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[2016] FCA 1118
Federal Court of Australia
2016-09-01
Charlesworth J
Original judgment source is linked above.
CHARLESWORTH J: 1 By an Amended Interlocutory Application dated 18 August 2016, the appellant, Mr Psevdos, seeks leave to adduce further evidence on this appeal. He also seeks leave to issue four subpoenas with a view to obtaining the further evidence he proposes to adduce. By one subpoena Mr Psevdos seeks to compel the production of that part of a document containing material in respect of which legal professional privilege is claimed by the respondent, the Commonwealth Bank of Australia (CBA). I will refer to that document as the RiskinSite Report. By the remaining three subpoenas, Mr Psevdos seeks to compel the attendance of three witnesses to give evidence "to verify the veracity of the evidence before the Honourable Court". The three proposed witnesses, Mr Peter John Marshall, Mr Robert Charles Ralston and Mr Michael Skates are officers or employees or otherwise representatives of CBA. 2 Before turning to the orders sought, it is necessary to traverse some of the history between Mr Psevdos and CBA.
Background 3 In February 2015, CBA and Mr Psevdos were respectively the plaintiff and defendant in an equitable priority dispute tried in the Supreme Court of South Australia. They each alleged competing equitable interests in the nature of mortgages over real property owned by a third party and located in the Bugle Ranges. The interest asserted by Mr Psevdos is alleged to have arisen in connection with a loan contract between the registered proprietor of the property and Mr Psevdos "as Trustee of the Orio Investment Trust" (Trust). The loan was said to have been advanced by Mr Psevdos in his capacity as Trustee of the Trust. CBA was not a party to that loan contract. Under the terms of the Orio Trust Deed, Mr Psevdos assumed personal liability for the debts or liabilities that he incurred in his capacity as Trustee of the Trust, although I note that issue is contentious on this appeal. 4 The trial proceeded over four days before the Honourable Justice Parker of that Court. On the final day of the trial, Mr Psevdos abandoned substantive pleas in his Defence and otherwise sought not to challenge the evidence of CBA. On 30 April 2015, the Supreme Court delivered judgment in favour of CBA and made an indemnity costs order against Mr Psevdos in respect of the whole of the action: Commonwealth Bank of Australia v Psevdos [2015] SASC 66, at [25] - [26] (the Costs Order). The reasons for judgment record that Mr Psevdos did not oppose an indemnity costs order being made against him. Mr Psevdos was represented by counsel for the purposes of that trial. Prior to the delivery of judgment in that action, Mr Psevdos had made an application to reopen his case to adduce further evidence and to cross examine a witness called by CBA, including a proposed addressee of a subpoena on this appeal, Mr Peter John Marshall. That application was dismissed. 5 Mr Psevdos filed a Notice of Appeal. He was ordered to pay security for costs on the appeal, which he did not pay. The appeal has since lapsed under the Supreme Court Civil Rules 2006 (SA). I should note that although Mr Psevdos submitted before the learned primary judge that the appeal was capable of being revived, he has not made any application for it to be reinstated. I accept that as Mr Psevdos is presently a bankrupt, the Bankruptcy Act 1966 (Cth) would prevent him from commencing that appeal, even in his capacity as a Trustee of the Trust. 6 Following judgment in the Supreme Court proceedings, CBA pursued the quantification of its costs in accordance with the Supreme Court Civil Rules 2006 (SA). At a hearing before Master Dart of the Supreme Court conducted on 18 September 2015, Mr Psevdos, by his solicitor, consented to an interim allocatur in partial satisfaction of the Costs Order in the amount of $120,068.98 (the Allocatur). The Allocatur was not expressed in terms limiting or excluding Mr Psevdos' personal liability. It is Mr Psevdos' position on this appeal that he consented to the issue of the Allocatur not in his personal capacity but in his capacity as the Trustee of the Trust. Execution of the Allocatur was stayed, by consent, until 30 October 2015. No appeal was commenced against the issue of the Allocatur. 7 On 2 November 2015, CBA issued a bankruptcy notice to Mr Psevdos in the amount of $121,121.64 (Bankruptcy Notice). That sum comprises the amount specified in the Allocatur together with interest. On 20 November 2015, Mr Psevdos made an urgent application to stay the Alloctatur, which he ultimately did not press. That application was dismissed on 24 November 2015. 8 Mr Psevdos then commenced proceedings in the Federal Circuit Court to set aside the Bankruptcy Notice. That application was dismissed by Registrar Colbran on 14 December 2015. The time for compliance with the Bankruptcy Notice expired that same day. 9 CBA filed a creditor's petition in the Federal Circuit Court on 17 December 2015 (Petition). The act of bankruptcy alleged on the petition was Mr Psevdos' failure to comply with the Bankruptcy Notice. 10 By an application commenced in the Federal Circuit Court on 4 January 2016 (and amended on 6 January 2016), Mr Psevdos made an application for review of the decision refusing to set aside the Bankruptcy Notice. Judge Heffernan of the Federal Circuit Court dismissed that application on 28 April 2016: Psevdos v Commonwealth Bank of Australia [2016] FCCA 978 (Review Decision). Mr Psevdos then commenced an appeal against that decision in this Court on 19 May 2016. On 27 July 2016, I made declaratory orders to the effect that the appeal commenced by Mr Psevdos from the Review Decision was stayed and then abandoned by the operation of s 60(2) and s 60(3) of the Bankruptcy Act 1966 (Cth): Psevdos v Commonwealth Bank of Australia [2016] FCA 844. 11 Meanwhile, on 26 May 2016, Mr Psevdos filed a notice of opposition to the Petition on the grounds inter alia "going behind the judgment" and "Respondent as trustee". It appears from submissions made by Mr Psevdos before the Federal Circuit Court that he sought to have that Court go behind the substantive judgment in the Supreme Court proceedings on the alleged ground that the judgment was affected by "fraud and collusion". On 6 June 2016, Judge Heffernan made a sequestration order against Mr Psevdos' estate (Sequestration Order). Relevantly, the learned primary judge said (Commonwealth Bank of Australia v Psevdos [2016] FCCA 1480 at [24]): As to the submission that I should look behind the judgment, I am not satisfied that it is necessary or appropriate in this matter that I should do so. I note the decision of Wren v Mahoney [(1971-1972) 126 CLR 212] where it was held that where a judgment has been determined as a result of proceedings in open Court, it requires exceptional circumstances to look behind it. I am not satisfied that such circumstances exist. 12 As to the allegation that the debt forming the basis of the Petition was not owed by Mr Psevdos personally, the learned primary judge in Psevdos v Commonwealth Bank of Australia [2016] FCCA 978 (at [24]) accepted that Mr Psevdos had entered the relevant loan contract in his status as Trustee of the Orio Investment Trust. However, the learned judge rejected the contention that Mr Psevdos was not liable to pay the sum specified in the Allocatur and, thereby, in the Bankruptcy Notice (at reasons [30]). 13 This appeal was commenced by Mr Psevdos on 27 June 2016. It is an appeal from the Sequestration Order founded on the Petition which identified the sum specified in the Allocatur (plus interest) as the debt owing by Mr Psevdos to CBA. The grounds of appeal are lengthy. Not all of the grounds are relevant to the determination of the Amended Interlocutory Application. It is sufficient to note for present purposes that Mr Psevdos alleges that the learned Federal Circuit Court judge erred in failing to find that he was not personally liable on the Allocatur. There are a number of grounds of appeal relying on the same proposition, most of which are fairly summarised in [8 XII], which states: Therefore the Respondent has not obtained a final judgement or final order against Mr Psevdos in his personal capacity the nature of which can be enforced through bankruptcy proceedings. (original spelling and grammar retained) 14 It is also alleged, relevantly, that the learned primary judge erred in determining that it was not necessary or appropriate to go behind the Supreme Court judgment. The particulars of the ground of appeal on this issue do not directly seek to impugn the Allocatur by Master Dart with Mr Psevdos' consent. Instead, it is alleged that the learned primary judge erred in failing to go behind the reasons for the Honourable Justice Parker's judgment in allowing CBA's claim for substantive relief in the underlying property dispute concerning the Bugle Ranges property.
The orders sought 15 The orders sought on the Amended Interlocutory Application are expressed, relevantly, in the following terms: l. Leave be granted to introduce new evidence on appeal. 2. Leave be grated to issue subpoenas to compel the attendance of Mr Peter John Marshall, Mr Robert Charles Ralston and Mr Micheal Skates to verify the veracity of the evidence before the Honourable Court on a date to be determined. 3. Legal professional privilege pertaining to the document referred to as the RiskInSite report dated 22 October 2013 (incident ID: IN-018181) be refused. 4. Leave be grated to issue a subpoena to compel the production of the RiskInSite report in its entirety devoid of the words 'subject to legal professional privilege' reviling the narrative as it was written by Mr Micheal Skates as at 22 October 2015. … 7. The Applicate to pay the travel costs and incidentals (food, drink and taxi transportation) of Mr John Peter Marshall, Mr Robert Charles Ralston and Mr Micheal Skates not exceeding $1500.00. (original spelling and grammar retained) 16 Mr Psevdos annexes to his supporting affidavit a redacted version of the RiskinSite Report. It is common ground that the redacted document was discovered and produced to him by CBA in the course of the Supreme Court proceedings. 17 Mr Psevdos acknowledges that, if he were in possession of an unredacted version of the RiskinSite Report so as to be in a position to tender it, the document in that form would constitute further evidence on this appeal in the sense that the complete document was not before the primary judge upon the hearing and determination of the Petition. 18 The stated purpose for calling Mr Marshall, Mr Ralston and Mr Skates is to have each of those witnesses "verify the veracity of the evidence before the Honourable Court". That is, with respect, a peculiar phrase, particularly in circumstances where CBA has neither adduced nor sought to adduce any evidence in this Court in the relevant sense. Interpreting the phrase beneficially toward Mr Psevdos, I proceed on the basis that Mr Psevdos seeks to cross examine each of the witnesses in relation to evidence given by them at least in the Supreme Court proceedings and (at least) in connection with the subject matter in dispute in that action, namely the parties' competing propriety claims over the Bugle Ranges property. Evidence adduced for that purpose would constitute further evidence on the appeal in that such evidence could not have been before the learned primary judge on his determination of CBA's Petition.
The application to adduce FURTHER evidence - principles 19 This Court has the discretion to receive further evidence on the appeal: s 27 of the Federal Court of Australia Act 1976 (Cth) (FC Act). Section 27 of the FC Act is silent as to the matters which are to govern the exercise of the discretion. The discretion is to be exercised judicially and consistently with the judicial process: Water Conservation and Irrigation Commission (NSW) v Browning (1947) 74 CLR 492 at 504-505 (Dixon J). In CDJ v VAJ (1998) 197 CLR 172 Gaudron J said, in connection with a provision conferring a relevantly equivalent discretion on the Family Court of Australia (at [55]): The fact that the power to admit further evidence is conferred on a court exercising appellate jurisdiction is of conservable relevance. More particularly, it is relevant that it is a power to be exercised after a hearing conducted in accordance with procedures that allow the parties to put their case and, also, to answer the case made against them. That consideration requires that, ordinarily, further evidence should not be admitted on appeal if it was available, or could reasonably have been obtained, at the time of the hearing. … 20 McHugh, Gummow and Callinan JJ said, of the same provision (at [116]): The failure to have adduced the evidence before the primary judge will be a variable factor, the weight of which will depend upon all the other factors pertinent to the case. Where the evidence has been deliberately withheld, the failure to call it will ordinarily weigh heavily in the exercise of the discretion. In other cases, the failure to call the evidence even if it could have been discovered by the exercise of reasonable diligence may be of little significance. No invariable rule concerning the failure to call the evidence can or should be laid down in view of the wide discretion conferred on the court by the section. 21 In Shannon v Commonwealth Bank of Australia (2014) 318 ALR 420, the appellant sought leave pursuant to s 27 of the FC Act to lead "further" evidence on an appeal against a sequestration order on the grounds, among others, that he had been denied procedural fairness when his adjournment application before the primary judge was refused. Logan J emphasised (at [78]) that good reason must be demonstrated as to why further evidence should be received. In the same case, Flick and Perry JJ said (at [127]): … The application to adduce 'further' evidence was tantamount to an invitation to this Court to revisit the findings of fact made by the primary Judge, not upon the evidence before that Judge, but upon the basis of 'further' evidence. To accede to such an application too readily would be tantamount to impermissibly shifting the arena of dispute from a primary judge to an appellate court: compare cf. CDJ v VAJ (1998) 197 CLR 172 at 202; Freeman v National Australia Bank Ltd (2003) 2 ABC (NS) 32 at 48; [2003] FCAFC 200 at [66] per French, Cooper, Rd Nicholson JJ. 22 Rule 36.57 of the Federal Court Rules 2011 (Cth) provides that an application to lead further evidence on an appeal must be accompanied by an affidavit explaining inter alia the further evidence sought to be adduced and the grounds of appeal to which the application relates. Compliance with that rule facilitates the objective that an applicant show that the evidence is credible and probative of an issue in the trial and, if accepted, likely to effect the result of the proceeding: see Watson v Australian Community Pharmacy Authority and Others (2012) 206 FCR 365, [110] (Lander, Jessup and Foster JJ).
Consideration 23 It is a unique feature of Mr Psevdos' application that he does not presently have in his possession the further evidence he seeks to adduce on the appeal. Nor is Mr Psevdos in a position to give a meaningful summary of the testimony that would be given by the three proposed witnesses, assuming that he was to be granted leave to issue subpoenas to them, and also assuming that he was to be granted leave to cross examine the witnesses on limited topics or otherwise at large. 24 In an affidavit sworn on 27 November 2015 in support of his application to have the Bankruptcy Notice set aside, Mr Psevdos deposed to matters arising in the Supreme Court proceedings in connection with the Bugle Ranges property. He claimed that it was the CBA's case at trial that "the deposit of five titles pertaining to the security property was made with its authorised purported employee" Mr Peter Marshall. He stated that it had come to his attention after the conclusion of evidence in the Supreme Court proceedings that Mr Marshall was not an employee of CBA but an independent contractor. He states that he had brought Mr Marshall's true employment status to the attention of the Honourable Justice Parker by making an application to adduce further evidence in those proceedings on 29 April 2015. Mr Psevdos goes on to state: 42. To wit: the application mentioned above was unsuccessful. Mr Marshall's employment status is questionable and when that fact was drawn to the attention of the Court, the Honourable Justice Parker deemed it irrelevant on 30th April 2015 and then proceeded to deliver his Judgment. His Honours decision to proceed regardless of fact has disturbed me greatly. 43. The non-discloser of Mr Marshall true employment status at the trail was unfair and deceitful by design I believe. The expression 'by design' is employed in this affidavit with the intention to mean: the non-discloser was as a result of a plan to conceal the fact. (grammar and emphasis retained) 25 I should say that Mr Psevdos' submissions before me used the phrase "fraud" in the same sense described in that passage of his affidavit. It is apparent from that evidence that Mr Psevdos subjectively believed, from at least 29 April 2015, that the evidence given in the Supreme Court proceedings was intentionally false. That is the same subject matter in respect of which Mr Psevdos now seeks to cross-examine Mr Marshall on this appeal, again assuming he could compel the attendance of that witness by the issue of a subpoena. 26 In his grounds of appeal before this Court, Mr Psevdos contends that the learned primary judge erred in declining to go behind the Allocatur and to accept that judgment and associated interest as satisfactory proof of the debt owing to CBA. The appeal, to that extent, is an appeal against the exercise of a discretion, albeit a discretion in the limited sense described by Barwick CJ in Wren v Mahony (1972) 126 CLR 212. After reviewing the authorities concerning the duty of a bankruptcy court to determine whether there is, in truth, a debt owing to a crediting petitioner, Barwick CJ said at 224-5, (Windeyer and Owen JJ agreeing): It is not the law, in my opinion, that whether in any case the Court of Bankruptcy will consider whether there is satisfactory proof of the petitioning creditor's debt is a mere matter of its own discretion. Nothing in Corney v Brien lends support for such a view. Rather the emphasis is upon the paramount need to have satisfactory proof of the petitioning creditor's debt. The Court's discretion in my opinion is a discretion to accept the judgment as satisfactory proof of that debt. That discretion is not well exercised where substantial reasons are given for questioning whether behind that judgment there was in truth and reality a debt due to the petitioner. (citation omitted) 27 Insofar as the judgment appealed against involved the exercise of a discretion in that limited sense, Mr Psevdos has the onus of establishing appealable error in accordance with the principles explained in House v The King (1936) 55 CLR 499 at 504-5 (Dixon, Evatt and McTiernan JJ). He must otherwise establish that the Allocatur was not satisfactory proof of the alleged debt and that the learned primary judge erred in failing to identify that there were substantial reasons for questioning it. He might in that regard submit that the learned primary judge expressed or otherwise applied the test wrongly. I am not presently concerned with that question. In the present context, these interrelated questions involve the evaluation of evidence, the ascription of weight, the finding of facts and (at least where oral testimony is concerned) the assessment of credibility: all being incidents of the exercise of original jurisdiction in respect of which appellate courts must ordinarily exercise restraint: Fox v Percy (2003) 214 CLR 118. 28 Mr Psevdos makes the present application in circumstances where he did not seek to compel the attendance of the witnesses before the Federal Circuit Court. He alleges no breach of the rules of procedural fairness in the Federal Circuit Court denying him the opportunity to do so. 29 I am satisfied that Mr Psevdos was in just as good a position in the Federal Circuit Court to make an interlocutory application of the kind now made before this Court, and yet he has not advanced an adequate explanation as to why he did not do so. Notwithstanding his status as a self-represented litigant, I infer from the content, volume and tenor of Mr Psevdos' evidence and submissions that he continually alleged fraud on the part of CBA, its employees and other representatives from the outset of the original property dispute. His failure to seek to adduce or obtain (by compulsion or otherwise) the proposed evidence in the Federal Circuit Court cannot be regarded as a mere oversight on the part of a self-represented litigant. As a consequence, this Court on appeal is denied the benefit of any assessment by the learned primary judge of the evidentiary material now sought to be introduced, and the benefit of reasons for any discretion that might have been exercised by reference to it. 30 In all of the circumstances, the receipt of further evidence on this appeal would undermine the important demarcation between the exercise of original and appellate jurisdiction to such an extent that leave to adduce the evidence should be refused. 31 There are further reasons for refusing the relief sought. 32 Put simply, Mr Psevdos does not know the content or effect of the evidence upon which he proposes to rely. He seeks not only to adduce further evidence on the appeal, but to use the processes of this Court to compel the production of a document and to compel the attendance of witnesses to testify so that the forensic value of the evidence may be revealed to him. His actual purpose for compelling the attendance of the witnesses is not correctly stated on the Amended Interlocutory Application. Mr Psevdos does not seek to have the witnesses "verify the veracity of the evidence before the Honourable Court". On the contrary, Mr Psevdos seeks to challenge the veracity of the evidence given by the witnesses in other proceedings so as to persuade this Court that the Supreme Court judgment was affected by fraud and that the learned primary judge erred in failing to act on that basis. 33 Further, Mr Psevdos has not articulated with any precision how any revelation concerning Mr Marshall's status as an independent contractor would alter the circumstance that the Supreme Court found in favour of CBA in relation to the substantive property dispute before it nor how any new revelation about Mr Marshall's contractor status would have affected the Costs Order (which he did not oppose) nor how any such revelation would have affected the issue of the Allocatur (to which he consented). It is conceivable that a party in Mr Psevdos' position might not have consented to a costs order had he or she known that evidence advanced by a party in the proceedings was incorrect or deliberately false, but he has not sought to give evidence before this Court to that effect. It is to be borne in mind that it is the Allocatur that comprises the judgment debt upon which CBA's Petition was based. 34 I turn now then to the CBA's claim for legal professional privilege in relation to the RiskinSite Report. Further, I am not satisfied that CBA's claim for legal professional privilege in respect of a part of the RiskinSite Report is improperly made. In an affidavit sworn on 5 August 2016 in opposition to this application, CBA's solicitor, Ms Jones, deposed: I was the practitioner responsible for the claim of Legal Professional Privilege in respect of the Document. The section that is the subject of the redaction comprises a reference to legal advice received by CBA from my firm, Fisher Jeffries (Gadens), the effect of which is restated in the Document. I was instructed that CBA maintained the claim of privilege at the time of the relevant redaction. I am instructed that CBA continues to maintain the claim of privilege. 35 No application was made by Mr Psevdos to cross-examine Ms Jones, nor was I invited by either party to inspect for myself the unredacted portion of the document so as to make my own assessment as to whether or not, on its terms, it evidenced a proper or improper claim for legal professional privilege. Mr Psevdos' submissions in connection with the document were to the effect that the document is a business record, being a category of document in respect of which he submits a claim for legal professional privilege could not properly be made. In that regard, he submitted that the test for the existence of legal professional privilege was one directed at the dominant purpose of the document itself. 36 I reject Mr Psevdos' submission that a document having the status of a business record cannot contain material subject to legal professional privilege. To conclude that a document meets the description of a business record within the meaning of the Evidence Act 1995 (Cth) or the Evidence Act 1929 (SA) is to say nothing more than that the document may, subject to other criteria, be admissible in evidence for a hearsay purpose. The rules concerning the admissibility of hearsay evidence have no bearing on the question of whether a communication is subject to legal professional privilege. They are unrelated concepts. 37 Further, Mr Psevdos' submissions fail to recognise that legal professional privilege attaches to a communication and not to a document. Where a document contains material that would, if disclosed, cause confidentiality to be lost in an otherwise privileged communication, then a claim of legal professional privilege may be made in respect of that part of the document so as to preserve the confidentiality in the communication. The redaction of the document in those circumstances involves the proper exercise of a legal right and does not, of itself, evidence a motive to conceal evidence of fraud. 38 Nor am I satisfied on the material referred to by Mr Psevdos that there is proven conduct on the part of CBA that is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect in the sense described in Mann v Carnell (1999) 201 CLR 1 (at [29]). 39 Finally, it is to be borne in mind that Mr Psevdos obtained the redacted RiskinSite document under compulsive disclosure processes in the Supreme Court prior to judgment being entered in those proceedings. Mr Psevdos has not exhausted his rights to challenge the sufficiency of CBA's disclosure or production in that Court. 40 There is, on this appeal, no compulsive process requiring the disclosure of the RiskinSite report, whether in its redacted or unredacted form, rather Mr Psevdos requires leave to issue a subpoena so as to compel its production. 41 The grant of leave should, in all of the circumstances be refused irrespective of whether the content of the document is subject to legal professional privilege. 42 The Amended Interlocutory Application should be dismissed. 43 In dismissing the Amended Interlocutory Application, I should not be understood as making any determination of the merits of Mr Psevdos' grounds of appeal. It remains to be determined whether the learned primary judge erred in finding that there was, in truth and reality, a debt owing to CBA by Mr Psevdos, and whether the learned judge erred in declining to go behind a judgment of the Supreme Court when deciding that question. Those issues are to be determined on this appeal by reference to the material properly before the learned primary judge at the time that the Sequestration Order was made. 44 I will hear the parties as to costs. I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Charlesworth.
Psevdos
Commonwealth Bank of Australia
[2015] SASC 66
(1998) 197 CLR 172
(2003) 214 CLR 118
(1936) 55 CLR 499
(1999) 201 CLR 1
(2014) 318 ALR 420
(1947) 74 CLR 492
(2012) 206 FCR 365
(1972) 126 CLR 212