Lauren Kay Cordes as Trustee for Alexander George v Dr Peter Ironside Pty Ltd
[2009] QSC 89
•27 April 2009
SUPREME COURT OF QUEENSLAND
CITATION:
Lauren Kay Cordes as Trustee for Alexander George v Dr Peter Ironside Pty Ltd ACN 008126 387 & Ors [2009] QSC 89
PARTIES:
LAUREN KAY CORDES AS TRUSTEE FOR ALEXANDER GEORGE
(applicant)
v
DR PETER IRONSIDE PTY LTD ACN 008 126 387
(1st respondent)
DR PETER IRONSIDE
(2nd respondent)
NATIONAL AUSTRALIA BANK LIMITED
(3rd respondent)
WILLIAM JOHN FLETCHER AS TRUSTEE FOR THE BANKRUPT ESTATE OF LAUREN KAY CORDES
(4th respondent)FILE NO/S:
3747 of 2008
DIVISION:
Trial Division
PROCEEDING:
Claim
ORIGINATING COURT: Supreme Court at Brisbane DELIVERED ON:
27 April 2009
DELIVERED AT:
Brisbane
HEARING DATE:
23 April 2009
JUDGE:
A Lyons J
ORDER:
The Plaintiff’s action is permanently stayed.
CATCHWORDS:
TRUSTS AND TRUSTEES – EVIDENCE – IN GENERAL – where dispute as to the existence of trust property – sufficiency of evidence of trust – where claimant became a bankrupt – where dispute as to where property vests
BANKRUPTCY – SUMMARY DISMISSAL – determination of a trust alleged by the bankrupt in respect of certain property – resulting and/or constructive trusts – indefeasibility of title by the mortgagee.
PROCEDURE – COURTS AND JUDGES GENERALLY – COURTS – where matters claimed by the bankrupt fall within the exclusive jurisdiction of the Federal Magistrates Court
ESTOPPEL – FORMER ADJUDICATION AND MATTERS OF RECORD OR QUASI OF RECORD – FORMER ADJUDICATION – JUDGMENT INTER PARTES – ISSUE ESTOPPEL – IDENTITY OF ISSUES – where matters claimed have already been litigated in another court.
Arnold v NatWest Bank Plc [1991] 2 AC 93
Cambridge Credit Corporation (1985) 2 NSWLR 685
Décor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 655
Farah Constructions Pty Ltd v. Say-Dee Pty Ltd (2007) 230 CLR 89
Fletcher v George and Ors (No. 6) [2009] FMCA 69
Green v Schneller [2001] NSWSC 897
Harrington v Rich [2008] FCAFC 61
Meriton Apartments Pty Ltd v industrial Court of New South Wales [2008] FCAFC 172
Scott v Bagshaw [2000] FCA 816
Secretary, Department of Aviation v. Ansett Transport Industries Ltd (1987) 72 ALR 188
Telstra Corporation Ltd v AAPT Ltd [1997] 38 IPR 539
ss 5, 27, 31, 116(2)(a), 120, 121 Bankruptcy Act 1966 (Cth)
s 127, 185 Land Title Act 1994 (Qld)
COUNSEL:
Plaintiff – self represented
Mr RM Galloway for the 1st and 2nd defendants
Mr CD Coulsen for the 3rd defendant
Mr DJ Morgan for the 4th defendantSOLICITORS:
The Plaintiff appears on her own behalf
Bell Dixon Butler for the 1st & 2nd defendants
Thynne & Macartney for the 3rd defendant
Holman Webb Lawyers for the 4th defendant
LYONS JA :
Background Information
Following an acrimonious matrimonial proceeding, Lauren Kay George received a costs assessment in respect of legal costs incurred in the sum of $110,000 and when those costs were not paid, the solicitor delivered a bankruptcy notice. On 24 February 2006 however, she became a bankrupt by her own petition and as a result, the fourth defendant, (the Trustee) became the Trustee of her estate. In the Statement of Affairs to the Trustee, she did not disclose any property held by her upon trust. Whilst Ms George was due to be discharged from her bankruptcy in February 2009, the Trustee filed a Notice of Objection to the Discharge and the period has now been extended until 25 February 2014.
On 24 April 2008, Lauren Kay George, using the name Lauren Kay Cordes (Ms Cordes), which is another name by which she is known, commenced proceedings in this Court seeking various declarations and orders in relation to property she claims is held on trust for her son, who is a minor. The defendants are persons to whom Ms Cordes claims the assets have been transferred and she claims that those assets are held on trust for her son. This property includes a property at Moggill, horses, a car and various chattels.
In relation to the Moggill property, Ms Cordes claims that at all material times the property which was registered in the name of her former brother-in-law, the first defendant Dr. Peter Ironside Pty Ltd (DPIPL), was in fact, held on trust for her minor son and that she was the Trustee of the trust. In her various pleadings and affidavits, Ms Cordes asserts various trusts exist in relation to the property, including allegations that express trusts were created by her various wills. She essentially claims that as early as 1997 and at least since 1 May 2002, a trust has existed for the benefit of her son. Ms Cordes submits that on 1 May 2002, she constituted herself as the trustee over a property at Pullenvale, of which she was the sole registered owner at the time and that the trust then acquired that property as its asset. She further states that, when the Pullenvale property was subsequently sold, she used the monies from the sale to purchase the Moggill property.
Ms Cordes’s claim is that this is evidenced by an amendment on 5 December 2003, to the original trust agreement. No trust deeds have been submitted, however it would appear that Ms Cordes endorsed a copy of the Trust Act 1973 (Qld) in May 2002, with the words “Property trust …..Pullenvale…..Lauren Kay Cordes as trustee for Alexander William George….holding life interest of mother/child referred to above.” Ms Cordes then signed the front of the copy of the Act. When the Pullenvale property was sold, Ms Cordes states that she then endorsed the then current reprint of the Act, with similar words in relation to the Moggill property on 5 December 2003.
The evidence shows that, DPIPL became the registered proprietor of the fee simple of the Moggill Property on 20 October 2005. It would seem from the documentation that, the stamped transfer was from Lauren Kay Cordes simpliciter, not as Trustee. There is no doubt that, the consideration for the transfer was in the amount of $400,000 and that the stamped contract is on a standard form REIQ contract, which confirms the purchase price of $400,000. I also note that, under the part of the contract dealing with “Matters affecting property” there is nothing noted under the sub-heading “Title Encumbrances” but there is a tenancy noted in favour of Lauren Kay Cordes for 30 years, commencing on the settlement date at the rate of $269 per month.
The National Australia Bank (NAB), as the third defendant, is the mortgagee of the mortgage that is held over the Moggill Property. This mortgage was registered in the Titles Office, on 30 October 2006 and at that time, it is clear that the property was registered in the name of DPIPL and that personal covenants under the mortgage are owed to NAB.
The Trustee in Bankruptcy for the Estate of Ms Cordes, has pursued the transfer from Ms Cordes to DPIPL as a sale, which he says, is liable to be avoided pursuant to Sections 120 or 121 Bankruptcy Act 1966 (Cth). On 7 November 2008, the Trustee filed an application in the Federal Magistrates Court (Fletcher v George & Ors BRG 709 of 2008), seeking declarations that, as at 24 February 2006, the legal and beneficial ownership of the Moggill property vested in him as Trustee and that, there was no trust in favour of Ms Cordes’s son. Declarations were also sought in relation to the Toyota Landcruiser, the mare ‘Stellamarra’ and a Deed of Settlement dated 28 October 2008, between the Trustee and Ms Cordes’s sister Susan Wilson, in relation to the horse, which stated that Ms Cordes had asked Ms Wilson to become the registered owner of the horse to prevent her ex-husband claiming an interest in it. The declarations sought were that the various assets vested in the Trustee of the bankrupt estate.
As Ms Cordes submits that she held the property and chattels on trust for her minor son, it would seem clear that, the effect of a declaration of a trust would mean that the Moggill Property and other assets would be taken out of her bankrupt estate, pursuant to Section 116(2)(a) Bankruptcy Act. In the Federal Magistrates Court proceedings Burnett FM[1] indicated that the respondents, except for NAB and a Mr Siebert,
“repudiated any such claims concerning title and have acknowledged that assets transferred to them were indeed transferred to them to hold on trust for the bankrupt. They do not accept that they hold assets in their own right or on trust for any third party alleged by the bankrupt but only on trust for herself. They join with the Trustee in seeking the declarations sought.”
[1] [2009] FMCA 69 at para 7.
On 12 November 2008, Orders were made by Federal Magistrate Burnett joining the first, second and third Defendants and Susan Wilson to the Federal Magistrate’s Court proceedings. On 18 November 2008, Orders were made in the Federal Magistrates Court directing that, Ms Cordes finalise her pleadings in that Court and that documents filed in these proceedings be taken as filed in the Federal Magistrates Proceedings. The application for a stay of the proceedings in the Federal Magistrates Court, pending hearing of the proceedings in this Court, was also dismissed. Those Orders were appealed by Ms Cordes, but dismissed by Collier J on 5 December 2008.
The Trustee’s application was heard before Burnett FM on 8, 9 and 10 December. During the course of that hearing on 9 December 2009, the Trustee and the respondents, other than Ms Cordes applied for summary judgment in respect of the action in that Court. The Supreme Court file was made available to the Federal Magistrate’s Court and later returned to this court.
On 8 January 2009, Byrne SJA ordered that, the matter be listed for hearing on 18, 19, and 20 February 2009, for the determination of a series of preliminary questions, which related to whether a trust had been created in relation to the Pullenvale and Moggill properties.
On 9 February 2009, Federal Magistrate Burnett delivered judgment (Fletcher v George and Ors (no 6)[2] in relation to the application for summary judgment and declarations and orders were made. His Honour summarised his findings as follows.
[2] [2009] FMCA 69.
“Summary
181. The Trustee seeks declarations that various property claimed by the bankrupt to be held by her in trust beneficially for her son is in fact beneficially [sic] by others on trust for her. The remaining respondents presently hold property in respect of which the Trustee seeks declarations. The Bank is the registered mortgagee in respect of land the subject of the application.
182. The Trustee and all respondents save for the bankrupt join in seeking the declarations sought.
183. In addition they also seek for the application to be disposed of summarily. They contend that accepting the bankrupt’s case at its best she has no real prospect of successfully defending the application and/or prosecuting her claim.
184. Except in respect of the issues between these parties concerning the alleged declaration of trusts relating to personalty I am satisfied the bankrupt has no real prospect of successfully defending the Trustee’s claims for declarations because the bankrupt’s claims are untenable at law.
185. Dealing with each of the bankrupt’s claims I find:
(a)No enforceable disposition by the bankrupt in favour of any trust has been effected by the incorporation of any provision in any will.
(b)The Trust purported to have been created on 1 May 2002 purporting to settle the Pullenvale property upon trust for the bankrupt’s son failed for want of certainty and form and in any event any equitable claim (if one ever arose) was extinguished by the bankrupt’s transfer of that property to a third party.
(c) The Trust purported to have been created on 5 December 2003 purporting to settle the Moggill property upon trust for the bankrupt’s son failed for want of certainty and form and in any event any equitable claim (if one ever arose) was extinguished by the bankrupt’s transfer of that property to a third party, DPIPL.
(d)The Trust purported to have been created by the agreement entered into between the bankrupt and DPIPL in June 2005, if it ever existed, failed because the Trust was never registered and DPIPL became the registered proprietor without notation concerning any trust. There is no evidence of fraud in the sense provided by s.184 Land Title Act to defeat DPIPL’s claim to indefeasible title.
(e)The circumstances of the proceeding do not support any basis for finding a resulting, constructive or implied trust in respect of the Moggill land or any other real property.
186.In her Amended Statement of Claim the bankrupt pursues other actions in her capacity as Trustee. I make no rulings in respect of those matters.
187.The facts do not support any basis to find any accessorial liability on the part of the Bank and the indefeasibility of its registered security is not affected by the circumstances surrounding these transactions.
188.Concerning personalty the bankrupt has no reasonable prospects in respect of the horse Stellamarra and the Toyota Motor Vehicle. Matters concerning the horse Cabernet and some chattels were disposed of by consent orders. However there is a factual case to be resolved concerning the furnishings and jewellery and any other remaining personalty alleged to be subject to a trust.
189In terms of the Trustee’s amended application it follows from my findings that the Trustee is entitled to the benefit of the compromise agreement concluded between all parties to these proceedings (except the Bank and Mr Siebert). Given the bankrupt’s only challenge to that agreement was that the Moggill property was held by her on trust. The agreement remains valid and enforceable and the Trustee, Ms Wilson, DPIPL and Dr Ironside are entitled to the declarations they seek.
190.There are issues to be addressed by trial concerning the remaining chattels. It follows declarations and orders cannot be made in respect of paragraphs 3 and 10 of the amended application.
191The relief sought at paragraphs 4a and 4b was not pursued at this hearing and may require hearing. It will be adjourned.
Orders
192.Declare that the Heads of Agreement dated 19 February 2008 and exhibited at WJF-8 to the Affidavit of William John Fletcher sworn
29 October 2008 remains valid and enforceable;193.Declare that as at 24 February 2006 the legal and beneficial ownership of Lot 13 on SP145714, County of Stanley, Parish of Moggill, Title reference 50440445 vests in the Applicant as trustee of the bankrupt estate;
194.Declare that as at 24 February 2006 the legal and beneficial ownership of the Toyota Landcruiser with the licence plate 590FXR, VIN Number: JT11UJA509019411 (V), Engine Number: 1FZ0444996 vests in the Applicant as trustee of the bankrupt estate;
195.Declare that as at 24 February 2006 the legal and beneficial ownership of the Hanoverian mare known as Stellamarra with the microchip number 939000001109809 vests in the Applicant as trustee of the bankrupt estate;
196.Declare that Deed of Settlement between the Applicant and Susan Jane Wilson dated 28 October 2008 remains valid and enforceable and that it be performed;
197.Adjourn for trial issues arising from relief sought in paragraphs 3, 4 and 10 of the amended application.”
On 18 February 2009, Fryberg J ordered that, rather than determine the preliminary questions, the Supreme Court proceedings were to be set down for a 7 day trial, to commence on 23 April 2009.
On 10 March 2009, Ms Cordes made an application before Collier J, for leave to appeal from the judgment of Burnett FM dated 9 February 2009 and Orders 1,2,3,4,5,6,9,and 10.
On 25 March 2009, Collier J made Orders, granting leave to appeal from the Orders of the Federal Magistrates Court and staying Orders 1,2,3,4,5,6,9 and 10, pending delivery of judgment in the appeal.
Her Honour’s reasons can be summarised as follows:
“Leave to appeal - relevant principles
[15]Issues relevant to the exercise of discretion by the Court in granting leave to appeal are:
·whether the judgment the subject of the appeal was attended by sufficient doubt to warrant it being reconsidered; and
·whether substantial injustice would result if leave were refused, supposing the decision to be wrong.
(Décor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 655; (1991) 33 FCR 397, at 398–399, Telstra Corporation Ltd v AAPT Ltd [1997] 38 IPR 539 at 542, Harrington v Rich [2008] FCAFC 61 at [25].)
[16]In this case, the Federal Magistrate has delivered a thoughtful and thorough judgment in circumstances where, not only was one of the key parties to this complex litigation (Ms George) without legal representation, but a great deal of information generated by Ms George was before his Honour. However, I consider that the issue raised by Ms George as to whether all of her evidence was properly available to the Federal Magistrate during the time his Honour was preparing the judgment, and therefore whether all of that evidence was taken into consideration by his Honour in his judgment, raises a question of justice such that an appeal from the decision of his Honour should be heard. Further, I am satisfied that both Ms George, and her minor son, who is not a party to these proceedings, would suffer substantial injustice should leave to appeal be refused. In the circumstances, I consider it appropriate to grant Ms George leave to appeal against his Honour’s orders of 9 February 2009, as sought in her application.
[17]In relation to Ms George’s application for a stay of His Honour’s Orders, while I note the principles arising from such cases as Cambridge Credit Corporation (1985) 2 NSWLR 685 brought to my attention by the first, second, third and fourth Respondents, I consider that, a refusal to order a stay would substantially frustrate any success Ms George would have should her appeal to the Full Court be successful. Accordingly, it is for this reason that I am prepared to exercise my discretion in favour of Ms George and order a stay of the Orders of His Honour of 9 February 2009, numbered 1, 2, 3, 4, 5, 6, 9 and 10 pending delivery of judgment in Ms George’s appeal. I am not prepared to make an Order in the terms sought by Ms George in para 2 of her amended Notice of Motion – as has been observed by both Dowsett J and myself during the course of these proceedings, if there is an error in the decision of the Federal Magistrates Court, it is for the Federal Court to review on appeal.
[18]Further, as I indicated to the parties at the hearing before me, I am not prepared to make the orders sought by Ms George in paras 4, 5, 6 and 7 of her amended Notice of Motion before me (TS 5 March 2009 86 ll 28-30). Instead, the hearing of those paragraphs is adjourned to a date to be fixed.
The Plaintiff’s Prayer for Relief
At the hearing, Ms Cordes amended her prayer for relief in her Amended Statement of Claim and deleted paragraphs 3, 4, 12, 13, 15, 16, 17, 18, 19, and 20. Ms Cordes now pursues the relief, as set out in the following paragraphs of her Amended Statement of Claim (using the original numbering):
1. The sale agreement made 18/06/05 be set aside;
2. That the Moggill property be re-conveyed to the Plaintiff in fee simple and life estate;
5. That the entry in the Land Titles Register for the Moggill property be corrected by removing the First Defendant from it and in lieu thereof substituting the Plaintiff;
6. As against the First, Second and Fourth Defendant, damages for breach of the agreement or alternatively equitable damages;
7. An order that the mortgage no. 710055137, presently encumbering the property be removed;
8. Pursuant to section 127 of the Land Title Act 1994, an order that caveat number 711220531 placed by the first defendant over the Moggill property be removed;
9. Further or in the alternative, an order that, transfer no. 7009070927 to the first defendant be declared invalid/void and an order that mortgage no. 710055137 be declared invalid/void and an order that the heads of agreement dated 19/02/08 be declared invalid/void. An order that specific performance of the agreement between the first and second defendant and the Plaintiff be enforced by way of exhibit LKC-3 being transfer documents fee simple and life estate of the plaintiff and registered in accordance with the practice directions Duties Act – 55.2
10. The bankrupt seeks specific performance of the agreement dated 1/1/2002 between the fourth defendant to continue to allow the uninterrupted life use of the mare named Stellamarra micro chip no. 939000001109809 and the Toyota Landcruiser registration number 590 FXR and for the consent orders made between the fourth and fifth defendant to be set aside/void;
11. A further declaration that the Horse and car named in point 10 are owned by the true material owner, Jane Wilson and do not vest in the fifth defendant;
14. That the rocking horse named dapples be returned to the minor Alexander George;
21. Such further or other order as may be appropriate;
22. Costs be paid by the first and second defendant to the applicant trustee.
The applications that the Amended Statement of Claim be stayed or dismissed
At the commencement of the trial, Counsel for the defendants argued that, there were two substantial reasons why these proceedings should be dismissed or stayed.
(a) this court does not have the jurisdiction to hear these proceedings as matters of bankruptcy must be heard in the exclusive jurisdiction of the Federal Court.
and
(b) the question as to whether or not a trust existed in relation to the Moggill property was an issue which was decided by the Federal Magistrates Court on 9 February 2009 and accordingly, an issue estoppel operates in relation to these issues.
The Jurisdictional Argument
The third and fourth Defendants submit that, these proceedings be dismissed or permanently stayed, as the question as to whether or not the Moggill property and other assets form part of Ms Cordes’s estate, is a question for a bankruptcy court.
The Trustee submits that s 27 of the Bankruptcy Act 1966 (Cth) confers exclusive jurisdiction on the Federal Court of Australia, (such jurisdiction being concurrent with the Federal Magistrates Court of Australia) and that the continuation of Supreme Court proceedings by the bankrupt is clearly inappropriate. The Trustee submits that the bankrupt has sought to invoke the jurisdiction of two Courts in relation to the question as to the existence of a trust and asserts those rights against a trustee in bankruptcy in a manner which falls within the exclusive jurisdiction of the bankruptcy court. The Trustee essentially submits that, this Court has no jurisdiction to determine the matters in issue.
The Trustee also submits that, there is no abuse of process by the Trustee bringing the application in a bankruptcy court, as opposed to litigating the matter in the Supreme Court, where the case put by the bankrupt asserts property rights as against a Trustee because that question is within the exclusive jurisdiction and must always be determined by a bankruptcy court.
‘Bankruptcy’ is defined in Section 5 of the Act:-
bankruptcy, in relation to jurisdiction or proceedings, means any jurisdiction or proceedings under or by virtue of this Act.
Section 27 provides;
Section 27, Bankruptcy Act
(1)The Federal Court and the Federal Magistrates Court have concurrent jurisdiction in bankruptcy, and that jurisdiction is exclusive of the jurisdiction of all courts other than:
(a)the jurisdiction of the High Court under section 75 of the Constitution; or
(b)the jurisdiction of the Family Court under section 35 or 35A of this Act.
Section 27 confers a wide jurisdiction on the Federal Court and the Federal Magistrates Court, which is all jurisdiction and all proceeding ‘under or by virtue of’ the Act and as Branson J[3] has held, “[w]hatever the outer limits of that jurisdiction, it is a jurisdiction which s 27 makes plain cannot be exercised by State Courts.”
[3]Meriton Apartments Pty Ltd v Industrial Court of New South Wales [2008] FCAFC 172.
Section 31(1) confers power on a s 27 court and provides:
31Exercise of jurisdiction
(1)In exercising jurisdiction under this Act, the Court shall hear and determine the following matters in open Court:
…
(e)applications to set aside or avoid a charge, charging order, settlement, disposition, conveyance, transfer security or payment;
…
(f)applications to declare for or against the title of the trustee to any property;
The 2008 decision of the Full Court of the Federal Court, in Meriton Apartments Pty Ltd v Industrial Court of New South Wales,[4] examined the meaning of the jurisdiction ‘in bankruptcy’ and the nature and effect of the exclusive jurisdiction of s 27 courts. State courts are clearly not s 27 courts as defined and the decision determined that, courts which are not ‘section 27’ courts, do not have jurisdiction “to the extent any jurisdiction or proceeding arises under or by virtue of the Bankruptcy Act”.[5] Importantly, it was held that, there is a distinction between the exercise of a court’s jurisdiction in a proceeding, that calls into question a provision of the Bankruptcy Act and the exercise by that court, of a jurisdiction ‘under or by virtue’ of the Bankruptcy Act.[6] Whilst the Full Court held that, exclusive jurisdiction does not mean that state courts cannot and should not apply the Act in proceedings that properly come before them, or that, state courts cease to have jurisdiction as soon as a matter acquires a bankruptcy aspect to it, it held that, once the s 27 concept of jurisdiction ‘in bankruptcy’ arose, then there was exclusive jurisdiction.
[4][2008] FCAFC 172.
[5]per Branson J at [4] and [81].
[6]per Branson J at [88].
As Greenwood J said in Meriton Apartments[7]:
“111 In Scott v Bagshaw[8] the Full Court of this court, again considered the source and scope of the court’s jurisdiction in bankruptcy in proceedings in which, the trustee of a family trust asserted an equitable charge over three properties, in support of a loan made to the registered proprietors, a husband and wife. The trustees in bankruptcy of the estate of the husband denied any entitlement in the appellant trustee to an equitable mortgage of Torrens title land and contended that the appellant’s claim related to a provable debt under s 82 of the Bankruptcy Act. The appellant required leave under s 58(3)(b) to commence the proceeding.
112 Applying the earlier authorities, the court described s 27 as the "seminal" source of the court’s jurisdiction in bankruptcy. The court held that s 27 fell to be understood in context and that s 31(1)(f) elucidated what the drafter "had in mind as falling within ‘bankruptcy’ in s 27(1) as defined in s 5(1)". Thus, applications declaring for or against the title of the trustee to any property would be encompassed within the s 27 concept of jurisdiction in bankruptcy. The court distinguished Sutherland v Brien (citation omitted) on the ground that s 31(1)(f) made it plain that as against the trustees in bankruptcy, the proceeding before the Full Court was within s 27 as a proceeding under or by virtue of the Bankruptcy Act. In Green v Schneller,[9] Barrett J after considering Sutherland v Brien and Scott v Bagshaw made this observation at [22]:
When persons become bankrupt, it is necessary for courts to determine all kinds of questions about the consequences. Many of those questions will depend for their answers on the provisions of the Bankruptcy Act. One class of such questions relates to the nature of the rights of persons to property. Austin J held that nothing in the Bankruptcy Act precludes the exercise in such cases of the well established jurisdiction of courts other than those mentioned in s 27(1) "to determine and declare rights to property and make orders as to its destination". But that undoubted jurisdiction will yield to any aspect of the jurisdiction for determination and declaration of such rights which the Bankruptcy Act itself places in the hands of s 27(1) courts. In Scott v Bagshaw the Full Federal Court noted that among the matters so placed in the hands of those courts, is "applications to declare for or against the title of the trustee to any property". Because this is one of the matters s 31(1) of the Act requires "the Court" to hear an open court, it is identified as a matter within the definition of "bankruptcy" and thereby seen to be within s 27(1). That aspect of the general jurisdiction "to determine and declare rights of property and to make orders as to its destination" which entails "applications to declare for or against the title of the trustee to any property" is accordingly reposed in s 27(1) courts alone.
113 In the result, Barrett J concluded the Supreme Court of New South Wales did not have jurisdiction to entertain a motion for leave pursuant to s 58(3)(b) to continue the proceeding.
114 The emphasis upon s 31(1)(f) as a contextual elucidation of the s 27 jurisdiction (Scott v Bagshaw) gives emphasis to the structure of the act more generally. Section 27 confers jurisdiction in bankruptcy. Section 30(1) confers broad general powers in the exercise of that jurisdiction. Section 31 describes the matters the court shall hear and determine in open court in the exercise of jurisdiction. A proceeding engaging any of the s 31 subject matter is expressly an exercise of s 27 jurisdiction (with a statutory direction that the matter be dealt with in open court). Although the s 27 conferral goes beyond the s 31 subject matter, s 31 nevertheless gives a clear statutory indication of the classes of subject matter that the Bankruptcy Act treats as jurisdictional subject matter arising under or by virtue of the Bankruptcy Act. Each proceeding owes it authority to the Bankruptcy Act.”
[7]at [111] to [114].
[8][2000] FCA 816.
[9][2001] NSWSC 897.
The issue here, therefore, is whether the matters raised in Ms Cordes’s claim, are the matters that s 31(1) of the Act requires “the Court” to hear in open court and whether the matters identified, fall within the definition of “bankruptcy” and are therefore, seen to be within s 27(1). A proceeding, engaging any of the s 31 subject matter, is expressly an exercise of the s 27 jurisdiction and therefore, is within the exclusive jurisdiction of a s 27 Court and not this Court. Initially, the matters raised by Ms Cordes in her Statement of Claim, clearly related to applications to declare for or against the title of the trustee to any property.
This claim has been the subject of significant amendment and over 116 documents have been filed in these proceedings and are contained in several boxes. I have found it difficult to understand the essence of Ms Cordes arguments given the volume of material she has filed. I agree with the remarks of Collier J that:
“The matter is complicated not only by the plethora of hearings and the number of parties, but also by the fact that while Ms George (Cordes) has clearly invested a great deal of time and effort in preparing her case both in this Court and the court below, her submissions, affidavits and pleadings exhibit the familiar problems associated with those of self-represented litigants, and frequently lack precision and relevance.”
Furthermore, Ms Cordes often refers to the wrong Defendant as she consistently refers to the fourth Defendant as the fifth Defendant when there is no fifth Defendant in these proceedings.
In relation to the relief which Ms Cordes claims it would seem to me that the order sought in paragraph 11 of the prayer for relief clearly relates to an “application to declare for or against the title of the trustee to any property” and as such would seem to be clearly within the exclusive jurisdiction of section 27(1) Courts. I also consider that the matters which remain in the Prayer for Relief still relate to the matters which are within s 31(1), because, in order to succeed, Ms Cordes must assert the existence of a trust, as against the Trustee. I agree with the submission of the Trustee that, “while the bankrupt, in whatever capacity, asserts a title contrary to the title of the trustee then that question must always be determined by a bankruptcy court.” The Trustee further submits that, in relation to the Moggill property, he has an immediate right to registration and Ms Cordes is asserting a right to registration, which is contrary to the Trustee’s right to the property. In his reasons Burnett FM stated;[10]
[10][2009]FMCA 69 at para 3 – 4.
“3 Concurrent with the applicant’s proceedings in this Court there are related proceedings on foot in the Supreme Court of Queensland. In the Supreme Court proceedings the bankrupt person claims in her capacity as trustee fro her son Alexander William George (an infant). She has filed a statement of claim to which various defendants have filed defences. She seeks declarations, inter alia, in respect of the same property concerning which the Trustee makes a claim. The Defendants to those proceedings are respondents to the present proceedings.
4. Following application to this Court by the Trustee it was determined that this Court should proceed to determine the Trustee’s amended application despite the concurrent Supreme Court proceedings. That decision was affirmed by the Full Court upon appeal following application for leave to appeal and appeal by the bankrupt. (footnotes omitted)
I consider that in substance, this is a claim for relief which requires a determination of title in the Moggill property, the horse and the car against the title of the Trustee in Bankruptcy. Some of the Orders sought are not, as a matter of form, applications for a declaration of Title, although paragraph 11 of the Prayer for Relief is.
I consider, therefore, that given the substance of the claim, in the circumstances of this case, the issues which have arisen relate to the exclusive jurisdiction of a s 27(1) Court and not this Court.
An alternate ground is also raised.
The Estoppel Argument
It is argued by all defendants that, the question as to whether or not a trust existed over the Moggill property, the horse and the car were issues, which were decided by the Federal Magistrates Court in Fletcher v. George (No.6).[11] In particular it is argued that the learned Federal Magistrate declared that, the legal and beneficial ownership of the Moggill property vested in the Trustee, subject to the registered mortgage in favour of NAB.
[11][2009] FMCA 69 per Burnett FM on 9 February 2009.
The Federal Magistrates Court is clearly a court of competent jurisdiction to decide those issues. I also consider that, the issues were squarely raised in those proceedings and were necessarily determined as part of the proceedings there. It is also argued that each of the parties in the Supreme Court of Queensland proceedings, was a party in the Federal Magistrates Court, (although in that court there were additional parties as well). Furthermore, Burnett FM had specifically ordered that, the Supreme Court pleadings and affidavits, be adopted in the Federal Magistrates Court.[12] I also note that the extent, to which his Honour considered that material, is in fact an issue which has been raised on appeal and which will clearly be considered on that appeal in the Federal Court.
[12]See reasons para [6].
Whilst it is clear that, an appeal has been lodged unless and until the decision is altered on appeal, there is a still a determination of the issue on the record of a court of competent jurisdiction.
It is necessary to carefully examine the issues, which have been raised in the two proceedings. Mr Morgan, Counsel for NAB, summarised those issues as follows;
“The Federal Magistrates Court proceedings
1.The Trustee, by his amended application, sought declarations as to the beneficial ownership of certain property, including the Moggill property, and as a consequence one of the issues, which was necessarily determined, was whether that property is now within Ms Cordes’ bankrupt estate.
2.The proposition that the property was held on trust, and if so on what terms, was decided by the Federal Magistrates Court, which has power to hear and determine the question either in its primary jurisdiction under the Bankruptcy Act or under its accrued jurisdiction.
3.Whether or not Ms Cordes owned the Moggill Property beneficially or merely as trustee, raises the question of whether or not she had a beneficial entitlement to that property. The question was squarely within the Federal Magistrates Court’s primary jurisdiction.
The Supreme Court proceedings
4.In the Supreme Court of Queensland Ms Cordes has commenced proceedings, ostensibly as litigation guardian of her infant son Alexander. The first defendant is Peter Ironside personally and as another defendant DPIPL. NAB is another defendant; originally, the action title referred to NAB as the second defendant, but that has changed in subsequent versions of the statement of claim to refer to NAB as the third defendant. The transfer in question is the one concerning the Moggill Property, and the mortgage which is sought to be impugned is NAB’s mortgage. Section 185 Land Title Act 1994 (Qld) is raised against DPIPL and Dr. Ironside personally, but not against NAB.
NAB’s interests
5.NAB is interested as the registered mortgagee of the Moggill property.
6.NAB enjoys the benefits of registration conferred by the Torrens title system, as set out in Section 184 Land Title Act 1994 (Q) and is liable to defeasance of that registration, only subject to Section 185 Land Title Act 1994: Farah Constructions Pty Ltd v. Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22; at [192] – [194].
7.The question of whether or not the Moggill property forms part of the bankrupt estate of Ms Cordes is properly a question for the bankruptcy court.”
Ms Cordes argued, before Collier J, that Fryberg J held on 18 February 2009, that there was no issue estoppel. This statement is disputed by all Counsel. Collier J noted Ms Cordes’s submission in the following way;
“Ms Cordes seeks leave to appeal from O 1, 2, 3, 4, 5, 6, 9, and 10 of his Honour and an order staying those orders.
9. On 18 February 2009, Fryberg J ordered that the Supreme Court proceedings involving the parties be set down for hearing in that Court for three days in April 2009. I understand from the submissions of the parties in these proceedings that Fryberg J said that there was no issue estoppel in the Supreme Court arising from the decision of the Federal Magistrates Court because inter alia:
·further trusts raised by Ms George had not been considered in the Federal Magistrates Court; and
·the Federal Magistrate considered different questions to those before the Supreme Court of Queensland.
Extracts of the transcript of the hearing before Fryberg J, are annexed to the affidavit of Ms George, filed 6 March 2009, in these proceedings.”
Counsel submits that, the question of issue estoppel was not determined by Fryberg J and that, significantly, Ms Cordes did not give Collier J the full transcript of the hearing before Fryberg J, but rather selected extracts. Having considered the transcript of proceedings before Fryberg J, it is clear that, there was some substantial argument in this regard, however, in my view there was no final determination of the issue by his Honour.
Furthermore, it is clear that, the further earlier trusts, raised by Ms Cordes, were in fact considered by Burnett FM. Mr Galloway, has taken me to the transcript[13] of the proceedings before Burnett FM and it is clear that, further factual matters were raised in those proceedings and his Honour indicated that, he fully understood “what the nature of the amendments to the statement of claim are proposed to be”[14] and that, he allowed “the bankrupt to make the consequential amendments that she seeks to introduce, and they’ve been identified as three.”[15]
[13]Exhibit 2.
[14]Exhibit 2 p 92 l 34.
[15]Exhibit 2 p 96 l 15.
It is clear that in ‘issue estoppel,’ the decision relied upon is a decision which has not determined the cause of action sued on, but rather it covers “fundamental issues determined in an earlier proceeding, which formed the basis of the judgment.”[16] In Arnold v NatWest Bank Plc[17] Lord Keith stated;
“Issue estoppel may arise where a particular issue forming a necessary ingredient in a cause of action has been litigated and decided and in subsequent proceedings between the same parties involving a different cause of action to which the same issue is relevant one of the parties seeks to reopen that issue.”
[16]Spencer Bower, Turner and Handley, The Doctrine of Res Judicata (1996).
[17][1991] 2AC 93 at p105.
The principles in relation to issue estoppel were also discussed by Fisher J in Secretary, Department of Aviation v. Ansett Transport Industries Ltd,[18] where reference was made to the decision of Jordan CJ in the Amalgamated Engineering Case:
[18](1987) 72 ALR 188 per Fisher J with which Ryan J agreed.
“The Chief Justice said:
‘But in order that a judicial decision may involve an estoppel as to the matter decided, it is necessary that the tribunal should possess jurisdiction to decide the matter conclusively and for all purposes between the parties, and not merely incidentally and for a limited purpose. In the case of a superior court, difficulties can seldom arise as to whether estoppel attaches to matters which have been expressly or impliedly decided for the purpose of the direct and immediate decision. This is by reason of the rule that 'nothing shall be intended to be out of the jurisdiction of a superior court, but that which specially appears to be so': …
Further, the estoppel is not restricted to judicial decisions appearing on the face of any formal record of the order of the tribunal. It extends to any matters in fact raised and judicially decided for the purpose of arriving at the decision: Rentit Ltd v Duffield [1937] 3 All ER 117 and also to any matters necessary to be determined in order to found the decision, provided always that the tribunal has jurisdiction to determine these matters for all purposes between the parties, ie jurisdiction to determine them directly and immediately as well as merely incidentally.’……
Fisher J continued;In my opinion the earlier decision of Lockhart J can properly found a plea of issue estoppel in this matter. The issue which must be determined, as a preliminary to the exercise of the power to review, is exactly the same as that decided by him earlier when he considered the obligation to provide a statement of reasons. The fact that that decision was subject to appeal at the time of the later decision is nothing to the point. As the authors of Halsbury's Laws of England 4th ed, vol 16, state in para 1518:
‘A judgment which purports finally to determine rights is none the less effective for the purpose of creating an estoppel because it is liable to be reversed on appeal or because an appeal is pending ...’”
Accordingly, the fact that the decision is subject to an appeal, does not prevent the creation of an estoppel.
I also consider that in the present case, the same issues are raised. Whilst Ms Cordes argues a more extensive factual basis to that actually pleaded in the Federal Magistrates Court, it is clear that, the Federal Magistrate took the amended pleadings into account and this is specifically noted in the footnotes of his Honour’s reasons.
However, there is a fundamental requirement that the same parties are involved in the two sets of proceedings. In the proceedings in this Court, Ms Cordes sues as ‘Trustee’ for her minor son. I can see no evidence that Ms Cordes’s son was a party to the proceedings in the Federal Magistrates Court. As Spencer Bower, Turner and Handley state in their text on The Doctrine of Res Judicata, it is essential not only that the parties to both proceedings are the same, but that “the onus is on the person asserting the estoppel to establish identity or privity.”[19]
[19]Spencer Bower, Turner and Handley, The Doctrine of Res Judicata (1996), para 214.
I am not satisfied therefore, that privity of parties has been conclusively established and I do not consider that the onus has been satisfied. Furthermore, no party has asserted that the decision involved is a decision ‘in rem’.
Whilst I am not satisfied that issue estoppel has been successfully established, I consider that, given the exclusive jurisdiction of the bankruptcy court, the Plaintiff’s action in this Court should be permanently stayed.
I will hear further submissions as to costs and as to the form of the order.
ORDER
The Plaintiff’s action is permanently stayed.
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