Haskins, David v Insolvency & Trustee Service Australia
[1996] FCA 914
•3 OCTOBER 1996
CATCHWORDS
. VG 194/96
APPEAL - BANKRUPTCY - appeal from decision upholding trustee's decision not to pursue bankrupts' litigation - assessment of merits of proposed litigation by trial judge - litigants in person - nature of relationship of bankrupt and bankrupt's trustee
. VG 238/96
APPEAL - BANKRUPTCY - appeal from decision not to remove trustee from office - alleged improper rejection of evidence - litigants in person
. VG 400/96
APPEAL - BANKRUPTCY - appeals from sanctioning of settlement between trustee and principal creditor, from procedural directions, and from refusals of stay applications - litigants in person - interference with discretion of court at first instance
Bankruptcy Act 1966 ss 170(2), 177, 178, 179
House v The King (1936) 55 CLR 499
DAVID HASKINS & ANOR v INSOLVENCY AND TRUSTEE SERVICE AUSTRALIA No VG 194 of 1996
DAVID HASKINS & ANOR v INSOLVENCY AND TRUSTEE SERVICE AUSTRALIA No VG 238 of 1996
DAVID HASKINS & ANOR v INSOLVENCY AND TRUSTEE SERVICE AUSTRALIA No VG 400 of 1996
SPENDER, DRUMMOND and R D NICHOLSON JJ
MELBOURNE
3 OCTOBER 1996
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
ON APPEAL from a single judge of the Federal Court of Australia
No VG 194 of 1996
BETWEEN: DAVID HASKINS and CONNIE CASSAR
Appellants
AND: INSOLVENCY AND TRUSTEE SERVICE AUSTRALIA
Respondent
ON APPEAL from a single judge of the Federal Court of Australia
No VG 238 of 1996
BETWEEN: DAVID HASKINS and CONNIE CASSAR
Appellants
AND: INSOLVENCY AND TRUSTEE SERVICE AUSTRALIA
Respondent
ON APPEAL from various single judges of the Federal Court of Australia
No VG 400 of 1996
BETWEEN: CONNIE CASSAR and DAVID HASKINS
Appellants
AND: INSOLVENCY AND TRUSTEE SERVICE AUSTRALIA
Respondent
CORAM: Spender, Drummond and R D Nicholson JJ
PLACE: Melbourne
DATE: 3 October 1996
MINUTES OF ORDER
THE COURT ORDERS THAT:
Each appeal is dismissed, with costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
ON APPEAL from a single judge of the Federal Court of Australia
No VG 194 of 1996
BETWEEN: DAVID HASKINS and CONNIE CASSAR
Appellants
AND: INSOLVENCY AND TRUSTEE SERVICE AUSTRALIA
Respondent
ON APPEAL from a single judge of the Federal Court of Australia
No VG 238 of 1996
BETWEEN: DAVID HASKINS and CONNIE CASSAR
Appellants
AND: INSOLVENCY AND TRUSTEE SERVICE AUSTRALIA
Respondent
ON APPEAL from various single judges of the Federal Court of Australia
No VG 400 of 1996
BETWEEN: CONNIE CASSAR and DAVID HASKINS
Appellants
AND: INSOLVENCY AND TRUSTEE SERVICE AUSTRALIA
Respondent
CORAM: Spender, Drummond and R D Nicholson JJ
PLACE: Melbourne
DATE: 3 October 1996
REASONS FOR JUDGMENT
SPENDER J:
These are a series of appeals by Connie Cassar and David Haskins, the appellants, from orders by five single
judges of the Federal Court exercising jurisdiction in bankruptcy.
The appeals concern decisions and conduct by the official trustee in the administration of the appellants' estates and orders and directions given by the court on various occasions in the resolution of the appellants claims concerning those matters.
The appellants became bankrupt by the presentation of their own joint petition on 8 January 1996. On that day, by virtue of ss 58(1) and 116(1) of the Bankruptcy Act 1966 (the 'Act'), the property of the appellants divisible amongst their creditors became vested in the Official Trustee (the 'trustee'). This included any proprietorial rights of action the appellants had against the builder of a pre-fabricated home on their land at Tawonga, Victoria, prior to the date of their bankruptcy.
It is apparent that the appellants either do not understand or do not fully appreciate the significance of this event and the implications it has and continues to have for them. In addition, they labour under a fundamental misconception as to their relationship with their trustee in bankruptcy. It is implicit in the arguments put on many occasions to judges of this court that they regard the trustee of their estates in some sense as their agent and answerable to them in every aspect of the administration of their estates. In the matter of the continuation of litigation against the builder, they assert that the trustee acts unreasonably unless he follows their wishes.
The trustee of a bankrupt estate has the obligations imposed by the Act. Central to the functions of a trustee is the duty to get in the property divisible amongst the creditors of the bankrupt and distribute it rateably amongst them. As the name indicates, a trustee owes fiduciary duties. Those duties are owed to the creditors of the bankrupt. A trustee of course is not to ignore the interests of the bankrupts and the trustee has to act bona fide in the interests of the creditors of the bankrupts as a whole. But in no way is the trustee the agent of the bankrupts. In no way is the trustee subject to the direction of the bankrupt as the bankrupt's principal. Nor is the trustee accountable to the bankrupt other than as required by the Act.
Division 4 of Part VIII of the Act is headed "Control over Trustees". The sections in that Division, including the section headings, are as follows':
"177(1) Subject to this Act, in the administration of the estate of a bankrupt, the trustee shall have regard to any lawful directions given by resolution of the creditors at a meeting of the creditors or by the committee of inspection.
178If the bankrupt, a creditor or any other person is affected by any act, omission or decision of the trustee, he may apply to the Court, and the Court may make such order in the matter as it thinks just and equitable.
179(1)The Court may, on the application of the Registrar, the Inspector-General, a creditor or the bankrupt, inquire into the conduct of a trustee in relation to a bankruptcy and may do one or both of the following:-
(a)remove the trustee from office; and
(b)make such order as it thinks proper.
179(2)The Registrar, the Inspector-General or a creditor may at any time require a trustee to answer an inquiry in relation to the bankrupt's estate or affairs. "
The persons entitled under s 179(2) of the Act do not include the bankrupts.
The primary sections called in aid by the appellants in their various motions are those of ss 178 and 179 of the Act.
It is necessary to set out, in some little detail unfortunately, what this court is asked to decide and the grounds that are relied on by the appellant. Before I do that I note that at the outset of the hearing of the appeals the appellant sought to put before the court an extensive bundle of material. Objection was taken to the admission of this material by counsel on behalf of the respondent.
It is true to say that much of the material would not be admissible on the ordinary tests for the receipt of further material on an appeal. And part of the material which Mr Haskins handed up to the court would, in the ordinary course, be objectionable for other reasons. However, having regard to the fact that the appellants are and have been acting for themselves, the court has had regard to the entirety of the material, including the material which Mr Haskins wanted us to have regard to. The court has acted in this way lest there be any aspect of the entire material available to the appellants which would assist their submissions.
The present appeals are from orders of various judges of the court and they have been allotted by the court file numbers VG194, VG238 and VG400 of 1996.
The appeal numbered VG194 arose out of an application filed on 29 February 1996 by Ms Cassar and Mr Haskins under s 178 of the Act. In this application they challenged the decision of the Official Trustee not to pursue a number of cases which had been commenced by the appellants in the Supreme Court of Victoria prior to their bankruptcy.
On 10 April 1996, Sundberg J dismissed the application, and on 12 April 1996 the appellants filed a notice of appeal against that decision.
The appeal numbered VG238 arose out of an application filed on 10 April 1996 by Ms Cassar and Mr Haskins under s 179 of the Act. That day was the same day on which Sundberg J had made the orders the subject of appeal numbered VG194. In the application in appeal numbered VG238 made on 10 April 1996 the appellants sought the removal of the Official Trustee as trustee of their estate. Much of this case was based on the same events which were the subject of the proceedings before Sundberg J. Heerey J, on 24 April 1996, dismissed the application and on 26 April 1996 the appellants filed a notice of appeal against the decision of Heerey J.
Proceedings VG400 of 1996 arise out of the following events. On 8 May 1996 Ms Cassar and Mr Haskins filed a notice of motion which claimed:
"1. The trustee is to stop procrastinating with the Appellants' property at 66 St. Bernard Drive, Tawonga South, and is to sell it forthwith, giving the Appellants notice of when it is to be sold, and proceeds from the sale to be put into an interest bearing account.
2.If proceeds are to come from any Insurance claim on the above property, then this money is also to be put in the interest bearing account.
3.The Appellants also seek that any other funds that could be owed to them from claims against any of their creditors, to also go into the interest bearing account, if so obtained.
4.Apart from item 1, the Appellants seek that the trustee takes no further action in the administration of the Appellants estate pending the outcome of their Appeal Nos. VG194 of 1996, and VG 238 of 1996. "
On 16 May 1996, the notice of motion filed 8 May came before Ryan J, who ordered:
"1. That the motion on notice dated 8 May 1996 be treated as an application for directions in the administration of the bankrupt estate of David Haskins and Connie Cassar (proceedings No. VB 35/96).
That the said motion be adjourned to 19 June 1996.
3.That the Official Receiver file and serve by 12 June 1996 an affidavit setting out the results of inquiries made and any opinion formed by him as to the existence of any charge or other security over the property at 66 St Bernard Drive Tawonga South and any proposal which he may then have for the sale of the said property.
4.That the Official Receiver's costs of this day be reserved. "
On 19 June 1996 Ryan J made the following orders in relation to that motion:
"1. That the motion on notice dated 8 May 1996 be adjourned to 24 July 1996.
2.That the Official Receiver file and serve by 28 June 1996 any application which he may be advised, such application to be returnable on 24 July 1996.
3.That the Official Receiver file and serve by 28 June 1996 any affidavit or affidavits on which he intends to rely in support of the application referred to in paragraph 2 of this order or on the hearing of the motion on notice dated 8 May 1996 which by order of Ryan J of 16 May 1996 is to be treated as an application for directions in the administration of the bankrupt estates of David Haskins and Connie Cassar.
4.That David Haskins and Connie Cassar file and serve by 12 July 1996 any affidavit or affidavits in which they intend to rely in answer to any affidavits referred to in paragraph 3 of this order, and file and serve also by 12 July 1996 any notice requiring the deponent of any such affidavit to attend for cross-examination on 24 July 1996.
5.That the time for preparation of appeal books in matters numbered VG 194 and VG 238 of 1996 be extended to 18 August 1996 or as may be otherwise ordered on 24 July 1996.
6.That the Official receiver's costs of this day be reserved. "
On 28 June 1996 the Official Trustee filed an application under s 135 of the Act for leave to enter into terms of settlement with the major creditor of the estates and ancillary orders. On 11 July 1996, Ms Cassar and Mr Haskins filed a notice of appeal against the orders made by Ryan J on 19 June 1996. In respect of that notice of appeal, North J on 23 September 1996 noted that:
"This document is six pages long and on page two, under the heading "Grounds", begin 3½ pages of general complaints which range over a wide area of the wrongs which Ms Cassar and Mr Haskins allege against numerous parties whom they hold responsible for the overall situation in which they presently find themselves. "
On 23 September 1996, North J, in his reasons for judgment at page 7, set out a small extract "for the purpose of giving some impression of the style of the document". He set out paragraph (e) of the notice of appeal against the orders of Ryan J, filed on 11 June 1996, which extract commences:
"The orders made by His Honour Justice Ryan, which are only the orders that Mr Carroll sought, is a ploy by Mr Carroll (AGS), and Mr Willoughby (ITSA), to stall this case for another month, which will enable them to get a decision against us and in favour of the builder, in doing a deal with the builder by allowing him to remove the house off our land. We ask this Honourable Court, how can this be allowed when the house is a fixture on the land making it property under the Torrens Title as a fixture, and not separable, eg: in our case with the builder, the contract signed was a Uniform Housing Contract, and not a Transportable Homes Contract, which would have been more favourable to us, yet now that it suits the builder, the house is being claimed as a Transportable Home. We draw the courts' attention to the Conspiracy and Denial of Natural Justice, between the builder, his solicitor, ITSA and their solicitor, Victoria Police, and the New South Wales Police, and it's a fact that there's been communication between all of them. The bankrupts estate was damaged by fire in August, 1994. The Victoria Police spent eleven (11) months investigating, and decided that they wouldn't lay charges against the Appellants, but the builder and his solicitor then convinced the Victoria Police to hand over the file to the New South Wales Police to see if they could lay charges against Mr Haskins, one of the named Appellants. After many months the Summons issued upon Mr Haskins, was that he made the builders' solicitor in fear that Mr Haskins would damage the property, namely 66 St Bernard Drive, Tawonga South, belonging to the builder. We draw the courts' attention that this Summons is still current, and if ITSA and the builder get their way, to allow the builder to remove the house off the land, then this would be used as proof against Mr Haskins that the house belonged to the builder, leaving Mr Haskins looking at being charged on a maximum of five (5) years imprisonment, if found guilty. The house is not the builders', it's on our land, and the Appellants are still the registered proprietors. Mr Willoughby (ITSA) informed the Appellants as early as the first or second meeting with him, that the house and land would vest into the Trustee, which to date still hasn't happened, and all that he's done is put a charge on the title. What the Appellants have found out is that the builder put one (1) illegal 'Warrant of Seizure', in November, 1995, and attempted to put a second illegal 'Warrant of Seizure' on 24th January, 1996, which all parties knew was an illegal move to do as the appellants had already been declared bankrupt. "
On 24 and 29 July, Jenkinson J made orders in relation to the application by the Official Trustee under s 135, and in relation to the motion, notice of which was filed on 8 May 1996 (which notice of motion was the subject of the two orders by Ryan J). The orders which Jenkinson J made on 24 July were:
"1. That each of the motions of which notice specified in the notice of motion filed 8 May 1996 be dismissed.
2.That the Trustee of the bankrupts' estate have leave to make the compromise which is expressed in the Terms of Settlement of which a copy is set out in the Schedule to this order. "
The orders made on 29 July 1996 were:
"1. That the orders made on 24 July 1996 giving leave to the Trustee of the bankrupts' estate to make the compromise specified in the said order be stayed until 1.00pm on 30 July 1996.
That further proceedings under the said order and under the said compromise be stayed until 1.00pm 30 July 1996.
3.That the bankrupts have leave to move on 30 July 1996 for a further stay of the said order upon filing and serving a Notice of Appeal against the said order and filing and serving Notice of the said Motion. "
The Terms of Settlement referred to in these two sets of orders contained the following terms:
"1. That in consideration for the release by Brae-Villa against any claim for the land or against the bankrupt estate of the bankrupts, the Official Trustee will allow Brae-Villa full and free access to the land for the purpose of removing and retention of the 'works' as that term is defined in the building contract dated 16 October 1992 and full and unfettered title to those works PROVIDED THAT nothing in this clause is taken to be a release by Brae-Villa with respect to the bankrupts personally to the extent that any competent claims may be brought or defence to any future action or actions by the bankrupts made.
2.That in further consideration for the release by Brae-Villa against any claim for the land the Official Trustee agrees not to assign any rights in relation to any action arising out of the building contract to the bankrupts.
Brae-Villa shall have exclusive, free and uninterrupted possession of and access to the land for the purpose of removal of the works. All costs, expenses or losses incurred or occasioned by Brae-Villa in the course of removal of the works shall be borne by Brae-Villa and no claim shall be made against the Official Trustee. Brae-Villa shall reinstate the land as near to the condition it was in before the commencement of the works.
Brae-Villa shall commence removal of the works from the land within 21 days of any order of the Federal Court approving these Terms of Settlement as between Brae-Villa and the official Trustee.
Brae-Villa will provide to the Official Trustee a duly completed withdrawal of the caveat identified in Dealing number S453786D lodged 23 April 1993 over the land. Such withdrawal of caveat shall be provided prior to the entry by Brae-Villa onto the land for removal of the works and shall be held in trust by the Official Trustee until completion of the removal of the said works.
Subject to compliance by the parties with each of the obligations imposed by these Terms herein, the parties hereto will mutually release and forever discharge each other from all claims and demands, whether past or future, related to, or in connection with, the administration of the bankrupts' estate.
These Terms are conditional upon approval by the Federal Court and subject to any orders made in relation to them.
The Official Trustee agrees to seek orders from the Court to enable Brae-Villa, its servants and agents, to remove the home without hindrance from the bankrupts and/or their servants and agents. "
On 30 July 1996 Ms Cassar and Mr Haskins filed a document headed "AMENDMENT BY SUPPLEMENTARY NOTICE":
"1. TAKE NOTICE that the appellants appeal from the whole of the orders of Justice Jenkinson given on the 24th July, 1996, at Melbourne.
The Appellants seek to have this amendment combined with their current Appeal No. VG 400 of 1996. His Honour Justice Jenkinsons' orders are part of the hearing heard in front of His Honour Justice Ryan.
The Appellants also seek to include in the amendment all the documentation produced by the Respondent and its' solicitor, Mr. Gavin Carroll of the Australian Government Solicitors on the 24th July, 1996, in front of His Honour Justice Jenkinson, and for these documents to be included in the Draft Index of Appeal Papers.
The Appellants seek to have all the file, including personal notes, and all correspondence concerning the major creditor held by the Official Trustee, and for certain of its' employees to be required to give evidence, and be cross examined on oath. This is also required of the Australian Government Solicitors, and certain of its' employees, and the files to be included in the above Draft Index. "
On the same day, that is to say 30 July 1996, they filed a notice of motion in the original application which sought orders:
"1. The court grants a stay on His Honour Justice Jenkinsons' orders made on the 24th July, 1996, unlimited as to time in Bankruptcy proceedings because there is an appeal pending in this Honourable Court.
The Appellants seek the stay on the grounds that it would deprive them the means of prosecuting the appeal, also filed and served on the 30th July, 1996.
The Appellants also seek the court to make an order upon the Australian Government Solicitors, and the Insolvency and Trustee Service Australia (Official Trustee of the bankrupts' estate), to be stopped from having any further dealings with the estate pending the outcome of the appeal. "
On 30 July, Merkel J made the following orders in relation to the motion, notice of which had been filed by the appellants on 30 July:
"1. Extend stay granted on operation of order of Jenkinson J till 4.15pm today or further order.
Grant leave to respondent to file affidavit.
Adjourn till 2.15pm today.
That the Notice of Motion dated 30 July 1996 of the two bankrupts be dismissed.
That the costs are reserved.
That the order extending the stay be vacated. "
On 6 August 1996 the appellants filed a document headed "AMENDMENT BY SUPPLEMENTARY NOTICE":
"1. TAKE NOTICE that the appellants appeal from the whole of the orders of Justice Merkel given on the 30th July, 1996, at Melbourne.
2.The Appellants seek to have this amendment combined with their current Appeal No. VG 400 of 1996. His Honour Justice Merkels' orders are in reference to the orders made by His Honour Justice Jenkinson, dated 29th July, 1996.
3.The Appellants also seek to include in the amendment all the documentation produced by the Respondent and its' solicitor, Mr. Gavin Carroll of the Australian Government Solicitors on the 30th July, 1996, in front of His Honour Justice Merkel, and for these documents to be included in the Draft Index of Appeal Papers.
4.The Appellants seek to have all the file, including personal notes, and all correspondence concerning the major creditor held by the Official Trustee, and for certain of its' employees to be required to give evidence, and be cross examined on oath. This is also required of the Australian Government Solicitors, and certain of its' employees, and the files to be included in the above Draft Index. "
A motion was filed on 15 August 1996 by the appellants, which was determined by North J on 23 September 1996. There is no appeal from the orders of North J and it is therefore unnecessary to consider the subject matter of that motion. On the same day, 23 September 1996, North J dismissed an application by the Official Trustee for security for costs of the appeals on the ground that:
"...the delay in bringing the application [was] determinative against awarding security for costs of the appeals. "
North J, in response to a notice of motion by the Official Trustee on that day, the notices of motion being directed to orders seeking that various of the notices of appeals be struck out as incompetent or embarrassing or scandalous, also said:
"I expect that Ms Cassar and Mr Haskins could make the bases of their challenges clearer by shortly stating the specific complaints against each order under challenge. "
Pursuant to s 25(2B)(c) of the Federal Court of Australia Act 1976, which permits a judge of the court to give directions concerning the conduct of an appeal, North J directed that "Ms Cassar and Mr Haskins prepare and serve a document of no more than one page in respect of each of the challenges to orders of Ryan J, Jenkinson J and Merkel J, setting out in very short summary the reasons why they say each specific order is wrong".
The appellants have filed shorter documents, although they are somewhat longer than indicated by North J.
The litigious history in the Federal Court is almost matched by the history of litigation involving the appellant and the builder in the Supreme Court of Victoria prior to their bankruptcy. Contrary to the beliefs of the appellants, that litigation is largely irrelevant to the present appeals although the prospects of success of the appellants in the Supreme Court litigation is material to the decision by the Official Trustee not to pursue those proceedings.
A building contract was entered into between the bankrupts and Brae-Villa in October 1992. Brae-Villa contracted to erect a prefabricated house on the bankrupt's property at 66 St Bernard Drive, Tawonga, Victoria. The local shire refused to issue a certificate of occupancy for the premises once erected, on the basis that the dwelling contained a number of building defects. The dispute arose when Brae-Villa refused to remedy the defects in the building. Subsequent to those events, in summary form what occurred in the Supreme Court of Victoria was this. The matter went to arbitration, pursuant to a clause in the contract signed in October 1992.
On 16 June 1994 an interim award was handed down by the arbitrator, a Mr Robert Thyer, in favour of the builder. On 20 July 1994 the appellants appealed to Byrne J in the Supreme Court of Victoria in proceeding 6942 of 1994 against the interim award. That appeal was dismissed with an order for costs against the bankrupts. The bankrupts have made a number of complaints, including to the Chief Justice, that no reasons were given by Byrne J (a matter to which I will shortly come because it is referred to by Sundberg J in his reasons for judgment). At that appeal to Byrne J, the bankrupts were represented by counsel.
On 13 December 1994, in proceedings 8673 of 1994, Brae-Villa applied to Master Wheeler for leave to enforce the award, which application was granted. On 17 July 1995, in proceedings 5137 of 1995, the bankrupts applied to set aside the order of Master Wheeler and applied for leave to appeal to remove the arbitrator for misconduct. On 27 July 1995, O'Bryan J handed down his decision granting leave to appeal. No order was made in relation to Master Wheeler's order, and the costs were awarded against the bankrupts. On 4 October 1995 the arbitrator handed down his final order, which included an order for costs against the bankrupt.
On 14 November 1995, in proceedings 8203 of 1995, the bankrupts sued Brae-Villa in relation to a fire on the property which seriously damaged the house. The claim by the bankrupts in that litigation was that Brae-Villa wrongly failed to maintain insurance on the property, thereby giving them a right in damages against Brae-Villa. On 15 December 1995, an application by the bankrupts, being proceedings number 7031 of 1995, to remove the arbitrator for misconduct was heard by Nathan J. After a five day hearing, the application was dismissed on the merits.
In December 1995, in the proceedings heard by Byrne J, namely 6942 of 1994, the bankrupts applied for special leave to appeal the decision of Byrne J. On 22 December 1995, in the proceedings earlier referred to (8673 of 1995), Brae-Villa applied for an injunction to prevent the bankrupts from dealing with the property or any proceeds of insurance relating to the fire on the property, which application was granted.
The trustee on 13 February 1996 received advice as to "whether the trustee should become involved in those [Supreme Court] proceedings which were still on foot, or whether any of the choses in action relating to the proceedings should be assigned to the bankrupts".
The advice sought expressed the opinion that:
"After reading Nathan J's decision one cannot but form the view that the bankrupts will not accept that they are on the losing side of the dispute with Brae Villa. "
The advice said it was "...unlikely that leave to appeal would be granted..." and that even if leave to appeal were granted, the appeal:
"Appears to be based...on unmeritorious claims previously dismissed by [Mr Justice] Nathan. "
The trustee acted on the advice that he received, and communicated his decision to the bankrupts, which led to their application before Sundberg J.
The applicants before his Honour wanted the trustee to appeal to the Court of Appeal from Byrne J's refusal of leave to appeal against the interim award of the arbitration in favour of Brae-Villa. Leave to appeal would be necessary. His Honour noted in his reasons for judgment that after he had reserved his decision it became apparent that he could not decide the issue raised by the application by the present appellants without having a copy of the building contract.
He therefore caused his associate to communicate with the parties to ascertain whether they agreed that the judge should treat the contract as part as of the evidence before him. They did so agree, and his Honour was provided with a copy of the contract. It is not disputed that on 1 April 1993 the appellants had re-keyed the locks on the house and entered possession. They did not obtain Brae- Villa's written agreement before doing so. The arbitrator had concluded that:
"In my view, deemed Practical Completion can and did occur under clause 22(e) when the Proprietors took possession, regardless of whether or not a notice is given under clause 22(b). "
Sundberg J said:
"That view is clearly correct. It was shared by Nathan J."
Sundberg J concluded:
"An application for leave to appeal would, in my view, have no prospect of success. "
His Honour also said:
"The complaint that Byrne J did not give written reasons, or that no transcript was made of his oral reasons, would not lead to the grant of leave to appeal. "
Notwithstanding the repetition of this complaint by the appellants, no submissions have been directed to establish the contrary of what his Honour there concluded. The conclusion by his Honour is contained at page 9 of his judgment:
"In coming to his decision the Trustee, in addition to AGS's advice, took into account: that there are no funds in the estates with which to pay for an application for leave to appeal; that the applicants have no assets with which to finance further proceedings; that other creditors are most unlikely to provide the Trustee with an indemnity in relation to the costs of further proceedings which the Trustee has been advised not to pursue, and the risk that the court might order the Trustee personally to pay the costs of an unsuccessful application. All these matters amply justified the Trustee's decision not to seek leave to appeal. "
The grounds on which the appellants challenge his Honour's reasons and his orders are reproduced:
"a) On reading Justice Sundbergs' reasons for His Judgement, the Appellants believe that His Honour has just taken a one eyed view, and only used out of the evidence in front of him, the parts that are against the Appellants.
b)Page 8,(Denial of Natural Justice) in His Honour's reasons for Judgement, the Appellants verily believe that His Honour has misconstrued, what the Appellants are putting forward to the court.
c)Pages 8,9,10, of His Honours' Judgement. The Appellants claim that Justice Sundberg has pre-empted what would be the Appellants' case in the Court of Appeals in the Supreme Court of Victoria. Twenty one months later, His Honour, Justice Sundberg, has taken it upon Himself to state that there was no merits for the case in front of His Honour Justice Byrne, and the Appellants verily believe that Justice Byrne himself never stated these words. The Appellants assert that His Honour Justice Byrne, did not give reasons. "
Grounds (a) and (b) do not assist the appellants. Concerning the complaint which appears not specifically to be covered by the grounds of appeal, but was advanced before us, that the court order the trustee to provide to the appellants the "full and complete file", his Honour found that:
"The only document the applicants do not have is the Trustee's letter of instructions to AGS. "
Concerning this request for access to the full file, his Honour concluded, having regard to the fact that only one letter had not been made available to them:
"Assuming in favour of the applicants that the letter is 'information' within s 170(2), it is not, in my view, information reasonably required by them concerning their property or affairs. "
Again, notwithstanding the repetition of complaints seeking access to the file and seeking to cross-examine Mr Willoughby as to the contents of the file, there is no material before this court to indicate that there is any material which comes within "information" in s 170(2) of the Act which has not been supplied to them.
As to the claim in ground (c) that Byrne J did not give reasons, his Honour correctly noted that that complaint would not found an application for leave to appeal. The question of the merits of any proposed application were carefully considered by Sundberg J. His conclusion that the prospects were nil was a view which was shared by Nathan J, by the arbitrator, and implicitly underpins the decision of Byrne J.
No grounds have been advanced by Mr Haskins or Ms Cassar which permit this court to conclude to the contrary of those numerous considered findings. In fact there was really no submission directed to controverting the conclusion that deemed practical conpletion occurred under clause 22(e) of the building contract on 1 April 1993 when they re-keyed the locks and entered into possession. Further, not only was the assessment of the merits of the proposed litigation considered and assessed, that was not the only factor in the decision by his Honour upholding the decision by the trustee not to pursue the litigation. No error has been demonstrated in his Honour's conclusions in that regard and that appeal should be dismissed with costs.
Concerning the appeal against the orders made by Heerey J, as I have indicated, the appellant sought the removal of the trustee. That order was sought under s 179(1) of the Act. The grounds of the appeal from his Honour's orders are as follows:
"a) The Appellants had a summons to witness on Mr. Rodney Willoughby, officer of the Trustee, and it was still not accepted by Justice Heerey to put Mr. Willoughby in the witness box to swear on oath, stating that the entire file had been provided.
b)By Justice Heereys' decision handed down on the 24th April, 1996, the Appellants have again been denied Natural Justice, and the Appellants claim this as they weren't allowed to prove to His Honour their allegations, and this includes Mr. Willoughby not being put in the witness box to be cross examined.
c)After Mr. Willoughby was dismissed by Justice Heerey from giving evidence on oath, Mr. Carroll (counsel for Trustee), took over the case. Justice Heerey sought Mr. Carrolls decision, but we were seeking an adjournment as it was gone 4.30pm, and we believed that the case couldn't be argued fairly in the time that was left.
d)The Appellants were not allowed to lead evidence, which in turn denied the Appellants the opportunity to go through their affidavit, and His Honour did not give an independent decision on the application, but instead His Honour relied on Justice Sundbergs' hand down, and that the matters had already been dealt with.
e)His Honour Justice Heerey was also made aware of the fact that the Appellants had already lodged an appeal against Justice Sundbergs' decision, but His Honour Justice Heerey didn't seem to take notice of it. "
The orders that his Honour made were that the cross-examination of Mr Willoughby be declined, the application be dismissed and the bankrupts pay the trustee's costs. Heerey J concluded that the complaints dealing with the trustee's decision concerning the Supreme Court litigation had been determined by Sundberg J. Having regard to the disposition of the earlier appeal, that complaint consequently cannot assist the appellants in this appeal.
The aspect concerning the failure to disclose information and the denial of cross-examination of Mr Willoughby is again a matter which was canvassed by Sundberg J, and the conclusion by Heerey J is to the same effect.
There are a number of matters specifically referred to by his Honour which his Honour extracted from the joint affidavit of the bankrupt sworn on 3 April 1996. They appear at page 3 of the judgment. In respect of the last two of those matters his Honour concluded there was no evidence to support the allegations there made.
Similarly, of the assertion that the bankrupt believes that "Mr Willoughby, for the trustee, is working hand in hand with the police and our major creditor to fool the other creditors", his Honour found that there was no evidence to support that "extravagant" allegation.
No error by Heerey J has been demonstrated in respect of his refusal to remove the trustee. Indeed, speaking candidly, there was rehashed before Heerey J much of the material before Sundberg J, albeit for a different purpose.
The appeal from those orders should also be dismissed with costs.
The appeals from Ryan J and Jenkinson J can be dealt with together. I set out now the entirety of the grounds of appeal in the short summary document ordered by North J to be supplied by the appellants giving the reasons why they say that the orders made by Ryan J and the orders made by Jenkinson J are wrong. The reasons dealing with the orders of Ryan J are in these terms:
"1. His Honour Justice Ryan erred in law on the 16th May, 1996, by conceding to Mr Carroll's criminality to have our Notices of Motion dated 8th May, 1996 be treated as an Application.
2.His Honour permitted Mr Carroll to hijack our Notices of Motion by allowing the Official Trustee to file an Application which then made the Official Trustee the Appellants in the proceedings, and this is how Mr. Carroll hijacked our Notices of Motion by addressing this Honourable Court first, then us, and then Mr. Carroll had the final right to reply.
The Notices of Motion should have been treated as such and dealt with at the hearing in front of his Honour Justice Ryan on 16th May, 1996, but instead His Honour has used our Notices of Motion to allow the Official Trustee to further procrastinate and criminally conspire with the builder and the police against the Appellants to allow the builder to take away the house. This was ten (10) weeks after the Notices of Motion were first in front of His Honour.
4.The Notices of Motion were never addressed fully in the court but the Application brought by the respondent was the case being heard in this Honourable Court.
5.His Honour has bowed to the criminality and conspiracy perpetrated against the Appellants by the Official Trustee, and once the Official Trustee filed their Application, the Appellants' Notices of Motion were as well as being dismissed as they were not addressed in this Honourable Court.
6.His Honour still made the orders in VG194, and VG238 of 1996, even after His Honour was treating the Notices of Motion as an Application for directions in the administration of the bankrupt estate which then should have been in VB35 of 1996.
7.His Honour was aware of the two (2) appeals already on foot, and we believe that His Honour should have made orders to stop any further dealings in our estate as this was denying our rights in the Appeals.
8.The proof of what we say is in the transcript, and this is proving what we say in our long winded Notice of Appeal re the conspiracy of Mr. Carroll from the AGS, Mr. Willoughby from ITSA, Mr. Brain the builder, his legal people and the Victorian Police. ITSA and AGS are bringing up the Supreme Court cases against us when they conveniently stopped us from appealing them ourselves. " "
Concerning the appeal from the orders of Jenkinson J, the appellants say:
"1. His Honour Justice Ryan heard the case twice before and made orders to go back in front of him a third time. In the meantime a Notice of Appeal is filed by the Appellants, and suddenly His Honour has to go to Tasmania. How does anybody know that the new Judge, His Honour Justice Jenkinson will come to the same decision as the Judge who heard most of the case.
2.The Appellants' Notices of Motion were not heard, and His Honour Justice Jenkinson addressed Mr. Carroll re his application. Mr. Carroll provided a Terms of Settlement to His Honour which His Honour made an order on Mr. Carroll to take away the Terms of Settlement and have them signed by both parties. His Honour adjourned the court until 2.15pm for this reason.
3.When the hearing commenced, Mr. Carroll wrongly gave to the Appellants and His Honour Justice Jenkinson two (2) affidavits to back up what he was just putting in front of His Honour. His Honour Justice Jenkinson should not have allowed this to happen. Re the documents to be signed by both parties, they had been changed from the morning, and still only signed by one party.
4.His Honour accepted this, still only signed by the one party against our vehement objections re ourselves not being a party to it when it was signing away our rights, but still allowing the builder to take civil and criminal actions against us.
5.The AGS, ITSA, the builder and his legal people all agreed to the Terms of Settlement to which His Honour made an order to have enforced which also included certain conditions. We had no input to this, and also our disagreement to this, keeping in mind this is our life that was being dealt with and not just a small bankruptcy.
6.His Honour Justice Ryan made orders on 19th June, 1996 to file any notice requiring the deponent of any such affidavit to attend for cross examination on 24th July, 1996. A summons to witness was filed upon Mr. Willoughby on 13th June, 1996 to be heard in front of His Honour Justice Ryan, We were denied our rights to have Mr. Willoughby cross examined as by the time the matter was in front of His Honour on 24th July, 1996, our Notices of Motion, and the Summons were hijacked by the Application filed by the Official Trustee, and His Honour once again conceded to Mr. Carroll and the Official Trustees' (sic) criminality perpetrated against us.
7.His Honour was aware of the three (3) appeals on foot and His Honour conceding to the Terms of Settlement was denying the Appellants their rights in the appeals, because all dealings should have been stopped because of the appeals. With the house gone, apart from proving criminal dealings, what is there left for the Appellants, because we believe, handled fairly everybody could have been paid a dividend and ourselves allowed out of bankruptcy immediately. His Honour should have understood this re the appeals, also we've kept asking for the trustee to stop from doing anything further, because the trustee will not communicate with the Appellants re what is decided in their estate nor will he allow the Appellants any say.
8.Also by conceding to the Terms of Settlement our Notices of Motion/Application dated 8th May, 1996, were made invalid after allowing AGS and ITSA ten (10) weeks of extra time to work this cospiracy against us. "
The appellants contend that there is something sinister in the various motions being heard by successive judges, and that the fact that this has occurred is some evidence of a conspiracy against them in which the judges are implicated. This misunderstanding of the operation of the court in respect of the hearing of notices of motion, while understandable, does not provide any viable ground of appeal.
This complaint, however, does have a serious side to it. It reflects the concentrated focus and the morbid pre-occupation of the appellants with the bankruptcy litigation, to such an extent that balanced judgment has been displaced.
In this respect I refer to the short summary document concerning the reasons why the appellants say the orders made by his Honour Merkel J on 3 July were wrong.
That document, of some two pages, in paragraphs 1, 2 and 3 purports to set out the history of what occurred on 29 July 1996. Paragraph 4 deals with what occurred on the morning of 30 July 1996. The appellants say:
"...while the Appellants were filing [their] Notices of Motion and Notice of Appeal, the Appellants were advised and rushed to a courtroom where the Appellants were listed to be in front of His Honour Justice Merkel as His Honour Jenkinson was not available. Again the Judge making the orders is not available, and a third Judge is now involved. No skilled barrister would have accepted to go in front of three (3) Judges with three (3) different sets of orders to one (1) Notice of Motion."
In paragraph 6, concerning whether Mr Carroll had in fact contacted the appellants and whether he had the means of doing so, the appellants say in that paragraph:
"His Honour is heard telling his Associate in the tapes at Auscript, 'You can't trust nobody'. "
The appellants in that paragraph say:
"The Appellants have spent 4 hard days, 8 hours a day listening to the original tapes of all their cases at Auscript, except for his Honour Justice North's hearing, but we state it was the only case run properly. The Federal Court should listen to the tapes to see what is transpiring in the Federal Court against two innocent people representing themselves."
In paragraph 8, ominously they say:
"As the Appellants were entering the building at 451 Lt. Bourke Street, they photographed his Honour Justice Jenkinson on the steps of the Federal Court speaking to an elderly woman, yet his Honour, we had been advised, was not available. "
It is sufficient to say that the fact that a particular notice of motion filed in the court comes before different judges on different days before it is ultimately determined, provides no basis for the submission that there has been bias or conspiracy or a want of impartial adjudication in respect of the matters the subject of the various notices of motion by the appellants. The contents of paragraph 8 offer telling evidence of the way in which events in the court, and submissions made by the various parties in the court, have been misunderstood (if I can put it as neutrally as that) by the appellants.
So far as the appeals against Ryan J and Jenkinson J are concerned, those in relation to Ran J have been dealt with by the observations just made.
In relation to the question of the orders by Jenkinson J, it is not true to say, as was submitted on behalf of the appellants, that the notices of motion originally filed on 8 May 1996 were ignored by the court.
Specifically, the first order by his Honour Jenkinson J relates to the relief sought by those notices of motion, and he says in relation to those matters:
"Nothing has appeared to justify the giving of any of those directions. "
His Honour's orders commenced:
"Each of the motions of which notice is specified in the Notice of Motion filed 8 May 1996 be dismissed; "
This ground of appeal lacks substance when regard is had to the contents of the relief sought, and the absence of evidence before his Honour which could provide any satisfactory basis for the giving of any of the directions sought.
His Honour also indicated in his reasons for judgment:
"Since I have formed the view upon a reading of the notices of appeal and of the material in the bankruptcy file and after listening to both the bankrupts that none of the appeals has any prospect of success, I decline to make any order of the kind which is sought. "
And he then proceeded to deal with the application made by the trustee.
There is nothing pernicious or suspicious in the direction by his Honour Ryan J to regard the notices of motion as an application for directions to the trustee. An application of an interlocutory kind in bankruptcy jurisdiction is commenced by an application in Form 45, and the applicants have simply used an inappropriate label on their applications, which error has been corrected by his Honour.
So far as the order by his Honour Jenkinson J giving leave to make the compromise expressed in the terms of settlement earlier set out, the facts are that there was a large claim by a builder which had a number of questionable aspects to it: not only its quantum, but also the availability of funds to resist any claim by the builder against the trustee concerning the proof of debt. There were then very strong factors which would incline a prudent trustee to compromise a claim in the order of $110,000.00 as best as possible in the interests of all of the creditors of the bankrupts' estates.
The fact that the builder was willing and did in fact compromise his proof of debt for something in the order of $20,000.00 is hardly remarkable, given the likely prospects of success of recovering more than that by distribution of assets, however they be realised.
The final matter to which I wish to refer concerns the appeal against the orders made by Merkel J, essentially refusing a stay. I have referred to some of the argumentative and, let it be said, offensive material referred to in the short document relating to the reasons why Merkel J's orders are said by the appellants to be wrong.
It seems to me that the only matter of any substance at all in the complaints concerning Merkel J's refusal to grant a stay concerns the question of the complaint by the appellants that his Honour in some way had condoned contempt of the Federal Court. It was said on behalf of the appellants that Merkel J had countermanded the orders of Jenkinson J in giving leave in accordance with the terms of settlement. His Honour, it was also said, had allowed perjury and contempt in the Federal Court.
It seems to me that the builder had in fact not complied with the terms of settlement sanctioned by his Honour Jenkinson J and that, in a number of respects, there had been non-compliance by the builder with those terms. Whether in the circumstances that amounts to an actionable contempt may be debated.
I can understand, given the history of the matter, the concern by the appellants at the conduct of the builder. Whatever be the validity of the complaint concerning the conduct of the builder, the fact is that the orders by Merkel J refusing a stay do not amount to a condoning of any contempt or perjury.
The orders by his Honour were directed to whether, in all the circumstances, a stay ought to have been granted. The existence, even if it did exist, of contempt or perjury would not bear on whether a stay ought to have been granted. It may be that the builder has exposed himself by his conduct to proceedings of the sort referred to by the appellants. That circumstance, however, is quite irrelevant to the disposition of the matters before Merkel J. I may say that a large part of the document being the short form of complaint concerning Merkel J's orders, is of the type identified by North J and sought to be prevented by the directions given by his Honour. I refer in particular to what is contained in paragraph 13 of that document.
I have dealt in excruciating detail with the history of the matter and with the nature of the issues before this court.
In my opinion none of the orders sought to be impugned by the appellants ought to be set aside. The attack
on Sundberg J's decision lacks any legitimate basis for complaint. So too concerning the decision of Heerey J.
In relation to the procedural matters which are comprehended by the orders made by Ryan J, no error has been shown, and the same can be said, if I may respectfully say so, in relation the orders of Jenkinson J and of Merkel J.
The sad conclusion that I have reached is that the appellants have been pursuing something which lacks any substance in their hands, and that they have, with relentless and determined conduct, sought to pursue the unattainable.
There is no reason why any of the appeals should be allowed.
For those reasons, the orders of the Court are that each appeal be dismissed, with costs.
DRUMMOND J:
I agree with the orders proposed by the learned presiding judge, and with his reasons. I would add the following few comments. Each of Sundberg J in VG194 of 1996, Heerey J in VG238 of 1996 and the three judges whose rulings are the subject of the appeals in VG400 of 1996 gave judgments or rulings that involved the exercise of a judicial discretion. The grounds on which an Appeal Court will interfere in such discretionary judgments are well established: see House v The King (1936) 55 CLR 499. Nothing, in my opinion, was identified in the course of the hearing of these appeals which would justify the Court in concluding that any of the discretions challenged in these appeals had miscarried.
As to the appeal against Merkel J's orders of 30 July 1996, I would myself indicate that I have considerable doubt in seeing how the builder could be in contempt of Court in respect of his failure to comply with various of the terms of settlement. It may well be that that failure constitutes an actionable breach of contract, but, as I see things, there was no order of the Court requiring the builder to comply with those terms, and so no question of contempt could arise. Insofar as it may be suggested by the appellants that contempt was involved by the builder and indeed by the trustee and those associated with the trustee in respect of the builder's removal of the house, and in respect of the impact it had on the appellants' appeals, there can be no question of there being any contempt of Court by any of those persons, in my opinion.
The house was removed following the approval of the compromise by the order of Jenkinson J on 24 July 1996, and prior to any stay of proceedings under that compromise being ordered, the first such stay being ordered on 29 July. The mere institution of appeal proceedings does not itself operate as a stay of any order of the Court.
NICHOLSON J:
I am of the same opinion as the other members of the Court and I agree with the reasons of the presiding judge for that conclusion. I want only to add that in respect of the question of the withdrawal of caveat, it was conceded before us that, contrary to the terms of settlement, the withdrawal had not been delivered in accordance with those terms but rather had been made available only to the solicitors for the builders. That concession having been made, nevertheless it in no way creates the position that it leads to a circumstance which would support the case brought by the appellants. There is no allegation or evidence before us on appeal that the trustee in any way condoned or engaged in the events that occurred in relation to that withdrawal.
I certify that this and the preceding thirty-four pages are a true copy of the reasons for judgment herein of the Honourable Justice Spender, the Honourable Justice Drummond and the Honourable Justice R D Nicholson.
Associate
Date: 3 October 1996
The applicants appeared in person.
Counsel for the respondent : Mr J Nolan
instructed by : Australian Government Solicitor
Date of Hearing : 30 September 1996
Date of Judgment : 3 October 1996
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