Stone v Viterra Ltd Formerly Known as ABB Grain Ltd
[2017] FCCA 1307
•19 June 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| STONE & ANOR v VITERRA LTD FORMERLY KNOWN AS ABB GRAIN LTD & ANOR | [2017] FCCA 1307 |
| Catchwords: BANKRUPTCY – Application to set aside sequestration order made by registrar in 2011 – applicants now discharged from bankruptcy – jurisdiction – abuse of process – application dismissed. |
| Legislation: Federal Circuit Court Act 1999: ss.17A, 103, 104 |
| Cases cited: Stone v Permanent Custodians Limited [2016] WASCA 200 Daskalovski v The Austral Brick Co Pty Ltd [1998] FCA 782 McKellar v Container Terminal Manager Services Limited (1999) 165 ALR 400 Dey v Victorian Railway Commissioners (1949) 78 CLR 62 Webster v Lampard (1993) 177 CLR 598 at 602 |
| Applicants: | PETAH JOHN STONE & VALERIE KAYE STONE |
| First Respondent: | VITERRA LTD FORMERLY KNOWN AS ABB GRAIN LTD |
| Second Respondent: | LANDMARK OPERATIONS LTD |
| File Number: | ADG 290 of 2010 |
| Judgment of: | Judge Brown |
| Hearing date: | 13 June 2017 |
| Date of Last Submission: | 13 June 2017 |
| Delivered at: | Adelaide |
| Delivered on: | 19 June 2017 |
REPRESENTATION
| Counsel for the Applicant: | In person |
| Counsel for the First Respondent: | Mr Carragher at the first hearing then excused from further attendance |
| Solicitors for the First Respondent: | Thomson Geer |
| Counsel for the Second Respondent: | Ms Link |
| Solicitors for the Second Respondent: | Norton Rose Fulbright Australia |
ORDERS
The application filed on 7 March 2017 is dismissed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADG 290 of 2010
| PETAH JOHN STONE & VALERIE KAYE STONE |
Applicants
And
| VITERRA LTD FORMERLY KNOWN AS ABB GRAIN LTD |
First Respondent
And
| LANDMARK OPERATIONS LTD |
Second Respondent
REASONS FOR JUDGMENT
The application and background
On 16 May 2011, a registrar of this court ordered the sequestration of the estate of Petah John Stone and Valerie Kaye Stone on the petition of Viterra Ltd, which was formerly known as ABB Grain Ltd. At the time of the petition, it was the position of Viterra Ltd that Mr and Mrs Stone were indebted to the petitioner in the sum of $500,000.00 in respect of the supply of fertiliser, which had not been paid for.
The petition of Viterra Ltd was filed in the court on 28 October 2010. It was the sole petitioner. Thereafter the proceedings were adjourned on a number of occasions, whilst issues of service of the petition were dealt with by the court. Mr and Mrs Stone subsequently appeared in the proceedings and were apparently before the court when the sequestration order was made. In the period immediately following the sequestration order, Mr and Mrs Stone did not seek any review of the registrar’s decision. A trustee of their estate, Mr Conlan was appointed.
On 16 March 2017, Mr and Mrs Stone filed a document headed Interim Application, pursuant to the provisions of Rule 2.01 of the Federal Circuit Court (Bankruptcy) Rules 2006. The application apparently relates to the sequestration order made on 16 May 2011. In addition to Viterra Ltd, the application also names Landmark Operations Ltd and Permanent Custodians Ltd, as respondents, although these entities were not apparently involved in the original proceedings.
Sub-Rules (3) & (4) of Rule 2.01 require any application to the court, purportedly brought pursuant to the provisions of the Bankruptcy Act 1966, to state each section of that Act or of the related Bankruptcy Regulations , under which the proceeding in question is brought.
Mr and Mrs Stone personally prepared the application in question. I am not sure precisely which provisions of the Act are said to be applicable. It is not easy to follow the application. However, as I understand the application, it seeks to set aside the sequestration order made on 16 May 2011.
The grounds of this application can be summarised as follows:
·The sequestration order was obtained by fraud;
·It is interlocutory in nature;
·It is an injunction or for the appointment of a receiver;
·Does not reflect the intention of the court; and
·Is made in favour of a respondent, who consented to it.
On 13 June 2017, I dismissed Mr and Mrs Stone’s application. At the time, I provided brief oral reasons in support of this decision. Essentially, Mr Stone confirmed that he and his wife had been discharged from their bankruptcy on 30 June 2014. He also advised that the documents, currently filed on his behalf in this registry of the court, had been refused for filing, in the court’s Perth registry.
I approached the application on the basis that it was one seeking a review of the registrar’s decision to make the sequestration order in question or otherwise to set it aside. As the bankruptcy had been finalised, I further took the view that there was no sequestration order to review or set aside in any event. Therefore I had no jurisdiction to deal with the application brought by Mr and Mrs Stone.
At the time, I asked Mr Stone which particular provision of the Bankruptcy Act on which he relied. He was unable to tell me and sought more time to research the matter. He also informed me that he was seventy-four years of age and the sequestration order in question had wrought a significant injustice on him and his wife.
I was not prepared to adjourn the proceedings further, given my view that the application was misconceived. I therefore dismissed the application. I acknowledge that this decision is likely to have caused Mr Stone some distress. He has requested that I provide more reasons in support of this decision. These are the reasons requested by him.
In support of their application, Mr and Mrs Stone deposed a lengthy affidavit. Again, it is not always easy to follow the logical thread of this affidavit, which largely consists of the annexure of other documents, particularly proceedings between Mr and Mrs Stone and Permanent Custodians Ltd, filed in the Supreme Court of Western Australia.
As best as I can understand Mr & Mrs Stone’s position, it is that the sequestration order in question had robbed them of their standing to sue a number of individuals, particularly Permanent Custodians Ltd and Landmark Operations Ltd, which had allegedly dealt with them in a financially harsh way, during the period of their bankruptcy and beforehand.
Pursuant to the provisions of section 149 of the Bankruptcy Act, a bankrupt is discharged from bankruptcy three years after he or she filed his or her statement of affairs. Annexed to Mr and Mrs Stone’s affidavit is a letter from the Australian Financial Security Authority, which advises that they were discharged from their bankruptcy on 30 June 2014.
One of the consequences of bankruptcy is that, pursuant to the provisions of section 116(1)(b) of the Act, a bankrupt’s capacity to take proceedings, on his or her behalf, vests in his or her trustee in bankruptcy. This provision appears to be the factor leading to the instigation of these current proceedings by Mr and Mrs Stone.
As I understand matters, it is Mr Stone’s position that if he had not been bankrupt, he would have been able to sue Permanent Custodians Ltd and other entities in respect of actions taken against him and his wife in respect of a mortgage and related loan agreement secured against a farm, which he and Mrs Stone had previously owned.
Attached to Mr and Mrs Stone’s affidavit is a copy of a judgment of the Court of Appeal of the Supreme Court of Western Australia, in which they are the appellants and Permanent Custodians Ltd is the respondent.[1] The judgment in the case was that Mr and Mrs Stone’s appeal to the Full Court was dismissed.
[1] See Stone v Permanent Custodians Limited [2016] WASCA 200
In the judgment, the Court of Appeal sets out some of the background to the current matter. It notes that Mr and Mrs Stone, who are or were farmers, had entered into a loan agreement, with Landmark Operations Ltd, to borrow a sum of approximately $2,200,000.00, with the loan secured over their farming land.
Mr and Mrs Stone had defaulted in repayment of their loan and, as a result, the relevant financier had commenced proceedings against them, in the Supreme Court of Western Australia, claiming vacant possession of the mortgaged land and the repayment of the loan.
Mr and Mrs Stone counterclaimed alleging that the loan agreements were ineffectual and had breached the provisions of the Trade Practices Act 1974 prohibiting corporations from engaging in misleading or deceptive conduct.
The proceedings between Mr and Mrs Stone and Landmark Operations Ltd were apparently settled in February of 2011. Pursuant to the memorandum of settlement, filed in the Supreme Court of Western Australia, judgement was entered for Landmark Operations Ltd in a sum of $6,200,000.00; Mr & Mrs Stone were to deliver up vacant possession of the mortgaged land; and the counterclaim was dismissed. Clearly, these proceedings were compromised a short time prior to Mr and Mrs Stone’s bankruptcy.
Thereafter, the judgment of the Western Australian Court of Appeal indicates that on 9 June 2015 Mr and Mrs Stone commenced proceedings in the Supreme Court of Western Australia seeking declarations that the debt originally claimed by Landmark Operations Ltd, in the 2008 proceedings, was not enforceable, notwithstanding the earlier compromise of the proceedings.
On 8 September 2015, the Master of the Supreme Court ordered that summary judgement be entered against Mr & Mrs Stone in those proceedings. That order led to their appeal to the Supreme Court of Western Australia, which as earlier indicated, was also dismissed.
The Court of Appeal characterised Mr & Mrs Stone’s statement of claim as being incomprehensible. Permanent Custodians Ltd (I assume a corporate successor of Landmark Operations Ltd) was represented, both before the Master and on appeal. Counsel for Permanent Custodians Ltd submitted that Mr and Mrs Stone’s application was doomed to fail on three basis:
·Firstly, Mr and Mrs Stone did not have standing to bring the claim, as any rights they might have had against the respondent had vested in the official trustee pursuant to the provisions of the Bankruptcy Act;
·Secondly, the claim is res judicata. Essentially, this means the application had been litigated and could not be re-litigated;
·Thirdly, the terms of the deed between Landmark and Mr and Mrs Stone barred the claim.
The Court of Appeal determined to deal with the appeal on the basis of the first matter only. The Court of Appeal held as follows:
“… although they have been discharged from bankruptcy, the appellants lack the capacity to bring proceedings to enforce claims that existed at the time of sequestration. While the present claims are in their terms incomprehensible, it is clear enough that they relate to causes of action that are alleged to have arisen before the appellants' bankruptcy. Any such claims they may have had against the respondent were assets of their respective estates at the time the sequestration orders were made, and accordingly those claims (if they existed) automatically vested in the Official Trustee and remain vested in the Official Trustee. The master, with respect, correctly concluded that the proceedings were incompetent and that judgment should be entered for the respondent.
None of the grounds of appeal has any reasonable prospect of succeeding and there is nothing to suggest that any arguable grounds of appeal exist. The appeal must be dismissed.”[2]
[2] Ibid at [26] – [27]
Accordingly, as best I can glean it, it is Mr and Mrs Stone’s position that, if they are able to render their bankruptcy inoperative, in some retrospective fashion, the way will be open for them to proceed against Landmark. I have formed the view that this expectation is both forlorn and hopelessly misconceived.
Discussion and applicable legal provisions
Pursuant to section 37(2) of the Bankruptcy Act, the court does not have the power to rescind or discharge, or to suspend the operation of a sequestration order. In Daskalovski v The Austral Brick Co Pty Ltd[3] Emmett J considered that there was power to set aside a sequestration order, if the order had been made in the absence of the bankrupt and it was in the interests of justice to do so. He said as follows:
“However, such a power would normally be exercised in circumstances where the matter comes before the Court very soon after the order has been made and before there has been any administration in bankruptcy pursuant to a sequestration order.”
[3] Daskalovski v The Austral Brick Co Pty Ltd [1998] FCA 782
Neither of these conditions precedents is satisfied in this particular case. In this case, I note that there is, in any event, now no operative sequestration order to set aside. In addition, the application is now made approximately six years after the sequestration order in question was made. Mr and Mrs Stone’s estate has been administered by the trustee appointed to do so. Their bankruptcy is over.
If Mr Conlan had considered it was in the interests of Mr and Mrs Stone’s creditors to bring proceedings against Landmark Operations Ltd or any other entity, to benefit those creditors, he could have done so. He did not. Mr Conlan’s administration of the estate of Mr and Mrs Stone has concluded.
The sequestration order in question was made pursuant to powers of the court delegated to a registrar pursuant to the provisions of section 103 of the Federal Circuit Court of Australia Act 1999. Pursuant to section 104 of the Act, the court may review any delegated exercise of power to a registrar.
It is a longstanding principle of bankruptcy that proceedings relating to the duties of trustees and the rights of creditors, in respect of bankrupt estates, should be dealt with expeditiously. This is particularly so in respect of applications seeking to review the making of sequestration orders pursuant to powers delegated to a registrar.
For this reason, time limits apply to the review of sequestration orders made by registrars. Pursuant to rule 2.03 of the Federal Circuit Court (Bankruptcy) Rules 2006 such applications must be brought within 21 days.
In my view, Mr and Mrs Stone’s application should not have been accepted for filing by the court. Pursuant to rule 2.06 of the Federal Circuit Court Rules 2001, a registrar may refuse to accept a document for filing, if it appears, on its face, to be an abuse of process, or frivolous, scandalous or vexatious.
I am not suggesting, in any way, that either Mr Stone or Mrs Stone are frivolous or scandalous individuals. However, their application is without merit, and as such is an abuse of the processes of the court and vexatious to it.
Mr and Mrs Stone’s application is vexing in the sense that it is essentially an inchoate plea for justice to be accorded in respect of events which took place many years ago and which have been finalised – no doubt in difficult and emotionally challenging circumstances for Mr and Mrs Stone personally.
Notwithstanding the natural sympathy one is inclined to feel for the applicants, who are mature in years and no doubt feel hard done by as a consequence of what happened between 2008 and 2011, which resulted in the loss of their land, the court cannot conjure up jurisdiction, where none exists.
Section 17A of the Federal Circuit Court of Australia Act 1999 (Cth) provides as follows:
“(1)The Federal Circuit Court of Australia may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a)the first party is prosecuting the proceeding or that part of the proceeding; and
(b)the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding.
(2)The Federal Circuit Court of Australia may give judgment for one party against another in relation to the whole or any part of a proceeding if:
(a)the first party is defending the proceeding or that part of the proceeding; and
(b)the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.
(3)For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:
(a) hopeless; or
(b) bound to fail;
for it to have no reasonable prospect of success.
(4)This section does not limit any powers that the Federal Circuit Court of Australia has apart from this section.”
Rule 13.10 of the Federal Circuit Court Rules 2001 reads as follows:
“The Court may order that a proceeding be stayed, or dismissed generally or in relation to any claim for relief in the proceeding, if the Court is satisfied that:
(a)the party prosecuting the proceeding or claim for relief has no reasonable prospect of successfully prosecuting the proceeding or claim; or
(b)the proceeding or claim for relief is frivolous or vexatious; or
(c)the proceeding or claim for relief is an abuse of the process of the Court.”
The jurisdiction of the court to dismiss a claim upon the basis that it discloses no reasonable cause of action is to be sparingly invoked.[4] The case “must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination … by the court …”[5] In Webster v Lampard[6] the High Court said as follows:
“The power to order summary judgment must be exercised with exceptional caution … and should never be exercised unless it is clear that there is no real question to be tried.”
[4] See McKellar v Container Terminal Manager Services Limited (1999) 165 ALR 400 per Weinberg J at 415 [12]
[5] See Dey v Victorian Railway Commissioners (1949) 78 CLR 62
[6] See Webster v Lampard (1993) 177 CLR 598 at 602
In McKellar Weinberg J, after summarising the various authorities, relating to summary dismissal, said as follows:
“… a proceeding should not be dismissed summarily merely on the ground that it appears, at the early stage of the hearing of the motion brought for that purpose, to advance a highly implausible claim which will very probably fail, but only where the claim may properly be described as unarguable, and almost incontestably bad, or where the claim is otherwise objectionable as an abuse of the process of the court.”[7]
[7] Ibid at 416 [18]
In my view, Mr and Mrs Stone’s application is patently unarguable. It has no prospects of success. On that basis, I am satisfied that the application should be dismissed, which was the order of the court made on 13 June 2017.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding forty-one (41) paragraphs are a true copy of the reasons for judgment of Judge Brown
Date: 19 June 2017
0
6
5