CATCHWORDS
NOTICE OF MOTION - incompetency of appeal - whether non-parties to original proceedings may be made parties to the appeal - collateral attack on decision of the court - whether proceedings are vexatious
COSTS - awarded on solicitor-client basis
Federal Court Rules O 52 rr 14, 18
Giannarelli v Wraith (1988) 165 CLR 543
Stergiou v McGrail, (unreported, Federal Court, Burchett, Ryan and Gummow JJ,
22 April 1994)
Cameron [1996] 2 QdR 218
PETER ALEXANDER GARGAN v THE OFFICIAL TRUSTEE IN BANKRUPTCY
& ORS
No QG 181 of 1996
SPENDER J
BRISBANE
24 MARCH 1997
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY No QG 181 of 1996
GENERAL DIVISION
BETWEEN: PETER ALEXANDER GARGAN
Appellant
AND: THE OFFICIAL TRUSTEE IN BANKRUPTCY
First Respondent
AND: JOHN ERNEST GARGAN
Second Respondent
AND: BARRY MICHAEL JOHNSON
Third Respondent
AND: CHARLES ANTHONY MARINO
Fourth Respondent
AND: WAYNE COCHRANE
Fifth Respondent
AND SAM INDUSTRIES PTY LTD
Sixth Respondent
AND ABDUL AZIZ MOHAMMED
Seventh Respondent
AND: FRANCIS JAMES TOY
Ninth Respondent
CORAM: SPENDER J
PLACE: BRISBANE
DATE: 24 MARCH 1997
MINUTES OF ORDER
THE COURT ORDERS THAT:
1. The appeal (so far as it relates to the second, third and ninth respondents) is dismissed.
2. The applicant pay the costs of the second, third and ninth respondents on a solicitor-client basis, to be taxed if not agreed.
3. If leave be necessary, leave to appeal from the order that the appeal so far as it relates to the second, third and ninth respondents is dismissed, be refused.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
QUEENSLAND DISTRICT REGISTRY No QG 191 of 1996
GENERAL DIVISION
BETWEEN: PETER ALEXANDER GARGAN
Appellant
AND: OFFICIAL TRUSTEE IN BANKRUPTCY
First Respondent
AND: JOHN ERNEST GARGAN
Second Respondent
AND: BARRY MICHAEL JOHNSON
Third Respondent
AND: CHARLES ANTHONY MARINO
Fourth Respondent
AND: WAYNE COCHRANE
Fifth Respondent
AND SAM INDUSTRIES PTY LTD
Sixth Respondent
AND ABDUL AZIZ MOHAMMED
Seventh Respondent
AND: FRANCIS JAMES TOY
Ninth Respondent
CORAM: SPENDER J
PLACE: BRISBANE
DATE: 24 MARCH 1997
REASONS FOR JUDGMENT
This is a notice of motion filed on 12 February 1997 by John Ernest Gargan, Barry Michael Johnson and Francis James Toy seeking orders that an appeal, insofar as it seeks relief against them, or relates to them, be struck out. The motion is a small part of a rather lengthy and complex history of litigation.
The notice of appeal filed by Mr Peter Gargan on 11 October 1997 commences:
“ The appellant appeals from the whole of the Judgment of M/s Justice Kiefel sitting in bankruptcy jurisdiction, in the Federal Court of Australia, delivered in Brisbane and Cairns on the 2nd day of October 1996....”
The appeal as originally filed contained further matters of complaint. It originally requested “a review of the failure of the Australian Federal Police and the Commonwealth Director of Public Prosecutions to act upon a complaint made in Cairns regarding fabricated evidence filed and used by Barry Michael Johnson, William Lindsay Jue Sue and Mr Peter Toy”. That aspect of the appeal was struck out, or discontinued by Mr Gargan, on 28 February 1997, and the Commonwealth Director of Public Prosecutions who was named as the eighth respondent to that appeal by Mr Peter Gargan was also struck out. On the same day, I struck out Kiefel J as the tenth respondent styled in the appeal.
As filed, there were 10 respondents which included the Official Trustee, John Ernest Gargan, as second respondent, Barry Michael Johnson as third respondent, and Mr Peter Toy as the ninth respondent. Mr Peter Toy is a reference to one of the applicants on this motion, Francis James Toy.
It is necessary to set out some of the background of the litigation. The appeal, as I have indicated, is against the decision of Kiefel J delivered on 2 October 1996. That decision was in application QB 697 of 1993. That application contained three parts. It states:
“ Application is hereby made to the Federal Court sitting in Bankruptcy by Peter Alexander Gargan of Springmount Station Mareeba in the State of Queensland for the following orders;
(1) That the court direct the Official Receiver to assign to the Bankrupt all choses in action presently vested in him, or in the alternative allow the Trustee to disclaim the Contract to administer the Bankrupts (sic)Estate to the extent of the Property in the Choses in Action, and make an order vesting them in the Bankrupt.
(2) That the Court make an inquiry into the conduct of the Trustee in Bankruptcy to determine whether the allegations of negligence and breach of contract raised against The Official Trustee have merit.
(3) That the Court examine evidence that the debt upon which the Sequestration Order was made as to whether the Debt is a personal Debt or rightfully a debt for which the Bankrupt is entitled to an indemnity and if so grant an annulment.
...”
Part 1 of that application was heard and determined by Drummond J on 18 August 1995. He on that day ordered:
“ (1) The application insofar as it seeks the relief in paragraph 1 is dismissed.
(2) The application insofar as it seeks the relief in paragraphs 2 and 3 is adjourned to the District Registrar; and
(3) The costs of the application be reserved.”
The decision of Drummond J of 18 August 1995 was appealed to the Full Court by Mr Peter Gargan.
The orders sought from the Full Court in the notice of appeal from the judgment of Drummond J included applications for the orders:
“ 3. That the trial of all the issues affecting the bankrupt Estate of the appellant be granted as per the original application.
4. A declaration for sequestration Order made by Mr Justice Spender on 23/3/1993, transferred jurisdiction in all matters affecting the applicant from the State of Queensland to the Federal law and that State time limits for an appeal from the Judgment of Thomas J are inapplicable to the Trustee in Bankruptcy.
....
6. A declaration that S 30 of the Bankruptcy Act combined with S 109 of The Constitution giving the Bankruptcy Court jurisdiction to go behind the Judgment of Thomas J, for the purposes of determining all the controversies between the parties.”
The Full Court, constituted by Davies, Lockhart and Foster JJ, on 4 November 1995 dismissed the appeal. In those reasons, their Honours said:
“ For our part, we think that paragraph (1) was misconceived.”
Later in their reasons:
“ The real complaint of Mr Gargan as presented to the Court in this appeal was that the Trustee had not fulfilled the duties which the Bankruptcy Act 1966 (Cth) imposed upon him. In the course of his submissions, Mr Gargan conceded that he could not expect that the choses in action would be assigned to him. We think that that was a proper concession, for these were matters for the Trustee's consideration. We see no ground for allowing the appeal. Mr Gargan made some criticism of the procedure adopted below.
...
We see no error in the procedure adopted and we are of the view that the trial judge was correct in refusing the orders sought in paragraph (1) of the application.
For those reasons, we are of the view that the appeal should be dismissed.”
The second part of the application QB697 of 1993 was heard by Kiefel J, who dismissed it on 23 August 1996. On that day, her Honour ordered, subject to certain directions:
“ (1) That the application under s 178 of the Bankruptcy Act 1966 for an inquiry into the Official Trustee's conduct be dismissed.
(2) The application for annulment be adjourned to a date to be fixed.”
The application for annulment was later heard by Kiefel J, together with a further application by Mr Peter Gargan dated 29 August 1996. The further application sought to have Kiefel J rescind or vary the orders which her Honour had made on 23 August 1996 which dismissed the second part of the application in QB 697 of 1993. On 2 October 1996, her Honour ordered:
“ 1. The application of 29 August 1996 be dismissed.
2. That part of the application filed 7 July 1995 seeking an order for annulment and that the Court examine evidence to determine that question, is also dismissed.
3. The applicant, Peter Alexander Gargan, pay the Official Trustee in Bankruptcy's costs of and incidental to the two motions to be taxed.”
The parties to that judgment were Mr Peter Gargan as applicant and the Official Trustee in Bankruptcy as respondent. None of the three applicants on the motion was at any time a party to, or in any way involved in the matters heard before Kiefel J, either on 23 August 1996 or 2 October 1996.
I note that Mr Peter Gargan submits that he had sought to have those three persons joined as parties to his application before Kiefel J, but that his application had been refused by her Honour. It is submitted by Mr Peter Gargan that this is a sufficient basis on which to join the three applicants on the motion as respondents to his present appeal from the orders of Kiefel J.
The notice of motion filed on 12 February 1997 is brought pursuant to O 52 r 18 of the Federal Court Rules. That rule relevantly provides:
“ (1) A respondent may move on notice at any time for an order dismissing an appeal as incompetent.
(2) Upon the hearing of the motion, the burden of establishing the competency of the appeal is on the appellant.
....”
The question of the appropriate parties to an appeal is covered by O 52 r 14 of the Federal Court Rules which provides:
“ (1) Each party to the proceeding in the court appealed from who is affected by the relief sought by a notice of appeal or is interested in maintaining the judgment under appeal shall be joined as a party appellant or respondent to the appeal.
(2) The Court or a Judge may order the addition or removal of any person as a party appellant or respondent to an appeal.
(3) A person shall not be made an appellant without his consent.”
While none of the three persons moving on the motion presently before me was a party to the proceeding in the court appealed from, it may be that they might be affected by an order which Mr Gargan seeks to obtain from the Full Court, and it may be that they are perhaps interested in maintaining the judgment under appeal. However, they were not a party to the proceeding in the court appealed from, and they are not, in my judgment, persons or parties who should be joined as a respondent to the appeal. [see Sen v The Queen (1991) 30 FCR 173 at 175.]
No application has been made to a Court or Judge for the addition of any person as a respondent to Mr Gargan's appeal filed on 11 October 1995 pursuant to O 52 r 14(2) of the Federal Court Rules.
It seems to me, in addition, that the naming of these persons as respondents is in contravention of a direction made by Drummond J on 7 July 1995.
Drummond J dealt on that occasion with the lack of standing of Mr Mohammed to be represented at that moment. Mr Francis Toy announced his appearance on behalf of Mr John Gargan, Grace D. Gargan and other members of the Gargan family, Mr William Jue Sue, and Montgomery and Montgomery, Solicitors, and a conditional appearance was entered on behalf of certain persons.
In directions hearings on that day, his Honour said:
“ Mr Gargan filed an initial application following the directions hearing on 29 May which listed a large number of persons in addition to the Official Trustee as parties. That was done, I would assume, due to a misunderstanding on Mr Gargan’s part of the directions I gave. It was never directed or intended that anyone other than the Official Trustee would be a party to the present proceeding, although it was intended given the nature of the proceeding that persons against whom Mr Gargan claimed that he had a good right of action would be given notice of his application seeking a direction that the trustee assign to him those causes of action notwithstanding his bankruptcy and would be given an opportunity to appear, if they wished, not as parties, but still an opportunity to appear if they wish to make submissions on the hearing of the application. A letter has been written to Mr Gargan directing his misapprehension by my associate dated 28 June 1995 and I will mark that Exhibit 1.
Following receipt of that letter I note that Mr Gargan has filed a new application which has the Official Trustee as the only respondent. So there can be no doubt about the position I will order that insofar as Mr Gargan has made application joining persons other than the Official Trustee as a party to it, all those other persons shall be struck out as respondents to the application.”
That direction was made in proceedings QB 697 of 1993.
[The context of these directions is found from the order of the Supreme Court of Queensland, transferring application No. 4 of 1994 in that Court to the Federal Court; the directions and orders of Drummond J of 29 May 1995; the application which is Exhibit BMJ 2 to the affidavit of Mr B M Johnson sworn 14 February 1997; the application in QB697 of 1993 filed 7 July 1995, and the transcript of the directions hearing before Drummond J on 7 July 1995, particularly pages 2 to 4.]
The parties that were before Kiefel J and in respect of whom her Honour gave judgment (the subject of the present appeal) were Mr Peter Gargan as applicant and the Official Trustee as respondent. It is asserted by Mr Gargan that Kiefel J was wrong in failing to join other persons, but that cannot affect their status as non-parties in the proceedings before her Honour.
It seems to me plain from a consideration of O 52 r 14 that none of the second, third or ninth respondents should be a party to the appeal and the reference to them should be deleted from the notice of appeal.
That is sufficient to dispose of the matter, but I ought to say something in relation to submissions that have been made by Mr Peter Gargan concerning these matters.
Mr Gargan referred to the observations of Griffith CJ in Ah Yick v Lehmert, (1905) 2 CLR 393 at 601, where his Honour said:
“ When there is a general appeal from an inferior Court to another Court, the Court of Appeal can entertain any matter, however arising, which shows that the decision the Court appealed from is erroneous. The error may consist in a wrong determination of a matter properly before the Court for its decision, or it may consist in an assertion by that Court of a jurisdiction which it does not possess, or it may consist in a refusal of that Court to exercise a jurisdiction which it possesses. In all these cases the Court of Appeal can exercise its appellate jurisdiction in order to set the error right.”
I should say, respectfully, that there is nothing in that passage to which exception can be taken, but there may be a misapprehension by Mr Peter Gargan that the reference to a general appeal permits an appellant to range far and wide over matters generally and not in respect of the matters that were before the court appealed from.
That there was, and is such a misapprehension, is fortified from Mr Peter Gargan's written submissions. In those written submissions which are styled "A reply to the submissions made by Francis James Toy on behalf of the second, third and ninth respondents", Mr Peter Gargan says that the appeal is not brought by him against the decision of Kiefel J delivered on 2 October 1996 in application QB 697 of 1993. He says:
“ This is a general appeal against all proceedings in QB 697 of 1993 and petition 1176 of 1992. The evidence before the court is so organised.”
That statement is wrong and it is contradicted by the opening words of the notice of appeal in the present matter which I have earlier set out.
The second matter concerns a contention by Mr Peter Gargan that it is desirable that these persons be parties to the appeal so that the court may make binding orders against them.
It seems to me that if the primary judge was wrong in declining to order their joinder (as Mr Peter Gargan contends), the Full Court would be able to correct that error. However, the Full Court would not make any binding orders against parties who were not before the primary court. At best for Mr Gargan, the court would direct that the matter be remitted to the trial judge with a direction that those parties be joined and with a direction that, after notice to them, the matters affecting those parties be the subject of evidence and submissions and perhaps orders.
The next matter to which I wish to refer concerns the claim by Mr Gargan which seems to be central to all the matters he wants the Full Court to consider. Mr Gargan claims that, when the court made a sequestration order against him on 22 March 1993 and noted that the relation back period commenced on 6 January 1992, the effect of the Bankruptcy Act 1966 (‘the Act’) and the operation of s 109 of the Constitution is to render sterile, litigation which had in fact occurred in the Supreme Court in late 1993 before Thomas J, and in respect of which an adjournment of the petition had been granted by me so as to illuminate the claim by Mr Peter Gargan that there was in fact no debt which founded the creditor's petition.
That central question, of course, is a matter for the Full Court to determine. But it is submitted on behalf of the applicants on the motion that Mr Peter Gargan seeks collaterally to challenge decisions which have been made and, in some cases, unsuccessfully appealed in other proceedings, other than those proceedings which led to the judgment of Kiefel J on 2 October 1996. This much is made plain by the submission that “this is a general appeal against all proceedings in QB 697 of 1993 and petition No 1176 of 1992”.
In relation to the question of the impropriety of collateral attack, I refer to the observations of Dawson J in Giannarelli v Wraith (1988) 165 CLR 543 at 595 where his Honour, speaking of an attempt to use a proceeding in negligence as a means by which criminal proceedings might be reconsidered, said:
“ True it is that the way in which a trial has been conducted by a practitioner appearing for an accused may afford a ground for appeal if it results in a miscarriage of justice (see, e.g. Re Knowles [1984] V.R. 751), but to contemplate an attack in collateral proceedings which would be incapable of affecting the verdict, raises quite different considerations. Nothing could be more calculated to destroy confidence in the processes of the courts or be more inimical to the policy that there be an end to litigation. If the decision of a court is wrong, the appeal process is the means by which it should be corrected. To allow the courts to be used to undermine its authority in other proceedings is clearly not in the public interest.”
Similar observations were made in Stergiou v McGrail, (unreported, Federal Court, Burchett, Ryan and Gummow JJ, 22 April 1994), where their Honours said at page 4 of the judgment:
“ The principle forbidding collateral attack upon a decision is itself the second obstacle to this appeal. It is an abuse of process to bring a proceeding, not to obtain the relief for which the ability to bring that proceeding was provided, but in order to make a collateral attack upon an unappealed decision of the Court, or upon a decision which, having been appealed, has been affirmed.”
It is of course true that s 109 of the Constitution has an effect where there is an inconsistency between State law and Commonwealth law. A relevant observation in this regard is that of Brennan J (as he then was) in University of Wollongong v Metwally (1984) 158 CLR 447 at 473, where his Honour said:
“ The period during which s 109 sterilizes a State law is the period during which the condition which governs its operation is satisfied; i.e., while the Commonwealth law and the inconsistent State law are contemporaneously on the respective statute books. During that period, a legal right or obligation that would have arisen under the State law had it been operative does not arise. During that period, an act, matter or thing to which the State law would have applied is barren of the legal effect that the State law would otherwise have attributed to it. That consequence flows from the operation of s 109, not from the operation of the Commonwealth law with which the State law is inconsistent: Reg v Railways Appeals Board (N.S.W.); Ex parte Davis (1957) 96 C.L.R. 429, at p 439; Reg v Credit Tribunal; Ex parte General Motors Acceptance Corporation (1977)137 C.L.R. 545, at p. 563. When and so long as the Commonwealth law and the inconsistent State law are on the statute books, the condition is satisfied and s 109 takes effect: it is self-executing: Federated Saw Mill &c Employees of Australasia v James Moore & Son Pty Ltd (1909) 8 C.L.R. 465, at p. 536.”
As Mason CJ, Deane and Dawson JJ observed in Walton v Gardner (1992-93) 177 CLR 378 at 393:
“ [I]t has long been established that, regardless of the propriety of the purpose of the person responsible for their institution and maintenance, proceedings will constitute an abuse of process if they can be clearly seen to be foredoomed to fail. Again, proceedings within the jurisdiction of a court will be unjustifiably oppressive and vexatious of an objecting defendant, and will constitute an abuse of process, if that court is, in all the circumstances of the particular case, a clearly inappropriate forum to entertain them. See, generally, Voth v Manildra Flour Mills Pty Ltd (1990), 171 C.L.R. 538. Yet again, proceedings before a court should be stayed as an abuse of process if, notwithstanding that the circumstances do not give rise to an estoppel, their continuance would be unjustifiably vexatious and oppressive for the reason that it is sought to litigate anew a case which has already been disposed of by earlier proceedings. See, e.g., Reichel v Magrath (1889), 14 APP. Cas. 665, at p. 668; Connelly v Director of Public Prosecutions, [1964] A.C. 1254, at pp. 1361-1362. The jurisdiction of a superior court in such a case was correctly described by Lord Diplock in Hunter v Chief Constable of the West Midlands Police [1982] A.C. 529, at p. 536 as ‘the inherent power which any court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people."
On the question of what is necessary to make legal proceedings vexatious, Fitzgerald P observed in Re Cameron [1996] 2 QdR 218 at 220:
“ It is also necessary to decide what makes legal proceedings vexatious. Although there are sometimes statutory indications, the broad test potentially concerns such factors as the legitimacy or otherwise of the motives of the person against whom the order is sought, the existence or lack of reasonable grounds for the claims sought to be made, repetition of similar allegations or arguments to those which have already been rejected, compliance with or disregard of the court’s practices, procedures and rulings, persistent attempts to use the court’s processes to circumvent its decisions or other abuse of process, the wastage of public resources and funds, and the harassment of those who are the subject of the litigation which lacks reasonable basis..."
It seems to me that the central question which Mr Peter Gargan wishes to agitate before the Full Court, namely, the effect of the sequestration order made on 23 March 1993, with a relation-back period to 6 January 1992, will be still able to be canvassed by him before the Full Court. However, for the reason that, in my opinion, none of the second, third, and ninth respondents is properly within O 52 r 14, the court should make orders having the effect of those sought by the motion.
The remaining matter is the question of costs. It seems to me that the applicants should have their costs of the motion in the ordinary way. The only question is whether those costs should be on an indemnity basis.
The notice of motion with which I am presently concerned seeks in each case that the appellant be ordered to pay the costs of each of the second, third and ninth respondents on an indemnity basis. It is submitted that it is appropriate in this case that indemnity costs be ordered in light of a letter on 10 December 1996 written on behalf of each of the moving parties to Mr Peter Gargan. That letter said in part:
“ We hereby give you notice that you are required to withdraw the Appeal against the three abovenamed parties who are said to be Respondents within ten (10) days from the date of this letter. John Ernest Gargan, Barry Michael Johnson and Mr. Peter Toy were not parties to the matter determined by Her Honour Justice Kiefel which is appealed from. Accordingly, they are not parties pursuant to the relevant legislation and Rules of Court.
It will be submitted that even if those persons are parties (which is not admitted) there has been no proper service in accordance with the Rules.
Should we not receive your confirmation on or prior to 20 December, 1996 that you will forthwith discontinue against John Ernest Gargan, Peter Toy and Barry Michael Johnson, we shall apply on notice to the Federal Court that the proceedings in Action No. QG 181 of 1996, so far as they apply to the parties we represent, be struck out. In the event of a striking out application being successful, we will also be seeking an order for costs against you.”
On which is handwritten and sent back by Mr Peter Gargan:
“ Thank you for acknowledging notice. One of Kiefel J many failings was the failure to join you. That is under appeal. So stop the crap. You will be in court either way. Sam Industries tried and died, so will you. Answer of the 18th.“
And on the reverse of that letter is the note:
“ Johnson, you have been a total idiot. What you will get is only what you deserve. PG."
The significance of that letter and its response is that Mr Peter Gargan was properly put on notice in respect of the matters in respect of which the second, third and ninth respondent named in his appeal have succeeded before me.
In all the circumstances, it seems to me that this is a case where I ought to order Mr Peter Gargan to pay the costs of the applicants on the motion on a solicitor-client basis.
The final matter is an oral application made by Mr Peter Gargan today, after judgment, for leave to appeal from my decision on the motion that the appeal so far as it relates to the second, third and ninth respondents be dismissed.
In relation to that application, I made it plain in my reasons for judgment what I understand to be the central questions that Mr Gargan wishes to agitate, but in all the circumstances, I do not think that the competency of the appeal as against the second, third and ninth respondents is a case where, if leave be necessary, I ought to grant leave to appeal.
I certify that this and the preceding fourteen (14) pages are a true copy of the reasons for judgment herein of the Honourable Justice Spender.
Associate
Date: 24 March 1997
The applicant appeared in person.
Counsel for the respondent : Mr F Toy
instructed by : Barry Johnson
Date of hearing : 24 March 1997
