(An appeal to the Court of Appeal was dismissed - Marrinan v Vibart [1963] 1 QB 528, with Sellers LJ saying, at 533-534, "I would be content to decide this case in the same terms as the clear judgment of Salmon J …" and Willmer LJ, said at 537, "I find myself completely in agreement with the decision of Salmon J, and with the reasons he gave for it." )
Was There an Agreement Between the Defendants, the Predominant Purpose of Which was to Injure the Plaintiff?
105 While the plaintiff pleaded in the alternative that there were three separate groups of conspirators (all the defendants, or all the natural defendants, or the Bryants) it will suffice, for present purposes, to examine whether this contention is made out so far as the Bryants are concerned.
106 In reaching a conclusion about whether there was such an agreement, and what its dominant purpose was, I bear in mind s 140 Evidence Act 1975. In particular, s 140(2)(c) expresses principles similar to those articulated for the common law by Briginshaw v Briginshaw (1938) 60 CLR 336.
107 In the present case, as commonly occurs in conspiracy cases, there is no direct evidence of the agreement which is alleged. The court is asked to infer the existence of the agreement from the overt acts which are pleaded. This is the process of reasoning described by Isaacs J in R v Associated Northern Collieries (1911) 14 CLR 387, at 400:
"… thought primarily each set of acts is attributable to the person whose acts they are, and to him alone, there may be such a concurrence of time, character, direction and result as naturally to lead to the inference that these separate acts were the outcome of preconcert, or some mutual contemporaneous engagement, or that they were themselves the manifestations of mutual consent to carry out a common purpose, thus forming as well as evidencing a combination to effect the one object towards which the separate acts are found to converge."
108 In is clear enough that the three Bryant defendants were of the common view that the contract for sale to NN&D should be executed and carried into effect.
109 That contract is one which has some highly unusual features. The absence of any solicitors, or real estate agent, is unusual. The deposit of $1,000 represents a deposit of 0.62% of the total purchase price, substantially below the usual 10% deposit. The contract required no part of the principal of the purchase price to be paid, apart from the deposit of $1,000, for, in effect, five years. During those five years, interest of $2,000 per annum would be paid. On the outstanding purchase price of $160,000, that represents a return of 1.25% per annum. After the first five years, principal repayments are made, at the rate of $8,000 per annum, yet the amount of interest remains constant each year, at $2,000 per annum. This is a highly unusual arrangement.
110 The provision for the principal not to be repaid until 2019 - that is, so that the last principal is not repaid until 25 years after the contract is entered - is one which, in the ordinary course of events, would be highly disadvantageous to a vendor. While I was not presented, in evidence or submissions, with any discounted cash flow calculation, which showed the net present value, as at 8 August 1995 of the instalment of purchase price, I am satisfied that any properly done net present value calculation would show that the net present value of the total consideration payable under the contract was very substantially less than $161,000.
111 The arrangement set out in the second set of Special Conditions to the Contract (see paragraph 77 above) are ones which are replete with uncertainties. While it appears that some form of lease back to the Bryant Family Trust of a completed development is proposed, there is only the sketchiest statement of what that development will consist of, or how the development is to be financed and carried into effect. I cannot accept that the contract was a commercial arrangement which Rylegrove entered to obtain commercial benefits. Rather, it seems to me that the contract was entered into to remove assets from Rylegrove, so that they would either be inaccessible, or less accessible, to creditors of Rylegrove. In reaching this conclusion, I take into account the statements of the Bryants and Mr McCullough, which have been tendered in evidence. However, I cannot regard the contents of those statements as outweighing the terms of the arrangement itself, the speed with which the contract was entered into, the transfer executed, and the transfer registered, and the coincidence in time between those events and both Fatimi's taking steps to enforce its judgment, and the Commonwealth Bank having obtained the judgment in proceedings 4938 of 1991. While Mr McCullough's note of 5 October 1994 shows that a proposal for Mr McCullough to himself invest in some sort of development relating to Lot 2 Little Hartley had been discussed since at least 5 October 1994, that does not explain why the project suddenly needed to take the form of legal documentation, and be completed, on 8 August 1995.
112 I am satisfied that it was Mr Bryant who was the instigator of the entry into of the contract and transfer on 8 August 1995. However, even in relation to Mr Bryant, I am not satisfied that his predominant motive in entering the arrangement was to harm Fatimi. Rather, it seems to me his predominant motive was to seek to protect Rylegrove's assets. He would have clearly realised that the inevitable consequence of him succeeding in protecting Rylegrove's assets in this way would be that Fatimi would not be able to execute against those assets - but, in accordance with McKernan v Fraser, that is not enough to show that the "predominant purpose to injure the plaintiff" element of the tort of conspiracy has been committed. As well, Mr Bryant had come to the view that Fatimi had obtained its judgment from Master Macready by fraud and perjury. He said so not only in the witness statement which I have earlier quoted, but also in an affidavit which he swore in proceedings 40484 of 1994 in the Court of Appeal, on 28 August 1995; part of that affidavit, where Mr Bryant so swore, was tendered in these proceedings by Fatimi. When that was Mr Bryant's view, and he had appealed against Young J's rejection of an appeal from the decision of Master Macready, a plausible hypothesis to explain what he was aiming at in having the land transferred was that it was being put somewhere where execution against it would be more difficult, until such time as the Court of Appeal could set matters right, by overturning Master Macready's judgment. The evidence does not enable me to find that this hypothesis is in fact correct, but neither does it provide sufficient grounds for rejecting the hypothesis.
113 Further, even if Mr Bryant had engineered the execution of the contract for the purpose of harming Fatimi, it would not be enough, for the tort of conspiracy to be committed, that the three Bryants co-operated in execution of the contract and transfer, in circumstances where one of them had a predominant motive to harm Fatimi.
114 The way that not everyone who assists to carry out a purpose to injure a plaintiff is themselves a conspirator is illustrated by Taylor J in Williams v Hursey (1959) 103 CLR 30, at 108, concerning two men who had attended a union organised picket line:
"While there can be no doubt that, on these occasions, these defendants made common cause with the others then present I think it may be carrying inference too far to say that the evidence established that they were parties to the agreement pursuant to which the "picket lines" were so consistently established. It is, of course, clear enough that on occasions they lent their assistance to the conspirators but this is not to say they were conspirators themselves."
115 Before a case of conspiracy is made out against Mrs Bryant and Michael Bryant all three of them must have agreed that they would act so as to harm Fatimi. I am not satisfied that either Mrs Bryant, or Michael Bryant, had any such purpose. I would infer, from Mrs Bryant's statement that she was briefed by her husband concerning the litigation, that she knew of the judgments which had been obtained by Fatimi and the Commonwealth Bank. I would infer that she knew that each of those judgments had been appealed against. However, I would not be prepared to infer, or find, that her purpose in causing Rylegrove to enter the contract with NN&D was to harm Fatimi.
116 I would reach a similar conclusion concerning Michael Bryant.
117 Fatimi sought to place substantial weight on Michael Bryant swearing his affidavit of 10 August 1995. That affidavit is one which Fatimi would have been entitled to assume, when it was served on it, was an affidavit sworn in compliance with Brownie J's orders of 3 August 1995. However, Michael Bryant has sworn in his answers to interrogatories that he was not aware of that order of Brownie J. In those circumstances, I am not prepared to infer that his swearing of the affidavit was in any way an attempt to mislead or confuse Fatimi.
118 Fatimi also relied on Michael Bryant's affidavit of 27 August 1995 as an overt act from which the conspiracy could be inferred. I cannot regard the affidavit of 27 August 1995 in that way. By 27 August 1995 the fact that the transfer of the land had taken place was known to Fatimi, and Fatimi had injunctions in place freezing the land and its proceeds of sale. By that time, it was too late, even if there had at one time been a conspiracy, for the Bryants to be continuing to put it into effect. I note that the conspiracy is pleaded in paragraph 13 of the Second Further Amended Statement of Claim, to have been on foot from about 25 July 1995 to about 10 August 1995. Thus 27 August 1995 falls outside the time of Fatimi's own allegation of when the conspiracy was on foot.
119 As will appear later in this judgment, the essential reasons why Fatimi has received much less, as events have turned out, than it would have received had it been able to proceed, completely unhindered, to levy execution against the land, are that (a) Rylegrove was wound up, and (b) in the winding up, Fatimi received a very small dividend, partly because the liquidator's costs and disbursements were large, and partly because the liquidator admitted to proof claims against Rylegrove of millions of dollars, in addition to the claim of Fatimi. Some of the liquidator's costs and expenses would have been attributable to running the litigation to undo the transfer of the Little Hartley land from Rylegrove to NN&D. Even so, I see no basis for believing that any of the Bryants were trying, when they co-operated in having Lot 2 Little Hartley transferred to NN&D, to bring about a situation where Fatimi was injured through Rylegrove going into liquidation, the liquidator incurring the significant expenses, and large proofs of debt being admitted, in addition to the proof of debt of Fatimi, in the winding up of Rylegrove. Indeed, I see no basis for concluding that the Bryants had a purpose of achieving any of these means by which Fatimi was actually put in a worse position than it would have been if it had been able to levy execution unhindered. There is no legal requirement that a defendant in an action for conspiracy should aim to achieve the particular means by which a plaintiff has actually suffered damage - the requirement is just that the defendant should be seeking to achieve the purpose of harming the plaintiff. However, when there is reason to believe that the defendants were not trying to achieve the means by which the plaintiff has actually suffered harm, that is a relevant fact for a court to take into account in deciding whether it is satisfied that any defendant was seeking to harm the plaintiff.
Overt Acts, Causing Damage
120 If (contrary to the finding I have just made) the "predominant purpose" element of the tort had been made out, Mrs Bryant and Michael Bryant signing the contract would have been, I shall assume, a sufficient overt act carrying out the conspiracy. (I say, "I shall assume" because a question was argued before me about the circumstances in which company directors can commit the tort of conspiracy when they take concerted action to cause the company to adopt some particular course of conduct - O'Brien v Dawson (1941) 41 SR (NSW) 295 at 307-308; O'Brien v Dawson (1942) 66 CLR 18 at 32; Said v Butt [1920] 3 KB 497; G Scammell & Nephew Limited v Hurley [1929] 1 KB 419; De Jetley Marks v Greenwood [1936] 1 All ER 863 at 872-873; Mc Kernan v Fraser (1931) 46 CLR 341 at 361; Root Quality Pty Ltd v Root Control Technologies Pty Ltd (2000) 177 ALR 231 at [115]-[146]; Idoport Pty Limited v National Australia Bank Limited [2001] NSWSC 328; LMI Australasia Pty Limited v Baulderstone Hornibrook Pty Ltd [2001] NSWSC 886 at [79]-[99]. In light of other conclusions to which I have come, it is not necessary for me to examine this question.)
121 Fatimi contends that, if it were not for the transfer of the land to NN&D, Fatimi would have not pressed on with its application to wind up Rylegrove, would have levied execution against the land, and received the entire value of the land (minus expenses of sale) in reduction of its judgment debt. Instead, Fatimi says it has suffered significant loss because, as things eventuated, it received only a small dividend in the winding up of Rylegrove, instead of the full net value of the land, that it would have received if the land had remained available for Fatimi to levy execution on.
122 The Bryants contend that, even if I were to find that there had been a conspiracy of the type alleged, it did not cause damage to Fatimi. They point out that it was only nine days after the date of the contract that Fatimi found out about the transfer, that it was only 13 days after the transfer that Fatimi obtained ex parte relief effectively freezing the land in NN&D's hands, and that the transfer of the land was reversed by the order of Bryson J on 22 April 1996. The Bryants contend that, even if the land had not been transferred from Rylegrove to NN&D, Fatimi would have been no better off. The Bryants say that this situation would have arisen because either the Commonwealth Bank would have wound up Rylegrove, or else Fatimi itself would have wound up Rylegrove. Analysis of this contention requires one to consider what financial outcome emerged from Rylegrove's winding up, and what is likely to have happened, if the transfer of Lot 2 had never occurred, and Fatimi had persisted in its attempts to levy execution against that land.
The Financial Outcome of the Winding Up
123 Fatimi's case on damages depends on a comparison of the actual amount it received in the winding up, and the value of the land. After Rylegrove was ordered to be wound up, the Commonwealth Bank promptly lost its diffidence about relying on the mortgage which Rylegrove had given it. On 25 September 1995, the bank made a demand on the liquidator of Rylegrove for $4,335,485.79, being the amount claimed to be owing by Rylegrove to the bank under the registered mortgage over the Kemps Creek property. By 10 October 1997 an internal memorandum of the bank records that Mr Andrew (who was also the liquidator of two other Bryant companies) would lodge proofs of debt for $1million and $125,000 respectively for those companies on Rylegrove.
124 Fatimi was admitted to proof in the winding up of Rylegrove for an amount of $240,688.12. This was made up of the judgment debt of $133,520, interest to 7 September 1995 of $26,118.12, and various costs orders which Rylegrove owed Fatimi totalling $81,050. Of those costs, $12,540 were costs which Fatimi had incurred as petitioning creditor, and therefore were paid in full.
125 The total proofs of debt admitted by the liquidator were $2,915,962.62. The total receipts of the liquidator were $676,255.58. This included $145,100 as the gross proceeds of sale of Lot 2 Little Hartley. The payments of the liquidator included $325,999.15 in legal costs (in addition to the $12,540 costs payable to Fatimi as petitioning creditor) and $185,000 as liquidator's remuneration. After payment of all costs and expenses, a little over $114,000 was distributable amongst the creditors. This resulted in a first and final dividend of 3.9 cents in the dollar being paid. Thus, on its total proof of debt, Fatimi received its costs as petitioning creditor of $12,540, plus an amount of $9,386.84.
Value of the Little Hartley Land
126 Two registered valuers, Mr Hopcraft and Mr Hodgson, had expressed opinions about the value of the land. An experts' conference, pursuant to Part 36, Rule 13CA of the Supreme Court Rules, was held between those two valuers on 29 November 2001, resulting in agreement between them that the value of the property did not change between August 1995 and April 1996, and that during that period its value was $158,000. Their joint report to that effect was admitted without objection.
127 The Bryants contend that the Court ought not adopt this figure arrived at by the valuers, because the valuers have failed to take into account an absolutely fundamental matter, namely the sale price that was achieved for the land itself. The liquidator of Rylegrove sold Lot 2 Little Hartley by contract made 1 May 1997 for $145,100. That sale was effected by private treaty, after a public auction had been held on 19 April 1997. The auctioneer reported to the liquidator that the auction was well attended, with some 18 people in attendance. He continued:
"After the reading of the contract document Mr Joe Bryant took the floor and proceeded to address the audience. Despite my repeated requests for Mr Bryant to cease his obvious attempts to intimidate any or all prospective purchasers he continued to use our auction for his political platform. Eventually he refrained and took up a position at the rear of the room.
Mr Bryant's son attempted to open the bidding at $50,000. As I felt this bid was not in the best interest of the vendor I referred to page three of the contract and subsequently refused to accept the bid.
The bidding commenced at $100,000 and rose to $122,000. The property was passed in …"
128 Following that auction, the real estate agent negotiated with the man who had been the highest bidder at the auction, and with the eventual purchasers (who had not been at the auction at all). Mr Ashcroft, one of the purchasers, gave evidence that the amount for which he had purchased it was the amount that he was prepared to pay - in other words, that he would not have been prepared to pay more.
129 I accept that a sale of the actual piece of land being valued, at a time close to the date as at which it is being valued, is a very important consideration to take into account in determining the value of land. In Inez Investments Pty Limited v Dodd (9 July 1979, unreported), Carmichael J held that a valuer who failed to take into account an actual sale of the property being valued was negligent. However, in the present case, it seems to me that the actual sale was achieved following a flawed sale process. Mr Bryant's behaviour at the auction was behaviour clearly calculated to dissuade purchasers, and it would be unsafe for me to proceed on any basis other than that there is a realistic prospect that he might have succeeded in dissuading one or more purchasers who might have otherwise been interested in the land. Likewise, the attempt by "Mr Bryant's son" to open the bidding at $50,000 was an act calculated to achieve a low selling price. When the actual sale was achieved for a price which was not the free produce of market forces, I am not prepared to regard it as a reason for departing from the opinion of the valuers.
130 There is some other evidence to support the opinion of the valuers. Mr Bryant stated, in the statement which was tendered in these proceedings by Fatimi:
"I am aware that the property at Lot 2 Little Hartley was sold by the liquidator by private treaty contract dated 1 May 1997 for the sum of $145,000. I believe that this price was under the value of the land. I understand that the purchaser is a real estate agent and it is likely that the land will be developed into one-acre blocks. Having regard to the likely use of the land I believe that the value should have been well above this figure and as previously stated by me in evidence in various cases to date."
131 The answers to interrogatories which both Mrs Bryant and Michael Bryant gave (see paragraph 95 above) put the value of Lot 2 Little Hartley, as at 3 August 1995 as being, "$160,000 to $300,000, depending on the use to which the buyer wanted to use the property."
132 In all these circumstances I find that the value of the Little Hartley land was $158,000.
133 There is evidence from Mr Hawley, a real estate agent at Little Hartley, that if there were to be a sale of land by private treaty, the likely expenses would be agents fees comprising 4% of the sale price, advertising costs of $2,000, and disbursements of $300. No evidence has been presented to suggest that a sale by the Sheriff would incur expenses which were any different. On the basis of a sale price of $158,000, the total expenses of sale would therefore be $8,620. The net proceeds of sale which Fatimi would have received, if it had sold the land by execution, are $149,380.
The Processes Which Need to be Gone Through for Execution of a Judgment by Sale of Land
134 Part 45, Rule 4 Supreme Court Rules prescribes an order of realisation of assets which the Sheriff must follow:
"(1) Where it appears to the Sheriff that the property subject to levy under a writ is more than sufficient to satisfy the money to be levied, he shall first take or realise so much of the property as appears to him to be sufficient.
(2) In taking or realising property under subrule (1), the Sheriff shall take or realise the property -
(a) in such order as seems to him best for the speedy execution of the writ without undue expense;
(b) subject to paragraph (a), in such order as the debtor may direct; and
(c) subject to paragraphs (a) and (b), in such order as seems to the Sheriff best for minimising hardship to the debtor and other persons.
(3) Land shall not be sold under the writ before all other property liable to sale under the writ has been sold unless -
(a) the debtor requests that the land be sold before any other property liable to sale under the writ is sold; or
(b) the Sheriff is satisfied, after making reasonable attempts to inquire of the debtor and such other person as the Sheriff thinks fit, that the sale of the land before the sale of all other property liable to sale under the writ would minimise hardship to the debtor and other persons."
135 It is not completely clear whether, in mid 1995, Rylegrove had any goods on which execution could have been levied. The reader will recall that, in proceedings 4938 of 1991, the Court had made a declaration that certain chattels:
"… are held by [Rylegrove] on trust for [the Commonwealth Bank of Australia]
2. [the Commonwealth Bank of Australia] is entitled to have delivered up to it by [Rylegrove]" those items.