Spain v Commonwealth of Australia

Federal Court of Australia|2011-06-09|Before: McKerracher J

introduction 1 The applicant (Mr Spain) seeks an extension of time to file and serve an appeal from summary judgment in favour of the respondent (the Commonwealth) in the primary judgment (Spain v Commonwealth of Australia [2011] FCA 223). For the reasons which follow, the application for an extension of time is refused.

BACKGROUND 2 On 22 October 2010, Mr Spain sought an order that the Commonwealth pay him compensation for unjust property acquisitions 'under section 69E of the (Cth) Banking Act 1959' in the amount of $15,632,920. 3 Pursuant to a notice of motion brought by the Commonwealth, Mr Spain's primary application was dismissed with costs either on the basis of lack of jurisdiction or, alternatively, on the basis of s 31A(2) of the Federal Court of Australia Act 1976 (Cth) (FCA) and O 20 r 5 of the Federal Court Rules (FCR). 4 As the summary judgment application was interlocutory, it is necessary by virtue of s 24(1A) FCA and O 52 r 10 FCR to obtain leave to appeal from the decision. Pursuant to O 52 r 10(2A) FCR, an application for leave to appeal from an interlocutory judgment must be filed within 7 days after the date on which the interlocutory judgment was pronounced or within such further time as the Court or Judge may allow. 5 Because Mr Spain's notice of appeal was not filed and served within the time limited under the FCR, it has been necessary for him to seek an extension of time in which to file and serve what should be an application for leave to appeal (as the judgment was interlocutory) as distinct from the terms of the motion which seek an extension of time in which to file and serve a notice of appeal from the judgment. 6 The motion will be treated as being a motion for an extension of the time to file an application for leave to appeal.

PROCEDURAL ASPECTS 7 Relevantly, O 52 r 10 FCR provides: 10 Leave to appeal from interlocutory judgments of the Court (1) An application for leave to appeal from an interlocutory judgment of the Court may be made orally to the Judge who has pronounced the judgment at the time of its pronouncement. (2) If an application has not been made in accordance with subrule (1), an application may be made by motion on notice. (2A) Order 19 applies to an application under subrule (2), and the notice of motion must be filed: (a) if the interlocutory judgment is in the nature of a decision on a question under Order 29 - within 21 days after the date on which the interlocutory judgment was pronounced; and (b) in any other case - within 7 days after the date on which the interlocutory judgment was pronounced; or within such further time as the Court or a Judge may allow. … 8 No point is taken by the Commonwealth about the delay. As Mr Spain is unrepresented, the Commonwealth does not submit that Mr Spain's explanation for that delay is such as to justify the Court refusing to allow him to institute an appeal out of time. Were that the only issue, the extension of time would be granted. 9 However, there is a more fundamental issue. On an application pursuant to O 52 r 10(2A) FCR, not only does the Court need to consider whether the reasons advanced for delay are sufficient to excuse or explain the delay but the Court must also consider and assess the prospects of such leave being obtained: Kalaba, Lazar v The Queen [1996] FCA 908 per Finn J. In Parker v The Queen [2002] FCAFC 133, the Full Court (at [6]) endorsed the comments of Wilcox J in Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344, (at 348-349) where his Honour indicated that five factors should be considered in determining whether relief ought to be given. 10 These factors can be summarised as follows: (a) Applications for an extension of time are not to be granted unless it is proper to do so; the legislative time limits are not to be ignored. (b) There must be some acceptable explanation for the delay. (c) Any prejudice to the respondent in defending the proceedings, caused by the delay, is a material factor militating against the grant of an extension. (d) The mere absence of prejudice to the respondent is not enough to justify the grant of an extension. (e) The merits of the substantial application are to be taken into account in considering whether an extension is to be granted. 11 The well known tests in Decor Corp Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 (at 398) govern whether or not a Court should grant leave to appeal. Those tests are: 1. whether, in all the circumstances, the decision is attended with sufficient doubt to warrant reconsideration by a court on appeal; and 2. whether substantial injustice would result if leave was refused supposing the decision at first instance was wrong.

The proposed grounds of appeal 12 To understand both the nature of the proposed appeal grounds and how the primary judge dealt with Mr Spain's claims, there is little option other than to set each out in some detail. The grounds proposed by Mr Spain are these: In relation to favouring the respondent's motion for summary dismissal, I appeal this decision primarily based on [the primary judge's] opinion that my application is a genuine log of complaints, whether rightly or wrongly, against the bank and its directors, servants and agents. And I appeal the decision, which supports that the dispute is between the bank and me only and does not involve the Commonwealth. The visible grounds are: a) No consideration to clause 11 of the deed of settlement b) Premature dismissal because a question of rightly or wrongly requires answering c) Under the deed, it's impossible for civil remedy against the bank directly d) Narrow interpretations of the (Cth) Banking Act 1959 ("the Act") e) No consideration of the (Cth) Corporations Act 2001 f) Inconsistency with High Court decisions concerning the (Cth) Federal Court of Australia 1976 Primarily, my claim was made by way of the current provisions of [the Act], and a deed of settlement with the National Australia Bank. Essentially, the claim is that the bank has breached the deed by not providing information under clauses 10 and 11. And because it has not done so, and refused to do so for over eight years, in effect the deed is an instrument that has facilitated an unjust acquisition under section 69C of the Act, which qualifies for compensation under section 69E. The bank has facilitated an unjust acquisition by breaching the effects of the deed because the contract, with bank support if needed; was supposed to allow me to commence proceedings against the bank's directors, servants and agents individually, but the bank has prevented this from happening. Hence, grounds supporting this appeal and points a) through f) are; 1. By way of clauses 5, 10, and 11, I will be able to establish that the acquisition in the deed settlement between the bank and me was under an operation of the [Act] and particularly, section 69C being conduct of directors, servants, and agents. This would satisfy the parameters of section 69E and provide the Court reasons to allow this appeal. And it would also: i) Prove clause 11 of the deed has not been considered, but should be because it is a written term in the contract ii) Prove a summary judgement (sic-judgment) was premature iii) Prove the Banking Act has been interpreted and applied narrowly 2. By way of clauses 5, 10, and 11, I will be able to establish that the bank has breached the deed and so by law, must provide truthful answers to questions that will also prove an unjust acquisition has occurred, via the guidelines according to section 69E of the Act. Therefore, as a result the appeal should be allowed because; i) An application and affidavit with a genuine log of complaints, whether rightly or wrongly, can't be dismissed summarily because further evidence may prove the claim. ii) Inherently, in law the term 'whether rightly or wrongly' infers a decision can only be made after all factors are considered, and a genuine log of complaints would most likely lead one to the conclusion that a reasonable person believes a crime has been committed. iii) Summary dismissal of my application is outside the High Court's judgments and decisions relating to section 31A of the (Cth) Federal Court of Australia Act 1976. iv) A person should not be forced to apply to the High Court for permission to seek justice by way of the (Cth) Criminal Code only because a civil claim has been dismissed. 3. In relation to the Recitals in the deed, I will establish that the reasons for summary dismissal relied too heavily on these clauses because in reality they are irrelevant to the cause for an unjust acquisition. It will also be proven that the Recitals primary purpose was to establish ease of acquisition and value of property; not a summary of negotiations that caused the reasons for a settlement in the first instance. This will also support reasons why summary dismissal was made without lawful foundation. 4. In relation to the decision concerning ownership of property, by the Recitals in the deed and (Cth) Corporations Act 2001, I will also establish my rights to the property and thereby, prove I am entitled to compensation via section 69E in the Banking Act. 5. In conclusion, I will also establish that because of the deed's effect or purpose it is impossible for me to gain civil remedies against the bank directly. This will prove that the judgement (sic-judgment) for summary dismissal is unreasonable and at cross purposes with the High Court's ruling on section 31A of the Federal Court of Australia Act 1976. The Federal Court does not have the power to be in conflict with High Court decisions. (emphasis added)

The primary judgment 13 The primary judge (at [4]-[15]) (which findings are not challenged by the grounds of appeal) reached the following conclusions: 4 The applicant was formerly the sole director of Burymore Pty Ltd (Burymore), which was previously the owner of a property known as Hope Valley. The applicant was also involved with two other business entities, MGY Accounting Bunbury Pty Ltd ("MGY Accounting") and Jack Corporation Pty Ltd ("Jack Corporation"). The latter was the owner of two taverns. 5 The Bank provided three commercial mortgage overdraft facilities to Burymore totalling $650,000, and a fixed interest loan account in an amount of $535,000. These overdraft facilities and loan account provided to Burymore were secured by a registered mortgage debenture registered on 26 September 2000 (the Registered Mortgage Debenture), a mortgage over the Hope Valley property registered on 5 April 2001, and a guarantee and indemnity given by Burymore and the applicant in favour of the Bank with a basic liability of $1,135,000. 6 The applicant was also one of several persons who had, on 31 August 1999, given a guarantee and indemnity to the Bank with respect to the obligations of MGY Accounting, with a basic liability of $293,300. 7 By letter dated 15 March 2001, Mr Bob Jacobs, Principal Manager - Asset Structuring WA - of the Bank, advised the applicant that pursuant to clause 29.1 of the Registered Mortgage Debenture, Martin Jones of Ferrier Hodgson, Chartered Accountants, had been appointed as Investigative Accountant to examine the business affairs of Burymore. The applicant makes something of the fact that Mr Jacobs and Mr Jones were agents of the Bank. I will return to this later in these reasons. 8 In or about April 2001, the applicant agreed to put Jack Corporation into voluntary administration with Martin Jones as Administrator. 9 As at 2 December 2002, Burymore acknowledged that its indebtedness to the Bank was $1,567,885.97, that it had failed to pay that amount to the Bank, and that the Bank was entitled to exercise its rights under the Hope Valley property mortgage. 10 As at 2 December 2002, the applicant acknowledged that his liability to the Bank was $293,300 in respect of a guarantee given in relation to MGY Accounting, and was $1,135,000 in respect of the guarantee which he had given in relation to the debts of Burymore to the Bank. 11 During the period April 2001 to November 2002, the applicant was in dispute with the Bank in relation to various issues in relation to Burymore's debt to the Bank, Jack Corporation and MGY Accounting. In or about June 2001 the applicant relocated to Queensland. On 6 July 2001, Martin Jones was appointed as Joint and Several Liquidator of Jack Corporation. On 2 September 2002 the Deputy Sheriff wrote to the Bank advising that under the authority of writ of fieri facias 279/2002 Kris McGillivray, Brett McEvoy and Lester Weston v Burymore Pty Ltd, he was directed to sell the interest of Burymore in the Hope Valley property. Deed of Settlement 12 By a Deed of Settlement dated 17 December 2002 entered into between the Bank, the applicant and Burymore, the applicant and Burymore released and discharged the Bank from any liability relating to any claim or allegation against the Bank arising from any matters which occurred before the execution of the Deed (including any claims connected in any way with Jack Corporation), and the Bank agreed that, notwithstanding the acknowledgments of indebtedness by Burymore and the applicant, the Bank's rights against them would be limited to the extent of the proceeds of sale of the Hope Valley property, and the Bank would provide the applicant with a settlement payment of $200,000. 13 According to the applicant, he negotiated the Deed of Settlement on his behalf and on behalf of Burymore. Mr Richard Lorraway, Head of Asset Structuring in Western Australia for the Bank, it seems, negotiated on the Bank's behalf. 14 According to the applicant, he did not know, before he executed the Deed of Settlement, that Mr Jacobs was actually employed by Ferrier Hodgson, a firm of chartered accountants and that Mr Jones, who had earlier been appointed by the Bank as Investigative Accountant to examine the business affairs of Burymore and who later became Administrator of Jack Corporation, was Mr Jacob's boss at that firm. Mr Jacobs was on secondment to the Bank at the relevant times. He says that if he had known these facts he would not have agreed to Mr Jones being appointed to either of those two positions in relation to Burymore and Jack Corporation respectively. It is to be remembered that there was no contractual or other relationship between the Bank and Jack Corporation. Demands by liquidator of Jack Corporation 15 Mr Martin Jones was appointed liquidator of Jack Corporation and by letters dated 2 December 2002, in that capacity, he wrote to the applicant advising that he considered that there were strong grounds to show that the directors including the applicant had breached s 588G of the Corporations Act 2001 (Cth) in relation to Jack Corporation as Trustee for the Daniels Unit Trust formerly trading as "Liars Saloon", and as Trustee for the Coke Unit Trust formerly trading as "E Bar", and that he had quantified the claims against the applicant for insolvent trading in the sums of $136,061.87 and $389,522 respectively. 14 It is in reality almost impossible, against the background discussed by the primary judge (at [4]-[15]), to understand any basis upon which a claim against the Commonwealth could possibly be advanced. 15 His Honour observed (at [22]-[27]): 22 On the facts and circumstances set out above, there has not been any acquisition of the applicant's property by reason of the operation of the Banking Act. 23 Indeed, and fundamentally, the Hope Valley property was acquired by the Bank from Burymore and not from the applicant. For that reason alone he has no standing to bring such a claim even if it were otherwise maintainable which in my view, it is not. Burymore was de-registered on 26 June 2005. 24 Moreover, the Hope Valley property was acquired by the Bank pursuant to its rights as mortgagee from Burymore as mortgagor under the terms of the mortgage registered on 5 April 2001. The Bank's entitlement to exercise its rights under this mortgage was acknowledged both by the applicant and Burymore in cl 1.1 of the Deed of Settlement. The alleged breaches of the Deed of Settlement, as I earlier concluded, do not give rise to any claim under s 69E of the Banking Act. The applicant's real dispute, whatever the merits may be, is with the Bank. It is no concern of the respondent. 25 The repeal of ss 69C (1) and (2) of the Banking Act could not have caused any acquisition of the applicant's property resulting from the operation of that Act. The repeal of ss 69C (1) and (2) does not constitute "the operation of this Act" within the meaning of s 69E(1)(a) of that Act, and whatever the effect of that repeal, it could not, and did not, result in any acquisition of the applicant's property. 26 In my opinion, the application should be dismissed pursuant to s 31A(2) of the Federal Court Act as the applicant has no reasonable prospect of successfully prosecuting the proceeding. The applicant has not and cannot show any acquisition of his property by operation of the Banking Act. 27 It is unnecessary to consider the further ground that the proceeding and the claim for compensation against the Commonwealth is frivolous and vexatious and an abuse of the process of the Court, and for those reasons should also be dismissed pursuant to Order 20 rule 5 of the Federal Court Rules. 16 The Commonwealth submits that what are referred to by Mr Spain as the 'visible grounds' as set out at paras a) to f) of the proposed notice of appeal are incomprehensible. The Commonwealth complains that Mr Spain's submissions are difficult to understand, and do not attempt to or properly address any of the grounds of appeal. They are not grounds of appeal that are capable of demonstrating that Mr Spain's appeal has sufficient prospects of success or that there is an arguable error in the interlocutory judgment to make it just that his appeal should now be allowed to proceed.

CONSIDERATION 17 His Honour concluded that there had not been any acquisition of Mr Spain's property by reason of the operation of the Banking Act 1959 (Cth) (at [22]) (the Banking Act). It follows that Mr Spain's claim against the Commonwealth for compensation pursuant to s 69E of the Banking Act was bound to fail. 18 There was no error or even arguable error by his Honour in dismissing the application. 19 I accept the submission of the Commonwealth that Mr Spain's claim in para 1 of the proposed notice of appeal that cll 5, 10 and 11 of the deed of settlement with the National Australia Bank established that the acquisition of the Hope Valley property by the Bank under the deed of settlement was under an operation of the Banking Act, namely, s 69C, is misconceived. Although Mr Spain relies upon the conduct of directors, servants and agents under s 69C(1) and s 69C(2), those provisions simply provided a means of showing the state of mind of a body corporate for the purposes of the Banking Act, and that any conduct engaged in by such persons is also deemed to have been engaged in by the body corporate. In any event as the Commonwealth observes, those provisions were repealed with effect from 17 June 1999, well before the events in relation to the deed of settlement of which Mr Spain complains. 20 Further, his Honour found as a fact (at [23]) that the Hope Valley property (the property that Mr Spain claimed had been acquired from him by reason of the operation of the Banking Act) was acquired by the Bank from Burymore Pty Ltd, which was deregistered on 26 June 2005. For that further reason alone, Mr Spain had no standing to bring the application. 21 In my view, his Honour did well to distil as much as he did from the 65 pages of affidavit (plus annexures) relied upon by Mr Spain. At [3] of his Honour's reasons he said: Most of this factual background is deposed to in the applicant's affidavit sworn 21 October 2010 in support of his substantive application but read in opposition to the respondent's motion. This affidavit, which runs to some 65 pages with a significant number of attachments, is discursive and is almost entirely irrelevant. It does betray, however, what is I believe a genuinely held catalogue of complaints, whether justified or not, against the National Australia Bank Limited (the Bank) and some of its employees and agents. 22 Mr Spain has seized on the words 'genuinely held' in the last sentence of this paragraph but his Honour did not for a moment and could not possibly conclude that whatever confidence Mr Spain 'genuinely' appeared to have in his claims, that they could ever succeed. 23 It is not possible to criticise his Honour's approach to the matter. It must be concluded, with all due respect to Mr Spain, that this litigation has no prospects of success and the motion for an extension of time to seek leave to appeal must therefore be refused with costs. The orders will be: 1. The application for an extension of time to file and serve an application for leave to appeal is refused. 2. The applicant is to pay the costs of the respondent, to be taxed or agreed. I certify that the preceding twenty-three (23) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice McKerracher.

Federal Court Act 1976(Cth)s 24(1A)

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