Lion Finance Pty Ltd v Johnston
[2018] FCCA 2745
•5 October 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| LION FINANCE PTY LTD v JOHNSTON | [2018] FCCA 2745 |
| Catchwords: BANKRUPTCY – Application for review made out of time – Application for review found to be entirely without merit – Application for review dismissed and costs ordered. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.32, 52(1) Federal Circuit Court of Australia Act 1999 (Cth), s.104 Federal Circuit Court (Bankruptcy) Rules 2016 (Cth), r.2.02(3) |
| Cases cited: Meads v Meads (2012) ABQB 571 First National Bank of Montgomery v. Jerome Daly, Dec. 9, 1968 (Justice Court, Credit River Township, Scott County, Minnesota) |
| Applicant: | LION FINANCE PTY LTD |
| Respondent: | BELINDA JOHNSTON |
| File Number: | BRG 189 of 2018 |
| Judgment of: | Judge Middleton |
| Hearing date: | 15 June 2018 |
| Date of Last Submission: | 15 June 2018 |
| Delivered at: | Townsville |
| Delivered on: | 5 October 2018 |
REPRESENTATION
| Solicitors for the Applicant: | CLH Lawyers |
| Respondent appearing on her own behalf |
ORDERS
The application for review be dismissed.
The applicant (Belinda Johnston) pay the respondent (Lion Finance Pty Ltd) costs of and incidental to the application filed on 28 May 2018 as agreed or taxed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRG 189 of 2018
| LION FINANCE PTY LTD |
Applicant
And
| BELINDA JOHNSTON |
Respondent
REASONS FOR JUDGMENT
This application was commenced on 28 May 2018 by Ms Johnston. In the application she seeks a review of the sequestration order made by Registrar Belcher on 3 May 2018.
The first order she seeks in her application is that the order made by Registrar Belcher be set aside, pursuant to section 104 of the Federal Circuit Court of Australia Act 1999 (Cth).
The second order sought by the applicant is that Lion Finance Pty Ltd (Lion Finance) and CLH Lawyers to cease and desist all and any contact with us (sic) regarding this or any other matter.
The third order sought is that the creditor's petition filed by creditor to be dismissed.
The fourth order sought was that a stay of proceedings until orders are set aside (sic).
The fifth order sought was the Court to make no orders for costs.
The last order sought was “my right of subrogation to be applied by the Creditor, Judge and Registrar to the effect of full set off and closure to file BRG189/2018.”
In the applicant's (Johnston) affidavit in support of her application at paragraph 3 the applicant (Johnston) says that she has requested but never received various documentation in evidence including validation of the debt;
“by production of evidence of the amount paid to Westpac for the debt in question, proof of standing by “the production of the original credit contract” and breakdown of claimed amount “as we believe interest is not to be applied without a payment arrangement in place, and the original debt was $5868.88."
The applicant (Johnston) annexes a DNA analysis to “verify standing in this matter and observe the fact no other party to this case has proven, standing, despite multiple requests."
The applicant (Johnston) thereafter alleges multiple “dishonourable actions have been taken in order to deceive and profit from our estate, such as but not limited to the following;”
·Filing of a claim in a state other than Western Australia.
·Attempting to force an estate into bankruptcy for a claim they refuse to verify being a party to.
·Applying interest to a claimed amount without a payment arrangement in place.
·Continual threatening behaviour, including legal actions, bankruptcy and contacting two neighbours on separate occasions.
·Refusing to provide the deed of assignment and prove the amount paid to Westpac for the debt in question.
·Refusing to provide the original credit contract and prove standing in this matter.
·Refusing to provide a breakdown of claimed amount on bankruptcy notice of $7825.44.
·Attempting to collect amount of $14,132.06 without explanation.
·Refusing to provide a breakdown of claimed amount of $14,132.06.
·Attempting to confuse and hinder our response to correspondence by contacting us from different entities multiple times, i.e. CLH Lawyers, Lion Finance, back to CLH Lawyers and then back to Lion Finance again.
The applicant (Johnston) alleges that the actions of Lion Finance Pty Ltd and CLH Lawyers have caused her considerable harm, distress to relationships, health and well-being to the point of requiring treatment and medication for depression and anxiety.
At paragraph 7 of the applicant's (Johnston) affidavit she states
“I Belinda Johnston, the person's personal representative for Belinda Johnston, require the equitable remedy of subrogation to be applied for file number BRG189/2018. All instruments and bonds created without credit or value shall be used to apply the remedy of set-off, for the claimed amount with any surplus funds returned to Belinda Johnston, care of 40A Chaffers Street, Morley, Western Australia.”
Without reference to any annexure there is however annexure marked BJ1 which purports to be a claim made by;
“I a man Daniel Haddon of the family Johnston, of the house of God, c/o 40A Chaffers Street on Morley on Western Australia herein after claimant, for Daniel H Johnston and Belinda Johnston herein after Alleged Debtor."
It is the claimant's offer to perform upon debt validation and therein sets out a number of obligations as set out in the "claim."
The “claim” also alerts the respondent (Matthew Thomas care of Chief Executive Officer Lion Finance) that the document creates a criminal investigation of the business practices of the respondent as the respondent's claim for the debt due is “founded upon a false record in violation of Australian criminal code act 1995."
The claim continues that;
“failure to “cease and desist" shall be evidence respondent intends to be guilty of the aforementioned crimes and more; respondent's failure to meet all of the stipulations required herein is respondent's full agreement through tacit acquiescence there can be no case, collection or action; “no civil or criminal cause of action can arise lest, out of fraud, there be a valid, honest contract"; see Eads v Marks P; 2d 257 260."
The claim alleges that in the event the respondent (Lion Finance Pty Ltd) makes contact in any way other than by mail each and every person who commits such breach on behalf of the respondent (Lion Finance Pty Ltd) will be liable for “actual lawful remedy of $10,000, as well as statutory damages of up to $1000 for each and every violation."
Upon reading the documentation it is clear that the applicant (Johnston) will only accept validation of the debt once the applicant has seen the “wet ink contract."
Having read the applicant's (Johnston) material I formed the view that the applicant (Johnston) was seeking to avoid payment of her debt by engaging in an argument which has found some favour around the world, but principally in the United States, Canada and Australia. The argument has been described in various cases as an “organised pseudo-legal commercial argument" and there are a number of hall marks to that type of approach, which are present in this case.
The relevant approach has been described in other cases, and I do not intend to go through chapter and verse what the argument entails as I have set out the argument above. The argument has been the subject of explanation in a decision from Canada in Meads v Meads (2012) ABQB 571.
The argument germinated from a decision, First National Bank of Montgomery v Jerome Daly, Dec. 9, 1968 (Justice Court, Credit River Township, Scott County, Minnesota), also known as the Credit River Case.
In that case a Justice of the Peace in a Court in Minnesota determined that the US Federal Reserve Act was unconstitutional and void, determined that the US National Banking Act was unconstitutional and void and declared a mortgage acquired by the First National Bank of Montgomery Minnesota in the regular course of its business, along with the foreclosure and a share of sale to be void.
The respondent who was being pursued by his bank for recovery of land that was used as security for the loan was successful in avoiding having to repay the debt, and by the decision was able to keep his land.[1]
[1] Ennis v Credit Union Australia [2016] FCCA 1705 at Para 19
As His Honour Jarrett J[2] pointed out the decision has no importance here for a number of reasons. First, it is a decision of a very minor Court in the United States given in 1968. It has no precedent value here. It is not even part of the same court system. Secondly, the decision in that Court was “voided" in 1969 by a subsequent decision of the Minnesota Supreme Court (Zurn v Northwestern National Bank 284 Minn. 573, 170 N.W.2d 600 (1969)).
[2] ibid para 20
For those reasons and for the reasons explained in Mead v Mead the argument and the approach is flawed.
The applicant in the substantive proceedings and respondent (Lion Finance Pty Ltd) to this application sets out the material it relies upon in the outline of submissions filed 13 June 2018.
The respondent opposes the application on the following grounds
i)The application is made out of time;
ii)That the applicant complied with all requirements of section 52(1) of the Bankruptcy Act 1966 (Cth) (“the Act”);
iii)That the supporting material relied upon by the respondent in support of the application for review does not establish any basis upon which the Court ought to exercise its power review under section 104 of the Federal circuit Court act;
iv)That the applicant committed an act of bankruptcy on 25 January 2018;
v)The applicant is insolvent [3]
[3] notice stating grounds of opposition to application filed 4 June 2018
The respondent (Lion Finance Pty Ltd) seeks an order that the application be dismissed and that the applicant (Johnston), pay the (the respondent to this application) costs of and incidental to the application.
Rule 2.02(3) of the Federal circuit Court (Bankruptcy) rules 2016 (Cth) provides that an application for review of a Registrar's decision must be filed within 21 days following the sequestration order.
Registrar Belcher’s sequestration order was made on 3 May 2018. The applicant (Johnston) filed her application for review on 28 May 2018. Pursuant to the rules, the application for review had to be filed by 24 May 2018. It was not and is therefore out of time.
The application should be dismissed on that basis alone. However if I am wrong about that I will make some comments about the applicant's (Johnston) case.
If the applicant (Johnston) were not out of time this would be a hearing de novo.
Having perused and considered the applicant's supporting material, I can find no valid dispute at law that exists as to the liability of the applicant (Johnston) to the respondent (Lion Finance Pty Ltd).
The document that sets out how it is that the respondent (Lion Finance Pty Ltd) is liable to pay monies to the applicant (Johnston) has no legal validity. As such, the applicant (Johnston) has failed to prove any of said claim.
A perusal and consideration of the material filed by the applicant (Johnston) in these proceedings provides no evidence at all as to her ability to pay the debts and nor does the respondent (Lion Finance Pty Ltd) assert that she is solvent. Indeed at the hearing of the application the applicant (Johnston) informed the court that she was not going to provide proof that “I can pay the debt."
I am satisfied after considering all of the material relied upon by the respondent (Lion Finance Pty Ltd) that it complied with all aspects of rule 52(1) of the Bankruptcy Act 1966 (Cth) (“the Act”) prior to the sequestration order being made.
As to the applicant's (Johnston) alleged right of subrogation. I can find no evidence that the doctrine of subrogation is applicable to the sequestration order and I find that it is without merit and incorrect at law.
If I am incorrect in relation to that finding the applicant (Johnston) fails to identify a third party to be subrogated to the proceedings and more importantly in my view fails to identify the basis on which subrogation would apply.
For those reasons the application must be dismissed.
The respondent (Lion Finance Pty Ltd) seeks that the applicant (Johnston) pay its costs of and incidental to this application.
Section 32 of the Bankruptcy act 1966 provides;
The court may in any proceedings before it including a proceeding dismissed for want of jurisdiction make such order as to costs as it thinks fit.
In circumstances where the applicant (Johnston) brought her application out of time and the application itself was entirely without merit I am satisfied that the applicant (Johnston) should pay the respondents (Lion Finance Pty Ltd) costs of and incidental to this application.
Accordingly for the reasons set out above I make the orders detailed at the commencement of this judgment.
I certify that the preceding forty three (43) paragraphs are a true copy of the reasons for judgment of Judge Middleton
Date: 5 October 2018
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