Re Heerey; Ex parte Heinrich

Case [2001] HCA 74

HIGH COURT OF AUSTRALIA

KIRBY J

IN THE MATTER OF AN APPLICATION
FOR A WRIT OF MANDAMUS AGAINST
PETER CADDEN HEEREY & ORS  RESPONDENTS

EX PARTE STEPHEN GLENN HEINRICH  APPLICANT

Re Heerey; Ex parte Heinrich
[2001] HCA 74
8 October 2001
A25/2001

ORDER

Application refused.

Representation:

No appearance for the respondents

The applicant appeared in person

Notice:  This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

  1. KIRBY J.   I have before me an application for an order nisi for the constitutional writ of mandamus directed to Justices Heerey, Branson and Lindgren, judges of the Federal Court of Australia ("the respondents").

    The background facts

  2. The applicant for relief is Mr Stephen Heinrich ("the applicant"). He seeks the relief pursuant to the s 75(v) of the Constitution. There is no doubt that the respondents are "officers of the Commonwealth" within that paragraph of the Constitution. They are therefore amenable to the writ[1].

  3. The applicant asks that the writ issue to command the respondents to vary the order of Mansfield J made in the Federal Court in Adelaide on 6 September 2000 to "order an account of mutual dealings be taken as requested of them on 28 May 2001".  An additional order is sought that all public examination proceedings involving the applicant be stayed until a full and complete account of the mutual dealings is taken.

  4. The respondents constituted the Full Court of the Federal Court of Australia.  On 28 May 2001 that Court unanimously dismissed the applicant's purported appeal from a judgment of Mansfield J.  By his judgment, Mansfield J ordered that a sequestration order be made against the estate of the applicant.  The judge appointed a registered trustee as trustee of that estate.  That trustee has not been named as a respondent to these proceedings.  Nor has the creditor that instituted the original bankruptcy proceedings against the applicant in the Federal Court been named as a respondent.  That creditor was the Commonwealth Bank of Australia ("the Bank").  The named respondents have submitted to the orders of this Court. 

  5. The facts recounted in the respondents' reasons in the Full Court of the Federal Court indicate that the relief which the applicant sought in the Full Court, and now seeks to revive in these proceedings, was founded on s 86 of the Bankruptcy Act 1966 (Cth) ("the Act"). That section provides (with emphasis added):

    "Mutual credit and set-off

    (1)Subject to this section, where there have been mutual credits, mutual debts or other mutual dealings between a person who has become a bankrupt and a person claiming to prove a debt in the bankruptcy:

    (a)an account shall be taken of what is due from the one party to the other in respect of those mutual dealings;

    (b)the sum due…

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AGLC
Re Heerey; Ex parte Heinrich [2001] HCA 74
Case
[2001] HCA 74
Decision Date

CaseChat Overview and Summary

The applicant, Mr Stephen Heinrich, sought a constitutional writ of mandamus directed to Justices Heerey, Branson, and Lindgren of the Federal Court of Australia. The application was made pursuant to s 75(v) of the Constitution, which grants the High Court original jurisdiction to issue writs of mandamus against officers of the Commonwealth. Mr Heinrich sought to compel the respondent judges to vary an order made by Mansfield J, which had imposed a sequestration order against his estate, by ordering an account of mutual dealings as requested by the applicant. He also sought a stay of all public examination proceedings until this account was taken. The respondent judges constituted the Full Court of the Federal Court, which had previously dismissed Mr Heinrich's appeal from Mansfield J's sequestration order.

The legal issues before the High Court concerned the applicant's entitlement to an order for an account of mutual dealings under s 86 of the *Bankruptcy Act 1966* (Cth) and whether the Federal Court had erred in refusing to grant this relief. Specifically, the court had to consider whether s 86 could be invoked in the circumstances, whether the Federal Court's appellate jurisdiction was engaged in a manner that would permit such an order, and whether the underlying decisions of the Supreme Court of South Australia and the Federal Court disclosed any error.

Kirby J reasoned that s 86 of the *Bankruptcy Act* applies only after a person has become bankrupt and assumes the validity of the sequestration order. The applicant had not contested the sequestration order before the Full Court. Furthermore, s 86 governs the administration of a bankrupt's estate, and the appeal before the Full Court was from a judgment of Mansfield J, not directly concerning the administration of the estate itself. To order an account under s 86, the judgment of Mansfield J would first need to be set aside for error, which had not occurred. The court also noted that the applicant had not appealed from a judgment of the Supreme Court of South Australia, upon which the bankruptcy notice was based, and that judgment remained valid and in force under s 118 of the Constitution. The applicant had also unsuccessfully sought to establish a counterclaim or set-off against the creditor before another Federal Court judge. Consequently, the challenge to the Federal Court's decisions was considered misconceived.

The application for the writ of mandamus was refused.

Orders

Orders of the court

Application refused.

Background

Background to the litigation

I have before me an application for an order nisi for the constitutional writ of mandamus directed to Justices Heerey, Branson and Lindgren, judges of the Federal Court of Australia ("the respondents").The background facts The applicant for relief is Mr Stephen Heinrich ("the applicant"). He seeks the relief pursuant to the s 75(v) of the Constitution. There is no doubt that the respondents are "officers of the Commonwealth" within that paragraph of the Constitution. They are therefore amenable to the writ[1].[1]R v Watson; Ex parte Armstrong (1976) 136 CLR 248 at 263; R v Federal Court of Australia; Ex parte Pilkington ACI (Operations) Pty Ltd (1978) 142 CLR 113 at 123. The applicant asks that the writ issue to command the respondents to vary the order of Mansfield J made in the Federal Court in Adelaide on 6 September 2000 to "order an account of mutual dealings be taken as requested of them on 28 May 2001". An additional order is sought that all public examination proceedings involving the applicant be stayed until a full and complete account of the mutual dealings is taken. The respondents constituted the Full Court of the Federal Court of Australia. On 28 May 2001 that Court unanimously dismissed the applicant's purported appeal from a judgment of Mansfield J. By his judgment, Mansfield J ordered that a sequestration order be made against the estate of the applicant. The judge appointed a registered trustee as trustee of that estate. That trustee has not been named as a respondent to these proceedings. Nor has the creditor that instituted the original bankruptcy proceedings against the applicant in the Federal Court been named as a respondent. That creditor was the Commonwealth Bank of Australia ("the Bank"). The named respondents have submitted to the orders of this Court. The facts recounted in the respondents' reasons in the Full Court of the Federal Court indicate that the relief which the applicant sought in the Full Court, and now seeks to revive in these proceedings, was founded on s 86 of the Bankruptcy Act 1966 (Cth) ("the Act"). That section provides (with emphasis added):"Mutual credit and set-off (1)Subject to this section, where there have been mutual credits, mutual debts or other mutual dealings between a person who has become a bankrupt and a person claiming to prove a debt in the bankruptcy: (a)an account shall be taken of what is due from the one party to the other in respect of those mutual dealings; (b)the sum due from the one party shall be set off against any sum due from the other party; and (c)only the balance of the account may be claimed in the bankruptcy, or is payable to the trustee in the bankruptcy, as the case may be. (2)A person is not entitled under this section to claim the benefit of a set-off if, at the time of giving credit to the person who has become a bankrupt or at the time of receiving credit from that person, he or she had notice of an available act of bankruptcy committed by that person." The section appears in Pt VI of the Act ("Administration of Property"). It is within Div 1 of that Part ("Proof of Debts"). Its purpose is to provide for the accumulation of the net debts and liabilities of the bankrupt, incurred before the date of his or her bankruptcy. Before the respondents in the Full Court the applicant (through Mr Gargan who was permitted to represent him but who has not appeared today) made it clear that the taking of the account was sought for the purpose of establishing that a judgment of the Supreme Court of South Australia, made after a contested hearing in that Court between the Bank and the applicant, was wrong.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

KIRBY J
No appeal has been instituted from that judgment of the Supreme Court. It remains valid and in force. By s 118 of the Constitution, full faith and credit must be given to that judgment as the "judicial proceedings of [a] State". At the hearing in the Supreme Court between the Bank and the applicant, the applicant was represented by counsel. Mansfield J found that the applicant had enjoyed a proper opportunity in that Court to litigate the issues. He did not appeal from the judgment. He is now well out of time to do so.The decision of the Full Federal Court The difficulties facing the applicant's proceedings before the respondents in the Full Court were recognised by the respondents in their reasons for judgment. First, s 86 of the Act has application only where a person has become bankrupt. The section therefore assumes the validity of the sequestration order against the bankrupt's estate. In the proceedings before the Full Court, Mr Gargan, for the applicant, made it clear that the applicant did not contest the order for sequestration of his estate. The respondents in the Full Court had to deal with the appeal before them on that basis. Secondly, s 86 governs the administration of a bankrupt's estate. The Full Court was not concerned, as such, with the administration of the applicant's estate but with the purported appeal by him from the judgment of Mansfield J. Without setting aside that judgment for error, it would not have been competent for the respondents, exercising the appellate jurisdiction of the Federal Court in an appeal from a judgment of Mansfield J, to order the taking of an account under s 86 of the Act. Thirdly, in any case, the appeal from the judgment of Mansfield J appears, on its face, bound to fail. His Honour had exercised a discretion under s 30(3) of the Act to decline an order for jury trial. The applicant contested that decision. However, no error was demonstrated in that exercise of discretion. His Honour had also declined to go behind the judgment of the Supreme Court of South Australia, upon the basis of which the bankruptcy notice had been served on the applicant in the first place. His Honour was bound to take that position. The applicant had, therefore, committed an act of bankruptcy on 19 April 2000 when he failed to comply with the bankruptcy notice, either in time or at all. In the circumstances, the decisions of the primary judge and the Full Court disclose no error. Accordingly, the challenge to them was misconceived. Fourthly, the respondents in their reasons in the Full Court pointed out that, before another judge of the Federal Court (O'Loughlin J), the applicant had sought, without success, to establish that he had a counterclaim, set‑off or cross‑demand against the Bank. O'Loughlin J found that the applicant had failed to allege or establish that he had repaid the moneys advanced to him by the Bank. No application for leave to appeal from the order that followed that decision was before the Full Court. The respondents were only concerned with the purported appeal from the judgment of Mansfield J.Reasons for refusing to issue mandamus

Ratio Decidendi

Legal Principle Established

Established by: KIRBY J

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