FEDERAL COURT OF AUSTRALIA

Garrett v Duncan [2015] FCA 255

THE COURT ORDERS THAT:

1.    The application for leave to appeal Tracey J's decision made on 21 November 2014 is dismissed.

2.    The applicant is to pay the respondent's costs of and incidental to the application for leave to appeal.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

1    The applicant seeks leave to appeal the orders and decision of Tracey J made on 21 November 2014 pursuant to which his Honour ordered, inter-alia, that the applicant's originating application be dismissed. The respondent opposes such leave to appeal.

2    In my opinion, for the reasons that follow, leave to appeal should be refused.

3    Before proceeding further, I should note one matter. Justice Pagone on 26 February 2015 made a vexatious litigant order under s 37AO of the Federal Court of Australia Act 1976 (Cth) (the Act) in proceeding VID 600 of 2014 (Garrett v Commissioner of Taxation [2015] FCA 117). The present application for leave to appeal was instituted before that order was made. The order in form does not expressly refer to continuing a proceeding already begun before the order was made. In my view, although the leave application may be a “proceeding”, it is not caught by his Honour’s order. In any event, even if it was so caught, I would grant leave to the applicant to continue with his application for leave to appeal.

Factual Background

4    The relevant factual background is as follows:

(a)    A sequestration order was made against the applicant on 24 September 2004, on which date Peter Ivan Macks (Macks) was appointed as the trustee in bankruptcy of the applicant’s estate. On or about 22 December 2004, a sequestration order was made against the applicant’s former spouse, Averil Gay Garrett, on which date the respondent Stephen James Duncan was appointed as the trustee in bankruptcy of her estate.

(b)    The applicant was discharged from his bankruptcy on 22 April 2009, with Macks finalising the administration of the applicant’s estate on or about 17 May 2011. On or about 23 December 2007, Averil Garrett was discharged from her bankruptcy, with the respondent subsequently finalising the administration of her estate.

(c)    During the course of the administration of his and his former spouse’s estates, the applicant, Macks and the respondent were involved in various disputes and legal proceedings.

(d)    On 10 March 2009, the applicant, Macks and the respondent (both personally and in his capacity as trustee for the bankrupt estate of Averil Garrett) entered into a Settlement Agreement to resolve their disputes and differences. The applicant has also brought separate proceedings against Macks. I heard and determined the applications for leave to appeal together (see Garrett v Macks [2015] FCA 254]).

5    The Settlement Agreement contained various terms including the following:

8.    Releases by Garrett

8.1    Garrett unconditionally releases and forever discharges Macks, Duncan, Lipman Karas, including its directors and employees, Sashi Maharaj QC of counsel, Arturo Dal Cin of counsel, Graham Dart of counsel and Cosoff Cudmore Knox, including its partners and employees from any and all claims whatsoever and howsoever arising out of the facts, matters and circumstances referred to in the Proceedings and in relation to all matters, whensoever or howsoever arising, touching or arising from or in connection with the facts, matters and circumstances alleged in each and every of the Proceedings and including without limitation all matters arising out of the administration by Macks of the bankrupt estate of AMG and the administration by Duncan of the bankrupt estate of Averil Gay Garrett.

8.2    Save as provided for by the terms of this agreement, Garrett forever releases any claim to and entitlement to the Royalty Stream, which has priority over Macks and Duncan.

8.3    Obligations and rights under this clause continue after the expiration or termination of this agreement.

8.4    Nothing in this clause 8 prevents any party from seeking to enforce the obligations or exercise the rights under this agreement.

8.5    For the avoidance of doubt, the releases and discharges given by Garrett in this clause 8 are to be held by Macks and Duncan jointly and severally for themselves and on trust for and on behalf of the parties released and discharged who are not parties to this agreement.

…

10.    Covenant not to sue

10.1    Garrett must not make any claim whatsoever or howsoever arising against any of Macks, Duncan, Lipman Karas, including its partners and employees, Sashi Maharaj QC of counsel, Arturo Dal Cin of counsel, Graham Dart of counsel and Cosoff Cudmore Knox, including its partners and employees arising directly or indirectly out of or relating to:

10.1.1    the conduct of the Proceedings; or

10.1.2    the administration of the bankrupt estate of AMG; or

10.1.3     the administration of the bankrupt estate of Averil Gay Garrett.

(the Releases)

The proceedings before Tracey J

6    On 28 July 2014, the applicant commenced the proceeding below against the respondent by the filing of an originating application. In the proceeding, the applicant ambitiously sought orders that the surplus of the bankrupt estate of his former spouse be paid to him in his capacity as joint trustee of a family trust as follows:

1.    That an Order is made that the Surplus of the Bankrupt Estate SA 2112/2004 is paid to the nominated Account of the Applicant in his capacity as Joint Trustee of the Averil Garrett Family Trust ABN 45 598 585 281

2.    Such other orders as this Honorable Court Deems Fit

7    Various forms of interlocutory relief were also sought. The applicant filed a statement of claim on the same day in which he made various allegations relating to the conduct of the respondent.

8    On 2 September 2014, the respondent made an application seeking that the Court summarily dismiss the proceeding without the need for an oral hearing pursuant to s 20A of the Federal Court of Australia Act 1976 (Cth) (the Act) and r 26.01 of the Federal Court Rules 2011 (Cth) (the Rules). The respondent filed an affidavit in support sworn on 2 September 2014. In his affidavit the respondent deposed that he was “not aware of any matter which could vary, qualify or vitiate the Settlement Agreement”. He expressed the opinion that it remained binding. He also deposed that the administration of Averil Garrett’s bankrupt estate had been finalised and that there were no funds available to him in his capacity as trustee which might be available for use to defend the proceeding. He accordingly sought to be relieved of the obligation to attend an oral hearing. In his affidavit at [38] to [40] he deposed as follows:

38.    I seek an order that these proceedings commenced by Mr Andrew Garrett be summarily dismissed pursuant to Rule 26.01 of the Federal Court Rules 2011 on the basis that the evidence set out in this affidavit establishes that:

38.1    Mr Andrew Garrett has no reasonable prospect of successfully prosecuting the proceedings; and, or

38.2    the proceedings are vexatious.

39.    I do not have any funds available to me in relation to the bankruptcy of Mrs Garrett. The administration of the bankrupt estate of Mrs Garrett has been finalised, on the basis of inter alia the settlement agreement, and no dividend has been paid.

40.    I respectfully request that the Court or a Judge deal with this matter without an oral hearing pursuant to section 20A of the Federal Court Act 1976, on the basis of the matters set out in this affidavit

9    On 5 September 2014, the matter was mentioned before his Honour. The respondent was excused from attendance. At that hearing the applicant advised the Court that he had engaged legal representation. The matter was adjourned to allow the solicitors for the applicant to prepare affidavit material and submissions.

10    His Honour subsequently granted a number of other adjournments to allow the applicant to obtain legal advice and so that the hearing of the respondent’s application could coincide with that of the trustee of the applicant’s bankrupt estate (Macks) in proceeding VID 304 of 2014.

11    On 21 November 2014, the matter was called on before his Honour. There was no appearance for the respondent. The applicant opposed the respondent’s application under s 20A of the Act and r 26.01(1) of the Rules but declined to present oral argument in opposition. He sought a 12 week adjournment in order to prepare a response. His Honour rejected that application on the basis that no evidence was presented to support the need for such a delay (the same reasons were given by his Honour in a similar application in proceeding VID 304 of 2014 Garrett v Macks [2014] FCA 1259).

12    His Honour granted the respondent’s application for the Court to deal with the matter without an oral hearing and dismissed the applicant’s application. His Honour found that the applicant’s application had no reasonable prospects of success as a clear legal basis existed for summarily terminating the proceeding, being the release clauses contained in the Settlement Agreement.

Application for leave to appeal

13    On 4 December 2014, the applicant filed an application for leave to appeal against his Honour’s order.

14    The order made by Tracey J is an interlocutory judgment. An order summarily dismissing proceedings on the basis that they have no reasonable prospects of success is interlocutory (I should say that s 24(1D)(b) of the Act does not apply as the respondent did not invoke s 31A). Accordingly, the applicant requires leave to appeal (see s 24(1A)).

15    In determining whether leave to appeal should be granted, the Court is required to consider whether:

(a)    in all the circumstances the decision below is attended with sufficient doubt to warrant its reconsideration; and

(b)    substantial injustice would result if leave were refused supposing the decision to be incorrect (Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398 to 399).

16    Expressed slightly differently, leave to appeal will be granted where there is a reasonably arguable case that the decision of his Honour was affected by an appealable error and a grant of leave is necessary to remedy a substantial injustice (Re CSR Ltd (2010) 183 FCR 358 at [5]). Leave will more readily be granted where an interlocutory decision determines substantive rights as distinct from being a matter of mere practice and procedure.

17    In summary, the applicant’s proposed draft notice of appeal raised the following 8 grounds:

1.    Whether it was reasonable for his Honour to make the findings and orders.

2.    Whether his Honour was bound to consider all the evidence filed in the proceeding.

3.    Whether his Honour was unreasonable in failing to adjourn the application for 12 weeks upon the application of the applicant as a matter of procedural fairness and natural justice.

4.    Whether his Honour erred in failing to find that there was an arguable case that the respondent was appointed in respect of a debtor’s petition that should not have been made.

5.    Whether it was open to the Court to interpret the application as an application under s 179 of the Act which was not precluded by the Deed.

6.    Whether his Honour exercised the discretion of the Court reasonably in failing to observe that the respondent was bound to annul the sequestration order under s 153A of the Act.

7.    Whether his Honour acted reasonably in not finding that the respondent had trespassed on the estate of the applicant since 24 September 2004.

8.    Whether his Honour acted reasonably and had failed as a matter of natural justice and procedural fairness to deliver complete justice.

18    First, no error is demonstrated as to the manner in which Tracey J approached the exercise of his discretion and task in considering whether to deal with the matter without an oral hearing pursuant to s 20A of the Act. His Honour applied the appropriate principles (see [10] to [11]).

19    Section 20A provides as follows:

20A    Power of the Court to deal with civil matters without an oral hearing

(1)    This section applies in relation to any civil matter coming before the Court in the original jurisdiction of the Court.

(2)    The Court or a Judge may deal with the matter without an oral hearing (either with or without the consent of the parties) if satisfied that:

(a)    the matter is frivolous or vexatious; or

(b)    the issue or issues on which determination of the matter depends have been decided authoritatively in the case law; or

(c)    determination of the matter would not be significantly aided by an oral hearing because:

(i)    there is no real issue of fact relevant to determination of the matter; and

(ii)    the legal arguments in relation to the matter can be dealt with adequately by written submissions.

(3)    This section does not limit subsections 20(4) and (6).

20    His Honour principally proceeded under s 20A(2)(c), although it was also open to his Honour to proceed under the vexatious limb of s 20A(2)(a).

21    In relation to s 20A(2)(c) there are a number of features to note. First, elements (i) and (ii) are cumulative. Second, the combination of elements (i) and (ii) is exhaustive of the circumstances justifying the conclusion that “determination of the matter would not be significantly aided by an oral hearing”. In other words, unless that combination is established, s 20A(2)(c) is not established. Nevertheless, there is an argument that s 37P(3) may be of sufficient scope to step outside the strictures of s 20A(2)(c), although the better view is that s 37P(3) could not be so used. Both s 20A and s 37P were introduced at the same time (Act No 117 of 2009); moreover, s 20A is specific, s 37P is general.

22    The purpose of s 20A(2)(c) is to save time and expense where an unmeritorious claim can be disposed of on an application of legal principle in circumstances where either no relevant facts are in dispute or any factual adjudication is unnecessary to such a disposition. Further, where one of the parties is self-represented, s 20A(2)(c)(ii) may in some circumstances more readily be substantiated where it is apparent that such a party’s legal arguments are misconceived.

23    First, his Honour rightly applied s 20A to the circumstances of the case before him.

24    Further, no error is demonstrated in relation to how his Honour approached the task under r 26.01. The Court can grant summary judgment where, as a matter of law, the applicant has no entitlement to the relief sought even if he establishes the facts which he seeks to prove. Further, summary judgment can be granted where an applicant has instituted proceedings contrary to terms of settlement which resolved by compromise the applicant’s claims.

25    Second, no error is demonstrated as to his Honour’s reliance upon the Settlement Agreement. No relief was sought by the applicant in his application that the Settlement Agreement should be set aside. The submission now advanced by the applicant complaining as to the lack of bona fides of the parties in entering into the Settlement Agreement was simply bare assertion unsupported by any proper evidentiary foundation. Put simply, the respondent performed his obligations under the Settlement Agreement according to the evidence before his Honour and the applicant received benefits under the Settlement Agreement accordingly.

26    The applicant raised before me various issues concerning the Settlement Agreement, but they were all premised on the proposition that the Settlement Agreement was not binding or should not be enforced. But as I say, the originating process did not raise any such relief. Further, the applicant never made any application to his Honour foreshadowing any such relief.

27    Further, in a proposed amended notice of appeal, the applicant has sought to raise many more grounds of appeal (48 in total) which purportedly embrace a challenge to the original judgment debt, the original sequestration order and consequently the validity of the trustee’s appointment, all for the purpose of seeking to collaterally challenge or being anterior to a challenge to set aside the Settlement Agreement. But the originating process before his Honour never embraced such points and nor were such points ever raised before his Honour. Moreover, the proposed grounds raised are nebulous and misconceived. The proposed amended notice can be put to one side.

28    No error is demonstrated as to his Honour’s construction and application of the releases. The claim for relief sought by the applicant was caught by the releases. The applicant’s claim was one “arising out of… the administration by Duncan of the bankrupt estate of Averil Gay Garrett” (cl 8.1) or “arising directly or indirectly out of or relating to… the administration of the bankrupt estate of Averil Gay Garrett” (cl 10.1.3).

29    Further, the releases constituted an accord and satisfaction which barred the applicant from any right to relief under the application (see his Honour’s reasons at [13]).

30    Third, the applicant raised before me the issue that his originating process was an application under s 179 of the Bankruptcy Act 1966 (Cth) (Bankruptcy Act) and that, accordingly, the Court’s exercise of jurisdiction and powers under s 179 could not be foreclosed by the terms of the Settlement Agreement; in other words, the releases and the covenant not to sue could not be a conclusive bar. But even assuming this, his Honour was quite correct or would have been quite correct to reject any such application in the exercise of his discretion based upon the existence of the Settlement Agreement and the releases that it contained. To pursue such an application in the face of the Settlement Agreement and the releases and covenant not to sue was an abuse of process. Even if his Honour was in error in treating the releases and the covenant not to sue as a conclusive bar, no substantial injustice would be caused to the applicant if leave was refused; the proceeding in any event was an abuse of process. Indeed, and in any event, in my view the applicant had no standing under s 179 concerning the activities of the trustee of his former wife’s estate.

31    Fourth, just looking at the form of the relief contained in the originating process, it was based on a false premise; no surplus had been established on the evidence. Moreover, and in any event, the applicant had no standing or entitlement to claim any surplus arising from his former wife’s estate. Even if his Honour had in any way been in error in confining his decision to the effect of the releases, and I do not say that he was so in error, no substantial injustice would be caused by refusing leave to appeal. The claims in the originating process appeared hopeless in any event.

32    Fifth, no error is demonstrated in his Honour’s decision to refuse a further adjournment on 21 November 2014. Aside from the matters that his Honour identified in his reasons (at [9]; see also Garrett v Macks [2014] FCA 1259), no evidence was filed by any legal representative or proposed legal representative of the applicant supporting the applicant’s assertion that a further 12 week adjournment would have enabled such a representative to properly deal with the matter. Further, as his Honour set out in his reasons (at [7] to [8]), the applicant had already been granted a number of indulgences to enable him to obtain legal representation. His Honour’s approach in refusing the adjournment application was consistent with appropriate case management principles, the overarching purpose described in s 37M of the Act and the principles expounded in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 at [92] to [101].

33    Further, in considering the question of an adjournment, his Honour was also not required to limit himself to just the competing interests of the parties before him. His Honour would undoubtedly have also had in mind the observations in Sali v SPC Ltd (1993) 116 ALR 625 at 629 per Brennan, Deane and McHugh JJ:

In determining whether to grant an adjournment, the judge of a busy court is entitled to consider the effect of an adjournment on court resources and the competing claims by litigants in other cases awaiting hearing in the court as well as the interests of the parties. As Deane J pointed out in Squire v Rogers ((1979) 27 ALR 330 at 337) this “may require knowledge of the working of the listing system of the particular court or judge and the importance in the proper working of that system of adherence to dates fixed for hearing”. What might be perceived as an injustice to a party when considered only in the context of an action between parties may not be so when considered in a context which includes the claims of other litigants and the public interest in achieving the most efficient use of court resources.

34    Finally, it is appropriate to comment upon a number of other matters emphasised by the applicant in oral submissions.

35    The applicant asserted that his Honour failed to have regard to all of the evidence before him. There is no substance to this assertion. I should say that in any event most of the applicant’s evidence was largely irrelevant to the matters that his Honour was required to and did consider. Much of it was directed to exposing the entrails of a history of the events and circumstances which affected or purportedly affected the applicant as seen through his own distorted and astigmatic lens. This was typified by the very detailed chronology that the applicant provided to me setting out numerous events over the period 31 May 1993 to 21 November 2014. At best, some of it might have had relevance, if in an admissible form (most of which was not in such a form), to assertions concerning the respondent’s earlier activities. But the proceeding before Tracey J involved no such issues or, as I have said, a challenge to the Settlement Agreement. Moreover, and for completeness, when an adjournment was sought by the applicant before his Honour, the applicant did not expressly identify that one purpose was to consider amending the proceedings to claim relief by way of setting aside the Settlement Agreement.

36    Further, the applicant sought to place before me new material that had not been before his Honour. I reject the applicant’s application to rely upon this new material. It is largely irrelevant and is sought to be put before me by the applicant on a misconceived premise. Further, for the material that was in existence at the time of the hearing before his Honour, no satisfactory reason has been advanced as to why it was not put before his Honour.

37    Further, as I have said earlier, the applicant has sought leave to put forward a proposed amended notice of appeal containing 48 proposed grounds of appeal. It is not useful for me to go through each one of them. In oral argument, the applicant’s “real” grounds of complaint were crystallised and have been addressed by me earlier. None of the proposed grounds of appeal have substance, whether the principal arguments addressed above or the lengthy grounds referred to in the proposed amended notice of appeal.

Conclusion

38    In summary, the applicant has not shown that his Honour’s decision was attended with any sufficient doubt such as to warrant the grant of leave to appeal.

39    Moreover, given the form of the orders sought in the originating process, the applicant has not in any event shown that he would suffer substantial injustice by my refusing leave, even if the decision below was incorrect.

40    The application for leave to appeal will be dismissed with costs.

Associate:

Dated:    24 March 2015