RDCW Diamonds Pty Ltd v DA GLORIA

LEGISLATION CITED : Foreign Judgments Act (1991) (Commonwealth) Civil Procedure Act 2005

Delfino v Trevis (No. 2) [1963] NSWR 194 Godard v Gray (1870) LR 6 QB 139 CASES CITED : Carl Zeiss Stiftung v Rayner & Keeler Ltd (No.2) [1967] 1 AC 853 Malaysia-Singapore Airlines Ltd v Parker (1972) 3 SASR 300 Ainslie v Ainslie (1927) 39 CLR 381 General Steel Industries Inc v Commissioner for Railway (NSW) (1964) 112 CLR 125

PARTIES : P - RDWC Diamonds Pty Ltd D - Rogerio Fabio Correia DA GLORIA

COUNSEL : P - Mr A Blank D - Mr J Dupree

SOLICITORS : P - Mr Todd Porman (Morgan Lewis Attorneys) D - Mr Salvatore Russo (Russo & Partners)

-12- IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

RDWC DIAMONDS PTY LTD v Rogerio Fabio Correia DA GLORIA 11747 of 2005

1 HIS HONOUR: The substantive application before this Court is the enforcement of a judgment of the South African High Court Witwatersrand Local Division (hereinafter the "South African Court"), which was a default judgment said to have been issued on 10 May 1999 against the defendant in these proceedings, who was also the defendant in the proceedings in South Africa.

South African Proceedings 2 The plaintiff is a company incorporated in the Republic of South Africa and it issued proceedings on 28 August 1998 in the South African Court. The initiating summons to those proceedings was served on the defendant's attorneys on 31 August 1998 and those attorneys signed for the receipt of it. 3 On 4 September 1998 the defendant served a Notice of Intention to Defend the South African proceedings, which Notice of Intention to Defend submitted to the jurisdiction of the South African Court. 4 The Notice of Intention to Defend was followed by the defendant serving and filing a Defence and Cross-Claim. The Cross-Claim was in two parts and alleged that the plaintiff was involved in wrongfully arranging for the arrest of the defendant and that the plaintiff did not properly account for profits and expenses.

5 The defendant, in the Cross-Claim, sought the appointment of a liquidator in order that a proper account could be taken and there could be a distribution of the assets of the business venture undertaken by both the plaintiff and the defendant. 6 The plaintiff denied the Cross-Claim on 17 November 1998. On 20 January 1999 a Notice of Hearing Date was fixed and that notice was served (and received) on 26 January 1999. Conveniently, each of the pleadings and notices in the South African proceedings were required to be, and were in fact, signed by the opposing party, acknowledging receipt and the date of receipt. The date fixed for hearing was 10 May 1999. 7 On 2 March 1999 the attorneys for the plaintiff received a Notice of Withdrawal of Attorneys of Record dated 24 February 1999. As previously stated, at the date fixed for hearing, default judgment issued for the sum of US$927,000 plus interest from 11 September 1998, at 15.5 percent per annum until the date of payment. New South Wales Proceedings 8 The proceedings in the New South Wales were commenced in the Common Law Division by summons filed on 3 May 2005. On 11 May 2005 the defendant filed a Notice of Appearance. There were a series of skirmishes relating to procedural matters, which require explanation. 9 By letter dated 7 June 2005, the defendant's solicitors sought further and better particulars, which were not provided. The defendant filed a Notice of Motion seeking orders for the provision of further and better particulars. A Registrar of the Court ordered that the plaintiff file and serve any evidence by 1 August 2005 and that the Notice of Motion stand over, for hearing before a Registrar on 10 August 2005.

10 On 21 July 2005 the plaintiff filed an affidavit of Todd Porman in support of its own motion for summary judgment returnable 10 August 2005. 11 On 28 July 2005 the defendant served a Notice to Produce. After further skirmishing the Registrar specially fixed the defendant's motion for particulars and the plaintiff's motion to set aside the Notice to Produce for 16 September 2005. The Registrar also set down for hearing the motion for summary judgment, for 6 October 2005. On 16 September 2005 Registrar Howell reserved judgment which was delivered on 23 September 2005 and which dismissed the defendant's Notice of Motion and the defendant's Notice to Produce. The defendant was ordered to pay the plaintiff's costs of both motions. 12 On 11 October 2005, the defendant filed a motion to review the Registrar's decision and a motion for the proceedings to continue on pleadings. Both motions were returnable on 21 October 2005. On 4 November 2005 Malpass Assoc J heard the motion for review and dismissed it. Malpass Assoc J further determined that the Registrar had power to hear the motion for summary judgment. The motion for summary judgment was listed for hearing before Registrar Howe on 15 December 2005 at which time the defendant objected to the Registrar hearing the matter and sought to have him recuse himself.

13 The matter was referred to the Prothonotary who referred it back to Registrar Howe. The Registrar listed the motion for the matter to continue on pleadings for hearing on 22 February 2006. On that date Registrar Riznyczak dismissed the motion. On 9 March 2006, the defendant filed and served a Notice of Motion to review the decision of the Registrar of 22 February 2006. 14 Finally, the latest review of the decision of the Registrar, together with the motion for summary judgment, was listed before me on 13 and 14 March 2006, at which time it was adjourned to be joined with any fresh applications, in or to the same effect as this matter, for hearing on 16 March 2006.

15 On 16 March 2006, after hearing full argument on all motions, I granted the plaintiff leave to file an affidavit relating to the current status of debt and gave the defendant leave to reply to any affidavits and, otherwise, reserved judgment. Pursuant to that leave, an affidavit of Todd Porman was filed on 17 March 2006, to which affidavit objection was taken. A further affidavit of Todd Porman was filed on 28 March 2006. On 7 April 2006, well outside the time permitted for the filing of any further affidavit, after contact from the Court, the solicitors for the defendant advised that they were "in the process of preparing an Affidavit in Response and hope to have it to you shortly." On 20 April 2006, the Court contacted the solicitors for the defendant again and directed that any further affidavit be required by 4 pm 21 April 2006. The Court was informed that the solicitor for the defendant was overseas and would be returning to the office on 26 April 2006. An affidavit was faxed to the Court in the evening of 26 April 2006. Evidence and Attitude of Parties 16 The plaintiff relies upon two formal affidavits sworn by Todd Porman. To the first affidavit of 21 July 2005 were annexed the aforementioned South African Court documents, described in the affidavit as "true copies of the following documents". After the affidavit was formally read, there was cross-examination of Mr Porman after which counsel sought to object to the paragraph of the affidavit describing the annexures and to the annexures themselves on the basis that Mr Porman could not attest to their truth as copies from personal knowledge. Lack of personal knowledge is not obvious from the affidavit. There had been no cross-examination of Mr Porman as to the extent of his personal knowledge of the documents annexed. The documents themselves purport to be Court documents. The cross-examination was not on the voir dire and the degree to which the witness could attest to the documents fitting the description in the affidavit was a matter on which the witness could give evidence and be cross-examined, but was not. I disallowed the objection. 17 For the plaintiff, the evidence before the Court proved, on the balance of probabilities, that the documents were copies of those giving rise to the proceedings before the South African Court, of the Notice to the Defendant of the South African proceedings, of the submission to the jurisdiction of the South African Court by the defendant, and of a judgment debt of US$927,000 plus interest as specified above.

18 South Africa is not a participating State for the purposes of the Foreign Judgments Act 1991 (Commonwealth) and the South African Court is, consequently, not a scheduled court for the purposes of that Act or the Regulations made pursuant thereto. Therefore, the plaintiff relies upon the common law for the recognition and enforcement of the judgment of the South African Court. 19 In the proceedings before this Court, the defendant relied upon an affidavit of Salvatore Russo sworn 17 February 2006. The form of that affidavit is, to say the least, unusual. The body of the affidavit, in its totality, states: "Refer Annexure 'A' - Affidavit". It then attaches a document titled "Annexure A", which commences with the words "I say on oath" but contains no jurat. The affidavit does not swear to the truth of the annexure. The annexure, of some six pages or 32 paragraphs, alleges the existence of a business relationship between the defendant and a Mr Sean Cohen, who was said to be a principal of the plaintiff. The annexure describes the circumstances in which the defendant obtained diamonds for the plaintiff and the arrangements for payment. Those circumstances include the defendant obtaining diamonds in Angola, bringing them into South Africa, and providing them to the plaintiff; the arrest of the defendant seemingly for customs offences; and the allegation that no monies were owing, at the time of the proceedings before the South African Court or at all. The annexure also alleges a suspicion on the part of the defendant that the plaintiff, or persons on its behalf, paid officials in South Africa to fabricate the claim and engineer the arrest of the defendant. 20 The annexure also alleges that a proper accounting did not occur in relation to the profits arising from the business relationship between the plaintiff and the defendant. 21 Paragraph 31 of the annexure is in the following terms: "I am instructed that my client has spoken to Mr Vanrhyn the solicitor he employed in South Africa and a conversation took place to the following effect: My client: 'Do you still have my file in respect of proceedings commenced by Rand Diamond Cutting Works?' Cohen: 'I don't think there is much of it still available as the matter is so old but I will make enquiries and get back to your solicitor in Australia.'" The reference to Rand Diamond Cutting Works is a reference to the plaintiff, RDCW Diamond Pty Ltd. Notwithstanding the terms of the annexure the Court assumes the reference to "Cohen" is actually a reference to Mr Vanrhyn.

22 It should be made clear that the whole of the annexure to the affidavit of Salvatore Russo purports to repeat instructions. Although there is no evidence of the source of these instructions, I will assume, although it is not stated in the annexure, that the instructions come from the defendant. The circumstances, day, date and time of those instructions are not given in the annexure. 23 The terms of paragraph 31 confirm that the defendant knew of the proceedings in South Africa and had engaged lawyers to act for him. 24 The defendant continued to press before the Court its claim that the proceedings should continue by pleadings and that the Court should require the plaintiff to file a Statement of Claim to which, it says, the defendant would file a Defence. Further, as I understand the submission, the defendant asserts that the plaintiff is neither suing on the original cause of action nor seeking to enforce the alleged judgment of the South African Court. 25 A fair construction of the summons supports the submission that the defendant is not suing on the original cause of action. The originating summons is in the following terms: "Pursuant to judgment granted against the Defendant in case number 21807/98 in the High Court of South Africa … an order that: 1.1 the Defendant pay to the Plaintiff an amount …" and thereafter the summons set out the monetary claim, the claim for interest, and costs of the South African proceedings and these. 26 While the terms of the summons could be more clearly drafted, the intention of the summons was to enforce in Australia the judgment obtained in the South African Court or, if it be different, to sue in Australia for a liquidated sum, being the judgment debt, a debt arising from the judgment of the South African Court, proof of which debt is the judgment in South Africa: see Delfino v Trevis (No 2) [1963] NSWR 194 at 196; Godard v Gray (1870) LR 6 QB 139 at 150. 27 With the exception of two matters, to which I will return, the affidavit of 27 April 2006, to which objection is taken, does little more than confirm, in better form, the instructions originally contained in the annexure to the earlier affidavit filed by the defendant. I take account of the fact that the later affidavit provides far more details, but essentially recites the same circumstances upon which the defendant earlier relied.

Principles to be Applied 28 Because a foreign judgment is not, under common law, a judgment of record, there is no merger of action and a suit may be commenced in New South Wales on the original cause of action, should the plaintiff so choose. If that course were taken, the plaintiff could then rely on one or more genus of estoppel to prevent a defendant from pleading defences that were either taken or could have been taken in the foreign proceedings: see Carl Zeiss Stiftung v Rayner & Keeler Ltd (No. 2) [1967] 1 AC 853.

29 In the proceedings before this Court, the plaintiff has chosen, as previously stated, not to bring a fresh action on the original cause of action but to bring an action for a liquidated sum relying on the foreign judgment. The plaintiff has shown that the South African Court had jurisdiction over the defendant at the time that the proceedings were commenced in South Africa and that the defendant submitted to the jurisdiction of the South African Court by the filing of an Appearance, a Defence and a Cross-Claim in South Africa: see Malaysia-Singapore Airlines Ltd v Parker (1972) 3 SASR 300. 30 On the material before this Court, there is no basis upon which the defendant can argue legitimately that the South African Court did not possess jurisdiction or that the judgment was not capable of being made by that Court. 31 With the exception of two matters earlier mentioned, all of the matters raised by the defendant, purportedly in defence to the summons in this Court, were matters raised by the defendant in the South African proceedings. With the exception of a defence based upon an allegation that the foreign judgment was obtained by fraud, or generally a defence based on fraud which was not available in the foreign proceedings, it is not open to a defendant to challenge the intrinsic merits of a foreign judgment by alleging that the foreign Court made a mistake as to the facts or the law: see Ainslie v Ainslie (1927) 39 CLR 381 at 402: "I recognise, of course, that a finding of a foreign Court, whether of fact or law, cannot usually be impeached when an attempt is made to enforce it elsewhere; but it will not be enforced if it can be shown that it was obtained by fraud, or that the foreign law, or at least some part of the proceedings in the foreign Court, is repugnant to natural justice…" (per Higgins J)

32 The plaintiff has established the foreign judgment; that no monies have been paid; that there has been no satisfaction of the terms of that judgment or any part of it; and that the debt is owed to the plaintiff by the defendant. In those circumstances, the plaintiff is entitled to judgment on the summons. I earlier mentioned two exceptions to which I would later return. The two exceptions are: that the default judgment is not due and payable; and that the defendant was in the process of preparation of an application in South Africa to set aside the default judgment. Is the Default Judgment Due and Payable?

33 The affidavit of Salvatore Russo of 27 April 2006 baldly alleges, in paragraph 29 thereof, "the Judgment Debt is not due and payable and that there is no debt due in respect of the subject matter in which the Plaintiff seeks (sic)". While the deponent makes clear that these are his instructions, no basis in fact or law is given for that assertion. The civil procedure in South Africa, particularly under the rules of the High Court of South Africa, are in general terms identical to procedures in all other common law countries. Once default judgment has been obtained it may be enforced by a writ of execution or otherwise and in the case of a liquidated sum usually by writ of execution. There is no material before the Court which suggests that the default judgment is unable to be enforced or does not create a debt. There is no material on which the Court could determined that the debt is not due and payable at this time. It appears to be due and payable on the face of the judgment.

34 The other issue, which I earlier described as an exception, was the application to set aside, which is alleged to be in the process of preparation for filing in South Africa. 35 As earlier stated, the default judgment was obtained on 10 May 1999. The defendants have had seven years in which to set aside the default judgment if they had so chosen. More strikingly, the defendants have had since 3 May 2005, when the summons was filed in this Court, to seek to set aside the default judgment in South Africa. As far as the Court is aware, as yet, the default judgment in South Africa has not been set aside and no application has been filed to achieve that purpose. On the material before me, the criteria, for the exercise by the Court of the discretion to stay its hand and not make orders, have not been satisfied. Furthermore, should the default judgment in South Africa be set aside, no doubt an appropriate application could be made in this Court to stay or set aside any New South Wales judgment or the execution of such judgment. Summary Judgment

36 The Notice of Motion filed by the plaintiff sought an order pursuant to Part 15 Rule 26 of the Supreme Court Rules, which, at the time the Notice of Motion was filed, was applicable. Since the date of the filing of the Notice of Motion, the Uniform Civil Procedure has come into force. Rule 15.26 of the Supreme Court Rules is the equivalent of rule 13.2 of the UCP Rules. It deals with the striking out of a pleading, not summary judgment. Uniform Civil Procedure Rule 13.1 deals with summary judgment (SCR Part 13 Rule 2). Nevertheless, since the Notice of Motion was filed, on 21 July 2005, it has been treated in the proceedings, and described by both parties, as a motion for summary judgment and the defendant could have been under no illusions as to the nature of the motion before the Court. The defendant submits that, because the plaintiff relies upon the wrong rule, the Court either should not or cannot grant summary judgment. The defendant suffers no denial of natural justice in these proceedings and was aware of the nature of the orders sought by the plaintiff. 37 There is no reason why, on the basis that the wrong rule has been specified, if there were otherwise grounds for the granting of summary judgment, summary judgement should not issue. 38 On the basis of the evidence before the Court, the plaintiff has shown a cause of action to which there is no defence. In circumstances where a foreign judgment is sought to be enforced and the only arguable matters raised are matters properly determined by that foreign judgment, or in those foreign proceedings, a sufficiently clear case has been made out within the Rules that there is no defence and the principles governing an application for summary judgment have been satisfied: see General Steel Industries Inc v Commissioner for Railway (NSW) (1964) 112 CLR 125. 39 The foreign judgment is in US dollars and it is appropriate that any order of this Court issue in US dollars. The foreign judgment orders the payment of interest at 15.5 percent per annum from 11 September 1998 and it is appropriate that an order be made for the interest up until the date of this judgment. Hereafter, interest will accrue at the rate applicable to a judgment of the Supreme Court and s.101 of the Civil Procedure Act 2005 applies. The interest payable under s.101 of the Civil Procedure Act is not to be calculated on the interest payable under the judgment of the South African Court. If not otherwise clear, interest is not payable on interest and, further, the interest payable under s.101 of the Civil Procedure Act shall be in substitution for and not in addition to any interest otherwise payable for the same period.

40 The summons also seeks costs of the proceedings in South Africa, but the sum contemplated by that order is not before this Court and I assume that such costs of the South African proceedings would be subject to taxation, or assessment, or agreement. It is inappropriate for this Court to tax or assess costs of the foreign proceedings. The amount of such costs is not a liquidated sum and will not be the subject of summary judgment. 41 Lastly, although not raised, it is unclear from the material before the Court whether the default judgment has determined the Cross-Claim in the South African proceedings. Of itself, this does not seem to interfere with that which this Court is doing. It is conceivable that default judgment could be issued in the proceedings without determining a Cross-Claim relating thereto. 42 For the above reasons I make the following orders: a the defendant shall pay to the plaintiff an amount of US$927,000; b the defendant shall pay interest on US$927,000 at the rate of 15.5 percent per annum from 11 September 1998 until the date of this judgment; c the defendant shall pay the plaintiff's costs, as agreed or assessed, of and incidental to these proceedings.

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