FEDERAL COURT OF AUSTRALIA

Wilson v Commonwealth of Australia [1999] FCA 1308

BANKRUPTCY – whether a litigant can agitate an issue previously determined by a court

Bankruptcy Act 1966 ss 178 and 179

Sea Culture International Pty Ltd v Scoles (1991) 32 FCR 275 referred to

Walton v Gardiner (1992-1993) 177 CLR 378 cited

Rogers v The Queen (1994) 181 CLR 251 cited

Hunter v Chief Constable [1982] AC 529 applied

Stephenson v Garnett [1898] 1 QB 677 applied

Reichel v Magrath (1889) 14 App Cas 665 applied

Giannarelli v Wraith (1988) 165 CLR 543 referred to

Williams v Official Trustee in Bankruptcy (1994) 122 ALR 585 discussed

Williams v The Official Receiver and Wenona Pty Ltd (unreported, Federal Court, 10 December 1992)

ERNEST ARTHUR WILSON & PATRICIA LORRAINE WILLIAMS v COMMONWEALTH OF AUSTRALIA & ANOR

N 261 OF 1999

BURCHETT, WEINBERG & HELY JJ

21 SEPTEMBER 1999

SYDNEY

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

THE COURT ORDERS THAT:

1.                  Leave to appeal be refused.

2.         The appellants pay the respondents’ costs.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

ON APPEAL FROM A SINGLE JUDGE OF THE FEDERAL COURT OF AUSTRALIA

REASONS FOR JUDGMENT

THE COURT:

1                     In 1979 the appellants entered into possession of the “Gardiners Inn Hotel” at Blackheath, the freehold of which was owned by Welona Pty Ltd (“Welona”).  They took a five year lease of the hotel from Welona commencing on 29 January 1980.  The lease contained a covenant on the part of the appellants that they would keep the hotel premises in good and substantial repair.  Welona contended that the appellants were in breach of this covenant, as a result of which it incurred substantial costs in effecting repairs at the end of the lease term in 1985.  The appellants denied that they were responsible for the state of repair of the hotel in 1985 and, in support of that denial, contended that the hotel was in a dilapidated state at the commencement of their lease in 1980.

2                     A sequestration order was made against the estate of each appellant early in 1986.  Welona lodged a proof of debt dated 10 August 1988 which, when adjusted for corrections and other amounts, was in the sum of $151,856.57.  The proof covered unpaid rent and rates, but was substantially comprised of monies allegedly payable in consequence of the breach of the covenant for repair.  Welona’s claim was rejected by the Official Trustee to the extent of $55,162.18.  On 28 March 1991 the proof of debt was admitted in the amount of $96,694.39.

3                     Both the appellants and Welona challenged the decision of the Official Trustee.  Those challenges were heard by Sweeney J, and decided in December 1992.  The critical issue in dispute in the proceedings before Sweeney J was the state of repair of the hotel at the commencement of the lease in 1980.  Sweeney J accepted the evidence of the lessor’s representative (Mr Bowen) as to the state of repair of the hotel, rather than that of the appellants’ representative (Mr Wilson).  In the result, (leaving aside orders made by consent) a sum of $132,722.97 referable to the cost of repairs was allowed to Welona.  Orders were ultimately entered allowing Welona’s proof of debt in a total amount of $140,534.45.

4                     The appellants then appealed to the Full Court.  The appeal was heard, and judgment reserved on 30 September 1993.  After judgment was reserved, the appellants filed a Notice of Motion seeking leave to adduce fresh evidence.  The fresh evidence consisted of 26 photographs of the hotel premises which the appellants’ solicitor had found, on the day prior to the hearing of the appeal, in the Court file in an envelope which contained Exhibit 8 (a single photograph) in the proceedings before Sweeney J.  It was the appellants’ contention that these photographs were taken in 1980, and that they showed the rundown condition of the hotel at the time of commencement of the lease.

5                     On the application to adduce fresh evidence the appellants claimed that if the photographs had been available at the hearing before Sweeney J, they would have corroborated the evidence of the appellants, and in particular, that of Mr Wilson, as to the condition of the hotel at the commencement of the term.  The appellants claimed that the photographs were not available because they had been mislaid by the trustee; a claim which was substantially confirmed by the relevant officer of the Official Trustee, Mr Garrett.

6                     It is unnecessary for us to recount the decision of the Full Court in any detail.  It is reported at 122 ALR 585.  It is sufficient for present purposes to record that the Full Court considered, for reasons which it gave, that “it would be quite unsafe now to accept at its face value Mr Wilson's evidence that the photographs were taken in April 1980”.  The application for a new trial, based on the fresh evidence, was dismissed because the Full Court concluded “that the availability of the photographs at the trial would have been quite unlikely to have made any difference to its outcome”.

7                     Special Leave to Appeal from the decision of the Full Court was refused by the High Court.  Mason CJ said:

“This case commands no prospect of success whatsoever.  The application is therefore refused.”

8                     On 16 September 1998 the appellants instituted proceedings seeking relief under ss 178 and 179 of the Bankruptcy Act 1966 (Cth) (“the Act”) and certain declaratory relief.  That application was summarily dismissed by Branson J.  Leave to appeal is sought from her Honour’s orders.

9                     Although expressed in various ways, the essential thrust of the appellants’ claim before Branson J was that had the Official Trustee properly conducted himself in relation to the Welona claim, particularly in relation to the photographs, then the outcome of the proceedings before Sweeney J would have been different, and the estates of the appellants would not have been exposed to the liabilities imposed upon them by virtue of the judgments of Sweeney J, and of the Full Court.

10                  As her Honour correctly observed, the liability of the bankrupt estates to make payment to Welona derives from the judgment of this Court, and not from any act, omission or decision of the Official Trustee in the course of administration of the bankrupt estates of the appellants.  The validity of Welona’s proof of debt was authoritatively established by an order of this Court, which is not now sought to be set aside. 

11                  An attempt to litigate in the Court a dispute or issue which has earlier been resolved in other litigation in this or another court may, according to the circumstances, constitute an abuse of process even if not attracting the doctrines of res judicata or issue estoppel: Sea Culture International Pty Ltd v Scoles (1991) 32 FCR 275 at 279 per French J; Walton v Gardiner (1992-1993) 177 CLR 378, 393; Rogers v The Queen (1994) 181 CLR 251.

12                  In Hunter v Chief Constable [1982] AC 529 at 542 Lord Diplock said that the applicable principle is simply and clearly stated in passages which his Lordship extracted from the judgment of A L Smith LJ in Stephenson v Garnett [1898] 1 QB 677, 680-681 and the speech of Lord Halsbury LC in Reichel v Magrath (1889) 14 App Cas 665, 668. The extract from the judgment of A L Smith LJ was:

“... the court ought to be slow to strike out a statement of claim or defence, and to dismiss an action as frivolous and vexatious, yet it ought to do so when, as here, it has been shewn that the identical question sought to be raised has been already decided by a competent court.”

The passage from Lord Halsbury’s speech was:

“... I think it would be a scandal to the administration of justice if, the same question having been disposed of by one case, the litigant were to be permitted by changing the form of the proceedings to set up the same case again.”

The fundamental principle favouring finality of litigation is one of the planks which underpins the advocate’s immunity from suit: Giannarelli v Wraith (1988) 165 CLR 543, 558, 573, 579, 594, 609.

13                  The contention that a different judgment would have been pronounced had the evidence of the photographs been available before Sweeney J invites a collateral attack on the decision of the Full Court.  It is not open to the appellants now to contend that the outcome of the proceedings before Sweeney J would have been different had the photographs been available, because that contention was put by the appellants to the Full Court, and rejected.  Unless the appellants can make good that position then there is no foundation for any claim to compensation against the Official Trustee, however that claim is expressed, and whatever other difficulties may lie in their path.

14                  It is not necessary for close attention to be given to all of the matters which were argued on the hearing of the application for leave to appeal (which was also treated as the hearing of the appeal) because the matter to which we have referred is fundamental to the appellants’ claim.  As the appellants are unable to overcome that fundamental obstacle, and
as it is common ground that leave to appeal from her Honour’s decision is required, we would refuse leave to appeal.

Associate:

Dated:              21 September 1999