George v Fletcher (Trustee)
[2012] FCAFC 148
•25 October 2012
FEDERAL COURT OF AUSTRALIA
George v Fletcher (Trustee) [2012] FCAFC 148
Citation: George v Fletcher (Trustee) [2012] FCAFC 148 Appeal from: Fletcher v George & Ors [2011] FMCA 553 Parties: LAUREN KAY GEORGE v WILLIAM JOHN FLETCHER AS TRUSTEE FOR THE BANKRUPT ESTATE OF LAUREN KAY GEORGE, DR PETER IRONSIDE PTY LTD (ACN 008 126 387), PETER DOUGLAS IRONSIDE AND NATIONAL AUSTRALIA BANK File number: QUD 192 of 2011 Judges: SIOPIS, JESSUP & KATZMANN JJ Date of judgment: 25 October 2012 Catchwords: COURTS AND JUDGES – Procedural fairness – bias – apprehended bias – association – prejudgment – adverse credit finding in earlier judgment – waiver
COURTS AND JUDGES – Procedural fairness – judicial intervention in the conduct of proceeding – whether judicial questioning of witnesses excessive – pejorative and inappropriate comments by federal magistrate – limits on one party’s rights to issue subpoenas and cross-examine witnesses
BANKRUPTCY AND INSOLVENCY – whether federal magistrate erred in finding that certain property was not held by the bankrupt on trust for her son – whether federal magistrate erred in treating certain chattels as having been returned to the bankrupt – failure to undertake necessary inquiry under Bankruptcy Regulations (Cth)
TRUSTS AND TRUSTEES – matters relating to registration and evidence in writing of purported trust – whether notation on reprints of the Trusts Act evidenced purported trust
PRACTICE AND PROCEDURE – Consent orders giving effect to a compromise between parties – whether it was open to federal magistrate to make an order inconsistent with consent orders
Legislation: Bankruptcy Act 1966 (Cth) ss 58, 78, 116(1), 116(2)
Bankruptcy Regulations 1966 (Cth) reg 6.03
Evidence Act 1995 (Cth) ss 37,42, 102, 135
Federal Magistrates Act 1999 (Cth) ss 42, 45, 62, 63
Federal Magistrates Court Rules 2001 (Cth) rr 14.02,14.04Property Law Act 1974 (Qld) s 11(1), 200(1)
Cases cited: Aardvark Security Services Pty Ltd v Ruszkowski (1993) 13 NSWCCR 1
Anderson v National Australia Bank [2007] VSCA 172
Angaston and District Hospital v Thamm (1987) 47 SASR 177
Aussie Airlines Pty Ltd v Australian Airlines Pty Ltd (1996) 65 FCR 215
Australian National Industries Ltd v Spedley Securities Ltd (in liq) (1992) 26 NSWLR 411
Budd v Kambah Tea Tree Plantations Pty Ltd [2001] NSWCA 180
Clampett v Attorney-General of the Commonwealth (2009) 181 FCR 473
Concrete Pty Ltd v Parramatta Design & Developments (2006) 229 CLR 577
Cordes v Dr Peter Ironside Pty Ltd & Ors (2009) 231 FLR 32
Cordes v Dr Peter Ironside Pty Ltd [2010] 2 Qd R 235
Damjanovic v Sharpe Hume & Co [2001] NSWCA 407
Duong v Tran [2010] NSWCA 280
Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337
Edwards v Allmen Engineering Pty Ltd [1995] NSWCA 138
Fletcher v George & Ors (No. 6) [2009] FMCA 69
Fletcher v George & Ors (No. 7) [2010] FMCA 541
Fletcher v George & Ors (No. 8) [2010] FMCA 542
Fletcher v George & Ors [2011] FMCA 553
Fletcher v George(No. 2) [2008] FMCA 1625
Fletcher v George(No. 3) [2008] FMCA 1626
Fletcher v George (No. 4) [2008] FMCA 1627
Fletcher v George [2008] FMCA 1624
Fox v Percy (2003) 214 CLR 118
Galea v Galea (1990) 19 NSWLR 263
George v Fletcher (Trustee) (No 2) [2010] FCA 655
George v Fletcher (Trustee) (No 2) [2010] FCAFC 71
George v Fletcher (Trustee) [2008] FCA 1848
George v Fletcher(Trustee) [2010] FCAFC 53
Government Insurance Office of New South Wales v Bailey (1992) 27 NSWLR 304
Harvey v Phillips (1956) 95 CLR 235
Johnson v Johnson (2000) 201 CLR 488
Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70
Ley v R. De W. Kennedy (Finance) Pty Ltd (unreported, New South Wales Court of Appeal, Moffitt P, Reynolds and Mahoney JJA, 21 May 1975)
Livesey v NSW Bar Association (1983) 151 CLR 288
Loveridge v Emery [2011] FamCAFC 226
Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427
Minister for Immigration and Multicultural Affairs v Jia (2001) 205 CLR 507Preston v Carmody (1993) 44 FCR 1
R v Watson; Ex parte Armstrong (1976) 136 CLR 248
Sali v SPC Ltd (1993) 116 ALR 625
Smits v Roach (2006) 227 CLR 423
Southern Equities Corporation Ltd (in liq) v Bond (2000) 78 SASR 339
Spies v Commonwealth Bank of Australia (1991) 24 NSWLR 691
Vakauta v Kelly (1989) 167 CLR 568
Wentworth v Rogers (No 12) (1987) 9 NSWLR 400Date of hearing: 28 and 29 February, 1 and 2 March 2012 Place: Adelaide (via video link to Brisbane) Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 355 Counsel for the Appellant: The appellant appeared in person. Counsel for the First Respondent: Mr C Coulsen Solicitor for the First Respondent: Holman Webb Lawyers Counsel for the Second & Third Respondents: Mr R M Galloway Solicitor for the Second & Third Respondents: Bell Dixon Butler Lawyers Counsel for the Fourth Respondent: Mr D J Morgan Solicitor for the Fourth Respondent: Thynne & Macartney
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
QUD 192 of 2011
ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA
BETWEEN: LAUREN KAY GEORGE
AppellantAND: WILLIAM JOHN FLETCHER AS TRUSTEE FOR THE BANKRUPT ESTATE OF LAUREN KAY GEORGE
First RespondentDR PETER IRONSIDE PTY LTD (ACN 008 126 387)
Second RespondentPETER DOUGLAS IRONSIDE
Third RespondentNATIONAL AUSTRALIA BANK
Fourth Respondent
JUDGES:
SIOPIS, JESSUP & KATZMANN JJ
DATE OF ORDER:
25 OCTOBER 2012
WHERE MADE:
ADELAIDE (VIA VIDEO LINK TO BRISBANE)
THE COURT ORDERS THAT:
1.The appeal be allowed in part.
2.The proceeding be remitted to the Federal Magistrates Court of Australia for the purpose of determining which, if any, of the chattels removed from the appellant’s house by the first respondent was or were not property divisible amongst the creditors of the appellant pursuant to the provisions of s 116(2)(b)(i) of the Bankruptcy Act 1966 (Cth) and reg 6.03 of the Bankruptcy Regulations 1996 (Cth), and of making any consequential orders.
3.The appeal otherwise be dismissed.
4.The appellant pay the costs of the second, third and fourth respondents.
5.The appellant pay 90% of the costs of the first respondent.
6.The operation of the previous order be stayed for 14 days and, if an application be made pursuant to the following order, thereafter until the determination of that application.
7.The appellant and the first respondent have leave to apply for a variation of Order 5 above by filing and serving, within 14 days, submissions, not exceeding five pages in length (including any attachments and any documents incorporated by reference) setting out the terms of the variation sought and a statement of the reasons why it should be made. In the event that any such submissions are made by either such party, the other party may, within a further 14 days, file and serve submissions, also not exceeding five pages in length (including any attachments and any documents incorporated by reference), in response. In the event that any such submissions in response are made, the first party may, within a further seven days, file and serve submissions, not exceeding two pages in length (including any attachments and any documents incorporated by reference), in reply.
Note:Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
QUD 192 of 2011
ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA
BETWEEN: LAUREN KAY GEORGE
AppellantAND: WILLIAM JOHN FLETCHER AS TRUSTEE FOR THE BANKRUPT ESTATE OF LAUREN KAY GEORGE
First RespondentDR PETER IRONSIDE PTY LTD (ACN 008 126 387)
Second RespondentPETER DOUGLAS IRONSIDE
Third RespondentNATIONAL AUSTRALIA BANK
Fourth Respondent
JUDGES:
SIOPIS, JESSUP & KATZMANN JJ
DATE:
25 OCTOBER 2012
PLACE:
ADELAIDE (VIA VIDEO LINK TO BRISBANE)
TABLE OF CONTENTS
INTRODUCTION........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... [1] FACTUAL BACKGROUND........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. [6] THE ALLEGATIONS CONCERNING THE TRUST........ ........ ........ ........ ........ ........ ... [21] THE COURSE OF THE PROCEEDING........ ........ ........ ........ ........ ........ ........ ........ ........ [31] GROUND 1........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... [62] The question of association........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . [75] The federal magistrate’s decision of 3 November 2008........ ........ ........ ........ ........ ...... [79] Failing to provide a fair and just mechanism for adjudicating the issues in dispute... [99] The conduct of the trial........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ [100] Taking over the prosecution of the case........ ........ ........ ........ ........ ........ ........ ........ .. [107] The subpoena issue........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .. [113] Restricting Ms George’s rights to representation and cross-examination........ ...... [120] Rejecting evidence........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... [145] Limiting Ms George’s “right of response”........ ........ ........ ........ ........ ........ ........ ..... [147] Failing to adjudicate on several of Ms George’s claims........ ........ ........ ........ ........ . [148] The intemperate outbursts........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ....... [158] Refusing to address disclosure requirements........ ........ ........ ........ ........ ........ ........ .. [168] Differential treatment........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... [187] The evidence of Mr Siebert........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . [188] Failing to give due and proper consideration to evidence........ ........ ........ ........ ........ ... [195] Making factual errors, incorrectly paraphrasing transcript and other mistakes........ .. [198] Making findings of fact so unreasonable that no reasonable court could have made. [199] Conclusion........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... [200] GROUND 2........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... [201] Ground 2(a): Error in the finding that Mr Fletcher had returned chattels wrongly seized........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ... [203] Ground 2(b): The efficacy of the transfer of title in the Moggill property........ ........ . [216] Ground 2(c): The finding that the trustee’s interest must be registered for a trust to be valid........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . [226] Ground 2(d): The finding as to the failure to produce a copy of the (original) trust “agreement”........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ . [236] GROUND 3........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... [242] Grounds 3(a) and 3(b): The findings concerning ownership of the Moggill property........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ..... [242] Ground 3(d): The mortgage to NAB........ ........ ........ ........ ........ ........ ........ ........ ........ .. [307] Ground 3(f): The Lara horse float........ ........ ........ ........ ........ ........ ........ ........ ........ ...... [311] Ground 3(g): The Landcruiser........ ........ ........ ........ ........ ........ ........ ........ ........ ........ .... [340] Ground 3(i): Chattels allegedly owned in trust........ ........ ........ ........ ........ ........ ........ ... [348] Ground 3(j): Chattels as exempt household or sentimental property........ ........ ........ . [352] CONCLUSION........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ [354] REASONS FOR JUDGMENT
THE COURT
INTRODUCTION
Lauren Kay George (aka Cordes) was made bankrupt on her own petition in February 2006. The first respondent, William Fletcher, was appointed her trustee in bankruptcy. Section 58 of the Bankruptcy Act 1966 (Cth) provides that on bankruptcy the property of a bankrupt vests immediately in the trustee. After the sequestration order was made, consistent with his obligations under the Bankruptcy Act, Mr Fletcher tried to take possession of Ms George’s property. The property in question consists of a house and land at Moggill in outer-suburban Brisbane where Ms George was living; two horses, a horse float (the Lara horse float), a Toyota Landcruiser and various other chattels including household items and jewellery. Ms George, however, claimed that Mr Fletcher was not entitled to the property, principally because (save for the Lara horse float) it was not “property of the bankrupt” within the meaning of the Bankruptcy Act (s 116(2)(a)). Rather, she has maintained that she holds the property on trust for her son, a trust she told the Court she declared orally on the day of his birth and later in writing. Ms George also claimed that in any event household items Mr Fletcher had seized from her home were reasonably necessary for her domestic use and so were exempt from distribution to creditors under s 116(2)(b) of the Act and that certain items of jewellery had sentimental value for her and were exempt on that account (s 116(2)(ba)). In the case of the Lara horse float she claimed it was used to earn income by personal exertion and exempt by reason of s 116(1)(ba). Mr Fletcher disputed all these claims. The dispute became the subject of litigation in both the Queensland Supreme Court and the Federal Magistrates Court.
On 27 July 2011 Burnett FM held that Ms George did not hold the property in question on trust and that all the property, with the exception of her mother’s watch which had sentimental value, vested in the trustee in bankruptcy: Fletcher v George & Ors [2011] FMCA 553 (Fletcher v George). He made a number of declarations and orders giving effect to his findings. This is an appeal from that judgment. In these reasons, generally speaking, we refer for convenience to the trustee by name but in each case it should be understood that the reference is to him in his capacity as trustee of Ms George’s bankrupt estate.
The federal magistrate opened his reasons for judgment with a scathing indictment of Ms George’s credibility. Ms George contended that from the outset his Honour was biased against her (or that there is a reasonable apprehension that he might have been). She also challenged other aspects of the judgment, claiming that his Honour made various errors of law and fact.
In broad terms the appeal raises the following issues:
(a)whether the trial miscarried for want of procedural fairness because of apprehended bias on the part of the federal magistrate or a denial of a real opportunity to be heard; and
(b)whether the federal magistrate made various errors of fact and law, in particular, whether his Honour erred in failing to find that Ms George owned the Moggill property on trust for her son and that she was entitled as trustee for the trust to retain the chattels seized from her.
In order to understand the issues and the reasons for some of the federal magistrate’s conduct, it is necessary to provide some background. We will return to some of these matters in our discussion of the grounds of appeal. Having regard to the way those grounds are formulated, a certain amount of repetition is unavoidable.
FACTUAL BACKGROUND
Ms George gave birth to her son, Alexander, on 27 November 1997. At the time of his birth Ms George and her then husband, Matthew George, lived on a property in Pullenvale, Queensland. The marriage later broke down. The Pullenvale property was sold and Ms George used the proceeds of the sale to purchase a block of land at Moggill upon which she later had a house built. The contract for the sale of the Moggill land names Ms George (as Cordes) as the purchaser. There is no mention of a trust.On 22 September 2003 Mr George placed a caveat over the Moggill land, claiming to have an equitable interest (in the nature of a constructive, resulting or implied trust). The registered owner listed on the caveat is “Lauren Kay George”. The certificate of title issued on 3 December 2003 records the name of the registered owner as “Lauren Kay Cordes”.
In proceedings in the Family Court of Australia resulting from the breakdown of the marriage Ms George filed three financial statements. Each statement purported to set out her income, assets, expenditure and liabilities and included an affidavit from her stating that she was aware of her obligations to make full and frank disclosure of her financial situation. In the September 2002 and October 2004 statements she listed herself as the sole owner of her home. The January 2004 statement listed the Moggill property by address and again did not name any other owners. There was no reference to any trust.
On 14 July 2004 the fourth respondent, National Australia Bank (NAB) registered a mortgage over the Moggill property. Ms George is named as mortgagor. Once again, there was no mention of a trust. In January 2005 Ms George applied to NAB for finance to build a house on the property and for a first home mortgage stamp duty concession. The application made no reference to any trust.
In March and April 2005 the Family Court heard a dispute between Ms George and her former husband over the questions of property settlement and spousal maintenance. On 29 April 2005 Barry J made final orders. The judgment, which was an annexure to Mr Fletcher’s affidavit in the court below, made no mention of the existence of any trust in favour of Alexander and before the federal magistrate Ms George conceded that no evidence was called in that proceeding of the existence of such a trust. Ms George appealed from the Family Court judgment. When the appeal came on for hearing on 31 October 2005, consent orders were made, allowing the appeal and discharging the orders for spousal maintenance.
On 18 June 2005 Ms George entered into a contract in standard REIQ form to sell the Moggill property to the second respondent, Dr Peter Ironside Pty Ltd (DPIPL) (a company associated with the third respondent, her brother-in-law, Dr Peter Ironside) for $400,000. The contract was not subject to any encumbrances but included provision for a 30 year tenancy agreement in Ms George’s favour at a set rental. There was no reference in the contract to the existence of any trust. Ms George contended that the parties entered into a collateral agreement the same day to transfer the property back to her at some indeterminate time. NAB agreed to a sale at the contract price, leaving a debt of $20,000 to be repaid at $200 a month, but a private loan of $80,000 was given to assist with the property settlement. Mr Fletcher contended that the sale was for less than the market value and that the transfer was therefore void against the trustee in Ms George’s bankruptcy (see s 120(1) of the Bankruptcy Act).
On 24 August 2005 a solicitor, Alan Lethbridge, witnessed Ms George’s signature on a memorandum of transfer of the Moggill property by DPIPL to Ms George. Ms George said she left the solicitor’s office with two forms. One contained her own and Mr Lethbridge’s signature. The other was never produced. Where the particulars of the transferee are given (item 5) the words “Lauren Kay Cordes” are printed and the words “in trust for Alexander George” are handwritten. In the court below Ms George admitted that she had added the words “life estate” and “life interest” to items 1 and 5 respectively in September 2007, well after the transfer was executed and witnessed, and, significantly, after she had become bankrupt. (The federal magistrate noted that the words “in trust for Alexander George” appeared to be in the same ink.) This transfer document was executed in support of the collateral agreement.
Ms George and Dr Ironside entered into a formal tenancy agreement on 27 August 2005. Dr Ironside gave evidence before the federal magistrate, which his Honour accepted, that the agreement produced by Ms George and annexed to her affidavit included a number of matters which were not in the document when it was executed. Amongst them were the words “periodic/life interest mother and child”. His Honour said (at [163]) that the additions were clearly in Ms George’s handwriting.
Between 2 and 21 September 2005 letters of instruction were sent to NAB relating to the release of the mortgage on the Moggill property. None of them suggested that the property was held on trust or that any excess of funds on settlement would be received and held by Ms George on trust. All invoices relating to payment of building contractors under the building loan were directed to Ms George personally. Craig Wood, the business banking manager at NAB, who completed some of the documents and was Ms George’s business manager, testified that Ms George never told him that the property was held on trust for her son and that none of the documents held by the bank referred to the existence of such a trust.
On 20 October 2005 the memorandum of transfer of the Moggill property (in settlement of the contract for sale of 18 June 2005) was lodged with the Queensland land registry. The transferor is named as “Lauren Kay Cordes”. There was no reference to a trust.
On 21 February 2006 Ms George filed a debtor’s petition. The principal creditor was the solicitor who acted for her in her family law proceedings. The statement of affairs accompanying the petition did not disclose that she held any property on trust. In contrast to the financial statement she filed in the Family Court, the only assets she disclosed consisted of cash in hand of $50.
The sequestration order was made on 24 February 2006. Mr Fletcher was appointed trustee for the bankrupt estate on 31 March 2006.
In 2007 a matrimonial proceeding involving Dr Ironside and his former wife (and Ms George’s sister), Susan Wilson, began in the Family Court (the Ironside proceeding). One of the issues in that proceeding was whether the Moggill property was matrimonial property capable of being included in any property settlement between Dr Ironside and Ms Wilson.
On 31 December 2007 Ms George transferred the registration of a Hanoverian mare known as Stellamarra (not mentioned in her statement of affairs) to Ms Wilson.
On 4 April 2008 Ms George (as Cordes) wrote to the Registrar of Land Titles enclosing a cheque for $189 to register a caveat on the title of the Moggill property. She told the Registrar that the property should have been registered in the name of “Lauren Kay Cordes in trust for Alexander George”.
On 14 October 2008 Mr Fletcher issued a notice to Ms Wilson under s 77A of the Bankruptcy Act asking for information regarding her dealings with Ms George’s affairs. Ms Wilson provided certain information and two weeks later she executed a deed of settlement assigning ownership of the mare, Stellamarra, and the Toyota Landcruiser (which Ms George had transferred to her eight months before the sequestration order), to Mr Fletcher as trustee of the bankrupt estate of Ms George.
THE ALLEGATIONS CONCERNING THE TRUST
On 2 October 2007 Ms George sent an email to NAB stating that “the minor by the name Alexander William George d.o.b. 27/11/97 maintains a life interest in this property” and that “Dr Peter Ironside therefore holds this interest in trust for the minor and is fully aware that as of 18/6/05 he is unable to convert, sale or mortgage without the consent of the trustee”.
The same month Ms George asserted in correspondence with the solicitors for the parties in the Ironside proceeding that the Moggill property was impressed with a life interest in favour of her son. The following month she produced to Mr Fletcher what she alleged was written proof of the existence of the trust. It consisted of two different reprints of the Trusts Act 1973 (Qld) containing certain handwritten endorsements. At around this time Mr Fletcher successfully applied to be joined as a party to the Ironside proceeding.
On 6 December 2007 Ms George (as Cordes) swore an affidavit in the Ironside proceeding in which she stated that she had purchased the Moggill land and built a home on it on trust for her son, Alexander.
In the court below Ms George claimed that from her hospital bed on the day her son was born she declared an express trust “by way of parole”. She said that she told her son “on his birth” that the Pullenvale property was his property and his home for life. She also claimed that on 1 May 2002 she endorsed a copy of the then current reprint of the Trusts Act with the following words:
Property trust 130 Airlie Road Pullenvale Queensland 4069 Lauren Kay Cordes as trustee for Alexander William George dated 1st May 2002 holding a life interest of mother/child referred to as above dob 4/7/1964 and 27/11/1997 respectively.
Ms George further claimed that on 5 December 2003 – the day she entered into the contract to buy the Moggill property – she endorsed a copy of the then current reprint of the Trusts Act with the following words:
Property trust agreement amendment to original trust agreement dated 1st May 2002. Lauren Kay Cordes as trustee for Alexander William George property trust Lot 13 Survey Plan 145714 County of Stanley Parish of Moggill dated 5/12/2003 holding life interest of mother and child on the above property – Lauren Kay Cordes.
To corroborate her claim that her property was held on trust for her son Ms George also relied on a number of wills she executed over the years before her estate was sequestrated.
On 24 January 2008 Ms George (purportedly as trustee for Alexander) applied to be joined as a party in the Ironside proceeding.
Dr Ironside and his wife were directed to attend a mediation. The mediation took place on 19 February 2008. Ms George attended the mediation, uninvited, and over the opposition of Mr Fletcher. The dispute was resolved by heads of agreement (the heads of agreement). They were signed by Ms Wilson and all the parties to this proceeding with the exception of the NAB. The document recorded Ms George’s agreement to abandon any claims to the Moggill property “whether on her own account or as a trustee”. Before the federal magistrate, however, Ms George claimed that she signed under duress. Apart from the equivocal evidence that she was later seen to be crying, her claim was uncorroborated. The federal magistrate found that the day after the mediation, Ms George did everything possible to give effect to the heads of agreement.
On 26 February 2008 orders were made in the Federal Magistrates Court putting into effect the terms of the heads of agreement.
On 9 April 2008 the Moggill property was transferred to Mr Fletcher as trustee of Ms George’s bankrupt estate.
THE COURSE OF THE PROCEEDING
On 24 April 2008 Ms George filed a statement of claim against DPIPL in the Queensland Supreme Court seeking, amongst other things, orders that the sale of the Moggill property to DPIPL be set aside, the property be reconveyed to her “in fee simple and life estate” and that the heads of agreement be declared void. She filed an “amended statement of claim” on 23 December 2008, which added as defendants Dr Ironside, NAB, Ms Wilson and Mr Fletcher and also sought a variety of additional and alternative orders relating not only to the Moggill property but extending to personal property which was later seized by Mr Fletcher, the horse, Stellamarra, and the Landcruiser.
On 27 April 2009 the Queensland Supreme Court proceeding was permanently stayed: Cordes v Dr Peter Ironside Pty Ltd & Ors (2009) 231 FLR 32. An appeal against that judgment was dismissed: Cordes v Dr Peter Ironside Pty Ltd [2010] 2 Qd R 235. At this point it is convenient to explain the allegations Ms George made in the Supreme Court proceeding as the federal magistrate later ordered that her amended statement of claim stand as her pleading in the Federal Magistrates Court. For present purposes it is sufficient to refer to the following summary in the judgment of the Queensland Court of Appeal.
[8] The pleading as to the arrangement between Dr Ironside, [DPIPL] and [Ms George] is very difficult to understand. The thrust of it seems to be that [DPIPL] was to pay $400,000 and the Moggill property, subject to an existing mortgage to [NAB], was to be transferred to it, but leased back to [Ms George]. Strangely, the tenancy agreement also provided that she and her son were to retain a life interest in the property. At the same time, however, the arrangement was conditional on [DPIPL]’s holding the property in trust for her son, and undertaking to transfer it back to [Ms George] at any time she wished.
[9] [Ms George] went on to plead that unconscionably, in breach of trust and in breach of their agreement, Dr Ironside and [DPIPL] refused to reconvey the property, used it as security for loans in the amount of $2 million, lodged a caveat on the title, and entered the Family Court agreement with the trustee in bankruptcy. [NAB] was joined as an accessory to their breach of trust. Against the trustee in bankruptcy, it was pleaded that he knowingly assisted in the breach of the trust by failing to reconvey the property and asserting his interest in it. [Ms George] alleged that she had signed the Family Court agreement under duress.
[10] By way of relief, [Ms George] sought orders setting aside the sale agreement, the transfer of the property to [DPIPL] and the mortgage to [NAB], with removal of the caveat and the mortgage, and orders that the Moggill property be reconveyed to her “in fee simple and life estate” and the land title register corrected accordingly. In the alternative, she asked for declarations that the transfer, mortgage and Family Court agreement were invalid, and an order for specific performance of the agreement between her, [DPIPL] and Dr Ironside, by way of a registered transfer of the property to her. In addition, she sought damages against Dr Ironside, [DPIPL], and [NAB].
[11] Part of the statement of claim concerned chattels seized by the trustee in bankruptcy. They included a horse and a motor vehicle, both of which the appellant said were owned by her sister, who had agreed to give the appellant “life use” of them. The trustee in bankruptcy had also seized a horse float, some smaller personal items belonging to [Ms George] and a rocking horse belonging to [Ms George]’s son. [Ms George] pleaded that the trustee executed warrants (one assumes for the purpose of recovering property), in the process “breach[ing] legal privilege”, resulting in “valuable stolen jewellery and damages to the Moggill property”. A further allegation is that the trustee refused to allow her to take action to set aside a costs assessment notice, in respect of legal fees which were the cause of her bankruptcy, and but for which she could achieve a discharge.
[12] [Ms George] sought specific performance of the agreement to allow [Ms George] life use of the horse and vehicle, the setting aside of the consent orders made for transfer of that property to the trustee with a declaration that it remain vested in her sister, not the trustee, and return of the rocking horse. At the hearing before the learned primary judge, however, in order to deflect the argument about bankruptcy jurisdiction, [Ms George] disavowed other forms of relief sought in the statement of claim. They were: a declaration that the Moggill property did not vest in the trustee in bankruptcy; declarations that the vehicle and the horse float vested in her (the former as trust property, the latter as “tools of trade”); declarations that warrants were illegally executed and that a solicitor for the trustee in bankruptcy “breached legal privilege”; a declaration that she “be discharged” in February 2009, three years after she became bankrupt; an order for return of her personal items; damages resulting from the seizure of assets; the setting aside of the costs assessment notice which had caused her bankruptcy; and a declaration that she was illegally detained (the connection of which to the pleading is obscure).
In the meantime, on 29 October 2008, Mr Fletcher filed an application in the Federal Magistrates Court seeking ex parte orders that:
(a)a search warrant be issued under s 130 of the Bankruptcy Act to allow him and his agents to enter the Moggill property in order to search it and obtain documents and property forming part of the bankrupt estate;
(b)he be permitted to seize all computers and all filing cabinets at the premises for the purpose of examining them and their contents to see whether they contained any documents or information that Ms George had withheld from him; and
(c)he be permitted to seize the Toyota Landcruiser, Stellamarra and any other livestock or assets that he had reason to believe formed part of the bankrupt estate.
The application was supported by an affidavit sworn by Mr Fletcher to which numerous documents were annexed. At [47] Mr Fletcher deposed that:
[a]s a result of my investigations and that of my solicitors I now suspect that the Bankrupt has been hiding assets from her estate and I am concerned that if I request that she delivers the black Hanoverian mare known as Stellamarra and the Landcruiser to me she will try and transfer or hide them. I am also concerned that the Bankrupt has other assets and bank accounts which she may have registered into other people’s names prior to or after the bankruptcy which she has not accounted for and to [sic] which are now assets of the bankrupt estate.
Mr Fletcher said he was making the application ex parte because he was genuinely concerned that if Ms George had notice of it she would hide information and property, especially the mare.
On the same day the application was filed, the federal magistrate ordered that the search warrant be issued and then adjourned the application until 5 November 2008: Fletcher v George [2008] FMCA 1624. On 30 October 2008 Ms George unsuccessfully applied to have the warrant set aside: Fletcher v George(No. 2) [2008] FMCA 1625. On 31 October 2008 Mr Fletcher successfully applied for a further warrant to search Ms George’s property and seize assets: Fletcher v George(No. 3) [2008] FMCA 1626.
On 3 November 2008 Mr Fletcher returned to the court to make an oral application to examine Ms George about the location of some of the property, including two horses, which she maintained she did not own. She claimed to have had “instructions” from “the true” owners of this property not to divulge its whereabouts. The federal magistrate told Ms George that “they” were going to ask her questions and that if she did not answer them or he thought she was prevaricating or telling him lies he would stand the matter down and have her “held over” until the morning. Ms George persistently refused to answer questions about the whereabouts of the horses, even when directed by the federal magistrate to do so. She admitted to having made arrangements to remove them from the property. She claimed to have done so on the instructions of her sister. She repeatedly refused to name the person who took them. She later claimed not to know where they were. She said she could find out by making a phone call, but would still not tell his Honour
His Honour noted that in circumstances where a bankrupt has concealed or removed property with a view to preventing or delaying possession of it, the court may issue a warrant for her arrest and commit her to gaol (see s 78 of the Bankruptcy Act). He referred to Ms George’s persistent refusal to answer questions, even when directed. He then referred to some other material, presumably derived from Mr Fletcher’s first affidavit, and said he was persuaded that Ms George was intentionally seeking to conceal and remove two chattels the subject of contention in the application. Consequently, he said, it was appropriate that, until the questions were answered, she should be “held over”. He then directed that a warrant be issued for her to be held at the Brisbane watch house until the following morning. See Fletcher v George (No. 4) [2008] FMCA 1627 (Fletcher v George (No. 4)).
The next day Ms George continued to refuse to answer his Honour’s questions about the location the horses, maintaining that she was relying on “client privilege”. Consequently, his Honour ordered that a warrant of committal again issue, remanding her to the Brisbane watch house until 10.00 am on 5 November 2008. In fact, Ms George remained in custody until 12 November 2008.
In the meantime, on 7 November 2008 Mr Fletcher filed an amended application in the Federal Magistrates Court (Mr Fletcher’s application) seeking declarations that, as at 24 February 2006 (the date of Ms George’s bankruptcy), the legal and beneficial ownership of the Moggill property vested in him as trustee and that there was no trust in favour of Ms George’s son or any other person. He also sought declarations that ownership of the Toyota Landcruiser and the mare, Stellamarra, vested in the trustee of the bankrupt estate; that the heads of agreement remained valid and enforceable; and that a deed of settlement dated 28 October 2008 between him as trustee and Ms Wilson also remained valid and enforceable. The deed of settlement related to Stellamarra and stated that Ms George had asked Ms Wilson to become the registered owner of the horse to prevent Mr George claiming an interest in it. Mr Fletcher’s position was that all the property was property of the bankrupt and that the “trust” was a sham. The evidence he relied upon was largely contained in his 29 October 2008 affidavit. The central question in the proceeding before the federal magistrate, therefore, was whether that property was held on trust as Ms George had claimed.
On 12 November 2008 his Honour released Ms George on her undertaking that the mare be kept safe and secured and not be subject to any transfer, encumbrance or dealings until further order. He then stood over Mr Fletcher’s application until 18 November 2008. He also added as respondents NAB, Ms Wilson, Dr Ironside, and DPIPL.
On 18 November 2008 his Honour refused an application by Ms George to stay Mr Fletcher’s application pending the hearing and determination of the Queensland Supreme Court proceeding. At the same time he issued directions to the effect that the amended statement of claim Ms George had filed in the Queensland Supreme Court stand as her pleading on Mr Fletcher’s application, subject to such additions or variations as she might advise on or before 21 November 2008. And he directed that the documents filed in the Supreme Court proceeding be taken to be filed in the Federal Magistrates Court proceeding. He also ordered the joinder of Richard Siebert, who, supported by Ms George, claimed that he was the owner of some of the chattels on her land, including one of the horses and the Lara horse float. Ms George applied for leave to appeal from the federal magistrate’s decision of 18 November 2008 to refuse the stay but her application was unsuccessful: George v Fletcher (Trustee) [2008] FCA 1848.
On 3 December 2008, Mr Fletcher amended his application to add an alternative order in the event that a trust in Alexander’s favour was found in the Supreme Court proceeding, and alternative orders in relation to Stellamarra.
On 5 December 2008 his Honour made declarations by consent that Mr Siebert was the owner of various items of property, including the horse known as Cabernet. His Honour also ordered by consent that the Lara horse float vest in the trustee. At that point he gave leave to Mr Siebert to withdraw from the proceeding with no order as to costs.
Mr Fletcher’s application came on for hearing before the federal magistrate on 8 December 2008. His Honour indicated that he proposed to hear the claims relating to Stellamarra and the Landcruiser on a summary basis. Mr Coulsen, who appeared for Mr Fletcher, then made an oral application that Mr Fletcher’s application for a declaration that no trust existed over the Moggill property also be determined summarily, supported by counsel for the NAB and counsel for DPIPL and Dr Ironside. With some encouragement from the federal magistrate, counsel for DPIPL and Dr Ironside also applied orally for summary judgment. That application apparently related to claims Ms George had made that DPIPL entered into the mortgage to NAB in breach of its constitution and forged certain internal documents. His Honour delivered judgment on those claims on 9 December 2008. The reasons do not appear to have been published, but the inescapable inference from the transcript of argument and the remarks made by his Honour after judgment was given is that he dismissed the claims.
The hearing lasted for three days. On the second day Ms George applied for his Honour to disqualify himself on the ground that there was a reasonable apprehension of bias. The application was refused. On the third day his Honour reserved his decision.
On 23 December 2008, Ms George filed in the Federal Magistrates Court proceeding an “amended Statement of Claim”, ostensibly the same as the one she filed in the Supreme Court the same day.
On 9 February 2009 the federal magistrate pronounced judgment on the application for summary judgment: Fletcher v George & Ors (No. 6) [2009] FMCA 69 (Fletcher v George (No. 6)). His Honour found that, “[e]xcept in respect of the issues between [the] parties concerning the alleged declaration of trust relating to personalty”, Ms George had no real prospect of successfully defending the trustee’s claims because her claims were “untenable at law”. In the case of NAB, he noted that the statement of claim included no allegation that the bank knew that DPIPL or Dr Ironside intended to defeat or encumber the Moggill property contrary to Ms George’s wishes, no matter in what capacity she owned the land and on the pleadings alone was dubious of how Ms George could overcome NAB’s apparently indefeasible interest. He dismissed her claim against NAB as having no reasonable prospects of success, noting that the title to the land was held by DPIPL subject to a registered mortgage in NAB’s favour, and his earlier finding that “the interests” were not subject to any trust in favour of Ms George’s son. His Honour went on to make orders in the nature of declarations as follows:
(1)the heads of agreement dated 19 February 2008 remain valid and enforceable.
(2)as at 24 February 2006 the legal and beneficial ownership of the Moggill property vested in [Mr Fletcher] as trustee of the bankrupt estate.
(3)as at 24 February 2006 the legal and beneficial ownership of the Toyota Landcruiser vested in [Mr Fletcher] as trustee of the bankrupt estate.
(4)as at 24 February 2006 the legal and beneficial ownership of the mare known as Stellamarra vested in [Mr Fletcher] as trustee of the bankrupt estate.
(5)the Deed of Settlement between [Mr Fletcher] and Susan Jane Wilson dated 28 October 2008 remained valid and enforceable and that it be performed.
His Honour then made consequential orders and adjourned for trial the issues arising from paragraphs 3, 4 and 10 of Mr Fletcher’s application. Paragraph 3 sought a declaration that there was no trust in favour of Alexander George or anyone else over the Moggill property or any of the property stored or located on it. In the alternative that the court found there was a trust in favour of Alexander, paragraph 4 sought (in effect) an order for a lump sum monetary payment by Ms George and a declaration to the effect that the transactions between Ms George and DPIPL were under value. Paragraph 10 sought a declaration that as at 24 February 2006 the legal and beneficial ownership of items listed in a schedule to the application vested with the trustee in bankruptcy.
Ms George obtained a grant of leave to appeal and a Full Court upheld her appeal in part, finding that certain matters were not suitable for summary judgment. The majority held (at [76]) that in respect of the Moggill property and the heads of agreement there were substantial issues of credit to resolve, the resolution of which depended on a range of difficult issues: George v Fletcher(Trustee) [2010] FCAFC 53 (George v Fletcher (Trustee)). The Full Court set aside the first two orders made on 9 February 2009 and directed that so much of the proceeding as concerned the claim for relief in respect of the heads of agreement and the Moggill property be remitted to the Federal Magistrates Court for hearing and determination according to law.
In her notice of appeal Ms George had also made allegations of bias against the federal magistrate. The Full Court unanimously rejected the allegations. Ryan and Logan JJ, with whom Marshall J agreed on this question, found (at [89]) that there was no evidence which would support a finding of actual bias. Their Honours then went on to consider whether the federal magistrate erred in declining in the course of the trial in December 2008 to disqualify himself because of a reasonable apprehension of bias. For this purpose their Honours considered the transcripts of the directions hearing on 5 December 2008 and of the trial of the applications for summary judgment. With respect to the directions hearing their Honours said (at [91]) that the transcript revealed “nothing more than an earnest endeavour by the learned federal magistrate to determine whether the matter was ready for trial on 8 December and to identify the issues for trial”. As for the trial, their Honours found (at [92]) that there was no basis for concluding that a fair-minded lay observer could reasonably apprehend or suspect that his Honour had prejudged the case.
Ms George applied for a stay of the Full Court’s orders in anticipation of applying to the High Court for special leave to appeal. The application was refused: George v Fletcher (Trustee) (No 2) [2010] FCA 655 (George v Fletcher (Trustee) (No 2)).
The matter returned to the federal magistrate in June 2010 at which time he listed Mr Fletcher’s application for hearing on 20 September 2010.
On 8 June 2010 Ms George filed an interlocutory application (later amended on 17 June 2010 and 5 July 2010) in which she sought a number of declarations and orders which cut across the matters raised in Mr Fletcher’s application.
On 16 July 2010 Ms George filed another interlocutory application, seeking that the federal magistrate transfer the proceeding to the docket of another federal magistrate. Her affidavit in support was a mixture of evidence and argument. In it she referred to a Full Court judgment in Clampett v Attorney-General of the Commonwealth (2009) 181 FCR 473 (Clampett). In that case the federal magistrate had charged, convicted and imposed a custodial sentence on two litigants (Mr Clampett and Ms Noah) for contempt in the face of the court. The Full Court (Black CJ presiding) held that the federal magistrate’s discretion to hear the contempt charges himself miscarried. The judgment received some publicity in the press, which at some stage came to Ms George’s attention and which appears to have inspired the interlocutory application.
Ms George also expressed concern that the federal magistrate had taken an adverse view of her as a result of her success in the Full Court. She said that, since the matter had been returned to his Honour, he had “continued to ignore the rules of the court” and to display “a prejudicial view”, resulting in a denial of natural justice.
Mr Fletcher opposed the application. He submitted that the matter had been decided by the Full Court and that nothing Ms George had raised had occurred after the date of that judgment.
His Honour heard both applications on 16 July 2010. He dismissed the disqualification application, though not on the basis upon which Mr Fletcher had opposed it: Fletcher v George& Ors (No. 7) [2010] FMCA 541 (Fletcher v George (No. 7)). He dismissed the other application, in part because it sought to agitate matters he had already decided on 9 February 2009, which decisions were not set aside by the Full Court: Fletcher v George & Ors (No. 8) [2010] FMCA 542 (Fletcher v George (No. 8)).
On 19 July 2010 Ms George applied for leave to appeal that decision and several others. She also applied for a stay of various orders and for the matter to be transferred to the docket of a different magistrate. Reeves J heard the application in August 2010. He refused the stay and reserved judgment on the application for leave to appeal, saying he would give his judgment “in due course”. He did so on 4 August 2011 (after the federal magistrate handed down his judgment), dismissing the application as futile.
The hearing of Mr Fletcher’s application began before the federal magistrate on 27 September 2010 and concluded, after 12 days of hearing, on 8 December 2010. Judgment was pronounced on 27 July 2011. His Honour came to the same conclusions on the existence of the trust as he had reached in the summary judgment and upheld the validity of the heads of agreement, rejecting Ms George’s allegation that she had signed them under duress. His Honour then made declarations in the following terms:
1. The Heads of Agreement dated 19 February 2008 and exhibited at WJF-8 to the Affidavit of William John Fletcher sworn 29 October 2008 is valid and enforceable as between the parties to that Heads of Agreement;
2. The legal beneficial ownership of Lot 13 on SP145714, County of Stanley (The Land), Parish of Moggill, Title Reference 50440445 (the "Land") vests in the Applicant and is subject only to the registered interest of the Fourth Respondent, National Australia Bank Limited;
3. No trust exists in favour of Alexander George, the First Respondent or any other person over the Land, or any chattels stored at, located at, or seized from the Land;
4. All chattels seized from the First Respondent including a registered horse float, registration number 938QMZ VIN 6T9T27V97603EZ050 vest with the Applicant subject to the orders below;
He then proceeded to make orders as follows. The horse float referred to in these orders (as in the last-mentioned declaration) is the Lara horse float.
5. The Registrar return to the First Respondent the watch currently being held by the court as an exhibit, which the First Respondent claims to be her late mother’s;
6. The Registrar return to the Applicant all items of jewellery, other than the watch referred to in order 5, which are currently being held by the court and which exhibits vest with the Applicant;
7. The First Respondent forthwith deliver to the Applicant the horse float referred to in paragraph 4 herein and execute any such instruments as may be required to effect a transfer or registration within 7 days of their submission;
8. In default of the First Respondent failing to comply with the order contained in paragraph 7, the Registrar is directed to sign all documents and do all things necessary in the place of the First Respondent to give effect to order 7;
9. The First Respondent pay all other parties’ costs of and incidental to the application including reserved costs to be assessed.
10. Liberty to apply.
We now turn to consider the grounds of the appeal as set out in the amended notice of appeal and, where necessary, as expanded in submissions.
GROUND 1
The first ground of appeal raises issues about the integrity of the hearing. The amended notice of appeal recited numerous ways in which Ms George had allegedly been denied procedural fairness.
The first complaint was that the federal magistrate “[failed] to provide a fair and just mechanism for adjudication of the issues in dispute”.
The second complaint concerned the federal magistrate’s conduct of the hearing.
The third was of discriminatory treatment. Ms George alleged that his Honour had treated her less favourably than the other parties.
Fourthly, Ms George complained that his Honour “failed to adjudicate at all, or adequately”, on her claims. She alleged that several issues (matters of insurance, a dispute concerning the payment of a veterinary bill and an application that the bankruptcy be discharged) were not resolved.
Fifthly, Ms George complained that his Honour made findings on issues that were not agitated and that he adjudicated on issues at hearings in her absence and so, we would infer, denied her opportunities to be heard.
Sixthly, Ms George alleged that his Honour failed to give “due and proper consideration” to the evidence she called.
Finally, Ms George complained about alleged errors of fact, incorrect paraphrases of transcript, and other alleged mistakes against her interests and contended that his Honour made findings of fact that were so unreasonable that no reasonable court could have made them. In the way this ground was developed in submissions, it was largely a complaint that the federal magistrate was biased against Ms George or, more accurately, that there is a reasonable apprehension that he was. If the bias point is a good one, it will dispose of the appeal, regardless of whether there is any error in the federal magistrate’s reasons and there will have to be a new trial: Concrete Pty Ltd v Parramatta Design & Developments (2006) 229 CLR 577 (Concrete v Parramatta Design) at [117] per Kirby and Crennan JJ (Gummow ACJ agreeing at [3]); Duong v Tran [2010] NSWCA 280 at [8] per Giles JA, Sackville AJA and Harrison J agreeing at [78] and [79] respectively; Michael Wilson & Partners Ltd v Nicholls (2011) 244 CLR 427 (Nicholls) at [80].
Ms George’s submissions blurred the line between actual and apprehended bias. She often spoke in terms of actual bias but relied on authorities dealing with apprehended bias. Bias can arise in various ways. In Ms George’s written submissions she raised two of them: prejudgment and association. The state of mind described as bias in the form of prejudgment is one so committed to a conclusion already formed as to be incapable of alteration, whatever evidence or arguments may be presented: Minister for Immigration and Multicultural Affairs v Jia (2001) 205 CLR 507 at [72]. Generally speaking, it is very difficult to make out. The question of actual bias can be put to one side, though, because Ms George need not go that far. The bar is much lower for apprehended bias. If she proves that, (absent any question of waiver) she will succeed.
The first question, then, is whether there is a reasonable apprehension of bias. The second is whether Ms George should be taken to have waived her right to object.
To establish apprehended bias it is necessary to show that a fair-minded lay observer might reasonably apprehend that the judicial officer might not bring an impartial mind to the resolution of the questions in dispute. See, e.g. Livesey v NSW Bar Association (1983) 151 CLR 288 (Livesey), Johnson v Johnson (2000) 201 CLR 488 (Johnson), Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 (Ebner). The hypothetical observer is not to be assumed to have a detailed knowledge of the law, but whether or not the suggested apprehension is reasonable must be considered in the context of ordinary judicial practice: Johnson at [13], [53] and [80]. The hypothetical observer is assumed to know the issues to be decided and the circumstances in which they came to be decided: Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 at 87. As Kirby J observed in Johnson at [53], acting reasonably, the hypothetical observer would not come to a hasty conclusion based on the appearance evoked by an isolated episode of temper or remarks to the parties or their legal representatives taken out of context.
The test is easy to articulate but not always easy to apply. Two steps are involved. First, it is necessary to identify what it is said might lead the judge to decide the case other than on its merits. Secondly, it is necessary to show a logical connection between the suggested reason and the feared deviation. See Ebner at [8].
Before turning to the grounds of appeal we will deal with two important matters not directly raised by the amended notice of appeal but canvassed in submissions.
The question of association
In her written submissions Ms George asserted:
The Federal Magistrate has previously disclosed his interest of friend William John Fletcher being the first respondent and therefore this precludes him from adjudicating upon the matter as he has stated “Bill is well known to him” reflecting bias towards one particular party.
The submission contains no transcript reference to support it and we were taken to none in argument. But we take it Ms George was alluding to remarks made by his Honour on 5 November 2008 where the transcript records the following exchange:
MR COULSEN: … And, your Honour, obviously to allay Mr Lewis’s fears, the trustee has got to act in the best interests to preserve the assets and, in so far as any undertaking is necessary, an undertaking will be proffered, your Honour.
FEDERAL MAGISTRATE: Mr Coulsen, Mr Fletcher is a registered insolvency trustee well known to these Courts- - -
MR COULSEN: That’s so, your Honour.
FEDERAL MAGISTRATE: - - -and his reputation, with all respect to the parties, I’m not prejudging any of these matters, but his reputation precedes him. He’s a very well respected, very experienced liquidator. He doesn’t act irrationally, he acts commercially. He won’t - I’m satisfied he won’t act in a manner which is designed to prejudice the assets that he has to liquidate for the benefit of the creditors. So unless there’s some evidence put before me to show that he’s going to act irrationally or do something that is going to damage the value of the assets, I’m not inclined to accept any submissions to that effect.
Mr Lewis was appearing for Ms Wilson, who (initially) did not consent to Mr Fletcher taking possession of Stellamarra and was concerned that, if he did, she would be cared for and not disposed of before the question of ownership had been resolved. These were presumably the fears to which Mr Coulsen was alluding. His Honour emphasised that he was not then dealing with the question of ownership and was simply wishing to secure the asset pending the resolution of the question after trial.
Where apprehended bias is alleged based on the relationship between a decision-maker and a party, there must be “something in the nature or the extent of the association which leads that bystander to conclude, whether for friendship, love, money, fear, favour or otherwise, that the [decision-maker] might be influenced by it”: Aussie Airlines Pty Ltd v Australian Airlines Pty Ltd (1996) 65 FCR 215 at 222 per Merkel J. Here, the only material before the Court indicates that the association between the federal magistrate and Mr Fletcher was a professional, not a personal or financial one. There is nothing in the nature of this association which might lead a fair-minded lay observer to conclude that his Honour might be influenced by the association to decide the issues in dispute in a particular way. It follows that the submission that he was biased because of his association with Mr Fletcher must be rejected.
The federal magistrate’s decision of 3 November 2008
This complaint relates to the federal magistrate’s decision to gaol Ms George and to the reasons his Honour gave at the time.
It involves two issues: whether there was a reasonable apprehension of bias and (no question of necessity, consent or special circumstances having been raised) whether Ms George should be taken to have waived her right to object to the conduct now complained of.
Waiver aside, the principle is best encapsulated in the following passage from Livesey (at 300), a case in which two of the three members of the bench of the NSW Court of Appeal constituted to hear the Bar Association’s summons to have Mr Livesey struck from the roll of barristers had (in a previous case) made adverse credit findings about one of his witnesses:
In a case such as the present where it is not suggested that there is any overriding consideration of necessity, special circumstances or consent of the parties, a fair-minded observer might entertain a reasonable apprehension of bias by reason of prejudgment if a judge sits to hear a case at first instance after he has, in a previous case, expressed clear views either about a question of fact which constitutes a live and significant issue in the subsequent case or about the credit of a witness whose evidence is of significance on such a question of fact.
Here, Ms George was a critical witness whose evidence was of significance on a question of fact which constituted a live and significant issue in the case. That issue was whether before her bankruptcy she had created a trust in favour of her son. The resolution of that issue depended on whether or not the federal magistrate accepted her as a witness of truth.
The necessary apprehension, of course, is that the judicial officer might not decide the case impartially, not that he might decide it adversely to one party. A previous decision of the judicial officer might generate such an expectation. This does not mean, however, that the judicial officer will not approach the issues in the case with the requisite degree of objectivity: Re JRL; Ex parte CJL (1986) 161 CLR 342 (JRL) at 352. The mere fact that a judge has made interlocutory decisions that adversely affected a party does not mean that he or she is precluded from hearing the principal proceeding, although judges are usually circumspect in the way they express themselves so as to avoid any appearance of bias: Southern Equities Corporation Ltd (in liq) v Bond (2000) 78 SASR 339 (Southern Equities) at [129] per Bleby J, Olsson J agreeing. A judge has a duty to sit; judicial officers should not accede too readily to suggestions of appearances of bias and so encourage parties to forum-shop: JRL at 352. But a party who believes on reasonable grounds that the judge has decided in advance to disbelieve his or her evidence cannot have confidence in the result of the proceedings: R v Watson; Ex parte Armstrong (1976) 136 CLR 248 at 265. In Australian National Industries Ltd v Spedley Securities Ltd (in liq) (1992) 26 NSWLR 411 Mahoney JA (at 442E), with whom Meagher JA agreed (at 447G), observed that a previous decision on the same fact or on the credibility of a relevant witness will “normally, if not inevitably” give rise to a reasonable apprehension of bias.
In paragraph 42 of her affidavit in support of the July 2010 disqualification application Ms George said (without alteration):
In the circumstances that the application in case relates to the Magistrates attempts to wrongly detain me in gaol. It would be seriously unjust and a denial of Natural Justice if he were allowed to hand down a summary judgment in the matter given he has already expressed prejudicial views on the issue and the directions made by the Chief Magistrate Black on the issue.
(Emphasis added.)The “directions” said to have been made on the issue are the reasons in Clampett. The reference to Chief Magistrate Black is obviously a reference to Black CJ. The use of the adjective “summary” to describe the final judgment is obviously an error.
The submission is poorly expressed but it seems reasonably clear that Ms George’s concern was that his Honour had already uttered views about her case or issues that would arise for determination in her case that were prejudicial to it.
The judgment in Clampett was published on 28 October 2009 – two months after the Full Court had reserved its judgment but seven months before it pronounced judgment. In his reasons for refusing to disqualify himself in July 2010 the federal magistrate said that Clampett was irrelevant: Fletcher v George (No. 7) at [12]. With this observation we respectfully agree. His Honour then said that Ms George’s interpretation of what happened when she was examined (on 3 November 2008) was “simply wrong”. He explained (at [13]):
there is, in my view, nothing that any fair-minded lay observer, fully informed of the facts, in this instance, would conclude that I made any adverse finding in respect of the bankrupt by reason of orders that were necessarily made, because of the refusal to answer questions that she was lawfully required to answer, pursuant to the provisions of the Bankruptcy Act.
There are a number of difficulties with this passage, not least with the syntax. It seems that his Honour was intending to convey that a fair-minded lay observer, fully informed of the facts, would not conclude that he had made an adverse finding because of the orders he was bound to make. If so, his conclusion was in error. In the first place, the test is not whether a fair-minded lay observer would conclude that an adverse finding had been made. It is whether a fair-minded lay observer might reasonably apprehend that he might not decide the issues impartially. In the second place, Ms George’s complaint was not about (or merely about) the orders but with the views he had expressed in his reasons for making the orders. In the third place, his Honour did make a finding adverse to Ms George in his judgment on 3 November 2008 (Fletcher v George (No. 4)). He had made an adverse finding on her credit, the single most important issue in the proceeding. At [11]–[13] of his reasons his Honour said:
[11] In this case the bankrupt has been directed to answer two questions which she point blank refuses to answer. In my view the circumstances of this case would ordinarily justify the issue of a warrant for the recovery of the chattels as there is a good basis to believe that the bankrupt, by the conduct of her affairs, has engaged in deceitful conduct which in this case might [sic] be not only could, but is likely to, lead to efforts on her part to conceal or remove the property.
[12] The title of the goods is in issue. She has been party to the removal. She knows who took the goods but not only that, she has a history of poor form in relation to these sorts of transactions. One only needs to look to the judgment of Barry J in the Family Court proceedings where at p.12 in para.41 of his Honour’s judgment, dealing with an issue in dispute there, he drew particularly adverse inferences about the manner in which the bankrupt conducted herself. In that instance he found that in relation to a certain transaction the bankrupt received $125,000 from the sale of property which she then claimed (but he says at the worst that version was false), and she in fact received a sum of $66,000 as referred to in exhibit 19. At best, he described her as being a willing party to a fraud on the revenue of South Australia. He was not prepared to accept that the solicitors involved would have been complicit to any such fraud.
[13] In any event, I am persuaded that in this case the bankrupt is intentionally seeking to conceal and remove two chattels which are the subject of contention in this application and so in my view it is appropriate that until I get an answer to these two questions that were asked this afternoon, you be held over.
These remarks strongly suggest that his Honour had formed an adverse view of Ms George’s credit. The use of the euphemism “poor form” does not remove the clear impression reached on reading the judgment that his Honour had decided that she was a deceitful person. The observations at [12] about what Barry J said in the Family Court proceedings were otherwise entirely gratuitous. Their only logical purpose could have been to bolster his Honour’s views about her. The unqualified statement at [13] amounted to a finding that Ms George was deliberately hiding relevant information from the court.
In our view, these remarks might well have caused an informed fair-minded lay observer to think that his Honour might not bring an impartial mind to the assessment of Ms George’s credibility. We appreciate that his Honour’s remarks were made in the context of s 78(1)(d) of the Bankruptcy Act, which empowers the court to commit to gaol a bankrupt who “has concealed, or, without the permission of the trustee, has removed, any of the property of the bankrupt”. If the federal magistrate came to the conclusion that the bankrupt was refusing to answer questions because she was concealing the whereabouts of property forming part of the bankrupt estate, it is inevitable that he would have formed an adverse view about her credit. The fact that he was bound to make these judgments, however, does not mean that an apprehension of bias might not then arise if he went on to decide the substantive case.
In Southern Equities, Bleby J (who, with Olsson J, made up the majority) said at [129]:
it should not be assumed that, merely because a judge has been responsible for the pre-trial case management of a particular case and will obviously have made decisions adversely affecting one party or another, the judge is necessarily precluded from conducting the trial. Indeed, there would be few interlocutory applications, a decision on which would be likely to give rise to a reasonable apprehension of bias. This is particularly so because most contested applications are decided on affidavit evidence where either the facts are not in dispute or where, as in the case of an interlocutory injunction, the judge merely has to be satisfied that the facts deposed to raise a serious question to be tried. Usually, findings on such issues will be cast in language which could not possibly found a successful submission of apprehension of bias.
The present is not such a case.
Southern Equities was concerned with an application for a freezing order where, in his reasons for judgment, the primary judge made findings about the defendants’ credit and findings of fact about the movement of funds between different corporate entities. A majority of the Full Court of the South Australian Supreme Court held that these findings created a reasonable apprehension of bias. Olsson J observed (at [50]) that, where in an interlocutory hearing specific findings of fact on the available evidence must be made, even if those findings are expressed to be provisional, they might reasonably engender an apprehension of prejudgment as to other issues at trial if they are made by the trial judge. But, he said, much will depend on the precise nature of the findings and the manner in which they are expressed. Unfortunately, in this case, the nature of the findings and the manner in which they were expressed justify Ms George’s complaint. We are satisfied that the remarks the federal magistrate made in Fletcher v George (No. 4) gave rise to a reasonable apprehension of bias.
The question now is whether Ms George should be taken to have waived her right to object.
It is well accepted that if a party to civil proceedings or the party’s legal representative knows the circumstances that give rise to the disqualification but acquiesces in the proceeding by not promptly taking objection, it will likely be held that the party has waived the objection: Nicholls at [76] citing: Smits v Roach (2006) 227 CLR 423 at [43] per Gleeson CJ, Heydon and Crennan JJ and [61] per Gummow and Hayne JJ (see also Kirby J at [125]); Vakauta v Kelly (1989) 167 CLR 568 at 572 per Brennan, Deane and Gaudron JJ, 577–9 per Dawson J, 587–8 per Toohey J. In Vakauta v Kelly Brennan, Deane and Gaudron JJ explained at 572:
Where such comments which are likely to convey to a reasonable and intelligent lay observer an impression of bias have been made, a party who has legal representation is not entitled to stand by until the contents of the final judgment are known and then, if those contents prove unpalatable, attack the judgment on the ground that, by reason of those earlier comments, there has been a failure to observe the requirement of the appearance of impartial judgment. By standing by, such a party has waived the right subsequently to object.
In Vakauta v Kelly the objection was only taken on the appeal. Here, the point was taken before final judgment, but after the result of the summary judgment was known and the allegation of apprehended bias made to the Full Court (for different reasons) had been unanimously dismissed. The principle is the same. A litigant is not entitled to keep the point up her sleeve, so to speak. As the plurality went on to say in Vakauta v Kelly at 572:
The reason why that is so is obvious. In such a case, if clear objection had been taken to the comments at the time when they were made or the judge had then been asked to refrain from further hearing the matter, the judge may have been able to correct the wrong impression of bias which had been given or alternatively may have refrained from further hearing. It would be unfair and wrong if failure to object until the contents of the final judgment were known were to give the party in default the advantage of an effective choice between acceptance and rejection of the judgment and to subject the other party to a situation in which it was likely that the judgment would be allowed to stand only if it proved to be unfavourable to him or her.
These cases all involved parties who were legally represented. Indeed, the statement of principle made in the joint judgment in Vakautav Kelly referred to parties with legal representation. Nevertheless, waiver affects represented and unrepresented litigants alike: Wentworth v Rogers (No 12) (1987) 9 NSWLR 400 at 422; Preston v Carmody (1993) 44 FCR 1 (Preston) at 14; Loveridge v Emery [2011] FamCAFC 226, although, as Wilcox J observed in Preston, where a party is unrepresented, it is always necessary to consider whether the party had the requisite knowledge to found waiver.
In this case we are satisfied that Ms George had the requisite knowledge. She was present in court when his Honour made the remarks. She knew she had the right to object. Indeed, a month later she asked him to recuse himself based in part on what she said were findings of credibility made on 29 October 2008 when his Honour determined the ex parte application for the issue of the search warrant. But apart from the order for her imprisonment she did not then complain of anything he had said or done on 3 November 2008 when the offending remarks were made. Nor did she complain about this to the Full Court in the appeal from the summary judgment. In fact, as we have already observed, she did not raise the point until nearly two years had passed. In the circumstances she should be taken to have waived the objection.
Failing to provide a fair and just mechanism for adjudicating the issues in dispute
This is a complaint that five exhibits went missing “without any plausible explanation”. Ms George insinuated that the respondents (or one of them) took them because, unlike her, they were not always supervised by security staff. The complaint is baseless and must be dismissed.
The conduct of the trial
In this respect Ms George’s complaints against the federal magistrate were numerous. They involved:
(a)taking over the prosecution of her case in a manner that was detrimental to it;
(b)refusing to issue subpoenas she had requested for the production of documents and the attendance of witnesses;
(c)restricting her rights to representation and cross-examination, and taking over her cross-examination;
(d)refusing her request for two witnesses to appear in person, rather than by telephone;
(e)denying her a timely or fair right of response to evidence adduced by the other parties;
(f)abusive, intemperate and disrespectful language;
(g)rejecting evidence she wished to tender; and
(h)refusing to address disclosure requirements.
Before going any further, we would make a number of observations that provide some relevant context.
First, Ms George presented particular challenges for the federal magistrate. She was at times obdurate and often querulous. Doubtless she tested the patience of everyone in the courtroom.
Secondly, the trial was taking an inordinately long time. This placed considerable pressure on a busy court.
Thirdly, the Federal Magistrates Court, like the Federal Court, operates on a docket system. As Callinan J explained in Concrete v Parramatta Design at [174], cases are assigned to individual judges who oversee and make directions concerning all interlocutory matters arising in the assigned cases. Documents, including affidavits, will be filed in advance of the hearing and will almost always be read before it starts. His Honour continued (at [175]):
This system has its disadvantages and dangers. On the one hand, the trial judge will be well educated in many of the details of the case on each side by the time that the hearing starts. But on the other hand, it may sometimes be difficult for the trial judge, apparently fully conversant with the facts and issues, not to have formed some provisional view at least of the outcome of the case.
Finally, we do not underestimate the challenges posed by some self-represented litigants or this litigant in particular. Although people are entitled to conduct their own cases and courts must be specially vigilant to perform their functions correctly in cases presented by litigants in person (Edwards v Allmen Engineering Pty Ltd [1995] NSWCA 138 per Kirby P, Sheller JA agreeing), there are limits. As Mahoney JA pointed out in Ley v R. De W. Kennedy (Finance) Pty Ltd (unreported, New South Wales Court of Appeal, Moffitt P, Reynolds and Mahoney JJA, 21 May 1975):
[T]hat right must not be seen as giving … an absolute right to conduct a case, or to conduct the case in the manner and for the time that such a person chooses, whatever that choice may be. That right must be balanced against the rights of the other parties who are involved in the litigation, including the right, as I have put it, not to be involved in pointless litigation and to have the litigation conducted properly and with reasonable promptitude; and it must be balanced against the right of the public generally not to have the court’s time wasted.
...
What steps will be appropriate, in a particular case, to prevent injustice being done to parties who find themselves involved in litigation conducted in this way, must, of course, be determined in the light of the facts of that case: but it should be clear that it is proper that steps be taken to that end.If, for example, it appears to the tribunal that a party is, because of emotional involvement in the case or for any other reason, not capable of conducting the case adequately or properly, or refuses so to do, it will be within the power of the court to make appropriate orders to protect the interests of that party and those who are involved in the litigation by or with him and to prevent the improper waste of public time and money.
We now turn to Ms George’s specific complaints.
Taking over the prosecution of the case
The federal magistrate had a duty to ensure that the evidence was confined to the issues, that the trial was conducted and completed expeditiously, and that the trial was fair to all parties. Section 42 of the Federal Magistrates Act 1999 (Cth) (FM Act) provides that:
In proceedings before it, the Federal Magistrates Court must proceed without undue formality and must endeavour to ensure that the proceedings are not protracted.
Dr Ironside strongly denied that the agreement he made with Ms George was that DPIPL was to hold the property on trust for Ms George as trustee for her son, or that he agreed to any arrangement in respect of which Ms George or her son was to have a life interest in the Moggill property. The federal magistrate accepted Dr Ironside’s evidence that he would not have entered into an arrangement on those terms. The federal magistrate also accepted the evidence of Dr Ironside that there was nothing in the contractual document at the time that he signed it which provided that Ms George was conveying the property to him subject to a life interest either in her favour or in favour of her son or that a 30-year tenancy agreement was referred to in the contract for sale.
As for the General Tenancy Agreement, Dr Ironside said that he did not recall seeing the words “life interest mother & child” after the word “periodic” in the document he signed. Dr Ironside deposed that those words took the agreement beyond that which had been agreed in June 2005. Dr Ironside also said that the words under the heading “Special Terms” were not in the document he signed. The federal magistrate accepted Dr Ironside’s evidence on this point, too. His Honour found that the evidence of Mr Glasspool was not helpful on the question of whether the General Tenancy Agreement contained the contentious words at the time that Mr Glasspool witnessed the parties’ signatures.
His Honour went on to find that it would have been irrational for Dr Ironside to have entered into the transaction contended for by Ms George, because DPIPL had borrowed $400,000 to complete the purchase, and would thereby have exposed itself to the risk of not being able to resort to the property as security to repay the loan.
As for the transfer document (exhibit 87), the federal magistrate found that the words “in trust for Alexander George” had been handwritten in the same ink as the words Ms George admitted she had added to the document in November 2007. His Honour also found that when signed in 2005, the contract of sale did not refer to a tenancy to Lauren Kay Cordes for 30 years from the settlement date of a monthly rental of $269 per month; and that Ms George added those words in November 2007 together with the words “life interest mother & child” and the words under the heading “Special Terms” in the General Tenancy Agreement. He found that she did so after becoming aware of the prospect of losing the Moggill property to the trustee in bankruptcy and that claiming a trust in favour of her son was a means of defeating his claim to the property. His Honour held that the insertion by Ms George of the handwritten words into the documents was a “fraudulent concoction on her part”.
In her appeal, Ms George contended that the federal magistrate made a number of errors, which led him to make the factual findings she impugned under these two grounds of appeal.
First, Ms George contended that the federal magistrate erred in accepting Dr Ironside’s evidence that he did not agree, on behalf of DPIPL, to acquire or hold the Moggill property on trust for Ms George as trustee for her son, with a life interest in favour of her and her son. Ms George argued that Dr Ironside’s evidence was undermined by the fact that Dr Ironside had in email correspondence with her acknowledged the trust relationship in respect of the Moggill property.
Ms George referred the Court to two emails from Dr Ironside upon which she relied as evidencing Dr Ironside’s acknowledgement of the trust relationship. There is, indeed, a reference in the emails to the property being held on trust. But the emails contain no acknowledgment that Ms George held the Moggill property on trust for her son. The reference in the emails to a trust arises in the context of the question whether the Moggill property would be part of the matrimonial property for the purposes of a property settlement in the Ironside proceeding; or whether it would be excluded on the grounds that it was held on trust.
The relevant parts of the two emails are as follows:
Sent: Thursday, August 23, 2007 7:20 AM
Subject: Re: United front
My offer to jane can’t happen until the conference in which we state that you and I have a trust agreement about the house. The mediator will then have to arrange a prelim hearing before a judge to address that issue.
Sent: Saturday, August 25, 2007 2:45 PM
Subject: Re: United front
I have now read the stuff that you sent to Margaret. Your are really not getting it. The parties have NOT agreed to leave your house out of it , and that is what we need to be united about in front a judge. We want to leave your house out of it , but the only offer from jane’s side includes it.
…
Take some advice , and stop giving us instructions which we can’t take. The first part of the process is to establish that the house is in trust and then it will be left out. That is what we are trying to do. By having you as a co-respondent , it enables you to have your say and to present your actual interest in the house. To be saying that you don’t want to be a co-respondent puts the whole process at great risk. If you are not going to get independent legal advice , then , please at least take ours.
(Emphasis added.)
Dr Ironside explained in cross-examination that he was using the word “trust” loosely, to describe the collateral arrangement reached with Ms George whereby Ms George had a right to repurchase the Moggill property. There is nothing in the emails to suggest that Dr Ironside knew that Ms George held the Moggill property on trust for her son.
Accordingly, these emails do not assist Ms George’s contention that DPIPL agreed to acquire and hold the Moggill property on trust for her in her capacity as trustee for her son, Nor do they demonstrate that the federal magistrate erred in accepting Dr Ironside’s evidence.
Secondly, Ms George claimed that the evidence of Dr Ironside’s step-daughter, Ms Mitchell, corroborated her claim that DPIPL held the property on trust for her as trustee for her son; and that the federal magistrate erred in failing to give any weight to that evidence.
The evidence to which Ms George referred is an affidavit in which Ms Mitchell deposed that on 18 September 2007 she sent a text message to Dr Ironside about his matrimonial dispute. Ms Mitchell went on to depose that Dr Ironside had replied to her text message with a text message of his own which stated:
Trying to establish that the house is in trust and not an asset not to sell.
In our view, the federal magistrate did not err in not treating Ms Mitchell’s evidence as corroborating Ms George’s contention that in August 2005 she held the Moggill property on trust for her son and that DPIPL took the transfer of the Moggill property subject to those trust interests. This evidence goes no further than providing possible support for a finding that Dr Ironside had acknowledged that Ms George may have had some beneficial interest in the Moggill property. It does not prove that Dr Ironside acknowledged that DPIPL held the property on trust for Ms George as trustee for her son.
Thirdly, Ms George complained that the federal magistrate erred in his assessment of the evidence of Mr Lethbridge, the solicitor who witnessed Ms George’s signature to the transfer document (exhibit 87) on 24 August 2005. It will be recalled that exhibit 87 contained the handwritten additions Ms George relied upon as evidencing the existence, in August 2005, of the trust she claimed in favour of her son. At the time he gave evidence, Mr Lethbridge had his affidavit and a copy of exhibit 87 in front of him. Mr Lethbridge testified that he would not usually witness documents that were partially completed. He went on to state, on a number of occasions, that he had no actual recollection of witnessing Ms George’s signature on that document. The federal magistrate referred to this evidence and observed (at [171]) that it was not inconsistent with the finding that Ms George had added words to the document in November 2007 – well after Mr Lethbridge had apparently witnessed her signature.
Ms George contended that the federal magistrate’s assessment of Mr Lethbridge’s evidence was undermined by the fact that Mr Lethbridge had given evidence by telephone and was not, therefore, able to inspect the original document (exhibit 87). Had this occurred, said Ms George, Mr Lethbridge’s memory might have been sparked. As we have intimated (at [125] above), there is no reason to believe that if Mr Lethbridge had seen the original, rather than a copy, his evidence would have been any different. As the federal magistrate found, Mr Lethbridge gave evidence that he had no recollection of the event in question. In this regard, Mr Lethbridge referred to the fact that he witnessed about 30 documents a day, and to the amount of time that had elapsed since he had witnessed Ms George’s signature. In our view, the federal magistrate did not err in his assessment of Mr Lethbridge’s evidence.
Fourthly, Ms George contended that the evidence of Mr Glasspool corroborated her claim and the federal magistrate erred in failing so to find. On 27 August 2005 Mr Glasspool, it will be recalled, witnessed Dr Ironside’s signature on exhibit 87 and the General Tenancy Agreement and Ms George’s signature on the General Tenancy Agreement.
Mr Glasspool testified that he was a justice of the peace and not a lawyer. He gave evidence as to his practice in witnessing signatures on documents. He said that he would not witness a signature on a blank form; nor would he add his initials to a handwritten notation in a document if there was nothing to show that the handwriting had been corrected. Mr Glasspool also said that he would not normally initial the handwritten parts of a form where the entries on the form were a combination of printed and handwritten entries.
As mentioned, the federal magistrate concluded that Mr Glasspool’s evidence was not helpful on the question of whether Ms George’s handwritten notations in exhibit 87 and the General Tenancy Agreement were part of the documents he witnessed on 27 August 2005. Ms George contended that in light of Mr Glasspool’s evidence referred to in the preceding paragraph, the federal magistrate erred in this assessment. Rather, Ms George submitted, Mr Glasspool’s evidence supported her contention that both exhibit 87 and the General Tenancy Agreement contained the crucial contentious handwritten terms at the time they were signed.
In our view, it was open to the federal magistrate to make the assessment of Mr Glasspool’s evidence that he did. That is because, during his evidence, Mr Glasspool accepted that he could not say whether the handwritten notations on exhibit 87 were present at the time that he witnessed Dr Ironside’s signature on that document, nor could he confirm that the contentious notations were part of the General Tenancy Agreement on which he had witnessed Ms George’s and Dr Ironside’s signatures.
Fifthly, Ms George submitted that the evidence of her sister, Ms Wilson, supported her contention that at the time that she entered into the 2005 DPIPL transaction, she (Ms George) held the Moggill property on trust for her son and that DPIPL acquired and held the property on trust for Ms George in the same capacity.
Ms George drew the Court’s attention to Ms Wilson’s oral evidence at the trial that she was upset when she learned from Ms George of the 2005 DPIPL transaction and that Ms George held exhibit 87 in a safety deposit box. Ms Wilson said that she was upset because she thought that her husband was seeking to use the Moggill property to “blackmail” her in a future property settlement. This evidence went nowhere. It did not support Ms George’s claim that in August 2005 she held the Moggill property on trust for her son. Consequently, the federal magistrate did not err in placing no weight on it.
Sixthly, during oral submissions Ms George complained that the federal magistrate erred by not giving any weight to two documents: Exhibits 11 and 92.
Exhibit 11 is a document which purports to be an agreement in the form of an undertaking between Ms George and DPIPL. It was not witnessed by Mr Glasspool, although it carries the same (handwritten) date (27 August 2005) as the dates of the General Tenancy Agreement and exhibit 87, the transfer document. Exhibit 11 contains the following printed clause:
2/The property situated above will not be sold or the mortgage debt increased without consent and knowledge from both parties. If sold the funds will repay the debt/mortgage to Dr Peter Ironside Pty Ltd with the remaining funds going to Lauren K Cordes.
At the end of this clause, there is then inserted in handwriting the words:
in trust for Alexander George.
The document bears the signatures of Dr Ironside and Ms George. Dr Ironside acknowledged in cross-examination that the signature on the document was his. However, he deposed that he did not recall executing such a document, and that the terms set out in the document did not reflect the terms of the arrangement on which he agreed to purchase the Moggill property from Ms George. Dr Ironside acknowledged that in their discussions, Ms George raised the possibility of her son being able to purchase the property in the event that she died. But he denied that Ms George mentioned to him that she held the property on trust for her son.
In the light of that evidence, it was open to the federal magistrate not to place any weight on exhibit 11. Further, the document was not witnessed and the handwritten addition was not initialled by Ms George and Dr Ironside to acknowledge it as an amendment. Having regard to his Honour’s findings concerning Ms George’s fraudulent conduct in altering the documents already referred to, it was open to him not to place any weight on this document.
Exhibit 92 is a form entitled Property Transfer Information which had been completed entirely in Ms George’s hand. The document describes DPIPL as the transferor of the Moggill property and “Lauren Kay Cordes in trust for Alexander George” as the transferee. The document is not signed or witnessed by any other party. It provides no independent support for Ms George’s case. In these circumstances, the federal magistrate did not err in failing to advert to it as corroborative of Ms George’s central contention.
Seventhly, in the course of her oral submissions Ms George referred to the various wills she had made. The wills showed that on her death her son would inherit her property. They provided no support for the notion that she held the property on trust for her son during her lifetime. The same is true of Ms George’s evidence that her husband, Matthew, had acknowledged that, in the event that she predeceased him, her property was to go to her son, and not to Mr George’s side of the family.
Ms George also referred to a certificate of title which showed that she was the legal owner of the Pullenvale property. This document did not support Ms George’s central contention, either.
Consequently, the federal magistrate did not err in giving these documents no weight.
In addition Ms George referred to two documents relating to the Ironside proceeding.
One of the documents is an application to the Family Court dated 14 November 2007, filed by Dr Ironside’s solicitors in the Ironside proceeding, seeking “the construction of the agreement (if any)” between Dr Ironside, Ms Wilson and the trustee [Mr Fletcher], and for the declaration of the bankruptcy trustee’s interest in the Moggill property. Among the orders sought in the application were orders contemplating that Mr Fletcher, as Ms George’s trustee in bankruptcy, might have an interest in the Moggill property on behalf of Ms George as trustee for her son.
The second document comprises the instructions to the mediator in the Ironside proceeding which were prepared by Dr Ironside’s solicitors. The instructions stated that in an affidavit of 15 November 2007 (filed in the Ironside proceeding), Dr Ironside said that he “appeared” to have executed a transfer document in which he transferred the Moggill property to Ms George as trustee for Alexander George. Dr Ironside went on to say that he remained unaware of the meaning and effect of that transfer document.
Ms George submitted that these two documents proved that Dr Ironside acknowledged that, at the time of its transfer, Ms George held the Moggill property on trust for her son. In our view, the references in those two Family Court documents relating to the possibility of Alexander George holding the beneficial interest in the Moggill property do not support the submission. This is because it is plain that, in preparing the two documents and Dr Ironside’s affidavit of 15 November 2007, Dr Ironside’s solicitors took the contents of exhibit 87 (which by then included the handwritten amendments made by Ms George) at face value. This is apparent from the fact that in the affidavit (referred to in the mediation instructions), Dr Ironside said only that he “appeared” to have signed the transfer document transferring the Moggill property to Ms George as trustee for Alexander George, not that he had in fact signed a transfer document to that effect.
It follows that the federal magistrate did not err in placing no weight on these documents either.
In summary, the federal magistrate did not err in making any of the impugned factual findings. It was open to his Honour to find that Ms George had in November 2007 fabricated the documents by making the handwritten notations on the two reprints of the Trusts Act, the contract for sale, exhibit 87 and the General Tenancy Agreement. In making those findings, the federal magistrate placed considerable significance on the fact that Ms George had not referred to the written declarations of trust evidenced by the annotated reprints of the Trusts Act in her matrimonial proceedings against her former husband. We agree with his Honour that this circumstance is particularly telling against Ms George’s credibility.
Ms George advanced a number of arguments in her outline of written submissions relating to the law on the formal requirements for the creation of a trust affecting land. The submissions contained a number of legal propositions and references to observations from cases. The submissions, so far as we could discern, were directed towards a contention that in declaring the trusts upon which she relied, Ms George had complied with the formal requirements of the law for the declaration and creation of a trust of land. The premise for all these submissions was Ms George’s evidence that she had in fact declared and created the trusts for which she contended. In the light of our finding that the federal magistrate did not err in rejecting Ms George’s evidence concerning the declaration and creation of those trusts, it is unnecessary to deal with Ms George’s submissions as to the law.
Grounds 3(a) and 3(b) must be dismissed.
Ground 3(d): The mortgage to NAB
The next ground of appeal (there is no ground 3(c)) is that the federal magistrate erred in failing to find that DPIPL had no legal right to grant the mortgage to NAB which was executed on 19 September 2006 by DPIPL and on 29 September 2006 by NAB.
The ground is founded on the assumption that the federal magistrate erred in failing to find that Ms George held the Moggill property on trust for her son at the time that she transferred that property to DPIPL in September 2005 and that DPIPL held that property on trust for her in that capacity. For the reasons we have given above, the federal magistrate did not err in rejecting Ms George’s claims that she held the Moggill property on trust for her son. It follows that the assumption is unfounded.
By the time DPIPL executed the mortgage in favour of NAB, Ms George was bankrupt. Any interest Ms George may have held in her own right in the Moggill property at that time was held by Mr Fletcher as her trustee in bankruptcy.
We therefore dismiss ground 3(d). There is no ground 3(e). It was deleted by the amended notice of appeal.
Ground 3(f): The Lara horse float
The next ground of appeal is that the federal magistrate erred in failing to find that the Lara horse float was used by Ms George in earning income by personal exertion, had a value less than the limit prescribed by the Bankruptcy Regulations, and was not divisible amongst Ms George’s creditors.
In her statement of claim Ms George sought an order that the Lara horse float vest in her by reason of s 116(2)(c) of the Bankruptcy Act. This is the provision which precludes property a bankrupt uses to earn income by personal exertion (colloquially referred to as a “tool of trade”) from being property divisible amongst the creditors.
The federal magistrate rejected the claim on the basis that the evidence of Ms George and Mr Siebert could not be accepted.
Why the federal magistrate came to deal with this question at all at the trial and in his reasons for decision is a mystery. As we observed above, by a consent order made on 5 December 2008, his Honour had ordered that the Lara horse float vest in the trustee.
The background is as follows. This review of necessity canvasses some matters to which we have already referred.
In November 2008 Mr Siebert swore two affidavits in the proceeding below in which he deposed that he was the owner of the Lara horse float. He said that he had purchased it from a Mr Arthur and he permitted Ms George to use it. He complained in his affidavits that Mr Fletcher had seized the horse float and sought its immediate return.
By an order of 18 November 2008, Mr Siebert then was joined as a party to the proceeding.
On 5 December 2008 the federal magistrate made the consent order relating to the Lara horse float. At the same time his Honour also made an order by consent permitting Mr Siebert to withdraw from the proceeding. He made those orders in open court at a hearing at which Ms George appeared and Mr Siebert was on the telephone.
On 8 December 2008 the federal magistrate began hearing the applications for summary judgment.
In an amended statement of claim filed by Ms George on 23 December 2008 (while his Honour’s judgment was reserved), Ms George pleaded that she had used the Lara horse float to earn income. Ms George also pleaded that Mr Siebert had purchased the horse float from her for $3,000, and that Mr Siebert had:
donated the float to the bankrupt trustee for the continued use by the bankrupt by way of consent orders in the circumstances where the litigation to maintain ownership of such an asset would exceed the original cost of purchase being $3000 (including registration).
Ms George went on to plead that Mr Siebert would not have willingly consented to the order if it were not for the fact that Mr Fletcher had seized the Lara horse float and this had resulted in Mr Siebert being joined as a party to the proceeding. Ms George sought an order that the Lara horse float vest in her under s 116(2)(c)(i) of the Bankruptcy Act.
On 3 February 2009 Mr Fletcher filed a defence to this claim stating that the ownership of the Lara horse float was the subject of the consent orders made on 5 December 2008.
The federal magistrate made no order affecting the Lara horse float, when he made orders on the summary judgment applications (Fletcher v George (No. 6)). In his reasons for judgment in Fletcher v George (No. 6) (at [69]–[70]) his Honour referred to the consent orders in relation to “the horse float”. Although his Honour did not refer expressly in those two paragraphs to the Lara horse float, it is plain that this is the horse float to which he was referring. It appears from those paragraphs that he considered that the question of who was entitled to the property in the Lara horse float had been determined by the consent orders made on 5 December 2008.
As we mentioned in connection with ground 2(a) of the appeal, in [71]–[73] of his reasons in Fletcher v George (No. 6), the federal magistrate then went on to refer to a claim made by Ms George about an “unregistered horse float”. His Honour then found that this claim (together with the claim with respect to household effects and jewellery) could not be the subject of a summary judgment and should go to trial.
The Full Court’s decision on the appeal from that judgment (George v Fletcher (Trustee)), delivered on 28 May 2010, and the attendant orders, did not mention any claim in relation to the Lara horse float. It is apparent, however, that Ms George again raised the question of the Lara horse float before Logan J in her application to stay the orders of the Full Court. At [15] of his reasons for judgment in George v Fletcher (No 2) Logan J observed:
Also read today was another order of the Federal Magistrates Court, one made, originally, on 5 December 2008 and amended on 11 December 2008. That order records the following, materially, as having been made by consent:
That the dual axle Lara construction horse float, registration number 938 QMZ is property vested in the trustee.
There has never been a grant of leave to appeal in respect of the order made in the Federal Magistrates Court, in respect of the float. It is, having regard to the fact that the order concerned was made by consent, a complete and utter distraction to give any further consideration, in these circumstances, to the question of whether there ought to be any stay of the orders of the Full Court on the appeal, in relation to the float. The appeal was in no way concerned with that item of property.
On 16 July 2010 there was a hearing before the federal magistrate apparently for the purpose of making some pre-trial directions. During the course of that hearing his Honour had regard to an amended application which Ms George had filed. In his reasons for decision in Fletcher v George (No. 8) at [12]–[13] he observed:
First, I will dispose of the less controversial matters. First, the horse float, paragraphs 4, 5 and 13. As noted in paragraph 71 of my judgement of 9 February 2009, this chattel is a subject of a factual dispute to be resolved at trial. There was a consent order made concerning its title on 5 December 2008 which matter will be agitated at trial. The trustee presently holds the asset but the bankrupt has claimed that this asset is a tool of trade – see her amended statement of claim, paragraph 57.
This is a matter she can no doubt pursue at trial on the basis of her prospective success in her application for a declaration of title to that chattel. But, ultimately, whether any such application under section 116(2)(c) Bankruptcy Act has prospects depends upon a favourable outcome in her application for declarations as to title. As I understand it, the trustee does not seek to do anything with the chattel to date and there is no need for any formal orders.
It appears that the federal magistrate was of the view that it was open to Ms George to pursue her claim, notwithstanding the existence of the consent orders of 5 December 2008. Further, the federal magistrate appeared to have overlooked the distinction he had drawn (rightly or wrongly) in his reasons in Fletcher v George (No. 6) between the Lara horse float (referred to in [69]–[70]) and the so-called “unregistered horse float” (referred to in [71]–[73]).
During the trial Ms George contended that the Lara horse float was owned by Mr Siebert and also contended that the Lara horse float should be vested in her because it fell within s 116(2)(c)(i) of the Bankruptcy Act. Her case was that she generated income by the conduct of a dressage training business and that prior to the seizure of the Lara horse float she had used the horse float in her business. The federal magistrate found that the only evidence in support of the contention that Ms George conducted a business that required the Lara horse float was her own evidence and the evidence of Mr Siebert. His Honour rejected Ms George’s evidence on the basis of his adverse view of her credit generally. He rejected the evidence of Mr Siebert on the basis that he was “not satisfied” that Mr Siebert was truly impartial and independent.
Ms George submitted that the federal magistrate erred in making these findings.
Mr Fletcher’s response was that, regardless of the fact that the federal magistrate had rejected Ms George’s claim on credibility findings, this ground of appeal should be dismissed because the claim was fundamentally flawed for two reasons. The first was that there was an order of the Federal Magistrates Court that had not been set aside and which was inconsistent with Ms George’s claim that the Lara horse float vested in her as a “tool of trade”. Secondly, Ms George’s claim that the Lara horse float vested in her as a “tool of trade” was inconsistent with her claim that Mr Siebert was the owner of the horse float.
We would dismiss this ground of appeal on the basis that there was at the time of the trial an extant order of the Federal Magistrates Court to the effect that the Lara horse float vested in the trustee.
The manner in which the trial proceeded in relation to this issue is somewhat curious. There is reason to believe that at the time of the judgment in Fletcher v George his Honour believed there were two horse floats: one registered, one unregistered. The evidence about this is confusing. Whether or not this is correct, however, Mr Siebert’s evidence only related to the Lara horse float (which had a registration number but which may have been unregistered at the time he gave evidence). During the course of Mr Siebert’s evidence the federal magistrate drew attention to the fact that, by the consent orders made on 5 December 2008 to which Mr Siebert had been a party, the court had made an order that the Lara horse float vested in the trustee and Mr Siebert had taken no steps to set it aside. Notwithstanding this observation, his Honour continued to permit the question of the ownership and use of the Lara horse float to be explored in the evidence. Further, his Honour did not refer in his reasons to the existence of the consent order, nor its effect upon Ms George’s claim.
It is apparent from the transcript of that hearing that the consent orders made on 5 December 2008 were made consequent upon an agreement between Mr Fletcher and Mr Siebert, whereby Mr Siebert agreed that the Lara horse float vested in Mr Fletcher, as trustee of Ms George’s bankrupt estate, and Mr Fletcher agreed to release Mr Siebert as a party to the proceeding. In other words, the consent orders of 5 December 2008 gave effect to a compromise reached between Mr Siebert and Mr Fletcher.
In Harvey v Phillips (1956) 95 CLR 235, the High Court said, at 243–4, that in that circumstance:
The question whether the compromise is to be set aside depends upon the existence of a ground which would suffice to render a simple contract void or voidable or to entitle the party to equitable relief against it, grounds for example such as illegality, misrepresentation, non-disclosure of a material fact where disclosure is required, duress, mistake, undue influence, abuse of confidence or the like.
There is also authority to the effect that any application to set aside consent orders which give effect to a compromise is to be brought by a separate action (Spies v Commonwealth Bank of Australia (1991) 24 NSWLR 691). There was no evidence of any such application ever having been made by Mr Siebert, the party to the compromise.
Since 5 December 2008, therefore, the consent order has remained in force. We observe that there is nothing in that order which supported Ms George’s pleaded case that Mr Siebert had “donated the horse float to the bankrupt trustee for continued use by [Ms George]”. Nor is there anything in the consent order which evidenced any agreement by Mr Fletcher to permit Ms George to continue to use the Lara horse float. Further, it would follow from the fact that Mr Siebert agreed that the horse float vested in Mr Fletcher as trustee of Ms George’s bankrupt estate without preserving any right in Ms George to continue to use the horse float that Mr Siebert thereby, at least impliedly, terminated any licence which Ms George might previously have enjoyed in relation to the use of the Lara horse float.
In those circumstances, the existence of the consent order vesting the property of the Lara horse float in the trustee in bankruptcy was an insurmountable obstacle to Ms George’s claim and should have been treated as such by the federal magistrate.
Accordingly, we dismiss ground 3(f) of the appeal.
We also observe, in passing, that Ms George contended before this Court that an issue estoppel had arisen on the question of the Lara horse float by reason of a judgment made by Wilson FM in a matrimonial proceeding between Ms George and her husband. The finding to which Ms George referred was a finding that the Lara horse float belonged to Mr Arthur, a client of Ms George. In our view, this finding goes nowhere and does not assist Ms George. It was also contradicted by Mr Siebert in the evidence Ms George, herself, adduced. In any event, findings made by Wilson FM in the matrimonial proceeding would not constitute an issue estoppel in respect of the proceeding before the federal magistrate because Mr Fletcher was not a party to the matrimonial proceeding.
Ground 3(g): The Landcruiser
The next ground of appeal was that the federal magistrate erred in failing to find that the Toyota Landcruiser was property primarily used by Ms George as a means of transport, and that the first $6,850 (being the proceeds of the sale) was not divisible amongst her creditors. Ms George sought an order that Mr Fletcher pay her that sum.
The federal magistrate made no findings about the Landcruiser. This is because the question of the ownership of the Landcruiser and Ms George’s claim that the Landcruiser was exempt property under s 116(2)(ca) of the Bankruptcy Act were the subject of the summary judgment application and of the orders his Honour made on 9 February 2009. One of those orders was a declaration that the legal and beneficial ownership of the Landcruiser vested in the trustee. Ms George failed in her attempt to set aside that order in her appeal to the Full Court.
It appears from Ms George’s written submissions, that, in essence, she makes two complaints.
The first appears to be that the federal magistrate in an earlier decision, namely, Fletcher v George (No. 8) at [21]–[28], in giving directions for the trial, refused to permit Ms George to raise at the trial the question of the ownership of the Landcruiser and the application of s 116(2)(ca) of the Bankruptcy Act.
The second complaint arises from the fact that during the course of the trial the trustee sold the Landcruiser. Ms George’s complaint is that the federal magistrate refused to permit her to ask questions during the trial about any refund to her of the $6,850 under s 116(2C) of the Bankruptcy Act,
As to the first complaint, the federal magistrate did not err in refusing to permit Ms George again to raise these questions at the trial. These questions were decided against her by the federal magistrate in his judgment in Fletcher v George (No. 6) and by the Full Court on appeal.
Neither did his Honour err in relation to the second complaint. That complaint was not the subject of any pleaded claim made in the proceeding. Consequently, it was open to him to prevent Ms George from pursuing it during the trial.
This ground of appeal is dismissed.
Ground 3(i): Chattels allegedly owned in trust
The next ground of appeal (ground (h) having been deleted in the amended notice of appeal) is that the federal magistrate erred in failing to find that all chattels seized from Ms George described within Exhibits 2–9 vested in Ms George as trustee for her son.
Ms George contended that the declaration of trust in respect of the chattels was a trust by parole and did not have to comply with s 11 of the Property Law Act which prescribed the formality of writing in relation to a trust of land or interest in land.
As the federal magistrate did not accept Ms George’s evidence that she had made an oral declaration of trust in favour of her son and as we have found that it was open to the federal magistrate to do so, the premise for this ground of appeal is not made out.
Accordingly, this ground of appeal is also dismissed.
Ground 3(j): Chattels as exempt household or sentimental property
In the final ground of appeal Ms George contended that the federal magistrate erred in failing to find that all the chattels seized from her, which are described in exhibits 2–9, annexure LKG 101, were either exempt household or sentimental property which remained protected under s 116(2) of the Bankruptcy Act and so were not divisible amongst her creditors.
This ground of appeal overlaps with the issues referred to in ground 2(a) of the appeal considered above. We have allowed that ground of appeal and we would, accordingly, also allow this one in so far as it deals with the same items with which ground 2(a) is concerned. Plainly, for the reasons set out above, it was not open to Ms George to argue that some of the seized chattels were exempt property.
CONCLUSION
Ground 2(a), and to the extent that they raise the same issue, grounds 1 (in part) and 3(j) (in part) are allowed. The appeal is otherwise dismissed.
Ms George should pay the costs of DPIPL, Dr Ironside and NAB. There should, however, be some reduction in the costs to which Mr Fletcher, as a successful respondent, would conventionally be entitled to reflect the limited respects in which he did not succeed on the appeal; and possibly also some allowance, in favour of Ms George, for such of her disbursements as related to that aspect of the case. We assume that, as a self-represented appellant, Ms George would have no professional costs to which she would be entitled on a taxation (see George v Fletcher (Trustee) (No 2) [2010] FCAFC 71 at [16]). Our own estimate is that justice would be done in both of these respects if we were to order Ms George to pay 90% of Mr Fletcher’s costs. We would permit, but not encourage, Ms George and Mr Fletcher to apply within 14 days for a variation of our costs order, pending which time the operation of that order will be stayed. If there is such an application, it will be decided on such brief written submissions (not exceeding three pages) as we receive within the times laid out in the orders we propose to make.
I certify that the preceding three hundred and fifty five (355) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Siopis, Jessup and Katzmann. Associate:
Dated: 25 October 2012
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