Williamson v Debney

[2023] NSWSC 783

Supreme Court

New South Wales

Medium Neutral Citation:

Williamson v Debney [2023] NSWSC 783

Hearing dates:

30 May 2023

Date of orders:

7 July 2023

Decision date:

07 July 2023

Jurisdiction:

Common Law

Before:

Harrison AsJ

Decision:

(1) The plaintiff’s proceedings are dismissed pursuant to UCPR r 13.4

(2) The plaintiff is to pay the first, third and fourth defendants’ costs of the proceedings including both notices of motion

Catchwords:

CIVIL PROCEDURE - bankruptcy – alleged fraud – insolvent companies – lack of standing.

Legislation Cited:

Bankruptcy Act 1966 (Cth) s 5

Limitation Act 1969 (NSW) s 52

Uniform Civil Procedure Rules 2005 (NSW) rr 13.4 and 14.28

Cases Cited:

Samootin v Shea [2010] NSWCA 371

Williamson v Elders Rural Services Australia Limited & Ors [2021] NSWSC 1259

Category:

Procedural rulings

Parties:

Hugh Francis Arthur Williamson (Plaintiff)
Stuart Russel Debney (First Defendant)
Robert Macaulay (Third Defendant)
Christine Byrne (Fourth Defendant)

Representation:

Counsel:
Self-represented (Plaintiff)
K. Holcombe (First, Third and Fourth Defendants).

Solicitors:
Self-represented (Plaintiff).
Moray & Agnew (First, third and fourth defendants).

File Number(s):

2022/00264667-1

Judgment

1. There are two notices of motion before the Court. By notice of motion dated 29 September 2022, the first, third and fourth defendants (‘the defendants’) seek that the plaintiff’s statement of claim filed 1 September 2022 be summarily dismissed as incompetent and/or pursuant to rule 13.4 of the Uniform Civil Procedure Rules 2005 (NSW) (‘UCPR’). In the alternative, the defendants’ seek that the whole of the statement of claim be struck out, pursuant to rule 14.28 of the UCPR.

2. By notice of motion filed 27 September 2022, the plaintiff seeks that: judgment against the first defendant for damages to be assessed; judgment against the second defendant for damages to be assessed; judgment against the third defendant for damages to be assessed; and judgment against the first defendant for damages to be assessed.

3. The plaintiff is Hugh Francis Arthur Williamson. The first defendant is Russell Stuart Debney. The second defendant is Julian Malnic. The third defendant is Robert Macaulay and the fourth defendant is Christine Byrne.

4. At the hearing, the plaintiff was self-represented. K. Holcombe of counsel, appeared for the defendants. The second defendant plays no role in this notice of motion and did not appear at the hearing. The defendants relied on a folder named Judges Working Documents (‘Ex 1’), dated 27 September 2022 and 12 October 2022.

5. The plaintiff relied upon his affidavit dated 11 May 2023. The defendants’ relied on three affidavits, those of Baron David Alder sworn 28 September 2022 and 27 April 2023 and an affidavit of Andrew John Crockett sworn 29 May 2023. The plaintiff relied upon his affidavit sworn 11 May 2023. The plaintiff opposes the orders sought in the motion. I shall first deal first with the defendants notice of motion: as they are successful in the orders sought by them, the plaintiff’s notice of motion is otiose.

The law

6. Rules 13.4 and 14.28 of the UCPR read:

13.4   Frivolous and vexatious proceedings

(cf SCR Part 13, rule 5; DCR Part 11A, rule 3; LCR Part 10A, rule 3)

(1)  If in any proceedings it appears to the court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings—

(a)  the proceedings are frivolous or vexatious, or

(b)  no reasonable cause of action is disclosed, or

(c)  the proceedings are an abuse of the process of the court,

the court may order that the proceedings be dismissed generally or in relation to that claim.

(2)  The court may receive evidence on the hearing of an application for an order under subrule (1).

…

14.28   Circumstances in which court may strike out pleadings

(cf SCR Part 15, rule 26; DCR Part 9, rule 17; LCR Part 8, rule 3)

(1)  The court may at any stage of the proceedings order that the whole or any part of a pleading be struck out if the pleading—

(a)  discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading, or

(b)  has a tendency to cause prejudice, embarrassment or delay in the proceedings, or

(c)  is otherwise an abuse of the process of the court.

(2)  The court may receive evidence on the hearing of an application for an order under subrule (1).

7. On 8 October 2021, Campbell J delivered a judgment in Williamson v Elders Rural Services Australia Limited & Ors [2021] NSWSC 1259 (‘Elders’). I have carefully read this decision. At [7], his Honour stated:

“[7] The proceedings before Judge Altobelli are bankruptcy proceedings against Mr Williamson at the suit of the Banks. The hearing before the Registrar was the purpose of fixing the date for the hearing of this current application. The purpose of the tender was to prove that notwithstanding the adverse outcome of the litigation in this Court, Mr Williamson still believes strongly that he is the victim of fraud and continues to maintain a determination to vindicate his belief by ongoing litigation in this Court ventilating the same cause until he is successful.”

8. At [90], His Honour made the following orders:

“[90] …

(1) On the motion filed by the Rural Bank Limited and the Bendigo and Adelaide Bank Limited on 30 October 2019:

Under s 8(7) Vexatious Proceedings Act 2008, except in the case of leave first obtained under Part 3 of the Act, Hugh Francis Arthur Williamson is prohibited from instituting proceedings in New South Wales against the Rural Bank Limited and the Bendigo and Adelaide Bank Limited, their directors, officers, employees or legal representatives in any matter in any way related to, arising out of, or in connection with the subject matter of proceedings file No. 2017/156318 determined by Rees J on 16 November 2018 by entry of judgment in favour of the Bendigo and Adelaide Bank Limited and proceedings No. 2015/226349 determined by Johnson J on 19 December 2018 by entry of judgment in favour of Elders Rural Services Australia limited.

(2) On the notice of motion filed by Elders Rural Services Australia Limited on 3 February 2020:

Under s 8(7) Vexatious Proceedings Act 2008, except in the case of leave first obtained under Part 3 of the Act Hugh Francis Arthur Williamson is prohibited from instituting proceedings in New South Wales against Elders Rural Services Australia Limited and Elders Limited their directors, officers, employees or legal representatives in any matter in any way related to, arising out of, or in connection with the subject matter of proceedings no. 2015/226346 determined by Johnson J on 19 December 2018 by entry of judgment in favour of Elders Rural Services Australia Limited.”

9. The plaintiff in Elders ventilated fraud by the actions of the officer Bendigo Bank and the Adelaide Bank together with the real estate agents. Now by these proceedings, the plaintiff continues to ventilate, but against different defendants.

10. This time the plaintiff’s focus is on different defendants and their actions in relation to two companies, Direct Nickel Limited (‘DNi’) and Windward Prospects Limited (‘Windward Prospects’). As the plaintiff’s statement of claim, filed 1 September 2022. is difficult to comprehend. I shall summarise his oral submissions as best I can in order to briefly set out his allegations of wrongdoing against the current defendants.

11. The statement of claim as pleaded by the plaintiff is longer and more discursive. While the plaintiff underwent a serious operation in 2013, he does not now claim that he is under a disability as set out in s 52 of the Limitation Act1969 (NSW).

12. By way of brief background, the plaintiff and the first defendant, Mr Debney, were in a legal partnership together between 2003‑2006. The second defendant is alleged to have been an investor in two companies, DNi and Windward Prospects Limited.

13. The plaintiff alleges in the statement of claim that the first defendant, his former partner, the third defendant and Bendigo Bank essentially formed an agreement to thwart his prosecution of the previous Bendigo proceedings, and that if that agreement had not been made, Bendigo Bank and other parties would have been found liable for “fraud” in those proceedings.

14. The first defendant allegedly promised the plaintiff shares in DNi. The first defendant allegedly told the plaintiff that he would protect DNi on the front line and he would always make sure that the company was protected. However, according to the plaintiff in 2013, the first defendant told the plaintiff that DNi was now insolvent.

15. By ‘on the front line’, he meant that the first defendant used to work with a web of companies, but he would not put DNi into deals. The first defendant would take shares from DNi and he would make sure that the shares in other companies were owned by DNi, but he would not do anything which meant that DNi would be exposed to a claim.

16. Apparently, the first defendant bought a company that dealt with stationery and changed its name to Windward Prospects Limited. Windward Prospects was meant to acquire minerals. It was said that Windward Prospects had made $695 million out of Nautilus shares. The plaintiff heard that there was a reasonable prospect of extracting gold out of the Papua New Guinea mine.

17. In 2013, the plaintiff was unable to express himself due to his brain injury. The first defendant denied that he had ever been involved in any company called Windward Prospects, registered in the UK in 2014 or 2015. Apparently Windward Prospects lent DNi $2 million dollars but did not receive any payment. Then Windward Prospects, which is owned by the first defendant and by the second defendant, then “takes DNi and makes it insolvent”.

Bankruptcy

18. When I asked the plaintiff about the fact that he was a bankrupt, the plaintiff made light of it. He agreed that he was bankrupt. The plaintiff then gave an involved explanation concerning his farm and the property next door that he bought subject to a mining lease and his investment in a forestry company that did not grow any trees.

19. Apparently, the plaintiff had borrowed money from this forestry company. However, it failed. The company did not turn a profit and thus the plaintiff was bankrupted. The plaintiff claims this was done without any proof he was lent $300,000 by Bendigo Bank.

20. Since these earlier Bendigo proceedings before Campbell J on 27 August 2021, the plaintiff has been declared bankrupt. The appointed trustee in bankruptcy was John Melluish of PCI Partner (NSW) (‘the trustee’).

21. In Samootin v Shea [2010] NSWCA 371, the Court of Appeal (Campbell JA (with Beazley and Hodgson JJA)) referred to the relevant provisions of the Bankruptcy Act 1966 (Cth) as follows:

“[67] Section 58(1) Bankruptcy Act 1966 provides, so far as presently relevant:

‘Subject to this Act, where a debtor becomes a bankrupt:

(a) the property of the bankrupt, not being after-acquired property, vests forthwith in the Official Trustee … and

(b) after-acquired property of the bankrupt vests, as soon as it is acquired by, or devolves on, the bankrupt, in the Official Trustee ….’

[68] Section 5 Bankruptcy Act says:

‘property means real or personal property of every description, whether situate in Australia or elsewhere, and includes any estate, interest or profit, whether present or future, vested or contingent, arising out of or incident to any such real or personal property.’

[69] This “vesting” is a transfer, by automatic operation of the statute, to the Official Trustee of title to all the “property”, as defined, of the bankrupt. Such a vesting by operation of statute has been a feature of bankruptcy law since the 1831 English statute 1 & 2 Will 4 c 56 s 25 introduced it, dispensing with the former need for there to be a deed of assignment of the property of the bankrupt executed by the commissioners: Rogers v Spence (1844) 13 M & W 571, 153 ER 240 at 573, 240 per Sgt Byles arguendo. (Those commissioners had been men appointed by the Chancellor, by commission under the Great Seal, to exercise the power of the Chancellor over the person and property of a bankrupt: Holdsworth, A History of English Law Vol 1, 7^th ed 1956 p 470).

…

[77] Any action commenced by a person who subsequently becomes a bankrupt is automatically stayed under section 60(2) Bankruptcy Act upon that person becoming a bankrupt, until the trustee makes an election in writing to prosecute or discontinue the action. If the trustee fails to make an election within 28 days after being called on to do so, he is deemed to have abandoned the action: section 60(3). However, section 60(4) provides:

“Notwithstanding anything contained in this section, a bankrupt may continue, in his own name, an action commenced by him or her before he or she became a bankrupt in respect of:

(a) any personal injury or wrong done to the bankrupt …”

[78] Using the same language as section 60(4), section 116(2)(g) Bankruptcy Act exempts from the property divisible amongst a bankrupt’s creditors “any right of the bankrupt to recover damages or compensation … for personal injury or wrong done to the bankrupt …”. While there is no question of section 60(4) applying in the present case, because there is no question of Ms Samootin continuing any action she commenced before she became a bankrupt, cases concerning section 60(4) are relevant to construing section 116(2)(g).”

Resolution

22. The plaintiff’s claim is not one of personal injury. Rather, it falls within the definition of “property” in s 5 of the Bankruptcy Act1966 (Cth). A search of the National Personal Insolvency Index conducted on 15 September 2022 reveals that the plaintiff was declared bankrupt on 27 August 2021. The plaintiff is a bankrupt: He has no standing to bring these proceedings.

23. On 22 September 2022, when the plaintiff commenced these proceedings, he was an undisclosed bankrupt. On 27 September 2022, the trustee replied to the defendants’ solicitor, Mr Crockett of Moray & Agnew. The reply relevantly reads:

“I refer to our recent telephone discussion regarding the above bankrupt estate and the proceedings commenced by the bankrupt in the Supreme Court of New South Wales on 1 September 2022.

As discussed, the basis and/or circumstances of the proceedings filed by the bankrupt are unknown to me. Further, I confirm that the bankrupt did not seek my permission or consent prior to filing the proceedings, in the event that such actions vest in me pursuant to Section 58 of the Bankruptcy Act 1966 (“the Act”).

At this time, and in the absence of funding, if I was served with Notice of the proceedings, in accordance with Section 60(3) of the Act, and thereby required to make an election to continue to proceedings, I would not make such an election in the current circumstances of this matter. If such an election was not made, the matter would be deemed to be abandoned after a twenty-eight (28) day period.”

24. A further letter to the trustee stated:

“We hereby serve on you this letter, which is notice by the first, third and fourth defendants of the proceeding given under section 60 of the Bankruptcy Act 1966 (Cth) (the Act).

The plaintiff in the proceeding is Hugh Francis Arthur Williamson of 6/10 Alfred Street Bronte NSW 2024, Mr Williamson is an undischarged bankrupt.

We require you, in your capacity as the trustee in bankruptcy for Mr Williamson’s bankrupt estate, to make a written election pursuant to section 60(2) of the Act within 28 days of service of this notice, in default of such election, you will be deemed to have abandoned the proceeding pursuant to section 60(3) of the Act.”

25. No reply from the trustee was forthcoming.

26. On 26 May 2023, the defendants’ solicitor emailed the trustee advising him of the defendants’ motion, the orders sought and the hearing details. The trustee confirmed that he did not intend to appear or be represented at the hearing.

27. On the same day, the defendants’ solicitor obtained an updated search of the National Personal Insolvency Index revealing that the plaintiff remains an undischarged bankrupt. A copy of the search is in evidence.

28. It is my view that the plaintiff has no standing to bring these proceedings. In the exercise of my discretion, there is no utility in granting him leave to replead his statement of claim: it is futile, as he cannot overcome being bankrupt. The pleading in the statement of claim has no reasonable chance of success. In these circumstances, these proceedings should be summarily dismissed as the plaintiff is incompetent. It follows that the plaintiff’s notice of motion does not need to be determined.

29. As the plaintiff is bankrupt and has no standing, he is incompetent to bring proceedings against the second defendant. Hence, I summarily dismiss the proceedings against all the defendants.

Costs

30. Costs are discretionary. Costs normally follow the event. The plaintiff is to pay the defendants costs (except the second defendant’s costs).

THE COURT ORDERS THAT:

1. The plaintiff’s proceedings are dismissed pursuant to UCPR r 13.4.

2. The plaintiff is to pay the first, third and fourth defendants’ costs of the proceedings, including both notices of motion.

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Decision last updated: 07 July 2023