State Bank of NSW v Gomez - [2004] FMCA 244

FEDERAL MAGISTRATES COURT OF AUSTRALIA

STATE BANK OF NSW v GOMEZ

[2004] FMCA 244

BANKRUPTCY – Application for Sequestration Order – where debtor has filed Notice of Intention to Oppose – where debtor seeks to go behind the judgment by alleging fraud on the part of the Petitioning Creditor – where debtor has brought proceedings in the Supreme Court of New South Wales making same allegations – where those are allegations are withdrawn – where debtor claims fault in not prosecuting fraud allegations lay with his legal advisers- where there is considerable delay – whether Notice of Intention to Oppose is an abuse of process.

Bankruptcy Act 1966 (Cth), s.52(1)

Applicant:

STATE BANK OF NEW SOUTH WALES LIMITED (ACN 003 963 228)

Respondent:

JOSEPH WENCESLAUS GOMEZ

File No:

SZ 2875 of 2003

Delivered on:

20 April 2004

Delivered at:

Sydney

Hearing date:

20 April 2004

Judgment of:

Raphael FM

REPRESENTATION

Counsel for the Applicant:

Mr R Harper

Solicitors for the Applicant:

Garland Hawthorn Brahe

For the Respondent:

Respondent in person

ORDERS

Sequestration order made against the Estate of Joseph Wenceslaus Gomez.
John Maxwell Prentice is appointed trustee of the bankrupt’s estate.
The applicant creditor’s costs be taxed in accordance with the Federal Court Rules and paid from the estate of the respondent debtor in accordance with the Bankruptcy Act 1966.

The Court notes that the date of the act of bankruptcy is 12 December 2003.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SZ 2875 of 2003

STATE BANK OF NEW SOUTH WALES LIMITED
(ACN 003 963 228)

Applicant

And

JOSEPH WENCESLAUS GOMEZ

Respondent

REASONS FOR JUDGMENT

This matter comes before me today as the second return date of a petition seeking a sequestration order against Joseph Wenceslaus Gomez. The proceedings between the applicant and the debtor have a history dating back to 1996 when the bank, which had lent a considerable sum of money to the debtor, commenced original proceedings in the Supreme Court of New South Wales claiming, inter alia, a monetary judgment in the sum of $2,974,463.31 and orders for possession.
Those proceedings were finalised. Judgment for possession was given and a monetary judgment was also entered in favour of the applicant. The properties were sold and the balance of the moneys owed were then sought to be collected. The bank issued a bankruptcy notice against Dr Gomez, which was the subject of an application to set aside. This was heard in the Federal Court and it was unsuccessful on the part of the debtor. An appeal did not disturb the original decision.
In 2000 Dr Gomez also commenced proceedings in the Supreme Court of New South Wales under matter No 20640 of 2000 seeking damages against the bank arising out of the same loans. I am not entirely sure what happened in the early stages of those proceedings save that they were commenced on 21 November 2000 and an amended statement of claim had been filed on 6 December 2002. In any event, by the time the bank had decided to issue a new bankruptcy notice on 27 May 2003, those proceedings were still in existence.
Dr Gomez sought to have that new bankruptcy notice set aside and the matter was referred to the Registrar for that purpose on 10 July 2003. The application was adjourned so that a notice of motion in the Supreme Court of New South Wales, relating to a further amendment to the statement of claim and a counter notice of motion for the dismissal of the statement of claim, could be heard in that court.
I interpose here to say that the second bankruptcy notice was the subject of an order for substituted service. On 21 November 2003, Master Malpass heard the Supreme Court applications. Dr Gomez was represented by counsel and by solicitors. On 25 November 2003 Master Malpass gave judgment in the matter. I have had the opportunity of seeing that judgment, where at paragraph [10] the learned Master says:
“On 29 August 2003 the plaintiff filed in this Court a Notice of Motion seeking to further amend the Amended Statement of Claim. It annexes a copy of the proposed Further Amended Statement of Claim. This document contains a number of amendments which have been described as being, inter alia, grammatical in nature. It also sought to add two new paragraphs (paragraphs 26A and 26B). Paragraph 26A propounds the proposed claim to have the judgment in the 1996 proceedings set aside on the grounds of fraud. Paragraph 26B alleged that the judgment obtained in 1998 was unconscionable.”
At [13] the learned Master says:
“ At the commencement of the hearing of the Notices of Motion, counsel for the plaintiff advised that his client did not propose to press the amendment sought in paragraphs 26A and 26B, but did wish to press the other amendments. By consent, the course was taken of putting that Notice of Motion aside to abide the result of the defendant's Notice of Motion.” (emphasis added)
The learned Master then went on to find for the defendant on its notice of motion on the basis of res judicata, issue estoppel and Anshun estoppel. At [18] he said:
“After carefully reading the pleading, the material placed before the court and listening to submissions made by counsel for the plaintiff, I have come to the view that I am satisfied that the Amended Statement of Claim fails to disclose a reasonable cause of action and is an abuse of process. In my view, the defendant is entitled to have it struck out.”
There was no appeal from this decision. On 27 November 2003 the application to set aside the bankruptcy notice was argued before the Registrar and was dismissed. I am advised that the question of fraud was not alleged on that occasion. No review of the decision of the Registrar was requested. The application for a sequestration order was issued on 23 December 2003. Once again, substituted service was required. The first date of the hearing of the petition was 19 March 2004 when the matter was stood over untill today. Dr Gomez has filed on 14 April 2004, a Notice of Intention to Oppose Application or Petition.
His grounds are that the judgment of 29 April 1998, upon which the bankruptcy notice was founded was, in all the circumstances obtained by misrepresentation and fraud. When the matter came on for hearing before me today, I determined that I should consider whether or not I would permit the Notice of Intention to Oppose the application to be argued by Dr Gomez in the light of the representations by counsel for the petitioning creditor but these were all matters that had been argued over the last eight years and should not be permitted to be further rehearsed.
I asked Dr Gomez to address me on the matter and he did so at some considerable length. He also produced for me an affidavit dated 12 April 2004 and a document entitled “outline of applicant's submissions”.
The thrust of Dr Gomez's argument that these matters should now be agitated is that the question of fraud has never before been considered by any court. He told me that he had first discovered the evidence which led him to believe that the bank had acted fraudulently in 2000 in the discovery process relating to the first bankruptcy notice.
He told me that he had raised the matter with his solicitors but they had declined to do anything or had just not done anything. He told me that he had dismissed his solicitors and employed another firm whom he requested to act on his behalf in connection with the fraud matters but they had not done anything either. He told me that today was the first occasion upon which he had had an opportunity to raise properly the allegations of fraud.
I do not accept what Dr Gomez says. It is quite clear from the judgment of Master Malpass and from the further amended statement of claim that I have previously referred to that the question of fraud was very much alive and for some reason or other not explained to me by Dr Gomez it was not pressed before the Master. It is also quite clear from Dr Gomez's own admissions that he knew about the fraud in 2000 and that he allowed his own agents not to prosecute a case which he believed was the one thing that was going to stand between himself and bankruptcy.
Dr Gomez may have been badly served by his solicitors. But that is really not a matter which this court should take into account given the enormous delay that has occurred since judgment was first obtained and the public interest in ensuring the bankruptcy proceedings are dealt with speedily and for the benefit of all creditors.
I am of the view that the application made by Dr Gomez to oppose the application or petition is an application made in abuse of process of the court. Dr Gomez has said that fraud vitiates all matters and I think he is right in that. He has also said that his allegations of fraud extend not only to the bank but to legal officers of the bank and therefore to persons who are officers of this court. He believes that it is essential that the matter is agitated and that he has an opportunity to put his case in full.
I have some sympathy for him but I do not think that this detracts from my earlier view that the delay, the failure to properly instruct those who he employed to act for him and the very serious matter of the withdrawal of the very allegations which he says he now wishes to make all conspire to defeat the submissions that the fraud charge should be heard.
I make these comments without going into any detail of the charges that are made. Dr Gomez tells me that he has filed three affidavits concerning them. I think it would be wrong of me to make any comment upon them because that would effectively bring the matters into contention which I do not believe is the appropriate thing in all the circumstances.
I therefore dismiss the Notice of Intention to Oppose Application and I invite Mr Harper to establish those matters required by s.52 of the Bankruptcy Act 1966 (Cth) so that I can, if satisfied, make a sequestration order.
I am satisfied of the matters required to be proved under s 52(1) of the Bankruptcy Act and I make a sequestration order against the Estate of Joseph Wenceslaus Gomez. I note that John Maxwell Prentice of Messrs Prentice Parbury Barilla has by notice of consent dated 9 March 2004 agreed to act as trustee and I so appoint him. I note the date of the act of bankruptcy is 12 December 2003 and I order that the creditor’s costs of the petition be payable out of the estate of the debtor and to be taxed if not agreed pursuant to the Federal Court Act and Rules.

I certify that the preceding seventeen (17) paragraphs are a true copy of the reasons for judgment of Raphael FM

Associate:

Date: