|
|
[Home]
[Databases]
[WorldLII]
[Search]
[Feedback]
Federal Court of Australia |
Bankruptcy Act 1966 (Cth)
Corporations Law, s 459G
Bourke v Beneficial Finance Corporation Ltd (1993) 47 FLR 264, applied
Cabassi v Vila [1940] HCA 41; (1940) 64 CLR 130, cited
Corney v Brien [1951] HCA 31; (1951) 84 CLR 343, cited
McDonald v McDonald [1965] HCA 45; (1965) 113 CLR 529, cited
Monroe Schneider Associates (Inc) v No 1 Raberem Pty Ltd (No 2) [1992] FCA 367; (1992) 37 FCR 234, cited
Owens Bank Ltd v Bracco [1992] 2 AC 443, cited
Re Haddad; Ex parte R W Jordan Pty Ltd (FCA/Sackville J, 20 August 1997, unreported), cited
Wentworth v Rogers (No 5) (1986) 6 NSWLR 534, cited
Wolff v Donovan (1991) 29 FCR 480, cited
RE GREGORY MALOUF & ORS; EX PARTE COMMONWEALTH BANK OF AUSTRALIA
NP 976 OF 1997
DAVRIDGE PTY LIMITED V COMMONWEALTH BANK OF AUSTRALIA
NG 3695 OF 1997
SACKVILLE J
3 FEBRUARY 1998
SYDNEY
|
IN THE FEDERAL COURT OF AUSTRALIA | |
| NEW SOUTH WALES DISTRICT REGISTRY | np 976 of 1997 |
|
RE: | Gregory Malouf
Tammy Malouf George Malouf Debtors |
|
EX PARTE: | Commonwealth Bank of Australia
(ACN 123 123 124) Petitioning creditor |
|
JUDGE: | SACKVILLE J |
| DATE OF ORDER: | 3 FEBRUARY 1998 |
| WHERE MADE: | SYDNEY |
THE COURT ORDERS THAT:
1. The estate of each of the debtors be sequestrated.
2. The petitioning creditor's costs, including any reserved costs, be taxed and paid in accordance with the Bankruptcy Act 1966 (Cth).
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
|
IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY | NG 3695 OF 1997 |
|
BETWEEN: | Davridge Pty Limited
Applicant |
|
AND: | Commonwealth Bank of Australia
(ACN 123 123 124) Respondent |
JUDGE: SACKVILLE J
DATE: 3 FEBRUARY 1998
PLACE: SYDNEY
THE COURT ORDERS THAT:
1. The application be dismissed.
2. The applicant pay the respondent's costs.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
|
IN THE FEDERAL COURT OF AUSTRALIA | |
| NEW SOUTH WALES DISTRICT REGISTRY | NP 976 of 1997 |
|
RE: | Gregory Malouf
Tammy Malouf George Malouf Debtors |
|
EX PARTE: | Commonwealth Bank of Australia
(ACN 123 123 124) Petitioning Creditor |
|
NG 3695 of 1997 |
|
BETWEEN: | Davridge Pty Limited
Applicant |
|
AND: | Commonwealth Bank of Australia
(ACN 123 123 124) Respondent |
JUDGE:
SACKVILLE J DATE: 3 FEBRUARY 1998 PLACE: SYDNEY
The Proceedings
These proceedings are the latest in a series involving the Commonwealth Bank of Australia ("the Bank"), on the one hand, and members of the Malouf family and a company associated with them, Davridge Pty Ltd ("Davridge"), on the other. The present proceedings arise out of actions taken by the Bank under the Bankruptcy Act 1966 (Cth) ("the Bankruptcy Act") and under the Corporations Law in respect of a judgment obtained by it on 17 November 1995 in the Commercial Division of the Supreme Court of New South Wales ("the Commercial Division judgment").
The Commercial Division judgment was given by Giles CJ Comm D after a contested nine day hearing in which the Maloufs and Davridge were legally represented. His Honour made orders which, inter alia, required Gregory John Malouf, Tammy Anne Malouf (Gregory's wife), Dr George Tewfic Malouf (Gregory's brother) and Davridge to pay the Bank $9,350,024.31. In March 1996, the Bank served bankruptcy notices on each of the Maloufs requiring them to pay the balance due under the judgment as at the date of the notices (an amount, after allowing for interest and the realisation of certain securities, of $8,521,072.94). On 11 September 1996, the Bank served a statutory demand, dated 3 September 1996, on Davridge, requiring it to pay the amount of $8,170,469.14 then due in respect of the Commercial Division judgment. Neither the bankruptcy notices nor the statutory demand have been complied with.
Two matters are before the Court in these proceedings. The first is a creditor's petition, presented on 19 August 1996, whereby the Bank seeks sequestration orders against the estates of each of the Maloufs. The second is an application by Davridge under s 459G of the Corporations Law, filed on 27 September 1996, to set aside the statutory demand. Both matters have been heard together, with evidence in one being evidence in the other.
Each of the Maloufs filed a notice of intention to oppose the Bank's petition. The notices, which were in identical form, stated the ground of opposition relied on by them (see Federal Court Rules ("FCR"), O 77, r 20 (now r 11)). As amended, the ground of opposition is as follows:
"That the judgment referred to in paragraph 2 of the...creditor's petition [that is, the Commercial Division judgment] was obtained by fraud as set out in the attached summary of contentions in NSW Supreme Court proceedings No 50059 of 1997."
The ground of objection takes the rather curious course of incorporating a summary of contentions filed in proceedings in the Supreme Court of New South Wales. The reference to "NSW Supreme Court proceedings No 50059 of 1997" is to an application by the Maloufs and Davridge, to whom I refer collectively as "the debtors", to set aside the Commercial Division judgment, on the ground that it was obtained by fraud. That application was the second attempt to set aside the judgment. The first was summarily dismissed by Rolfe J on 17 July 1996. The second suffered a similar fate, being dismissed by Hunter J on 12 June 1997.
These setbacks did not deter the Maloufs from relying on essentially the same grounds in the present proceedings as had been unsuccessfully put to both Rolfe J and Hunter J. However, in the course of the hearing I gave the Maloufs leave to amend the "summary of contentions" and it was that document, as amended, that particularised the contention that the Commercial Division judgment had been obtained by fraud. The substance of the case put on behalf of the debtors was that a former officer of the Bank, Mr Alexander Sloss, had given false evidence at the trial and had done so in consequence of inducements provided to him by the Bank. Mr Sloss, at the relevant times, was the Manager, Loans, at the Parramatta branch of the Bank, although he retired from the Bank in September 1990. During final addresses, Mr Hodgekiss, who appeared for the debtors, sought leave to further amend the summary of contentions. I shall refer later to the application to amend.
Davridge's application to set aside the statutory demand rested on the same grounds as those relied on by the Maloufs to resist the creditor's petition. Mr Hodgekiss, on behalf of Davridge, expressly conceded that if the matters raised by the Maloufs in the bankruptcy proceedings were decided adversely to them, Davridge could not succeed in its application under s 459G of the Corporations Law.
Procedural Issues
At the outset of the hearing, Mr Forster SC, who appeared with Mr Bell for the Bank, applied for an order
"that the order made on 16 July 1997 be corrected so that it also provides that the period at the expiration of which the creditor's petition will lapse be the period that ends on 18 August 1998".
The application was necessary because a creditor's petition lapses at the expiration of twelve months from the date of its presentation, unless extended prior to its expiration for a further period not exceeding twelve months: Bankruptcy Act, subss 52(4) and (5). In this case the Bank's representatives neglected to seek an extension at the call-over which took place on 16 July 1997 and thus the petition lapsed on 18 August 1997. The Bank's application was made under the "slip rule" (FCR, O 35, r 7(3)), and was designed to correct the failure to seek an extension within the period specified by the Bankruptcy Act.
The Bank's application was not opposed. I made the orders sought by the Bank and gave my reasons in a brief judgment.
A second procedural issue (although one that did not ultimately require a ruling) concerned the order in which evidence was to be given. Mr Forster read affidavits on behalf of the Bank addressing the formal matters necessary to support the Bank's petition. Mr Hodgekiss, on behalf of the Maloufs, conceded that the formal requirements had been satisfied by this evidence.
Mr Hodgekiss then submitted that all remaining affidavits to be read on behalf of both the debtors and the Bank should be read before any witnesses gave oral evidence. As I understood the position, Mr Hodgekiss's submission was motivated, in part, by the need to make a forensic judgment as to whether to call Mr Sloss to give oral evidence, bearing in mind that Mr Sloss had declined to provide a statement to the debtors for the purposes of these proceedings. Mr Forster submitted that, having regard to the serious allegations made against the Bank, the debtors should adduce all evidence in support of their case based on fraud and only then should the Bank be required to adduce its evidence in response.
In the result, the course proposed by Mr Forster was followed. Neither side called Mr Sloss, although, according to the evidence of Mr Fernon (formerly a solicitor with the Bank, who had carriage of the proceedings involving the Maloufs), he was in the precincts of the Court for part of the hearing.
A third procedural issue should be noted. Orders are made from time to time in bankruptcy proceedings for the separate determination of the question of whether the Court should go behind a judgment. If the answer is in the affirmative, the Court proceeds to consider whether there is a real debt due to the creditor: Wolff v Donovan (1991) 29 FCR 480 (FCA/FC), at 486, per Lee and Hill JJ. The possible splitting of the present proceedings in this manner was raised before another Judge of this Court in a directions hearings. The view was expressed at that time (correctly, in my respectful opinion) that the nature of the proceedings was such that an order should not be made for the separate determination of an issue. Accordingly, the evidence adduced by the parties was directed to all issues in dispute. However, the Bank maintained its position that this was not an appropriate case to go behind the Commercial Division judgment.
Previous Proceedings
There have been many legal proceedings between the Bank and the debtors. It is necessary to refer in detail only to three of these:
* the Commercial Division proceedings, determined by Giles CJ on 9 November 1995, in respect of which judgment was entered on 17 November 1995;
* the first application to set aside the Commercial Division judgment, which was dismissed by Rolfe J on 17 July 1996 ("the first application"); and
* the second application to set aside the Commercial Division judgment, which was dismissed by Hunter J on 12 June 1997 ("the second application").
The Commercial Division Proceedings
In the Commercial Division proceedings, the Bank claimed, inter alia, money judgments against the debtors under guarantees given in relation to unsuccessful development projects. As Giles CJ explained in his detailed, eighty four page judgment, there was "a stark conflict of fact" as to the occasions on which banking or loan arrangements were discussed between the Maloufs and representatives of the Bank. The relevant dealings between the Bank and the Maloufs occurred during 1989 and 1990. They usually involved Gregory and George Malouf and Mr Sloss, although others participated in some of the meetings and discussions.
The account given by Gregory and George Malouf included claims to the effect that, at a meeting on 1 June 1989, Mr Sloss and Mr Mitchell (the Senior Manager, Loans, at the Parramatta branch) represented that personal guarantees from the Maloufs would not be required by the Bank. Gregory and George Malouf also gave evidence that they signed a guarantee on 15 June 1989 without knowing what the document was. Mr Sloss and Mr Mitchell disputed this account of events.
Giles CJ rejected the evidence of Gregory and George Malouf, for a number of reasons. These included:
* the probabilities, having regard to the objective circumstances;
* documentary evidence pointing to Gregory and George Malouf having acknowledged that they executed the disputed guarantee; and
* documentary evidence indicating that (contrary to the Maloufs' evidence) they had not protested at meetings in mid 1990 at which Bank referred to their responsibility under the terms of the guarantee.
Giles CJ expressed his conclusions on this aspect of the case as follows:
"The combination of these matters, or indeed some only of them, causes me to prefer the evidence of Messrs Mitchell and Sloss to that of Gregory and George where there is conflict between them, and to decline to accept that Mr Mitchell and Mr Sloss said that personal guarantees were not required or that the guarantee of 15 June 1989 was signed by Gregory and George in ignorance of its nature. My conclusions are fortified by my impressions of the relevant witnesses, impressions not only in connection with this transaction. I did not think that Gregory gave his evidence with complete frankness or care for the truth, and in my view he was concerned to advance an account of the acts and statements of himself and other members of the Malouf family unduly favourable to the interests of the Malouf family and an account of the acts and statements of officers of the Bank unduly adverse to its interests: as a general statement, I would not accept his evidence unless it was inherently likely or supported by other credible evidence. The evolution of emergent assertions of signing blank documents was a feature of his evidence not conducive of its acceptance. George had a much more confined role in dealing with the Bank, and that plus the stress of events flowing from the failure of the developments must have been amongst the reasons for his difficulties in recollection. In my view, such recollection as he had was distorted, probably by the stress and by the association with Gregory's position inevitably arising as these proceedings were prosecuted. Messrs Mitchell and Sloss suffered from a rather unusual absence of contemporaneous diary records, and they had little direct recollection and in many respects really gave evidence of practice or of what they would have done or not done, but within those limits I considered that they gave evidence to the best of their recollections. Since I do not accept the accounts of Gregory and George, the non est factum defences fail and the Bank succeeds in its claim against them under the guarantee of 15 June 1989."
Gregory Malouf gave further evidence that Mr Sloss had misrepresented the effect of a mortgage executed in July 1989 by Davridge. Giles CJ rejected this claim for a number of reasons. His Honour accepted evidence inconsistent with Gregory Malouf's account from a Bank officer in whose presence the document was executed and who was not cross-examined. Moreover, his Honour found that there was no reason for Mr Sloss to engage in the alleged subterfuge. His Honour expressed the opinion that "Gregory's account...so departs from reality as to cast doubt on his ability to give reliable evidence generally". His Honour expressed a similar view in relation to a claim by Gregory Malouf that he had signed another mortgage in blank, in the presence only of Mr Sloss.
Another issue on which Giles CJ rejected Gregory Malouf's evidence was the latter's claim that, on 2 August 1989, Mr Sloss had orally and unconditionally approved a loan to Davridge of $1.1 million for the purpose and development of a property at Fairlight. Again, his Honour reached his conclusion not merely on the basis of Mr Sloss' evidence, but by reference to contemporary documentation, including correspondence from Gregory Malouf himself.
Gregory Malouf supported his claim that the Bank had unconditionally approved a loan to Davridge by asserting that Mr Sloss had been aware, from about October 1989, that substantial development work had commenced at the Fairlight property. Mr Sloss's version was that he had not known of anything except preliminary work at the site until he visited it on 19 January 1990. His Honour preferred Mr Sloss' evidence on this issue. In reaching this conclusion, he took into account (as he did on other factual questions) what he described as "deficiencies" in Mr Sloss's submissions to the Bank's regional office.
Yet another factual dispute concerned the circumstances in which Gregory and Tammy Malouf executed a guarantee and a mortgage of their home on 12 January 1990. Their version was that Mr Sloss assured them that the Bank would never enforce the securities and that he provided no explanation as to their import. Once again Giles CJ preferred Mr Sloss's account, but did so after considering other evidence, including that of a Bank officer who prepared documents in advance of the meeting of 12 January 1990. His Honour also took into account his assessment of Tammy Malouf as a witness and as a person. Giles CJ saw no sufficient reason to attribute to Mr Sloss "what would have been grossly improper conduct".
The debtors filed a notice of appeal in relation to the Commercial Division judgment. However, the appeal to the New South Wales Court of Appeal was not pursued and, on 4 June 1996, the appeal was dismissed.
The First Application
By a summons filed on 31 May 1996 in the Commercial Division of the Supreme Court of New South Wales, the debtors sought an order that the Commercial Division judgment "be reviewed and reversed". The summons, as later amended, identified the claim as one that the judgment be reviewed and reversed "as having been obtained by fraud". It was alleged that the fraud was constituted by the Bank
"causing evidence to be given by [Mr Sloss]...such evidence being material to such proceedings and such evidence being contrary to a prior written statement signed by [Mr Sloss] and constituting a false account of events involved in the litigation."
By a notice of motion filed on 5 June 1996, the Bank sought to have the proceedings stayed or dismissed. After a contested hearing, Rolfe J ordered that the amended summons be dismissed.
Rolfe J, in his judgment, adopted the principles stated by Kirby P in Wentworth v Rogers (No 5) (1985) 6 NSWLR 534, at 538-539, as those governing an application to set aside a judgment on the ground of fraud. In particular, Rolfe J held that it was necessary, in order for the debtors to succeed, to show that fresh facts had been discovered since the date of the judgment under attack. His Honour identified the correct approach as follows (at 17):
"In my opinion the correct approach in the case of fraud will be governed by the particular factual circumstances said to create the fraud including the availability of the material at the time of the hearing, and if it was not available the reasons for its unavailability. If the allegation is that there is further evidence, which was available at that time, but upon which reliance was not placed by the unsuccessful party it will be necessary, at least prima facie, for that to be explained by the unsuccessful party. If it is said that there was other evidence, which was not available it is necessary to consider the reasons for that. It may be that the unavailability can be explained by reference to the test appled [sic: applied] in a new trial situation, or by reference to other and more extensive considerations."
Rolfe J set out what he said were certain facts relevant to the application. Since the evidence before me is to the same effect, it is convenient to reproduce the bulk of the chronological sequence of events identified by his Honour, omitting evidentiary references:
"1. The transactions giving rise to the proceedings took place in 1989 and 1990.
2. In about mid-April 1990 Mr Sloss commenced six months long service leave.
3. Mr Sloss terminated his employment with the Bank in September 1990.
4. Mr Sloss was paid his superannuation entitlements from the Bank on 30 November 1990.
5. On 7 May 1991 Mr Sloss made a statement to the solicitors for the [debtors].
6. In July 1991 the Bank made demands on the [debtors].
7. On 22 July 1991 certain of the [debtors] had a meeting with representatives of the Bank at which the statement of Mr Sloss was produced.
8. Following that meeting the Bank withdrew all action against the [debtors].
9. On 11 November 1991 the solicitor for the Bank wrote to the then solicitors for the [debtors] rejecting an offer made by them after consideration, inter alia, of Mr Sloss' statement, inviting a reply and concluding that the Bank `will not serve the fresh demands within fourteen (14) days of the date of this letter'.
10. In early 1992 Mr Sloss had a conversation with Mr Gregory Malouf in which he sought more assistance and detail `to make the Bank act into the negotiations of settlement', to which Mr Sloss replied:
`I cannot assist you with any further statement as the Bank have agreed to release my superannuation early on the proviso that I do not speak to you any more.'
11. On 18 June 1993 the Bank took a charge over the assets of Filedice Pty Limited ("Filedice"), to secure loans made or to be made to Filedice. The amount of the loan was $50,000.
12. Filedice is a company of which Mr Sloss and his wife are the only directors and shareholders.
13. On 12 December 1992 and 20 December 1993 Filedice acquired two properties for $92,000 and $129,000 respectively, which are not mortgaged.
...
16. In about April 1995 Mr Malouf was told by Mr Sloss that he had taken steps to build a wall around the Bank, which would never be penetrated by the [debtors].
Rolfe J observed that a reading of the principal allegations in the amended summons suggested that the debtors were asserting that the Bank actively caused Mr Sloss to give false evidence. His Honour noted, however, that Mr Hodgekiss (who also appeared for the debtors on that occasion) disavowed any allegation that the payment of superannuation entitlements and the making of the loan to Filedice were done by the Bank with a view to ensuring that Mr Sloss gave false evidence. Rather, the allegation was merely that the payments, without more, caused Mr Sloss to give false evidence. In other words, Mr Hodgekiss, on behalf of the debtors, accepted that there was no improper motive in the Bank making the payments, or in Mr Sloss accepting them. In these circumstances, his Honour concluded that the matters relied on could not support the serious allegations of fraud made by the debtors.
Despite this conclusion, Rolfe J proceeded to address the matters pleaded by the debtors. One matter pleaded (as elucidated by Mr Hodgekiss in his oral submissions to Rolfe J) was that Mr Sloss's written statement of 7 May 1991, provided by him to the debtors, was inconsistent with evidence given by Mr Sloss at the hearing before Giles CJ. It followed, according to Mr Hodgekiss, that Mr Sloss's evidence to Giles CJ was false and that the falsity was brought about by the benefits provided to him or to Filedice by the Bank.
I interpose to observe that it is very difficult to see the relevance to the application to set aside the Commercial Division judgment of any inconsistencies between Mr Sloss's statement of 7 May 1991 and his evidence to Giles CJ. Obviously, the statement made by Mr Sloss was available to counsel for the debtors, who cross-examined Mr Sloss in the Commercial Division proceedings heard by Giles CJ. Plainly, his Honour chose to accept Mr Sloss as a more reliable witness than the Maloufs, notwithstanding his earlier statement (or those portions of it relied on by counsel for the debtors).
Nonetheless, Rolfe J chose to consider whether there were any discrepancies between Mr Sloss's statement and his evidence at the trial. After a careful consideration of the statement and the evidence given by Mr Sloss, Rolfe J concluded that, with one minor qualification conceded by Mr Sloss in his cross-examination in the first application, there was no discrepancy between Mr Sloss's statement and his evidence in the Commercial Division proceedings. In any event there had been "every opportunity to expose and capitalise on any such differences at trial".
Rolfe J then dealt with a number of other matters pleaded. He expressed the conclusion, in strong terms, as follows:
"There is no evidence to show that the [debtors] have discovered any fresh facts which would demonstrate that any of his evidence was false. The highest the evidence goes is that there was some evidence available on which Mr Sloss could have been cross-examined, which may have tended to cast doubt upon the veracity of his evidence. But, as I have said on a number of occasions, the suspicion about this matter was known for a long time before the trial and it was not pursued. Mr Hodgekiss, in his final submissions, accepted the difficulty this presented to the [debtor's] present proceedings.
...
In the circumstances the calling of Mr Sloss could not, on my view of the evidence, constitute a fraud by the Bank, and there is no basis to say that his evidence was false. Mr Hodgekiss did not assert any conspiracy or agreement between the Bank and Mr Sloss for Mr Sloss to give perjured evidence.
The particulars given merely repeat matters previously pleaded and, in my view, do not carry the matter further. The pleading, in my opinion, does not disclose a cause of action based upon a judgment having been procured by fraud.
There has not been a new discovery of something material in the sense that fresh facts have been found which, by themselves or in combination with previously known facts, would provide a reason for setting aside the judgment. The [debtors] are doing nothing more than seeking to re-agitate the matters argued in the Original Proceedings with the assistance of some further material, of which they had sufficient notice to enable them to pursue them at the hearing. No new material has emerged to show that any evidence given by Mr Sloss was false. They have infringed what Kirby P referred to as the refraining `from raising their objection at the trial, thereby keeping the complaint in reserve'.
I am also of the view that the complaints do not raise above `mere suspicion', although I must say that the suspicion raised by the so-called fresh facts is barely discernible when the matter is looked at in the light of all that transpired and the relationship between the various parties. Nextly, even if, and I am not to be taken as suggesting that Mr Sloss was guilty of perjury because there is no evidence to support that assertion, there was perjury, it does not, as the case was pleaded and explained to me, impact upon the Bank. The reason for that is that there is now no suggestion that it was responsible for any alleged perjury."
The debtors sought leave to appeal to the Court of Appeal from the judgment of Rolfe J. On 12 August 1996 the Court of Appeal (Priestley and Sheller JJA) refused leave. Their Honours observed that Rolfe J had dealt with the issues in a "very thorough way" and that he had followed "the correct approach" in a case based on allegations of fraud.
The Second Application
Despite the conclusions so firmly expressed by Rolfe J and the refusal of the Court of Appeal to grant leave to appeal, on 20 March 1997 the debtors commenced yet further proceedings to set aside the Commercial Division judgment on the ground of fraud. (In the meantime, Davridge had commenced proceedings in this Court to set aside the bankruptcy notice.) The nature of the dispute, as stated in the summons filed on behalf of the debtors in the second application, was in identical terms to that stated in the amended summons filed on behalf of the debtors in the first application, except that the first summons included an allegation relating to discovery which was not repeated in the second summons. The particulars supporting the allegations of fraud were substantially the same as those relied on in the earlier proceedings, although it was now alleged that the benefits provided by the Bank to Mr Sloss included his engagement as a contractor to perform certain work on its behalf.
At the outset of the hearing, senior counsel then appearing for the debtors sought to reformulate their case. Hunter J, however, took the view that the reformulation did not alter the case which had been mounted by the debtors in the first application to set aside the judgment. In particular, his Honour considered that the debtors had not alleged any intention, objective or agreement, on the part of the Bank, aimed at putting false evidence before the Court in the Commercial Division proceedings. His Honour held that the debtors were estopped by Rolfe J's judgment from relitigating the allegations that had been raised and dealt with in the first proceedings. For this reason he dismissed the debtors' application.
The Debtors' Case
As I have already noted, the debtors' case as originally pleaded in the present proceedings incorporated the very summary of contentions upon which they had relied in the second application. During Mr Hodgekiss's opening, I inquired whether or not the debtors intended to allege that the Bank deliberately intended to procure false evidence from Mr Sloss. Mr Hodgekiss's response was in the negative. However, he qualified this response by stating that the Bank provided Mr Sloss with special financial benefits in order to induce Mr Sloss to give favourable, but not untrue evidence. He also stated that it was part of the debtors' case that Mr Sloss did give false evidence.
Mr Hodgekiss acknowledged that this way of presenting the case required an amendment to the summary of contentions incorporated in the debtors' ground of opposition. Leave was given to amend the summary of contentions to include the following paragraphs:
"12A The allegation on behalf of the debtors is that the Bank provided Mr Sloss with:
(a) special financial benefits in connection with his retirement and the payment of superannuation to him; and
(b) the granting of credit on favourable terms and in favourable circumstances to Filedice Pty Limited, a Sloss company; and
(c) the engagement of Sloss to carry out contracting work for the Bank;
in anticipation of and seeking to induce favourable evidence from Mr Sloss including his contradiction of his statement of 7 May, 1991.
It is further alleged that the Bank actively engaged in the preparation of the evidence statements given by Mr Sloss at a time when Mr Sloss was subject to such inducements.
12B. It is further alleged that Mr Sloss did in fact give false evidence in statements and at the trial.
12C. It is further alleged that the Bank did not disclose to the debtors or the Trial Judge the matters referred to in paragraph (a), (b) and (c) above, nor the possible operation of such matters in terms of Mr Sloss giving such evidence as he did in fact give."
Paragraph 13 of the summary alleges that the "undisclosed matters" were unknown to the debtors at the date of the hearing in the Commercial Division proceedings.
Paragraph 18 of the summary of contentions is as follows:
"18. The [debtors] have since the hearing of the proceedings before Mr Justice Giles discovered fresh facts which, taken in combination with previously known facts, demonstrate:
(a) That the evidence given by the said Sloss was false.
(b) Sloss was induced to give false evidence by the action of the Bank in providing Sloss with financial benefits as set out in [paragraph 12A] above.
(c) That the use of the said evidence of Sloss by the...Bank in the hearing constituted a fraud by the defendant."
It is fair to say that these paragraphs constitute the essence of the debtors' case.
The Principles
In Re Haddad; Ex parte R W Jordan Pty Ltd (FCA, 20 August 1997, unreported), I summarised the general principles relating to the power of the Court, when exercising the bankruptcy jurisdiction, to go behind a judgment debt (at 8-9):
"Section 52(1)(c) of the [Bankruptcy Act] provides that, at the hearing of a creditor's petition, the Court must require proof of the fact that the debt or debts on which the petitioning creditor relies are still owing. In Wren v Mahony [1972] HCA 5; (1972) 126 CLR 212, at 223, Barwick CJ (with whom Windeyer and Owen JJ agreed) emphasised the "dominant place the mandatory words of s 52(1) occupy in relation to the making of a sequestration order". Wren v Mahony and the earlier decision of the High Court in Corney v Brien [1951] HCA 31; (1951) 84 CLR 343, demonstrate that a court exercising bankruptcy jurisdiction has the power to go behind a judgment to inquire whether the judgment is founded on a real debt. In Wren v Mahony, Barwick CJ (at 224-225) stated the principle as follows:
`The judgment is never conclusive in bankruptcy. It does not always represent itself as the relevant debt of the petitioning creditor, even though under the general law, the prior existing debt has merged in a judgment. But the Bankruptcy Court may accept the judgment as satisfactory proof of the petitioning creditor's debt. In that sense that court has a discretion. It may or may not so accept the judgment. But it has been made quite clear by the decisions of the past that where reason is shown for questioning whether behind the judgment or as it is said, as the consideration for it, there was in truth and reality a debt due to the petitioning creditor, the Court of Bankruptcy can no longer accept the judgment as such satisfactory proof. It must then exercise its power, or if you will, its discretion to look at what is behind the judgment: to what is its consideration. It is not the law, in my opinion, that whether in any case the Court of Bankruptcy will consider whether there is satisfactory proof of the petitioning creditor's debt is a mere matter of its own discretion. Nothing in Corney v Brien lends support for such a view. Rather the emphasis is upon the paramount need to have satisfactory proof of the petitioning creditor's debt. The Court's discretion in my opinion is a discretion to accept the judgment as satisfactory proof of that debt. That discretion is not well exercised where substantial reasons are given for questioning whether behind that judgment there was in truth and reality a debt due to the petitioner.'
The rationale for this approach is that the making of a bankruptcy order affects not merely the parties to the judgment, but the rights of all creditors: In re Hawkins, Ex parte Troup [1895] 1 QB 404, at 408-409, cited in Wren v Mahony, at 223; Corney v Brien, at 347, per Dixon, Williams, Webb and Kitto JJ, at 355, per Fullagar J."
The existence of the judgment is prima facie evidence of the debt and a court exercising bankruptcy jurisdiction will not go behind the judgment in every case: Wolff v Donovan, at 486, per Hill and Lee JJ. The Court will more readily look behind a judgment obtained by default, than in a case where there has been a hearing on the merits: Corney v Brien, at 347-348, per Dixon, Williams, Webb and Kitto JJ; Wolff v Donovan, at 486. In Corney v Brien, Fullagar J, in his concurring judgment said (at 356-357) that, if a judgment followed a full investigation at a trial at which both parties were represented, the Court "will not reopen the matter unless a prima facie case of fraud or collusion or miscarriage of justice is made out".
Where it is alleged before a court sitting in bankruptcy that the judgment on which the proceedings are founded was obtained by fraud, some guidance on the approach to be taken is provided by the principles governing the circumstances in which a judgment can be set aside for fraud: Bourke v Beneficial Finance Corporation Ltd (1993) 47 FCR 264 (FCA/FC) at 271. In the bankruptcy proceedings the court's task is not to determine whether the judgment should be set aside since that is a matter for the court pronouncing the judgment. Thus, the principles relating to the setting aside of judgments can only apply by analogy, although the circumstances of an individual case may demand a more flexible approach: Bourke, at 272-273.
The Court in Bourke (Sheppard, Einfeld and Beazley JJ) cited passages from the judgment of Lord Bridge in Owens Bank Ltd v Bracco [1992] 2 AC 443, which were said by the Full Court in Monroe Schneider Associates (Inc) v No 1 Raberem Pty Ltd (No 2) [1992] FCA 367; (1992) 37 FCR 234, at 240-241, to state the law correctly for Australia. In Owens Bank, Lord Bridge said this (at 483, 489):
"[T]he common law rule [is] that the unsuccessful party who has been sued to judgment is not permitted to challenge that judgment on the ground that it was obtained by fraud unless he is able to prove that fraud by fresh evidence which was not available to him and could not have been discovered with reasonable diligence before the judgment was delivered....This is the rule to be applied in an action brought to set aside an English judgment on the ground that it was obtained by fraud. The rule rests on the principle that there must be finality of litigation which would be defeated if it were open to the unsuccessful party in one action to bring a second action to relitigate the issue determined against him simply on the ground that the opposing party had obtained judgment in the first action by perjured evidence. Your Lordships were taken, in the course of argument, through the many authorities in which this salutary English rule has been developed and applied and which demonstrate the stringency of the criterion which the fresh evidence must satisfy if it is to be admissible to impeach a judgment on the ground of fraud. I do not find it necessary to examine these authorities. The rule they establish is unquestionable and the principle on which they rest is clear.
...
An English judgment, subject to any available appellate procedures, is final and conclusive between the parties as to the issues which it decides. It is in order to preserve this finality that any attempt to re-open litigation, once concluded, even on the ground that judgment was obtained by fraud, has to be confined within very restrictive limits."
In Bourke (at 272) the Court pointed out that the fresh evidence which is relied on to establish fraud need not be admissible evidence in the action in which the judgment is sought to be impugned, citing McDonald v McDonald [1965] HCA 45; (1965) 113 CLR 529, at 533, per Barwick CJ, at 542-543, per Menzies J. However, the evidence must be "fresh" and the fraud alleged must be "directly material" to the judgment, as distinct from going to a collateral issue, such as the credit of witnesses who gave evidence at the trial and were cross-examined: Monroe Schneider, at 242. The latter category of fraud "may well lack the necessary materiality", bearing in mind (as the Court pointed out in Monroe Schneider, at 241-242) the reluctance of courts to intervene solely on the ground that a witness or witnesses committed perjury.
In Cabassi v Vila [1940] HCA 41; (1940) 64 CLR 130, Williams J (with whom Rich ACJ concurred) said (at 147-148) that he had
"been unable to find any case in which a judgment has been set aside where the only fraud alleged was that the defendant or a witness or witnesses alone or in concert had committed perjury. In fact the court has said that except in very exceptional cases perjury is not a sufficient ground for setting aside a judgment".
In Wentworth v Rogers (No 5) (1986) 6 NSWLR 534, at 539, Kirby P explained this reluctance on the part of the courts as follows:
"In hard fought litigation, it is not at all uncommon for there to be a conflict of testimony which has to be resolved by a judge or jury. In many cases of contradictory evidence, one party must be mistaken. He or she may even be deceiving the court. The unsuccessful party in the litigation will often consider that failure in the litigation has been procured by false evidence on the part of the opponent and the witnesses called by the opponent. If every case in which such an opinion was held gave rise to proceedings of this kind, the courts would be even more burdened with the review of first instance decisions than they are. For this reason, and in defence of finality of judgments, a more stringent requirement than alleged perjury alone is required."
A judgment may be set aside on grounds other than fraud or subornation of witnesses. As Barwick CJ put it in McDonald v McDonald (at 532-533):
"The discovery subsequent to verdict of admissible credible evidence, which could not have been sooner discovered by the exercise of reasonable diligence in the circumstances, and which is of such probative value and significance that, taken with the evidence already given at the trial, it will in all probability be decisive of the issues between the parties in a sense opposite to that of the verdict, is a ground for the granting of a new trial. If the Court is satisfied that the fresh evidence fulfils these requirements, it will generally conclude that, therefore, the interests of justice demand that the issues be tried afresh."
An application based on the discovery of fresh credible evidence requires the applicant to show that the new evidence would probably be decisive of the issues between the parties. A judgment may be set aside, however, where it is shown that it was obtained by fraud, even if it is not established that the evidence, had it been available at the trial, would have produced a different result: McDonald v McDonald, at 533, 540.
Reasoning
The approach laid down in Bourke shows that the principles governing the setting aside of judgments generally apply, albeit by analogy, to a bankruptcy proceeding in which the debtor contends that the court should go behind the judgment on the ground that the judgment was obtained by fraud. The particularly striking feature of this case is that the debtors have attempted unsuccessfully on two previous occasions to set aside the Commercial Division judgment, which itself was obtained after a contested hearing.
As has been seen, the first application was dismissed after a careful consideration by Rolfe J, both of the principles governing the setting aside of judgments on the basis of fraud and of the evidence relied on by the debtors. Rolfe J concluded that the debtors' case, taken at its highest, did not establish that they had discovered fresh facts demonstrating that any of Mr Sloss's evidence was false. The debtors had not alleged any conspiracy or agreement between the Bank and Mr Sloss for the latter to give perjured evidence. His Honour characterised the complaints about Mr Sloss's evidence as "mere suspicion" and added the observation that the "suspicion raised by the so-called fresh facts is barely discernible". His Honour therefore concluded that there was no basis for the claim that the Commercial Division proceedings had been procured by fraud. Hunter J considered that the second application was based on essentially the same grounds as the first.
If attention is confined to the case pleaded by the debtors in the present proceedings, it is difficult to see how it differs from that put forward unsuccessfully in the Supreme Court of New South Wales on the two previous occasions. The ground of opposition in the present proceedings explicitly rests the debtors' case on the contention that the Commercial Division judgment was obtained by fraud. The particulars in the summary of contentions are identical to those relied on in the second application to set aside the Commercial Division judgment, save for paragraphs 12A, 12B and 12C.
The substitution of pars 12A, 12B and 12C for par 12 of the summary of contentions put to Hunter J does not seem to me to alter the substance of the case presented by the debtors in both the first and second applications. Paragraph 12 of the summary of contentions relied on before Hunter J was as follows:
"12. The said Sloss was induced to give the false evidence in those proceedings set forth in paragraphs 14, 15, 16 and 17 hereof by the action of the defendant in providing him with (i) special financial benefits in connection with his retirement from the defendant and the payment of superannuation to him at that time; (ii) the subsequent grant of credit to Filedice Pty Limited; and (iii) the engagement of Sloss to carry out work for the defendant.
Matters set out in the affidavit of 20 February, 1997 of Gregory John Malouf in Federal Court proceedings No NP 976 of 1996."
The only significant difference between par 12 in this form (which relied on matters particularised in an affidavit filed in this Court) and in its form in the first proceedings is that the later version included a reference to the engagement of Mr Sloss to carry out work for the Bank. Hunter J specifically addressed this addition to par 12 and concluded that there was
"nothing in the employment issue to take it outside the category of benefits alleged in the first application to have induced the allegedly false evidence of Sloss and which, as the case was framed in that application (and, now, in these proceedings), was held incapable of supporting a case that the principal judgment was procured by fraud for which the [Bank] was responsible."
Paragraphs 12A, 12B and 12C of the summary of contentions in the present proceedings do not allege that the Bank provided the specified benefits to Mr Sloss in order to induce him to give false evidence. The allegation is merely that the Bank provided those benefits in "anticipation of and seeking to induce favourable evidence from Mr Sloss" including what is said to be the contradiction of the statement of 7 May 1991 provided by Mr Sloss to the debtors. The pleading is consistent with the Bank having provided benefits to Mr Sloss with the intention of encouraging him to give truthful and accurate evidence in the Commercial Division proceedings. While the summary of contentions alleges, or might be taken to allege, that Mr Sloss was induced to give false evidence by the Bank's actions, there is no allegation that the Bank knew or had reason to believe that his evidence was false. In these circumstances, I am unable to see how the case pleaded by the debtors is capable of amounting to fraud on the part of the Bank.
Mr Hodgekiss, in the course of submissions, conceded that the Bank was entitled to read the case as pleaded by the debtors as confined to alleging fraud on the part of the Bank, as distinct from alleging that Mr Sloss, on his own initiative, gave deliberately false evidence. If that concession is ignored, and the pleaded case is read as making out a case based on allegedly perjured evidence given by Mr Sloss on his own initiative, it adds nothing to the contentions addressed by Rolfe J. His Honour considered in detail the evidence adduced by the debtors which they claimed demonstrated Mr Sloss's evidence in the Commercial Division proceedings was false in material respects and found that it raised nothing more than a bare suspicion.
As I have already pointed out, the question of whether the Court should go behind the Commercial Division judgment was not identified (for good reason) as a matter for separate determination. Had it been, the appropriate course may well have been to decline to go behind the judgment simply on the basis that the debtors' pleaded case (read generously) and their proffered evidence add nothing of substance to the case rejected by Rolfe J and Hunter J. However, since evidence was given at the hearing before me, including evidence from the Bank, I think it is appropriate to take all that evidence into account in determining whether the Commercial Division judgment should be reopened.
The Bank adduced evidence from a number of its officers going to the three categories of benefits allegedly provided to Mr Sloss. It is fair to say that none of the witnesses who gave oral evidence was seriously challenged on credit and I did not understand Mr Hodgekiss to submit that the evidence of any of the Bank's witnesses should not be accepted. I find that each of the Bank's witnesses who gave oral evidence did so truthfully and, to the best of his or her ability, accurately. In these circumstances, I think it is necessary to give only a brief summary of the relevant evidence.
Evidence of the Bank's dealings with Filedice (Mr Sloss's company) was given by Mr Sippel who was, at relevant times, the Manager of the Eastwood branch and subsequently Senior Manager of the Eastwood Central branch. Evidence was also given by Ms Areda, who was, at relevant times, a loans officer at the Eastwood branch subject to the control and supervision of Mr Sippel, and by Mr Gravas, the Central Branch Lending Manager for Epping, who approved an increase in a loan facility provided to Filedice. Mr Sippel and Ms Areda were cross-examined; Mr Graves was not. Their evidence establishes the following:
* Mr Sloss approached Mr Sippel as the Manager of the Eastwood branch in March/April 1993;
* Mr Sippel had never met Mr Sloss and had no knowledge of his role with the Bank until so informed by Mr Sloss;
* Neither Mr Sippel nor Ms Areda at any stage in their dealings with Mr Sloss knew anything about the litigation between the Bank and the debtors or about Mr Sloss's involvement in that litigation;
* the loans to Filedice were approved by the relevant officers in accordance with the Bank's requirements for all customers and neither Mr Sloss nor Filedice received any "special treatment", whether by reason of Mr Sloss's prior association with the Bank or otherwise;
* Filedice was required to pay interest on its loans in accordance with the Bank's standard requirements; and
* no-one in the Bank asked Mr Sippel, Ms Areda or any other officer to accord Mr Sloss or Filedice special or favourable treatment.
Mr Parlevliet is the company secretary of the Commonwealth Bank Officers Superannuation Corporation Pty Ltd, which is the trustee of the Officers' Superannuation Fund ("OSF"). He gave evidence of Mr Sloss's superannuation benefits, on the basis of the OSF file. His evidence, in my view, establishes that:
* the superannuation benefits paid to Mr Sloss were paid in accordance with the rules governing the entitlements of bank officers;
* Mr Sloss was not treated any differently, in relation to superannuation benefits, than any other bank officer in similar circumstances; and
* (so I infer) Mr Sloss did not receive superannuation payments earlier than was his entitlement.
There is no evidence (despite a submission to the contrary by Mr Hodgekiss) that the Bank had accused Mr Sloss of some impropriety in his conduct as a Bank officer, nor that it had threatened to withhold his superannuation benefits for that reason. Mr Hodgekiss appeared to place some reliance on the record of a meeting between the Maloufs, their legal representatives and representatives of the Bank (but not Mr Sloss) on 22 July 1991. However, there is nothing in that record to support a contention that Mr Sloss was regarded by the Bank as having acted improperly.
I should add that I have taken into account that Gregory Malouf gave affidavit evidence that, early in 1992, he had a conversation with Mr Sloss, to the following effect:
Malouf: `We need more assistance from you and more detail to make the Bank act into the negotiations of settlement.'
Sloss: `I cannot assist you with any further statement as the Bank have agreed to release my superannuation early on the proviso that I do not speak to you any more.'
Mr Malouf was not cross-examined and therefore there is no basis for rejecting his account, notwithstanding that the conversation was not put to Mr Sloss during his cross-examination in the Commercial Division proceedings. However, there is no other evidence to support the proposition that the Bank agreed to release Mr Sloss's superannuation early. On the contrary, in my view, Mr Parlevliet's evidence strongly suggests that Mr Sloss's superannuation was not released early. I take into account that Mr Sloss did not give evidence and I am prepared to assume that Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298, applies against the Bank in these circumstances. Nonetheless, I find that Mr Sloss's superannuation was not released earlier than was appropriate under the rules governing his entitlement. I also find that the Bank did not give Mr Sloss any benefit in relation to superannuation in return for his evidence in the Commercial Division proceedings.
Mr Luke gave evidence of the circumstances in which Mr Sloss was engaged, after his retirement in 1990, to perform services for the Bank. During 1992, Mr Luke was the Manager, Operations, and then Manager, Customer Services, at the Parramatta branch of the Bank. During this period he engaged Mr Sloss, whom he had known for many years, to perform relatively minor tasks as a handyman. Mr Luke was aware that Mr Sloss had completed a repair tradesman course. Mr Luke had no knowledge of the litigation between the debtors and the Bank, nor of Mr Sloss's role in that litigation. Mr Luke's engagement of Mr Sloss had nothing whatever to do with Mr Sloss agreeing to give evidence on behalf of the Bank in the Commercial Division proceedings.
Having regard to these findings, there is simply no factual basis for the debtors' claim that the Bank provided Mr Sloss or Filedice with special financial benefits or other favourable treatment as alleged in par 12A of the debtors' summary of contentions. Nor is there any basis for the claims that the Bank provided benefits to Mr Sloss in an attempt to induce him to give favourable evidence.
The second plank of the debtors' case was (or could be regarded as being) that Mr Sloss had given deliberately false evidence in the Commercial Division proceedings on his own initiative. In this connection, Mr Hodgekiss relied on precisely the same argument put to Rolfe J, namely, that there were inconsistencies between the statement Mr Sloss provided to the debtors on 7 May 1991 and his later evidence before Giles CJ in the Commercial Division proceedings. It is enough for me to say that I think that this argument is without substance. Rolfe J gave detailed reasons for his conclusion that there was no significant inconsistency between the statement and Mr Sloss's evidence. I am content to adopt those reasons.
Mr Hodgekiss also relied on what were said to be other examples of false evidence given by Mr Sloss in the Commercial Division proceedings, which were particularised in the debtors' summary of contentions. One such example, selected by Mr Hodgekiss as significant for the debtors' case, was Mr Sloss's evidence in the Commercial Division that he had visited a particular building site (Fairlight) on 19 January 1990. The debtors pleaded that this evidence was false, in that Mr Sloss had first visited the site on 26 February 1990, and that they had discovered fresh facts demonstrating the falsity of Mr Sloss's evidence.
I pressed Mr Hodgekiss to explain why the incorrect date given by Mr Sloss (assuming that it was incorrect) was significant for the debtors' case. Ultimately, Mr Hodgekiss conceded that Giles CJ had not made any finding that the visit had taken place on 19 January 1990 and that the only relevance of the correct date was that it may have made it more likely that Giles CJ would have accepted Gregory Malouf's evidence over that of Mr Sloss. Mr Hodgekiss also conceded that the material relied on by the debtors to establish falsity was available to them prior to the hearing before Giles CJ. It follows, in my view, that if Mr Sloss gave incorrect evidence on this point, it was not material to the outcome of the Commercial Division proceedings. Furthermore, the debtors have not shown that they have discovered any "fresh facts" which demonstrate that Mr Sloss's evidence was false.
More fundamentally, the matters relied upon by the debtors fall far short of showing that Mr Sloss deliberately gave false evidence in the Commercial Division proceedings. As Rolfe J said in his judgment on the first application, the evidence at best merely gives rise to a bare suspicion that some aspects of Mr Sloss's evidence may not have been accurate. For example, even if Mr Sloss's evidence concerning the date of his inspection of the Fairlight property was incorrect, it would not establish that his evidence on such a peripheral question was deliberately false. That would be so even taking into account the absence of Mr Sloss from the witness box in these proceedings.
Another matter pleaded by the debtors was that Mr Sloss gave false evidence as to the reasons for the alleged discrepancies between his statement of 7 May 1991 and his subsequent evidence in the Commercial Division proceedings. This allegation rests on the assumption that there were indeed significant discrepancies between the statement and the subsequent evidence. For the reasons given by Rolfe J and adopted by me, that assumption is incorrect.
It follows from what I have said that the case pleaded by the debtors has not been made out on the facts. Thus, even if the pleaded case were capable of constituting fraud of the kind required to set aside a judgment (and therefore, by analogy, capable of justifying a court exercising bankruptcy jurisdiction going behind the judgment), the facts do not support the pleaded case. The appropriate course, in these circumstances, in my view, is to refuse the debtors' application to go behind the Commercial Division judgment.
The Proposed Amendment
In the course of his final address, Mr Hodgekiss, doubtless recognising the factual difficulties in the path of the debtors' case, applied to amend the ground of opposition. He sought to amend the ground of opposition by adding these words:
"and was affected by a miscarriage of justice constituted by the matters referred to in that Summons [that is, the summary of contentions]".
As I followed Mr Hodgekiss' argument, he founded the debtors' application on the proposition that a court exercising bankruptcy jurisdiction can go behind a judgment, even in the absence of fraud, where there has been a miscarriage of justice. Moreover, according to Mr Hodgekiss, a miscarriage of justice can be established even where the debtor has not been able to show that fresh facts have emerged since the judgment.
Mr Forster objected to the proposed amendment. He submitted that, if Mr Hodgekiss's contentions as to the law were correct, the Bank had been subjected to irremediable prejudice because it had conducted its entire case in response to the allegations of fraud put forward by the debtors. In particular, it had not sought to cross-examine Gregory Malouf, whose affidavits had been read in support of the debtors' case. In any event, Mr Forster submitted that the proposed amendment should not be permitted because it was futile.
Having regard to the conclusions I have reached on the case pleaded by the debtors I do not think there is any point in allowing the proposed amendment. On the findings I have made "the matters referred to in [the] Summons", or at least those of them that are relevant, have not been established. Consequently, an attempt to give those matters a different legal complexion is doomed to failure. In reaching this conclusion I need not rule on the legal assumptions underpinning the debtors' application. However, it is appropriate to note that they appear to fly in the face of well-established authority.
I should add that I would not have been disposed, in any event, to permit an amendment which, at the very last stage of the proceedings, fundamentally altered the basis on which the debtors' case was to be put. The debtors' pleaded fraud on the part of the Bank and the case was conducted on that basis. The Bank was entitled to make forensic judgments by reference to the pleaded case, especially having regard to the apparently serious allegations levelled against it. I doubt that any prejudice suffered by the Bank (ignoring any question of irrecoverable costs) could be remedied, at least not without the case, in effect, being rerun on different assumptions. It must be remembered that the debtors have now had three separate opportunities to formulate what amounts to a challenge to the Commercial Division judgment.
Conclusion
For the reasons I have given, I think the Commercial Division judgment should be accepted as satisfactory proof of the debt due by the debtors to the Bank. As I have noted, there was no dispute that the other requirements of s 52 of the Bankruptcy Act had been met. Accordingly, I propose to make a sequestration order against the estate of each of the debtors. The creditor's costs, including any reserved costs, should be taxed and paid in accordance with the Bankruptcy Act.
Since, as Mr Hodgekiss conceded, the fate of Davridge's application depends on the outcome of the creditor's petition, Davridge's application should be dismissed with costs.
I certify that this and the preceding
twenty-five (25) pages are a true copy
of the Reasons for Judgment herein
of the Honourable Justice Sackville.
Associate:
Dated: 3 February, 1998.
Counsel for the Applicants: Mr W G Hodgekiss
Solicitors for the Applicants: Lloyd & Lloyd
Counsel for the Respondent: Mr R G Forster SC and Mr A Bell
Solicitors for the Respondent: L.E. Taylor
Dates of hearing: 8-12 December, 1997
AustLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.austlii.edu.au/au/cases/cth/FCA/1998/35.html