Allardyce Lumbar Company Limited v Quarter Enterprises Pty Limited

Allardyce Lumbar Company Limited v Quarter Enterprises Pty Limited - [2010] NSWSC 807 - NSWSC 2010 case summary — Zoe

[12]

The foreign proceedings 2 Quarter Enterprises brought proceedings in the High Court of the Solomon Islands against Allardyce Lumbar Company Limited and its 2 Directors John Beverley and Devon Minchin arising out of contracts concerned with logging, selling and exporting timber. Quarter Enterprises was initially successful in obtaining a judgment against Allardyce for US$2,733,936.54 together with interest and costs. 3 Allardyce appealed successfully to the Court of Appeal of the Solomon Islands, a Court comprising Lord Slynn of Hadley P, MacPherson and Ward JJA. 4 One of the issues at the trial was the credibility of Ronald Gibbs, a Director and the controlling mind behind Quarter Enterprises. The Trial Judge accepted Mr Gibbs. There appears to have been strong contemporaneous written evidence that cast doubt on important aspects of Mr Gibbs's testimony. The Court of Appeal appears to have accepted that the evidence pointed to Mr Gibbs's having falsified a note which he claimed to be contemporaneous to support his testimony. 5 The Court of Appeal, having found that fabrication, then said this: [36] We reach this conclusion with some regret, for it has grave and far-reaching implications for the fate of the appeal. If Mr Gibbs was prepared on one occasion to support his evidence by falsifying a note, there is reason to suspect he might have been prepared to do so on other occasions too. Mr Sullivan took us to further examples that he claimed exhibited features similar to the file note of 21 February 1997. One was a file note dated 20 September 1996 in which Gibbs states that Beverley was "pushing for an answer" to his fax of 15 September. In fact, it appears that the answer had already been supplied on 17 September 1996, which casts suspicion on the authenticity of the file note of 20 September 1996. Then there is a note of a meeting with Beverley held on 31 December 1999 (or it may have been 30 December 1999) in which Gibbs records his having given Beverley a letter dated 22 December addressed to him and Minchin. When called for, and produced by the plaintiff at the trial, the letter ex 22 turned out to be the original, with Gibbs's original signature on it. Plainly, the original letter cannot have been sent as claimed in the file note.

[13]

[37] We do not think it necessary on this appeal to reach a final conclusion about these matters of fact. Suffice to say that they raise serious questions about the correctness of the trial Judge's decision to accept the reliability of Mr Gibbs's evidence by reason of the support for it his Lordship thought it gained from documentary material in the form of file notes. We have thought it right to express ourselves cautiously on this matter because we now see no feasible alternative to the process of sending this action back for retrial. (emphasis added) 6 The Court of Appeal then went on to discuss the principles associated with an appeal court dealing with credibility findings as discussed in a number of cases including SS Hontestroom v SS Sagaporack [1927] AC 37 at 47-49 and Fox v Percy (2003) 214 CLR 118. They then continued: [41] Considered by these standards, and despite the traditional reluctance of appellate courts to interfere when confronted by factual findings resting on credit, we are persuaded that in this case the trial judge's assessment of the credit worthiness of Mr RH Gibbs is falsified by an indisputable fact; that is to say, the witness's erroneous claim concerning the presence of Mr Wilkie at the meeting on 21 February 1997. The impact of that error cannot be confined to the specific event or conversation to which the particular file note dated 21 February 1997 relates. His Lordship's acceptance of Gibbs's general practice of making file notes carries by implication the further finding that in the Judge's view they were contemporaneous and accurate. Otherwise they would have been worthless as aids to determining credibility. His conclusions on the matter flowed through not only to other file notes, but to Gibbs's evidence generally. Conversely, it helped to determine his Lordship's overall preference for his evidence over against that of Beverley. The case is therefore one in which the relevant credibility finding is, within the meaning of the authorities referred to, one that is contradicted by an "incontrovertible fact"; or that was arrived through "disregard of a material fact"; or is "falsified" by a fact that is "indisputable". The delay of 18 months in giving judgment in this case is another factor that weighs against unquestioning acceptance of credibility findings on this appeal. See the discussion of the English and Australian authorities in Expectation Pty Ltd v PRD Realty Pty Ltd (2004) 140 FCR 17, at 32-35.

[14]

[44] Consistently with our wish to avoid observations on facts that will be submitted to for re-trial on a future occasion, we will try to avoid comments that go beyond the bare allegations pleaded in para 52 of the statement of claim, and the findings made at the trial on this occasion. The main point to be noticed is that in essence the representations are alleged to have been made orally by Beverley to Gibbs and Hayes on the occasion of the meeting on 21 February 1997, when the Contract was concluded and signed at Wilkie's house in Sydney. It was very much this occasion on which, at the trial, competing claims of credit became critical to proof of each of the alleged representations. For the reasons we have given in relation to the credit findings made in favour of Gibbs, these allegations will necessarily fall to be tried and determined again when the matter comes to be re-heard. We therefore refrain here from commenting further on those issues. (emphasis added) 7 The Court of Appeal then allowed the appeal with costs, set aside the verdicts and judgments of the High Court, dismissed the claim against Mr Minchin (the present Third Plaintiff) with costs and ordered a new trial of the action. They ordered that the costs of the First and Second Defendants (the present First and Second Plaintiffs) abide the event of the new trial. 8 Subsequently an order for security for costs was granted. Quarter Enterprises failed to pay the amount required and Allardyce brought an application for dismissal of the proceedings for want of prosecution. 9 Under Rule 24.18(f) of the Solomon Islands Courts (Civil Procedure) Rules 2008 there is power to make a costs order against a person who is the effective controlling mind of a body corporate against whom a costs order is made. To that end Mr Gibbs was added as a Respondent to the application whereby Allardyce sought to obtain costs of the proceedings from Quarter Enterprises. 10 On 20 May 2009 Goldsbrough J delivered judgment where he dismissed the proceedings and ordered the costs of Allardyce be paid by Quarter Enterprises and Mr Gibbs. He assessed the amount of the costs at US$436,733.97. Quarter Enterprises and Mr Gibbs appealed to the Court of Appeal constituted by Sir Albert Palmer CJ, McPherson and Williams JJA. On a date not made clear in the evidence, but subsequent to 20 July 2009, the Court of Appeal dismissed the appeal with costs. 11 It is in respect of the costs ordered by Goldsbrough J to be paid by Quarter Enterprises and Mr Gibbs that the present application is made.

[18]

(12) If, on the day of the application for registration of a judgment, the judgment of the original court has been partly satisfied, the judgment is not to be registered in respect of the whole amount payable under the judgment of the original court, but only in respect of the balance remaining payable on that day. … 7 Setting aside a registered judgment (1) A party against whom a registered judgment is enforceable, or would be enforceable but for an order under section 8, may seek to have the registration of the judgment set aside by duly applying to the court in which the judgment was registered, or (where applicable) a court in which the judgment was registered under Part 6 of the Service and Execution of Process Act 1992 , to have the registration of the judgment set aside. (2) Where a judgment debtor duly applies to have the registration of the judgment set aside, the court: (a) must set the registration of that judgment aside if it is satisfied: (i) that the judgment is not, or has ceased to be, a judgment to which this Part applies; or (ii) that the judgment was registered for an amount greater than the amount payable under it at the date of registration; or (iii) that the judgment was registered in contravention of this Act; or (iv) that the courts of the country of the original court had no jurisdiction in the circumstances of the case; or (v) that the judgment debtor, being the defendant in the proceedings in the original court, did not (whether or not process had been duly served on the judgment debtor in accordance with the law of the country of the original court) receive notice of those proceedings in sufficient time to enable the judgment debtor to defend the proceedings and did not appear; or (vi) that the judgment was obtained by fraud; or (vii) that the judgment has been reversed on appeal or otherwise set aside in the courts of the country of the original court; or (viii) that the rights under the judgment are not vested in the person by whom the application for registration was made; or (ix) that the judgment has been discharged; or (x) that the judgment has been wholly satisfied; or (xi) that the enforcement of the judgment, not being a judgment under which an amount of money is payable in respect of New Zealand tax, would be contrary to public policy; or (b) may set the registration of the judgment aside if it is satisfied that the matter in dispute in the proceedings in the original court had before the date of the judgment in the original court been the subject of a final and conclusive judgment by a court having jurisdiction in the matter. (3) For the purposes of subparagraph (2)(a)(iv) and subject to subsection (4), the courts of the country of the original court are taken to have had jurisdiction: (a) in the case of a judgment given in an action in personam: (i) if the judgment debtor voluntarily submitted to the jurisdiction of the original court; or (ii) if the judgment debtor was plaintiff in, or counter-claimed in, the proceedings in the original court; or …. (c) in the case of a judgment given in an action other than an action of the kind referred to in paragraph (a) or (b) - if the jurisdiction of the original court is recognised by the law in force in the State or Territory in which the judgment is registered.

[32]

19 Allardyce also read an affidavit of Rodney Kingmele, the Senior Associate of the solicitors' firm in the Solomons Islands who acted for Allardyce at the trial, the first appeal and all subsequent proceedings in the High Court and Court of Appeal. Mr Kingmele himself was involved in all aspects of the proceedings including as junior counsel. His affidavit annexed the reasons for judgment of both Court of Appeal judgments and the reasons of Goldsbrough J in the High Court. 20 The Defendants had filed and served 2 affidavits of Ronald Harry Gibbs of 16 June 2010 and 16 July 2010 but did not ultimately read those affidavits. I mention that for 3 reasons. First, both Mr Beverley and Mr Kingmele responded to matters raised in Mr Gibbs's earlier affidavit in the expectation that that affidavit would be read. Mr King objected to paragraph 2 of Mr Beverley's affidavit of 19 July 2010. I provisionally admitted that paragraph saying that I would reconsider the matter when all of the evidence was before the Court. Mr King chose not to read Mr Gibbs's affidavit and, accordingly, paragraph 2 of Mr Beverley's affidavit (with the exception of annexure "C" referred to in that paragraph) is now irrelevant and I reject it. Annexure "C" contains a copy of the Court of Appeal Act of the Solomon Islands. In my opinion, s 174(1)(b)(c) Evidence Act 1995 justifies the admissibility of that document and I admit it into evidence. 21 Secondly, Mr King's written submissions referred to matters in Mr Gibbs' s affidavits. Since those affidavits were not read, there was no evidentiary basis for some of Mr King's submissions. I shall refer more particularly to these matters when dealing with whether the Plaintiffs have satisfied the requirements of the Act and the Rules. 22 Thirdly, the decision by Mr King not to read Mr Gibbs's affidavits is likely to be relevant if, as foreshadowed by Mr King, an application is subsequently made by the Defendants to set aside any registration of the judgment. I shall return to that matter presently. 23 The judgment of Goldsbrough J giving rise to the present application is relevantly in these terms: [2] The Defendants' costs of the trial in the sum of USD436,733.97 (being costs assessed at USD473,693.97 less USD36,960.00 being the equivalent of the negotiated bank guarantee of SBD300,000.00) be paid jointly and severally by the Claimant and Gibbs provided that the Third Defendant's costs which are assessed in the sum of USD419,053.26 are included in the total costs as set out above.

[41]

(h)(i) Enforceability of judgment 31 Paragraphs 6 (b) and (c) of Mr Susanto's affidavit gives evidence that the judgment is able to be enforced in the Solomon Islands. (h)(ii) Judgment not liable to be set aside under s 7 of the Act 32 This somewhat unusual provision requires the Plaintiff to prove a series of negatives of the matters contained in s 7(2)(a) and (b). No doubt this was inserted because many applications to register a judgment would be done ex parte as rule 53.2(3) and (4) envisage. Requiring some proof of the negative of these listed matters would be likely to reduce the likelihood of applications by judgment debtors under s 7 of the Act. 33 The matter has some significance in the present case where the application is made on notice to the Defendants, and those Defendants appeared to resist the registration. Where issue has been taken about the satisfaction of the proof of these negatives, that may give rise either to an Anshun estoppel or an issue estoppel on any subsequent application by the Defendants under s 7. 34 Mr King based most of his opposition to the registration on matters in s 7(2). I shall, therefore, deal with those paragraphs which he submitted were not satisfied. (iv) That the courts of the country of the original court had no jurisdiction in the circumstances of the case 35 In his written submissions Mr King argued that the evidence disclosed no basis for any order to be made against Mr Gibbs because there was no evidence of what jurisdiction the High Court had to make orders joining him and ordering costs against him. However, this ground was abandoned during the hearing. (v) that the judgment debtor, being the defendant in the proceedings in the original court, did not (whether or not process had been duly served on the judgment debtor in accordance with the law of the country of the original court) receive notice of those proceedings in sufficient time to enable the judgment debtor to defend the proceedings and did not appear 36 Mr King submitted that the Order annexed to Mr Beverley's affidavit showed that the order against Mr Gibbs was made ex parte. A perusal of the Order does not bear this out. Moreover, the reasons of Goldsbrough J make specific reference to Mr Gibbs being present at court, representing himself but being given assistance by the legal representative for Quarter Enterprises. (viii) that the rights under the judgment are not vested in the person by whom the application for registration was made 37 Mr King submitted that the Third Plaintiff, Mr Minchin, was dismissed as a party upon the first Court of Appeal giving judgment. Whilst that is correct, the Court of Appeal also ordered that costs of the proceedings and of the appeal be awarded to him. When considering the matter of costs, Goldsbrough J said: [44] In particular I regard it as important to ensure that all matters are complete and that, in my view, should include consideration of the costs already awarded in the Court of Appeal to the 3 rd Defendant.

[42]

The 3 rd Defendant was, of course, Mr Minchin. Goldsbrough J then went on to make the order in relation to the trial costs in the terms of Order 2 set out in para 23 above. The rights under the judgment are vested in all three of the present Plaintiffs. (ix) that the judgment has been discharged 38 Mr King submitted "it appears that payments have been made but are not accounted for as against particular judgments for particular plaintiffs". Mr King led no evidence to substantiate this submission. There was no other evidence suggesting any amounts had not been appropriately accounted. The Certificate from the Acting Registrar of the High Court showed the accounting. It establishes that what is sought to be registered is the amount that remains owing to the Plaintiffs. (xi) that the enforcement of the judgment, not being a judgment under which an amount of money is payable in respect of New Zealand tax, would be contrary to public policy 39 Mr King submitted that it would be contrary to public policy to register the judgment on the basis that McPherson JA sat as a judge in the second Court of Appeal in circumstances where he had sat as a judge in the first Court of Appeal and that first bench had made credibility findings adverse to Mr Gibbs. Mr King submitted that that gives rise to apprehended bias, and that a judge sitting in those circumstances is contrary to public policy. 40 Even accepting that the first Court of Appeal made credibility findings against Mr Gibbs (and the passages I have highlighted in the Court of Appeal's judgment suggest no such findings were made, rather, that the whole of the evidence pointed to the trial judge having fallen into error by reason of his approach to the credibility issue, and that that issue needed to be determined by the judge who would hear the re-trial), the judgment that is sought to be registered is the judgment of Goldsbrough J and not that of the second Court of Appeal. But in any event, a judge at first instance who made adverse credibility findings about a party would not be obliged to recuse himself or herself from subsequently dealing with the costs of the matter. There was no basis for McPherson JA to recuse himself in circumstances where the second Court of Appeal was considering the correctness of costs orders made by a judge of the Court who had not sat in judgment previously of Mr Gibbs or the other parties. 41 I raised with Mr King whether application had been made to McPherson JA to recuse himself and he informed me that it had. However, he chose to lead no evidence about that matter notwithstanding that his written submissions referred to an affidavit from Mr Gibbs dealing with the issue. I have no doubt that this is because Mr King intends to try to lead the evidence of these matters on an application to review my judgment if it goes against his clients' interests. In this regard, Mr King points to the judgment of Ambrose J in Mendikwae Limited v Adel Ibrahim El-Mezin [2000] QSC 056. 42 In Mendikwae the defendant appeared on an application to register a default judgment, and put forward reasons why it should not be registered including whether service of the foreign proceedings should be set aside (see s 7(2)(v) of the Act). Ambrose J held that the Plaintiff was entitled to register the judgment but that the defendant would be able to raise those matters on any application to set aside the registration. 43 Whilst, at first blush, this would appear to provide support for Mr King's position, a closer analysis suggests otherwise. The Uniform Civil Procedure Rules 1999 (Qld), in relation to registration of foreign judgments under the Act, are significantly different in certain respects from the NSW UCPR. In particular, there is no equivalent to the requirement in the NSW Rules of rule 53.3(1)(h)(ii) - the provision that requires the negating of the grounds in s 7 of the Act for setting a registration aside. There was, therefore, no occasion, for Ambrose J to consider the matters in s 7, as I have been required to do, on an application to register the judgment. 44 In my opinion, the scheme established by rule 53.3 contemplates that on any contested hearing for registration of the judgment a defendant is required to raise and satisfy (in an evidentiary onus sense), if it is able to do so, the Court of any matter falling within s 7 that would, if proved, result in the registration being set aside. It would be entirely inimical to s 56 Civil Procedure Act 2005 for the present application to be regarded as some sort of practice run for a judgment debtor so that the clear issues between the parties are not fully aired but await an application under s 7 of the Act to set aside the registration. 45 Ultimately, it will be for the judge hearing any such application to consider if the Defendants are estopped from raising those matters either because of the Anshun principle or because issues estoppel arise from the fact that there was a full contested hearing before me and I have determined the issues raised. (i) Interest 46 No interest is payable under the judgment sought to be registered. (j) Extent to which judgment unsatisfied 47 Mr Beverley gives evidence that the Plaintiffs have received and amount of US$21,615.04 leaving a balance of US$315,118.93 owing from the original judgment sum of US$436,733.97. Otherwise, he says the balance remains unsatisfied. There was no evidence to the contrary. I accept this evidence.

[45]

Judgment in the sum of US$315,118.93 … 51 It seems to me that the judgment creditors have stated that they wish the judgment to be registered in US dollars, as judgment was given in that currency by the High Court of the Solomon Islands. A further statement that that they wished it to be registered in US dollars would have been mere superfluity. In my view, the provisions of s 6(11)(b), (11A) & (11B) are not engaged. 52 Secondly, Mr King submitted that the judgment should not be registered because the Certificate from the Acting Registrar of the Solomon Islands court involved setoffs between three different judgments, being those of Goldsbrough J and the 2 judgments of the Court of Appeal. In my opinion this is a complete misunderstanding of what appears in that Certificate. The Certificate provides a procedural history of the matter including details of all of the costs orders and moneys that have been paid in satisfaction of them. The Certificate shows, in complete accordance with the judgment of Goldsbrough J and the affidavit of Mr Beverley, what remains unsatisfied from the judgment of Goldsbrough J. The Plaintiffs seek only to register that judgment and nothing else. They do not seek to register what is contained in that Certificate. 53 Thirdly, Mr King submitted that the wrong order had been sought by the Plaintiffs. He asserted that what the Plaintiffs were required to seek was "An order that the judgment of the High Court of the Solomon Islands be registered." He said that the order sought does not comply with the Act. Indeed, he said that the Act does not require the applicant even to identify the amount of the judgment, only the currency of the judgment in which the judgment is to be registered. I do not accept these submissions. 54 The order sought asks for a judgment in the amount of the unsatisfied portion of the judgment given by the foreign court and it continues "pursuant to the section 6(1) of the Foreign Judgments Act 1991 (Cth)". In my opinion that was an appropriate order to seek. It is necessary to specify the amount of the judgment sought to be registered because s 6(7) provides that when registered a judgment has the same force and effect as if it was originally given in this Court. Further s 6(12) speaks of a judgment being registered in respect of an amount of money, being whatever amount is owing on the day registration is sought. 55 In the event that I accepted this submission of the Defendants, the Plaintiffs apply to amend to seek an order in these terms:

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