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Shields and ANOR v Australia and New Zealand Banking Group S33/1997 [ 1998] HCATrans 75  (13 March 1998)

Office of the Registry

Sydney No S33 of 1997

B e t w e e n -

ISAAC JOHN MACKAY SHIELDS

First Applicant

JENNIFER MARGARET SHIELDS

Second Applicant

and

AUSTRALIA AND NEW ZEALAND BANKING GROUP

Respondent

Application for special leave to appeal

GAUDRON J

McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 13 MARCH 1998, AT 10.46 AM

Copyright in the High Court of Australia

MR I.J.M SHIELDS: I appear with my wife, MRS J.M. SHIELDS.

GAUDRON J: Thank you. You are going to speak on behalf of both, are you, Mr Shields?

MR SHIELDS: We will be doing both. I will do some speaking and we have got a piece that we have typed out between us and Jenny will read that out.

GAUDRON J: Thank you.

MR G.O. BLAKE: May it please the Court, I appear for the respondent. (instructed by Norton Smith & Co)

GAUDRON J: Yes, Mr Shields. Is Mrs Shields going first? Thank you.

MRS SHIELDS: This is the outline of our argument. We believe this case runs foul of the Constitution of Australia, section 51(xiii), (xvii), (xxv), (xxxvi), (xxxix); section 72; section 73 and clause 5; the Federal Court of Australia Act 1976 section 22; the Crimes Act 1914 section 5(1); Bankruptcy Act section 52 and rule 154, natural justice, as we have been bankrupt on no debt; Judiciary Act section 32, if this application is refused.

The application book, page 78 line 30 there are two lines missing. The tying of the hands is achieved by the Bank not supplying the documents in the notice to produce or the subpoena; in other words, discovery.

This matter is different to other matters. The courts below made orders to enable the respondent, the ANZ Bank, to take all we ever had but now it is different because it is the public that has to pay and the public do not want to pay other than on a proven debt. You may say it is the public's money that is on trial here. In this matter, the applicants could not show proof that there was no debt as the respondent, ANZ Bank, have not complied with the notice to produce documents or the subpoena to produce documents, in other words, discovery. So you may say the court complied with the Federal Court Act section 22, "properly brought forward by him in the matter" and ruled against the applicants. But the respondent, ANZ Bank, also did not show proof of debt and the court biasly ignored section 22 "properly brought forward by him in the matter".

McHUGH J: Did not the trial judge have affidavits before him showing the existence of a debt?

MR SHIELDS: The affidavit did not have anything to prove - there was no proof of debt in it. It is somebody saying there is a debt.

McHUGH J: That is proof of a debt. That is the way it has been done in the Bankruptcy Court for 40 years to my knowledge.

MR SHIELDS: The thing is that the Constitution says quite clearly "peace, order and good government" and then it comes to the making of the Bankruptcy Act and the Bankruptcy Act says in 52 "proof of debt". Right. Now - - -

GAUDRON J: Let us get this right. There was a judgment, is that not right?

MR SHIELDS: Yes. There was a consent judgment. We disagreed with the consent but we were not able to find three judges that would agree with us.

GAUDRON J: Yes. Well, there was a judgment. Then the property was sold.

MR SHIELDS: Correct.

GAUDRON J: Some credit was given against the judgment from the proceeds of sale?

MR SHIELDS: Yes.

GAUDRON J: And an affidavit was given - was sworn and tendered in evidence as to the balance after credit was given for the proceeds of sale.

MR SHIELDS: That would appear, but the problem is that we asked for - - -

GAUDRON J: But that is proof of debt. That is evidence.

MR SHIELDS: Where did that evidence come from? There is nothing there to say where it came from. Now, the Bank is a big organisation and for somebody - if you asked one of the persons there to know about your account, they would first have to go and look up the whole thing. To come into a bankruptcy matter, they are going to have to look it up properly and find out. Now, when he looks up all this evidence to find out, yes, you owed or you do not owe whatever the case may be, why then cannot that person then put that in an affidavit and show proof.

McHUGH J: He might, if he wants to, and if he does, he might show that there was not a debt, as happened in a case I was in at the Bar which came up to the Court a long time ago called Mahoney v Wren. But here, an affidavit was put on, it alleged that there was $35,800-odd still owing from a final judgment debt of $139,000 and the deponent swore to it and it was up to you to challenge it. You could have cross-examined him, you could have called evidence saying you did not owe any money.

MR SHIELDS: We were not able to cross-examine the deponent.

McHUGH J: You could have.

MR SHIELDS: No, we were stopped.

McHUGH J: Why were you stopped? Because you were not there.

MR SHIELDS: The first time I was not there. However, the second time I asked and we were refused.

McHUGH J: Refused what?

MR SHIELDS: To - able to cross-examine the deponent.

GAUDRON J: On what occasion was that; after the making of the bankruptcy - after the sequestration order?

MR SHIELDS: I was sick the night before so I could not - I was not able to be there so - - -

McHUGH J: Yes, but that means your complaint is that you should have been given an adjournment. You brought that point up to this Court, among other courts, and special leave was refused in respect of it. So you have to - - -

MR SHIELDS: No, no, hang on. The special leave previously was on the consent, not on the bankruptcy. The bankruptcy matter is really being bankrupt on no proof of debt.

GAUDRON J: Bankrupt on an affidavit, you say, without the supporting documents. It comes to that, does it not? It is not no proof of debt, it is an affidavit which did not attach the supporting documents.

MR SHIELDS: Yes. We are saying, with just somebody verballing, then that is not proof of debt. The Bankruptcy Act:

At the hearing of the creditor's petition, the Court shall require proof of:

(a) the matters stated in the petition (for which purpose the Court may -

may -

accept the affidavit verifying the petition as sufficient);

So the Bankruptcy Act uses the word "may", they "may accept" it. I am saying that when there is a dispute, then the court may not accept it. When you look at the Constitution, it says "peace, order and good government". To accept an affidavit, when the orders say "may" accept it, when there is a dispute against it, I believe is wrong.

In section 51 of the Constitution, the first part is "peace, order and good government". Subsection (xxxvi):

Matters in respect of which this Constitution makes provision until the Parliament otherwise provides:

That is another one that you can attach to the bankruptcy thing which still goes back to the original thing, peace, order and good government.

McHUGH J: But the words "peace, order and good government" have no legal effect in any real sense.

MR SHIELDS: When the people were writing the Constitution they certainly must have had that in mind.

McHUGH J: It was a standard form of expression which had been used for more than a century to describe the type of power that parliaments were to have. But they are not words of limitation.

MR SHIELDS: Are you saying that because the Constitution is 100 years old it is not valid?

McHUGH J: Not at all. But the words "peace, order and good government" do not restrict the powers of the Parliament. The presumption is that any law that is within the lettered paragraph is for the peace, order and good government of the Commonwealth. The Court has been saying that for a long period of time; the last time in the Union Steamship Company Case, 11 or 12 years ago.

MR SHIELDS: I still believe that in the Bankruptcy Act it has got the word "may" accept it.

McHUGH J: Yes, but that gives a discretion to the trial judge.

MR SHIELDS: Yes, but "may" is not a positive, it is - - -

McHUGH J: No, it is empowering. It empowers the judge, if he wishes or she wishes, to act on affidavit evidence. Here was an affidavit sworn by an officer of the Bank and the judge decided to act upon it. The judge could have said, "I'm not going to act on this evidence. I'll give you, the petitioner, an adjournment to go and get other evidence.", but the judge elected to, and that was a matter that falls within his discretion in this particular case.

MR SHIELDS: We have served on a number of notice to produce, subpoenas and everything, and in none of those documents could they produce any evidence that there was ever a debt. Now, the situation is like this, that I accuse you of owing me money. Now, you have not got anything there in your possession to show that you owe me money. It is the same story. The Bank has not got anything there - - -

GAUDRON J: It has the judgment debt.

McHUGH J: It has the judgment debt to stand - - -

MR SHIELDS: That is a consent.

McHUGH J: That makes no difference.

GAUDRON J: That makes it even better actually. A consent judgment is both - - -

MR SHIELDS: No, consent leaves the whole thing open to fraud because, let us face it, I am bankrupting you, for argument sake - I am not saying I am, so do not get me wrong, it is just an expression - say I am bankrupting you and I want to claim a big tax or whatever on my side, right. I can say to you, listen, you consent to this bankruptcy and I will give you a brand new Rolls Royce. How do you know that the Bank did not do that to me and the Rolls Royce broke down?

GAUDRON J: If you allege fraud, this is not the way to do it. But short of alleging fraud, the judgment is - a consent judgment is perfect evidence of debt.

McHUGH J: And indeed, what has happened is that the Bank, instead of claiming the whole amount of the judgment, has said that they are now only owed $35,000 of that.

MR SHIELDS: Because they have sold everything that they - - -

McHUGH J: I know they did, but they are giving you credit for it. They are giving you credit for it. This really is not a point - I know this case and what has happened to you must affect you, Mr and Mrs Shields, but you are tearing yourself apart litigating this issue. You have to put it behind you. You have been through the courts, you have lost all along the lines. We have read these papers as carefully as we can, having regard to all the work we have to do in respect of these matters, and there just is no substance in any of your points. If there were we would be the first one to grant you special leave.

MR SHIELDS: You see, this consent settlement came to be because the judge was retiring and they all wanted to go to the party. So there was a consent handed up. At that stage, we knew very little of the law and later on we realised what had happened to us. We knew absolutely nothing of the law. It is since that stage that we have been starting to learn and find out what we can. The problem is that when the Bank says it is consent, and there are highly trained professional party against a non-trained self litigant, it is one hell of a job. The same as here - which consent, and the documents I put up, Corney v Brien, point out there that the court must look at any consent with suspicion. Then there is another case, Russo, a Queensland case, where the judge there said that these sort of things is not proof of debt. Proof of debt is where there is actually papers produced to show there is a debt.

See, there is nothing here to show there was ever a contract. That has not been produced. So you boil it down to there is a forced consent put up. A person from the Bank has put an affidavit in but cannot produce any documents to show that there was a debt. It is just his word. Why is not our word as good as that fellows?

McHUGH J: No, it is not a question of that; it is a question that there is a judgment debt of the court which is good against the world. That is evidence - - -

MR SHIELDS: This Queensland case, it said there that a judgment is not proof of debt.

GAUDRON J: There are certainly circumstances in which you can go behind a debt, but the onus, which you cannot now do in these proceedings because that is not the issue in these proceedings, but the onus is then on the person who wants to go behind the judgment debt. It is not an onus on the Bank to prove.

MR SHIELDS: Just as Justice Einfeld did. He went behind the judgment. There was a judge's book put up, which is - I do not know, without counting it, it would be round about 1,000 pages - and the Bank put that up, which was wrong. We should have compiled that. Now, they had it. They had all the advantage of putting in everything they wanted to put in it. Now, that went before Justice Einfeld and he dismissed it and he did not show there was any judgment in his - so he went behind the judgment and found no debt. So if he could not have found a debt, then where is the debt? They quite clearly say they have not produced any documents to show the debt because there is no debt. I still say that on the Bankruptcy Act, the judges may accept an affidavit. Now, they do not have to accept an affidavit. We were not there at the time. There was a fax sent in to the court, which was read out in the court, and that asked that he enforce the notice on discovery. It was never done.

We have been denied natural justice. We have been denied discovery, which is a thing that has gone through the High Court a lot of times, where discovery, a notice to produce, whichever you like to call it, had not been complied with, the Court in all cases has ordered that it be complied with. We have been denied that. Why cannot we ask - why cannot they produce the documents to show there is a debt?

McHUGH J: They did. They produced a judgment debt or they swore to a judgment debt executed or filed in the Federal Court on 8 February 1993. That was the basis of the debt. And the quantum of the debt, they said, remaining was $35,000. They gave you credit for $104,000-odd being the proceeds from the sale of your home.

MR SHIELDS: Right, now, in all these matters they are supposed to have their costs et cetera taxed. You do not know what was the cost or what was the sale of the house. Neither do I. See, the thing, right through it, we have been denied discovery. The High Court has ruled in a lot of cases on discovery and just because we are a self litigant against the Bank, we have no right and a consent is not a judgment. We did not consent.

GAUDRON J: That is a matter that has been litigated on several other occasions. It is not a question to be litigated in this proceeding.

MR SHIELDS: All right, fair enough, I will grant you that. But what I am saying is that is not a proof of debt and it leaves it open to fraud. How do you know that there has not been a fraud there? If there has not been fraud, why then have they not produced the documents to show the debt?

McHUGH J: For the reason that they do not have to. As I said to you earlier, for 40 years, not only have affidavits been used to support debts but people, probably hundreds of thousands of people, have been bankrupted on no more than an affidavit alleging a judgment debt.

MR SHIELDS: There you go yourself. You say "alleging". Why should we be bankrupted on an allegation.

McHUGH J: That is the allegation. That is what is alleged in the affidavit. That is evidence of it. They say that the money is there. When I say "allege", it is open to anyone to dispute it. But if it is not disputed, that is the end of the matter.

MR SHIELDS: The thing is that in this here, that you probably know, is - you are not Justice Toohey by any chance?

McHUGH J: No, I am not.

MR SHIELDS: Okay. We summonsed the - - -

McHUGH J: He has retired. When I sit on special leave days I think sometimes I should be retired.

MR SHIELDS: Sorry about that. We summonsed the Attorney-General. Justice Toohey investigated that and ruled and he implied that until this matter had run, we did not really have an argument. So if this is rejected, then we proceed on those lines again, because we are adamant, we do not owe the debt and we are stuck with this that the Bank can come in and say there is a debt owing. But the rotten part about it, we cannot say that it is not owing. You see, they can say with no evidence that there is a debt but we cannot say that there is no debt. We have to produce concrete evidence and without the discovery, our hands are tied. That is what we got in the back of that book, our hands are tied - what was it, 78:

The Respondent asserts but cannot prove.

The Respondent has the hands of the applicants tied and say the applicants have not proved, but how can the applicants prove with their hands tied.

All this while the courts sit idly by?

The tying of the hands is achieved by the Bank not producing discovery, subpoena.

McHUGH J: It seems to me that from your point of view, having regard to what you have been arguing here today, that your case started to go wrong when you were not there on the day that Justice Whitlam dealt with the matter. If you had been, you could have asked for the notice to produce to be enforced and that may have led to this or that and you may have got documents which would have then provided some foundation for cross-examining the deponent to the affidavit. You may have got some evidence which would suggest you did know it, but one thing that you could not have done is show that there was not a debt because there was a judgment.

MR SHIELDS: Okay. We sent a fax in - it is in the application book - to that effect and we asked that the judge order those documents to be produced. I could not be there, unfortunately. I could not help being sick. That can happen to anybody. And being on your own, once you are sick, that is it.

McHUGH J: I know, Mr Shields. But I think the Full Court explained to you once you did not turn up, that was the end of the matter from the point of view of the judge. It was not part of the judge's duty to go out and send somebody out to ANZ and then go through the documents himself to make a case.

MR SHIELDS: Section 22 of the Federal Court Act and 32 of the Judiciary Act implies that every case must be a final case and it must be heard in such a way there is no multiplicity to continuation of it. So, in other words, they should hear the whole case properly. Now, what you are saying is a complete denial and contrary to the - - -

McHUGH J: No, it is not at all. The judge was dealing with a case between you and the Bank. You did not attend. The judge was not prepared to adjourn the proceedings and so he proceeded on what evidence was there. Now, if you had appeared and conducted the case - - -

MR SHIELDS: I could not appear, so because I was ill and could not appear, then I am denied justice.

McHUGH J: Perhaps your wife could have been there.

MR SHIELDS: We had small children.

McHUGH J: The Federal Court did not think that you had given a real explanation as to the facts, one that satisfied them - - -

MR SHIELDS: How could we - - -

McHUGH J: In any event, it is beside the point, Mr Shields. The fact is that there was a judgment debt and it was verified by affidavit. That is the beginning and end of the matter.

MR SHIELDS: There was no document to show the affidavit. The person that swore the affidavit did not even come to court. We asked to be able to question the deponent of the affidavit and we were denied. Now, how can that affidavit truly stand up as justice. It cannot. That is a straight and - - -

McHUGH J: How do you know the person was not there in attendance at court on the day in question? You were not there.

MR SHIELDS: I asked in the appeal court for it. I asked to be able to cross-examine the person.

McHUGH J: And it was then said it was too late.

MR SHIELDS: I was denied it. So regardless of how it was, I was prevented from cross-examining that person. I fail to see why that person, if there is a debt, which I say there was not, and the biased part about it is the Bank can say there is a debt, I say there is not, the Bank is law.

McHUGH J: No, the Bank is not law.

MR SHIELDS: And the Bank cannot produce, with a number of notices to produce, subpoenas, the whole lot. There is a penalty in the subpoena notice if they do not produce. There is a penalty there. If it is an individual, the person can be sent to gaol. Now, they laughed at all those things and come to court and our word is rubbish and theirs is gospel. Now, the International Covenant requires that all parties have equal rights. We certainly are not getting those.

GAUDRON J: We think we understand your submission, Mr Shields, and your time unfortunately is up.

MR SHIELDS: This will continue on.

GAUDRON J: That may be. But your time is up. We do not need to hear from you, Mr Blake.

There is no error disclosed in the judgment of the Full Court in this matter. Thus the proposed appeal enjoys no prospect of success. Accordingly, special leave is refused.

MR BLAKE: I ask for costs, your Honours.

GAUDRON J: There is an application for costs, Mr Shields.

MR SHIELDS: We have just explained to you we have nothing. If they get costs, you in fact pay for it out of your taxes. We have not got anything. We are bankrupt. You know that.

GAUDRON J: Yes. The application is refused with costs. That is the usual course. Thank you.

AT 11.12 AM THE MATTER WAS CONCLUDED