FEDERAL COURT OF AUSTRALIA

Duncan v National Australia Bank [2005] FCA 1644

PRACTICE AND PROCEDURE – application to be joined as a respondent to the proceedings – where issues between existing parties determined by settlement – application dismissed.

STEPHEN DUNCAN (TRUSTEE IN BANKRUPTCY) v NATIONAL AUSTRALIA BANK & ORS

SAD 29 of 2005

LANDER J

10 NOVEMBER 2005

ADELAIDE

THE COURT ORDERS THAT:

1.          The application by Andrew Morton Garrett as trustee of the Andrew Garrett Family Trust No 3 to be joined as a respondent to these proceedings is dismissed.

2.          Paragraphs 5.3, 7 and 9 of the orders of the Court made on 9 September 2005 be discharged.

3.          The proceeds from the sale of chattels sold or to be sold by the applicant the subject of the action be forthwith paid, after deduction of the auctioneers’ reasonable and proper costs and any goods and services tax, but without any further deduction, to National Australia Bank Ltd by cheque made out to “Johnson, Winter & Slattery Trust Account”.

4.          The transfer of the furniture, effects and jewellery itemised in the valuation of James F Bruce dated 29 November 2002, and otherwise described in the schedule hereto to this order, to the second respondent by agreement dated 19 February 2004 be and is hereby declared to be void against Peter Ivan Macks in his capacity as the trustee of the bankrupt estate of Andrew Morton Garrett and against Stephen James Duncan in his capacity as trustee of the bankrupt estate of Averil Gaye Garrett, pursuant to section 120 of the Bankruptcy Act 1966.

5.          Peter Ivan Macks and Stephen James Duncan shall pay to the second respondent the sum of $80,000 on account of consideration given for the assets referred to in paragraph 4 hereof.

6.          The cross-claim brought by the fourth respondent against Mr Macks and Mr Tseng, dated 23 September, is dismissed.  Further consideration of the application is adjourned.

7.          I direct the third respondent to file and serve any amendment to the cross-claim that he may be advised in relation to any further directions in the matter by Friday, 18 November 2005.

8.          I adjourn further consideration generally until Wednesday, 23 November 2005 at 9.15am.

9.          I confirm that any further consideration of the matter thereafter be on 6 December 2005.

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

REASONS FOR JUDGMENT

1                     This is an application by Andrew Morton Garrett as trustee of the Andrew Garrett Family Trust No 3 to be joined as a respondent to these proceedings.  The timing of the application is somewhat curious; it comes immediately after all of the issues between the existing parties have been determined by settlement.

2                     On 20 July 2005 Evajade Proprietary Limited (‘Evajade’), as trustee of the Andrew Garrett Family Trust and Andrew Garrett Family Trust No 2, applied to be joined as a respondent.  On 9 September I refused Mr Andrew Garrett leave to appear on behalf of Evajade.  However, I gave leave to Mr Sandow, who was then and still is Evajade’s sole director, to appear on behalf of that company.

3                     I gave directions as to the procedure which Evajade was to undertake before its application could be considered.  The directions were substantially complied with but Evajade later abandoned its application to be joined.  It appears from an exhibit to an affidavit sworn by Mr Garrett that Mr Sandow is suffering from ill health and has or is about to resign as a director.  However, the reasons why Evajade abandoned its applications have not been made clear to the Court.  Mr Sandow did confirm this morning that the application was abandoned.

4                     On 12 October 2005 Mr Garrett filed a notice of motion seeking to be joined as a respondent.  That application came on for hearing before Finn J, who refused the application on 13 October 2005.  Yesterday, in anticipation of a directions hearing today, Mr Garrett filed this application, which was supported by his own affidavit sworn 9 November 2005.  It appears from the exhibits to that affidavit that, apparently, the Andrew Garrett Family Trust No 3 was established by a deed dated 7 November 2005.  It is a discretionary trust; the settler is Mr Sandow and the appointor Mr Michael Garrett.  Mr Andrew Garrett is the trustee of the trust.

5                     Mr Garrett is also a beneficiary of the trust, being a parent of the two primary beneficiaries, which thereby constitutes him, pursuant to the terms of the trust, as a beneficiary.  The trust fund was settled with the sum of $100.  The trust was constituted following meetings and discussions between Mr Garrett and Mr Sandow.  In those meetings it was decided that a third Andrew Garrett Family Trust would be established to acquire the assets of Evajade in respect of the various actions in the Federal Court, the High Court and the Supreme Court of South Australia.

6                     On 7 November 2005, the date upon which the trust was constituted, Mr Andrew Garrett wrote to Mr Andrew Sandow confirming that the trustee had been constituted in terms to which I have referred and seeking to acquire certain assets from Evajade in its capacity as trustee of the Andrew Garrett Family Trust and the Andrew Garrett Family Trust No 2.  The assets which were sought to be acquired in the letter of offer were:

(a)        the claims and standing of Evajade in action number SAD 29 of 2005;

(b)        the standing of Evajade as registered proprietor of an undivided 23/26^th of the property known as Springwood Park, being the land comprised in:

(i)         Certificate of Title Register Book Volume 5342 Folio 475,

(ii)        Certificate of Title Register Book Volume 5334 Folio 326, and

(iii)       Certificate of Title Register Book Volume 5348 Folio 15;

in action 127 of 2004 of the Supreme Court of South Australia and in, as the second applicant for special leave to appeal in action A67 of 2004 of the High Court of Australia.

7                     It is not clear to me exactly what assets Mr Andrew Garrett was offering to purchase.  It might be that he was offering to purchase various choses in actions then in the possession of Evajade but the letter is not clear.  The purchase price of the assets was said to be:

(a)        75 per cent of the net proceeds to be made by order in favour of Andrew Garrett by the trial judge in action SAD 29 of 2005, deposit $5000 payable on the settlement of funds pursuant to the letter of offer of finance from Loans Plus dated 21 October 2005 plus,

(b)        75 per cent of the 23/26^th of the equity in the property net of NAB mortgages as calculated from the valuation of the property, payable on settlement of the loan funding from Consolidated Securities and Investments, dated 4 November 2005.

8                     Again, the purchases price is, at least on my understanding, not clear.  Indeed, it is not at all clear to me what is said to be the consideration which is offered for the assets to which I have referred.  In any event, apparently that offer was accepted.  Mr Sandow has signed the letter and written “accepted” on 7 November 2005.  Mr Garrett therefore says that he has an interest in these proceedings and should be joined as a respondent.

9                     As I have said, the timing is curious.  The existing parties have settled all of their differences.  The only matter that may need to be considered by the Court are for directions which Mr Andrew Garrett’s trustee might make to this Court in relation to indemnities from the Andrew Garrett Family Trust and Andrew Garrett Family Trust No 2.  For that reason, by itself, the application by Mr Garrett should be refused.  However, there are other reasons why the application should be refused.

10                  Mr Andrew Garrett also filed a proposed statement of claim to indicate the claims that he would have as trustee of the Andrew Garrett Family Trust No 3 against the existing parties.  Mr Doyle described the proposed statement of claim as hopeless in form.  I think, with respect, that is an appropriate description.  It is not clear from the statement of claim what cause of action that the trustee of a discretionary trust formed years after the events and two or three days before the application could have relevant to the existing proceedings.

11                  If there is any substance in the claims it relates to claims made by Andrew Garrett in relation to the conduct of the second respondent and the second respondent’s solicitors.  Those solicitors, of course, are not parties to these proceedings.  Nothing in the proposed proceedings relates to the matters in issue between the existing parties.

12                  Mr Evans, counsel for the first respondent, also pointed out that nothing raised in the proposed statement of claim affects his client in any way. 

13                  The matters and issues between the parties have been settled.  The issues which are sought to be raised by Mr Garrett in his capacity as trustee of the Andrew Garrett Family Trust No 3 are not relevant to those settled issues.  Therefore, the application for joinder as a respondent is dismissed.

Associate:

Dated:              15 November 2005