a ' E 0. 30. (BE IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION No. B 5694 of 1987 BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES AND THE AUSTRALIAN CAPITAL TERRITORY wee Re: JEFFREY KENNETH GATES Judgment Debtor Ex parte: CAPITA FINANCIAL GROUP LIMITED (formerly known as The City | Mutual Life Assurance Society Limited) Judgment Creditor MINUTE OF ORDER JUDGE MAKING ORDER Neaves J. DATE OF ORDER : 12 February 1988 WHERE MADE : Canberra THE COURT ORDERS THAT: 1. The application dated 22 December 1987 to set aside Bankruptcy Notice No.B5694 of 1987 be dismissed. 2. The judgment debtor pay the judgment creditor's costs of the application. Note: Settlement and entry of orders is dealt with in rule 124 of the Bankruptcy Rules. ce nt syrte cee IN THE FEDERAL COURT OF AUSTRALIA GENERAL DIVISION BANKRUPTCY DISTRICT OF THE STATE OF NEW SOUTH WALES AND THE ) ) ) ) No. B 5694 of 1987 ) ) AUSTRALIAN CAPITAL TERRITORY ) Re: JEFFREY KENNETH GATES Judgment Debtor Ex parte: CAPITA FINANCIAL GROUP LIMITED (formerly known as The City Mutual Life Assurance Society Limited) Judgment Creditor CORAM: Neaves J. DATE: 12 February 1988 REASONS FOR JUDGMENT | This is an application by Jeffrey Kenneth Gates ("the judgment debtor") for an order setting aside a bankruptcy notice (No. B 5694 of 1987) issued against him on 12 November 1987. Alternatively, he seeks an order that further proceedings under the bankruptcy notice be stayed. The bankruptcy notice was issued on the application of Capita Financial Group Limited, formerly known as The City Mutual Life Assurance Society Limited ("the judgment creditor"). The notice is based upon a final order for costs obtained by the judgment creditor against the judgment debtor in the High Court of Australia on 20 February 1986. rte It required the judgment debtor, within 28 days after service of the notice upon him, to pay to the judgment creditor the sum of $6,704.76 or to secure the payment of that sum to the satisfaction of the Federal Court of Australia or the judgment creditor or to compound that sum to the satisfaction of the judgment creditor. The bankruptcy notice was served on the judgment debtor on 2 December 1987. The application at present before the Court was filed on 22 December 1987. On the following day, 23 December 1987, orders were made giving the judgment debtor leave to amend the application to correct certain errors therein and extending the time for compliance with the bankruptcy notice up to and including 3 February 1988. Ancillary orders for the filing of affidavits were also made. On 3 February 1988 a further order was made extending the time for compliance with the bankruptcy notice up to and including 12 February 1988. It is necessary to refer to the nature of the proceedings which culminated in the order for costs on which the bankruptcy notice is based and their history. The following summary is taken from the judgment of Gibbs C.J. in Gates v. City Mutual Life Assurance Society Ltd (1986) 63 A.L.R. 600 at pp.601-2: "The appellant, Mr Gates, brought proceedings in the Federal Court claiming against the respondent, an insurance company, damages for breaches of ss.52 and 53(g) of the Trade a er Tere aera eerie Practices Act 1974 (Cth), as amended (the Trade Practices Act) or alternatively damages for breach of contract. The matter came before Ellicott J. who held that the appellant, on the faith of false statements made to him by an agent of the respondent, arranged for a superannuation policy which he had already taken out with the respondent to be extended to include total disability cover, and also arranged for that cover to be included ina new life policy which he took out at about the same time with the respondent. In the case of each policy an extra sum of $2.09 Eper month] was paid by way of premium. The statements which the learned trial judge found were made by the agent of the respondent and were false were to the effect 'that the total disability benefit under the provisions he was recommending for inclusion in his existing and new policy would be payable to [the appellant] if he suffered an injury or iliness which left him physically incapable of carrying on his occupation as a self-employed builder'. In fact, in the case of each policy, the total disability clause entitled the appellant to the extra benefits under that clause only if the respondent, 'having regard to medical evidence, considers him incapacitated to such an extent as a result of such illness or injury as to render him unlikely ever to be able to attend to, any gainful profession, occupation or employment'. The learned trial judge held that the respondent had committed breaches of ss.52 and 53(g) of the Trade Practices Act. However, he held that' the appropriate measure of damages was that applicable in tort and that since there was no evidence to show that the cover under the total disability clauses was not worth the premiums payable for it, and since no consequential losses were proved, the appellant was not entitled to any pecuniary damages for the breach of those sections. He added that an alternative method of compensating the appellant for the loss or damage he had suffered would be to vary or rescind the policies and direct a refund of the premiums paid to date, but that the appellant had not claimed to be compensated on that basis. He went on to hold that' the statements made by the agent were intended to have contractual effect and that there was a collateral contract under which the appellant agreed to enter into the contracts of insurance and to pay the premiums thereunder in consideration of the respondent agreeing to pay disability benefits to the appellant in the circumstances represented by the respondent's agent. He assessed damages for breach of this contract at $66,003. "1 me a wow ee. From this decision both parties appealed to the Full Court of the Federal Court. That court held that the statements did not give rise to a collateral contract and, since they agreed that no claim for damages under the Trade Practices Act had been made out, dismissed the appeal of the present appellant and allowed that of the respondent. The orders of Ellicott J. were accordingly set aside and the proceedings were dismissed." From the judgment of the Full Court of this Court the judgment debtor appealed to the High Court. He filed in that Court two notices of appeal (numbered respectively 20 and 21 of 1983) anda notice of motion (numbered S541 of 1985). The latter was treated by the Court as seeking an order setting aside all the previous proceedings in the matter and ordering a new trial. The High Court dismissed the appeals with costs and dismissed the notice of motion. The costs were subsequently taxed and allowed in the sum mentioned in the bankruptcy notice. It may be noted that the proceeding in the original jurisdiction of this Court was numbered G 39 of 1981. The appeals to the Full Court of this Court were numbered respectively G 170 and Gi173 of 1982, the former being the judgment debtor's appeal and the latter that of the judgment creditor. In support of the application, the judgment debtor has sworn and filed a number of affidavits. The respective dates of swearing of those affidavits are 14 December 1987, 16 December 1987, 21 December 1987 and 19 January 1988. It is not easy: to discern from the affidavits, which largely consist of argumentative material, on what facts the ae . judgment debtor relies in support of the present application. The comment may also be made that the affidavits contain much material the relevance of which to any issue which arises on the present application 1s not obvious. Exhibited to one of the affidavits, that of 14 December 1987, are the appeal books (3 volumes) lodged in the High Court in connection with the appeals to that Court and the material (6 volumes) filed in that Court in support of the notice of motion (numbered $41 of 1985) to which reference has already been made. The judgment debtor seeks to invoke the undoubted power of this Court, when exercising jurisdiction in bankruptcy, to go behind the judgment or order upon which a bankruptcy notice or a creditor's petition is founded and inquire into the validity of the debt upon which the judgment creditor relies. That is a power which may be exercised where there is evidence that the judgment or order has been obtained by fraud or collusion or that there has been some other miscarriage of justice. An initial difficulty of formidable proportions faces the judgment debtor in this case in that the judgment debt relied upon is one for costs awarded against him in proceedings by way of appeal which he instituted in the High Court and in which, after a full hearing, he was unsuccessful. It is not easy to discern from the ! material before the Court any basis upon which the judgment creditor should be deprived of his right to take proceedings in ~ eae a bankruptcy based upon that order. An allegation of bias, or the appearance of bias, in the judges constituting the High Court was made by the judgment debtor. However, no foundation whatsoever has been shown for the allegation and I can only regard the conduct of the judgment debtor in raising the matter as irresponsible. The path by which the judgment debtor seeks to reach his desired goal is a somewhat tortuous one. There are clearly a number of obstacles along the way which must be surmounted if he is to succeed in his present application. Those obstacles also stand in the way of his achieving what is clearly his ultimate aim of having the orders made in proceeding numbered G 39 of 1981 set aside and having a new trial of that proceeding after amendments thereto to add additional parties, both applicants and respondents, and to expand the issues by the inclusion of additional causes of action. An assertion (and it is no more than an assertion unsupported by evidence) which is fundamental to the judgment debtor's present application is an assertion that his legal advisers failed to give effect to his instructions to include in proceeding numbered G 39 of 1981 additional claims which he and members of his family are said to have had against the judgment creditor or against companies associated with the judgment creditor. As has already been mentioned, in the proceeding numbered G 39 of 1981 the judgment debtor claimed damages against the judgment — onsen creditor on two bases. The first was on the basis that the judgment creditor, through its agent, one Gary Alwyn Rainbird, had been guilty of conduct in contravention of ss.52 and 53(g) of the Trade Practices Act. The second, an alternative basis, was that there had been a breach by the judgment creditor of the terms of a contract alleged to have been made with the judgment debtor, those terms being more favourable to him than the terms of the policies issued by the judgment creditor. The claims arose in relation to the t extension, to include total disability cover, of a superannuation policy (numbered 909837) which the judgment debtor had taken out some time before with the judgment creditor and the inclusion of similar cover ina new life policy (numbered 438249) which the judgment debtor was then in the process of having issued to him. It is asserted that each of his sons, Christopher James Gates and Stephen James Gates, they being then minors, had an insurance policy with the judgment creditor or an associated company (those policies being respectively numbered 820896/7 and 820896/8) | and that, under that policy and in the events which occurred, the insurer became liable to make payment but that it failed to do so. The judgment debtor further says that he had a personal accident policy (numbered 6PA44/57426) with The City Mutual General Insurance Limited under which, in the events which had occurred, there was an obligation upon the company to make payments to the judgment debtor on account of disabilities suffered in an accident in the course of his employment as a self-employed builder. The judgment debtor contends that the failure of his legal ep tae a weer eM Tee wot —_—_ advisers to include in the proceeding numbered G 39 of 1981 the claims under the policies numbered 820896/7, 820896/8 and 6PA44/57426 amounted to a miscarriage of justice. In relation to those assertions made by the judgment debtor, it is sufficient to say that, even if, contrary to his anstructions, issues arising between other members of the applicant's family and the judgment creditor and between the judgment debtor and a company other than the judgment creditor were not included in the proceeding numbered G 39 of 1981, that circumstance, of itself, provides no foundation for a claim that the judgment debtor did not have a fair trial upon the issues that were in fact raised by that proceeding. The judgment debtor also complains of dissatisfaction with the manner in which the proceeding numbered G 39 of 1981 was conducted before this Court. In particular, he complains that his legal advisers failed to put before the Court all available evidence and made submissions to the Court based upon a view of the facts with which the judgment debtor did, and does, not agree. The assertion that all available evidence was not called appears to be related solely to the assertion, to which I have already referred, that the proceeding should have included claims under the other policies mentioned. Evidence relevant only to those claims was clearly inadmissible. Further, as the judgment debtor succeeded in the proceeding a on ante Ww PA Prins ene ww ees Sere en ee ee before Ellicott J. and the appeals from his Honour's judgment did not turn on evidentiary matters, it can hardly be seriously contended that the judgment debtor suffered any miscarriage of justice by the failure of his legal advisers to adduce any evidence which was relevant to the issues then before the Court. It must also be said that the other matter relied on does not advance the applicant's case. A further complaint is made that the judgment creditor was dilatory in discovering all relevant documents, some documents being produced only at the hearing. It is not suggested that, in the end, any documents were withheld and the circumstance that the judgment creditor was dilatory provides no ground for the relief now sought. An allegation is also made that Mr Rainbird, who was the authorised agent of the judgment creditor and the person with whom the judgment debtor arranged the total disability cover, "did knowingly give false testimony, fabricate evidence, withhold true testimony and commit perjury throughout G 39 of 1981". To deal with this allegation it is necessary to refer to the proceeding before Ellicott J. As his Honour said, the conversations which took place between the judgment debtor and Mr Rainbird lay at the heart of the case. Their evidence gave two quite diverse versions of what had occurred but his Honour, having considered all the evidence, accepted the version deposed to were yt oe, . 10. by the judgment debtor and the witnesses called on his behalf. His Honour said (43 A.L.R. at p.326): "T am strengthened in this conclusion by the impression which I had of Mr Rainbird's evidence. It seemed to me, as I listened to him in the witness box, that he reconstructed his evidence based on what he regarded as his normal conduct. That impression is confirmed by my study of the transcript of his evidence. The evidence established that he discussed the question of total disability benefits with many clients and in cross-examination he conceded that he had no independent recollection of what took place.... This does not mean that I thank Mr Rainbird deliberately told an untruth. It may well he that he gave his evidence to the best of his ability but his recollection was, inmy view, faulty and not based on an independent recollection of the events but on what he regarded he would have said based on what he believed was his normal practice at the time.... I therefore do not regard Mr Rainbird as a reliable witness particularly as to the content of the conversations which took place leading up to Mr Gates adding total disability cover to his policy No.909837." The judgment debtor has placed before the Court no material additional to that which was before Ellicott J. to support the very serious allegation he has made. No basis has been shown upon which this Court, sitting in its bankruptcy jurisdiction, could properly find, contrary to the finding of Ellicott J., who had the advantage of observing Mr Rainbird in the witness box, that Mr Rainbird had deliberately given false testimony. In the absence of ~ — poo [— Seema nesinetemeneertet ited teat tee pore re ose oe il. any additional material, TIT can, again, only regard the allegation as having been made irresponsibly. The judgment debtor also sought to rely on a number of other allegations of a less serious nature in relation to the conduct of the proceeding numbered G 39 of 1981. I do not find it necessary to refer to them. Iam satisfied that, whether taken singly or in combination, they provide no basis for the contention that the judgment in that proceeding was obtained by fraud or was otherwise tainted with illegality. Even if the judgment debtor had been able to sustain any of the allegations he has made in relation to the proceeding numbered G 39 of 1981, further formidable obstacles would have confronted him in showing that this Court, in the exercise of its bankruptcy jurisdiction, should, in effect, restrain the judgment creditor taking bankruptcy proceedings based upon the order for costs made by the High Court in dismissing the judgment debtor's appeal to that Court. However, in view of the firm conclusion to which I have come that the judgment debtor has not established any of the matters relied upon in relation to the proceeding numbered G 39 of 1981, I am relieved of the necessity of considering those obstacles. Although I have considered it appropriate to examine afresh the specific matters raised by the judgment 1-5 nes meee Ty fr 12. debtor on the hearing of the present application, it should be recorded that the High Court has previously decided, on the material then before it, that there were no grounds for the making of an order setting aside the proceedings before Bllicott J. and the Full Court of this Court and ordering a new trial. In dismissing the motion made by the judgment debtor for such orders, Gibbs C.J. said (63 A.L.R. at p.602): "The notice of motion was quite irregular but in any case the material before the court did not establish that those representing the appellant in the Federal Court had acted without' the authority or against the interests of the appellant or that there was any other ground on which it could be concluded that there had been an abuse of the process of the court or a conspiracy to pervert the course of justice." Mason, Wilson and Dawson JJ., after referring to the two notices of appeal to the High Court lodged by the judgment debtor, said (at p.606): "Moreover, by notice of motion he seeks an order for a new trial on the ground that his legal representatives had conducted the proceedings at first instance without his authority and against his instructions, with the consequence, so he claims, that he did not get a fair trial. The materials before us do not support this contention. What is more, they do not indicate that the matters of which he complains in this respect can be attributed to conduct on the part of the respondent or its legal representatives. All that he can point to, so far as the respondent 1s concerned, is that one or more of his witnesses was confused in cross-examination. There is no substance in the application for a new trial and it must be refused." we ee = a ore oan a moe er 13. The material on which the judgment debtor now relies is not substantially different from that which was before the High Court. The application is dismissed. The judgment debtor must pay the judgment creditor's costs of the application. I certify that this and the preceding 12 pages are a true copy of the Reasons for Judgment herein of the Honourable Mr Justice Neaves. A Associate Dated: 12 February 1988 Judgment debtor in person Counsel for the judgment creditor : Myr J.A. Timbs Solicitors for the judgment creditor: Murphy & Maloney Date of hearing : 3 February 1988 Dh eer a