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IN THE FEDERAL COURT
OF AUSTRALIA No. SAD 146 of 2006
SOUTH AUSTRALIA
DISTRICT REGISTRY
BETWEEN:
STEPHEN GLENN HEINRICH
Applicant
- and -
ALAN GEOFFREY
SCOTT as Trustee of the Bankrupt estate of Stephen Glenn Heinrich
Respondent
DRAFT
APPLICANT’S SUBMISSION
Hearing Date :
13 September 2006
MATERIAL TO BE
READ
SAD 264 of 2005: Affidavit and Exhibits of Stephen Glenn Heinrich sworn
22nd November 2005
SAD 146 of 2006: Affidavit and Exhibits of Stephen Glenn Heinrich sworn 4th
August 2006
Orders
1
The Order in SAD 264 of 2005 made on 3 April 2006 be set aside;
2
The trustee’s decision be reviewed
under 178 Bankruptcy Act 1966;
3
The trustee be removed, and a new trustee appointed
under 179 Bankruptcy Act 1966;
4
Annulment under 153A Bankruptcy Act 1966;
5
The rejected cost,
overcharges, interest on overcharges, and post sequestration interest
totalling $661,433.42
be returned to the applicant under
116 (2)(g)(i), (6)
Bankruptcy Act
1966;
6
Such further or other order(s) deemed just and equitable;
7
Costs.
History
1
Heinrich became a customer of the Commonwealth Bank of Australia (“CBA”)
on
26 June 1985.
2
On
26 March 1993 the CBA sent a demand
notice to Heinrich for
$311,217.32.
3
The amount in the CBA demand notice was incorrect at the time and was
disputed then, and continued to be disputed, and later shown by accounting
evidence to be incorrect.
4
On
24 February 2000 in Supreme Court of
South Australia SASC No.1648 of 1993 the CBA obtained
judgment against Heinrich for the amount of the demand notice for
$311,217.32 with interest to the date
of the Order made on
1 March 2000 to the
sum of
$673,358.81.
Post
Sequestration
the purpose of the Bankruptcy is to stop debt accruing after the date of
sequestration
5
On
6 September 2000 in Federal Court of
Australia FCA No.7099 of 2000 the CBA obtained a Sequestration
Order against the estate of the Heinrich, and had him made bankrupt.
6
In
2000 FCAFC No.106 of 2000
Heinrich appealed to the Full Court under Section 86 of the
Bankruptcy Act 1966 for an account of all monies had and received
between the CBA and Heinrich. The CBA objected and in the face of settled
law determined by the High Court in Gye v Mc Intyre (1991) HCA, the
Federal Court overruled that High Court decision and Heinrich’s
application was dismissed.
7
In
2001
HCA No.A25 of 2001 Heinrich went
before Justice Kirby seeking relief pursuant to section 75v Constitution
for being denied an account under section 86 Bankruptcy Act 1966 by
the Full Federal Court. Heinrich complained that the trustee would not let
him lead the trustee through evidence he had provided to the trustee which
proves the account incorrect:
7.1
Kirby J stated in the
Transcript at 280 to 285
that: the trustee is an officer under an Act of the Commonwealth and he
ought to respond to Heinrich’s inquiries.
7.2
The trustee has now furnished an account, and the account was incorrect at
the time of Heinrich’s application to the High Court of Australia.
8
In
2001
Heinrich instigated Charges in the
Magistrates Court of South Australia against CBA, the trustee and his
solicitor – under sections 43 and 87 Crimes Act 1914 (Cth).
Accountants Evidence
4 December 2003
9
In Supreme Court action by CBA, Alan Geoffrey Scott and Gregory Travers
Brown v Stephen Glenn Heinrich No. SASC No.822 of 2002. The said
applicants had Heinrich’s criminal charges permanently stayed and had him
declared a vexatious litigant for his persistence in trying to obtain an
honest and truthful statement of his real account with CBA. In this action
fresh accounting evidence by the affidavit of Chartered Accountant, Mr
Jeffrey, sworn 4 December 2003
[“SGH-2”
Heinrich affidavit 4/8/06 SAD 146-06]
filed and
served on the CBA and the trustee was material evidence of the fact that
the CBA wrongly overcharged the account of Heinrich on 54 bills of
exchange discounts to the amount of
$9,976.77
over the period from
1985 to 1992 in
contravention of Heinrich’s bills of exchange agreement with CBA. These
overcharged discounts have not been corrected and have not been repaid to
his estate:
Knowledge of
certain evidence
9.1
The trustee had sufficient knowledge by the affidavit of Mr Jeffery that;
9.2
the overcharged discounts of
$9,976.77 by
CBA in the account of Heinrich from
1985 to 1992
were incorrect.
From
1985
to the date of sequestration
6 September 2000 CBA had accrued interest
on the overcharged discounts to
$36,175.44;
9.3
Heinrich was not liable at law or equity for the overcharged discounts of
$9,976.77 or the interest accrued
$36,175.44
on the overcharged discounts
by CBA. The trustee had a duty in his administration to correct the
overcharges claimed by CBA by the provisions in sections 82(3B), 107 and
116(2)(g)(i), (6) Bankruptcy Act 1966.
10
On
15 January 2003
the CBA executed its
“Discharge of
Mortgage” No.7051412 over Heinrich’s estate.
11
On
4 August 2003 in
appeal FCAFC No.571 of 2003 Heinrich proved by evidence that
the quantum of the Certificate of debt was incorrect and was referred to
in the reasons of judgment but the appeal was dismissed.
12
By no later than
2 October 2003 a third
party independent prosecutors served documents on the trustee in the NSW
Proceedings [para. 22 Scott affidavit 11/10/05 SAD 264-05] made him
sufficiently aware that the CBA account was grossly incorrect before the
trustee produced his
“Deed of
Settlement” to the CBA, Sarabe Pty Ltd (“Sarabe”) by its directors,
Jennifer Heinrich, and Benjamin Heinrich, to settle the bankruptcy for
$1,650,000.00
that was
claimed by CBA against Heinrich, when the trustee knew the CBA
settlement amount was incorrect.
Settlement of Bankruptcy
13
On
10 October 2003 in the trustee’s action
FCA S7014 of 2002 against Sarabe, the trustee was sufficiently
aware that the CBA account of Heinrich was incorrect continued in court
proceedings to obtain the consent judgment, and the Order, for
Sarabe to pay to the trustee
$1,650,000.00
to settle bankruptcy for amount he knew were overstated and
incorrect:
13.1
at the time the trustee obtained the judgment and Order against Sarabe the
trustee had not yet called for the
“Proof of
Debt” from the CBA;
13.2
by the trustee’s statement of claim and affidavits
represented to the court that the
alleged indebtedness against Heinrich was correct, induced the directors
of Sarabe to settle the bankruptcy for the amount stated by the trustee
and CBA;
13.3
on
10 October 2003
the “Deed of Settlement” the
trustee had previously prepared
was
executed
by the trustee, CBA, and the directors of Sarabe;
13.4
that the costs of the litigation be born by each party for their own
costs;
13.5
that Sarabe pay the settlement amount by
4
February 2004.
14
On
22 January 2004 Sarabe paid the trustee
$1,650,000.00
for
settlement of the
bankruptcy:
15
On
12 February 2004 the trustee paid a
dividend of
$570,000.00
to the CBA from the sale of the Mortgage security in pursuance of
the
“Deed of Settlement”.
16
On
15 April 2005 CBA produced its
“Proof of Debt” to the trustee, some
four and a half years after sequestration and 15 months after
Sarabe paid the trustee $1,650,000.00 to
settle the bankruptcy. CBA then claim the amount of
$673,358.81 it obtained on
1 March 2000
in the Supreme Court Order.
The amount in the Order was based on two dummy bills of exchange
(“bills”) that CBA admitted in court that the bills were not for value.
The CBA posted the bills to the dummy loan account 1000 5503 8661 where
CBA charged interest on the bills to the date of sequestration on
6 September 2000:
CBA
Claim pursuant to the Order 1/3/00 to date of sequestration 6/9/00
16.1
Supreme Court Order SASC 1648-1993
$ 673,358.81
16.2
Allocatur SASC 1266-1998 $
41,395.14
16.3
Interest to sequestration
6/9/00
$ 71,164.84
16.4
Costs claimed by CBA $
343,452.15
16.5
Costs formally rejected by trustee
[“AGS-7”] $
- 94,200.00
16.6
Overcharge claim
on discounts
$
-9,976.77
16.7
Interest on overcharge to sequestration
6/9/00
$
-36,175.44
16.8
CBA allowable
claim to sequestration
6/9/00 $
988,566.58
(Amounts
in 16.5, 16.6 and 16.7 to be returned under s.82(4) and 116(2)(g)(i),(6)
of the Act)
Dividend
distributions and
post sequestration interest paid to CBA
17
The Settlement amount received and the dividends paid by the trustee to
CBA:
17.1
22/1/04 Settlement
Trustee received from Sarabe $
1,650,000
17.2
12/2/04
Dividend paid to CBA $ 570,000
17.3
14/12/05
Dividend paid to CBA $ 464,718.79
17.4
25/7/06
Post Sequestration interest paid to CBA $ 360,000
17.5
Total
Dividend paid to CBA
$ 1,394,718.79
17.6
25/7/06
Monies retained by Trustee $ 255,281.21
17.7
6/9/00
to
30/9/05
Interest received to the estate
$ 46,952.20
17.8
25/7/06
Total retained by Trustee to 30/9/05 $
302,233.41
(Amounts
in 17.4 to be returned under s.82(3B) of the Act)
18
Further interest monies received to the estate since
30 September 2005 to the date of Mr
Brown’s affidavit sworn
21 August 2006 has
not been disclosed by the trustee.
19
On
9 June 2005 the trustee in his letter
[“AGS-7” Trustee affidavit 11/10/05 SAD 264-05]
formally rejected
$94,200.00 costs from
the
CBA
“Proof
of Debt”.
19.1
the trustee failed to return to Heinrich the
$94,200.00 costs under section 82(4) Bankruptcy Act 1966;
or the
$360,000.00 post sequestration
interest under 82(3B) and 107 Bankruptcy Act 1966; or the
$9,976.77 overcharged discounts and the
$36,175.44
interest accrued to the overcharged discounts (to date of bankruptcy) is
claimed by Mr Heinrich under 116(2)(g)(i),
(6)
Bankruptcy Act 1966.
Go to page 2
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