FEDERAL COURT OF AUSTRALIA
Garrett v Cahill [2015] FCA 314
Citation: Garrett v Cahill [2015] FCA 314 Appeal from: Garrett v Cahill [2015] FCCA 26 Parties: ANDREW MORTON GARRETT v FRANCIS MICHAEL CAHILL File number: VID 49 of 2015 Judge: BEACH J Date of judgment: 31 March 2015 Catchwords: BANKRUPTCY AND INSOLVENCY – appeal from decision of the Federal Circuit Court dismissing application to set aside bankruptcy notice – alleged cross-claims against creditor – s 40(1)(g) of the Bankruptcy Act 1966 (Cth) – alleged denial of procedural fairness by failure to adjourn – application to adduce new evidence granted – no error of law or fact – appeal dismissed Legislation: Bankruptcy Act 1966 (Cth) ss 30(1), 33(1), 40(1)(g), 41(6A), 41(7), 52(2)(b)
Federal Court of Australia Act 1976 (Cth) ss 25(1AA)(a), 27, 37AO, 37ARCases cited: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175
Ebert v Union Trustee Co of Australia Ltd (1960) 104 CLR 346
Endresz v Australian Securities and Investments Commission (No 2) [2015] FCAFC 33
Garrett v Commissioner of Taxation [2015] FCA 117
Guss v Johnstone (2000) 171 ALR 598
House v The King (1936) 55 CLR 499
James v Abrahams (1981) 34 ALR 657
Luck v University of Southern Queensland [2015] FCA 286
Re Glew; Glew v Harrowell of Hunt & Hunt Lawyers (2003) 198 ALR 331
Re Gould; ex parte Skinner (1983) 72 FLR 393
Sali v SPC Ltd (1993) 116 ALR 625
Stratton v Bowles (No 2) [2015] FCA 43
Stec v Orfanos [1999] FCA 457Date of hearing: 27 and 31 March 2015 Date of last submissions: 29 March 2015 Place: Melbourne Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 68 Counsel for the Appellant: The Appellant appeared in person Solicitor for the Respondent: Mr S Byrne (sole practitioner)
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 49 of 2015
ON APPEAL FROM THE FEDERAL CIRCUIT COURT OF AUSTRALIA
BETWEEN: ANDREW MORTON GARRETT
AppellantAND: FRANCIS MICHAEL CAHILL
Respondent
JUDGE:
BEACH J
DATE OF ORDER:
31 MARCH 2015
WHERE MADE:
MELBOURNE
THE COURT ORDERS THAT:
1.The appeal be dismissed.
2.The appellant is to pay the respondent's costs of and incidental to the appeal to be fixed in the amount of $5,500.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
VID 49 of 2015
ON APPEAL FROM THE FEDERAL CIRCUIT COURT OF AUSTRALIA
BETWEEN: ANDREW MORTON GARRETT
AppellantAND: FRANCIS MICHAEL CAHILL
Respondent
JUDGE:
BEACH J
DATE:
31 MARCH 2015
PLACE:
MELBOURNE
REASONS FOR JUDGMENT
The appellant has appealed a decision of Judge Burchardt of the Federal Circuit Court of Australia wherein his Honour on 19 January 2015 dismissed the appellant’s application filed on 11 August 2014 to set aside a bankruptcy notice served on him on 24 July 2014 that had been caused to be issued by the respondent. The power to set aside such…
Continue reading Garrett v Cahill
Sign in free to access the full text
Details
- AGLC
- Garrett v Cahill [2015] FCA 314
- Case
- [2015] FCA 314
- Decision Date
CaseChat Overview and Summary
The case of Garrett v Cahill involves an appeal by Garrett against a decision of the Federal Circuit Court, which dismissed his application to set aside a bankruptcy notice. Garrett's appeal contends that the Federal Circuit Court erred by failing to adjourn the hearing to allow him to adduce new evidence and by denying him procedural fairness. The primary dispute revolves around the validity of the bankruptcy notice issued against Garrett, with the respondent, Cahill, asserting that Garrett owes a substantial debt arising from a professional relationship between them. Garrett, on the other hand, argues that the debt is either extinguished or offset by various alleged cross-claims and debts.
The legal issues before the court pertain to whether the Federal Circuit Court correctly dismissed the appeal and whether there was an error in not allowing the introduction of new evidence. Specifically, the court had to determine if the trial judge's decision was vitiated by any procedural unfairness and whether the new evidence presented could have altered the outcome of the case. Furthermore, the court needed to assess whether there was any error in law or fact that warranted the appeal's success.
The court found that the trial judge's decision was correct and that there was no procedural unfairness in dismissing the application to set aside the bankruptcy notice. The court held that the appellant had not demonstrated any material error in the trial judge's determination, even when considering the new evidence. The court also noted the appellant's tendency to file voluminous and largely irrelevant material in multiple proceedings, which had caused significant inconvenience to the court and its registry. While the court did not impose a formal order restricting the appellant's filing methods, it warned that such an order might be made if the behaviour persisted. The court ultimately dismissed the appeal and ordered the appellant to pay the respondent's costs of the appeal.
The legal issues before the court pertain to whether the Federal Circuit Court correctly dismissed the appeal and whether there was an error in not allowing the introduction of new evidence. Specifically, the court had to determine if the trial judge's decision was vitiated by any procedural unfairness and whether the new evidence presented could have altered the outcome of the case. Furthermore, the court needed to assess whether there was any error in law or fact that warranted the appeal's success.
The court found that the trial judge's decision was correct and that there was no procedural unfairness in dismissing the application to set aside the bankruptcy notice. The court held that the appellant had not demonstrated any material error in the trial judge's determination, even when considering the new evidence. The court also noted the appellant's tendency to file voluminous and largely irrelevant material in multiple proceedings, which had caused significant inconvenience to the court and its registry. While the court did not impose a formal order restricting the appellant's filing methods, it warned that such an order might be made if the behaviour persisted. The court ultimately dismissed the appeal and ordered the appellant to pay the respondent's costs of the appeal.
Orders
Orders of the court
1. The appeal be dismissed.
2. The appellant is to pay the respondent's costs of and incidental to the appeal to be fixed in the amount of $5,500.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
On 26 March 2015, I raised with the appellant that I might make an order pursuant to s 37AO(2)(c) ancillary to the order made by Pagone J on 26 February 2015, such that the appellant be prevented from filing any further material in this Court and in the Registry of this Court otherwise than by post. I will return to this matter later.(b) Evidence before Judge Burchardt The evidence filed by the appellant that was before his Honour consisted of two affidavits, being an affidavit sworn on 11 August 2014 and a second affidavit wrongly dated 11 August 2014, but sworn on 20 October 2014. The affidavit contained various assertions concerning HC Legal Pty Ltd (in liquidation) (HCL) previously trading as Hambros & Cahill Lawyers. HCL was registered as an incorporated practice. Peter Hambros and the respondent were joint legal practitioner directors. The respondent in opposition filed an affidavit sworn by him on 24 October 2014. In the respondent’s affidavit, some useful background was set out at [8] and [13] to [27] in the following terms: 8.Garrett has made a number of claims and allegations against me in his affidavits made 11 August 2014 and 20 October 2014 and filed in this proceeding. I deny those claims and state that I do not owe him any money in my personal capacity. After reading Garrett's affidavit, it appears to me that Garrett is seeking to set off the amount owed to me under the Bankruptcy Notice against:a.an alleged debt owed by me to him in his capacity as a purported controller of property of HCL (the validity of his appointment as a company controller will be addressed below);b. alleged debts owed to him by HCL, a company:i.that was wound up by order the Federal Circuit Court on 26 April 2013; andii. of which I was a joint director with Mr Peter Hambros; andc. an alleged debt owed to him by me and Mr Hambros jointly.…HC Legal Pty Ltd (in liq) trading as Hambros & Cahill Lawyers 13.On or about 12 October 2005, HCL was registered as an incorporated practice trading as Hambros & Cahill Lawyers. Both Mr Peter Hambros and I were joint legal practitioner directors of HCL.14.On or about 4 April 2013, HCL ceased trading as a result of a falling out between the joint directors of HCL.15.On 26 April 2013, HCL was wound up as a result of an application filed by the Deputy Commissioner of Taxation for the winding up of the company. Mr Wayne Lamb of Worrells was appointed Liquidator. Retainers between HCL and Garrett16.Between August 2011 and September 2012, the Garrett Entities retained HCL to act on their behalf in several matters. Mr Hambros, who specialises in commercial law, had the care and conduct of most of Garrett Entities' commercial matters.17.During the retainer, HCL provided legal services to the Garrett Entities and duly issued tax invoices for these services. 18.Most of these tax invoices were duly paid to HCL by the Garrett Entities in tranches of payment amounting to a total of $310,000.19.For the entirety of HCL's retainer with Garrett, he had only ever paid for work in arrears and never in advance. Garrett has erroneously maintained in his affidavits filed in this proceeding that the payments amounting to $310,000 was paid to be held in trust for works to be undertaken by the firm, which is incorrect.20.In Garrett's affidavits, he made references to the sum of $400,000. I believe that this figure comprises of the $310,000 that was paid to HCL for the provision of legal services as outlined above and another payment made to HCL by the Garrett Entities on or about 6 April 2012 for the sum of $90,000. This payment was made pursuant to a settlement that one of the Garrett Entities, Sanctuary Australasia Pty Ltd, entered into with another party in a Supreme Court proceeding. Despite specific advice to Garrett to pay the sum of $90,000 directly to that party with a bank cheque, Garrett on his own accord caused Sanctuary Australasia Pty Ltd to deposit the money into the operating account of HCL. As a result of the money being placed in the operating account, there was no time for it to be moved into the trust account prior to settlement. Consequently, the money was withdrawn on the same day it was deposited and transferred to that other party immediately to satisfy the terms of settlement.21.Neither Garrett nor the Garrett Entities have paid anything to me personally at all material times.Legal Services Commissioner – Complaint lodged by Garrett22.Subsequent to the termination of the retainers, on or about 19 November 2012, the Garrett Entities made a complaint to the LSC against me, Peter Hambros and HCL, alleging that HCL had failed to account for the sum of $400,000 that they paid and requesting a proper accounting of the payments made.23.Although the complaint was also addressed to Mr Hambros, it does not appear that Mr Hambros had at any stage assisted the LSC with its investigation. This is notwithstanding that he acted predominantly in the Garrett Entities' matters. Due to the acrimonious falling out with Mr Hambros, I was unable to contact him to obtain information to assist the LSC with its investigation.24.Despite that, I assisted the LSC with its investigation to the best of my ability. Specifically, I advised them that:a.Garrett 's allegation that the money he paid to HCL was trust money is misconceived.b.It is inherently implausible for the Garrett Entities to assert that the payment was made to HCL by way of provision in respect of legal work to be undertaken when, prior to him making the payment, a substantial amount of legal work had already been undertaken by HCL for which tax invoices were issued by HCL to the Garrett Entities.25. I believe that Garrett has also made a claim against the Fidelity Fund.26.On 31 March 2014, the LSC made a decision dismissing the complaint against me on the basis that the payment of the $400,000 was properly accounted for and that Commissioner was not satisfied that there was a reasonable likelihood that the VCAT would find me guilty of professional misconduct or unsatisfactory professional conduct. 27.On 17 September 2014, the LSC wrote to me and advised me that:a."an aspect of the above complaint was not properly investigated [by the LSC]. That aspect relates to the payment of $5,000 allegedly made by Holy Grail Hospitality Pty Ltd'';b."the investigation of this aspect is re-opened”;and requested that I provide further explanation to them specifically about this payment of $5,000.
Decision
Reasons for decision
Finally, grounds 1, 2 and 5 have no additional meaningful content beyond what I have dealt with in detail concerning ground 4. For completeness, grounds 4a, 4i and 4j are misconceived; grounds 4b, 4c and 4d were not made out on the material before his Honour; the trust assertions set out in grounds 4e, 4f, 4g and 4h were not made out on any material that was before his Honour; moreover, even if such points were good, they hardly overcame the mutuality issue discussed earlier; ground 4k was not made out, but in any event would not overcome the mutuality problem; relatedly, the assertion in ground 4m was not made out; as for ground 4l, his Honour’s findings at [25] and [52] concerning the illusory nature of the “Vendor Finance Loans” have not been impugned, but in any event would not overcome the mutuality problem.(d) Conclusion The appellant has not challenged the costs order the subject of the bankruptcy notice. Further, the appellant has not paid the sum demanded. As to s 40(1)(g), the appellant has not demonstrated any error in his Honour’s determination, whether on the material before his Honour or on or including the “new” evidence. The appellant’s appeal will be dismissed with costs.(e) Other matters This is the fourth proceeding that I have dealt with involving the appellant. In the four proceedings that have been before me, the appellant has filed, without discernment or restraint, voluminous material, most of which has been irrelevant to the precise issues that needed to be considered. The Court and the Registry have been flooded with such extraneous material. The following statistics of the material filed or sought to be filed in the four proceedings that have been before me exemplify the point: I raised with the appellant at the hearing on 27 March 2015 my intention to consider making an order that any future filings of the appellant be by post with, accordingly, no electronic filings or filings by physical attendance at the Registry permitted. Such an order would be likely to stem the tide of what the appellant has inappropriately sought to file electronically. It would also reduce the time taken by the Registry staff of this Court to deal with his physical attendances and ameliorate other issues. I am entitled to make such an order under s 37AO(2)(c) of the FCA Act. I gave the appellant the opportunity to address me on whether I should make such an order. But after hearing from the appellant on 31 March 2015 and indicating with some emphasis my concern about the volume of largely irrelevant material that he has filed in this and other proceedings, in all the circumstances I have decided not to make such an order at present. But the appellant is on notice that if he persists with such conduct, such an order is likely to be made in other proceedings.
Ratio Decidendi
Legal Principle Established
Full text does not contain this section.