Re ANZ Banking Group Ltd

[2014] NSWSC 1076

Supreme Court

New South Wales

Medium Neutral Citation:	Re ANZ Banking Group Ltd; Funds in Court [2014] NSWSC 1076
Hearing dates:	11 and 18 July 2014
Decision date:	11 August 2014
Jurisdiction:	Equity Division
Before:	Lindsay J
Decision:	Orders for the part payment out of funds in court, and for a stay of other claims on those funds pending the determination of proceedings in the Federal Court of Australia or further order of this Court.
Catchwords:	PROCEDURE - Supreme Court procedure - New south Wales - Procedure under Uniform Civil Procedure Rules - Payment into and out of court - Due administration of funds in court - Partial payment out to satisfy claimed lien for legal costs - Prevention of abuse of processes of court - Deferral of consideration of other claims to funds pending administration of other proceedings.
Legislation Cited:	Bankruptcy Act 1966 Cth, s 27(1) Jurisdiction of Courts (Cross Vesting) Act 1987 Cth, s 4(1)
Cases Cited:	Gorkowski v Turner [2014] VSC 200 JKB Holdings Pty Limited v De La Vega [2013] NSWSC 501 at [99]-[114] NSW v The Commonwealth [No 3] (1932) 46 CLR 246 at 260-261, 262, 266 and 268 Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589 at 598-604 Walton v Gardiner (1993) 177 CLR 378 at 392-393 Williams v Spautz (1992) 174 CLR 509 at 518-519 and 522)
Category:	Interlocutory applications
Parties:	Plaintiff: ANZ Bank Applicant: Schon Condon Applicant: DC Legal Applicant: Truthful Endeavours
Representation:	Counsel: Plaintiff (ANZ Bank): R Lewin, Solicitor of Gadens Applicant (Schon Condon): S Golledge instructed by Russo & Partners Applicant (DC Legal): P Finch instructed by DC Legal Applicant (Truthful Endeavours): P Finch instructed by DC Legal Solicitors: Plaintiff (ANZ Bank): Gadens Applicant (Schon Condon): Russo & Partners Applicant (DC Legal): DC Legal Applicant (Truthful Endeavours): DC Legal
File Number(s):	2014/140779

Judgment

INTRODUCTION

1. On 16 June 2014 Gadens Lawyers (on behalf of ANZ Banking Group Limited) paid into Court (in these proceedings numbered 2014/00140779) the sum of $739,953.65.

1. Three parties ("the Claimants") have made competing applications to the Court for the fund constituted by that payment in to be paid out to them in whole or part:

(a)   by paragraph 3 of its summons filed on 25 March 2014 in the proceedings numbered 2014/0090173 (read with paragraph 14 of Reasons for Judgment published by White J on 6 June 2014 in both those proceedings and these proceedings numbered 2014/00140779) Truthful Endeavour Pty Limited ("Truthful Endeavour") has applied for the whole of the funds to be paid out to it or as it may direct.

(b)   by a notice of motion filed on 20 June 2014 in the proceedings numbered 2014/00140779 DC Legal Pty Limited ("DC Legal"), the solicitor for Truthful Endeavour, has applied for $220,554.26 or thereabouts to be paid out to it.

(c)   by a notice of motion filed on 27 June 2014 in the proceedings numbered 2014/0090173, Mr SG Condon as trustee for the bankrupt estate of Colleen Anne Rayhill aka Colleen Lewis ("Mr Condon") has applied, inter alia, for an order that the whole of the fund be paid out to him.

1. A preliminary question that has arisen in respect of these competing applications is (as recorded in paragraphs 3-4 of Mr Condon's notice of motion) whether the proceedings in this Court, on those competing applications for payment out of the funds in Court, should be:

(a)   stayed pending the hearing and determination of proceedings numbered NSD1923/2013 in the Federal Court of Australia; or

(b)   transferred to the Federal Court of Australia to be heard with, or in connection with, the proceedings pending in that Court.

1. The parties to the Federal Court proceedings are Mr Condon (as Applicant) and Truthful Endeavour (as Respondent).

1. The proceedings in the Federal Court are presently the subject of:

(a)   an Application filed by Mr Condon on 18 September 2013;

(b)   a statement of claim filed by Mr Condon on 15 April 2014; and

(c)   a defence to that statement of claim filed by Truthful Endeavour on 15 July 2014.

1. The following written submissions have been made by the Claimants to the Court, on the preliminary question, to date:

(a)   written submissions of Mr Condon (prepared by Mr Golledge of counsel) respectively dated 9 July 2014 (MFI "C1"), 17 July 2014 (MFI "C4") and 21 July 2014 (MFI "C7");

(b)   written submissions of Truthful Endeavour (prepared by Mr PJ Finch of counsel) respectively dated 9 July 2014 (MFI "C2"), 17 July 2014 (MFI "C5") and 22 July 2014 (MFI "C8"); and

(c)   written submissions of DC Legal (prepared by Mr PJ Finch of counsel) respectively dated 9 July 2014 (MFI "C3"), 17 July 2014 (MFI "C6") and 22 July 2014 (MFI "C9").

1. The Claimants' competing applications, and the proceedings pending in the Federal Court, arise in circumstances in which there may be reference to:

(a) the judgment of the Court of Appeal in the proceedings styled "Lewis v Condon" [2013] NSWCA 204; 85 NSWLR 99 at [114]-[115];

(b) the judgments of Rein J that were the subject of, or at least prior to, appeal to the Court of Appeal (namely, those reported at [2013] NSWSC 120 and [2013] NSWSC 126); and

(c)   disposition by Rein J of the proceedings numbered 2012/00359743 (on remittal from the Court of Appeal) by orders made on 19 July 2013;

1. On the hearing of the Claimants' competing applications on 11 July 2014 the ANZ Bank appeared (having filed written submissions dated 10 July 2014 prepared by Mr TD Castle of counsel) and, without objection by any Claimant, was excused from further attendance.

ANALYSIS

1. The funds held by the Court are not held as a trustee for any particular party but as an exercise of the judicial function of the State: NSW v The Commonwealth[No 3] (1932) 46 CLR 246 at 260-261, 262, 266 and 268. Such rights as claimants to those funds may have is a right to due administration of the funds in court, and a right to be heard about disposition of the funds, rather than a right of property: Harmer v Federal Commissioner of Taxation (1991) 173 CLR 264 at 272-274; JKB Holdings Pty Limited v De La Vega [2013] NSWSC 501 at [99]-[114].

1. In making decisions about the payment out, or retention, of funds in court the Court engages in an exercise of prudential management of those funds in order to ensure their due administration and that the processes of the Court are not abused.

1. The funds presently held in court were paid into court by the ANZ Bank following its sale, in exercise of a power of sale under a mortgage, of property at Kenthurst.

1. Following the sale, the Bank obtained judicial advice from White J (recorded in Reasons for Judgment delivered on 6 June 2014 but not published generally) pursuant to which the Bank paid surplus sale proceeds into court.

1. Prima facie, following the determination of the proceedings in this court on 19 July 2013 (on remittal from the Court of Appeal), subject to a lien claimed by its solicitor, DC Legal, Truthful Endeavour is entitled to the funds in court.

1. However, notwithstanding the course of the proceedings leading to the orders made on 19 July 2013 (in which he could, arguably, have advanced the case he now seeks to pursue), Mr Condon seeks to advance a new claim, in equity, to beneficial entitlement to the property (now represented by the funds in court) on grounds pleaded in the Federal Court proceedings.

1. Whether Mr Condon is entitled to advance that new case, or any other, is a question the subject of hot contest.

1. A substantial question for determination, either by the Federal Court or this Court, is whether Mr Condon's pursuit of the new case is an abuse of the processes of the court having regard, inter alia, to principles such as those discussed in Port of Melbourne Authority v Anshun Pty Limited (1981) 147 CLR 589 at 598-604.

1. At one point, despite the course of earlier proceedings in the Supreme Court in which he actively participated, Mr Condon suggested that (because of the operation of the Bankruptcy Act 1966 Cth, s 27(1)), this Court lacks jurisdiction to determine his fresh claim or, pending determination of that claim, to deal with the funds presently held in court.

1. With the benefit of the judgment in Gorkowski v Turner [2014] VSC 200, which drew attention to the operation of s 4(1) of the Jurisdiction of Courts (Cross Vesting) Act 1987 Cth, he, substantially if not wholly, resiled from that position.

1. However, it is not necessary, for the purpose of the determination I have to make, to form a view about the proper construction, and due operation, of the Bankruptcy and cross vesting legislation.

1. The question currently before the Court focuses upon the due administration of funds in court. It does not involve any exercise of bankruptcy jurisdiction.

1. Whether or not Mr Condon may, or may not, ultimately, be able as trustee for the bankrupt estate of Ms Lewis to establish a fresh claim, in equity, against Truthful Endeavour, is a question for the future. He has not done so, or sought to do so, at this point.

1. Given that his current claim is the subject of pleadings in the Federal Court that have closed, and that those proceedings are before a judge of that court for case management, it is appropriate (subject to one qualification) to defer, for a reasonable time, further consideration of whether the funds held in this Court should be paid out to Truthful Endeavour or be otherwise dealt with.

1. The qualification is this. Truthful Endeavour and DC Legal contend that Mr Condon's conduct of the proceedings in this Court, and separately in the Federal Court, involves a strategy of withholding payment of legal costs due, by Truthful Endeavour to DC Legal, so as to jeopardise Truthful Endeavour's ability to have legal representation in its opposition to his current claim.

1. Mr Condon denies that his conduct involves any element of an abuse of process.

1. Nevertheless, viewing the course of proceedings in this Court, the Court of Appeal and the Federal Court, I am satisfied that to withhold from Truthful Endeavour the means of payment (from the funds in court) of the legal costs it concedes that it owes DC Legal would be to render Mr Condon's application for a stay, or for transfer of proceedings to the Federal Court, an instrument of oppression.

1. The jurisdiction of the Court to prevent use of its processes in an oppressive way, and to facilitate the administration of justice with fairness and impartiality, is ample enough to deal with this problem. See Walton v Gardiner (1993) 177 CLR 378 at 392-393. It extends to a case in which a moving party, such as Mr Condon, has, or must be assumed to have, a prima facie case (Williams v Spautz (1992) 174 CLR 509 at 518-519 and 521 - 522) so that, even if it be assumed that Mr Condon will be able, in due course, to establish the new case he seeks to make, it is open to the Court to take steps designed to ensure that its processes are not, on the way to such an outcome, oppressive, vexatious or otherwise an abuse of process.

1. I am satisfied that, for the object of minimizing if not preventing of any abuse of process arising from the way Mr Condon has conducted the proceedings in this Court to date, and to allow him a reasonable opportunity to advance the case he seeks to advance in the Federal Court, without unfairness to both Truthful Endeavour and DC Legal, an order should be made for the payment out to DC Legal (in discharge of its entitlement to be paid such moneys by Truthful Endeavour) the sum of $220,554.26, as sought by it on its notice of motion filed 20 June 2014.

1. The payment out of this money to DC Legal, on the authority of an order of the Court, and for these stated purposes, relieves DC Legal of such (if any) entitlement that Mr Condon might otherwise have to trace funds he currently claims against Truthful Endeavour into the hands of DC Legal.

1. In any event, the operation of any stay such as that sought by Mr Condon should be conditional upon the payment out of the funds sought by DC Legal with the support of Truthful Endeavour.

1. A practical, incidental feature of this scheme of orders is that it facilitates the conduct of the Federal Court proceedings by enabling the respective rights and obligations of Truthful Endeavour and Mr Condon to be the subject of consideration without need of any ongoing involvement of DC Legal as a claimant on funds in court.

1. During the course of argument on his application for a stay or a transfer order, Mr Condon indicated a willingness to submit to an order that $150,000 be paid out of court to DC Legal on account of its costs as a condition of a grant of his application. However, his preparedness to do so was accompanied by a purported reservation of a right to recover any such moneys from DC Legal should he ultimately succeed, vis-à-vis Truthful Endeavour, in establishing a beneficial entitlement to the funds in court.

1. Mr Condon's approach to this litigation is marked by a determination to vex Truthful Endeavour, and incidentally DC Legal, with ongoing threats of legal action designed to deter Truthful Endeavour from enjoying the fruits of its victory in the proceedings in this Court.

1. Confirmation of this may be found in a change of direction by Mr Condon during the course of his current application. At the outset of the hearing he disclaimed any application of the type reserved by the Court of Appeal (at 85 NSWLR 123 [114] - 124 [115]) for further consideration. During the course of the hearing he indicated that, if his new case were to be litigated in this Court rather than the Federal Court, he would seek to resile from that disclaimer so as to run a broader case than permitted by the pleadings in the Federal Court.

1. The mandate, and obligation, of the Court to deploy its case management powers (including those under Part 6 of the Civil Procedure Act 2005 NSW) towards a just, efficacious determination of real issues in dispute have scope for operation in relation to management of competing claims to funds in court. As AON Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at 211 [93] - 215 [103] and 217 [111] - [112] illustrates, there is a public interest factor involved in the management of proceedings.

1. Whether or not Mr Condon may ultimately establish an entitlement to claim the balance of the funds presently held in court, he cannot, without an abuse of the processes of the Court, be permitted, by staged claims to relief in different proceedings in different courts, to use ongoing, shifting threats of further litigation as a means of oppression of an opponent.

ORDERS

1. Accordingly, I make the following orders and notation:

(1)   ORDER that the sum of $220,554.26 of the funds in court in these proceedings (numbered 2014/00140779) be paid out to DC Legal Pty Limited in discharge of the debt for that amount owed by Truthful Endeavour Pty Limited to DC Legal Pty Limited for legal costs.

(2)   Upon condition that Order 1 is complied with, ORDER that the competing applications of Truthful Endeavour Pty Limited and Mr SG Condon (as trustee for the bankrupt estate of Colleen Anne Rahill aka Colleen Lewis) for payment out to them of the balance of the funds in court be stayed until the final determination of the proceedings numbered NSD 1923/2013 in the Federal Court of Australia, or further order of this Court.

(3)   RESERVE liberty to apply for such, if any, orders that may be required to enforce orders 1 and 2.

1. Subject to further order, I propose to reserve, pending determination of the Federal Court proceedings, all questions of costs relating to the three competing applications to the Court that are (as indicated in paragraph 2 of these Reasons) the subject of this Judgment.

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Decision last updated: 12 August 2014