Andrew Garrett Wines Resorts Pty Ltd v National Australia Bank Limited

[2006] SASC 130

SUPREME COURT OF SOUTH AUSTRALIA

(Civil: Application)

ANDREW GARRETT WINES RESORTS PTY LTD & ORS v NATIONAL AUSTRALIA BANK LIMITED & ORS

[2006] SASC 130

Judgment of Judge Lunn a Master of the Supreme Court

10 May 2006

PROCEDURE

Payment into Court - payment tendered to Registrar by way of an international bill of exchange - held Registrar not obliged to allow payment into Court by such a bill - one amount purportedly tendered as payment into Court in two actions not between the same parties and with no allocation of the amount between the two actions - held contrary to para 3 of Practice Direction 17 and not in the interests of the administration of justice for there to be such payments into Court and the Registrar was justified in not accepting a tender on those terms - application by Andrew Garrett that there were moneys in Court available to satify an order for security for costs dismissed.

ANDREW GARRETT WINES RESORTS PTY LTD & ORS v NATIONAL AUSTRALIA BANK LIMITED & ORS
[2006] SASC 130

Reasons on application by Andrew Garrett concerning alleged moneys in Court.

1. JUDGE LUNN:                   In an earlier judgment on 13 January 2006 in this matter I summarised the background facts relating to this action as follows:

   Brief history of Actions 127/04 and 1506/03

   Action 127/04 was instituted on 4 February 2004 by Andrew Garrett Wine Resorts Pty Limited (“Resorts”) and Averil Gay Garrett (“Mrs Garrett”) as plaintiffs.  Resorts, as to 23 undivided 26 parts, and Mrs Garrett, as to 3 undivided 26 parts, were the registered proprietors of three properties which are collectively known as “Springwood Park”.  The Bank held two registered mortgages over that property.  In brief, the statement of claim challenged the validity of one of the mortgages against Mrs Garrett and sought declarations that the total liability of the plaintiffs under the mortgages was only $2.1 million plus interest and costs on one mortgage and $47,000 plus interest and costs on the other mortgage. 

   There had been an earlier action, 1506/03, between the parties.  On 29 October 2003 the Bank had issued a summons against Resorts and Mrs Garrett under Part XVII of the Real Property Act seeking a summary order for possession of Springwood Park. On 3 December 2003 another Master made an order for possession in favour of the Bank. Resorts and Mrs Garrett appealed against that order. Further evidence was submitted on the appeal. By an order of 5 March 2003 Besanko J (Reasons dated 2 March 2004, Judgment Number [2004] SASC 60) allowed the appeal and set aside the possession order. He gave directions for the substantive dispute between the parties to be resolved in action 127/04, which had been instituted before he resolved the appeal. (He also directed that actions 1506/03 and 127/04 should be consolidated, but no steps were taken to implement the consolidation).

   On 19 March 2004 the Bank filed a defence and counterclaim.  It pleaded that in addition to the moneys advanced on the granting of the mortgages, the mortgages also secured moneys due to the Bank under various guarantees given over the indebtedness to the Bank of other companies associated with the Garrett interests.  Under those guarantees it counterclaimed $9.087 million from Mrs Garrett and also joined Andrew Garrett as an additional defendant to the counterclaim and claimed a similar amount from him.  It also counterclaimed $7.337 million from Resorts.  It sought a declaration that the moneys claimed against Resorts and Mrs Garrett were secured by its mortgages and an order for possession of Springwood Park under the mortgages.  Defences to the counterclaim were filed by all defendants to it asserting that the only moneys secured by the were those pleaded in the statement of claim. 

   After a contested hearing on 26 July 2004 Besanko J (Judgment Number [2004] SASC 229, FDN 62) discharged interlocutory injunctions restraining the Bank from enforcing its mortgages and ordered that the plaintiffs give up possession of Springwood Park to the Bank. Importantly the sealed Order (FDN 40) contained the following paragraph 3:

   Upon the plaintiffs paying to the defendant the moneys remaining due (sic) the defendant upon the security of Memoranda of Mortgage Registered Numbers 9374752 and 9617285, the defendant (subject and without prejudice to the due exercise of any power of sale for the time being vested in the defendant) re-deliver to the plaintiffs possession of the property and release to the plaintiffs the security constituted by the mortgages.

   On 28 July 2004 Andrew Garrett became self-represented and has not since had solicitors on the file for him.

   On 4 November 2004 the Full Court, (Judgment No [2004] SASC 348 FDN 114) dismissed an appeal against the orders of Besanko J of 26 July 2004. A subsequent appeal to the High Court has apparently lapsed.

   On 19 November 2004 the plaintiffs purportedly filed a further statement of claim, although I have not been able to find any grant of leave for them to do so.  It was prepared by Andrew Garrett.  It treated Evajade Pty Ltd (“Evajade”) as a party to the action, but it has never been joined as such.  This statement of claim was apparently ignored by the Bank and was not dealt with by the Court in subsequent applications.

   On 23 March 2005 Gray J, (Judgment No [2005] SASC 105, FDN 143) rejected a challenge by Mrs Garrett (who was legally represented for the purpose) that the Bank’s mortgages were not binding upon her. Gray J refused leave to appeal against this decision. (Judgment No [2005] SASC 171, FDN 175).

   On 12 May 2005 Gray J, (Judgment No [2005] SASC 172, FDN 174) refused an application by Andrew Garrett and Mrs Garrett in person to re-open the Full Court appeal against the dismissal of the appeal against the possession order made on 26 July 2004. The application was based on alleged new evidence including wide-sweeping allegations of fraud by the Bank.

   On 20 September 2005 Resorts, which had gone into liquidation on 18 May 2005, filed a notice of discontinuance of the action.

   On 3 August 2005 Gray J, (Judgment No [2005] SASC 292, FDN 197), dealt with an application by the Bank concerning the duplicate certificate of titles to the Springwood Park properties which were not held by the Bank, but apparently by Andrew Garrett or entities associated with him. The issue arose because in taking its mortgages over Springwood Park the Bank had obtained a discharge of a prior registered mortgage over the property given to N M Rothschild and Sons (Australia) Ltd by the plaintiffs (“the Rothschild mortgage”). Andrew Garrett was present at the hearing before Gray J and was permitted to make submissions against an order sought under s 64 of the Real Property Act 1886 that the Bank be permitted to register the discharge of the Rothschild mortgage without producing the duplicate title to the Registrar General. The entitlement of the Bank to the benefit of the discharge of the Rothschild mortgage was put in issue in those proceedings and Gray J found that it was entitled to the benefit of that discharge. As appears from paras [17-23] of those Reasons, Andrew Garrett sought to represent the Garrett interests generally on that hearing, but Gray J found there was no proper basis for him to do so.

   On 6 December 2005 Gray J (Judgment No [2005] SASC 455, FDN 228) granted an application by the Bank for payment out to it of various moneys which had been paid into Court by Mrs Garrett as conditions for various injunctions and the like.

   This has already been a long, complicated and bitterly fought action.  The Court file comprises over 228 documents contained in 19 folders.  Many of those documents are affidavits to which there are many, and often voluminous, exhibits.  There is also over 1,000 pages of transcript of numerous hearings.  It has been impracticable, and indeed impossible, for me to go through every document on the Court file to resolve the applications which are before me. 

2. At the conclusion of that judgment I stated:

   These applications have been part of a relentless campaign by Andrew Garrett to thwart the sale of Springwood Park by the Bank.  While he is entitled to pursue any legal rights which he may arguably have, he is not to be permitted to abuse the processes of the Court through pursuing many untenable applications, and thereby cause substantial expense to the Bank in defending them.  There is no doubt that the Bank is to have its costs of each of the applications which I have dealt with.  In addition, I order under R 101.91(7) that those costs are to be taxed and payable immediately.  In order to protect the Bank from costs for any further frivolous and misconceived applications in this action I direct that other than in respect of any appeals against these orders, Andrew Garrett is not to be permitted to file any further applications in this action unless he first pays into Court the sum of $5,000 on account of the taxed costs of the Bank of the applications which I have dealt with in these reasons. …..

   Orders were made in accordance with those Reasons. The appeal against that judgment was dismissed by Vanstone J on 8 February 2006, Judgment No [2006] SASC 38.

3. No sum of $5,000 has been paid into Court pursuant to my order and the Registry has refused to allow Andrew Garrett to issue any further applications in the matter except in relation to appeals.  He has maintained that there are already more than sufficient moneys in Court in this action which are available to satisfy the order for the payment in of $5,000.  The Court records do not support this.  He alleges the Registrar has not acted properly in dealing with a bill of exchange which was lodged on 25 February 2005.  In order to resolve his dispute with the Registrar I have allowed him to file an application to have the point judicially determined.

4. On 3 March 2006 Andrew Garrett took out a Notice for Direction (FDN 248) which sought the following orders:

   2That pursuant to the Terms of the Full Court dated 14^th September 2004 in respect of Injunctive Relief over the property known as “Springwood Park” that the International Bill of Exchange No 61 75521 currently held in the Court Safe be presented by the Registrar of the Supreme Court to Westpac Bank where the account for the Fund is domiciled in respect of payment of $1,000,000 given in consideration for that injunction.

   3That an order be made that as “the Holder of the Bill in Due Course”, the Registrar be required to follow the process of dealing with Bills of Exchange in accordance with the Bills of Exchange Act (1909), the Banking act (1959) & Banking and Financial Institution Law.

   4That pursuant to the orders of the Master Lunn that $5,000 is received to the suitors fund in respect of security as to costs and deducted from the bill of exchange.

   5That an order be made that tender of performance has occurred in respect of the payment for injunctive relief and security as to costs in this action.

   6That an order be made that the balance of the funds received by the court in respect of this Bill be paid to the account of Evajade Pty Ltd being $695,000.

5. At the hearing Mr Garrett spoke to a lengthy memorandum and, without objection, handed up various documents which he said were exhibited to affidavits filed in this or other actions in this Court.  I confine these Reasons to a number of points which are more than sufficient to dispose of the application.  It is not necessary to deal with many of the arguments raised by Mr Garrett which were either of marginal, or of no, relevance.

6. On 14 September 2004 the Full Court dismissed an appeal against the order for possession of Springwood Park.  (In paragraph 7 of my earlier Reasons I had stated the date of that order as 4 November 2004, but that was the date when the Full Court delivered its Reasons and not when it made its Order).  The Chief Justice, on behalf of the Full Court, said as follows on 14 September 2004:

   Having made those orders we indicate that the orders we have made do not exclude the grant of a stay against a sale of the property.  We indicate that it might – and I emphasise “might” – be appropriate to grant such a stay if an amount of not less than $1,000,000 were actually paid into Court and if ongoing interest at a rate to be determined by a Judge were paid pending the trial of the action in November.  In other words, we indicate that upon payment into Court of an amount of not less than $1,000,000 and the continuing payment of the interest at a rate to be determined, all of this pending trial in November, it might be appropriate then to order that the property not be sold by the Bank although the Bank would be in possession.  These are matters that Gray J can deal with on the applications that are currently before him, he being familiar with the matter and having participated in this decision today. …..

   MR LIVESEY:    The Chief Justice has indicated an indication with respect to interest.  Does that cover also the interest for the period between May and now?

   DOYLE CJ: Well, that would have to be dealt with by Gray J. ….. It would be a matter for him to determine what rate would be appropriate if he was moved to grant a stay of a sale or to order that the property not be sold pending trial, he would deal with rate and the question of any arrears.

   MR LIVESEY:    So the bank would take possession but not the – if a stay was to be granted, not be permitted to sell?

   DOYLE CJ Well, at the moment the order for possession stands.  All we are saying is, in certain circumstances, there might be a basis on Mr Garrett’s further application for the court to order that the property not be sold, but at the moment we have simply dismissed the appeal against the order for possession and dismissed the appeal against refusals of stays and the dissolution of the injunction, so I’m just forecasting what might happen if Mr Garrett was in a position to do certain things.

   The proposed trial of the action referred to by the Chief Justice was subsequently taken out of the trial list and has never been re-listed. 

7. On 25 February 2005 an International Bill of Exchange drawn on Creditnet Bank Internationale for $1,700,000 (Australian) in favour of the National Bank on account of Evajade Pty Ltd was lodged by Andrew Garrett with the Registrar of this Court.  The following endorsements appeared in handwriting on the back of that bill of exchange:

   I, Andrew Kenneth Sandow Director of Record & Power of Attorney for Evajade Pty Ltd ….. of 248 Flinders Street Adelaide hereby Transfer all right of title of this International Bill of Exchange ….. to Andrew Garrett Wine Resorts Pty Ltd ….. and Averil Gay Garrett (as Vendors/Registered Proprietors) of the property known as “Springwood Park” pursuant to the Heads of Agreement for sale and purchase dated 4^th January 2005.

   (A K Sandow)

   ANDREW KENNETH SANDOW

   DIRECTOR EVAJADE PTY LTD

   Dated 4^th January 2005

   24^th February

   4^th January  (AKS)

   I, Andrew Morton Garrett, Director of Record and Power of Attorney for Andrew Garrett Wine Resorts Pty Ltd ….., power of attorney for Averil Gay Garrett hereby transfer all right and title in ….. International Bill of Exchange ….. to the Supreme Court Suitor’s Fund ….. in matters 127 of 2004 and 1767 of 2003.

   (A M Garrett)

   Dated 24 February

   By power of Attorney for

   Averil Gay Garrett.

8. Two Notices of Payment Into Court accompanied the lodgement of the bill of exchange.  One notice was in this action, 127/04.  It was incorrectly in Form 15, which only applies to payments into Court under R 39.04, which has no application to this action.  The relevant parts of that Notice read:

   To the Registrar, Supreme Court of South Australia

   To;

   NATIONAL AUSTRALIA BANK LIMITED

   …..

   On 25^th February, 2005 the Plaintiffs, ANDREW GARRETT WINE RESORTS PTY LTD & AVERIL GAY GARRETT PHOENIX RISING VINEYARDS, J & W HOLDINGS & ORS has paid $AUD1,700,000 into Court with a DENIAL of liability and says that this sum is sufficient to satisfy the DEFENDANT’S claim(s) in this action and in ACTION 1767 of 2003.

   In respect of 127 of 2004 this amount is in respect of this amount is specifically in respect of the discharge of Mortgage (9374752) (Which secures no interest over the Land) and Mortgage(9617285) to National Australia Bank Ltd. (Which is Voidable between the parties) registered over;  (then are set out the title references to the Springwood Park property)

   …..

   In respect of action 1767 of 2003 this amount is in respect of this amount is specifically in respect of the discharge of;

   Mortgage (9376045) to National Australia Bank Ltd.

   Mortgage (9376115) to National Australia Bank Ltd.

   Registered over;  (Then are set out the title references to the Bulka Station properties at Langhorne Creek).

   …..

   [Signed]: (A M Garrett)

   ANDREW MORTON GARRETT     , By Power of Attorney

   ·Averil Gay Garrett & Andrew Garrett Wine Resorts Pty Ltd

   ·J & W Holdings Pty Ltd as Trustee for the Sunburst Property Trust

   ·Phoenix Rising Vineyards Pty Ltd as Trustee for the Phoenix Rising Vineyards Unit Trust.

   The other Notice of Payment In was for action 1767/03 in which Sunburst Properties Pty Ltd (in liquidation) (Receivers and Managers appointed) (“Sunburst”) was the plaintiff and Agwater Pty Ltd, Andrew Garrett, Averil Garrett and others were defendants.  That Notice was also addressed to the National Australia Bank Ltd, although it was not party to 1767/03.  Its contents were identical to those of the Notice lodged in 127/04.  On that day the Registrar advised Andrew Garrett that the bill of exchange had been placed in the Court’s safe until directions from the Honourable Justice Gray had been sought.  The bill has remained in that safe until the present time and the Registrar has not taken any steps to present it or negotiate it. 

9. The intimation of the Chief Justice on 14 September 2004 assumed that some entity in the Garrett interests would make an application to Gray J for an order restraining the sale of Springwood Park by the National Bank pending the trial of the action.  My researches do not indicate that any such application was ever issued.  The record of all of the orders of the Court made in this action does not show any such order being made or refused.  As no application was apparently made, no direction was given by Gray J to the Registrar about what should be done with the bill of exchange.

10. Action 1767/03 did not directly concern the Bulka Station properties which are referred to the Notice of Payment In.  The National Bank was not a party to that action and an application to join it as a party was refused.  The National Bank held mortgages over the Bulka Station properties from Sunburst and it had appointed the Receivers and Managers to Sunburst.  I have not read the file of 1767/03 to see what, if any, basis there may have been for Andrew Garrett to pay any moneys into Court for that action.

11. Practice Direction 17, which is made pursuant to R 109.20, provides in relation to moneys paid into Court:

    3(1)     Every person lodging funds in court shall at the time of lodgement furnish the registrar with a pay-in slip in the form direction by the registrar containing as far as possible the following particulars:

    (a)The title of the proceedings in relation to which the funds are lodged.

    (b)The ledger credit to which the funds are to be credited.

    (c)The description and amount of the funds lodged.

    (d)The full names, address and description of the person lodging the funds.

    (e)Particulars of the order or any other authority under which the lodgement is made and any other details showing the circumstances under which the lodgement is made.

    (2)The title of the account to which the funds are to be credited may be determined by the registrar.

    A purported payment into Court, as was attempted here, sought to pay the money into two actions in which there were different parties, and without stating how much of the total payment was in respect of each action.  This is impermissible, both as a breach of Practice Direction 3(1)(a) and because it is contrary to the proper administration of justice.  The funds, once deposited, are held by the Registrar for the purpose for which they were paid in, and are not subject to any trusts:  Andrew Garrett Wine Resorts Pty Ltd v National Australia Bank (No 7), Gray J 6 December 2005 [2005] SASC 455, unreported. If the payer makes no allocation between the actions, it is impossible for the Court to determine itself any allocation between the actions and how the moneys should be paid out, particularly if there are more claims in both actions than can be met by the moneys paid into Court. Accordingly, in any event, the Registrar should not have accepted the payment in under the terms on which it was tendered.

1. Furthermore, there was no obligation on the Registrar to accept the payment of moneys into Court by means of a bill of exchange.  Such a bill of exchange is not legal tender under s 36(1) of the Commonwealth Reserve Bank Act 1959 and s 16 of the Commonwealth Currency Act 1965.  While it is always in the discretion of a payee to accept a conditional payment by a bill of exchange, there is no legal obligation on a payee to accept such a bill, and particularly where it is not drawn on a recognised and well-known banking institution:  The Laws of Australia Vol 7, para 7.5.38 and particularly footnote 5.  By immediately advising Mr Garrett that the bill was being held pending directions from Gray J, the Registrar did not waive the right to reject it.  The actions (or lack of them) by the Registrar ultimately amounted to a rejection of the tender of the bill.

2. The costs orders against Andrew Garrett in this action, which were the subject of the order for the payment in of $5,000, are orders against him personally, and not as the trustee of any trust.  Although I do not intend to go into the complicated and convoluted issues of whether the bill of exchange was tendered as moneys beneficially coming from the Springwood Park Unit Trust, it is the case of Andrew Garrett that they were trust moneys.  As the costs orders were made against him personally, the Court would be unlikely to allow trust moneys to be used to satisfy those liabilities for costs, and particularly as he asserts that he has no personal beneficial interest in those trust moneys.  His applications to be joined in this action as the representative of various trusts have all been refused.

3. The endorsement on the reverse of the bill of exchange on behalf of the plaintiff, Andrew Garrett Wine Resorts Pty Ltd, is stated to be made by Andrew Garrett as “Director of Record and Power of Attorney for” that company.  If “Director of Record” means he was acting as a director of the company in executing the endorsement that would be illegal, and probably of no legal effect, by virtue of s 206A of the Commonwealth Corporations Act 2001 as on 25 February 2005 he was an undischarged bankrupt.  Although the Court, as far as I am aware, has not ruled on the validity of any power of attorney given by Andrew Garrett Wines Resorts Pty Ltd to Andrew Garrett, there must be some doubt about its effectiveness as other powers of attorney given to him by other companies associated with him have been held to be ineffectual.

4. These reasons are sufficient to refuse the order sought in paragraph 4 of the application.  In respect of the other paragraphs of the application my previous order prevents Andrew Garrett from making such applications, but in any event he does not have locus standi in this action in his sole capacity as a defendant to the counterclaim to make any such application.  Accordingly, all paragraphs of the application are to be dismissed.

5. There remains the question of what is to happen to the bill of exchange.  On the material put before me, it is unclear who may now be beneficially entitled to it.  Any persons who claim to be entitled to it can make application to the Court for an order that it be handed over to them.  Until any such order is made, the Registrar should continue to hold the bill of exchange.

   I have today made the following orders on the application (FDN 248).

   1      The orders sought in paragraphs 2-6 of the application are refused.

   2Andrew Garrett is to pay the costs of the application as agreed or taxed to the National Australia Bank.

   3      Such costs are to be taxable and payable immediately.

   4      Fit for counsel.

   5      Time for any appeal extended to 14 days from today