Charan v Commonwealth Bank of Australia

These proceedings represent the fourth occasion in the last five years in which the plaintiffs, or one of them, have brought the same substantive claim in this Court. The core underlying issue raised in each proceeding relates to the alleged ‘wrongful possession and sale’ of certain properties at Casula and Holsworthy by the first defendant, a mortgagee of the properties. The second and third defendants are trustees or former trustees in bankruptcy of the plaintiffs, or their son.

After obtaining judgment for possession on 14 February 2013, the first defendant sold the properties by the exercise of its power of sale on 16 August and 17 December 2013 respectively. There then followed one failed proceeding in this court after another. Each was predicated on the same substantive facts and circumstances. I adopt the summaries of the relevant contextual and background facts set out in the judgments of McDougall J given on 27 March 2015 and Darke J given on 12 May 2017.

Set out below is a convenient chronological listing of each proceeding in this court and its outcome:

The legal and commercial objective of each of the four proceedings has been the same. In the first claim (2014/196642), Mr Charan sought ‘reversion’ of the Holsworthy land or damages representing its value. In the second claim (2014/361879), Mr and Mrs Charan sought ‘compensation for wrongful possession and sale’ of the Holsworthy and Casula lands. In the third claim (2016/318834), Mr Charan sought orders to ‘set aside the mortgagee power of sale to reconvey the two lands to the plaintiff’ or ‘compensation for the loss of the lands at the current market value’.

In relation to the first claim, White J (as he then was), held that Mr Charan’s pleaded claim revealed no arguable cause of action and summarily dismissed the proceeding. In relation to the second claim, McDougall J held that ‘each and every one of the claims pleaded is utterly unsustainable’. In relation to the third claim, Darke J summarily dismissed the proceeding. He held that ‘the plaintiff’s conduct in bringing these proceedings, which is, in effect, the third time these claims have been advanced in this Court, amounts to an abuse of process’.

All these judgments arise out of the same substratum of facts. Each judgment represents considerable judicial diligence and thoroughness. If it were not for one supposed point of distinction which I address below, I would have no hesitation in promptly dismissing this proceeding on the same grounds on which McDougall J and Darke J relied.

It is appropriate to repeat the following reasons of policy that I explained in Riva NSW Pty Ltd v Official Trustee in Bankruptcy [2019] NSWSC 49 at [4], [9] and [10]:

The point of distinction on which Mr and Mrs Charan rely in this proceeding is that their pleaded claims for relief include ‘compensation for personal wrong done resulting in the loss of properties’. This is the basis on which they seek to justify this further attempt to litigate the loss of their properties. I allowed Mrs Charan to be the advocate for herself and her husband. She said the personal wrong issue was the ‘core issue which the defendants are relying on’. It is a marginally new perspective on old facts. But it is legally and factually unsustainable.

Adding the language of ‘personal wrong’ to the claims for relief, is simply a late attempt by the plaintiffs to bring their existing claim within the exceptions set out in Sections 60(4) and 116(2)(g) of the Bankruptcy Act 1966 (Cth) (the Act). This is necessary (if it is available) because such causes of action as the plaintiffs may have in the circumstances, are causes of action that would have vested in the respective trustees in bankruptcy.

Mr Charan was made bankrupt on 20 February 2018 and remains an undischarged bankrupt. Mrs Charan was made bankrupt on 6 June 2012. She was discharged on 10 July 2015. Section 58(1) of the Act provides that the ‘property of the bankrupt’ vests automatically in the official trustee upon the commencement of the bankruptcy. Property includes causes of action, with the following relevant exceptions:

Those statutory provisions explain this attempt, in the fourth proceeding commenced by the plaintiffs in this court arising out of the same facts, to formulate and characterise their claim as one for a ‘personal wrong’.

It should be noted that, even as pleaded, the plaintiffs’ claim is not for a personal wrong in isolation. It is expressed to be a personal wrong ‘resulting in loss of properties’. The first paragraph of the plaintiffs’ submissions clearly states that this proceeding is the fourth statement of claim filed in this court seeking equitable compensation or damages for wrongful possession and sale of the [properties]. It is clear therefore that the fulcrum on which the supposed ‘personal wrong’ hinges is the same substantive complaint that formed the basis of the previous three proceedings in this court, namely the ‘wrongful possession and sale’ of the properties.

Well established authority is against the plaintiffs. The cases establish the following principles:

In this case, the entirety of the plaintiffs’ claims arises from actions that occurred in connection with the bank’s enforcement process in respect of its mortgages over the properties. No genuinely excluded cause of action is discernible. None is pleaded.

Insofar as any supposed ‘personal wrong’ may be identified from the plaintiffs’ pleading, it is based on the following propositions, none of which are sufficient:

Finally, toward the conclusion of her oral submissions, Mrs Charan raised a further point. She contended that the two properties ‘did not vest in the trustees. They were exempt properties’. I have carefully reviewed the prior judgments, especially that of White J (as he then was). In addition to the judgments of White J, McDougall J and Darke J in this court, there have been a number of judgments against the plaintiffs in the Federal Court and the Federal Circuit Court, as the Federal Magistrates Court is now named.

I am satisfied that this additional issue has already been addressed and determined. Facts have been found and conclusions have been reached on this issue that do not justify attempting to re-open it. Each of the preceding judgments in this court, not to mention those in the Federal Court or Federal Circuit Court, has either determined that the trustees were entitled to become the registered proprietors of the respective properties or proceeded on that basis. It would be an abuse of process and not in the interests of justice to allow the plaintiffs to go over this ground.

The defendants provided evidence of the costs incurred by them in this proceeding. Having regard to that evidence, I assess a reasonable lump sum for the costs of the first defendant as $18,000 and a reasonable lump sum for the costs of the second and third defendants as $17,000.

In the circumstances, and especially given the indemnity costs orders made by Darke J in the third proceeding, it is appropriate to make a lump sum costs order and to restrain the plaintiffs from commencing further proceedings arising from the same subject matter, without the leave of a judge of this court and unless and until the plaintiffs have paid the defendants’ costs of this proceeding.

I gratefully adopt the statement of principles and reasons explained by Black J in K Sheridan v Colin Biggers & Paisley [2019] NSWSC 621 at [26]-[31]. They reinforce the appropriateness of the orders I propose to make in this case.

I order that: