New South Wales Supreme Court CITATION : Gould v Day [2003] NSWSC 810 HEARING DATE(S) : 28 August 2003 JUDGMENT DATE : 28 August 2003 JUDGMENT OF : McDougall J at 1 DECISION : Statement of Claim dismissed. Plaintiff to pay defendants' costs. CATCHWORDS : PROCEDURE - whether amended statement of claim discloses a sustainable cause of action - whether SCR Pt 13 r 5 dismissal or stay, or SCR Pt 15 r 26 striking out, should be ordered - whether res judicata or issue estoppel applies - BANKRUPTCY - consideration of the right of a bankrupt to enforce proceedings to recover damages for injuries to the bankrupt's estate - whether s 116(2)(g) of the Bankruptcy Act applies LEGISLATION CITED : Bankruptcy Act 1966 Trade Practices Act 1974 Cummings v Claremont Petroleum NL (1996) 185 CLR 124, 135-6 CASES CITED : Faulkner v Bluett (1981) 52 FLR 115 Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 Stephen Gould (P1) Guy Blomberg (P2) PARTIES : Ken Bromfield (P3) Julian Day (D1) Alan Manly (D2) FILE NUMBER(S) : SC 20438/02 COUNSEL : Plaintiff - In person Defendant - In person SOLICITORS : Plaintiff - In person Defendant - In person LOWER COURT Supreme Court JURISDICTION : LOWER COURT 20438/02 FILE NUMBER(S) : LOWER COURT Registrar Howe JUDICIAL OFFICER : IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION McDOUGALL J 28 August 2003 20438/02 STEPHEN GOULD & ORS v JULIAN DAY & ANOR JUDGMENT 1 HIS HONOUR: This is the hearing of two questions referred to a Judge of the Court by Assistant Registrar Howe on 5 August 2003. The questions are: (1) whether the Amended Statement of Claim filed herein should be dismissed, or stayed, pursuant to Pt 13 r 5, or struck out pursuant to Pt 15 r 26; and (2) if a cause of action is shown, whether that action can be maintained, personally, by Stephen George Gould because the property falls within the category of property excluded by s 116(2) of the Bankruptcy Act 1966. 2 The Assistant Registrar referred to what he called "reasons set out in the attached document". Those reasons set out what the Assistant Registrar understood to be the background to the present litigation and the history of the current proceedings. 3 Mr Gould has made it clear that he disagrees with the Assistant Registrar's statement of reasons. As I understand it, the principal ground for dispute is that the reasons set out by the Assistant Registrar do not adequately or, indeed, at all, (in Mr Gould's view) set out the history of the dispute that has arisen between Mr Gould and Messrs Day and Manly. 4 However, it is clear, as the Assistant Registrar has said, that there has been "a spate of litigation" between the present parties since his Honour Judge Patten in certain proceedings in the District Court between the present plaintiff as plaintiff and the present defendants as defendants, gave judgment in favour of the defendants with costs. 5 The spate of litigation includes proceeding N 185/02 in the Federal Court of Australia; that application was dealt with by his Honour Justice Emmett on 28 March 2002: [2002] FCA 423. In paragraph 3 of his Honour's reasons for judgment, his Honour set out the application for relief that Mr Gould, as applicant, brought against Messrs Day and Manly as respondents as follows: "The applicant will apply to the Court for an immediate and permanent restraint against the creditors, Day and Manly. The application is made on the grounds that the creditors breached sections 45D, 45BD and section 51AC of the Trade Practices Act 1974 in their dealings with the applicant and his business associations since 1996 and continue to do so, with a letter distributed to an unknown number of people on 5 March 2002". 6 It is clear from his Honour's reasons for judgment that Mr Gould relied on some eight matters in support of his claim for injunctive relief; they being the matters described in paragraphs 8 to 20 of his Honour's reasons for judgment and being matters that occurred between 11 August 1997 and 5 March 2002. 7 Mr Gould has said to me today that there is a longer background, i.e. a background going behind 11 August 1997 and I am prepared to assume that that is so. Mr Gould has also said that the eight matters that underlay his claim for an immediate and permanent restraint also underlie the present proceedings, with an additional matter being, as I understand it, an allegation that, earlier this year, the defendants put into use under their own name, certain intellectual property that Mr Gould says is his alone and not theirs. 8 It is clear, however, that even if that allegation be correct in fact, it is an allegation relating to intellectual property that was the subject of the complaint made before Emmett J; this is made clear from the paragraph of the Amended Statement of Claim that Mr Gould relied upon in his submissions before me, being a paragraph on page 8 of that document. That reads as follows: "During 1998, Julian Day as the Managing Director of ISEG Pty Ltd, released an Internet application product called ISEG - International Software Evaluation Guide". 9 Emmett J dismissed on its merits the application for an immediate and permanent restraint based upon the eight matters to which I have referred. His Honour's reasons for doing so are contained in paragraphs 24 and following of his reasons for judgment. 10 In so far as the applicant relied upon, what I might call, the boycott provisions of the Trade Practices Act, which, in the proceeding before Emmett J, indicates reliance on ss 45D and 45BD and in the present proceeding, indicates reliance on ss 45D, 45DA and 45DB, the reasons that Emmett J gave for concluding that the claims were unsustainable are equally applicable to the present case. 11 In the case of the s 45D claim, his Honour pointed out that the claim would only be maintainable on the conditions set out in subs 3 or subs 4 of that section, namely, that what the legislation calls, "the fourth person", or "the third person", is a corporation and, in the latter event, that the conduct -- 12 GOULD: Your Honour, SEA New South Wales is a corporation that has been listed five times. How many times do I have to keep providing evidence to show that these judgments are wrong. 13 HIS HONOUR: Thank you, Mr Gould. Please take your seat. 14 GOULD: You are reconfirming a mistake. You are reconfirming a mistake, your Honour. I will be getting a transcript to show that the judgment - your Honour, there is no justice. This is like going back to the Rum Corps. 15 HIS HONOUR: I have noted what you have said. I would ask you to be temperate in your remarks. I will take account in my reasons of what you have said and I will continue with my judgment. 16 -- would have, or be likely to have, the effect of causing substantial loss or damage to the business of the third person. There was no claim based on those facts brought under s 45DA before his Honour, but s 45DA mirrors s 45D in the requirements that I have just read: compare s 45DA(3) with ss 45D(3) and 45D(4). 17 So far as s 45DB was concerned, his Honour noted that it was a requirement of that section that the conduct in question have, or be likely to have, the effect of preventing, or substantially hindering, a third person from engaging in trade or commerce involving the movement of goods between Australia and places outside Australia. His Honour stated in paragraph 32 that there was no evidence of any proposal -- 18 GOULD: Your Honour we had one award in Stockholm and we were given that - I was setting up international contracts. Again, unless these things are put on record, your Honour, you just reiterate the mistakes that Justice Emmett made in his judgment. Hence, this is why I am saying we won - we were presented with an award by the King of Sweden. 19 I was talking about the various people in Europe, about setting up distribution rights. This is the impact of Day and Manly on SEA New South Wales, to stop the Australian distribution contract going ahead. I would like it on the record. 20 HIS HONOUR: It has been noted, Mr Gould. 21 GOULD: Thank you, your Honour. 22 HIS HONOUR: You didn't appeal from his Honour's decision, I think. 23 GOULD: I did and it was refused. The Court wouldn't allow me - the Federal Court wouldn't allow me to appeal his decision. Again, I have to record it all to say we are talking about intellectual property issues which Australia claims it wants to become a world leader. The legislation is lagging so far behind. This is why I had to go to Europe in 1987 to take out copyright in the UK because the Australian legislation is so far behind, yet here we are, trying to say we want to be the intelligent country. 24 JUDGMENT CONTINUED 25 -- on the part of the applicant to engage in trade or commerce involving the movement of goods between Australia and places outside Australia. In that context, I note that his Honour had emphasised the word "goods", in the preceding paragraph where he set out the relevant provisions of s 45DB. 26 The transcript will show that, in the course of giving these reasons and when I was referring to the relevant provisions of ss 45D and 45DB and Emmett J's reasoning based on those sections, Mr Gould interjected - and I use that word without intending to be pejorative - to claim that there had been evidence before his Honour to show that his Honour's reasoning on both those points was factually wrong. Mr Gould also indicated that he had sought to appeal from the decision of Emmett J, but that his appeal was, in his word, "refused". 27 That indicates, again, to me an essential similarity between the subject matter of the proceeding before Emmett J and the subject matter of the complaint raised by the Amended Statement of Claim in this Court. It also indicates that Mr Gould, understandably, as a layperson, may not have an appreciation of the fundamental point that a decision of a superior court, such as the Federal Court of Australia, or this Court, is binding on the parties, except to the extent that it may be reversed on appeal. 28 Mr Gould may also not appreciate that, as a consequence of that doctrine, it is not open to him in litigation against Messrs Day and Manly, who were the respondents in the proceeding before Emmett J, to relitigate in fresh proceedings, in a different court, the same subject matter -- 29 GOULD: Your Honour, I must say, it is a totally different issue. One is about injunction; the other is about a claim for damages. 30 HIS HONOUR: You have made that point. I will come to it shortly, Mr Gould. 31 JUDGMENT CONTINUED 32 -- nor do I have any power to sit as a Court of Appeal from the decision of Emmett J. 33 As to s 51AC, Emmett J noted that the prohibition in that section was directed at a corporation and that neither Messrs Day nor Manly was a corporation. Section 46, which is relied upon in the present proceeding is, likewise, directed at a corporation and his Honour's reasoning necessarily applies to that section also. 34 It seems to me to follow inexorably that his Honour's determination of the issues of principle based on the same subject matter in litigation involving the same parties necessarily determines the issues in front of me. 35 Mr Gould takes the point that the proceeding before his Honour was a claim for an injunction, whereas the proceedings before me are a claim for damages. I accept that that is so, but note that the claim before Emmett J, being a claim for an immediate and permanent restraint, was a claim for final relief. 36 It is also unquestionably the fact that, under ss 82 and 87 of the Trade Practices Act, Mr Gould could have claimed either damages under the former of those sections or, among other things, compensation under the latter of those sections in the proceeding before Emmett J; he did not do so. 37 Whether or not that circumstance gives rise to the application of the principle established by the decision of the High Court of Australia in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589, is an obvious question. However, in view of the fact that, as I understand the judgment of Emmett J, his Honour's reasons determined the very same issues of law that are the basis of the present application, I do not need to consider that issue. 38 I should indicate that Mr Gould, upon being informed of the way that I perceived the issues, sought an adjournment so that he could obtain legal advice. Mr Gould agreed that at a status conference in this Court on 10 June 2003, he informed the Assistant Registrar who presided that he was to instruct a legal representative and that he gave a similar indication at a further status conference held on 2 July 2003. 39 Mr Gould has handed to me, and I have read, an affidavit that details what he says are his attempts to seek legal advice since about 10 July 2003 and I have taken into consideration the matters raised in that affidavit. If I were of the view that somewhere buried in the Amended Statement of Claim there was a sustainable cause of action, I would have been inclined, notwithstanding the factors that I indicated to Mr Gould in the course of argument, to grant his application for an adjournment. 40 However, since I have come to the clear view that there is no sustainable cause of action and that I ought to answer the questions posed by the Assistant Registrar in a way that will bring these proceedings to an end, I have decided, on the ground that any adjournment would lack utility and would simply extend both personal cost to the defendants and the consumption of Court time, to decline to do so. 41 I note, in any event, that if I am wrong in the views to which I have come, Mr Gould's position will be protected because he will have the right to go to the Court of Appeal and if he wishes to obtain legal representation, both to consider my reasons and to advise him in respect of the appeal -- 42 GOULD: It will go on the Internet to show the Rum Corps still exists. The legislation in New South Wales hasn't progressed too far in 150 years. 43 HIS HONOUR: For the reasons that I have given, it seems to me that the cause of action advanced in the Amended Statement of Claim is unsustainable. It follows, in my opinion, that there is a case for relief under either or both of Pt 13 r 5 and Pt 15 r 26. 44 In relation to those parts of the Rules, Mr Gould has taken the point that the defendants have not made application, but that this is a matter raised by the Court. That is undoubtedly correct, although I do note that, on 4 October 2002, shortly after these proceedings were commenced, a firm known as Ramensky Lawyers, wrote on behalf of the defendants to the Chief Executive Officer of the Court, pointing out a number of matters and asking that the proceedings be stayed forthwith. The Court, understandably, replied in terms to the effect that such an application could not be dealt with on correspondence and it would be necessary for the matter to be raised in open Court. 45 The other question that is raised by the Assistant Registrar's reference involves the construction and application of the relevant provisions of the Bankruptcy Act 1966. In view of the conclusion to which I have come and which I have already expressed, it is not, strictly speaking, necessary for me to give detailed consideration to that issue. 46 In this context, Mr Gould relies on a decision of Studdert J given in earlier proceedings in this Court being Gould v Day and Ors and his Honour's judgment bears the reference [2002] NSW SC 492. It is apparent from his Honour's reasons that, in those proceedings also, Mr Gould indicated on at least one occasion that he was seeking legal representation and sought an adjournment for that reason. 47 The matter before his Honour involved complaints as to the form of the pleading in that case. His Honour was of the view that the complaints were justified and concluded that the statement should be struck out because of a number of deficiencies and his Honour noted that, if there were a viable cause of action, that order would not prevent it from being pursued. In the course of coming to that conclusion, his Honour considered an argument based on s 116 of the Bankruptcy Act. 48 Section 58(1) of the Bankruptcy Act provides that where a debtor becomes a bankrupt, the debtor's property not being after-acquired property, vests forthwith in the Official Trustee or the other trustee, and that after-acquired property of the bankruptcy, vests as soon as it is acquired by, or devolves on the bankrupt in the Official Trustee, or other trustee. 49 It is not in doubt that Mr Gould was made bankrupt by a sequestration order made in September 2000; the precise date does not appear from the papers. It is not in doubt that that bankruptcy continues, in accordance with the Act. Under s 149(4), the earliest date for discharge would be three years from the date on which Mr Gould has filed his Statement of Affairs. I do not know when the Statement of Affairs was filed, although I note that under s 54(1), it is to be filed within 14 days from the date on which Mr Gould was notified of the bankruptcy. The point is, simply, that Mr Gould is and was, at the time he commenced these proceedings and, if it matters, the proceeding before Emmett J, a bankrupt. 50 Section 116 of the Bankruptcy Act defines the property of the bankrupt that is divisible among creditors. It is clear that that property includes things in action, including causes of action that belong to, or are vested, in a bankrupt. The generality of subs 1 is limited by subs (2) and para (g) of subs (2) is of particular relevance. It excludes from property divisible among creditors: "Any right of the bankrupt to recover damages or compensation: (i) for personal injury or wrong done to the bankrupt, the spouse of the bankrupt, or a member of the family of the bankrupt; or (ii) in respect of the death of the spouse of the bankrupt, or a member of the family of the bankrupt; and any damages or compensation recovered by the bankrupt (whether before or after he or she became a bankrupt) in respect of such injury, or wrong, or the death of such a person". 51 The general effect of the operation of the bankruptcy laws and in particular, their impact on causes of action belonging to or vested in the bankrupt, was considered by the High Court of Australia in Cummings v Claremont Petroleum NL (1996) 185 CLR 124. The majority in that case, Brennan CJ and Gaudron and McHugh JJ, stated at pp 135-136 that the cases: "establish the negative proposition that a bankrupt has no right to bring or prosecute proceedings to protect, enhance or add to the property of which he has been divested on bankruptcy". 52 Studdert J, in relation to the cause of action that was being agitated before him - and I emphasise that that was not the present proceedings - referred to the decision of Lockhart J in Faulkner v Bluett (1981) 52 FLR 115. He noted that Lockhart J had stated the proposition that, "rights of action generally pass to the trustee of a bankrupt's estate", but that "exceptions have been created by decisions of the Court". 53 Those exceptions, Lockhart J said, included rights of action for slander, for seduction of a servant and for trespass to lands or goods in the plaintiff's actual possession, at least where the only substantial damage is for annoyance and personal inconvenience to the plaintiff. There were also exceptions under the Common Law for personal injuries arising out the certain breaches of contract, such as a contract of marriage. 54 Studdert J noted that the Common Law principles that Lockhart J had stated were embodied in the bankruptcy legislation, that is to say, as it now stands, in s 116(2)(g) and accordingly, Studdert J concluded "that had the first plaintiff's claim been a claim for damages for personal injury, or had the claim been a claim for defamation, section 116(2)g would have applied, in which event, any right of action and any damages recoverable in such action would not have been vested in the official trustee." 55 His Honour concluded that, on the pleadings as they stood "it is simply not possible to determine, as the matter has been pleaded, whether section 116(2)(g) is enlivened". 56 In my opinion, the distinction that is inherent in s 116(2)(g) may be expressed as follows. Injuries to the estate of the bankrupt pass to the Official Trustee or other trustee and may be enforced by them, not by the bankrupt. Injuries that are personal to the bankrupt, such as injury to character, credit and reputation and, I would add, certain actions for personal injury, do not pass to the Official Trustee or other trustee, but remain the property of the bankrupt and may be enforced by the bankrupt. 57 GOULD: Could you read that again to make sure I understand, injuries to character -- 58 HIS HONOUR: ... credit and reputation and I would add, personal injuries do not pass to the Official Trustee or other trustee and may be enforced by the bankrupt. 59 GOULD: Thank you. 60 HIS HONOUR: In the present case, the damages that Mr Gould claims are set out in summary form on page 14 of his Amended Statement of Claim. They include damages for loss of investment, damages for loss of income and general damages. The damages for loss of investment represent, as I understand it, the opportunity cost of developing the intellectual property in question and the damages for loss of income relate to the moneys that Mr Gould says would have been received had he been enabled to exploit the intellectual property in question. In my opinion, it is clear that damages in those two categories vest in the Official Trustee. 61 The third category of damages claimed is damages to reputation. The Amended Statement of Claim notes that those damages have not been calculated "as the lawyers that had agreed to handle this matter on a contingency fee basis withdrew from the matter on Friday, 27 June 2003". Nonetheless, consistent with my understanding of the relevant principles, damages in the third category for loss of reputation would remain the property of Mr Gould and would be enforceable by him. 62 Were it necessary for me to reach a concluded view on the second question posed by the Assistant Registrar, I would answer it by saying that the causes of action in the first two categories that I have referred to, namely, for loss of investment and loss of income, were not maintainable personally by Mr Gould, but that the claim for damages in the third category was. 63 However, since an answer in those terms would not bring the proceedings to an end, whereas the view that I have come to does bring the proceedings to an end, I do no more than indicate those views. 64 In the circumstances, I have come to the view that, having regard both to the earlier determination of Emmett J and, to the extent that it is necessary to do so, his Honour's reasons for coming to that determination, the claims advanced by the present Amended Statement of Claim cannot succeed, notwithstanding that they are claims for damages and not for injunctive relief. 65 Accordingly, in my opinion, it is appropriate to dismiss the Amended Statement of Claim and I so order. 66 DAY: Can we have costs in the matter? 67 HIS HONOUR: What do you say about that, Mr Gould? 68 GOULD: I have to thank your Honour for allowing me to document all of this. As I said, the interesting thing about the law it is continuously developing and needs the public to point out the deficiencies. 69 Well, with regard to costs, as you can see, Mr Day and Mr Manly have not filed any documents. I am sure they are claiming their time just sitting in court. All of this could be conducted electronically, which is what I will endeavour to point out, to save, obviously, my time and in future, obviously, the Court time. 70 As we can see, the Court are getting too heavily congested with issues that are, in my opinion, irrelevant. There is a claim anybody can read; they can read the case on this. Day and Manly sought to defraud me and my colleagues and have been protected by the Court. The Assistant Registrar conducted a spurious application that Day and Manly didn't file. Whichever way you look at it the Court haven't acted in an unbiased manner; they have not fulfilled their judicial responsibility -- 71 HIS HONOUR: Mr Gould, please take your seat. 72 GOULD: This has to be pointed out. You have not held up an unbiased opinion in this particular matter. The courts have been totally biased. 73 HIS HONOUR: Please take your seat. 74 GOULD: So this has to be pointed out to the relevant people. 75 HIS HONOUR: Please take your seat, Mr Gould. If you have a quarrel with the decision that I have given you have your rights. Those rights -- 76 GOULD: It just prolongs the whole matter, your Honour. 77 HIS HONOUR: Let me finish - those rights do not extend to personal insults to officers of the Court or to me. The question that I have asked you is what, having regard to the decision I have come to, you wish to say on the question of costs. You have said that Messrs Day and Manly may not have incurred a great deal in the way of costs; that may be correct. If it is correct, it will be reflected in any assessment made, should I order costs. Is there anything else you wish to say on the question of costs, as opposed to expressing your views on the merits of the decision I have given? 78 GOULD: Yes, I believe there should be costs in the cause. Obviously, I am going to appeal your decision. 79 HIS HONOUR: The cause has come to an end. 80 The order of the Court is: (1) I order that the Statement of Claim be dismissed; (2) I order the plaintiff to pay the defendants' costs. ****** Last Modified: 09/05/2003 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.