Majeed v Kerr as trustee of the Bankrupt Estate of Majeed
[2016] FCCA 1625
•1 July 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MAJEED v KERR AS TRUSTEE OF THE BANKRUPT ESTATE OF MAJEED & ANOR | [2016] FCCA 1625 |
| Catchwords: BANKRUPTCY – Application for summary dismissal of proceedings – application to set aside a 2009 sequestration order – application to annul bankruptcy – application for an inquiry into the conduct of the former trustee in bankruptcy and for other orders – application for orders in relation to a person other than the trustee in bankruptcy – application summarily dismissed. |
| Legislation: Bankruptcy Act 1966 (Cth), ss.5, 12, 19, 52, 54, 60, 139ZA-139ZIS, 149(4), 149A, 153B, 154A, 155C, 154A, 155H, 155I, 176, 178, 179, pt.VIII Federal Circuit Court of Australia Act 1999 (Cth), ss.17A, 104 |
| Cases cited: Australian Securities and Investments Commission v Cassimatis (2013) 220 FCR 256; [2013] FCA 641 Ex Parte James; In re Condon (1874) LR 9 Ch App 609 Jackson v P/T Constructions WA Pty Ltd [2015] FCCA 1014 Jefferson Ford Pty Ltd v Ford Motor Company of Australia (2008) 167 FCR 372; [2008] FCAFC 60 Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd (2009) 239 CLR 75; [2009] HCA 43 Jones (Bankrupt) in the matter of Jones v Porter (Trustee) [2015] FCA 644 Krajniw v Newman (No.2) [2015] FCA 673 Macchia v Nilant [2001] 110 FCR 101; [2001] FCA 7 Majeed v Mahmud & Ors [2007] NSWSC 1413 Manday Investments Pty Ltd v Commonwealth Bank of Australia (No 3) [2012] FCA 751 Manolakis v Carter [2008] FCA 505 Manolakis v Carter [2008] FCAFC 183 Maxwell-Smith v Donnelly [2006] FCAFC 150 Nand v Fuji Xerox Australia Pty Ltd [2014] FCA 757 Pattison v Hadjimouratis (2006) 155 FCR 226; [2006] FCAFC 153 Re Alafaci; Registrar in Bankruptcy v Hardwick (1976) 9 ALR 262 Re Gault; Gault v Law (1981) 57 FLR 165 Re Tyndall; Ex parte Official Receiver (1977) 17 ALR 182 Spencer v Commonwealth of Australia (2010) 241 CLR 118; [2010] HCA 28 Stillman v Pascoe [2010] FMCA 548 SZWBH v Minister for Immigration and Border Protection (2015) 229 FCR 317; [2015] FCAFC 88 Takemoto v Moodys Investors Service Pty Ltd [2014] FCA 1081 Walton v Gardiner (1993) 177 CLR 378; [1993] HCA 77 Wentworth v Rogers (No. 5) (1986) 6 NSWLR 534 White Industries Aust Ltd v Commissioner of Taxation (2007) 160 FCR 298; [2007] FCA 511 Williams & Ors v Spautz (1992) 174 CLR 509; [1992] HCA 34 Zdrilic & Anor v Hickie & Anor [2015] FCCA 2882 |
| Applicant: | MOHD FAROK ABDUL MAJEED |
| First Respondent: | DAVID JOHN KERR AS TRUSTEE OF THE BANKRUPT ESTATE OF MOHD FAROK ABDUL MAJEED |
| Second Respondent: | RICHARD LOCK |
| File Number: | SYG 279 of 2015 |
| Judgment of: | Judge Barnes |
| Hearing date: | 26 November 2015 |
| Date of Last Submission: | 7 December 2015 |
| Delivered at: | Sydney |
| Delivered on: | 1 July 2016 |
REPRESENTATION
| The Applicant: | In Person |
| Solicitors for the Respondent: | Matthews Folbigg Pty Ltd |
ORDERS
The Amended Application filed on 24 August 2015 is dismissed.
The Applicant pay the costs of the Respondents (including in relation to their interim application of 4 September 2015) as agreed and in the absence of agreement taxed in accordance with the Federal Court Rules 2001 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 279 of 2015
| MOHD FAROK ABDUL MAJEED |
Applicant
And
| DAVID JOHN KERR AS TRUSTEE OF THE BANKRUPT ESTATE OF MOHD FAROK ABDUL MAJEED |
First Respondent
| RICHARD LOCK |
Second Respondent
REASONS FOR JUDGMENT
Background
Mr Majeed became bankrupt on 9 November 2009 when a sequestration order was made by a registrar of this court. His bankruptcy ended on 27 September 2015.
He commenced proceedings on 4 February 2015 on an urgent ex parte basis, seeking annulment of his bankruptcy on the ground that his trustee in bankruptcy could not object to him being discharged because he became bankrupt on 9 November 2009. He also sought various interim orders, including permission to travel overseas. That application was dismissed by Judge Driver on 4 February 2015.
Mr Majeed filed a fresh application on 24 February 2015 in which he named Mr Kerr of RSM Bird Cameron, his then trustee in bankruptcy, and Mr Lock (a senior manager employed by RSM Bird Cameron) as Respondents. He sought that the sequestration order of 9 November 2009 be set aside, permission to travel overseas and various other orders. In subsequent directions hearings, I gave several opportunities to Mr Majeed to clarify the orders he sought, the basis for such orders and the proper parties to the proceedings, particularly as his claims related largely to the petitioning creditor, who he had not joined and refused to join as a respondent to the proceedings (allegedly on the basis that he feared for his life). As discussed further below, Mr Majeed subsequently filed three Amended Applications (on 19 May 2015, 13 July 2015 and 24 August 2015). In the last of these he sought, inter alia, orders pursuant to ss.178 and 179 of the Bankruptcy Act 1966 (Cth) (the Act) in relation to both Mr Kerr and Mr Lock.
By interim application filed on 4 September 2015 the Respondents sought summary dismissal of Mr Majeed’s Application, as amended, and costs.
I have come to the conclusion that Mr Majeed’s application should be summarily dismissed. Because of the nature of these proceedings it is relevant to set out in some detail the steps taken made by Mr Majeed (who in his affidavits claimed to be “qualified in law” but is not a legal practitioner and was self-represented) to clarify the basis on which he sought orders against Mr Kerr and/or Mr Lock and to file supporting evidence. The opportunities afforded to Mr Majeed are outlined in some detail in the affidavit of Stephen Keith Mullette, the solicitor for the Respondents, of 4 September 2015.
The sequestration order of 9 November 2009 was made in proceedings brought in this court (then the Federal Magistrates Court of Australia) by Dato Onn Mahmud as petitioning creditor against Mr Majeed (the bankruptcy proceedings).
The Official Receiver was Mr Majeed’s initial trustee in bankruptcy. Mr Kerr became sole trustee of Mr Majeed’s bankrupt estate on 2 December 2009. A copy of the certificate of his appointment as trustee, signed by the Official Receiver and dated 2 December 2009, is in evidence. As stated on that certificate, pursuant to reg.13.07 of the Bankruptcy Regulations 1996 (Cth) in the absence of evidence to the contrary such certificate can be used as evidence in any proceedings without further proof of information on the national personal insolvency index. There is no evidence that Mr Lock was ever appointed a trustee of Mr Majeed’s bankrupt estate.
Mr Majeed did not file his Statement of Affairs until 26 September 2012. In accordance with s.149(4) of the Act, Mr Majeed was automatically discharged from bankruptcy three years from that date, that is, on 27 September 2015.
I note also that on or about 4 October 2012, Mr Majeed filed an application in this court seeking an annulment of his bankruptcy. He named the petitioning creditor as respondent. That application was dismissed on 28 February 2013 on the basis of Mr Majeed's non-appearance at the hearing.
It is relevant, having regard to Mr Majeed’s claims that his trustee in bankruptcy “extended” his bankruptcy and that Mr Lock was also a trustee of his bankrupt estate, that on or about 30 July 2013, Mr Majeed sent an email to his trustee in bankruptcy asking him to make arrangements to discharge him from bankruptcy (sic). By letter dated 30 July 2013 Mr Kerr advised Mr Majeed that the only way he could be discharged was by automatic discharge or by annulment. Mr Kerr explained the process of automatic discharge and why Mr Majeed’s bankruptcy would not end until September 2015 (given he only filed his Statement of Affairs in September 2012). He expressed the view that Mr Majeed had substantially failed to comply with his obligations or to co-operate with his trustee in various specified ways which could constitute grounds for an objection to discharge from the bankruptcy and result in his bankruptcy being extended for a further five years. Mr Kerr also advised Mr Majeed that when he was made bankrupt on 9 November 2009 the Official Trustee became his trustee and that Mr Kerr became the trustee of his bankrupt estate on 2 December 2009 by virtue of providing a consent to act to the Official Trustee.
The First Application
As indicated, following the unsuccessful ex parte application filed by Mr Majeed on 4 February 2015, he filed an application on 24 February 2015 in which he named Mr Kerr and Mr Lock as Respondents. This is referred to as the First Application in these proceedings.
In the First Application (and the three subsequent amended applications) Mr Majeed sought the same four interim orders:
a)that he be “allowed to travel overseas with immediate effect and continue to undertake his Doctor of Philosophy (PhD) in Laws”;
b)that “[t]he trustees cannot set any precondition for [him] to travel overseas to visit the recent deaths of his mother, his auntie and nephew”;
c)that “[t]he trustees should apologise to His Honourable Member of Warringah and his staff for anxiety and stress cause by the action of trustees”; and
d)that “AFSA should take all necessary action it deems fit for all the breaches by the trustees contrary to the Act, or Acts.”
By the time of the hearing of the Respondents’ application for summary dismissal Mr Majeed indicated that he did not press the first two interim orders (which had become unnecessary given that he was discharged from bankruptcy in September 2015).
Mr Majeed sought two final orders in the First Application. The first was that the “Bankruptcy Order and Sequestration Order be set aside” on the basis that Onn Mahmud (the petitioning creditor) owed Mr Majeed $15,385,120.00 as against what was described as the “legal cost claim” of $62,449.36. However the petitioning creditor was not named as a respondent.
Secondly, Mr Majeed sought a final order that “Alistair Little should be referred to New South Wales Legal Commissioner for misleading and deceptive conduct for abuse of court process and abuse of police powers, abuse of trustees power and breach of the Bankruptcy Act and bringing the AFSA and judiciary into disrepute”. Mr Little is not (and has never been) a party to these proceedings.
There is no evidence that this Application was served on anyone other than Mr Kerr and Mr Lock. There is no evidence of any notice to creditors (cf r.7.06 of the then applicable Federal Circuit Court (Bankruptcy) Rules 2006 (Cth) (Bankruptcy Rules)).
There was nothing in the final orders sought in the First Application to indicate that Mr Majeed was seeking any relief against Mr Kerr (his trustee in bankruptcy) or Mr Lock.
The orders were said to be sought on “grounds stated in the supporting affidavit or statement of claim” (although Mr Majeed has never filed a statement of claim). The supporting affidavit filed by Mr Majeed on 24 February 2015 contained an account of Mr Majeed’s claimed past involvement with and work performed for the petitioning creditor in support of the proposition that the petitioning creditor owed him an amount exceeding $15 million based on what were said to be services rendered and an entitlement to a share of the profits of undertaking joint property development. In his subsequent affidavits Mr Majeed repeated these claims and set out the amount he claimed he was owed by the petitioning creditor on the asserted basis. Mr Majeed relied on this and all other affidavits he filed in these proceedings.
This affidavit (and the next three affidavits filed by Mr Majeed) also contained three paragraphs which appeared to be the essence of his complaints, other than his claim to be owed money by the petitioning creditor. They are in the form of submissions, were admitted as such and are as follows (errors in original):
Conflict of Interest
The trustee of bankruptcy is conflict of interest as Cahya Mata Sarawak owed by Onn Mahmud accountant RSM RKT in Malaysia is part of the same organisation of RSM Bird Cameron in Sydney.
Breach in Bankruptcy of Fiduciary duties as Trustee
The trustee of bankruptcy fail to take necessary action to recover the amount of money owed by the Onn Mahmud (the petitioning creditor) as required by the Act.
Extension of time should not be granted and the trustee failure to act fairly as required by the Act
The trustee of bankruptcy should as required by the Act to act fairly and but made unnecessary requirements and prevent the applicant to leave to undertake further study, to attend his beloved mother funeral, to visit his sick brother, and the recent death of his nephew.
The Second Application
After this matter was transferred to me from the Bankruptcy Registrar, I made orders on 15 April 2015 giving Mr Majeed the opportunity to file an Amended Application and further affidavit evidence to clarify the orders sought against the Respondents and the basis for such relief. I explained to Mr Majeed the difficulty he faced in seeking that the sequestration order be set aside, given the time that had passed, the need for an extension of time and his refusal to join the petitioning creditor as a party as well as the need to clarify the basis on which he sought orders against the Respondents. Mr Majeed maintained his opposition to joining the petitioning creditor as a party to the proceedings (reiterating on several occasions his fear that his life would be at risk if he did so). I also made orders for the filing of a trustee’s report and listed Mr Majeed’s application for hearing on 29 June 2015.
After an extension of time was granted, Mr Majeed filed an Amended Application on 19 May 2015 (the Second Application) and a further supporting affidavit. He purported to identify the basis on which he named his trustee in bankruptcy as a Respondent. He did not clarify the basis on which he sought orders against Mr Lock. He did not join the petitioning creditor as a party to the proceedings.
The Second Application did not raise or seek any relief against the Respondents beyond that sought in the interim orders in the First Application. Mr Majeed again sought that “[t]he Bankruptcy Order and Sequestration Order be set aside as Onn Mahmud (the petitioning creditor) (sic).” The proposed order sought ceased at that point, but was sought on the apparently unrelated “ground” that: “Pursuant to S19 Duties of Trustees of the Bankruptcy Act 1966 and Inspector Practice Direction 14 the trustees is in breach for failure to take the necessary action to recover amount owed to the Applicant of the petitioning creditor…” (errors in original). At the same time, Mr Majeed repeated the claim that Mr Mahmud (the petitioning creditor) owed him over $15 million against the legal cost claim of $62,449.36 as was said to be detailed in the “amended” affidavit.
The second, third and fourth proposed orders in the Second Application sought that the bankruptcy “should have been annulled and extension period of bankruptcy disallowed” on three separate grounds. First it was stated (errors in original):
Pursuant to Schedule 4A – Performance Standard of trustees of the Bankruptcy Act 1966 Inspector General Practice Direction 14 and the trustees is in breach for failure to act honestly and impartially a document that the trustee knows, or ought reasonably to know, is false or misleading as Alistair Little of Tress Cox misleading and deceptive conduct for abuse of court process and abuse of police powers, abuse of trustees power in ensuring the Applicant in a state of bankruptcy and to extend further without good reasons (details in amended affidavit).
It appears that the reference to Schedule 4A is intended to be a reference to Schedule 4A to the Bankruptcy Regulations 1996 (Cth) (the Bankruptcy Regulations) which specifies standards applicable to the exercise of powers or the carrying out of duties of registered trustees for the purposes of s.155H(5) of the Bankruptcy Act which, in turn, relates to consideration of involuntary termination of registration of a trustee by the Inspector-General in Bankruptcy (and see s.155I). Mr Majeed paraphrased and elaborated on the general standard in clause 2.3 in Part 2 of Schedule 4A to the Bankruptcy Regulations. However he has not explained how these provisions relate to and support his application, either in the form it appeared in the Second Application or on the basis contained in the subsequent Applications (discussed below). In particular the reference to an “extension period of bankruptcy” is inexplicable. Mr Majeed’s bankruptcy was not extended. As indicated because he did not file a Statement of Affairs until 26 September 2012 (see s.54 of the Act) by automatic operation of s.149(4) he was not discharged from bankruptcy until the end of the period of three years from that 2012 date.
The next basis on which an annulment was sought was described as follows in the “ground” to “order 3” (errors in original):
Pursuant to Schedule 4A - Performance Standard of trustees of the Bankruptcy Act 1966 Inspector General Direction 14 - Conflict of Interest and the trustees is in breach in carrying out his duties, a trustee must not only act independently, but must be seen to act independently. Therefore, if a conflict of interest arises the trustee must avoid or remove that conflict if it raises any perception of partiality. The test is whether there might be, in the eyes of a reasonable person, a perception of conflict. Where there is an actual or potential conflict of interest the trustee must notify the relevant parties and take appropriate steps to avoid the conflict of interest (details in amended affidavit).
RSM Bird Cameron and RSM RKT are part of RSM international RSM is the 7th largest worldwide. The petitioning creditor (Onn Mahmud) is a client of RSM RKT it is well known fact that Onn Mahmud use his influence to contain Applicant movement by misleading and deceptive conduct through his solicitors in abuse of court process and abuse of police powers, abuse of trustees power in ensuring the Applicant in a state of bankruptcy and prevent him to earn living and threaten the safety of the family of the Applicant and the Applicant through the court process and ultimately into a penniless situation (Benny Ng counterpart in Malaysia) or death (Ross Boyert my counterpart in USA).
In the fourth “ground” Mr Majeed sought annulment and “extension period of bankruptcy disallowed” on the following basis (errors in original):
Pursuant to Schedule 4A – Performance Standard of trustees of the Bankruptcy Act 1966 Inspector General Practice Direction 14 – breach of fiduciary duty. A trustee must act justly. Trustees are officers of the Court and in exercising powers and discretions and making decisions no lesser standard is to be expected of them than of a court or judge. This is referred to as the rule in Ex parte James. They have a general duty to exercise the powers committed to them in such a fashion that the objects of the Act, including those of equality between creditors and fairness to bankrupts and debtors, are served and bringing the AFSA and judiciary into disrepute.
Mr Majeed filed an “amended” affidavit on 19 May 2015 in support of the Second Application. In essence, he repeated his claims about the basis for a debt said to be owed to him by the petitioning creditor. He also “explained” that he sought annulment of his bankruptcy and contended that the “extension order” should not have been granted on the basis that the petitioning creditor owed him $15 million and based on what were said to be (unspecified) breaches of the Bankruptcy Act by the trustees (sic). It appears that Mr Majeed was mistakenly of the view that the period of his bankruptcy had been extended following an objection by his trustee in bankruptcy (see s.149A of the Act).
In this affidavit Mr Majeed also repeated the three generally expressed paragraphs in the nature of submissions in his earlier affidavit about conflict of interest, breach of fiduciary duty and the failure to act fairly.
In addition, this affidavit contained five further paragraphs (which were repeated in two subsequent affidavits). Mr Majeed complained that the petitioning creditor had pursued a bankruptcy proceeding against him when he had not been present at the hearing in the District Court which was the basis for the judgment debt relied on by the creditor. He contended that what he described as this “malicious prosecution was a miscarriage of justice, abuse of the court process and abuse of police powers” so that he could not appeal against the petitioning creditor as he was made bankrupt.
Mr Majeed also alleged that the petitioning creditor (Mr Mahmud) took bankruptcy proceedings against him because Mr Majeed was aware that Mr Mahmud was involved in money laundering and was going to discredit him. He continued:
The trustee is now fully aware that he was instructed to contain my movement and prevents me to take further legal action against Onn Mahmud (the petitioning creditor).
This is the only reference to the trustee in the additional paragraphs in the affidavit of 19 May 2015.
Finally, Mr Majeed claimed that he was “qualified in law with honours and when to Lincoln Inn and did a post graduate at Harvard Law School” (errors in original). He also asserted that a right to be heard was a principle of natural justice and a “basic constitutional right”.
The Respondents filed, and rely on, an affidavit consisting of a report of 12 June 2015 by Mr Kerr, the trustee of Mr Majeed’s bankrupt estate prepared in accordance with the requirements of the Bankruptcy Rules in preparation for the scheduled hearing of Mr Majeed’s application to set aside the sequestration order and/or for an annulment of his bankruptcy.
The Respondents also rely on the affidavit of Mr Mullette of 4 September 2015. Mr Mullette recorded that on 25 June 2015 he wrote to Mr Majeed informing him that the Second Respondent, Mr Lock, was a manager at RSM and not his trustee in bankruptcy, suggesting that there was no appropriate relief sought against Mr Lock and that the proceedings should be dismissed against Mr Lock. Mr Mullette also explained to Mr Majeed that it appeared that, in broad terms, he was seeking that the sequestration order should be set aside or his bankruptcy annulled and that he be allowed to travel overseas, but that the Second Application did not appear to be seeking any relief as against the trustee. Mr Majeed was informed that the Respondents would be conducting the hearing of the Second Application on that basis. Mr Majeed was asked to advise whether he intended to proceed with his Amended (Second) Application as against the trustee.
The Third Application
Given the nature of the assertions in the Second Application and supporting affidavit and the concerns raised by Mr Majeed, when the matter came before the court on 29 June 2015, I raised the issue of whether Mr Majeed was in essence seeking an inquiry into the conduct of the trustee under s.179 of the Act. Mr Majeed agreed that this was what he sought. The Respondents then sought an order that Mr Majeed file a further amended application to enable them to know what case they were being asked to meet, in particular exactly what “conduct” Mr Majeed was alleging should be the subject of an inquiry.
I adjourned the hearing and made orders for Mr Majeed to file a further amended application and any further affidavit evidence by 6 July 2015, for the Respondents to file any further evidence, for Mr Majeed to file evidence in reply and listed the matter for hearing on 17 August 2015.
On 13 July 2015 (outside the time provided for in the orders) Mr Majeed filed a further amended application, which for convenience is referred to as the Third Application, and a freshly affirmed copy of his previous supporting affidavit. Notwithstanding Mr Majeed’s oral confirmation that he sought an inquiry into the conduct of his trustee in bankruptcy, in the Third Application he continued to seek that the sequestration order be set aside or annulled and that the “extension period of bankruptcy disallowed” on essentially the same “grounds” as in the previous application, albeit that he included reference to provisions in the Bankruptcy Act, including ss.178 and 179. To the extent it could be construed as an application for a s.179 inquiry, the Third Application did not set out the “conduct” of the trustee (or Mr Lock) in relation to which an inquiry was sought.
In the Third Application the first “ground” relied on (again in support of a proposed order that the sequestration order be set aside) was expressed as follows:
Pursuant to S178, S179, S178(1), S179(1)(a) and (1)(b) or the alternative and S19 Duties of Trustees of the Bankruptcy Act 1966 and Inspector Practice Direction 14 the trustees is in breach for failure to take necessary action to recover amount owed to the Applicant of the petitioning creditor (Onn Mahmud) who owed the Applicant $15,385,120 against the legal cost claim of $62,499.63 against the Applicant (details in amended further affidavit) (underlined parts added in Third Application).
This “ground” proceeds on the basis that complaints about the conduct or omissions of a trustee in bankruptcy are a basis for an application to set aside a sequestration order.
Once again, the other proposed order sought was an annulment and disallowance of an “extension” of Mr Majeed’s bankruptcy. Proposed order 2 repeated the reference to a breach of performance standards by the trustees (sic) and the reference to Mr Little, but added a reference to an alternative basis described as “pursuant to S153(B)”. The next basis for such an order repeated the reference to conflict of interest in the Second Application, but also stated “[p]ursuant to S153 (sic)” as an alternative ground. It appears that this was also intended to be a reference to s.153B of the Act. Similarly, the last basis on which such order was sought repeated the reference to breach of fiduciary duty and added “pursuant to S153” as an alternative.
However, like its predecessors, the Third Application did not seek any specific orders or relief against the trustee and/or Mr Lock or disclose any cause of action against either of the Respondents (except in the proposed interim orders in relation to approval to travel overseas which were the same as in the earlier applications). Again, this application did not include the petitioning creditor as a Respondent. Mr Majeed continued to object strenuously to the proposition that the petitioning creditor was an appropriate respondent and should be joined as a party, notwithstanding the basis on which he sought that the sequestration order be set aside. There is no evidence that the Third Application was served on any person other than the trustee and Mr Lock or of notice having been given to any creditor of Mr Majeed.
The Fourth Application
At the request of the solicitor for the Respondents the proceedings were re-listed before the then proposed hearing date. The Respondents submitted that the Third Application failed to shed any further light on the basis for Mr Majeed's request for an inquiry under s.179 of the Bankruptcy Act and that the trustee and Mr Lock were still unable to know what case they were to meet. It was explained (for the benefit of Mr Majeed) that the Third Application did not, with any sufficient particularity, identify the conduct of the trustee and Mr Lock with respect to which Mr Majeed was seeking an inquiry and submitted that there appeared to be no connection between the orders sought, the grounds purportedly supporting the orders, and Mr Majeed's affidavits or, indeed, between the matters about which Mr Majeed was complaining and the conduct of the trustee or Mr Lock.
Mr Majeed nonetheless again confirmed that he was seeking an inquiry into the conduct of the trustee pursuant to s.179 of the Bankruptcy Act. He indicated that he also sought an annulment of his bankruptcy. He conceded that he needed to amend his application. He maintained that Mr Lock should remain a party to the proceeding, despite his awareness of the Respondents’ submission that Mr Lock was not his trustee in bankruptcy.
In these circumstances, having regard not only to the seriousness of a s.179 application, but also to the fact that the Applicant was self-represented, I gave Mr Majeed another opportunity to file an amended application together with further affidavit evidence, in particular in relation to the basis on which he sought an inquiry under s.179 of the Bankruptcy Act.
The Respondents foreshadowed that they may file an interim application seeking summary dismissal depending on whether, and what, further amended application was filed.
On 24 August 2015 (outside the time provided for in orders) Mr Majeed filed a further amended application (referred to for convenience as the Fourth Application) and supporting affidavit. Again, this application named Mr Kerr and Mr Lock as Respondents. Mr Majeed did not join the petitioning creditor as a party to the proceedings and there is no evidence of notification to any creditor or service on any other person. The Respondents filed the foreshadowed summary dismissal application on 4 September 2015.
As the Fourth Application is the subject of the summary dismissal application, it is appropriate to set it out in full. Under the heading “Final Orders Sought by the Applicant” it was stated (errors in original):
Order:
1. The Bankruptcy Order and Sequestration Order be set aside as Onn Mahmud (the petitioning creditor)
Grounds:
Pursuant to S19 Duties of Trustees of the Bankruptcy Act 1966 and Inspector Practice Direction 14 the trustees is in breach for failure to take the necessary action to recover amount owed to the Applicant of the petitioning creditor (Onn Mahmud) who owed the Applicant $15,385,120 against the legal cost claim of $62,449.36 against the Applicant. (details in amended affidavit)
Order
2. Order an inquiry be conducted in conjunction with the Inspector General of AFSA on the conflict of interest and breaches of fiduciary duties of the trustees David Kerr and Richard Lock of RSMI Cameron on breaches of the Bankruptcy Act 1966 on the grounds stated below.
Grounds:
Pursuant to Schedule 4A – Performance Standard of trustees of the Bankruptcy Act 1966 Inspector General Practice Direction 14 and the trustees is in breach for failure to act honestly and impartially a document that the trustee knows, or ought reasonably to know, is false or misleading as Alistair Little of Tress Cox misleading and deceptive conduct for abuse of court process and abuse of police powers, abuse of trustees power in ensuring the Applicant in a state of bankruptcy and to extend further without good reasons. (details in amended affidavit)
3. Order an inquiry in conjunction with the Inspector General of AFSA on the conflict of interest and breaches of fiduciary duties of the trustees David Kerr and Richard Lock of RSMI Bird Cameron on breaches of the Bankruptcy Act 1966 on the ground stated below. The trustees to make good any loss caused by breach of duty of S176 of the Bankruptcy Act 1966.
Grounds:
Pursuant to Schedule 4A – Performance Standard of trustees of the Bankruptcy Act 1996 Inspector General Practice Direction 14 – Conflict of Interest and the trustees is in breach in carrying out his duties, a trustee must not only act independently, but must be seen to act independently. Therefore, if a conflict of interest arises the trustee must avoid or remove that conflict if it raises any perception of partiality. The test is whether there might be, in the eyes of a reasonable person, a perception of conflict. Where there is an actual or potential conflict of interest the trustee must notify the relevant parties and take appropriate steps to avoid the conflict of interest (details in amended affidavit).
RSM Bird Cameron and RSM RKT are part of RSM international RSM is the 7th largest worldwide. The petitioning creditor (Onn Mahmud) is a client of RSM RKT it is well known fact the Onn Mahmud use his influence to contain Applicant movement by misleading and deceptive conduct through his solicitors in abuse of court process and abuse of police powers, abuse of trustees power in ensuring the Applicant in a state of bankruptcy and prevent him to earn living and threaten the safety the family of the Applicant and the Applicant through the court process and ultimately into a penniless situation (Benny Ng my counterpart in Malaysia) or death (Ross Boyert my counterpart in USA).
4. Order an inquiry in conjunction with the Inspector General of AFSA on the conflict of interest and breaches of fiduciary duties of the trustees David Kerr and Richard Lock of RSMI Bird Cameron and on breaches of the Bankruptcy Act 1966 on the grounds stated below. The trustees to make good any loss caused by breach of duty off S178 and S179 of the Bankruptcy Act 1966 failing to act honestly and impartially.
Grounds:
Pursuant to Schedule 4A – Performance Standard of trustees of the Bankruptcy Act 1966 Inspector General Practice Direction 14 – breach of fiduciary duty. A trustee must act justly. Trustees are officers of the Court and in exercising powers and discretions and making decision no lesser standard is to be expected of them than of a court or judge. This is referred to as the rule in Ex parte James. They had a general duty to exercise the powers committed between creditors and fairness to bankrupts and debtors, are served and bringing the AFSA and judiciary into disrepute
3. Costs.
Under the heading “Interim Orders Sought by Applicant” it was stated:
1. The Applicant is allowed to travel overseas with immediate effect and continue to undertake his Doctor of Philosophy (PhD) in Laws
2. The trustees cannot set any precondition for the Applicant to travel overseas to visit the recent deaths of his mother, his auntie and nephew.
3. The trustees should apologise to the His Honourable Member of Warringah and his staff for anxiety and stress cause by the action of the trustees.
4. AFSA should take all necessary action it deems fit for all the breaches by the trustees contrary to the Act or Acts (errors in original)
The affidavit of 24 August 2015 filed in support of the Fourth Application in essence repeated the material in Mr Majeed’s affidavit of 13 July 2015, except that in paragraph 59, after complaining about malicious prosecution and the conduct of the petitioning creditor in making him bankrupt, Mr Majeed asserted that his bankruptcy had been:
…further extended by the trustees (David Kerr and Richard Lock) on the request by Alistair Little on behalf of the petitioning creditor (onn Mahmud) (sic).
In addition, Mr Majeed made further submissions in this affidavit as follows (errors in original):
63. Plead that an order an enquiry and a inquiry should be conducted by the Inspector General of AFSA on the conflict of interest and breaches of fiduciary duties of the Bankruptcy Act 1966 on continuously allowing the petitioning creditor (Onn Mahmud) through his lawyer Alistair Little to undertake a fraudulent acts and abuse the court process to deprive the Applicant of his entitlements for professional services rendered from 2002 to 2007.
64. Order an enquiry that the trustees fail to deny or affirm by the trustees (David Kerr and Richard Lock) is in continuously in breach of the Bankruptcy Act 1966 by failing to deny by several emails by the Applicant that the trustees Malaysian Operation RKT RSMI have received benefits and future benefits from the business relationship, being accountants and financial advisors to the trustees Malaysian operation RSMI RKT whom are providing professional services and substantially remunerated by the Petitioning Creditor (Onn Mahmud).
65. The trustees to make good any loss suffered by the Applicant caused by breach of duties under the S176 of the Bankruptcy Act 1966.
66. An inquiry to be made for breaches of S178 and S179 of the Bankruptcy Act 1966 and to inquire into any act, omission of the decisions of the trustees (David Kerr and Richard Lock) of RSMI Bird Cameron and also in breaches of Division 2.2 of Schedule 4A to act honestly and impartially and they fail to act during the period November 2009 to now.
The Summary Dismissal Application
In an interim application filed on 4 September 2015 the Respondents sought an order that the Amended (Fourth) Application filed on 24 August 2015 be dismissed or struck out (the summary dismissal application). Reliance was placed on rr.13.09 and 13.10 of the Federal Circuit Court Rules 2001 (Cth) and/or r.16.21 of the Federal Court Rules 2011 (Cth). The Respondents also sought costs and such further or other order as the Court deemed fit.
The Respondents to the substantive proceedings sought that the whole of the proceedings be summarily dismissed on the basis that none of the claims made by Mr Majeed had any reasonable prospects of success. It was also asserted that the proceedings involved an abuse of process. It was made very clear to Mr Majeed from the time Respondents’ interim application was first foreshadowed that they sought summary dismissal of the whole of his application (see SZWBH v Minister for Immigration and Border Protection (2015) 229 FCR 317; [2015] FCAFC 88 at [57]).
When the matter next came before the Court for directions I listed the Respondents’ interim application for hearing on 26 November 2015. I gave Mr Majeed the opportunity to file and serve any further affidavit evidence in response to Mr Mullette’s affidavit of 4 September 2015, on or before 29 October 2015. He did not file any such affidavit evidence. Nor did he seek an extension of time to do so.
In support of the summary dismissal application, the Respondents relied on the affidavit of Mr Mullette sworn on 4 September 2015, which set out the procedural history of this matter and the trustee’s report in the affidavit of Mr Kerr of 12 June 2015.
The post-hearing “affidavit”
On 26 November 2015 during the hearing of the summary dismissal application, Mr Majeed repeatedly sought a further adjournment to give him the opportunity to file further affidavit evidence on the basis that he claimed he was taken by surprise by some aspects of the Respondent’s written submissions (in particular in relation to whether Mr Lock was an appropriate Respondent). The Respondents had not been ordered to file submissions, but had done so to assist the Court. I refused the adjournment application. The hearing proceeded. However, as the submissions had only been served on Mr Majeed the day before the hearing I gave him the opportunity to file and serve post-hearing written submissions (in particular in relation to the basis for his claim against Mr Lock) on or before 3 December 2015. The Respondents were given the opportunity to file written submissions in reply.
Instead, and without obtaining leave, on 3 December 2015 Mr Majeed filed a further “affidavit” with substantial annexures which had not formed part of his earlier affidavits. He did not file written submissions. The Respondents filed written submissions addressing the “affidavit” and annexures.
Mr Majeed proceeded in this manner despite the several opportunities he had been given to file affidavit evidence and the four earlier affidavits he filed. He provided no explanation for his failure to comply with court orders or his failure to file the material annexed to his “affidavit” of 3 December 2015 within the time provided. His “affidavit” contended, without explanation, that the “trustees” had been negligent in performance of “their” duties under the Bankruptcy Act and that Mr Lock had “continuously taken an active role and continuously act as trustees and David Kerr act a freelance trustee. David Kerr has left Richard Lock in the management of my affairs. The active role of Richard is supported by all evidence”. In support of this allegation he attached copies of some emails to him from the trustee’s office (in which, among other things, Mr Lock referred to Mr Kerr as Mr Majeed’s trustee) and emails from Mr Majeed to Mr Lock.
Mr Majeed also contended (again without explanation) that “RSMI RKT and RSMI Bird Cameron have shadowy relationship between themselves” and that “Chaya Mata”, which was said to be owned and managed by the petitioning creditor, was a client of RSM RKT. This allegation was supported by a reference to a screenshot of “clientele” of RSM RKT Group in Annexure B to the affidavit.
Mr Majeed referred in this affidavit to a Ms Rewcastle, said to be an “investigative journalist” and the sister-in-law of former Prime Minister of England (without explanation). He annexed an exchange of emails with Ms Rewcastle including about the alleged involvement of his petitioning creditor with various corporate entities.
He also referred to what was said to be the “corruption and money laundering” of his petitioning creditor (by reference to an Annexure containing a “report” by a Swiss charitable association and other documents apparently relating to the petitioning creditor, his family and associates).
Finally, Mr Majeed accused Mr Mullette of making an (unparticularised) statement amounting to perjury in his affidavit. This serious assertion is not only unparticularised, it does not refer to any material in support, let alone material that provides a proper foundation for such a claim. Such assertion should be struck out as objectionable under r.15.29 of the Federal Circuit Court Rules 2001 (Cth) (and see Manolakis v Carter [2008] FCA 505 at [12]).
Otherwise, despite my concern at the manner in which Mr Majeed flouted the orders of the court and the extensive earlier opportunities he had to clarify the basis of his claim against the Respondents and to file evidence prior to the hearing of the summary dismissal application, given the nature of these proceedings and the opportunity the Respondents had to address this material in post-hearing submissions I consider it appropriate to have regard to Mr Majeed’s “affidavit” of 3 December 2015 as submissions and also to the accompanying material as material on which he would seek to rely were his application not to be summarily dismissed. I do so notwithstanding that his evidence was supposed to be complete before 17 August 2015 and despite the subsequent opportunities afforded to him before the hearing of 26 November 2015.
In proceeding in this manner and in considering the “grounds” relied on by Mr Majeed, I have borne in mind the fact that while on his evidence he is “qualified in law with honours”, there is no suggestion that he is admitted as a legal practitioner. He is self-represented (see Jones (Bankrupt) in the matter of Jones v Porter (Trustee) [2015] FCA 644 at [33]-[34] and Wentworth v Rogers (No. 5) (1986) 6 NSWLR 534 at 536). However I have also borne in mind that as the Full Court of the Federal Court stated in Manolakis v Carter [2008] FCAFC 183 at [9]:
Whatever the difficulties facing an applicant in person may be, those difficulties cannot justify a departure from the Rules relating to the institution and conduct for proceedings and to pleadings such that anything will go. Justice requires fairness to all parties. A respondent is entitled, at the least, to know the case that is brought against him or her and the rudimentary facts upon which that case is based.
The manner in which this matter has proceeded has reflected an attempt to give Mr Majeed every opportunity to express his claims in a comprehensible and appropriate form, to identify any viable cause of action and any basis for a claim against Mr Kerr and/or Mr Lock to proceed against the appropriate party or parties and to file supporting evidence. Given Mr Majeed’s strong and insistent opposition and expressions of fear in response to the explanation that the petitioning creditor would (as in his first annulment application of 2012) be a necessary and appropriate respondent insofar as he sought review of the sequestration order or annulment. I have not required the petitioning creditor to be included as a party (see rr.11.01(2) and 11.01(4) of the Federal Circuit Court Rules). Mr Majeed sought only to maintain these proceedings against Mr Kerr and Mr Lock despite having been made aware of the need to join the petitioning creditor (particularly in relation to the application to review the sequestration order).
Summary Dismissal Principles
Section 17A(2) of the Federal Circuit Court of Australia Act 1999 (Cth) is relevantly as follows:
(2) The Federal Circuit Court of Australia may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a) the first the party is defending the proceeding or that part of the proceeding; and
(b) the Court is satisfied that other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.
For the purposes of this provision, a proceeding need not be “hopeless” or “bound to fail” for it to have no reasonable prospect of success (see s.17A (3)).
This power is reflected in r.13.10 of the Federal Circuit Court Rules on which the Respondents relied. Rule 13.10 is as follows:
Disposal by summary dismissal
The Court may order that a proceeding by stayed, or dismissed generally or in relation to claim for relief in the proceeding, if the Court is satisfied that:
(a) the party prosecuting the proceeding or claim for relief has no reasonable prospect of successfully prosecuting the proceeding or claim; or
(b) the proceeding or claim for relief is frivolous or vexatious; or
(c) the proceeding or claim for relief is an abuse of the process of the Court.
The Respondents filed the requisite application in accordance with r.13.09 of the Federal Circuit Court Rules 2001 (Cth).
The authorities on s.17A and its Federal Court equivalent (s.31A of the Federal Court of Australia Act 1976 (Cth)) are of relevance in the sense considered in Jackson v P/T Constructions WA Pty Ltd [2015] FCCA 1014 and cases cited therein. In Spencerv Commonwealth of Australia (2010) 241 CLR 118; [2010] HCA 28 Hayne, Crennan, Kiefel and Bell JJ emphasised that there was a distinction between the test of “no reasonable prospect” of success in s.31A of the Federal Court of Australia Act 1976 (Cth), the tests previously applied and expressions such as “no real prospect” or “no plausible claim” (see the discussion at [51]-[60]). In particular, their Honours stated at [58]-[60]:
58. How then should the expression “no reasonable prospect” be understood? No paraphrase of the expression can be adopted as a sufficient explanation of its operation, let alone definition of its content. Nor can the expression usefully be understood by the creation of some antinomy intended to capture most or all of the cases in which it cannot be said that there is “no reasonable prospect”. The judicial creation of a lexicon of words or phrases intended to capture the operation of a particular statutory phrase like “no reasonable prospect” is to be avoided. Consideration of the difficulties that bedevilled the proviso to common form criminal appeal statutes, as a result of judicial glossing of the relevant statutory expression, provides the clearest example of the dangers that attend any such attempt.
59. In many cases where a plaintiff has no reasonable prospect of prosecuting a proceeding, the proceeding could be described (with or without the addition of intensifying epithets like “clearly”, “manifestly” or “obviously”) as “frivolous”, “untenable”, “groundless” or “faulty”. But none of those expressions (alone or in combination) should be understood as providing a sufficient chart of the metes and bounds of the power given by s 31A. Nor can the content of the word “reasonable”, in the phrase “no reasonable prospect”, be sufficiently, let alone completely, illuminated by drawing some contrast with what would be a “frivolous”, “untenable”, “groundless” or “faulty” claim.
60. Rather, full weight must be given to the expression as a whole. The Federal Court may exercise power under s 31A if, and only if, satisfied that there is “no reasonable prospect” of success. Of course, it may readily be accepted that the power to dismiss an action summarily is not to be exercised lightly. But the elucidation of what amounts to “no reasonable prospect” can best proceed in the same way as content has been given, through a succession of decided cases, to other generally expressed statutory phrases, such as the phrase “just and equitable” when it is used to identify a ground for winding up a company. At this point in the development of the understanding of the expression and its application, it is sufficient, but important, to emphasise that the evident legislative purpose revealed by the text of the provision will be defeated if its application is read as confined to cases of a kind which fell within earlier, different, procedural regimes.
It is well-established that caution should be exercised in summarily dismissing an application, having regard to the requirements of procedural fairness in the exercise of judicial power. As French CJ and Gummow J stated in Spencer at [24]-[25]:
24. The exercise of powers to summarily terminate proceedings must always be attended with caution. That is so whether such disposition is sought on the basis that the pleadings fail to disclose a reasonable cause of action or on the basis that the action is frivolous or vexatious or an abuse of process. The same applies where such a disposition is sought in a summary judgment application supported by evidence. As to the latter, this court in Fancourt v Mercantile Credits Ltd said:
The power to order summary or final judgment is one that should be exercised with great care and should never be exercised unless it is clear that there is no real question to be tried.
More recently, in Batistatos v Roads and Traffic Authority (NSW) Gleeson CJ, Gummow, Hayne and Crennan JJ repeated a statement by Gaudron, McHugh, Gummow and Hayne JJ in Agar v Hyde which included the following:
Ordinarily, a party is not to be denied the opportunity to place his or her case before the court in the ordinary way, and after taking advantage of the usual interlocutory processes. The test to be applied has been expressed in various ways, but all of the verbal formulae which have been used are intended to describe a high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way.
There would seem to be little distinction between those approaches and the requirement of a “real” as distinct from “fanciful” prospect of success contemplated by s 31A. That proposition, however, is not inconsistent with the proposition that the criterion in s 31A may be satisfied upon grounds wider than those contained in pre-existing Rules of Court authorising summary dispositions.
25. Section 31A(2) requires a practical judgment by the Federal Court as to whether the applicant has more than a “fanciful” prospect of success. That may be a judgment of law or of fact, or of mixed law and fact. Where there are factual issues capable of being disputed and in dispute, summary dismissal should not be awarded to the respondent simply because the court has formed the view that the applicant is unlikely to succeed on the factual issue. Where the success of a proceeding depends upon propositions of law apparently precluded by existing authority, that may not always be the end of the matter. Existing authority may be overruled, qualified or further explained. Summary processes must not be used to stultify the development of the law. But where the success of proceedings is critically dependent upon a proposition of law which would contradict a binding decision of this court, the court hearing the application under s 31A could justifiably conclude that the proceedings had no reasonable prospect of success.
I have borne in mind that an application for summary dismissal is concerned with substance and whether the Applicant has a genuine or valid claim. (See Australian Securities and Investments Commission v Cassimatis (2013) 220 FCR 256; [2013] FCA 641 at [45] and the discussion of principles in relation to s.31A in Manday Investments Pty Ltd v Commonwealth Bank of Australia (No 3) [2012] FCA 751 at [9]-[10] and Takemoto v Moodys Investors Service Pty Ltd [2014] FCA 1081 at [10]-[15]). As Gordon J stated in Jefferson Ford Pty Ltd v Ford Motor Co of Australia Ltd (2008) 167 FCR 372; [2008] FCAFC 60 at [127]:
… each case must be considered separately. No particular hard and fast rules can be set down, only general principles. One principle is that the moving party bears the onus of persuading the court that the opponent has no reasonable prospect of success (see Crayford Freight Services Ltd v Coral Seatel Navigation Co (1998) 82 FCR 328 at 333). As noted earlier, however, s 31A has lessened the standard that must be met. In that regard, it must be emphasised that once a moving party has established a prima facie case that the opponent has no reasonable prospect of success, the opposing party must respond by pointing to specific factual or evidentiary disputes that make a trial necessary; general or non-particularized denials will be insufficient to defeat the motion: see Fortron Automotive Treatments Pty Ltd v Jones (No 2) [2006] FCA 1401 at [22]. In other words, it is inappropriate in defence of a claim for judgment under s 31A of the Federal Court Act to seek to defend by merely putting a claimant to formal proof: Vans, Inc v Offprice.Com.Au Pty Ltd [2006] FCA 137 at [12]. This is not a new concept. It finds earlier reflection in ss 190(4) and 191 of the Evidence Act 1995 (Cth) and O 33, O 34 and O 34B of the Federal Court Rules.
(See also Finkelstein J at [22]-[23] and Rares J at [74]).
The Respondents also contended that the proceeding was an abuse of the process of the court (see r.13.10(c)). As stated in Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd (2009) 239 CLR 75; [2009] HCA 43 at [28]:
The term “abuse of process,” as used in Australia today, is not limited by the categories mentioned above or those which constitute the tort. It has been said repeatedly in the judgments of this Court that the categories of abuse of process are not closed. In Walton v Gardiner the majority adopted the observation in Hunter v Chief Constable of the West Midlands Police that courts have an inherent power to prevent misuse of their procedures in a way which, although not inconsistent with the literal application of procedural rules of court, would nevertheless be “manifestly unfair to a party to litigation ... or would otherwise bring the administration of justice into disrepute among right-thinking people.” This does not mean that abuse of process is a term at large or without meaning. Nor does it mean that any conduct of a party or non-party in relation to judicial proceedings is an abuse of process if it can be characterised as in some sense unfair to a party. It is clear, however, that abuse of process extends to proceedings that are “seriously and unfairly burdensome, prejudicial or damaging” or “productive of serious and unjustified trouble and harassment” (footnotes omitted).
The Respondents, who bore the onus of persuading the Court that the proceedings should be dismissed in the sense considered in Jefferson Ford, made detailed submissions as to the basis on which summary dismissal was sought in relation to the whole of the application. Mr Majeed responded orally and was also given the opportunity to file post-hearing submissions. I have considered his submissions and the material he filed on 3 December 2015.
Strike Out Application
In their interim application the Respondents suggested, in the alternative, that the “pleadings” should be struck out pursuant to r.16.21 of the Federal Court Rules 2011 (Cth) (if such Rule were to be applied by this court pursuant to r.1.05 of the Federal Circuit Court Rules). This argument was put on the basis that the Fourth Application could be seen as a form of pleading.
However in my view it is not appropriate to apply a rule such as r.16.21 of the Federal Court Rules2011 (Cth) in the present circumstances. The Fourth Application is neither in form nor in substance a statement of claim. This matter did not proceed by way of pleadings. Were the Fourth Application or any of the prior applications to be regarded as a statement of claim they would clearly be deficient, but in my view the preferable approach is to consider whether the application should be summarily dismissed. I note the distinction drawn in Spencer at [23] per French CJ and Gummow J between an application to strike out pleadings and the power to summarily dismiss a proceeding on the basis that the applicant has no reasonable prospect of successfully prosecuting the proceeding. Nonetheless, it is relevant to have regard to whether Mr Majeed has failed, after being given ample opportunity, to “plead” (in a broad sense) in any of his applications a reasonable cause of action as this “may suggest that none exists” (see White Industries Aust Ltd v Commissioner of Taxation (2007) 160 FCR 298; [2007] FCA 511 at [47] per Lindgren J).
The basis for the orders sought
As contended by the Respondents, it is instructive, in the context of considering the summary dismissal application to have regard to Mr Majeed’s continued reliance, in purported support of his application for orders under ss.176 and 178 and for an inquiry under s.179 of the Bankruptcy Act into the conduct of Mr Kerr and Mr Lock, on in essence the same “grounds” as formed the basis for his applications that the sequestration order be set aside and/or his bankruptcy annulled.
As set out above, despite the opportunities afforded to Mr Majeed to clarify his claim against the Respondents, there is little variation in the various applications. The first order sought in the Fourth Application was the same as the first order that was sought in the previous two applications, in that it sought that the sequestration order be set aside “as Onn Mahmud (the petitioning creditor)”. Indeed, the “ground” on which this order was sought in the Fourth Application abandoned the reference in the Third Application to ss.178 and 179 of the Act, but maintained the claim (as a basis for review of the sequestration order) that the trustees (sic) were in breach of duties under s.19 of the Bankruptcy Act (and “Inspector Practice Direction 14”) for failing to take the necessary action to recover an amount said to be owed to Mr Majeed by the petitioning creditor.
It is the case that the second order sought in the Fourth Application departed from previous orders sought in seeking that:
…an inquiry be conducted in conjunction with the Inspector General of AFSA on the conflict of interest and breaches of fiduciary duties of the trustees David Kerr and Richard Lock of RSMI Bird Cameron on breaches of the Bankruptcy Act 1966 on the grounds stated below.
However the ground on which this order was sought repeated the earlier general unparticularised claims about the trustee failing to act honestly and impartially and the allegations about Alistair Little (a non-party).
The Fourth Application also sought an order that:
…The trustees (sic) to make good any loss caused by breach of duty of S176 (sic) of the Bankruptcy Act 1966.
However the “ground” on which such order (as well as an inquiry) was sought repeated the earlier reference to Schedule 4A and performance standards and the assertion of a conflict of interest by the trustees (sic) in carrying out duties expressed in the same terms as had been relied on in support of the earlier annulment application. Consistent with the “grounds” in the earlier annulment applications, the Fourth Application referred to RSM Bird Cameron and RSM RKT being part of RSM International and asserted that the petitioning creditor had used his influence to “contain” the Applicant’s movement and that the trustee had abused his power in ensuring that the Applicant remained bankrupt.
The last order sought in the Fourth Application was expressed in terms of seeking an inquiry in conjunction with the Inspector General of AFSA in relation to an asserted conflict of interest and breaches of fiduciary duties of the trustees (sic) as well as asserted breaches of the Bankruptcy Act. It was also sought that the trustees (sic) make good any loss “caused by breach of duty of S178 and S179 of the Bankruptcy Act 1966 failing to act honestly and impartially.”
However, again, the ground upon which this order was sought was the same as that previously relied on Mr Majeed in relation to his application for annulment in the Second and Third Applications, insofar as reference was made to Schedule 4A and an unparticularised breach of fiduciary duty was asserted.
Mr Majeed maintained his application for the same four interim orders (and costs).
Mr Lock as a Respondent
The Respondents submitted that Mr Lock was not a proper party to any application filed with respect to the bankruptcy of Mr Majeed as he was never Mr Majeed’s trustee in bankruptcy and no specific relief was sought against him and that the proceedings against him had no reasonable prospect of success and was also an abuse of process. It was contended that neither the Fourth Application nor any prior application pointed to any principle or basis for Mr Lock to be joined as a party to the proceedings. In particular it was submitted that there was no jurisdiction for the court to make any order under s.179 of the Bankruptcy Act in relation to Mr Lock.
Before filing his affidavit of 3 December 2015 Mr Majeed had submitted that the majority of correspondence between himself and RSM Bird had been between himself and Mr Lock and claimed that he had the “impression” that Mr Kerr and Mr Lock were both his trustees in bankruptcy from the time of his sequestration order.
He submitted that, even in the absence of any documentation showing the appointment of Mr Lock as trustee, the court should accept that if a person continuously acted as a trustee of bankruptcy (as he contended that Mr Lock did) and gave directions to a bankrupt as to what to do and what not to do, that indicated that he was acting as trustee and was in fact the trustee.
Mr Majeed asserted in his “affidavit” of 3 December 2015 that Mr Lock took an active role and continuously acted as trustee. He attached selected communications with the trustee’s office.
The Respondents submitted that this correspondence merely indicated that Mr Majeed had on occasion communicated with Mr Lock in relation to his bankrupt estate. It was pointed out that nowhere in these communications had Mr Lock purported to be a registered trustee in bankruptcy, let alone Mr Majeed’s trustee in bankruptcy, and that at all times Mr Lock had referred to Mr Kerr as the trustee.
I am satisfied that Mr Majeed has no prospect at all of successfully prosecuting any claim for relief in the present proceedings against Mr Lock. His claim in this respect is completely untenable. The evidence before the court is that Mr Lock is not a proper party to these proceedings. He is not and has never been Mr Majeed’s trustee in bankruptcy, notwithstanding Mr Majeed’s contentions and claimed mistaken view as to how one becomes a trustee in bankruptcy (cf ss.154A and 155C of the Bankruptcy Act). Mr Lock is a senior manager employed by RSM Bird Cameron Partners (RSM) who assisted the trustee in the conduct of the administration of the bankrupt’s estate. Mr Kerr’s evidence is that Mr Lock is not a registered trustee and that his involvement in the administration of the bankrupt estate of Mr Majeed was subject to the supervision or direction of Mr Kerr. There is no evidence to the contrary (see Jefferson Ford at [127]).
The fact that Mr Lock sometimes wrote to Mr Majeed in relation to the administration of his bankrupt estate (and that Mr Majeed wrote to Mr Lock) is not such as to render Mr Lock Mr Majeed’s trustee in bankruptcy. Indeed, on the evidence before the court there is no factual basis for any confusion in that respect on the part of Mr Majeed. At all times in the correspondence before the court Mr Lock’s position was described in his email signature as “Senior Manager – Turnaround & Insolvency”. At all times in such correspondence Mr Kerr was referred to as the trustee of Mr Majeed’s bankrupt estate. Consistent with this, included in the material annexed to Mr Majeed’s affidavit of 3 December 2015 is an email sent to him on 27 September 2012 in which Mr Lock stated:
I refer to your recent discussions with David Kerr of this office as Trustee of your bankrupt estate.
Mr Kerr has asked me to send you details of his initial appointment documents from ITSA.
For your information Mr Kerr was on a panel of registered trustees maintained by ITSA for selection for appointment by rotation.
In addition, the material included in Annexure “A” to Mr Majeed’s affidavit of 3 December 2015 included emails to Mr Majeed from Mr Lock which were said to attach correspondence from the trustee (although such attachments were not included in the material before the court).
Further, as attested to in Mr Kerr’s Trustee’s Report, Mr Kerr on occasion wrote to Mr Majeed in his capacity as trustee of his bankrupt estate (in particular in relation to Mr Majeed’s travel requests while he was bankrupt and in response to his request of 30 July 2013 that Mr Kerr should “make arrangements” to discharge him from bankruptcy).
A copy of the certificate of appointment of Mr Kerr as trustee is in evidence. There is no evidence to the contrary to suggest that this certificate is not an accurate certificate as to the content of the National Personal Insolvency Index.
Insofar as Mr Majeed’s application is an application for orders in relation to Mr Lock, it should be summarily dismissed. He is not a proper party to an application to set aside a sequestration order, annul a bankruptcy or in relation to any of the interim orders sought. There is no basis on which the Court could engage in a review under s.178 or order an inquiry into the conduct of Mr Lock under s.179 of the Bankruptcy Act. Section 178 applies only where a person is affected by “an act, omission or decision of the trustee”. Mr Lock is not a trustee in bankruptcy and there is no basis on which Mr Majeed could successfully prosecute this aspect of his claims against Mr Lock. Section 179 is also limited to ordering an inquiry “into the conduct of a trustee in relation to a bankruptcy”. Mr Lock is not a proper party to these aspects of the application.
Insofar as Mr Majeed seeks that the trustees (sic) make good any loss caused by breach of duty of s.176 of the Bankruptcy Act, the court’s power under s.176 arises only on application by the Inspector-General or a creditor who has or had a debt provable in the bankruptcy (not on the application of the bankrupt or former bankrupt). Furthermore that section applies only where “the Court is satisfied that a person who is or has been a trustee of a bankrupt’s estate has been guilty ... of breach of duty in relation to the bankrupt’s estate or affairs”. As indicated, it is clear that Mr Lock is not, and has never been, a trustee of Mr Majeed’s bankrupt estate.
Apart from the fundamental difficulties with Mr Majeed’s application for some unspecified kind of inquiry in conjunction with the Inspector-General in Bankruptcy (discussed below), Mr Lock is not a proper party to any such claim as he is not, and has never been, a trustee of the bankrupt estate of Mr Majeed.
As for the interim orders sought, Mr Majeed (who is no longer bankrupt) does not press his application in relation to approval to travel overseas or his assertion that the “trustees” could not set any pre-condition for travel. Insofar as Mr Majeed maintains a request for an order that the “trustees” apologise to Mr Abbott, the member for Warringah, Mr Lock is not and was not a trustee of Mr Majeed’s bankrupt estate and there is no basis on which such an order could be made against him.
The final interim order sought is that AFSA take necessary action for breaches “by the trustees”. Apart from the other problems with the basis on which this order is sought, Mr Lock was not a trustee of Mr Majeed’s bankrupt estate. This aspect of Mr Majeed’s case is also hopeless.
Mr Majeed has no reasonable prospect of successfully prosecuting any of the asserted claims against Mr Lock (see r.13.10(a) of the Federal Circuit Court Rules 2001 (Cth)). Moreover, in proceeding against Mr Lock on the basis that he was a trustee of Mr Majeed’s bankrupt estate, Mr Majeed commenced (and maintained) proceedings that were “foredoomed to fail” (see Walton v Gardiner [1993] HCA 77; (1993) 177 CLR 378 at 393) and amount to an abuse of the process of the court in the same sense considered in Jeffery & Katauskas Pty Ltd v SST Consulting Pty Ltd. (Also see Krajniw v Newman (No. 2) [2015] FCA 673).
Despite being put on notice of the difficulty he faced in this respect and being given several opportunities to clarify the basis on which he contended that Mr Lock was an appropriate respondent, Mr Majeed has not established any basis at all for Mr Lock’s participation in these proceedings. Mr Lock’s participation as a party was not necessary for the court to completely and finally determine all matters in dispute in the present proceedings (cf r.11.01(1) of the Federal Circuit Court Rules 2001 (Cth)).
All the parts of the Fourth Application that make claims by Mr Majeed against Mr Lock should be summarily dismissed. I would be of this view whether or not any or all other aspects of the proceedings were summarily dismissed.
Application to “Set Aside the Bankruptcy Order and Sequestration Order”
This aspect of the Fourth Application (the first order sought) refers to the petitioning creditor without explanation (perhaps in recognition of the fact that Mr Majeed would not join and did not want the petitioning creditor to be joined as a party). It is pursued on the basis of an allegation that Mr Majeed’s trustee in bankruptcy breached duties in s.19 of the Bankruptcy Act and “the Inspector-General’s Practice Direction 14” in failing to take action to recover an amount said to be owed to Mr Majeed by the petitioning creditor. Insofar as it refers to “trustees”, as indicated Mr Lock has never been a trustee of the bankrupt estate of Mr Majeed. That leaves for consideration the claim in respect of Mr Kerr.
Mr Majeed’s application to set aside the sequestration order that was made on 9 November 2009 seeks the review of the exercise of power by the Registrar under s.104(2) of the Federal Circuit Court of Australia Act 1999 (Cth).
On the assumption (for present purposes) that a sequestration order could be set aside after the bankruptcy had ended, in this case the sequestration order was made on 9 November 2009 but this application (as originally pleaded) was not filed until 24 February 2015 (cf s.104(2)(a) and the 21 day period provided for in r.2.03 of the Federal Circuit Court (Bankruptcy) Rules). There is no explanation for the delay or other evidentiary support for an extension of time, let alone an extension of time for a period of over 5 years.
Moreover, the fundamental difficulty with this part of the proceeding is that it is based on an allegation about the conduct of the trustee in bankruptcy, who became trustee of Mr Majeed’s bankrupt estate on 2 December 2009. The allegations about the trustee’s conduct relate to circumstances after the sequestration order was made and Mr Kerr was appointed trustee. Such claims are not capable of satisfying the requirements of ss.52(2)(a) or 52(2)(b) of the Act. Mr Majeed has no reasonable prospect of successfully prosecuting this part of his application on the asserted basis.
I note that a hearing of an application to set aside a sequestration order made by a Registrar is a hearing de novo (see Nand v Fuji Xerox Australia Pty Ltd [2014] FCA 757 at [28] and cases cited therein). In such circumstances and given Mr Majeed’s assertion that he had a claim against the petitioning creditor for the amount exceeding the amount he owed the creditor, the petitioning creditor (who has not been joined in the present proceedings) would be the proper respondent.
Insofar as this part of the application ought to be considered as an annulment application (see Pattison v Hadjimouratis (2006) 155 FCR 226; [2006] FCAFC 153) s.153B of the Act requires the court to be satisfied, relevantly, that a sequestration order “ought not to have been made”. Mr Majeed has no reasonable prospects of successfully prosecuting a claim that the sequestration order of 9 November 2009 ought not to have been made based on allegations about what the trustee did or did not do after that time or otherwise based on events occurring since the date of the sequestration order.
Further, Mr Majeed was required under rr.7.03 and 7.06 of the Federal Circuit Court (Bankruptcy) Rules 2006 to give notice of a review or annulment application to each person known to be a creditor. Mr Majeed has not met this requirement. Whether or not such a requirement may be dispensed with in an appropriate case, it was brought to Mr Majeed’s attention on several occasions in directions hearings that if he wished to seek that the sequestration order be set aside or an annulment of his bankruptcy, then the appropriate and necessary respondent (particularly given the claims that he made in his affidavits about having a claim against the petitioning creditor) was the petitioning creditor. He has, however, been insistent that the petitioning creditor not be joined as a party or notified of these proceedings.
In the particular and unusual circumstances of this case, I am satisfied that the application for review/annulment is an abuse of process. It is apparent from the manner in which Mr Majeed has conducted these proceedings and the various applications and affidavits he has filed, that to the extent he continues to seek orders that the sequestration order be set aside or his bankruptcy annulled, he seeks to use the pretext of an application against Mr Kerr (his former trustee in bankruptcy) and Mr Lock as an improper basis for seeking that his bankruptcy be set aside or annulled without complying with the Rules or proper process by joining the proper party (the petitioning creditor). He does so in circumstances where he makes allegations about the conduct of the petitioning creditor and (although he does not ask the court to go behind the debt on which his bankruptcy was based or his insolvency) asserts that the petitioning creditor owed him over $15 million. It appears that he sees it as appropriate that the court determine this claim in the absence of the petitioning creditor by naming Mr Kerr and Mr Lock as Respondents. This is an improper purpose for the conduct of litigation and amounts to an abuse of process. The court has power to prevent an abuse of process resulting in oppression against the Respondents (see Williams & Ors v Spautz (1992) 174 CLR 509; [1992] HCA 34 and note Zdrilic & Anor v Hickie & Anor [2015] FCCA 2882 at [23]-[24]).
Whether seen as an application to review a sequestration order made by a registrar or as an annulment application this ground has no prospects of success on the basis asserted. It is also an abuse of process. The Application for order 1 should be summarily dismissed.
It appears that Mr Majeed no longer pursues his application for an inquiry or order under ss.178 or 179 of the Act on “grounds” of the trustee’s failure to pursue what Mr Majeed asserted was a debt of over $15 million owed to him by the petitioning creditor (but see the discussion below).
An Order for an “Inquiry”
The remaining orders sought in the Fourth Application filed on 24 August 2015 seek an “inquiry in conjunction with the Inspector General of AFSA”. It is not clear what this means. The Inspector-General in Bankruptcy (see s.5 of the Act) has power under s.12 of the Act to make such inquiries and investigations as the Minister directs or the Inspector General thinks fit, at the request of the Commonwealth proceeds of crime authority or that are within s.12(1C) of the Act. There are also powers conferred on the Inspector-General in Bankruptcy to review certain decision of a trustee in bankruptcy on his or her own initiative or, in certain circumstances, at the request of the bankrupt (see for example in ss.139ZA-139ZIS) and the Inspector-General has powers in relation to the control of trustees under Part VIII of the Act. None of these provisions assist Mr Majeed. While he refers to unparticularised breaches by the trustee of the duties in s.19 of the Act, even if such breaches were made out this would not provide a basis on which to set aside the sequestration order or annulment of Mr Majeed’s bankruptcy. Further, Mr Majeed has not identified any provision in the Act that makes provision for a “joint” inquiry or for the court to order the Inspector-General to participate in an “inquiry”. He has not particularised with any clarity the basis on which any such inquiry should be ordered, were there power to make such an order. As “pleaded” these claims cannot succeed. Mr Majeed has no reasonable prospects of success in such claims.
I have however considered these claims as applications for orders under ss.176, 178 and/or s.179 of the Act, as Mr Majeed maintained he sought.
These provisions are as follows:
Court may order trustee to make good loss caused by breach of duty
176 (1) Where, on application by the Inspector-General or by a creditor who has or had a debt provable in the bankruptcy, the Court is satisfied that a person who is or has been a trustee of a bankrupt's estate has been guilty (whether before or after the commencement of this section) of breach of duty in relation to the bankrupt's estate or affairs, subsection (2) applies.
(2) The Court may make any one or more of the following orders:
(a) an order directing the person to make good any loss that the bankrupt's estate has sustained because of the person's breach of duty;
(b) if the person is a registered trustee--an order directing the Inspector-General to cancel the person's registration as a trustee;
(c) any other order that the Court considers just and equitable in the circumstances.
…
Appeal to Court against trustee's decision etc.
178 (1) If the bankrupt, a creditor or any other person is affected by an act, omission or decision of the trustee, he or she may apply to the Court, and the Court may make such order in the matter as it thinks just and equitable.
(2) The application must be made not later than 60 days after the day on which the person became aware of the trustee's act, omission or decision.
Control of trustees by the Court
179 (1) The Court may, on the application of 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.
(2) 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.
Proposed orders 2, 3 and 4 each seek “an inquiry… on the on the conflict of interest and breaches of fiduciary duties” although the grounds vary. Proposed order 3 also seeks an order under s.176. The only reference to ss.178 or 179 in the Fourth Application is in proposed order 4 which seeks orders that the trustees (sic) “make good any loss caused by breach of duty off S178 and S179 of the Bankruptcy Act 1966 failing to act honestly and impartially.” The clarification in the affidavit of 24 August 2015 also suggests “breaches” of ss.178 and 179.
However given Mr Majeed’s claims about the need for an inquiry into the conduct of the trustee on any or all of the asserted bases, I have considered generally the possibility that the claims asserted in any of the proposed orders, grounds or affidavits may be seen as seeking relief under all or any of ss.176, 178 and/or 179 and, if so, whether the application should be summarily dismissed in that respect.
As discussed, the application for an order for an inquiry “in conjunction with” the Inspector-General has no reasonable prospects of success and must fail. Similarly, insofar as this part of the application purports to rely on s.176 of the Act, Mr Majeed has no prospect of successfully prosecuting such a claim as he has no standing to seek an order under s.176.
Taking this ground at its widest it may be seen as an application for an inquiry under s.179 of the Act (despite the fact that it does not refer to s.179 and appears to contemplate an inquiry in association with the Inspector-General in Bankruptcy), although I note that the matters relied on under this “ground” were previously relied on as a basis for Mr Majeed’s application for annulment and his assertion that an “extension period” of his bankruptcy should be disallowed.
The only matter clearly identified in this ground and in the supporting affidavit (other than the general recital of the standards for trustees) is the suggestion of a conflict of interest on the basis that RSM Bird Cameron and RSM RKT are part of RSM International and the assertion that petitioning creditor is a client of RSM RKT. Beyond this, the ground takes issue with the asserted conduct of the petitioning creditor in relation to Mr Majeed and provides no basis for an inquiry under s.179 of the Act into the conduct of the trustee or a review of any act, omission or decision of the trustee.
Insofar as Mr Majeed asserts a conflict of interest on the part of the trustee, it appears that his concern is that RSM Bird Cameron (where Mr Kerr works) and RSM RKT in Malaysia are part of RSM International. He asserted that the petitioning creditor (Onn Mahmud) is a client of RSM RKT. Mr Majeed also made unparticularised assertions to the effect that the petitioning creditor had used his influence, including to contain Mr Majeed’s movement and somehow to result in an abuse of the trustee’s power. He did not identify the asserted breached of fiduciary duty by the trustee.
In his affidavit of 24 August 2015 Mr Majeed “submitted” that the trustee “fail to deny or affirm by the trustees (David Kerr and Richard Lock) is in continuously in breach of the Bankruptcy Act 1966 by failing to deny by several emails by the Applicant that the trustees Malaysian Operation RKT RSMI have received benefits and future benefits from the business relationship being accountants and financial advisors to the trustees Malaysian operation RSMI RKT whom are providing professional services and substantially remunerated by the Petitioning Creditor (Onn Mahmud)”.
This appears to be an assertion of misconduct in some sense by the trustees on the basis of an alleged failure “to deny or affirm” that either the trustee and/or the Malaysian RSM RKT entity had or would receive benefits from a suggested business relationship between the Malaysian entity and the petitioning creditor.
This is not the same allegation as appears in the “ground” relied on in relation to proposed order 3 in the application but in any event I am satisfied that Mr Majeed has no reasonable prospects of successfully prosecuting an application for an inquiry under s.179 on the basis in the ground or on the basis of an asserted failure by the trustee “to deny or affirm” that the Malaysian entity, RSM RKT had received remuneration or benefits from the petitioning creditor.
Mr Majeed maintained this claim notwithstanding the absence of any evidence that the petitioning creditor was a client of RSM RKT and despite the evidence in the trustee’s report of inquiries made by the trustee in 2012 in relation to assertions Mr Majeed had made to the trustee (while he was bankrupt) of a conflict of interest on this basis.
Mr Kerr acknowledged that RSM Bird Cameron Partners was a member of RSM International, a worldwide network of accounting and consultancy firms, with member firms in 112 countries including RSM RKT Group in Malaysia. His evidence was that he wrote to Mr Majeed on numerous occasions (in response to his allegations of a conflict of interest) advising him that he was not aware of any connection between the petitioning creditor and RSM RKT. This was not disputed by Mr Majeed. Moreover Mr Kerr made inquiries in relation to the asserted conflict of interest. He annexed to his affidavit copies of emails of 2012 between his office and the RSM RKT office in which the tax audit and insolvency departments of the Malaysian entity advised that they had not undertaken any work for Onn Mahmud in the previous three years. It was acknowledged that they could not be certain that he was not a shareholder or director of any company or holding company for which they may do work. However there is no evidence that while he was bankrupt Mr Majeed informed his trustee of the identity of any such company. Insofar as Mr Majeed intended to take issue with some act, omission or decision of Mr Kerr in 2012 he is outside the time limit in s.178(2) for such a review application.
In his “affidavit” of 3 December 2015 filed after the hearing, Mr Majeed provided (for the first time in these proceedings) a copy of an October 2012 email to him from a third party suggesting that the RSM RKT website had a link to another website which indicated that “CMS” was a client. It appears (although there is no evidence before the court to this effect) that Mr Majeed is of the view that “CMS” is associated with the petitioning creditor.
However, even if that is so, this in itself provides no arguable basis on which an inquiry into the conduct of Mr Majeed’s former trustee would be ordered. Mr Majeed has not pointed to (and nor does the evidence he relies on even suggest) any action (or inaction) on the part of Mr Kerr (bearing in mind that s.179 relates to an inquiry into the “conduct of a trustee in relation to a bankruptcy”) involving or reflecting any possible conflict of interest because an entity said to be associated with petitioning creditor may be a client of RSM RKT in Malaysia. Insofar as Mr Majeed’s concern reiterates his misunderstanding that the trustee “extended” his bankruptcy, it is clear that this did not occur.
I have had regard to Annexure “C” to Mr Majeed’s affidavit of 3 December 2015 which contains copies of communications between Mr Majeed and a Ms Clare Rewcastle. Mr Majeed’s affidavit does not explain the suggested relevance of such emails, stating only that Ms Brown is an investigative journalist and sister-in-law of Gordon Brown, the former Prime Minister of England.
Mr Majeed wrote to Ms Rewcastle by email of 18 May 2015 claiming:
I need to set aside the Sequestration Order by Onn Mahmud as the trustee of bankruptcy RSMI BIRD CAMERON and RSMI RKT which has been extended.
I need a investigating journalist to make statement that is a conflict interest by the trustee
If I can submit by tomorrow the Judge will review and quashed the Sequestration Order and I will free to leave for overseas and take a fresh proceeding in the Singapore High Court against Onn Mahmud.
Ms Rewcastle’s response to this request was to state that Mr Majeed had “been criminally treated by On (sic) and you should explain this to the police”. She addressed his concern about Mr Mahmud and speculated that “there appears to have been added potential conflict of interest in some of the parties put in a position of judgement, which is suspect” (emphasis added).
Mr Majeed’s claims and these emails do no more than assert a relationship between RSM RKT and RSM in Australia and that RSM RTK acts, or acted for “CMS”. This does not identify any basis on which there is an actual or potential conflict of interest, let alone a failure to act independently on the part of the trustee or identify conduct which could properly be the subject of a s.179 inquiry. Even if Ms Rewcastle’s response was intended to be a reference to the trustee, her expression of views (about an apparent potential of conflict of interest “in some of the parties put in a position of judgement”) does not have the status or weight which would meet even the lowest threshold required for the court to be satisfied that there was a reasonable prospect of success in Mr Majeed’s application for an inquiry under s.179 of the Act into the conduct of the trustee.
The mere fact Ms Rewcastle acknowledged Mr Majeed’s concerns and/or that RSM RKT may act for a company with which the petitioning creditor may be associated (assuming for present purposes that that is so) does not provide any basis for an inquiry into the conduct of the trustee. There is no evidence at all of conduct by or on behalf of Mr Kerr as trustee of Mr Majeed’s bankrupt estate, that might be said to be attributable to or perceived to be attributable to such matters (taking them at their highest). The documents in Annexure “C” are not probative of anything relevant to Mr Majeed’s application. Ms Rewcastle, whose position and qualifications are not identified, does not identify specific concerns as to the conduct of the trustee.
I note that the documents referred to in Annexure “D” to Mr Majeed’s affidavit of 3 December 2015, including a “report” said to relate to asserted “corruption and money laundering” by the petitioning creditor consisting of a 2012 document called “The Taib Timber Mafia” which is said to contain “facts and figures of politically exposed persons in Sarawak, Malaysia”, do not, even on Mr Majeed’s evidence, relate to the trustee (or to any aspect of his conduct). Rather this material, like many of Mr Majeed’s concerns, related to allegations against the petitioning creditor. Interestingly, this document does refer to Mr Majeed’s 2007 litigation against Mr Mahmud, but suggests that in the middle of the court case Mr Majeed “went missing and has not been traced since”. It provides no basis for any of the orders sought in these proceedings.
This material provides no support for any aspect of Mr Majeed’s application in relation to Mr Kerr. Moreover nothing in the affidavit of Mr Majeed dated 3 December 2015 changes the legal position that Mr Lock is not a registered trustee and not capable of being subject to an order for an inquiry under s.179. Nor does this material provide any basis on which Mr Majeed’s review/annulment application has any reasonable prospects of success.
Further, the concerns Mr Majeed expresses about the behaviour of the petitioning creditor are not such as to provide, either alone or taken in conjunction with the other allegations made by him, any reasonable basis on which to order an inquiry into the conduct of the trustee. In his affidavit of 24 August 2015, Mr Majeed repeated the suggestion of a conflict of interest and breaches of fiduciary duty on the basis that the trustee “continuously allowing the petitioning creditor (Onn Mahmud) through his lawyer Alastair Little to undertake fraudulent acts and abuse of the court process to deprive the applicant of his entitlements and for professional services rendered from 2002 to 2007”.
This assertion provides no basis for an inquiry into the conduct of the trustee. There is no evidence of any logical connection between the conduct of the trustee in bankruptcy appointed in 2009 and prior acts of the petitioning creditor and/or his solicitor. The bare assertion that Mr Kerr “continuously allowed” the petitioning creditor, through his lawyer to undertake fraudulent acts and abuse the court process is unsupported by any evidence.
Mr Majeed has failed to raise any arguable grounds, let alone any substantial grounds, upon which it can be suggested that the administration of his bankruptcy has erred or that is such as to warrant an inquiry under into the conduct of his trustee in bankruptcy.
I am satisfied that this aspect of the application has no reasonable prospects of success and should be summarily dismissed.
Breaches of Fiduciary Duty and the Bankruptcy Act
The fourth proposed order and substantive ground in the Fourth Application again seeks an inquiry in conjunction with the Inspector-General. It refers to both ss.178 and 179 of the Act. It relies on general and unspecified claims of breaches of fiduciary duties and unparticularised breaches of the Bankruptcy Act, as well as a reference to the asserted conflict of interest discussed above. Mr Majeed seeks orders that the trustee make good any loss caused by “breach of duty of S178 and S179 of the Bankruptcy Act 1966 failing to act honestly and impartially”(errors in original).
Again, insofar as this ground may be seen as reflecting some concern about the trustee’s response when the asserted conflict of interest was brought to his attention (apparently in 2012), it is clear that any events of 2012 occurred long before 60 days prior to the institution of these proceedings (let alone the institution of the claim relating to s.178 of the Act). Mr Majeed has no reasonable prospects of success in any claim under s.178 of the Act on that basis.
If Mr Majeed is relying on the mistaken assertion that there was some extension of the period of bankruptcy from 2012 to 2015 or from February 2015 to September 2015, there was no such extension. His bankruptcy came to an end in September 2015 by automatic discharge pursuant to s.149 of the Act, three years after he filed his Statement of Affairs.
Mr Majeed has no reasonable prospects of successfully prosecuting any claim on the basis asserted under s.178 of the Act in this part of the Application on the material before the court.
Further, in the absence of identification of any relevant conduct of the trustee reflecting the asserted breach of fiduciary duty and the obligation on the trustee to act justly and exercise his powers in such a fashion that the objects of the Act are served (the same ground that Mr Majeed raised as a basis for his annulment application in earlier applications), the claims in this respect provide no basis at all for an inquiry into the conduct of the trustee under s.179 of the Act.
This aspect of the Fourth Application also refers to Schedule 4A (to the Bankruptcy Regulations) – Performance Standard of Trustees of the Bankruptcy Act 1966 Inspector-General Practice Direction 14 – Breach of Fiduciary Duties (discussed above). It restates the general principles that a trustee must act justly, that trustees are officers of the court and that in exercising powers and discretions and making decisions, no less a standard is to be expected of them than of a court or judge (see Ex Parte James; In re Condon (1874) LR 9 Ch App 609). It was contended that trustees have a general duty to exercise the powers committed to them in such a fashion that the objects of the Act, including those of equality between creditors and fairness to bankrupts and debtors, are served.
However this general statement of the standard to be expected of a trustee does not identify any “conduct” about which an inquiry may be ordered. It is not clear what is intended by this ground. There is nothing in this ground (or the supporting affidavits) which may be seen as particulars of any relevant identified conduct of the trustee.
Mr Majeed has no reasonable prospects of successfully seeking a s.179 inquiry on the basis asserted in proposed order 4 or the ground relied on.
Other Complaints
As the solicitor for the Respondents conceded, the court should not be quick to dismiss claims where there is the essence of a claim, albeit poorly framed, by a self-represented litigant. However Mr Majeed’s application and affidavits do not refer to or contain material such as to support even an arguable prima facie case such as would warrant the court ordering a s.179 inquiry. The initial reference in the proposed fourth order in the Fourth Application to a conflict of interest is apparently a repetition of the reference to the association between RSM Bird Cameron and RSM RKT. As discussed, this provides no basis on which to order an inquiry into the conduct of the trustee as trustee of Mr Majeed’s bankruptcy estate.
As indicated, there is also a complaint in general terms in Mr Majeed’s affidavits that his trustee in bankruptcy failed to take necessary action to recover a debt said to be owed to him by the petitioning creditor which is discussed above. There is otherwise no evidence or specific allegation by Mr Majeed as to what it is said that Mr Kerr did or failed to do, such as to amount to “conduct” into which Mr Majeed might be asking the court to order that there might be an inquiry. Moreover, it appears on the evidence before the court (and Mr Majeed does not dispute) that the existence of this claimed debt was not brought to Mr Kerr’s attention in any manner until Mr Majeed lodged his Statement of Affairs almost three years after he was made bankrupt. The trustee informed creditors in 2010 that he had not received a Statement of Affairs and that he had been unsuccessful in attempts to contact Mr Majeed. Mr Majeed lodged his statement of affairs in September 2012. Moreover, on 24 October 2012 the trustee explained in a further creditors report that Mr Majeed had minimal assets and while he (then) claimed he was owed $5,212,615 (sic) by the petitioning creditor he had not provided information to the trustee in response to a request for particulars of the claimed debt. Again, this has not been disputed by Mr Majeed.
On 15 January 2014 the trustee again wrote to creditors, informing them that Mr Majeed had, among other things, failed to comply with the trustee’s demands for information and refused to meet with him and that he had also attempted to leave the country on numerous occasions without the trustee’s permission (as well as making unsupported accusations against Mr Kerr and his firm and initiating legal proceedings requiring the involvement of representation for the trustee). Mr Kerr’s report of June 2015 confirmed Mr Majeed’s failure to provide him with further information about the asserted debt.
In circumstances where Mr Kerr advised that his independent investigations into the bankrupt’s affairs had failed to ascertain the existence of any assets or income for the benefit of the estate, he also advised that he saw no benefit to the creditors or the estate (or the trustee) in continuing to actively administer the estate and that he proposed not to do so or to object to the bankrupt’s discharge or to lodge any offence referral with AFSA.
In these circumstances Mr Majeed’s application in ground 4 for a s.179 inquiry based on Mr Kerr’s failure to pursue a claimed debt after September 2012, in circumstances where he provided no particulars of the claimed debt to Mr Kerr when requested, has no reasonable prospects of success.
Mr Majeed’s concerns do not appear to include any concern about the action of the trustee in indicating in 2014 that he saw no benefit to the creditors or the estate in continuing to actively administer the estate and that he proposed not to object to Mr Majeed’s discharge from bankruptcy or to lodge any offence referral with AFSA. The trustee did advise Mr Majeed by letter of 20 February 2014 that in response to the circular to creditors containing this advice he had received strong objections to his proposal to cease to actively administer the estate and was considering what action he should take to attempt to make Mr Majeed comply with his ongoing obligations under the Bankruptcy Act. It appears from an email to Mr Majeed that this may be a reference to a letter from the solicitor for the petitioning creditor disagreeing with the trustee’s recommendation. However the trustee did not in fact object to Mr Majeed’s discharge from his bankruptcy in September 2015. There is no basis for any inquiry into the trustee’s conduct in this respect and hence no reasonable prospects of success in any application for such an inquiry.
Further, I note, relevant to any issue that Mr Majeed may have intended to raise about the trustee’s conduct in relation to his requests to travel overseas, that Mr Kerr’s evidence (not countermanded by anything in Mr Majeed’s affidavits) is that each time Mr Majeed made a travel request to him, Mr Kerr notified him of the specified information required in order to consider the request for approval but that, on each occasion, Mr Majeed failed to provide the information requested to allow the trustee to consider his request to travel. In his Report Mr Kerr detailed the applications Mr Majeed had made to the court to travel and described numerous attempts he made to leave the country without the trustee’s consent. He was denied permission to travel by the Australian Federal Police in these circumstances as he was on the airport watch list.
The general allegations by Mr Majeed that the trustee “made unnecessary requirements” and prevented him leaving the country to undertake further study, attend his mother’s funeral, visit a sick brother, and in relation to the death of his nephew do not explain Mr Majeed’s concerns such as to support in any way a s.179 inquiry into the conduct of the trustee. In fact, the issues Mr Majeed raised about travel were not put forward in the Fourth Application as the basis for an application for a s.179 inquiry. In any event, the bare assertion in his affidavit evidence of refusal of an application to travel is not such that the court can be satisfied that there is even an arguable prospect of successfully prosecuting an application for a s.179 inquiry. The consent of the trustee was a prerequisite to such travel. Any refusal was open to review by the court (as Mr Majeed unsuccessfully sought in February 2015). He also sought, but did not pursue, further review in that respect in these proceedings. In these circumstances the fact that such consent was not granted is not, in itself or in conjunction with all the other circumstances, such as to indicate any reasonable prospects of success in an application for an inquiry under s.179 of the Act.
Mr Majeed’s assertions about the conduct of petitioning creditor, considered in their entirety are in no way attributable to the trustee. Nor do they provide a basis for an inquiry into the conduct of the trustee. Insofar as it is suggested that there was an “extension” of his bankruptcy by his trustee in response to a request by Alistair Little on behalf of the petitioning creditor, as set out above that is not what occurred. This provides no basis for an inquiry, even taking it at its highest and accepting (for present purposes) that there was such a request. There was no extension or objection by the trustee to Mr Majeed’s discharge from bankruptcy.
Similarly, Mr Majeed’s contention about the petitioning creditor’s motivation in taking bankruptcy proceedings against him is of no relevance to the proceedings against the trustee. His claim that the trustee “is now fully aware that he was instructed to contain my movement and prevents me to take further legal action against Onn Mahmud (the petitioning creditor)” would appear, at least implicitly, to suggest that there was some instruction to the trustee. However there is no evidence at all of any such “instruction”, no material supporting any suggestion that the trustee acted in accordance with any such request or supporting any claim that requirements imposed on Mr Majeed while he was bankrupt in relation to his applications to travel overseas (which according to the trustee’s report he did not meet) or otherwise were on the basis of any instruction from the petitioning creditor or anyone else. These are generally expressed and amorphous allegations (notwithstanding the numerous opportunities Mr Majeed has had to put on fresh affidavit evidence). They are not such to provide any support or basis for an application into an inquiry into the conduct of the trustee.
In this respect I have borne in mind that, as considered above in relation to Ground 2 in the Fourth Application, in his affidavits Mr Majeed sought an inquiry on the basis of conflict of interest and breaches of fiduciary duties and also asserted that the trustee had been “continuously allowing the petitioning creditor (Onn Mahmud) through his lawyer Alistair Little to undertake fraudulent acts and abuse the court process to deprive the Applicant of his entitlements and for professional services rendered from 2002 to 2007”.
However, as indicated, there is no reasonable prospect of the court ordering an inquiry in relation to the trustee’s conduct arising out of such general and unparticularised claims and assertions in Mr Majeed’s affidavit.
As also discussed above, the assertion about the trustee’s alleged failure to deny or affirm that the Malaysian entity, RSM RKT, had received benefits from acting for the petitioning creditor does not identify any basis on which there is a breach of the Bankruptcy Act or provide any basis for the court to inquire into the conduct of the trustee.
Mr Majeed made a general assertion that the trustee should make good any loss suffered by him caused by breach of duties. He referred (incorrectly) to s.176 of the Act. This assertion and the affidavit evidence does not make good or support any basis on which to support a claim for an application for an inquiry. An application on such basis has no reasonable prospects of success.
Finally, in the last paragraph of his affidavit of 24 August 2015 Mr Majeed reiterated his assertion about breaches of ss.178 and 179 and the need for an inquiry into “any act, omission or decision of the trustees” (echoing the wording of s.178) and alleging unspecified breaches of the professional standards obligation in Schedule 4A to the Bankruptcy Regulations to act honestly and impartially. Mr Majeed has not identified any conduct of the trustee, either in his evidence or in the grounds in the fourth application, that would provide even an arguable basis for a s.179 inquiry. Nor has he identified any specific act, omission or decision that would satisfy the court that there were even arguable prospects of success in any application for orders under s.178 of the Act.
Having regard to all of the circumstances this is such a clear and exceptional case that I am satisfied that Mr Majeed has no reasonable prospects of successfully prosecuting an application for a s.179 inquiry into the conduct of Mr Kerr in relation to Mr Majeed’s bankruptcy on the basis of any or all of the matters asserted by Mr Majeed.
On the material before the court the trustee has not been made aware of the grounds on which the court is being asked to inquire into his conduct in such a way as to afford him a proper opportunity to prepare and present his “case”. Not only is the trustee not in a position to identify properly the basis on which it is suggested there is a prima facie case against him or a basis on which an inquiry into his conduct should be ordered, nor is the court. The absence of a proper basis for the relief sought is such that Mr Majeed has no prospects of successfully prosecuting his claim for an inquiry in relation to the conduct of Mr Kerr (or, for that matter, Mr Lock if I am wrong in relation to his “status”) and this part of his application should be summarily dismissed.
Insofar as Mr Majeed relies on such matters in support of any application for an annulment or review of the sequestration order, such application has no reasonable prospects of success on the basis of any of the matters referred to in proposed grounds 2 to 4. Mr Majeed has not established even an arguable basis for an extension of time in relation to the sequestration order. He refuses to join the petitioning creditor (the proper respondent to such proceedings given the matters apparently relied on relevant to the time the sequestration order was made). He has failed to seek any dispensation in relation to the court rules regarding service. He has chosen not to notify his creditors of the making of the application, in particular the petitioning creditor, despite the court’s repeated statements to him that he would need to attend to this step. He sought to prosecute such claim against his trustee only notwithstanding that he appeared to rely on a claim about an earlier debt said to be owed to him by the petitioning creditor. He has not put forward any arguable basis in these proceedings against his trustee in bankruptcy upon which it was suggested that the sequestration order made against him was not properly obtained or, in the words of s.153B of the Act, “ought not to have been made”. His arguments about the subsequent conduct of his trustee in bankruptcy provide no such basis.
The last substantive order sought in the Fourth Application is an order for costs. Mr Majeed is self-represented. In any event, any such consequential order would depend on his success in some other aspect of his claims.
None of the claims for substantive orders in the Fourth Application or the supporting affidavits have any reasonable prospects of success.
Interim Orders
Mr Majeed also made an application for “interim” orders, which he ultimately sought should be addressed at the same time as the application for final orders, although (unsurprisingly given his discharge from bankruptcy) he did not press the first two which related to approval to travel.
Mr Majeed maintained however, his claim for an interim order that the trustees (sic) should apologise to the Member for Warringah (Mr Abbott) and his staff for anxiety and stress said to have been caused by the (unidentified) action of the trustees (sic). No basis has been identified on which the court would have jurisdiction to make such an order or, if it did, to establish any arguable basis for such relief. I am satisfied that Mr Majeed has no reasonable prospects of successfully prosecuting this part of his claim. Indeed, it is foredoomed to fail and as such is an abuse of process.
Finally, Mr Majeed sought an order that AFSA should take all necessary action it deemed fit for all breaches by the trustee contrary to the Act or Acts. AFSA is not a party to these proceedings. Mr Majeed has no reasonable prospects of successfully obtaining such an order in the present proceedings.
Conclusion
In these circumstances, I am satisfied that Mr Majeed has no reasonable prospects of successfully prosecuting any part of the application of 24 August 2015 and that the application should be summarily dismissed in its entirety.
Abuse of process
As discussed above, there are particular aspects of the Fourth Application which in themselves amount to an abuse of process, in particular Mr Majeed’s proceedings against Mr Lock and the review/annulment application sought on the basis of asserted action by the trustee in bankrpucty. During these proceedings the absence of any meaningful connection between any application for an inquiry and the material relied on by Mr Majeed was pointed to by the solicitor for the Respondents in support of the proposition that the court could be satisfied that the application as a whole was an abuse of process as well as being hopeless.
It is only an exceptional case in which proceedings are summarily dismissed as an abuse of process. Given my findings in relation to the absence of reasonable prospects of success it is not, strictly speaking, necessary to determine whether there is an abuse of process. However, having regard to the nature of an application for summary dismissal on the basis of no reasonable prospects of success in the context of an application for an inquiry into conduct under s.179 of the Act, in the particular and exceptional circumstances of this case I consider it also appropriate to determine this issue in that respect.
The Respondents submitted that the orders sought, grounds relied on, and the affidavit evidence considered in its entirety, as well as the conduct of the application and Mr Majeed’s statements to the court, made it clear that his real desire was to have his bankruptcy annulled, but that because he did not wish to have the petitioning creditor joined as a party (albeit because he claimed to be in fear of the petitioning creditor) he sought such an annulment “through the back door”, rather than indicating any serious intention to make a real complaint against the trustee or to seek any relief against him.
I am satisfied that an inference to this effect can be drawn in all the circumstances of this case and having regard to the matters considered above. This is relevant not only to whether the review/annulment application (based on post-sequestration asserted conduct of the trustee) was an abuse of process (as discussed above) but also to the issue of whether there was an improper purpose in maintaining a s.179 claim in relation to the trustee. There is no suggestion that Mr Majeed has brought any complaint against the trustee in the six years prior to the present proceedings (except insofar as he has sought review of decisions in relation to requests to travel overseas). He previously sought an annulment of his bankruptcy in 2012, properly joining the petitioning creditor as respondent, but did not appear at the hearing. He unsuccessfully sought an “ex parte” annulment on 4 February 2015. The first three applications (after the initial application of 4 February 2015) sought no relief against the trustee and simply sought to bring Mr Majeed’s bankruptcy to an end. It was only when inquiries were made by the court of Mr Majeed about the particulars on which he sought to rely in proceeding against Mr Kerr and Mr Lock, that Mr Majeed agreed that it was the conduct of the trustee about which he wished to complain. He thereafter maintained that this was so, notwithstanding that he conflated his complaint against the trustee with his complaint against the petitioning creditor. In essence, he relies on the same, or almost the same, grounds and particulars as in the earlier applications which had sought an annulment of his bankruptcy (apart from the substitution of references to ss.178 and 179 for earlier references to annulment).
I am satisfied that the application for a s.179 inquiry on any or all of the bases contended for in the Fourth Application of 24 August 2015 is an abuse of the process of the court. I have had regard to all the circumstances, including the inference that can be drawn that the purpose of the Applicant in pursuing in these proceedings was to bring his bankruptcy to an end (in particular to have it annulled) without the proper party to such application (the petitioning creditor) having an opportunity to participate in the proceedings. The bases relied on in the various applications and affidavits maintain in essence the grounds that were previously relied on as the basis for a review or annulment application as the basis for an inquiry into the trustee’s conduct. Mr Majeed was given extensive opportunities to clarify the basis for his application for an inquiry into the conduct of the trustee. The history and conduct of these proceedings and the material before the court do not reveal any serious intention on the part of Mr Majeed to make a real complaint against the trustee or to seek any relief against him. In addition, the grounds include, insofar as they can be understood, allegations against non-parties, including Alistair Little of TressCox (the solicitor acting for the petitioning creditor, and not the trustee) and take issue with the conduct of the petitioning creditor in the context of the application for a s.179 inquiry in circumstances where Mr Majeed vigorously opposed the suggestion that the petitioning creditor should be joined as an appropriate party, rather than taking issue with any specific conduct of the trustee.
Moreover the conduct of Mr Majeed in filing an additional affidavit after the hearing, without leave of the court and in lieu of submissions, was in itself an abuse of the court’s process and suggestive of an ulterior purpose on the part of Mr Majeed in maintaining these proceedings against Mr Kerr and Mr Lock as Respondents. It goes to support my view that the application (at least as it was made against the Respondents) is an abuse of process.
Relevantly, in the context of directions which allowed only for post-hearing submissions, Mr Majeed instead sought to further restate and lead fresh additional evidence of his dispute and complaints against the petitioning creditor and various persons associated with the petitioning creditor. In proceeding in this manner Mr Majeed made it apparent that he relied on the pretext of an application against the Respondents, in particular the application for a s.179 inquiry into the conduct of Mr Kerr and Mr Lock, as an improper basis for seeking that his bankruptcy be set aside or annulled without complying with the court rules or proper process by joining the proper parties. This is an improper purpose for the conduct of litigation. The court has power to prevent an abuse of process resulting in oppression against the Respondents (Williams & Ors v Spautz at [24]).
Mr Majeed’s unfounded assertions about some improper influence being brought to bear on the trustee or a conflict of interest in the administration of his bankrupt estate are no more than that. In all the circumstances (and having regard to the extensive opportunities Mr Majeed has had to put on evidence) there is, in my view, nothing to suggest that Mr Kerr, as Mr Majeed’s trustee in bankruptcy, failed to carry out his duties in accordance with the Bankruptcy Act. Mr Lock was never Mr Majeed’s trustee in bankruptcy.
The application for an inquiry under s.179 of the Act cannot succeed. There is no proper case for an inquiry in circumstances where such an inquiry “is not likely to reveal misconduct” (see Stillman v Pascoe [2010] FMCA 548 at [30]) in which Lucev FM pointed out that “an inquiry ought only be undertaken where there is a clear case for the Trustee to answer”). Not only does Mr Majeed have no reasonable prospects of establishing a case for the trustee to answer, but also the application for a s.179 inquiry amounts to an abuse of process.
Mr Majeed’s application should be summarily dismissed. As sought by the Respondents, Mr Majeed should pay the Respondents’ costs of these proceedings, including in relation to the Respondents’ interim application of 4 September 2015.
I certify that the preceding two hundred and eleven (211) paragraphs are a true copy of the reasons for judgment of Judge Barnes
Date: 1 July 2016
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