Reasons
27At the outset I note that Mr Johnson submits that, in circumstances where serious allegations of knowing assistance in an alleged fraud have been raised, then the standard of proof required in order for the Court to be satisfied of the existence of a genuine offsetting claim (or other reason why the demand should be set aside) is at a higher level, on the application of the principles in Briginshaw v Briginshaw (1938) 60 CLR 336. I have some difficulty with that proposition. The question before the Court on an application to set aside a statutory demand based on the existence of a genuine offsetting claim (or other reason) is not one which requires a determination of the merits (nor is it appropriate to make any such determination) and the test is well recognised as having a low threshold.
28What has to be determined is whether the factual evidence is sufficient to satisfy the Court that the claim has a proper factual basis ( John Holland Construction & Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 14 ACSR 250) and whether the claim has some merit (as explained by Barrett J in Toorallie Pty Ltd v Black [2001] NSWSC 1088 at [14] and expressed in different ways in various cases, including Edge Technology Pty Ltd v Lite-On Technology Corporation (2000) 34 ACSR 301 at [25]; Jesseron Holdings Pty Ltd v Middle East Trading Consultants Pty Ltd (1994) 13 ACSR 787 at [791]; Macleay Nominees Pty Ltd v Belle Property East Pty Ltd (above) at [18]; Intag Microelectronics Pty Ltd v AWA Ltd (1995) 18 ACSR 284 at 289; Scanhill Pty Ltd v Century 21 Australasia Pty Ltd (1993) 12 ACSR 341 at 357; Royal Premier Pty Ltd v Taleski [2001] WASCA 48 at [63] and Beauty Health Group Ltd v Sholl [2011] NSWSC 77).
29In Beauty Health , Barrett J said at [23]:
The court's task is not to make any final choice between the competing contentions about the relevant matter. It need only see that the Plaintiff has asserted a claim and that the claim rises to the level of a serious question to be tried ( Scanhill Pty Ltd v Century 21 Australasia Pty Ltd (1993) 12 ACSR 341), is based on a cause of action advanced in good faith for an amount claimed in good faith ( Macleay Nominees Pty Ltd v Belle Property East Pty Ltd [2001] NSWSC 743) and is not frivolous or vexatious ( Chadwick Industries (South Coast) Pty Ltd v Condensing Vapourisers Pty Ltd (1994) 13 ACR37).
30What seems to be suggested by Mr Johnson's invocation of Briginshaw is that, in determining the question whether the offsetting claims have a proper factual basis, the court must be persuaded to a higher level of satisfaction where the allegations involve fraud than would ordinarily be required to meet the low threshold otherwise applicable in applications of this kind. While I readily accept that any allegation of fraud is not lightly to be made, I have found no authority for the proposition that Briginshaw principles apply in order to require a higher level of satisfaction to be reached as to the factual basis of an offsetting claim in cases where the claim involves serious allegations of the kind here raised (namely, knowing assistance in a fraud) and given the limited nature of the task on an application to set aside based on offsetting claims under s 459H(1)(b), I am not persuaded that this is the case. In any event, even applying a Briginshaw standard, I would have reached the same ultimate conclusion in the present case.
(i) Graywinter
31As noted above, the first issue is whether the supporting affidavit sworn by Mr Taylor satisfies the minimum requirements for an affidavit to be a "supporting affidavit" for the purposes of s 459 (and hence whether Hopetoun has met the jurisdictional hurdle recognised in Graywinter ).
32Mr Johnson submits that the failure of Mr Taylor to raise, in his first affidavit, a challenge to the retainer of JPR (or the breach of fiduciary duty now alleged against JPR) precludes reliance upon any ground predicated on such a dispute. (Mr Johnson notes that Mr Taylor, in his affidavit at [15], has himself deposed that from September 2007 to September 2009, JPR had assumed the conduct of the law practice known as "JPR Legal" and had continued Mr R's retainer by the Waugh group of companies.)
33There is no dispute between the parties as to the applicable principles on this first issue, those being set out in Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund (1996) 70 FCR 452 (at [459]-[460]); (1996) ACSR 581 (at [588]) and applied in various cases since then (including Process Machinery Australia Pty Ltd v ACN 262 590 Pty Ltd [2002] NSWSC 45, at [22]; Tokich Holdings Pty Ltd v Sheraton Constructions (NSW) Pty Ltd (in liq) CGU Workers Compensation (NSW) Ltd v Tokich Holdings Pty Ltd; Application of Sheraton Constructions (NSW) Pty Ltd (in liq) [2004] NSWSC 527; (2004) 184 FLR 130 at [56]; and Elm Financial Services Pty Ltd v MacDougal [2004] NSWSC 560 at [7]). In Graywinter, Sundberg J held that the failure of an affidavit to meet the minimum requirements was a jurisdictional impediment to an application under s 459G. The High Court in David Grant & Co Pty Ltd v Westpac Banking Corporation [1995] HCA 43; (1995) 184 CLR 265, confirmed that the court cannot entertain, as an application under s 459G of the Corporations Law , a case in which an affidavit containing the minimum requirements has not been served within time. Nor can a jurisdictional defect be met by evidence served outside the 21-day period.
34What is required in order to satisfy the s 459G(3) requirement is that the affidavit alert the party to the nature of the case sought to be made on the application to set aside the statutory demand, identifying the "area of controversy" so that it is identifiable with one or more of the grounds available under ss 459H and 459J ( Process Machinery and Elm ).
35In Graywinter , Sundberg J said (at [587]):
In order to be a 'supporting affidavit', an affidavit must say something that promotes the Company's case... The affidavit need not detail, in admissible form, all the evidence that supports the contention of genuine dispute ... The affidavit must...disclose facts showing there is a dispute between the parties. A mere assertion that there is a genuine dispute is not enough, nor is a bare claim that the debt is disputed sufficient. (my emphasis)
36There need not be an explicit articulation in the supporting affidavit of the ground(s) on which the application to set aside is to be raised, provided the ground is raised expressly or by necessary or a reasonably available inference ( POS Media Online Ltd v B Family Pty Ltd [2003] NSWSC 147; (2003) 21 ACLC 533 per Austin J; Hansmar Investments Pty Ltd v Perpetual Trustee Ltd [2007] NSWSC 103; (2007) 61 ACSR 321 per White J).
37Barrett J in Saferack Pty Ltd v Marketing Heads Australia Pty Ltd [2007] NSWSC 1143; (2007) 25 ACLC 1392, noting that what was required was that the grounds of objection be evident on the face of the affidavit, nevertheless considered that where the ground of challenge was a defect by reason of an omission from the creditor's accompanying affidavit, it would be sufficient if this omission was discernible on the face of a document annexed to the affidavit in support accompanying the statutory demand, even though attention had not been drawn to the point sought to be raised thereby (approving Callite Pty Ltd v Adams [2001] NSWSC 52, where an available inference from the documents annexed to the relevant affidavit that a particular ground of challenge had been raised was held to be sufficient).
38Lindgren AJA in NA Investment Holdings Pty Limited v Perpetual Nominees Limited [2010] NSWCA 210 held that there is no requirement that the party seeking to set aside a statutory demand draw to the attention of the defendant the particular issue on which reliance will be sought to be placed (observing that such a submission confused the concept of "support" in the requirement for an affidavit in support with natural justice considerations). (His Honour's observation is relevant in the present case where a reader of Mr Taylor's first affidavit might have assumed that the offsetting claims under that heading in his affidavit were the only offsetting claims asserted by Hopetoun.)
39In the case of an application to set aside based on an offsetting claim which is unliquidated (as is the first of the bases on which the present application is brought), Gzell J held in Broke Hills Estate Pty Ltd v Oakvale Wines Pty Ltd [2005] NSWSC 638 that a supporting affidavit is insufficient if it does not contain sufficient material indicating not only the nature of the offsetting claim but also the way in which it is calculated (to enable a court to make an estimate of the amount of an offsetting claim), that being necessary having regard to the statutory exercise under s 459H(2) of the Corporations Act required to be carried out by the court (namely, the calculation of the "substantiated amount" of a statutory demand by deducting from the amount which is not genuinely in dispute the total amount of any offsetting claim).
40Similarly, in relation to applications based on any ground under s 459J(1)(b), the affidavit needs sufficiently to identify the "other reason" why the statutory demand should be set aside ( Process Machinery) .
41Therefore, the question in the present case is whether there was sufficient evidence in the supporting affidavit sworn by Mr Taylor (and the documents annexed thereto) and filed within the 21-day period to raise (whether expressly or by necessary, or a reasonably available, inference) the grounds of challenge to the statutory demand now sought to be made based on the identification of the relevant retainer and the alleged breach of fiduciary duty.
42Mr Johnson concedes that if the relevant areas of controversy are sufficiently identified in the supporting affidavit, then reliance can be placed by Hopetoun on the further affidavits in relation to those matters as supplementing the factual grounds relied upon by the plaintiff in support of the allegation of an offsetting claim or of the "other reason" for the statutory demand to be set aside (as held in Energy Equity Corp Ltd v Sinedie Pty Ltd [2001] W ASC 419; (2001) 166 FLR 179 at [29]).
43Mr Martin submits that the question of the identity of the party to the retainer with Hopetoun was an issue identified in the initial affidavit of Mr Taylor, referring to paragraphs [14], [15], [16], [20] and [21] of that affidavit. The paragraphs so identified by Mr Martin (in the context in which they appear in the affidavit) are as follows:
14. From 2003 until August 2007 [Mr R] was retained as company solicitor for all of the companies and businesses in the Waugh Group including those set out above and Waugh Consultancy.
15. From September 2007 until September 2009 the Defendant assumed the conduct of the law practice known as JPR Legal and continued [Mr R's] retainers referred to above.
16. I observe from the correspondence and accounts that at various times between 2003 and 2009 Mr R acted for the Waugh Group including Hopetoun, the Estate and Waugh Consultancy as [Mr R] solicitor and JPR Legal.
17. During this time I am told by Mr Ashton Waugh that Mr R expanded his staff from himself and some paralegals up to about 6 employed solicitors.
18. Mr R was not in partnership with any other solicitors and did not himself work for any other solicitors.
19. During all of this period, other than the clients set out at paragraph 22 below, the Waugh Group including Waugh consultancy was Mr R's main client.
20. Hopetoun and, from my inquiries I can say Waugh Consultancy and the Managed Entities, always thought that Mr R was the companies' solicitor and that Mr R, or JPR, had not informed Hopetoun, Waugh Consultancy or the Managed Entities of the consequences of Mr R becoming an incorporated legal practice.
44Mr Martin submits that the material facts on which Hopetoun seeks to rely for its contention that the entity to whom any fees were payable was Mr R not JPR are set out in that affidavit. (As to the appeal, Mr Martin confirmed that one of the issues on the appeal is the correct identity of the party to whom Hopetoun might be liable to pay.) Mr Martin submits that the position of Hopetoun, as asserted by Mr Taylor, is that its retainer was always with Mr R and it was led to believe that this position continued throughout. It is submitted that all that Mr Waugh's later affidavit does is to supplement the evidence relating to the identity of the appropriate legal practice or practitioner to whom any legal fees were due.
45The statutory demand was annexed to Mr Taylor's first affidavit. In that document JPR claims an amount due to JPR, for professional services rendered to Hopetoun at its request (that being the basis on which the costs determination and judgment were obtained). It is submitted by Mr Martin that, read in light of the paragraphs of the affidavit, one can determine that there was an issue as to the party to whom the legal fees were payable.
46I was taken in submissions to the costs assessor's determination. As I understand it, at the costs determination, an issue was raised as to who was the appropriate costs respondent (the bill of costs having been issued to both Hopetoun and Waugh Consultancy) but the issue as to the entity with whom the costs retainer at the relevant time or times subsisted (Mr R or JPR) was not raised. The costs assessor was apparently not satisfied that it was in his jurisdiction to determine the appropriate parties to the retainer (the costs assessors' power to have made such a determination being another matter raised on the appeal). I understand that the parties then proceeded on the basis that Hopetoun accepted that it would be liable on any costs determination but there was no determination (or agreement) as to the identity of the party properly able to claim the costs under the retainer. At T 62.23, Mr Martin confirmed that no submission had been made to the costs assessor that JPR was the incorrect applicant (but noted that insofar as there may be leave to appeal under s 385(1) of the Act, this would be an appeal by way of a hearing de novo ).
47In Mr Taylor's first affidavit, the offsetting claims are identified (at [5]) as being:
(a) As assignee from Waugh Hotel Consultancy Pty Limited, Bitannia Pty Limited and Afinia Pty Limited of their rights, title and interests and benefits and returns arising there from and all claims, demands, rights and causes of actions maintainable by them arising out of the facts, matters and circumstances of their claims on the defendant as per the Deeds of Assignment annexed and marked "C";
(b) Moneys held on trust by the defendant on behalf of Hopetoun;
(c) Restitution of moneys had and received to the use of the plaintiff;
(d) Constructive trust imposed on the defendant for knowing assistance in breach of fiduciary duty together with interest as particularised below;
(e) An account of profits received by the Defendant in breach of fiduciary duty or equitable compensation;
(f) Conversion of cheques by the defendant;
(g) Damages for breach of contract;
(h) Damages for misleading or deceptive conduct and or misrepresentation;
(i) Interest as particularised below.
48In oral submissions, any reliance on an offsetting claim in relation to Afinia was expressly disclaimed and Mr Martin also confirmed that no claim was made for the misappropriations that occurred before the incorporation of JPR (the offsetting claims being pressed simply for losses referable to the subsequent misappropriations and, in the case of (ii), the fees paid to JPR). I accept that the claims as identified in the submissions do not encompass in whole the claims described in Mr Taylor's first affidavit (not only in relation to Afinia but also in relation to matters such as any claim for an account of profits or for conversion or for misleading and deceptive conduct). However, what is clear from the first affidavit is that Mr Taylor was asserting claims based, inter alia , on knowing assistance by JPR in the misappropriation by Mr J of funds and a failure on the part of JPR to inform the respective companies of its knowledge in relation to the transactions in question.
49The claims that Hopetoun now asserts as offsetting claims are those articulated in the Statement of Claim filed in the Hopetoun proceedings (largely mirroring the Points of Claim filed by it on 14 October 2011 in these proceedings).
50Mr Johnson submits that the Statement of Claim (and Points of Claim) constitute no more than assertions, relying in that regard on what was said in Bhagat v Global Custodians Ltd [2002] FCA 223 at [53]:
... the mere production of a Statement of Claim in an action that pleads fact which, if proved, would support a claim has long been held to be insufficient: "(a) Statement of Claim is no evidence of anything: In Re: Foster, ex-parte Basan [1885] 2 Morr 29 at 33... it is not even sufficient for a Debtor to file an Affidavit which merely propounds a claim that states how, the Debtor proposes to establish it: Ebert v The Union Trustee Co. of Australia Limited [1960] HCA 50. There is an obligation on the Debtor to adduce evidence that provides reasonable grounds for the institution of proceedings: Vogwell v Vogwell [1939] 11 ABC 83 at 85 per Latham CJ. The task Mr Bhagat faced was an onerous task. He raised serious allegations but has not placed before the Court the material (if indeed such material exists) that would satisfy a bankruptcy Court from interfering with the judgment that founded the Bankruptcy Notice.
51I agree that allegations made in a pleading (until proved) cannot rise higher than assertions. Mr Martin, however, relies on the allegations contained in the Statement of Claim as identifying the claims that Hopetoun has made against JPR, not as evidence of the factual basis on which those claims will be sought to be established.
52In summary, Hopetoun now maintains that it has the following offsetting claims against JPR:
(i) a claim in the sum of $118,600 by way of equitable compensation for breach by JPR of its fiduciary duties owed to Hopetoun, breach of contract and negligence in relation to the circumstance in which JPR engaged Mr R to provide legal services to Hopetoun and failed to disclose to Hopetoun alleged breaches of fiduciary duty (and/or knowing receipt or knowing assistance) on the part of Mr Rin in relation to the misappropriation of a sum of $315,000 by Mr J (the sum claimed being quantified by reference to a further sum misappropriated by Mr J of $18,600 after JPR engaged Mr R's services from 29 August 2007 and the costs of $100,000 said to have been incurred in order to recover those additional moneys).
(ii) a claim in the sum of $840,760 as equitable compensation for breach of fiduciary duties owed to Hopetoun, and for money had and received, in relation to legal fees claimed by JPR (and paid by Hopetoun) for legal services allegedly provided by JPR to Hopetoun between 29 January 2004 and the date of JPR's incorporation on 29 August 2007 (during which period it is said it knew that it could not have provided and did not provide such services to Hopetoun) so that those fees could not be the subject of any offsetting claims by Hopetoun against Mr R for breaches of fiduciary duty, knowing receipt and knowing assistance in relation to misappropriations by Mr J.
(iii) a claim in the sum of $315,000 for breach by JPR of its fiduciary duties owed to Hopetoun and for knowingly assisting Mr R in a dishonest and fraudulent design (in relation both to the misappropriation of that amount by Mr J and to the incorporation of a corporate vehicle in order to render the claim for legal fees not capable of offsetting claims in relation to Mr R's conduct and subsequent application for assessment of costs in relation thereto), the breach of fiduciary duty again being alleged to be the conduct of JPR in claiming legal fees for services allegedly provided by it to Hopetoun prior to the incorporation of JPR for the purpose asserted in (ii) above. (The sum of $315,000 is quantified as the loss of the benefit of that offsetting claim.)
(iv) a claim in the sum of $287,272, which was assigned to it by Waugh Consultancy Pty Ltd on 12 September 2011, being a sum arising out of the same broad facts as those the subject of the claim in (i) above (although referable to Waugh Consultancy) for equitable compensation, breach of contract and negligence ($287,272 being the amount misappropriated after the date of incorporation of JPR and retainer by it of Mr R's services without disclosure of the breaches of his fiduciary duty).
(v) a claim in the sum of $181,959, which claim was assigned to it by Bitannia on 12 September 2011, again being a sum arising out of the same broad facts as those the subject of the claim in (i) above (although referable to Bitannia) for equitable compensation, breach of contract and negligence ($181,959 being the amount misappropriated after the date of incorporation of JPR and retainer by it of Mr R's services without disclosure of the breaches of his fiduciary duty).
53The claims identified (in submissions and in the pleading) as offsetting claims have in common various allegations in relation to the fiduciary duties alleged to have been owed by Mr R (as the solicitor for the various companies prior to 29 August 2007) and JPR (as the firm of solicitors through which Mr R seems to have carried on practice as a solicitor after that date).
54It is submitted that, as Hopetoun's solicitor, JPR owed fiduciary duties to Hopetoun ( Maguire v Makaronis (1997) 188 CLR 449 at 463; Clark Boyce v Mouat [1994] 1 AC 428 at 437) and that those obligations required JPR to act in utmost good faith for the benefit of Hopetoun; to avoid conflicts between its duties to Hopetoun and its personal interest or the interest of a third party; not to use improperly its position to gain an advantage for itself or for any other person or to cause detriment to Hopetoun; and not to apply Hopetoun's property for the benefit of anyone other than Hopetoun (reference being made to the Court of Appeal's judgment in Beach Petroleum NL v Kennedy [1999] NSWCA 408; (1999) 48 NSWLR 1 at 46 [196] and 47 [201]).
55Mr Taylor's first affidavit deposes to the various transfers of moneys into Mr R's trust account ([27], [55]-[57] (and at [52] as to the payment of a particular cheque of $50,000 drawn in favour of Mr R's trust account) [62] and [64]) and the respective ledgers to which those sums were credited in Mr R's trust account. He also deposes in his first account to the transfers out of that account of the respective moneys; the entities to which those transfers were made; and Mr J's relationship with those entities. He further deposes as to the transfers being without the consent or authorisation of the company from whose funds the moneys were transferred (which I read as an assertion based on his review of the accounting records of the relevant companies and subject to weight, having regard to the fact that only generalised information was given as to the basis on which Mr Taylor had formed that opinion). Nevertheless, the details as to the transfers in and out of the trust account are set out in the first affidavit and Mr Martin submits that the statements in the affidavits as to matters such as this should be read not as mere assertions but as conclusions in relation to primary facts.
56I accept that the supporting affidavit raises facts from which one can infer that there is a claim for breach of fiduciary duty against JPR based on non-disclosure of the relevant transactions. What is not described in the first affidavit is an offsetting claim for equitable compensation arising out of an alleged breach of fiduciary duty in relation to the incorporation of the law firm per se (which presumably could only be a breach of duty by Mr R, not that of the entity so incorporated) which had the effect of protecting Mr R's position in relation to fees for services rendered while he was a sole practitioner against any offset for the respective claims asserted against him. (Mr Martin confirmed at T 55 that the alleged breach of fiduciary duty arises out of the effect of that conduct being to prefer the interests of Mr R over those of the client, not whether that was the intent.) Nor is there a suggestion in the affidavit that any appeal would be brought against the costs determination (though the affidavit does depose to the giving of instructions for the commencement of proceedings against JPR for other claims, including for knowing assistance in Mr J's alleged breaches of fiduciary duty and "to claim against the defendant for damages suffered as a result of the defendant failing to inform the plaintiff of Mr J's misappropriation" of the respective proceeds). Reference is also made to an alternative claim for damages (for misleading or deceptive conduct and or for misrepresentation) for any loss suffered "in consequence of the defendant not informing [the relevant entity] of the consequences of Mr R changing from being a solicitor in his own right to an incorporated legal practice.
57The breaches of fiduciary duty alleged against JPR in the draft pleading, and as identified in submissions, in general turn on the allegation that, on or after 29 August 2007 when it was incorporated, JPR engaged Mr R to provide legal services to Hopetoun (or the other companies in the group to which reference is made in the draft pleadings) in circumstances where it knew (through the knowledge of Mr R imputed to it) that Mr R had breached his fiduciary duties in relation to the misappropriations by Mr J from Hopetoun or that other Waugh group company (by receiving and disbursing the said moneys); knew that Mr R had knowingly received the misappropriated funds in breach of his fiduciary duties owed to Hopetoun or that other company; knew that Mr R had knowingly assisted Mr J in his dishonest and fraudulent design in relation to the said misappropriations; and failed to inform or to disclose to Hopetoun or that other company the said breaches by Mr R. The material facts on which those allegations are based are set out in Mr Taylor's first affidavit (so, for example, in relation to the first such complaint - as to the $315,000 - reference is made to [32] - [35] of his affidavit; as to the Waugh Consultancy complaint the comparable facts alleged are contained in [44], [47], [49] [52], [55]-[57] of Mr Taylor's first affidavit; and the Bitannia complaint is based upon the facts set out in [62], [63] and [66] of Mr Taylor's first affidavit).
58The basis of Hopetoun's claim for equitable compensation (or for damages for breach of contract or negligence) in the case of the claims identified at (i), (iv) and (v) is in each case is that had JPR not breached its fiduciary duties owed to its client (Hopetoun, Waugh Consultancy or Bitannia as the case may be), that company would have become aware of Mr J's misappropriation and dismissed him immediately; sought to recover the money immediately; and not continued to retain JPR (that being read as an assertion by Mr Taylor, who was not a director of the companies at the relevant time). Thus it is alleged that losses incurred by additional misappropriations after that time (and the costs of seeking to recover those additional moneys), to which reference is made in Mr Taylor's first affidavit, are recoverable.
59The allegation in relation to the offsetting claim in (ii) is somewhat different in that the breach of fiduciary duty relates to the making of the claim by JPR in its application for assessment of costs filed on 1 June 2010 that it had provided legal services to Hopetoun from 29 January 2004 up to and including its date of incorporation on 29 August 2007 (and that its profit costs for that period amounted to $785,081 and its disbursements in the sum of $55,679, totalling $840,760) in circumstances where it is said that JPR could not (and could not to its knowledge) have provided any such services prior to its incorporation. Thus, it is said that the fees paid following the costs determination are recoverable as equitable compensation for that breach of fiduciary duty.
60In (iii) the breach of fiduciary duty extends to an allegation that the incorporation of JPR (part of a dishonest and fraudulent design alleged on the part of Mr R with which it is alleged JPR knowingly assisted) was a vehicle to preclude Hopetoun from invoking a set-off as against fees incurred under its retainer with Mr R as sole practitioner of its claims for equitable compensation or the like for his alleged breaches of fiduciary duty or for damages for breach of contract and in tort. (In Mr Taylor's first affidavit, it is asserted that on or after 29 August 2007, Hopetoun continued with and did not vary the terms of the retainer with Mr R whereby Mr R had agreed to provide legal services to Hopetoun ([20]) and that Hopetoun had not entered into any agreement or retainer with JPR (through JPR by itself or through Mr R) to provide legal services to Hopetoun.)
61Mr Martin further notes that, in its costs application, JPR itself had stated that:
There is no costs agreement between the law practice and the client. This is because there was a verbal agreement made in 2003 upon which [Mr R] and Mr Bill Waugh agreed to and shook hands in acceptance of this agreement.
and that:
Mr R was to act on behalf of Mr Bill Waugh, his companies and related companies, employees of his company, his family and related persons as and when requested by Mr Bill Waugh.
They agreed on an hourly rate for Mr Rin 2003 of $250.
62As far as the "other reason" for setting aside the statutory demand, which is based on the appeal brought from the cost assessor's determination, Hopetoun relies on errors of law relating to the identity of the party with whom there was the retainer for the period prior to 29 August 2007 and which was providing the services for which the fees were rendered. The factual matters relating to the retainer, as set out in the first affidavit of Mr Taylor, have been extracted above. Hopetoun contends that the retainer was at all times with Mr R personally and that it was he who provided the legal services to the Waugh Group from 2003 to September 2009 (this contention being said to be based on the facts in [14], [16] and [20] of Mr Taylor's first affidavit (though also the subject of [2], [5] - [11] of Mr Waugh's later affidavit of 17/10/11).
63Therefore, Mr Martin submits that the grounds relied upon by Hopetoun under both s 459H (1)(b) and s459J(1)(b) were "raised" in the first affidavit of Mr Taylor, being discernible from the matters deposed and documents annexed to that affidavit (applying the reasoning emerging from Callite and Saferack, to which I have referred above). In particular, he notes that in Saferack , Barrett J referred with approval to the decision in Callite (where, at [12], Santow J considered that the "legal consequences" which followed from the form of accounts rendered by a solicitor to his client were not required to be pleaded or mentioned in the affidavit).
64Mr Martin, in his submissions in reply, has identified the following paragraphs of Mr Taylor's first affidavit from which he submits the grounds for each offsetting claim can be discerned. (To the extent that Mr Johnson appears to have objected to the ambit of the reply submissions as falling outside the leave granted, I did not understand the leave I gave to be limited to particular issues but in any event the analysis carried out by Mr Martin was that which I had independently already carried out, though that it not to suggest that I have not been assisted by those submissions.)
65Using the numbering I have ascribed above to the particular offsetting claims, I note that Mr Martin relies upon the following paragraphs of Mr Taylor's first affidavit in support of the proposition that there has been compliance with the Graywinter principle:
(i) Claim in the sum of $118,600 for breach of fiduciary duties owed to Hopetoun: [5(e)], [15], [22(a)], [22(d)], [23(d)], [23(n)], [27], [32] - [35], [38] and [42];
(ii) Claim in the sum of $840,760 for breach of fiduciary duties owed to Hopetoun and for money had and received: [5(c)], [5(e)], [20];
(iii) Claim in the sum of $315,000 for breach of fiduciary duties owed to Hopetoun and for knowingly assisting Mr R in a dishonest and fraudulent design: [5(a)], [5(e)], [20], [21] [22(a)], [22(d)], [23(d)], [23(n)], [27], [32], [35], [38] and [42];
(iv) Claim in the sum of $287,272, for breach of fiduciary duties owed to Waugh Consultancy, assigned to it by Waugh Consultancy on 12 September 2011: [5(a)], [5(e)], [15], [22(f)], [23(a)], [23(f)], [23(m)], [47], [49], [52], [55] - [57], [58(a)], [58(c)];
(v) Claim of $181,959 for breach of fiduciary duties owed to Bitannia, assigned to it by Bitannia on 12 September 2011: [5(a)], [5(e)], [15], [22(c)], [23(b)], [23(c)],[23(g)], [23(h)], [23(k)], [23(1)], [62], [63], [66], [76].
66Mr Martin submits that the grounds for the "other reason" under s 459J(1)(b) can be discerned from [5(c)], [14], [16] and [20] of Mr Taylor's first affidavit (those being that Hopetoun's retainer was at all material times with Mr R personally and that it was he, not JPR, that provided the legal services to Hopetoun from 2003 to 2009).
67I am satisfied that the material contained in Mr Taylor's first affidavit does sufficiently raise the grounds on which Hopetoun now relies for its offsetting claims in (i), (iv) and (v) above, based on alleged breach of fiduciary duty (or other claims) in relation to the circumstances in which moneys were transferred into and out of the trust account(s) maintained by Mr R and/or JPR Legal (and which Mr Taylor's review of the records leads him to conclude were not authorised) and the fact that JPR's knowledge of those transactions (such as it may ultimately be proven to be) was not disclosed to Hopetoun or its other Waugh company clients.
68Insofar as Mr Johnson objected to much of Mr Taylor's evidence as mere assertion (and I did read much of his affidavit evidence as assertion based on Mr Taylor's review of company records and subject to weight), I do not consider that the evidence to which Mr Martin points on this issue can be dismissed as bare assertion. The material relating to the transfers in question is before the Court and the position of Hopetoun (and Mr Taylor) seems to be that in the absence of an explanation discernible from the company records for the payment out of the funds in the manner that they were paid then an inference can be drawn that they were unauthorised by the company in question and not for its benefit.
69In Tokich Holdings v Sheraton Constructions , White J noted at [22] that:
Although the mere assertion that a debt is denied will be insufficient, evidence in the form of conclusions as to primary facts which would be inadmissible as proof of the relevant facts wither pursuant to the opinion rule in s 76 of the Evidence Act, or under s 135 of the Evidence Act, may be admissible as evidence that there is a dispute as to the existence or amount of the debt, and as to whether that dispute is genuine.
70His Honour there referred to what had been said by Young J (as his Honour then was) in John Holland (Young J there indicating that what more than assertion is required may differ from case to case and referring to what he had earlier said in Jesseron that "so long as the claim is not fictitious or merely colourable and is genuinely believed to exist one can ordinarily take that as sufficient. That is something more than mere assertion") and to the rejection by Young CJ in Eq (as his Honour then was) in Reale Bros Pty Ltd v Reale [2003] NSWSC 666; (2003) 179 FLR 427 of the proposition that there must be evidence on each and every element that the company would need to prove at a trial on the merits of the issue. White J appeared to accept that a generalised summary may be admissible for the purpose of establishing a genuine dispute (though noted that whether it would be sufficient for such a purpose was a different question).
71I am satisfied that the material relied upon by Hopetoun, though it involves the drawing of inferences as to matters such as the knowledge of Mr R and the lack of authorisation for moneys transferred, goes beyond mere assertion and that it sufficiently raises the grounds in respect of claims (i), (iii) and (iv) (the quantum of which, calculated in the manner articulated by Hopetoun, exceeds the amounts claimed in the statutory demand).
72As to (ii), I accept that the affidavit also sets out the facts from which an offsetting dispute as to the rendering of the invoices for pre-August 2007 work is discernible, relying in that regard on Callite and the proposition that the affidavit need not spell out the particular legal consequences that may be said to flow from, say, the rendering of invoices by an entity not in existence when the work was performed and not on any view of the matter a party to the initial retainer agreement.
73It seems to me less clear that the material to which Mr Martin points disclosed by necessary or available inference a claim for breach of fiduciary duty of the kind relied upon in (iii), namely a claim that there was a breach of fiduciary duty by Mr R and/or JPR (or by Mr R in which JPR was knowingly involved) by reference to the incorporation of the corporate vehicle and making of a claim for services rendered prior to that date with the intent or effect of precluding just the kind of set-off now sought to be raised by Hopetoun or the other Waugh companies. However, I have concluded that the fact that the statutory demand itself asserts that Hopetoun owes the judgment debt "for professional services rendered by the Creditor [i.e. JPR] to the Company at the request of the Company ", coupled with the evidence of Mr Taylor putting in issue the identity of the party with whom there was a retainer, is sufficient to raise (by reasonably available inference) the existence of an offsetting claim for breach of fiduciary duty at least in relation to the raising of the accounts in question. (The fact that there may be an inconsistency between the Points of Claim and the affidavit material in this regard is not fatal to such a conclusion - in SMEC International Pty Ltd v CEMS Engineering Inc [2001] NSWSC 459; (2001) 38 ACSR 595 at 600 Austin J admitted evidence characterised as in some respects vague - though it may point to an issue as to the genuineness of the present assertions, which will be addressed in (ii) below.)
74Therefore, I am satisfied that there has been compliance with the Graywinter principle in relation to the identification in the affidavit served within the 21 day period of facts that give rise to the offsetting claims even those offsetting claims have been formulated in some regards in a different way than that described in Mr Taylor's first affidavit. (As to the latter point, I simply refer to Lindgren AJA's observations in NA Investments to the effect that there is not a failure to meet the requirements in relation to the supporting affidavit simply because the debtor may not have drawn to the creditor's attention the significance of the matters deposed to in the affidavits, the requirements in that regard not being a matter of natural justice. The fact that JPR may (quite understandably given the headings utilised in the affidavit) have read the affidavit as outlining the ambit of and way in which the offsetting claims were being put (which is apparent from the disconformity in parts between the submissions served in advance of the hearing by JPR and the way in which Hopetoun ultimately articulated its claims) therefore does not lead to the conclusion that the jurisdictional requirements enunciated in Graywinter have not been met.)
75Where I am left in doubt is as to the question whether the first affidavit sufficiently identifies the factual basis on which it is contended that there is an 'other reason' why the statutory demand should be set aside. True it is that the material in Mr Taylor's first affidavit raises the issue of the identity of the party with whom the retainer was in place, but what it does not indicate is any intention on the part of Hopetoun to seek to challenge the costs determination. On balance I am not satisfied that the affidavit complies with Graywinter in this regard and therefore I am not satisfied that Hopetoun can now raise the existence of the appeal as a basis for the statutory demand to be set aside.
(ii) Are there genuine offsetting claims?
76The consequence of the above finding is that the evidence provisionally admitted by me subject to the Graywinter ruling is now admitted (since it does not relate solely to the costs appeal in the District Court) without any such qualification (though subject to the rulings I have already made in relation to particular paragraphs of affidavits to which other objections were taken).
77I turn then to whether that evidence is sufficient to establish that there are genuine offsetting claims that exceed the amount of the judgment debt claimed in the statutory demand. Mr Martin notes that (while "offsetting claim" is defined in s 459H(5) to mean "a genuine claim that the company has against the respondent by way of counter-claim, set-off or cross-demand, even if it does not arise out of the same transaction or circumstances as a debt to which the demand relates", and it has been held that "counter-claim" and "set-off" in this section bear their technical meanings, citing John Shearer Ltd v Gehl Co (1995) 18 ACSR 780 at 786; National Australia Bank Ltd v Idoport Pty Ltd [2007] NSWSC 1349 at [39]-[56]), the term "cross-demand" does not. In John Shearer, the Full Court of the Federal Court said at [786]:
It would seem to follow that in the context of [s 459H], a context similar to that in s 41(7) of the Bankruptcy Act 1966 (Cth), a cross-demand will include any claim for damages which exists at the time the application to set aside the statutory demand is made , which is for a monetary amount capable of quantification whether or not it arises out of the same transaction or circumstances as the debt to which the statutory demand relates. (my emphasis)
78It is accepted that, in order for s 459H to apply, the offsetting claim must be genuine . What is required is that the plaintiff raise a plausible contention requiring investigation ( Eyota Pty Ltd v Hanave Pty Ltd (1994) 12 ACSR 785 at [787]). In Eyota , McLelland J (as his Honour then was) said (at [787]):
It is, however, necessary to consider the meaning of the expression "genuine dispute" where it occurs ... in my opinion that expression connotes a plausible contention requiring investigation, and raises much of the same sort of considerations as the "serious question to be tried" criterion which arises on an application for an introductory injunction or for the extension or removal of a caveat. This does not mean that the court must accept uncritically as giving rise to genuine dispute, every statement in an affidavit "however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or other statements by the same deponent, or inherently improbable in itself, it may be not having "sufficient prima facie plausibility to merit further investigation as to its [truth]" (cf Eng Me Yong v Letchumanan [1980] AC 331 at 341), or "a patently feeble legal argument or an assertion of fact unsupported by evidence": cf South Australia v Wall (1980) 24 SASR 189 at 194.
But it does mean that, except in such an extreme case [i.e. where evidence is so lacking in plausibility], a court required to determine whether there is a genuine dispute should not embark upon an enquiry as to the credit of a witness or a deponent whose evidence is relied on as giving rise to the dispute. There is a clear difference between, on the one hand, determining whether there is a genuine dispute and, on the other hand, determining the merits of, or resolving, such a dispute .... In Re Morris Catering Australia it was said the essential task is relatively simple - to identify the genuine level of a claim ...
79Similarly, in Edge Technology , in the context of consideration as to whether a breach of warranty gave rise to a genuine dispute or offsetting claim (and the question of quantification of the offsetting claim), Santow J (as his Honour then was) noted that the task before it was not to resolve competing claims but to determine whether there was (relevantly for present purposes) a genuine offsetting claim against the party serving the statutory demand and if so in what amount and that it was neither necessary nor appropriate, for the court to consider the merits of that claim (citing Goldspar Australia Pty Ltd v KWA Design Group Pty Ltd (1999) 17 ACLC 456; Re Morris Catering (Aust) Pty Ltd (1993) 11 ACSR 601; Chadwick Industries (South Coast) Pty Ltd v Condensing Vaporisers Pty Ltd (1994) 13 ACSR 37). (See more recently the observations of Barrett J in Beauty Health at [23] to similar effect.)
80In Edge Technology , it was further said (at [43] - [45]) that there are several matters of fact bearing on whether the dispute or the asserted offsetting claim is not genuine (i.e. that it is, "spurious, hypothetical, illusory or misconceived"), Santow J noting that a rigorous and in-depth examination of the evidence relating to the plaintiff's claim, dispute or offsetting claim was not required.
81The Court must also be in a position to assess the amount of the offsetting claim. In Jesseron Holdings Pty Ltd v Middle East Trading Consultants Pty Ltd (No 2) (1994) 122 ALR 717; (1994) 13 ACSR 787; (1994) 12 ACLC 490, Young J (as his Honour then was) said (at [57]) that "The amount of the claim is an expression which has a more or less defined meaning ... [it] means the amount claimed in good faith, so long as that claim is not fictitious or merely tolerable".
82In Macleay Nominees Pty Ltd v Belle Property East Pty Ltd [2001] NSWSC 743, Palmer J said (at [17] - [18]);
In my view, a claim for the purposes of CA s 459H(1) and s 459H(2) means not just a cause of action, so that once a genuine cause of action for unliquidated damages is shown by a plaintiff, the court is compelled to accept at face value the damages claimed by the plaintiff as the amount of the offsetting claim for the purposes of the calculation required by s 459H(2). .... In my opinion, a genuine offsetting claim ... means a claim on a cause of action advanced in good faith, for an amount claimed in good faith. "Good faith" means arguable on the basis of facts asserted with sufficient particularity to enable a court to determine that the claim is not fanciful. In a claim for unliquidated damages for economic loss, the court will not be able to determine whether the amount claimed is claimed in good faith unless the plaintiff adduces some evidence to show the basis upon which the loss is said to arise and how that losses calculated. If such evidence is entirely lacking, the court cannot find that there is a genuine offsetting claim ... .
83His Honour had earlier in that case said (at [16]);
the real difficulty in this case is the amount of the plaintiff's alleged offsetting claim. Where the case involves a claim for a liquidated sum the application of the section is relatively easy, the court simply determines whether the cause of action is a genuine one and if that proves to be the case, the amount of the offsetting claim is the amount of liquidated sum, the subject of that claim. The position is by no means as easy where claim is a claim is for unliquidated damages and the damages are said to be economic loss suffered by the plaintiff.
84Turning to the offsetting claims asserted by Hopetoun (each of which has been quantified by reference to the quantum of amounts paid into and transferred out of trust accounts held in the name of either Mr R or JPR), it seems to me that there is sufficient evidence by reference to which the claims are quantified. As to whether a sufficient factual basis been established for the claims themselves, Mr Johnson raised a number of issues. He noted that there were two separate identified trust accounts to which moneys were transferred (namely, the trust account in operation when Mr R was in sole practice, that being under the control of Mr R, and the JPR Legal Trust Account, said to be under the control of JPR (although effectively, it would seem, likely also to be under the control of Mr R who continued to practise as a solicitor with JPR and was a director and the principal solicitor, as I understand it, at the incorporated firm)).
85It was contended that under the applicable professional rules, the operator of the account is required to have regard to the 'client' in whose name the account is maintained (under either the Legal Profession Act 1987 or, after 1 October 2005, the Legal Profession Act 2004) and not (unless there are established some special circumstances) any third party. Reliance was placed on the judgment of Sheppard AJA in Licardy v Law Society of New South Wales [1998] NSWCA 130 as to the duty of the solicitor to act in accordance with the instructions of the client in relation to trust account moneys.
86Mr Johnson points out that the payments of $315,000 on 25 January 2007 (before the incorporation of JPR), of $50,0000 on 12 March 2008 and of $500,000 in 2006 (again before the incorporation of JPR) were, on the evidence, paid to the sole practitioner's trust account and not to the trust account maintained by JPR. (That, it seems, would be consistent with the continuation of the personal retainer but does not necessarily exclude JPR having knowledge of the funds so paid and having a duty to alert its client(s) to any concerns as to the funds so held by it.)
87I do not accept that the distinction between the two funds necessarily addresses the complaint made as to JPR's conduct, insofar as it is said (as I understand it) that JPR had a duty to disclose to Hopetoun (or the other Waugh companies) the circumstances in relation to the transactions in question (where, for the purposes of the present argument, I will assume it acted in accordance with instructions from Mr J). (There is also the issue as to whether acting on Mr J's instructions would have been action in accordance with the instructions of the client if Mr J were not in fact authorised to give those instructions, but that is another issue for determination at a trial in due course.)
88In any event, it seems to me unlikely that the professional rules governing the conduct of solicitors (or the application of Licardy as to the question to whom a solicitor has a duty in relation to trust moneys) would permit the turning of a 'blind eye' to the receipt of moneys transferred from a client's account, or the unquestioning payment out of those moneys on a direction by someone in Mr J's position, if that occurred in circumstances where there was cause for suspicion as to whether those transactions were authorised by the client and hence I have some doubt as to whether the fact that the moneys may have been transferred into the trust account and recorded in the ledger as referable to or to the account of Mr J would be an answer to the claims presently sought to be made. However, it is not necessary for any finding to be made in this regard. It is sufficient that I am of the view that the evidence permits the reasonable inference that a claim against JPR would lie in this respect and that the total of such claims exceeds the amount of the statutory demand.
89Insofar as the claims raised by Hopetoun are based on knowledge of JPR, it is submitted by Mr Martin that, as Mr R was the sole director of JPR, he was its controlling mind and will and his knowledge is to be imputed to JPR ( Hamilton v Whitehead [1988] HCA 65; (1988) 166 CLR 121 at 127; Kation Pty Ltd v Lamru Pty Ltd [2009] NSWCA 145; (2009) 257 ALR 336 at [117]; Entwells Pty Ltd v National & General Insurance Co Ltd (1991) 6 WAR 68). It is further submitted that Mr R received (into his trust account) the moneys in question with knowledge of Mr J's breach (as financial controller of the Waugh group companies) of fiduciary duties owed by Mr J to his clients and that, by so doing (and by subsequently disbursing these amounts in the manner in which they were disbursed) he was knowingly assisting in Mr J's fraudulent and dishonest design) (having regard to the principles articulated in Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22; (2007) 230 CLR 89 and to the notion that conduct is dishonest and fraudulent conduct if it is "contrary to normally accepted standards of honest conduct" as considered in Barlow Clowes International Ltd (in liq) v Eurotrust International Ltd [2006] 1 WLR 1476 at [15]).
90Mr Johnson takes issue with the suggestion that a proper factual basis has been established for the assertions made as to the knowledge (actual or constructive) of Mr R. It is submitted that on the evidence before the Court, Mr J was a long-standing trusted employee of one or other of the Waugh companies and that there would be no reason for Mr R, unless something unusual occurred, to be on notice of any wrongdoing.
91In reply, Mr Martin has itemised the evidence on which it is submitted that there is an arguable case that Mr R had the requisite knowledge (within the first 4 categories of Baden Delvaux & Lecuit v Societe Generale pour Favoriser le Development du Commerce [1992] 4 All ER 161; [1993] 1 WLR 509) of the underlying frauds committed by Mr J. In essence, Hopetoun submits that Mr R would have been put on inquiry when not insubstantial amounts of money were paid by one of the companies in the Waugh Group, of which Mr J was the financial controller, into Mr R's trust account in the name of Mr J or his nominee.
92I do not propose to set out here in detail the material on which Hopetoun relies in this regard. Suffice it to say that in relation to each of the sums deposited into Mr R's solicitor's trust account, reliance is placed on one or more of bank account statements or other documents (such as receipts) recording the deposits (some referring to the receipt of moneys being "from Mr ... J"; entries in the trust account ledgers recording the receipt of moneys from Mr J ("on account") and recording the transfer(s) from that account; and evidence to demonstrate that the entity to whom moneys were paid was a creditor of Mr J or Mr R and the relationship between the respective entities.
93So, for example, the misappropriation of the sum of $315,000 is said to have been a matter within Mr R's knowledge having regard to documents of the above kind and the fact that the payments made out of those funds were paid variously to an entity known as Shellharbour Links (with which Mr J was associated and for whom, and for Mr J, Mr R was acting) and to CHUPS Ltd (a company incorporated in New Zealand of which Mr R was the sole director and shareholder) and in which Hopetoun had no financial or other interest.
94The common feature in the factual scenario(s) relied upon by Hopetoun in respect of the different payments seems to be that Mr R was acting for or associated with the entities to whom payments were made out of the moneys transferred from Waugh companies (and, it might be inferred from his retainer with the late Mr Waugh and his companies, would have been aware of any involvement of those companies in the transactions on which payments of Waugh company funds were being made) and the evidence is that the Waugh companies had no financial interest in the respective payees.
95A matter in contention in the course of the submissions was the expression of opinion by Mr Taylor that there had been breaches by JPR of its trust account obligations in relation to the trust account in the name of Hopetoun. Ultimately, it does not seem to me that this takes the matter anywhere, since the offsetting claims raised seem to be related to a different issue (namely the failure to disclose particular transactions or concerns arising out of those transactions and the allegations in relation to the purpose of incorporation of JPR and the rendering of accounts for pre-August 2007 work). Exhibit D was a bundle of documents produced by the Law Society of New South Wales under subpoena. Mr Johnson submitted that this material disclosed no relevant complaint in relation to the maintenance of the relevant trust accounts. In submissions in reply, Mr Martin points to particular directions given by the Law Society in 2009 as to how the funds in Mr R's sole practitioner trust account were to be dealt with, having regard to the cessation in August 2007 of Mr R's sole practice and his acknowledgement thereof. It is submitted that the evidence discloses that a sum of money was transferred from this trust account to the JPR trust account in September 2009 without the consent or authorisation of Hopetoun and that this amount was received by JPR with the knowledge that it had been transferred in breach of trust and that amounts were subsequently withdrawn therefrom. (Whether or not there had been such a breach, it does not seem to me to relate to the offsetting claims now sought to be brought by Hopetoun.)
96Mr Martin also submits that there were false invoices issued by JPR (being invoices by JPR referable to legal services provided at a time before it existed) as contained in Exhibit C. (The ability of Hopetoun to rely on those documents depends on the outcome of the notice of motion filed on 21 October in relation to leave to be released from the undertaking in respect of use of subpoena documents, considered under issue (iv) below.) Assuming that leave is granted for the use of those documents, they at least raise the issue as to whether JPR created and issued invoices falsely claiming that legal services provided prior to 29 August 2007 had been carried out by JPR. (Another explanation for the documents was proffered in oral submissions by Mr Johnson. I make no finding on this. It seems to me that this is an issue for determination at a final trial and not on an application of this kind.)
97In relation to the offsetting claims maintained by Hopetoun following the assignment to it of claim said to be available to each of Waugh Consultancy and Bitannia for breach of fiduciary duty, an issue was raised by Mr Johnson as to the assignability of those claims (referring to the divergence in the authorities to which Ball J has adverted in Prosperity Advisers Pty Ltd v Secure Enterprises Pty Ltd t/as Strathearn Insurance Brokers Pty Ltd [2011] NSWSC 35). Mr Martin submits that the respective assignments to Hopetoun by Waugh Consultancy and Bitannia (of any causes of action those companies have against JPR for breach of the fiduciary duties owed to them or otherwise in relation to the claims made) are valid, on the basis that Hopetoun, as assignee, has a genuine commercial interest in the enforcement of those claims, arising from its position as a substantial creditor of the assignors at the time of the assignment and the fact that the assignors are its subsidiaries.
98As a preliminary point, Mr Johnson submits that the recitals in the respective Deeds of Assignment (to the effect that between 2003 and until 28 August 2007 Mr R traded as JPR Lawyers (recital E) and that thereafter JPR (i.e. the corporate entity) traded as JPR Legal (recital F)) are inconsistent with the Points of Claim filed on 14 October 2011 and with the most recent affidavits of Messrs Waugh and Green (insofar as those documents assert that there was no relevant retainer of JPR). I am not convinced that there is necessarily an inconsistency (in that there may be a distinction between the existence of a retainer as such and the provision of legal services). Nevertheless, in relation to the period post 2007, the Deeds of Assignment recite that JPR "continued the provision of legal services for the Management Business and [the relevant company] in place of [Mr R] " (recital F, my emphasis).
99On that point, it seems to me that what is now sought to be put in issue in relation to the Waugh companies' retainer is the identity of the party with whom the pre-August 2007 retainer was entered and hence the party entitled to claim legal fees for work rendered prior to the incorporation of the law practice (since it is the claim for legal fees for the earlier period that is the focus of at least one of the allegations of breach of fiduciary duty). Therefore, an assertion that JPR continued the provision of legal services after August 2007 in place of Mr R is not necessarily inconsistent with a claim that JPR was in breach of a fiduciary duty to the client in rendering invoices for work it had not performed (at least in the absence of an arrangement that JPR was to have the benefit of fees referable to Mr R's earlier retainer).
100Mr Johnson further submits that none of the respective Deeds of Assignment is valid and effective at law to enable Hopetoun to assert in its own name the alleged offsetting claims (in effect, if I understand it correctly, this submission intimates that Hopetoun would only have a commercial interest (if at all) it were entering into the Deed as a trustee for the estate).
101It seems to me that, notwithstanding recital B as to Hopetoun's position as trustee of the late Mr Waugh's estate, there is some support (at least in the Bitannia deed) for the proposition that since reference was made in the description of the parties in the Bitannia Deed to Bitannia as a party to the deed "on its own behalf and also as Trustee ..." but makes no such qualification in relation to Hopetoun, then it must have been intended that Hopetoun be a party to the assignment in its own right and not as trustee (though the execution clauses are not relevantly different in that deed). The capacity in which Hopetoun entered into the deed is another issue on which it seems to me that a final determination should not be made at this stage. Moreover, whether or not Hopetoun entered into the Bitannia deed as trustee (and the same question does not arise on the face of the Waugh Consultancy deed), Hopetoun also maintains that it has a commercial interest in the recovery of moneys owing to companies in which it (or its subsidiary) has an interest that would arguably be a sufficient basis for it to sustain the respective assignments (and it is not necessary for me to find more than that there is a reasonable and arguable basis for the contention that the assignment is valid and permits Hopetoun to enforce the rights claimed by Waugh Consultancy and Bitannia).
102Mr Martin accepts that the general principle at common law that there can be no assignment of a mere cause of action in tort ( Poulton v Commonwealth (1953) 89 CLR 540 at 571 and 602) and accepts that the bar on assignment of personal actions would include actions in equity that are of a personal kind ( Glegg v Bromley [1912] 3 KB 474 at 489-92) but relies upon the exception to that principle enunciated in Trendtex Trading Corporation v Credit Suisse [1982] AC 679 by Lord Roskill at 703:
But it is today true to say that in English law an assignee who can show that he has a genuine commercial interest in the enforcement of the claim of another and, to that extent, takes an assignment of that claim to himself is entitled to enforce that assignment unless by the terms of that assignment he falls foul of our law of champerty, which, as has often been said, is a branch of our law of maintenance ...
If the assignment is of a property right or interest and the cause of action is ancillary to that right or interest, or if the assignee had a genuine commercial interest in taking the assignment and in enforcing it for his own benefit, I see no reason why the assignment should be struck down as an assignment of a bare cause of action or as savouring of maintenance.
103In Rickard Constructions Pty Ltd v Rickard Hails Moretti Pty Ltd [2004] NSWSC 1041; (2004) 220 ALR 267 McDougall J, having reviewed the authorities in which this issue has been debated, held at [53] that the principle enunciated in Trendtex represents the law in Australia. Similarly, in Tosich v Tasman Investment Management [2008] FCA 377; (2008) 250 ALR 274, Gyles J (concurring with the analysis by Finkelstein J in TS & B Retail Systems Pty Ltd v 3 Fold Resources Pty Ltd (No 3) [2007] FCA 151; (2007) 158 FCR 444 of the import in this regard of the High Court's decision in Campbell's Cash & Carry Pty Ltd v Fostif Pty Ltd [2006] HCA 41; (2006) 229 CLR 386) concluded at [33] that the principle enunciated in Trendtex can be taken to be established in Australia. Ball J noted the area of controversy in the authorities in this regard in Prosperity Advisers without in that case needing to decide the question. For the purposes of the present application, it should be accepted that there is an arguable basis on which it can be claimed that an assignment of the causes of action and rights contained in the Deeds is valid.
104As to what amounts to a genuine commercial interest, Bergin J (as her Honour then was) noted in Whyked Pty Ltd v Yahoo Australia & New Zealand Pty Ltd [2006] NSWSC 650 (at [24] and [26]) that this will depend upon the facts and circumstances of each case and considered that this a matter that should be decided at trial in light of all of the evidence then before the Court (and not determined on a summary application). (Reference was also made to the decision in Airs Re Pty Ltd v JBB Treatt [2007] NSWSC 1100 at [27] in this regard).
105Examples given by Cohen J in Monk v Australia & New Zealand Banking Group Ltd (1994) 34 NSWLR 148 of a genuine commercial interest were as follows, at 153:
... it has been held that there was such an interest where the assignee was already a substantial creditor of the assignor with a right to enforce the debt ( Trendtex, [Re Timothy's Pty Ltd and the Companies Act [1981] 2 NSWLR 706]) or where the assignee was the sole shareholder who was a guarantor of the overdraft of the assignor ( [Re Daley; ex parte National Australia Bank (1992) 37 FCR 390]) or where the assignee was a debenture holder with an interest in protecting the value of its security ( [First City Corporation Ltd v Downsview Nominees Ltd [1989] 3 NZLR 710])
106Mr Martin notes that in National Mutual Property Services (Aust) Pty Ltd v Citibank Savings Ltd (1995) 132 ALR 514, Lindgren J said at 540:
...The genuine commercial interest referred to in Trendtex is not a nebulous notion of the general commercial advantage of the assignee but something more specific and limited. In particular, it does not embrace an interest arising from an arrangement voluntarily entered into by the assignee of which the impugned assignment is an essential part. ... Rather, the expression refers to a commercial interest which exists already or by reason of other matters, and which receives ancillary support from the assignment.
107As to Hopetoun's position as a creditor of Waugh Consultancy at the time of the assignments, there is evidence in the material exhibited to Mr Green's affidavit that JPR had issued and served its bill of costs dated 30 April 2010 on both Hopetoun and Waugh Consultancy, together with other companies in the Waugh group, and had issued its application for assessment of costs on both Hopetoun and Waugh Consultancy. In that application, JPR stated at [2] that "Additional instructions were provided by Mr Ashton Waugh in his capacity as director of Waugh Hotel Management Pty Ltd in Waugh Hotel Consultancy Pty Ltd, at material times the manager and supervisor of the Waugh interests in the various hotels a part of the proposed business securitisation."
108It is thus submitted that Hopetoun and Waugh Consultancy were jointly liable to pay the legal fees of JPR and hence Hopetoun is entitled to claim contribution from Waugh Consultancy in respect of its liability and is a creditor of Waugh Consultancy (whose debt is likely to be reduced by reference to any moneys recovered by Hopetoun from the assigned cause of action against JPR).
109As to the second basis on which the interest of Hopetoun in the enforcement of the assigned claim against JPR is put, there is evidence that Hopetoun owns all of the shares in both Hopetoun Kembla Pty Ltd (which owns all of the shares in Waugh Consultancy) and Hopetoun Kembla Holdings Pty Ltd (which is the majority shareholder in Bitannia).
110I am satisfied that there is a reasonable basis for the assertion by Hopetoun (and the belief expressed by its director) that it is in a position to enforce the identified causes of action against JPR assigned to it by both Waugh Consultancy and Bitannia.
111As to the genuineness of the respective claims (which has been seen as a requirement that they be real and not spurious, as the test was described in Edge Technology ; or "illegitimate, phony, counterfeit (or) false" as considered in Andi - Co Australia Pty Ltd v Meyers [2004] FCA 1358; or brought in good faith, as discussed in Jesseron ; John Shearer; Maniotis v Valimi Pty Ltd [2002] 4 VR 386 [42] - [43]), Mr Johnson impugned the motivation of Hopetoun by reference to the fact that proceedings had not earlier been commenced in relation to the causes of action now asserted and as to the timing of execution of the Deeds of Assignment (that being coincident with the application to set aside the statutory demand). The lateness of the appeal was another factor called in aid of this submission (as was the manner in which documentation had been produced only shortly before the hearing of this application in relation to the claim).
112Mr Johnson further submitted that the fact that reference had not been made to the Bitannia proceedings (in which it was suggested claims of the now alleged kind could have been brought) and that the affidavit raised matters not now pressed, suggested that the offsetting claims were a recent concoction. I was invited to apply the "elephant test" to which reference was made by Bromberg J in On Call Interpreters and Translators Agency Pty Ltd v Commissioner of Taxation (No 3) [2011] FCA 366; (2011) 279 ALR 341 (on the basis of which it was suggested that a finding should be made that the alleged offsetting claims were not genuine).
113Mr Martin rejects the suggestion that any inference can be drawn that the offsetting claims are not advanced in good faith. Although he notes that Mr Taylor was not cross-examined to suggest otherwise, I note that it is not the usual practice to permit cross-examination on applications of this kind for the reasons adverted to in Mibor Investments Pty Ltd v Commonwealth Bank of Australia [1994] 2 VR 290; (1993) 11 ACSR 362 .) Mr Martin submits (and I accept) that the fact that there was some delay in bringing the claims does not in itself establish a lack of good faith. He further notes that the claims could not have been made in the Bitannia proceedings since JPR was not a party to them.
114It was submitted that the affairs of the companies in the Waugh group, including Hopetoun, were complex and that the misappropriations by Mr Johnson (and the subsequent disbursement of the funds) were (as presumably most, if not all, misappropriations are) designed to be concealed from the party so defrauded, in this case Hopetoun or the other Waugh group companies.
115Insofar as it was suggested that the timing of the assignments was an attempt to manufacture an offsetting claim, I see no reason not to accord to the Deeds the intent therein expressed. Further, while I note the coincidence of timing in relation to the commencement of these proceedings and the assertion of the fiduciary duty claims, it seems to me that this is equally explicable by a considered view as to the complex transactions not having been reached until focus was placed on this in light of the statutory demand. Looking at the overall effect of the picture painted by the evidence before me, to use the words of Mummery J in Hall (Inspector of Taxes) v Lorimer [1992] 1 WLR 939 at 944 as quoted by Bromberg J in On Call , I am satisfied that the offsetting claims in the present case have been genuinely raised.
116Therefore, I am satisfied that there have been established to be genuine offsetting claims as identified in (i)-(v) above.
117As to the quantification of the offsetting claims, in Mr Taylor's first affidavit he set out the components of the total offsetting claims there identified ($2,444,565.05) seemingly by reference to the facts set out in earlier portions of the affidavit (although there seems to be a typographical error in this regard) and to the Statement of Claim. In Mr Martin's submissions, the explanation of the quantum of the particular offsetting claims pressed by Hopetoun was outlined by reference to material in the first affidavit or (in the case of the costs determination) by reference to figures in that determination (the certificate in respect of which was admitted without objection as part of Exhibit E). The basis on which the claim has been quantified is sufficient in my opinion to allow the court to make the calculation required in s 459H(2). The total of the offsetting claims clearly exceeds the judgment debt. (Even if no more than the claims in (i), (iv) and (v) were found to have been raised on the first affidavit (i.e. the claims not referable to the alleged design in relation to the incorporation of the corporate vehicle for the provision of legal services and the rendering of the accounts including pre-incorporation fees), the claims would exceed the amount of the judgment debt.)
118Insofar as there is a claim for interest in respect of moneys in terms of s 100 of the Civil Procedure Act (NSW) 2005, it is submitted by Mr Johnson that such a claim cannot be regarded as a genuine offsetting where the nature of the claim is dependent upon the exercise of a discretion by the Court at the conclusion of proceedings between parties. Thus it is submitted that, to the extent that claims for interest are identified in [93(b)], [93(d)], [93(f)], [93(h)], [93(j)], [93(l)], [93(n)] and [93(p)] of the first Taylor affidavit, these claims could not be regarded as an amount falling within the meaning of offsetting amount in terms of s 459H(2) of the Corporations Act 2001 . (In submissions in reply, Hopetoun simply maintains its claim for interest which has accrued on each of its offsetting claims against JPR without discussion as to the argument that such a claim is discretionary.)
119I accept that an award of interest under s 100 is discretionary but it is not necessary to determine whether it could form part of an offsetting claim in the present case, since the quantum of the offsetting claims even apart from interest would exceed the debt the subject of the statutory demand.
120I am satisfied that Hopetoun has satisfied the threshold required to establish that there are genuine offsetting claims that exceed the quantum of the debt claimed in the statutory demand (even without adding the interest component) and, to the extent that a higher level of satisfaction is required in this regard in circumstances where the underlying breaches of fiduciary duty involve allegations of fraud and knowing assistance in a fraud (about which proposition I consider there is some doubt given the numerous authorities that emphasise the low threshold in a case such as this and given that I am not making any findings as to conduct but simply as to the existence of a genuine claim based on allegations of such conduct), that test would in any event be satisfied in the present case.
121For completeness, I note that a question was raised during the course of oral submissions as to the time at which an offsetting claim is required to exist in order to invoke the jurisdiction to set aside the statutory demand. By analogy with the position expressed in relation to the bankruptcy context in Re Schekeloff; Ex parte Schekeloff v Hopkins Group Pty Ltd (1989) 86 ALR 645, it was submitted that the offsetting claim must have existed at the time of the service of the statutory demand (which would not have been the case with the claims based on causes of action assigned to Hopetoun by Waugh Consultancy and Bitannia). (It was, however, conceded by Mr Johnson that there may be cases against that proposition in the corporations context, as is indeed the case.)
122If such a suggestion were to be correct then, if a genuine offsetting claim only arose after the time the demand was served, even though it may have arisen within the 21-day statutory limitation period under s 459G(3), there would be no basis for an offsetting claim to be raised under s 459H(1)(b). In other words, the position of JPR is that a statutory demand cannot be set aside due to the existence of a genuine offsetting claim unless that offsetting claim was in existence at the time the demand was served.
123I was referred to Re Schekeloff where the case before the court involved bankruptcy notices that had been issued in respect of final judgments of the District Court and, as at the time of service of the notices, the execution of the judgments had not been stayed. There, the subsequent application to set aside the notices (after execution of the judgment was stayed) was unsuccessful. Burchett J applied the reasoning of Lord Esher MR (with whom Fry and Lopes LJJ agreed) in Re Dennis; Ex parte Dennis (1888) 60 LT 348 at p 349:
The only question under that sub-section [he was referring to sub-s (1)(g) of s 4 of the Bankruptcy Act 1883 which was relevantly in the same terms as s 1(1)(g) of the Bankruptcy Act 1914] is, whether there was, at the time of the service of the bankruptcy notice upon the person against whom the receiving order has been made, a final judgment against him upon which execution had not been stayed. At the time of the service of the bankruptcy notice upon this judgment debtor execution on the judgment had not been stayed, nor had anything happened which could be suggested to be equivalent to a stay of execution. At that time no garnishee order at all had been served on the judgment debtor.
....
The words are: 'If a creditor has obtained a final judgment against' the debtor 'for any amount, and execution thereon not having been stayed, has served on him ... a bankruptcy notice under this Act'. That is, execution thereon not having been stayed before the service on him of the bankruptcy notice. In this case there was nothing to prevent the service of the bankruptcy notice, because, at the time of the service, execution on the judgment had not been stayed. The service of the notice being, therefore, regular within the words of the sub-section, what is to happen after the service? ... The requirements of the notice are that the debtor shall pay the judgment debt, or pay or compound for it to the satisfaction of the creditor, or satisfy the court that he has a counter-claim. None of those conditions have been complied with in this case, and there is, therefore, nothing to prevent the receiving order being made. Looking at the words of the Act alone, therefore, this would be a clear case.
124Upon considering further authorities that adopted similar reasoning, his Honour concluded (at p 649) that:
Not only has Re Dennis, supra, stood unchallenged now for one hundred years, but in numbers of other cases, in which admittedly the precise point did not arise, courts have stated the law in terms that are consistent with Re Dennis. In my view, this court should follow those statements of the law. Therefore, I hold that the bankruptcy notices in the present case are not liable to be set aside by reason of the orders for payment by instalments, and staying execution, which were not made until after service of the notices. If the notices are not liable to be set aside, it is conceded that there is no power to grant any further extension of the time fixed by them: James v Abrahams (1981) 34 ALR 657 at 662; 51 FLR 16 at 22.
For these reasons, I shall dismiss the debtor's applications, and make orders terminating the periods of the extensions granted in respect of the bankruptcy notices pending judgment herein.
125However, it seems to me that the line of reasoning adopted in Schekeloff cannot be adopted in the present case. There is clear authority for the proposition that, for the purposes of determining whether or not an offsetting claim exists pursuant to s 459H(1)(b), it is necessary only that the claim exist as at the time of the hearing of the s 459H application (and be raised in the supporting affidavit served within the 21 day period so as to activate the jurisdiction under s 459H.
126In Equuscorp Pty Ltd v Perpetual Trustees WA Ltd (1997) 16 ACLC 12, in considering when an offsetting claim should come into existence for the purposes of s 459H(1)(b), French, Kiefel and Sundberg JJ in the Full Court of the Federal Court said (at [29] - [30]):
Subject to variation of the arrangements, as at the time of the statutory demand it appears that no offsetting entitlement had arisen under cl 17 of the Loan Agreements. But as his Honour said in his judgment:
"The amount of the offsetting claim, including accrued interest, has to be considered as at the time the Court is determining the application under s 459(G). This follows from the ordinary language of the statute and the use of the present tense. Section 459H(1) speaks of the Court being satisfied that there is a genuine dispute between the company and the creditor. Similarly the definition of `offsetting claim' refers to a genuine claim that the company has against the creditor. Moreover s 459H(4) assumes that the Court may vary the amount in the demand, which necessarily contemplates that the Court may take into account variations in the debt which have occurred since the service of the demand, for example by payment on account.''
His Honour's view is in accord with the ordinary English construction of the relevant provisions of s 459H.
The contention that no offsetting claim can be made out in the present case cannot be sustained. (my emphasis)
127In Edge Technology , Santow J (as his Honour then was), addressing the question of the genuineness of an alleged offsetting claim that arose only after and contemporaneously with the service of the demand, said (at [33]-[34]):
First, the defendant points out that the complaint of the plaintiff, now encapsulated in the Federal Court proceedings, arose only after and contemporaneously with the service of the statutory demand. Could it be said then that the absence of complaint by the plaintiff prior to the issue of the statutory demand evidences a lack of bona fides in relation to the alleged dispute? My answer is, not necessarily; it turns on the circumstances which I consider below.
It must be borne in mind in an application to set aside, that it is the debt the subject of the statutory demand to which the genuine dispute must relate. However, if in addition (or instead) an offsetting claim is relied on to reduce or eliminate the amount claimed under the statutory demand, then it is the genuineness of that offsetting claim that matters, not the genuineness of a dispute about that claim. If then, there be a genuine dispute in respect of that debt at the time the statutory demand is served upon the alleged debtor (5 November 1999), that is sufficient to ground an application under s 459G and the relevant time for that purpose. However, the amount of any offsetting claim, including any accrued interest must be determined at the time the s 459G proceeding is heard to set aside the demand: Equuscorp Pty Ltd v Perpetual Trustees WA Ltd (1997) 80 FCR 296 ; 25 ACSR 675 ; 16 ACLC 12 at 30. Absence of complaint before the service of the demand can be some evidence of a lack of bona fides in the alleged debtor's dispute and speak against s 459G or 459H relief. But it is not ordinarily conclusive by itself. (my emphasis)
128In Central City Pty Ltd v Montevento Holdings Pty Ltd [2011] WASCA 5, Buss and Murphy JJA noted (at [14]) that:
The dispute must exist at the time of the hearing of the application to set aside a statutory demand, and not at some other time: Mibor Investments Pty Ltd v Commonwealth Bank of Australia at (293). Likewise, the amount of any offsetting claim is to be considered as at the time the court is determining an application under s 459G, not as at the date of demand: Equuscorp Pty Ltd v Perpetual Trustees WA Ltd at 697.
129See also, Endeavour Film Management Pty Ltd and Anor v Fox Studios Australia Pty Ltd [2003] NSWSC 1056 at [10]; John Shearer (in the extract quoted above).
130(I note that it has been held that, while the offsetting claim must be genuine and be in existence on the day of the s 459H hearing, it does not necessarily have to be enforceable on the day of the hearing. An offsetting claim for the purposes of s 459H(1)(b) therefore includes a claim that is stayed by court order ( Maniotis v Valimi Pty Ltd [2002] VSCA 91; (2002) 4 VR 386.)
131It has been submitted by Mr Martin, and I accept, that the requirement is only that a genuine offsetting claim must be in respect of a cause of action which has already accrued and presently exists at the time of the hearing of the application (Mr Martin citing Advance Ship Design Pty Ltd v D J Ryan t/as Davies Collison Cave (1995) 16 ACSR 129, where McLaughlin M (as the Associate Justice then was) (at [135]-[136]) expressed agreement with the proposition that noted that the definition of an offsetting claim in subs (5) of s 459H requires not only that the claim be a genuine claim but also that it be in respect of a cause of action which has accrued, and that it cannot relate to a cause of action which is not presently in existence and said:
... the offsetting claim must be one which the plaintiff presently has. The mere fact that the plaintiff has filed process does not mean that the plaintiff has a claim in that amount. The claim must be one which exists at the present time, and it must be one which, if the plaintiff is able to prove the factual matters alleged in the pleading in the statement of claim filed in the Equity Division, would result in the plaintiff being presently entitled to the damages claimed.
132Similarly, Mr Martin relies upon Andi - Co (applied in Re Ox Operations Pty Ltd [2008] FCA 61 at [10] (Gordon J), West International Pty Ltd v Ultra Drilling Pty Ltd [2008] FCA 1443; (2008) 68 ACSR 108 at [7] and K & L Airconditioning Pty Ltd v Circuit Force (WA) Pty Ltd [2008] FCA 1715 at [14]), where Heerey J said at [16] :
The existence of a genuine dispute or genuine claim is to be determined at the time the Court hears the application. It is then the Court has to be satisfied of the existence of either or both of the matters in s 459H(1).
133The fact that some of the offsetting claims arose after the statutory demand was issued (namely at the time of the assignments) does not (on the reasoning in Equuscorp ) preclude reliance thereon in an application under s 459H.
134Having found that there are genuine offsetting claims for in excess of the amount of the statutory demand, I am satisfied that the statutory demand should be set aside and I will so order.
(iii) Is there some other reason why the demands should be set aside?
135Given the conclusion that I have reached in relation to the Graywinter issue, it is not open to Hopetoun to raise this as a ground on which to set aside the statutory demand. However, for completeness I consider the position that would have applied had my conclusion on that issue been otherwise.
136Hopetoun submits that it has reasonable and arguable grounds on its appeal from the costs determination and that this amounts to some "other reason", within the meaning of s 459J(l)(b) of the Act, for the statutory demand to be set aside. Hopetoun has confirmed through its Counsel that it is prepared to pay the amount of the judgment debt into Court pending determination of the costs appeal. Thus it is submitted that JPR is assured of payment of the debt the subject of the statutory demand and does not need to rely on the presumption of insolvency that would enable it to proceed with the winding-up application (reference in that regard being made to the approach taken in this regard in Cranney Farm Pty Ltd v Corowa Fertilisers Pty Ltd [2011] NSWSC 9; by Barrett J in Timberland Property Holdings Pty Ltd v Schindler Lifts Australia Pty Ltd [2011] NSWSC 466 and by White J in Quarter Enterprises Pty Ltd v Allardyce Lumber Co Ltd [2011] NSWSC 1031). In Timberland , Barrett J said at [26]:
As things stand, "some other reason" within s 459J(1)(b) does not exist, but if the amount of the judgment debt is deposited so as to be available to meet the judgment if the Court of Appeal proceedings extinguish the possibility of the judgment's being set aside, then, some other reason, will exist. The reason will be, in effect, that Schindler, as judgment creditor, is assured of the availability of funds to meet (and, accordingly, payment of the debt the subject of the statutory demand) and therefore does not stand in need of the presumption of insolvency that would enable it to proceed with a winding-up application if the statutory demand stood but was not complied with. In saying this, I do not intend to imply that Schindler would enjoy any form of security over the funds in court.
137The exercise of the jurisdiction under s 459J(1)(b) was considered by Emmett J in Eumina Investments Pty Ltd v Westpac Banking Corporation (1998) 84 FCR 454 at [457] - [458]. Emmett J (having rejected the argument that the company there seeking to set aside a statutory demand had a genuine offsetting claim that exceeded the amount claimed in the demand - on the basis that the doctrine of res judicata precluded a contention to the contrary of the judgment against the company) turned to consider the application of s 459J(1)(b) and said (at [458]):
However, s 459J(1)(b) appears to me to have relevance in the present context. It may be that "some other reason" within the meaning of s 459J(1)(b) is something other than defect in a demand, the existence of a genuine dispute or the existence of an offsetting claim. The language of s 459J(1)(a) indicates that s 459J is concerned with the possibility of injustice if a statutory demand is permitted to stand with the consequence of the presumption of insolvency which is then compelled by s 459C(2)
though noting that the discretion under s 459J(1) may be exercised even without showing that substantial injustice would be caused (citing Hoare Bros Pty Ltd v Deputy Commissioner of Taxation (1996) 62 FCR 302; 135 ALR 677.)
138There, Emmett J stated at p459:
One circumstance where it may be unjust for a demand to stand, in my opinion, is where there is a judgment or order which precludes a contention that there is a genuine dispute or an offsetting claim, but there is on-foot a bona fide appeal from that judgment or order. In those circumstances, the Court may, if justice requires, and subject to the possibility of imposing conditions as contemplated by s 459M, set aside a demand which is based on the judgment or order which is subject to appeal, or in respect of which if an appeal succeeds there would be an offsetting claim.
his Honour being of the opinion that it was appropriate for a court to exercise the discretion conferred by s.459J(l)(b) where the court was satisfied that there is an appeal based on reasonable and arguable grounds which, if successful, would result in the existence of an offsetting claim (the expression "reasonable and arguable grounds" having been drawn by his Honour from the decision in Ahern v Deputy Commissioner of Taxation (Qld) (1987) 76 ALR 137 at 148).
139Mr Martin notes that in Midas Management Pty Ltd v Equator Communications Pty Ltd [2007] NSWSC 759, Hammerschlag J adopted the approach of Emmett J in Eumina Investments , balancing the competing merits of what his Honour accepted were the debtor's plausible grounds of appeal and the creditor's rights under the judgment by ordering that the statutory demand be set aside on condition that the amount of the judgment debt be paid into court.
140In Tatlers.com.au Pty Ltd v Davis [2006] NSWSC 1055; (2006) 203 FCR 473 at [11] and [29] it was said that there is some "other reason" why the demand should be set aside must be determined in the circumstances obtaining when the court comes to consider the s 459G application.
141In relation to this ground of challenge, Mr Johnson submitted that there was no reasonably arguable basis for appeal by reason of the submission that the District Court lacks jurisdiction (the costs determination being said to be made under the 1987 legislation under which an appeal could only be brought in this Court). The Amended Certificate of Determination noted on its face that it was issued under the Legal Profession Act 1987 (the earlier certificate having been issued under a template referring to the 2004 Act).
142In reply submissions, Mr Martin submits that the appeal and leave application of Hopetoun in respect of the costs determination have been properly brought in the District Court of New South Wales under the Legal Profession Act 2004 (NSW), noting that Part 11 of the Legal Profession Act 1987 (NSW) sets out the procedures for determining an application for costs assessment and any appeal from such determinations and that a party dissatisfied with the decision of the costs assessor has two avenues of appeal under the 1987 Act (a right of appeal to this Court on a matter of law under s 208L(1) and the ability to seek leave to appeal from this Court under s 208M(1), the latter application if granted enabling this Court to may hear and determine the appeal by way of a new hearing (s 208M(4))
143Part 3.2 of the 2004 Act, which repealed the 1987 Act, set out similar procedures for appealing a costs assessor's decision to that contained in the 1987 Act and provides for an appeal to this Court as to a matter of law (s 384(1)) or otherwise by leave (s 385(1)). Mr Martin notes that the 2004 Act was amended by s 3 and Schedule 14 of the Courts and Crimes Legislation Amendment Act 2009 (NSW) (which substituted "District Court" for "Supreme Court" in ss 384 and s385, effective from 1 September 2008).
144Mr Martin relies on s 737 of the 2004 Act, which gives effect to Schedule 9, clause 18 of which provides as follows:
18 Client information and legal costs
(1) Subject to subclauses (2) and (3) , Part 3.2 of this Act applies to a matter if the client first instructs the law practice on or after the commencement date, and Part 11 of the old Act continues to apply to a matter if the client first instructed the law practice in the matter before that day.
noting that s 4 of the 2004 Act defines "client" to mean "a person to whom or for whom legal services are provided" and the term "law practice" to mean, inter alios, (a) an Australian legal practitioner who is a sole practitioner and (d) an incorporated legal practice (that in turn being defined in s 134(1) to mean an "a corporation that engages in legal practice in this jurisdiction, whether or not it also provides services that are not legal services".
145Thus it is submitted that Part 3.2 of the 2004 Act applies to the matter the subject of the present appeal and leave application of Hopetoun by reason of the transitional provisions contained in clause 18(1) of Schedule 9 of the 2004 Act. It is noted that the first time that JPR could have received instructions from Hopetoun was on 29 August 2009 when it was incorporated. Accordingly, it is submitted that Part 11 of the 1987 Act could not apply by reason of clause 18(1) of Schedule 9 of the 2004 Act.
146Mr Martin further submits that even if it is held that JPR did first receive instructions from Hopetoun before the commencement of the 2004 Act (1 October 2005) with the consequence that the matter arose under the 1987 Act (contrary to Hopetoun's primary submission), the appeal and leave application of Hopetoun were made under the 2004 Act by reason of the transitional provisions of clause 22A(2) of the Schedule 9 of the 2004 Act, which provides as follows:
22A New appeals or reviews about old matters
(1) A matter arising under the subject of an appeal or review made or applied for on or after 1 October 2005 if the appeal or review could have been made or applied for had this case not been enacted.
(2) The appeal or review may be made or applied for under the provisions of either the old Act or this Act (even if the matter could not otherwise be the subject of appeal or review under this Act if the matter had arisen on or after 1 October 2005).
(3) The appeal or review may be dealt with under this Act (even if the matter could not otherwise be the subject of appeal or review under this Act if the matter had arisen after 1 October 2005) except insofar as a direction of the Supreme Court or the President of the Tribunal, as the case requires, under this clause otherwise provides.
147Reliance was placed on what was said in CSR Limited v Eddy [2008] NSWCA 83; (2008) 70 NSWLR 725, by Basten JA at [17] (followed by Hislop J in Cufurovic v Coshott [2009] NSWSC 372 at [32]):
Pursuant to cl 22A in Sch 9 of the Legal Profession Act 2004, an appeal could be made under either the Legal Profession Act 1987 or the Legal Profession Act 2004, in relation to a matter arising under the Legal Profession Act 1987.
148Thus it is submitted that the appeal and leave application of Hopetoun were properly made in the District Court under the 2004 Act by reason of the transitional provisions of clause 22A(2) of Schedule 9 of the 2004 Act even if they be regarded as relating to a matter arising under the 1987 Act.
149Had the issue been necessary to determine, I would have held that there were reasonable and arguable grounds for appeal (and that the challenge as to the jurisdiction of the District Court was one to be determined in the appeal proceedings not on a summary basis). In circumstances where Hopetoun has proffered an undertaking to pay the moneys the subject of the debt claimed in the statutory demand into Court pending the determination of those appeal proceedings, I would have held that there was an "other reason" why the statutory demand should be stayed, for the purposes of s 459J(1)(b) and would have done so subject only to the condition as to payment into Court of the judgment debt. As it is, this issue does not arise given the finding I have made on the Graywinter objection in relation to this basis of challenge to the statutory demand.
(iv) Application for leave to use subpoenaed documents from other proceedings
150As noted earlier, during the course of the hearing on 21 October 2011 Hopetoun sought to read the affidavit of Mr Green sworn 7 October 2011 and to tender 3 volumes of documents comprised in the exhibit to the affidavit and marked "MFG 2". Objection was raised both on the Graywinter principle and, in relation to "MFG 2", on the basis that these were documents obtained under compulsion of a subpoena in other proceedings before this Court (albeit not produced to the Court but, by consent, ordered to be delivered to the lawyers for Hopetoun) for which no leave had been sought. (I provisionally admitted a subset of these volumes into evidence, subject to a ruling on the leave application that was then made and gave directions for the service of submissions in relation to the application for leave.)
151At the conclusion of submissions on 21 October 2011 (subject to directions for further submissions in reply and submissions in relation to the Notice of Motion) a Notice of Motion dated 21 October 2011 was filed together with a further affidavit of Mr Green sworn on 21 October 2011.
152With the submissions served in relation to the leave application, Mr Johnson subsequently provided a list of objections to various portions of that affidavit (his principal objection remaining the Graywinter point). As to those objections, in general they were as to relevance (although objection was also made to hearsay in relation to the conversations set out in paragraphs 6 and 10; and to the schedule referred to in paragraph 15 both relevance as hearsay and an inadmissible summary having regard to s 50 and s 135 of the Evidence Act 1995.
153Ruling now on those evidentiary objections, have read paragraphs [3], [4], [5], [7], [8] and [16] subject to relevance and I reject paragraphs [6], [9] and [10]. I was inclined to read paragraph [15] and the "procedural chronology" annexed to the affidavit as a submission. However, having regard to the fact that its contents may well be contentious and include conclusions drawn from material not before the Court (and since JPR did not have the opportunity at the hearing to address matters that may be of dispute in relation to the schedule), I reject [15] and Annexure B to that affidavit as well.
154Complaint has been made by Mr Johnson as to the manner in which the application for leave was brought and as to the evidence put before the court. In this regard, he raises the following matters: that only one of the two subpoenas was put before the court by Hopetoun on this application (the first subpoena issued on 7 September 2009), Mr Johnson tendering the second subpoena issued on 19 October 2009 (to which Mr Green in his affidavit has referred but a copy of which he did not annexe to his affidavit); that there has been no articulation of which of the documents contained in the contentious exhibit "MFG2" were produced in answer to which subpoena; that there was no statement as to whether the documents in question comprised all of the documents produced in answer to the subpoenas or a selected number of documents; that the purpose for which the various documents were sought to be relied upon was not identified until the submissions made during the course of the hearing on 21 October 2011 by Mr Martin. (However, Mr Johnson's primary objection to this material was that based upon the Graywinter principle.)
155It is accepted that the documents comprised in the tender of exhibit "MFG 2" are documents that were produced by JPR (not Mr R) in proceedings commenced by Bitannia (acting on its own behalf and also as trustee of the Bill Waugh Family Trust No 2) and a number of other parties as plaintiffs against Mr J and others as defendants. (The Further Amended Statement of Claim in the Bitannia proceedings (2009/3875) is Exhibit 1 in the present proceedings.)
156It is not disputed that two subpoenas were served on JPR (one of which was also served on Mr R) in the Bitannia proceedings. The first, issued in September 2009, a copy of which is annexed to Mr Green's 21 October affidavit, called for the production (in summary) of files maintained in relation to certain identified partnerships and companies; records of a particular trust account (including ledgers, cash books and statements of account in respect of monies received on behalf of or credited to, inter alios, Mr J; and, thirdly, records of the said trust account (including ledgers, cash books and statements of account in relation to the identified transactions involving Mr Jand others).
157The second subpoena to produce issued in the Bitannia proceedings and addressed solely to JPR (or more precisely its proper officer) sought the production of trust account records maintained by the legal practice of Mr R and JPR falling within particular categories but in general relating to records kept and maintained in respect of monies received on behalf of or credited to Mr J or a entity associated with him or various of the Waugh group companies as well as records of the trust account in relation to a particular transaction identified in item 3 of the schedule. A copy of that second subpoena was tendered by Mr Johnson and I have admitted that document and consent orders made on 5 November 2009 in the Bitannia proceedings (for the production and delivery of documents under the second subpoena) as Exhibit 2 in the proceedings before me (treating the hearing as having been re-opened for that limited purpose).
158The documents ultimately sought to be relied upon (out of the 3 volumes in Exhibit "MFG2" to Mr Green's earlier affidavit) were a limited bundle identified by reference to a schedule handed up by Mr Martin during the course of the hearing on 21 October 2011. (I had indicated that, in order to address any prejudice to JPR by the late production of this material and the lack of specification as to the relevance of that material to the issues in the present proceedings, I was minded only to admit (subject to the Graywinter objection and to the question raised as to the provenance and ability to use those documents) the limited sub-set of documents referred to in that schedule).
159The Notice of Motion seeks leave in the following terms:
Leave be granted to the Plaintiff to use in these proceedings [i.e. the present proceedings to set aside the statutory demand] the documents produced by the Defendant under the subpoenas to produce dated 19 October 2009 in proceeding no. 2009/289954 in the Supreme Court of New South Wales equity division [those being the Bitannia proceedings].
160There is no application for leave to use those documents in the proceedings more recently commenced by Hopetoun (in which the relevant pleading is Exhibit 1). Mr Johnson submits that, in the absence of a proper identification of the documents that were produced in answer to the subpoena dated 19 October 2009, it is inappropriate for the Court to make the open-ended order of the kind sought in the Notice of Motion. (In that regard, given that these proceedings, as Mr Johnson notes, concern only the application for relief in relation to the setting aside of the statutory demand and will be disposed of by the making of orders following this judgment, I do not see that there is any difficulty with the form of relief sought by Hopetoun. Insofar as the order sought is not limited to the subset of documents provisionally admitted as Exhibit C, there may remain a concern that notwithstanding the fact that only a portion of the subpoenaed documents were ultimately tendered there was a 'use' of the balance insofar as they were exhibited to Mr Green's affidavit and sought to be tendered. It seems to me that it is unproductive to leave open the possibility of what may well prove to be an arid dispute over what constitutes 'use' in this regard and hence, if otherwise satisfied that leave should be granted, I will do so in the form of the order sought in the notice of motion.)
161There was also some debate as to whether use of the documents amounted to a breach of a written undertaking (as opposed to a breach of the implied undertaking that would in any event have arisen in relation to the use of such documents). Mr Martin submitted that there was no written undertaking in circumstances where the documents in question were not physically produced to the court but had been produced pursuant to the orders of the court by way of delivery directly to the plaintiffs' lawyers. However, there is some lack of clarity as to what in fact was produced when (a matter the subject of complaint by Mr Johnson as noted earlier). In any event there would be an implied undertaking precluding the use of the documents. Hence there seems little arising out of the debate on this point.
162In Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217, Wilcox J considered the factors to be taken into account when considering whether to grant leave to permit the use of documents obtained under compulsion in one set of proceedings for a purpose other than those proceedings and said at p 225:
For "special circumstances" to exist it is enough that there is a special feature of the case which affords a reason for modifying or releasing the undertaking and is not usually present. The matter then becomes one of the proper exercise of the court's discretion, many factors being relevant. ... But plainly they include the nature of the document, the circumstances under which it came into existence, the attitude of the author of the document and any prejudice the author may sustain, whether the document pre - existed litigation or was created for that purpose and therefore expected to enter the public domain, the nature of the information in the document (in particular whether it contains personal data or commercially sensitive information), the circumstances in which the document came into the hands of the applicant for leave and , perhaps most important of all, the likely contribution of the document to achieving justice in the second proceeding.
163The basis on which leave for use of the documents is sought is that they are relevant to issues in the present proceedings (namely as to the breach of fiduciary claims that are predicated on their having been invoices raised by JPR for work performed earlier than the time at which it was in existence). Although there were allegations as to breach of trust account regulations made in the affidavit material before the Court, no claim directly referable to a breach of trust account regulations appeared to be pressed as an offsetting claim (nor is it an issue in the Statement of Claim now filed in the recent proceedings commenced by Hopetoun). Mr Martin, however, confirmed that Hopetoun relies on the trust account documents (or at least the subset admitted provisionally as Exhibit C) as relevant to the allegation that there was a backdating of invoices (or creation of false invoices) for work not carried out by JPR that amounted to a breach of fiduciary duty on the part of JPR (see T 30.20).
164Turning to the factors identified by Wilcox J in Springfield , it is submitted by Mr Martin (and a brief review of the 3 volumes supports this) that the documents sought to be tendered by Hopetoun out of the material produced by JPR in answer to subpoena in the Bitannia proceedings does not include documents of third parties but rather comprise trust account records and associated documents where the clients identified on the documents are Hopetoun or various named entities (who appear from the evidence before me to be members of or associated with the Waugh group of companies). Mr Martin submits that all of the documents contained in Exhibit C as records of assets held on trust for those clients form part of the assets held on trust for those clients and to which those clients are entitled as a matter of right.
165In this regard, reliance was placed on what was said by Gummow J, then sitting in the Federal Court, in Re Simersall: Blackwell v Bray (1992) 35 FCR 584 at pp 588 - 589, namely that:
One of the essential elements of a private trust is that the trustee is subject to a personal obligation to hold and deal with their trust property for the benefit of the beneficiaries, and a necessary incident of that obligation is the liability of the trustee to account to the beneficiaries for his stewardship of the trust property by the trustee is the trustee's obligation to keep proper accounts and to allow inspection of them by the cestui que trust: see Spellson v George (supra) (at 315-316). Hence, the description of Lord Wrenbury of the right of inspection as "proprietary" in character, annexed as it is to the beneficial interest of the beneficiary in the trust property.
166It is submitted that the documents comprising Exhibit C belong to the Hopetoun in its own right or as trustee of the estate of the late Mr William Montague Waugh or belong to companies which are part of the Waugh Hotel Group and are managed by Waugh Consultancy (or are documents in respect of which it has a right of possession and/or inspection).
167I accept that trust account records maintained by JPR in respect of moneys received on behalf of or to the credit of client accounts would be records in respect of which the client would have a right of inspection. Insofar as it is suggested that this means that "ownership" of the documents reposes in Hopetoun or the Waugh companies, that seems to be inconsistent with the conclusion in Wentworth v De Montfort (1988) 15 NSWLR 358, with reference to Re Londonderry's Settlement; Peat v Walsh [1964] Ch 594, that a solicitor's trust account records of dealings with a client's money is the property of the solicitor (though the client is entitled to inspect those records and to be provided with copies of those records), Hope JA there noting that while the trustee remains trustee documents relating to a trust account are the trustee's records and entitled to be retained by the trustee (at p 356) and that financial records made by a solicitor not as trustee would be subject to the same principles as if the solicitor were not a trustee.
168In any event, the distinction between 'ownership' and a right of inspection is immaterial in the present case, since the relevant point is that Hopetoun and the Waugh companies (as clients, whether under a retainer with JPR or the earlier retainer with Mr R) would be entitled to inspect and call for copies of the material the subject of the subpoenaed documents.
169As to the attitude of the author of the documents and any prejudice that the author might sustain by use of the documents (that being another of the factors to which Wilcox J referred), it is submitted that any prejudice that JPR might suffer is irrelevant as it is the prerogative of the owner of the document (said to be Hopetoun or the Waugh companies) to determine what should become of it. Leaving aside the issue of ownership, the fact that it would have been open to Hopetoun to call for documents of this kind for use in the present proceedings makes it difficult for JPR to maintain any claim that it is prejudiced by their use. The prejudice identified by it, instead, was the inability to respond to the material in the time available (in the sense of adducing evidence to explain the creation of the documents in the first place - or the manner in which they were produced). So, for example, Mr Johnson informed me that the explanation for what appears to be a backdating of documents was or might be that the documents were printed on JPR letterhead for the purposes of compliance with the subpoena. I sought to address the question of any prejudice in this regard by limiting the tender and indicated a preparedness to permit further evidence to be adduced going to the question of the creation of the invoices. Therefore, insofar as JPR chose not to avail itself of that opportunity, I do not see that there is any relevant prejudice in granting the leave sought for use of the documents (though I take into account the possibility of an alternative explanation for their creation from that submitted by Mr Martin).
170As to the circumstances in which the documents came into the hands of the applicant for leave, Mr Martin notes that, had the documents not been produced by JPR (or, if that be the case, Mr R) under subpoena in the Bitannia proceedings, Hopetoun in its own right or as trustee of the estate of the late Mr Waugh and the companies in the Waugh Hotel Group managed by Waugh Consultancy could have compelled the production of the documents whether in these proceedings or otherwise. I agree, although that does not excuse what seems to be a clear breach of the undertaking limiting the use of the documents that were obtained under subpoena. Nevertheless, the fact that the documents could readily have been obtained in any event seems to me to be relevant in now determining whether leave should be granted for their use.
171Finally, Mr Martin submits that the documents are likely to contribute to the achievement of justice in these proceedings for the reason that they are relevant to the assertion that JPR breached its fiduciary duty to Hopetoun in obtaining a Costs Certificate determination based on work which it could not have performed prior to its incorporation on 29 August 2007. It is submitted that the documents in Exhibit C reveal the creation of false invoices issued by JPR to Hopetoun and other members of the Waugh Hotel Group of companies, for work that JPR could not have done on the dates that those invoices bear since it was not then in existence. (It is also submitted that those documents are relevant in responding to JPR's submission in court on 21 October 2011 that Hopetoun had alleged Mr R's dishonesty without identifying breached of the trust account regulations (T 4.20 - 4.25) in that they demonstrate falsification of documents which form part the relevant sole practitioner trust account records.)
172I consider that the factors to which Mr Martin points tend strongly in favour of the grant of leave in relation to the use of the documents in question. They seem to me to be documents for the production of which Hopetoun and/or other Waugh group companies would have had a right to call even absent any ongoing court proceedings. (There was a suggestion in correspondence annexed to Mr Green's 21 October 2011 affidavit, namely the letter annexure C, which I admitted subject to relevance, that the lawyers acting for JPR in response to the subpoenas issued in the Bitannia proceedings had asserted a lien over documents of this kind by reference to the unpaid fees. Presumably any such issue was resolved, since there seems no dispute that documents were in fact produced in answer to the procedure. Therefore, I place no weight on this correspondence. I simply note that it might indicate that there may not have been a ready response to a request for production of documents outside the context of the court proceedings.)
173I do not consider that there is any relevant prejudice attached to their use in the present proceedings (taking into account the fact that JPR has not chosen to put on evidence as to the creation of the documents though balancing this against the lateness with which the issue seems to have been flagged in the course of the proceedings). That is because the documents are being relied upon only in order to establish that there is a factual basis on which the alleged offsetting claims are raised. The proceedings do not involve any determination of the issue as to whether there was a backdating of the invoices or as to whether, if so, there was a breach of fiduciary duty in the circumstances in which that occurred. Moreover, even in the absence of the trust account material there is evidence that supports a finding that there are genuine offsetting claims in this regard.
174Insofar as Mr Johnson calls, in effect, for a specific statement as to the particular issue or issues in the present proceedings to which the documents in question are said to be relevant and in respect of which a release from the implied undertaking is sought, it seems to me that this has been provided by means of the schedule limiting the documents to be tendered and by the submissions made by Mr Martin as to the issues to which the documents are said to be relevant and I do not consider that anything further is required.
175Mr Johnson submits that an explanation as to the circumstances under which the implied undertaking was not addressed (when considering the use in these proceedings of documents produced in another proceeding at least 18 months before) should have been provided on the current application. The affidavit sworn by Mr Green addresses the circumstances in which the subpoenas were issued (the first being issued only shortly after the commencement of proceedings seeking Mareva orders). I would infer from the contents of Mr Green's affidavit that the explanation for the position leading to the current application was inadvertence on the part of the legal representatives. There is nothing to suggest a deliberate disregard of the undertaking (and I accept the submission by Mr Martin that the allegation of impropriety or contumacious behaviour should be rejected).
176Mr Johnson further submits that there should be an apology to the Court for what he contends is the otherwise contumacious behaviour on the part of the plaintiff's legal practitioner (in using documents produced in answer to compulsory Court process in proceedings other than those in which they were produced without the consent of the party that produced those documents or the leave of the Court). I am concerned that there has been an apparent breach of an undertaking that should be taken very seriously by legal practitioners. Nevertheless, I accept that when the issue was raised there was an immediate application for leave to be granted (and hence no suggestion that there was any deliberate attempt to make further use of documents subject to the undertaking). I do not condone any breach of undertakings of this kind. However, I consider the conduct of the plaintiff's legal representatives in making the present application likely to reflect a consciousness of the breach and I am prepared to proceed on the basis that they will take care to avoid any repetition in the future. (In this regard, I note that the leave sought extends only to the present proceedings and that care will need to be taken in relation to any future use of the documents in the context of the more recently commenced proceedings.)
177I am therefore satisfied that leave should be granted as sought in the notice of motion filed 21 October 2011.
Orders
178For the reasons set out above, I order as follows:
- The Statutory Demand dated 22 August 2011 served on Hopetoun Kembla Investments Pty Ltd by JPR Legal Pty Ltd set aside pursuant to s459H of the Corporations Act 2001 (Cth).
- Leave be granted to Hopetoun Kembla Investments Pty Ltd to use in these proceedings ((2011/293538) the documents produced by JPR Legal Pty Ltd and/or the second defendant under subpoenas to produce issued on 5 September 2009 and 19 October 2009, respectively, in proceeding no. 2009/289954 in the Supreme Court of New South Wales.
- Order that JPR Legal Pty Ltd pay the costs of Hopetoun Kembla Investments Pty Ltd of these proceedings.