Reynolds v Aluma-Lite Products Pty Ltd (No 2)
[2010] FCA 914
•25 August 2010
FEDERAL COURT OF AUSTRALIA
Reynolds v Aluma-Lite Products Pty Ltd (No 2) [2010] FCA 914
Citation: Reynolds v Aluma-Lite Products Pty Ltd (No 2) [2010] FCA 914 Appeal from: Aluma-Lite Products Pty Ltd v Reynolds & Anor [2010] FMCA 122 Parties: ROSS MCKENZIE MAX REYNOLDS and MARGOT LOGAN REYNOLDS v ALUMA-LITE PRODUCTS PTY LTD ACN 009 843 832 File number: QUD 65 of 2010 Judge: LOGAN J Date of judgment: 25 August 2010 Catchwords: APPEAL AND NEW TRIAL – Grounds of appeal relating to issues of fact not raised at trial – Whether procedurally unfair to respondent – Where respondent did not have chance to leave evidence or cross-examine witnesses as to these factual issues at trial
Held: New grounds struck out
LIMITATION OF ACTIONS – Whether the Limitation of Actions Act 1974 (Qld) s 43A has operation beyond Choice of Law characterisation
Held: Limitation of Action Act 1974 (Qld) s 43A only deals with characterisation of limitation period for Choice of Law
Legislation: Acts Interpretation Act 1954 (Qld) s 14
Bankruptcy Act 1966 (Cth) ss 40, 52
Choice of Law (Limitations Periods) Act 1996 (Qld) s 8
Limitation of Actions Act 1974 (Qld) ss 10, 12, 43A
Federal Court (Bankruptcy) Rules 2006 r 2.06
Federal Magistrates Court (Bankruptcy) Rules 2006 r 2.06
Uniform Civil Procedure Rules 1999 (Qld)Cases cited: Allman v Country Roads Board [1957] VR 581 cited
Henderson v Henderson (1843) 3 Hare 100 cited
John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503 cited
Maxwell v Murphy (1957) 96 CLR 261 cited
Moorhouse v Angus and Robertson (No 1) Pty Ltd [1981] 1 NSWLR 700 cited
Munday v Australian Capital Territory (1998) 146 FLR 17 considered
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 cited
Re Jigrose Pty Ltd [1993] 1 Qd R 382 considered
Reynolds v Aluma-Lite Products Pty Ltd [2009] QSC 379 cited
Walsh v Law Society of NSW (1999) 198 CLR 73 considered
Whisprun Pty Ltd v Dixon (2003) 77 ALJR 1598 consideredPalmer, NE, Palmer on Bailment (3rd ed, Sweet & Maxwell, 2009)
Date of hearing: 18 August 2010 Place: Brisbane Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 87 Counsel for the Appellants: Mr F Harrison QC with Mr A Evans Solicitor for the Appellants: Shand Taylor Counsel for the Respondent: Mr B O'Donnell QC Solicitor for the Respondent: Ellison Moschella & Co
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
QUD 65 of 2010
ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA
BETWEEN: ROSS MCKENZIE MAX REYNOLDS
First AppellantMARGOT LOGAN REYNOLDS
Second AppellantAND: ALUMA-LITE PRODUCTS PTY LTD ACN 009 843 832
Respondent
JUDGE:
LOGAN J
DATE OF ORDER:
25 AUGUST 2010
WHERE MADE:
BRISBANE
THE COURT ORDERS THAT:
1.The appeal is dismissed.
2.The appellants pay the respondent’s costs of and incidental to the appeal.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
QUD 65 of 2010
ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA
BETWEEN: ROSS MCKENZIE MAX REYNOLDS
First AppellantMARGOT LOGAN REYNOLDS
Second AppellantAND: ALUMA-LITE PRODUCTS PTY LTD ACN 009 843 832
Respondent
JUDGE:
LOGAN J
DATE:
25 AUGUST 2010
PLACE:
BRISBANE
REASONS FOR JUDGMENT
At first blush, it seems to say the least odd that, under our legal system, the appellants, Mr and Mrs Reynolds might be made bankrupt as a sequel to a sale for $5.00 by a Supreme Court enforcement officer under a warrant of execution of an inoperable electric motor and gearbox seized by him in 2008 from where they lay in the grass on a rural property once owned by Mr and Mrs Reynolds but of which the respondent, Aluma-Lite Products Pty Ltd (Aluma-Lite) had taken possession under a mortgage in 1996 and later sold. That is one but not materially the only, feature of the facts which ground the sequestration order made against the estates of Mr and Mrs Reynolds in the Federal Magistrates Court. They have appealed against the making of that order.
Section 40(1)(d) of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act) relevantly provides:
40Acts of bankruptcy
(1)A debtor commits an act of bankruptcy in each of the following cases:
…
(d) if:(i)execution has been issued against him or her under process of a court and any of his or her property has, in consequence, either been sold by the sheriff or held by the sheriff for 21 days; or
(ii)execution has been issued against him or her under process of a court and has been returned unsatisfied;
By its petition filed in the Federal Magistrates Court on 10 March 2010 Aluma-Lite alleged that Mr and Mrs Reynolds jointly and severally owed it $858,710.22 “for a judgment debt awarded on 14 March 1996 in the amount of $1,750,000 which resulted from [their] failure to repay a loan given to [them in or about February 1994]”. The amount alleged to be owed under the judgment was particularised as follows:
Judgment debt $ 1,750,000.00
Less payments $ 1,636,359.58
Plus accrued interest to 10 March 2008 $ 744,869.80[This equates to $858,510.22 not $858,710.22, an immaterial difference not hitherto noted].
Aluma-Lite further alleged in its petition:
i property of the Respondent debtors has been sold; and
iithe warrant of execution relating to the act of bankruptcy has been returned unsatisfied.
Though, with respect, neither a wholly accurate rendition of the acts of bankruptcy described in s 40(1)(d) of the Bankruptcy Act nor a particularised allegation of any of those acts, it was understood by all concerned that Aluma-Lite initially relied on acts of bankruptcy falling within each limb of s 40(1)(d).
When the petition came on for hearing in the Federal Magistrates Court Aluma-Lite by its counsel stated that it was not relying upon the allegation that the warrant of execution had been returned unsatisfied, ie the act of bankruptcy for which s 40(1)(d)(ii) provides. That left Aluma-Lite to prove the act of bankruptcy for which s 40(1)(d)(i) provides.
What lay behind the allegation made in the petition in respect of this alleged act of bankruptcy emerged from the exhibits to the affidavit verifying the petition sworn by a director of Aluma-Lite, Mr Derek Williams. On this evidence the learned Federal Magistrate came to find:
(a)Aluma-Lite obtained judgment against Mr and Mrs Reynolds in the Supreme Court of Queensland (Fryberg J) on 14 March 1996 in the amount of $1,750,000 and interest at the rate of $635.62 per day from 1 March 1996 until payment;
(b)Also pursuant to that judgment:
(i)Aluma-Lite recovered possession of 12 parcels of real property known collectively as “Condamine Ponds” near Warwick and more particularly described in the schedule to the judgment;
(ii)execution of any writ of possession in respect of those properties was stayed until 28 March 2006; and
(iii)Aluma-Lite recovered costs.
(c)On 15 August 2003 the Supreme Court of Queensland (P McMurdo J) gave Aluma-Lite leave to start enforcement proceedings against Mr and Mrs Reynolds in relation to the judgment given on 14 March 1996.
(d)On 2 January 2008 a Registrar of the Supreme Court of Queensland issued to an “Enforcement Officer” an “Enforcement Warrant” authorising the seizure and sale of such of Mr and Mrs Reynolds’ real and personal property (other than property that was not property divisible amongst the creditors of a bankrupt for the purposes of the Bankruptcy Act) as was necessary to satisfy in full the total amount owing under the judgment of 14 March 1996.
(e)On 29 January 2008 Mr Roach, a Supreme Court Enforcement Officer, attended at “Kingsley”, a part of “Condamine Ponds”, recovered from there various chattels including an electric motor and gearbox in non-working condition and returned to Toowoomba with the same.
(f)On 16 February 2008 and having advertised the electric motor and gearbox, Mr Roache sold these for $5.00 at an auction conducted at the Supreme Court at Toowoomba.
These particular facts were not controversial either in the court below or on the hearing of the appeal.
Mr Derek Williams was not required by Mr and Mrs Reynolds to attend for cross-examination on the hearing of the petition. Neither, though an affidavit given by him was also read in Aluma-Lite’s case, was Mr Roache so required. Given the basis upon which Mr and Mrs Reynolds contested the petition before the Federal Magistrates Court, these were unremarkable forensic, tactical decisions. As will be seen, that such decisions were made with the consequence that neither of these witnesses was cross examined is not without significance in relation to some of the grounds of appeal which Mr and Mrs Reynolds seek to pursue on this appeal.
As required by r 2.06 of the Federal Magistrates Court (Bankruptcy) Rules 2006, (an exact replicate of r 2.06 of the Federal Court (Bankruptcy) Rules 2006) and in accordance with interlocutory directions made by the learned Federal Magistrate, Mr and Mrs Reynolds filed and served on Aluma-Lite a notice of opposition to the creditor’s position in Form 5 (again, the same as the form used in this Court), together with an affidavit from Mr Reynolds in support of those grounds.
Materially, the notice of opposition specified in sub-para 1(a) the following ground of opposition, “the property purportedly seized and sold referred to in the purported return of warrant of execution was not property of [Mr and Mrs Reynolds] jointly or either of them personally”.
The other grounds in the notice of opposition related in one way or another to questions of compliance with the technical requirements of the Uniform Civil Procedure Rules 1999 (Qld) in relation to the execution and return of an enforcement warrant. These grounds were addressed by the learned Federal Magistrate and resolved against Mr and Mrs Reynolds. A challenge to the correctness of so deciding them did not feature in the appeal.
Also materially, the learned Federal Magistrate identified the issues for decision in the case as follows:
(a)was the electric motor and gear box the property of the debtors; and
(b)were those chattels unencumbered or did they form part of a chattel subject to the AWL Wilson Pty Ltd Bill of Sale (the Wilson Bill of Sale)?
Having regard to the notice of opposition, Mr Reynolds’ affidavit, the way in which the parties before him identified the issues in and conducted their respective cases, there was no error in his Honour’s so identifying the issues.
In light of the brevity of the only presently material ground of opposition to the creditor’s petition and the way in which the learned Federal Magistrate identified the issues, it is instructive to set out in full the grounds of appeal as they have come to be pleaded by Mr and Mrs Reynolds:
Grounds
1.The court should have held that there was no act of bankruptcy within s 40(1)(d)(i) of the [Bankruptcy Act] in that electric motor and gearbox (“the Item”) purportedly sold by way of execution was not the appellants’ property on the dates of taking and subsequent sale within that provision. In particular, the court should have held that this was so on the bases set out below:
a.The respondent took possession of all machinery of the appellants used for farming, harvesting and earthmoving (including the Item) (“the Machinery”) situated on the farming property known as Condamine Ponds in 1996, and the Item remained out of the appellants possession until it was taken in purported execution of the respondent’s judgment against the appellants on 29 January 2008.
b.In 1997, the appellants sued to inter alia recover possession of and damages for the detention of the Machinery in the Federal Court, which proceedings were transferred to the Supreme Court of Queensland as action S 7589 of 1997 (the Proceedings).
c.By reason of orders made in those proceedings by Fryberg J on 16 December 2004, Moynihan J on 19 May 2005, and Wilson J on 31 October 2005, on the date the Item was taken in purported execution the appellants were unable, by reason of an estoppel by judgment or in the alternative an Anshun estoppel, to recover that property, and accordingly the Item was not the property of the appellants on the dates of taking and sale.
d.Alternatively, the appellants’ entitlement to possession of the item as against the respondent was barred by ss 10, 12 and 43A of the Limitation of Actions Act 1974 in 2002 and accordingly thereafter the item was not property of the appellants on the dates of taking and sale.
e.Alternatively, by the operation of s. 12(2) of the Limitation of Actions Act 1974 in 2002 the title in the Item was extinguished.
2.In the alternative, the court should have held that the item was subject to the Wilson bill of sale.
3.In particular, his Honour’s finding that it was not subject to the Wilson Bill of Sale was against the evidence and the weight of the evidence in that:
a.his Honour gave undue weight to equivocal oral evidence of John Williams with respect to items identified in certain photographs over the concise oral evidence of the appellant Ross MacKenzie Max Reynolds (Reynolds);
b.his Honour was impermissibly influenced by the reasons of Martin J in his findings about the credit worthiness of the witness Reynolds.
c.his Honour erred in finding at paragraph 36 of his decision that there must have been four bale stackers on the property formerly owned by the respondents when the preponderance of evidence could only reasonably lead to a conclusion that there was three.
d.The preponderance of evidence could only reasonably lead to a conclusion that the bale loader/stackers referred to in the various versions of the Respondents’ statements of claim filed in the proceedings only refer to the “Taylor Bale Stacker” and the “International Bale Loader” and that there was a further 18 Foot Bale Stacker on the Respondent’s property that was dismantled.
4.The Court should have refused to make a sequestration order on the grounds that:
(a)the execution on which the petition was founded was tainted, as being an abuse of process of the Supreme Court of Queensland, in that the respondent’s directing the bailiff to sell one item only of those seized in execution, which was near valueless, and to return to remainder, showed that the purported execution was not a bona fide attempt to enforce the judgment, but rather, was a mere pretext to engage the provisions of the Bankruptcy Act; and
(b)additionally, for this reason, and because the respondent petitioned for a sequestration order, not to achieve the orderly administration of the appellants’ estates, but to frustrate the appellants’ prosecution of Supreme Court proceedings against the respondent for damages for conversion of certain of their property, the petition was an abuse of process of the Federal Magistrates Court.
5.Alternatively, in all the circumstances, his Honour should have exercised his discretion under s 52(2)(b) to dismiss the petition because of the matters mentioned in para 4.
It is not the prolixity of the grounds of appeal but rather the breadth of the issues thereby sought to be raised, the contrast between them and those identified by the learned Federal Magistrate and the extent to which new grounds of opposition to sequestration and alleged error on the part of the court below have evidentiary implications which is instructive. Aluma-Lite submits that it is necessary to give consideration to whether it would be procedurally fair to permit each of these new grounds to be raised. Its submission is that the result of any such consideration must necessarily be that these grounds should not be entertained. It is both necessary and convenient first to deal with that submission.
The relevant principle was succinctly stated, by reference to prior authority, by Gleeson CJ, McHugh and Gummow JJ in Whisprun Pty Ltd v Dixon (2003) 77 ALJR 1598 at [51] – [52]:
[51] … Nothing is more likely to give rise to a sense of injustice in a litigant than to have a verdict taken away on a point that was not taken at the trial and could or might possibly have been met by rebutting evidence or cross-examination. Even when no question of further evidence is admissible, it may not be in the interests of justice to allow a new point to be raised on appeal, particularly if it will require a further trial of the action. Not only is the successful party put to expense that may not be recoverable on a party and party taxation but a new trial inevitably inflicts on the parties worry, inconvenience and an interference with their personal and business affairs.
[52] As Water Board v Moustakas makes clear, a point may be a new point even though it is within the pleadings or particulars. The pleadings and particulars are frequently decisive in determining whether a party is seeking to raise a new point on appeal. But they are not conclusive. To determine whether a party is raising a new point on appeal, it is "necessary to look to the actual conduct of the proceedings". Thus in Water Board, the plaintiff's case at trial had been that his employer was negligent in failing to prevent traffic from crossing in to the lane in which he was working. On appeal, the Court of Appeal of New South Wales allowed the plaintiff to raise a case that the employer was negligent in failing to provide a barrier to prevent the plaintiff from straying into the adjoining lane. This Court held that, although this alternative case was within the particulars, it had not been the plaintiff's case at the trial and the Court of Appeal had erred in allowing it to be raised on appeal.
[Emphasis added; footnote references omitted]
The following issues (adding the relevant appeal notice paragraph) are not referred to in the reasons for judgment of the court below:
(a)absence of ownership of the electric motor and gear box by reason of abandonment – ground 1(a);
(b)“Anshun” estoppel – grounds 1(b) and 1(c);
(c)Absence of ownership by virtue of the operation of the Limitation of Actions Act 1974 (Qld) (Limitations of Actions Act) – grounds 1(d) and 1(e).
(d)Abuse of the process either of the Supreme Court of Queensland or of the Federal Magistrates Court – grounds 4(a) and 4(b) respectively;
(e)Related to ground 4, dismissal on the basis of “other sufficient cause” pursuant to s 52(2)(b) of the Bankruptcy Act – ground 5.
The absence of reference to these issues was not the result of inattention or inadvertence by the learned Federal Magistrate. Rather, not one of these was put forward on behalf of Mr and Mrs Reynolds either in their notice of opposition or otherwise. As was his duty, his Honour dealt with the issues which were alive before him. He did this thoroughly. In light of the imminence of the expiry of the petition relative to the date of trial that thoroughness is, with respect, especially noteworthy given the pressure under which his Honour was necessarily working.
Loss of Ownership by Abandonment Ground
As to the “abandonment of property” ground, reference was made for Mr and Mrs Reynolds to the breadth of the ground 1(a) in the notice of opposition. I accept that this ground was, in its generality and viewed in abstract, apt to embrace abandonment as a basis for why, when the electric motor and gearbox were seized and sold in 2008, they were not their property.
True it is also that, as Mr and Mrs Reynolds submitted, there was no formal request for particulars to be furnished of ground 1(a) of the notice of opposition. Such particularity was though inferentially evident from such evidence as was filed with their notice of opposition. The requirement in r 2.06(2)(c) is to “file an affidavit in support of the grounds of opposition”. Mr Reynolds does not assert in his affidavit that the electric motor and gearbox concerned had been abandoned. His was the only evidence led on behalf of his and his wife’s behalf.
There was evidence in the court below that, after securing its judgment, Aluma-Lite took possession of Condamine Ponds on 5 October 1996. When they gave up possession of Condamine Ponds, Mr and Mrs Reynolds left many chattels on the property. Some of these, I note in passing, were left across an access way. Thereafter, they returned to collect some chattels but never the electric motor and gearbox. These just lay on the property from 1996 to 2008. Aluma-Lite progressively sold the parcels of land collectively known as Condamine Downs between 1997 and 1999. By 2008 the “Kingsley” block of land from which Mr Roache came to seize the electric motor and gearbox had passed into the hands of two successive new owners.
Such facts would have been relevant to the determination of, but not conclusively answered, a question as to whether the electric motor and gearbox had been abandoned by Mr and Mrs Reynolds.
For property to be regarded as abandoned by its owner it is necessary not just for the owner to have parted with physical possession of or control over a chattel but also to have an intention to abandon that chattel: Moorhouse v Angus and Robertson (No 1) Pty Ltd [1981] 1 NSWLR 700 at 706E/F per Samuels JA. Even if such an intention were present, a question would arise as to whether at common law the person with that intention and who had manifested it by parting with possession of the chattel nonetheless remained its owner until another took possession of that chattel. On that question, differing views have been expressed as to whether, at common law, chattels must always have an owner.
The competing English and some of the Australian authorities as to the common law position are collected in Palmer, NE, Palmer on Bailment (3rd ed, Sweet & Maxwell, 2009) at [26-021] to [26-029]. These and other authorities were the subject of learned and engaging submissions on behalf of Mr and Mrs Reynolds on the appeal. Those of Aluma-Lite, though no less learned and engaging, were made subject to the over-riding qualification that it was neither necessary nor desirable, for procedural fairness reasons, to venture an opinion as to the true position at common law as to the effect of abandonment by an owner on ownership of a chattel.
Of the authorities, it is only necessary to refer to two. In Re Jigrose Pty Ltd [1993] 1 Qd R 382 at 386, after a detailed consideration of competing authorities, Kiefel J stated, “it seems to me that if I do not wish to retain the possession or property in goods (perhaps most clearly shown by throwing them away), there is no reason in principle why the common law would require me to remain owner.” That view is quoted with evident approval by Higgins J, sitting as a judge of the ACT Supreme Court, in Munday v Australian Capital Territory (1998) 146 FLR 17 at 32. Having so done his Honour makes (ibid) the following further observation, “however, it will be noted that there are two requirements to be satisfied before lost or abandoned goods become the property of another. The first is that the prior owner has truly intended to abandon the goods. The second is that the person taking possession thereof does so lawfully.” These cases serve to underscore that, on any view of the common law position, the parting with physical possession of or control over a chattel is not, in itself, sufficient to effect a loss of ownership. At the least, a mental element, an intention to abandon, must also exist.
While I do not deny the forensic ingenuity in the formulation of the loss of ownership by virtue of abandonment argument put on behalf of Mr and Mrs Reynolds, the temptation to deal with it is one firmly to be resisted in the exercise of appellate jurisdiction in the circumstances of this case, in my opinion. That is because it would be procedurally unfair to permit Mr and Mrs Reynolds to raise this ground on appeal.
The submissions made by Mr and Mrs Reynolds as to their loss of ownership of the electric motor and gearbox by abandonment were made in the alternative and on the assumption that these chattels were not, as they primarily contended, covered by the Wilson bill of sale. To resolve the question as to whether ownership of the electric motor and gearbox had been relinquished by Mr and Mrs Reynolds at some stage prior to 2008 it would be necessary, inter alia, to determine whether, when giving up possession of Condamine Ponds and, with that, physical possession of that motor and gearbox, they intended also to abandon ownership of that property.
Counsel for Aluma-Lite made the telling point in his submission that the absence of any notice, be it formal or informal, of reliance on this as a ground of opposition to the creditor’s petition meant that he had been denied the opportunity to cross-examine Mr Reynolds on the subject of intention in the course of his evidence in the court below. This was not empty rhetoric. There were fertile sources for cross-examining Mr Reynolds on the subject of his intention in relation to the electric motor and gearbox. The pleadings as formulated from time to time on Mr Reynolds’ instructions are one such source. Another is correspondence directed by or on behalf of Mr and Mrs Reynolds to new owners of Condamine Downs in relation to chattels left by them on that property when they gave up possession of the property. In neither of these was there a consistent pattern of disavowment by Mr and Mrs Reynolds of any interest of any kind in any remaining chattels at the Condamine Ponds property evident. Indeed, the recipients of the correspondence concerned might conceivably have featured as witnesses in Aluma-Lite’s case at trial had abandonment of ownership featured as a ground of opposition in the court below. The loss of ownership by abandonment ground is unquestionably one that, as to intention, might have been met either by cross-examination or by evidence in rebuttal.
Present in this case in relation to the endeavour by Mr and Mrs Reynolds now to rely on a loss of ownership by abandonment ground are the very circumstances to which the statement made in the passage quoted from Whisprun Pty Ltd v Dixon was directed. I therefore expressly refrain from expressing an opinion as to the merits of this ground. Instead, because to permit it to be raised for the first time on the appeal would deny Aluma-Lite procedural fairness I strike out ground 1(a) in the appeal notice.
“Anshun Estoppel” Ground
The submission put on behalf of Mr and Mrs Reynolds was that any action brought by them immediately prior to their seizure in 2008 for the return of the electric motor and gearbox would have been barred by the extended principle of estoppel, known locally as “Anshun estoppel”, described by Sir James Wigram VC in Henderson v Henderson (1843) 3 Hare 100 at 115 (67 ER 313 at 319), which was cited with approval by Gibbs CJ, Mason and Aickin JJ in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 at 598:
[W]here a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.
In an action in the Supreme Court of Queensland between Mr and Mrs Reynolds as applicants and Aluma-Lite as respondent, Application No 7587/97 (the Supreme Court action), they sought an award of damages against Aluma-Lite for an alleged breach of a mortgagee’s duty in respect of the exercise of the power of sale as well as damages for detinue in respect of various chattels. It was submitted on their behalf that the subject matter of this litigation was, relevantly, the chattels which were on Condamine Ponds, including it was said the electric motor and gearbox, when it was sold in 1997. This was said to be evident from the statement of claim as variously amended from time to time, referred to in the reasons for judgment of the court below.
Before dealing with this submission, two matters should be noted in passing. The reference in ground 3(b) of the grounds of appeal to the reasons for judgment of Martin J is to the judgment delivered in November 2009 by his Honour in the trial of the Supreme Court action: Reynolds v Aluma-Lite Products Pty Ltd [2009] QSC 379. Ground 3(b) was not pressed on the hearing of the appeal. Nor was it suggested by either party on the hearing of the appeal that it was necessary to defer judgment in this case pending the determination of a reserved judgment in an appeal to the Queensland Court of Appeal against the judgment given by Martin J in the Supreme Court action.
In respect of this ground also Aluma-Lite submitted that it would not be procedurally fair to entertain it, even assuming that it otherwise had merit. Again, the basis for the denial of procedural fairness submission was that the failure to advance it below meant that they had not had the opportunity to meet it either via cross examination or calling further evidence.
Aluma-Lite noted that Mr and Mrs Reynolds had included the electric motor in their detinue claim in the Supreme Court action at the time when that item of property was seized in January 2008. They did not abandon so much of that claim as related to that item until the filing of their fourth amended statement of claim on 4 July 2008 (ie after the seizure and sale). As at January 2008 and as then pleaded, the Supreme Court action was unresolved.
When the electric motor and gear box were seized those chattels were not then in Aluma-Lite’s possession but rather in that of the new owner of the land. On the evidence, Mr and Mrs Reynolds then had no proceedings at all on foot as against the new owner. That is one way at least in which Aluma-Lite might have been able to meet in the court below this “Anshun estoppel” ground, whatever might otherwise have been its merits. Another is that the failure by Mr and Mrs Reynolds below to rely on this ground meant that Aluma-Lite was deprived of the opportunity to lead evidence, perhaps from the new owners of the land, as to whether, immediately prior to the seizure of the items, they would have had any objection to Mr and Mrs Reynolds recovering the electric motor and gearbox upon the making of a request. The advancing of these grounds is, to this extent, tainted by a denial of procedural fairness.
They may though be a more fundamental reason why there is no merit in the “Anshun estoppel” point. Aluma-Lite further submitted that, even were there otherwise a basis for such an estoppel, it would bar a remedy in respect of the electric motor and gearbox but would not extinguish any right of ownership Mr and Mrs Reynolds had in those chattels at the time when they were seized and sold. In other words, execution having issued against them, an estoppel would not establish that it was nonetheless not their property which had been sold. It would remain the case, if indeed they were the owners, that it was their property which the enforcement officer had sold. This submission is correct.
However approached, grounds 1(b) and 1(c) in the notice of appeal are without merit.
Limitation of Actions Act Ground
To put these grounds (grounds 1(d) and 1(e)) in context it is first necessary to set out the material parts of ss 10, 12 and 43A of the Limitation of Actions Act:
10Actions of contract and tort and certain other actions
(1)The following actions shall not be brought after the expiration of 6 years from the date on which the cause of action arose—
(a)…, an action founded on simple contract or quasi-contract or on tort where the damages claimed by the plaintiff do not consist of or include damages in respect of personal injury to any person;
12Actions in cases of successive conversions and extinction of title of owners of converted goods
(1)Where a cause of action in respect of the conversion or wrongful detention of a chattel has accrued to any person and before the person recovers possession of the chattel a further conversion or wrongful detention takes place, an action shall not be brought in respect of the further conversion or detention after the expiration of 6 years from the accrual of the cause of action in respect of the original conversion or detention.
(2)Where a cause of action to which subsection (1) applies has accrued to any person and the period prescribed for bringing that action or any action in respect of which a further conversion or wrongful detention referred to in subsection (1) has expired and the person has not during that period recovered possession of the chattel, the title of that person to the chattel shall be extinguished as against a purchaser, mortgagee or other person having a title to or an interest in the chattel bona fide for value.
(3)Where, before the expiration of the period of limitation prescribed by this Act for an action in respect of the further conversion or wrongful detention of a chattel, such an action is brought, the expiration of the period of limitation does not affect the right or title of the plaintiff to the chattel—
(a)for the purposes of the action; or
(b)so far as the right or title is established in the action.
43ACharacterisation of limitation laws
(1)In this section—
limitation law means a law (including, but not limited to, this Act) that provides for the limitation or exclusion of any liability or the barring of a right of action for a claim by reference to the time when a proceeding on, or the arbitration of, the claim is started.
(2)A limitation law of the State is to be regarded as part of the substantive law of the State.
(3)This section applies to a cause of action that arose before the commencement of this section but does not apply to a proceeding started before the commencement.
As grounds 1(d) and 1(e) disclose on their face, there were two limbs to the submission made on behalf of Mr and Mrs Reynolds in reliance upon the Limitation of Actions Act.
In the first instance, Aluma-Lite meets each of these grounds with the submission that it would be procedurally unfair to permit either to be raised as each could have been met by rebutting evidence or cross-examination. There is merit in this submission. Some of the relevant considerations have already been mentioned when discussing the “Anshun estoppel” grounds.
The submission made on behalf of Mr and Mrs Reynolds put forward 2002 as the time when any cause of action which they may have had to recover the chattels expired. Presumably this was selected by reference to the 6 year limitation period in s 10(1)(a) of the Limitation of Actions Act and the time in 1996 at which Aluma-Lite took possession of Condamine Ponds. It by no means follows though that, as against the owner of that part of Condamine Ponds from where the electric motor and gearbox were seized in 2008, the limitation period had by then expired. The electric motor and gearbox were not in the possession of Mr and Mrs Reynolds when seized and sold. Whether the then owners of Condamine Ponds had ever been requested by Mr and Mrs Reynolds to allow them to retrieve these chattels and whether they would have objected to their retrieving them are subjects upon which the failure to raise any limitation of actions point deprived Aluma-Lite of any opportunity to explore either in cross examination or by leading evidence.
These are reasons enough not to permit Mr and Mrs Reynolds to rely upon these appeal grounds for procedural fairness reasons.
In any event, there is at least reason to doubt the correctness in law of the construction of the Limitation of Actions Act for which Mr and Mrs Reynolds contend and upon which these grounds depend. They contend that the effect of s 43A(2) of the Limitation of Actions Act was to bar any right which they had in the electric motor and gearbox upon the expiry of the limitation period. This is at odds with the conventional approach to the construction of a limitation statute, which is that it bars remedies, not rights: Maxwell v Murphy (1957) 96 CLR 261, an approach which was always subject to singularity of language in a particular limitation provision such that the limitation in question ought to be regarded as having a substantive effect: Allman v Country Roads Board [1957] VR 581. Mr and Mrs Reynolds submit that s 43A(2) has just such singularity of language and generality of application.
There is, as was submitted on behalf of Aluma-Lite, a relevant indication in the Limitation of Actions Act that, where Parliament intended the expiry of a particular limitation period to have a substantive effect in relation to the subject matter of a particular cause of action, this was expressly stated in respect of that limitation period. The relevant indication is found in s 12(2). Even then title is extinguished only as against “a purchaser, mortgagee or other person having a title to or an interest in the chattel bona fide for value”. It does not follow from this that, assuming that Mr and Mrs Reynolds were not the owners of the electric motor and gearbox at the time when Mr Roache seized and sold them. The only effect of that subsection would be to extinguish their title in them as against whomever it was that purchased them at auction.
Further, s 43A of the Limitation of Actions Act has no wider role to play than answering a characterisation question that arises in respect of a limitation period for choice of law purposes. So much is suggested by the heading of the section, which forms part of it: s 14(2)(a) Acts Interpretation Act 1954 (Qld). That impression is confirmed by regard to the explanatory notes circulated by the then Queensland Attorney-General in respect of the Bill which became the Choice of Law (Limitations Periods) Act 1996 (Qld), s 8 of which inserted s 43A into the Limitation of Actions Act. The title of that amending Act is itself instructive as to the purpose of s 43A. This aside, in the explanatory notes it is stated (p 1) that the reason for the amendment made by the Bill arises in the following way:
The High Court, in McKain v R W Miller & Company (South Australia) Pty Ltd (1991) 174 CLR 1, decided that, according to the general rules as to choice of law, limitation periods are treated as governed by the law of the place where the proceedings are brought, regardless of where the cause of action arose. This may tend to encourage forum shopping to take advantage of the longest limitation periods.
The purpose of making the amendment is stated to be to discourage forum shopping. On further examination of the background to the amendment, it is responsive, though not fully responsive, for it is confined to cases where the lex causae is that of another State or Territory or New Zealand, rather than more generally, to a recommendation made by the Australian Law Reform Commission: ALRC Report No 58, Choice of Law at [10.33]. It is to be remembered that the amendment was enacted prior to the later judgment of the High Court in John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503 in which it was decided that, for conflict of laws purposes, a statutory limitation period was to be treated as substantive, not procedural (at 544, 554, 571-574).
Yet further, the presence in the Limitation of Actions Act of elaborate provision in Pt 3 for the extension of limitation periods is inconsistent with affording s 43A the wide substantive effect for which Mr and Mrs Reynolds contend.
Were it necessary, and it is not, to determine grounds 1(d) and 1(e) by reference to an issue of statutory construction, as opposed to their involving a denial of procedural fairness, I should therefore also dismiss these grounds for the foregoing reasons.
Abuse of Process?
Whether cast by reference to an alleged abuse of process of the Supreme Court in respect of the action taken to secure and then enforce the enforcement warrant or by reference to the later creditor’s petition proceeding before the Federal Magistrates Court the answer to ground 4 is the same. The issues raised by this ground were not raised in the court below on behalf of Mr and Mrs Reynolds. As I have already noted, Mr Derek Williams and Mr Roache each gave affidavit evidence in Aluma-Lite’s case before that court. Neither was cross-examined. It was not necessary in the circumstances for their affidavit evidence in chief to delve into facts which might touch on whether the actions of Aluma-Lite itself or the enforcement officer constituted in some way an abuse of process.
To permit Mr and Mrs Reynolds to raise ground 4 for the first time on appeal would, for reasons already given, be to deny Aluma-Lite procedural fairness. For that reason I dismiss this ground.
Should the petition have been dismissed for some other reason?
Section 52(2) of the Bankruptcy Act provides:
(2)If the Court is not satisfied with the proof of any of those matters, or is satisfied by the debtor:
(a)that he or she is able to pay his or her debts; or
(b)that for other sufficient cause a sequestration order ought not to be made;
it may dismiss the petition.
Mr and Mrs Reynolds did not attempt to prove that they were able to pay their debts. Once it is recalled that Mr Roache, the enforcement officer, was not cross-examined, the evidence before the learned Federal Magistrate hardly put his Honour on notice that they might be solvent. An enforcement warrant in respect of the judgment against them had been expressly drawn to their attention. Neither had sought to satisfy it. The only property which the enforcement officer had seized and sold had yielded $5.00. That was not enough to meet the enforcement cost, let alone the judgment.
It was put on behalf of Mr and Mrs Reynolds that it was necessary to construe the act of bankruptcy specified in s 40(1)(d)(i) of the Bankruptcy Act as carrying with it an obligation on the part of the petitioning creditor to prove insolvency on the part of the debtor because a quality of insolvency was present in each of the other acts of bankruptcy specified in s 40(1). I reject this submission. In the first instance, it adds a gloss to the specified act of bankruptcy which neither context nor purpose dictates. This is impermissible. Secondly, that it has proved necessary to sell a debtor’s property after it has been seized under a warrant of execution does logically raise a concern about that debtor’s ability to pay the debt concerned and perhaps others. It does not follow from the commission of this act of bankruptcy that the estate of the debtor must be sequestrated. It is open for the debtor on the hearing of the petition to prove that he or she can pay his or her debts. Indeed, it would be a bold creditor who, in the face of the prior provision of such evidence, either filed or further prosecuted a petition relying on this particular act of bankruptcy. All other things being equal and if an ability to pay debts were then proved by the debtor, so to do might expose the creditor to an adverse costs order, perhaps on an indemnity basis.
As already noted, abuse of process was not raised before the court below. Given this and the absence of any requirement that Mr Derek Williams and Mr Roache attend for cross-examination, the learned Federal Magistrate was entitled to act on the basis that such an issue need not concern him. The evidence which was led was not consistent only with a conclusion that either the enforcement warrant or the petition must necessarily be an abuse even though that issue had not been raised by Mr and Mrs Reynolds. There was no other reason why the sequestration order ought not to have been made once his Honour had concluded that the act of bankruptcy and the other formal matters proof of which s 52(1) of the Bankruptcy Act required had been established.
Subject to the Wilson Bill of Sale?
The Wilson Bill of Sale was granted by Mr and Mrs Reynolds on 29 March 1996. By clause 3 of that bill of sale they transferred to RWL Wilson Pty Ltd (the grantee) what was described as the “Mortgaged Property”. That was defined (clause 1.1) to be “the Chattels set out in Item 3”. The word “Chattels” is separately defined in the bill of sale (also clause 1.1) to mean, “the property described in items 3 and 4 of the Schedule and where the Grantor and/or Debtor carries on a Business it shall be deemed to include”, materially, “(g) all other assets whatsoever and wheresoever of the Business”.
It is apparent from the reasons for judgment of the learned Federal Magistrate (at [51]) that his attention was drawn by counsel for Aluma-Lite to that part of the definition of “Chattels” which I have set out. His Honour observed (and the fact is) that the bill of sale defined “Business” by reference to what was specified in item 6 in the Schedule and that the parties to the bill of sale had not specified anything at item 6. The reference by counsel to this definition seems to have been for completeness with the principal submission for Aluma-Lite being that it was only the chattels specified it item 3 in the Schedule which was transferred to the grantee. The import of the observations made by his Honour in relation to the definition of “Chattels” is that he did not regard clause (g) of the definition as relevant because, by leaving item 6 in the Schedule to the Wilson Bill of Sale blank they had rendered that part of the definition of “Chattels” inapplicable. Thereafter, attention in the judgment focussed upon whether the electric motor and gearbox formed part of the property described in item 3 in the Schedule to the bill of sale.
No point was taken on the appeal that the learned Federal Magistrate had misconstrued the bill of sale. Rather, the point advanced by ground 2 of the notice of appeal was that the learned federal Magistrate ought to have concluded that the electric motor and gearbox were covered by the Wilson Bill of Sale. The interest which Mr and Mrs Reynolds had in demonstrating this was obvious. The effect of the Wilson Bill of Sale, as the learned Federal Magistrate correctly concluded, was to transfer property in the chattels specified in item 3 in the Schedule to the grantee. That transfer was subject to the proviso, for which clause 4 provided, that the chattels might be redeemed by Mr and Mrs Reynolds upon payment in full of the monies secured by the bill of sale and upon observance by them of its covenants. There was never a suggestion on the evidence below that the monies secured by the Wilson Bill of Sale had been repaid by Mr and Mrs Reynolds. Thus, if the electric motor and gearbox were covered by the Wilson Bill of Sale, it was not their property which the enforcement officer had sold at auction and hence the act of bankruptcy relied upon would not have been proved.
The onus of proving, on the civil standard of the balance of probabilities, the matters stated in the petition, which included the alleged act of bankruptcy, fell upon Aluma-Lite as petitioning creditor. This creditor’s petition was accompanied, as s 47 of the Bankruptcy Act required, by an affidavit, that of Mr Derek Williams previously referred to, which verified the facts alleged in the petition. As the parenthetical reference in s 52(1)(a) of the Bankruptcy Act states, the court hearing the petition was entitled to “accept the affidavit verifying the petition as sufficient”. Whilst it might be thought that it was a necessary corollary of the challenge made below to the commission of the act of bankruptcy which was pressed that Mr Derek Williams had to be required to attend for and be cross-examined, lest it be said that the verification of the commission of the act of bankruptcy was unchallenged, it was nonetheless understood by all concerned in the court below that Mr and Mrs Reynolds denied that the chattels which were sold by Mr Roache at auction were their property.
In the circumstances, Mr and Mrs Reynolds bore an evidentiary onus to introduce such evidence as would persuade the learned Federal Magistrate that Aluma-Lite had not proved on the balance of probabilities the act of bankruptcy which it pressed.
A difficulty which Mr and Mrs Reynolds faced in doing this was that, though Annexure A to the Wilson Bill of Sale, to which item 3 in the Schedule directs attention, contains a very lengthy list of chattels. Such is the detail that the list extends even to naming a play pen, a cot and a toy tricycle and scooter. The list does not, in terms, refer to an electric motor and gearbox as discrete items of property. Thus, it was not apparent on the face of a contemporaneous document brought into existence by parties apparently dealing with each other at arm’s length that the chattels which years later came to be sold by Mr Roache under the warrant of execution were covered by the Wilson Bill of Sale. There was no other contemporaneous document in evidence which supplied that detail.
Mr and Mrs Reynolds’ case in the court below as to the electric motor and gearbox being covered by the Wilson Bill of Sale depended upon the acceptance by the learned Federal Magistrate of Mr Reynolds’ evidence. His evidence was that the motor and gearbox powered a bale stacker. He said that the motor and gearbox were not attached permanently to that stacker but rather, so as to keep the electric motor out of the weather, were detached and stored in a shed when the stacker was not in use. His evidence also was that, when attached to the stacker, the gearbox powered by the electric motor engaged with a sprocket which, in turn, drove a chain drive by which the stacker operated.
It was common ground in the case that, as a matter of ordinary parlance, a bale “stacker” might equally be described as a bale “loader” or a bale “conveyor”
Annexure A to the Wilson Bill of Sale referred to three such items:
(a)a “Taylor bale stacker”;
(b)an “International bale loader”; and
(c)a “Bale stacker”.
It was Mr Reynolds’ evidence that the last mentioned of these items of plant, the “Bale stacker”, was the one powered by the electric motor and gearbox. He identified this particular item of plant as depicted in photos C and D of Exhibit 2 in the proceeding in the court below.
Neither party led evidence from any officer of RWL Wilson Pty Ltd or from any business records of that company directed to giving precision as to exactly what was the “Bale stacker”.
Mr John Williams, an engineer and the brother of Mr Derek Williams, gave evidence on behalf of Aluma-Lite. He had undertaken an inventory of chattels on Condamine Ponds in October 1996 when Aluma-Lite took possession of the property. The purpose of his so doing was to identify items which were subject to the Wilson Bill of Sale. Mr Williams’ evidence was that he recalled seeing only two bale stackers on the property when he undertook this inventory. One he placed as being in the hay shed at the time; the other he placed as then being in a paddock near the hay shed. He recalled that the bale stacker which he saw in the paddock did not need a motor to operate it as it was attached to a vehicle to propel it. He recalled that the bale stacker which he saw in the shed was petrol driven with a “V” belt drive and not a chain.
It was put to Mr Williams in cross-examination that photos C and D depicted the “Bale stacker”. He did not accept this, describing what was depicted in these photos as “junk”. He accepted that the electric motor and gearbox which came to be sold were not stand alone items but had the purpose of powering some item of plant.
Mr Reynolds’ and Mr John Williams’ evidence coincided in this respect. Each gave evidence that the “International bale loader” referred to in the Wilson Bill of Sale had been given back to Mr Reynolds. They also agreed that the “Taylor bale stacker” had been collected from the property by a Mr McDonald.
Save for this coincidence of evidence, it fell to the learned Federal Magistrate to decide whether he preferred the evidence of Mr Reynolds to that of Mr John Williams in relation to whether there was a third, electrically powered bale stacker on Condamine Ponds. That decision entailed the making of a value judgment by his Honour with respect to credibility.
Messrs Reynolds and John Williams were each cross-examined by counsel on behalf of the respective parties in the course of their evidence before the court below. Necessarily, that conferred upon the learned Federal Magistrate an advantage which I do not have. His Honour had the opportunity to observe and listen to each of them in the course of their evidence. In Walsh v Law Society of NSW (1999) 198 CLR 73 at [54], in the course their discussion of the nature of the appellate jurisdiction exercised by the New South Wales Court of Appeal in an appeal from that State’s Legal Services Tribunal, McHugh, Kirby and Callinan JJ made some more general observations about the ramifications of the advantage which I have just mentioned for the exercise of appellate jurisdiction, irrespective of the technical nature of that jurisdiction:
Some aspects of the appellate procedure will remain the same where the appeal is conducted solely on written materials, whether those materials be technically evidence in a de novo hearing or the record under consideration in an appeal under s 75A of the Supreme Court Act 1987. In either case, the appellate court will be bound generally to defer to any conclusions on the questions of credibility formed by the court or tribunal from whom the appeal is brought where the latter has seen and heard the witnesses. In particular circumstances, it will be open to an appellate court to reach conclusions contrary to those of the court or tribunal below, notwithstanding a credibility finding. Sometimes it will be authorised to reject those findings where they are "glaringly improbable" or "contrary to compelling inferences" of the case. But the caution required of all appellate courts in such matters has long been recognised and frequently upheld in decisions of this Court.
[Footnote references omitted]The cautionary note sounded in these observations in relation to the general deference to be paid by an appellate court to conclusions reached at trial with respect to questions of credibility applies with equal force to the present appeal.
It is relevant when reflecting on the credibility conclusion reached by the learned Federal Magistrate to contrast issues in the Supreme Court action with those in the present. In the Supreme Court action it was in the interests of Mr and Mrs Reynolds to cast their claim in detinue as thoroughly and widely as possible in terms of the loss which they alleged they had suffered. It was a material part of that claim to identify chattels which were subject to the Wilson Bill of Sale and those which were not, especially those which were not. In contrast, one very particular interest which they had in the present case was to place the electric motor and gearbox within the coverage of the Wilson Bill of Sale.
Mr Reynolds was cross-examined carefully and at length by reference to the pleadings, particulars and other documents which gave precision to the claim in the Supreme Court action for damages allegedly suffered by him and his wife by reason of the wrongful detention of goods. Mr Reynolds accepted that these materials had been prepared on his instructions. Any inconsistencies as between the position from time to time adopted in the Supreme Court action in relation to the status of the electric motor and gearbox relative to the Wilson Bill of Sale and the position adopted in relation to those chattels in the Federal Magistrates Court and any explanation given by Mr Reynolds had obvious utility in the making of a value judgment with respect to Mr Reynolds’ credibility. It is obvious from the reasons for judgment of the learned Federal Magistrate (at [38] – [39]) that his Honour well appreciated this:
38.… [It] is difficult to reconcile the evidence of Mr Reynolds with the facts as he pleaded them through the course of the various iterations of pleadings and particulars provided in the [Supreme Court action]. All of these matters were agreed by him to have been matters within his knowledge and he was the source of instructions for the pleadings. It is also inconsistent with his oral testimony. I have no confidence in the reliability of anything he has told me of and I reject his evidence on these matters unless otherwise stated.
39.The question remains whether the electric motor and gearbox form part of the bale stacker which Mr Reynolds says is now in pieces and shown in photograph Exhibit 2-C. I do not accept it is. First I do not accept the material shown in photo Exhibit 2-C is a bale stacker disassembled or otherwise. As Mr Williams said the photograph shows “just a pile of junk”. Mr Reynolds said in his evidence he could see a bale stacker from within the material depicted in the photograph. I think Mr Reynolds was being both wishful and fanciful in the expression of his evidence. I have no reason to doubt Mr Williams’ evidence on this point. From the evidence it appears he has the least to gain personally from the outcome of these proceedings and accordingly less interest in that outcome. The same cannot be said for Mr Reynolds.
In the paragraphs which preceded this passage the learned Federal Magistrate identified a number of inconsistencies as between the position as given by Mr Reynolds in his evidence before his Honour and his position in the Supreme Court action which led him to the conclusions which he expresses in this passage. These inconsistencies were well and accurately summarised in the submissions made on behalf of Aluma-Lite on the appeal (adding a parenthetical reference to the relevant passage from his Honour’s reasons for judgment) as follows:
(a)identifying the electric motor as a discrete item from the two bale stackers (Reasons, [20]-[21]);
(b)identifying the two bale stackers as subject to the Wilson Bill of sale and the electric motor as not being subject to that bill of sale (Reasons, [23] and [32]);
(c)identifying the “Taylor bale stacker” and the “Bale stacker” in the Wilson Bill of Sale as each powered by a 4 horse power Briggs & Stratton engine (conceded by Mr Reynolds to be fuel driven) (Reasons, [33] and [35]);
(d)failing when giving particulars of items which were alleged to be used for the larger items of machinery detailed in an annexure to one version of the statement of claim to make any reference to the electric motor and gearbox when the bale stackers were the subject of that statement of claim (Reasons, [26] to [30]).
When such inconsistencies were highlighted to him in the course of his cross-examination Mr Reynolds’ response was that there had been a “mistake”. How each “mistake” had come to be made over the lengthy interlocutory course of the Supreme Court action was not explained by Mr Reynolds.
Against this background, the learned Federal Magistrate concluded (Reasons, [45]):
Insofar as Mr Reynolds has given evidence that the electric motor and gearbox was part of a bale stacker I am of the view that his evidence on those matters is unreliable. I do not accept his explanation of the various tables prepared as annexures to the pleading and to explain the pleading simply incorporating a mistake which has been compounded through the course of the proceedings. Various documents came into existence after the creation of annexure B to explain annexure B. The preparation of those documents such as the document evident at annexure RNM-21 at page 273, the contracting rates document, annexure B List 2 and List 3 to the 3rd ASOC [amended statement of claim] and particulars provided under cover of letter of 28 October 2006 each afforded Reynolds an opportunity to correct any errors. None were corrected. The 4th ASOC only served to limit the issues. It did not radically alter the course of the [Supreme Court action]. Undoubtedly the 4th ASOC was designed to limit the expense of the [Supreme Court action] by abandoning those allegations which would not have justified their prosecution on a costs/benefit analysis. I am satisfied those documents more reliably reflect the true position than Mr Reynolds’ oral testimony and the recent affidavit prepared for this application.
It was submitted on behalf of Aluma-Lite that, against this background, it was open to the learned Federal Magistrate to regard the documents in the Supreme Court action to which he refers in this passage as more reliable than Mr Reynolds’ oral testimony. I agree. His Honour’s consequential, ultimate finding of fact that the electric motor and gearbox were not subject to the Wilson Bill of Sale is necessarily an unremarkable one.
It was put on behalf of Mr and Mrs Reynolds in both oral and written submissions on the appeal that this ultimate finding of fact was against the weight of the evidence. Though supported in quite some elaborate detail, the unarticulated premise for these submissions was an assumption that the learned Federal Magistrate was bound to accept the testimony of Mr Reynolds where that differed from that of Mr John Williams. His Honour was not so bound.
For example, it was put on behalf of Mr and Mrs Reynolds that Mr Reynolds evidence that photos C and D in Exhibit 2 depicted a disassembled bale stacker should have been preferred to Mr Williams’ “unuseful” description that what was depicted was “junk”. It was submitted that Mr Williams’ answers during cross-examination about these photos was equivocal and non-responsive to most of the questions asked. In contrast, it was submitted that Mr Reynolds’ evidence was “concise” and “refers to an item of equipment he was familiar with as it was something he had purchased and used on the farm for some time”. Such considerations were legitimate to highlight in the court below as factors to take into account in the making of a value judgment as to credibility. Even in the court below they did not compel a conclusion in favour of accepting Mr Reynolds’ evidence. It would do violence to the cautionary note sounded in the observations which I have quoted from Walsh v Law Society of NSW for me to regard the submission as compelling such a conclusion on the appeal.
Mr Williams’ description of what the photos depicted as “junk” was only “unuseful” to the case which Mr and Mrs Reynolds’ sought to make in opposition to the creditor’s petition. The description had utility for the learned Federal Magistrate. It underscored that there was no corroboration of what Mr Reynolds claimed to be depicted in photos C and D in Exhibit 2. The position might be different if these photos, even to an untutored lay inspection, depicted what was obviously a particular item of plant and Mr Williams nonetheless had termed it “junk”. What is depicted in the photos does not though have this quality or clarity.
Further and more fundamentally, even if Mr Reynolds’ description is the more accurate, it does not necessarily follow that the electric motor and gearbox were covered by the Wilson Bill of Sale. The learned federal Magistrate never questioned that there was a third bale stacker referred to in that bill of sale apart from the “Taylor” and “International” models. Photos C and D did not themselves answer what was the power source of whatever was depicted there.
It was further put on behalf of Mr and Mrs Reynolds that the learned Federal Magistrate had misinterpreted Annexures B and D to the amended statement of claim of 3 November 2005 filed in the Supreme Court action. Regard though to the particulars dated 26 November 2006 of this version of the statement of claim and to the answers which Mr Reynolds gave in cross-examination in respect of these documents demonstrates that it is the submission made on behalf of Mr and Mrs Reynolds which is in error. As was correctly put on behalf of Aluma-Lite, “the upshot is that in the amended statement of claim of 3 November 2005 in Annexure B, the two bale stackers at item 26 and 193 are the ‘Taylor bale stacker’ and the ‘bale stacker’ listed in the Wilson Bill of Sale.”
Apart from accepting that the Wilson Bill of Sale referred to three bale stackers, the learned Federal Magistrate opined that there must, at the time when Aluma-Lite took possession of the property, have been a fourth bale stacker somewhere there. The relevant part of his Honours reasons for judgment is para 36.
Another anomaly apparent in the evidence relates to the number of bale stackers. Three bale stackers were covered by the Wilson Bill of Sale. Mr Williams and Mr Reynolds agree from their evidence that in 1992 the International bale stacker was given to the Reynolds. Both Mr Williams and Mr Reynolds also agree that a bale stacker was given to the McDonalds. Although Mr Williams was not able to be particular about the description of the bale stacker he agreed that the bale stacker was similar to that shown in photograph JW4. That bale stacker was similar to the Taylor bale stacker. Mr Reynolds contended the Taylor bale stacker was given to Mr McDonald. Although not spoken of, there must have been a fourth bale stacker on the property for two to be in existence at the time of the preparation of annexure B.
His Honour’s reference to “annexure B” is a reference to Annexure B to the version of the statement of claim dated 3 November 2005. This is one way of explaining the anomaly to which his Honour refers. In any event, as was put on behalf of Aluma-Lite on the appeal, even if this explanation were erroneous, it does not follow that, of the three bale stackers itemised in the Wilson Bill of Sale, one had an electric motor and gearbox.
For these reasons Mr and Mrs Reynolds have not shown, on the bases set out in grounds 2 and 3 (insofar as pressed) of the notice of appeal, that the learned Federal Magistrate was in error in rejecting their claim that the electric motor and gearbox were subject to the Wilson Bill of Sale and thus not their property when sold at auction.
Conclusion
I referred at the outset of these reasons to a first blush impression.
When it is additionally known that Mr and Mrs Reynolds were judgment debtors in 2008 who then owed Aluma-Lite hundreds of thousands of dollars, who did not satisfy that judgment when presented with a warrant of execution, who did not contend when the creditor’s petition was heard that this warrant, the seizure and sale under it or that petition were abuses of process and who did not attempt at the hearing of that petition to prove they could pay their debts and that such of their property as had been possible to seize and sell under the warrant had yielded but $5.00 it is not at all odd that, under our legal system, they might be, and were, made bankrupt.
Their appeal should be dismissed. That means that the sequestration order the operation of which has been stayed pending the determination of this appeal will take effect according to its terms.
There is no reason why the costs of and incidental to the appeal should not follow the event.
I certify that the preceding eighty-seven (87) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Logan. Associate:
Dated: 25 August 2010
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