Background
2The first appellant (Quarter) brought proceedings in the High Court of Solomon Islands against the first respondent (Allardyce) and two of its directors, the second and third respondents (Mr Beverley and Mr Minchin respectively), arising out of contracts connected with logging, selling and exporting timber.
3Quarter was successful at first instance and obtained judgment against each of the respondents for sums of US$2,733,936.54 and AU$51,923.18.
4However, that judgment was set aside on appeal. An important issue at both the trial and the appeal was the credibility of the second appellant (Mr Gibbs). The trial judge accepted the evidence of Mr Gibbs. However, the Court of Appeal of Solomon Islands accepted evidence that cast doubt on the credibility of Mr Gibbs, including the fact that there was a serious question that at least one of the file notes which he claimed was contemporaneous had been falsified. The conclusions of the Court of Appeal were in the following terms:
"[27] In the way the case came to be decided, the fundamental question at trial was reduced to one of credibility; that is, whether Ronald Gibbs or Beverley was to be believed in the competing versions which they each gave of events and conversations in 1996 and 1997, but principally with respect to what was said on the occasion when the Contract ex 1 was signed on 21 February 2007. In relation to all these matters Brown J emphatically preferred the evidence of Gibbs to that of Beverley. His Lordship was unfavourably impressed with Beverley's attitude to his duty of discovery, especially his failure to admit or to produce the Itochu agreements of 1996. In this context, the learned Judge formed a distinctly adverse view of Beverley's demeanour, referring variously to his 'overweening pride' and 'apparent disdain', his 'dogmatic and patronising manner', and 'his prevarication in cross-examination'.
[28] Some, perhaps many, of these comments may have been justified, as a reading of the transcript tends to confirm. Yet, despite reminding himself not to be diverted from the primary task of finding the relevant facts in issue, it is evident that his Lordship was strongly influenced by Beverley's forensic deficiencies, to which he reverted more than once and at length in the course of his reasons. They were all matters that a trial Judge may legitimately take into account in determining issues of credibility. It nevertheless remains true that in litigation like this, which required clear proof of misrepresentations, the plaintiff was obliged to establish his case on the strength of his own evidence rather than weaknesses in that of his opponent, or supposed character defects in the personality of its leading witness.
[29] His Lordship was not merely entitled but required to make findings of credibility and, if thought fit, to express them as he did in strong language. It should, however, be borne in mind that the witnesses were speaking about events and conversations that had taken place some eight or nine years before trial, and almost as long before they would first have been asked to recall details of the incidents. Faced with the inevitable problem of failing memories, his Lordship preferred the evidence of Ronald Gibbs to that of Beverley. His main reason for doing so was that Gibb's account was supported by contemporaneous file notes, whereas Beverley's was not.
[30] Having set out in his reasons an extract from cross-examination that extended over some nine pages concerning 'The Itochu deal' that was said to affect Beverley's credit 'fatally', Brown J went on (vol 1, at p217) under the sub-heading Competing issues of credit to make some further observations on that subject. We set out verbatim the following passage from his Lordship's reasons:
'The material on which the plaintiff has relied is principally that from the records of the defendants. So the credit of respectively Mr Beverley and Mr Ron Gibbs whom have been contrasted by Mr Sullivan need to be looked at with any supporting documentary material in mind. The material which undermines Mr John Beverley's credit has been exhaustively elicited by Mr King as the trial progressed. The material which undermined Mr Ron Gibbs credit was that contemporaneous note where Gibbs included Mr Wilkie as a participant in a meeting when he clearly wasn't there. That is somewhat inexplicable but as I have said, I do accept the practice of Gibbs to make file notes.'
[31] The contemporaneous file note in which Gibbs included Wilkie as 'a participant in the meeting' purported to be a brief note of the critical meeting on Friday morning 21 February 1997, at which the Contract ex 1 was concluded and signed. The meeting was held at Mr Wilkie's house in Sydney. Present there were Mr Gibbs and Mr Hayes, solicitor, on behalf of Quarter, and Mr Beverley and Mr Minchin on behalf of Allardyce. Also present, according to Mr Gibbs's file note, as well as his affidavit and oral evidence at the trial, was Mr Howard Wilkie. It is desirable that the file note, which was tendered, be set out in full:
'ALLARDYCE FILE NOTE:
Went with David Hayes to Howard Wilkie's place today to sign the agreement with Allardyce. John Beverley, Devon Minchin and Howard and Dorothy Wilkie present. Beverley reported everything was fine with Dakolae project. He said that the necessary approvals were in hand and that the agreement with land owners was being finalised as per the heads of agreement they had sent us. He said that this was a formality as land ownership was not in question. I asked him about timber cutting licence and log export licence. No problems anticipated. I also commented about the inclusion of a second ranking floating charge in the agreement instead of a bill of sale over the equipment as previously suggested by them. My comment was that I hoped that this clause would not need to be used. Devon Minchin said everything would be fine. Agreement was signed by myself and David Hayes for our side and by Beverley and Minchin for their side. Mention was made of need to have the agreement stamped. John Beverley will do this.
RHG21/2/97'
[32] The fact was, however, as was independently proved and accepted by the Judge, that, on arriving at Mr Wilkie's house on Friday morning 21 February, the four visitors discovered Mr Wilkie was not there. He had been rushed to hospital with a heart complaint. His wife, Mrs Wilkie, was there only briefly before leaving for the hospital. It having been arranged that the meeting take place at the Wilkie house, it proceeded as planned, but without Mr Wilkie. The final draft of the Contract was given to Gibbs and Hayes, who read it. There was some discussion about various matters, before the Contract was signed and witnessed as already described. Surprisingly perhaps, Mr Hayes, the solicitor, evidently made no notes of the meeting; at any rate, he gave no evidence about the conversations of that morning, although he was, we were told, present throughout the trial.
[33] Despite its being put to Gibbs in cross-examination that Mr Wilkie was not present at the meeting but was in hospital on 21 February, Mr Gibbs remained adamant that Wilkie was there. He said that he, Gibbs, personally prepared the file note and arranged for it to be typed on returning to his office later that day. He subsequently used the note to refresh his memory when compiling his affidavit of evidence for the trial. Furthermore, on the following Monday morning, 24 February, Beverley from his hotel in Sydney sent a fax to Gibbs to discuss postponing another meeting which they had arranged to hold that day. The fax begins:
'Howard [Wilkie] is back home and I hope to see him tomorrow afternoon if he is feeling okay'.
[34] From that part of the fax, Mr Gibbs would have been clearly reminded on Monday 24 February that Mr Howard Wilkie had been absent from home on the occasion of the meeting on the previous Friday 21 February. After receiving that fax at 9:34 am on the Monday, Gibbs himself sent a fax saying that he would not phone Howard or Dorothy 'as they both need some quiet...' Having accepted that in fact Wilkie was not present at the Friday meeting, Brown J nevertheless continued to regard Gibbs's evidence as reliable because of the support he thought it derived from the contemporaneous file notes. Accordingly, he preferred Gibbs's accounts of that and other meetings and events rather than that of Beverley with respect to the same matters.
[35] As appears from the foregoing extract from his reasons, Brown J disposed of this inconsistency in Gibbs's file note and evidence quite simply as being 'somewhat inexplicable'. It plainly merited that description. More to the point, it was in fact unexplained. No attempt was made by the plaintiff at trial to find any plausible explanation for it. On appeal, Mr King of counsel for Quarter suggested that perhaps Gibbs had dictated the file note a week or so after the meeting and had simply overlooked Wilkie's absence from the meeting. This seems improbable; but in any event it is contrary to Gibbs's own assertion in evidence that he had prepared the note on returning to the office on the same day. On reflection, there is, we consider, no acceptable explanation of how this error crept into the file note, except the one suggested by [senior counsel] for the appellant. It is that it was in fact not a contemporaneous note as claimed, but a later fabrication made at a time sufficiently remote from the event for Gibbs to have forgotten about Wilkie's absence from the Friday meeting as well as the reason for it. He must have made the file note later on without referring to the contemporaneous faxes of Monday 24. No other explanation for it has been suggested on appeal.
[36] We reach this conclusion with some regret, for it has grave and far-reaching implications for the fate of the appeal. If Mr Gibbs was prepared on one occasion to support his evidence by falsifying a note, there is reason to suspect he might have been prepared to do so on other occasions too. [Senior counsel for the respondents] took us to further examples that he claimed exhibited features similar to the file note of 21 February 1997. One was a file note dated 20 September 1996 in which Gibbs states that Beverley was 'pushing for an answer' to his fax of 15 September. In fact, it appears that the answer had already been supplied on 17 September 1996, which casts suspicion on the authenticity of the file note of 20 September 1996. Then there is a note of a meeting with Beverley held on 31 December 1999 (or it may have been 30 December 1999) in which Gibbs records his having given Beverley a letter dated 22 December addressed to him and Minchin. When called for, and produced by the plaintiff at the trial, the letter ex 22 turned out to be the original, with Gibbs's original signature on it. Plainly, the original letter cannot have been sent as claimed in the file note.
[37] We do not think it is necessary on this appeal to reach a final conclusion about these matters of fact. Suffice to say that they raise serious questions about the correctness of the trial Judge's decision to accept the reliability of Mr Gibbs's evidence by reason of the support for it his Lordship thought it gained from documentary material in the form of file notes. We have thought it right to express ourselves cautiously on this matter because we now see no feasible alternative to the process of sending this action back for retrial."
5After referring to cases including Fox v Percy [2003] HCA 22; (2003) 214 CLR 118, the Court of Appeal concluded as follows:
"[41] Considered by these standards, and despite the traditional reluctance of appellate courts to interfere when confronted by factual findings resting on credit, we are persuaded that in this case the trial judge's assessment of the credit worthiness of Mr RH Gibbs is falsified by an indisputable fact; that is to say, the witness's erroneous claim concerning the presence of Mr Wilkie at the meeting on 21 February 1997. The impact of that error cannot be confined to the specific event or conversation to which the particular file note dated 21 February 1997 relates. His Lordship's acceptance of Gibbs's general practice of making file notes carries by implication the further finding that in the Judge's view they were contemporaneous and accurate. Otherwise they would have been worthless as aids to determining credibility. His conclusions on the matter flowed through not only to other file notes, but to Gibbs's evidence generally. Conversely, it helped to determine his Lordship's overall preference for his evidence over against that of Beverley. The case is therefore one in which the relevant credibility finding is, within the meaning of the authorities referred to, one that is contradicted by an 'incontrovertible fact'; or that was arrived through 'disregard of a material fact'; or is 'falsified' by a fact that is 'indisputable'. The delay of 18 months in giving judgment in this case is another factor that weighs against unquestioning acceptance of credibility findings on this appeal. See the discussion of the English and Australian authorities in Expectation Pty Ltd v PRD Realty Pty Ltd (2004) 140 FCR 17, at 32-35.
[42] It follows that the appeals of each of the three appellant defendants must be allowed and the judgments against them set aside. Because we have in mind that, in the case of at least two of the defendants, re-trials must be ordered, we have been cautious in stating our own views on contentious issues of fact that will fall for determination by another Judge in the future. We would have preferred, if possible, to have saved something from the wreck. But the influence of credibility on the Judge's findings generally and on his perceptions of the case as a whole are too far-reaching to admit of a half-way house, if any were legally possible. As well in this context, we feel unable to part from this matter without some comment on the quality of the reasons for judgment on which the decision is based. In all, they extend over some 90 pages of typescript. They are, we regret to say, so replete with unnecessary and confusing repetitions, lengthy extracts from the transcript, obscurities of language, and grammatical and other solecisms, as to leave the meaning unclear and in some places incomprehensible. There are also inconsistencies in some findings that are nowhere resolved. The result is to raise the suspicion that the reasons may have been dictated sporadically at intervals over the period of 18 months since trial, and then delivered without first being read through and edited or corrected and fully integrated as a whole. Identifiable mistakes of fact and law are so numerous as to raise the question whether, even apart from the issue of credibility, the judgment could have been allowed to stand.
...
[44] Consistently with our wish to avoid observations on facts that will be submitted to for re-trial on a future occasion, we will try to avoid comments that go beyond the bare allegations pleaded in para 52 of the statement of claim, and the findings made at the trial on this occasion. The main point to be noticed is that in essence the representations are alleged to have been made orally by Beverley to Gibbs and Hayes on the occasion of the meeting on 21 February 1997, when the Contract was concluded and signed at Wilkie's house in Sydney. It was very much this occasion on which, at the trial, competing claims of credit became critical to proof of each of the alleged representations. For the reasons we have given in relation to the credit findings made in favour of Gibbs, these allegations will necessarily fall to be tried and determined again when the matter comes to be re-heard. We therefore refrain here from commenting further on those issues."
6In the result, the Court of Appeal allowed the appeal with costs, set aside the verdict and judgment of the High Court and dismissed the claim against Mr Minchin. The Court ordered that Quarter pay Mr Minchin's costs of and incidental to the action, including reserved costs, and ordered that the costs of Allardyce and Mr Beverley abide the event of a new trial.
7Subsequently an order for security for costs was made against Quarter. Quarter failed to provide the security and Allardyce made an application seeking to have the action dismissed for want of prosecution.
8On 20 May 2009 Goldsbrough J dismissed Quarter's claim for want of prosecution and ordered that the costs of Allardyce be paid by Quarter and Mr Gibbs. The power to order Mr Gibbs to pay the costs was contained in r 24.18(f) of the Solomon Islands Courts (Civil Procedure) Rules 2007 (SOL), which empowers the court to make a costs order against a person who is the effective controlling mind of a body corporate against whom a costs order is made. In his judgment at par [5] Goldsbrough J recorded that an application had previously been made for leave to serve Mr Gibbs with the application to dismiss the claim.
9Goldsbrough J also recorded in par [34] of his judgment that Mr Gibbs was brought into the matter on the question of costs. His Honour noted that Mr Gibbs stated that he was the controlling mind of Quarter.
10A copy of the order of Goldsbrough J dated 22 May 2009 is Annexure A to this judgment.
11An appeal from the order of Goldsbrough J was dismissed by the Court of Appeal of Solomon Islands: Quarter Enterprises Pty Ltd v Allardyce Lumber Company Ltd [2009] SBCA 15. The Court expressly rejected an argument that there was no power to make a costs order against Mr Gibbs. McPherson JA, who delivered the judgment of the Court, put the matter as follows:
"[10] The order that was made on 20 May 2009 determined several matters. In addition to dismissal of the action, the defendants' costs of the first trial, which were assessed and fixed at the sum of US$419,053.26, were ordered to be paid within one month of the order, together with the costs of the application itself fixed at SB$35,800. The order that these costs be paid jointly and severally by the plaintiff and Gibbs was challenged in ground 3 of the draft appeal. Gibbs, of course, was not a party to the action as originally constituted, but was added only on the matter of costs. Rule 24.17 provides that a court must not make an order for costs in a proceeding against a person who is not a party to it except in accordance with rule 24.18. That Rule (24.18) authorises the court to make an order, including an indemnity costs order:
'(f) for costs against a person who is the effective controlling mind of a body corporate against whom a costs order is made'.
[11] An order with respect to the costs of the appeal had been made against the plaintiff by the Court of Appeal in its order of 12 March 2008. As to the remaining requirement of Rule 24.18(f), at the hearing before Goldsbrough J, Mr Gibbs himself asserted that he was the controlling mind of the plaintiff. When, as the learned Judge records, Mr Hayes for the plaintiff sought to stop him from making this concession, Mr Gibbs persisted with it. Quite apart from this statement, there was evidence at the first trial that, in the absence of Mr Gibbs, no decision could be taken by the plaintiff. His Lordship's conclusion that Rule 24.18(f) was available here was therefore correct. Ground 3 in the plaintiffs written submission is that an order of the kind made against Gibbs may not be, or ought not to have been, made retrospectively after the trial; but it is quite clear that such an order is within the contemplation of Rule 24.18, as can be seen, for example, from the terms of Rule 24.18(c). It provides for an order against someone who has committed an abuse of the court's process that caused or inflicted cost upon a party to the proceeding. That is something that, of course could ordinarily be determined only after the trial was over.
[12] Among the various paragraphs of Rule 24.18 there are some others that the defendants claim are applicable to the conduct of Gibbs at the first trial. They also suggest that the order against him was justified at common law independently of the Rule: See Aidin Shipping Co Ltd v Interbuilt Ltd [1986] 1 AC 965, and Aerolift International Ltd v Mahoe Heli Lift Ltd [2001] SBHC 139. It is not necessary to pursue these submissions in detail because the jurisdiction under Rule 24.18(f) is plainly apparent in this instance. In Carborundum Abrasives v Bank of New Zealand [1992] 3 NZLR 757, 764, Tomkins J said in effect that the corporate 'veil' is not readily removed; but the potential exceptions to corporate personality recognised in Rule 24.18 are statutory and quite specific. It may be added that some of the plaintiffs written submissions in para 11 appear to be directed to orders for security for costs, which is not the issue at this juncture. We consider that his Lordship did not exercise his discretion incorrectly in deciding that Mr Gibbs ought be ordered to pay costs along with the plaintiff. There are limits on the extent to which the corporate veil is capable of protecting individual wrongdoers: see Standard Chartered Bank v Pakistan National Shipping Corporation [2003] 1 AC 959. It is just such an exception that has now been enacted in Rule 24.18(f). It follows that Ground 3 of the draft cannot be sustained."(Emphasis in original)
12Subsequently, an order was made pursuant to s 12 of the Foreign Judgments (Reciprocal Enforcement) Act (SOL), the Solomon Islands equivalent to the Act, issuing to the first and second respondents a certified copy of the judgments and relevant orders, together with a certificate showing particulars of the balance of the judgment debt in the sum of US$315,118.93. A copy of the certificate is Annexure B to this judgment.
13On 12 August 2010 Davies J ordered that the judgment of Goldsbrough J be registered under Pt 2 of the Act. Unusually, the appellants appeared by counsel and made submissions in opposition to its registration. Notwithstanding, Davies J ordered that the appellants were entitled within 28 days after service upon them of the notice of registration to apply to set aside the registration.
14The appellants made such an application. The primary judge permitted them to reagitate many of the arguments made before Davies J but ultimately dismissed the application. The appeal is brought from that dismissal.