MORRISON -v- WOODTHORPE [No 2] [2022] WASC 373 (1 November 2022)

(a) Whether resolutions of directors of Nguvu purportedly appointing a third director (Mr List and Ms List being the only directors at the time of the purported appointment), reducing shares in Nguvu owned by Rowntry Ltd (a company controlled by Mr List) and subsequently forfeiting Rowntry Ltd's entire shareholding in Nguvu, and appointing Ms List managing director were valid?

(b) Whether if validly appointed as managing director of Nguvu, Ms List's authority extended to effecting the removal of the first plaintiff as a director of the second plaintiff.

1. In relation to the issue of Ms List's authority, the defendants place reliance on what has transpired in the litigation in the Eastern Caribbean Supreme Court. In November 2021 Mr List applied for and was granted an ex parte injunction restraining Ms List from undertaking certain activities in relation to the management of Nguvu. After an inter-partes hearing in December 2021, the injunction was varied to limit the restraint imposed on Ms List. In the course of reasons delivered for the variation of the injunction the court noted:[2]

Mr. List conceded that the day-to-day management has for some time now been in the hands of Ms. List. To grant such an injunction on the entire management of the affairs of BCM Investments Limited [now known as Nguvu Holdings Ltd] appears to me to be an inequitable exercise of the court's discretion.

1. The defendants contend that the concession made by Mr List in relation to the day-to-day management of Nguvu is an admission that supports Ms List's authority to exercise Nguvu's control of its shares in the second plaintiff to remove the first plaintiff as a director of the second plaintiff.
2. The same firm of international lawyers represents Ms List in the proceedings before the Eastern Caribbean Supreme Court as presently represents the defendants in the application before this court.

1. The substantive application was filed on 5 April 2022. It was supported by affidavits sworn by the first plaintiff and Mr List. The plaintiff's evidence has been supplemented by expert evidence on the law of St Kitts & Nevis.
2. On 27 April 2022 the defendants applied for a stay of the proceedings pending the outcome of the proceedings in the Eastern Caribbean Supreme Court. The application was supported by an affidavit by a lawyer instructed by the defendants. The affidavit attached an affidavit sworn by Ms List in the Eastern Caribbean Supreme Court proceedings. The application for a stay was dismissed by Master Sanderson on 9 June 2022.
3. At the hearing on 9 June 2022 the Master made directions for the application to proceed on pleadings. At that hearing senior counsel for the defendants informed the court that it was contemplated that at the final hearing the defendants would rely on the evidence of four witness of fact and one expert. Pleadings were subsequently filed and served.
4. On 4 August 2022 Master Sanderson made trial directions and thereafter the matter was listed for trial to commence on 14 November 2022.
5. On 8 September 2022 the defendants' present lawyers filed a notice of change of representation.
6. The plaintiffs have complied with the directions as to discovery and the trial directions. In contrast the defendants have not given discovery or complied with any of the trial directions.
7. In support of the adjournment application the defendants relied on a number of affidavits.[3] The plaintiffs relied on affidavits filed in support of the substantive application and one further affidavit in opposition to the application. The parties agreed that the objections that might otherwise be made to the affidavits would be taken into account in determining the weight to be attached to the evidence on the basis that the objections could be renewed at trial.

1. Order 34 r 4 of the Rules of the Supreme Court governs this application. The principles governing applications to adjourn a trial were considered by the Court of Appeal in Martincic v Marusco[4] and I adopt, without reproducing, the principles stated by the Court of Appeal.

1. The defendants contend that an adjournment is necessary to provide them with a sufficient opportunity to prepare and present their case and to facilitate a just and fair determination of the dispute. In support of that overarching contention the defendants argue:

(a) Their lack of readiness is attributable to the conduct of their former lawyers and it would be unjust to visit the consequences of that conduct on the defendants. In summary, the defendants contend their former lawyers stopped work in mid-August having not prepared any proofs of evidence, taken any steps to obtain expert evidence or taken any steps to give discovery. Further, the defendants say that they had not been informed of the trial dates.

(b) The plaintiffs have not demonstrated that they would suffer any prejudice by an adjournment of the trial and relisting it to commence shortly after the summer recess.

1. The plaintiffs challenge the factual foundation of the defendants' application and argue that even if there were delays by the defendants' former lawyers the defendants have had since 7 September 2022 to prepare for the trial. The plaintiffs argue that further delay will prejudice the plaintiff and Mr List by perpetuating the de-facto control of the second plaintiff and its subsidiaries by Ms List. Further, the plaintiffs argue that the adjournment of the trial is prejudicial to the administration of justice generally and is contrary to the overriding objectives of an efficient, expeditious, just and fair determination of disputes.

1. The following observations may be made about the fundamental premise on which the defendants' application is based, that is, the conduct of their former lawyers has deprived them of an opportunity to prepare and present their case.
2. First, the significance of the defendants' evidence that they had not been informed of the trial dates by their former lawyers is diminished by the following circumstances. First, they were Ms List's nominees to the Board of the second plaintiff, secondly, it is she and Mr List who are the protagonists in this dispute and thirdly, there is no evidence to suggest that Ms List was not aware of the trial dates.
3. Secondly, the plaintiffs' evidence supports the conclusion that the defendants' former lawyers stopped work because they were instructed to do so by Ms List. On 12 August 2022 a lawyer in Ghana representing Ms List sent an email to one of the defendants' then lawyers stating:[5]

I've been trying to reach Angela. As I mentioned in my earlier email she's been travelling until Monday evening. At this point, I would urge that we pause all work in order not to incur any additional fees until we have paid the outstanding invoices and had the call to discuss the case, role allocations, and the indemnity of the directors.

Also, I would urge that the directors remain in place while we resolve all the outstanding issues with respect to the fee payments and indemnity.

1. The lawyer replied by an email also sent on 12 August 2022 (copied to Ms List and each of the defendants) as follows:[6]

We will not be performing any more work on this matter until we hear further from you.

1. The evidence does not disclose what further communications, if any, took place between Ms List or her Ghanian solicitor, the defendants, and their then lawyers.
2. The defendants' counsel accepted that it was open to infer from the exchange of emails set out above that the reason why the defendants' lawyers did no further work in August 2022 was because they had been asked not to do so. In my judgment not only is that inference open but it is compelling. On the materials before the court the reason why the defendants' former lawyers did not undertake any preparatory work in the three weeks between 12 August and 7 September 2022 was because they had been instructed not to do so.
3. Thirdly, in the circumstances of this case, that proofs of evidence had not been prepared and an expert had not been retained by the defendants' former lawyers does not support the conclusion that those lawyers were delinquent in their conduct of the litigation. The position must be assessed in the context of the issues, the nature of the evidence that may be relevant to those issues and the work undertaken in relation to the proceedings in the Eastern Caribbean Supreme Court.
4. The defendants' counsel informed me that, in addition to giving evidence themselves, the defendants will call Ms List, Mr Jonathan Adongo, a manager who works with or who is an associate of Ms List who resides in Ghana, and one expert on the law of St Kitts & Nevis.
5. The issues in the substantive application primarily concern whether meetings of the board of directors of Nguvu were properly convened, whether the business purportedly transacted at those meetings was lawful and whether the steps taken by Ms List to remove the first plaintiff as a director of the second plaintiff were lawful. It appears that there is a documentary record of the relevant events. Ms List has sworn an affidavit in the Eastern Caribbean Supreme Court proceedings setting out her position in respect of those events. It is not unreasonable to assume that Ms List's affidavit evidence will form the foundation of her evidence in the present application.
6. It appears that any relevant evidence that the defendants themselves may be able to give is limited. There is nothing to suggest that they had any involvement with the affairs of any relevant company before being appointed to the board of the second plaintiff and the absence of proofs of evidence from them does not suggest a material deficiency in the management of the litigation on the part of the defendants' previous lawyers.
7. It is difficult to draw inferences from the absence of a proof of evidence from Mr Adongo without knowing more about the subject matter of his evidence. It is apparent from the defendants' evidence that Ms List has retained lawyers in Ghana who have participated in some way in the conduct of the dispute between Ms List and Mr List and it is not unreasonable to assume in the light of the email of 12 August 2022 that the Ghanian lawyers might have been responsible for the preparation of at least the first draft of a proof of evidence.
8. The defendants' counsel informed me that an expert had now been selected and a brief was about to be finalised. The expert evidence concerns questions of law relating to the administration of corporations incorporated in St Kitts & Nevis. My impression is that the issues on which opinion evidence is to be given are confined and not complex. Given that Ms List was represented by an international law firm in the proceedings in the Eastern Caribbean Supreme Court proceedings, who presumably would have been able to identify and assist in the briefing of an expert, the fact that no expert had been retained by 12 August 2022 is not a matter from which an inference adverse to the defendants' former lawyers can be drawn.
9. In the light of the observations above I do not accept the fundamental premise on which the defendants' application is based. The defendants (in reality Ms List) have had an opportunity to present their case. They did not take it.
10. The following further observations must be made.

(a) It is not correct that the plaintiff has not demonstrated prejudice. Any vacation of trial dates over opposition from a party who has not contributed to the reasons for an adjournment causes that party prejudice in terms of delay, inconvenience and costs. Moreover, in this case, as the plaintiffs submitted, on their case the delay that would be caused by an adjournment would perpetuate the unlawful de facto control of the company and its subsidiaries by Ms List.

(b) The defendants' lawyers had a period of six weeks between being instructed and making the application for a vacation of the trial dates in which to prepare. Whilst I appreciate the difficulty in taking over the conduct of litigation relatively shortly before the trial, given the confined nature of the issues, I am not persuaded that the defendants' lawyers have not had adequate time to undertake the tasks that the defendants complain were not undertaken by their former lawyers.

(c) As the plaintiffs' submitted, the exercise of the discretion to vacate trial dates involves more than balancing the prejudice that might be suffered by the applicant if the trial is not vacated against the prejudice suffered by the respondent if the trial is vacated. Fixing trial dates involves the allocation of scarce judicial resources and vacating dates close to the trial is prejudicial to the administration of justice generally. Late adjournments mean that other litigants, anxious to have their cases dealt with expeditiously, have been deprived of the opportunity of having their cases heard on those trial dates.

(d) In my assessment it is possible for the defendants to be ready for trial by 14 November 2022. What changes may be required in the trial directions to accommodate the defendants' self‑inflicted difficulties will be considered at a further directions hearing to be held on 4 November 2022.

1. The application to vacate the trial will be dismissed. The defendants must pay the plaintiffs' costs of the application to be taxed and paid forthwith.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[1] Affidavit of Belinda Sarah Giles affirmed on 25 October 2022, 46.

[2] Affidavit of Monica Hamid sworn on 22 April 2022, 111.

[3] Affidavit of Kevin Mark Woodthorpe sworn on 19 October 2022; Affidavit of Ryan Eamonn Lennon affirmed on 19 October 2022; Affidavit of Ryan Eamonn Lennon affirmed on 21 October 2022 and Affidavit of Ryan Eamonn Lennon affirmed on 26 October 2022.

[4] Martincic v Marusco [2016] WASCA 133 [44] - [47].

[5] Affidavit of Belinda Sarah Giles affirmed on 25 October 2022, 13.

[6] Affidavit of Belinda Sarah Giles affirmed on 25 October 2022, 13.