Commonwealth Bank of Australia v Stephen Glenn Heinrich No. Scciv-93-1648

[2003] SASC 425

COMMONWEALTH BANK OF AUSTRALIA v

STEPHEN GLENN HEINRICH
[2003] SASC 425

Civil

1. DEBELLE J           After hearing a trial of this action, Nyland J made orders on 24 February 2000 upholding the claims of the plaintiff, the Commonwealth Bank of Australia, against the defendant, Mr Heinrich, and dismissed a counterclaim by Mr Heinrich.  Her Honour ordered Mr Heinrich to pay the Bank the sum of $673,358.81 plus interest and further ordered Mr Heinrich to pay the Bank’s costs.  Mr Heinrich did not appeal against the decision of Nyland J.

2. The judgment debt remains unpaid.  It is unnecessary, for the purposes of this application, to recite all the steps taken in other proceedings in which Mr Heinrich is a party relating to payment of the judgment debt.  It is sufficient to note that on 6 September 2000, a sequestration order was made in the Federal Court and Mr Heinrich was declared bankrupt.  Mr A G Scott was appointed trustee in bankruptcy.  Mr Heinrich appealed against the sequestration order but on 28 May 2001 the Full Court of the Federal Court dismissed the appeal.  Mr Heinrich is, therefore, an undischarged bankrupt.

3. On 27 July 2003 Mr Heinrich made an application in this action for leave to adduce fresh evidence in this action.  Although not expressly stated in the application, it seems that Mr Heinrich seeks to have the judgment set aside on the grounds of fraud and on other grounds recited in the application.  It also appears that he seeks to re-open the hearing.  It is common ground that the trustee in bankruptcy of Mr Heinrich’s estate has not consented to the application.

4. An attempt was made by the court to list the hearing of Mr Heinrich’s application in November.  However, 9 December was the first day for hearing which was convenient for Mr Heinrich.

5. Although there are real limits upon the capacity of a bankrupt to commence legal proceedings, it is open to a bankrupt to apply to a Bankruptcy Court for leave to contest the validity of the petitioning creditor’s judgment on the ground of fraud, collusion, or for any other sufficient reason: In re Flatau; Ex parte Scotch Whisky Distillers, Limited (1888) 22 QBD 83. However, that is the only means by which a bankrupt can contest a judgment. He cannot contest it in any other court on the ground of fraud or on any other ground: Boaler v Power [1910] 2 KB 229 at 232 – 233. Further, pursuant to s 153B of the Bankruptcy Act 1966 (Cth), a Bankruptcy Court may set aside the sequestration order if satisfied that it ought not to have been made.

6. The Federal Court and the Federal Magistrates Court have exclusive jurisdiction in bankruptcy, save for the jurisdiction of the High Court under s 75 of the Constitution: s 27 of the Bankruptcy Act.  If Mr Heinrich seeks to adduce fresh evidence and re-open the judgment of Nyland J he must, therefore, obtain leave from the Federal Court.  It is not competent for this Court to grant leave.  Mr Heinrich’s application to this Court is, therefore, incompetent.  Expressed another way, this Court is bound by reason of the terms of s 27 to dismiss Mr Heinrich’s application.

7. For these reasons, Mr Heinrich’s application is dismissed.  Mr Heinrich must pay the costs of the Commonwealth Bank.