FEDERAL COURT OF AUSTRALIA Hunter v Leahy [1999] FCA 1075 PRACTICEAND PROCEDURE - vexatious litigant – application for leave to commence proceeding – Judge of own motion making order requiring leave for filing of any future documents – source of power – rules based powers – implied incidental power – section 23 Federal Court of Australia Act 1976. Bankruptcy Act 1966 (Cth) Trade Practices Act 1974 Federal Court of Australia Act 1976 Federal Court Rules Jackson v Sterling Industries Ltd (1987) 162 CLR 612 followed Commonwealth Trading Bank v Inglis (1974) 131 CLR 311 discussed Horvath v Commonwealth Bank of Australia [1999] FCA 504 cited Grepe v Loam [1887] 37 Ch D 168 cited Attorney-General v Wentworth (1988) NSWLR 481 cited LINDSAY HUNTER v LESLEY LEAHY, FLOREAT SETTLEMENTS, FRANK DI NARDO, ESTATE REALTIES, SETTLEMENT AGENTS SUPERVISORY BOARD and PAUL ARNS W 65 OF 1999 FRENCH J 9 AUGUST 1999 PERTH IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY W65 OF 1999 BETWEEN: LINDSAY HUNTER Applicant AND: LESLEY LEAHY First Respondent FLOREAT SETTLEMENTS Second Respondent FRANK DI NARDO Third Respondent ESTATE REALTIES Fourth Respondent SETTLEMENT AGENTS SUPERVISORY BOARD Fifth Respondent PAUL ARNS Sixth Respondent JUDGE: FRENCH J DATE OF ORDER: 9 AUGUST 1999 WHERE MADE: PERTH THE COURT ORDERS THAT: 1. The order made by Sheppard J of 19 July 1996 is varied so that no application or other document lodged by Lindsay Hunter at the Court shall be accepted without the leave of a judge where such application or other document is, in the opinion of the Registrar, related to the matter the subject of the judgment of Sheppard J given on 19 July 1996 or which names Luci Webb or any of the respondents in this application as a respondent. 2. The application is otherwise dismissed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA WESTERN AUSTRALIA DISTRICT REGISTRY W65 OF 1999 BETWEEN: LINDSAY HUNTER Applicant AND: LESLEY LEAHY First Respondent FLOREAT SETTLEMENTS Second Respondent FRANK DI NARDO Third Respondent ESTATE REALTIES Fourth Respondent SETTLEMENT AGENTS SUPERVISORY BOARD Fifth Respondent PAUL ARNS Sixth Respondent JUDGE: FRENCH J DATE: 9 AUGUST 1999 PLACE: PERTH REASONS FOR JUDGMENT 1 On 21 August 1995 the District Registrar of the Federal Court made a sequestration order against Lindsay Hunter. On 6 October 1995 Mr Hunter filed a motion, subsequently amended, in which he sought an order that the sequestration order be set aside and declared a nullity and, alternatively, that there be a permanent stay of the sequestration order. That motion was ultimately heard by Sheppard J from 15 to 19 July 1996. On 19 July 1996 his Honour made orders in the following terms: "1. The notice of motion filed by the applicant on 8 September 1995 as amended by the notice of motion filed on 6 October 1995 be dismissed. 2. The petitioning creditor's costs of the notice of motion be paid out of the assets of the bankrupt, the debtor, Lindsay Hunter. 3. The application made by Lindsay Hunter for a stay of proceedings be refused. 4. Direct that Lindsay Hunter not be permitted to file in this Court any application or other document including any subpoena or summons to witness whether in this or any other matter without the leave of a judge of this Court." The respondent to Mr Hunter's motion on that occasion was the petitioning creditor, Luci Mary Webb. 2 Paraphrasing the factual history set out in the reasons for Sheppard J, the sequestration order was based upon failure to comply with a bankruptcy notice which made demand for payment of a judgment debt. The judgment debt was by way of an amount of costs which Mr Hunter had been ordered, in the Supreme Court, to pay Mrs Webb after unsuccessful proceedings against her. These were not the only proceedings between Mr Hunter and Mrs Webb in the Supreme Court. In other proceedings, Mrs Webb had taken action for specific performance of a contract for the purchase of property at 114 Empire Avenue, Wembley Downs, originally before a Master of the Supreme Court in an application for summary judgment. On that application an order for specific performance was made on 20 September 1993. The application was appealed to the Full Court but that appeal was dismissed and an application for special leave to appeal to the High Court was also dismissed. 3 Sheppard J in his reasons said: "The essential matters raised by Mr Hunter in support of his application to set aside the sequestration order arise out of transactions referred to and discussed in the judgments delivered in the Supreme Court of Western Australia. But Mr Hunter says that essential facts which were relevant to the outcome of those proceedings, and indeed to a counter-claim which he wishes to bring in the Supreme Court, were not before the Court with the consequence that the Court proceeded on an erroneous assumption as to the facts. This he claims was due to fraudulent conduct on the part of Mrs Webb and others. He has said that the fraud was, to use his language, "a concealed fraud"." 4 The question posed by the application for his Honour was whether or not Mr Hunter had demonstrated "other sufficient cause" within the meaning of par 52(2)(b) of the Bankruptcy Act 1966 so as to warrant the conclusion, notwithstanding the decision of the Registrar, that the sequestration order either ought not to have been made at all, or ought at least to be set aside or stayed. Details of the transaction which had led to the dispute between Mr Hunter and Mrs Webb are set out in his Honour's judgment and it is unnecessary to revisit those in these reasons, save to note that Mr Hunter asserted before his Honour that references to Mrs Webb in the body of a transfer of the subject land and reference to her as a party executing the transfer were added without his knowledge or authority and constituted fraudulent conduct on somebody's part. Moreover in relation to an agreement physically appended to the July 1992 contract, he asserted that he did not approve of all the conditions or conditions in the form in which they appeared to be and that he was not bound by these either. In his submission the basis for the order for specific performance made in the Supreme Court had gone. When he looked at the documents his Honour could not see how they could have made any difference to the proceedings in the Supreme Court or to Mr Hunter's counterclaim. In the event, his Honour preferred the evidence of Mrs Webb to that of Mr Hunter and settlement agent, Mrs Leahy, who is named as the first respondent in these proceedings. His Honour said: "There is absolutely no evidence, other than the evidence of Mr Hunter, which would suggest that there had been engaged in any course of conduct either by Mrs Webb or by others in order to defraud him. An allegation of fraud is a very serious matter. There is not to be found in the evidence any support for it except the assertions which are to be found in Mr Hunter's evidence. Accordingly, I have come to the conclusion, quite firmly, that the case which Mr Hunter makes of forged documents should be rejected." Mr Hunter's case before his Honour failed because the fraudulent conduct upon which he relied was not established. At the conclusion of his reasons, his Honour also said this: "I direct that Lindsay Hunter be not permitted to file in this Court any application or other document including any subpoena or summons to witness in this or any other matter without the leave of a judge of this Court. I make that direction because of the nature of large numbers of the documents which have been filed by Mr Hunter in this and other matters, the form of those documents, and the language contained in them." 5 On 15 July 1999 Mr Hunter filed an application in this Court which was described as "Application for leave to file the annexured (sic) Trade Practices Act application and to set aside or annul or vary the order in regard to filing of documents made by Sheppard J on 19 July 1996 as a nullity at law or other". (sic) In his application Mr Hunter asserted that the order of Sheppard J requiring leave of a judge before Mr Hunter be permitted to file any document was unconstitutional and wrong at law. He further said: "That considering the gravity and extent of the deceit or fraud or other perpetrated against the Applicant in the Federal Court by the 1st to 4th Respondents and other deceit and other in regard to forgery and uttering and perjury and concealment and fabrication of evidence would be a gross injustice and contrary to the principles of justice and the principles of fair and equal justice to all. It is vital in the interests of justice that the Applicant be allowed to right a serious wrong" Mr Hunter further asserted in his application: "In addition, bear in mind that Sheppard J did not consider the merits of the forged contract as he said it was "…illegible…". And further if it was illegible how could he make any ruling whatsoever about it if he would not read it and contrary to the sworn evidence of the Applicant that was uncontradicted" The orders sought by Mr Hunter were in the following terms: "1. There be leave to file the Application pursuant to the Trade Practices Act as amended 2. The order of Sheppard J made 19 July 1996 in relation to filing of documents by the Applicant be annulled or set aside or varied to remove such order or to remove the effect of such order 3. Costs in the cause 4. There be leave to call witnesses in this matter and subpoena documents" It will be noted that the respondents to these proceedings were not named as parties in the proceedings before Sheppard J, which named the petitioning creditor as respondent, as it was an application to set aside the sequestration order. 6 The proposed application in respect of which Mr Hunter sought leave was described as: "Application under Trade Practices Act as amended and Crimes Act 1914 as amended, Transfer of Land Act as amended, Statute Frauds as amended, Strata Titles Act as amended, 1991 REIWA Joint Conditions for Sale of Land and Common Law and other" On what he described as grounds appearing in the accompanying affidavit Mr Hunter asserted against the first and second respondents breaches of the Trade Practices Act by way of engagement in deceptive and misleading conduct or breach of a duty of care. This is said to have occurred in relation to the concealment, suppression or non-disclosure of documents from him and from the Supreme Court of Western Australia, the Full Court and the High Court at all material times until July 1996 and until the present time relating to his purchase of the property at 114 Empire Avenue, Wembley Downs. He asserted loss, injury and damages to be assessed but estimated at about $20 million. He also asserted deceptive and misleading conduct on behalf of the first and second respondents in relation to the Federal Court proceedings. They were said to have removed several original documents from the subpoenaed file prior to their testimony in July 1996 and to have given these to counsel for Mrs Webb without disclosing to the Court or to Mr Hunter that the documents were not on the file. The documents referred to are an original blank transfer, said subsequently to have been illegally completed, other transfers and a strata title application. Additional "deceptive and misleading conduct" is said to have been committed by the first and second respondents by false statements in a letter to the applicant dated 5 May 1995 from their solicitor that they did not have a copy of an alleged forged contract dated 21 May 1992 between Mr Hunter as purchaser and a Mr and Mrs Gardiner as vendor. Mr Hunter asserts that this document was on the file at all material times and that the deceit caused him loss and injury and damages which he estimates at about $20 million. There are further allegations of deceptive or misleading conduct under the Trade Practices Act involving forgery, misrepresentation to the State Taxation Office in connection with the stamping of the contact, failure to advise Mr Hunter that the contract or transfer had been altered, destruction of the original of the altered contract, failure to provide proper documentation in regard to settlement, failure to get Mr Hunter's authority or instructions in regard to settlement, and acting without his authority or instruction at all material times in relation to alleged forgeries. A fifth head of breach of the Trade Practices Act for deceptive and misleading conduct is related to the first and second respondents allegedly giving false evidence in the Federal Court on 15 July 1996 and failing to prepare a "$65,000 penalty clause transfer". Misleading of the Supreme and Federal Courts is also asserted under this head. Other elements of false testimony and conduct are pleaded. 7 In relation to the third and fourth respondents, they also are said to have breached the Trade Practices Act in relation to an affidavit said to have been false and misleading, procuring a signature to a memorandum to backdate an agreement in favour of Mrs Webb, failing to avoid a purported contract and agreement and other conduct. Assertions of breach of the Trade Practices Act and deceitful and negligent action are also made against the other two respondents. 8 As can be seen from the content of the application, Mr Hunter seeks to use these proposed proceedings as a vehicle for yet again revisiting his assertions of fraudulent conduct in relation to the transaction between himself and Mrs Webb. He has filed affidavits of 15 July 1999 and 26 July 1999 in which he substantially seeks to establish that he has been the victim of forgery and fraudulent conduct. The affidavit of 26 July largely exhibits documents relating to the transaction with Mrs Webb. 9 At my request Mr Hunter also provided a chronology of litigation in which he has been involved in relation to this matter. The chronology was not complete and annexed a chronology which had been prepared by Bennett & Co in earlier proceedings. Having perused the application and the affidavits lodged in support of it, I have no doubt that they are an abuse of process. This is yet another attempt on Mr Hunter's part to revisit proceedings which long ago have been concluded. 10 Mr Hunter questioned the authority of Sheppard J to make the order which his Honour did preventing Mr Hunter from filing documents without the prior leave of a judge of the Court. There are specific rules of court relating to vexatious litigants and documents which may be an abuse of process. 11 Order 21 provides: "1. Upon the application of – (a) the Attorney-General or Solicitor-General of the Commonwealth or of a State or Territory; . . . (c) the Registrar of the Court where any person (in this rule called the vexatious litigant) habitually and persistently and without any reasonable ground institutes a vexatious proceeding in the Court, and whether against the same person or against different persons, the Court may order that the vexatious litigant shall not, without leave of the Court, institute any proceeding in the Court and that any proceeding instituted by the vexatious litigant in the Court before the making of the order shall not be continued by him without leave of the Court." 12 Rule 2 deals with the case of vexatious proceedings habitually and persistently and without any reasonable ground instituted against a particular person. Orders made under O 21 may be varied or rescinded (O 21 r 4). Rule 5 provides: "Where the Court has made an order under rule 1 or rule 2 against any person, the Court shall not give him leave to institute or continue any proceeding unless the Court is satisfied that the proceeding is not an abuse of process and that there is prima facie ground for the proceeding." 13 Reference should also be made to O 46 r 7A which provides for the Registrar to refuse to accept or issue a document which appears on its face to be an abuse of the process of the Court or to be frivolous or vexatious. Alternatively, the Registrar can seek the direction of a judge who may direct that the document be accepted or issued or not or that it not be accepted or issued without the leave of a judge first had and obtained. 14 These rules may be seen as generally protective of the Court's processes and of parties against whom vexatious litigation or proceedings may be brought. It should be noted that Sheppard J did not proceed under O 21, there having been no application by the Attorney-General or the Registrar. Order 46 r 7A was not applicable because that rule only applies to a document which has been presented, whereas the order made by Sheppard J was prospective in character. This does not mean that he made his order without power. For these rules are merely an expression of the power of the Court generally to protect its own procedures against abuse. The rules themselves are made pursuant to s 59 of the Federal Court of Australia Act 1976 which authorises the judges or a majority of them to make rules not inconsistent with the Act "making provision for or in relation to the practice and procedure to be followed in the Court" and "in relation to all matters and things incidental to any such practice or procedure, or necessary or convenient to be prescribed for the conduct of any business of the Court". Apart from the specific powers and procedures prescribed by the Rules there is a general power under s 23 of the Act which provides: "The Court has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, including interlocutory orders, and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate." It is accepted that courts of law and equity have general powers now accepted as an established part of their armory to prevent the abuse or frustration of their processes in relation to matters coming within their jurisdiction. The power to grant such relief in relation to a matter in which the Federal Court has jurisdiction is conferred expressly by s 23 of the Act – Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 623, Deane J. As Deane J went on to say in that case: "Indeed, even in the absence of the provisions of s 23 the Federal Court would have possessed power to make such orders in relation to matters properly before it as an incident of the general grant to it as a superior court of law and equity of the jurisdiction to deal with such matters." 15 Although the term "inherent jurisdiction" was used to describe such a power in courts of general jurisdiction, it is better described in a statutory court as an implied power of which Bowen CJ at first instance in Jackson v Sterling Industries said, in comments with which Deane J expressly agreed: "In relation to a statutory court such as the Federal Court it is wise to avoid the use of the words "inherent jurisdiction". Nevertheless a statutory court which is expressly given certain jurisdiction and powers must exercise that jurisdiction and those powers. In doing so it must be taken to be given by implication whatever jurisdiction or powers may be necessary for the exercise of those expressly conferred. The implied power, for example to prevent abuse of its process, is similar to, if not identical with, inherent power." – quoted with approval at 624 by Deane J See also Mason J at 616, who agreed with Deane J, Wilson and Dawson JJ at 618 and Brennan J at 621. 16 It seems however that s 23 and the implied incidental power are not to be taken as authorising the making of an order as widely expressed as that made by Sheppard J. In Commonwealth Trading Bank v Inglis (1974) 131 CLR 311 the High Court held that it had no power to make an order that no legal proceedings should be instituted by the respondents in that case without leave of a Justice of the Court. Reference was made to the High Court equivalent of O 21, namely O 63 r 6(1). At 318 in the joint judgment of Barwick CJ and McTiernan J it was said, after reference to the inherent jurisdiction of the Court: "…in so far as the provisions relate to the issue of the court's own process, it is a consequence of the argument for the applicant that they have had the effect, not of adding to the power of the court to deal with vexatious litigants, but of restricting its power to do so. In our opinion, the nature of such provisions and the history of their introduction show clearly that they were intended as grants of an additional power. It is unacceptable, in our opinion, to say, as the applicant submits, that the enactment of such a provision as that contained in O 63 r 6 leaves unaffected an inherent power which the court is said to have to make an order of the kind for which that rule provides. Those authorities which refer to the continued existence of an inherent power, notwithstanding that a like power is conferred by rules of court, have no application, in our opinion, to a provision of the kind now being considered." Their Honours held that the making of unwarranted and vexatious applications in an action pending in the court was a matter over which there was an inherent power in the court to exercise control. There was an essential difference in their Honours' opinion between regulating the conduct of such an action so as to prevent the court's process from being abused on the one hand and impeding a particular person in the exercise of a right of access to the court on the other hand. The Judiciary Act 1903 in s 32 confers on the High Court statutory power to make a range of orders which is analogous to that conferred on the Federal Court by s 23. In Horvath v Commonwealth Bank of Australia [1999] FCA 504 the judgment was referred to by Finkelstein J in connection with an order made under O 21 r 2. His Honour also referred in that case to Grepe v Loam [1887] 37 Ch D 168 where, after judgment in an action had been given, the court restrained the making of applications to have the judgment set aside or orders inconsistent with the judgment. It was considered that those applications were made "in the action" although after judgment. In Attorney-General v Wentworth (1988) NSWLR 481, in a comprehensive discussion of the power of the court to restrain vexatious litigation, Roden J referred to s 84 of the Supreme Court Act 1970 which reflected, in substance, the terms of O 21. The section, referring as it did to the institution of proceedings, his Honour in that case indicated that in determining whether proceedings were to be regarded as "instituted" for the purposes of s 84 he would consider the form rather than the substance of the matter. Thus if an interlocutory proceeding was made in a pending action it would not be a proceeding instituted for the purposes of s 84. However if it sought substance relief and, in particular, sought to bring an additional party into the proceedings, it would be capable of being so regarded. 17 I do not regard the decision in Commonwealth Trading Bank v Inglis as so constraining the inherent jurisdiction or the implied incidental power of this Court or the application of s 23, that it can prevent this Court from restraining the institution of proceedings which, in effect, seek to relitigate the substance of matters already determined in proceedings which have been disposed of in the Court. As in the Wentworth case the touchstone of the Court's power must be substance rather than form. I think therefore that although on the authority of Inglis, Sheppard J's order was too widely cast, it can be recast to meet the difficulties posed by Mr Hunter's continued attempts to relitigate the issue on which he has thus far been unsuccessful. I therefore propose to vary the order of Sheppard J accordingly. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice French. Associate: Dated: 9 August 1999 Counsel for the Applicant: Mr L. Hunter appeared in person. Counsel for the Respondent: No appearance for the First to Sixth Respondents Date of Hearing: 27 July 1999 Date of Judgment: 9 August 1999