Thredgold v Fyfe Pty Ltd - [2019] SADC 89

DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
THREDGOLD v FYFE PTY LTD
[2019] SADC 89
Judgment of His Honour Judge Soulio
14 September 2018
TORTS - MALICIOUS PROCEDURE AND FALSE IMPRISONMENT - MALICIOUS CRIMINAL AND CIVIL PROCEEDINGS - ESSENTIALS OF CAUSE OF ACTION GENERALLY - INSTITUTION OR CONTINUANCE OF PROCEEDINGS BY DEFENDANT
Plaintiff asserted that defendant instituted debt recovery proceedings against him erroneously and pursued bankruptcy proceedings for an ulterior purpose.
Plaintiff sought damages of $8,391,228.00 for losses said to have been sustained as a result of being wrongly declared bankrupt – and the consequent termination of the plaintiff’s employment, loss of ability to continue to act as a director of his company, earn income and derive profit.
Held – Plaintiff’s claim dismissed.
Bankruptcy Act 1966 (SA) ss 58, 60, 82, 83, 149, referred to.
Williams & Ors v Spautz (1991-92) 174 CLR 509; Williams v Spautz [1992] ALR 635; Smits & Ors v Roach & Ors [2002] NSWSC 241; Spautz v Gibbs (1990) 21 NSWLR 230; Commonwealth Life Assurance Society Ltd v Brian (1935) 53 CLR 343; Martin v Watson [1996] 1 AC 74; Beckett v New South Wales (2013) 248 CLR 432; Gibbs v Rea [1998] AC 786; Torridge v Hardy (1955) 94 CLR 147; A v New South Wales (2007) 230 CLR 500; Mullett v Nixon [2016] VSC 512; Willers v Joyce [2016] UKSC 43; Perera v Genworth Financial Mortgage Insurance Pty Ltd [2017] NSWCA 19; Eliezer v Owners – Strata Plan 51682 [2017] NSWSC 278, considered.

THREDGOLD v FYFE PTY LTD
[2019] SADC 89
Introduction

Mr Thredgold sought payment of $8,391,228.00 from the defendant, Fyfe Pty Ltd (‘Fyfe’) as damages for losses he asserted were sustained as a result of him wrongly being declared bankrupt, which led to the termination of his employment, and the loss of his ability to continue to act as a director of Your Development Matters Pty Ltd (‘YDM’) which resulted in a loss of income from YDM, and a loss of the profit that YDM, and in turn the plaintiff, would have derived as a result of a land deal in which YDM was engaged.
The basis of the plaintiff’s claim was that the defendant had abused the process of the court, and engaged in a malicious prosecution against him, over a debt he said was in fact owed by YDM.
The plaintiff said that Fyfe had obtained a default judgment on 1 August 2011 while the plaintiff was serving a prison sentence for tax offences. Bankruptcy proceedings were subsequently instituted and a sequestration order was made on 3 September 2012. The plaintiff sought to annul the sequestration order, initially in the Federal Magistrate Court,[1] and then on appeal before White J in the Federal Court of Australia. The defendant resisted the application. The plaintiff was unsuccessful.
[1] Subsequently the Federal Circuit Court.
The plaintiff alleged that Fyfe had wrongly obtained a default judgment against the plaintiff, and then used that judgment, and what the plaintiff described as misleading documents, to bring about his bankruptcy. He alleged that once he had been made bankrupt, the company’s projects were terminated, and the company was placed in liquidation.
I dismiss the plaintiff’s claim. My reasons for doing so are set out below.
The Pleadings
The plaintiff represented himself during the course of proceedings, and at trial. I do not replicate the pleadings by his Third Statement of Claim but endeavour to summarise his pleadings as follows:
YDM engaged in land development. The plaintiff was a director of YDM from 1 October 2009 until 3 September 2012 when he was made bankrupt. YDM had engaged Fyfe to obtain development approval for a project called Northern Lights at Munno Para. The plaintiff, as director of the company, had signed an authority to act, which gave Fyfe the right to act on the company’s behalf in dealing with state and local government authorities.
Mr Starr, a town planner employed by Fyfe, sought payment of a fee for lodgement of the development approval application, which payment was made by YDM. On 11 October 2010 Mr Starr met with the plaintiff, the managing director of Fyfe, and one David Goss, on the basis that Mr Goss would act as director of YDM, and provide directions to Fyfe. That arrangement was contemplated because it appeared that the plaintiff faced a sentence of imprisonment.
The plaintiff alleged that he wrote to Ms Carusi, a financial officer at Fyfe, on 7 January 2011, advising her that YDM could not pay invoices rendered by Fyfe, as the invoices needed to be rendered in the name of YDM, and not in the name of the plaintiff. The plaintiff alleged that at that time he also advised Fyfe that YDM was being audited by the Australian Tax Office (‘ATO’). The plaintiff alleged by his pleading that the ATO audit concluded that Fyfe’s invoices were rendered to the wrong entity, and as such were invalid.
The plaintiff alleged that on 5 April 2011 he commenced serving a six month sentence of imprisonment.[2] The plaintiff alleged that Fyfe knew that the plaintiff was in gaol, as Mr Starr was informed by the plaintiff’s mother, Jan Thredgold, and by Mr Bishop of LBW Environment Services, by telephone.
[2] The sentence was in fact a sentence of imprisonment for two years and six months with the plaintiff to be released after serving four months, upon signing a recognizance.
On 1 August 2011 Fyfe obtained a default judgment against the plaintiff in the sum of $37,000 for unpaid invoices, rendered to the plaintiff, which should have been rendered to YDM.
The plaintiff alleged that he was released from gaol on 6 August 2011, and that Fyfe did not notify him of the legal action, nor advise him of the default judgment after his release from gaol. Fyfe continued to work on the project after the plaintiff’s release from gaol, and to deal with the plaintiff.
It is common ground that on 22 May 2012 the plaintiff was served with a creditor’s petition on behalf of Fyfe, based on the judgment debt. At the hearing on 1 August 2011 Fyfe sought an adjournment to examine caveats lodged by YDM on a project called the Penfield Development. The plaintiff alleged that Fyfe knew about that project because Fyfe had undertaken project management of civil construction on behalf of the joint venture partners, YDM and Kindock Pty Ltd. The plaintiff alleged that on 20 August 2012 the matter was again adjourned so that Fyfe could await the outcome of a loan application by YDM. On 3 September 2012 a sequestration order was made on the application of solicitors acting for Fyfe.
The plaintiff alleged that on 25 January 2013 the default judgment in the Magistrates Court was set aside on the basis that the plaintiff had been unable to attend court due to his incarceration, and on the basis that there was sufficient evidence to show that the debt was owed by another entity.
The plaintiff alleged that on 5 April 2013 Fyfe applied to have the Magistrates Court action for the recovery of its debt stayed, on the basis of the plaintiff’s bankruptcy.
The plaintiff alleged that between 2013 and 2015 he had made attempts to have the bankruptcy overturned, which attempts were opposed by Fyfe on the basis that the plaintiff was still insolvent, and that the debt said to be owed to Fyfe, in respect of which judgment had been set aside on 25 January 2013, was not a relevant consideration as to whether the bankruptcy should be set aside.
It is common ground that in November 2015 a further application brought by the plaintiff to have his counterclaim dealt with in the Magistrates Court action, was opposed by Fyfe, on the basis that the plaintiff was bankrupt, and there was no basis to continue the action.
The plaintiff, in seeking to establish that the original debt owed to Fyfe was owed by YDM and not the plaintiff personally, alleged that the development application was over land which YDM had contracted to purchase, and in respect of which caveats had been lodged by YDM to protect the interests of the parties. Fyfe had lodged the development application on behalf of YDM. The Playford City Council Development Assessment Panel meeting of 18 July 2011, where the development had been approved, had before it the Development Assessment Commission letter of 18 March 2011, which confirmed that the application had been made on behalf of YDM, and not on behalf of the plaintiff.
The plaintiff sought damages, and a declaration as to which entity was responsible for payment of Fyfe’s invoices, interest on the amount found to be due to the plaintiff, and costs.
The plaintiff’s losses of $8,391, 228 were said to be comprised as follows:[3]
[3] The sum claimed by the plaintiff appears to have excluded the third superannuation component.

Losses incurred

Amount

40% of end of project profit

$4,392,360

Income $78,000 p/a

$234,000

Phone and internet allowance

4,700

Superannuation @ 9%

$21,060

Performance payment

$300,000

Contract 2

Pay $1,000 @ 18 months

$18,000

Performance payment

$100,000

80% value

$788,000

Superannuation @ 9% p.a.

$326,160

Contract 3

Joint venture for Penfield’s

$344,256.50

Superannuation @ 9% p.a.

$123,932.34

Interest @ 7%

$1,862,691.28

Total

$8,515,160.00

Fyfe’s Defence

By its second defence, Fyfe set out a chronology as follows:
·On 1 August 2011 the defendant obtained default judgment for $30,313.89 in the Magistrates Court.
·On 6 March 2012 the plaintiff applied to have the default judgment set aside. On 12 April 2012 the plaintiff’s application was stuck out.
·On 3 September 2012 a sequestration order was made in the Federal Circuit Court[4] under the Bankruptcy Act, against the plaintiff, based on the defendant’s unsatisfied Magistrates Court judgment.
·On 25 September 2012 the plaintiff filed a second application to set aside the default judgment.
·On 25 January 2013 the plaintiff’s application to set aside the default judgment was successful.
·In February 2013 the plaintiff issued proceedings in the Federal Circuit Court seeking an annulment of the bankruptcy.
·On 13 March 2013 that application was refused.
·In July 2013 the plaintiff lodged an appeal in the Federal Court of Australia against the sequestration order made by the Federal Circuit Court.
·On 16 December 2013 the Federal Court of Australia dismissed the plaintiff’s appeal against the sequestration order.
·On 20 December 2013 the Magistrates Court ordered a stay of the Magistrates Court proceedings pursuant to s 58(3)(b) of the Bankruptcy Act, and dismissed the plaintiff’s counterclaim in the Magistrates Court proceedings pursuant to s 60 of the Bankruptcy Act.
·On 15 September 2015 the plaintiff filed an application in the Magistrates Court proceedings, seeking leave to file an updated defence and counterclaim.
·On 29 September 2015 that application was dismissed.
[4] Formerly the Federal Magistrate Court.
In answer to the plaintiff’s specific pleadings, the defendant pleaded:
·that it denied knowing that the plaintiff was in gaol for a period of six months in 2011.
·that the period between entering the default judgment in the Magistrates Court proceedings, and the obtaining of an order setting aside the default judgment, was approximately 18 months.
·that a period of over 10 months elapsed between the plaintiff’s first application to set aside the default judgment, and the default judgment being set aside.
·that the delay in setting aside the default judgment was not due to any conduct on the part of the defendant.
·that until the default judgment was set aside the defendant was entitled to pursue a sequestration order against the plaintiff.
·that notwithstanding that the default judgment was set aside, the Federal Court of Australia dismissed the plaintiff’s appeal against the sequestration order, on the grounds that the plaintiff did not prove his solvency.
·that the defendant denied that it had abused the court process in relation to court proceedings in the Magistrates Court, the Federal Circuit Court, or the Federal Court of Australia.
·that the defendant denied that it had engaged in a malicious prosecution of the plaintiff.
The defendant denied that it was liable to the plaintiff in the amount claimed, or any amount, and pleaded that the application seeking a declaration as to which person or entity was liable for the debt that was the subject of the Magistrates Court proceedings, was nugatory, as the debt had been discharged by the plaintiff’s bankruptcy, and the company YDM had been wound up.
The Evidence
The parties tendered a composite book of documents.[5] In addition each of the parties tendered certain other documents to which I will refer as necessary. A number of witnesses were called, on subpoena, by the plaintiff. The plaintiff did not give evidence. The defendant did not call any oral evidence.
[5] Exhibit P1.
The Plaintiff’s Evidence
Ms Carusi
Ms Carusi was employed by Fyfe as a financial officer until l3 March 2012.[6] For the year before she left she was dealing with debtors and chasing up debts.[7] She did not generate invoices.[8] She also pursued debts for another entity, Allan Gilbert and Associates (‘Allan Gilbert’) that was part of the Fyfe group of companies.[9] Allan Gilbert and Fyfe each had their own staff, and did their own invoicing, but Ms Carusi followed up the debts for both entities.[10] She did not prepare the Fyfe invoices rendered to the plaintiff on 29 October 2010, 30 November 2010, 31 December 2010, 31 March 2011, or 18 April 2011.[11]
[6]    T 19 L 4.
[7]    T 19 L 28.
[8]    T 20 L 9; T 21 L 7.
[9]    T 20 L 21.
[10] T 21 L 1.
[11] T 21 L 5; invoices are at Exhibit P1 Tab 1.2,
By letter of 13 September 2010 Fyfe had provided a fee proposal in respect of a proposed land division described as being Fradd Road, Munno Para Downs. The fee proposal was addressed as follows:[12]
Att: Mr Mark Thredgold
Your Development Matters
Via: [email protected]
[12] Exhibit P1 Tab 2.2.
I note that in response to the fee proposal from Fyfe, Mr Thredgold signed a “fee offer acceptance/authority to proceed” in relation to the proposed Fradd Road development which contained the following:[13]
I Mark Thredgold
Accept the fee offer of Fyfe dated 13 September 2010
Company Your Development Matters
Address [email protected]
Contact numbers: 0457102208
Signed (Mark Thredgold) dated 14/09/10
[13] Exhibit P1 Tab 2.3.
Ms Carusi was asked whether she could have compared the outstanding invoices against the fee offer in order to ensure that she was pursuing the correct entity. She said that she did not do that, and did not regard it as her position to do so as her role was confined to obtaining a copy of the invoices, and sending out statements.[14]
[14] T 24 L 6.
Ms Carusi was asked about a letter she had sent addressed “Att Mr Mark Thredgold Your Development Matters, PO Box 356, Tailem Bend SA 5259” dated 17 November 2010 seeking payment of an overdue balance of $7,741.25. That letter was sent on behalf of Allan Gilbert. Ms Carusi was asked whether it was possible that related to a Fyfe invoice and whether she could have used an Allan Gilbert letterhead in error, instead of a Fyfe letterhead. She denied that that was possible and said that it related to an Allan Gilbert invoice.[15]
[15] T 25 L 12; letter – Exhibit P1 – plaintiff’s additional bundle of documents.
Ms Carusi was asked whether it was possible that the invoices were erroneously issued in his name, rather than YDM’s name. She said that that was up to the project manager. She only received copies of invoices once they had already been issued, and it was a matter between the developer and the project manager as to whom the invoice was to be rendered.[16]
[16] T 31 L 32.
On 29 March 2011 Ms Carusi sent a letter to Mr Thredgold at PO Box 356 Tailem Bend SA 5259, in respect of outstanding accounts to Fyfe for $20,541.26, and from Allan Gilbert for $15,276.25. The overdue balance was a total of $35,817.51. In that letter Ms Carusi raised the question of referring the outstanding accounts to solicitors for collection and said:[17]
If you have already sent the payment, please call us. If you haven’t done so, please send your payment in full today.
[17] Exhibit P1 Tab 16 - Letter – Plaintiff’s bundle of documents.
Ms Carusi said that referral to solicitors was not carried out immediately, and that some leeway would be provided. She could not recall whether she in fact turned the matter over to solicitors.[18]
[18] T 33 L 1.
Ms Carusi confirmed, as was apparent from the letter of 29 March 2011,[19] that there were separate accounts with Fyfe and with Allan Gilbert. She was asked whether, when she sent that letter, she knew Mr Thredgold was going to prison. She said that she could not remember.[20]
[19] Exhibit P1 Tab 16.
[20] T 38 L 2.
It was not disputed that Mr Thredgold was incarcerated on 5 April 2011. He was apparently due for early release on home detention on about 1 August 2011.
On 15 August 2011 Ms Carusi sent an email to Stephen Warren of Fyfe, copied to Mr Starr. Mr Starr responded by email of the same date stating:[21]
Hi Irene and Stephen – I believe that Mark has now finished his home detention and may now be available to meet with and try and resolve this issue of payment which if we can resolve will mean that the project can continue with significant fees still potentially to be charged – if necessary I can contact him to arrange a meeting – cheers Darren.
[21] Exhibit P1 Tab 16.
Ms Carusi was asked whether the information she had sent with her email included the default judgment against the plaintiff. She said that it would have been something else, but she could not remember.[22]
Mr Birdseye
[22] T 35 L 10.
Mr Birdseye is an accountant who holds a Bachelor of Economics, is a registered tax agent and a registered company auditor. YDM, had been a client for over 10 years.[23] Mr Birdseye prepared financial statements for YDM for the year ending 30 June 2012.[24] On 6 March 2013 he signed off that the total equity of YDM was $10,782,438.00, comprising assets being trade and receivables of $482,438.00, and intangible assets of $11 million. Liabilities were of the order of $700,000. The $11 million was attributed to the value of a development approval, and was based on a document prepared by Knight Frank.[25]
[23] T 43 L 4.
[24] Exhibit P1 Tab 1.10 p 116.
[25] Exhibit P1 Tab 1.7 p 3.
In cross-examination Mr Birdseye was directed to the Knight Frank report which contained a valuation of the Northern Lights development at Fradd Road. The report said:
We are of the opinion that the market value of the subject property assuming a sale of the freehold interest as detailed herein relevant to prevailing levels of value as at 6 April 2011 for first mortgage security purposes was … Project Related Site Value assuming development approval issued $11,000,000 (GST exclusive).
He was then asked whether YDM owned the subject property. He said “I can’t confirm or deny that”.[26] He agreed that he had not listed the subject property as an asset of YDM, but rather just listed the development approval. He said he could not remember what the arrangement was in terms of agreements, or options to purchase. On that basis he had assigned the value to an intangible asset, namely the development approval.
[26] T 50 L 8.
There was a dispute as to the plaintiff’s entitlement to endeavour to elicit opinion evidence from Mr Birdseye, in the absence of compliance with the Rules,[27] and to his entitlement to rely on the untested opinion expressed by Knight Frank, the author of the report having declined to give evidence, and there having been no compliance with the Rules as to expert evidence.
[27] See T 46 L 7-T 49 L 8.

I am unable to accept on the basis of the documents, and Mr Birdseye’s evidence, that in fact YDM had an intangible asset worth $11 million as at 30 June 2012. I am unable, in the face of the objection taken by the defendant, to accept any opinion expressed in the Knight Frank valuation, nor accept opinion evidence from Mr Birdseye.
Mr Costa
Members of Mr Costa’s family owned allotments of land on Stebonheath Road Munno Para.[28] Mr Costa confirmed that there had been an agreement between his mother, Joyce Costa as vendor, and YDM and Mark Thredgold (designated as the guarantor) as purchaser in respect of the purchase of land at Lot 1 Stebonheath Road Munno Para Downs for a price of $3,750,000.00.[29] There was a second agreement in respect of the purchase of Lots 310 and 311 Stebonheath Road Munno Para Downs between Anthony Dominic Costa and Pamela Elizabeth Costa as vendors, and YDM and Mr Thredgold (designated as guarantor) as purchaser. The purchase price was $7,250,000. As is apparent, the total purchase price was $11,000,000. YDM lodged a caveat over the land on 23 July 2012.[30] The caveats were removed in approximately November 2012.[31]
[28] T 59 L 10.
[29] T 60 L 16; Exhibit P1 Tab 1.3.
[30] Exhibit P1 Tab 1.4.
[31] T 63 L 1.
Mr Costa denied that he or any member of his family had subsequently acquired the development approval over the land, nor paid any money to Fyfe or YDM for that.[32] He said that the land had subsequently been sold to a developer.[33]
[32] T 64 L 25.
[33] T 64 L 36.
In cross-examination Mr Costa agreed that he was not an owner of any parcel of land. His parents had owned one portion, and Mr Costa’s uncle and aunt had owned another. He was looking after his mother’s interests after his father passed away.[34] YDM had never settled on the contracts,[35] and the land was sold to another developer in about mid-2014.[36]
[34] T 65 L 10.
[35] T 65 L 19.
[36] T 65 L 22.
Mr Costa said he vaguely recalled a conversation with someone from Fyfe, who was concerned that Fyfe had done a lot of work on the development approval, and was fearful Fyfe would not be paid. The person from Fyfe asked whether Mr Costa was interested in pursuing the development approval, and Mr Costa had advised that he and his family would not be interested.[37]
[37] T 66 L 18.
Mr Costa said that he had become aware that Mr Thredgold had been incarcerated, sometime after the commencement of the prison term, but whilst Mr Thredgold was still in prison. It appears that he was informed of that by Mr Thredgold’s mother.[38]
[38] T 62 L 1.
Mr Costa was asked whether he recalled speaking to the person from Fyfe about when Mr Thredgold would be released from prison. He said that he did not recall mentioning or discussing that. He could not recall when the conversation was so the conversation with the person from Fyfe may have been when Mr Thredgold was in prison or may have been after he was released from prison.[39]
[39] T 66 L 28.
In re-examination Mr Costa said that although he had dealt with Mr Thredgold for the entire period, Mr Costa assumed that Mr Thredgold was acting on behalf of YDM.
Mr Macks
Mr Macks became Mr Thredgold’s trustee in bankruptcy upon the request of Lynch Meyer, the solicitors acting for Fyfe. Mr Macks was asked whether he found any caveatable interest relating to Mr Thredgold, in properties known as Lots 310 and 311 Fradd Road; Stebonheath Road; or 9 Placid Estate Road Munno Para. Mr Macks said that his memory was not all that good, but that his memory was that there was property, or allegations in relation to a property. He said that was outlined in correspondence and in the statement of affairs.[40] He said that he would have undertaken a search of the property.[41]
[40] Exhibit P1 Tab 6 p 337.
[41] T 73 L 4.
Mr Macks was shown the invoices from Fyfe.[42] He could not recall whether he searched the development application in question, or had determined what entity or name the development application was made in.[43]
[42] Exhibit P1 Tab 1.2.
[43] T 73 L 32.
Mr Macks appeared to have a vague recollection about the development application, and said he could recall issues associated with the development application for a property, and a potential interest in a property. He said he could not recall expending money to undertake a valuation, as that would have been an expensive exercise and he did not have any funds. He said that he recalled something about a valuation which might have been “pre-done”.[44]
[44] T 74 L 5.
Mr Macks agreed that any shares held by Mr Thredgold vested in the trustee.[45] Mr Macks was asked questions as to whether given the valuation provided by Knight Frank, and the caveats previously referred to that was an asset he would not wish to forgo, as trustee. He said:[46]
I think the caveator is Your Development Matters, I was appointed trustee of you. I think you've got to establish the link between Your Development Matters and you and my recollection, and correct me if I'm wrong, there was an issue in relation to the shareholding of Your Development Matters and as a consequence of all that and discussions, someone else was appointed given the uncertainty as a director because you weren't - if I've got the right company - you weren't able to continue as a director of Your Development Matters. So I think you have to link them if I've got the right company and I haven't checked it, but that's my memory. There was an issue in relation to your standing in that company and there was a director subsequently appointed in your stead.
[45] T 77 L 1.
[46] T 75 L 37.
Mr Macks said that when Mr Thredgold applied for a stay of the bankruptcy, his position as trustee was to neither object nor consent, but rather let the court make its determination.[47]
[47] T 77 L 2.
Mr Macks was then asked whether he had been informed that the Magistrates Court judgment had been set aside on 25 January 2013. The plaintiff produced to Mr Macks a print out of an email dated 27 March 2013. From the header it appears to have been printed from Mr Thredgold’s computer. The subject was “FW: Thredgold”. The attachments were said to be “Thredgold – resolution Eneberg 1 February 2013 - - 010213.pdf.” The email said:
Dear Mr Thredgold,
This email trail is to confirm that we had various discussions with your trustee about release from bankruptcy.
After you obtained the setting aside of judgement on the Fyfe debt which caused the bankruptcy we asked the trustee’s representative, Mr Begg, who would be liable for his costs and would they support and an application for a stay or an annulment (sic).
Mr Begg told us that it was not your problem and that the trustee would have to wear them as he was a court appointed trustee.
Rgds
Nick Birdseye
The email trail referred to in that document included an email said to have been sent by Mr Begg of Mr Macks’s office, to Mr Birdseye on 1 February 2013 at 5.58pm. The email put to Mr Macks by Mr Thredgold during the course of examination-in-chief, says the following:[48]
Nick
I enclose a copy of a resolution by the Trustee resolving to appoint Eneberg as director for your information.
As to our phone conversation now that the judgment of Fyfe has been set aside we see no reason oppose the application for a stay or an annulment. As for costs the trustee would have to wear them as he was a court-appointed trustee. (my emphasis)
Kind regards
Andrew Begg
[48] Exhibit P1 Tab 2.12 p 329-330.
Mr Thredgold asked the following question:[49]
So that sort of suggests that you were made aware by Mr Birdseye through Mr Begg that the judgment had been set aside and an application to seek annulment, is that correct.
[49] T 77 L 28.
Mr Macks responded:[50]
AWell, there are a few pertinent comments in relation to this document. If you're referring me to the 27 March document 2013, it precedes a document, an email which is dated 1 February 2013 allegedly from Andrew Begg, who works for me, to Nick, being Nick Birdseye, that document is not a genuine document. I bought along the genuine document search from our electronic archives and it is different to that document.
QHow greatly different.
ASignificantly different. This document has been tampered with. The real document records the first paragraph 'I enclose a copy of the resolution of trustee resolving to appoint A Begg as a director for your information'. It is silent and absent in relation to the second paragraph, the second paragraph has been inserted, it's not a consideration of Mr Begg's. So there's the original
[50] T 77 L 32.
The document described by Mr Macks as the original, which I accept was a printout from his records,[51] was also dated 1 February 2013 and was also marked as sent at 5.58pm. It contains the single line referred to by Mr Macks, enclosing a copy of the resolution to appoint Eneberg. No mention was made in, what I accept is the genuine version of the email, of the setting aside of Fyfe’s judgment, nor as to any liability for costs.
[51] Exhibit D3.
As to the modified email, Mr Macks said that that document had been sent (in hard copy) to him at some stage by Mr Thredgold. Mr Macks said that he checked the emails against the copies on his system. That revealed the inconsistency.[52]
[52] T 98 L 29.
Mr Thredgold was provided with an opportunity for Mr Birdseye to be recalled on the topic of the inconsistent versions of the email, one version being produced by Mr Thredgold and the other by Mr Macks.[53] Mr Thredgold declined the opportunity to recall Mr Birdseye to be questioned in relation to that email.[54]
[53] Exhibit D3.
[54] T 104-105.
As I have said, I accept that Exhibit D3, the version of the email produced by Mr Macks, is the genuine email. The version of the email produced by Mr Thredgold contains the paragraph referred to, inserted after the event. That might lead to the inference that Mr Thredgold inserted the paragraph. He did not give evidence, and therefore could not be cross-examined. I infer that his evidence on that topic would not have assisted his case.[55]
[55] Jones v Dunkel (1959) 101 CLR 298.
Mr Macks said that he could not recall there being a creditors meeting, and had no recollection of knowing that the petitioning creditor’s judgment had been set aside.[56] Mr Macks reiterated that he would not adopt any position in relation to an application for a stay for annulment of the bankruptcy.[57] He said he could not recall attending any of the hearings in the Federal Circuit Court.[58]
[56] T 79 L 28.
[57] T 80 L 33.
[58] T 81 L 22.
Mr Macks appeared to have little memory of Mr Thredgold’s bankruptcy. He agreed that he had appointed a Mr Wallace as director of YDM, on the basis that that is what was shown in the ASIC register extract.[59] When shown the first creditors report,[60] he said that he did not recall monitoring any of Mr Wallace’s actions in relation to dealing with the assets of YDM.[61] Mr Macks said he could not recall instructing Mr Wallace to dispose of any assets or terminate any projects.[62]
[59] Exhibit D2.
[60] Exhibit P1 Tab 6 p 336.
[61] T 85 L 33.
[62] T 85 L 38.
The first creditor’s report,[63] at paragraph 2 sets out a statement of affairs prepared by Mr Thredgold. That records the assets of the bankrupt. It shows nil assets. It shows unsecured creditors of $40,498.00 and petitioning creditor’s costs of $7,040.00, a total of $47,539.00. The notes in the report record as follows:
[63] Exhibit P1 Tab 6 p 336.
Para 2.8 – real estate
No real estate was disclosed. A search of the Lands Title Office did not reveal any property in the name of the bankrupt.
Extensive investigations and requests for detailed information were made to the Lands Title Office as to the ownership of lease properties at Lot 8 and Lot 9 Placid Estates Road, Wellington East, SA.
The bankrupt was questioned as to any interest that he may have in the above properties and advised that he considered the properties to be of a further possible development in his company. The bankrupt advised that he had lived at one of the properties some years ago.
Based on the above findings we do not consider there to be any equity in the above properties for the Estate.
Para 2.9 – shares
No shares were disclosed.
Para 2.10 – investments
No investments were disclosed other than the shares discussed in section 4 of this report.
Para 2.14 – assets in somebody else’s possession
No assets in somebody else’s possession were disclosed.
The report goes on to say:
Para 4 – companies and trusts
The following companies were disclosed and confirmed with searches undertaken at the Australian Securities and Investments Commission:
4.1 – Your Development Matters Pty Ltd (ACN139766484)
Appointed as director:
1 November 2009
Shareholding: 2 fully paid shares (100% shareholding).
From discussions with the bankrupt we were advised that this company has been involved in property development projects at Penfield and Munno Para, and the company has subsequently issued proceedings in the South Australia District Court as to a caveat over equity in the Penfield property development.
As we have not sought the appointment of a director of this company, we understand that Mr Gary Wallace (an associate of the bankrupt) has taken on the role of director of the company.
The bankrupt has indicated to us that by the company continuing the caveat over the disputed property development at Penfield, the company would maintain some value. Accordingly, as shareholders we do (not) oppose the appointment of Mr Wallace in that his appointment may provide some value of the company and in turn to the Estate.
Section 4 goes on to mention Tailem Bend B & B and Boat Hire Pty Ltd, and Adelaide Floating Docks Pty Ltd, in which Mr Thredgold held 100 per cent shareholdings, but records that Mr Thredgold had advised that the companies were non-trading entities without any assets.
The report concluded that the investigations to date had disclosed that no assets had been identified for the Estate, to enable any dividend to be paid to creditors.
Mr Thredgold put to Mr Macks that Mr Macks had permitted Mr Wallace to conduct the company, and to do as he wished with the assets. Mr Macks rejected that proposition.[64] Mr Macks said that his recollection was that he had not been informed that the proposed development had a significant value. He recalled issues and complexities in relation to any amount being realised for the valuation, and said that he recalled Mr Thredgold endeavouring to install a director so that value could be realised if at all possible, and that he did not oppose that.[65]
[64] T 86 L 17.
[65] T 86 L 33.
Mr Thredgold sought to examine Mr Macks as to the decision by Justice White in the Federal Court of Australia to maintain the bankruptcy.[66] He asked Mr Macks whether Mr Macks had identified some uncertainty regarding a debt owed by the plaintiff to Marrone Constructions. Mr Macks said he could not recall that, but said that a trustee only deals with creditors, and an adjudication process when there are funds available to do so. He did not consider the situation necessitated a determination. He said that he could not recall any discussions that led to a cogent argument that there would be a payout of the bankruptcy, or a s 73 composition which would be required to deal with that.[67]
[66] T 90 L 19.
[67] T 90 L 29.
Mr Macks agreed that as trustee in bankruptcy the shares in YDM, formerly held by the plaintiff, vested in the trustee.[68] He agreed that it would be the practice of a trustee who has shares vested in him, to monitor the activities undertaken by a director installed in the company. However he said that he would only do so if he considered there was an active project and there was value. His recollection was that it was Mr Thredgold who wanted a particular person, presumably Mr Wallace, installed. Mr Macks said there was concern in relation to the solvency of the company, and whether or not it had any value whatsoever. There was a determination by Mr Thredgold to have a director installed. Mr Macks said he did not oppose that, but did not agree to it. He said that he did not recall what happened after that examination.[69]
[68] T 91 L 21.
[69] T 92 L 1.
Mr Thredgold put to Mr Macks that:[70]
Given that you reject it, but Mr Wallace was appointed and I'll say disposed of that asset and terminated that project, you didn't attend court, you didn't inform the court of any of your findings other than through Lynch Meyer. Lynch Meyer represented you in the Federal Circuit Court for the stay, which could be considered as a possible conflict of interest. Wouldn't you say that your management of the bankruptcy was probably not true and correct.
[70] T 92 L 21-28.
Mr Macks responded that that was a:[71]
Preposterous allegation. A compilation of a whole lot of issues that you are just constructing in a very convenient and helpful way, so the answer to your question is no.
[71] T 92 L 30-33;
Mr Thredgold put to Mr Macks the following question:[72]
QDid Fyfe ever approach you to keep Mr Thredgold in bankruptcy.
ANo, not to my recollection. Why possibly would that occur? That's almost a conspiracy-type allegation. No.
QWell if someone remains in bankruptcy, it is quite easy to stifle some litigation, isn't it, Mr Macks. I'd have to get your consent if I wanted to go to the Magistrates Court or make applications to the Federal Court. There is a whole series of things that the Bankruptcy Act –
ALook, Mr Thredgold, that's preposterous. I'm not going to even really listen to such a conspiracy theory. Because it's just a normal bankruptcy with a trustee with no funds whatsoever, with the frustration of a stay application before the court which he's dealing with. That's just bizarre.
[72] T 92 L 32.
Mr Thredgold then asked:[73]
QMr Macks, did Fyfe use s.60 under the Bankruptcy Act to not further pursue their claim.
ANot that I'm aware of.
[73] T 94 L 32.
Mr Macks denied that any step had been taken by him or in conjunction with him, to stifle litigation which Mr Thredgold appeared to be suggesting he intended pursuing.
In cross-examination Mr Macks was taken to the ASIC company search,[74] which referred to Mr Thredgold as a previous member of YDM, and referred to the shares not being beneficially held by Mr Thredgold.[75] Mr Macks said in evidence that where shares are recorded as not being beneficially held by the bankrupt, that might mean that they are held by a trust or a separate entity which creates uncertainty as to whether or not there is truly any asset there.[76]
[74] Exhibit D2.
[75] Exhibit D2 p 3 –ASIC company extract re YDM.
[76] T 98 L 19.
Mr Macks confirmed that the report to creditors dated 20 September 2012,[77] was produced after asking the bankrupt to fill in a questionnaire. He said the bankrupt prepares the statement of affairs as part of the statutory obligation.[78] He agreed that the plaintiff’s nominated address, namely 1 Tree Martin Court, Tea Tree Gully, would have been extracted from the questionnaire. The report also referred to a search of the National Personal Insolvency Index, which indicated that Mr Thredgold had previously been a bankrupt.[79]
[77] Exhibit P1 Tab 6 p 336.
[78] T 100 L 10.
[79] T 99 L 19.
Mr Macks said that on the basis of the information and the investigations, no assets had been identified for the Estate to enable any dividend to be paid. His fees were never paid. An adjudication would not occur until there was some action or reason for it, and if there were no funds ever available in the Estate to enable a dividend to be paid no adjudication would have been carried out.[80] There was never any value realised into the Estate from the shareholding in YDM.[81]
Mr Starr
[80] T 100 L 25.
[81] T 101 L 11.
Mr Starr was a town planner with Fyfe who held the position of Discipline Leader, Town Planning. He said that a Mr Vlahos, who was employed by Allan Gilbert, had referred Mr Thredgold to Fyfe. Mr Starr was taken to an email he had sent to Mr Thredgold on 14 September 2010 attaching a fee offer acceptance form.[82] That fee offer acceptance form dated 13 September 2010, as I have already said, was addressed to:[83]
Att: Mr Mark Thredgold
Your Development Matters
Via: [email protected]
[82] Exhibit P1 Tab 2.8 p 310.
[83] Exhibit P1 Tab 2.2 p 15.1

Mr Starr said he was dealing with Mr Thredgold as representing YDM.[84] The draft plan of division[85] described the applicant for the approval as “Your Development Matters” although I note that Mr Starr’s email of 22 September 2010 to Mr Salmon, at Playford Council, said “Fyfe represent Mr Mark Thredgold in relation to the division of land at the corner of Fradd Road/Stebonheath Road. … ”[86] A revised plan referred to the applicant as Your Development Matters.[87]
[84] T 108 L 18.
[85] Exhibit P1 Tab 2.8 p 305.
[86] Exhibit P1 Tab 2.8 p 304.
[87] Exhibit P1 Tab 2.8 p 299.
Mr Starr said that the Development Assessment Commission used a website known as EDALA for the electronic lodgement of land divisions. The EDALA lodgement was made on 3 November 2010.[88] The record of that lodgement also recorded YDM as the applicant.[89] Similarly, YDM was recorded as the client on a proposal for an environmental site assessment by LBW Environment Pty Ltd dated 4 November 2010.[90] Mr Starr agreed that LBW Environment had been engaged by Fyfe on behalf of YDM.[91]
[88] T 114 L 13.
[89] Exhibit P1 Tab 1.5 p 75.
[90] Exhibit P1 Tab 2.8 p 273.
[91] T 112 L 12.
The invoices rendered by Fyfe in respect of the development application were rendered to Mr Thredgold. The invoices contained no reference to YDM.[92] Mr Thredgold asked Mr Starr how it was that all of the information was in the name of YDM, but the invoices were issued to Mr Thredgold. Mr Starr said that Fyfe had a project management system called Project Tracker which enabled time spent on a project to be allocated to that project, and at the end of the billing period the system would generate an invoice for that project.[93] Mr Starr said that there were two possible explanations, either Mr Thredgold was already in the system as a client, or that a new customer reference was commenced in Mr Thredgold’s name, entered by either Mr Starr himself, or one of the project coordinators.[94]
[92] Exhibit P1 Tab 1.2.
[93] T 117 L 19.
[94] T 118 L 3.
Mr Starr was taken to his hand written notes[95] which recorded that:
Entry 27 April 2011
Kylie has spoken to Mark’s mum.
He is in Cadell – waiting for home release application.
David Goss – bus. partner now involved in Fradd Road. Finance – David Garner – club finance.
[95] Exhibit P1 Tab 2.9 p 312.
Mr Thredgold asked whether Mr Starr had contact with Mr Goss from YDM to advance the project. He responded:[96]
The contact that I had while you were incarcerated was with Jan Thredgold. I don't recall speaking to David. I may have but I don't specifically recall speaking to David. I think most of my discussions were with Jan Thredgold.
[96] T 122 L 21.
Mr Starr could not recall being informed that a default judgment had been secured against the plaintiff, nor whether he had informed anyone in the accounts department, or any other staff, of the incarceration of Mr Thredgold.[97]
[97] T 123 L 34.ff
Mr Starr’s note of 18 May 2011[98] recorded “6^th June release date” and “Fyfe have referred debt to solicitors.” Mr Starr said he did not know the solicitors to whom the debt issue had been referred. He said that the finance manager would have made that decision. He did not know whether the person who did so knew that the plaintiff was incarcerated.[99]
[98] Exhibit P1 Tab 2.9 p 312.
[99] T 124 L 23.
Mr Starr was taken to his affidavit of 5 December 2012,[100] in the Magistrates Court proceedings, in which he deposed that Mr Thredgold, the defendant in those proceedings, had approached Fyfe, the plaintiff in those proceedings, seeking Fyfe’s services to gain development approval for a land division application. He had further deposed that he had the daily conduct of Mr Thredgold’s development application.
[100] Exhibit P1 Tab 13 p 397.
Mr Starr frankly conceded that it would have been more factually correct had he deposed to the fact that he was dealing with YDM’s application.[101]
[101] T 130 L 5, T 131 L 6, T 131 L 27.
I accept that on the face of it Mr Starr’s affidavit was accurate in its terms. I accept that he was not in any way endeavouring to create a false impression that YDM was not involved in the development application.
Mr Neate
Mr Neate is a partner of Lynch Meyer Solicitors. He acted for Fyfe in the Magistrates Court proceedings, seeking to recover the debt said to be owed by the plaintiff. He also acted for Fyfe in bankruptcy proceedings in the Federal Circuit Court.[102]
[102] T 142.
Mr Thredgold asked Mr Neate whether, when seeking to recover the debt in the Magistrates Court, Fyfe had implied that judgment should be obtained by the end of the financial year, or in a particular hurry, or that Fyfe had instructed, before proceedings were instituted in the Magistrates Court, that Fyfe intended to bankrupt Mr Thredgold. Mr Neate said he had no recollection of either event having occurred.[103]
[103] T 142 L 29.
Mr Thredgold took Mr Neate to a series of documents seeking to establish that Fyfe’s true client was YDM.[104] Mr Neate was asked whether it was the firm’s practice to seek additional information by way of supporting documents prior to instituting proceedings seeking payment of a debt said to be owed. Mr Neate responded:[105]
In answer to your question, this matter started out as a very ordinary routine debt collection matter and our practice is for such matter to receive only fairly limited instructions by reference to invoices, statements and possibly letter of demand if the client has issued one. We don't normally go back into the entire contractual history of the matter at that stage.
[104] T 143 ff.
[105] T 149 L 7.
Mr Neate was not directly involved in the Magistrates Court action, but, rather, was the supervising partner of people in his team instituting the proceedings.[106] He had no memory of being advised by Fyfe that Mr Thredgold was incarcerated prior to seeking judgment.[107]
[106] T 149 L 28.
[107] T 149 L 36.
Mr Neate had sworn an affidavit in what was then the Federal Magistrates Court on 17 August 2012. He deposed to the fact that since the matter was last in that court on 23 July 2012 he had had various conversations with Mr Thredgold concerning land transactions which Mr Thredgold said would result in payment of Fyfe’s claim in full. He also deposed to the fact that on 9 August 2012 he had advised Mr Thredgold that Fyfe’s claim, inclusive of costs, was $36,953.53. He deposed to the fact that he had received various emails with attachments from Mr Thredgold, and had written to Mr Thredgold raising concerns about the transactions Mr Thredgold had referred to. Those letters were exhibited to the affidavit.[108]
[108] Exhibit P1 Tab 2.1 p 130 ff.
Mr Neate was challenged as to why the creditor’s petition had been adjourned on the basis of transactions potentially involving YDM. He said:[109]
The aim of debt recovery is to recover the money that is owed. You obviously had approached us to explain that payment could be made from a refinancing. An adjournment was allowed to see if that would eventuate
[109] T 156 L 24.
Mr Thredgold took Mr Neate to the sequestration order.[110] The order noted that the court had appointed Ms Orr as trustee. Mr Thredgold asked why Lynch Meyer had sought to appoint Mr Macks in those circumstances. Mr Neate responded that he inferred that it was Mr Macks’ consent on file, and that the order contained an error.[111]
[110] Exhibit P1 Tab 11.
[111] T 158 L 3.
The following exchange then took place:[112]
QI am going to put it to you I suggest that you appointed Mr Macks because he is solely renowned for keeping people in bankruptcy; is that correct.
ANo, I reject that.
QIs it because you could have had some leverage over the trustee if you had appointed him.
ANo, I reject that.
QIs it because know that Mr Macks also can spend and has been known to spend a lot of money chasing small debts.
ANo, I reject that.
[112] T 158 L 22.
Mr Neate said that if a bankruptcy order had been made by the time of the application to set aside the Magistrates Court judgment, it would not be inappropriate to seek to have the application to set aside the judgment stayed pursuant to s 60 of the Bankruptcy Act. He said that he did not recall informing the trustee that the judgment in the Magistrates Court had been set aside, once that had occurred.[113]
[113] T 159 L 13, T 160 L 2.
Mr Neate properly conceded that had he had all of the documentation, it may have been apparent that the debt owed to Fyfe, was not owed by Mr Thredgold personally.[114] However, Mr Neate’s position was summarised in the following answer:[115]
QThat position would come (a) whole lot clearer to you reviewing those documents today, wouldn't it.
AThey are consistent with what you are saying. My view as to the contractual liability is in some ways almost academic. It is asserted by my client, it is consistent with the instructions I have been provided, it was the subject of a judgment, proceedings were enacted upon that, there was a challenge to the bankruptcy which withstood that challenge, those proceedings were then reviewed by other judges, those issues seem to be fairly set in my mind.
[114] See T 165 L 23.
[115] T 165 L 35.
Mr Thredgold then sought to explore with Mr Neate who his client was in the Federal Circuit Court proceedings. Mr Neate said it was Fyfe. In orders made by Federal Circuit Judge Simpson on 12 May 2012, in an application by Mr Thredgold naming Mr Macks as respondent, and seeking a stay, Mr Neate was noted as solicitor. He said:[116]
Yes, that document indicates I appeared for the respondent Mr Macks. It may have been that I was technically appearing for the petitioning creditor given their interest in the matter. Without seeing the transcript of the actual hearing I am afraid I am not entirely sure now who I appeared for.
[116] T 169 L 31.
Mr Neate denied that there was a conflict of interest in acting for Fyfe on one hand, and appearing for the trustee on the other.[117]
[117] T 171 L 37.
Mr Neate agreed that in respect of the application for an annulment before Federal Circuit Judge Lindsay, he was acting for the petitioning creditor, that Fyfe had instructed him to act, and that it wished to maintain the bankruptcy by continuing to assert its position as a creditor of the Estate.[118]
[118] T 173 L 3.
On 20 December 2013 in the Magistrates Court action, a stay of the Magistrates Court proceedings pursuant to s 60 of the Bankruptcy Act was noted. Mr Neate said that that was in effect an automatic consequence of the fact that the bankruptcy remained on foot.[119]
[119] T 178 L 17.
Mr Neate accepted the proposition that if a court determined that Mr Thredgold was not liable for the debt, the proceedings in the bankruptcy action had been brought against the wrong party.[120] Mr Neate also maintained however that Judge Lindsay, in the Federal Circuit Court, had determined that it was appropriate that the bankruptcy remain, even though he excluded the Fyfe debt from his consideration of issues related to solvency.[121]
[120] T 179 L 17.
[121] T 179 L 38.
Mr Thredgold put to Mr Neate that Mr Neate had advised his client to resist the application to set aside the judgment in the Magistrates Court, and the appeal in the Federal Court, in order to achieve a situation whereby Mr Thredgold’s claim for damages, ultimately lodged in the Magistrates Court by way of counterclaim, could be stayed. Mr Thredgold was thereby pursuing the foundation for a submission that the behaviour of Fyfe, and their solicitors, comprised an abuse of process or malicious prosecution against him.[122] Mr Neate rejected that suggestion.[123]
[122] T 181 L 30.
[123] T 182 L 12.
In cross-examination Mr Neate said that at no stage during the Magistrates Court proceedings did he have any reason to think there was not a proper basis to maintain the judgment.[124] Nor did he have any reason to think that there was not a proper basis for commencing and maintaining the bankruptcy proceedings.[125] Nor did he have any reason to think there was not a proper basis to maintain the opposition to the annulment application and appeal.[126]
[124] T 185 L 15.
[125] T 185 L 20.
[126] T 185 L 24.
It was Mr Neate’s understanding, at all stages, that the purpose of the Magistrates Court proceedings, and the subsequent bankruptcy proceedings, was to recover the debt Fyfe asserted was owed by Mr Thredgold, and he was not aware of any other motive that his firm, or Fyfe, had in bringing the proceedings.[127] He did not, nor did Fyfe, act with any ill will or malice towards Mr Thredgold at any point in the proceedings.[128] He was not, and to his knowledge Fyfe was not, driven by any desire or wish for revenge with respect to Mr Thredgold during the course of any of the proceedings.[129]
Mr Thredgold
[127] T 185 L 28.
[128] T 185 L 36.
[129] T 186 L 6.
Mr Thredgold maintained his position that he did not wish to give evidence.[130]
[130] T 193 L 25.
The Defendant’s Evidence
As I have said, the defendant did not call oral evidence.
The defendant tendered certain documents to deal with matters raised in the plaintiff’s case. The defendant tendered invoices dated 22 September 2010 for $4045.00 and 30 September 2010 for $3,300.00, a total of $7,345.00,[131] rendered to the plaintiff which were paid.
[131] Exhibit D4.
A certificate of record of the District Court of South Australia[132] confirmed that Mr Thredgold was sentenced by Judge Barrett on 6 April 2011, on 11 counts of obtaining financial advantage by deception, and sentenced to imprisonment for two years and six months commencing on 5 April 2011, to be released after serving four months imprisonment, on a 12 month recognizance. He was also ordered to pay to the Commonwealth of Australia the sum of $156,000.00 within seven days of signing the recognizance.[133]
[132] Exhibit D6.
[133] Exhibit D6 - Mr Thredgold said from the bar table that he had been imprisoned arising out of a GST error made on BAS statements and repeated on 12 occasions – the matter did not have anything to do with YDM, and was not directly relevant to the subject matter of the present proceedings. T 67 L 24.
The defendant tendered a letter from Mr Neate to Mr Thredgold dated 16 August 2012 referring to a pending Federal Magistrates Court hearing on 20 August 2012, following an adjournment on 23 July 2012 on the basis that the plaintiff had apparently advised that a transaction would occur for the purchase of the property, and sufficient funds would be available to pay the petitioning creditors’ claim in full, namely $36,953.53 inclusive of costs. The letter refers to difficulties Mr Thredgold had in following through with his suggestion.[134]
[134] Exhibit D7.
Federal Magistrate Lindsay’s decision of 11 June 2013,[135] and Justice White’s decision of 16 December 2013,[136] were also received into evidence.
[135] Exhibit D9.
[136] Exhibit D10.
The Basis of the Plaintiff’s Claim
The plaintiff submitted that his action in damages was based in malicious prosecution and abuse of process. It was founded on the contention that Fyfe knowingly instituted proceedings in the Magistrates Court against the wrong debtor, and proceeded to obtain a default judgment knowing that the plaintiff was incarcerated; brought bankruptcy proceedings in the Federal Magistrates Court, and then deliberately resisted the plaintiff’s application to set aside the default judgment in the Magistrates Court, and the plaintiff’s application to annul the bankruptcy proceedings; for some ulterior motive, including frustrating the plaintiff’s counterclaim in the Magistrates Court.
I set out verbatim the plaintiff’s written submissions as to the asserted legal basis of his claim:
The plaintiff’s statement of claim clearly discloses a cause of action for the tort of abuse of process occurred these can be found in point 23 and 24 and the plaintiff clearly outlines this in his opening introduction in the of the 3^rd statement of claim.
Kinghorn v HKAC Asset Management Services (AFFL) Pty Ltd [2010] NSWDC 232.
… the plaintiff’s statement of claim discloses a cause of action for the tort of abuse of process and I have declined to strike out that part of the statement of claim relating to the abuse of process. There is a considerable overlap between the factual basis for the malicious prosecution claim and the abuse of process claim. To permit the malicious prosecution claim will not add greatly to the time or costs of the proceedings.
The defendants submitted that to excise the malicious prosecution claim would save considerable time and costs. It is not immediately apparent why this would be so. The circumstances of the termination of the Federal Court proceedings may well be relevant to the abuse of process claim in demonstrating that the purpose of the defendants was not to prosecute the claim to its conclusion, in other words in showing that the defendants did not commence the Federal Court proceedings wanting to obtain a remedy within the scope of the proceedings. The defendants submitted that many of the particulars of malice would cease to become relevant because they are incapable of relating to collateral purpose. At the very least however, particulars relating to the fabrication of allegations and the knowledge of their falsity would be relevant in an abuse of process claim as going to the claim for aggravated damages. They would also arguably be relevant as disclosing that the true purpose of the defendants was not to prosecute the claim to conclusion but simply to exert pressure in the form of a “stalking horse.”
Does the statement of claim discloses a cause of action for abuse of process
The tort of collateral abuse of process differs from the tort of malicious prosecution in that a plaintiff suing for abuse of process does not need to show either that the initial proceeding has terminated in his or her favour or that there was a want of reasonable and probable cause for the institution of the proceedings. The critical element in the tort of abuse of process is that the party who has instituted proceedings has done so for a purpose or to effect an object beyond that which the legal process offers: see Williams v Spautz (1992) 174 CLR 509 at 523. It is not sufficient that there be an unworthy or reprehensible motive in bringing the action. What is required is that the purpose of the litigant in bringing the proceedings is outside the scope of the proceedings and improper: see Williams at page 525.
The plaintiff contended that the defendant had conceded, in the Federal Circuit Court, in February 2013, that it should never have sought the sequestration order. I do not accept that.
The plaintiff submitted:[137]
There is no impropriety of purpose when a plaintiff commences proceedings desiring to obtain a result within the scope of the remedy even if proceedings are commenced with an ulterior purpose which will be fulfilled by obtaining the legal remedy which the proceeding was intended to produce: Williams v Spautz per Brennan J at p. 535.
However, as the joint judgment in Williams v Spautz pointed out at pp 526-527, “It is otherwise when the purpose of bringing the proceedings is not to prosecute them to a conclusion but to use them as a means of obtaining some advantage for which they are not designed or some collateral advantage beyond what the law offers”. Isaacs J in Varawa v Howard Co Ltd (1911) 13 CLR at 91 referred to the proceedings being “merely a stalking-horse to coerce the defendant in some way entirely outside the ambit of the legal proceedings.” Which can be seen in the affidavit of James Neate where they sort payments form a loan YDM through the Tangiers corporation and he sort payments for accounts which were made out to Kindock Pty Ltd and Your Development Matters Pty Ltd.
While the defendant seeks to claim this part of “debt recovery” what they missed was they engaged a law firm Lynch Myer which failed to impose as a pre-requisite is contained in s 345 (1) of the Legal Profession Act 2004, namely, that there must be a reasonable belief on the basis of provable facts and a reasonably arguable view of the law that the claim has reasonable prospects of success.
This case disclosed by the pleadings and in particular that in the Magistrates court and the Federal Court proceedings were commenced based on fabricated allegations and furthermore Mrs. Walker has now tendered evidence throughout her closing submission which could not be tested and therefore should be struck out
This can be clearly seen by the invoices which she exhibit D4 and claimed were paid by the check on the 3^rd of November 2011, when one invoice wasn’t raised until 31 January 2011 This has now placed the court in a position where by a gravamen could claim the decision of the court could be compromised in its ability for form the correct decision or administer justice. While this can be seen as small scale abuse of process the outcomes are never the less the same. Little v Law Institute of Victoria [1990] VR 257.
Abuse of Process
[137] Plaintiff’s written submissions on Legal Principles Applicable to the Tort of Abuse of Process.

In Williams v Spautz[138] the court set out the basis upon which conclusion may be reached that an abuse of process has occurred. The court said that an abuse of process occurs when the purpose of bringing the proceedings is not to prosecute them to a conclusion, but to use them as a means of obtaining some advantage for which they are not designed or some collateral advantage beyond what the law offers.[139] The proceedings must have been instituted for an improper purpose, that is, when the court processes are employed for ulterior purposes or in such a way to cause improper vexation and oppression.[140] The criterion for abuse of process is whether the improper purpose is the predominant purpose.[141]
[138] Williams & Ors v Spautz (1991-92) 174 CLR 509 per Mason CJ, Dawson, Toohey and McHugh JJ; Williams v Spautz [1992] ALR 635.
[139] Williams v Spautz [1992] ALR 635 p 647.
[140] Williams v Spautz [1992] ALR 635 p 641.
[141] Williams v Spautz [1992] ALR 635 p 648.
It is not essential that the party institute proceedings not only for an improper purpose, but also without reasonable grounds.[142] The power to stay proceedings as an abuse of process, for example, extends even if the moving party has a prima facie case.
[142] Williams v Spautz [1992] ALR 635 p 643.
The onus of satisfying the court that there is an abuse of process lies upon the party alleging it. The onus is a heavy one and, where the remedy sought is a stay, the power to grant a permanent stay is one to be exercised only in the most exceptional circumstances.[143]
[143] Williams v Spautz [1992] ALR 635 p 649.
In order to establish an entitlement to damages for abuse of process the plaintiff must establish that the defendant’s predominant purpose in instituting proceedings was an improper purpose.[144] The existence of an unworthy or reprehensible motive for bringing proceedings is not enough to establish the tort. It must be shown that the purpose sought to be effected by the litigant in bringing proceedings was not within their scope and was improper.[145]
[144] Williams v Spautz [1992] ALR 635 p 648-149.
[145] Smits & Ors v Roach & Ors [2002] NSWSC 241 at [319].
A plaintiff may recover damages for abuse of process even if the defendant had obtained, or showed they had been in a position to obtain, judgment against the plaintiff in the proceedings alleged to have been an abuse of process.[146]
[146] Smits & Ors v Roach & Ors [2002] NSWSC 241 at [316].
As McClellan J said of the proceedings instituted by the defendant against the plaintiff, claiming damages for abuse of process, in Smits v Roach:[147]
However, I am also satisfied that the multitude of proceedings were commenced with the genuine expectation of recovery of the monies claimed. Although they were in part motivated by the hatred which Leslie had formed of Roach, and the desire, which I am sure both Smits and Leslie felt, to inflict damage on Roach for the wrong which they believed had been done to them, I am satisfied the proceedings were brought for the genuine purpose of seeking to recover the monies claimed. The purpose was to prosecute them to a conclusion.
No doubt in many cases where a litigant brings proceedings he or she is motivated by a desire for revenge and to inflict financial and emotional harm upon the opponent. It may sometimes be the case that but for these motivations, the proceedings would not have been brought. However, if the proceedings are otherwise legitimate and brought for the purpose of recovering an arguable claim, the tort will not be made out.
[147] Smits & Ors v Roach & Ors [2002] NSWSC 241 at [323]-[324].
In Smits v Roach, McClellan J referred to the judgment in Spautz v Gibbs,[148] where Priestley JA referred to the United States text Prosser and Keeton on the Law of Torts, 5th ed, (1984) in which the learned author said:[149]
Abuse of process differs from malicious prosecution in that the gist of the tort is not commencing an action or causing process to issue without justification, but misusing, or misapplying process justified in itself for an end other than that which it was designed to accomplish. The purpose for which the process is used, once it is issued, is the only thing of importance. Consequently in an action for abuse of process it is unnecessary for the plaintiff to prove that the proceeding has terminated in his favour, or that the process was obtained without probable cause or in the course of a proceeding begun without probable cause.
[148] Spautz v Gibbs (1990) 21 NSWLR 230.
[149] Spautz v Gibbs (1990) 21 NSWLR 230 at [316].
In Spautz v Gibbs Priestley JA went on to say in respect of the passages he had extracted:[150]
Although it seems clear that the tort exists in Australian, English and American jurisdictions, the above formulations could cause misunderstanding of its scope. It seems that the tort is one for which a plaintiff could recover damages even if the defendant had obtained or showed he had been in a position to obtain judgment against the plaintiff in the proceedings some use of, or during, which is alleged to be an abuse of process.
Malicious Prosecution
[150] Spautz v Gibbs (1990) 21 NSWLR 230 at [316].
In order to establish an entitlement to damages for malicious prosecution, the plaintiff must establish that the defendant counselled, or procured, or continued a prosecution.[151] The class of “prosecutor” extends to a person or entity who is instrumental in setting the relevant proceedings in motion, for example the defendant giving false evidence to support the prosecution, or a prosecutor being unduly influenced by the person providing the information, such that that person will be regarded as the true instigator of the action.[152]
[151] Commonwealth Life Assurance Society Ltd v Brian (1935) 53 CLR 343 p 380.
[152] Martin v Watson [1996] AC 74 pp 86-87.
Further, the plaintiff must establish that the prosecution was terminated in his favour.[153]
[153] See for example Commonwealth Life Assurance Society Ltd v Brian (1935) 53 CLR 343; Beckett v New South Wales (2013) 248 CLR 432.
In order to constitute malice, the dominant purpose of the prosecutor must be a purpose other than the proper invocation of the law; that is, an illegitimate or ulterior motive.[154] That improper purpose must be the sole or dominant purpose actuating the prosecutor.[155]
[154] Gibbs v Rea [1998] AC 786 p 804.
[155] Torridge v Hardy (1955) 94 CLR 147 p 162; A v New South Wales (2007) 230 CLR 500 at [91]
The plaintiff must also establish that the defendant prosecutor did not honestly believe the case that was instituted; or had no sufficient basis for such an honest belief; or both. As to the subjective element, proof will depend upon whether or not the prosecutor is supposed to have had firsthand knowledge of the facts of the case prosecuted. A proven absence of persuasion of guilt satisfies that element.[156]
[156] A v New South Wales (2007) 230 CLR 500 at [71]; Mullett v Nixon [2016] VSC 512 at [17].
Where the defendant prosecutor does not have firsthand knowledge of the facts, the defendant prosecutor can be found to have acted without reasonable and probable cause if it can be established that he did not honestly conclude that the material available at the time of instigating the prosecution warranted the instigation of the prosecution. The plaintiff must demonstrate, in those circumstances, what the defendant prosecutor made of the material available when deciding to prosecute or maintain the prosecution.[157] The objective aspect of this element of the tort is described in terms of “reasonable, and ordinarily prudent and cautious” persons in the position of the defendant prosecutor.[158]
[157] A v New South Wales (2007) 230 CLR 500 at [83].
[158] A v New South Wales (2007) 230 CLR 500 at [85].
An absence of reasonable and probable cause may support an inference of malice, but it is necessary to establish both malice as a positive element and an absence of a reasonable and probable cause as a negative element.[159]
[159] Mullett v Nixon [2016] VSC 512 at [18].
Further, the plaintiff must have suffered damage.[160] In order to establish an entitlement to damages, the plaintiff is required to establish that the malicious prosecution is causally linked to the damage said to have been suffered.
[160] Mullett v Nixon [2016] VSC 512 at [17] per Forrest J.
Consideration
As I have said, the basis of the plaintiff’s claim is that the defendant:
·commenced and prosecuted proceedings in the Magistrates Court including obtaining a default judgment against him on 1 August 2011
·commenced and prosecuted bankruptcy proceedings in the Federal Circuit Court by service of a creditor’s petition, which resulted in the making of a sequestration order on 3 September 2012
·opposed an annulment of the sequestration order in an application made by the plaintiff firstly to Magistrate Lindsay in the Federal Circuit Court, and a subsequent appeal heard by White J in the Federal Court.[161]
[161] The basis of opposition to the Annulment Proceedings was the inability of the plaintiff to establish solvency and other discretionary factors.
The plaintiff was a director of YDM which purported to engage in land development. In March 2011 YDM entered into contracts to purchase land at Lots 1, 301, and 311 Stebonheath Road Munno Para Downs. The plaintiff was designated as guarantor under those contracts. Both before and after that date Fyfe provided services in respect of a proposed subdivision of the Land, and had demanded payment of its unpaid invoices.
Shortly after entering into the contracts for the purchase of the Land, the plaintiff was sentenced to a term of imprisonment of two years and six months, to be released after four months, upon entering a 12 month recognizance.
Fyfe issued the Magistrates Court proceedings seeking payment of a number of invoices issued to the plaintiff by Fyfe during the period October 2010-April 2011. Two earlier invoices issued to the plaintiff by Fyfe had been paid.
The Magistrates Court proceedings were commenced on 23 June 2011. Fyfe was represented by Lynch Myer. The proceedings were served on 1 July 2011 by post. Default judgment was entered in the sum of $30,313.89 on 1 August 2011, while the plaintiff was in custody. The plaintiff was released shortly thereafter, on 5 August 2011.
The plaintiff attempted to set aside the default judgment by application filed on 6 March 2012. The application was dismissed on 12 April 2012 after the plaintiff failed to attend the second hearing date on that application.
The bankruptcy proceedings were commenced after the dismissal of the plaintiff’s application to set aside the default judgment by the filing of a creditor’s petition on 2 May 2012. Fyfe was again represented by Lynch Myer. A sequestration order was made against the plaintiff on 3 September 2012.
On 25 September 2012 the plaintiff again applied to set aside the default judgment.
I find that the first time the plaintiff asserted that the contracting party was YDM, as opposed to the plaintiff personally, was on 20 November 2012, when he filed an affidavit in the Magistrates Court proceedings in support of the second application to set aside the default judgment, some two months after the sequestration order was made and more than a year after the entry of the default judgment.
The default judgment was ultimately set aside on 25 January 2013. The plaintiff commenced the first of the annulment proceedings, by application to the Federal Circuit Court. The application was dismissed on 13 June 2013, in part because the plaintiff had failed to establish that he was solvent.
The plaintiff appealed the dismissal of his application to the Federal Court. That appeal was dismissed on 16 December 2013. Fyfe was a respondent to each of the annulment proceedings, and the appeal was represented by Lynch Myer.
On 20 December 2013, the Magistrates Court proceedings were stayed pursuant to the operation of s 60 Bankruptcy Act 1966. Fyfe’s claim was lodged with the plaintiff’s trustee in bankruptcy. There were no assets, and Fyfe’s claim, and other claims, were never adjudicated upon.
I accept that the witnesses were generally truthful, albeit that their evidence suffered from the passage of time. Where their oral evidence is inconsistent with contemporaneous documents, however, I prefer the documentary evidence, subject to an issue I refer to below.
For reasons I have already articulated, I am unable to accept Mr Birdseye’s evidence as to the value of any asset held by YDM. The plaintiff’s other witnesses did not assist the plaintiff in material respects.
Ms Carusi, Fyfe’s financial officer at the relevant time, did not produce or send invoices. She was responsible for following up debtors. The plaintiff did not suggest to her that he had notified her that the invoices were issued to the wrong entity.[162]
[162] T 23 L 2-9; T 29 L 1-13.
Mr Costa had assisted his family members in relation to transactions over the Munno Para land. He said that the contract for the sale was never completed. He said that proceedings were issued after caveats were lodged by YDM. The proceedings ultimately resulted in the removal of the caveats, and the bringing to an end of the contracts.
Mr Macks checked the documents that the plaintiff had provided to him prior to giving evidence. He identified that the email put to him by Mr Thredgold,[163] was not a genuine document, and had been altered.[164] As I have said, I find that the genuine version is Exhibit D3. I accept Mr Macks’s evidence that the shares in YDM were not beneficially owned by the plaintiff, giving rise to questions as to the value of that asset in the bankruptcy. He confirmed that nothing was ever realised in the bankruptcy resulting from the plaintiff’s shareholding in YDM. He confirmed that there had been no adjudication of proofs of debt in the plaintiff’s bankruptcy, because there were no assets available to meet any of the debts claimed, including that of Fyfe. Mr Macks rejected the suggestion that Fyfe had approached him with a view to keeping the plaintiff subject to a sequestration order in order to stifle litigation.[165]
[163] Exhibit P1 Tab 4 p 330.
[164] T 77 L 25-T 78 L 13.
[165] T 92 L 34-T 96 L 5.
Mr Starr dealt with the plaintiff in respect of the proposed land division of the Land. While he accepted, on reflection, that the invoices may have been issued to YDM rather than the plaintiff personally, he also confirmed that his dealings were with the plaintiff. Mr Starr quite properly accepted that his affidavit in the Magistrates Court proceedings may have been more accurate had it referred to YDM. However he also confirmed his denial that the plaintiff had ever previously told him that the invoices were issued to the wrong entity. Mr Starr was not challenged as to his reference in contemporaneous correspondence to Fyfe’s client being the plaintiff.[166]
[166] Exhibit P1 Tab 2.8 p 290.
The plaintiff’s decision not to expose himself to giving evidence on oath leads me to conclude that had he given evidence, it would not have assisted him.[167] The unchallenged evidence of Mr Macks was that the plaintiff’s version of the email document of 1 February 2013,[168] was not a genuine document, and that the original genuine document,[169] did not contain the second paragraph. The plaintiff specifically declined the opportunity to recall Mr Birdseye, the purported recipient of the email, despite being put on notice by Fyfe that in the event that Mr Birdseye was not recalled and Mr Thredgold did not give evidence, Fyfe would seek to have an adverse inference drawn as a result.[170] I infer that the plaintiff altered the email.
[167] Jones v Dunkel (1959) 101 CLR 298.
[168] Exhibit D1 Tab 4 p 330.
[169] Exhibit D3.
[170] T104 l 1-T 105 l 34.
I further find, consistent with the contentions of counsel for Fyfe that:
·the first two invoices issued to the plaintiff pursuant were paid on or about 3 November 2010, without any complaint being made by the plaintiff about who they were addressed to,[171]
·Mr Starr considered, at the relevant time, that Fyfe’s client was the plaintiff himself,[172]
·by 4 February 2011, prior to the plaintiff being incarcerated, he was on notice that Fyfe considered the invoices to be payable to him, as Ms Carusi had set out in her email to him on that date.[173]
[171] Exhibit D4 - See invoices numbered 58134, 58428.
[172] Exhibit P1 Tab 2.8 p 290 & 303.
[173] Exhibit P1 Tab 2.5 p 161.
As I have said, it was only on 20 November 2012 that the plaintiff first raised with Fyfe the suggestion that the invoices, the subject of the Magistrates Court proceedings, had been incorrectly addressed to him rather than YDM. Whilst it was suggested in the plaintiff’s affidavit dated 20 November 2011,[174] that he had told Mr Starr that the invoices needed to be made out to YDM at some point, I prefer Mr Starr’s evidence by way of affidavit sworn in the Magistrates Court proceedings,[175] and his denial of that in oral evidence in these proceedings.
[174] Exhibit P1 Tab 12.
[175] Exhibit P1 Tab 13.
At no time prior to 20 November 2012 did the plaintiff suggest the invoices were made out to the wrong party. My view in that regard is reinforced by the fact that on the first application to set aside default judgment dated 6 March 2012, the reasons given for disputing the claim made no mention of the invoices being incorrectly addressed but rather referred to “unsigned variations and Fraud committed by Fyfes in withholding money that’s not theirs”.[176]
The Magistrates Court Proceedings
[176] Exhibit P1 Tab 10.
I find that Fyfe was advised on 10 June 2011 that the plaintiff would be released from prison on 22 June 2011.[177] Fyfe filed the Magistrates Court proceedings on 23 June 2011, being the day after the plaintiff was, to the Fyfe’s knowledge, to be released from prison.[178]
[177] Exhibit P1 Tab 2.9 p 313.
[178] Exhibit P1 Tab 2.9 p 313; oral evidence of Mr Starr and Mr Costa; Exhibit P1 Tab 8.
The plaintiff maintained the post office box to which the Statement of Claim was served, being PO Box 356 Tailem Bend SA 5259, until at least 6 March 2012, as that address was provided by the plaintiff on the first application he filed to set aside the default judgment.[179] Given the defendant’s failure to give evidence, I infer that the Magistrates Court Summons was received at that PO Box address on a date shortly after 1 July 2011 and service was thereby effected.[180]
[179] Exhibit P 1 Tab 10 p 364.
[180] The relevant rule at the time – Rule 47 Magistrates Court Rules 1992 permitted service by post.
On the basis of the authority completed by the plaintiff, the fact of payment of two of the invoices addressed to the plaintiff, and the fact that the plaintiff did not assert that the invoices and the account were incorrectly addressed to him at any time prior to his bankruptcy, Fyfe and its legal representatives were entitled to commence and maintain the Magistrates Court proceedings against the plaintiff for the unpaid invoices.
The Bankruptcy Proceedings
Fyfe waited until the plaintiff’s application to set aside the default judgment was dismissed before commencing the bankruptcy proceedings on 3 September 2012. The material available to the defendant was sufficient to warrant the defendant commencing the bankruptcy proceedings. As no challenge was made as to the identity of the contracting party until 20 November 2012,[181] more than two months after the sequestration order had been made, material available to Fyfe and its legal representatives was sufficient to warrant maintaining the bankruptcy proceedings.
[181] Exhibit P1 Tab 12.
The Annulment Proceedings
The plaintiff has put forward no evidence to suggest that Fyfe’s opposition to the annulment of the bankruptcy was unreasonable. The material available to Fyfe and its legal representatives was sufficient to warrant the position it took as a respondent to the annulment proceedings. The decisions in the Federal Circuit Court on the application and the Federal Court on the appeal are consistent with that position.
Has the Plaintiff Made out his Case?

In Willers v Joyce,[182] the Supreme Court of the United Kingdom held that a claim in malicious prosecution could be brought in relation to civil proceedings. Willers v Joyce was referred to by the New South Wales Court of Appeal in Perera v Genworth Financial Mortgage Insurance Pty Ltd,[183] where the court highlighted the difference between commencing and conducting litigation negligently and doing so with an improper purpose. However, it is not settled law in Australia whether the tort of malicious prosecution extends to civil actions.[184]
[182] Willers v Joyce [2016] UKSC 43.
[183] Perera v Genworth Financial Mortgage Insurance Pty Ltd [2017] NSWCA 19 at [50] & [53].
[184] Eliezer v Owners – Strata Plan 51682 [2017] NSWSC 278 at [75].
Ultimately, for reasons which follow, it is not necessary to determine whether the tort of malicious prosecution applies to civil proceedings.
In an action for damages for malicious prosecution a plaintiff is required to establish that the proceedings were terminated in his favour. Here, the bankruptcy proceedings did not terminate in his favour. The plaintiff was subjected to the sequestration order, and thereafter failed in his application to set aside or annul the bankruptcy in the annulment proceedings.
The Magistrates Court Proceedings were stayed pursuant to s 60 of the Bankruptcy Act 1966, which provides that:
(1)The Court may, at any time after the presentation of a petition, upon such terms and conditions as it thinks fit …
(b) stay any legal process, whether civil or criminal or whether instituted before or after the commencement of this sub-section, against the person or property of the debtor:
(i) in respect of the non-payment of a provable debt …
Section 82 of the Bankruptcy Act identifies what is a provable debt (subject to identified exclusions) namely, all debts and liabilities, present or future, certain or contingent to which a bankrupt was subject at the date of the bankruptcy, or to which he or she may become subject before his discharge by reason of an obligation incurred before the date of bankruptcy. There are no relevant exclusions which apply in respect of the claim the subject of the Magistrates Court proceedings.
Pursuant to s 83 Bankruptcy Act a creditor is not taken to have proved a debt until a proof of debt lodged by that creditor has been admitted. That is a reference to admitting the debt during the course of the adjudication of proof of debt process which is provided for by s 102 of the Bankruptcy Act. As a result, until the adjudication process is undertaken, the debt remains undetermined.
Here, there was never any process of adjudicating upon proofs of debts undertaken because there were never any funds in the Estate which could give rise to any satisfaction of those proofs of debts. As a result, the debt the subject of the Magistrates Court proceedings, which was notified to the plaintiff’s trustee in bankruptcy,[185] was never determined. Instead, upon the plaintiff’s discharge from bankruptcy, he was released by such discharge from all debts provable in the bankruptcy.[186]
[185] See report as to creditors dated 20 September 2012 which records Fyfe’s claim in the amount of $30,314, Exhibit P1 Tab 6 p 336.
[186] Being a period three years after the filing of his statement of affairs, by operation of s 149(2) of the Bankruptcy Act.
By operation of the Bankruptcy Act, Fyfe’s claim against Mr Thredgold was stayed, diverted into the alternative claim process provided for by the Bankruptcy Act, and never determined one way or the other. Given the fact that the proceedings were stayed to enable a different legislated claim process to take place, the plaintiff has not established that the Magistrates Court proceedings were terminated in his favour.
The plaintiff has not established that Fyfe, in initiating or maintaining the proceedings, acted maliciously. To constitute malice the sole or dominant actual purpose actuating the prosecutor must be one other than the proper invocation of the law.[187] I find that Fyfe, in commencing and maintaining the Magistrates Court proceedings, did not do so for any purpose other than seeking to recover a debt that, on the face of its dealings with the plaintiff, and the surrounding circumstances, was reasonably arguably payable by the plaintiff. I accept the evidence of Mr Neate in that regard. Nothing in the material adduced by the plaintiff established that Fyfe, or its solicitors, acted maliciously in commencing and maintaining the Magistrates Court proceedings, nor the bankruptcy proceedings.
[187] A v New South Wales (2007) 230 CLR 500 at [91].
The plaintiff has not established that Fyfe acted without reasonable or proper cause, that is, that Fyfe subjectively did not “honestly believe” the case that was instituted, or that it had no objective basis to form such an honest belief. I find that the plaintiff has not established that Fyfe or its agents did not “honestly believe” that there was a basis for the institution and maintenance of the Magistrates Court proceedings. It was open for Fyfe to proceed on the understanding, albeit arguably erroneously, that the client was the plaintiff himself. As I have found, two of the invoices addressed to him were paid, and nothing had been said by the plaintiff at the time of the commencement of either the Magistrates Court proceedings, nor the bankruptcy proceedings, nor indeed prior to 20 November 2012, to suggest that the identity of the contracting party was in dispute. The subjective element of this aspect of the cause of action is not made out.
With respect to the objective component, on the material available to Fyfe, and therefore its representatives, there was a basis for the case that the plaintiff was the contracting party, and had failed to pay the invoices rendered for work carried out. Again, the invoices which were the subject of the Magistrates Court proceedings were issued to the plaintiff. The plaintiff had been put on notice, before he commenced serving the sentence of imprisonment, that the account would be forwarded to solicitors for collection. In response, the plaintiff stated that he understood Fyfe’s concern with the account, and suggested that Fyfe may wish to charge interest until he was able to settle the debt.[188] There was sufficient material available to Fyfe, and in turn to Fyfe’s solicitors, which objectively gave rise to a basis for the commencement and maintenance of the Magistrates Court proceedings, and in turn the bankruptcy proceedings. The plaintiff has not made out the objective element of the requirement to establish that Fyfe acted without reasonable or probable cause.
[188] Exhibit P1 Tab 2.5 p 164.
Further, I am unable to find that the plaintiff has established that he suffered any loss or damage as a result of the Magistrates Court proceedings, or the bankruptcy proceedings as claimed. The plaintiff’s claim is predicated on YDM having successfully carried out a significant development project at Munno Para, as well as two other projects in respect of which there was no evidence. The plaintiff was not the beneficial owner of shares in YDM. Accordingly he had no entitlement to receive the benefit of dividends from YDM or their value from a sale of the shares. No evidence was led as to the identity of the beneficial owner of the shares. YDM was placed into liquidation on 13 March 2013.[189] I am not satisfied that YDM ever had the funds necessary to purchase the land. There was no evidence that it was able to raise funds to purchase the land. YDM did not settle on the land as required under the contracts or at any time. YDM had no meaningful realisable assets recorded in its financial statements, with the only current asset as at 30 June 2011 being a loan to the plaintiff of some $150,000.[190]
[189] Exhibit D2.
[190] Exhibit P1 Tab 1.10 p 119.
The contract of employment relied upon by the plaintiff,[191] was not executed by YDM. On its face it purported to be executed by six persons who were not shareholders in the company.[192] The basis of their involvement is unclear with the exception of Mr Birdseye, YDM’s accountant, and Jan Thredgold, the plaintiff’s mother. There is no evidence that any of the signatories had capacity to authorise YDM to enter into legal arrangements.
[191] Exhibit P1 Tab 8.6 pp 80-81.
[192] Exhibit D2.
I find that the plaintiff has not established that the purported contract of employment, and joint venture agreement,[193] would have been productive of any income or profit to him. There is no evidence as to their provenance, nor as to the project, nor as to whether the project proceeded.
[193] Exhibit P1 Tab 1.6 pp 82-87.
The plaintiff must fail in his claim for damages for malicious prosecution.
In respect of the claim for damages for abuse of process, I am satisfied that the proceedings were commenced for the genuine purpose of seeking to recover the monies claimed and with the genuine expectation of recovery of payment of the monies claimed.
For reasons referred to in respect of the institution of the Magistrates Court proceedings, the issuing of the creditor’s petition, and the opposition to the annulment proceedings, I accept that Fyfe genuinely pursued recovery proceedings on proper legal advice, with no ulterior or collateral motive.
Conclusion
The plaintiff has failed to establish the basis of his claim, and failed to establish that he suffered loss. I dismiss the plaintiff’s claim.
I will hear the parties as to any consequential orders.

Losses incurred	Amount
40% of end of project profit	$4,392,360
Income $78,000 p/a	$234,000
Phone and internet allowance	4,700
Superannuation @ 9%	$21,060
Performance payment	$300,000
Contract 2
Pay $1,000 @ 18 months	$18,000
Performance payment	$100,000
80% value	$788,000
Superannuation @ 9% p.a.	$326,160
Contract 3
Joint venture for Penfield’s	$344,256.50
Superannuation @ 9% p.a.	$123,932.34
Interest @ 7%	$1,862,691.28
Total	$8,515,160.00