Gomez v The Honourable Justice Moshinsky Federal Court of Australia & Ors

[2019] HCATrans 22

[2019] HCATrans 022

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne   No M126 of 2018

B e t w e e n -

IRWIN GOMEZ

Plaintiff

and

THE HONOURABLE JUSTICE MOSHINSKY FEDERAL COURT OF AUSTRALIA

First Defendant

JNGO PTY LTD (ACN 168 239 781)

Second Defendant

MICHAEL CARRAFA (AS TRUSTEE)

Third Defendant

KEANE J

TRANSCRIPT OF PROCEEDINGS

FROM BRISBANE BY VIDEO LINK TO MELBOURNE

ON WEDNESDAY, 20 FEBRUARY 2019, AT 10.00 AM

Copyright in the High Court of Australia

MR N. GOMEZ:   Good morning, your Honour, Nathan Gomez representing the second defendant and assisting Mr Gomez, the plaintiff, this morning.  (instructed by the applicant and the second defendant)

MR T.J. SOWDEN:   I appear for the third defendant, your Honour.  (instructed by Zervos Lawyers)

HIS HONOUR:   Mr Gomez, I have read the summons filed on 29 January 2019 by the plaintiff, the affidavit of Irwin Gomez filed on 29 January 2019 and the exhibits thereto, the outline of submissions of the plaintiff and second defendant filed on 11 February 2019, the application for an order to show cause filed on 28 August 2018, the plaintiff’s outline of submissions filed on 28 August 2018, the response of the third defendant filed on 14 January 2019, and the reply of the plaintiff filed on 21 January 2019. 

Now, this is your opportunity to say anything further that you wish to say in support of your summons of 29 January 2019.  In inviting you to do that, I should say that insofar as your summons is concerned, it may be the case that your side is proceeding on the assumption that merely filing the application to show cause somehow or other undoes or renders void in some way the judgment of Justice Moshinsky.  That assumption is not correct.  Do you understand that?

MR N. GOMEZ:   I think so, your Honour.

HIS HONOUR:   Good.  Well, I will let you tell me anything further that you want to tell me in support of your application.

MR N. GOMEZ:   Well, we got the recent application for a stay ‑ ‑ ‑

HIS HONOUR:   That is the application with which I am dealing today.

MR N. GOMEZ:   Yes, that is correct.  All the material is – the legislation and relevant authorities are in the outline of submissions that is before you, your Honour.

HIS HONOUR:   I have read them.

MR N. GOMEZ:   Yes, and I know that you have given Mr Sowden leave to give oral submissions this morning.  I am perfectly content with Mr Sowden giving oral submissions.  My one request is that if there are any authorities that – or legislation, new legislation that he is intending to bring up this morning, that I be given leave to file a reply in writing.

HIS HONOUR:   Yes. I should perhaps make it clear that under the High Court Rules your application – your summons can be determined on the papers, in other words you are not actually entitled to a hearing.

MR N. GOMEZ:   I understand, your Honour.

HIS HONOUR:   I ordered the matter be listed for hearing because I thought I may get some assistance from the parties, but you should understand that the constraints under which this Court works are such that we cannot indulge the parties to the extent that other courts perhaps can.  The position is that if I am not of the view that I would be assisted by giving you further time, then I will proceed to deal with the matter as best I can today on the basis that this oral hearing is actually something of an indulgence to the parties.  In other words, what I am saying is you will have to do your best.

MR N. GOMEZ:   Your Honour, it would be essentially just a short amount of time so when the transcript is available I would only need about a day to file a reply in writing and your Honour can reserve judgment.

HIS HONOUR:   We will see how we go, Mr Gomez.

MR N. GOMEZ:   If Mr Sowden has authorities and legislation ‑ ‑ ‑

HIS HONOUR:   We will see how we go.

MR N. GOMEZ:   Yes, your Honour.

HIS HONOUR:   What I am trying to do is make it clear that in this Court, while the parties no doubt get very focused on the tactical skirmishing, in this Court we tend to try to look at the bigger picture.

MR N. GOMEZ:   I understand.  So basically all of the material is in the outline of submissions.  If your Honour has any questions in relation to that I am happy to answer ‑ ‑ ‑

HIS HONOUR:   All right.  Well, my principal question is this.  Given what I said to you earlier about the mere filing of an application seeking the constitutional writs does not itself set aside the decision of Justice Moshinsky, this Court’s decisions are very clear that the Federal Court, being a superior court of record, its decisions are binding until they are set aside. 

Now, that means in order to succeed today with your application for a stay, you need to show that there is a serious prospect that the decision of Justice Moshinsky will be set aside.  Your principal difficulty in that regard is that that decision – is that your side sought leave to appeal from that decision and leave was refused.  For you now to seek to set aside that decision by your new proceedings is, on the face of things, an abuse of process.  Do you want to address me about that concern?

MR N. GOMEZ:   The special leave disposition stated that the application was dismissed on the basis that there was no – I need to get it in front of me.  As I recall correctly, your Honour, there was no question of general importance but ‑ ‑ ‑

HIS HONOUR:   Their Honours also went on to say “The appeal foreshadowed by the application for special leave enjoyed insufficient prospects of success to warrant the grant of special leave”.  So there is that.  This Court has already concluded that the issues which you wish to agitate with a view to demonstrating error on the part of Justice Moshinsky did not enjoy sufficient prospects to warrant a grant of special leave.  The point that I am trying to make to you, though, is your side sought special leave to appeal on the basis that it contended that there were errors in the judgment of Justice Moshinsky.  That application failed.  Now, to attempt to argue that there were errors that justify the decision of Justice Moshinsky being set aside is, on the face of things, an abuse of process.

MR N. GOMEZ:   I will address your Honour on that.  Usually in the special leave dispositions there is a statement which says something along the lines of:  “There is no reason to doubt the correctness of the decision of the Federal Court” or “The decision of the Federal Court is not attended to with sufficient doubt”.  The special leave disposition that we have in front of us does not specifically have that statement.  So one way of looking at this is to say that the Justices who attended to this special leave might have had doubt with the application – that there were issues as a matter of law in the application and special leave or agitating the appellate jurisdiction of the High Court of Australia would not be the right process - an appeal to this Court. 

So, basically what I am essentially trying to say, your Honour, is if there is not a definitive statement clearly stating that the decision is not attended to with sufficient doubt or something with regard to the correctness of the decision, the matter cannot really be said to be finalised.

HIS HONOUR:   The position is that your side sought leave to appeal the decision of Justice Moshinsky and that application failed. As a result the litigation between you and the third defendant in relation to the correctness of the decision of Justice Moshinsky came to an end. Now to seek to reopen it, by proceedings under section 75(v) of the Constitution, is prima facie an abuse of process.  That litigation has ended.  It ended in a declaration of rights and obligations as between your side and the other side.  Those rights and duties are now there.  You attempted to have them set aside.  You failed.  To attempt again to do so is, on the face of things, an abuse of process.

MR N. GOMEZ:   I understand what you are saying, your Honour, but given that it does not specifically state that the Federal Court of Australia – the decision was not attended to with doubt, there was doubt in the minds of the Justices, in this application that is before us there are many jurisdictional errors, serious jurisdictional errors that need to be addressed, some of which include - including retrospective rules, not properly speculating, relying on compound questions as a result of adducing evidence, a failure to properly observe well‑established principles of law, namely that ‑ ‑ ‑

HIS HONOUR:   Mr Gomez, all and any of these contentions were available to you – were available to your side in the application for special leave that was refused.

MR N. GOMEZ:   We need to know or have some clarity as to why these issues were not addressed in the special leave process.

HIS HONOUR:   No, I do not really, given that there is no reason why, if they were good arguments, you could not have made them then.

MR N. GOMEZ:   These arguments were made, your Honour, and ‑ ‑ ‑

HIS HONOUR:   All the more reason to hold that these arguments have been concluded as between your side and the other side upon the refusal of special leave.

MR N. GOMEZ:   Fundamentally, what we are saying is that no reasons were given as to why those do not constitute as errors and why – or whether there is doubt or whether there is not doubt in the judgment and that is principally this application.

HIS HONOUR:   Mr Gomez, I should also tell you – and perhaps you should know it – that it is the practice of the court that only brief reasons are given for the refusal of special leave.  These are the sorts of reasons that it is the practice of the court to give.

MR N. GOMEZ:   So if there were errors in the judgment how are litigants supposed to know of these errors, or how are they supposed to be informed, is my question.

HIS HONOUR:   Well, the litigants advance contentions as to the existence of errors that justify the grant of special leave and if the court is

not convinced it refuses special leave on the footing that those contentions are rejected.

MR N. GOMEZ:   So someone - at the end of the day, I think, the primary contention is someone needs to answer for jurisdictional errors that are made in the judgment below if they are ‑ ‑ ‑

HIS HONOUR:   Not if the answer is sought in proceedings that are an abuse of process.

MR N. GOMEZ:   I am not sure that it can constitute as an abuse of process, your Honour, given that the court has not concluded ‑ ‑ ‑

HIS HONOUR:   Mr Gomez, I am not concerned about what you are not sure about.  Unfortunately – and I understand that this is a difficult situation for you and your family – but unfortunately the situation is that you are here making submissions.  You are not here to receive an education.  I really have to ask you, given that I think we are going around in circles, is there anything further you want to say as to why this application is not an abuse of process?

MR N. GOMEZ:   Fundamentally, the jurisdictional errors stipulated in the judgment below need to be answered by someone before the matter is finalised.  That is the primary contention, your Honour.  Jurisdictional errors must be answered in the interest of proper observation of the law.

HIS HONOUR:   All right, thank you.  Mr Sowden, I do not think I need to trouble you.  If you would just remain seated I will give some short reasons for the decision that I am about to give.

MR SOWDEN:   Thank you, your Honour.

HIS HONOUR:   On 28 August 2018, the plaintiff, Mr Gomez, filed an application in the original jurisdiction of this Court for constitutional writs under section 75(v) of the Constitution in respect of the judgment of the Federal Court of Australia (Justice Moshinsky).  This Court had earlier dismissed an application by the plaintiff for special leave to appeal from that judgment.

On 29 January 2019, the plaintiff filed another summons in which he sought an urgent hearing and further relief, including an order to stay the proceeding commenced in the Federal Circuit Court of Australia by the third defendant against the plaintiff to enforce the third defendant’s rights arising out of the judgment of Justice Moshinsky.  The third defendant to the plaintiff’s application is the trustee in bankruptcy of the bankrupt estate of the plaintiff’s wife.  The various orders sought by the plaintiff are to prevent the third defendant from dealing with particular assets of the bankrupt estate in the course of winding it up.

A sequestration order had been made against the estate of the plaintiff’s wife on 21 August 2014.  The date of commencement of her bankruptcy was 2 July 2014, after she had failed to comply with a bankruptcy notice served on 10 June 2014. 

Shortly prior to the bankruptcy, the plaintiff’s wife transferred to the plaintiff her interests in two pieces of real estate, and a sum of money.  The two pieces of real estate, the Altona and Hallam properties, were transferred on 25 June 2014 from the joint names of the plaintiff and his wife to the plaintiff alone for a total consideration of $60,000.  The sum of $171,480 was transferred on 27 February 2014 from the plaintiff’s wife to the second defendant, JNGO Pty Ltd.  That is an entity controlled by their son, Mr Nathan Gomez, as the sole director and shareholder.

The third defendant applied to the Federal Circuit Court of Australia for declarations and consequential orders under sections 120 and 121 of the Bankruptcy Act1966 (Cth) that the transfers of property, including the transfer of the sum of money, were void as against the trustee in bankruptcy. The application was made on the basis that the transfers by the bankrupt occurred within five years of the commencement of the bankruptcy and the transferee in each instance gave no consideration or consideration of less than the market value of the property.

The plaintiff resisted the third defendant’s claim asserting an equity of exoneration and rights as a surety.  The equity of exoneration was said to arise because the properties that were owned jointly by the plaintiff and the bankrupt, including the Altona and Hallam properties, were mortgaged to fund the property investment and development activities of a company wholly owned by the bankrupt.  In these circumstances it was contended that the plaintiff had acted as a surety for a debt incurred for the sole benefit of the bankrupt.

The equity of exoneration contention was also relied upon by JNGO which argued that the money it received from the bankrupt was actually money lent to it by the plaintiff.  In applying the equity of exoneration, the plaintiff was, it was said, entitled to the money. 

The plaintiff did not appear at the trial. He applied for an adjournment of the trial but that application was refused by the primary judge. Mr Nathan Gomez appeared on behalf of JNGO Pty Ltd. Since JNGO’s case was dependent on the case of the plaintiff, JNGO addressed the grounds that the plaintiff would have advanced had the plaintiff been present. The primary judge, Judge Riley, held that the requirements of section 120 of the Bankruptcy Act were satisfied.  The primary judge found as a fact that the plaintiff did not act as surety for a debt incurred for the sole benefit of the bankrupt.  Accordingly, the plaintiff’s claim for an equity of exoneration was rejected.

The primary judge also rejected JNGO’s claim that the transfer of $171,480 was a loan from the plaintiff to JNGO. The primary judge made declarations to the effect that the transfers of property were void pursuant to section 120 of the Bankruptcy Act and also ordered that the amount of $123,139.01 held by JNGO, because at the time of trial JNGO no longer had all of the amount transferred, be paid to the third defendant. 

The plaintiff and JNGO appealed to the Federal Court of Australia (Justice Moshinsky) from the orders of the Federal Circuit Court challenging a number of the factual findings made by the primary judge and the conclusion that the equity of exoneration was not established.  Leave was given for the plaintiff to challenge the primary judge’s refusal of the adjournment application.

Justice Moshinsky dismissed the appeal, concluding that the plaintiff and second defendant had failed to establish that the primary judge erred in relation either to the factual findings or the overall conclusion.  Justice Moshinsky also concluded that no error was shown in the primary judge’s refusal of the adjournment or that the plaintiff and second defendant were denied procedural fairness in the conduct of the trial.

The plaintiff applied for special leave to appeal on the grounds that Justice Moshinsky had erred in law and had failed to address the errors of law in the judgment of the primary judge. The plaintiff’s application was filed outside the time limit prescribed by rule 41.02.1 of the High Court Rules 2004 (Cth). The application for special leave was refused by Justices Bell and Gageler. Their Honours concluded that it would be futile to grant an extension of time that was necessary to enable the application to go forward as the application did not identify any suitable question of general importance and because the appeal foreshadowed by the application for special leave enjoyed insufficient prospects of success to warrant the grant of special leave to appeal.

Approximately two weeks after the Court’s dismissal of the plaintiff’s application for special leave, the plaintiff filed his application under section 75(v) of the Constitution contending that Justice Moshinsky should be compelled to defend his Honour’s judgment against allegations of jurisdictional error by the plaintiff and that his Honour’s orders, and the orders of the primary judge, should be quashed by a writ of certiorari.  In the alternative, the plaintiff sought a writ of certiorari to quash the orders in the judgments below.  The plaintiff also sought interlocutory relief in the nature of an injunction against the third defendant from dealing with the properties of the bankrupt estate that were the subject of the transfers by the bankrupt that have been declared void.

Justice Moshinsky, the first defendant to this new application, filed only a submitting appearance on 4 September 2018. Each of the second and third defendants filed a response on 14 January 2019. The response of the second defendant, JNGO Pty Ltd, supported the plaintiff. The third defendant, on the other hand, contended that the plaintiff’s application is an abuse of process insofar as it constituted a de facto appeal after the plaintiff’s appeal rights had been exhausted. It was said that the plaintiff’s allegations of jurisdictional error advanced substantially the same assertions as to error as were advanced in the plaintiff’s application for special leave. The third defendant also objected to the writ of certiorari under section 75(v) of the Constitution on the basis of the lapse of time since the judgment now sought to be challenged.

On the footing that the transfers of the assets by the bankrupt were void, the third defendant applied on 7 December 2018 to the Federal Circuit Court for orders to deal with those assets in the winding up of the bankrupt estate.  The plaintiff’s summons of 29 January 2019 was quite evidently prompted by the commencement of these proceedings by the third defendant against the plaintiff. 

The plaintiff now applies for an order to stay or dismiss the Federal Circuit Court proceeding and for the third defendant to be restrained from otherwise dealing with the properties or lodging further incidental proceedings.  The plaintiff argues that as the matter is now before this Court it would be improper and vexatious for the third defendant to commence a concurrent proceeding in the Federal Circuit Court. 

Further, the plaintiff seeks a stay of proceedings and orders made in the judgments of the primary judge and on appeal by Justice Moshinsky.  An order for the stay of proceedings commenced by the third defendant in the Federal Circuit Court will be made by this Court only if the plaintiff can show that there is a serious question to be determined as to whether the third defendant is entitled to proceed to enforce his rights under the judgment of Justice Moshinsky.  The plaintiff has failed in this regard.

It is necessary to appreciate that it is well established that because the Federal Court, as a superior court, has authority to make a binding decision that it has jurisdiction unless and until set aside on appeal or pursuant to section 75(v) of the Constitution:  see this Court’s decision in Re Macks; Ex parte Saint (2000) 204 CLR 158 at 177-178 [22]-[23], 185-186 [53], 211 [140]-[142], 235-237 [214]-[220], 279 [343]-[344]. Accordingly, the rights and duties established as between the parties by the judgment of Justice Moshinsky are binding on them unless and until that judgment is set aside. The mere commencement of proceedings asserting jurisdictional error on his Honour’s part is no basis on which to ignore the judgment.

Further, the attempt now to relitigate those issues that were finally concluded by this Court’s refusal of special leave to appeal is a clear abuse of the processes of the Court.  There is no prospect that this Court will entertain such an abuse of process.  Such an abuse of process cannot be allowed to impede the third defendants in the exercise of the rights established by the judgment of Justice Moshinsky.  Accordingly, the plaintiff’s summons of 29 January 2019 should be dismissed.

Is there any question as to costs, Mr Sowden?

MR SOWDEN:   Yes, I seek an order for costs, your Honour.

HIS HONOUR:   What do you say about that, Mr Gomez?

MR N. GOMEZ:   I have one question, your Honour.  When the appeals – constitutional writs are only sought after the appeals process has been exhausted.  When the appeals court does not address ‑ ‑ ‑

HIS HONOUR:   Mr Gomez, I have explained that to seek to agitate the same issues that have already been concluded collaterally in these proceedings is an abuse of process.  I understand that this is a difficult time for you and your family but I am afraid I have said what I have said and that is an end of it.  Now, do you have anything to say as to why costs should not follow the event upon the dismissal of your application?

MR N. GOMEZ:   I have nothing to say, your Honour.

HIS HONOUR:   Very well.  The plaintiff is ordered to pay the third defendant’s costs of and incidental to the summons. 

The Court will now adjourn.

AT 10.29 AM THE MATTER WAS CONCLUDED