Re Hunter, Lindsay v Ex Parte Webb, Luci Mary
[1996] FCA 701
•19 Jul 1996
CATCHWORDS
BANKRUPTCY - application to review sequestration order made by Registrar - whether bankruptcy petition should have been dismissed "for other sufficient cause" - consideration of complex of conflicting evidence.
Bankruptcy Act 1966, ss.31A(6), 52(2)(b).
LINDSAY HUNTER v LUCI MARY WEBB
No. P515 of 1995, No. WB994 of 1995
CORAM: SHEPPARD J
PLACE: PERTH
DATE: 19 JULY 1996
IN THE FEDERAL COURT OF AUSTRALIA )
) No. P515 of 1995
WESTERN AUSTRALIAN DISTRICT REGISTRY ) No. WB994 of 1995
)
BANKRUPTCY DIVISION )
RE: LINDSAY HUNTER
Debtor
EX PARTE: LUCI MARY WEBB
Petitioning Creditor
MINUTES OF ORDER
CORAM: SHEPPARD J
PLACE: PERTH
DATE: 19 JULY 1996
THE COURT ORDERS THAT:
The notice of motion filed by the applicant on 8 September 1995 as amended by the notice of motion filed on 6 October 1995 be dismissed.
The petitioning creditor's costs of the notice of motion be paid out of the assets of the bankrupt, the debtor, Lindsay Hunter.
The application made by Lindsay Hunter for a stay of proceedings be refused.
Direct that Lindsay Hunter not be permitted to file in this Court any application or other document including any subpoena or summons to witness whether in this or any other matter without the leave of a judge of this Court.
NOTE: Settlement and entry of orders is dealt with in
Rule 124 of the Bankruptcy Rules.
IN THE FEDERAL COURT OF AUSTRALIA ) No. P515 of 1995
WESTERN AUSTRALIAN ) No. WB994 of 1995
DISTRICT REGISTRY )
BANKRUPTCY DIVISION )
RE:LINDSAY HUNTER
Debtor
EX PARTE: LUCI MARY WEBB
Petitioning Creditor
CORAM: SHEPPARD J
PLACE: PERTH
DATE: 19 JULY 1996
REASONS FOR JUDGMENT
HIS HONOUR: The critical application to be dealt with is an amended notice of motion which was filed on 6 October 1995 on behalf of Mr Hunter in which there is sought an order that the sequestration order made by Registrar Jan on 21 August against Mr Hunter be set aside and declared a nullity or, alternatively, that there be a permanent stay of that sequestration order. Other relief is sought, but I do not find it necessary to refer to it. The primary relief sought is that which I have indicated.
The amended notice of motion replaced an earlier notice of motion which was filed on 6 September 1995. It had sought similar relief. Both the notice of motion and the amended notice of motion were filed in matter no. P515 of 1995 but the proceedings to which they gave rise were subsequently given the number no. WB994 of 1995. That is why I have included both numbers in the heading to this judgment and in the Court's formal orders.
On 17 May last directions were given by French J so that this matter might be got ready for hearing. On that day his Honour set down the application for hearing on 15 and 16 July. He directed that any further affidavits in support of the application be filed and served by 17 June, that any affidavit in reply be filed and served by 28 June and that outlines of submissions be filed and served by 12 July. It is clear, in my view, that his Honour, by making those directions, was making a comprehensive set of directions to ensure that the matter would be ready for hearing on 15 July on the basis of what the parties did pursuant to those directions. They related to no matters other than the filing of further affidavits and outlines of submissions. Furthermore, it is clear that his Honour had in mind that the usual practice of this Court would be followed, namely that the trial would be on affidavit evidence and not upon completely oral evidence.
The sequestration order, which is referred to in the amended notice of motion, was made, as I have indicated, on 21 August 1995. It was made by Registrar Jan in the absence of the applicant, Mr Hunter, in circumstances to which I shall refer later on. The fact that it was made in his absence,
however, is one of the matters upon which he relies in support of his application.
The act of bankruptcy upon which the bankruptcy petition was based was failure to comply with a bankruptcy notice. The bankruptcy notice was based on an order of the Supreme Court of Western Australia made in proceedings no. CIV 1654 of 1993 brought by the applicant against Mrs Webb. In those proceedings the applicant had sought injunctive relief, interlocutory I think, and had indeed obtained an ex parte injunction which had been granted by the Chief Justice.
The matter came on for hearing before Anderson J who, apparently on the ground that full disclosure had not been made to the Chief Justice, ordered that the application be dismissed. His Honour's order was made on 16 July 1993. He ordered that the costs of it were to be paid by the applicant, Mr Hunter. These were subsequently taxed in the sum of approximately $2400.
The proceedings in which the order for costs was recovered were not the only proceedings between Mr Hunter and Mrs Webb in the Supreme Court of Western Australia. The other proceedings, no. CIV 1731 of 1993, were an action by the petitioning creditor, Mrs Webb, for specific performance of a contract for the purchase of property 114 Empire Avenue, Wembley Downs. These proceedings originally came before Master Bredmeyer of the Supreme Court on an application for summary judgment. Mrs Webb was successful before the Master who, on 20 September 1993, made an order for specific performance. The contract, specific performance of which was ordered, was said to be a contract between the parties dated 17 July 1992. There was an appeal to the Full Court that was dismissed on 5 August 1994. The principal judgment was delivered by Nicholson J. His judgment was agreed in by the Chief Justice and Rowland J. There was an application for leave to appeal to the High Court from this judgment. It was dismissed on 30 May 1995, the High Court saying, amongst other things, that an appeal would not enjoy sufficient prospects of success to justify a grant of leave.
The essential matters raised by Mr Hunter in support of his application to set aside the sequestration order arise out of transactions referred to and discussed in the judgments delivered in the Supreme Court of Western Australia. But Mr Hunter says that essential facts which were relevant to the outcome of those proceedings, and indeed to a counter-claim which he wishes to bring in the Supreme Court, were not before the Court with the consequence that the Court proceeded on an erroneous assumption as to the facts. This he claims was due to fraudulent conduct on the part of Mrs Webb and others. He has said that the fraud was, to use his language, "a concealed fraud."
The application for review of the Registrar's order is made pursuant to subsec. 31A(6) of the Bankruptcy Act 1966 ("the Act"). The application is a re-hearing. I refer to the judgment of Northrop J in Re Kwiatek; Ex parte Big J Limited v Pattison, (1989) 89 ALR 631 where his Honour held that under s.31A of the Act, a Registrar of the Court is exercising powers conferred by the Act initially on the Court itself. In consequence an application under subsec. 31A(6) to review the exercise of a power by a Registrar of the Court is by way of re-hearing based upon the evidence before the Registrar supplemented by any evidence the parties desire to produce.
It needs to be said at the outset that this is, at least not primarily, a case more commonly found in this Court of a debtor endeavouring to go behind the judgment on which the act of bankruptcy is founded. It involves wider considerations and raises questions concerning the ambit of the Court's discretion under subsec. 52(2) of the Act. That subsection provides that, if the Court is not satisfied with the proof of matters which are provided for in subsec. 52(1) or is satisfied by the debtor that he is able to pay his debts, or -and this is the important part - that "for other sufficient cause" a sequestration order ought not be made, it may dismiss the petition. The question is whether Mr Hunter has shown "other sufficient cause" within the meaning of the expression used in para. 52(2)(b) of the Act so as to warrant the conclusion, notwithstanding the decision of the Registrar, that the sequestration order either ought not to have been made at all, or ought at least now be set aside or stayed.
The provisions of subsec. 52(2) of the Act were discussed by a Full Court of this Court in Bourke v Beneficial Finance Corporation Limited (1993) 47 FCR 264. Under a heading, "Setting Aside a Judgment on the Ground of Fraud", the Court said (at 271):
"Some guidance upon the approach to be taken in determining whether a court sitting in bankruptcy should go behind a judgment is to be found in the principles relating to the circumstances in which a court in which a judgment has been obtained will set it aside. A reference to those principles is helpful in the present case because a classic example of the circumstances in which a court will go behind a judgment is where the judgment has been obtained by fraud. The fraud must be proved by fresh evidence which was not available and could not have been discovered with reasonable diligence before the judgment was delivered."
The Court went on to discuss those principles and referred to a number of authorities, particularly the then recent decision of the Full Court of this Court in Monroe Schneider Associates (Inc) v No 1 Raberem Pty Limited (No 2) (1992) 37 FCR 234. Other authorities were referred to. The Court eventually said (at 272) that fresh evidence which was relied upon to establish fraud need not be admissible evidence in the action in which the judgment was sought to be impugned, and also that, although fraud might be constituted by the giving of perjured evidence doubts had been expressed whether perjury was a sufficient ground to set aside a judgment on the ground of fraud.
There was further discussion of that matter and the Court continued (at 272):
"In the present case it must be remembered that the appeal which we are considering is against the making of sequestration orders in respect of the estates of the two appellants; the appeal is not an appeal against a decision to refuse to set aside a judgment on the ground of fraud or perjured evidence. Whatever the outcome of the appeal may be, the judgment recovered by Beneficial in the Supreme Court and the judgment of Hill J on the trade practices issues will remain. If we think that 'for other sufficient cause' (s 52(2)(b) of the Bankruptcy Act) the sequestration orders ought not to have been made, they will be set aside. But the only effect that order will have will be in relation to the sequestration orders; it will not touch any of the judgments."
I pause here to emphasise that point in this case. I have from time to time felt, despite his disavowal of the proposition, that Mr Hunter has thought that this Court has power to interfere with the judgments given in the Supreme Court of Western Australia. It has no such power. It could, if it were appropriate to do so, go behind the judgment to see whether underlying the judgment there was indeed a debt, the reason for that being that it has to be satisfied under subsec. 52(1) of the Act, amongst other things, of the fact that the debt or debts on which the petitioning creditor relies is still owing.
The Full Court in Bourke went on to say (at 272-3):
"We appreciate that this fine distinction may be difficult for lay people such as the appellants, who appeared in person, to comprehend. It is a
distinction which arises, not because of any refined judicial analysis, but by reason of the provisions of an Act of Parliament, s 52 of the Bankruptcy Act. The explanation for it lies in the seriousness of the change of status which bankruptcy brings with it and a perception by parliaments (the Australian legislation is not unique) and judges that a case has to be very clear before a debtor will be made bankrupt. These matters were explained to the appellants, particularly in directions hearings which took place before the appeals were heard, but it would not be surprising if they had experienced difficulty in understanding their full purport.
The fact that we are not directly concerned with an application to set aside the Supreme Court judgments or that of Hill J has significance in two respects. First, the principles to which we have referred, which govern the question whether a judgment should be set aside on the ground of fraud, are not of direct relevance. It is not the task of a court sitting in bankruptcy in the exercise of its jurisdiction and power under s 52(2) of the Bankruptcy Act to set aside a judgment procured by fraud. But in the exercise of that jurisdiction, it seems appropriate, as we have said, that the Court should be guided by similar principles. We do not say that that will invariably be so; when the Court is sitting in bankruptcy, the circumstances of a given case may demand a more flexible approach. Subject to that consideration, we think that in a case such as this we should apply them, if not directly, then by analogy."
The Court said (at 273) that there was a question whether a court sitting in bankruptcy could look behind a judgment, other than the one upon which the bankruptcy notice and the bankruptcy petition were based, and conclude that there was no indebtedness under the judgment which founded the bankruptcy notice. The Court went on to say (at 273):
"The proceedings which were dealt with by Hill J could have been the subject of cross-claims in the Supreme Court proceedings. Had they succeeded, they would have resulted in a set-off against Beneficial's claim in those proceedings: AWA Ltd v Exicom Australia Pty Ltd (1990) 19 NSWLR 705. Had
that course been taken at the outset, execution of the judgments, or even the proceedings in which the judgments were obtained, may well have been stayed pending the outcome of the set-off proceedings. Although that is not how the appellants chose to conduct their litigation, we are of the opinion that, as in the present case, where the Federal Court proceedings are so closely linked with the judgments upon which the bankruptcy notices are based, the Court may look behind the Federal Court judgment to determine whether that judgment was obtained by fraud such that it would be likely to be set aside. There is no reason of substance why this should not be a permissible course especially bearing in mind the width of the language used in s 52(2)(b) of the Bankruptcy Act."
The Court eventually concluded (at 273) that it was necessary to consider whether there was sufficient evidence to show that, if a challenge was made to the judgment of Hill J on certain issues, it was likely that the judgment would be set aside on the ground of fraud constituted by perjured evidence. Similar considerations apply in the present matter.
Thus, in the present case, the Court needs to look at the circumstances which were before the judges in the Supreme Court of Western Australia in relation to the transactions into which these parties entered to see whether, in all the circumstances, one should reach the conclusion that for other sufficient cause the sequestration order should not have been made.
It is next necessary to endeavour to explain, as best I can, the nature of the transaction or transactions which concern the Court here and which to a large degree concerned the Western Australian Supreme Court. As I have mentioned, the transactions concerned dealings with land at 114 Empire Avenue, Wembley Downs.
The first of the documents to which I refer is a document which is entitled, "Contract for Sale of Land by Offer and Acceptance". It is a contract by which Mr Hunter alone agreed to purchase the property from two people named Gardiner - Mr and Mrs Gardiner - of Unley Park in South Australia. The contract was partly typed and partly in handwriting. It provided for a purchase price of $161,000, and a deposit of $5000. It contained some printed conditions and some typed conditions which were amended in handwriting here and there. I do not refer to the detail of these except to say that the seventh condition was not typed but handwritten. It provided for a letter of authority from the vendors to apply for planning and building approval immediately on the acceptance of the offer. The approval was said to be for a duplex development. At that stage, as I understand the evidence, it was not thought appropriate to subdivide the land into two allotments. The date of the contract was May 1992, Mr Hunter having signed it on the 20th and the Gardiners on the 21st.
The second document to which I refer is a document which is in similar terms to the one to which I have just referred subject to the fact that it has been varied or altered. The original document began:
"WE ("THE PURCHASER") (FULL NAME AND ADDRESS) LINDSAY HUNTER OF 13 LANGDALE STREET, WEMBLEY DOWNS"
and concluded with those words. In the second document there have been added to them at some later time the words, "and nominee." The conditions have also been added to. There has been added after the handwritten condition to which I have referred, condition 7, a new condition, condition 8, which said, "The nominee is LUCI MARY WEBB", that being a reference to Mrs Webb. The date of the document remained May 1992, that is to say 20 and 21 May, respectively. There was no alteration to the date but the evidence establishes that Mrs Webb did not come into the matter until July of 1992, at least in any serious way. The way in which Mrs Webb came into the matter is explained by her in evidence which she has given. There is an issue between the parties about the correctness of that evidence. I shall refer to it later on.
Before I come to that, I need to refer to another contract for sale of land by offer and acceptance. This time the purchaser is Mrs Webb and the vendor is Mr Hunter. The description of the property sold is not the whole of 114 Empire Avenue but, in the words of the contract, the rear portion of it. The contract was apparently signed by Mrs Webb on 16 July 1992 and by Mr Hunter on 17 July 1992. It is, I think, correct to say, common ground in the case that at that stage Mr Hunter could not have sold Mrs Webb the rear portion of the land because it had not been subdivided. In evidence is an undated application signed by Mr Hunter and Mrs Webb for the registration of a strata plan. The application related to
the land in question. The idea was that there should be a subdivision of the rear portion of the land from the front portion.
A further document in evidence is a memorandum of transfer of land, the transferors being Mr Hunter and Mrs Webb and the transferee being Mrs Webb. The consideration is said to be $65,000. The transfer bears the signatures, apparently, of Mrs Webb and Mr Hunter as transferors and of Mrs Webb as transferee.
I should mention at this point that one of the problems in this case seems to me to have been the large number of facsimile or photocopy documents in the case. The application and transfer to which I have just referred and two other transfers later to be mentioned are the only original documents relating to the contractual dealings between these parties and the transfer of the title to the property which I have. All other documents are somewhat indistinct, photocopy or facsimile copies, which are in places extremely difficult to read. There is no satisfactory explanation in the evidence that I can find for the fact that the Court should have not been advantaged by the originals of the relevant documents. I find their absence from the proceedings a puzzling feature but in the view I take of the matter, I do not think that that tells in favour of one party or the other.
A copy of the certificate of title is in evidence. It has the usual endorsements of dealings on it and shows that Mr and Mrs Gardiner became the registered proprietors of the property as joint tenants by a transfer which was registered on 4 October 1990. The next entry is of a transfer numbered E947420 to Mr Hunter and Mrs Webb as tenants in common in equal shares. This was registered on 28 July 1992. There is a further entry which shows that on 27 October 1993 the entirety of the property was transferred to Mrs Webb.
Another document to which I should refer, which I must say is more distinct than most of the other copies is a copy of a memorandum of transfer of land from Mr and Mrs Gardiner whereby, in consideration of a payment of $161,000, the Gardiners transferred the land to Mr Hunter and Mrs Webb as tenants in common in equal shares. The transfer purports to bear the signatures of Mr Hunter and Mrs Webb and both those signatures appear to have been witnessed by Mrs Leahy who carries on business as a settlement agent. That is the transfer which was registered by the Registrar General and numbered E947420. The transfer has a note concerning stamp duty upon it. It refers to an instrument dated 21 May 1992 and shows that an amount of $3,720 was paid by way of stamp duty. If one goes back to the document to which I referred earlier in which Mrs Webb is described as a nominee, one can see that stamp duty was noted as having been paid on that document in the sum of $3720.
So both the stamp office and the land titles office accepted the transfer to which I have referred as a transfer pursuant to the contract to which I have referred which was dated 20 and 21 May 1992 and which contained the reference to Mrs Webb as nominee. At that stage, for the purpose of the registration of the two as tenants in common, the subsequent contract entered into between Mrs Webb and Mr Hunter was not relevant; nor could it have been because it provided for the acquisition by Mrs Webb of the rear portion of the land and that was not something which could be done at that stage.
Appended to the contract signed by Mrs Webb and Mr Hunter in July 1992 is a document entitled, "Appendix to Offer". It is dated 16 July 1992. There is an issue whether the document appended to the "offer" was appended to it at the time the offer was signed.
The appendix was described as an agreement made between Mr Hunter and Mrs Webb and recited that both Mr Hunter and Mrs Webb jointly agreed to purchase the property at 114 Empire Avenue, Wembley Downs, as tenants in common with one equal share each and to subdivide the said property into front and rear duplex halves and then upon title issue to transfer the front duplex half to Lindsay Hunter and transfer the rear duplex half to Luci Webb "according to" a number of terms and conditions. Conditions 4, 5, 6 and 7 are as follows:
"4.All rental income from the property at 114 Empire Ave, Wembley Downs is to be paid to the
Mortgagee each month and any shortfall is to be paid by Lindsay Hunter who undertakes to be responsible and liable for the monthly mortgage payments until discharge of such.
Lindsay Hunter undertakes to do everything necessary to complete the subdivision of 114 Empire Avenue, Wembley Downs, through to title issue within 4 months from settlement with any delays by the Stirling Shire excluded from this period and is responsible and liable for all and any costs in this respect.
In the event of default by Lindsay Hunter in regard to clause 4 or clause 5 of this agreement then the ownership of the property at 114 Empire Avenue, Wembley Downs, shall revert solely to Luci Webb according to clause 7 of this agreement.
Lindsay Hunter hereby agrees to provide a signed transfer of his one share of 114 Empire Avenue, Wembley Downs, to Luci Mary Webb to be held in trust by Frank Di Nardo for both parties, such that in default as in clause 4 and clause 5 Frank Di Nardo shall upon notice of default in writing from Luci Webb after a 14 day grace period register the transfer of the property solely to her name."
In evidence are two transfers of land, one from Mr Hunter and Mrs Webb to Mr Hunter and the other from Mr Hunter and Mrs Webb to Mrs Webb. The transfers are each in respect of the whole of the land comprised in the certificate of title relating to 114 Empire Avenue, Wembley Downs. The transfers are original documents. Neither has been registered. The transfer from Mr Hunter and Mrs Webb to Mrs Webb is a transfer which would conform to condition 7 of the conditions contained in the agreement which is said to be an appendix to the July contract. Consideration for each of the transfers to which I have referred is a nominal consideration of $1. The contract appended to the July 1992 contract, described as the agreement of 16 July 1992, was the document upon which Mrs Webb instituted the proceedings for specific performance in the Supreme Court and it was of that agreement that she was granted specific performance. As I understand it, the title passed to Mrs Webb as a consequence of the enforcement of that order, no doubt the transfer being executed by one of the court officers instead of Mr Hunter. That accounts for the fact that the transfer from Mr Hunter and Mrs Webb to Mr Webb was not registered.
That, I think, is the documentary background to this matter. The contest arises because Mr Hunter says that he was at no relevant time aware of the agreement which was purported to be made between him and his nominee, Mrs Webb, as purchaser and the Gardiners as vendors. He has referred me to the different typewriting used in adding "and nominee" and in adding condition 8, and to the fact that his initials, so far as one can tell from the document although it is very difficult to tell from the document I have, do not appear where one might have expected that they would, either beside the words "and nominee" or against the new condition 8, which identified the nominee as Mrs Webb.
Mr Hunter believed, so he said, that at all material times the contract, which was being completed, was the original one in which he alone was the purchaser. Mr Hunter further says that, in relation to the memorandum of transfer dated 27 July 1992, when he signed the document - and his signature does appear first on it - there was no other signature on it and no provision for any other party to it. He says that the reference to Mrs Webb has been added without his authority. He points to the fact that in the body of the transfer it refers to Lindsay Hunter of 13 Langdale Street, Wembley Downs and there is no full stop and that is on one line. On the next line are the words:
"and LUCI MARY WEBB of 12 BATHURST STREET, DIANELLA. AS TENANTS IN COMMON IN EQUAL SHARES."
He says that the reference to Mrs Webb in the body of the transfer and also the reference to her as a party executing the transfer were added without his knowledge or authority and constitute fraudulent conduct on the part perhaps of Mrs Webb or perhaps of the settlement agent, Mrs Leahy, and Mr Hunter's own estate agent, Mr Di Nardo. Finally, as I understand his case, he says, in relation to the agreement which is physically appended to the July 1992 contract, that he did not approve of all the conditions or conditions in the form in which they appear to be and that he is not bound by these either. So that, in his submission, the basis for the order for specific performance made in the Supreme Court has gone.
In this regard he has produced a number of documents, the first being a letter dated 22 July 1992 from Mrs Leahy to Mr Gardiner who was then in Illinois, as I understand it. The letter is in fact addressed to Arthur Anderson and Co in Illinois, in St Charles. It refers to the contract, to some question about penalty interest and does not refer to Mrs Webb. There is another copy of the contract attached. He says that those documents came only to his attention after the Supreme Court proceedings and if they had been before the Supreme Court it is likely that the result of those proceedings would have been different. In any event he says that those documents tend to establish fraud on the part of Mrs Webb and others.
I have to say at this point that I have looked at the documents as carefully as I can and I have given the matter consideration. I bear in mind what Mr Hunter has said about them, but I have not understood how they could have made any difference to the proceedings in the Supreme Court or to his counter-claim, or how they could be relied upon by him, at least successfully, as the basis of his very strong submission that this matter is tainted with what he has described as concealed fraud. I did not always find Mr Hunter's evidence or submissions easy to understand and it may be that the problem was that he was unable to explain himself to me sufficiently, but as I look at the documents and bear in mind the whole of the circumstances of the case, I really find it very difficult to understand how they could have made any difference to the outcome, or would make any difference to the outcome of any counter-claim he may be entitled to bring.
I need to say something now about the way this case was conducted and the evidence which was given in it by some of the witnesses. Mr Hunter, of course, had to begin. He was unrepresented and suffered the difficulties unrepresented parties often have in courts. I think it should be clear that judges are very understanding of their difficulties. They realise that, particularly in a matter that is apparently as complex as this, a litigant in person is disadvantaged. The court to a degree endeavours to make up for this, but it cannot redress the balance completely because, if it does so, it will appear to be acting favourably to the litigant in person and adversely to the litigant who is represented. It thus creates an appearance of unfairness and disadvantage for the person who is represented which is to be avoided. So the path the court has to tread is not an easy one, and it is not unlikely that misapprehensions and misinterpretations of what the court does or does not do from time to time during the course of a case will occur. That is something that judges have to put up with, particularly bearing in mind the increasing numbers of cases which we are now finding coming before the court in which there are unrepresented parties.
I next come to the affidavits which were relied upon by the parties. In this regard I should explain that affidavits relied upon by them came not only from those filed in these proceedings but in other proceedings, particularly the Supreme Court proceedings to which I have earlier referred. I decided to take a fairly flexible approach to this problem. Otherwise it would have been necessary for the parties to file fresh affidavits in these proceedings or to refer specifically to each of the affidavits to be relied upon and to verify them in these proceedings in evidence in the witness box. I thought a more practical approach was warranted and gave the parties leave to read, in these proceedings, affidavits which were relevant to the proceedings no matter that they had been filed in other proceedings.
Mr Hunter relied on a large number of affidavits which he had himself sworn. Mrs Webb had also sworn a large number of affidavits many of which had been filed in other proceedings. There were affidavits also by a solicitor who appears for her, a Mr Rowick. When the case began Mr Hunter indicated that he proposed to read the affidavits of Mrs Webb and Mr Rowick. I endeavoured to point out to him as best I could that that course had its dangers for him because, if he did that, the witnesses would become his witnesses and his ability to cross-examine them would be circumscribed, perhaps to such an extent that he would not be allowed to cross-examine them at all.
I emphasised this to him more than once and I think perhaps the warning dissuaded him, at least at that stage, from reading Mr Rowick's affidavits. However he persevered and read Mrs Webb's affidavits and of course he read his own. In relation to his own affidavits I have to say that I felt bound to reject most of them, either in their entirety or in substantial part. It would be true to say I think that very little of the original affidavits remains in evidence. The reason for this was that I felt many of the statements in the affidavits were quite irrelevant to any issue in the case, that they were not probative of any event because they were hearsay, or hearsay upon hearsay, or that they referred and purported to give evidence of the contents of written documents.
There were other grounds which I referred to at the time of the rejection and I do not wish to go over that now. But another reason why I rejected large parts of his affidavits was because - I have to say, somewhat regrettably - there were large portions of them which I regarded as containing material which to say the least was scandalous and vexatious. It is clear that Mr Hunter is very distressed by this case and the outcome of the transaction for him. He finds it very difficult to see the matter at all objectively. And he believes, or purports to believe, that a number of people have defrauded him and deprived him of an entitlement that might have yielded a substantial profit. Nevertheless, the Court cannot have on its file material of the kind which he endeavoured to rely upon. There is a question in my mind whether numbers of the affidavits should even have been received by the Registry.
Mr Hunter gave oral evidence at some length. I endeavoured to assist him in that regard, and he was of course cross-examined. He called Mrs Webb to give oral evidence and I allowed him some latitude in that regard because of the circumstances, but of course I could not allow him too much latitude particularly as I had given him the warning to which I have referred. But he did seek to cross-examine her, and perhaps to a degree here and there he succeeded in asking cross-examiner's questions.
The fact that that occurred had one benefit. It gave me the opportunity of observing Mrs Webb in the witness box, at least to a degree. The fact that she could not be cross-examined of course denied me the opportunity of observing her for any substantial period. I only have her rather short appearance in the witness box to go on. But I have to say at once that she made a favourable impression on me, and I am disposed to accept her as a witness of truth.
I am sorry to say that I cannot say the same for Mr Hunter's evidence which I found unreliable. I do not say that Mr Hunter has been deliberately untruthful about his evidence. I think the problem is, as I have said, that he is obsessed by the case, by the circumstances of it, by his belief that numbers of people have injured him deliberately by engaging in fraudulent and similar conduct and he has been driven to a situation where perhaps his recollection is playing him tricks, or where he has come to believe, whatever the original position may have been, in a set of facts which is simply not correct.
I do not want to say any more about it, but what it means is that, where there is a conflict, I accept Mrs Webb's evidence and I reject that of Mr Hunter. I should mention that Mr Di Nardo's affidavit was read by Mr Hunter, but he was not cross-examined. I have read the affidavit. I do not regard it as particularly helpful one way or the other in resolving the proceedings. Additionally, Mr Hunter subpoenaed three witnesses who were subpoenaed very much at the last minute last week - a Mr O'Halloran, a former solicitor, a Mr Webb, who was Mrs Webb's former husband, and Mrs Leahy, the settlement agent.
Each of these were called to give oral evidence. The evidence given by Mr O'Halloran and Mr Webb is not of importance because it did not touch on any of the matters here in question. Unquestionably, however, the evidence of Mrs Leahy had an importance and Mr Hunter saw it as very important. She was in the witness box for some considerable time. There were objections to evidence taken by Mr Bennett of counsel for Mrs Webb. I then began to feel that I had engaged in an exercise that was not proving productive. That was because I had thought that because these witnesses had each been badly inconvenienced by the subpoenas and their need to comply with them, I should allow them to be called first in order to get them away. It became clear that in order to understand Mrs Leahy's evidence I needed to have a better understanding of the overall facts of the matter than I had at that time, and that is what I indicated. For that reason I thought I should bring her examination, because it was a purported examination-in-chief that was being conducted, to an end at that time, but said that if it were appropriate she could be recalled at a later stage.
Mrs Leahy is a settlement agent who is in practice. She had a number of commitments, both on Tuesday, 16 and Wednesday, 17 July. I had indicated to Mr Hunter that I thought it unfair to her to bring her to court with little expectation of receiving any payment for witness's expenses. The scale of witness's expenses that applied showed that she was entitled to at least $60 per day for each day that she was required to attend court. I thought it fair in the circumstances that, if Mr Hunter wished her recalled, he should indemnify her for the amount of expenses to which she was entitled for the Monday and for the further day upon which she would have to be away from her business. The amount involved was $120 and I asked him to provide it, or satisfactory security for it, which he was either unable or unwilling to do. In those circumstances I refused his application to recall Mrs Leahy. That is the reason why she was not recalled.
I appreciate Mr Hunter's concern about the matter and his disappointment at the fact that Mrs Leahy was not recalled, but I had to choose between her inconvenience, which I thought was substantial and the desirability of having her as a witness. It seemed to me that for a comparatively small sum of money she could have been here, but the security was not provided and so she did not come.
I had the opportunity of observing her giving evidence under somewhat stressful circumstances for a period of some length. I bear in mind, of course, that her evidence was not concluded at the time that she left the witness box and so I have to be careful in what I say, but I do say that Mrs Leahy left no unfavourable impression on me. But of course I have qualified what I have said in the way that I have indicated.
Now, that means that when I come to consider the questions that are to be considered in this case, I can - in the light of what I have said - accept with some confidence the evidence which Mrs Webb has given. It is contained largely in two affidavits which she has sworn; one on 15 July 1993 and the other on 9 August 1993.
Mrs Webb said that on or about 27 May 1992, she saw an advertisement in the classified advertising section of the West Australian newspaper. The advertisement concerned the rear block of property, 114 Empire Avenue, Wembley Downs. Mrs Webb said that nothing in the advertisement alerted her to the fact that the rear block had not been subdivided. She inspected the land on 30 May 1992 with her former husband. She said that she was looking for land on which to build a home in which to live. The rear block suited her purposes and she discussed with her former husband the possibility of making an offer to acquire it. Over the next five weeks she visited the block with two different builders. She sought their advice about what problems she might encounter building on the land. She described the way it sloped and said that she was concerned about whether she could build on the rear block at all.
Early in July 1992 Mrs Webb made an offer to Estate Realities, Mr Di Nardo's firm, to purchase the rear block for $75,000. The offer was not accepted. Mrs Webb said that she believed it to be true that at that stage Mr Hunter had instructed Mr Di Nardo of Estate Realities to sell the rear block although he was not the owner of the land. She said that she understood that Mr Hunter had contracted with Mr and Mrs Gardiner to purchase it but could not complete the contract because he had insufficient funds to enable him to do so.
Mrs Webb said she made enquiries about what had to be done in order to have the land subdivided. She referred to the detail of the outcome of these. The upshot was that, on 16 July 1992, she signed the contract for the purchase of the rear block. I have earlier referred to this contract. She said that annexed to the contract was an agreement "in respect of sub-division of the land".
Mrs Webb said that she believed that, on 16 July 1992, she also signed a contract to purchase the land from the Gardiners. At the time she swore her affidavit she could not locate a copy of the agreement which she believed she signed. I take it, however, that this is a reference to the contract which contained the addition of the words "and nominee" and condition 8 identifying Mrs Webb as the nominee.
Mrs Webb said that, on 28 July 1992, Mr Hunter and she were registered as tenants in common of the land. She paid $65,000 towards the purchase price of $161,000. $100,000 was borrowed from a mortgagee, Mrs Foreman. Of that sum, $91,623.70 was paid to the Gardiners and $6,498 was paid to Mr Hunter. There was also a payment of moneys to the settlement agent.
Mrs Webb referred to condition 5 of the agreement which I have earlier set out which provided that Mr Hunter would, within four months of the date of settlement, subdivide the land and thus procure the issue of a title. She said that, by 27 November 1992, it was apparent to her that Mr Hunter would not be able to comply with the condition. There was a meeting on 5 December 1992 between Mr Hunter, Mr Di Nardo, Mr Webb and Mrs Webb to discuss a possible extension of condition 5. A four month extension was granted and the condition was amended to provide that Mr Hunter had until then in which to have the title ready "for dealing". She said that Mr Hunter expressed his appreciation to her because she had not proceeded to enforce the "default clause", this being a reference to condition 6. Mrs Webb said that Mr Hunter did not complete his obligations pursuant to condition 5 by 27 February 1993. On 28 February 1993 there was a further meeting. Mr Hunter told her that he was having a lot of problems with the City of Stirling's requirements which he said he had resolved. He said that the necessary work would be completed within eight to ten weeks. A further ten weeks extension was granted. This period expired on 9 May 1993.
On 24 March 1993 Mrs Webb was approached by a Mr Morawski, a builder, who requested permission to proceed with the construction of a retaining wall at Mrs Webb's expense. For reasons which are explained in Mrs Webb's affidavit, these negotiations came to nothing. Eventually, on 29 April 1993, she wrote to Mr Hunter. She recounted the history of the matter and said that no further extensions would be granted unless "the majority of works" had been or "are near on completion" by 9 May.
On 30 April 1993 Mr Hunter left a message on Mrs Webb's telephone pager saying that he had been away on holidays, that he intended to go ahead with the work and that he would telephone that evening. Mr Hunter did not ring. He did contact Mrs Webb on 3 May and a meeting was arranged for 4 May. At about 6 p.m. on that day, Mr Hunter cancelled the meeting which was rescheduled for 5 May. On that day there was a meeting for about two and a half hours. Mrs Webb's evidence proceeded as follows:
"Shortly after the meeting commenced the Plaintiff [Mr Hunter] said 'You tell me what you are going to do. If you are going to take the house away from me I have no intention of doing anything on the property'. Mr Phil Webb said 'You can't do that, you are bound by the contract'."
There was a lengthy discussion and a further extension was agreed upon conditional on Mr Hunter paying a portion of the moneys due to the builder. There were some further discussions. The further extension expired on 9 July 1993. There was still no approval of the subdivision of the rear block.
One matter that emerges from Mrs Webb's account of her dealings with Mr Hunter is that, at all times, according to her evidence, which, of course, I accept, he acted as if the documents, particularly the annexure to the July contract of sale, bound him to act as he did. His conduct is in accordance with the provisions of that contract. He appeared to be well aware that he was in default. He sought extensions of time. He was clear as to the consequences of default and appreciated that Mrs Webb, if he remained in default, would be entitled to take the whole of the property.
I have been strengthened in my conclusion that I should accept Mrs Webb's evidence by the whole of the surrounding circumstances and by the terms of the documents. There is absolutely no evidence, other than the evidence of Mr Hunter, which would suggest that there had been engaged in any course of conduct either by Mrs Webb or by others in order to defraud him. An allegation of fraud is a very serious matter. There is not to be found in the evidence any support for it except the assertions which are to be found in Mr Hunter's evidence. Accordingly, I have come to the conclusion, quite firmly, that the case which Mr Hunter makes of forged documents should be rejected. I am by no means satisfied that there was any such fraudulent conduct as he says there was. I think what happened was that he entered into a contract with the Gardiners to purchase the land. For financial reasons - and I know he would refute this - he was unable to complete it himself and he evolved the idea of inducing somebody to purchase the rear portion of the land when it was subdivided so that he would have finance available partly from a mortgage and partly from what he would receive for the price of the rear portion. There was certainly nothing wrong with this; it was probably a good idea if it could be achieved, but it was found - after Mrs Webb had expressed interest in the land and wanted to acquire it - that it was impractical to sell her the rear half before the subdivision occurred and there were difficulties standing in the way of subdivision approval, both from a development and a building point of view, and so there had to be delay.
So what the parties did - if I may so, very sensibly - was to say: Well, we will acquire the property as tenants in common from the Gardiners, we will protect ourselves by the transfers that Mr Di Nardo was to hold and which were never acted upon, we will hold the land as tenants in common until the subdivision goes through, and then we will transfer it; the rear portion to Mrs Webb, the front portion to Mr Hunter. He got into difficulty about complying with the conditions and could not comply with them and eventually Mrs Webb took advantage of the provisions of the agreement made in July 1992 and sought the order for specific performance which she obtained in the Supreme Court.
Now, I am very conscious that Mr Hunter says that it appears on the face of the various documents in a number of places that he has not initialled alterations or additions to them or put his signature to them or otherwise appeared to authorise them or approve them. I know that to be his case and I have taken that into account, but I think the likelihood is that, despite that fact, he well knew what the position was all along. It may be that events which have overtaken him since have put those matters to the background of his mind so that he genuinely believes the case he has made here but I am afraid any belief he has in that respect is mistaken.
The result is that the case he wishes to bring, the principal case, fails. The fraudulent conduct upon which he relies is not established. I would add that a party relying on fraudulent conduct although only having to surmount the civil standard of proof upon a balance of probabilities has to realise that an allegation of fraud is a very serious affair which courts look at very closely and seriously and there are judicial warnings about this from the highest courts, one of the well-known ones being that contained in the judgment of Dixon J in the High Court in Briginshaw v Briginshaw (1938) 60 CLR 336 at 361-3. There are many other cases in which these warnings have been given.
So a judge entrusted with a task such as I have had has to look very closely at the evidence of the party alleging fraud to decide whether or not it really does establish the fraudulent conduct which is relied upon. Having considered the whole of the evidence and taken into account what Mrs Webb has said and Mrs Leahy has said, and having looked at the documents, and considered the overall probabilities of the case, I am satisfied that the allegations have not been made out and I reject them.
Now, that leaves two matters. There is an issue concerning the failure of Mr Hunter to attend the hearing of the bankruptcy petition before the Registrar on 21 August 1995. He says he had no notice of it until, whilst having breakfast in a McDonalds Restaurant in a suburb near Scarborough, he read the law list and saw that the matter was listed. He must have read the law list, if that be the explanation, some time before half past eight that morning because there was sent to the Registrar of the Court at 8.32 a.m. on 21 August a facsimile which is in the following terms:
"ATTN:MISS N. SELMAN
TO FAX 221 3261
Dear Miss Selman,
Re:P515 of 1995 Webb v Hunter
Re:Hearing 9.30 am 21.8.95
I have a hearing in petty sessions on at same time and unable to attend.
Could you please adjourn P515/95 to another date after 1 September 1995.
Thank you.
Lindsay Hunter"
There had been a hearing of the bankruptcy petition before the Registrar on 12 June at which Mr Hunter had appeared and a further hearing on 7 August at which he had not appeared. On that day the matter was adjourned to 21 August. On 8 August 1995, Deputy Registrar Stanley wrote a letter to Mr Hunter addressed to the Canning Vale Remand Centre at Cannington. It referred to this matter and said:
"This is to confirm that the above matter has now been adjourned to Monday 21st August 1995, at 9:30am at Level 6, Commonwealth Law Courts Building, 1 Victoria Ave, Perth.
Should you have any inquiries regarding the above please contact Miss N Selman on 268 7123."
I draw attention to the fact that the facsimile sent by Mr Hunter on 21 August 1995 was marked for the attention of Miss Selman. There is a serious question in my view whether Mr Hunter did not receive the letter of 8 August which he denies receiving. He apparently was in the Canning Vale Remand Centre at that time, but was released as I understand it, some time later in that week. There is a question, of course, whether a letter addressed to a remand centre would necessarily reach the addressee particularly quickly. I appreciate there are problems about that, but having looked at the form of the facsimile and looked at the contents of the letter, I have reached the conclusion that I should be satisfied that Mr Hunter did in fact receive the letter of 8 August and that he sent the facsimile at 8.32 am on 23 August, in response to the letter, which I have no doubt he had had for some time.
I am strengthened in the view that that is the correct conclusion because of the vagueness of the evidence which Mr Hunter gave in relation to what he really was doing on the morning of 21 August. He said that he had a case in the Court of Petty Sessions, but that when he got to the Court of Petty Sessions he found the case was not on on that day but on a later day. He then went to the Federal Court, but by the time he arrived at the Federal Court, his matter had been disposed of. When asked about the matter in cross-examination he became vague at first as to which Court of Petty Sessions was the one to which he went and eventually said it was the one in Perth, which I believe is in St George's Terrace, not far from this court building - I think the evidence establishes no more than 400 yards or so away from this building - so it would not have taken him very long to get from there to here, if that is where he had been. The transcript of the proceedings for 21 August 1995 shows that the matter did not proceed straight away. Registrar Jan was worried about the fact that Mr Hunter was not present and inquiries were made by Mr Rowick who had appeared for Mrs Webb concerning whether Mr Hunter had a case in the Court of Petty Sessions.
It was found that he had not, but then of course that is common ground because Mr Hunter said he found that out too. But it does seem to me that the evidence has a degree of vagueness about it and I do not feel able to accept it. In all the circumstances, particularly bearing in mind the reference to Miss Selman in the facsimile, I think I should conclude, as indeed I have, that notice of the hearing was received by Mr Hunter and that he made the decision for better or worse to remain away. That seems to me to put an end to any suggestion that in some way his failure to appear was due to lack of notice and would itself provide a ground for granting the relief which he seeks.
There remains a question relating to the taxation of the costs which are the subject of the order upon which the bankruptcy notice was founded. There is evidence about whether or not the bill of costs was served, whether or not there should have been served an affidavit notifying him of the outcome of the taxation and a number of other matters of that kind. I have considered all those matters but I am satisfied that the taxation was conducted regularly and that the order for the amount which was ordered to be paid took effect and was properly made the subject of a bankruptcy notice. Failure to comply with the notice, of course, provided the act of bankruptcy upon which the petition was founded.
That I think, subject to one matter, completes the matters relied upon by Mr Hunter. He raised a number of matters concerning the question whether stamp duty had been paid on documents. In my view, the validity of the documents prevails whether there was stamp duty paid on them or not. I think that the submission is misguided, but it seems to me so far as I can tell from the documents, that stamp duty indeed was paid on the right documents and that there is not any question of the avoidance of stamp duty on them. I therefore reject any suggestion that any matter based on failure to pay stamp duty can give rise to any right in Mr Hunter to avoid the consequences of the conclusion which I have reached.
In all those circumstances therefore, I have reached the conclusion that the amended notice of motion filed on 6 October 1995 should be dismissed. That is the order which I make.
[Discussion ensued during the course of which Mr Hunter applied for a stay of proceedings. Thereafter his Honour proceeded as follows.]
HIS HONOUR: The orders I make are as follows. The application filed on 8 September 1995 as amended by the application filed on 6 October 1995 is dismissed. I order that the petitioning creditor's costs of that application be paid out of the estate of the bankrupt.
The application made by the bankrupt for a stay of proceedings is refused.
I direct that Lindsay Hunter be not permitted to file in this Court any application or other document including any subpoena or summons to witness in this or any other matter without the leave of a judge of this Court. I make that direction because of the nature of large numbers of the documents which have been filed by Mr Hunter in this and other matters, the form of those documents, and the language contained in them.
I certify that this and the thirty-six (36) preceding pages are a true copy of the reasons for judgment herein of the Honourable Justice Sheppard.
Associate
Dated
APPEARANCES
Mr Lindsay Hunter In person
Counsel for the
Petitioning Creditor Mr M.L. Bennett
Solicitors for the
Petitioning Creditor Bennett & Co.
Date of Hearing: 15 to 19 July 1995
Place of Hearing: Perth
Date of Judgment: 19 July 1996
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5
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