Consideration
60 The respondents' interlocutory application states that it is made pursuant to r 26.01 of the Rules and s 31A of the Act. However, s 31A is not mentioned in the respondents' written submissions and they therefore appear to disclaim reliance on that provision.
61 Rule 26.01 of the Rules provides relevantly:
(1) A party may apply to the Court for an order that judgment be given against another party because:
(a) the applicant has no reasonable prospect of successfully prosecuting the proceeding or part of the proceeding; or
…
(d) the proceeding is an abuse of process of the Court;
…
62 It is necessary to give close consideration to the relief sought by Smits in the originating application and the relationship between that relief and the various judgments of the Supreme Court which are, directly or indirectly, the subject of many of the orders sought.
63 In summary, the principal relief Smits seeks against Loel and Pioneer in the originating application, consists of:
Orders declaring that Loel and Pioneer contravened the TPA and the CCA by not disclosing the abandonment, and declaring that they took unfair advantage of their silence in the conduct of proceedings BS 6354 of 2006, BS 10707 of 2006 and BS 5325 of 2008 and in relation to the negotiation, execution, implementation and enforcement of the Deed of Settlement.
An order declaring the Deed of Settlement void or varying the terms of the Deed of Settlement.
An order under the Uniform Civil Procedure Rules 1999 (Qld) ("UCPR") setting aside the final orders made by Margaret Wilson J in BS 5325 of 2008 and an order that the respondents pay to Smits the costs he incurred in relation to those proceedings on an indemnity basis.
An order under the UCPR setting aside the orders made by the Court of Appeal in proceeding CA 159 of 2011 and an order that the respondents pay to Smits the costs he incurred on an indemnity basis.
An order that Loel and Pioneer refund money paid by Smits to James Conomos Lawyers or Pioneer pursuant to consent orders made by White J on 2 August 2007 in BS 6354 of 2006 and costs incurred by Smits and Zonebar in respect of those proceedings.
Compensation or damages for the various contraventions of the TPA and the CCA and for breach of duty and deceit.
64 As against Lillas & Loel, Smits seeks a declaration that the Deed of Assignment dated 29 July 2011 between Lillas & Loel and Pioneer be declared void or an order that Lillas & Loel be estopped from enforcing that Deed.
65 At this stage, it is useful to summarise the various proceedings and orders of the Supreme Court which Smits directly or indirectly challenges in the present proceeding:
BS 6354 of 2006: This was the proceeding brought by Pioneer against Smits, Zonebar and Shirlaw to have the second mortgage restored to the register. It was one of the proceedings settled under the Deed of Settlement and consent orders agreed as part of the settlement were made by Chesterman J on 13 June 2007. On 2 August 2007, White J made consent orders concerning which parties the funds in the Morgan Conley trust account were to be paid to and the order and priority of the payments.
BS 10707 of 2006: This was the proceeding commenced by Smits against Loel for negligence and breach of fiduciary duty in relation to the mortgages and other transactions in respect of the Yeppoon land. The proceeding was also settled under the Deed of Settlement. The terms of the Deed of Settlement required Smits and Loel to consent to an order that Smits have leave to discontinue the proceeding with no order as to costs.
BS 5325 of 2008: This was the proceeding brought by Togito against Pioneer and Conomos. Smits was added by counter-claim as the third defendant. After a trial, Margaret Wilson J dismissed Togito's claim and dismissed the counter-claim. Her Honour ordered that Togito and Smits pay Pioneer's costs. The costs assessed under the order are the debt which founds the bankruptcy notice.
CA 159 of 2011: This was an appeal by Togito against the judgment of Margaret Wilson J. The Court of Appeal dismissed the appeal with costs.
66 The power to dismiss a proceeding for abuse of process is an exceptional power which ought to be very sparingly exercised and only in exceptional circumstances: Burton v Shire of Bairnsdale (1908) 7 CLR 76 at 95 per Isaacs J; Sea Culture International Pty Ltd v Scoles (1991) 32 FCR 275 at 279 per French J.
67 It is an abuse of process to bring a proceeding in order to make a collateral attack upon an unappealed decision of a Court, or upon a decision which, having been appealed, has been affirmed: Stergiou v McGrail (unreported, Full Court of the Federal Court, Burchett, Ryan and Gummow JJ, 22 April 1994).
68 The respondents' submission that the proceeding is an abuse of process relies heavily on Shaw. The facts of that case bear a striking resemblance to those of the present case. In Shaw, the proceeding before the Federal Court of Australia was the culmination of a long history of proceedings. The original dispute related to the applicant's purchase from one of the respondents of land that was to be developed. Following an initial judgment against the applicant, there was a long series of appeals, applications and other proceedings in the Supreme Court of Victoria. A number of costs orders were made against the applicant and founded the basis of a bankruptcy notice served upon him.
69 The applicant then commenced proceedings in the Federal Court against ten named respondents. He sought damages for contraventions of the TPA, a stay of the bankruptcy proceedings and other relief. He made allegations against the defendants that included fraud and the giving of false evidence in the Supreme Court proceedings.
70 Jessup J summarily dismissed the proceeding pursuant to s 31A of the Act and r 26.01 of the Rules. His Honour held that the claims against each of the respondents had no reasonable prospects of success and were an abuse of process, being a collateral attack on orders made in the Supreme Court. His Honour also found that an Anshun estoppel arose in respect of the claims against some of the respondents.
71 As to the abuse of process, his Honour said:
44 … To my way of looking at it, a striking feature of the allegations is that, in point of substance, they relate to conduct said to have taken place in the conduct of those proceedings. Being substantially allegations of fraud or of presently analogous iniquities (misleading representation, duress, conspiracy etc), if the allegations were well-founded, they would inevitably provide grounds for the Supreme Court orders to which they relate to be set aside. But the Federal Court does not have power to grant any such relief, and none is sought. Rather, what is sought is a series of declarations about the conduct of the respondents in relation to the original proceeding, and damages on account of the applicant having been subjected to the orders made by the Supreme Court. The matter needs only to be viewed in this way for it to be clear that the use of the Federal Court and its procedures in this way would bring the administration of justice into disrepute, and very seriously so.
45 A further striking feature of the applicant's allegations is that the sources of the losses for which he claims damages are the pecuniary orders made by the Supreme Court itself. When coupled with the circumstance mentioned above - that the substantive basis of the cause of action is that the orders were procured by fraud, misrepresentation and the like - what we have is an applicant who, either alternatively or additionally to seeking the setting aside of the orders from which the losses are said to flow, desires to be compensated for those very losses. This is the clearest of collateral attacks on the Supreme Court orders, and should not be permitted.
72 The applicant then sought an extension of time for leave to appeal from the judgment of Jessup J. In Shaw v MAB Corporation Pty Ltd [2014] FCA 62, Mortimer J refused to grant leave to appeal. Her Honour concluded:
60 … The Federal Court proceedings must of their nature collaterally impugn the processes and judgments of other courts, in circumstances where the appellate processes in those other courts have been available and utilised when the applicant saw fit. Where the underlying disputes between the parties have already been the subject of judicial determination, asking a court which is otherwise a stranger to those disputes to make findings about the giving of false evidence, the suborning of witnesses, the engagement in fraudulent conduct - all abuses of the processes of those other courts - will bring the administration of justice into disrepute. Appellate processes, and claims in those courts' original jurisdiction where there has been fraud or perjury, are there to correct such alleged abuses of process, and to bring finality for the parties.
73 One point of difference between Shaw and the present case is that in Shaw the applicant did not seek orders setting aside orders made by a Supreme Court. Smits does. To that extent, this proceeding is a direct attack on orders of the Supreme Court of Queensland, not merely a collateral one. Paragraph 1(d) of the originating application seeks an order setting aside the final orders made by Margaret Wilson J in BS 5325 of 2008. Paragraph 1(e) seeks an order setting aside orders made by the Court of Appeal in CA 159 of 2011. Paragraph 1(j) seeks an order setting aside or varying the orders of White J made on 2 August 2007. To the extent that the originating application seeks such orders, the proceeding brings the administration of justice into disrepute and is an abuse of process.
74 In addition, the respondents submit that the Federal Court has no power to set aside orders of the Supreme Court and that the proceeding is an abuse of process to the extent it seeks such orders. A proceeding is an abuse of process if it is foredoomed to fail: Walton v Gardiner (1993) 177 CLR 378 at 393.
75 In Shaw, Jessup J held at [44] that the Federal Court does not have the power to set aside orders of the Supreme Court.
76 In Re Baxter; Ex parte Official Receiver v Baxter (1986) 10 FCR 398, Northrop J said at 401:
The Federal Court has no jurisdiction or power to set aside the order of the Family Court.
That positon applies analogously to orders of a Supreme Court.
77 In Birdon Pty Ltd v Houben Marine Pty Ltd (2011) 197 FCR 25 at [96], Keane CJ considered that s 118 of the Constitution prevented the Federal Court from challenging directly the judgment of a Supreme Court or ordering collateral relief in relation to the enforcement of a judgment of the Supreme Court.
78 To the extent that the originating application seeks that orders of the Supreme Court be set aside, this Court has no power to make such orders and those aspects of the proceeding are also an abuse of process for that reason.
79 Paragraph 1(a) of the originating application seeks a declaration that Loel and Pioneer contravened various provisions of the TPA by not disclosing the abandonment and that they took unfair advantage of such silence "in the conduct of … proceedings Nos. 6354/2006, 10707/2006 and 5325 /2008". It is clear from the amended statement of claim and Smits' written submissions that he alleges that Loel acted fraudulently by not disclosing the abandonment to the Supreme Court and to him. I would adopt in the present circumstances Jessup J's description of the allegations in Shaw as "substantially allegations of fraud or of presently analogous iniquities". Smits' TPA and CCA claims come within the latter part of that description.
80 In his written submissions, Smits asserts that he does not make allegations about conduct said to have taken place "in the course of conduct of those proceedings", but is alleging that the fraud preceded and was independent of the proceedings themselves (but that the actions taken by Smits following the fraud were influenced by the fraud). However, the relief sought in paragraph 1(a) of the originating application is in its terms aimed at conduct said to have occurred "in the conduct of" the relevant proceedings. In addition, the amended statement of claim specifically pleads that Loel and Pioneer, by failing to disclose the abandonment in their pleadings in proceedings BS 6354 of 2006, BS 10707 of 2006 and BS 5325 of 2008 made dishonest representations to Smits and the Supreme Court. Thus, Smits alleges that Loel and Pioneer engaged in a fraud on the Supreme Court in the conduct of those proceedings.
81 Paragraph 1(a) asks the Federal Court to make findings about fraudulent conduct amounting to abuse of the processes of the Supreme Court. In my opinion, the relief sought in paragraph 1(a) of the originating application collaterally impugns the processes and judgments of the Supreme Court in circumstances where the processes of the Supreme Court are available in respect of the alleged fraud. Smits' claim for declarations in respect of the Supreme Court proceedings listed in paragraph 1(a) of the originating application is an abuse of process.
82 Paragraph 1(a) also seeks a declaration concerning Loel's and Pioneer's conduct in relation to the negotiation, execution, implementation and enforcement of the Deed of Settlement. Paragraph 1(b) seeks a declaration that certain clauses of the Deed of Settlement are void. Paragraph 1(c) seeks compensation for losses relating to payments made under the Deed of Settlement. Paragraph 1(f) seeks an order that Loel and Pioneer refund to Smits money paid pursuant to consent orders made by White J on 2 August 2007 in BS 6354 of 2006, which reflect part of the terms of settlement. Paragraph 1(k) also seeks an order directing the refund or repayment of money paid pursuant to that order by Smits.
83 The Deed of Settlement was the basis for the orders being made by consent in BS 6354 of 2006 and BS 10707 of 2006. In Spencer Bower and Handley Res Judicata, (4th ed, LexisNexis, 2009), the author KR Handley at [2.16] states that the effect of a consent order is that:
[A]t the request of the parties it gives judicial sanction and coercive authority to an agreement which, except by statute, could not otherwise operate as a bar. Judgments, orders and awards by consent are as efficacious as those pronounced after a contest in creating cause of action estoppels and merging the cause of action sued on.
(Footnotes omitted)
84 The Deed of Settlement required the parties to consent to particular orders. The parties agreed that those orders would incorporate undertakings to the Supreme Court. The undertakings were given and a consent order made by Chesterman J on 13 June 2007 incorporated the undertakings. The undertakings are enforceable. The consent order and the Deed of Settlement are inextricably linked. Indeed, the order refers specifically to "the terms of settlement."
85 The Deed of Settlement cannot be set aside or treated as void when the parties' obligations under the Deed of Settlement have, at least in part, merged in the Supreme Court's orders. The orders sought in the originating application attack the Deed of Settlement on the basis of fraud and are necessarily linked to the paragraphs of the originating application that seek to have orders of the Supreme Court set aside on the same basis. Paragraphs 1(a), (b), (c), (f) and (k) amount to a collateral attack on the consent orders made by Chesterman J and by White J.
86 Paragraph 1(l) seeks an order that Smits' costs in BS 6354 of 2006 and BS 10707 of 2007 be paid by Loel and Pioneer on an indemnity basis. Such an order would be inconsistent with the orders made in those proceedings and is a collateral attack on those orders.
87 Paragraphs 1(g), (h), (i) and (m) of the originating application seek compensation or damages. Such compensation or damages is based on fraud and breaches of the TPA by Loel and Pioneer in their conduct of proceedings BS 6354 of 2006, BS 10707 of 2006 and BS 5325 of 2008 and in relation to the Deed of Settlement. Smits not only seeks the setting aside of the judgments in these proceedings, but compensation for his losses in bringing or defending such proceedings. These claims are also a collateral attack on the orders of the Supreme Court and amount to an abuse of process.
88 Paragraph 1(n) seeks an order declaring that Smits is entitled to set-off, cross-claim or cross-demand any amounts ordered to be paid in this proceeding against the costs orders in BS 5325 of 2006. Smits seeks other unspecified orders, declarations and relief in paragraph 1(o), interest in paragraph 1(p) and costs on an indemnity basis in paragraph 1(q). All of these aspects of relief depend upon obtaining the other relief he seeks. He cannot obtain the other relief because the claim for such relief is an abuse of process.
89 In paragraph 2(a) of the originating application, Smits seeks an order that the Deed of Assignment between Lillas & Loel and Pioneer be declared void or unenforceable. That relief depends upon the costs order in proceeding BS 5325 of 2008 being set aside. The amended statement of claim does not plead any other basis for the Deed of Assignment to be declared void or unenforceable. The relief sought is a collateral attack on the orders of Margaret Wilson J and the judgment of the Court of Appeal. The order sought in paragraph 2(b) is in a similar category. The remaining orders sought against Lillas & Loel also depend upon the costs order being set aside.
90 I consider that the relief sought by Smits against Loel, Pioneer and Lillas & Loel involves either a direct or collateral attack on the processes and orders of the Supreme Court. The use of the Federal Court and its procedures for this purpose would bring the administration of justice into disrepute. The proceeding against those parties is an abuse of process and will be dismissed pursuant to r 26.01(d) of the Rules.
91 For completeness, I add that some of the relief sought by Smits is sought under the UCPR. Contrary to Smits' submission, the Court has no jurisdiction under the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) to grant relief under the UCPR. Further, under r 3, the UCPR applies to proceedings in the Supreme Court, the District Court and the Magistrates Court. The UCPR has no application to proceedings in the Federal Court.
92 In the course of the hearing I indicated that I was not satisfied that, leaving aside the question of abuse of process, the respondents had established the second aspect of their argument, namely that Smits lacked any reasonable prospects of successfully prosecuting the case. In view of my decision that the proceeding against Loel, Pioneer and Lillas & Loel should be dismissed as an abuse of process, it is unnecessary to elaborate on my reasons for that conclusion.
93 In the interlocutory application, the respondents seek their costs on an indemnity basis, but did not raise that issue in written or oral submissions. I will give the parties the opportunity to make submissions as to costs.
94 Although the originating application names J M O'Connor as a respondent, it is not apparent whether that firm has been served. J M O'Connor has not filed an address for service and has not sought to take any part in the summary judgment application. I propose to seek an indication from Smits as to whether J M O'Connor has been served and whether Smits intends to proceed against that firm.
I certify that the preceding ninety-four (94) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rangiah.