Shields v Australia and New Zealand Banking Group Ltd

JUDGMENT No. .d62.2..?&

On appeal

f r o m a Judge

the F e d e r a l C o u r t of A u s t r a l i a

BETWEEN:

ISAAC JOHN MACKAY SHIELDS

F i r s t A p p e l l a n t

JENNIFER MARGARET SHIELDS

E a n h n A

A n n n l l 3-4-

AND :

C O W :	E i n f e l d ,	L i n d g r e n ,	L e h a n e	JJ
PLACE :	S y d n e y

DATE :

17 F e b r u a r y 1997

REASONS FOR JUDGMENT

( e x t e m p o r e )

EINFELD J:

This is an appeal against a judgment of Whitlam J, given on 16 July 1996, in which his Honour made a sequestration order against the estate of each of Isaac John Mackay Shields and Jennifer Margaret Shields (the Shields) on the petition of the Australia and New Zealand Banking Group Limited (the bank). His Honour's short judgment stated that he was satisfied with the proof of the matters required by section 52 (1) of the Bankruptcy Act and his Honour noted that the date of the act of

bankruptcy was 18 November 1994. The petition was founded upon

that act of bankruptcy.

The matter commenced in September and October 1992 with proceedings between the bank and the Shields on a mortgage dated 6 February 1990 over the home in which the Shields were then

living (the property). Those proceedings were commenced by the Shields and the bank filed a cross-claim against them seeking judgments in debt and for the possession of the property. On 8

February 1993, Morling J, then a judge of this Court, entered consent orders against the Shields for judgment in an amount of just under $140,000, and for possession of the property. His

Honour dismissed the Shields' amended application seeking effectively the opposite orders.

On 20 July 1993, Wilcox J dismissed a notice of motion filed by the Shields seeking to set aside the judgment and orders made by .Morling J on 8 February. Right to this day the Shields appear to be alleging that the orders which Morling J made were not in fact made by consent or were made in error. On 20 August 1993, a bankruptcy notice was issued against the Shields by a deputy registrar of the Court and on 8 October 1993 the bankruptcy notice was served on Mr Shields. An order was made by Hill J on

9 November 1993 extending the time for compliance by Mr Shields

with the bankruptcy notice and on 22 December of that year the

bankruptcy notice was served on Mrs Shields.

On 16 February 1994, the Shields applied to set aside the bankruptcy notice and on 22 February, Beazley J, when a Judge of

this Court, extended the time for compliance by Mrs Shields with the bankruptcy notice. On 3 March 1994, a Full Court of this Court dismissed an appeal against the judgments and orders made by Morling J on 8 February 1993, a judgment which was undisturbed by the High Court of Australia when it refused an application for special leave to appeal against it on 15 February 1995.

Mr and Mrs Shields also made an application for a jury trial of their application to set aside the bankruptcy notice but it was dismissed on 14 July 1994. On 11 November 1994 the application

to set aside the bankruptcy notice was dismissed and on 25 November the bank presented a creditor's petition which was served on 6 December 1994. The Shields filed an application for an extension of time to appeal against the order made on 11 November declining to set aside the bankruptcy notice, but on 17 February 1995, that application was dismissed.

On 20 February an appeal was lodged against the order declining an extension of time but that was dismissed by a Full Court of

this Court on 27 October 1995. There were also other proceedings in the course of this matter, principally concerning a notice to produce which the Shields had sought to serve on the bank and have answered, but it is not necessary for present purposes to go into the history of that litigation.

The matter comes before this Court now under what is described as a supplementary notice of appeal alleging that Whitlam J erred in making the sequestration order under section 52 of the Bankruptcy Act and under bankruptcy rule 154. The supplementary notice of appeal alleges that his Honour showed bias and demonstrated an incapacity to handle a situation where there was

what was described as a non-legally trained self-litigant, a .reference to Mr Shields, and a highly legally-trained professional person for the bank, a reference to the counsel and possibly the solicitor who then appeared for the bank.

His Honour is also said to have acted in an unconscionable manner in that he, as is described, "disallowed the course of justice" in not enforcing a notice to produce that had been

issued against the bank on 25 June 1996. This was a different

notice to produce than the one which had fallen foul of the Court at an earlier time but this notice to produce was apparently not called upon at the hearing before Whitlam J.

There are certain other assertions in the supplementary notice

o f appeal t o which it i s not necessary t o go

i n particular

d e t a i l . I t w i l l s u f f i c e t o say t ha t the principal point asserted i n the argument on the appeal was tha t no debt has ever been proven t o have ex is ted b y the Shields against the bank. I should mention also t h a t Mrs Shields has not attended t h i s hearing today and Mr Shields has asked t o appear for her. In my view, leave should be granted t o him t o appear for h i s w i f e i n

the

proceedings.

I t i s necessary t o r e f e r t o cer ta in other fac t s as we l l .

the

eve o f the hearing before Whitlam J , an unsigned l e t t e r dated

July 1996 bearing Mrs Shields' name was faxed t o t he Court, and it seems t ha t t h i s l e t t e r d i d come t o t he a t t en t ion o f Whitlam

J .

The

l e t t e r stated

i n part:

I am writing t h i s l e t t e r t o inform you that m y husband has taken ill within the l a s t three hours and has been vomiting profusely. Because he i s due i n court tomorrow 16 July

1996, I thought i t be s t t o inform you that he may be too

ill t o be there and as i t takes him a good two hours t o get

t o the court from where we are current ly staying t h i s i s why I am faxing you t h i s l e t t e r tonight . I t may very well be that he w i l l make some sort o f recovery and be able t o be there, but I thought i t only f a i r and courteous t o l e t you know as much as possible i n advance o f h i s possible absence. I t i s hoped that the court does the r igh t thing

i f M r Shields i s not able t o be i n court and orders the

respondent t o produce the documents i n the not ice t o

produce.	The proceedings have not ceased i n the Supreme
Court.

I am not entirely sure what is being referred to by "the proceedings in the Supreme Court" but it is not immediately relevant. In the events that occurred, his Honour decided to proceed with the hearing of the application for a sequestration order. The hearing had been specially fixed for hearing by a Judge of the Court some time earlier, and his Honour determined in a brief judgment given at the time that he should:

. . . accede to the petitioner's application to proceed in

the absence of the debtors.

There was no explanation as to why Mrs Shields was not or could not have been present on the day, although Mr Shields said today that they had young children, by which I assume he meant that Mrs Shields had duties to the children as a mother which prevented her from coming. None of this has ever been deposed to in any affidavit and even to this very day no medical certificate or any other corroboration of Mr Shields' illness has ever been presented to the Court.

If we read the assertion in the notice of appeal that Whitlam J acted in an unconscionable manner to mean that his Honour should have granted an adjournment of the hearing, and it should be noted that no such argument has been raised today, it will suffice to say that in my view such a ground has not been made

out. Nothing else argued could possibly fit the allegation of

unconscionability.

So far as concerns the notice to produce, the assertion was that if the notice to produce had been called upon and if the

documents had been produced, it would have been possible for the

Shields to establish that there was no debt. I shall return to this argument in a moment but it is to say the least unusual to suggest that the Judge should have called upon the bank to produce the documents referred to in the notice to produce and then, because neither of the Shields was present, made a search of them himself in order to investigate whether the debt existed. For that is the consequence of the argument that the notice to produce was not called upon and that his Honour did not force the bank to produce the necessary documents at the hearing. Without either of the Shields being present to take his Honour through the documents to establish the fact sought to

be established, it is difficult to see what Whitlam J would have

done with the documents if the notice to produce had been

enforced.

On 3 February, Mr Shields filed a motion in this appeal principally seeking the following orders:

(1)

That the ANZ Bank be required to show a proof of debt

or that it should now be found that time to show the

proof of debt has expired;

(2) That there is no money owing by Mr and Mrs Shields to

the bank;

(3) That a sequestration order should be made against the

bank.

The motion does not appear to me to comply with any of the rules which apply to an appeal of this kind. Moreover, Mr Shields has filed an affidavit in support of the motion which does not

support any of the orders sought in the motion, nor does it comply with any of the rules that would permit the Court to have regard to it on appeal, in that there is no fresh evidence in the affidavit that could not have been produced at a much earlier time, particularly at the time when the original hearing from which this appeal comes took place. Indeed there is no true evidence in the affidavit at all. Clearly the last order sought is completely untenable.

Nevertheless, in order to do overall justice in the matter, it seemed to me that we should accept the motion and that we should read the affidavit. It is significant that the affidavit, which annexes a considerable number of documents and makes some fairly assertive claims, does not at any time deny that the debt was owing. Nevertheless, Mr Shields asked us to read it that way saying that any ordinary member of the public who is not a lawyer would read it as a denial of any indebtedness. If it is

taken to deny the debt, it certainly does not seek to explain

the assertion that no debt is owing. There are no facts in the affidavit describing the relationship between the Shields and .the bank, by which I mean the contractual relationship between them, despite its saying that the Shields' family have lost their home to the bank. If the property was sold under the power of sale in the mortgage, then it would be extraordinary that nothing was ever done to attempt to stop the sale, supported by an affidavit which said that the bank was owed no money by the Shields; that its claim was mistaken, fake or false; and that there were no grounds at all for the allegation that the Shields owed the bank any money.

Although Mr Shields argued, if I may say so with considerable eloquence, that these are a lawyer's points, and not points that would be ordinarily understood by lay members of the public, it seems to me that members of the public well understand that when a public or private authority, particularly one as large as the

ANZ Bank, makes assertions against them that moneys are owing,

there are ample means of making their voices heard that the were or would otherwise be under threat.

moneys are either not owing at all or are excessively claimed.

.In those circumstances, it is more than surprising, especially where the litigants are as experienced as Mr and Mrs Shields,

that there never has been filed in the Court even to this very day an explanation of the facts as between the Shields and the

bank which would exculpate them from the debt which the bank

claims from them. The assertion by Mr Shields, in his argument today, in the affidavit to which I have referred, and in other documentation before the Court, that the bank has never proved a debt to this Court or any other court is quite false. In fact

the creditor's petition alleges in paragraph 3 that the Shields

are

. . . each justly and truly indebted to the bank for moneys

advanced by the bank to the first named debtor and the second named debtor in the sum of $35,846.70 and no more, being the current balance of a judgment debt due under a final judgment for $139,829.37, entered for the bank against the first named and second named debtor in the Federal Court of Australia, New South Wales District Registry, General Division, at Queen 'S Square, Sydney, New South Wales, on 8 February 1993, being a judgment the execution of which has not been stayed.

In support of that assertion, the petitioning creditor tendered to Whitlam J in the hearing below an affidavit of David Arthur Richard Brassington of 116 Miller Street, North Sydney, who swore that he was a relieving asset manager of the New South Wales Country and ACT Zone of Australia and New Zealand Banking Group Limited, the petitioner. He said that "he was authorised by the bank to make the affidavit", and he swore in paragraph

three of his affidavit that "the statements contained in

paragraphs 1, 2, 3, and 4 of the petition were within his own

knowledge true".

In an affidavit tendered to his Honour of Dorothy Margaret Person, a licensed commercial agent, dated a day in December 1994, it was proved that Mr Brassington's affidavit together with various other relevant documents were served on Mr and Mrs Shields. By an affidavit dated 15 July 1996 by Ian Douglas Geddes, an asset manager in the employ of the bank, it was stated that the amount of $35,846.70, owing by the Shields, was still at that date wholly due and unsatisfied. This is evidence not only that the Shields owed the sum claimed in the petition but also that despite the passage of something of the order of

eighteen months, they had not paid the debt by the time of the

hearing before Whitlam J.

No evidence has been brought subsequently, including in Mr Shields' affidavit supporting the motion to which I have earlier referred, that there was any error in any of these statements in the affidavits upon which his Honour relied in the judgment for the sequestration order given on 16 July 1996. In those circumstances, his Honour's finding that he was satisfied with the proof of the matters required by section 52 (1) of the Bankruptcy Act cannot be challenged. That is simply because there is no contrary evidence to that presented by the bank, nor

has anything been presented to this Court to show that there is any doubt about the correctness of the evidence upon which his Honour acted.

I can find no error under section 52 of the Bankruptcy Act nor under rule 154 of the Bankruptcy Rules. I cannot find any evidence of bias by his Honour, and indeed no argument has been addressed to suggest that he did show bias. So far as concerns the assertion in the supplementary notice of appeal that his Honour demonstrated an incapacity to handle the situation of a non-legally trained litigant against a competent barrister and solicitor, it will suffice to say that there was no such litigant before his Honour on the day in question because neither of the appellants appeared. But in the circumstances, even if it be accepted that some material was before his Honour, including a notice of intention by the debtor to appear at the

hearing of the petition, that required him to give attention to

the possibility that the evidence being presented by the petitioning creditor might be incorrect in some respect, there has not been demonstrated any failure by his Honour to give due and proper consideration to that material.

I have already referred to the Shields' complaint concerning the

notice to produce. To the assertion in the supplementary notice

of appeal that:

. . .

had

the documents been produced in the notice to I can only say that there is no evidence or material to support the assertion.

produce,

the outcome would have been substantially I should finally make mention of three other matters which Mr Shields raised at the threshold today. The first one is that I should disqualify myself from sitting on this appeal. This arises from a judgment which I gave on 11 November 1994 declining an application to set aside the bankruptcy notice. It

different

...

will suffice for me to say that I agree with my brethren that there is nothing in that judgment which would call upon me to disqualify myself from this hearing.

The second is that on 27 January 1997 Mr Shields faxed to the Court a request for the making available to him of a person to read documents for him upon this appeal. This request was based upon the assertion that he had received only a total of three years of primary education and that "as an illiterate person and someone who cannot read English", he was entitled to the same provision as is made available to people who cannot speak English. In my opinion, no ground was made out for the . , :.. provision of such a person. Mr Shields has presented a deal of

affidavit evidence in this as he has in most of his other proceedings. Where necessary, he read from this material perfectly clearly, efficiently and cogently. He has argued for himself and his wife in this appeal, as he has in many other proceedings before the Court, in an efficient, intelligible and even eloquent manner. If he ever had it, he has long since lost any fear of putting the most trenchant and pointed arguments to a court composed of senior Judges. Obviously the Court would make all possible arrangements to assist any deserving person in presenting a case. Mr Shields is not such a person.

The third preliminary application was that the bank should produce Mr Ian Douglas Geddes for cross-examination. As pointed out in argument, it was not Mr Geddes but Mr Brassington who actually gave the evidence that the debt existed, but in any event there was no warrant for anyone being called for cross- examination in this appeal for the purpose of enabling or assisting Mr Shields to establish that there was no debt. This appellate court is simply not the place for any such exercise.

The respondent moved the Court for the appeal to be dismissed for want of prosecution. This application was based upon an affidavit by an employed solicitor in the office of the solicitors for the respondent stating that, despite orders of a deputy registrar on 25 October 1996, the Shields did not file

their Appeal Books. Lockhart J, who calls over the Full Court list, also urged Mr Shields to put on his appeal papers. Yet they were in fact only handed to the Court today. Explanations were given by the Shields as to why this was not done in the time fixed, and these explanations were hardly convincing.

However, it is my view that the contents of them provided no prejudice to the respondent or to the Court as to suggest that anything should flow from the failure to comply with the earlier orders of the Court as to their filing. I would therefore dismiss the motion of the respondent.

It is my view that the appeal of the appellants and the motion which they have filed within the appeal should both be dismissed.

LINDGREN J:

I agree with the orders proposed by the learned presiding judge and I also agree generally with his Honour's reasons.

There are three brief matters to which I wish to refer. The first is that the thrust of the argument mounted by Mr Shields

today was that the respondent to the appeal ("the Bank") had not proved the existence of the debt. It was only after the

argument had proceeded quite some distance and after being pressed, that Mr Shields was prepared to make the statement from the bar table that the debt was not owing.

8 .

l	,The supplementary notice of appeal refers to s 52 of the
l
!	l	Bankruptcy Act 1966 which provides relevantly that:

At the hearing of a creditor's petition, the Court shall

require proof of:

. . .

petitioning creditor relies is or are still owing.

It is clear that there was proof before the trial judge of the existence of the debt, in the form of the affidavits to which the presiding Judge has referred. It was not incumbent upon the trial Judge, as perhaps the appellants think it was, to embark upon an investigation and testing of the Bank's evidence of the existence of the debt.

The second matter relates to the notice to produce dated 25 June 1996 (the supplementary notice of appeal erroneously refers to its date as 25 July 1996). That notice to produce called upon the Bank to produce documents on the hearing. Again, I agree

with all that the presiding Judge has said in relation to the ground of appeal relating to the notice to produce. It was not incumbent upon the trial Judge somehow to enforce the notice to

produce against the Bank on the ex parte hearing on 16 July

1996.

On the hearing today, Mr Shields has not concentrated any argument on the fact that the hearing proceeded on 16 July in the absence of himself and his wife. It is not amiss to note in this respect, however, that the hearing had been adjourned from

25 June 1996 on the appellants' application and over the

opposition of the Bank. That is to say, it was after a contested adjournment application that the matter was fixed for hearing on 16 July 1996. The appellants have not today led any medical evidence in support of the claim made in the facsimile transmission of 15 July 1996, referred to by the presiding Judge. Moreover, there was, and still is, no evidence filed on behalf of the appellants that the debt is not in fact owed.

The final matter to which I would refer arises out of Mr Shields' reference in his written submission to, Corney v Brien (1951) 84 CLR 343. That case is distinguishable from the

present one. In that case, the trial Judge had in fact, and on the basis of evidence, exercised the discretion to go behind the judgment and investigate the question whether there was an

underlying debt. In those circumstances, it was held that since the evidence had failed to reveal a debt, it was wrong to make a sequestration order. Those facts bear no resemblance to the facts which were before trial Judge in the present case.

LEHANE J:

I also agree with the order proposed by the learned presiding

judge and substantially with his reasons. I agree additionally

with the observations made by Justice Lindgren.

The orders of the court will be:

The appeal and the motions of both the appellants and the respondent will be dismissed.

[AFTER DISCUSSION]

It is the decision of the Court that the respondent should have its costs of the appeal but that the dismissal of the motions

should not carry orders for costs. Having regard to some

observations of Mr Shields on the issue of costs, we would observe that whether orders for costs are enforced and whether they are capable of being collected are not matters for the Court, nor is it appropriate for the Court to investigate the general activities of banks as they affect ordinary members of the public. We are in this appeal only considering the correctness or otherwise of the decision of the trial judge in this particular case, and nothing we have said or implied in the judgments which have been given should be taken to give any

approval or express any disapproval of any activities of banks in our community or of the A N Z Bank in particular in relation to

any of its customers.

I certify that this and the 18

preceding pages are a true c ~ p y

of the

Reasons for Judgment herein of his Honour

Justice Einfeld

Associate

Dated: 17 Apr i l

\9q7

[1997] FCA 1607

17 Feb 1997