Re Gates, J.K. v Ex parte Capita Financial Group Ltd

[1988] FCA 30

IN THE FEDERAL COURT OF AUSTRALIA	) )
GENERAL DIVISION	)
) No. B 5694 of 1987
BANKRUPTCY DISTRICT OF THE STATE	1
OF NEW SOUTH WALES AND THE	)

AUSTRALIAN CAPITAL TERRITORY 1

Re: JEFFREY KENNETH GATES

Judgment Debtor

Ex parte: CAPITA FINANCIAL GROUP LIMITD

(formerly known as The City I

Mutual Life Assurance	Society'
Llmited)

Judgment Creditor

MINUTE OF ORDER

JUDGE MAKING ORDER : Neaves J.

:

DATE OF ORDER	:	12 February 1988	I . '
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WHERE MAD E : Canberra

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B E COURT ORDERS THAT:

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1. The application dated 22 December 1987 to set aside

Bankruptcy Notice No.B5694 of 1987 be dismissed.

2. The judgment debtor pay the judgment creditor's

costs of the application.

Note: Settlement and entry of orders is dealt with in rule	124
of the Bankruptcy Rules.

: ,

IN THE FEDERAL COURT OF AUSTRALIA 1 1

DIVISION GENERAL 1

No. B 5694 of 1987

BANKRUPTCY DISTRICT OF THE STATE )

OF NEW SOUTH	WALES	AND THE	1
AUSTRALIAN'	CAPITAL	TERRITORY	)

Re: JEFFREY XENNETH GATES

Judgment Debtor

Ex parte: CAPITA FINANCIAL GROUP LIMITED

(formerly known as The City

Mutual Life Assurance Society

Limited)

Judgment Creditor

CORAM: Neaves	J.
W:	12 February 1988

REASONS FOR JUDGMENT

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This is an application by Jeffrey Kenneth Gates

( "the judgment debtor") for an order settlng aside	a
bankruptcy notice (No.	B 5694 of 1987) issued against him on

12 November 1987. Alternatively, he seeks an order that

further proceedings under the bankruptcy notice be stayed.

The bankruptcy notice was issued on the application

of Capita Flnanclal Group Limited, formerly known as	The
City Mutual Life Assurance Society Limited	("the judgment
creditor"). The notice is based upon	a final order for
costs obtained by	the judgment creditor against he judgment

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debtor in the High Court of Australia on 20 February 1986. !'

It required the judgment debtor, within 28 days afte;

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service of the notice upon him, to pay to the judgment

creditor the sum of $6,704.76 or to secure the payment of

that sum to the satisfaction of the Federal Court of

Australia or the judgment creditor or to compound that sum

to the satisfaction of the judgment creditor. The

bankruptcy notice was served	on	the judgment debtor on	2
December 1987.

The application at present before the Court was

flled on 22 December 1987. On the following day, 23

December 1987, orders were made giving the judgment debtor leave to amend the application to correct certain errors

therein and extending the time for compliance with the

bankruptcy notice up to and includlng 3 February 1988.

Anclllary orders	for the fillng of affidavits were also
made. On 3 February 1988 a further order was made extending the time for compllance with	the bankruptcy notice up to and

including 12 February 1988.

It is necessary to refer to the nature of the

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proceedings which culminated in the order for costs on which
the bankruptcy notice is based and their history. The

following summary is taken from the judgment of Gibbs C.J.

in Gates v. City Mutual Life Assurance Societv Ltd (1986)	63
A.L.R. 600 at pp.601-2:

"The appellant, Mr Gates, brought proceedings in

the Federal Court clalming a ainst the

respondent, an lnsurance company, damages for

breaches of ss.52 and 53(g) of the Trade

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Practices Act 1974 (Cth), as amended (the Trade

Practices Act) or alternatively damages for

breach of contract. The matter came before

Ellicott J. who held that the appellant, on the

faith of false statements made to him by an

agent of the respondent, arranged for a

superannuation policy which he had already taken

out	with	the	respondent to be	extended	to
include	total	disability	cover,	and	also

arranged for that cover to be included in a ew

life policy which he took out at about the same
time with the respondent. In the case of each

pollcy an extra sum of $2.09 Cper month3 was

paid by way of premium. The statements which

the learned trial Judge found were made by the agent of the respondent and were false were to the effect 'that the total disabllity benefit

under the provlsions he was recommending for

inclusion in his	existing and new policy would
be payable to [the appellant] if	he suffered an
in~ury	or illness which left him physically

incapable of carrying on his occupation	as	a
self-employed builder'.	In	fact, in the case of
each policy,	the	total disability clause

entitled the appellant to the extra benefits

under that clause only if the respondent,

'having regard to medical evidence, considers

him incapacitated to such an extent as a result

of such illness or injury as to render him

unlikely ever to be able to attend to, any

gainful profession, occupation or employment'.

The learned trial judge held that the respondent

had committed breaches of s s . 5 2 and 53(g) of the

Trade Practices Act. However, he held that the i

approprlate m asure of damages was that ' ;

applicable in tort and that since there was no	i'
evidence to show that the cover under the total disabllity clauses was not worth the premiums

payable	for	it,	and	since	no	consequential
losses	were	proved,	the	appellant	was	not

entitled to any pecuniary damages for the breach

of those sections. He added that an alternative . ..

method of compensating the appellant for the

loss or damage he had suffered would	be to vary
or rescind the policies and direct a refund	of

the premiums paid to date, but hat he

appellant had not claimed to be compensated on

that basis. He went on to hold that he i

statements made by the agent	were intended to
have contractual effect and that there was	a

collateral contract under which the appellant

agreed to enter into the contracts of insurance

and to pay the premiums thereunder in

consideration of the respondent agreeing to pay

disability beneflts to the appellant in the

circumstances represented by the respondent's

agent.	He assessed damages for breach of this
contract	at $ 6 6 , 0 0 3 .

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From this decislon both parties appealed to the	I-
Full Court	of the Federal Court. That court

held that the statements did not give rise to a collateral contract and, since they agreed that no claim for damages under the Trade Practices

Act had been made out, dismissed the appeal of the present appellant and allowed that of the respondent. The orders of Ellicott J. were accordingly set aside and the proceedings were

dismissed. 'I

From the judgment of the Full Court of this Court

the judgment debtor appealed to the High Court. He filed in

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that Court two notlces of appeal (numbered respectively 20

and 21 of 1983) and a notice of motion (numbered	S41 of
1985).	The latter was treated by the Court as seeking an

order setting aside all the previous proceedings in the

matter and ordering a new trial. The High Court dismissed

the appeals with costs and dismissed	the notice of motion.
The costs were subsequently taxed and allowed in the	sum

mentioned in the bankruptcy notice. It may be noted that

the proceeding in the original jurisdiction of this Court

was numbered G 39 of 1981.	The appeals to the	Full Court of
this Court were numbered respectively	G 170 and G 173	of

1982, the former being the judgment debtor's	appea1,and the
latter that of the judgment creditor.

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In support of the appllcation, the judgment debtor

has sworn and filed	a number of affidavits. The respective
dates of swearing of those affidavits are	14 December 1987,
16 December 1987, 21 December 1987 and 19 January 1988.	It

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is not easy3 to discern from the affidavits, whlch largely

consist of argumentative material, on what facts the

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judgment dehtor relies in support of the present

application. The comment may also be made that the

affidavits contain much material the relevance of which to

any issue which arises on the present application 1s not

obvlous. Exhibited to one of the affidavits, that of 14

December 1987, are the appeal books ( 3 volumes) lodged i'f

the High Court in connectlon with the appeals to that Court

and the material (6 volumes) filed in that Court in support

of the notice of motion (numbered	S41 of	1985) to which
reference has already been made.

The judgment debtor seeks to invoke the undoubted

power of this Court, when exercising jurisdiction in

bankruptcy, to go behind the judgment or order upon which	a
bankruptcy notice or a creditor's petition is founded	and

inquire into the validity of the debt upon which the

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judgment creditor relies. That is a power which may be

exercised where there is evidence that the judgment or order

has been obtained by fraud or collusion or that there	has
been some other miscarriage of justice.

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An initial difficulty of formidable proportions

faces the judgment debtor in this case in that the judgment

debt relied upon 1s one for costs awarded against him in

proceedmgs by way of appeal which he instituted in the High

Court and In which, after a full hearing, he was

unsuccessful. It is not easy to discern from the I material

before the Court any basis upon which the judgment creditor

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should be deprived of his rlght to take proceedings in

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bankruptcy based upon that order. An alleqation of bias, or

the appearance of bias, in the judges constituting the High

Court was made by the judgment debtor. However, no

foundatlon whatsoever has been shown for the allegdtion and

I can only regard the conduct of the judgment debtor In

raising the matter as irresponsible.

The path by which the judgment debtor seeks to r .

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reach his desired goal is a somewhat tortuous one. There

are clearly a number of obstacles along the way which must

be surmounted if he is to succeed in his present

appllcation. Those obstacles also stand in the way of his

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achleving what is clearly his ultlmate aim of having the

orders made In proceeding numbered G	39 of 1981 set aside
and havlng a new	trial of that proceeding after amendments

thereto to add additional partles, both applicants and

respondents, and to expand the issues by the inclusion of

additional causes of action.

An assertion (and it is no more than an assertion

unsupported by evidence) which is fundamental to the

judgment debtor's present application is an assertion that

his legal advisers failed to give effect to his instructions . .

to include in proceeding numbered G 39 of 1981 additional

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claims which he and members of his family are said to have !-

had against the ~udgment credltor or against companies

associated with the judgment creditor.	As has already been
mentloned, In the proceeding numbered	G 39 of 1981 the

judgment	debtor	claimed	amages	against	he	judgment	! '
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creditor on two bases. The first was on the basis that the

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judgment creditor, through its agent, one Gary Alwyn

Rainblrd, had been guilty of conduct in contravention	of
s s . 5 2 and 53(q) of the Trade Practices Act. The second,	an ..

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alternative basis, was that there had been a breach by the

judgment creditor of the terms of a contract alleged to have

been made with the judgment debtor, those terms being more

favourable to him than the terms of the policies issued by

the judgment creditor. The claims arose in relation to the

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extension, to include total disabillty cover, of a

superannuation policy (numbered 909837) which the judgment !

debtor had taken out some time before with the judgment

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creditor and the inclusion of similar cover in a new life

policy (numbered 438249) whlch the judgment debtor was then in the process of having issued to hlm. It is asserted that each of his sons, Christopher James Gates and Stephen James

Gates, they being then mlnors, had an insurance policy with

the judgment creditor or an associated company (those

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policies being respectively numbered 8 2 0 8 9 6 / 7 and 820896/8)

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and that, under that pollcy and in the events which

occurred, the insurer became liable to make payment but that :.

it falled to do so. The ~udgment debtor further says that

he had a personal accldent policy (numbered 6PA44/57426)

with The	City Mutual General Insurance Limited under	which,
in the events which had occurred, there was	an	obligation

upon the company to make payments to the judgment debtor on

account of disabilities suffered in an accldent in the

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course of his employment as a self-employed builder. The

judgment debtor contends that the failure of his legal

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advisers to include in thc proceeding numbered G 39 of 1981

the clalms under the policies numbered 82089617, 82089618

and 6PA44/57426 amounted to a miscarriage of justice.

In relation to those assertions made by the

judgment debtor, it is sufficient to say that, even if,

contrary to his Instructions, issues arising between other
members of the applicant's family and the judgment creditor

and between the judgment debtor and company other than the

judgment creditor were not included in the proceeding

numbered G 39 of 1981, that circumstance, of itself,

provides no foundation for	a claim that the judgment debtor
did not have	a fair trial upon the issues that were in fact

raised by that proceeding.

The judgment d b or also complains of

dlssatisfaction with the manner in which the pt-oceeding
numbered G 39 of 1981 was conducted before this Court. In

partlcular, he complalns that his legal advisers failed to

put before the Court all available evidence and made

submlssions to the Court based upon a view of the facts with

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which the judgment debtor did, and does, not agree. The

assertion that all available evidence was not called appears	. .
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to be related solely to the assertlon, to which I have

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already referred, that the proceeding should have included

claims under the other policies mentioned. Evidency

relevant only to those claims was clearly inadmissible.

Further, as the judgment debtor succeeded in the proceeding

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before Ellicott J. and the appeals from hls Honour’s

judgment dld not turn on evidentiary matters, it can hardly

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be seriously contended that the judgment debtor suffered any

miscarriage of justice by the failure	of his legal advisers
to adduce any evidence whlch	was relevant to the issues then
before the Court.	It must also be said that the other

matter relied on does not advance the applicant‘s case.

A further complaint is made that the judgment

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credltor was dilatory in discovering all relevant documents,
some documents being produced only at the hearing. It is

not suggested that, in the end, any documents were withheld

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and the circumstance that the judgment creditor was dilatory

provides no ground for the relief now sought.

An allegation is also made that Mr Ralnbird, who

was the authorised agent of the ~udgment credltor and the

person with whom the judgment debtor arranged the total

disability	cover,	“dld	knowingly	give	false	testimony,
fabrlcate	evidence,	wlthhold	true	testimony	and	commit

perjury throughout G 39 of 1981”. To deal with this

allegation it is necessary to refer	to the proceeding before
Ellicott J.	As his Honour said, the conversatlops which
took place between the judgment debtor and Mr Rainbird lay	I .
at the heart of the case. Their evidence gave two quite	,
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diverse verslons of what had occurred but	his Honour, having
considered all the evidence, accepted the version deposed	to

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by the judgment debtor and the wltnesses called on his

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behalf. His Honour said (43 A.L.R. at p.326):

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"I am strengthened in this concluslon by the

impression which I had of Mr Rainbird's

evidence. It seemed to me, as I listened to him

in the witness box, that he reconstructed his

evidence based on what he regarded as his normal

conduct. That impression is confirmed by my

study of the transcrlpt of his evidence. The

evidence established that he discussed the

I	question of total disability benefits with many
cllents and in cross-examination he conceded
!	that he had no independent recollection of what

place.. took . . I

This does not mean that	I thmk Mr Rainbird
deliberately told an untruth. It may	well be

that he gave his evidence to the best of his

ability but his recollection was, in my view,

faulty and not based on an independent

recollection of the events but on what he

regarded he would have said based	on what he
believed was hls normal practice at the tlme	....
I therefore do not	regard Mr Rainbird as a
reliable witness	particularly as to the content

of the conversations which took place leading up

to Mr Gates adding total disability cover	to his
policy No.909837."

The judgment debtor has placed before the Court no material additional to that which was before Ellicott	J. to
support the very serious allegation he has made.	No basis

has been shown upon which this Court, sitting in its	l
bankruptcy jurisdiction, could properly find, contrary to	. _	.
the finding of Ellicott	J.,	who had the advantage of

observing Mr Rainbird in the wltness box, that Mr Rainbird

had deliberately given false testimony. In the absence of

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any additional mater7a1, 1 can, again, only regard the

allegation as having been made iyresponsibly.

The judgment debtor also sought to rely on a umber

of other allegations of a less serious nature in relation to

the conduct of the proceedlng numbered G 39 of 19d1.	I	do
not find it necessary to refer to them.	I am	satisfied

that, whether taken singly or in combination, they	provide
no basis for the contention that	the judgment in that

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proceedlng ~7as obtained by fraud or was otherwise tainted

with illegality.

Even if the judgment debtor had been able to

sustain any of the allegatlons he has made in relation to

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the proceeding numbered G 39 of 1981, further formidable

obstacles would have confronted him in showing that this

Court, in the exerclse of its bankruptcy jurisdiction,

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should, in effect, restrain the judgment creditor taking

bankruptcy proceedings based upon the order for costs made	,.
by the Hlqh Court in dismissing	the judgment debtor's appeal

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to that Court. However, in view of the firm conclusion to

which I have come that the judgment debtor has not . -

establlshed any of the matters relied upon In relation to . .

the proceeding numbered G 39 of 1981, I am relieved of the

necessity of considerlng those obstacles.

Although I have considered it appropriate to

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examine afresh the specific matters raised by the judgment

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dcbtor on the hearing of the present application, it should	t
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I	be recorded that the High Court has previously declded, on the material then before it, that there were no grounds for
the maklng of an order setting aside the proceedings before
Ellicott J. and the Full Court of this Court and ordering a
new trial. In dlsmissing the motlon made by the judgment
debtor for such orders, Gibbs C.J. said (63 A.L.R. at
p.602) :  i _ .

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"The notlce of motion was quite irregular but in

any case the material before the court did not

establlsh that those representing the appellant

in the Federal Court had acted without the

authority or against he interests of the

appellant or that there was any other ground on

which it could be concluded that there had been

an abuse of the process of the court or a

consplracy to pervert the course of ~ustice."

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Mason, Wilson and Dawson JJ., after referring to the two

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notices of appeal to the Hlgh Court lodged by the judgment

debtor, said (at p.606):

"Moreover, by notice of motion he seeks an order

for a new trial on the ground that his legal

representatives had conducted the proceedings	at
first instance without his	authority and against

hls instructlons, with the consequence, so he

claims, that he did not get a fair trial. The

materials before us do not support his

contention. What is more, they do not indicate l

that the matters of which he complains in	this
respect can be attributed to conduct	on the part
of the respondent or its legal	representatives.

All that he can point to, so far as the

respondent 1s concerned, is that one or more of

hls wltnesses was confused in cross-examination.

There is no substance in the application for	a
new trial and it must be refused."

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The material on whlch	the judgment debtor now relies is not
substantlally different from that which	was before the High
Court.

The application is dismissed. The judgment debtor

must pay the judgment creditor's costs of the application.

I certify that this and

the preceding 12 pages are

a true copy of the Reasons

for Judgment herein of the

Honourable Justice Mr

Neaves .

Dated: 12 February 1988

Judgment debtor in person

Counsel for the ~udgment creditor : Mr J . A . Timbs

Solicitors for the judgment creditor: Murphy & Maloney

Date of hearing : 3 February 1988

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