Cinc v Bucan Holdings; Cinc v Bucan Holdings

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION EQUITY LIST

4475/04 LUCIEN CINC & ANOR v BUCAN HOLDINGS PTY LIMITED & ORS 4821/04 LUCIEN CINC & ANOR v BUCAN HOLDINGS PTY LIMITED & ORS JUDGMENT- Ex Tempore (revised 9 September 2004) 1 HIS HONOUR: There are two separate proceedings before the Court today. The first is proceedings number 4475/04. That is a set of proceedings brought by Mr Lucien Cinc and a company with which he is associated against six defendants. The first defendant ("the Company") is a company by which Lucien Cinc was formerly employed, and of which he continues to be a director. The other defendants are four natural persons and one company, who were also associated in the operation of the Company. The Company was a means by which the plaintiffs and the defendants carried on a business, until the defendants decided that Mr Lucien Cinc should no longer be involved in that business. Proceedings 4475/04 are proceedings in which the plaintiffs seek the winding up of the Company on the just and equitable ground. 2 The second defendant, Vic Cinc, is a brother of Lucien Cinc. 3 The proceedings are ones which were begun on 12 August 2004. On that date undertakings were given to the Court, in terms as follows: "4B. The Defendants grant the First Plaintiff immediate access to the business premises of the First Defendant such access to continue until further order of this Court. 4C The Defendants immediately grant the First Plaintiff read only access to the books and records of the First Defendant (including Internet access) and that the defendants provide to the First Plaintiff any Internet banking password used from time to time by the First Defendant. 4D The plaintiffs undertake not to harass contractors or employees of the First Defendant, including Troy van der Nord, or to interfere with the discharge by them of their contractual or employment duties for the First Defendant. 4E The defendants undertake not to harass the first plaintiff while he is exercising access." 4 On 23 August 2004 the matter was before the Court, and Palmer J gave directions for interlocutory steps to be taken, leading to a final hearing which his Honour fixed for 22 October 2004. 5 In accordance with the undertakings which were given to the Court on 12 August 2004, the defendants permitted Mr Lucien Cinc to have access to the business premises of the Company. While he was there, on Wednesday 25 August 2004, there was an incident which involved a violent encounter, and some heated words. There is extensive evidence about it, much of it conflicting. 6 It appears to be common ground that in the course of that incident the second defendant came to be on the floor and to have his head cut. The precise way in which this came about is a matter of dispute. There are some affidavits, from the defendants' side, to the effect that Mr Lucien Cinc threw the second defendant to the ground, or alternatively pushed him. Mr Lucien Cinc denies that, and says that the second defendant fell because he lost his balance. It is not possible, on this interlocutory hearing, to do anything more than record the extent of the differences about the evidence on that topic. 7 After that incident occurred, Mr Vic Cinc went to the Burwood Police Station, where he spoke to a constable, about the laying of assault charges. The constable told him he (the constable) needed to obtain statements from other witnesses, and also needed to speak to Lucien Cinc. 8 The matter came before me in the Corporations List in the morning of Monday 30 August 2004. At that time, the defendants made an interlocutory application that the previous regime under which the first plaintiff had access to the premises be modified, so that he have read only access, via daily delivery of documentation in electronic form, to the books and records of the Company. In the circumstance where the first plaintiff continued to be a director of the Company, and had a statutory entitlement under sections 290 and 1300 Corporations Act 2001 (Cth) to inspect the books and records, it seemed to me important to be satisfied that this regime really would enable him to inspect the books and records. The evidence before me at that stage did not satisfy me that it would be possible to have a full inspection of books and records by the regime which was put forward. My lack of satisfaction arose from the fact that that topic had not been fully addressed in the evidence, rather than because I had formed any view on the topic. Further, given that the undertakings remained on foot, and that sanctions could attach if they were breached, I was not prepared to act on the basis that there was a likelihood of a repetition of the incident of 25 August 2004. In those circumstances, I adjourned the interlocutory application for a week, without changing the existing access regime. 9 After that judgment had been given, at about 1.30 pm on 30 August 2004, Mr Vic Cinc went to the Burwood Police Station, and spoke to the constable who he had previously talked to about his assault allegation. By that time, he was aware that Lucien Cinc wanted to attend the company's office the next day, 31 August 2004. He expressed some concern about that visit to a policeman, and was advised that he could go to Burwood Local Court and obtain an apprehended violence order ("AVO"). He therefore attended the Burwood Local Court and spoke to the presiding chamber Magistrate. 10 The terms of the complaint which he made formally are recorded in writing, signed by him under the heading "Circumstances of Complaint" in the AVO which was issued on that day, namely: "The parties are brothers and partners in a company with three other persons. The complainant and the defendant are currently in a dispute over this Company with the defendant seeking to force the complainant and the other three persons to purchase his shares in the company at an inflated price. This matter is currently before the Supreme Court. About three weeks ago the defendant gave undertakings to the Supreme Court not to harass the complainant or other partners. Prior to these undertakings the defendant had made threats to the complainant telling him "I am going to kill you". On 25-8-04 the defendant came to the business premises in Burwood and the complainant has approached him asking him to take a seat indicating a chair he could sit in. The defendant has then taken his mobile phone and thrust it into the complainant's face and when the complainant told him to put it down the defendant held the phone to the complainant's face. The complainant has then grabbed the phone from the defendant and the complainant was then assaulted by the defendant who has lifted him causing him to fall to the ground and the defendant was on top of the complainant. As a result of this incident the complainant suffered an injury to the head which required three stitches. The defendant was forcible [sic] removed from the premises after this incident. The complainant has not heard from the defendant since that incident but a staff member on 30-8-04 received an email from the defendant where he says that he will be attending the business premises on 31-8-04. The complainant fears further violence and intimidation if the defendant attends the premises." 11 The orders contained in the AVO made on 30 August 2004 were in the following terms: "ORDERS MADE UNDER SECTION 562BC: A. The defendant must not engage in conduct that intimidates the protected persons(s) or any other person having a domestic relationship with the protected person(s). B. The defendant must not stalk the protected person(s). OTHER ORDERS MADE: 1. The defendant must not assault, molest, harass, threaten or otherwise interfere with the protected person(s). 3. The defendant must not enter the premises at which the protected person(s) may from time to time reside or work, or other specified premises 74 BURWOOD ROAD, BURWOOD. 4. The defendant must not go within 400 Metres of the premises at which the protected person(s) may from time to time reside or work, or other specified premises 2 ALPINE WAY, GLENWOOD. 7. The defendant must not contact the protected person(s) by any means (including through a third person) except through the defendant's legal representative. 12 To understand those orders, 74 Burwood Road, Burwood, is the business premises of the first defendant, while 2 Alpine Way Glenwood is the residential address of Mr Vic Cinc. 13 There is evidence before me from Mr Vic Cinc that he said more to the Magistrates at the Burwood Local Court than is recorded in the "Circumstances of Complaint" section of the AVO itself. He has given evidence to the effect that he saw two Magistrates on that day, and to the first Magistrate he explained his circumstances as follows: 'There are currently undertakings before the Supreme Court that allow Luc to have access to the office of the company, because he is a Director and is entitled to review the books and records of the company. I have no desire to deny Luc access to the books and records of the company, however, I have fears for my personal safety should he attend the office when I am present. I am also concerned for the safety of my family, particularly my wife who is 6 months pregnant and my 3 year old son, both of whom regularly attend the office to meet me for lunch. I do not want Luc near either myself nor my family whilst there is such hostility between us, given the assault which occurred on 25 August 2004." 14 He says he then went to see a second Magistrate, who asked him some questions, and who was, it seems, the person before whom he signed these "Circumstances of Complaint" set out in the AVO. 15 Once this AVO came to the attention of Mr Lucien Cinc, it lead to the institution of the second set of proceedings which are before me today. Those proceedings are number 4821/04. The parties to them are identical to the parties to proceedings number 4475/04. The summons claims a declaration that the interim AVO obtained by the second defendant against the first plaintiff in the Local Court at Burwood on 30 August 2004 is an abuse of process. It also claims various other orders, one of which is an order staying the effect of that interim AVO. 16 Those proceedings were begun on 31 August 2004. At that time I granted leave to serve short notice, and made them returnable yesterday. 17 Both matters came back before me yesterday, in the Monday Corporations List. I made an order that, for that day only, the proceedings be heard together, with the evidence in one to be evidence in the other. 18 Yesterday, the only relief which was sought in proceedings 4821/04 was an interlocutory stay of paragraphs 3 and 4 of the AVO. That stay was sought until 22 October 2004. The thinking behind that approach was that, if there was still a need for a stay at that stage, it was a matter which could be appropriately dealt with by the trial judge. 19 There also was listed before me the adjourned hearing of the interlocutory application, in proceedings number 4475/04, to vary the access regime which Mr Lucien Cinc had. 20 It is appropriate to deal first with the application for an interim stay of the AVO, as whether or not that stay is granted will have an effect on what, if any, modifications should be made to the access regime. 21 The basis upon which Mr Ashhurst, counsel for Mr Lucien Cinc, sought the stay was that there was an inherent jurisdiction in this Court to restrain an abuse of process in an inferior Court, as part of which proceedings in the inferior Court could be stayed, and orders of an inferior Court could be stayed, if the seeking of those orders was an abuse of process. He relied on Williams v Spautz (1992) 174 CLR 509. In that case, Dr Spautz had been dismissed from his university position. He began proceedings in the Equity Division of this Court, seeking a declaration that his dismissal was invalid. Those proceedings had not been determined at the time of the reported judgment in the High Court. He also began proceedings for criminal defamation, against various people who had been involved in his downfall and ultimate dismissal, which a trial Judge in the Supreme Court found were for the predominant purpose of exerting pressure on the university to reinstate him, or to obtain a favourable settlement of his equity proceedings. The High Court held that the criminal proceedings were an abuse of process, and that the Supreme Court had acted properly in staying them. The basis upon which they were an abuse of process was that they were instituted for a predominant purpose other than obtaining the relief which was sought in the criminal proceedings. 22 Mr Ashhurst submits that the AVO proceedings are ones which I should infer are not commenced for the purpose of Mr Vic Cinc obtaining protection from real, or feared, violence. Rather, he says that I should infer that the proceedings were started for the purpose of getting around my decision not to make an order, on the morning of 30 August 2004, varying the access regime. He points to several factual matters as a basis on which this conclusion could be drawn. First, the timing is extremely eloquent. It was within just a few hours of my having declined to vary the access regime that the Burwood Local Court was approached. 23 Second, Mr Ashhurst submits that if the interim AVO was being sought for the legitimate purpose of self-protection, it seems strange that it was not sought more promptly after the incident of 25 August 2004. While Mr Vic Cinc made a prompt complaint of assault to the police after that incident, he did not take the step of seeking an AVO at that time. 24 Next, he submits that if there was a real fear on Mr Vic Cinc's part of violence from his brother, it was not as though Vic Cinc was the only person who could provide access to the books and records, and it would have been perfectly open to him to simply absent himself from the premises while inspection of the books and records was being carried out. Yet the AVO prevented Mr Lucien Cinc from attending the business premises, whether Mr Vic Cinc was there or not. In that way the AVO goes wider than was really needed to protect Mr Vic Cinc from any risk of violence. 25 Mr Ashhurst also points to the "Circumstances of Complaint" which are recorded in the AVO, and notes that they do not include any mention of the undertakings which had been given to the Court, by Mr Vic Cinc, amongst others, that access to the business premises would be granted to Mr Lucien Cinc. He says that this failure to inform the Magistrate of a highly material fact is indicative of an improper purpose. 26 On the other side of the question about what Mr Vic Cinc's predominant purpose in obtaining the interim AVO was, there is evidence from Mr Vic Cinc, which I have earlier mentioned, of him having told the first Magistrate that he saw about the undertakings to allow his brother to have access to the premises. There is also evidence from Mr Vic Cinc in which he swore, "I was very concerned for my safety should the First Plaintiff attend the offices of the company on 31 August 2004 whilst I was present". He says, on affidavit, "I am in genuine fear for the safety of both myself and my family due to the aggression the First Plaintiff has displayed towards me. In my view, as time has passed, and our dispute has continued, the hostility and aggression between myself and Luc has continued to escalate, which culminated in the violent incident on 25 August 2004."

He also gives evidence, of an incident which Luc says never occurred, in mid August 2004 when Luc threatened to kill him. His seeking the AVO within hours of my refusing to vary the access regime could be argued to be conduct consistent with his being fearful for his safety. 27 On the material before me, if Mr Vic Cinc's side of the evidence were to be accepted at a final hearing, then the process of the Criminal Court would have been set in motion for a purpose which, at the least, included a legitimate purpose. The fact that, if his evidence were accepted, he had that legitimate purpose, of seeking to protect himself from violence or the threat of violence, would not be the end of the question, because there would then be a question of whether that was his predominant purpose. However, the material before me at least raises as a possibility which might come to pass, when the evidence is explored, that the criminal proceedings have been set in train predominantly for a proper purpose, and that there is no abuse of process, of the kind involved in Williams v Spautz (1992) 174 CLR 509. On the other hand, if after examination of the facts the inferences for which Mr Ashhurst contends were drawn, the criminal proceedings would have been set in train predominantly for an improper purpose. 28 When the evidence is in this state, it is impossible to do anything more on this interlocutory application than to say that there is a serious question to be tried about for what purpose the interim AVO was sought. 29 Williams v Spautz (1992) 174 CLR 509 was a case where the abuse of process which was being considered was an abuse of process of a criminal court. Because it was an inferior criminal court, the Supreme Court could exercise its supervisory jurisdiction, which permitted abuses of process in inferior courts and tribunals to be stayed, in exercise of the inherent jurisdiction of the Supreme Court established by cases such as Jago v The District Court of New South Wales (1989) 168 CLR 23 and Walton v Gardiner (1993) 177 CLR 378. 30 The question of whether the process of a criminal court is being abused depends, in the particular variety of abuse of process illustrated by Williams v Spautz (1992) 174 CLR 509, upon what is the predominant purpose by which the process of the criminal court has been set in motion. 31 There is another line of authority which has been discussed in argument, which is relevant to abuse of process. This is the line of principle which is drawn upon in the granting of anti-suit injunctions, and also had a role to play, in earlier periods of legal history, in the granting of common injunctions. It is referred to in the joint judgment of the High Court in CSR Limited v Cigna Insurance Australia Limited (1997) 189 CLR 345 at 391-2: "The counterpart of a court's power to prevent its processes being abused is its power to protect the integrity of those processes once set in motion. And in some cases, it is that counterpart power of protection that authorises the grant of anti-suit injunctions. Thus, for example, if "an estate is being administered … or a petition in bankruptcy has been presented … or winding up proceedings have been commenced … an injunction [may be] granted to restrain a person from seeking, by foreign proceedings, to obtain the sole benefit of certain foreign assets". Similarly, as Gummow J pointed out in National Mutual Holdings Pty Ltd v Sentry Corporation , a court may grant an injunction to restrain a person from commencing or continuing foreign proceedings if they, the foreign proceedings, interfere with or have a tendency to interfere with proceedings pending in that court. The inherent power to grant anti-suit injunctions is not confined to the examples just given. As with other aspects of that power, it is not to be restricted to defined and closed categories. Rather, it is to be exercised when the administration of justice so demands or, in the context of anti-suit injunctions, when necessary for the protection of the court's own proceedings or processes." 32 In this other line of authority, the superior court acts to prevent an abuse of its own process, not an abuse of the process of an inferior court or tribunal. The power of a superior court to prevent the abuse of its own process is wide. Many examples are given in Mason, 'The Inherent Jurisdiction of the Court' (1983) 57 ALJ 449 at 453-456. That power authorises the superior court to make Mareva orders preventing a litigant from disposing of assets pending a hearing, as a means of protecting its own process from abuse in relation to the enforcement of its orders: Jackson v Sterling Industries Limited (1987) 162 CLR 612 at 619, 621, 623, 634, 638-9; Cardile v LED Builders Pty Limited (1999) 198 CLR 380 at 393. It enables the superior court to punish a litigant in that court who, by action out of court, seeks to get an advantage concerning the litigation which the processes of the court do not permit him to have, or engages in conduct which interferes with the administration of justice by the court in which the litigation is occurring: Brambles Holdings Ltd v Trade Practices Commission (No 2) (1980) 44 FLR 182 at 192-4; Pioneer Concrete (Vic) Proprietary Limited v Trade Practices Commission (1983) 152 CLR 460 at 467-8, 473. It enables the court to make orders to undo what has been achieved by a person who is litigating in the superior court and who engages in a "… devious stratagem designed to achieve the result which it had sought to achieve in the proceedings, but which, at the time of its adopting that stratagem, it had not achieved by Order of the Court." ( Howse Fink and Johnson Computing Services Pty Ltd v Beard (Supreme Court of NSW, 26 October 1989 unreported), per Powell J. 33 As Young J said in Eagle Star Trustees Ltd v Tai Ping Trading Pty Ltd (No 2) (Supreme Court of NSW, 30 October 1990, unreported), at 8: "There is good authority for the proposition that if a party seeks to obtain a right by Court proceedings, then it is a contempt of Court to seek to obtain that which is apparently not being gained in the Court proceedings by some other route whilst those proceedings are still on foot. Although the principle seems to me to be quite clear, it is difficult to find a precise expression of it. It can be seen, however, in operation in cases where a person who has obtained a decree of specific performance of a contract for the sale of land is not permitted to terminate such contract without the approval of the Court. Even though the Court's decree merely is that the contract be carried out and the parties contractual rights remain, because the parties have submitted themselves to the Court's procedure, they are bound only to act in accordance with its order." 34 Another means by which a superior court protects the integrity of its own processes, without directly invoking the notion of abuse of process, is by regarding a litigant who has committed a particular topic to the Court for decision as having elected not to use extra-curial means to achieve the same objective as the application to the court was seeking to achieve: Argyle Art Centre Pty Ltd v Argyle Bond & Free Stores Co Pty Ltd [1976] 1 NSWR 377 at 386. 35 The power of a superior court to take action to prevent abuse of its own processes operates differently, of course, to the power of a superior court to prevent abuse of the process of an inferior court. One particular difference is that this Court can take action to prevent activities which have an objective tendency to interfere with its own processes, regardless of the purpose with which those activities have been engaged in. However, Mr Ashhurst did not seek orders based on any interference with the process of this Court, by reason of the AVO requiring Mr Lucien Cinc to stay away from the business premises, in flat contradiction to undertakings which Mr Vic Cinc has given to this Court, or based upon the AVO having an objective tendency to undermine my decision of 30 August 2004. I therefore say nothing more about it. 36 When I have found that there is a serious question to be tried concerning whether there is an abuse of process of the Williams v Spautz type, the question of whether there should be an interim stay of the AVO depends upon the balance of convenience. Concerning that, there are several interests which need to be taken into account. There is the very real and serious interest which everyone has in not being the victim of violence. As well, though, there are obligations which company directors are under, to permit other directors to carry out their duties or exercise their rights as directors. In particular, the right of Mr Lucien Cinc to access to the corporate records is not one which he simply forfeits, even if it were to be the case that a court were to decide that he had been the aggressor on 25 August 2004. If there were to be any future instances of violence, those instances are ones which will not be excused or permitted by the terms of any access regime which this Court orders. They will be matters which can be the subject of the criminal law. They will be matters which, if they involve a breach of undertakings which have been given to this Court, can be the subject of applications for contempt of Court. I would not regard the fact that the incident of 25 August 2004 occurred is something which means that those significant sanctions which hang over the head of anyone who engages in violence are to be disregarded or discounted. 37 There has been further evidence filed, since Monday 30 August 2004, which deals with the question of the practical ability of access to the books and records being granted by purely electronic means. The upshot of it is that significant amounts of the information can be sent by electronic means, but in relation to even that information which can be sent by electronic means, its bulk is great, and the transmission time involved in transmitting the material electronically, over the Internet connection which Mr Lucien Cinc presently has, is significant. As well, some of the information which is in electronic form has difficulties of access, because it lacks indexing. For those reasons, even though some material could readily be sent by electronic means, even that material which is in electronic form cannot all be adequately made available that way. As well, there are some company records which are simply not in electronic form. In these circumstances, where it is not practical for full and effective electronic access to be granted to all the books and records, it seems to me that the balance of convenience favours a staying of those parts of the AVO which prevent Mr Lucien Cinc from having access to the premises, and a setting up of a regime which allows Mr Lucien Cinc to have access to the documents at the Company's premises. 38 The parties have had some discussions about the type of access which would suffice to allow adequate inspection. One matter of principle upon which they have agreed, if I were to come to the conclusion that the AVO should be stayed, is that it would be possible for Mr Lucien Cinc to provide, on the evening before any inspection, a list of the books and records which he wished to inspect. Another matter which has been agreed in principle, if I were to come to this view, is that someone other than Mr Vic Cinc should be the primary contact person for the obtaining of this information. Mr Bennett Oprysa is agreeable to perform that task. For his part, Mr Lucien Cinc is prepared to limit the times at which he seeks that access. His initial proposal was that he should seek access only on Mondays, Wednesdays and Fridays, between the hours of 12 noon and 2 pm. 39 The defendants suggest that inspection could be conducted in a shorter period of time than 2 hours, and on fewer than three days per week. As I understand it, there has been agreement in principle between the parties that, provided a list of documents was provided by Mr Lucien Cinc the previous evening, it would be possible for any inspections which he wished to carry out to be conducted within the space of an hour-and-a-half on any day. 40 In these circumstances, what I propose to do is to stay orders 3 and 4 of the interim AVO to and including 22 October 2004. That staying, however, will be on various undertakings from Mr Lucien Cinc, which I propose to discuss with counsel now. * * * * * * * * * 41 I note the following undertakings to the Court given by Mr Lucien Cinc to and including 22 October 2004:

That he will not go to or within 400 metres of the premises at 2 Alpine Way, Glenwood.

That he will not attend the premises at 74 Burwood Road, Burwood, save on Mondays, Wednesdays and Fridays between 12 and 1.30 pm.

That he will provide by email to Bennett Oprysa, by 5 pm on the day before any inspection occurs, a list of the documents he wishes to inspect.

That he will stay at the premises at 74 Burwood Road, Burwood, for no longer than is necessary to carry out the inspection of the books and records.

While at the premises at 74 Burwood Road, Burwood he will not come within 10 metres of Vic Cinc, unless with the express consent of Vic Cinc.

That he will make all requests for information, books and records to Bennett Oprysa and to no other person if Bennett Oprysa is available at the premises, unless with the express consent of Bennett Oprysa.

In the event that Bennett Oprysa is not available at the premises, that he will make all requests for information, books or records to another responsible company officer who has been nominated in writing by Bennett Oprysa. 42 I note that the intent of this last-mentioned undertaking is that if Mr Oprysa is absent and fails to nominate another responsible company officer, Mr Cinc will be free to talk to anyone he likes about the books and records. 43 Upon those undertakings I stay, to and including 22 October 2004, Orders 3 and 4 of the Interim Apprehended Violence Order made on the application of Vic Cinc against Lucien Cinc at Burwood Local Court on 30 August 2004.

(Counsel handed up Short Minutes of Order for mediation of the dispute.) 44 By consent I make orders in accordance with short minutes of order which I initial, date today's date and shall place with the papers. 45 I congratulate the parties on having achieved that much in any event. I reserve the costs of yesterday and today's applications. **********

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