Lowe v Pascoe

Judgment 1At the time of his unfortunate illness, Smart AJ had heard but had not decided an application by Shiu Shing (Sunly) Sze Tu, the fifth defendant, and Shiu How (Gordon) Sze Tu, the sixth defendant, to re-open their case to tender five cash payments journals and an expert report in relation to the journals by Jason J Murray of 18 January 2011. 2Having been nominated as the judicial officer before whom the proceedings were to be listed under the Civil Procedure Act 2005, s 88(1), I directed the parties to file and serve an outline of submissions of no more than five pages identifying any evidence, submissions or law upon which they relied in support of their respective positions as to the part heard application of Sunly and Gordon. 3The parties have done that. Geoffrey Lowe, the first plaintiff, and Mary Lowe, the second plaintiff, wrote submissions opposing the application. Margaret Sze Tu (Margaret), the second defendant, and Helen Sze Tu (Helen), the third defendant, wrote submissions basically supporting the submissions of Sunly and Gordon. 4I reserved the question whether any of the witnesses should be recalled for examination or cross-examination. I have decided I do not need to take that course. 5The parties addressed the authorities on re-opening a case. It was pointed out that there may be a distinction between an application before delivery of reasons for judgement and an application made thereafter. In Smith v New South Wales Bar Association (1992) 176 CLR 256 at 266-267 the plurality said: "It is again necessary to distinguish between the considerations which may bear on a decision to re-open and the processes involved in reconsideration once a case has been re-opened. If an application is made to re-open on the basis that new or additional evidence is available, it will be relevant, at that stage, to inquire why the evidence was not called at the hearing. If there was a deliberate decision not to call it, ordinarily that will tell decisively against the application. But assuming that that hurdle is passed, different considerations may apply depending on whether the case is simply one in which the hearing is complete, or one in which reasons for judgment have been delivered. It is difficult to see why, in the former situation, the primary consideration should not be that of embarrassment or prejudice to the other side. In the latter situation the appeal rules relating to fresh evidence may provide a useful guide as to the manner in which the discretion to re-open should be exercised. But those considerations bearing on re-opening are not decisive of the question whether, a matter having been re-opened by reason of error, further evidence can be called." (Footnotes omitted) 6This dichotomy was recognised by Clarke JA with whom Mahoney and Meagher JJA agreed in Urban Transport Authority of NSW v Nweiser (1991) 28 NSWLR 471 at 478-479: "It is the fact, as Sheppard J observed in Joyce [v Government Insurance Office of New South Wales (Supreme Court of New South Wales, Sheppard J, 21 July 1976, unreported)], that there are a number of decisions which support the view that the principles relating to the calling of fresh evidence on appeal are relevant when what is under consideration is an application to re-open. That view may be correct where the application to re-open is made after the delivery of judgment but I can see no justification for importing those principles into an application to re-open which is made before the hearing is concluded." And reference was made to Smith. 7Smart AJ delivered reasons for judgment on 7 May 2010 (Lowe v Pascoe [2010] NSWSC 388) and on 25 June 2010 (unreported). 8The only order made in the May judgment was that a copy of the judgment be sent to the Australian Taxation Office (ATO). 9In the June judgment, Smart AJ made a declaration as to the existence of a partnership between Mr and Mrs Lowe, Margaret, Helen and Janet McNamara, the fourth defendant, the late Kut Sze Tu (KST) and the late Chow Fung Chun. His Honour also ordered that a copy of the judgment be sent to the ATO and made directions for the further hearing of the case. 10If there had been further content to the May judgment and the June judgment, the case would nonetheless continue because of his Honour's order separating the determination of liability from the determination of quantum and his order of a separate hearing of eight questions on liability. 11In O'Toole v Charles David Pty Ltd (1991) 171 CLR 232 at 245, Mason CJ cited with approval this passage from the judgment of Diplock LJ in Fidelitas Shipping Co Ltd v V/O Exportchleb [1966] 1 QB 630 at 642: "Where the issue separately determined is not decisive of the suit, the judgment upon that issue is an interlocutory judgment and the suit continues. Yet I take it to be too clear to need citation of authority that the parties to the suit are bound by the determination of the issue. They cannot subsequently in the same suit advance argument or adduce further evidence directed to showing that the issue was wrongly determined. Their only remedy is by way of appeal from the interlocutory judgment and, where appropriate, an application to the appellate court to adduce further evidence: but such application will only be granted if the appellate court is satisfied that the fresh evidence sought to be adduced could not have been available at the original hearing of the issue even if the party seeking to adduce it had exercised due diligence." See, also, Brennan J at 260. 12Had it been appropriate to deal with the application as one of re-opening it is my view that the proceedings do not fall within the category of a re-opening application after delivery of reasons for judgment. 13The reasons for judgment granted no relief and the proceedings were not concluded. Even if there had been a decisive determination of the eight issues identified by Smart AJ the proceedings would not have been concluded since there was to be a separate hearing on quantum. 14If it were appropriate to regard the matter as a re-opening application what was earlier said by Clarke JA in Nweiser at 478 is pertinent: "The principle which should guide the court in determining whether to grant an application for leave to re-open is whether the interests of justice are better served by allowing or rejecting the application as the case may be. No doubt it is relevant to take account of a number of matters such as likely prejudice to the party resisting the application and the reasons why the evidence was not led in the first place, but there is not, in my opinion, any hard and fast rule which requires the court to reject an application where the decision not [to] call the witness in the party's case was a deliberate one. Of course that does not mean that that is not a very relevant consideration. It is. Where, for instance, a decision was based on tactical grounds it may be difficult to resist the conclusion that the interests of justice were better served by the rejection of the application. But even in that circumstance there may be cases in which it is felt that the client whose application it is should not have to suffer for his or her counsel's deliberate decision. Where the decision is not made for tactical reasons and is based on a mistaken apprehension of the law or the facts the case is more appropriately to be considered as one in which the application has resulted from an error by counsel." 15But this is no longer an application to re-open. A fresh trial has been ordered, limited to three issues. The question is whether the cash payments journals and the report of Mr Murray should be admitted as evidence in the fresh trial. 16I see no reason why the cash payments journals should not be admitted in the fresh trial. The three issues the subject of the fresh trial are: "(a) the dissolution of the partnership; (b) the fiduciary duties, if any, owed by the late Kut Sze Tu to the plaintiffs and the breaches of any of those duties; and (c) whether three properties identified by his Honour in his order were held on trusts alleged in the statement of claim." 17The three properties were at Haig Street, Maroubra purchased for $129,000 in December 1978; a property at Maroubra Road, Maroubra Junction purchased for $585,000 in February 1983; and a property at Queen Street, Campbelltown purchased in July 1988 for $1,580,000. 18The partnership operated two businesses, Yee Sing Butchery (YS Butchery) and Wing Yuen Tai Grocery (WYT Grocery). The plaintiffs allege that KST had insufficient funds to purchase the three properties and must have used undisclosed profits of the partnership to acquire them. 19There is a dearth of available financial records. The five journals partially fill a void. They take the form of a cash payments journal recording payments by cheque or cash and attributing them to expense heading. 20They are not cash receipts journals recording the receipts of the businesses and attributing them to sales and other sources. 21But the journals do contain monthly bank reconciliation statements that identify an opening cash book balance at the beginning of the month to which is added the monthly deposits and from which is subtracted the monthly payments, thus arriving at a cash book balance at the end of the month. 22That figure is reconciled to the bank statement by deducting unpresented cheques from the bank balance at the end of the month. 23The cash payments journals cover the YS Butchery business from August 1975 to October 1980 and the WYT Grocery business from August 1975 to October 1980. 24The journals assist in determining the accuracy of the income tax returns and financial statements of the respective businesses; whether the tax returns are likely to be reliable; the manner in which the initial capital to purchase and start the respective businesses was obtained and from whom; the amounts accruing to any loan account at various times; partnership contributions and entitlements, including entitlements as capital and loan accounts and the repayments of such contributions or lack thereof; moneys available to the partnership to purchase the Haig Street and Maroubra Road properties; and payment of wages and drawings of the various partners, or lack thereof. 25The evidence is relevant to the question of fiduciary duties, if any, owed by KST to Mr and Mrs Lowe, breaches of any of those duties and whether the three properties are held on trust. Indirectly they may be relevant to the question whether the partnership should be dissolved. 26As relevant evidence the cash payments journals are admissible in terms of the Evidence Act 1995, s 56(1). 27Mr and Mrs Lowe oppose the tender of the journals on the basis that they were available but not tendered by the defendants at the trial before Smart AJ. 28That was a key part of Mr and Mrs Lowe's submissions to Smart AJ on the application to re-open. Sunly found at least some of the journals in 2007 and made a deliberate decision not to produce them. He said he spoke with Margaret and Helen and one or the other of them said he should not produce the documents. 29He looked at the journals again in the course of the litigation but decided not to produce them. He said he was advised by his then counsel that it was too late. 30It was only when he changed solicitors that a third supplementary list of documents discovering the five cash payments journals was served in December 2010. 31Those matters may have been determinative of an application to re-open. But while still significant they are not so telling when a fresh trial has been ordered. 32And there are countervailing circumstances. The cash payments journals are predominately in the handwriting of Mrs Lowe who obviously knew of their existence yet she never mentioned them in giving discovery. 33So far as the report of Mr Murray is concerned, Mr and Mrs Lowe produced extensive written submissions in opposition to the re-opening application before Smart AJ. They contained extensive objections to the report. In my view they are matters for challenge by cross-examination and address. 34It was submitted before Smart AJ that there was not a high degree of probability of different findings by the court if it were to receive the new evidence. 35That was an issue germane to the application to re-open. It is not an issue relevant to a fresh trial where relevance is the key concept. 36Mr Murray was cross-examined at some length in relation to alleged shortcomings in his report. Mr and Mrs Lowe have had the advantage of that cross-examination. 37And if Mr Murray is called in the fresh hearing they will have the further advantage of cross-examination. 38In a fresh hearing relevant evidence is admissible as on a hearing de novo except to the extent to which the court gives directions as to the evidence to be used in the fresh trial and, in particular, gives directions that all or part of the evidence given in the previous trial is to be taken to be evidence in the fresh trial without the need for the witnesses to be recalled; or gives directions that all or any of the witnesses are to be recalled for examination or cross-examination, or both, either generally or as to a particular question or questions in the proceedings, pursuant to the Civil Procedure Act, s 89. 39In my judgment the five cash payments journals and the report of Jason J Murray of 18 January 2011 should be admitted into evidence in the fresh hearing and I so direct.