Schepis & Anor v. Esanda Finance Co Ltd

[2007] QSC 56

[2007] QSC 056

SUPREME COURT OF QUEENSLAND

CIVIL JURISDICTION

CULLINANE J

No S521 of 2006

ANTHONY SCHEPIS

and

MICHELE DEBRA SCHEPIS

First Plaintiff

Second Plaintiff

and

ESANDA FINANCE CORPORATION LIMITED

and

JONES CONDON AUSTRALIA PTY LIMITED

and

KEMP STRANG LAWYERS PTY LIMITED

First Defendant

Second Defendant

Third Defendant

TOWNSVILLE

..DATE 09/03/2007

JUDGMENT

HIS HONOUR: This is an application by the first and the third defendants for judgment against the plaintiffs pursuant to rule 293 of the Uniform Supreme Court Rules, or in the alternative for an order that the claim and statement of claim of the plaintiffs be struck out, or in the further alternative that the matter be transferred to the Supreme Court of New South Wales at Sydney pursuant to the cross-vesting legislation.

A substantial body of material has been filed in the matter by the parties, particularly the plaintiffs who are unrepresented.  Mr Schepis appeared on behalf of he and his wife here today.  The proceedings were instituted on the 18th of August 2006.

By the claim, the plaintiffs seek damages due to what is said to be the wrongful repudiation of a lease between a company and the first defendant and the first respondent's fraud in conjunction with the second and third defendants in fabricating evidence and placing it before the local Court in Sydney in proceedings relating to the termination of the lease and the alleged indebtedness of the plaintiffs as guarantors of the lessee's obligations.

The third respondent is a corporation.  The material placed before me shows that it was not in existence at the time of the matters alleged in the statement of claim, something which  the plaintiffs acknowledge to be the case.

The relief sought in the claim can be summarised as the loss of the value of the shares in the company to which I have referred, the loss of assets of the plaintiffs which had to be sold to meet the debts and legal expenses that the plaintiffs incurred as a result of the action of the defendants, legal costs, damages for anguish and damages for loss of opportunity.

The second defendant is said in the statement of claim to have conducted the business of insolvency accountants.  Again the material shows that it was not in existence at the relevant time but the second defendant does not make application for judgment or to have the proceedings struck out.

It seems that the second and third defendants have been incorporated since the relevant time.  There is evidence which suggests that unincorporated associations carried on the respective practices of the second defendant and the third defendant prior to the incorporation of these defendants.  There thus seems little room to resist the application so far as it concerns the third defendant.

The allegations against the second defendant are not specifically relevant then to this application since it is not a party to it, but generally they concern it's actions as liquidator of companies controlled by or associated with the plaintiff. 

The plaintiffs guaranteed, as I have said, the obligations of the company which entered into the lease of certain equipment, with the first defendant.  The company carried on a business in the course of which the equipment, the subject of the lease, was used.  The plaintiffs have filed a substantial body of material as I have said, much of which is in the nature of assertions not relevant to any matter before this Court.

The relevant background of the matter can be briefly stated as can the difficulties which are facing the plaintiffs in bringing the action.

The first defendant sued the plaintiffs as guarantors in respect to the company's obligations under the lease.  It alleged that the company offered to return the goods to it and that it agreed to accept them and subsequently sold them and that in consequence there were moneys due and owing under the lease by the company to the first defendant for which the plaintiffs as guarantors were responsible.

In the alternative it was alleged that in breach of the lease the company had failed to keep the goods under its control and attempted to sell them and that in those circumstances the first defendant was entitled to repossess them and sell them and to claim damages from the plaintiffs as guarantor.

Initially proceedings which were instituted in the local Court in Sydney by the first defendant and in respect of which judgment was obtained by default, was set aside when questions were raised about the service of process.  However, subsequently the matter was litigated before that Court and the litigation resulted in a judgment for the first defendant against the plaintiffs.  The judgment was entered on the 9th of July 1999 in the sum of $48,574.13.  The earlier judgment which had been obtained was set aside in 1994 so that a substantial period had passed between that judgment which was entered on the 24th of August 1992 being set aside and judgment being entered after a hearing.

From this judgment the plaintiffs appealed to the Supreme Court of New South Wales in Sydney and by a judgment of the 14th of February 2000, the appeal was dismissed.  The plaintiffs then appealed to the Court of Appeal in New South Wales and the appeal was dismissed on the 25th of August 2000.

It appears that there was an application for special leave to the High Court but this did not ultimately proceed.

In these proceedings the plaintiffs are seeking to, in effect, overturn the judgment or to go behind it upon the basis that the judgment should not have been given against them and that perjured evidence was placed before the Court and fabricated documents were produced to the Court.  The latter appears to relate primarily to what are described as scratch pad notes of the first defendant.

The first defendant has pleaded res judicata as a defence.  It is of course axiomatic that this Court, the Supreme Court of Queensland, has no power to set aside a judgment of a Court of another State.  It is also plain that what the plaintiffs now allege in their pleadings amounts to a claim that the first defendant repossessed the goods when it had no right to do so, something which has already been determined against the plaintiffs in the proceedings to which I have referred.

Similarly it has been determined that the plaintiffs were liable in the amount to which I have referred, to the first defendant.  It seems to me that the defence of res judicata cannot be overcome by the plaintiffs in these proceedings and is a complete bar to them.

A Court has power to set aside a judgment of that Court where it is shown that the judgment was procured by fraud. See Wentworth v. Rogers (No 5) (1986) 6 N.S.W.L.R. 354. However, there is no power in this Court to set it aside.

Mr Schepis today referred to bankruptcy proceedings which have been taken against he and Mrs Schepis.  Initially there was an application to set aside a notice of bankruptcy which failed.  The matter went to the Federal Court on appeal and failed and is now, I am told, the subject of an application for special leave.

The hearing of the bankruptcy petition itself is due to take place before the Federal Magistrates Court here in Townsville.  An issue has arisen there as to the extent to which the Court in the bankruptcy proceedings is entitled to look behind the judgment for the purposes of determining whether the acts of bankruptcy have been made out.  It was not contested here that it is something that in the bankruptcy proceedings the Court in exercising that jurisdiction, has the power to do and I am content to proceed upon that basis.

The issues there however, are quite different to those which the plaintiffs raised in their pleadings here.

Rule 293 of the Uniform Civil Procedure Rules provides as follows:

"(1) A defendant may, at any time after filing a notice

of intention to defend, apply to the court under this part for judgment against a plaintiff.

(2) If the court is satisfied—

(a) the plaintiff has no real prospect of succeeding
    on all or a part of the plaintiff’s claim; and
(b) there is no need for a trial of the claim or the
    part of the claim;

the court may give judgment for the defendant against the plaintiff for all or the part of the plaintiff’s claim and may make any other order the court considers appropriate."

The matter is one which in my view, for the reasons I have already given, falls within the rule.  It does not seem to me appropriate to consider an order under the cross-vesting legislation.

If Mr and Mrs Schepis wish to take steps to set aside the judgment, then they can apply to the local Court in New South Wales to do so.  This was of course the Court at first instance and Mr Schepis has indicated that he proposes to do so.

The appropriate course then it seems to me, is to enter judgment for the first and third defendants against the plaintiffs.  I give judgment for the first and third defendants against the plaintiffs with costs to be assessed.

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