Counsel:
Mr D F Elliott - for the defendant
File Number(s): 2016/096823
[2]
Introduction
This is an application by the defendant in proceedings that were commenced in 2016. The defendant's notice of motion was filed on 18 August 2017, more than a year ago, and seeks orders staying the proceedings either pursuant to s 17 of the Trans-Tasman Proceedings Act 2010 (Cth) or by some other means. In the alternative, it seeks an order that the plaintiff provide security for the defendant's costs.
The plaintiff did not turn up on the first day of hearing of the defendant's application. On the second day, I listened patiently to submissions made on her behalf by a Mr Gibson. At the conclusion of submissions, I gave reasons and stated that I proposed to make orders staying this proceeding. These are those reasons.
The procedural history of this litigation, including related proceedings that have preceded it, reveal such a troubling state of affairs that I have concluded that this proceeding should not be allowed to continue. The behaviour by or on behalf of the plaintiff reflects those characteristics that I described in Zepinic v Chateau Constructions (Aust) Limited [2017] NSWSC 582 at [46]. I said then:
In this case, and in many similar such cases, the litigant's enthusiasm and passionate engagement in his quest for supposed justice, obscures the essential unreality of his expectations; blinds him to the chaos that his pursuit has created; and renders him oblivious to the waste and expense that he has generated or the disproportionate court time that he has consumed. Such a litigant's level of pre-occupation, ruminative thinking, pedantic attention to the minutiae of his case and dogged persistence, serve only to hinder the efficient administration of justice. It is usually made worse by extravagant language, repeated assertions of fraud and the constant denunciation of the tactics or behaviour of the opposing party.
In addition to the matters to which I referred in Zepinic, the submissions by Mr Gibson on behalf of the plaintiff suffered from repetition and loss of perspective. They were frequently rambling, mostly unhelpful and often inaccurate.
Litigation conducted in this way demonstrates a persistence that is totally disproportionate to the investment of time and resources that are justified. Grievances grow steadily from the mundane to the grandiose, and the time of this Court and the convenience of other litigants are disrupted and wasted. For those reasons, and for the other reasons that I have explained in the following paragraphs, the plaintiff should no longer be permitted to engage the time of this Court in pursuit of her claim. If she insists on pursuing her claim, then New Zealand is a more appropriate forum in which to do so.
[3]
The Protagonists
The protagonists in the story are as follows. Mr Drumm is the defendant and the applicant for a stay. He is a chartered accountant and a resident of New Zealand. Between 7 April 2010 and 20 February 2015, he was a trustee of a trust settled under New Zealand law known as the Corporate Consulting Services Trust.
Mr Gibson is a former New Zealand bankrupt, a former resident of New Zealand and a former practising dentist in New Zealand. The Corporate Consulting Services Trust is a discretionary trust in the usual form that was formerly known as the Gibson Family Trust. This proceeding is being conducted effectively for Mr Gibson's benefit and that of his family.
The third person involved is the plaintiff, Ms Huang. She is little more than a nominee for the interests of Mr Gibson. Quite what her relationship with Mr Gibson is, remains a mystery. She has no financial interest in the proceeding, and has played little or no effective practical role in the conduct of the proceeding, other than as the named plaintiff. She was allegedly appointed as the new trustee of the trust. She is the least significant of the actors in the proceeding.
I have concluded that Mr Gibson effectively directs the proceeding on behalf of the plaintiff, has prepared her affidavits (or been influential in their preparation), and is in effective practical control of the litigation. He made submissions on the plaintiff's behalf and conducted this hearing before me. He was declared bankrupt in New Zealand on 24 November 2010. At that time his creditors in New Zealand totalled $3,471,816.23.
[4]
The Trust
The trust was established in 2002, but the relevant history starts in 2009. On 19 October 2009 the High Court of New Zealand ordered that Mr Gibson pay the costs of the Dental Council of New Zealand in the sum of $56,529.06. On 26 January 2010 the Dental Council served a bankruptcy notice on Mr Gibson seeking recovery of that sum. On 5 February Mr Gibson filed an application in the High Court of New Zealand to set aside the bankruptcy notice. In March he approached Mr Drumm, a New Zealand accountant, to prepare his New Zealand tax return, and persuaded him to become the trustee of the trust.
On 7 April 2010, Mr Drumm executed a deed of appointment of new trustee. A few months later, Mr Gibson's application to set aside the bankruptcy notice of the Dental Council of New Zealand was dismissed. In July 2010 the Dental Council applied for an order that Mr Gibson be adjudicated bankrupt. In September Mr Gibson filed an application seeking approval of a proposal to creditors under Part 5 of the Insolvency Act 2006 of New Zealand. On 24 November 2010 Lang J in the High Court of New Zealand made orders that Mr Gibson be made bankrupt and that his application for approval of his Part 5 proposal be dismissed. I was told that any relevant assets of Mr Gibson were within the trust and not available to his Trustee in Bankruptcy.
[5]
The Three Proceedings
The litigation which I am about to describe involves three separate proceedings. The first was the 2010 proceeding commenced in the Supreme Court of New South Wales, number 2010/425027. The second was the Local Court proceeding in New South Wales, number 2015/22577. The third was this proceeding, commenced in 2016. It started life in the District Court of New South Wales, number 2016/96823 and was later transferred to this Court. The underlying complaint in this proceeding relates to Mr Drumm's agreement to settle the 2010 proceeding.
[6]
The 2010 Proceeding
In the 2010 proceeding Mr Drumm, as the then trustee of the trust, sought judgment against Dr McIntosh, effectively on behalf of Mr Gibson, for the sum of $NZ360,750 in respect of dental services and assistance that Mr Gibson alleged he had provided through the trust to Dr McIntosh in the period 1 April 2009 to 31 March 2010. This was at a time when the bankruptcy of Mr Gibson was clearly imminent.
Between January 2012 and October 2014, a number of interlocutory steps took place. They included the grant of leave to issue subpoenas in New Zealand to entities in New Zealand. The entities included the Medical Assurance Society, Medical Securities Limited, Medical Insurance Society Limited, lawyers in New Zealand, accountants in New Zealand and a New Zealand bank. Eventually, on 7 November 2014 Nicholas J in this Court made orders that Mr Drumm's claims as trustee against Mr McIntosh be referred to mediation in New Zealand. His Honour ordered that the mediation take place in New Zealand at a time and place to be arranged as soon as practicable. He also ordered that the claims of Mr Drumm against Dr McIntosh be stayed pending the outcome of the mediation.
As a consequence of those orders, on 12 December 2014, Mr Drumm attended a settlement meeting with Dr McIntosh and Mr Wood, his solicitor in New Zealand, at the offices of the Auckland District Law Society. During that meeting Mr Drumm and Dr McIntosh agreed in principle to settle the trust's claim against Mr McIntosh with no order as to costs. On 15 December 2014 Mr Drumm executed a deed of settlement pursuant to which Mr Drumm and Dr McIntosh settled all matters between them with no order as to costs. On 21 January 2015 Mr Drumm executed a notice of discontinuance of the 2010 proceeding.
For reasons that have not been revealed by the evidence, but at which one can only guess, Mr Gibson was not happy with that outcome. He sought to obtain an injunction restraining Mr Drumm and Dr McIntosh from effecting the settlement they had reached. On 8 January 2015 Black J in this Court refused to grant leave to serve Mr Gibson's injunction application on Mr Drumm and Dr McIntosh outside of Australia. The next step was that by means that appear somewhat ambiguous, Ms Huang, the current plaintiff in this proceeding, became the trustee of the trust. Mr Drumm ceased to be the trustee of the trust on 20 February 2015.
In due course, Ms Huang was joined in the proceeding as the fourth plaintiff and Mr Drumm was removed as a party to the proceeding. On 4 March 2016, Young AJ made orders that the proceeding against Dr McIntosh be dismissed. This was the culmination of the settlement to which Mr Drumm and Dr McIntosh had agreed in December 2014, following the order by Nicholas J that the proceeding be referred to mediation in New Zealand.
[7]
The 2015 Local Court Proceeding
In the meantime, in January 2015, at the same time that Mr Gibson was seeking to obtain an injunction to restrain Mr Drumm and Dr McIntosh from effecting their settlement, he caused the 2015 Local Court proceeding to be commenced. The plaintiff was Ms Huang. Unbelievably, the hearing of that claim was conducted over 15 days commencing on 8 December 2016 and culminating on 1 November 2017. That is not, I suspect, a reflection on the magistrate, but an indictment of the irresponsible conduct of the litigation by Ms Huang and Mr Gibson.
On 2 November 2017 Magistrate Barnett gave judgment on liability. And on 23 February 2018 he gave judgment on costs. The magistrate dismissed with the time-consuming proceeding with costs.
[8]
Wasteful Interlocutory Appeals
There was another aspect to the Local Court proceeding. Throughout the proceeding, Mr Gibson caused to be instituted a disgraceful number of unsuccessful and wasteful interlocutory appeals. They commenced even before the hearing got underway. On 29 September 2016 Ms Huang filed a summons commencing an appeal in the Common Law Division of the Supreme Court seeking to set aside orders made in the Local Court on 30 May 2016. Those orders were 'consent orders' and included orders relating to a timetable as well as an order that Ms Huang pay Mr Drumm's costs thrown away by reason of certain events. The appeal was hopeless. The relief sought in the summons was gibberish.
On 16 November 2016 Adams J heard and dismissed Huang's appeal and ordered her to pay Mr Drumm's costs. Mr Drumm had his costs assessed. On 6 June 2017 the costs assessor issued a costs certificate for those costs in the sum of $11,174.93. Mr Drumm subsequently lodged the certificate as a judgment in the Local Court. The judgment has not been paid and the costs remain outstanding. There were more appeals.
On 3 May 2017 Ms Huang filed a summons in the District Court of New South Wales appealing from a costs assessment made on 6 April 2017 in the sum of $16,409.75. The assessment related to a costs order made by consent in the Local Court on 30 May 2016. On 25 August 2017 that appeal was dismissed by consent. Mr Drumm had his costs of that appeal assessed. On 5 March 2018 the costs assessor issued a cost certificate for the sum of $20,971.95 plus assessment costs. On 14 March 2018 Mr Drumm lodged the certificate as a judgment in the Local Court. The judgment remains unsatisfied and the costs remain unpaid.
On 23 May 2017, during Ms Huang's re-examination of Mr Gibson, Ms Huang made an oral application for leave to issue a subpoena. The magistrate dismissed the oral application. Ms Huang then filed a summons commencing an appeal from that decision in the Common Law Division of this Court. On 14 July 2017 Adamson J heard and dismissed Ms Huang's appeal. Her Honour ordered that Ms Huang pay Mr Drumm's costs on an indemnity basis fixed in the sum of $11,000. This costs judgment remains unpaid.
On 22 August 2017 Ms Huang filed a bizarre and embarrassing summons commencing an appeal in the Common Law Division. The summons contained numerous, and almost certainly unjustified, grounds of appeal. It was, in effect, an appeal against a number of interlocutory orders made by Magistrate Barnett in the course of the hearing. It was clearly not drafted by a person with any legal training.
On 21 September 2017 Registrar Bradford dismissed Ms Huang's appeal by consent and order that she pay Mr Drumm's costs. Mr Drumm had his costs assessed. On 5 March 2018 the costs assessor issued a costs certificate for the sum of $9,622.18 plus assessment costs. On 14 March 2018 Mr Drumm lodged the certificate as a judgment in the Local Court. The judgment remains outstanding and the costs unpaid.
The hopeless interlocutory challenges continued. On 1 November 2017 Ms Huang filed a summons in the Supreme Court seeking a stay in relation to certain costs orders. On 7 November 2017 Harrison J dismissed Ms Huang's proceeding with costs. Mr Drumm has not yet had his costs assessed in that proceeding.
Lastly, on 30 November 2017 Ms Huang filed a summons appealing from the final orders made by Magistrate Barnett on 2 November 2017 dismissing her proceeding. In February 2018 she amended her summons and on 18 April 2018 a hearing took place before N Adams J. Her Honour struck out numerous paragraphs of the amended summons and refused leave to re‑plead.
On 22 August 2018 Davies J heard the appeal. Mr Gibson was allowed to address the Court on behalf of Ms Huang, just as I allowed him to do in this case. On 27 August 2018 Davies J dismissed Ms Huang's appeal with costs. His Honour reserved judgment on Mr Drumm's application for a fixed sum costs order in the sum of $35,900. At this stage of the litigious history, both the 2010 proceeding in this court and the 2015 Local Court proceeding had reached the end of the line.
[9]
The 2016 Proceeding
On 30 March 2016 Ms Huang commenced this proceeding. As I mentioned, it began in the District Court and was later transferred to this court. On 8 July 2016, on Mr Drumm's application, Judge Williams ordered a stay of the proceeding pursuant to the Trans-Tasman Proceedings Act. As there was doubt about the jurisdiction of the District Court to make such an order, an appeal from that order was later consented to by Mr Drumm's legal representatives. The proceeding continued but like the Local Court proceeding, it has been marred by wasteful interlocutory applications, including multiple contempt applications and allegations of criminal conduct by Ms Huang.
On the stay application before Judge Williams, an affidavit by Mr Drumm's solicitor, Mr Thornley was read. On 25 July 2016 Ms Huang filed a summons in the District Court seeking, among other things, a declaration that Mr Thornley had committed perjury in swearing that affidavit. On 11 November 2016 Judge Gibb dismissed the contempt application and ordered Ms Huang to pay Mr Thornley's costs on an indemnity basis fixed in the sum of $19,695.
On 14 November 2016 Ms Huang filed a notice of motion seeking a stay of the orders made by Judge Gibb. On 30 November that notice of motion was returnable before Judge Letherbarrow and then referred to Judge Gibb, who dismissed Ms Huang's stay application and ordered that she pay Mr Thornley's costs between 12 and 30 November as agreed or assessed.
Mr Thornley had his costs assessed. On 13 July 2018 the costs assessor issued a costs certificate for the sum of $22,058.72 plus assessment costs. On 3 August 2018 Mr Thornley lodged the certificate as a judgment in the Local Court. The judgment remains unsatisfied and the costs unpaid.
On 14 November 2016 Ms Huang filed a summons in the Court of Appeal seeking leave to appeal from the costs orders made by Judge Gibb. On 17 July 2017 the Court of Appeal refused leave to appeal and ordered that Ms Huang pay Mr Thornley's costs.
Once again, Mr Thornley had his costs assessed. On 8 August 2018 the costs assessor issued a costs certificate for the sum of $31,327.50 plus assessment costs. On 31 August 2018 the certificate was lodged as a judgment in the Local Court. The judgment remains unsatisfied and the costs unpaid.
On 8 November 2016 Ms Huang filed what appears to be an absurd summons in this Court, seeking to impugn the conduct of solicitors engaged on behalf of Mr Drumm. Once again, the summons was clearly not drafted by a person having any legal training. It sought orders that the files in District Court proceedings 2016/96823 and Local Court proceedings 2015/22577 be referred to the Director of Public Prosecutions, as well as declarations that various solicitors had obtained money by deception by providing work of an illegal nature and charging for it contrary to the Crimes Act 1900 (NSW); that they were in breach of their respective professional codes and obligations; and that a number were in breach of the Crimes Act for corruptly disrupting Ms Huang's proceeding in the District Court.
On 17 November 2016, Mr Thornley filed a notice of motion seeking to have the summons summarily dismissed. On 2 December 2016, Garling J heard the summons and on 10 November 2017, he dismissed it. On 25 May 2018 his Honour ordered that Ms Huang pay the costs of the successful parties on an indemnity basis, fixed in the sum of $27,890.
As a result of those orders, on 14 September 2018, Mr Thornley served a bankruptcy notice on Ms Huang on 14 September 2018. The sum sought to be recovered was $84,644.82. It encompassed the amount of the costs order made by Garling J as well as other costs orders in this Court and in the Local Court.
On 5 October 2018, Ms Huang filed an originating process in the Federal Circuit Court seeking to set aside the bankruptcy notice and/or to extend time to comply. Almost at the same time, on 4 October 2018 she filed a notice of motion in the Common Law Division of this Court seeking to set aside the judgments and orders which were the subject of the bankruptcy notice in the sum of $84,644.82. Those applications remain undecided.
[10]
Oppression and Hardship
The practical effect of this unwarranted and irresponsible litigation on the part of Mr Gibson and Ms Huang is to cause oppression, prejudice and hardship to Mr Drumm. In accordance with the requirements of his New Zealand professional body, Mr Drumm is required to hold professional indemnity insurance to cover his liability, including legal costs, incurred, among other things, as a trustee and accountant. He does not practise and has never practised outside of New Zealand. He has never obtained professional indemnity insurance that covers his liability outside of New Zealand. His professional indemnity insurance excludes claims made against him outside of New Zealand. The proceedings commenced against Mr Drumm in Australia have the effect that he is uninsured in respect of his professional legal costs and disbursements in defending them.
As at 6 April 2018, Mr Drumm had met the costs of the various proceedings commenced against him from his personal assets and borrowings. To that date he had incurred costs and disbursements totalling approximately $542,244.28 in respect of proceedings commenced by Ms Huang and Mr Gibson. Mr Drumm has now exhausted his personal savings in successfully defending the various proceedings and claims brought against him by Mr Gibson and Ms Huang. There are 15 separate proceedings in relation to which Mr Drumm or his solicitors have incurred costs and disbursements in defending what appear to have been unmeritorious claims initiated by Mr Gibson through Ms Huang. Those proceedings are as follows:
1. Local Court of New South Wales; Case No 2015/22577;
2. Supreme Court of New South Wales; Case No 2016/80143;
3. Supreme Court of New South Wales; Case No 2016/291992;
4. Supreme Court of New South Wales; Case No 2017/176611;
5. Supreme Court of New South Wales; Case No 2017/255987
6. District Court of New South Wales Proceeding: Case No 2017/96449;
7. District Court of New South Wales Proceeding: Case No 2017/133055;
8. District Court/Supreme Court of New South Wales Proceeding: Case No 2016/96823;
9. Supreme Court of New South Wales; Court of Appeal Case No 2016/233914;
10. Supreme Court of New South Wales; Case No 2017/363068;
11. District Court of Queensland Proceeding; Case No 512/15;
12. Federal Court of Australia; Case No NSD 186/2015;
13. Supreme Court of New South Wales; Case No 2015/256225;
14. District Court of New South Wales; Case No 2017/177128; and
15. District Court of New South Wales; Case No 2017/343410.
The wreckage that this ceaseless litigious warfare has caused is compounded because no reliable evidence is apparent to suggest that the foundational challenge by Ms Huang to the propriety of the settlement of the 2010 proceedings, to which Mr Drumm agreed at the court ordered mediation conference in Auckland, New Zealand in December 2014, is anything other than completely illusory - a fantasy, a chimera and a delusion. And the shameful procedural history of the litigation suggests that the prospect of ever reaching a final hearing on this issue is distant and remote.
[11]
Stay: Section 67 Civil Procedure Act
I have said enough to indicate that I am satisfied that the point has been reached where I should conclude that enough is enough. The litigation has achieved nothing for the plaintiff. And there is no end in sight. On the other hand, Mr Drumm has been subjected to the misery of unending claims and unpaid costs orders. To quote Charles Dickens, Mr Gibson and Ms Huang have:
twisted [the litigation] into such a state of bedevilment that the original merits of the case have long disappeared from the face of the earth … [They] are always appearing, and disappearing, and swearing, and interrogating, and filing, and cross-filing, and arguing, and sealing, and motioning, and referring …
In my view, the litigation has become an abuse of process. It offends the principles on which proceedings in this Court are conducted. I have an inherent power, as well as a statutory power pursuant to s 67 of the Civil Procedure Act 2005 (NSW), to stay proceedings before the Court, either permanently or until a specified day.
The statutory power is informed by the policy and principles set out in ss 56 to 60 of the Act. The overriding purpose of the Act is to facilitate the just, quick and cheap resolution of the real issues in civil proceedings. The Court must seek to give effect to the overriding purpose when it exercises any power given to it by the Act. The overriding purpose requires consideration not only of the just determination of a claim, but also of the efficiency, timeliness and proportionality of the litigation.
Proceedings in this Court are to be managed having regard, among other things, to the efficient disposal of the business of the Court and the efficient use of available judicial and administrative resources. The dictates of justice require that when granting a stay of proceedings, the Court have regard to all of the matters set out in s 58(2) of the Act. That includes any other matter the Court considers relevant in the circumstances of the case. The facts that I have described provide ample justification for exercising the power.
Other matters which are required to be taken into account are the need for the elimination of delay and the proportionality of costs. It seems evident in this case that unless I intervene, the proceedings will continue interminably with no likely end, and the costs burden on Mr Drumm and his solicitors will increase with unrepenting acceleration.
[12]
Mr Gibson
I have listened patiently to Mr Gibson and informed a clear and adverse impression of him. This is not the first time that he has appeared before me. Although I have only a vague recollection of it, he told me that he came before me on Christmas Eve 2010 at an early stage of this litigation. And in April this year, I had the dubious benefit of hearing submissions from him, on behalf of Ms Huang, at an earlier interlocutory application in this proceeding.
I am afraid to say that Mr Gibson demonstrates all of the hallmarks of an obsessive litigant. His approach indicates such a lack of proportionality that it suggests to me that he may well be suffering from a delusional disorder. That is not a diagnosis. It is merely a comment on the consequence of his actions, and the unreality of the constant unsuccessful applications that he has orchestrated in the name of Ms Huang. That conduct extends to all of the proceedings that I have described, namely the 2010 proceeding in this Court, the 2015 Local Court proceeding and this proceeding. Unless I intervene, the plaintiff's unproductive, wasteful and unmeritorious behaviour will only proliferate.
[13]
Stay: Trans-Tasman Proceedings Act
I should add that there is every reason why I should also make an order for a stay pursuant to s 17 of the Trans-Tasman Proceedings Act. The question for determination under that Act is whether a New Zealand Court is the more appropriate Court to determine the matters in issue. In making that determination I should take account of the matters stipulated in s 19(2)(a) to (i).
The first matter is the place of residence of the parties, or if a party is not an individual, its principal place of business. The position would seem to be as follows. Mr Drumm is resident in Auckland, New Zealand. Dr McIntosh is resident in Auckland, New Zealand. Mr Wood, a solicitor who attended the mediation conference, is resident in Auckland, New Zealand. Ms Huang who has no effective role to play other than as the named plaintiff, is resident in Queensland.
Mr Gibson, formerly of New Zealand, now resides in New South Wales. Mr Gibson's sister, Ms Donna Ogier, is resident in the United States, but would appear to have no significant role to play. Ms Huang's primary witness would appear to be Mr Gibson. He is the only person who resides in New South Wales. Mr Drumm's primary witnesses are located in New Zealand. Dr McIntosh has indicated by letter that he may be willing to be a witness if the proceedings were heard in New Zealand but not if they were heard in Australia.
A second matter to which I am required to have regard, is the place where the subject matter of the proceeding is situated. The subject matter of these proceedings is the causes of action that Ms Huang has pleaded against Mr Drumm for breach of trust, breach of fiduciary duty as trustee and accountant, and negligence in connection with the compromise of the 2010 proceeding. It is obvious that the subject matter of the proceeding is situated in New Zealand where the alleged breaches occurred. The trust was settled under New Zealand law. The underlying loan agreement with Dr McIntosh was entered into in New Zealand. The alleged agreement between Mr Gibson and Dr McIntosh for debt recovery services was entered into in New Zealand.
Further, a significant part of the services provided by Mr Gibson to Dr McIntosh occurred in New Zealand. The invoices issued by the trust for the period 1 April 2009 to 31 March 2010 were issued in New Zealand; were signed by Mr Gibson on behalf of the trust; and had a New Zealand based address, namely Post Office Box 7774 Wellesley Street, Auckland. The invoices utilised a New Zealand based GST number, namely 037-673-390, being that of Mr Drumm. The invoices applied GST at a rate of 12.5% to the fees charged, being the rate applicable under New Zealand law. The invoices were issued in New Zealand in local currency.
The impugned conduct by Mr Drumm in connection with the settlement meeting between Mr Drumm, Dr McIntosh and Mr Wood occurred in New Zealand. So also did the agreement to settle the Supreme Court proceedings. And, the deed of release and the notice of discontinuance executed by Mr Drumm, allegedly in breach of his duty, were executed in New Zealand.
In addition to the substantive complaint about the settlement of the 2010 proceeding, the peripheral conduct alleged against Mr Drumm, supposedly amounting to further breaches of fiduciary and other duties as accountant of the trust, could only have occurred in New Zealand. It is alleged that Mr Drumm failed to obtain a tax file number with the Inland Revenue Department of New Zealand; failed to obtain an employee file number for the trust; failed to file the requisite tax returns and other filings for the trust with the New Zealand authorities in compliance with the taxation laws of New Zealand; and failed to keep proper books and records for the trust in the conduct of its business in accordance with New Zealand law.
The self-evident conclusion that the subject matter of the dispute is located in New Zealand, is supported by comments made by Black J in one of the numerous incidental applications initiated by Mr Gibson. In Gibson v McIntosh (unreported), 8 January 2016, a decision that was affirmed on appeal in (2015) NSWCA 112, Black J said at [17]:
Here, the agreement which Mr Gibson seeks to attack is one formed between two New Zealanders in New Zealand. It therefore does not seem to me to be founded on a cause of action arising in New South Wales, or on a breach in New South Wales of a contract or a contract made in New South Wales.
He added at [19]:
To the extent that what is sought to be restrained is an agreement between two New Zealanders formed in New Zealand, the proper place for those proceedings is New Zealand.
Another matter to which I am required to have regard is whether there is any agreement between the parties about the Court or the place in which those matters should be determined. In the circumstances, I do not regard this matter as determinative. That is partly because the evidence put forward on behalf of Ms Huang in relation to this issue is highly problematic. The trust deed in evidence provides in cl 28.1 as follows:
Subject to the provisions of the following paragraph the proper law of the trust shall be that of New Zealand and all rights under the trust, its construction, effect and administration shall be subject to the jurisdiction of New Zealand and construed according to the laws of New Zealand by the Courts of New Zealand.
In April this year I heard an application by Mr Drumm requiring the plaintiff to produce documents which might reveal whether there had been any variation to the trust. I made orders, among others, for the production by 21 May 2018 of any deed or declaration of trust creating the Neville James Gibson Family Trust, including any variations, as well as the original deed settling the trust known as the Corporate Consulting Services Trust, including any variations. The two trusts appear to be the same, although the defendant reserves its position in that regard. Certainly Mr Gibson contends that there was simply a change of name. No documents were produced by 21 May 2018, or subsequently, in accordance with the order.
At this hearing, during the course of his submissions on behalf of Ms Huang, Mr Gibson produced for the first time, a poor copy, partly illegible, of a document described as 'Deed nominating law under which Corporate Consulting Services Trust is to be subject and jurisdiction'. The date is indecipherable. Mr Gibson said it is 8 March 2016. That of course is just before the commencement of this proceeding. That deed purports to be signed by Ms Huang and purports to provide that:
Henceforth and pursuant to clause 28.2 of the said trust, the proper law of the trust shall be that of Australia and all rights under the trust, its construction, effect and administration shall be subject to the jurisdiction of, and construed according to the laws of Australia by the Courts of Australia.
It was clearly not drafted by a legal practitioner. It does not specify whether it is intended to encompass the laws of any particular State or territory. In the context of the law of trusts, there is no such thing as the law of Australia. Apart from the fact that the provenance and authenticity of this deed are problematic, there is a further question relating to whether Ms Huang was in fact regularly appointed as the trustee, and was therefore in a position to execute the deed. This arises because the power to nominate any person to appoint a new trustee was given in the trust deed to Mr Gibson pursuant to cl 23.2(d).
Notwithstanding the provisions of cl 23.2, the deed pursuant to which Ms Huang claims to have been appointed as the 'new trustee' of the trust on 20 February 2015 is made between her on the one hand and someone called Mr Whittaker as 'continuing trustee' on the other hand. There was no satisfactory evidence as to the appointment of Mr Whittaker or the validity of the appointment of Ms Huang as trustee.
In any event, the other factors to which I have referred are compelling as to the practical reasons why the courts of New Zealand are a more appropriate forum for the litigation of the claims sought to be ventilated in this proceeding by or on behalf of Ms Huang.
[14]
Orders
Even if I thought it were not appropriate to grant a permanent stay, I would, at a minimum, order a stay unless and until all outstanding costs orders in favour of Mr Drumm against Ms Huang, as well as those orders in favour of Mr Thornley against Ms Huang, were paid.
Even if those costs orders were ultimately paid, I would not be prepared to allow this proceeding to continue without security for the future costs of Mr Drumm being provided and secured by Ms Huang.
And I should add two final matters. First, everything that I have said would suggest that there may well be justification - if Mr Drumm and those representing him were so advised - for seeking an order that Ms Huang and Mr Gibson be declared vexatious litigants pursuant to the Vexatious Proceedings Act 2008 (NSW). That is not a final view of course, but an observation on the evidence that was presented on the application before me.
Second, the evidence also suggests that there may well be justification - once again, if Mr Drumm and those representing him were so advised - for making a costs order against Mr Gibson, as a non-party, pursuant to Section 98(1)(a) and (b) of the Civil Procedure Act, 2005.
I will make costs orders at a later date. For the time being, I make the following orders:
1. I order that this proceeding be stayed pursuant to the inherent jurisdiction of the Court;
2. I order that this proceeding be stayed pursuant to Section 67 of the Civil Procedure Act, 2005 (NSW);
3. I order that this proceeding be stayed pursuant to Section 17 of the Trans-Tasman Proceedings Act, 2010 (Cth).
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 October 2018
Parties
Applicant/Plaintiff:
Huang
Respondent/Defendant:
Drumm
Legislation Cited (5)
(New Zealand) Trans-Tasman Proceedings Act 2010(Cth)