JUDGMENT No. 222.) tL IN THE FEDERAL COURT OF AUSTRALIA ) GENERAL DIVISION ) BANKRUPTCY DISTRICT OF THE ) No. NB237 of 1993 STATE OF NEW SOUTH WALES ) RE: JOHN MALAN Debtor EX PARTE: DORE SILVAS Creditor PLACE: SYDNEY 11 NOV 1994 : FEDERAL COURT 5 DATED 25 OCTOBER 1994 SRAL COUR OF ie PRINCIPAL , f REGISTRY , , OR oA Mr Malan applies to the Court for an order to annul his bankruptcy. He was made bankrupt by Beaumont J on a petition filed by Mr Silvas on 14 January 1993. The circumstances in which Mr Malan now finds himself invoke sympathy. The events which gave rise to his bankruptcy originated in or around 1985 and concern dealings between Mr Malan and Mr Silvas who Mr Malan, at _ least, believed at all times acted for him as his solicitor. The dealings in question concerned, among other things, an unsuccessful purchase of a house, an actual purchase of a house and workers' compensation litigation which Mr Silvas apparently conducted on behalf of Mr Malan's wife. Mr Malan alleges that Mr Silvas did not properly account to him in respect of moneys concerning each of these transactions. Those allegations led to a meeting in Granville in 1989 where Mr Malan, in the presence of others, said in the Romanian language words which were translated to the following effect: "What did you do with the thousand dollars which I have given to you in connection with the house which the change his mind to sell to me? [sic] Did you put this money in your pocket because you didn't give me any account of this money at all and never?". This conversation gave rise to proceedings which Mr Silvas then commenced against Mr Malan claiming damages for defamation. Initially, Mr Silvas requested a jury trial and Mr Malan was advised that there was no need for him separately to request a jury trial as his consent was necessary if Mr Silvas wished to withdraw Mr Silvas' request. Ultimately, however, the case did not proceed before a jury because the trial judge, in the exercise of his discretion, ordered that the case proceed by a judge alone. The actual trial lasted 13 days, spread over several months, in addition to various preliminary hearings. Mr Malan was not represented, apparently because he had been refused legal aid. The trial judge, Levine J, commented in the judgment which he ultimately delivered that Mr Malan's conduct of the case, having regard to difficulties of language, improved considerably over the period of the hearing. His Honour appears to have been impressed by Mr Malan's ability to represent himself in the proceedings, notwithstanding his lack of legal training or knowledge of the legal system. The judgment of Levine J comments that, generally, the hearing was conducted with some lack of formality except in respect of certain technical matters, particularly a question concerning the issue of bad reputation of Mr Silvas having regard to the imputation which his Honour found to be contained in the words of which Mr Silvas had complained. However, it seems that the evidence roamed over the relationships between Mr Malan and Mr Silvas in respect of the various transactions to which I have referred. To some extent the case involved an issue of the truth of the allegation which Mr Malan had made in the passage complained of. That issue depended upon the credit not only of Mr Malan, but also of his wife. A significant part of the judgment is concerned with that issue of credit. Suffice it to say that his Honour was apparently unimpressed both by Mr Malan and his wife. Ultimately his Honour awarded to Mr Silvas damages of $60,000. It is this judgment ultimately entered for $63,600 upon which the bankruptcy notice was initially grounded which formed the basis of the petition which Mr Silvas presented to this Court. Mr Malan views the judgment against him as being unjust. He believes that his version of the story and that given by other persons, whose evidence was apparently tendered, should have been accepted, with the result that judgment should not have been entered against him. Although out of time, Mr Malan appealed unsuccessfully to the Court of Appeal against the judgment of Levine J. The appeal, which was heard on 14 and 15 April 1992 and in respect of which judgment was ultimately delivered on 3 July 1992, was heard by Handley, Sheller and Cripps JJA. In that appeal Mr Malan was represented by counsel. The appeal was based first upon what was said to be an error by Levine J in not allowing Mr Malan to lead evidence of Mr Silvas' alleged bad reputation or of incidents of alleged misconduct by him, as well as what was said to be a denial to Mr Malan of procedural fairness by not informing him of his right to seek an adjournment to amend the pleadings. Levine J was also said to have been in error in dispensing with the jury. Not surprisingly, the appeal was not concerned with factual matters, particularly the question of the truth or otherwise of the imputation because those factual matters had been decided on credit and no question of error would have arisen. Mr Malan believes that he was badly represented on the appeal and has complained to me from the bar table that his counsel took a lengthy time to peruse the transcript, presumably the reason why the appeal was out of time, and otherwise did not properly advise him. The question of the existence or otherwise of a true debt does not appear to have arisen at the time the petition was ultimately heard or, if it did, was disposed of relatively quickly. Mr Malan, convinced of the justice of his case, does not recognise the fact that he has been adjudicated bankrupt. He does not recognise that a trustee has been appointed to his bankrupt estate. He refused to file a statement of affairs and as a result was committed to gaol for contempt having regard to the provisions of s.54 of the Bankruptcy Act 1966 (Cth) and appears to have languished there from 9 August 1993 until 20 September 1994. The circumstances of that unhappy episode are dealt with in a judgment of Einfeld J of 20 September 1994. I should add that to this day no statement of affairs has been lodged. As a consequence of Mr Malan's application to be released from custody, Einfeld J ordered the warrant of committal for contempt to be discharged and the immediate release of Mr Malan from custody. All remaining paragraphs of the application then made to the Court by Mr Malan, other than the application for annulment, were dismissed by his Honour who ordered that any affidavit evidence upon which Mr Malan proposed to rely in support of the application for annulment be filed not later than 14 October 1994, On 10 October 1994 Mr Malan filed in the Court an affidavit which was read in the present proceedings, but did not file any other evidence. That affidavit in essence annexed materials which concerned the dispute with Mr Silvas, the ultimate judgment against Mr Malan, matters concerning the sale by the trustee of a house in which Mr Milan's wife and two children were living while Mr Milan was in gaol, the removal of household goods, and material concerning Mr Malan's health. Might I say that I listened to what Mr Malan had to say on the matter and I understand the distress which the matter has caused him. Litigation is, I suppose, stressful, even to those whose native language is English and who have an intimate knowledge of the legal system. Where a litigant not only represents himself but suffers a language disability and becomes enmeshed in areas of the law of some technicality such as defamation and bankruptcy, the result may very well appear to that litigant "Kafkaesque". However, sympathy for Mr Malan is not sufficient to resolve the present proceeding. It is well established law that a court in bankruptcy may go behind a judgment to determine whether there is a true debt. That may happen in the context of a dispute concerning a bankruptcy notice or it may happen at the time the petition is heard or it may happen at a time when a bankrupt seeks to have the bankruptcy annulled on the basis that a sequestration order should not have been made. However, the cases make it abundantly clear that the court will not automatically go behind every judgment that has been given merely at the request of a debtor. A court will ordinarily do so if the judgment upon which the bankruptcy notice was based was obtained by default. Even where the judgment was obtained in contested litigation, a court may go behind it; for example, in a case where allegations of fraud are made out, although mere allegations of fraud may not necessarily suffice. However, in my opinion, the present is not a case where any circumstances have been shown which would justify the Court going behind the judgment and ascertaining whether in fact there was a real debt, as it is called, in respect of the $60,000 damages which were ultimately awarded to Mr Silvas. That judgment, as I have sought to indicate, was obtained after a lengthy trial and after rights to appeal had been exercised to the Court of Appeal and after the appeal had been unsuccessful. Running through the material which Mr Malan has tendered to me is a strong sense, on his part, of the injustice which he believes has been afforded to him, particularly in his not being given a jury trial and I suspect ultimately in his not having been believed. Those matters, however, are all matters which have been litigated before the Court of Appeal, other than the question of credit, and would not justify this Court in now embarking upon another two-week trial of a defamation proceeding. There must at some time be an end to litigation. In the circumstances and with some sympathy for Mr Malan, particularly in respect of the period of time which he has spent in gaol, although in no way condoning the contempt which he has shown to the system which he obviously despises, I would dismiss the application. I would make no order as to costs. I certify that this and the preceding seven (7) pages are a true copy of the Reasons for Judgment herein of his Honour Mr Justice Hill. Associate: WiSiroe how Date: 11 November 1994 Mr Malan appeared for himself. Solicitors for Trustee Ternes & Salier in Bankruptcy Date of Hearing: 25 October 1994 Date Judgment Delivered: 25 October 1994