Commonwealth Bank of Australia Limited Trading as BankWest v Eriksson
[2013] FCCA 2058
•6 December 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| COMMONWEALTH BANK OF AUSTRALIA LIMITED TRADING AS BANKWEST V ERIKSSON | [2013] FCCA 2058 |
| Catchwords: BANKRUPTCY – Creditors petition – opposed on the basis that the respondent has filed a Statement of Claim in the NSW Supreme Court that is “a counter-claim, set-off or cross-demand equal to or exceeding the amount of the judgment debt…that he…could not have set up” for the purposes of s.40(1)(g) of the Bankruptcy Act 1966 – that there is other sufficient cause not to grant the petition for the purposes of s.52(2)(b) of the Act – petition granted – sequestration order made. |
| Legislation: Bankruptcy Act 1966 ss.40(1)(g), 49, 52(2)(b) Australian Securities and Investment Commission Act 2001 (Cth) ss.12CA, 12GD |
| Re Longo (1995) 57 FCR 523 Smith v Abbott Stillman & Wilson [2007] FCA 1256 (17 August 2007) and [2008] HCASL 75 (28 March 2008) CBFC Ltd v Callen [2004] FMCA 894 (22 November 2004) Harvey v Phillips (1956) 95 CLR 235 Spies v Commonwealth Bank of Australia (1991) 24 NSWLR 691 O’Brien v Bank of Western Australia Ltd [2013] NSWCA 71 Lord & Anor v Rankine & Ors [2010] FMCA 688 Lipov v Alexander Fraser & Son Ltd (1978) 36 FLR 126 State Bank of NSW Ltd v Currababula Holdings Pty Ltd [2001] NSWCA 239 Menzies v Paccar Financial Pty Ltd [2011] FCA 460 (10 May 2011) Wren v Mahony (1972) 126 CLR 212 |
| Applicant: | COMMONWEALTH BANK OF AUSTRALIA LIMITED ABN 48 123 123 124 TRADING AS BANKWEST |
| Respondent: | TREVOR JAMES ERIKSSON |
| File Number: | SYG 905 of 2013 |
| Judgment of: | Judge Altobelli |
| Hearing date: | 15 August 2013 |
| Date of Last Submission: | 15 August 2013 |
| Delivered at: | Sydney |
| Delivered on: | 6 December 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr Dowdy |
| Solicitors for the Applicant: | Norton Rose Fulbright |
| Solicitors for the Respondent: | Hall Partners |
ORDERS
A sequestration order is made against the estate of Trevor James Eriksson.
THE COURT NOTES THAT:
(a)The date of bankruptcy is 17 April 2013.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 905 of 2013
| COMMONWEALTH BANK OF AUSTRALIA LIMITED ABN 48 123 123 124 TRADING AS BANKWEST |
Applicant
And
| TREVOR JAMES ERIKSSON |
Respondent
REASONS FOR JUDGMENT
Introduction
On 1 May 2013 the Commonwealth Bank of Australia Limited trading as Bankwest caused to be filed a Creditors Petition No SYG905/2013 against the respondent, Trevor James Eriksson. The petition relations to a judgment debt in the amount of $2,784,101 from the Supreme Court of NSW entered 15 July 2011. The petition avers to the commission by the respondent of an act of bankruptcy by failing to comply on or before 17 April 2013 with the requirements of a bankruptcy notice served on him on 18 February 2013.
By way of Notice filed 9 July 2013 stating grounds of opposition to the petition, the respondent in effect asks this Court to dismiss the petition. The respondent contends that the judgment dated 15 July 2011 is susceptible to being set aside as a result of fresh proceedings commenced in the Supreme Court of NSW on 9 July 2013 by way of Statement of Claim (called “the fresh proceedings”). He contends that the fresh proceedings are proceedings within s.40(1)(g) of the Bankruptcy Act 1966, ie that he will be able to “satisfy the Court that he…has a counter-claim, set-off or cross-demand equal to or exceeding the amount of the judgment debt…that he…could not have set up in the action or proceeding in which the judgment…was obtained;”. Also implicit on the respondents case was the contention that there is “other sufficient cause” not to grant the petition, for the purposes of s.52(2)(b) of the Act.
The applicant contends that the respondent is unable to satisfy the Court about the matters required by s.40(1)(g) and s.52(2)(b). In particular, the applicant submits that even if there is a prima facie case against it in the fresh proceedings, with a fair chance of success, that is being advanced bona fide (all of which is strongly refuted by the applicant) such claim could have and should have been set up at the time the judgment was obtained.
Background
Most of the background to this litigation is uncontentious. The applicant (henceforth called “the Bank”) acquired the respondent’s former bankers, Bankwest, in 2008 and became its successor in title. The respondent was a director of companies that had lending facilities with the Bank in respect of which he provided personal guarantees. The respondent, through various corporate entities controlled by him, undertook industrial property development in the Central West region of NSW, funded by the Bank. In June 2010 the Bank made demand in respect of certain facilities guaranteed by the respondent. In July 2010 the Bank appointed reviewers over 2 corporate entities associated with the respondent. In September 2010 the respondent and various corporate entities initiated proceedings in the NSW Supreme Court against the Bank. As a result of mediation by late 2010 all the parties to the litigation settled their claims against one another. On 24 December 2010 a Deed of Release was signed by the relevant parties including the respondent. The terms of the Deed of Release will be considered below. In any event, the non-bank parties to the Deed defaulted on the obligations they assumed under the Deed. This default occurred, however, after Hammeschlag J dismissed the proceedings against the Bank “as if on the merits” and stood the proceedings over for further directions. On 15 July 2011, and pursuant to a procedure expressly contemplated in the Deed of Release, McDougall J entered judgment against the respondent (and others) in the sum of $7,981,620, with the consent of the respondent.
Over 12 months later, the Bank caused to be issued against, and served on the respondent, a Bankruptcy Notice. This led to applications by the respondent both in this Court (in relation to the Bankruptcy Notice) and in the Supreme Court (in relation to the consent judgment). Both proceedings were ultimately dismissed. Relevantly, the respondent’s proceedings seeking leave to appeal the consent judgment, and to revisit the consent judgment, were discontinued by the respondent.
Even a later motion seeking leave to file a cross-claim was discontinued when the matter came before Hammerschlag J on 8 July 2013.
On 9 July 2013 the respondent, as one of 3 plaintiffs in the fresh proceedings, filed a Statement of Claim against the Bank seeking relief summarised as follows:
a)Declaration as to the unconscionability at general law and under s.12CA Australian Securities and Investment Commission Act 2001 (Cth) of certain review and lending practices of the Bank.
b)An order restraining the Bank from taking steps to enforce any obligation of the respondent pursuant to any agreement with the Bank, pursuant to s.12GD Australian Securities and Investment Commission Act 2001 (Cth), the Competition and Consumer Act 2010 (Cth) and the general law.
c)A similar order seeking to restrain the Bank taking any step on proceedings to enforce such obligation including in respect of the consent judgment.
d)Declarations under s.7 Contracts Review Act 1980 (NSW) to the effect that the Deed of Release was unjust or should be varied.
e)Damages.
The continuation of the fresh proceedings appear to depend on the outcome of the present proceedings, at least in so far as it relates to the respondent.
The Deed of Release
The Deed of Release was signed 24 December 2010. The respondent is a named party to the Deed, signed it, and was legally represented at all relevant times. It is necessary to set out some of the more important provisions of the Deed. As will be seen a company called Clergate Industrial Estate Pty Ltd is a major protagonist in the Deed. The respondent controls the said company, for all practical purposes, as well as guaranteeing its indebtedness to the Bank. Clergate commenced the proceedings against the Bank in the Supreme Court of NSW
Recital A to the Deed, described as Introduction, states:
Clergate has commenced the Proceeding against the Bank and the Receivers. Clergate claims, amongst other things, that the Bank’s conduct in relation to certain finance facilities that it provided to Clergate was:
(1)in breach of contractual obligations;
(2)constituted misrepresentations upon which Clergate relied to its detriment;
(3)unconscionable;, and
(4)that the appointment by the Bank of the Receivers was invalid or ought to be terminated.
Clergate also claims that the Receivers have acted in breach of their duties. Clergate seeks statutory and common law remedies.
What becomes abundantly clear from the above is that Clergate’s claim against the Bank clearly involved allegations that the Bank had breached its contractual obligations, had engaged in misrepresentations, and had acted unconscionably. These are matters very similar to those pleaded in the fresh proceedings.
Recital B states:
The Bank claims and each of Eriksson, Edinburgh, Clergate and CWDC admit that that, as at 14 December 2010, Clergate is indebted to the Bank in the amount of $8,497,165.34 (plus additional interest, legal costs, fees and charges), and that each of CWDC, Edinburgh and Eriksson have guaranteed and indemnified the Bank with respect to Clergate’s performance of its obligations to the Bank in that amount. The Bank claims that Clergate is in default of its facilities to the Bank, and is required to pay to the Bank the amount owing to the Bank immediately. The Bank and the Receivers deny the allegations made by Clergate in the Proceeding, and deny that they are liable to Clergate in damages or otherwise.
There is thus a clear acknowledgement of debt to the Bank in the sum of $8,497,165.34.
In paragraph 1.1(5) of the Deed, the word ‘claim’ is defined as follows:
Claim means any present or future, actual or contingent, claim, cause of action, complaint, liability, cost or expense that any person (whether or not a Party to the Proceeding) has or might have in connection with or arising in any way from the facts or matters referred to or alleged in the Proceeding and in Recitals A and B above, whether or not the facts, matters or circumstances giving rise to that Claim are known to that person or to any other person at the date of this Deed;
The significance of this becomes relevant when construing later provisions of the Deed.
Paragraph 2.1 states:
Subject to clause 4.1, each of the Parties acknowledge that they are aware that they, their advisers, agents or lawyers may discover facts different from or in addition to the facts that they now know or believe to be true with respect to the subject matter of this Deed, but that it is their intention to, and they do hereby, fully and finally settle all Claims on the terms of this Deed notwithstanding.
Paragraph 2.3 states:
Each Party warrants and represents to each other Party that:
(1)they have had adequate opportunity to obtain and have obtained competent legal and other professional advice concerning the terms and effect of this Deed;
(2)they have had the opportunity to negotiate the terms of this Deed;
(3)they consider that the terms of this Deed are reasonable in all the circumstances;
(4)they enter into this Deed voluntarily and without duress;
(5)the terms of this Deed are binding upon them according to its terms.
Paragraph 3 states:
3.1 Clergate acknowledges that it is indebted to the Bank in the full
amount of the Indebtedness.
3.2 Edinburgh, CWDC and Eriksson acknowledge that each ofClergate, Edinburgh, CWDC and Eriksson is jointly and severally indebted to the Bank in the full amount of the Indebtedness under the guarantees provided by them to the Bank.
The benefit derived by Clergate and the respondent is that the Bank agreed to settle for payment of $5,850,000 in lieu of $8,497,165.34. In this regard paragraph 5.1 states:
Clergate must pay or cause to be paid the Settlement Amount to the Bank by bank cheque delivered to the Bank’s offices at Level 17, 45 Clarence Street, Sydney NSW 2000 and marked to the attention of Neil Herbert as follows:
(1)$50,000 by no later than 31 January 2011;
(2)$450,000 by no later than 31 March 2011; and
(3)$5,350,000 by no later than 30 April 2011.
It is uncontentious that payment was made in accordance with 5.1(1) only of the Deed, despite the retirement of the receivers that the Bank had appointed on 24 December 2010.
Paragraph 8 deals with default and states:
If:
(1)the Bank does not receive the Settlement Amount in accordance with this Deed;
(2)any payment made by any of Clergate, Edinburgh, CWDC or Eriksson under this Deed is void or voidable under any law relating to insolvency;
(3)the rents referred to in clause 7.2 are not paid to the Bank in accordance with that clause; or
(4)any statutory declaration provided in respect of Edinburgh, CWDC, Eriksson or Your Storage referred to clause 4 is false, misleading or incomplete in any material respect; or
(5)Clergate, Edinburgh, CWDC or Eriksson otherwise fail to comply with their obligations under this Deed;
then:
(6)the Bank may re-list the Proceeding (if necessary) or commence fresh proceedings (if necessary);
(7)notwithstanding clause 6.1, the Bank may appoint the Receivers over the Properties, Clergate or Edinburgh, and Clergate, Edinburgh, CWDC and Eriksson consent to any such appointment and will not take any step or do any thing to oppose or impede such re-appointment and will not oppose or impede any steps taken by the Receivers in relation to that appointment;
(8)each of Clergate, Edinburgh, CWDC and Eriksson consent to the Bank filing a cross-claim (or claim as the case may be) against them seeking, amongst other things, payment of the Indebtedness and possession of the Properties and will consent to the Court ordering the same;
(9)each of Clergate, Edinburgh, CWDC and Eriksson hereby consent to dispensing with the necessity of the Bank actually filing such cross-claim;
(10)each of Clergate, Edinburgh, CWDC and Eriksson consent to the Bank obtaining judgment against Clergate, Edinburgh, CWDC and Eriksson for the Indebtedness to the extent not repaid or reduced and possession of the Properties.
It is uncontentious that the Bank followed this procedure in obtaining the consent summary judgment against the respondent.
In paragraphs 8.2 and 8.4 the respondent covenanted not to file any defence or counter-claim in the summary judgment proceedings. In consideration of the matters set out in the Deed, Clergate agreed to discontinue the proceedings against the Bank. The Deed contained Releases in accordance with paragraph 10:
10.1 Subject to Clergate paying or causing to be paid the Settlement
Amount, the Bank and the Receiver releases and discharges Clergate, Edinburgh and CWDC from all Claims and waives their rights in respect of the Indebtedness.
10.2 Subject to Clergate paying or causing to be paid the Settlement
Amount and Eriksson paying the Additional Amount, the Bank and the Receivers release and discharge Eriksson from all Claims.
10.3 Immediately upon execution of this Deed, Clergate, Edinburgh,
CWDC and Eriksson do hereby release and discharge the Bank and the Receivers from all Claims.
The Deed also contained a Covenant not to sue in paragraph 11:
Upon execution of this Deed, Clergate, Edinburgh, CWDC and Eriksson must not:
(1)take any further step in the Proceeding except as contemplated by this Deed; or
(2)bring any other legal proceeding, make any demand or take any other action against the Bank or the Receivers in connection with any Claim.
In paragraph 17 the parties agreed to a bar to proceedings:
A Party may plead this Deed as a complete defence to any action, proceeding or suit, which may be taken or commenced by another Party arising out of the facts or matters referred to in the Proceeding, after a relevant release has been granted by that other Party who has take or commenced that action, proceeding or suit.
Moreover, in paragraph 19 they agreed to no set-off:
Clergate, Edinburgh, CWDC and Eriksson must make all payments under this Deed in cleared funds, and without set-off or counterclaim.
Bank’s Contentions
In short, the Bank contends that the Deed of Release, and the consent judgment entered pursuant to it, preclude the respondent’s current claim against the Bank, and takes the situation outside of s.40(1)(g) because there can be no “counter-claim, set-off or cross demand…that could not have been set up…”. Moreover, the Bank contends that as a matter both of law and policy, there are no exceptional circumstances that justify a bankruptcy Court looking behind the consent judgment.
Subject to a consideration of the respondent’s contentions, there is substance to the Bank’s contentions. To the extent that the respondent’s Statement of Claim relies on s.12CA of the Australian Securities and Investment Commission Act 2001 (Cth) it is no more than a claim based on unconscionable conduct, an allegation categorically raised in the litigation that was settled in the terms set out in the Deed of Release. To the extent that the respondent’s Statement of Claim is based on s.7 Contracts Review Act 1980 (NSW), it must depend on establishing that the Deed was somehow ‘unjust’, which is defined in s.4(1) to include “unconscionable, harsh or oppressive”. These are matters expressly covered by the Deed of Release. Indeed it is hard to see how any of the matters pleased in the Statement of Claim filed 9 July 2013 are substantially different to that which was raised in the Clergate litigation against the Bank recited at A in the Deed, or somehow did not come within the definition of ‘claim’ at 1.1(5), or is somehow not covered by the Releases at 10 and Covenant not to sue at 11.1.
In this Court’s opinion, the observations set out above are unaffected by the fact that the Statement of Claim in the fresh proceedings is initiated by the respondent personally, but the proceedings settled in the Deed of Release were initiated by the respondent’s company. Indeed one wonders how, if the Statement of Claim were indeed pursued, the respondent can seek relief as guarantor independently of the corporate entities who were the borrowers from the Bank? The status of these companies may well be the explanation for this.
Moreover, to the extent that the respondent sought to contend that the relevant unconscionability extended to the entry of the consent judgment, as distinct from the entering of the Deed of Release, that again does not change the observations set out above. The consent judgment was a mechanical act performed in pursuance of paragraph 8 of the Deed. All that the respondent did in this regard was pursuant to this contractual provision. It was a mechanical act requiring no independent negotiation or decision making by or on behalf of the respondent and thus there is simply no scope for an argument about unconscionability or misrepresentation occurring after the Deed was entered into, but before the consent summary judgment was entered.
It is indeed hard to perceive how the matters raised in the Statement of Claim were matters that could not have been raised in the proceedings that led to the judgment.
To the extent that the respondent asks the Court to, in effect, go behind the judgment debt, the Bank submits a bankruptcy Court should only do so in very limited circumstances, indeed exceptional circumstances, where the judgment is based on a compromise or settlement: Re Longo (1995) 57 FCR 523 at 529; Smith v Abbott Stillman & Wilson [2007] FCA 1256 (17 August 2007) and [2008] HCASL 75 (28 March 2008); CBFC Ltd v Callen [2004] FMCA 894 (22 November 2004).
Those judgments indicate that a Court should only go behind a consent judgment if there was such suspicion of unfairness or impropriety to justify this, or evidence that the respondent was subjected to duress, coercion or received no independent legal advice, or there is fraud, collusion or miscarriage of justice. The onus clearly lies on the respondent in this regard. For present purposes there is no relevant distinction to be drawn between whether the respondent seeks to attack the compromise embodied in the Deed of Release, or the subsequent consent summary judgment. The test propounded by Harvey v Phillips (1956) 95 CLR 235 at 243-244, summarised by Handley JA in Spies v Commonwealth Bank of Australia (1991) 24 NSWLR 691 at 696-697 is substantially the same as that stated in the cases cited in the prior paragraph in these reasons. If the underlying agreement cannot be invalidated for any reason then neither can the consent summary judgment.
The Respondent’s Contentions
Doing the best the Court can, the respondent’s contentions will be articulated and discussed. This is not meant to be any criticism of the respondent’s lawyer, who did the best he could, in a short time frame, to present his client’s argument.
In a broad sense, the respondent’s case can be summarised in two propositions, both of which need further elucidation. The first is that the fresh proceedings constitute “a counter-claim, set-off or cross-demand that he…could not have set up in the action or proceeding in which the judgment or order was obtained” for the purposes of s.40(1)(g) of the Act. Thus there has been no act of bankruptcy, so the creditor’s petition should be dismissed. The second proposition is that, in any event, the facts demonstrate that there is “other sufficient cause” for the purposes of s.52(2)(b) of the Act such that a sequestration order should not be made.
The respondent’s case necessarily involves an examination of the Statement of Claim filed 9 July 2013. The respondent is the first named plaintiff. To the extent that this Statement of Claim relates in any way to any other party not a party to the Deed of Release it is plainly irrelevant in the present proceedings, despite any contrary assertion made on behalf of the respondent.
The relief claimed in the Statement of Claim has been described earlier in these reasons. Paragraphs 7 and 8 of the Statement of Claim are useful summaries of the two parts of the pleading. These paragraphs state:
(7)Part 1: - Parts B to G of this Statement of Claim seek relief on behalf of the Plaintiffs in respect of the judgments that have been entered against them, on the basis that they were obtained by the Bank in circumstances where the facilities to which they relate have been Performing Loans, but they became the subject of a Review and certain Review Practices carried out by BankWest that were unconscionable, or that were otherwise unlawful for the reasons that are set out in this Statement of Claim.
(8)Part 2: - Parts H through to P of this Statement of Claim concern the judgment entered in respect of Trevor Eriksson, setting out reasons why the Deed upon which the judgment entered concerning him is void or ought to be set aside, and consequently that the judgment that entered against him on 15 July 2011 ought to be subject of a permanent and mandatory injunction.
Paragraph 7 is not only a convenient, but an accurate summary of the matters pleaded in Part 1 paragraphs 9 to 41 inclusive. Regrettably for the respondent, however, nothing said on his behalf demonstrates, to the satisfaction of the Court, that any of the matters pleaded could not have been set up in the proceedings resulting in the judgment against the respondent. Moreover the conclusion that the Deed of Release, upon which the consent judgment was founded, explicitly covers the matters pleaded, is irresistible. It is interesting to note that the majority of the purported facts particularised in Part 1 of the Pleading pre-date the Deed of Release.
Part 2 of the Pleading particularises purported facts pre-dating the Deed of Release, between the Deed of Release and the consent judgment, and then after the consent judgment. Any matters pre-dating the Deed of Release cannot assist the respondent for the reasons articulated in the previous paragraph of these reasons. Moreover, the Court does not accept that anything which the respondent claims to have occurred in the 7 month period between the date of the Deed of Release and the consent judgment either can in theory, or does in fact, vitiate either the Deed or the judgment. The entering of the judgment was, for all practical purposes, a mechanical procedure expressly agreed to in the Deed, and carried out in accordance with the Deed. Paragraph 8 of the Deed is explicit in this regard. The respondent’s participation or cooperation in the default process was not expected, required or indeed contemplated. The respondents’ irrevocable consent is explicitly provided by the Deed itself. The respondent cannot, with respect, complain that he was not given the opportunity to do that which he expressly agreed not to do. Whether or not the respondent was suffering from cancer on the date of entry of judgment is irrelevant, as is whether he was legally represented or not. It is beyond doubt that the respondent was represented at the time of entering the Deed.
The respondent also raises in Part 2 of the Pleading some issues about obtaining business records apparently held by the Receivers, but not made available to the respondent thus, he contends, inhibiting his capacity to obtain the finance needed to comply with the obligations imposed on him and Clergate under the Deed. One difficulty with this clause is that by virtue of paragraph 6.2 of the Deed the Receivers had retired on 24 December 2010. Even if the fundamental premise of the allegations were accepted (that is that some act or omission of the Receiver resulted in the respondent or the company or companies he controlled being unable to raise finance) it is hard to see how the applicant Bank can be held accountable for this.
Part 2 of the Pleading raises other interesting issues about refinancing of debts, payments to the Bank’s solicitors, lost opportunities to refinance as a result of the Bank’s conduct, issues about valuations etc., some of which took place before the Deed, some after, and some perhaps even after judgment (it is not clear from the pleadings). On the material before the Court, none of these matters satisfy the Court that these are issues under s.40(1)(g).
A critical point about which the respondent has failed to satisfy this Court is why, even if all the matters pleaded were genuine, the Court should exercise its discretion in favour of the respondent in circumstances where over 2 years have elapsed since the consent judgment, and the respondent has not been able to successfully vitiate it in any way? The respondents own chronology records the failed attempts to seek leave to appeal the consent judgment, the failed appeal in relation to extending time for compliance with the bankruptcy notice, and the failed attempt to re-open the proceedings in the Supreme Court by way of a cross-claim. Quite apart from the fact that this Court does not accept that the s.40(1)(g) threshold (so to speak) has been crossed, there seems no reason to exercise a discretion in the respondents’ favour under s.52(2)(b).
On behalf of the respondent considerable emphasis was placed on the transcript of the proceedings before Hammerschlag J in the Supreme Court of NSW, which proceedings were discontinued and dismissed, immediately before the commencement of the fresh proceedings. Whatever his Honour said to the parties in those proceedings, and whatever his Honour might have meant to convey to the parties through what he said, is irrelevant in the present proceedings. The impression that this Court has formed is that it is possible that those representing the respondent may have misconstrued what his Honour said. This Court doubts, with respect to his Honour, that he meant to tacitly or implicitly endorse the respondents proceedings in any way, or in any context.
On behalf of the respondent the Court was referred to the New South Wales Court of Appeal judgment of O’Brien v Bank of Western Australia Ltd [2013] NSWCA 71 as authority for the proposition that suppression clauses within loan agreements preventing a party from suing until amounts owed were paid would not provide a means to overcome and defeat defences raised by a borrower that the debt is not due. The facts in the present case are so different that it is not possible to discern how the Court of Appeal’s decision is analogous. The summary judgment appealed from in O’Brien seems much more flawed than the consent judgment in the present case. In any event, if the respondent believes that the decision in O’Brien is so favourable to him, there are other possible alternatives open to him. O’Brien’s case does not assist the respondent in the present context.
From the reasons articulated in this judgment, this Court does not accept that the creditors petition has been filed for an improper purpose – namely to thwart the fresh proceedings. The decision in Lord & Anor v Rankine & Ors [2010] FMCA 688 does not assist the respondent. If anything, the procedural history as between the parties suggests that if there is any improper purpose it is not with the applicant.
Reference to Lipov v Alexander Fraser & Son Ltd (1978) 36 FLR 126 and State Bank of NSW Ltd v Currababula Holdings Pty Ltd [2001] NSWCA 239 does not assist the respondent in circumstances where the procedural history indicates an unsuccessful attempt to seek leave to appeal the consent judgment.
Reference to Menzies v Paccar Financial Pty Ltd [2011] FCA 460 (10 May 2011) likewise does not assist the respondent. Apart from the fact that this case is about s.49 of the Act, the facts are so materially different to the present ones so that it is unclear how, if at all, the case could be relevant.
The High Court’s decision in Wren v Mahony (1972) 126 CLR 212 does not assist the respondent’s case. There is no question about the power of this Court to go behind a judgment in certain circumstances, even if it will not do so as a matter of course. As these reasons for judgment demonstrate, the facts and circumstances leading up to the Deed of Release, to the date of the consent judgment, and subsequently, do not disclose any basis for going behind the judgment.
Determination
The respondent has not demonstrated to the satisfaction of the Court that the fresh proceedings or indeed any of the facts and circumstances referred to by the respondent, justify denying the applicant the relief that it seeks. None of the matters set out in ss.40(1)(g) or 52(2)(b) of the Act have been established. The applicant is entitled to have a sequestration order made. Mr Hall on behalf of the respondent conceded all matters of final proof in relation to the application. That was an entirely appropriate concession to make in the circumstances of this case. The Court is, in any event, independently satisfied that the grounds for granting the petition as set out in s.52 have been established.
I certify that the preceding forty-nine (49) paragraphs are a true copy of the reasons for judgment of Judge Altobelli.
Associate:
Date: 6 December 2013
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