Federal Court of Australia

Haughton v Shanahan (No 2) [2024] FCA 350

ORDERS

THE COURT ORDERS THAT:

1.    The originating application is summarily dismissed.

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

REASONS FOR JUDGMENT

CHARLESWORTH J

1    The applicant, Mr Peter Scott Haughton, was made bankrupt by a sequestration order made on 8 June 2021 under the Bankruptcy Act 1966 (Cth). The order was made on the petition of a creditor, Mr Fui Sak Chang. The petition was founded on an award of damages made in Mr Chang’s favour in proceedings in the District Court of South Australia DCCIV-16-1461 (District Court Proceedings) culminating in Haughton v Chang [2020] SADC 94 (Judgment). A Registrar of this Court made the sequestration order in the exercise of powers conferred upon her under s 35A of the Federal Court of Australia Act 1976 (Cth) (FCA Act). The Registrar considered the Judgment to be sufficient proof of the existence of the debt upon which the petition was based.

2    By his originating application lodged on 3 April 2023 Mr Haughton seeks an order annulling his bankruptcy under s 153B of the Bankruptcy Act (Annulment Application). Under the heading “Claim for interim relief” he seeks further orders to the effect that the administration of his bankruptcy be suspended “pending resolution of the disputed matters” (at [1]) and to the effect that the Trustee of his bankrupt estate “show cause” why he has or has not done (or should not be compelled to do) certain things in the administration of the estate in connection with specific property (at [2] – [4]).

3    The Trustee is the first respondent. He applies for an order under s 31A(2) of the FCA Act and r 26.01 of the Federal Court Rules 2011 (Cth) that there be summary judgment against Mr Haughton “and the proceedings as against the First Respondent otherwise be dismissed”. Alternatively, the Trustee seeks an order that the originating application be dismissed under r 39.03 of the Rules or otherwise set aside under r 13.01.

4    Mr Chang is the second respondent. He joins in the Trustee’s application, adopts the submissions made in support of it and relies on brief supplementary submissions.

5    The Trustee’s application does not in terms extend to that part of Mr Haughton’s originating application in which he seeks (at [5] under the heading “Claim for interim relief”) this relief:

That [Mr Chang] show cause by affidavit or otherwise why the true facts regarding the dealings between the applicant and himself should not be determined by a retrial in the Federal Court of Australia and the ‘Kable Principle’ be extended to all courts exercising jurisdiction between Australians.

6    The argument underlying that claim is the same argument made by Mr Haughton in support of the Annulment Application and in opposition to the Trustee’s application for summary judgment. At the hearing, Mr Haughton confirmed that he did not oppose the Court considering whether that part of his claim for relief enjoys reasonable prospects of success.

7    I will deal with the Trustee’s application (as supported by Mr Chang) on the basis that it extends to both the Annulment Application and all of Mr Haughton’s claims for “interim relief”.

OUTCOME

8    For the reasons that follow the Annulment Application should be summarily dismissed under s 31A of the FCA Act on the basis that it does not have reasonable prospects of success and because it constitutes, in part, an abuse of this Court’s processes.

9    The claims for “interim relief” should also be summarily dismissed on the basis that on the material before me they do not enjoy sufficient prospects of success. In addition, the claims for relief in [2] – [4] are not interim in nature. They raise issues that may be agitated in fresh proceedings relating to the ongoing administration of the bankrupt estate, provided that there is a sufficient evidentiary basis to entertain them. The claim for relief in [5] should be summarily dismissed as a consequence of my acceptance of the Trustee’s arguments concerning the remainder of Mr Haughton’s claims.

10    For reasons published as Haughton v Shanahan [2024] FCA 160 (Haughton 1), I made orders striking out other parts of the originating application and removing another person as a party.

11    The appropriate order is that the originating application be dismissed as against both the Trustee and Mr Chang. The order does not prevent Mr Haughton from bringing properly constituted proceedings seeking such directions in connection with the ongoing administration of the bankrupt estate as he may have standing to bring.

EVIDENCE

12    The Trustee’s application is supported by an affidavit affirmed by him on 19 February 2024 together with written submissions.

13    Mr Haughton relied on eight affidavits sworn by him on 1 May 2023, 22 May 2023, 31 January 2024, 28 February 2024, 14 March 2024, 18 March 2024, 20 March 2024 and 27 March 2024, together with an affidavit of Mr Michael Thomas Holt sworn 31 January 2024.

14    In large parts the affidavits contain material in the nature of legal submissions and I have treated them as such. In other respects the affidavits disclose the issues Mr Haughton seeks to have resolved on the assumption that this Court can and would go behind the Judgment, including by hearing and resolving substantive allegations of wrongdoing against Mr Chang and other evidentiary issues. In the context of the Trustee’s application for summary judgment, those parts of Mr Haughton’s affidavits have been read for the purpose of discerning whether they disclose an arguable case for the annulment of his bankruptcy, considered at their highest. The Court has not read the affidavits for the purpose of resolving any substantive issue of fact arising in the original lease dispute between Mr Haughton and Mr Chang.

EARLIER PROCEEDINGS

15    This action is preceded by a history of dispute and litigation between Mr Haughton, Mr Chang and others. The whole of that history is relevant. The following narrative is drawn from the Trustee’s affidavit and is otherwise apparent from the various judgments and orders annexed to it.

16    The District Court Proceedings began their life in the Magistrate’s Court of South Australia in a suit brought by Mr Haughton against Mr Chang and his wife alleging the unlawful termination of a lease. It is common ground that the lease was in relation to land situated in Lonsdale in South Australia and that it permitted Mr Haughton to deposit agreed amounts of fill on the land. Mr Chang counterclaimed for damages flowing from an alleged breach of the lease by Mr Haughton.

17    The District Court Proceedings and the Judgment are otherwise summarised in the reasons of the Court of Appeal of the Supreme Court of South Australia in Haughton v Chang [2023] SASCA 112 (Livesey P, David JA) in terms that are not effectively challenged. I am satisfied that it is a correct summary and I gratefully adopt it:

Long running litigation between the parties

6    These parties have been engaged in litigation for some years.

7    The dispute arises out of a lease agreement they entered during 2013 by which the appellant leased land owned by the respondent and Ms Kiew at Liston Road in Lonsdale, south of Adelaide. After entry into the lease the appellant took possession of the land and commenced depositing landfill. He was required to make various payments on presentation of an invoice, including for rent. By 2015 the parties were in dispute over what the respondent and Ms Kiew claimed were late payments by the appellant. The respondent and Ms Kiew instructed their solicitors to terminate the lease agreement and serve a notice of re-entry, after which the locks were changed and possession was resumed.

8    The appellant commenced proceedings in the Magistrates Court in mid-2015 and these were transferred to the District Court in 2016. An initial trial listed in 2018 did not proceed and the trial was eventually listed to commence in late 2019. By that stage the appellant’s solicitors had been given leave to withdraw and the appellant sought an adjournment. Although that was opposed, the trial was relisted for hearing during mid-2020 with 10 days set aside.

9    By late 2019 the appellant was raising a number of constitutional challenges to the jurisdiction of the District Court to hear the case. After the appellant failed to attend two directions hearings, the trial commenced on 1 June 2020. According to the District Court judge who heard the trial, the appellant maintained his objection but did not intend to prosecute his claim:

Mr Haughton attended on the first day of trial with a large group of people that he described as amicus curae. Owing to the limited size of the courtroom, and COVID-19 social distancing requirements, it was necessary for a number of these to sit outside. This caused some contention but ultimately the matter commenced. It did not appear that Mr Haughton was hampered in his submissions by limiting the number of supporters in Court. At the outset, Mr Haughton sought to challenge the jurisdiction of the Court to hear this action. He did not explain why he had not raised this by way of application or amendment of his pleadings. When pressed he said that he did not intend to address or call any evidence concerning the substantive issues raised in his pleadings against the Changs. It was pointed out to Mr Haughton that he had issued the proceedings against Mr Chang and Ms Kiew; he had invoked the jurisdiction of the Court. Mr Haughton disputed this by saying ‘the jurisdiction is fraudulent and I found out after it was invoked by my lawyers’. There was considerably more in this vein. I attempted to have Mr Haughton articulate what his application was with limited success…

(Citation omitted)

10    Eventually the appellant declined to prosecute his action. He also declined to discontinue it. The judge gave the appellant some time to consider whether he would press his claim. He was warned that he was at risk of the claim being dismissed. In response, the appellant purported to serve criminal proceedings on the court, placing a large box of documents on the bar table. The appellant told the judge that he would see her in the Full Court of the Supreme Court of Victoria. Service was declined and the box was made available to the appellant for collection.

11    In the course of her reasons, the judge referred to other litigation in which the appellant had made similar arguments about jurisdiction. These arguments had previously been described as being ‘without merit’, ‘manifestly misconceived’ and ‘seriously legally flawed’. The judge agreed with these conclusions. In the face of the appellant’s failure to raise his jurisdictional issue in a proper form and his stated intention not to prosecute his claim, the judge dismissed the appellant’s claim.

12    A counterclaim was, however, pressed. Mr Chang and Ms Kiew were not legally represented and had an imperfect grasp of what was required to prove their counterclaim. The trial was adjourned for some days to give them an opportunity to seek legal advice. Despite his objections to the jurisdiction of the court, the appellant later attended and cross-examined the respondent and gave evidence in support of his own defence. After carefully considering the terms of the agreement and the evidence offered in support of the cross-claim, the trial judge gave judgment on the counterclaim in the sum of $364,988 inclusive of interest but in addition to costs.

13    The appeal against that judgment was dismissed. Doyle JA (with whom Bleby JA agreed) rejected the appellant’s allegations of perjury by the respondent:

Mr Haughton’s complaints appear to be two-fold. First, he contends that the trial Judge was led into error as a result of Mr Chang having committed perjury. In this regard, he seeks to rely on fresh evidence regarding the terrain of the Property; he contends that this evidence proves that Mr Chang gave dishonest evidence when he said that there was a functional fence on the Property at the time Mr Haughton took possession.

Secondly, Mr Haughton contends that the lease had been frustrated before the respondents had terminated the Agreement, due to issues with the stormwater connection on the Property. He again seeks to rely on fresh evidence, including photographs of the Property, documents produced by the Onkaparinga Council, and correspondence from the same.

Having reviewed the material filed by Mr Haughton, I do not think there is any merit in either of these challenges to the trial Judge’s decision. There is no basis in the material before the Court from which it could sensibly be inferred that Mr Chang gave dishonest evidence, nor is there any evidence to support Mr Haughton’s claim that the Agreement had been frustrated.

14    The Court refused to receive further evidence on appeal and refused the appellant an extension of time in which to appeal.

18    As can be seen, by the time of the trial on the counterclaim, Mr Haughton’s claim had been dismissed following his confirmation that he proposed to call no evidence on it.

19    Mr Chang’s case on the counterclaim consisted of oral evidence given by Mr Chang and several documents tendered by him. Mr Haughton defended the claim, tendering documents and cross-examining Mr Chang. On relevant factual disputes, the District Court Judge expressed a preference for the evidence of Mr Chang over that given by Mr Haughton. Damages were awarded on the counterclaim.

20    The Official Receiver issued a Bankruptcy Notice in respect of the Judgment. Following service of the Bankruptcy Notice, Mr Haughton made no application to extend the period for compliance, nor did he make any application for an order setting the Bankruptcy Notice aside, nor did Mr Haughton pay the amount specified in the Bankruptcy Notice or any lesser amount.

21    On 7 April 2021, Mr Chang filed a creditor’s petition in this Court in action SAD 48/2021 (Sequestration Proceedings).

22    In opposition to the petition, Mr Haughton contended that he ought not have been made personally liable for damages in the District Court Proceedings because he had entered the lease in his capacity as the trustee of a family trust. He made oral submissions to the same effect on the hearing of Mr Chang’s petition. The Registrar rejected them.

23    On 17 June 2021, Mr Haughton commenced an appeal to the Supreme Court of South Australia (or a least an application for an extension of time in which to commence such an appeal) from the Judgment given in the District Court Proceedings. Whilst the appeal proceedings were on foot, Mr Haughton filed two actions in this Court.

24    By an application commenced on 21 June 2021, Mr Haughton sought a stay of the sequestration order. On 2 July 2021, White J dismissed that application under r 5.23 of the Rules because of Mr Haughton’s default in complying with orders for the filing of affidavit material and because of his failure to attend the hearing:  Chang v Haughton, in the matter of Haughton [2021] FCA 765.

25    Then, about a month later, Mr Haughton filed an interlocutory application in the Sequestration Proceedings by which he sought an order that “the Sequestration Order … be dismissed without prejudice”. In that action, he alleged that the Bankruptcy Notice on which the petition was based had not been properly served. In addition, he challenged the correctness of the Judgment in the District Court Proceedings. That application was dismissed by White J on 13 August 2021:  Chang v Haughton, in the matter of Haughton (No 2) [2021] FCA 998.

26    In his reasons for judgment, White J observed that on his earlier application for a stay, the Court had drawn Mr Haughton’s attention to the Court’s power to set aside the order of a Registrar on a review under s 35A of the FCA Act and the timeframes in which such an application should be made. He was urged to obtain legal advice. He was also referred to the judgment of Du Bray v ACW [2020] FCA 1142 concerning the Court’s power to grant a stay of the kind he had sought.

27    His Honour said that Mr Haughton had not sought to invoke the review procedure. His Honour said that the Court did not have the power to rescind, discharge or suspend the operation of a sequestration order, other than in a case where an appeal against the sequestration order has been commenced. He also observed that whilst the Court had the power to annul a bankruptcy under s 153B of the Bankruptcy Act, Mr Haughton had made no such application and, in any event, he had not demonstrated that in the circumstances before the Registrar the sequestration order ought not have been made.

28    His Honour went on to observe that the application had been made in a proceeding that had been concluded, but it was unnecessary to express a concluded view about whether that could be done because there were discretionary considerations favouring its dismissal. In that respect, his Honour said (at [18]) that “[t]he proper place for Mr Haughton to have sought dismissal of the applicants’ creditors’ petition was at the hearing on 8 June 2021 before the Registrar”. His Honour also observed that at the first return of the creditors’ petition on 25 May 2021, the Registrar had directed Mr Haughton, who was then in attendance and had raised issues about the manner in which he had been served with the Bankruptcy Notice, to file any notice of opposition and affidavit in support by a fixed date, and specifically to explain why he asserted that he had not been properly served with the Bankruptcy Notice and the creditors’ petition. His Honour said that the affidavit filed by Mr Haughton did not address those issues, and that he had had ample opportunity to bring issues concerning service to the Registrar’s attention before the sequestration order was made but had not done so. His Honour went on to reject Mr Haughton’s arguments alleging defects in service on their substantive merits.

29    Justice White also noted that appeal proceedings had been commenced by Mr Haughton in the Supreme Court of South Australia. The commencement of the appeal, he said, was not an event conferring power on this Court to stay the operation of a sequestration order. His Honour observed that the Court would have the power to grant a stay had Mr Haughton commenced an application for review of the sequestration order under s 35A(5) of the FCA Act but he had not done so, notwithstanding the guidance that had been provided to him on the earlier stay application.

30    On 2 September 2021, Mr Haughton's application for an extension of time in which to appeal from the Judgment was dismissed by the Court of Appeal:  Haughton v Chang [2021] SASCA 90, Doyle JA (which whom Bleby JA agreed) rejected allegations of perjury Mr Haughton had directed toward Mr Chang, as follows:

44    Mr Haughton’s complaints appear to be two-fold. First, he contends that the trial Judge was led into error as a result of Mr Chang having committed perjury. In this regard, he seeks to rely on fresh evidence regarding the terrain of the Property; he contends that this evidence proves that Mr Chang gave dishonest evidence when he said that there was a functional fence on the Property at the time Mr Haughton took possession.

45    Secondly, Mr Haughton contends that the lease had been frustrated before the respondents had terminated the Agreement, due to issues with the stormwater connection on the Property. He again seeks to rely on fresh evidence, including photographs of the Property, documents produced by the Onkaparinga Council, and correspondence from the same.

46    Having reviewed the material filed by Mr Haughton, I do not think there is any merit in either of these challenges to the trial Judge’s decision. There is no basis in the material before the Court from which it could sensibly be inferred that Mr Chang gave dishonest evidence, nor is there any evidence to support Mr Haughton’s claim that the Agreement had been frustrated.

31    The Court of Appeal refused Mr Haughton’s application to rely on additional evidence.

32    Mr Haughton laid an Information in the Magistrate’s Court of South Australia by way of a private prosecution against Mr Chang and his wife (Action No MCCRM-23-006509). That action was permanently stayed by a Magistrate. On 11 October 2023, the Court of Appeal dismissed an appeal from the order of the Magistrate:  Haughton v Chang.

LEGISLATION AND PRINCIPLES

Bankruptcy Act

33    An Official Receiver may issue a Bankruptcy Notice on the application of a creditor who has obtained (relevantly) a final judgment or order that is of a prescribed kind and that is for an amount of at least the statutory minimum:  Bankruptcy Act, s 41(1).

34    The Court may, on a petition presented by a creditor, make a sequestration order against the estate of the debtor where, among other things, a debtor has committed an act of bankruptcy:  Bankruptcy Act, s 43(1)(a). Under s 40(1)(g) of the Bankruptcy Act, a debtor commits an act of bankruptcy if he or she does not comply with the requirements of a Bankruptcy Notice or:

… satisfy the Court that he or she has a counter-claim, set-off or cross demand equal to or exceeding the amount of the judgment debt or sum payable under the final order, as the case may be, being a counter-claim, set-off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained.

35    Section 41 of the Bankruptcy Act contains the following:

(5)    A bankruptcy notice is not invalidated by reason only that the sum specified in the notice as the amount due to the creditor exceeds the amount in fact due, unless the debtor, within the time fixed for compliance with the notice, gives notice to the creditor that he or she disputes the validity of the notice on the ground of the misstatement.

(6)    Where the amount specified in a bankruptcy notice exceeds the amount in fact due and the debtor does not give notice to the creditor in accordance with subsection (5), he or she shall be deemed to have complied with the notice if, within the time fixed for compliance with the notice, he or she takes such action as would have constituted compliance with the notice if the amount due had been correctly specified in it.

(6A)    Where, before the expiration of the time fixed for compliance with a bankruptcy notice:

(a)    proceedings to set aside a judgment or order in respect of which the bankruptcy notice was issued have been instituted by the debtor; or

(b)    an application has been made to the Court to set aside the bankruptcy notice;

the Court may, subject to subsection (6C), extend the time for compliance with the bankruptcy notice.

(6C)    Where:

(a)    a debtor applies to the Court for an extension of the time for complying with a bankruptcy notice on the ground that proceedings to set aside a judgment or order in respect of which the bankruptcy notice was issued have been instituted by the debtor; and

(b)    the Court is of the opinion that the proceedings to set aside the judgment or order:

(i)    have not been instituted bona fide; or

(ii)    are not being prosecuted with due diligence;

the Court shall not extend the time for compliance with the bankruptcy notice.

36    Section 86 of the Bankruptcy Act provides:

(1)    Subject to this section, where there have been mutual credits, mutual debts or other mutual dealings between a person who has become a bankrupt and a person claiming to prove a debt in the bankruptcy:

(a)    an account shall be taken of what is due from the one party to the other in respect of those mutual dealings;

(b)    the sum due from the one party shall be set off against any sum due from the other party; and

(2)    A person is not entitled under this section to claim the benefit of a set-off if, at the time of giving credit to the person who has become a bankrupt or at the time of receiving credit from that person, he or she had notice of an available act of bankruptcy committed by that person.

37    As I explained in Haughton 1, s 86 is a provision concerned with the proof of debts within the administration of a bankrupt estate. It is not a provision that affects rights and liability as between a creditor and debtor prior to a judgment debt coming into existence or a sequestration order being made.

38    Section 52(1)(c) of the Bankruptcy Act provides that at the hearing of a creditor’s petition, the Court shall require proof of matters stated in the petition, service of the petition and “the fact that the debt or debts on which the petitioning creditor relies is or are still owing”.

39    The Court may dismiss the petition if it is not satisfied with the proof of those matters, or if the Court is satisfied by the debtor that he or she is able to pay his or her debts or that, “for other sufficient cause the sequestration order ought not to be made”:  Bankruptcy Act, s 52(2).

40    As to proof of the existence of the debt, in Shaw v Yarranova Pty Ltd (No 2) (2017) 252 FCR 267, the Full Court said (at [16]):

The requirement that the creditor prove that the debt relied upon is still owing will ordinarily be more easy to fulfil in respect of a judgment debt, the judgment being prima facie evidence of the debt:  Corney v Brien (1951) 84 CLR 343 (Corney) at 355 (Fullagar J). The Court nonetheless has the power to go ‘round the judgment’, to enquire into its subject matter, so as to satisfy itself that the creditor’s petition is founded on a ‘good debt’:  Dean v Pepper Finance Corporation Ltd [2016] FCA 648 at [43] (Katzmann J); see also Corney at 347 (Dixon, Williams, Webb and Kitto JJ), 353 - 354 (Fullagar J).

41    In Wren v Mahony (1972) 126 CLR 212, Barwick CJ (at 224 – 225 citing Lord Esher’s speech in Re Flatau; Ex parte Scotch Whisky Distillers Ltd (1888) 22 QBD 83 at 85-86) explained that a judgment debt is “never conclusive in bankruptcy”, that the Court always has the power to go behind it “and, if the case was a proper one, should do so”. His Honour said that judgment debt may not always represent itself as the relevant debt of a petitioning creditor, even though under the general law the prior existing debt has merged in a judgment. His Honour continued (at 224):

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.

42    The emphasis, his Honor said, was upon the “need to have satisfactory proof of the petitioning creditor’s debt”. The Court’s discretion to accept the judgment of satisfactory proof of that debt would not be 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”.

43    Having cited those passages, the Full Court in Shaw said that where substantial reasons are asserted for going behind the judgment, the Court should engage in a preliminary investigation about the merits of the attack that is made. The invitation to go behind the judgment may be rejected at that preliminary stage. However, as Fullagar J said in Corney v Brien (1951) 84 CLR 343 (at 358) if the Court decides it will go behind the judgment, the whole of the matter is open.

44    On a bankruptcy founded on a creditor’s petition, the power to annul under s 153B of the Bankruptcy Act may only be exercised if the Court is satisfied that the sequestration order “ought not to have been made”. In Re Frank, ex parte Piliszky (1987) 16 FCR 396 Fisher J considered the meaning of the word “ought” as it appeared in a statutory predecessor to s 153B, expressed in similar terms. His Honour said that the word should be strictly construed given the variety of mechanisms by which a person affected by the order may seek to have it revoked or otherwise set aside (including by way of appeal or revocation before the order is sealed). The word “ought”, his Honour said had imperative significance:  the bankruptcy should not be annulled unless the judge was, in the circumstances, bound not to make it “and even then there is a residual discretion not to annul”. His Honour said (at 403):

In circumstances where it was open to a judge to make [a sequestration order] in the exercise of his discretion, it can only be said he ‘ought not to have made the order’ if none of the circumstances could justify the making of an order. Alternatively it can be established that an order ‘ought’ not to have been made because subsequent evidence discloses that all of the true facts were not before the court when the order was made:  Re Cook (1946) 13 ABC 245 at 249.

45    To that statement of principle, the Full Court in Shaw added the following (at [22]):

Where, as here, a judge hearing the application for a sequestration order has declined to go behind a judgment that evidences or constitutes a petitioner’s debt, the bankrupt will face a significant hurdle in demonstrating that the Court should do so on a subsequent annulment application. That is particularly so where, as here, the judge hearing the creditor’s petition determined not to go behind the judgment and that determination has been unsuccessfully challenged on an appeal. In those circumstances, it will be necessary to show that there is evidence in existence that was not before the judge who made the sequestration order and that that judge would have been bound, in the face of that evidence, not to make the sequestration order. In other words, an annulment application is not an occasion for a bankrupt to have the question of whether to go behind the judgment considered anew, as though the proceedings on the creditor’s petition and the subsequent appeal had never occurred. Nor is an annulment application an occasion to seek to obtain, by compulsory processes, evidence that might sway the judge on the annulment application to a different view from that reached by the judge who made the sequestration order. A bankrupt who alleges grounds for the annulment of his or her bankruptcy should not advance grounds for annulment that cannot be proven by evidence already known to, or in the possession of, the bankrupt. That is particularly so when the grounds for annulment include allegations of fraud or other wrongdoing. The annulment proceedings ought not to be commenced in the hope that such evidence might somehow emerge, by compulsive processes or otherwise.

The FCA Act and the Rules

Powers of Registrars

46    A Registrar may exercise a power of the Court prescribed by the Rules, if the Court or a Judge so directs:  FCA Act s 35A(2). The power in s 52 of the Bankruptcy Act is one of those prescribed powers:  r 2.02 and item 9 of Sch 1 of the Federal Court (Bankruptcy) Rules 2016 (Cth). A party to proceedings in which a Registrar has exercised that power may, within the time specified by the Rules (or within such further time as may be allowed by them), apply to the Court to review the exercise of the power. The Court may, on such an application (or of its own motion) review the exercise of the power and may make such order or orders it thinks fit with respect to the matter:  FCA Act, s 35A(6). A review under s 35A(6) is in the nature of a hearing de novo:  Deputy Commissioner of Taxation v Vasiliades [2015] FCA 1190.

47    In Harris v Caladine (1991) 172 CLR 84, Mason CJ and Deane J (at 95) identified conditions on the legislative power of the Parliament to authorise the exercise the powers and functions of the (then) Family Court of Australia by persons other than Justices appointed under Chapter III of the Constitution. The same principles apply to the powers and functions of this Court.

48    Their Honours explained that it was not the case that the powers and functions of a Chapter III Court could not be exercised at all by non-judicial officers of the Court. Their Honours explained (at 95):

It seems to us that, so long as two conditions are observed, the delegation of some part of the jurisdiction, powers and functions of the Family Court as a federal court to its officers is permissible and consistent with the control and supervision of the Family Court’s jurisdiction by its judges. The first condition is that the delegation must not be to an extent where it can no longer properly be said that, as a practical as well as a theoretical matter, the judges constitute the court. This means that the judges must continue to bear the major responsibility for the exercise of judicial power at least in relation to the more important aspects of contested matters. The second condition is that the delegation must not be inconsistent with the obligation of a court to act judicially and that the decisions of the officers of the court in the exercise of their delegated jurisdiction, powers and functions must be subject to review or appeal by a judge or judges of the court. For present purposes it is sufficient for us to say that, if the exercise of delegated jurisdiction, powers and functions by a court officer is subject to review or appeal by a judge or judges of the court on questions of both fact and law, we consider that the delegation will be valid. Certainly, if the review is by way of hearing de novo, the delegation will be valid. The importance of insisting on the existence of review by a judge or an appeal to a judge is that this procedure guarantees that a litigant may have recourse to a hearing and a determination by a judge. In other words, a litigant can avail him or herself of the judicial independence which is the hallmark of the class of court presently under consideration.

49    It is well established that the provisions that operate to delegate powers upon Registrars of this Court fulfil the conditions discussed in Harris v Caladine. It cannot reasonably be argued otherwise.

Summary dismissal

50    Section 31A of the FCA Act provides:

(1)    The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:

(a)    the first party is prosecuting the proceeding or that part of the proceeding; and

(b)    the Court is satisfied that the other party has no reasonable prospect of successfully defending the proceeding or that part of the proceeding.

(2)    The Court may give judgment for one party against another in relation to the whole or any part of a proceeding if:

(a)    the first party is defending the proceeding or that part of the proceeding; and

(b)    the Court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceeding or that part of the proceeding.

(3)    For the purposes of this section, a defence or a proceeding or part of a proceeding need not be:

(a)    hopeless; or

(b)    bound to fail;

for it to have no reasonable prospect of success.

(4)    This section does not limit any powers that the Court has apart from this section.

(5)    This section does not apply to criminal proceedings.

51    Rule 26.01 of the Rules provides an additional source of power to dismiss a proceeding without conducting a trial of the issues. It provides:

(1)    A party may apply to the Court for an order that judgment be given against another party because:

(a)    the applicant has no reasonable prospect of successfully prosecuting the proceeding or part of the proceeding; or

(b)    the proceeding is frivolous or vexatious; or

(c)    no reasonable cause of action is disclosed; or

(d)    the proceeding is an abuse of the process of the Court; or

(e)    the respondent has no reasonable prospect of successfully defending the proceeding or part of the proceeding.

(2)    The application must be accompanied by an affidavit stating:

(a)    the grounds of the application; and

(b)    the facts and circumstances relied on to support those grounds.

(3)    The application and the accompanying affidavit must be served on the party against whom the order is sought at least 14 days before the hearing of the application.

(4)    If an order is made under subrule (1) dismissing part of the proceeding, the proceeding may be continued for that part of the proceeding not disposed of by the order.

(5)    If an order is made under subrule (1) giving judgment for the applicant against the respondent for the whole or part of the applicant’s claim, a respondent who has a cross-claim against the applicant or some other party may:

(a)    continue to prosecute the cross-claim against the applicant or other party; and

(b)    apply to the Court for an order staying execution on or enforcement of the judgment until the respondent’s cross-claim is determined.

Note: See also section 31A of the Act.

52    The principles for determining whether a proceeding has reasonable prospects of success were helpfully summarised by Wigney J in Mineralogy Pty Ltd v Australian Securities and Investments Commission (2021) 156 ACSR 508, as follows:

119    Summary judgment may be given against an applicant pursuant to r 26.01 of the Rules if, amongst other things, the applicant has ‘no reasonable prospect of successfully prosecuting the proceeding’, or ‘no reasonable cause of action is disclosed’, or the ‘proceeding is an abuse of the process of the Court’. It suffices to make the following short points concerning these grounds for summary dismissal.

120    First, an applicant may have no reasonable prospect of successfully prosecuting the proceeding even if it cannot be concluded that the proceeding is hopeless or bound to fail:  Spencer v Commonwealth (2010) 241 CLR 118; 269 ALR 233; [2010] HCA 28 at [17] (Spencer) (French CJ and Gummow J). Although the Court in Spencer was considering the principles applicable in the context of s 31A of the Federal Court Act, rather than r 26.01 of the Rules, those ‘provisions contain identical tests’:  Zippo Manufacturing Co v Jaxlawn Pty Ltd [2011] FCA 1125 at [20] (Gordon J). The relevant inquiry is ‘not an enquiry directed to whether a certain and concluded determination could be made that the proceeding would necessarily fail’:  Spencer at [52] (Hayne, Crennan, Kiefel and Bell JJ).

121    Second, a ‘reasonable cause of action’, for the purposes r 16.21 of the Rules, is a cause of action that has some chance of success having regard to the allegations pleaded:  Polar Aviation Pty Ltd v Civil Aviation Safety Authority (2012) 203 FCR 325; [2012] FCAFC 97 at [42]–[43]; Chandrasekaran v Commonwealth (No 3) [2020] FCA 1629 at [102], [108]–[111]. It is difficult to see why a ‘reasonable cause of action’ for the purposes of r 26.01(1)(c) of the Rules would have any different meaning.

122.    Third, the concept of abuse of process is flexible and ‘insusceptible of a formulation which comprises closed categories’:  Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; 323 ALR 1; [2015] HCA 28 at [25]. It applies in any circumstances in which the Court’s processes are used for an illegitimate purpose, or are used in a way which would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute:  Rogers v R (1994) 181 CLR 251 at 255–6, 286; 123 ALR 417 at 419–20, 444.

123    Fourth, the ‘exercise of powers to summarily terminate proceedings must always be attended with caution’, whatever may be the basis upon which that disposition is sought:  Spencer at [24] (French CJ and Gummow J). It is not a power to be exercised lightly:  Spencer at [60] (Hayne, Crennan, Kiefel and Bell JJ). There must be a ‘high degree of certainty about the ultimate outcome of the proceeding if it were allowed to go to trial in the ordinary way”:  Batistatos v Roads and Traffıc Authority (NSW) (2006) 226 CLR 256; 227 ALR 425; 45 MVR 288; [2006] HCA 27 at [46], citing Agar v Hyde (2000) 201 CLR 552; 173 ALR 665; [2000] HCA 41 at [57], referred to in Spencer at [24] (French CJ and Gummow J).

53    As to the characterisation of a proceeding as frivolous or vexatious or an abuse of the processes of the Court, see McDonald v Colbran [2019] FCA 1937 (at [46]) and the cases cited therein.

The Judiciary Act

54    Under s 78B of the Judiciary Act 1903 (Cth), in a proceeding involving a matter arising under the Constitution or involving its interpretation, a court has a duty not to proceed in the cause unless the Court is satisfied that notice of the matter has been given to the Attorneys-General of the Commonwealth and the States and a reasonable time has passed to facilitate their intervention. Mr Haughton informed the Court that he had issued such notices. Whether or not that has occurred, I do not consider that the matters raised by Mr Haughton in this proceeding invoke the duty under s 78B of the Judiciary Act. As French J said in Australian Competition and Consumer Commission v CG Berbatis Holdings Pty Ltd (1999) 95 FCR 292 (at [14]):

Section 78B does not impose on the Court a duty not to proceed pending the issue of a notice no matter how trivial, unarguable or concluded the constitutional point may be. If the asserted constitutional point is frivolous or vexatious or raised as an abuse of process, it will not attach to the matter in which it is raised the character of a matter arising under the Constitution or involving its interpretation – Nikolic v MGIC Ltd [1999] FCA 849; cf Australian Securities and Investments Commission v White (unreported, Federal Court, Drummond J, No QG 40 of 1998, 16 July 1998).

55    See also Barkla v Allianz Australia Insurance Limited [2018] FCA 2070 (at [124]).

56    As will become apparent, the present case is one in which the Constitutional points raised by Mr Haughton are either incomprehensible or inarguable.

SUMMARY OF SUBMISSIONS

57    The Trustee’s principal submission is that the material filed by Mr Haughton discloses no reasonable basis for the relief sought, having regard to the issues to be determined on an application under s 153B of the Bankruptcy Act. In addition, he submits that this proceeding more broadly should be characterised as frivolous and vexatious, including because it is an attempt to re-agitate matters that have either been determined against Mr Haughton in the past or that he had every opportunity to raise at various junctures before and after his bankruptcy, which occurred nearly three years ago. The Trustee submits that the “an obvious res judicata arises” in respect of some matters that Mr Haughton seeks to have determined in this action specifically disputed questions of fact and law that merged in the Judgment.

58    Mr Haughton’s position is that there is no proper basis for summary dismissal and that the Court should entertain the substance of his case concerning injustices that he claims arose in the District Court Proceedings and in the Sequestration Proceedings. He referred to an unresolved interlocutory application by which he sought orders against Mr Chang for the production of documents which, he submitted, would put a lie to the evidence Mr Chang had given in earlier proceedings. In accordance with the principles stated by the Full Court in Shaw (extracted at [45] above) I do not consider the existence of that unresolved interlocutory application to be of assistance to Mr Haughton in opposing the application for summary judgment.

59    The affidavits upon which Mr Haughton relies contain a mix of submissions and factual assertions that can broadly be summarised as giving rise to the following contentions:

(1)    the Registrar did not have the power to make the sequestration order;

(2)    the District Court did not have jurisdiction to hear and determine the matter in which the Judgment was given;

(3)    Mr Chang committed 50 acts of perjury in the District Court Proceedings for which he is criminally liable to pay a penalty in the amount of $156,800,000;

(4)    the District Court judge failed to apply s 86 of the Bankruptcy Act and so failed to have regard to mutual dealings between Mr Haughton and Mr Chang and to set off the amounts owed by each to the other;

(5)    the Judgment and the sequestration order were arbitrary;

(6)    this Court was bound to go behind the Judgment and in doing so was bound under the Constitution to conduct a trial by jury; and

(7)    an affidavit filed in the proceeding constituted an Information for the purposes of the Crimes Act 1914 (Cth) necessitating this Court to conduct a criminal trial, also by jury.

60    The affidavits also contain allegations of dishonesty and corruption directed to various courts and politicians. They are lacking in content and I have understood them as in the nature of a summation of Mr Haughton’s sense of grievance that various courts have thus far failed to recognise any merit in his claims.

CONSIDERATION

61    The submission that the Registrar lacked the power to make the sequestration order was based on R v Davison (1954) 90 CLR 353. It cannot enjoy reasonable prospects of success given the later authorities concerning the question and the availability of an avenue for de novo review.

62    In considering Mr Haughton’s affidavits and submissions I have otherwise borne in mind that he is a self-represented litigant. The materials reflect that status. They are replete with legal language but in many respects the points he seeks to make are incomprehensible or demonstrate a fixation on matters that (as explained below) cannot assist him in the present proceeding. Mr Haughton’s submissions otherwise betrayed a belief that this Court’s jurisdiction can be invoked as a means of redress against his perceived adversaries, including for the purpose of securing criminal convictions and orders for the imposition of penalties.

63    These are not criminal proceedings. The issue in dispute is whether this Court should exercise the jurisdiction under s 153B of the Bankruptcy Act.

64    Nor is the proceeding constituted as an application for review of the Registrar’s decision and there is no proper basis for treating it as such. The absence of an application for review is to be understood against the reasons of White J discussed earlier in these reasons. They record that Mr Haughton has previously been given guidance about s 35A of the FCA Act, and the reasons themselves repeat that guidance. Mr Haughton has had the benefit of those reasons for some years now. Against that background, I consider it neither necessary nor appropriate to repeat the guidance previously given to Mr Haughton, notwithstanding his status as an unrepresented litigant. Whether this action enjoys reasonable prospects of success is a question to be determined having regard to the conditions on the power under s 153B of the Bankruptcy Act, as summarised earlier in these reasons.

Going behind the Judgment

65    On an annulment application the Court may receive evidence that was not before the Registrar or Judge who made the sequestration order. However, in determining whether the sequestration order ought not to have been made, it is relevant to consider the evidence and submissions upon which the bankrupt relied in opposing the petition.

66    The Trustee deposed that the Registrar had provided Mr Haughton with an opportunity to file evidence in opposition. The material that he filed is now annexed to the Trustee’s affidavit. At the hearing of the present application, Mr Haughton did not adduce evidence to show that the Trustee’s description of what occurred in Sequestration Proceedings was inaccurate or incomplete.

67    The affidavit relied upon by Mr Haughton in opposition to the petition was short. It was confined in its subject matter to an assertion that he was not personally liable in debt to Mr Chang, because he was not party to the lease in his personal capacity but rather as the trustee of a family trust. He annexed an extract from the Judgment together with correspondence directed to the Registrar of the District Court requesting that the record of that Court be corrected to correctly identify him as having been sued in his capacity as a trustee.

68    To the extent that Mr Haughton relies upon the same contention for any purpose in support of the Annulment Application it has no reasonable prospects of success. The Registrar was plainly correct to proceed on the basis that a trustee is personally liable for the debts of the trust, although a trustee may turn to the trust to be indemnified in respect of such debts:  QB4 Capital Pty Limited v Guardian Securities Limited [2023] FCAFC 72; 411 ALR 496, Moshinsky, Stewart and Jackman JJ at [90] and the cases cited therein.

69    Mr Haughton’s affidavit in the Sequestration Proceedings is relevant for what it does not contain. Critically, Mr Haughton advanced no reason for the Registrar to go behind the Judgment other than the argument based on his status as trustee. In those circumstances, the Registrar could be under no obligation to consider any of the matters now raised by Mr Haughton in seeking to annul his bankruptcy:  she was entitled to act on the Judgment as proof of the debt and she implicitly did so. Nothing adduced by Mr Haughton in this proceeding supports a claim that the Registrar ought to have considered the exercise of her discretion to go behind the Judgment of her own volition, nor that the exercise of any discretion not to go behind the Judgment miscarried. The judgment followed contested litigation in which Mr Haughton had every opportunity to make forensic choices to prosecute his claim (or not prosecute it as the case may be) and to defend the counterclaim. There was nothing before the Registrar to suggest otherwise.

70    In addition, it has not been shown that the matters now put forward as a basis for going behind the Judgment were not known to Mr Haughton at the time of the Sequestration Proceedings. As I have mentioned, he did not make any application to set aside the Bankruptcy Notice on the basis of matters then known to him. Had he done so, it would have been necessary for him to demonstrate, in accordance with s 40(1)(g) of the Bankruptcy Act, that the array of counterclaims, set-offs and defences could not have been erected in the proceeding in which the Judgment was made. In addition, to the extent that the matters raised by him to only part of the assessment of damages culminating in the Judgment, Mr Haughton did not comply with s 41(5) and (6) of the Bankruptcy Act but instead persists with his assertion that there is no debt owing at all.

71    In oral submissions Mr Haughton acknowledged that he sought to use this proceeding to raise some evidentiary matters that he chose not to raise in the District Court Proceedings. He acknowledged that he had adduced no evidence on his claim against Mr Chang for breach of the lease by wrongful termination, and accepted that he had relied solely on his contention that the District Court lacked jurisdiction to hear his own claim (and presumably Mr Chang’s counterclaim). He characterised that choice as a “minor error” and complained that he should not be made bankrupt as a consequence of it.

72    Whether Mr Haughton’s choice should be characterised as a “minor error” is not to the point. For whatever reason, he considered it advantageous to adduce no evidence in his own case against Mr Chang. There is nothing to suggest that that decision resulted from any act or omission of the District Court or Mr Chang. There is no reasonable basis to conclude that the Court should or would now exercise any discretion to entertain such arguments now, especially given the appeal proceedings referred to earlier in these reasons and their outcomes.

73    Mr Haughton’s assertion that the District Court did not have jurisdiction to hear and determine his claim and Mr Chang’s counterclaim is a curious one, given that he invoked the jurisdiction of a State court in pursuit of damages against Mr Chang. He told this Court that the argument he raised before the District Court was based on the illegitimacy of laws known as the Australia Acts.

74    In Commonwealth Bank of Australia v Haughton [2020] SASC 135, Livesey J (then sitting as a justice of the Supreme Court of South Australia) dealt with arguments raised by Mr Haughton as “preliminary matters”. They included an argument summarised by his Honour (at [27]) as follows:

Speaking generally, Mr Haughton and his ‘group of friends’ believe that there have, since 1945, been a series of legally significant events. These include that Australia remains under the trusteeship of the United Nations, that the Honourable RJ Hawke AC and others were ineligible to sit in the Commonwealth Parliament when significant decisions were taken during the 1980s and 1990s (including the ‘sale’ of the bank), that the bank’s Memorandum and Articles of Association were not validly signed, that the Australia Acts of 1986 were passed without the necessary referenda and that all laws since passed (whether state or federal) are invalid, and that the Commonwealth of Australia is in fact a privately owned corporation based in the United States of America with the result that I and other judges are paid by a foreign power.

(footnote omitted)

75    That argument has several similar features to the material contained in the affidavits before me, including the affidavit of Mr Holt. In this proceeding, I have cautioned Mr Haughton that should he make a single submission to the effect that this Court does not have the jurisdiction to hear and determine the claims for relief set out in his own originating application I could and would exercise this Court’s power to summarily dismiss his action as an abuse of process without further notice to him. His oral submissions before me were confined to matters said to affect the jurisdiction of State courts.

76    Livesey J said that the relevance of the arguments based on the invalidity of the Australia Acts to the claim then brought by the Commonwealth Bank of Australia against Mr Haughton was unclear. His Honour said (at [44]):

…  The High Court has made it plain, then and subsequently, that the Australia Acts were valid and the continuance of the Constitution of this State pursuant to s 106 was subject to any Commonwealth law enacted pursuant to a grant of legislative power under s 51(xxxviii) of the Constitution. Section 6 of the Australia Act 1986 (Cth) was not an attempt to alter ss 106 or 107 other than in accordance with the procedures required by s 128.

(footnote omitted)

77    His Honour cited the reasons of Gleeson CJ, Gummow, Hayne and Heydon JJ in Attorney-General (WA) v Marquet (2003) 217 CLR 545 at [70], which he said was binding on him as seriously considered dicta in accordance with the principle stated in Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89, Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ (at [134]).

78    I respectfully agree with that approach and I adopt it.

79    In any event, Mr Haughton’s claims based on the jurisdiction of the District Court were agitated on his belated appeal from the Judgment and rejected as unmeritorious. To the extent that he claimed that the District Court Judge was obliged to refer the question to the High Court, that submission must be understood in the context of Mr Haughton’s right to appeal from the Judgment and, if unsuccessful, to seek special leave from the Judgment of the Court of Appeal.

80    In any event, Mr Haughton did not explain how the arguments founded on the Australia Acts could affect the common law of contract as it applied to the lease between him and Mr Chang, nor is it apparent how the arguments provide a basis for finding that the Annulment Application more broadly enjoys reasonable prospects of success.

81    The second aspect of the jurisdiction argument is that the District Court was not constituted in a way that complied with the principles discussed by the High Court in Kable v Director of Public Prosecutions (NSW) (1996) 189 CLR 51. Mr Haughton submitted that those principles required that the District Court be comprised of three judges rather than a single judge. Mr Haughton’s submissions did not explain how that proposition can be drawn from Kable. The submissions are incomprehensible and I am not satisfied the point is arguable.

82    I do not consider it necessary to characterise the circumstances as giving rise to a res judicata. It is well established that a person opposing a creditor’s petition founded on a judgment debt may invite the Court to go behind the judgment in order to identify the relevant debt, notwithstanding that the original claim in debt owing under a contract may have merged in a judgment. Given that legal framework I would hesitate to describe such an invitation as an abuse of process in every case, or as otherwise offending the principles of res judicata. It is enough to conclude that in the circumstances of the present case, the Trustee has discharged his onus of showing that Mr Haughton does not have reasonable prospects of succeeding on his application for annulment under s 153B of the Bankruptcy Act.

83    I will now explain that conclusion by reference to more specific issues raised by Mr Haughton in relation to the District Court Proceedings.

Unlawful termination of the lease

84    In the District Court Proceedings, Mr Haughton alleged that the lease had been terminated on a wrong factual basis concerning the amount of fill he had deposited on the land. He also alleged that Mr Chang had wrongfully denied him possession of the land by locking the gate in circumstances where termination of the lease was subject to a notice period that had not expired. Arguments of that kind could have been advanced by Mr Haughton on his claim, which was dismissed as a natural consequence of his choice not to adduce evidence. The Judgment followed a contested hearing on the counterclaim. In the circumstances described, there is no arguable basis for this Court to now find that the sequestration order ought not to have been made. That is especially so in circumstances where the Registrar was not asked to hear arguments and receive evidence of the kind Mr Haughton chose not to advance in support of his own claim in the District Court Proceedings.

Land tax

85    Mr Haughton submitted (correctly) that the Judgment reflects damages assessed by reference to (in part) rental payments owing on the lease. He submitted that the lease was governed by the Retail and Commercial Leases Act 1995 (SA), s 30 of which provides:

(1)    A retail shop lease cannot require the lessee to pay land tax or to reimburse the lessor for the payment of land tax.

(2)    However, the lessor’s liability for land tax in respect of the premises may be taken into account in the assessment of rent.

(3)    This section does not apply to a retail shop lease entered into before a date fixed by regulation for the purposes of this section.

86    On the material before me there is no arguable basis to find that this provision had any application in the lease entered into with Mr Chang. Even if it did, subs (2) permits for the amount of rent to be fixed having regard to the amount of land tax. Under the lease (now in evidence before me) the rent was calculated in a way that included a sum equivalent to half of the land tax payable by Mr Chang in relation to the land. The assessment of rent under the lease in question permissibly took into account the lessor’s liability for land tax in accordance with subs (2).

87    Moreover, even if Mr Haughton were to succeed on that argument, the result would be a reduction in the debt, but not so as to bring it under a statutory minimum provided for in the Bankruptcy Act.

88    Even more fundamentally, the assessment of damages was a matter in dispute in the contested District Court Proceedings and I do not consider the issue provides a basis for finding that Mr Haughton has reasonable prospects of success on his Annulment Application given all that I have said thus far about the history of litigation and the failure to advance any reason for going behind the Judgment in the Sequestration Proceedings.

Landfill

89    The submissions and evidence in part concerned an underlying dispute about the amount of fill deposited on the land by Mr Haughton in accordance with the terms of the lease. However, the District Court judge did not accept the evidence of Mr Chang on that topic and it has not been shown that the issue has any material bearing on matters that arise for resolution on the Annulment Application.

Evidence concerning a fence and land levels

90    The Judgment reflected a portion of damages for the costs of reconstructing a fence on the property boundary. At trial there was a contest of evidence as to whether Mr Chang had erected the fence. The District Court judge resolved the issue was follows:

Damage to a fence

62    Mr Chang and Ms Kiew say that there was a fence between their property and the adjoining property owned by Southdale Stud Pty Ltd. of which Mr Haughton was the sole director and shareholder. Mr Chang described the fence as a rural fence and supplied photographs of what remains of this fence together with a map showing its location on the property. Mr Chang said that the fence was fully functional at the time Mr Haughton took possession of the property. The fence was mostly removed and not in a functional condition when the Changs resumed possession of the property.

63    There was considerable evidence on the topic of the fence from both Mr Chang and Mr Haughton. Mr Haughton also tendered photographs that he said were taken on the morning of trial. These showed, in some parts, a functional fence and in others a derelict fence. Mr Haughton contended that he had put up the functional fence and that the other photographs showed the state of the fence as it was when he took over the property. The photographs taken by Mr Haughton were put to Mr Chang. Mr Chang did not agree that they were taken in the locations asserted by Mr Haughton and did not agree that they showed the relevant fence.

64    Having considered the evidence, I prefer the evidence given by Mr Chang. Accordingly, I find that Mr Chang and Ms Kiew are entitled to damages for the reconstruction of the fence between the two properties.

65    Mr Chang tendered, as part of his evidence, a quotation from McNamara Fencing Contractors dated 4 June 2020. The type of fence referred to in that quote is a rural style fence of the type I accept was removed by Mr Haughton. The quotation is subject to an onsite inspection and is based on a clear and level fence site. It was not clear to me why a site inspection had not taken place. The photographs tendered by Mr Chang show that the site is not level. Doing the best I can with the evidence before me I assess this head of damage at $12,000.

(footnotes omitted)

91    Mr Haughton’s affidavits and submissions are to the effect that Mr Chang’s evidence at the trial in the District Court Proceedings was untrue both in respect of the construction of a new fence and in relation to the levels of the land. He referred to evidence by which he sought to establish that Mr Chang had perjured himself on both topics. He submitted that “fraud unravels everything” such that it wouldn’t matter if the issue went to a relatively small proportion of the overall awarded damages. Once again, this is an issue that was not raised before the Registrar and it has not been shown by Mr Haughton that he was in no position to raise it. I am not satisfied that it provides a proper foundation for the annulment of the bankruptcy, given that Mr Haughton unsuccessfully appealed from the Judgment, and given the further judgment on appeal from the orders staying his attempt to privately prosecute Mr Chang for perjury. Mr Haughton complained that the Court of Appeal should have received further evidence, but it has not been shown that the evidence he sought to adduce on that appeal could not have been adduced in the District Court Proceedings or for that matter in the Sequestration Proceedings. Nor has it been shown that rejection of that part of the counterclaim on the basis that Mr Chang’s evidence was untruthful would have resulted in there being no award of damages on the counterclaim sufficient to found the subsequent bankruptcy. The issues of the fence and land levels do not present an obstacle to summary judgment.

CONCLUSION

92    In the above analysis the focus has been upon Mr Haughton’s submissions as to why his Annulment Application should be permitted to proceed to a hearing on its substantive merits. I have not overlooked that it is the Trustee who bears the onus on the present application. That onus is discharged principally because I am satisfied that the action has no reasonable prospects of success as that test is framed in s 31A of the FCA Act. In addition, I am satisfied that the bringing of the Annulment Application in all of the circumstances I have described constitutes an attempt to reagitate matters that could have been, and to some extent have been, agitated by Mr Haughton previously over a number of years. The Trustee has established that there is no arguable basis for permitting Mr Haughton to agitate or reagitate those matters nearly four years after the Judgment was given and nearly three years after the sequestration order was made.

93    The claims for “interim relief” will not be entertained for the reasons articulated at the commencement of these reasons.

Associate:

Dated:    11 April 2024