BEA Games
Alan L Tyree

In April, 2012, the NSW Government Office of State Revenue State Debt Recovery Office (OSR) issued an enforcement order relating to a fine issued by the Lismore Local Court in relation to a traffic offence which had not been paid. The order was issued to one "LRF" and was for an amount of just over $500.

Like most of us, LRF did not want to pay the fine. Unlike most of us, LRF had a scheme which he claimed satisfied the demand without actually paying the fine. The scheme was as follows:

1. LRF wrote on the Enforcement Order a number of 'endorsements'. These original 'endorsements' contained many capital letters. For readability, these have been omitted. The 'endorsements' included:

Inchoate Accounting Instrument Accepted for Value
Missing Particulars Completed Returned Complete

Pay the sum certain of One Australian Dollar Exactly

Payable AT: [address supplied]
at 16:00 hours without delay on Monday
the seventh day of May AD 2012

1. LRF also added additional information as follows:

LRF; State Debt Recovery Enforcement Order Number 311535530

Pay to the order of: The State Debt Recovery Office

The sum Certain of: One Australian Dollar exactly being sufficient valuable consideration for any bill of exchange in order to constitute and support a simple contract between the parties LRF & Office of State Revenue – State Debt Recovery.

LRF then added his signature to the document.

1. LRF posted this amended enforcement order to the OSR at the end of April 2012.
2. LRF then claimed that the 'bill of exchange' was dishonoured by the OSR on 7 May at 16:00 since it was not presented for payment. He sent a 'certificate of protest' on that date. He claimed that the 'bill' was dishonoured 'supra protest' and that the OSR therefore lost any right of recourse.
3. Claiming that the fine had not been paid, the Roads and Maritime Service (RMS) suspended LRF's driver's licence. LRF applied to the Court to have the suspension lifted.

This procedure, or ones essentially identical, has been used in at least five Australian cases. The cases, and the documents 'endorsed' are:

• Deputy Commissioner Of Taxation v Sproule [2012] FMCA 1188: a bankruptcy notice;
  • Fallon v Government Office of State Revenue State Debt Recovery Office (NSW) [2013] FCA 270: enforcement order relating to a traffic offence;
  • Rural Bank Limited v Lloyd [2013] NSWSC 1214: original document drafted by defendant;
  • Bertola v Australian and New Zealand Banking Corporation [2014] FCA 609: judgment of the Master of the Supreme Court of Western Australia facilitating the sale of certain assets by the bank;
  • Commonwealth Bank of Australia v Roskott [2014] NSWSC 246: original document drafted by the defendant;

The argument put forth by LRF is muddled to say the least, but the breakdown appears to be something like the following:

1. The enforcement notice sent by the OSR is an an inchoate bill of exchange. LRF, by 'accepting' it, did not become liable by dishonouring the bill.
2. Section 25 of the Bills of Exchange Act 1909 (Cth) ('BEA') confers authority on the person in possession of an inchoate bill to complete any missing particulars; the 'endorsements' were completions authorised by s25.
3. The resulting bill of exchange was made payable to the OSR;
4. The bill of exchange was 'accepted for value' by the OSR; acceptance was effected by delivery and notification in accordance with s4 of the BEA;
5. OSR was then obliged to present the bill for payment at the time and place specified; by failing to do so, it dishonoured the bill and is estopped from denying that the bill was sufficient discharge of the the liability.
6. As a result of the 'dishonour' and subsequent protest, the OSR lost its rights against LRF and the debt was discharged.

This argument is not expressly articulated in any of the cases where the procedure has been used. In each case, the person relying on the procedure has been self-represented and the arguments have been vague. It seems doubtful that they understood the basics of negotiable instruments.

The most detailed form of the argument appears in Sproule and Bertola A transcript is included in the judgment in the Bertola case. Barker J, obviously trying to be as fair as possible to self represented applicants, is clearly bewildered and frustrated by the fragmented argument put forth.

The judgment in Sproule includes substantial portions of the pleading of the defendant. Much of the above summary of the argument may be gleaned from these pleadings.

Almost every step of the argument is incorrect. In particular:

• the enforcement order/judgment/invoice is not a bill of exchange. The BOA simply does not apply to it. Note that the defendant in Bertola attempted to argue that s25 applied to any document, not just to bills of exchange.
• the resulting bill of exchange (if such it be) is not 'accepted' by the recipient. The proponents misunderstand the meaning of 'acceptance' in the BEA. None of the recipients added a signature signifying acceptance.
• failure to 'present for payment' does not raise an estoppel against the recipients of the unaccepted 'bills', nor does it relieve the 'drawer' of any liability.;
• payment by bill of exchange or by cheque is not a right of the debtor; tender of a bill of exchange or a cheque is not a valid tender for the debt unless there is a contractual right to tender payment in that form: see, for example, Polglass v Oliver (1831) Cr & J 15; [1831] EngR 176; George v Cluning (1979) 28 ALR 57.

The applicants/defendants in these cases clearly did not understand the procedures that they had implemented. In Bertola Barker J indicated that the procedure was suggested by a Mr P who appeared as a friend of the applicant and was permitted to speak on his behalf. Near the end of the transcript, this exchange takes place:

HIS HONOUR: But have you seen this argument that you’ve written into the document you’ve given me anywhere else?

MR P: I haven’t seen the argument with anyone – not off the internet, if that’s what you’re suggesting.

But 'off the internet' is precisely where one can find the argument. More precisely, a South African site calling itself Giftoftruth United. Under the heading 'Bills of Exchange', we find statements such as:

By not accepting the original Bill of Exchange (the traffic fine/bank loan/court order) you go into dishonour and this is why they have power over you.

The site goes on to elaborate procedures such as that followed in Fallon and the other cases. The arguments and procedures recommended are, for the most part, unintelligible and a curious mixture of plain silliness and faux erudition. And, of course, wrong.

Similar procedures appear to have surfaced in the USA where they are associated with the right-wing Sovereign Citizen movement. The American procedure typically takes a slightly different approach based on a 1922 Act purporting to "give" every person born in America a Treasurey bond for $650,000 against which the Treasury borrows.

The debtor, as a defence to a foreclosure action, draws a bill of exchange against the Treasury, claiming to be a drawing against the bond. The bill is accompanied by detailed instructions to the financial institutions which relate to presentation of the bill and the (erroneous) consequences of failing to present and collect on the bill.

See, for example,

• http://en.wikipedia.org/wiki/Sovereign_citizen_movement
• http://www.real-debt-elimination.com
• http://www.naplesnews.com/business/robert_bruss_did_bonded_bill_exchange_order_pay_ho,
  • http://www.arkansasbusiness.com/article/101649/sovereign-actions-of-little-rock-couple-complicate-foreclosure-of?page=all

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