Why leave to reopen was not granted
26 The applicants have closed their case. So have the respondents. Both Mrs Frigger and Mrs Trenfield were cross-examined on the basis of the evidence that had been admitted up to that point. Closing submissions have been heard and judgment has been reserved. The importance of efficient disposition of and finality in litigation mean that an applicant seeking to reopen the trial at this stage of the proceeding, after judgment has been reserved, in order to object on new grounds to evidence that has already been admitted, will need a very good reason for doing so.
27 I was not persuaded that the applicants had demonstrated any good reason here. In an attempt to advance one of the four recognised reasons for reopening I have listed above, Mrs Frigger said that she misapprehended the fact that Mrs Trenfield had misused her powers under the Bankruptcy Act. But the applicants have not established that they misapprehended anything. The letters they refer to were all in evidence well before the trial started. The letter of 3 September 2020, obtained during the course of the trial, does not provide any new context for the earlier letters or otherwise change the way in which they should be understood.
28 Let it be assumed for the moment that the dichotomy the applicants assert, between investigating in the course of the bankruptcy and obtaining information for the purposes of litigation, is sound. Even so, the purpose of the first letter to Just SMSF Audits and the letters to the banks was always evident from the terms and timing of the letters. The letter of 3 September 2020 shed no new light on any of that.
29 As for the letters to CommSec and share registries asserting that shares were property divisible among creditors, the applicants have long disputed that, and if it is misleading now to omit to mention the dispute, then it was equally misleading when the letters were first sent and first disclosed in Mrs Trenfield's affidavits. In their written opening submissions filed before trial, the applicants alleged that the letter of 28 August 2019 to CommSec was an 'abuse of power' and advanced it as one ground for the order they seek for the removal of Mrs Trenfield as trustee. The applicants have always been alive to their ability to allege impropriety against Mrs Trenfield on that basis. Nothing in the letter of 3 September 2020 points to any misapprehension about the earlier letters.
30 At its highest, the applicants' argument on this point can only be that they did not know that s 138 of the Evidence Act gave them a basis to object to the evidence that was obtained as a result of the earlier letters. But even if they, as self-represented litigants, did not know of the terms of s 138, they did know enough to claim that the evidence should be excluded because it was obtained by Mrs Trenfield abusing her power. After all, that is what Mrs Frigger did claim in relation to the letter of 3 September 2020, in an affidavit filed on 18 September 2020, only two days after she first saw that letter and before the court drew the applicants' attention to s 138. Simply being unaware of a particular statutory provision or legal principle is not the same thing as the 'mistaken apprehension' of the law to which Bradshaw refers as a recognised ground of reopening. If it were, then applications to reopen would be legion, from self-represented and legally represented litigants alike.
31 It would be inimical to the efficient conduct of litigation to permit litigants, self-represented or not, to reopen a trial after judgment is reserved simply because they have since identified an objection that did not occur to them before or in the course of the trial, or because they were unaware of the precise legal basis available to support the objection. Yet that is what the applicants sought by way of the Reopening Application. The applicants said (from the bar table) that they were overwhelmed by the volume of material they had to digest and by interlocutory applications which Mrs Trenfield brought shortly before the commencement of the trial. But preparing for trial is always demanding and time is usually short. It does not provide a good reason to depart from the usual approach that the parties must present their entire cases before judgment is reserved.
32 The applicants' inability to fit the reason for reopening into one of the four established classes is not necessarily fatal to the application; as I have said the classes are not closed and the ultimate question is where the interests of justice lie. But in the circumstances as I have described them, the considerations in favour of reopening would have to be compelling to overcome the lack of a satisfactory explanation for why the objection was not raised during the trial. Conceivably, if an applicant in an application for reopening presented to the court clear evidence of serious illegality or impropriety by another party, it could be in the interests of justice to permit a trial to be reopened so as to deny that other party the benefit of that illegality or impropriety.
33 Section 138(1), the relevant terms of which are set out at [15] above, imposes on a court a two stage task. Firstly, a party seeking to exclude the evidence bears the burden of satisfying the judge that the impugned evidence was obtained improperly or in contravention of an Australian law. Secondly, the party seeking admission of the impugned evidence must satisfy the court that the desirability of admitting the evidence outweighs the undesirability of admitting the evidence, having regard to the matters referred to in s 138(3): Wu (a pseudonym) v The Queen; Phan (a pseudonym) v The Queen [2020] VSCA 94 at [71]; R v McKeough [2003] NSWCCA 285 at [36] (Dunford J, Spigelman CJ and Hidden J agreeing on this point). This weighing or balancing exercise is discretionary: Em v The Queen [2007] HCA 46; (2007) 232 CLR 67 at [95] (Gummow and Hayne JJ).
34 I do not consider that the letters on which the applicants relied point so clearly to illegality or impropriety that, in the circumstances I have described here, they compel the reopening of the case to prevent injustice, including by considering the application of s 138. In so far as Mrs Trenfield's reliance on s 77A goes, the dichotomy alleged by the applicants between investigating in the course of the bankruptcy and obtaining evidence for use in litigation is not, in fact, sound. It is well established that a trustee in bankruptcy can use her investigative powers to obtain evidence for use in litigation, including litigation that has already been commenced. In Re Hugh J Roberts Pty Ltd (in liq) [1970] 2 NSWR 582 at 585, Street J said:
A liquidator needs information concerning his company just as much in connexion with current or contemplated litigation as in connexion with other aspects of its affairs. In using the statutory machinery of private examination he will in many cases be gathering evidence as an ordinary and legitimate use of this procedure … In my judgment it is immaterial in basic substance whether the private examination is sought to be used by a liquidator to gather information in connexion with proceedings he believes he might be able to bring, proceedings he contemplates bringing, proceedings he has decided to bring, and proceedings he has already brought. There is no presently relevant distinction in substance between gathering information referable to commencing proceedings and gathering information referable to continuing proceedings.
35 This passage has been approved on numerous occasions, including in Hongkong Bank of Australia Ltd v Australian Securities Commission (1992) 40 FCR 402 at 518 (Lockhart, Gummow and O'Connor JJ), in Hamilton v Oades (1989) 166 CLR 486 at 497-498 (Mason CJ), in Re Excel Finance Corporation Ltd (Receiver and Manager Appointed) (1994) 52 FCR 69 at 90 (Gummow, Hill and Cooper JJ) and in Re Southern Equities Corporation Ltd (in liq); Bond & Caboche v England (1997) 25 ACSR 394 at 432 (Cox, Lander and Bleby JJ). While all these cases concern the use of compulsory examination powers by company liquidators and receivers, there is no relevant distinction between that situation and the use by a trustee in bankruptcy of her investigative powers under s 77A of the Bankruptcy Act: see Fiore v Roufeil [2019] FCA 1774 at [26] and Roufeil v Fiore, in the matter of the Bankrupt Estate of Peter Andrew Fiore (No 4) [2020] FCA 1458 at [16].
36 The applicants sought to distinguish Fiore v Roufeil on the basis that there, the litigation had been commenced by the trustee, whereas here it was commenced by the bankrupt. But in Australia, at least, that distinction is of no moment in determining whether the trustee is abusing her powers: see Excel Finance at 90. They also sought to distinguish the compulsory examination powers of liquidators and receivers from the power under s 77A because the former takes place in a court and is subject to curial supervision. But I do not consider that difference is relevant here. The relevant questions are: for what purpose has the Bankruptcy Act conferred the power on the trustee; and did she use it for a reason outside that purpose? The purpose of both the compulsory examination powers and the investigative power under s 77A is the same: to obtain information which can be used in the administration of the bankrupt estate, including in litigation necessary in that administration.
37 What the trustee must not do is use her powers to obtain an improper forensic advantage in litigation to which she is a party. In Excel Finance at 91 the court gave examples, by reference to Hugh J Roberts, of what that means:
… Street J counselled liquidators not to be diffident in using a private examination for the ordinary and legitimate purpose of gathering in information. His Honour warned, of course, that the process should not be abused, giving, as an illustration, an attempt, where litigation was either contemplated or commenced, to summon the prospective or existing defendant's probable witnesses and examine them simply for the purpose of destroying their credit. So to do would involve using the examination process to obtain a forensic advantage in litigation, whether or not that litigation was yet commenced. Another, albeit related, case of abuse would be the conduct of an examination to enable a 'dress rehearsal of the cross-examination' to be instituted of a trial impending or contemplated. Other examples may be the use of an examination summons to obtain de facto discovery where a discovery order had been refused in proceedings already on foot. It is neither possible nor desirable to catalogue all the circumstances where use of an examination summons might constitute an abuse of process.
38 While this is not an exhaustive list, it shows that to use the trustee's compulsory powers to obtain documents relevant to litigation is not necessarily to gain an improper forensic advantage. The parties spent much time debating whether Mrs Trenfield had obtained documents that she could have obtained through discovery, or that were outside the scope of discovery orders that were made. But neither of those matters, without more, are grounds for saying that she gained an improper forensic advantage. If the documents were ordered to be discovered, and the applicants did not discover them, they can hardly complain that the trustee felt it necessary to obtain them in another way. To the extent that the documents were not ordered to be discovered, in this case it cannot be said that this was the result of Mrs Trenfield having applied to obtain discovery of them, and that having being dismissed. Either way, she has not gained any improper forensic advantage.
39 So, once it is appreciated that there is no relevant distinction, per se, between investigating under s 19AA of the Bankruptcy Act and obtaining information for use in litigation which has been commenced, it becomes apparent that the sending of the letter requesting material under s 77A is capable of constituting the necessary investigation. Mrs Trenfield gave no direct evidence that she was conducting an investigation but it may be that she did not need to. Asking questions in a letter in order to obtain information is an investigation. Section 19AA is broadly expressed. It appears in Part II Division 1 of the Act, which contains a miscellany of provisions about the general administration of the Act. The power to investigate which s 19AA confers relates to the broad subject matter of the bankrupt's conduct and examinable affairs and books, accounts and records kept by the bankrupt, and is confined only by the requirement that those matters relate to the bankruptcy. No formal requirement which must be fulfilled in order to constitute an investigation is prescribed. Further, the letter to Just SMSF Audits of 28 August 2019, and the letters to the banks of 30 August 2019, ask for a wide range of information which is of the kind that one would expect a trustee in bankruptcy conducting an investigation for the purposes of her administration of the bankrupt estate to seek. In light of the apparent breadth of s 19AA, I do not consider that the applicants have demonstrated a clear basis for thinking that the letters relying on s 77A, and therefore relying on the existence of an investigation under s 19AA, were misleading.
40 The applicants also alleged that Mrs Trenfield acted 'in furtherance of the respondent's plan to use Mrs Frigger's cross-examination in this proceeding as a dress rehearsal for a future public examination'. That is the reverse of the issue to which Excel Finance refers, which is using the examination power to conduct a dress rehearsal of curial litigation. But in any event, the applicants advanced no plausible basis for thinking that this was Mrs Trenfield's purpose in cross-examining Mrs Frigger at trial. All they pointed to was an email from a solicitor acting for the liquidator of the former trustee of the FSF, Computer Accounting and Tax Pty Ltd, which raised the possibility of an examination being conducted in the future in relation to matters which do not appear to be connected to the present proceeding. But as far as the present proceeding goes, the applicants brought it to establish that certain assets are not part of the bankrupt estate, Mrs Trenfield disputes that claim, and there is no reason to think that the cross-examination of Mrs Frigger was for any purpose outside that dispute.
41 I therefore do not consider that either the strength of the applicants' arguments that Mrs Trenfield abused her powers under s 77A or engaged in misleading conduct in relation to those powers, or the seriousness of such conduct if it were established, would be sufficient to warrant taking the extraordinary step of permitting the trial to be reopened to agitate new objections to evidence after judgment has been reserved. For the same reasons, I do not consider that the grounds for excluding the evidence under s 138 are sufficiently strong to mean that it is in the interests of justice to reopen.
42 As for the letters asserting that the shares were property divisible among creditors, whether that is so, and whether Mrs Trenfield abused her powers in sending the letter to CommSec are substantive issues in the proceeding which must be determined as a result of the trial. It would not be appropriate for me to express any firm views on those issues in the course of determining the Reopening Application. Given the similarity of the letters to the share registries, it would not be appropriate to make a firm finding about any of the letters in that regard. It is enough to say that, whether the assertion proves to be correct or not, I do not consider that the sending of the letter to CommSec points so clearly to an intention to mislead, or to any other improper purpose, as to justify taking the extraordinary step of granting leave to reopen to agitate the objections when there is no good explanation as to why they were not agitated during the trial. While Mrs Frigger's affidavit of 1 October 2020 contains hearsay evidence suggesting that the share registries were misled, Mr Newton's affidavit contains hearsay evidence suggesting the contrary, and it is not possible or appropriate to resolve that conflict in evidence in the course of the Reopening Application. Once again, for the same reasons I do not consider that the objections the applicants wish to raise under s 138 are so strong as to justify reopening the trial.
43 The applicants seemed to place a great deal of reliance on s 58(2) of the Bankruptcy Act, which provides:
Where a law of the Commonwealth or of a State or Territory of the Commonwealth requires the transmission of property to be registered and enables the trustee of the estate of a bankrupt to be registered as the owner of any such property that is part of the property of the bankrupt, that property, notwithstanding that it vests in equity in the trustee by virtue of this section, does not so vest at law until the requirements of that law have been complied with.
This, the applicants say, means that Mrs Trenfield did not have power to deal with the shares because they were not registered in her name, so that her letters of 24 April 2020 (and a subsequent letter of 29 September 2020) were 'a gross abuse of power'. But s 58(2) confirms that even where the transmission of shares is not registered, the shares still vest in equity. The letters of 24 April 2020 and 29 September 2020 did not say that the shares vested in law, nor have the applicants demonstrated that the requests put to the share registries would have been dealt with any differently if the letters had spelled out the effect of s 58(2).
44 The applicants submitted that the only right that Mrs Trenfield had over the disputed shares was to apply to a court to have the shares transferred to her. I do not accept that is so. Section 58 of the Bankruptcy Act vests property of the bankrupt (whether at law or in equity) automatically, without any need for curial intervention. There is no reason to suppose that a trustee seeking to preserve and get in assets which he or she believes are divisible among creditors cannot simply rely on s 58 in communications with third parties, but must always invoke the aid of the court. It will be a matter for the third parties whether they comply with the trustee's requests, and if they do not it will be a matter for the trustee whether he or she goes to court.
45 The applicants also sought leave to reopen to object to the evidence sought to be excluded on the basis that it was adduced solely to impugn Mrs Frigger's credibility. It is said to be inadmissible under s 102 of the Evidence Act. There is no reason given for why this was not raised during the trial. In any event, and without embarking on a full determination of the merits of the objection on this basis, it appears to me that it would be unlikely to succeed. The material in question mostly, if not entirely, went to the substantive issues in the proceeding, one of which, broadly speaking, was whether the applicants had objectively manifested an intention to hold various assets on trust for the FSF. If they did manifest such an intention, it would not matter that the material also damages Mrs Frigger's credibility, if that is what it does. It would be neither material relevant only because it affected the assessment of her credibility, nor material relevant for that purpose and for another purpose which does not make it admissible. Hence the definition of credibility evidence in s 101A of the Evidence Act is unlikely to apply to it, and the exclusionary rule in s 102 will also not apply.
46 For example, one of the documents the applicants seek to exclude is a 'financial year summary', that is a portfolio holding statement, issued by CommSec as at 30 June 2018, which was annexed to Mrs Trenfield's affidavit of 11 September 2019. Mrs Trenfield says she obtained it from Just SMSF Audits. In Mrs Frigger's affidavit sworn in support of the originating application, she annexed a version of the same document on which the notation 'FRIGGER SUPER FUND' appeared. That could have been relied on to support a submission by the applicants that the necessary intention to hold the shares in that fund has been manifested. That the version annexed to Mrs Trenfield's affidavit lacked that notation speaks against that submission. So it is relevant to determine an issue in the proceeding. Accepting it as negativing the applicants' submission may also damage Mrs Frigger's credibility. But that is not its sole relevance. If an objection under s 102 were permitted to be made, I doubt it would be upheld.
47 Another reason against reopening the trial to permit further objections stems from the fact that if they are upheld, a large volume of documentary evidence will be excluded. There may also be a significant quantity of oral evidence gained through cross-examination on such documents that will need to be excluded. The significant implications of excluding it show why objections of that kind need to be made and determined during the trial rather than after it. In oral submissions, Mrs Frigger acknowledged that if the trial was reopened, and the evidence was excluded, then Mrs Trenfield would seek to subpoena the material that had been excluded. Mrs Frigger said that the applicants would be happy for that to occur. But the court would not be happy with it. It would result in an effective retrial of a substantial part of the issues in the proceeding, including a repetition of cross-examination, with significant additional cost and delay. In addition, if leave is given to the applicants to adduce additional evidence as they propose, it will be necessary to permit cross-examination on that evidence. Even if further evidence is not adduced, the process of working out what cross-examination was conducted on the basis of material subsequently excluded, and therefore what oral evidence can and should be excluded, would be fraught with difficulty and productive of disputation. That these are possible outcomes of giving leave to reopen is a strong reason not to do so.
48 There would also be prejudice to Mrs Trenfield which would be difficult to remedy. Resolving objections to the evidence notified before trial took the better part of the first two days of trial. That included much of the evidence now sought to be excluded. Mrs Trenfield conducted the case, including cross-examination and closing submissions, on the basis that the evidence was in. Given how extensive the evidence sought to be excluded is, it would be difficult to know precisely how and to what extent the case would have been conducted differently if it had been excluded from the outset. There is a very real prospect that if the evidence was excluded, justice would require the trial effectively to be started again.
49 While the Reopening Application is mostly an application to exclude evidence rather than add to it, the following observations of Harper and Tate JJA and Beach AJA in Spotlight at [17]-[18] (footnote removed) are apposite:
There are good reasons why the circumstances must be exceptional before a court may allow a case, having been closed and judgment reserved, to be re-opened. The need for finality in litigation is one. It is no answer to this point to say that the further evidence sought to be adduced by the respondent in this case is confined to the quantum of damages. Were applications to re-open to be allowed almost as of course, such applications would be regularly made. That would add enormously to inefficiencies in the administration of justice, even if the re-opened hearing was strictly confined. The discipline which ought to attend the conduct of litigation by highly competent litigators would also inevitably decline.
The very strict rule that, subject to any applicable process of appeal or review, the presentation of their cases by parties to litigation must conclude with the end of the trial, has another important justification. It is that, very often, the boundaries of the re-opened issues would be hard to define and as difficult to protect. The re-opened hearing would then be bedevilled by arguments about whether one party or the other was seeking to take advantage of the re-opening to polish parts of its case which were more or less within the scope of the re-opened proceeding but not clearly on one side or the other of the prescribed limits.