Ingram v Y Twelve Pty Ltd

Judgment 1By Notice of Motion filed in Court on Friday 15 November 2013, and which I heard during the afternoon of 15 November 2013, the first defendant, Y Twelve Pty Ltd, sought leave to rely on the following affidavits and witness testimony at the final hearing of these proceedings (which commenced before me on Monday 18 November 2013): (a)affidavit sworn by Blagojce Petrovski on 31 October 2013; (b)outline of proposed evidence of Jim Koutsouklakis served 1 November 2013; (c)affidavit sworn by Christopher John Salmon on 12 November 2013; (d)affidavit sworn by Glenn John Rufford on 12 November 2013; and (e)affidavit sworn by Peter Matthew O'Shea on 13 November 2013. 2I refused to grant leave in respect of the affidavits of Messrs Salmon, Rufford and O'Shea. 3These are my reasons for that decision. 4The affidavit of Mr Petrovski and the outline of evidence of Mr Koutsouklakis were served on 1 November 2013. 5The affidavits of Messrs Salmon and Rufford were served by email after hours on 12 November 2013. The affidavit of Mr O'Shea was served after hours on 13 November 2013. 6Y Twelve required leave to rely on these affidavits because of the effect of a "guillotine order" made on 18 October 2013 by McDougall J. I will refer to that order further below. 7The background to these proceedings is set forth in the judgment of McDougall J in HM&O Investments Pty Ltd v Ingram [2012] NSWSC 958. 8The plaintiffs, Mr and Mrs Ingram, conducted a business involving the manufacture and design of outdoor playground equipment in childcare centres, schools and the like. Mr and Mrs Ingram sold that business to the second defendant, HM&O Investments Pty Ltd, and another company, Teach & Play Pty Ltd. 9HM&O and Teach & Play alleged that Mr and Mrs Ingram had engaged in misleading or deceptive conduct in relation to that sale and commenced proceedings in the Commercial List seeking from Mr and Mrs Ingram damages in the order of $5 million. 10After a hearing that lasted 11 days during 2011 and 2012, and a reference of certain technical issues to Mr Peter Taylor SC, McDougall J found that HM&O and Teach & Play were entitled to damages from Mr and Mrs Ingram in the sum of $10,000, including interest. As his Honour said in the judgment referred to at [7] above at [244], in substance, HM&O and Teach & Play failed. 11On 26 September 2012 McDougall J ordered that HM&O and Teach & Play pay the Ingram's costs of the proceedings (HM&O Investments Pty Ltd v Ingram [2012] NSWSC 1225). 12In these proceedings, Mr and Mrs Ingram seek a declaration that the transfers by HM&O to Y Twelve of certain shares and units constituted "an alienation of property... with intent to avoid creditors" for the purposes of s 37A of the Conveyancing Act 1919 and orders that those transfers be declared void, and that the shares and units be transferred back to HM&O (now in liquidation). 13HM&O, by its liquidator, has entered a submitting appearance. 14Y Twelve is thus the only active defendant. 15The allegations made by Mr and Mrs Ingram are summarised in the outline of submissions of Mr Curtin SC, who appears with Mr Bannan for Mr and Mrs Ingram, as follows: "In the final days of the hearing of [the proceedings before McDougall J] (which included 15 August 2012) it was tolerably clear HM&O and [Teach & Play] knew that they were at risk of losing their case against the Ingrams. [Mr] Salmon was present at Court on 15 August 2012. He discussed some problems in the case with HM&O and [Teach & Play's] solicitor and counsel, and discussed the possibility (which came to pass) that HM&O and [Teach & Play] would be ordered to pay the Ingrams' costs. In a file note recorded by HM&O and [Teach & Play's] solicitor, [Mr] Salmon then asked whether 'he could dispose some (sic) of the companies assets'. The advice given was 'he could not do so'. That advice was not followed. At 1.01pm on 29 August 2012 the parties were informed that judgment would be delivered two days later on Friday, 31 August. Eight hours later, at 9.12pm, [Mr] Salmon instructed an accountant (in substance) to implement the transfer of the assets. The various transfers were prepared and (ex facie) executed the following day, 30 August 2012. Judgment in the [proceedings before McDougall J] was delivered on 31 August 2012." 16On 7 March 2013 Y Twelve filed a Commercial List Response in which it denied that the transfers complained of were effected with intent to defraud creditors and in which it alleged that the transfers were made as part of a commercial enterprise described in 36 subparagraphs over some five pages of the pleading. 17Y Twelve has thus long known of the basis on which it proposes to defend these proceedings. 18There have been numerous orders made in the course of these proceedings for the filing of Y Twelve's evidence. 19On 10 May 2013 Hammerschlag J ordered that Y Twelve put on its evidence by 28 June 2013. That order was not complied with. 20On 4 July 2013 the matter was set down for hearing for four days commencing 18 November 2013. On that occasion, Hammerschlag J made clear to counsel appearing for Y Twelve that it was likely that Y Twelve would be required to put on its evidence within six weeks. 21On 26 July 2013 Hammerschlag J ordered that Y Twelve serve its evidence by 26 August 2013. That order was not complied with. 22On 13 September 2013 Hammerschlag J extended the time for Y Twelve to serve its evidence to 27 September 2013. That order was not complied with. In fact, for reasons not explained, preparation of Y Twelve's evidence did not take place until shortly after 13 September 2013. 23Until 4 October 2013, Ms Sarah Furlonger, a director of Yates Beaggi Lawyers, had the carriage of this matter on behalf of Y Twelve. 24According to an affidavit sworn by Mr Farshad Amirbeaggi, another director of Yates Beaggi, Ms Furlonger has taken leave from Yates Beaggi until 31 March 2014. As a result, Mr Amirbeaggi has assumed day to day conduct of the matter. 25Because of other professional commitments, Mr Amirbeaggi briefed Ms Bridie Nolan and Mr Mark Gunning of counsel to assist one of his employed lawyers in preparing the affidavit evidence. 26On 18 October 2013 McDougall J made an order that Y Twelve serve its evidence by 24 October 2013 and that Y Twelve not be permitted to rely upon any evidence not served by 24 October 2013 without the leave of the Court. This is the guillotine order to which I have referred. 27Those orders were made without objection from Ms Nolan. McDougall J informed Ms Nolan that Y Twelve "would be wise to assume that [the guillotine order] means what it says and having regard to the procedural history there might not be much in the way of leeway". 28On 24 October 2013 Mr Amirbeaggi wrote to Mr and Mrs Ingram's solicitors: "The affidavits for Messrs Salmon, Rufford, O'Shea and Petrovski are currently in draft form, and remain only to be submitted to the respective deponents for final verification. Unfortunately, our office was only informed on 19 October that Messrs Salmon and Rufford are both overseas, and will not be returning to Australia until 11 November 2013". 29In fact, Messrs Salmon and Rufford left Australia early on Sunday 20 October 2013 (less than 48 hours after McDougall J made the guillotine order) to travel to Germany to attend a trade fair. 30They have offered no explanation as to why, in the face of the order made by McDougall J, they thought it appropriate to take this course. 31Not only that, but now that they have returned to Australia, and their affidavits are belatedly served, rather than attend Court on 15 November 2013 and provide an explanation for their conduct, they travelled to Bathurst to pursue some other business matter. 32I can only conclude that Messrs Salmon and Rufford consider their business commitments to be of greater significance than their obligations to comply with orders made by the Court, or explain their failure to do so. 33I am satisfied that the late service of the affidavits of Mr Salmon and Mr Rufford has been caused by their decision to travel to Germany for the trade fair. In the absence of any evidence from Mr Salmon or Mr Rufford as to why, in the face of the guillotine order (and the earlier orders of the Court) they saw fit to leave the jurisdiction rather than comply with the guillotine order, I cannot be satisfied that an adequate explanation has been offered for this failure to comply with the orders. 34No evidence at all has been offered to explain why Mr O'Shea's affidavit was served so late. 35Mr Curtin informed me, and I accepted, that for a number of reasons that he explained, he could not deal with the recently served affidavits of Messrs Salmon, Rufford and O'Shea without a vacation of the hearing date of 18 November 2013. 36Were that hearing date vacated, the next date available to the Court for the hearing of this matter was 17 March 2014. 37Mr Curtin drew my attention to the observations of Allsop P (with whom McColl and Basten JJA agreed) in Richards v Cornford (No 3) [2010] NSWCA 134, in circumstances which, although not exactly the same as those before me, are closely analogous (see especially [38] - [40], [42], [44], [45], [49], [61], [106], [111] - [113], [117] and [119] - [121]). 38The conclusion to which I came was that it would be contrary to the requirements of justice that I grant Y Twelve leave to rely upon the affidavits of Messrs Salmon, Rufford and O'Shea. The granting of such leave would have resulted in the vacation of the hearing date; a course which would have caused considerable delay and which, in the circumstances, I concluded could not be justified. 39Different considerations arise in relation to Mr Petrovski's affidavit. It was served on 1 November 2013. Mr Curtin accepted that, except for one paragraph, he was able to deal with that affidavit. 40For that reason, I granted Y Twelve leave to rely upon Mr Petrovski's affidavit, with the exception of that one paragraph. 41So far as concerned the proposed evidence of Mr Koutsouklakis, Mr Amirbeaggi informed me that Mr Koutsouklakis was not prepared to swear an affidavit on behalf of Y Twelve and that he would attend during the hearing in response to a subpoena. The question of Mr Koutsouklakis's evidence can be dealt with at the trial if and when he appears in response to that subpoena. 42I appreciate that the allegation made by Mr and Mrs Ingram against Y Twelve is grave. In effect, the allegation is one of fraud. 43I also appreciate that refusal of leave to rely upon the affidavits of, in particular, Mr Salmon and Mr Rufford, will have the effect that Y Twelve will be "shut out" from adducing evidence which may be relevant, perhaps critically relevant, to Y Twelve's defence of the claim made against it. 44However, the responsibility for that lies entirely at the feet of Mr Salmon and Mr Rufford. 45Y Twelve has had every opportunity to adduce this evidence. It failed to comply with numerous directions of the Court, including the guillotine order. No adequate explanation was offered. 46For those reasons, on 15 November 2013, I made the following orders: (1)Grant leave to the first defendant to rely on the affidavit of Blagojce Petrovski sworn 31 October 2013 except for paragraph 66. Leave is granted subject to all other objections which can properly be taken to Mr Petrovski's affidavit. (2)The Notice of Motion filed today is otherwise dismissed with costs.