Williamson v Bendigo and Adelaide Bank Limited

[2021] FCCA 296

FEDERAL CIRCUIT COURT OF AUSTRALIA

Williamson v Bendigo and Adelaide Bank Limited [2021] FCCA 296

File number(s):

SYG 857 of 2019

Judgment of:

JUDGE DRIVER

Date of judgment:

18 February 2021

Catchwords:

BANKRUPTCY – Application to set aside a bankruptcy notice – proceeding by applicant to set aside the judgment debt unsuccessful and other proceedings asserting a set-off or cross demand also unsuccessful - application dismissed.  

Legislation:

Bankruptcy Act 1966 (Cth)

Federal Circuit Court (Bankruptcy) Rules 2016 (Cth)

Cases cited:

Bhagat v Global Custodians Ltd [2002] FCAFC 51

Ebert v The Union Trustee Co of Australia Ltd (1960) 104 CLR 346

Glew v Harrowell, in the matter of Glew (2003) 198 ALR 331

In re Foster, Ex parte Basan (1885) 2 Morr 29

Re Capsanis; Capsanis v Owners -- Strata Plan 11727 [2000] FCA 1262

Re Roy Edward Brink; Ex Parte the Commercial Banking Company of Sydney Limited (1980) 44 FLR 135

Re Verma; Ex parte Deputy Commissioner of Taxation (1985) 4 FCR 181

Williamson v Bendigo and Adelaide Bank Ltd [2020] NSWSC 933

Williamson v Elders Rural Services & Ors [2020] NSWSC 934

Williamson v Elders Rural Services Australia Ltd (No 2) [2018] NSWSC 1986

Williamson v Rural Bank Limited [2019] NSWSC 1735

Number of paragraphs:

39

Date of hearing:

18 February 2021

Place:

Sydney

:

The Applicant appeared in person

Solicitor for the Respondent:

Ms F Reynolds of TurksLegal

ORDERS

SYG 857 of 2019

BETWEEN:

HUGH WILLIAMSON

Applicant

AND:

BENDIGO AND ADELAIDE BANK LIMITED

Respondent

ORDER MADE BY:	JUDGE DRIVER
DATE OF ORDER:	18 FEBRUARY 0221

THE COURT ORDERS THAT:

1.The application as amended by leave filed on 15 February 2021 is dismissed.

2.The Court notes that the time for compliance with the Bankruptcy Notice for the purposes of s.41(7) of the Bankruptcy Act 1966 (Cth) expires on the dismissal of the application.

3.The applicant is to pay the respondent’s costs of and incidental to the application as agreed or, in the absence of agreement, as quantified or, if necessary, taxed under the Federal Court Rules 2011 (Cth).

REASONS FOR JUDGMENT

JUDGE DRIVER

INTRODUCTION AND BACKGROUND

1. On 18 February 2021 I dismissed with costs an amended application seeking to set aside Bankruptcy Notice 232347 (bankruptcy notice) issued on 21 December 2018.  The following are my reasons for those orders. 

2. The procedural background is conveniently set out in the respondent’s (the Bank) outline of submissions filed on 17 February 2021.

3. Mr Williamson applies to set aside a bankruptcy notice issued against him by the Bank. The basis for the bankruptcy notice is a final judgment obtained by the Bank against Mr Williamson in proceedings in the Supreme Court of New South Wales. 

4. The bankruptcy notice was issued on 21 December 2018.  The Court made orders on 4 March 2019 to facilitate substituted service.  The bankruptcy notice, and an amended bankruptcy notice (the amendment related solely to the time for compliance), were served by substituted service on 19 March 2019.

5. On 5 March 2019, the Court made orders extending the time for compliance with the bankruptcy notice to 23 April 2019.[1]

   [1] Orders of Registrar O’Connor made 5 April 2019

6. On 5 April 2019, before expiry of the time for compliance, Mr Williamson, who is a former solicitor and self-represented in these proceedings, filed an application to set aside the bankruptcy notice relying on a cross-demand that Mr Williamson claimed to have against the Bank, for the purposes of s 40(1)(g) of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act), in NSW Supreme Court Proceedings 2018/379388.

7. On 12 February 2021, the Court granted Mr Williamson leave to amend his application.  By Amended Application filed on 15 February 2021, Mr Williamson seeks orders that the bankruptcy notice be set aside on the basis that he has a counterclaim, set-off or cross demand against the Bank.

8. Mr Williamson also seeks an order pursuant to s 41(6A) of the Bankruptcy Act that the Court extend time for compliance with the bankruptcy notice until proceedings to set aside the judgment underlying the bankruptcy notice (being Supreme Court of NSW Proceedings 2019/283383) (the Set Aside Proceedings) have been determined. It was not apparent that that relief was pressed, as the Set Aside Proceedings were dismissed by the Supreme Court in July 2020.

9. No submissions were made by Mr Williamson either orally or in writing in relation to that aspect of the matter.  That is unsurprising given the outcome of those proceedings in the NSW Supreme Court. 

10. The matter has had a long procedural history.  As noted above, proceedings to set aside the bankruptcy notice were first filed on 5 April 2019 and allocated to the docket of a former judge of this Court.  Earlier in February 2021 the proceedings were transferred to me.  A great deal of material had already been filed in the matter.  I conducted a directions hearing on 12 February 2021, in which I granted Mr Williamson leave to amend his application filed on 5 April 2019.  I also gave leave for Mr Williamson to file and serve a single affidavit setting out the grounds relied upon in respect of the application as amended.  Mr Williamson complied with that order.  The Bank also assumed correctly that Mr Williamson would wish to rely upon his former solicitor Ms Christina Byrne’s affidavit made on 9 March 2019 (the Byrne affidavit).  Mr Williamson also presented short written submissions shortly before the trial and made oral submissions at the trial.

11. The Bank relies on three affidavits of Stephen Flamer-Smith made on 1 May 2020 (and exhibit SFS-1), 4 September 2020 (and exhibit SFS-2) and 16 December 2020.

12. Counsel for the Bank supplemented her written submissions orally at the trial.

    CONSIDERATION

13. Having heard the parties, it was obvious that Mr Williamson’s application faced grave difficulties.  His challenge to the judgment supporting the bankruptcy notice has failed in the NSW Supreme Court.  His asserted counterclaim, set-off or cross demand has already been litigated three times adversely to him.  The only outstanding proceeding is an application to have him declared a vexatious litigant, which Mr Williamson is resisting on the basis of allegations of fraud.  Those allegations are not new. 

14. I agree with the Bank’s submissions concerning the asserted counterclaim, set-off or cross demand. 

15. Mr Williamson seeks to set aside the bankruptcy notice on the ground that he has a counterclaim for the purpose of s 40(1)(g) of the Bankruptcy Act. The counterclaim is said to have arisen from Mr Williamson’s purchase of a property, in 2007, known as “Reevesdale”.

16. Mr Williamson says that in respect of his purchase of Reevesdale, which is located in Bungonia, New South Wales, the selling agent (Mr Hannan) misled Mr Williamson about the vendor’s reasons for the sale, and failed to tell Mr Williamson about a proposed quarry development.  Mr Hannan was employed by Elders Rural Services Australia Ltd.

17. On Mr Williamson’s purchase of Reevesdale, the outgoing mortgagee (that is, the vendor’s mortgagee) was Rural Bank Ltd.  At the time of the sale of Reevesdale in 2007, the Bank held 50% of the shares in Rural Bank Ltd. Mr Williamson’s alleged counterclaim is that the Bank received the proceeds of fraud upon the sale of Reevesdale, by reason of its holding shares in Rural Bank Ltd.[2]

    [2] Affidavit of Mr Williamson sworn 15 February 2021 (Williamson Affidavit) at [33] and Annexure B to the Byrne Affidavit at page 11 (see [11], [13], [18], [58]-[61] for the background; and against the Bank see [98]-[110])

18. Separately, Mr Williamson claims that the Bank has otherwise “assisted” Elders to conceal fraud, by taking steps to enforce its judgment, including serving the bankruptcy notice.[3]

    [3] Williamson Affidavit at [30] and [36] and Annexure B to the Byrne Affidavit at page 11 at [111]-[127]

19. These matters are said to give rise to a claim for damages.

20. In Glew v Harrowell, in the matter of Glew[4] Lindgren J observed at [9] that in order to be satisfied of a counterclaim, set off or cross-demand, a debtor must satisfy the Court of interrelated and sometimes overlapping matters as follows.  Mr Williamson must satisfy the Court that he has a prima facie case;[5] and that he has a “fair chance of success” or is “fairly entitled to litigate” the claim.[6]  Mr Williamson must also satisfy the Court that he is advancing a genuine or bona fide claim.[7]

    [4] (2003) 198 ALR 331

    [5] Ebert v Union Trustee Co of Australia Ltd (1960) 104 CLR 346 at 350

    [6] Re Roy Edward Brink; Ex Parte the Commercial Banking Company of Sydney Limited (1980) 44 FLR 135 at 141

    [7] Re Capsanis; Capsanis v Owners - Strata Plan 11727 [2000] FCA 1262 at [1]

21. Even if  Mr Williamson has a "counterclaim, set-off or cross demand equal to or exceeding the amount of the judgment debt", he may rely on it as a ground for setting aside a bankruptcy notice only if the counterclaim, set-off, or cross demand "could not have been set up" by him in the proceeding in which the judgment was obtained. The expression "could not have been set up" has been construed narrowly.  In Re Brink, Lockhart J stated:

    The words "that he could not have set up in the action or proceeding in which the judgment or order was obtained" mean "which he could not by law set up in the action.": see Re Jocumsen (1929) 1 A.B.C., at p. 85; Re A Debtor (1914) 3 K.B. 726 per Avory J. at p. 730 and Re Stockvis (1934) 7 A.B.C. 53 especially per Lukin J. at p. 57 where his Honour said: "I take a counter claim, set off, or cross demand which could not be set up as one which, from point of time, or from its nature, or from absence of empowering provisions, or from positive inhibition so to do, could not be set up in the particular case in which judgment was obtained . . . Mere failure to take advantage of the opportunity can hardly be said to be inability."

22. There are three reasons why Mr Williamson’s application to set aside the bankruptcy notice on the basis of a counterclaim failed.

23. First, Mr Williamson put no evidence before this Court to establish an effective counterclaim. Rather, he relied only upon a pleading filed in the NSW Supreme Court in proceedings 2019/286765,[8] and assertions and submissions made by him in his affidavit made on 15 February 2021.

    [8] At Annexure B to the Byrne Affidavit

24. The mere production of a statement of claim has long been held to be insufficient.[9]  The authorities make clear that a statement of claim is not evidence of anything.[10]  Nor is it sufficient for a debtor to file an affidavit which merely propounds a claim and states how the debtor proposes to establish it.[11]  That is precisely what Mr Williamson has done here.

    [9] Bhagat v Global Custodians Ltd [2002] FCAFC 51 at [53]

    [10] In re Foster, Ex parte Basan (1885) 2 Morr 29 at 33 per Brett MR; Re Verma; Ex parte Deputy Commissioner of Taxation (1985) 4 FCR 181 at 187

    [11] Ebert at 350

25. Mr Williamson claims that the Bank assisted Elders Rural Services in a fraud on him, and that previous judgments of the Supreme Court of New South Wales dismissing those same claims have been procured by fraud on that Court.  They are very serious allegations.  In order to satisfy this Court that he has a prima facie claim for the purposes of s 40(1)(g) of the Bankruptcy Act, cogent evidence would be required. It has not been produced.

26. Secondly, even if Mr Williamson had proffered some evidence of a prima facie case, Mr Williamson’s claims have been dismissed by the Supreme Court of NSW three times, including the dismissal of the proceedings 2019/286765 (the 2019 Proceedings).

27. Mr Williamson’s claims were first dismissed by the Supreme Court of NSW following proceedings commenced by him in 2015.  The Bank was initially a party to those proceedings. Mr Williamson discontinued his claim against the Bank on 1 March 2016.  By the time of trial, the sole remaining defendant was Elders Rural Services Australia Ltd (the real estate agent).  Johnson J delivered judgment in December 2018 holding that there was no evidence to establish a false representation or misrepresentation by Mr Hannan of the kind pleaded or alleged by Mr Williamson.[12]  His Honour also concluded at [175], fatally to Mr Williamson’s alleged counterclaim, that Mr Williamson did not rely on anything Mr Hannan said in purchasing Reevesdale; and that the property Reevesdale was worth at least the amount of money Mr Williamson paid for it in 2007.[13]  These factual findings are sufficient to dispel any suggestion of a “prima facie case” against the Bank of the kind relied on to set aside the bankruptcy notice.

    [12] Williamson v Elders Rural Services Australia Ltd (No 2) [2018] NSWSC 1986 at [165] - [168]

    [13] at [179]

28. Next, Mr Williamson commenced proceedings in 2018 again about the sale of Reevesdale, against the real estate agent and the Bank (and others).  Those proceedings were dismissed by Lindsay J as an abuse of process as Mr Williamson was bound by issue estoppel from the findings of Johnson J.[14]

    [14] Williamson v Rural Bank Limited [2019] NSWSC 1735

29. In respect of the claim against the Bank, Lindsay J further noted at [13]:

    Even if (contrary to Johnson J’s judgment) the Elders Parties were privy to a fraud, the plaintiff advances no plausible case for relief against the Banks, against whom the plaintiff discontinued claims for relief in the proceedings that culminated in Johnson J’s judgment. There is no suggestion that the Banks were privy to any form of fraud, unless a shareholding in the Elders Parties was of itself (which it could not be) sufficient to attract a liability for fraud alleged against the Elders Parties.

30. Thirdly, in the 2019 Proceedings, Mr Williamson contended that re-litigation of the issues determined by Johnson J ought be permitted as the judgment of Johnson J was procured by a fraud and Mr Williamson was under a disability during the trial before Johnson J.  In July 2020, Bellew J delivered judgment dismissing the 2019 Proceedings.[15]

    [15] Williamson v Bendigo and Adelaide Bank Ltd [2020] NSWSC 933; Exhibit SFS-2, page 136

31. Accordingly, Mr Williamson does not have a prima facie case against the Bank, with any prospect of success, or that he is entitled to litigate in light of the issue estoppel by which he is bound.

32. The Amended Application does not comply with rule 3.02 of the Federal Circuit Court (Bankruptcy) Rules 2016 (Cth) (Bankruptcy Rules), but I place no reliance upon that.

33. The Court has power to excuse formal defects or irregularities in compliance with the rules of Court, unless the Court is of the opinion that substantial injustice has been caused by the defect or irregularity which could not be remedied by court order.  

34. I also agree with the Bank’s submissions concerning the grant of any further relief under s 41(6A) of the Bankruptcy Act. A further extension would be inappropriate and is unnecessary as explained below.

35. By order 2 of the Amended Application, Mr Williamson seeks relief extending time for compliance with the bankruptcy notice under s 41(6A) of the Bankruptcy Act on the grounds that proceedings to set aside the judgment debt underlying the bankruptcy notice have been instituted (the Set Aside Proceedings), until the Set Aside Proceedings are determined. That relief should not be granted for two reasons.

36. First, s 41(6A) requires proceedings to set aside a judgment or order in respect of which the Notice was issued to have been instituted before expiration of the time fixed for compliance with the Notice (3 May 2019). The Set Aside Proceedings (NSW Supreme Court proceedings 2019/283383) were commenced on 11 September 2019.[16]

    [16] Exhibit SFS-1, pages 510-516

37. Secondly, the Set Aside Proceedings were dismissed, with costs, by the Supreme Court of New South Wales on 21 July 2020.[17]

    [17] Williamson v Elders Rural Services & Ors [2020] NSWSC 934; Exhibit SFS-2, page 2

38. In any event, as noted in my orders, Mr Williamson had the benefit of the automatic extension of time under s 41(7) of the Bankruptcy Act until the determination of his asserted counterclaim, set-off or cross demand. His application having been dismissed, that extension of time lapsed at the same time.

39. I also made the costs order as sought by the Bank on the basis that costs should follow the event.

I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Driver.

Associate:

Dated:       25 February 2021