Housing Guarantee Fund Ltd v Seymour [1999] FCA 543

FEDERAL COURT OF AUSTRALIA

Housing Guarantee Fund Ltd v Seymour [1999] FCA 543

BANKRUPTCY – sequestration order made by registrar – review of registrar's decision – whether any grounds for going behind judgment debt

HOUSING GUARANTEE FUND LIMITED V WALTER JOHN DANIEL SEYMOUR NO. VG 7977 OF 1998 JUDGE: FINKELSTEIN J PLACE: MELBOURNE DATE: 26 APRIL 1999

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY VG 7977 OF 1998

BETWEEN: HOUSING GUARANTEE FUND LIMITED

Applicant

AND: WALTER JOHN DANIEL SEYMOUR

Respondent

JUDGE: FINKELSTEIN J

DATE OF ORDER: 26 APRIL 1999

WHERE MADE: MELBOURNE

THE COURT ORDERS THAT: 1. The notice of motion dated 11 March 1999 be dismissed. 2. The costs of and incidental to the notice of motion, including reserved costs, be paid out of the bankrupt estate of Walter John Daniel Seymour with the same priority as if a sequestration order had been made on the hearing of the Notice of Motion. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY VG 7977 OF 1998

BETWEEN: HOUSING GUARANTEE FUND LIMITED

Applicant

AND: WALTER JOHN DANIEL SEYMOUR

Respondent

JUDGE: FINKELSTEIN J

DATE: 26 APRIL 1999

PLACE: MELBOURNE

REASONS FOR JUDGMENT 1 On 2 March 1999 a registrar of the court made a sequestration order against the estate of Walter John Daniel Seymour. The order was made on the petition of the Housing Guarantee Fund Ltd (the Fund). The petition was founded on a bankruptcy notice that had been served on the debtor, requiring him to pay, or make arrangements for the payment of, a judgment debt in the sum of $62,297, together with interest fixed at $377.87. The judgment had been obtained in the Domestic Building Tribunal (the tribunal), a body established under the Domestic Building Contracts and Tribunal Act 1995 (Vic). That judgment was then registered as a judgment of the Supreme Court of Victoria. 2 By motion dated 11 March 1999, the debtor asks for an order that the decision of the registrar be set aside. I assume that the debtor also seeks an order that the petition be dismissed. That relief was not mentioned in the motion but it seems to me, from the submissions that have been made, that such an order is sought. 3 The debtor did not appear in the proceeding before the registrar when the sequestration order was made. The reason appears to be that either the debtor or his son, Daniel Seymour, who appears to make submissions on behalf of the debtor, was not able to attend before the registrar on the appointed day because he was required to attend at proceedings in the County Court of Victoria sitting in Hamilton. 4 The motion is supported by an affidavit, sworn by the debtor's son. It is not a lengthy affidavit and it is as well that I set it out in full. It reads, omitting formal parts: "I allege the following that the HGF Ltd, an institution of the State Government of Victoria is guilty of breaching the Victorian and Federal Constitution and further allege that the HGF Ltd, has committed an act of Treason by way of the following Civil and Criminal offences abuse of Parliament and Public Office Obstruction of Justice, removal of democratic right of redress by secretly recalling Parliament 31/12/97 and the passing of illegal and unconstitutional legislation removing my right of redress to the Victorian Ombudsman prohibiting investigation of an unconstitutional Act of Parliament. I further allege that the HGF Ltd, in conjunction with the State Government of Victoria conspired to Pervert the course of Justice, Conflict of interest both Political and Legal and allege the Criminal acts of Fraud, Conspiracy Extortion, misleading the Courts, slander, accessory to the fact, accessory after the fact, and prior knowledge. Illegally declaring W.D.J. Seymour Pensioner a man of good standing and of great service to the community a Bankrupt by way of illegal findings of a State run Tribunal. The above is the truth, the whole truth and nothing but the truth, so help me God." 5 During the course of the hearing the debtor's son provided me with a number of documents that were to be relied upon in support of the motion. I received them without objection from counsel who appeared on behalf of the petitioning creditor. Counsel for the petitioning creditor also provided me with one document, being a determination of the tribunal made on 15 September 1997. 6 Although I have not been provided with the relevant legislation, I understand that the Fund was established for the purpose of providing indemnity to persons who have claims against builders in respect of defective workmanship. 7 From the various documents that have been provided to me it appears that the facts giving rise to the proceedings in the tribunal that led to judgment being entered against the debtor are as follows. The debtor had entered into a building contract with Mr and Mrs Augerinos. At some stage Mr and Mrs Augerinos made a complaint that certain of the building works had been carried out by the debtor in an unworkmanlike manner. The debtor disputed this allegation. Their dispute led to arbitral proceedings that were resolved by a consent award given by the arbitrator on 26 November 1991. The award records that there had been claims made, not only by Mr and Mrs Augerinos against the debtor, but also by the debtor against Mr and Mrs Augerinos. The precise nature of that claim was not identified. I presume that it was a money claim for work and labour done. By the consent award each party withdrew their respective claims against the other. The award recorded that the parties agreed to bear their own costs and were to contribute to the costs of the arbitration. 8 Although the parties had withdrawn their respective claims against each other, there were terms of settlement signed that dealt with certain outstanding matters. I do not have those terms of settlement but I understand that they required the debtor to undertake certain works and also required Mr and Mrs Augerinos to make certain payments with respect to those works. 9 Some time thereafter, it is not clear precisely when, another dispute arose between the debtor and Mr and Mrs Augerinos. The dispute led to litigation in the Magistrates' Court. The reason why that dispute was litigated in the Magistrates' Court rather than before an arbitrator is that when the first arbitration was resolved it was agreed by the parties that the arbitration clause in the building contract should be deleted and that all other disputes that might arise between them would be resolved by litigation. 10 The removal of the arbitration clause was a matter of real concern to the debtor. He says that the solicitor who at the time was acting on his behalf was in a position of conflict and could not properly and fairly advise the debtor of his rights in the arbitration. The conflict is said to arise from the fact, as asserted by the debtor, that whilst the solicitor was acting for the debtor he was also acting on behalf of the Fund. I must say that there is no evidence to support the allegation in the papers that I have read. 11 At all events, the proceedings that were instituted in the Magistrates' Court led to a judgment in favour of Mr and Mrs Augerinos in about May 1997. 12 Having obtained that judgment, Mr and Mrs Augerinos then made a claim on the Fund of the amount of the judgment debt. The amount of the judgment was approximately $42,000; one document that I have read puts the precise amount at $40,527. The Fund paid out the amount claimed in discharge of the liability of the debtor. It seems that the Fund was obliged to make that payment under its constituent legislation. 13 The debtor also entered into a building contract to build a property for a Mr Dodd. During the course of those building works Mr Dodd made a claim against the debtor for alleged defective workmanship. One aspect of his allegation was that timber that had been used in the building works was infested by termites. There were other allegations of defective workmanship as well. Mr Dodd demanded that the debtor make good the loss and damage that he had suffered. The debtor did not make any payments to Mr Dodd contending that none of the work that he performed was defective. 14 Mr Dodd then made a claim on the Fund for compensation. The claim was rejected. The reason given for the rejection of the claim was that an inspection that had been conducted by the Fund disclosed that there were no defects in the works carried out by the debtor. 15 Precisely what happened with the claim thereafter is a little difficult to follow. It may be that Mr Dodd lodged an appeal against the decision of the Fund or it may be, and this seems to be more likely, that Mr Dodd made a further claim in respect of faulty workmanship, being a claim relating to water penetration through a window and defects in a concrete slab in the building. At all events, the Housing Guarantee Fund ultimately did pay Mr Dodd an amount of approximately $28,000. 16 Having made those payments to Mr and Mrs Augerinos and Mr Dodd, the Fund then looked to the debtor for reimbursement. Under the applicable legislation, the Fund is entitled to obtain reimbursement from the builder in respect of whose faulty workmanship the Fund had made payments. 17 The claim for reimbursement was submitted for the determination of the tribunal. The debtor's son represented the debtor in that proceeding and the Fund was represented by counsel. I have no doubt this placed the debtor in a position of disadvantage; much the same disadvantage that the debtor suffers in this application. 18 In the proceeding before the tribunal the debtor tendered evidence to explain why it was that the claim by the Fund lacked bona fides. In an affidavit the debtor explained the background to the claim that had been made by Mr and Mrs Augerinos and Mr Dodd so as to show that it was not appropriate that he be ordered to reimburse the Fund in respect of the amounts that had been paid to Mr and Mrs Augerinos and to Mr Dodd. 19 Having considered the evidence and the submissions, the tribunal found against the debtor. The determination was as follows: "There is no evidence that the decisions by the Applicant [the Housing Guarantee Fund Ltd] to proceed to recover the sum of $57,284 ... and $24,260 ... were made other than in a bona fide manner by the Applicant. 20 The tribunal then ordered the debtor to pay to the Fund the sum of $62,297 with interest and costs. I should interpolate that the member constituting the tribunal was said by the debtor to have such a close involvement with the building industry in general and the State government in particular, that he could not render a fair decision in the proceeding. There is no evidence to show that there is any basis for this allegation. 21 Having considered documents that have been tendered in evidence, it appears to me that there are two basic complaints that the debtor makes in respect of the events that led to the decision of the tribunal. The first relates to the claim made by Mr and Mrs Augerinos. There the principal complaint is that the debtor's solicitor had acted negligently, if not improperly, in the conduct of his retainer. The debtor says that the solicitor did not act in accordance with his instructions in waiving the right to arbitration and was negligent in allowing the case to be settled in the manner that was ultimately agreed. 22 That these seem to be the principal complaints made appears from a submission made by the Master Builders Association of Victoria (the Association) to the Fund on the debtor's behalf. In that submission the Association requested the Fund to refrain from making a claim for indemnity against the debtor, saying that to do so would amount to a miscarriage of justice. The explanation was that the debtor had got himself into the difficulties that he faced by reason of his solicitor's negligence. 23 The issue in relation to the claim by Mr Dodd which seems to be central to the debtor's complaint is what I might describe as the termite claim. The debtor says that conformably with the Fund's original decision, either there was no termite problem, or, if there was, it was not one caused by the debtor. He also says that even if there was a terminate problem and it was caused by the debtor, it was not a claim maintainable against the Fund. 24 As the tribunal noted in its reasons for decision, there seems to be some misconception about the termite claim. In its reasons the tribunal went out of its way to point out that the amount paid out to Mr Dodd did not relate to his termite claim. 25 The allegations that appear in the debtor's affidavit which I have quoted above, namely that there has been some unconstitutional conduct, some treasonable conduct, some criminal conspiracy, or the commission of various civil wrongs, are, of course, not made out on the evidence. I think that the debtor is expressing his general unhappiness about the state of affairs that he now finds himself in, rather than seriously asserting that such conduct has in fact occurred. 26 I do understand that the debtor has a complaint about the perceived conflict of interest of his solicitor and that he feels aggrieved by the solicitor's conduct. The debtor does appear genuinely to be of the opinion that, but for the solicitor's conduct, he may not have been involved in any proceedings before the tribunal. 27 Be that as it may, despite the submissions made on the debtor's behalf, it does not appear to me that the proceedings before the tribunal were in any way tainted such as would lead to the conclusion that they were unfair or as having come about by reason of fraud or other misconduct on the part of the Fund. My reading of the reasons of the tribunal suggests that the tribunal gave the debtor a very fair hearing, listened to all of his arguments, took them into account, but in the end was not persuaded by them. 28 The role of this court on a hearing such as this is limited. If I was convinced that there was no foundation for the decision of the tribunal, then I might ignore the judgment given by it and the fact that that judgment has been registered in the Supreme Court. But I am far from convinced that the tribunal erred in any way. On the contrary, it seems to me that there is no basis, in fact or in law, that would entitle the debtor to say that the tribunal's determination should be ignored. 29 In the result, the debtor's application must be dismissed. I will also order that the costs of and incidental to this application, including reserved costs, be paid by the debtor. I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finkelstein.