Lowe v Pascoe

Procedural history

1. These proceedings were commenced by summons on 16 August 2023. Reasons for decision of the Court of Appeal relevant to these proceedings, or at least, thought to be relevant to these proceedings were handed down on 27 November 2023: Lowe v Sze Tu as Administrator of the Estate of the late Fung Chun Chow; Lowe v Pascoe as Administrator of the Estate of the late Kut Sze Tu [2023] NSWCA 282. These proceedings had been adjourned by consent pending the outcome of both the Court of Appeal proceedings and an application for judicial advice that had been foreshadowed by Mr Pascoe.
2. After the Court of Appeal judgment, these proceedings were adjourned to 6 February 2024. Pleadings by way of points of claim and defence were ordered on 5 February 2024. The points of claim were served a fortnight late by the Lowes on 22 March 2024.
3. On 3 May 2024, the Court ordered Mr Pascoe to make any application for judicial advice by 14 May 2024. Mr Pascoe did so. On 18 June 2024, Hammerschlag CJ in Eq made orders to the effect that Mr Pascoe was justified in defending these proceedings and entitled to be reimbursed and exonerated out of the assets of the trust estate for his costs, charges, expenses and remuneration properly incurred in defending the proceedings.
4. Mr Pascoe filed his points of defence on 31 July 2024. It is what happened next that is germane to the present applications.
5. On 14 August 2024, the Court made orders by consent including that the plaintiffs should serve their affidavits and any expert evidence on which they proposed to rely by 11 October 2024. Five days after that deadline, on 16 October 2024, the Court made an order by consent extending the time for the plaintiffs to file and serve their lay and expert evidence to 12 November 2024. Over the opposition of the Lowes, an order was also made that they may not rely on any evidence served in default of the order to which I have just referred without leave of the Court.
6. The Lowes have still not served any evidence. It was that failure to comply with both of those orders which excited the motion that has been filed by Mr Pascoe, and in response that of the Lowes seeking leave to rely on evidence yet to be filed. It appears from the evidence of the Lowes' solicitor, Mr Nathan Mattock, that whatever evidence is proposed to be filed, being principally that from an expert accountant, is expected to be available to be filed by 21 February 2025.
7. As I have already noted, the parties have, in accordance with the orders of the Court, filed points of claim and points of defence. The essence of the Lowes' claim, as may be discerned from their points of claim, is that the Court of Appeal has declared two constructive trusts referred to as the "net proceeds trust" and the "profits trust". Mr Pascoe is to be criticised, according to the Lowes, as to how he has allocated his expenses and fees charged in relation to the administration of the trust estate committed to him by failing to distinguish consistently between expenses incurred and fees charged in respect of the administration of the estate at the heart of these proceedings, being that of the late Kut Sze Tu, and the trusts identified by the Court of Appeal.

Consideration

1. Intending no disrespect to the parties' thorough submissions, I do not propose to recite all of them here and will confine these reasons to the matters which I consider to be dispositive. However, I have carefully read and considered all of the written submissions and attended to the matters put to me orally today. The reasons for the decision to which the Court has come may be set out as follows.
2. To begin, I accept Mr Burnett's submission that the relevant period for assessing any delay is that which commenced when the Court ordered the plaintiffs to put on their evidence, that is to say from 14 August 2024. Those orders gave the Lowes approximately two months to file and serve their lay and expert evidence, that is by 11 October 2024.
3. Mr Mattock, the Lowes' solicitor, is an experienced commercial litigator. He has sworn an affidavit in support of his clients' application that they be given leave to rely on evidence served outside the time limited by the guillotine order to which I have referred above.
4. The first difficulty for the Lowes disclosed by Mr Mattock's evidence is that there is no explanation whatsoever for why it appears that no substantive work was done on preparing the Lowes' evidence during the first period of time afforded by the Court to file and serve that evidence. It was put from the Bar table, and I accept it as such from Mr Burnett on his instructions, that there was "general engagement" between the Lowes, their solicitors and Mr Armenis, the accounting expert, during that period. But in the absence of any evidence disclosing at all what was done in that period, the Court can only conclude, as it does, that no substantive work was undertaken during that period.
5. Mr Mattock's evidence discloses that it was on 15 October 2024, which I emphasise was four days after the evidence was initially due, that he had meetings with the accounting expert and counsel then engaged by the Lowes in the proceedings. In drawing that to attention, I accept Mr Mattock's evidence that the accounting expert had been retained in November 2023 and that there had been some meetings between him, the Lowes and counsel before the meeting on 15 October 2024. However, that does nothing to ameliorate the unsatisfactory nature of the Lowes' attention to these proceedings during the period when the Court required them to be preparing and serving their lay and expert evidence.
6. The next relevant period was that which commenced on 16 October 2024 when the Court made the further orders extending the time for service of the evidence to 12 November 2024. It was accepted by the parties that order was made by consent. The Court therefore infers and finds that it was made advisedly on the part of the Lowes and their advisers in the expectation that there could and would be compliance with that order. However, again, while some activity appears to have taken place according to Mr Mattock's evidence, no substantive work seems again to have been done for these reasons advanced by Mr Mattock: 34. On 16 October 2024, the Court made the following orders. (a) The time for the Plaintiffs to file and serve all lay and expert evidence on which they rely, be extended to 12 November 2024. (b) Plaintiffs may not rely on any evidence served in default of order 1 above without leave of the Court. 35. As a result of the meetings discussed at paragraph 33 above, I issued instructions to Mr Armenis to conduct further analysis. I continued to liaise with the Lowes regarding the expert evidence and the Proceedings generally. 36. On 5 November 2024, I attended a meeting with the Lowes and their counsel briefed on the matter, being Michael Hodge KC, Mr Santucci and Mr Rogers to consider the Proceedings and analysis that had occurred to date. 37. After that meeting I received instructions from Mr Lowe to contact the Administrator's lawyers about trying to resolve the Proceedings. 2 days later, Mr Lowe gave further instructions which were contrary to his original instructions regarding settlement as he wanted to consider some matters further and had further questions for me about the Proceedings. Between 5 November and 18 November, I continued to engage with Mr Lowe regarding his instructions on the Proceedings, the expert evidence and whether he wished to settle the proceedings. These discussions resulted in additional issues being raised by Mr Lowe for which it was necessary to provide further advice. As a result, I was unable to provide final instructions to Mr Armenis in relation to the work required to complete his expert's report, including any further factual matters or assumptions that has arisen out of events occurring in early November.
7. Pausing there, the Court is left with the position that over the two periods of time amounting to just over three months in which the plaintiffs were given to prepare their evidence, no substantive work appears to have been done to prepare that evidence. While the Court accepts that earlier delays in the proceedings were by consent while the Court of Appeal decision was awaited and the judicial advice application was sought, that does not completely exonerate the plaintiffs from an obligation to have been in a position to progress their evidence with the appropriate degree of alacrity once orders were made. It is, after all, the Lowes' case and the Court can only assume that having filed points of claim on 22 March 2024, the Lowes knew what their case was and were able to get on with providing the evidence for it.
8. This brings me to the next point. There is no doubt that the Lowes have had the advantage of being represented by experienced commercial solicitors and counsel. However, against that background, three observations need to be made.
9. First, proceedings which plainly depend on expert accounting evidence were commenced, at least on the evidence before me, without the prior input of an expert accountant. The failure to do so is itself a source of delay now. Had an accountant been retained before the proceedings were commenced and provided the kind of advice which the Court knows is commonly used by parties to frame their proceedings, it is difficult to imagine that the kinds of delays that have now occurred would have taken place.
10. I am able to conclude, as I do, that this is a case which must always have been understood to depend largely, if not exclusively, on expert evidence from the fact that I have been informed from the Bar table by Mr Burnett that the nature of any lay evidence was expected only to be documentary material to be attached to an affidavit of Mr Lowe to prove material that was to be inserted or relied upon in the accounting expert's report. In other words, this was a case which was going to rise or fall on the expert evidence.
11. Second, I accept Mr Stoljar SC's submission that even at this stage there is no substantive evidence of what Mr Artemis is really doing and what is the task that he has been given in preparing an expert report. No letter of instructions, whether in draft or final form, has been put before the Court. What the Court does have is Mr Mattock's evidence which I accept as far as it goes: "Mr Armenis' work has included considering 40 circulars issued by Mr Pascoe since 2005, considering impacts of certain events, including judgments, orders and correspondence, and further supplementary instructions considering alternative scenarios".
12. That is a description, with respect, at the highest level of generality and at this stage the Court would have expected, particularly in support of an application to file evidence well and truly out of time that, in the absence of the evidence itself, a more detailed explanation could have been given about what it was that the accounting expert was actually doing.
13. Third, even the work that is required to be done is expressed by Mr Mattock in the most general of terms: 47. I am informed by Mr Armenis and verily believe the following. (a) Mr Armenis and his team has performed the large majority of the analytical work required for the preparation of this report. (b) The next stage of Mr Armenis' work will involve: (i) translating that analytical information into a report in an admissible form; (ii) conducting a final line-by-line review of any spreadsheet, tables and the draft report; and (iii) liaising with Marque Lawyers in respect of a final review of the draft report.
14. Against the background of the three matters to which I have referred so far, the Court is well satisfied that its jurisdiction to dismiss the proceedings is engaged. That being so, it then becomes necessary for the Court to weigh the interests of both sides of the record in determining whether or not to grant relief as serious as dismissing proceedings before they have been able to be heard on their merits.
15. For Mr Pascoe, I accept Mr Stoljar SC's submission that there is a considerable public interest after more than 20 years that this Court appointed administration be brought to an end. That is particularly the case after the vast amount of litigation that has ensued over that period.
16. As far as the Lowes are concerned, an important and ultimately, in my respectful opinion, dispositive consideration is that they are unable to demonstrate any irremediable prejudice by the dismissal of the proceedings. There are four things to be said about that.
17. First, Mr Burnett fairly accepted that in the time in which he had been able to take instructions over an adjournment which I afforded him, neither he nor those instructing him had been able to identify any particular prejudice that would be suffered if the proceedings were dismissed. This was because to the extent that the Lowes have any rights in relation to the issues that they seek to raise in these proceedings, they are in the nature of the rights of beneficiaries to an account. That is the relief principally sought in the points of claim. However, that right can be prosecuted in the usual non-litigious way available to beneficiaries.
18. Second, whatever work has been done by the expert accountant would not be wasted. That is because that work can be deployed by the Lowes to take up whatever issues they have with Mr Pascoe with the benefit of the accounting expert's work to date. The important point for present purposes is that Mr Pascoe would be able to deal with that outside the context of litigation and without the costly intervention of the solicitors and counsel who are necessarily retained while these proceedings remain on foot.
19. Third, I accept Mr Stoljar SC's submission that there is no real indication by the Lowes of what their case really is. Beyond the assertion made in the points of claim, no example has been proffered of a particular allocation that is challenged or a class of expenses that has been wrongly applied as between the various trusts. Whatever work has been undertaken by the expert accountant, it does not seem to have put the Lowes in a position at this point to be able to give the Court the slightest indication of what his ultimate opinion on any question is, or even to inform the Court of what he has been asked to address.
20. The fourth point is closely aligned to the third. As Mr Stoljar SC has pointed out, there has already been an extensive enquiry conducted by Emmett AJA into the various trusts and Mr Pascoe's conduct of them. That enquiry led to a number of judgments by his Honour and then further consideration by the Court of Appeal.
21. The point for present purposes is that the Court accepts that the course of that enquiry gave the Lowes every opportunity to raise whatever concerns they had about the administration of the estate and trusts. The fact that they have already had an opportunity to raise the kinds of concerns which they apparently wish to raise in these proceedings, together with their inability to point to any specific concern that they now wish to raise, are very important matters in the Court's consideration as to why these proceedings can and should be brought to an end.

Conclusion

1. Accordingly, the Court proposes to dismiss the proceedings and to accede to the application that it be on terms that proceedings to like effect cannot be commenced again. However, to provide some small opportunity to the Lowes were something to emerge that could properly be the subject of further litigation, I propose to ameliorate the effect of that order in two respects. First, it would be necessary for them to have paid the costs of these proceedings. If that is satisfied then, second, they would be entitled to seek the Court's leave to commence proceedings to similar effect to these.
2. Mr Burnett properly, in my respectful opinion, made no submission against the proposition that it was appropriate for costs to be ordered against the Lowes on the indemnity basis.
3. The orders of the Court are: 1. Proceedings dismissed. 2. The plaintiffs are not to bring fresh proceedings or claim the same relief in fresh proceedings as that sought in these proceedings (or relief substantially to the same effect as that sought in these proceedings) unless: 1. they have fully discharged their obligation to pay the defendant's costs of these proceedings; and 2. they have the leave of the Court to commence any such fresh proceedings. 1. The plaintiffs are to pay the defendant's costs of these proceedings on the indemnity basis.

Amendments 03 February 2025 - Correction to list and marked as applications list DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 03 February 2025