Commonwealth Bank of Australia, in the matter of Rigg v Rigg

[2001] FCA 1005

FEDERAL COURT OF AUSTRALIA

Commonwealth Bank of Australia, In the matter of Rigg v Rigg [2001] FCA 1005

IN THE MATTER OF ANTHONY THOMAS RIGG & DOROTHY ANNE RIGG

COMMONWEALTH BANK OF AUSTRALIA v ANTHONY THOMAS RIGG & DOROTHY ANNE RIGG

N7676 of 2000

MADGWICK J
SYDNEY
16 JULY 2001

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N7676 of 2000

IN THE MATTER OF ANTHONY THOMAS RIGG & DOROTHY ANNE RIGG

BETWEEN:

COMMONWEALTH BANK OF AUSTRALIA

APPLICANT

AND:

ANTHONY THOMAS RIGG & DOROTHY ANNE RIGG
RESPONDENTS

JUDGE:

MADGWICK J

DATE OF ORDER:

16 JULY 2001

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.The estates of Anthony Thomas Rigg and Dorothy Anne Rigg be sequestrated.

2.The applicant’s costs, including any reserved costs, be taxed and paid from the estates of the respondents in accordance with the Bankruptcy Act 1996 (Cth).

3.A copy of this sequestration order be given to the Official Receiver in Sydney, within two days.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY	N7676 of 2000

IN THE MATTER OF ANTHONY THOMAS RIGG & DOROTHY ANNE RIGG

BETWEEN:

COMMONWEALTH BANK OF AUSTRALIA

APPLICANT

AND:

ANTHONY THOMAS RIGG & DOROTHY ANNE RIGG
RESPONDENTS

JUDGE:	MADGWICK J
DATE:	16 JULY 2001
PLACE:	SYDNEY

REASONS FOR JUDGMENT
(revised from transcript)

HIS HONOUR:

1. An application, by the respondent debtors to the bankruptcy petition before me, has been made to adjourn these proceedings and for orders for discovery by the petitioning creditor, the bank, on a number of issues.  These are, firstly, alleged fraud in the establishment of the quantum of a debt for which the bank obtained judgment in proceedings in the Supreme Court of New South Wales in 1989; secondly, alleged fraud by the bank in the establishment of the quantum of a debt in the 1989 terms of settlement between all parties including the present respondents, which ultimately was accepted to be due from the debtors to the bank in settlement of a series of complex and inter-related Supreme Court cases; thirdly, fraud in the ascertainment of and/or unauthorised enlargement of the quantum of the debt since that time; fourthly, alleged fraud in relation to mismanagement of a large commercial property at South Nowra, involving a number of leases to tenants, which the debtors had owned; and finally, alleged fraud in relation to the sale, at an alleged under-value, of a house at Riverview Road, Nowra, which the debtors had owned.

2. The matter is complicated and the history of it is sufficiently set out in the documents that have been extracted and collected in the bundle which I have marked as exhibit “Discovery 2” in these proceedings.  The 1989 terms of settlement between the parties did not result in the debtors having been able to regroup their finances and pay out the bank, as no doubt every party to the terms of settlement had hoped.  When this became clear, the bank instituted fresh proceedings in 1993 in the Supreme Court and these were defended, on the basis, among other things, of a number of allegedly implied obligations.  It was said that the bank had wrongfully refused to co-operate in various ways in assisting the debtors to refinance their commercial ventures.  The issue of the sale, at an undervalue of the South Nowra property, by reason of prior mismanagement of that property, by the bank after it took possession under a security over the property, was litigated in the Supreme Court before Brownie J.  There was also litigated the question of whether in the claim leading to the 1989 judgment and the 1989 terms of settlement, the bank debt had been stuffed by unauthorised interest charges.  There was, however, no litigation in the Supreme Court on any issue concerning alleged padding by the bank of the claimed debts that led to the 1989 judgment and the 1989 terms of settlement.  During the raft of Supreme Court proceedings, there were discovered a great many documents by the applicant, lists of which were handed up in Court. 

3. The matter has something of a concurrent history.  Mr Rigg apparently gave evidence before a Senate Inquiry some number of years ago into the banking system and detailed his complaints about the petitioning bank.  He feels that he and his wife have been victimised.  Mr Rigg says that he has personally become aware recently of documents which, he believes, indicate that the bank’s 1989 claimed debt allegedly owed by him and his wife was wrongfully padded by application of unauthorised and unfairly large interest rates for various periods.  Furthermore, in Mr Rigg’s view, certain allegations he and his wife had made back in 1989, namely that it was they who owed a debt of $750,000 and not their company, receive at least partial support from the documents he has now seen.

4. The difficulty is that there is nothing before the Court to suggest anything other than that all the documents which give rise to the debtors’ suspicions or claims of seriously untoward behaviour by the bank were discovered in the proceedings before Brownie J.  Further, there is much to make me believe that such discovery was precisely the source of the documents now relied upon by Mr Rigg to sustain his allegations.

5. There is a new factor, namely the sale of the Riverview Road property.  As to this, the debtors claim that it was sold at an undervalue, which they estimate at approximately $160,000.  Even if a very generous view of this claim is taken and if they could establish sale at an undervalue, whether by fraud or incompetence, of double or treble this sum, the debtors would still owe a large amount of the judgment debt obtained by the bank in the Supreme Court in 2000 and now relied upon.  Further, the debtors have asserted through their counsel that they are indigent and, indeed, that a social security pension is the sole source of their support.

6. This may be a case where the lack of funds of the debtors and lack of legal expertise have, firstly, led them to repose confidence in legal advisers over the years who have not adequately discussed documents with them and, secondly, and more recently, where they have had trouble, evidently through lack of ability to have lavish access to their present pro bono counsel, in articulating their claims and difficulties.

7. However this matter arises, the debtors are in default of orders for particulars that I gave in this matter on 29 May 2001.  I indicated when this matter was last before me for directions on 9 July 2001 when the bank raised the matter, that I did not propose giving further directions but, rather, the bank could simply rely as it saw fit on that non-compliance at the hearing of the petition, the date for which has now arrived.  That date was set long ago.

8. There is no satisfactory basis shown to me in evidence, for inferring a reasonable prospect that fraud, relevant padding of the bank’s debt, or sale at an undervalue of the Riverview Road house could ever be shown.

9. It would be wrong to permit re-litigation of the alleged sale at an undervalue of the South Nowra commercial property when the Supreme Court case dealing with that matter was years in the preparation and, as it turns out, it seems likely that enough documents were produced by the bank on discovery in the Supreme Court proceedings to enable any further documents to be chased down in the litigation in that court.  There is no evidence that there are any such other documents, but I am prepared to contemplate that there might possibly be some, or that the applicant may not have fully disclosed documents in their possession or control.  Nor is there any evidence before me to indicate that any such other documents would have a real possibility of assisting the respondent.

10. In these circumstances it seems to me that no basis has been shown for me to make an order for discovery wholly or partially in terms of that sought.  There is therefore no point in acceding to the application for an adjournment and I decline to do so. 

11. I should add that, from the bar table today, Mr Fitzgibbon, counsel for the respondent has also adumbrated a possible claim of non est factum by Mrs Rigg in relation to the arrangements for the bank bill of exchange which had been the means of the bank principally financing the Riggs’ commercial activities.  It is candidly acknowledged that the claim has never before been raised and that the documents produced by the bank about the history of the Supreme Court proceedings indicate that the claim is in fact in contradiction of admissions expressly made by Mrs Rigg in those proceedings.

12. After I made remarks to the effect of the above, the applicant’s case proceeded.  On the evidence I am satisfied that the debtors committed the acts of bankruptcy alleged in the petition.  I am also satisfied with the proof of the other matters required by s 52 of the Bankruptcy Act 1996 (Cth) (“the Act”).  Accordingly, I will make a sequestration order against the estates of Anthony Thomas Rigg and of Dorothy Anne Rigg.  I will also order that the petitioning creditor's costs, including any reserved costs, be taxed and paid from the estates of the respondent debtors, in accordance with the Act.  Under the Bankruptcy Regulations, a copy of this sequestration order is to be given to the Official Receiver in Sydney, within two days.  I note that the date of the act of bankruptcy of each of the debtors is 6 June 2000. 

I certify that the preceding twelve (12) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Madgwick.

Associate:

Dated:             27 July 2001

Counsel for the Applicant:	A G Bell
Solicitor for the Applicant:	L E Taylor
Counsel for the Respondents:	D C Fitzgibbon
Date of Hearing:	16 July 2001
Date of Judgment:	16 July 2001