Re Horvarth

[1998] FCA 1431

FEDERAL COURT OF AUSTRALIA

PRACTICE AND PROCEDURE –notice of motion for leave to file application –application pursuant to s 99(1) of the Bankruptcy Act (1966)(Cth) that a proof of debt lodged by the judgment creditor had been wrongly admitted – whether matters raised in the application had previously been raised before the Court.

Bankruptcy Act: s 52, s 99

Federal Court Rules:  O 46 r7A

Walton v Gardiner (1993) 177 CLR 378

RE:  HORVATH & ANOR; EX PARTE COMMONWEALTH BANK OF AUSTRALIA

VG 604 of 1998

GOLDBERG J
MELBOURNE
10 NOVEMBER 1998

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 604 of 1998

BETWEEN:	GABOR HORVATH (SENIOR) and AGOTA HORVATH Applicant Debtors
EX PARTE:	COMMONWEALTH BANK OF AUSTRALIA (ACN 123 123 124) Respondent Judgment Creditor
JUDGE:	GOLDBERG J
DATE OF ORDER:	10 NOVEMBER 1998
WHERE MADE:	MELBOURNE

THE COURT ORDERS THAT:

1. Leave is refused to file the application, the subject of the applicants’ motion filed on 6 November 1998 and the Registrar is directed to refuse to accept such application.

1. The applicants’ motion filed on 6 November 1998 is dismissed.

1. The applicants pay the respondent’s costs of the motion.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY	VG 604 of 1998

BETWEEN:	GABOR HORVATH (SENIOR) and AGOTA HORVATH Applicant Debtors
EX PARTE:	COMMONWEALTH BANK OF AUSTRALIA (ACN 123 123 124) Respondent Judgment Creditor

JUDGE:	GOLDBERG J
DATE:	10 NOVEMBER 1998
PLACE:	MELBOURNE

REASONS FOR JUDGMENT

On 6 November 1998 the applicants filed a notice of motion naming the Commonwealth Bank of Australia (“the Bank”) as respondent although it was also directed to the applicants’ trustee in bankruptcy, Paul A Pattison. In the notice of motion the applicants sought the leave of the Court to file an application in the Court seeking an order pursuant to s 99 of the Bankruptcy Act 1966 (Cth) (“the Act”) that a proof of debt lodged by the Bank has been wrongly admitted. The notice of motion was supported by an affidavit of the first applicant which set out some of the history of the matter leading to a sequestration order being made against the applicants on 12 February 1997. The proposed application only nominated the Bank as respondent but having regard to the decision I have reached, it is not necessary to consider whether the proposed application was constituted properly without nominating the trustee as a respondent.

On 24 February 1995 the Bank obtained a default judgment in the Supreme Court of Victoria against the applicants that the Bank recover possession of certain premises at 9 Superior Drive, Dandenong South and judgment for the sum of $295,200.87.  That judgment debt formed the basis of subsequent sequestration orders against the applicants.  Judgment was also obtained against the applicants’ son who was a minor at the time of the transaction giving rise to the debt the subject of the judgment.

At the time the notice of motion was filed on 6 November 1998 the applicants did not require leave to file an application seeking orders under s 99 of the Act. It would appear, having regard to earlier proceedings in the Court, that the applicants anticipated that such leave was necessary. Apparently the applicants took that view because on two earlier occasions they had filed a similar application addressed to their trustee Mr Pattison which had been the subject of directions by Marshall J and Weinberg J that the applications not be accepted for filing without the leave of the Court pursuant to O 46 r7A of the Federal Court Rules.  Such leave in respect of both applications was sought before Weinberg J and refused by him on 30 October 1998.

When the notice of motion was filed on 6 November 1998 by the applicants the Registrar of the Court sought my direction as duty judge in relation to the notice of motion and I directed on 6 November 1998 that the Registrar refuse to accept or issue the motion without the leave of a judge first had obtained:  O 46 r7A(c).  It is that application for leave which is presently before the Court.  The first applicant, Mr Horvath, appeared in person.

The genesis of the applicants’ complaint is that they are not indebted to the Bank in the sum of money which was the subject of the Supreme Court judgment on 24 February 1995.  They say that the Bank has never proved their debt to it and that they were not the owners of the property which was the subject of that judgment.

The history of this matter is usefully set out in the unreported judgment of Weinberg J given on 30 October 1998. I have had the benefit of reading his Honour’s reasons. The matters to which I now refer are taken substantially from his Honour’s reasons. As in this proceeding the applicants in the proceeding before Weinberg J were seeking to challenge the decision of their trustee in bankruptcy to admit the proof of debt claimed by the Bank. The challenge in the proceedings before Weinberg J and before me is sought to be brought pursuant to s 99(1) of the Act.

From the time of the judgment obtained by the Bank in the Supreme Court of Victoria for the recovery of possession of the mortgaged property and the payment of money due under the mortgage the applicants have challenged the contention that there was a debt owing by them to the Bank.  Their claim is, in substance, that the Bank through its officers defrauded them, that forged documents were used, that they never purchased the property the subject of the mortgage and in respect of the loan by the Bank, that they do not owe the Bank the money which forms the basis of the judgment debt upon which the sequestration orders were made.  The Supreme Court judgment related to possession of, and a debt due in respect of, Lot 5 on Plan of Subdivision 20963N.  The applicants say that they purchased Lot 4 not Lot 5.

The applicants sought to set aside the default judgment in the Supreme Court of Victoria which had been obtained against them and their son.  On 6 April 1995 Master Wheeler set aside the judgment against their son but affirmed it as against the applicants.  The Bank appealed against Master Wheeler’s order in relation to the applicants’ son but that appeal was unsuccessful.  A bankruptcy notice was issued against the applicants based upon the Supreme Court judgment.  The Bank presented a petition for bankruptcy against the applicants and on 12 February 1997 Merkel J made sequestration orders against the estates of the applicants.  Merkel J refused to go behind the Supreme Court judgment and declined to exercise his discretion to refuse to make the sequestration orders.  The applicants appealed to the Full Court of this Court against that decision and on 4 June 1997 the Full Court (Ryan, Hill and Heerey JJ) dismissed the appeal.  The Full Court declined to go behind the Supreme Court judgment that formed the basis of the sequestration orders.  The applicants have sought to reactivate the Supreme Court proceedings but have been unsuccessful. 

On 23 June 1998 the applicants applied to the Federal Court by notice of motion seeking to have their bankruptcy annulled and that application was dismissed by Heerey J on 6 August 1998.  On 11 September 1998 the applicants applied to the Court for orders requiring the trustee to call a meeting of creditors and to require the Bank to verify its proof of debt.  Marshall J dismissed that application on 12 October 1998.

Weinberg J noted in his reasons that the matters which the applicants sought to agitate before him were matters which he had previously raised in one form or another before Northrop J, Merkel J, the Full Court of the Federal Court, Marshall J and in a different context, Finkelstein J and Heerey J.  Put shortly the applicants are seeking to go behind the Supreme Court judgment.  Weinberg J concluded that the fact that the question which the applicants sought to agitate before him had previously been determined adversely to them on a number of occasions was a powerful consideration against the grant of leave which was sought.  His Honour concluded that the applicants’ claim was either clearly foredoomed to fail or, taken at its highest, did not raise a serious question to be tried.

As in the proceeding before Weinberg J the material before the Court in support of the application for leave is very general and does not condescend to any detail.  In short, as Weinberg J found in the proceeding before him, it calls upon the Bank to substantiate its claim.  I can find nothing in the material which would justify interfering with the trustee’s decision to admit the Bank’s proof of debt.  There is rather an assertion, which the applicants have been making for a considerable period of time in numerous proceedings in this Court and the Supreme Court of Victoria, that they have been the victims of fraudulent conduct.

I have also had the opportunity of reading the transcript of the proceeding before Weinberg J on 30 October 1998.  His Honour put to Mr Horvath that the application had, in substance, been dealt with many times by a Court and that he had the burden to show that the case was not hopeless and that he had some prima facie or serious question to be tried.  When his Honour put to Mr Horvath that numerous judges had considered the very matters which he was raising before his Honour Mr Horvath’s reply was:

“Your Honour, this is it.  I will have to come back for the next hundred years to say it, because the case is only the case what I’m putting in.  I cannot put it in any other.  I can’t understand it – the law has to go behind the judgment.  That means the Bank can go in with a fraud and bankrupt me …”

When his Honour pointed out to Mr Horvath that the Court had already refused to go behind the judgment of the debt in earlier proceedings and asked, in substance, whether there was something new he wanted to raise Mr Horvath replied:

“I cannot any new [sic].  All I can raise is that’s it, that’s what they did, and if I file it in hundred times it’s going to be …”

When his Honour put to Mr Horvath that it was not the first time he had come to Court and told a judge that he believed that the Bank was involved in a fraud or a forgery Mr Horvath’s response was “yes, but every time it was dismissed”. 

When his Honour asked Mr Horvath whether there was anything further he wanted to say Mr Horvath said:

“I still say it again, to give you this – again, last time, because next week I try to come back again I will file relief”.

He then continued:

“Your honour, the Court gives me no other way.  I have to come back.  I have to prove I’m right or they have to come in with the proof of debt and prove that I am wrong”.

Mr Horvath made similar statements to me. When I asked whether the matter before me was the same matter as had been before Weinberg J, Mr Horvath said words to the effect – it can only be the same issue; the issue will not change; whether I owe the Bank money is always the issue. He reiterated that as, required by s 52 of the Act, the Bank had never proved its debt. But a sequestration orders were made against the estates of the applicants on the Bank’s petition and the Full Court dismissed an appeal from those orders.

In my opinion, the application for leave to file the application should be refused.  It is an abuse of the process of the Court.  It raises, and is based upon, issues which have already been determined by the Court adversely to the applicants.  It is, in short, a reiteration or re‑run of earlier proceedings which have been held to be without merit.  I do not consider that there is a serious question to be tried; the application is “clearly seen to be foredoomed to fail”:  Walton v Gardiner (1993) 177 CLR 378, 393 per Mason CJ, Deane and Dawson JJ.

The motion for leave to file the application will be dismissed with costs.

I certify that this and the preceding four (4) pages are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg

Associate:

Dated:             10 November 1998

Counsel for the Applicants:	In person
Counsel for the Respondent:	Mr J Tsalanidis
Solicitor for the Respondent:	Ian F Purbrick
Date of Hearing:	10 November 1998
Date of Judgment:	10 November 1998