Watts & Anor v Adelaide Bank Limited

[2010] HCATrans 70

[2010] HCATrans 070

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney     No S358 of 2009

B e t w e e n -

GAMBHIR WATTS

First Applicant

BHOJI WATTS

Second Applicant

and

ADELAIDE BANK LIMITED ACN 061 461 550

Respondent

Application for reinstatement

HEYDON J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON MONDAY, 22 MARCH 2010, AT 9.56 AM

Copyright in the High Court of Australia

MR G. WATTS appeared in person.

HIS HONOUR:   You appear for yourself and your wife?

MR WATTS:   Yes, your Honour.

MR T.M. MEHIGAN:   May it please the Court, I appear for the respondent.  (instructed by Gadens Lawyers)

HIS HONOUR:   Now, Mr Watts, you are moving on a summons.

MR WATTS:   Yes, your Honour.

HIS HONOUR:   That summons was filed on 19 January and it seeks reinstatement of your application for special leave?

MR WATTS:   Yes, your Honour.

HIS HONOUR:   You rely on an affidavit which you filed on 19 January 2010?

MR WATTS:   Yes, your Honour.

HIS HONOUR:   Is there any problem with that affidavit, Mr Mehigan?

MR MEHIGAN:   No objection, your Honour.

HIS HONOUR:   Very well.  That will be taken as read.  I have read everything else that has been filed.  Now, is there anything you want to add to what you have said in those documents which have been filed?

MR WATTS:   After that I received submission from the respondent and I have prepared my response to their submission, if I could submit that?

HIS HONOUR:   Yes.  That is your response dated 18 March 2010 and filed on 19 March?

MR WATTS:   No, that is my submission, but in addition to that, after that I received their response and I prepare further note on the response.

HIS HONOUR:   So that document in your hand has not been filed?

MR WATTS:   Not yet.

HIS HONOUR:   Very well.  Do you want leave to file it in Court?

MR WATTS:   Yes, your Honour.

HIS HONOUR:   Has Mr Mehigan seen it?

MR WATTS:   Yes.

MR MEHIGAN:   Yes, I have, your Honour, this morning, but I have no objection.

HIS HONOUR:   Yes.  You have leave to file that in Court.  Yes, I have read your submissions.  Let me just look at the accompanying materials.  I have got as far as the transcript of the argument in front of Justice Buchanan.  Do you want me to read all of that or just the parts that have been marked in the margin?

MR WATTS:   I do not understand the question.

HIS HONOUR:   See the parts of the transcript of proceedings before Justice Buchanan that have been marked in margin?

MR WATTS:   Yes, your Honour.

HIS HONOUR:   Do you just want me to read those or do you want me to read the whole of the transcript?

MR WATTS:   They were the important one.  I think if you can read the whole of it.

HIS HONOUR:   All right.  Yes, I have read that transcript.  Do you have any further submissions to put?

MR WATTS:   No, your Honour.

HIS HONOUR:   I need not trouble you, Mr Mehigan.

This is an application to reinstate an application for special leave to appeal from an order of the Full Federal Court.  The applicants, Mr and Mrs Watts, are not legally represented in this Court.  Their oral presentation was advanced by Mr Watts.  The application is made necessary by the failure of the applicants to have filed their written case within the time specified in rule 41.10.4 of the High Court Rules.  They endeavoured to do so on the last day but arrived after the Registry closed.  An explanation has been given for not completing the document earlier and the respondent realistically does not contend that the delay is fatal.  It rather contends that reinstatement would be futile since there is no realistic prospect of special leave being granted.

There is another application for special leave to appeal to this Court on foot:  BMG Poseidon Corp Pty Ltd v Adelaide Bank Limited.  That relates to an application to set aside a statutory demand served on a company, BMG Poseidon Corp Pty Ltd, hereinafter called BMG.  The application was dismissed by Justice Foster and the Full Federal Court, Justices Lindgren, Gilmour and Jagot, dismissed an appeal.  The controversy will be called the BMG proceedings.  The controversy out of which this reinstatement application arises will be called the Watts proceedings.

The Watts proceedings were directed at having bankruptcy notices which were served on the applicants set aside.  Justice Buchanan declined to set them aside and the same Full Federal Court upheld that decision.  The link between the two proceedings is that BMG borrowed money from the respondent to buy a property at Drummoyne.  The present applicants were guarantors of BMG in relation to that transaction.  The origins of the BMG proceedings lay in a failure by BMG to comply with notices issued by the respondent to repay the moneys advanced.  After serving BMG, Mr Watts and Mrs Watts with initiating process, the respondent obtained default judgments in the Supreme Court of New South Wales against BMG and against Mr and Mrs Watts as guarantors. 

The Drummoyne property was in due course sold for more than the figures in valuations obtained by the respondent, but less than the judgment debt.  Before it was sold the respondent had, at the request of the Watts’ interests, deferred taking possession of the property for some months in order to allow BMG to sell.  The respondent then served a statutory demand on BMG.  The next relevant event is that Mr and Mrs Watts applied to have the default judgment set aside 18 months after that judgment had been entered and nearly 12 months after the respondent had taken possession of the Drummoyne property.  Justice McCallum dismissed that application.  The Court of Appeal dismissed an appeal. 

In this Court, Justices Gummow and Kiefel dismissed an application to extend time within which to apply for special leave to appeal.  One of Mr Watts’ submissions today was that the reason for the refusal for the application was simply that it had been filed late.  In view of that submission, it is necessary to quote what Justices Gummow and Kiefel said:

The applicants have not advanced any question of law that would justify a grant of special leave to appeal.  This matter concerns the application of settled principle on an issue of practice and procedure, and there is no reason to doubt the correctness of the decisions below.

Before Justice Foster, BMG contended that there was a genuine dispute about the amount of BMG’s indebtedness.  To accept that submission would involve going behind the Supreme Court judgment after Justice McCallum and the Court of Appeal had found that there was no arguable defence.  After examining the evidence for himself, Justice Foster declined to do so.  He also found that BMG had no offsetting claim either based on an allegation that the respondent had sold BMG’s property at an undervalue or based on an allegation that the respondent had breached promises to forebear from taking or refrain from taking enforcement action.

Before Justice Buchanan, Mr and Mrs Watts contended that no real debt lay behind the default judgment in the Supreme Court of New South Wales.  This depended on going behind the Supreme Court judgment and the later orders of the Supreme Court.  Justice Buchanan declined to do that because no adequate reason for doing so had been identified, particularly since the Supreme Court and Justice Foster had examined the facts in detail.  The Full Court agreed with Justice Buchanan.

Before Justice Buchanan, Mr and Mrs Watts also contended that the respondent was misusing the bankruptcy notice procedure to put undue pressure on Mr and Mrs Watts to pay their debts.  Justice Buchanan said there was no foundation for that allegation and he distinguished a case on which reliance had been placed, namely, Brunninghausen v Glavanics unreported, 3 March 1998, Justice Emmett.  The Full Court agreed with Justice Buchanan on that issue as well.

Finally, Justice Buchanan said that an affidavit of Mr Watts stated that he proposed to initiate “separate claims” for losses caused by the respondent. He further said that there was no allegation in the proceedings before him, that there was a counterclaim set off or cross‑demand which could not have been set up in the original proceedings within the meaning of section 41(7) of the Bankruptcy Act 1966 (Cth).

In this Court, Mr and Mrs Watts submit that the respondent had been abusing the process of issuing bankruptcy notices because the present bankruptcy notice was the third on which it had relied.  Two earlier ones had led to court proceedings after which they were withdrawn.  That does not demonstrate an abuse of process, nor does it invalidate the reasoning in the courts below leading to the conclusion that Brunninghausen v Glavanics was distinguishable.  Mr and Mrs Watts also alleged that the judgment relied on in the bankruptcy notices was “clandestinely obtained . . . by default”.  This is not substantiated.  There was no notice of appearance filed until over 18 months after the relevant Supreme Court proceedings began.  There is no denial that Mr and Mrs Watts were served.  The respondent did not apply for entry of default judgment until eight months after the proceedings had begun.

In the BMG proceedings eventually disposed of by this Court, at first instance Justice McCallum found that allegations by Mr and Mrs Watts, that the respondent had agreed not to proceed with legal action against them and that the respondent had assured them that they need not enter an appearance, were not supported.  It has not been demonstrated that she was wrong or that Justice Foster, who after examining the evidence agreed with her, was wrong or that the five other judges who have agreed with their conclusions were wrong.

Today a complaint was made in substance that Justice Foster had erred in failing to receive some evidence which he was asked to rely on in the time between when he reserved his judgment and when he handed it down.  Justice Foster received a small part of that evidence but rejected the rest largely on the ground that it had been available for tender during the trial and no good reason had been demonstrated for its not having been then tendered.  That decision of Justice Foster is not one which has been shown to be attended with error or to be relevant to the present application.

Nothing else in the submissions of Mr and Mrs Watts invalidates the primary bases on which the conclusions of the courts below rested.  They did, however, advance one other submission.  In effect, they contended that the Watts proceeding should be reinstated because they were closely connected with the BMG proceedings and the BMG proceedings were validly before the court.  It is not desirable to say anything about the merits of the BMG proceedings since that is a matter for two or three judges to consider in the ordinary way in which applications for special leave which have not been deemed abandoned are considered. 

It is sufficient to say that the prospects of special leave being granted in the Watts proceedings, considered in isolation, are so slight as to make it futile to reinstate them.  Accordingly, the summons is dismissed with costs.

The Court will now adjourn.

AT 10.19 AM THE MATTER WAS CONCLUDED