NAB v Larter
[2007] FMCA 422
•20 March 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| NATIONAL AUSTRALIA BANK v LARTER | [2007] FMCA 422 |
| BANKRUPTCY – Application for adjournment of a sequestration order where there is an appeal against the dismissal of a cross claim against the judgment creditor – where the grounds of appeal have not been filed – where holding appeal has been entered – where judgment indicates no evidence of damage has been proffered – where applicant seeks to go behind the original judgment on grounds of the type identified in Re Halstead – whether court should deal with the matter as a preliminary issue – where adjournment is required because of conduct of legal practitioner. |
| Glew v Harrowell (2003) 198 ALR 331 Re Brink; Ex parte: Commercial Banking Co of Sydney Ltd (1980) 30 ALR 433 Re Capsanis v The Owners – Strata Plan 11727 [2000] FCA 1262 Porter v OAMPS Limited [2004] FMCA 272 Re Halstead and Another; Ex parte Westpac Banking Corporation (1991) 31 FCR 337 Commonwealth Bank of Australia v Jeans 219 ALR 22, [2005] FCA 569 |
| Applicant: | NATIONAL AUSTRALIA BANK LIMITED |
| Respondent: | WANDA LARTER |
| File number: | SYG2677 of 2006 |
| Judgment of: | Raphael FM |
| Hearing date: | 20 March 2007 |
| Date of last submission: | 20 March 2007 |
| Delivered at: | Sydney |
| Delivered on: | 20 March 2007 |
REPRESENTATION
| Counsel for the Applicant: | Mr J White |
| Solicitors for the Applicant: | Dibbs Abbott Stillman |
| Solicitors for the Respondent: | Mr J Kells |
ORDERS
The court will hear the following separate issue:
Whether the Court ought to exercise its discretion to go behind the judgment on which the petition is based, on grounds 2 and 3 identified in the “Notice stating grounds of opposition to application, interim application or petition” filed 13 March 2007:
(i) Having regard to the following judgments:
(a)National Australia Bank Limited v Electra Electrical Products (Aust) Pty Limited (unreported, District Court of New South Wales, 3800/05, Robison DCJ, 10 April 2006) (Exhibit SAT 3 to the Affidavit of Stacey Amanda Taylor sworn 16 March 2007); and
(b)National Australia Bank Limited v Electra Electrical Products (Aust) Pty Limited [2007] NSWDC 3 (Exhibit SAT 7 to the Affidavit of Stacey Amanda Taylor sworn 16 March 2007).
(ii) And on the assumption that there is a prima facie case that the debtor will establish the admissible factual matters contained in the affidavits of Wanda Larter and Bruce Ian Larter each sworn 13 March 2007, and filed in opposition to the petition.
Respondent to file and serve any further evidence upon which she intends to reply on or before 27 March 2007.
Respondent to file and serve her outline of case and list of authorities on or before 2 April 2007.
Applicant to file and serve its outline of case and list of authorities on or before 5 April 2007.
Hearing 11 April at 10.15a.m.
Costs reserved.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYG2677 of 2006
| NATIONAL AUSTRALIA BANK LIMITED |
Applicant
And
| WANDA LARTER |
Respondent
REASONS FOR JUDGMENT
The proceeding before me today is both the hearing of an application for a sequestration order in respect of which a notice of grounds of opposition has been filed and the hearing of an application to adjourn that hearing by the debtor on the basis that an appeal against the decision of his Honour Rolfe J in the District Court of New South Wales is pending.
Mrs Larter is one of two assignees of a chose in action owned by Electra Electrical Products (Aust) Pty Limited. The chose in action is constituted by a claim against the National Australia Bank Limited for breach of confidence and other activities surrounding the business activities of Electra with certain New Zealand companies. The bank had previously brought proceedings against Electra and Mr and Mrs Larter for debt and judgment was given against the company and the two individual guarantors by Robinson J of the District Court on 10 April 2006. That judgment was not appealed and it is upon that judgment the bankruptcy petition is based.
The petition had been adjourned so that the proceeding before Rolfe J could be heard. It has now been heard and his Honour dismissed the claim. A notice of appeal has been filed. The procedure in the Court of Appeal of New South Wales is that a holding appeal is filed and then within three months a proper grounds of appeal is required to be filed. The three months has not yet expired. Mrs Larter has indicated that there are two grounds upon which the appeal will be based. The first is that certain evidence was not permitted to be heard by Rolfe J. The second appears to be a suggestion that his Honour was biased.
It is the existence of this appeal that is the first ground upon which Mrs Larter relies to adjourn the bankruptcy petition and if this was the only ground I would have dismissed the application and proceeded to hear the petition. I say this because whilst the authorities are generous in allowing a person against whom judgment has been given an opportunity to appeal that decision before making a final sequestration order. This is not such a case.
It is not such a case because the judgment upon which the petition issues has not been appealed. The debtor sought merely to cross-claim. The principles upon which the court should decide whether or not to adjourn a petition are have found in a number of cases of which Glew v Harrowell (2003) 198 ALR 331, Re Brink; Ex parte: Commercial Banking Co of Sydney Ltd (1980) 30 ALR 433, Re Capsanis v The Owners – Strata Plan 11727 [2000] FCA 1262 and a case that I determined and referred to the relevant authorities Porter v OAMPS Limited [2004] FMCA 272 are but a few.
Those cases make it clear that in order to obtain the court’s indulgence the debtors must show that they have a prima facie case that they are fairly entitled to litigate and that it is constituted by a genuine or bona fide claim. The difficulty with which Mrs Larter is faced in this regard is that there is little evidence from the transcript or otherwise, that would assist me in coming to any view about the arguability of her appeal. The judgment seems to me to indicate one matter upon which no argument has been raised in the papers, although it was mentioned by Mr Kells in submissions. It is that there was no evidence before the court that Electra has suffered any loss or damage so that even if the appeal was successful there would not be a claim. There would not be any money payable which would have the effect of setting off the amount owed by Mrs Larter to the bank. In those circumstances I would not be inclined to further adjourn this case.
But Mrs Larter has an additional claim. She says that she was a person who was misled by the bank and, possibly her husband, in relation to the signing of the guarantee. She says that she is a married woman with no interest in the financial affairs of the debtor company who did not realise and did not have explained to her the significance of the documents she was signing. Although this claim is raised by
Mrs Larter in her notice of opposition it was not really addressed in the proceedings before me this morning until it was brought to my attention by Mr White whose helpful written submissions and his patience in regard to what must be the frustrating manner in which this case has been handled, is exemplary.
Mr White has provided me with authorities not provided by Mrs Larter’s representative, Re Halstead and Another; Ex parte Westpac Banking Corporation (1991) 31 FCR 337 and Commonwealth Bank of Australia v Jeans first at 219 ALR 22 and then at [2005] FCA 569. Re Halstead was a case quite similar to the one before me in which Heerey J accepted that on the hearing of a petition the original judgment could be gone behind when a case, such as the one put up by Mrs Larter, is raised. The Jeans cases established firstly that the court might consider as a preliminary point whether this should happen and in its final form decided that it should not happen where a party has had a full hearing.
In Mrs Larter’s case, the judgment was obtained by the bank on a summary judgment application, which meant that Mrs Larter only had to raise the possibility of this defence to have prevented judgment being entered against her. But she did not do so. Mr White has provided me with a draft of the preliminary issues he wished to raise. He had hoped that they would be heard today. Before lunch I raised this question with Mr Kells and I asked him to consider his client’s position and to provide me with some submissions upon my return from lunch. What Mr Kells did was to start giving me evidence from the bar table about his professional relationship with Mrs Larter, what he knew and what she knew. Of course, an advocate cannot do this. An advocate cannot be a witness and an advocate in the same proceeding. Mr Kells must resign his instructions in this case if he is to give this sort of evidence. He must advise his client that she should obtain other legal representation and that he may be a necessary witness.
It is always unfortunate when the actions of a legal representative, that are hardly those that the court would normally expect to see, results in a client obtaining a benefit that they would not have obtained and if the case had been run properly. I feel I am obliged now to give Mrs Larter a short adjournment so that the separate questions raised by Mr White can be determined. The adjournment which I shall grant will be as short as possible and I will make it clear to those to whom Mrs Larter may apply for representation that I will brook no further delay. I will expect the proposed separate questions to be determined on the day and if I am of the view that there should be no going behind the judgment then I will expect the bank to proceed with the application for a sequestration order. It should be understood that these reasons are determinative of any application for an adjournment arising out of the existence of the appeal from the decision of Rolfe J.
Mr White has asked me to reserve the question of costs because he wishes to make an application that costs be personally paid by Mr Kells. I understand his position and will reserve costs. I direct that if an application is made for personal payment of costs against Mr Kells then it is to be returnable and heard at the same time as I hear the other matter.
I certify that the preceding eleven (11) paragraphs are a true copy of the reasons for judgment of Raphael FM
Associate:
Date:
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