Samootin v Shea - [2010] NSWCA 371 - NSWCA 2010 case summary — Zoe

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Samootin v Shea

[2010] NSWCA 371

Court of Appeal (NSW)|2010-11-08|Before: Beazley JA, Hodgson JA, Campbell JA, Hammerschlag J, Palmer J

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Source facts

Court

Court of Appeal (NSW)

Decision date

2010-11-08

Before

Beazley JA, Hodgson JA, Campbell JA, Hammerschlag J, Palmer J

Source

Original judgment source is linked above.

Judgment (23 paragraphs)

[1]

The Application for Injunction Concerning 24 Oxford Falls Road 55 At some time on or after 25 June 2010 Ms Samootin lodged a caveat against the title of 24 Oxford Falls Road. A lapsing notice was served on Ms Samootin, in consequence of which she approached Rein J on 16 September 2010 seeking an extension of the caveat. His Honour declined to do so, in consequence of which the caveat lapsed: Alexandra Samootin v Peter John Deans (Rein J, Equity Division, 16 September 2010, unreported and no medium neutral citation). 56 Ms Samootin lodged a second caveat against the title to that land on 4 November 2010. It claims an equitable unregistered mortgage security interest over the property, said to arise from the fact that the registered proprietor and Mr Deans "borrowed from me monies by way of unregistered mortgage over the property … this money is still owed to me." 57 At the hearing before us, Ms Samootin said that she was concerned that Mr Deans might try to have that caveat removed, just as he had had the previous caveat removed, and she sought an injunction. The terms of that injunction were not precisely defined, but its general nature was to prevent the registered proprietor dealing with the land pending the determination of her rights in it. She explained that her mortgage arose from the document that Mr Deans signed in July 1998 ([19] above), and pointed in particular to the statement "became part of a personal loan including my mortgage payout as below" in the fourth paragraph, and the statement in the third-last paragraph that the money was "provided for S R Deans Pty Ltd and myself in the form of personal loans". She also pointed to the statement in the final paragraph of the letter, and contended that the reference to "cancellation of the personal loan" refers to the "personal loan" that Mr Deans and his company had obtained from Mr Shea on behalf of himself and Ms Samootin. 58 The application for injunction was made orally in court, without any initiating process or service of any documentation, but at a time when Mr Deans was present. Mr Deans was appearing unrepresented. As the Court was about to rise for the luncheon adjournment, Mr Deans rose, and made an impassioned complaint about the manner in which he had been, in his view, subjected to endless litigation and expense by Ms Samootin, and made clear that he wanted an end to it. 59 Mr Deans did not return to court after the luncheon adjournment. After the Court had resumed sitting in the afternoon, Mr Deans telephoned the Associates of two of the Bench, to apologise for his intemperate outburst, and to say that he was not intending to return to court in relation to Ms Samootin's matters. Apart from that message, no judge received any communication either directly, or indirectly, from Mr Deans on the day of the hearing. Hence the Court has not had the benefit of any submissions from him (nor, more relevantly, from S R Deans Pty Ltd, the registered proprietor of number 24) concerning the application for an injunction. Even so, notwithstanding the procedural irregularity of the application for injunction, in my view in the particular circumstances of this case it should be dealt with. 60 Though no amendment has been made to the application for leave to appeal itself, Ms Samootin filed, on 3 November 2010, an "Amended Draft Notice of Appeal" in which she indicates that she is seeking leave to appeal against not only the decisions of Hammerschlag J, but also the decision of Palmer J of 1 August 2003, and orders made pursuant to it. 61 Mr Deans has lived at number 24 continually since Loan Design purchased that property. He continues to live there.

[2]

Competency of the Applications 62 Consideration of these applications has given rise to a question of whether the proceedings are competent. After judgment was reserved, the parties were given the opportunity to make additional written submissions directed to whether the present proceedings were incompetent, and if so what the Court should do about it. 63 It is a fundamental principle on which the legal system operates that a question can be brought for determination before the Court only by a person who has standing to raise that question. 64 Any proceedings that are brought by a person who lacks standing are incompetent. Apart from situations where a statute confers standing on a particular type of person, court proceedings that seek to enforce rights in private law, can only be brought by a person who has a real interest in having the question determined: Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438, at 448 per Lord Dunedin; Forster v Jododex Aust Pty Ltd [1972] HCA 61; (1972) 127 CLR 421 at [6] per Gibbs J; Green v. Daniels [1977] HCA 18; (1977) 51 ALJR 463, at 469 per Stephen J re declarations. That principle is the implicit basis of Bridgewater v Leahy [1998] HCA 66; 194 CLR 457 at [27], [80], and CGU Insurance Limited v OneTel Limited (In Liquidation) [2010] HCA 26 at [29]-[39]. Case law concerning particular types of causes of action can provide more specific guidance as to what counts as a "real interest" for the purpose of that cause of action. In proceedings to determine a question in public law there is also a requirement that a plaintiff have standing (eg Queensland v Whitlam (1974) 131 CLR 432; Attorney-General (Vic); Ex Rel Black v Commonwealth ("DOGS case") [1981] HCA 2; (1981) 146 CLR 559 at [6], 588 per Gibbs J, [43]-[46], 633 per Mason J, [58]-[59], 661 per Wilson J), though different tests can apply to standing to bring proceedings that seek to determine questions in public law than applies in private law, eg Onus v Alcoa of Australia Ltd (1981) 149 CLR 27; Shop Distributive and Allied Employees Association v Minister for Industrial Affairs (SA) (1995) 183 CLR 552. 65 The Court has power acting on its own motion to dismiss proceedings brought by a person who does not have standing to do so, as it is an abuse of process for a person who lacks the legal right to do so to commence or continue court proceedings. Because the Court should not permit an abuse of its process to occur, the Court should exercise its power to dismiss proceedings once it is satisfied that proceedings are incompetent. 66 Whether Ms Samootin has standing to bring the present proceedings requires examination of in whom is vested the rights that she seeks to enforce, and in whom is vested the assets that are available for payment of the liabilities that she seeks to contest.

[3]

Property Vesting in Official Trustee 67 Section 58(1) Bankruptcy Act 1966 provides, so far as presently relevant: "Subject to this Act, where a debtor becomes a bankrupt: (a) the property of the bankrupt, not being after-acquired property, vests forthwith in the Official Trustee … and (b) after-acquired property of the bankrupt vests, as soon as it is acquired by, or devolves on, the bankrupt, in the Official Trustee …." 68 Section 5 Bankruptcy Act says: " property means real or personal property of every description, whether situate in Australia or elsewhere, and includes any estate, interest or profit, whether present or future, vested or contingent, arising out of or incident to any such real or personal property." 69 This "vesting" is a transfer, by automatic operation of the statute, to the Official Trustee of title to all the "property", as defined, of the bankrupt. Such a vesting by operation of statute has been a feature of bankruptcy law since the 1831 English statute 1 & 2 Will 4 c 56 s 25 introduced it, dispensing with the former need for there to be a deed of assignment of the property of the bankrupt executed by the commissioners: Rogers v Spence (1844) 13 M & W 571, 153 ER 240 at 573, 240 per Sgt Byles arguendo. (Those commissioners had been men appointed by the Chancellor, by commission under the Great Seal, to exercise the power of the Chancellor over the person and property of a bankrupt: Holdsworth, A History of English Law Vol 1, 7th ed 1956 p 470.) 70 Any equitable interest that Ms Samootin had in the two items of real estate at Oxford Falls was clearly property that vested in the Official Trustee upon her bankruptcy. 71 Ms Samootin has conducted litigation before Palmer J on the basis that payment of the proceeds of the Mona Vale house to Mr Deans and his company gave rise to a proportionate beneficial interest in the two Oxford Falls Road properties, and obtained a court declaration to the effect that she had such a beneficial interest. After that, it must be doubtful whether it is open to Ms Samootin now to contend that, instead, the transaction gave rise to a debt on the part of Mr Deans and/or his company. However, even if one puts that doubt aside, any debt that Ms Samootin was owed at the time of her bankruptcy would also be property that vested in the Official Trustee upon her bankruptcy. 72 It is quite obscure how any loan that Mr Deans or his company might have owed to Ms Samootin has come to be a secured loan, but even if she had any rights against Mr Deans or his company as a secured creditor, those rights would likewise have vested in the Official Trustee upon her bankruptcy. 73 Even if the orders made by Hammerschlag J in 2007 were regarded as giving rise to any new rights (rather than as working out the consequences of existing rights) to the extent to which they conferred new rights on Ms Samootin, those rights would be after acquired property, within section 58(1)(b) Bankruptcy Act, and would have vested in the Official Trustee for that reason. 74 In so far as the claim against Ms Wagner sought compensation for loss of Ms Samootin's property, the right to sue was property in the form of a chose in action, and vested in the Official Trustee: Faulkner v Bluett (1981) 52 FLR 115. 75 For the purpose of the proceedings heard by Palmer J, Ms Samootin pleaded her claim against Ms Wagner in a separate statement of claim. It is diffuse and rambling. It clearly contains allegations that Ms Wagner, through her alleged negligence, dishonesty and breach of fiduciary duty, caused Ms Samootin to lose the property rights that, on Ms Samootin's case, she should have had in the net proceeds of sale of the Mona Vale property, and caused her to pay money to Ms Wagner that Ms Samootin sought be refunded to her. It also contains allegations that that alleged negligence, dishonesty and breach of fiduciary duty caused Ms Samootin what she describes as "pain and suffering". In an early version of the statement of claim she made a specific claim of $100,000 damages for that "pain and suffering". The final statement of claim sought orders (set out by Palmer J at [11] of his judgment) that claimed an amount of $100,000 for a variety of items, some of which were recovery of disbursements, some of which were compensation for her time involved in dealing with the case, but which still included "pain and suffering". 76 That gives rise to a question about whether, because of the claim for pain and suffering, the totality of the rights that Ms Samootin was asserting against Ms Wagner had vested in the Official Trustee. 77 Any action commenced by a person who subsequently becomes a bankrupt is automatically stayed under section 60(2) Bankruptcy Act upon that person becoming a bankrupt, until the trustee makes an election in writing to prosecute or discontinue the action. If the trustee fails to make an election within 28 days after being called on to do so, he is deemed to have abandoned the action: section 60(3). However, section 60(4) provides: "Notwithstanding anything contained in this section, a bankrupt may continue, in his own name, an action commenced by him or her before he or she became a bankrupt in respect of: (a) any personal injury or wrong done to the bankrupt …" 78 Using the same language as section 60(4), section 116(2)(g) Bankruptcy Act exempts from the property divisible amongst a bankrupt's creditors "any right of the bankrupt to recover damages or compensation … for personal injury or wrong done to the bankrupt …". While there is no question of section 60(4) applying in the present case, because there is no question of Ms Samootin continuing any action she commenced before she became a bankrupt, cases concerning section 60(4) are relevant to construing section 116(2)(g). 79 The test of whether a cause of action seeks "damage or compensation … for personal injury or wrong" has been held to be "… whether the damages or part of them are to be estimated by immediate reference to pain felt by the bankrupt in respect of his mind body or character and without reference to his rights of property": Cox v Journeaux (1935) 52 CLR 713 at 721 per Dixon J (applying in the Australian statutory context, Wilson v United Counties Bank Ltd [1920] AC 102 at 111 and 128-133, which was in turn applying Erle CJ in Beckham v Drake (1849) 2 HLC 579; 9 ER 12113 at 604, 1222), applied in Daemar v Industrial Commission of NSW (1988) 12 NSWLR 45 at 55-56 per Kirby P (with whom Clarke JA agreed); Mannigel v Hewlett Phelps [1991] NSWCA 186 at 2 per Handley JA (with whom Meagher JA agreed and Kirby P agreed "generally"); Arnoya Holdings Pty Ltd v Metway Leasing Limited [1999] NSWCA 120 at [16] per Sheller JA (with whom Powell and Beazley JJA agreed). In Faulkner v Bluett (1981) 52 FLR 115 at 119 Lockhart J said: "The common thread running through these cases is that where the primary and substantial right of action is direct pecuniary loss to the property or estate of the bankrupt, the right to sue passes to the trustee notwithstanding that it may have produced personal inconvenience to the bankrupt … Where the essential cause of action is the personal injury done to the person or feelings of the bankrupt the right to sue remains with the bankrupt." 80 For this purpose, the nature of the action is determined by examining the initiating process and pleadings and any other relevant documents in the case: Bryant v Commonwealth Bank of Australia (1997) 75 FCR 545 at 549 per Lockhart J, 557-558 per O'Loughlin and Merkel JJ. 81 The "pain and suffering" for which Ms Samootin was claiming damages was pain and suffering that, on her pleaded case, allegedly arose from having lost her property through wrongful action of Ms Wagner. Thus any right of Ms Samootin to sue concerning Ms Wagner having caused her "pain and suffering" in the way alleged in the statement of claim is a right that would also have vested in the Official Trustee. 82 Thus, before the decision of Palmer J, each chose in action that Ms Samootin sought to enforce in the litigation was the type of property that would have vested in a Trustee in Bankruptcy upon her becoming a bankrupt. While Palmer J dismissed that claim and leave to appeal concerning it was refused before Ms Samootin became bankrupt, Ms Samootin still had, before her bankruptcy such further rights as might exist to seek to have the dismissal considered on appeal. Those rights would be no higher than to make a third application for leave to appeal, but that is precisely what Ms Samootin is now seeking to do. It is therefore necessary to consider whether that right has vested in the Official Trustee. 83 In Cummings v Claremont Petroleum NL (1996) 185 CLR 124 the ratio of the case included that the right of a person who became bankrupt to appeal against a judgment holding him liable to pay a money sum was not "property of the bankrupt". However, Brennan CJ Gaudron and McHugh JJ also recognised, at 134, that: "[if] the postulated appeal relates to property that became vested in the trustee on the bankruptcy, or if the postulated appeal relates to a claim by the bankrupt or money or property that would be vested on recovery in the trustee, the right to appeal is vested in the trustee". 84 In accordance with that reasoning, even if the present application for leave to appeal extended to an appeal against Palmer J's dismissal of the claim against Ms Wagner, the right to appeal against that dismissal would have vested in the Trustee in Bankruptcy. 85 Thus, in so far as Ms Samootin seeks in the present applications for leave to appeal to challenge the refusal of Palmer J to grant any of the rights that her statement of claim identified, her right to seek to appeal has vested in the Official Trustee.

[4]

Effect of Vesting on Standing to bring Proceedings 86 In Rochfort v Battersby (1849) 11 HLC 387; 9 ER 1139 Lord Cottenham LC said, 409, 1147: "The insolvent under the Insolvent Debtors Act is not considered by the Court as having any such interest in the property as entitles him to enter into any litigation respecting it." 87 He continued, at [410], 1148: "Then, my Lords, the question is, whether you can hear him as an appellant? The moment you show he had no recognised interest in the property or in the matter, there is an end of his competency to raise the question." 88 Though many of the principles of bankruptcy law have changed since 1849, the principles just quoted have not changed. In Cummings v Claremont Petroleum NL (1996) 185 CLR 124 at 136 Brennan CJ, Gaudron and McHugh JJ held that: "… a bankrupt has no right to bring or prosecute proceedings to protect, enhance or add to the property of which he has been divested on bankruptcy." 89 The orders that Hammerschlag J declined to make on 3 September 2007 included orders for adjournment of the matter. As those orders were sought in aid of Ms Samootin's claims concerning assets that were vested in the Official Trustee at the time the orders were made, she has from the outset lacked standing to complain about the failure to make those orders. Another order that Hammerschlag J declined to make on that day was, in effect a stay of the order for possession. In so far as that sought a remedy to hold the status quo pending determination of Ms Samootin's proprietary claims to the house, she never had standing to challenge it. In any event, now that the order for possession has been executed, any appeal concerning that order would lack subject matter, and for that reason be incompetent. 90 Insofar as any application for leave to appeal against the decision of Palmer J involved an appeal against the costs orders made in favour of Ms Wagner and Mr Holmes, or indeed any other litigant, any right to appeal would not, in accordance with the ratio in Cummings ([74] above), have vested in the Trustee in Bankruptcy. However, in Cummings the High Court held that even though the right of appeal against a judgment that imposed a liability on a person who thereafter became bankrupt was not "property of the bankrupt", the bankrupt did not have standing to appeal against that judgment, at least in circumstances where the judgment debt was itself provable in the bankruptcy. The reasoning, at 136-138, is that the making of the sequestration order converts the debt into a right of proof, the only assets out of which it can be satisfied are assets that have vested in the trustee, and for that reason the bankrupt has no interest in the proceedings. Further, as their Honours said at 138: "A bankrupt's contingent interest in a surplus does not give him an interest which would allow him to sue to enforce proprietary rights, and, that being so, it cannot give him an interest to appeal to minimise liabilities." 91 Thus, at the time Ms Samootin began the present proceedings, she had no standing to do so, because any rights that she was seeking to enforce through the proceedings were not rights that were vested in her.

[6]

See also Mannigel v Hewlett Phelps [1991] NSWCA 186 at 3 per Handley JA (with whom Meagher JA agreed and Kirby P agreed "generally" ). 95 That discharge of a bankrupt from bankruptcy does not cause any assets that have vested in the Official Trustee to revert to the bankrupt, is also the implicit basis of the High Court's judgment in Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306. In Schultz a testatrix's will had given her house and its contents upon trust for Ms Schultz. At the time of the testatrix's death Ms Schultz was bankrupt. The testatrix's husband brought an application under the Family Provision legislation, which resulted him being awarded, at first instance, the entire house and contents. After Mrs Schultz's release from bankruptcy the husband's award was reduced, on appeal, to a life estate in the property in question, with the remainder to Mrs Schultz. The court held that the interest in remainder in the house and contents was vested in the Official Receiver. 96 Section 153(1) Bankruptcy Act provides: "Subject to this section, where a bankrupt is discharged from a bankruptcy, the discharge operates to release him or her from all debts (including secured debts) provable in the bankruptcy, whether or not, in the case of a secured debt, the secured creditor has surrendered his or her security for the benefit of creditors generally." 97 None of the exceptions in section 153 are of present relevance. While section 153(1) has the effect of releasing the bankrupt from liability for all provable debts, that does not mean that the rights of creditors with provable debts totally cease when the bankrupt obtains his or her discharge. Even after discharge, such creditors retain the right conferred on them by the Act to receive dividends from any property that has vested in the Official Trustee and remains vested in him at the time of the bankrupt's discharge from bankruptcy. 98 In Re Balhorn; ex parte Balhorn and Official Receiver (1981) 39 ALR 223 Lockhart J said, at 226: "The effect of a discharge from bankruptcy is to release a bankrupt from all debts provable in the bankruptcy except the debts mentioned in s 153(2). The discharge "does not put an end to the bankruptcy regarded as a series of judicial and administrative acts and rights and powers": Re a Debtor (No 946 of 1926); The Debtor v Official Receiver [1939] 1 All ER 735 , per Sir Wilfrid Greene MR, at 742; followed in Re a Debtor (No 12 of 1958); Ex parte Trustee of Property of Debtor v Clegg , supra. The property of a bankrupt divisible amongst his creditors (property of the bankrupt at the commencement of the bankruptcy and property acquired thereafter but before discharge: s 116) remains vested in the trustee of his estate. A bankrupt is entitled to any surplus remaining after payment in full of the costs, charges and expenses of the administration of the bankruptcy; all debts that have been proved in the bankruptcy; and interest on interest bearing debts that have been proved in the bankruptcy: s 148. The trustee of a bankrupt's estate is still bound to collect, realize and distribute such of the bankrupt's property as was vested before discharge in the trustee."

[7]

See also, to similar effect, Gosden v Dixon (1992) 107 ALR 329 at 331 per McLelland J; Rankin v Official Trustee in Bankruptcy [2005] FCA 1084; (2005) 220 ALR 723 at [34] per Heerey J; Satchithanantham v National Australia Bank [2008] NSWSC 1097 at [26]-[27] per White J. 99 An effect of this is that if an asset that the bankrupt had owned at the time of the bankruptcy has disappeared and only come to light after the bankrupt has been discharged, that asset remains vested in the Official Trustee. Therefore, it is for the Official Trustee to take any steps he deems appropriate to recover the asset, and, if it is recovered, it can be applied in payment of any provable debts that remain unpaid. Similarly, if an asset that the bankrupt owned at the time of the bankruptcy but that was thought to be worthless is shown, after the bankrupt has been discharged, to have some value, that asset remains vested in the Official Trustee, and if the Official Trustee is of the view that that value is worth realising, it is only the Official Trustee who has the power to realise that value. 100 Thus, notwithstanding her release from bankruptcy, Ms Samootin still lacks the capacity to bring proceedings to vindicate rights relating to, or arising from, any equitable interest that she had in the two properties. Her claim to possession of No 26 having been based upon a claim of proprietary right, she lacks the capacity to bring proceedings to vindicate any such right (quite apart from her claim for possession having become moot through the sale of No 26 having occurred). She also lacks the capacity to recover any debt that may have been owed to her by Mr Deans or his company at the time of her bankruptcy, or to enforce any security interest that she might have had in any of the property of Mr Deans or his company at that time, or to challenge liabilities of a kind that were provable in her bankrupt estate. 101 Ms Samootin responded to the opportunity to make written submissions concerning the competency of the present applications by filing written submissions on 2 December 2010. They include some wide-ranging allegations about a variety of matters, including:

[14]

various medical problems from which Ms Samootin suffers or has suffered, and poor medical treatment to which she has been subjected. 102 None of those matters bear upon whether the present applications that Ms Samootin makes are competent. 103 Ms Samootin also seeks an adjournment of the present application, pending the determination by the High Court of an application for special leave that she filed in the High Court on 30 September 2010. That application apparently seeks to contend that the bankruptcy notice that ultimately resulted in an order being made for the sequestration of Ms Samootin's estate was illegal. In light of the previous history of Ms Samootin's attempts to challenge the validity of the bankruptcy, I do not regard the making of the application for special leave to appeal as a sufficient ground for adjournment of the present applications. 104 Ms Samootin's specific response to the invitation to make submissions about the competency of the appeal starts at [69] of her written submissions. She contends that the conduct of the Official Trustee in acting without her consent to reach an agreement with Mr Deans, that ultimately came to be embodied in the orders of Hammerschlag J, was not a consequence of section 58(1) Bankruptcy Act, but rather was "identity theft". She submits that identity theft is a contravention of various principles of the Universal Declaration of Human Rights, of the United Nations International Covenant on Civil and Political Rights, the United Nations Declaration on the Elimination of Violence against Women, and the "contract law parol evidence rule". 105 None of those matters show that she has the interest in the subject matter that is needed for her to be able to bring the present proceedings. The issues in the present proceedings are ones that arise from those litigated in the court below, which did not include anything about identity theft. While the Official Trustee exercised various powers over the property that prior to the bankruptcy had been Ms Samootin's property, by virtue of the statutory vesting of property in the Official Trustee it was no longer her property. 106 Ms Samootin submits that the solicitor for the Official Trustee has contravened various provisions of the Consumer Credit (New South Wales) Act 1995, the Consumer Credit (New South Wales) Code and Regulations, the Contracts Review Act 1980 and the Bankruptcy Act section 58(4). Even if those allegations were true (a matter concerning which I expressly do not state any view) they do not provide a reason why Ms Samootin has capacity to bring the present proceedings. 107 I have considered the balance of Ms Samootin's submissions. Nothing in them provides even an arguable reason why the rights that she is seeking to vindicate are not ones concerning property that has vested in the Official Trustee, or concerning liabilities payable only from property that has vested in the Official Trustee.

[15]

Ms Samootin's Contentions About Errors in the Order of Hammerschlag J 108 One of the matters that Ms Samootin was seeking leave to appeal concerning is her contention that the orders of Hammerschlag J incorrectly allocate the beneficial interests and the burden of liabilities connected with the properties. 109 After the sale of number 26 net proceeds of $325,469.91 were available for distribution. Number 24, still unsold, was valued in August 2008 (on two different bases of valuation) as being worth $625,000, or $680,000. It appears that calculations of the amounts due to each of Ms Samootin, Mr Shea and Loan Design have been made on the basis the net funds distributable between the three beneficial owners are of the order of $980,000. When the various allowances required by the orders of Hammerschlag J are made to the percentage interest that those orders declared her to have, the net result is that Ms Samootin's share of that fund is a little less than $32,000. As I understand it, she contends that that result in itself suggests that something has gone wrong with the calculations. 110 The orders of Hammerschlag J declared that the beneficial interests in numbers 24 and 26 were held by Ms Samootin as to 15.2%, Mr Shea as to 15.2%, and Loan Design as to 69.6%. The percentage equities appear to have been calculated by treating Loan Design as having provided the whole of the monies borrowed from St George Bank, and Ms Samootin and Mr Shea as having equally provided the balance. If the percentage equities were indeed 15.2%, 15.2% and 69.6%, all expenses concerning the mortgage should have been payable by Loan Design. The orders do not proceed in that way. However, Ms Samootin does not contend that Loan Design should bear all expenses of the mortgage. 111 Rather, Ms Samootin submits (in an affidavit of 22 July 2009, that is referred to in her submissions seeking leave to appeal from the orders of Hammerschlag J) that the orders were wrong because the percentage equities should have been calculated by treating Loan Design as having provided half of the monies borrowed from St George Bank, and Ms Samootin and Mr Shea as having equally provided the balance. In that circumstance, she contends that the proportionate beneficial interest of Loan Design in the property is more like 34.5%, and her own proportionate beneficial interest is more like 32.75%. If that were the correct method of calculating the beneficial interests, it would produce a flow on to all the calculations of outgoings that were based upon her having a 15.2% beneficial interest. 112 So far as the specific orders for allocation of expenses go, Order 9(a)(i) required Ms Samootin to allow Loan Design an amount of $48,150.75 as a contribution to the mortgage payments made by Loan Design. It is not clear, on the evidence before us, how that sum was arrived at. Loan Design's statement of account with St George as at 31 October 2005 showed that the amount owed had been reduced to $237,161.05. There is some incomplete evidence before us, that Ms Samootin has made a contribution to the mortgage repayments, which she says totalled $36,239.42 as at 4 September 2006. 113 It appears to be Ms Samootin's contention that if the proportionate beneficial interests were calculated in the way she advocates, and by treating half of the borrowing from St George as made by Mr Shea (as trustee for himself and Ms Samootin), the borrowing from St George would be treated as being, as to one half, the responsibility of Loan Design, and as to the other half the responsibility of Mr Shea (as trustee for himself and Ms Samootin in equal shares). It is not clear on the material before us how the sum of $48,150.75 referred to in order 9(a)(i) was arrived at, and in particular whether it was arrived at by using this principle. 114 Another contention that she makes is that she ought not be required to contribute to outgoings of number 24, after the sale of number 26 and her eviction from it. Another contention is that there is something manifestly wrong about the orders requiring her to pay over half of the mortgage outgoings, if her beneficial interest is only 15.2%. This does not exhaust the errors that she submits were made. 115 Even if the Official Trustee were persuaded, on reconsidering the matter, that there were errors in the orders, its ability to correct any such error may be limited by the fact that the orders are consent orders, that have now been entered. If Ms Samootin is unable to persuade the Official Trustee to take such steps as might be open to it to rectify what she says are errors in the orders, or itself to seek leave to lodge an appeal of the kind that Ms Samootin was seeking, her lack of standing to bring the present applications does not leave her totally without an avenue for curial relief. 116 The majority judgment in Cummings v Claremont Petroleum at 138-9 noted that the relief that is available to a bankrupt when a trustee declines to exercise his power to sue or to appeal is to apply to the Court (which in this context means the Federal Court) under section 178 of the Act to seek an order requiring the Trustee to appeal or to allow the bankrupt, on providing suitable security, to use the Trustee's name. I say nothing about the prospects of success of any such application, and my mention of the theoretical availability of that avenue of relief should not be taken as any encouragement for Ms Samootin to adopt it.

[16]

Effect of Incompetency of the Applications 117 The reasoning so far leads to the conclusion that the application for leave to appeal from the decisions of Hammerschlag J should be dismissed as incompetent. 118 The application for leave to appeal from the decision of Palmer J should likewise be dismissed as incompetent. That is in itself a sufficient reason for dismissing it. 119 However, even apart from that, no plausible basis has been shown why an appeal from Palmer J's decision (insofar as it resulted in the orders of 28 June 2004, the only orders that remain on foot) would have the slightest prospect of success. The orders for an account were an appropriate way of allowing the quantum of the respective interests of the parties in the two properties to be ascertained. Palmer J found that Ms Wagner had no liability to Ms Samootin. His reasons for so doing (at [65]-[79]) included: - "there can be no doubt that Ms Samootin's account of events cannot be accepted in any material particular in which it differs from the accounts given by the other witnesses." ([65]) - "Ms Samootin's account is contradicted on important points by contemporary records." ([67]) - "Ms Samootin's evidence was not believable on many issues." ([68]) - "Ms Samootin was prepared to give contradictory and prevaricating evidence when it suited her." ([71]) - "the reliability of Ms Samootin's evidence generally must be inherently dubious because of the evidence which she persists in giving concerning the circumstances of her son's death and the alleged involvement of Mr Shea, Mr Deans and many others in his alleged murder." ([73]) - "the evidence given by all of the other witnesses was inherently plausible, it was supported by contemporaneous documentation, and it was consistent. Nothing emerged in the course of their cross examinations to shake their credibility." ([75]) - Palmer J accepted the evidence of Ms Knowles (a conveyancing clerk who had been involved in the conveyancing transaction) ([77]), and accepted the evidence of Ms Wagner ([78]) 120 Palmer J made findings of fact at [80], that: "- prior to exchange of contracts for the purchase of No 26 in the name of Mr Shea alone, Ms Samootin agreed with Mr Shea that her share of the proceeds of the Mona Vale Property would be used in the purchase of No 26; - Ms Samootin suggested and acquiesced in the purchase of No 26 in the name of Mr Shea alone because she did not want her pension benefits to be at risk in case she and Mr Shea were able to develop No 26; - it was at all times agreed and understood between Ms Samootin and Mr Shea that Ms Samootin would have an interest in No 26 commensurate with her contribution to the equity therein; - prior to the exchange of contracts for the purchase of No 26, Ms Samootin instructed Ms Knowles that the purchase of No 26 was to be in the name of Mr Shea alone. Further, she confirmed these instructions to Ms Wagner in a meeting in Ms Wagner's office on 23 October 1997; - after exchange of contracts for the purchase of No 26, it was agreed between Ms Samootin, Mr Shea and Mr Deans that the parties would acquire both Nos 24 and 26 in the name of a company for the purpose of developing both properties; - Ms Samootin agreed and understood that her share of the proceeds of sale of the Mona Vale Property would be used in the purchase of Nos 24 and 26 by the company; - prior to settlement of the purchase of Nos 24 and 26, all parties agreed and understood that Ms Samootin would have an interest in both properties commensurate with her contribution to the equity therein; - Ms Samootin expressly or impliedly authorised Mr Shea to give instructions on her behalf to Ms Wagner implementing the parties' agreement for the purchase of Nos 24 and 26 in the name of a company; - since settlement of the purchase of Nos 24 and 26, Loan Design, Mr Shea and Mr Deans have never denied the interest of Ms Samootin in those properties." 121 Those findings could be overturned on appeal only in accordance with the criteria laid down in Fox v Percy (2003) 214 CLR 118. Ms Samootin has not begun to make out a case why she has the slightest prospect of overturning the findings on those criteria. No justification is put forward for the extraordinary delay, of more than 6 years, in making this third application for leave to appeal from the decision of Palmer J. No explanation is forthcoming as to how circumstances have changed in any relevant way since one application for leave to appeal from that decision has been allowed on only a very narrow basis, and another application for leave to appeal has been rejected in earlier years. Finality in the litigious process is in itself highly important. These matters provide reasons, separate to the incompetence of the appeal, why no extension of time should be granted to permit the third application for leave to appeal from the decision of Palmer J. 122 The question decided by Allsop P related to whether Ms Wagner and Mr Holmes should be parties in the applications for extension of time to seek leave to appeal. The incompetence of those applications for extension of time to seek leave to appeal makes the question of whether his Honour's decision should be reviewed of no practical importance. Further, the application to review the decision of Allsop P is an interlocutory application in proceedings that are incompetent, and so is itself incompetent. 123 It is appropriate, however to say that I see no error in his Honour's decision. 124 The reasons I have given at [119]-[121] show, independently of the incompetence of the proceedings, why there was no justification for keeping Ms Wagner in the proceedings in this court. From the time he was first joined there was no justification for Mr Holmes being party to the proceedings. 125 The application to read further evidence, being made in and for the purpose of proceedings that are incompetent, is itself incompetent, and should be dismissed. 126 The application for injunction stands on a slightly different footing. Apart from circumstances where an appeal concerns whether an injunction should or should not have been granted at first instance, an appeal court can issue an injunction to protect the status quo pending a hearing in that appeal court. When there are no competent proceedings brought by Ms Samootin in this court, the court, acting as an appeal court, cannot issue an injunction on that basis. 127 Individually, the judges who heard Ms Samootin's applications on 8 November 2010 each have the powers and authority of a single judge of the Supreme Court. Thus, I have power to issue an injunction as an exercise of the first-instance jurisdiction of the Supreme Court. Overlooking for the moment the unusualness of an appellate judge choosing to exercise that power to issue an injunction, rather than remitting the application to the Equity Division, I would refuse to grant any such injunction. It would be appropriate to grant an injunction of the type Ms Samootin seeks only if there were a serious question to be tried concerning her having the rights as an equitable mortgagee over 24 Oxford Falls Road that she claims. For the reasons I have given, any proceedings that she brought to enforce such an equitable mortgage would be incompetent. For that reason, there is no serious question to be tried, that could justify the issue of the injunction that is sought. When it is clear that the application for injunction must fail, it is inappropriate to refer it to a judge of the Equity Division. Thus, the application for injunction should be dismissed. In light of the circumstances in which the application for injunction was made, no one is likely to have incurred any costs in connection with it, so the order for dismissal of that application should not be accompanied by an order for costs.

Parties

Applicant/Plaintiff:

Samootin

Respondent/Defendant:

Shea

Legislation Cited (1)

Bankruptcy Act 1966(Cth)

Cases Cited (32)

Alexandra Samootin v Christopher George Shea (No 2) (NSWCA, 3 June 2004, unreported) Alexandra Samootin v Christopher George Shea (No 3) (NSWCA, 3 June 2004, unreported) Alexandra Samootin v Christopher George Shea (NSWCA, 16 May 2005, unreported) Alexandra Samootin v Peter John Deans (Rein J, Equity Division, 16 September 2010, unreported) Arnoya Holdings Pty Ltd v Metway Leasing Limited [1999] NSWCA 120 Attorney-General (Vic); Ex Rel Black v Commonwealth ("DOGS case") [1981] HCA 2; (1981) 146 CLR 559 Beckham v Drake (1849) 2 HLC 579; 9 ER 12113 Bridgewater v Leahy [1998] HCA 66; 194 CLR 457 Bryant v Commonwealth Bank of Australia (1997) 75 FCR 545 CGU Insurance Limited v OneTel Limited (In Liquidation) [2010] HCA 26 Cox v Journeaux (1935) 52 CLR 713 Cummings v Claremont Petroleum NL (1996) 185 CLR 124 Daemar v Industrial Commission of NSW (1988) 12 NSWLR 45 Daemar v Industrial Commission of NSW (No 2) (1990) 22 NSWLR 178 Faulkner v Bluett (1981) 52 FLR 115 Forgeard v Shannahan (1994) 35 NSWLR 206 Forster v Jododex Aust Pty Ltd [1972] HCA 61; (1972) 127 CLR 421 Fox v Percy (2003) 214 CLR 118 CASES CITED: Gosden v Dixon (1992) 107 ALR 329 Green v. Daniels [1977] HCA 18; (1977) 51 ALJR 463 Mannigel v Hewlett Phelps [1991] NSWCA 186 Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306 Onus v Alcoa of Australia Ltd (1981) 149 CLR 27 Queensland v Whitlam (1974) 131 CLR 432 Rankin v Official Trustee in Bankruptcy [2005] FCA 1084; (2005) 220 ALR 723 Re Balhorn; ex parte Balhorn and Official Receiver (1981) 39 ALR 223 Rochfort v Battersby (1849) 11 HLC 387; 9 ER 1139 Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438 Ryan v Dries [2002] NSWCA 3; (2002) 10 BPR 19,497; [2003] ANZ Conv R 47 Samootin v Shea (No 2) [2003] NSWSC 695 Samootin v Shea [2005] NSWCA 16 Samootin v Shea [2010] NSWCA 124 Samootin v Wagner [2009] FCAFC 77 Satchithanantham v National Australia Bank [2008] NSWSC 1097 Shop Distributive and Allied Employees Association v Minister for Industrial Affairs (SA) (1995) 183 CLR 552 Shop Distributive and Allied Employees Association v Minister for Industrial Affairs (SA) (1995) 183 CLR 552 Wilson v United Counties Bank Ltd [1920] AC 102

(1) Adjustments by reason of occupation are not automatic. They are given only if one common owner has excluded another, or if there is an agreement supporting the adjustments, or if one common owner is required to do equity because he or she is seeking equity, or there is some other equitable basis (such as a finding that one owner is to be treated as collecting rents on behalf of all): see Forgeard v Shannahan (1994) 35 NSWLR 206, Ryan v Dries [2002] NSWCA 3; (2002) 10 BPR 19,497; [2003] ANZ Conv R 47 (which disagree on some points, but both support these points).

(2) an application for leave to appeal from what are described as decisions of Hammerschlag J of 16 July 2007, 17 July 2007, 30 July 2007 and 3 September 2007. Ms Samootin has attempted, in a procedurally informal fashion, to extend that application so that it also seeks leave to appeal from a decision of Palmer J given on 1 August 1993 ( Samootin v Shea (No 2) [2003] NSWSC 695) and various orders of Palmer J made to give effect to that decision;

Second Application for Leave to Appeal from Palmer J 30 Ms Samootin then instituted proceedings number 40603 of 2004 in the Court of Appeal. It sought leave to appeal from the orders that Palmer J had made on 28 June 2004. 31 On 17 February 2005 Giles JA dismissed an application that Ms Samootin made for a stay of, amongst other things, numerous orders for costs that had been made: Samootin v Shea [2005] NSWCA 16. His Honour summarised his view at [16]: "… that Ms Samootin might overturn what she regards as the adverse outcome of the proceedings heard by Palmer J is so remote that giving effect to his Honour's decision should not be inhibited by any form of stay." 32 On 16 May 2005 Giles and Bryson JJA dismissed the application for leave to appeal that had been made in proceedings 40603 of 2004: Alexandra Samootin v Christopher George Shea (NSWCA, 16 May 2005, unreported and no medium neutral citation). Bryson JA said at [6]: "In the sense that the later orders are clearer it should, in my view, be said that the orders made on 28 June 2004 are more favourable to the claimant than those earlier made." 33 Bryson JA said at [25] and [26] that in substance, though not in form, the application renewed an earlier application made before the Court of Appeal on 3 June 2004. He noted that there was no dispute that the Court had power to hear the application before it: "… because, as a matter of form although I think not as a matter of substance, it is an appeal against a different order made later in time than the hearing before the Court of Appeal on 3 June 2004."

Bankruptcy Proceedings Against Ms Samootin 34 On 13 May 2005, the costs that Ms Samootin had been ordered to pay to Ms Wagner and Mr Holmes having been quantified, judgment was given against Ms Samootin in favour of Ms Wagner and Mr Holmes for one amount of around $155,000, and another amount of around $9,000. 35 A bankruptcy notice was issued against Ms Samootin based on non-payment of those judgment debts. It was followed by issue of a creditors' petition and, on 24 May 2006, an order for the sequestration of her estate. 36 Over the following years Ms Samootin brought numerous proceedings in the Federal Magistrate's Court and the Federal Court challenging the validity of her bankruptcy or seeking to have it annulled. On 9 December 2009 the High Court dismissed her application for leave to appeal against orders of the Full Federal Court in Samootin v Wagner [2009] FCAFC 77. In these proceedings, the Full Federal Court rejected her challenges to a decision that had declined to annul the bankruptcy, and made a variety of other allegations of error relating to her bankruptcy. The Full Court found, at [10], that "none of [the grounds of appeal] have any factual or legal substance". 37 Ms Samootin has made numerous applications for special leave to appeal to the High Court concerning decisions that this Court has made concerning the litigation. It is not clear on the material before me whether there has ever been an application for leave to appeal against the limitation that this Court's orders of 3 June 2004 imposed on the appeal that she was granted from the orders of Palmer J, or against this Court's rejection on 16 May 2005 of her application for leave to appeal from the orders that Palmer J made on 28 June 2004. I will proceed on the assumption that there has been no such application for leave to appeal.

Application for Leave to Appeal from Hammerschlag J 44 On 10 September 2007, Ms Samootin, in her own name, filed a holding summons for leave to appeal in the Court of Appeal, thereby initiating proceedings 40598 of 2007. It notified an intention to seek leave to appeal from the decision of Hammerschlag J on 3 September 2007. 45 On 8 October 2007 Ms Samootin filed an ordinary summons for leave to appeal in proceedings 40598 of 2007. It sought leave to appeal from decisions of Hammerschlag J on 16 July 2007, 17 July 2007, 30 July 2007 and 3 September 2007. 46 At the time, Part 51 rule 4(1) Supreme Court Rules enabled a holding summons for leave to appeal to be filed within 28 days after the judgment or order appealed against. Thus, the holding summons for leave to appeal filed on 10 September 2007, relating as it did only to Hammerschlag J's judgment of 3 September 2007, was well in time. 47 Part 51 rule 4(1) Supreme Court Rules required a summons for leave to appeal to be filed within 28 days of the "material date" (here, the date of the order appealed against), or (under Part 51 rule 4(3)) if a holding summons for leave to appeal had been filed, within 3 months of service of the holding summons on all necessary parties. Thus, the ordinary summons for leave to appeal filed on 8 October 2007 was within time insofar as it sought to appeal against the order made on 3 September 2007, but out of time insofar as it sought to appeal against the orders made in July 2007. An undated Notice of Motion appears at p 88 of the Application Book. It seeks an extension of time in which to seek leave to appeal concerning those orders. 48 While the ordinary summons for leave to appeal named as opponents all six of the defendants in the court below (Mr Shea, Mr Deans, Loan Design, S R Deans Pty Ltd, Ms Wagner and Mr Holmes), against the names of Ms Wagner and Mr Holmes was written "not applicable". There is a dispute, which it is unnecessary to resolve, about whether Ms Wagner and Mr Holmes were served with that process. There was no occasion to serve them, as they were not affected by any of the orders of Hammerschlag J to which the application related, and so were neither necessary nor proper parties to a dispute about whether Hammerschlag J's orders were correct. 49 Ms Samootin was discharged from bankruptcy pursuant to section 149 Bankruptcy Act 1966 (Cth) on 22 June 2009. On 24 July 2009 Ms Samootin served Mallesons, the solicitors who had been on the record for Ms Wagner and Mr Holmes in the proceedings before Palmer J, with an amended draft notice of appeal and amended summary of argument relating to the application for leave to appeal. 50 On 20 August 2009 Ms Nash, the solicitor for the Official Trustee, wrote to Mallesons referring to an appearance before the Registrar on 17 August 2009 in this matter, and saying: "The Official Trustee in Bankruptcy does not adopt the proceedings which have been commenced by the bankrupt. … The Official Trustee in Bankruptcy does not propose to appear further in the matter as the Official Trustee in Bankruptcy has no interest in pursuing the matter. … [T]he bankrupt has no capacity to commence or maintain the proceedings either as an undischarged or discharged bankrupt." 51 On 9 November 2009 the matter was before the Registrar. It was adjourned to 31 May 2010, to await the outcome of Ms Samootin's application for special leave to appeal to the High Court concerning the validity of her bankruptcy. 52 On 23 April 2010 Mallesons wrote to Ms Samootin, and referred to the High Court having dismissed her application for special leave to appeal concerning validity of the sequestration order. The letter asserted that the proceedings 40598 of 2007 in the Court of Appeal were incompetent, "as it relates to property which is vested in the Official Trustee by operation of the sequestration order made on 24 May 2006." It enclosed a copy of Ms Nash's letter of 20 August 2009. Ms Samootin was invited to consent to orders dismissing the proceedings, with no order as to costs. Mallesons received no reply to that letter. 53 On 17 May 2010 Ms Wagner and Mr Holmes filed a notice of motion in the present proceedings, seeking an order that the proceedings be dismissed, or alternatively that they be dismissed as against Ms Wagner and Mr Holmes. Allsop P decided that notice of motion on 24 May 2010: Samootin v Shea [2010] NSWCA 124. Counsel for Ms Wagner and Mr Holmes did not press the application that the proceedings as a whole be dismissed. His Honour dismissed the proceedings as against Ms Wagner and Mr Holmes. The nub of his Honour's reasons is at [13]: "… When one examines the summons for leave, it seeks leave from orders of Hammerschlag J only. However, it is clear that Ms Samootin wishes to draw the fifth and sixth defendants back into this costly litigation by the terms of the amended notice of appeal and the amended summary of argument. What is clear, it seems to me, is that the fifth and sixth defendants should be freed from this litigation, given that there is no basis legitimately revealed before me today why there would be any prospect of an extension of time for filing an application for leave to appeal against Palmer J's judgment. In those circumstances, the orders made by Hammerschlag J having no bearing upon the position of the fifth and sixth defendants, it is just that they should be removed from this litigation." 54 On 4 June 2010 Ms Samootin filed a notice of motion in proceedings 40598 of 2007, seeking a review, under UCPR 51.58, of this decision of Allsop P. By that time, the introduction of a new computer system in the court Registry had resulted in the proceedings being re-numbered as 2007/266108.

[1981] HCA 2

[1972] HCA 61

[1977] HCA 18

(1981) 146 CLR 559

(1997) 75 FCR 545

(1935) 52 CLR 713

(1996) 185 CLR 124

(1988) 12 NSWLR 45

(1990) 22 NSWLR 178

(1981) 52 FLR 115

(1994) 35 NSWLR 206

(1972) 127 CLR 421