Bhagat v Global Custodians Ltd [2002] FCA 926

FEDERAL COURT OF AUSTRALIA

Bhagat v Global Custodians Ltd [2002] FCA 926 PRACTICE AND PROCEDURE – Application for a stay – whether interim stay should be granted – whether applicant has demonstrated that appropriate circumstances exist for the grant of a stay – interests of justice – whether new evidence exists in support of claims made – whether basis exists for setting aside earlier determinations BANKRUPTCY – Construction of s 43 of the Bankruptcy Act 1966 (Cth) – whether provisions should be read cumulatively

Bankruptcy Act 1966 (Cth) s 43

Bhagat v Global Custodians Ltd [2002] FCAFC 51 referred to Global Custodians Ltd v Bhagat [2002] FCA 701 cited Re Mendonca; Ex parte Commissioner of Taxation (1969) 15 FLR 256 cited HARI BHAGAT v GLOBAL CUSTODIANS LTD N 496 OF 2002 TAMBERLIN J SYDNEY 26 JULY 2002

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N 496 OF 2002

BETWEEN: HARI BHAGAT

APPLICANT

AND: GLOBAL CUSTODIANS LTD

RESPONDENT

JUDGE: TAMBERLIN J

DATE OF ORDER: 26 JULY 2002

WHERE MADE: SYDNEY

THE COURT ORDERS THAT: 1. The application for an interim stay order is dismissed. 2. Costs be reserved. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N 496 OF 2002

BETWEEN: HARI BHAGAT

APPLICANT

AND: GLOBAL CUSTODIANS LTD

RESPONDENT

JUDGE: TAMBERLIN J

DATE: 26 JULY 2002

PLACE: SYDNEY

REASONS FOR JUDGMENT 1 This is an application by Mr Bhagat for a stay of a sequestration order made by Branson J on 24 May 2002. Mr Bhagat has lodged an appeal against these orders. Mr Bhagat also seeks other orders referred to in three Notices of Motion filed by him, dated 29 May, 8 July and 15 July 2002. 2 The matter came before me as Duty Judge for a directions hearing on Tuesday 23 July 2002. Mr Bhagat claimed that there was now great urgency in the stay application because the matter is listed before the Supreme Court on Friday 26 July 2002 when a determination may be made as to the appointment of a Receiver. Both parties have informed me that they were ready to proceed on this application. Mr Bhagat also said that he must go to India in early August this year to deal with over 250 Statements of Claim in relation to extensive litigation in that country. Mr Bhagat has been before this Court on several previous occasions and in addition he has been engaged in what can only be described as extensive litigation in the Supreme Court, much of it before Young J. 3 The history of the relevant litigation is set out in the affidavit of Jeffrey Flick, solicitor for the respondent, filed on 18 July 2001, read on this application and I will not repeat it. The background is also fully set out in a more discursive manner in the decision of the Full Court of 13 March 2002 in Bhagat v Global Custodians Ltd [2002] FCAFC 51. In that case the Full Court concluded at [78] that: "In our opinion, Mr Bhagat's complaints do not have any substance. Beaumont J correctly concluded that the information that Mr Bhagat had placed before him did not warrant him going beyond the judgment of Young J and the decision of the Court of Appeal. Furthermore, notwithstanding the extent of material that Mr Bhagat has placed before this Court, there was nothing in it or in the material that was before the primary Judge that could be classified as a counter-claim, set-off or cross demand of the type that is referred to in the Bankruptcy Act. The application for leave to appeal is refused. Mr Bhagat is to pay the costs of the application. Those costs are to be taxed on the normal party and party basis in default of agreement." 4 The application for a sequestration order came before Branson J on 24 May 2002 when her Honour made the sequestration order. Her Honour delivered her reasons on 31 May 2002 and rejected the assertions of Mr Bhagat that the petitioning creditor and other parties had engaged in fraudulent conduct: see Global Custodians Ltd v Bhagat [2002] FCA 701. 5 The Full Court judgment to which I have referred refers to the judgment of Young J on 13 April 2000 in which Global Custodians Ltd ("Global") was successful in obtaining an order that Mr Bhagat's claims against it be dismissed with Mr Bhagat ordered to pay Global's costs on an indemnity basis. Those costs were subsequently taxed in the sum of $64,689.93 and on 1 May 2001 judgment was entered in Global's favour in that sum with effect from 13 April 2000. The Court of Appeal of New South Wales refused leave to appeal in that matter. 6 On 14 February 2002, Young J delivered reasons for judgment in three matters involving Mr Bhagat and on 4 April 2002, his Honour made orders and declarations which answered a number of questions raised in the proceedings. His Honour also ordered that Global and Messrs Greenlees, who were also party to the proceedings, were entitled to have access to certain documents and also awarded costs against the defendants, including Mr Bhagat, and declined to stay the operation of those orders. 7 Mr Bhagat claimed that to hear the substantive stay application, which he had filed in relation to the orders of Branson J, would require three to eight days. I explained that the Court could not make this time available or anything like it in a Duty week. I indicated that as Duty Judge I would be prepared to hear his application for an interim stay, pending the hearing of a full stay application, provided the application of Mr Bhagat did not take more than an hour to present. Alternatively, I suggested to him that he might otherwise approach the Registry to see if there was another Judge who could grant him the time necessary to hear the application. He agreed to proceed before me and made detailed submissions extending over eight pages of type-written submissions which he had prepared in advance. He provided the Court with those submissions at the conclusion of the hearing. 8 I should point out that so far as the urgency of the application is concerned Mr Bhagat was given the opportunity to present his case for a stay to another Judge of this Court on 5 June 2002, two weeks after Branson J's order, but did not take advantage of it on the basis that he was not ready to proceed at that time. Counsel for Global also pointed out that the letter received by Mr Bhagat of 10 July 2002, from the Indian Advocate who was acting for him in the proceedings in India, had made reference to an earlier communication with respect to the need for Mr Bhagat to go to India so that the urgency did not suddenly arise on 10 July 2002. He has now had over six weeks from the date of the sequestration order to prepare the case on the stay application. The Trustee in Bankruptcy of Mr Bhagat's estate has stated that it would be unlikely that he would grant Mr Bhagat permission to travel outside Australia because he has not furnished certain information to him. 9 The principal issue before me is whether an interim stay should be granted. 10 The principles in relation to the grant of a stay are well settled. Order 52 rule 17 of the Federal Court Rules provides: "17(1) An appeal to the Court shall not – (a) operate as a stay of execution or of proceedings under the judgment appealed from; or (b) invalidate any intermediate act or proceeding, except so far as the Court or a Judge or the Court below may direct." 11 The general approach of the Court is to give weight to the submission that the judgment appealed from is correct and the Court will not lightly deprive a party of the fruits of the litigation. That consideration is important in this proceeding where the case advanced by Mr Bhagat has been examined in a number of other proceedings. The case law indicates that it is not necessary for the Court to be satisfied that "special" or "exceptional" circumstances have been made out but it is sufficient if the applicant demonstrates that a reason or an appropriate case has been made out to warrant the exercise of the Court's discretion. The discretion is broad. Where an applicant for a stay has not made an appropriate case but has left the situation in a state of speculation or has advanced mere argument, weight must be given to the fact that the judgment below was in favour of the other party. Other discretionary factors that can be taken into account are the desirability of a party being able to fully present any reasonable argument it wishes to advance and the interests of justice and fairness to all parties. The circumstances of each particular case are the determining considerations in exercising the discretion. 12 On this application Mr Bhagat claims that there are newly discovered facts, new evidence, new circumstances or new findings which provide the basis for an appeal and which warrant the reconsideration of his case or the consideration of a reformulation of his case as set out in his Fourth Further Amended Notice of Appeal. 13 At the heart of the claims by Mr Bhagat is an allegation that the Supreme Court judgments were obtained by fraud based on assignments which were fraudulent. He claims that he can now prove his case based on new matters or newly discovered facts referred to in his affidavits, his Fourth Further Amended Notice of Appeal and in his Statement of Claim in two Supreme Court proceedings. 14 A consideration of the "core issues" formulated by Mr Bhagat and attached to the Notice of Motion filed on 15 July 2002 indicates that they largely turn on whether the Supreme Court proceedings, begun on 22 May 1998, were based on fraudulent dealings and were fraudulently commenced or pursued. These issues were considered by the Full Federal Court, by Justice Young, and by Beaumont and Branson JJ, and found to be without foundation and nothing has been raised before me which could call for a different conclusion. 15 An examination of the alleged new facts or material indicates that there are no new facts or material in evidence. Mr Bhagat is relying on mere allegations or assertions. He has not identified new evidence or circumstances or factual material apart from matters which have already been extensively canvassed at length in a number of judgments. Although numerous assertions of fraud are made, there is no substantive evidence or material to point to this and it is counter to the findings which have been made in earlier litigation between the parties. The Full Federal Court in its reasons, agreed with Young J that Mr Bhagat had not identified any fresh facts or evidence which could indicate fraud: see Bhagat v Global Custodians Ltd [2002] FCAFC 51 at [49]-[55]. Nor has he done so on the present application. 16 Mr Bhagat relies heavily on the material to which has he referred me and which I have read. He particularly emphasised his affidavit of 8 July 2002. An examination of the material to which I have been directed indicates that there are no new facts established. For example, I have been referred to pages 93 through 102 in the affidavit of 8 July 2002. There is nothing in this material which establishes or refers to any new circumstances which give rise to any basis for setting aside earlier determinations in relation to the assignments in question or the conduct of the parties in those proceedings. The matters raised are either assertions or, as I have said, statements in judgments, or pleadings or affidavits, which do not advance the case put forward by Mr Bhagat. In particular he relies on allegations made in Court documents in the nature of pleadings or submissions which do not amount to evidence that may assist his case. His affidavit material on this application is a series of assertions or conclusions without evidentiary foundation. 17 One other matter which was sought to be raised by the applicant relates to the construction of s 43 of the Bankruptcy Act 1966 (Cth). This is referred to, for example, in Mr Bhagat's affidavit of 8 July 2002 at page 83 where he relies on the absence of the expression "or", indicating an alternative between s 43(1)(b)(i) and subpars (ii) and (iii), to submit that the requirements are cumulative and not alternative. Accordingly, it is suggested that the Court demonstrated an error in its construction of s 43. There is no substance in this submission and it is quite clear, in my view, that the provisions of s 43(1)(b) are in the alternative throughout and are not cumulative in any respect: see Re Mendonca; Ex parte Commissioner of Taxation (1969) 15 FLR 256 at 260, per Gibbs J. Consequently, for example, it is not necessary to demonstrate that a person was personally present or ordinarily resident in Australia and had a dwelling house or place of business in Australia and was carrying on business in Australia. 18 Mr Bhagat also seeks to restrain Global from taking further steps in the Supreme Court proceedings. No basis has been shown to justify granting this anti-suit injunction. 19 I have considered the detailed submissions made to me by Mr Bhagat, both orally and in written form, together with the material to which he has referred me. I am not persuaded that any appropriate reason has been made out for the grant of any stay in this matter. Nor do I consider any case has been made out for the making of any other order or direction sought by Mr Bhagat. 20 Accordingly, I dismiss the application made any Mr Bhagat for an interim stay order. The costs of the application will be reserved. I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin.