Crupe Pte Limited v Stuart Kinnear Robertson [2018] NSWSC 2056 | Case summary

Supreme Court of NSW|2018-12-12|Before: Pembroke J, Lindsay J, McLelland J, As McLelland J

Solicitors: Colin Biggers Paisley - for the first and second plaintiffs Minter Ellison - for the first and second defendants File Number(s): 2018/3583000

Introduction

This is an application for interlocutory relief in the same terms as the claim for final relief in the summons. No other relief is sought. The relief sought consists of worldwide freezing orders against the defendants.
Interlocutory orders were first made by Lindsay J on 21 November 2018. They were continued by the Chief Judge in Equity on 27 November 2018 and continued again by me on 7 December. The matter came back to me today in the duty judge's list in the last week of term. On 7 December, after discussion with counsel, it was apparent that there needed to be some better evidence, including possibly expert evidence, in relation to the questions of foreign law that are central to the claim and the defendants' opposition to it.
This is not a final hearing. The application to continue the freezing orders has come on hurriedly and has been affected by the exigencies of the list. When the Court is being asked to grant interlocutory relief it must consider what course is best calculated to achieve justice between the parties in the circumstances of the particular case pending the resolution of any uncertainty and bearing in mind the consequence to the defendants of the grant of an injunction and the consequence to the plaintiffs of the refusal of an injunction: Kolback Securities v Epoch Mining NL (1987) 8 NSWLR 533 at 535 (McLelland J). As McLelland J said in that case: Where that uncertainty depends in whole or in part upon a contested question of fact, it is not appropriate for the Court to decide that question on an interlocutory application. Where the uncertainty depends in whole or in part on a contested question of law, it may or may not be appropriate for the Court to decide that question on the interlocutory application depending on the circumstances.

The Application

The plaintiffs' application is based on UCPR 25.14. In particular, that rule allows the Court to make a freezing order against a prospective judgment debtor if the Court is satisfied, having regard to all the circumstances, that there is a danger that a prospective judgment will be wholly or partly unsatisfied because of certain matters. Relevantly, those matters include the removal from Australia, or from a place inside or outside Australia, of assets which might otherwise be available to satisfy the prospective judgment.
The plaintiffs have commenced proceedings in the High Court of Singapore. The writ of summons was originally filed in early October 2016. At that stage there was only one plaintiff and a fully articulated claim, if any claim, had not been formulated against Mr and Mrs Robertson as defendants. The writ of summons had only been served on The Crupe Foundation, which is only one of the three current defendants. Claims were eventually formulated against Mr and Mrs Robertson and an amended writ was served on them in Australia in July 2017.
The claims against Mr and Mrs Robertson are serious. They include breaches of fiduciary and common law duties, as well as breaches of trust. They involve a thread of dishonesty and fraud. The amount alleged to have been the subject of their dishonest conduct is said to be in excess of US$120 million.
The argument today has been devoted to whether or not the freezing orders should be continued in relation to assets owned or controlled by the defendants in Switzerland. For the purposes of today's hearing, senior counsel for the defendants was prepared to accept, if I were otherwise satisfied, that the worldwide freezing orders should continue other than in relation to the defendants' assets in Switzerland. It was accepted that there were assets in Australia, Hong Kong, Saint Lucia and Switzerland that might be available to the plaintiffs to satisfy a judgment obtained in Singapore.
Mr and Mrs Robertson currently live on the Gold Coast in Queensland. Mr Robertson is an Australian citizen as well as being a Swiss citizen. His wife is a Swiss citizen. They have been resident in Australia since early 2017. Mr Robertson owns a house at Broadbeach Waters in Queensland. It is the family home and has been since early 2017. It may once have been for sale but has been withdrawn from sale. In August 2017 Mr and Mrs Robertson started to renovate the property so that they would have more room for their children and to enable Mrs Robertson's parents and other family members and friends from Europe to come and stay with them in Australia.
The possibility of sale of the property apparently ceased in November 2018. The 'For Sale' signage was removed and Mr and Mrs Robertson have proceeded with renovations to the upstairs area of the property. Those renovations have been approved by the local council but have not commenced.
Mr & Mrs Robertson have made no decision to relocate to Switzerland. Their sons may complete their schooling at the Southport School. They expect to have family visitors from Switzerland in the future at their property at Broadbeach Waters. Mrs Robertson has applied for permanent residency in Australia.

The Issue

The central issue raised by the defendants in opposition to the extension of the freezing orders amounted to this: They say that there is no danger of a prospective judgment being wholly or partly unsatisfied on the ground that their assets in Switzerland may be disposed of or dealt with or diminished in value, because any judgment of the High Court in Singapore could not be enforced in Switzerland against those assets.
It should be noted that the proof of foreign law is a question of fact. However, the application of the foreign law to the facts of the particular case is a question of law: Brereton J, Proof of Foreign Law - Problems and Initiatives [2011] NSWJ Schol 13.

Expert Evidence

I had the benefit of affidavit evidence from several experts on Swiss law. It was not conclusive. In some respects, it raised more questions. On the basis of that evidence, the defendants contended that a Singapore judgment obtained in the current proceedings would not be enforceable in Switzerland. The relevant Swiss statutory provision is article 165 of the Swiss Federal Code on Private International Law. It provides that a foreign decision concerning a claim based on company law shall be recognised in Switzerland if it were rendered in the state of the company's registered office and the defendant's domicile was not in Switzerland. Article 165 does not specify the point in time at which the defendants' domicile should be determined.
Professor Furrer contended for the defendants that it was a general and undisputed rule that the legally relevant point in time for the ascertainment of the defendant's domicile is the time of initiation of the claim. He added that some authors extended this relevant point in time to the date of judgment on the merits.
The expert called on behalf of the plaintiffs, Ms Schnyder, simply said that foreign decisions concerning claims under company law shall be recognised in Switzerland (a) if they were rendered or recognised in the state in which the company has its registered office and the defendant was not domiciled in Switzerland; or (b) if they were registered in the state of domicile or at the place of habitual residence of the defendant. The latest memorandum of Ms Schnyder for the purposes of this hearing was only compiled in Switzerland yesterday.
There is really no clear joinder of issue between Professor Furrer and Ms Schnyder on the question as to the precise point in time at which the domicile of the defendant is relevant for the purposes of the application of article 165. I did not have the opportunity to see either witness, nor to ask them questions. Nor did counsel have the opportunity to ask them questions. The point remains unresolved. As I said, the issue of the proof of foreign law is a question of fact which may not be appropriate for resolution by the Court on an interlocutory application if contested, and especially if the competing expert opinions are not readily irreconcilable.
If things stand as they are today, it looks very much as if Mr and Mrs Robertson will continue to reside on the Gold Coast. I am satisfied on the balance of probabilities that they will do so for the time being. I was not impressed by the submission that I should assume that if a judgment is obtained in Singapore, or a bankruptcy notice was threatened in Australia, Mr & Mrs Robertson would remove themselves to Switzerland to avoid the consequences of enforcement of any judgment or order in Switzerland. In other words, they would change their domicile to avoid enforcement in Switzerland. The submission seemed to me to reinforce the need, in the particular circumstances of this case, and at this early stage of the litigation, to adopt a course best calculated to achieve justice between the parties by ensuring that the freezing orders are maintained for the time being.
The second issue on which the parties called expert evidence was in relation to the application of article 166. It provides, in relation to the possible enforcement of an Australian bankruptcy order in Switzerland, that a foreign bankruptcy order will be recognised and enforced, in effect, if it were rendered in the state of the company's registered office or recognised there and the defendant's domicile was not in Switzerland.
Professor Furrer contended that an Australian bankruptcy decree will only be recognised in Switzerland if the person the subject of the decree was domiciled in Australia at the time the decree was made or entered, or the notice of threat of bankruptcy or petition for bankruptcy was served. The somewhat cynical submission of the defendants was that: 'There is no prospect of the Robertsons remaining domiciled in Australia while that happens.'
For that reason, it was said, there could hardly be a danger of them dealing with their assets so as to defeat the prospective judgment of the Singapore High Court - because the judgment could not be enforced.
On this issue also, the contentions of the experts were not in alignment and it was difficult to determine what the position is - namely, the proof of the relevant law as a question of fact. In her last-minute memorandum dated 11 December Ms Schnyder said that article 166 does not refer to the domicile of the defendants but only to the state of domicile of the debtor, which shall be determined at the moment of either the notice of threat of bankruptcy or the slightly later date of issue of the petition for bankruptcy, both taking place procedurally earlier than the order or decree declaring bankruptcy.

Uncertainty and Inconclusive Evidence

I would have liked to have had the benefit of Ms Schnyder's elaboration of that point and to hear it tested in cross-examination. The same also applies for Professor Furrer's contentions. These are not issues that are easily, safely or appropriately determined on an interlocutory application - especially in the circumstances in which this application has arisen urgently, in the last week of term.
I am therefore satisfied that, given the uncertainty in relation to the factual and legal questions of the proof of foreign law and its application to the facts of this case, in particular in relation to the enforceability in Switzerland of a prospective judgment of the Singapore High Court, the course which is best calculated to serve the interests of justice between the parties is to continue the existing orders for the time being.

Further Arguments

However, there are several further arguments that the defendants put. They contended that if it were held that the prospective judgment of the High Court of Singapore could be enforced against the assets of Mr and Mrs Robertson in Switzerland, then the Court should decline to exercise its discretion to continue the freezing orders at all.
Three reasons were put in support of that contention. The first was, in substance, that there was an insufficient connection with Australia to justify the exercise of the discretion to grant the orders. It was said that Mr and Mrs Robertson are both Swiss citizens; that the majority of their assets are in Switzerland; that the issues arising in the Singapore proceeding have no connection with Australia; and that on the hypothesis that the prospective judgment of the High Court of Singapore is enforceable in Switzerland, the continuation of the freezing orders would be an unjustifiable use of the powers of the Court and an unwarranted interference in foreign proceedings.
The last point is drawn from an observation by Bathurst CJ in Severstal Export GmbH v Bhushan Steel Ltd [2013] NSWLR 141 at [54]. However, that general statement by the Chief Justice was an observation made in response to an hypothesis which did not arise in that particular case. It obviously requires considerable respect but I do not see that it is by itself a sufficient reason for not adopting a course in this case - on an interlocutory application - best calculated to serve the interests of justice between the parties for the time being. It may possibly be relevant at a final hearing between the parties.
The second reason was said to be that the plaintiffs should have disclosed, at the first return of the summons on their ex parte application, that the prospective judgment of the Singapore High Court could be enforced against the assets of Mr & Mrs Robertson and the third defendant in Switzerland.
I regard that as somewhat disingenuous. The basis on which the plaintiffs made the application was a concern that a judgment of the Singapore High Court might not be enforceable in Switzerland. And they effectively repeated the contention put forward by the legal representatives of the defendants. I do not think it was an intentional, or even a seriously inadvertent, omission resulting in a material nondisclosure so as to disentitle them to the interlocutory relief which they seek to continue today.
The third reason does not I think amount to much. It does appear that the solicitors for the plaintiff drew to the attention of a Swiss corporation, Edenalp AG, the warning on the front page of the freezing orders that any other person who knows of this order and does anything which helps or permits the defendants to breach the terms of this order may be punished. Unfortunately, the letter to Edenalp AG did not refer to order 16 in the freezing order which provides that persons outside Australia are not affected by the order except in the circumstances specified in order 16.
It was inappropriate for the plaintiffs' solicitors to inform Edenalp AG in the way that they did, but a copy of the freezing order was enclosed with their letter and it would have been apparent to lawyers advising Edenalp AG that order 16 in the freezing order provided adequate protection for them. I do not think that the letter to Edenalp AG amounted to a threat.

Conclusion

For those reasons, I propose to continue the existing orders until further order but on condition that the plaintiffs move expeditiously to obtain a hearing date for the determination on a final basis of the relief sought in the summons.
The orders made by me on 7 December were made until further order. They will continue with the qualification that order 8(a) will now read in the third line after the reference to assets worldwide - '(excluding Switzerland)'. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 16 May 2019

Crupe Pte Limited v Stuart Kinnear Robertson

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