Commonwealth Bank of Australia v Heinrich

COMMONWEALTH BANK OF AUSTRALIA & ORS v STEPHEN GLENN HEINRICH
[2003] SASC 322
Civil

DEBELLE J By summons issued on 20 June 2002 the plaintiffs seek orders that private prosecutions commenced in the Magistrates Court by the defendant against them be permanently stayed. In addition, the plaintiffs seek an order prohibiting the defendant from instituting further proceedings without leave of this Court. On 7 August 2002 Mullighan J stayed the prosecutions until further order.
The plaintiffs’ application was listed for hearing before me on 10 February 2003. The defendant then applied for an adjournment. I dismissed the application for reasons I then gave.
The plaintiffs’ applications are but a further step in a matter which has had a long and unfortunate history. I regret that there has been further delay because I have not published these reasons sooner. I briefly note the critical events leading to this application.
There are three plaintiffs. The first plaintiff, the Commonwealth Bank of Australia (“the Bank”) was at one time the defendant’s banker. As will be seen, it has secured a judgment in this Court ordering the defendant to pay it $673,358.81 plus interest. The Bank has secured a sequestration order in the Federal Court of Australia against the defendant who has been declared bankrupt. The trustee in bankruptcy is the second plaintiff, Mr Scott. The third plaintiff is Mr Brown who is solicitor for Mr Scott.
The defendant, Mr Heinrich, is a farmer. He farms land near Maitland on the Yorke Peninsula.
In 1985 Mr Heinrich became a customer of the Bank. On 28 June 1985 he executed a mortgage over part of his farming land, namely, Section 36 in the Hundred of Kilkerrin. The mortgage was security for loans by the Bank. On 12 October 1992 Mr Heinrich purported to close his account with the Bank.
In January 1993 Mr Heinrich made allegations denying the validity of the mortgage. Those allegations continued and in November 1993 Mr Heinrich alleged that the mortgage was tainted with fraud. He claimed that it had been incorrectly completed by the manager of the Kadina branch of the Bank, Mr Saunders.
On 10 September 1993 the Bank instituted an action in this Court, action no. 1648 of 1993 (“the 1993 action”), in which it claimed payment of the monies due to it by Mr Heinrich. In his defence and counterclaim, Mr Heinrich alleged fraud by Mr Saunders, challenged the validity of the mortgage, challenged the method of accounting by the Bank and claimed that the Bank was indebted to him. The Bank also sought orders for possession of the land subject to the mortgage but later withdrew that aspect of the claim and prosecuted only its claim for the money due to it.
In September 1998 Mr Heinrich commenced an action in this Court, action no. 1266 of 1998 (“the 1998 action”), in which he claimed declarations against the Bank for breach of its accounting and taxation obligations. Other claims raised issues which overlapped those in the Bank’s action, 1648 of 1993.
In January 1999 Mr Heinrich agreed to withdraw the 1998 action and to prosecute in the 1993 action any claims he had wished to pursue in the 1998 action. He was ordered to pay costs thrown away on the withdrawal of the 1998 action. He had legal representation at the time when he withdrew the 1998 action.
The trial of the 1993 action was heard by Nyland J. The trial began on 11 February 1999. In the course of the trial, Mr Saunders gave evidence for the Bank that the mortgage had been validly executed. During the course of the trial, Mr Heinrich secured an adjournment in order to appeal rulings as to procedure made by Nyland J. The Full Court dismissed Mr Heinrich’s appeal. Plainly, that appeal delayed the hearing of the action. On 24 February 2000 Nyland J published reasons for judgment. Her Honour ordered that Mr Heinrich pay the Bank the sum of $673,358.81 plus interest. She dismissed Mr Heinrich’s counterclaim. She ordered Mr Heinrich pay the Bank’s costs. In the course of her reasons, Nyland J rejected the allegations of fraudulent behaviour made by Mr Heinrich against the Bank and its officers and, in particular, she rejected the allegation of misconduct against Mr Saunders. Her Honour accepted the certificate signed by Mr Saunders as proof of the debt due by Mr Heinrich to the Bank. She did not accept Mr Heinrich’s evidence holding:
“[He] was confused in his recollection of some matters and demonstrated a tendency to reconstruct events to accord with his perception of how he expected matters to have been, rather than as they really were. He was, as a result, not a reliable witness.”
It is necessary to note two consequences of the dismissal of the counterclaim, namely, that Mr Heinrich’s challenge to the validity of the mortgage was dismissed as was his claim that moneys were due to him by the Bank. Mr Heinrich did not appeal against the judgment of Nyland J.
During an adjournment of the trial, Mr Heinrich had made three applications in the 1998 action to set aside or stay the orders as to costs in that action and the taxation of those costs. The applications were dismissed by Master Burley. Mr Heinrich appealed against the orders of Master Burley. The appeal was dismissed on 30 May 2000.
The taxed bill of costs in the 1998 action was allowed at $41,395.14. The Bank issued a bankruptcy notice in October 1999 in respect of that amount. I will call this bankruptcy notice “the first bankruptcy notice”. Mr Heinrich has applied to set aside the first bankruptcy notice.
Having been successful in the action 1648 of 1993, the Bank issued a second bankruptcy notice against Mr Heinrich. Mr Heinrich applied to set aside the second bankruptcy notice.
On 17 March 2000 Mr Heinrich applied for an order adjourning the hearing of his application to set aside the first and second bankruptcy notices. The application was dismissed.
On 7 June 2000 O’Loughlin J dismissed Mr Heinrich’s application to set aside the first and second bankruptcy notices. In the course of his reasons, O’Loughlin J held that there was no reason to go behind the findings of Nyland J. Mr Heinrich did not appeal against the judgment of O’Loughlin J.
On 8 June 2000 the Bank issued a bankruptcy petition based, among other things, on the failure of Mr Heinrich to pay the judgment debt and applied for a sequestration order. Mr Heinrich opposed the petition. The application for a sequestration order was heard by Mansfield J who, on 6 September 2000, dismissed Mr Heinrich’s objections and made a sequestration order against him and appointed Mr Scott, the second plaintiff, as trustee of Mr Heinrich’s estate.
On 27 September 2000 Mr Heinrich instituted an appeal against the sequestration order made by Mansfield J. On 28 May 2001 the Full Court of the Federal Court of Australia dismissed Mr Heinrich’s appeal.
Mr Heinrich did not appeal from the decision of the Full Court of the Federal Court but, instead, made an ex parte application to the High Court of Australia for an order of mandamus addressed to the three judges of the Full Court who had dismissed his appeal. The application in the High Court was heard by Kirby J on 8 October 2001. Kirby J dismissed the application.
In December 2000 and January 2001 summonses for public examinations of Mr Heinrich, his wife, two of his sons, and Phillip Heinrich were issued by Mr Scott out of the Federal Magistrates Court. The public examinations have been adjourned from time to time. Mr Heinrich refuses to file a Statement of Affairs.
On 21 January 2002 Mr Heinrich issued a complaint and summons out of the Magistrates Court of South Australia at Maitland against Mr Brown and a separate complaint against Mr Scott alleging breaches of s 43 and s 44 of the Crimes Act, 1914 (Cth). Both were listed for hearing on 19 February 2002. They were ultimately adjourned to the Adelaide Magistrates Court on 2 May 2002.
On 26 February 2002 Mr Heinrich issued a document which he called “Notice of Demand” to Mr Hampton, an officer of the Bank, claiming that the failure by Mr Hampton to deny the certificate was wrongly prepared would constitute an admission that he had acted dishonestly on behalf of the Bank. Mr Hampton had prepared a certificate of Mr Heinrich’s indebtedness which was tendered by the Bank with the consent of Mr Heinrich’s counsel in the 1993 action heard by Nyland J.
On 20 March 2002 Mr Heinrich issued a complaint and summons out of the Magistrates Court of this State against the Bank claiming that the Bank had acted in breach of s 43 and s 87 of the Crimes Act. The first count alleged that between 26 March 1993 and 5 February 2002 the Bank attempted to obstruct, prevent, pervert or defeat the course of justice in relation to the judicial power of the Commonwealth contrary to s 43. The particulars of the count are inadequate in that the act said to pervert the course of justice is not identified. All that can be said is that it is alleged the Bank, by doing something unspecified and without first taking account of mutual dealings under s 86 of the Bankruptcy Act 1966 (Cth) and contrary to the decision of the High Court in Gye v McIntyre (1991) 171 CLR 609, had breached s 43.
The second count alleged that the Bank had given a certificate which may have affected Mr Heinrich’s rights with knowledge that this certificate was false in a material particular contrary to s 87 of the Crimes Act. The particulars of the allegation are that between 8 November 1999 and 8 June 2000 the Bank caused a certificate to be made and signed by Mr Hampton representing it to the Supreme Court of South Australia knowing it to be false, and on 8 June 2000 caused a petition for bankruptcy to be issued. The particulars go on to allege also that a certificate given by another officer of the Bank, Mr N A Smith, was false.
On 20 March 2002 Mr Heinrich also issued a second complaint and summons against both Mr Brown and Mr Scott claiming similar but differently particularised breaches of s 5, s 35, s 43 and s 87 of the Crimes Act. They were adjourned for hearing on 2 May 2002 in the Adelaide Magistrates Court.
On 13 April 2002 Mr Heinrich issued an information and summons against the Bank including allegations in relation to Mr Handtke which also alleged breaches of s 43 and s 87 of the Crimes Act. The particulars of each offence are different but might be summarised by stating that they related to complaints that the Bank had obtained the judgment in the 1993 action fraudulently and had acted improperly in seeking to pursue matters under the Bankruptcy Act against Mr Heinrich.
In addition to the information issued against the Bank on 13 April 2002, Mr Heinrich on the same day issued an information against Mr Brown and a separate information against Mr Scott. They alleged breaches of s 35, s 43 and s 87 of the Crimes Act but were differently particularised from the earlier complaints and summonses. However, all of the criminal proceedings related to the complaints by Mr Heinrich that the Bank had obtained its loan judgment fraudulently and that Mr Brown and Mr Scott had jointly and severally acted improperly in seeking to pursue the administration of the bankruptcy.
The Bank, Mr Brown and Mr Scott deny all allegations of criminal behaviour.
On 14 April 2002 Mr Heinrich issued an application in the Federal Magistrates Court seeking to stay all proceedings in that court until the information and summons against Mr Brown, Mr Scott and the Bank had been determined. The application for a stay was refused by the Federal Magistrate.
On 2 May 2002 all of the complaints and the informations were heard in the Adelaide Magistrates Court by Mr Prescott DCM. The complaints were all dismissed and Mr Heinrich was ordered to pay the costs to the Bank, Mr Scott and Mr Brown in the sum of $3,000 within 28 days. Those costs have not been paid. The information was adjourned to 12 July 2002.
On 23 May 2002 the public examination of Mr Heinrich pursuant to the Bankruptcy Act continued before a Registrar of the Federal Magistrates Court. In the course of that examination, Mr Heinrich admitted that he had instituted the private prosecution in order to obtain a decision contrary to that of Nyland J in the 1993 action. Mr Heinrich also admitted that he had warned Mr Scott, the trustee in bankruptcy, and Mr Brown, Mr Scott’s solicitor, that if Mr Scott did not agree to a mutual accounting under s 86 he would prosecute them both under the Crimes Act. Later in his evidence, he inferred that the prosecution would be withdrawn if Mr Scott made a finding that the Bank owed Mr Heinrich money and the Bank paid that money.
On 5 June 2002 Mr Heinrich delivered to Mr A A Burdett, the Bank’s solicitor, a summons issued out of the State Magistrates Court directing him to produce documents in relation to Mr Heinrich’s private prosecution.
On 7 June 2002 Mr Heinrich sent to Mr Michael Ullmer, an officer of the Bank, a document which he had entitled “Notice to Admit”, seeking the admission of certain facts concerning receipt of documents from Mr Heinrich. The notice to admit had been issued in respect of Mr Heinrich’s private prosecution.
On 12 June 2002 Mr Burdett received from Mr Heinrich:
•nine volumes of documents said to be related to Mr Heinrich’s private prosecution,
•a summons issued out of the Magistrates Court of South Australia requiring production of documents for the private prosecution,
•an index to the nine volumes of documents,
•another index, and
•three lists of proposed witnesses.
The index to the nine volumes of documents discloses that documents to be relied on at the private prosecution are substantially the same as those produced in the two actions in the Supreme Court and in the applications heard in the Federal Court and in the public examination of Mr Heinrich. On the same day, Mr Heinrich caused nine volumes of documents to be served on Mr Brown, the third plaintiff.
On 20 June 2002 the Bank commenced this action seeking a permanent stay of the private prosecutions and an order prohibiting Mr Heinrich from issuing further proceedings except by leave of this Court.
On 12 June 2002 this application was argued before Mullighan J. Although the plaintiffs wished His Honour to make final orders, Mr Heinrich did not. Mullighan J therefore proceeded on the footing that the application was for interim orders. On 7 August 2002 he made orders staying the prosecution of the private prosecution until further order.
Mr Heinrich has sworn affidavits in answer to the claims made by the plaintiff. The affidavits do not satisfactorily address the issues and contain a substantial volume of irrelevant material. It is neither necessary nor helpful to seek to summarise the contents. It is sufficient to note that Mr Heinrich has filed affidavits in opposition to the plaintiffs’ claims.
A substantial amount of documents and correspondence have been exchanged between the parties. It is unnecessary to summarise them. It will be sufficient to refer later to those which are relevant.
On 4 September 2002 Mr Heinrich commenced an action in the Federal Court of Australia against the Bank applying for an order to annul the sequestration orders made on 6 September 2000 on the ground of alleged new evidence. That is action no. S7015 of 2002.
On 25 October 2002 the Bank responded by issuing an action in the Federal Court seeking an order striking out the annulment application and for an order to have Mr Heinrich declared a vexatious litigant. On 8 November 2002, Mansfield J ordered that that action be heard together with the action no. S7015 of 2002. He listed the hearing for 5 February 2003. There is no evidence as to the outcome of that hearing.
At this stage, there are now three separate informations issued against the Bank, Mr Scott and Mr Brown. None of the informations had been issued with the authority of the Director of Public Prosecutions for the Commonwealth or with the authority of either the Attorney-General, the Director of Public Prosecutions for this State or the Crown Solicitor for this State.
Each information is at an early stage in the committal hearing. Although there are differences between the counts in each of the informations and between the particulars of those counts, all three informations have a common purpose, namely, to controvert the judgment of Nyland J and to seek to coerce Mr Scott into applying s 86 of the Bankruptcy Act 1966 (Cth).
It is readily apparent from this recital of the history of this matter that Mr Heinrich is not willing to comply with either the orders made by Nyland J in this Court or the orders made in the Federal Court of Australia by O’Loughlin J, Mansfield J and by the Full Court of the Federal Court. Although he did not appeal against the judgment of Nyland J, Mr Heinrich sought to controvert it before O’Loughlin J at the hearing in June 2000 of his applications to set aside the first and second bankruptcy notices. O’Loughlin J was not prepared to go behind the judgment of Nyland J. Mr Heinrich did not appeal against the decision of O’Loughlin J. Nevertheless, he has sought to controvert that judgment and the judgment of Nyland J in other ways. I refer again to the applications before Mansfield J, the appeal to the Full Court of the Federal Court and the application for mandamus in the High Court. Between March 2000 and 31 December 2002, Mr Heinrich has instituted at least 15 sets of proceedings seeking to controvert the decisions of Nyland J and O’Loughlin J. Those proceedings include the private prosecutions. In these private prosecutions, Mr Heinrich seeks, among other things, to canvass the judgment of Nyland J. He has admitted that in his public examination on 23 May 2002. The above considerations are relevant to the prosecution of each of the plaintiffs.
Stay for Abuse of Process
It is well established that the Supreme Courts in Australia have inherent jurisdiction to stay proceedings which are an abuse of process: Williams v Spautz (1992) 174 CLR 509 at 518. The jurisdiction to grant a stay has a dual purpose, namely, to prevent an abuse of process or the prosecution of a criminal proceeding which will result in a trial which is unfair: Williams v Spautz (supra). It is important to distinguish between those two purposes when considering whether to exercise the jurisdiction. So in Williams v Spautz at 519, the majority of the High Court said:
“ However, in the light of the particular object sought to be achieved by an exercise of the jurisdiction in each class of case, it is important to distinguish between them. If a permanent stay is sought to prevent the accused from being subjected to an unfair trial, it is only natural that the court should refrain from granting a stay unless it is satisfied that an unfair trial will ensue unless the prosecution is stayed. In other words, the court must be satisfied that there are no other available means, such as directions to be given by the trial judge, of bringing about a fair trial. Jago was such a case. Consequently, the judgments in that case gave emphasis to the necessity that the court should satisfy itself upon this point before granting the relief sought.
If, however, a stay is sought to stop a prosecution which has been instituted and maintained for an improper purpose, it by no means follows that it is necessary, before granting a stay, for the court to satisfy itself in such a case that an unfair trial will ensue unless the prosecution is stopped. There are some policy considerations which support the view that the court should so satisfy itself. It is of fundamental importance that, unless the interests of justice demand it, courts should exercise, rather than refrain from exercising, their jurisdiction, especially their jurisdiction to try persons charged with criminal offences, and that persons charged with such offences should not obtain an immunity from prosecution. It is equally important that freedom of access to the courts should be preserved and that litigation of the principal proceeding, whether it be criminal or civil, should not become a vehicle for abuse of process issues on an application for a stay, unless once again the interests of justice demand it.” [Footnotes omitted.]
In Williams v Spautz at 520, the majority identified two policy considerations which must be taken into account, referring to reasons of Richardson J in Moevao v Department of Labour [1980] 1 NZLR 464 at 481. The majority said:
“The first is that the public interest in the administration of justice requires that the court protect its ability to function as a court of law by ensuring that its processes are used fairly by State and citizen alike. The second is that, unless the court protects its ability so to function in that way, its failure will lead to an erosion of public confidence by reason of concern that the court’s processes may lend themselves to oppression and injustice. As Richardson J. observed, the court grants a permanent stay:
‘in order to prevent the criminal processes from being used for purposes alien to the administration of criminal justice under law. It may intervene in this way if it concludes … that the Court processes are being employed for ulterior purposes or in such a way … as to cause improper vexation and oppression.’ ” [Footnotes omitted.]

The issue in this case is not whether the plaintiffs will be subjected to an unfair trial but whether Mr Heinrich’s private prosecutions have been instituted for an improper purpose. The fact that the plaintiffs might ultimately be acquitted does not mean that the discretion should not be exercised to prevent the abuse. Lord Salmon identified that last factor in these terms in R v Humphrys [1977] AC 1 at 46:
“For a man to be harassed and put to the expense of perhaps a long trial and then given an absolute discharge is hardly from any point of view an effective substitute for the exercise by the court [of its inherent power to prevent abuse of its process].”
On the score of costs alone, the exercise of the power will protect the accused person from expenditure on a trial which he or she cannot recoup: Williams v Spautz at 521.
It is unnecessary to recite all of the principles established in Williams v Spautz. I list those which are relevant to the determination of the application, noting the page at which the principle is stated.
(1)The power of the Court to stay proceedings extends to the prevention of an abuse of process resulting in oppression, even if the moving party has a prima facie case or must be assumed to have a prima facie case: Williams v Spautz at 522.
(2)It is enough to constitute an abuse of process if the proceedings are instituted for an improper purpose. It is not necessary to be able to identify an improper act: Williams v Spautz at 527. So it is an abuse of process when the party commencing the proceedings has previously threatened that, unless the other party complies with some improper demand the first party has made, criminal proceedings will be commenced and prosecuted to a conviction. In such a case, the very commencement of the proceedings amounts to use of them for an improper purpose: Williams v Spautz at 528. See also Brennan J at 533 – 535.
(3)It is not necessary that the improper purpose be the sole purpose of the moving party; it is sufficient if it is the predominant purpose: Williams v Spautz at 529.
(4)The party alleging that the proceeding is an abuse of process carries the onus of proof and the onus is a heavy one: Williams v Spautz at 529.
The plaintiffs seek to interfere with the course of the preliminary hearing of each information. This Court has jurisdiction to make orders of the kind sought by the plaintiffs. It is well settled that courts will be slow to interfere with committal proceedings. Although the Court has jurisdiction, there are factors which must be considered when deciding whether in the exercise of its discretion the Court should make the order. The factors affecting the exercise of a discretion when a declaration is sought on an issue in the committal proceedings were identified by Gibbs ACJ in Sankey v Whitlam (1978) 142 CLR 1 at 25 and reiterated by King CJ in The Queen v Kelly; ex parte Hoang Van Duong (1981) 28 SASR 271 at 274 – 275 and in The Queen v Harry; ex parte Eastway (1985) 39 SASR 203 at 212 – 213. Those decisions establish that the power will be exercised in exceptional circumstances only. There is an interesting question as to the extent to which the principle applies in relation to a stay sought on the ground of an abuse of process. The matter was not argued. The decision in Williams v Spautz concerned a committal hearing and it was not suggested that a stay for abuse of process would only be granted in exceptional circumstances. Indeed, the principles stated by the High Court as to the care with which a court must determine whether the alleged abuse of process exists suggests that it is not necessary to establish exceptional circumstances for a stay where an abuse of process exists. It is unnecessary to examine the issue closely as I will approach the issues in this case on the footing that the power to stay committal proceedings will be exercised in exceptional circumstances only.
Does An Improper Purpose Exist?
As already mentioned, the information against the Bank seeks to controvert the judgment of Nyland J. It is unnecessary to repeat all that has been said earlier in these reasons.
In respect of the information charging Messrs Scott and Brown with offences against the Crimes Act, there is a substantial body of clear and unequivocal evidence of an improper purpose on the part of Mr Heinrich. That improper purpose is to seek to persuade Mr Scott directly and indirectly through his solicitor, Mr Brown, to act in the administration of the bankruptcy in a way that suits the private purposes of Mr Heinrich, which is that Mr Scott should arrange a set-off under s 86 of the Bankruptcy Act. Mr Heinrich’s purpose is to seek to coerce Mr Scott to utilise the powers in s 86 of the Bankruptcy Act. Mr Scott has refused a number of requests by Mr Heinrich to do so. Since at least 27 September 2000, Mr Heinrich has been misguidedly attempting to persuade Mr Scott to utilise s 86 and make a set-off. Mr Scott has not acceded to these requests. On a number of occasions thereafter, Mr Heinrich has threatened that, if Mr Scott and Mr Brown do not accede to his requests, he will commence proceedings under s 43 and s 44 of the Crimes Act. It is sufficient to refer to
• a letter dated 2 November 2001 from Mr Heinrich to Mr Scott,
• a letter dated 26 November 2001 from Mr Heinrich to Mr Scott,
•a document prepared by Mr Heinrich and dated 16 December 2001 entitled “Declaration to Disavow and Declaration of Corruption” addressed to the Chief Magistrate of the Federal Magistrates Court in Adelaide, to Mr Brown and to Mr Scott, and
•a document prepared by Mr Heinrich and dated 11 January 2002 entitled “Declaration of Further Prejudice and Corruption against the Defendants by Officers of this Court” which was addressed to the Chief Magistrate of the Federal Magistrates Court in Adelaide, to the Registrar of the Federal Magistrates Court, to Mr Brown and to Mr Scott.
Each contains an express threat to commence proceedings under the Crimes Act if Mr Scott and Mr Brown do not act pursuant to s 86.
If any further evidence is required of Mr Heinrich’s purpose, it exists in answers he has made in the course of his public examination on two separate occasions. On 23 January 2002, in the course of his public examination, he unequivocally stated that, if Mr Scott were to apply s 86, he would withdraw the summons he had issued. On 23 May 2002, again in the course of a public examination, he acknowledged the threats he had made in the documents listed above and his intention to issue the criminal proceedings if Mr Scott did not comply with his request.
I earlier used the adverb “misguidedly” to describe Mr Heinrich’s conduct in seeking to require Mr Scott to apply s 86 of the Bankruptcy Act. The question whether there are circumstances which justify utilising s 86 is a matter to be addressed when the administration of the bankruptcy is more advanced and Mr Scott as trustee has called for proof of debts. Mr Heinrich’s conduct has prevented the administration proceeding to that stage. By his own actions, Mr Heinrich has prevented Mr Scott from being in a position to call for proof of debts. Mr Heinrich’s efforts to rely on s 86 at this stage are therefore as premature as they are misconceived. Added emphasis is given to the fact that any consideration of s 86 is premature because Mr Heinrich has so far refused to file a statement of affairs. I accept Mr Scott’s evidence that he has been unable to proceed promptly and efficiently with the administration of the bankruptcy because of Mr Heinrich’s unwillingness to co-operate. I find that Mr Heinrich has in fact done all he can to obstruct the administration of the bankruptcy.
If Mr Heinrich has concerns as to the manner in which Mr Scott as trustee is administering his estate, Mr Heinrich may make an application under s 178 or s 179 of the Bankruptcy Act. Mr Heinrich is seeking to use the criminal proceedings to achieve remedies which would more appropriately be enforced under s 178 or s 179. However, I do not decide the matter on the ground that s 178 and s 179 are the more appropriate means of seeking redress.
In the result, an examination of the documents leads compellingly to the clear inference that Mr Heinrich’s purpose is an improper one, namely, to seek to persuade Mr Scott both directly and through his solicitor, Mr Brown, to utilise s 86 of the Bankruptcy Act in a way which Mr Scott was not prepared to adopt. The issue is put beyond doubt by Mr Heinrich’s evidence at his public examination.
The impropriety of Mr Heinrich’s purpose is made even more apparent by reason of the fact that Mr Heinrich’s counsel in the Full Court of the Federal Court expressly stated that Mr Heinrich was seeking an account of all mutual dealings pursuant to s 86 between himself and the Bank for the purpose of establishing that the judgment of Nyland J is wrong. Mr Heinrich persists in seeking to rely on s 86, notwithstanding that he was quite clearly informed by Branson J when giving the reasons of the Full Court of the Federal Court of the purpose and operation of s 86 and the time when it is appropriate to apply it. Mr Heinrich is not willing to heed the advice he received in the judgment of the Full Court of the Federal Court. Instead, he insists on relying on s 86.
Each of the plaintiffs has clearly discharged the heavy onus of proof they bear. The evidence as to the threats made against Mr Scott and Mr Brown is, I think, relevant to the Bank’s application. Mr Heinrich has the clear purpose of seeking to controvert the findings and orders made by Nyland J. In addition, he seeks to coerce Mr Scott in the way identified above. He has issued the information because Mr Scott and Mr Brown refuse to comply with his improper demands to apply s 86. I am satisfied that these are his predominant motives. I am satisfied that it is appropriate to stay each of the criminal proceedings.
There are other routes by which a court could arrive at the same conclusion. The reasons why the criminal proceedings should be stayed are compelling. I have not addressed all of the arguments which would justify the order. The conduct by Mr Heinrich constitutes an appalling abuse of process.
A Vexatious Litigant?
The plaintiffs applied pursuant to s 39(1) of the Supreme Court Act 1935 for an order prohibiting Mr Heinrich from instituting further proceedings except by leave of the Court. Section 39(1) provides:
“ 39 (1) If, on the application of the Attorney-General or any other interested person, the court is satisfied that a person has persistently instituted vexatious proceedings, the court may make either or both of the following orders:
(a)an order prohibiting the person by whom the vexatious proceedings were instituted from instituting further proceedings, or further proceedings of a particular class, without leave of the court;
(b)an order staying proceedings already instituted by that person.”
In s 39, “proceedings” means both criminal and civil proceedings whether instituted in the Supreme Court or in any other court of the State: s 39(6). Subsection (5) defines “vexatious proceedings” in these terms:
“ (5) For the purposes of this section, proceedings are vexatious–
(a)if instituted to harass or annoy, to cause delay, or for any other ulterior purpose;
or
(b)if instituted without reasonable ground.”
Thus, the matters upon which the court must be satisfied before it makes an order under s 39(1) are that the applicant has standing and that the respondent has persistently instituted proceedings for the purposes of harassing or annoying or causing delay or for any other ulterior purpose or without reasonable ground. An order made pursuant to s 39 is an extreme remedy. It is a remedy which must be applied having regard at all times to the fundamental principle that a person should in the ordinary course have a right of access to the courts: Ramsey v Skyring (1999) 164 ALR 378.
Section 39 envisages a two-stage process. The applicant must first satisfy the Court that the respondent has persistently instituted proceedings which are vexatious within the meaning of s 39(5). The Court must then consider whether or not, in all the circumstances, it is proper to exercise its discretion in favour of making the order sought: Attorney-General for the State of South Australia v Burke (1997) 190 LSJS 28 at 33.
The words “without reasonable ground” should be given their ordinary meaning in determining their application in a particular case. It is relevant to have regard to the whole history of the matter. That will assist in determining whether the respondent has persistently instituted proceedings for the purpose of re-agitating questions which have already been determined: Attorney-General for the State of South Australia v Burke (supra) at 35.
I respectfully agree with Perry J in Attorney-General for the State of South Australia v Burke (supra) at 35 that, when determining whether proceedings are vexatious, the court must be careful to allow for the fact that a party has acted on his own behalf and without the benefit of legal advice or representation. One must be careful to ensure that, buried within the papers, there is not some arguable point.
I make all proper allowances for the fact that Mr Heinrich has in recent years acted on a number of occasions without legal representation. However, on at least four occasions he has been represented by counsel, namely, in the Supreme Court before Nyland J, in the Full Court of the Federal Court, in February 2003 before Mansfield J in the Federal Court, and on this application.
It is apparent from the facts recited above Mr Heinrich does not intend to comply with the order of Nyland J, notwithstanding that he did not appeal against her judgment. He has issued at least five substantive applications in the Federal Court and High Court to seek to controvert Her Honour’s findings or in some other way to re-agitate or controvert the issues in that action, including the issue whether the Bank has any indebtedness to him. He has issued a number of complaints and informations which together number eight separate criminal proceedings. In all of them he seeks, in one way or another, to re-agitate the same issues over and over again.
I am satisfied that the plaintiffs have standing. The intent of the Bank, Mr Scott and Mr Brown, is to proceed with the administration of the bankruptcy but they are being delayed and frustrated in that process by the proceedings which Mr Heinrich has instituted since the sequestration order was made. They are defendants in the criminal proceedings instituted by the applicant. They have a manifest interest in seeking to enforce the orders made by Nyland J and to proceed with the proper administration of Mr Heinrich’s bankruptcy.
For the reasons given in respect of the application for a permanent stay, I am satisfied that Mr Heinrich has issued all proceedings, including the criminal proceedings for an ulterior purpose which is also an improper purpose. For those reasons, I am satisfied that all of the proceedings issued by Mr Heinrich since the sequestration order had been made have been instituted to harass and annoy the Bank, Mr Scott and Mr Brown, and to cause delay to the administration of the bankruptcy of Mr Heinrich. It is, therefore, unnecessary to determine whether the proceedings have been instituted without reasonable ground. It follows that I am satisfied that Mr Heinrich has persistently instituted vexatious proceedings.
It will have been noticed that s 39(1)(b) authorises the court, if satisfied that a person has persistently instituted vexatious proceedings, to stay those proceedings. The plaintiffs have not founded their application on s 39(1)(b). I therefore simply note that I am satisfied that the informations issued by Mr Heinrich are vexatious and that I would have stayed the information on that ground also had the plaintiffs made such an application.
I must now consider whether, in the exercise of my discretion, it is proper to make an order that Mr Heinrich be prohibited from instituting further proceedings except by leave. I have no doubt that such an order should be made. Mr Heinrich’s conduct at least since Nyland J delivered her judgment, his correspondence with the plaintiffs, the other documents he has delivered to the plaintiffs and the numerous substantive proceedings, both criminal and civil which he has instituted, compel the conclusion that he will continue to initiate proceedings for so long as he can do so in an attempt to controvert the judgment of Nyland J and to delay the administration of the bankruptcy. The position of the plaintiffs reminded me of the labours of Hercules and, in particular, with his struggle with the Hydra. As soon as one proceeding is terminated, at least two others take their place. It is time to apply a cautery. That cautery must be an order under s 39(1).
For these reasons, I will also make an order pursuant to s 39(1) of the Supreme Court Act that Mr Heinrich be prohibited from instituting any further proceedings in this Court or in any other court in this State without leave of this Court.
Conclusion
For these reasons, there will be orders staying each of the informations permanently and prohibiting Mr Heinrich from instituting any further proceedings in this Court or in any other court in this State without the leave of this Court.

[2003] SASC 322

12 September 2003

Key Legal Topics

Areas of Law

Civil Litigation & Procedure

Legal Concepts

Stay of Proceedings

Injunction

Costs