Federal Court of Australia|1992-12-11|Before: Drummond J, Pincus J

Re Cyril Sharpe; Arthur Smith; John Burton and Patrick Keane v Kenneth Goodhew; Barry Day; Ian Barton; Ralph Roots; Barry Glover; Graham Smith; Stan Hardwick; Les Summers; PK Brady; Hughcombe Pty Limited; Michael Slade; Federated Engine Drivers and [1992] FCA 616 (11 December 1992)

Re: CYRIL SHARPE; ARTHUR SMITH; JOHN BURTON and PATRICK KEANE

And: KENNETH GOODHEW; BARRY DAY; IAN BARTON; RALPH ROOTS; BARRY GLOVER; GRAHAM

SLADE; FEDERATED ENGINE DRIVERS AND FIREMENS ASSOCIATION OF AUSTRALASIA;

QUEENSLAND BRANCH UNION OF EMPLOYEES; JACK KEVIN CAMBOURNE and VIC FITZGERALD

Judgments and Orders - order made for the taking of an account - directions subsequently given as to the transactions in respect of which account to be taken - accounting party seeking to dispute his liability to account - basis on which an account can be ordered under Order 39 of the Federal Court Rules - construction of order (by reference to reasons for judgment and evidence led at trial) to determine whether in relation to each transaction the subject of the directions there had been a determination of liability to account - certain directions set aside pursuant to Order 35 rule 7(2)(c).

Federal Court Rules O. 35 r. 7 and O. 39 rr. 1, 3 and 10

Australian Energy Limited v. Lennard Oil N.L. (No. 2) (1988) 2 Qd R 230

Kwikspan Purlin System Pty Ltd v. Federal Commissioner of Taxation 86 ATC 4602

R. D. Werner and Co. Inc. v. Bailey Aluminium Products Pty Ltd (1988) 80 ALR 134

Rapid Metal Developments (Australia) Pty Ltd v. Rosato (1971) Qdr 82

Sharpe v. Goodhew (1990) 33 IR 238

Solicitors for the First Respondent: Masinello and Associates

Counsel for Respondents by cross-claim: L. Boccabella

Solicitors for Respondents by cross-claim: Peter Channell and Associates

1. The order made by Pincus J on 25 November, 1991 that the

first respondent file and serve an account and verifying

affidavit regarding the following transactions be set

aside:

FUNDS DESCRIPTION AMOUNT

(a) J. Ware Metway account no. 168167285-6 cash

withdrawal 24/10/85 $500.00

(b) J. Ware Metway account no. 340105802-6 cash

withdrawal 20/03/86 $478.73

(c) J. Ware Metway account no. 340105802-6 transfer

to K.W. Wilson Metway no. 168171364-7 on

19/03/86 $15,534.69

2. The Registrar is to proceed to take the accounts directed

with respect to the following transactions only:

FUNDS DESCRIPTION AMOUNT

(a) N. Jackwitz Westpac account no. 510443, various

cash cheque withdrawals from 11/03/88 to

03/07/89 $51,264.50

(b) N. Jackwitz Westpac account no. 510443, various

cash cheque withdrawals from 11/03/88 to

03/07/89 $7,050.00

(c) N. Jackwitz Westpac account no. 510443, various

handybank withdrawals from 11/03/88 to 03/07/89

$2,900.00

(d) Suncorp undisclosed FEDFA account no.

20511118609, cash withdrawals between 19/08/85

and 26/02/86 $13,200.00

(e) Suncorp undisclosed FEDFA account no.

20511118609, cash withdrawals between 18/06/87

to 24/06/87 $3,800.00

(f) Transfer to K.W. Wilson (Goodhew account) on

23/07/87 $8,000.00

(g) Bass and Wilson account Metway no. 168171348-6

transfer to K.W. Wilson Metway account

168171364-7 on 12/01/87 $2,302.40

(h) K.W. Wilson Metway account no. 346286499-5, cash

withdrawals between 25/03/88 and 08/04/88

$8,000.00

(i) K.W. Wilson Metway account no. 346286499-5

transfer to K.W. Wilson Metway account no.

168171364-7 on 26/07/88 $500.00

3. It being conceded by counsel on behalf of the Federated

Engine Drivers and Firemens Association of Australasia

("FEDFA") that the accounts are to be taken on the basis

that there was in existence at all relevant times a

governing body of FEDFA with authority to bind FEDFA to the

application of its funds by the first respondent, the

Registrar is to take the accounts on the following bases:

(a) that it is not open to the first respondent to

dispute that he is liable to account to FEDFA in

respect of each of the transactions the subject

of the directions referred to in paragraph 2;

(b) that the Registrar shall have regard to any

evidence that either party may adduce relevant

to the question whether the governing body of

FEDFA for the time being was aware, either prior

to or after the event, of the particular

application that was made of the funds of FEDFA

which are the subject of the directions referred

to in paragraph 2 and whether any such

application of funds was expressly or impliedly

authorised or acquiesced in or ratified by that

governing body.

4. The taking of the accounts is to proceed before the

Registrar on a date to be fixed by him after completion of

the following steps:

(a) the first respondent is to file and serve

affidavits of all persons upon whose evidence he

intends to rely therein by Friday, 29 January,

1993;

(b) FEDFA is to file and serve affidavits of all

additional persons upon whose evidence it

intends to rely therein by Friday, 12 February,

1993;

(c) if either party intends to call a witness who is

not prepared to provide an affidavit, that

party, by the time already limited by this

order, shall serve on the other party a

statement summarising the evidence that party

expects to elicit from that witness.

5. There is to be no order as to costs in relation to the

proceedings of 23 November, 1992 and so much of today's

proceedings as relate to those proceedings.

Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

DRUMMOND J. This matter came before me by way of a request by the District Registrar for further directions as to the manner of taking an account. The account in question is that which Pincus J in his judgment of 1 June, 1990 ordered be taken by the District Registrar of what sum (if any) was due by the first respondent in the action, Mr Goodhew, to the respondent by cross-claim, Federated Engine Drivers and Firemens Association of Australasia Queensland Branch, Union of Employees ("FEDFA"). The judgment is reported as Sharpe v Goodhew (1990) 33 IR 238. His Honour adjourned for further consideration the question of the directions that should be given as to the mode of taking this account. On 25 November, 1991, Pincus J gave directions which included a requirement that Mr Goodhew file and serve an account and verifying affidavit regarding particular cash withdrawals from, and other transactions on, certain bank accounts.

2. In compliance with these directions, a large volume of material has now been filed by Mr Goodhew and FEDFA and both parties have informed the Registrar that they intend to call a number of witnesses to give oral evidence. It is because of the nature and complexity of the issues which the parties intend to raise on the taking of the account that the District Registrar has sought directions from the Court.

3. The chief question for my determination is whether, in view of Pincus' J order of 1 June, 1990, it is still open to Mr Goodhew to assert (as he has) that, with respect to a number of the transactions the subject of the directions of 25 November, 1991, he is under no liability to account to FEDFA.

4. By way of example, some of the directions related to three groups of withdrawals from a Westpac account no. 510443 in the name of "N. Jackwitz". Mr Goodhew deals with the "Jackwitz" account in paragraphs 4 to 18 of his affidavit filed in compliance with these directions. In essence, he alleges that another union official, Gannon, using the name of a deceased union member, Jackwitz, set up a contract in Jackwitz's name for the cleaning of certain union premises and that Mr Goodhew suspects that Gannon used the account set up in Jackwitz's name to siphon union funds into it for his own benefit. FEDFA has filed an affidavit by Mr Procopis, a financial analyst with the Cooke Royal Commission, who says that he discovered that various persons connected with the union had set up a number of accounts in false names into which union funds were moved, thereby removing control of those funds from the union to the signatories of the various false name accounts; while most of these funds were either transferred back to disclosed union bank accounts or used for union purposes, some of these funds were used for personal purposes or were otherwise unaccounted for. The "Jackwitz" Westpac account was one of this last-mentioned class of funds. Most of the deposits into the "Jackwitz" account coincide with withdrawals from union accounts. However, Mr Procopis has turned up little evidence as to the destination of funds withdrawn from the "Jackwitz" account, including the three amounts the subject of the directions. He does not say that Mr Goodhew was a signatory to the "Jackwitz" account. Mr Channell, the solicitor for FEDFA, in his affidavit filed 19 February, 1992, describes approaches he has made to obtain affidavits from the various people to whom Mr Goodhew refers in his own affidavit. Mr Channell, however, did not approach Gannon for the reason that "he is currently awaiting trial for misappropriating FEDFA money".

5. The taking of an account is only appropriate once it has been established that the parties involved are in an accounting relationship with each other, that is, only once it has been established that one party is liable to pay to the other anything that is found, on the taking of the account, to be due to that other: Rapid Metal Developments (Australia) Pty. Ltd. v Rosato (1971) Qdr 82 at 88-90; Rockhampton Permanent Building Society v Petersen (1986) 1 Qdr 128 at 130 and Lang v Simon (1952) 53 SR (N.S.W.) 508 at 514. Rules such as Order 39, rules 1 and 3 of the Federal Court Rules do not create a new cause of action or a new equity, nor do they confer a general right to an account in substitution for the trial of issues; these rules do not authorise the sending of the whole case to the Registrar, they only authorise the directing of such accounts as are subsidiary to determining the rights of the parties, thus emphasising that the main issue in suit cannot be disposed of by ordering the taking of an account: Rapid Metal Developments (Australia) Pty. Ltd. v Rosato at pages 88 and 89.

6. Pincus' J judgment of 1 June, 1990 in which he ordered that an account be taken, must be held to be a determination binding on Mr Goodhew that he was liable to account to FEDFA with respect to certain transactions: "A decree for an account is not, as appears to have been assumed, a mere direction to inquire and report. It proceeds, and must always proceed, upon the assumption that the party calling for it is entitled to the sum found due. It is a decree affirming his rights, only leaving it to be inquired into, how much is due to him from the party accounting ... We cannot make a decree, ordering them to account, without first determining that they are liable to pay if anything be found due." Lang v Simon at pages 513-4, citing from the judgment of Dr. Lushington in the Privy Council decision in Baboo Janokey Doss v Bindabun Doss (1843) 3 Moo. Ind. App. 175.

7. The present difficulty arises because Pincus J deliberately did not set out in his judgment his reasons for holding that Mr Goodhew was in an accounting relationship to FEDFA with respect to any particular transaction, including any of the transactions the subject of his directions of 25 November, 1991. The reason for his Honour's reticence was, plainly enough, his concern that if he were to make express findings on the allegations of misconduct made against Mr Goodhew in the proceedings before him, that might prejudice the conduct of the criminal proceedings foreshadowed against Mr Goodhew.

8. The issues in the action covered a much wider field than Mr Goodhew's liability to account to FEDFA. But as to the issues raised by FEDFA's cross-claim concerning Mr Goodhew's financial wrongdoing, Pincus J, at page 239 of his judgment, said:

"The origin of this problem (at least in part) may have been

an attempt by some officials of the Queensland branch to

conceal assets, in order to keep them beyond the reach of

legislation passed or contemplated by the Queensland

Government. As it was, I suppose, an inherent risk of that

concealment, it appears that some succumbed to the

temptation to take advantage of the opportunities afforded

by the resultant irregularities in the company's

administration, in order to improve their own financial

positions. It is not possible for me to reach a conclusion

as to the final financial outcome of any misfeasance which

occurred. It is however necessary, in order completely to

dispose of the issues, to determine whether any sum is due

by Mr Goodhew as a result of the dealings just alluded to."

9. His Honour did not explain further the grounds for making the order for the taking of an account other than to say (at page 254), when dealing with the issue concerning ownership of the branch's property:

"As will appear, I do not propose in these reasons the grant

of any specific relief with respect to property, except

ordering the taking of an account against Mr Goodhew. All

other questions concerning relief as to property will be

adjourned for further consideration."

"A barrister appointed by the State Government, shortly

after these proceedings began, to investigate amongst other

matters overlapping those with which I am concerned has

recently, I am informed, made his report. It seems evident

that the investigations of fact underlying the report were

much more comprehensive, as to certain financial questions,

than those the results of which were presented to me. It

appears that the report recommends certain prosecutions. In

these circumstances, there is risk that material which might

be published in these reasons concerning Mr Goodhew could

be relevant in any prosecution which might be brought

against him. There is plainly evidence suggesting the

necessity of a careful scrutiny of financial dealings

involving the branch and Mr Goodhew, but it seems

undesirable, in the circumstances, to publish at this stage

my views concerning the evidence against Mr Goodhew

relating to financial matters.

It was admitted that accounting matters need to be

investigated, and the only question raised is as to how that

should be done. Counsel for FEDFA, who appeared before me

in an interlocutory hearing in these proceedings recently,

suggested that it would not be appropriate to appoint the

Registrar to take an account, since questions of credit and

the like arise.

Despite that submission, I propose that the District

Registrar shall be appointed to take an account, as O 39, r

9 contemplates may be done."

10. There are some passages in his Honour's reasons in reliance upon which it was submitted on behalf of Mr Goodhew that his Honour should not be regarded as having made any finding to the effect that Mr Goodhew was liable to account to FEDFA in respect of any particular transaction. I have already referred to the passage at page 259. To this can be added what his Honour said at pages 259 and 260, concerning the proposals by FEDFA for an investigation in a form other than the taking of an account and what his Honour had to say about FEDFA's application to join parties additional to Mr Goodhew, including various of Mr Goodhew's relatives and the person Gannon I have already referred to, against whom FEDFA made allegations that they had misappropriated moneys belonging to it. However, I think the explanation for what his Honour said there was his concern not to make any findings which might prejudice the criminal proceedings foreshadowed against Mr Goodhew in respect of his dealing with union funds, the very matter that was before his Honour.

11. The argument advanced on behalf of Mr Goodhew really proceeded on the basis that the directions of 25 November, 1991 were in large part wrongly given because they could only properly be given if it was first established that Mr Goodhew was an accounting party in respect of the transactions the subject of the directions; it was said that the evidence did not justify such a conclusion.

12. But Mr Goodhew has not appealed against the judgment of 1 June, 1990. Nor has he appealed against the order of 25 November, 1991 on the ground that it gives directions for the taking of an account with respect to transactions that are not within the scope of the judgment of 1 June, 1990 that he account to FEDFA.

13. In seeking an answer to the question whether Mr Goodhew can dispute his liability to account in respect of any of the transactions the subject of the directions, I think I must proceed on the basis that the judgment of 1 June, 1990 is a binding determination that Mr Goodhew is liable to account to FEDFA in respect of certain transactions that are not, however, identified in the formal judgment. It is by the process of construing that judgment that these transactions are to be identified.

14. The directions of 25 November, 1991 are necessarily interlocutory in view of Order 39, rule 10(1), (3) and (4). If these directions can be seen to go beyond the judgment of June 1990 in that they require Mr Goodhew to file an account of particular transactions in relation to which he has not been found by that judgment, properly construed, to be liable to account to FEDFA, then I think I should exercise the power conferred by Order 35, rule 7(2)(c) to set aside any such direction, even though the order containing the directions has been perfected: for the reasons already given, a direction with respect to the manner of taking an account can properly be given only where there has already been a finding that the person to whom the direction is addressed is liable to account in respect of the matter in question to another.

15. The circumstances in which the directions of 25 November, 1991 were made were the subject of discussion before me. The material to which I was referred showed that Mr Goodhew was given notice after the judgment of June 1990, but well prior to the hearing on 25 November, 1991, that FEDFA would seek the directions in fact given that day; it also appears from what took place at that hearing that Mr Goodhew agreed to the making of directions in the terms in which Pincus J gave them on 25 November, 1991. However, the directions are not themselves expressed in the formal order to be by consent and Mr Goodhew's concurrence can only be gathered from a reference to the transcript. A perusal of the material before the Court on 25 November, 1991 shows quite clearly that Mr Goodhew's consent was accompanied by a reservation of the entitlement he believed he had to dispute that he was liable to account in relation to certain of those transactions. I do not therefore think that FEDFA can gather any support for the proposition that Mr Goodhew cannot, in complying with the directions given on 25 November, 1991, dispute his obligation to account on the ground that he consented to those directions being given. In any event, the power contained in Order 35, rule 7(2)(c) can be exercised even if the interlocutory order in question is a consent order: R.D. Werner and Co. Inc. v Bailey Aluminium Products Pty. Ltd. (1988) 80 ALR 134.

16. Since I am of the view that the answer to the present problem depends upon the proper construction of the judgment of 1 June, 1990, it becomes necessary to identify the range of material to which regard can be had in interpreting that judgment.

17. In Australian Energy Limited v Lennard Oil N.L. (No. 2) (1988) 2 Qdr 230, Andrews C.J. (Kelly S.P.J. agreeing) rejected an argument that a declaration should be granted as to the proper construction of a declaration made in an earlier action between the parties only if the latter was ambiguous. He said, at page 232:

"I would further hold that it is necessary in order fully to

understand the effect of the declaration to examine the

reasons expressed by McPherson J in coming to his decision

and the extrinsic evidence and surrounding circumstances

relied upon by him. This is not so much to construe the

words of the declaration as to understand it in its place in

the context of the matter and thus give it its true

construction."

18. In granting Australian Energy Limited the declaration as to the proper construction of the original order which it sought, His Honour had regard to both the reasons of the judge who made the original declaration and to the evidence before that judge, which took the form of admitted facts. In Gordon v Gonda (1955) 1 WLR 885, Evershed M.R., with Hodson L.J. agreeing, appears to have taken much the same approach as the majority in the Australian Energy Limited case in construing the judgment there in issue.

19. In Kwikspan Purlin System Pty. Ltd. v F.C. of T. 86 ATC 4602, Macrossan J had to decide whether an earlier order allowing a taxpayer's appeal and remitting the case to the Commissioner of Taxation for re-assessment resolved the question whether the Commissioner was precluded from disallowing a particular deduction claimed by the taxpayer on the re-assessment. He took the view that the matter was governed by the proper interpretation of the earlier order. In determining this, his Honour declined to limit his considerations to the words of the order, which were argued to be sufficient in themselves to justify the Commissioner's amended assessment disallowing the particular deduction, and had regard to the reasons given for the making of the earlier order and to the notice of objection that led to the appeal in which that order was made, as aids to the construction of that order. His conclusion was that the taxpayer's entitlement to the deduction was fairly involved in, and so decided by, the appeal. The problem here is very similar to that which confronted Macrossan J.

20. In my view, these three cases are authority for the propositions that even if a judgment is not ambiguous, it is nevertheless proper (if not essential) in construing it to have regard to the factual context in which the judgment was given and that this context includes the pleadings, the reasons for the judgment and the course of evidence at the trial.

21. I turn now to this question of construction of the judgment of 1 June, 1990. I have already referred to what appears in the reasons relevant to this question: that material throws little light on the present problem. Nor do the pleadings illuminate the matter. It is thus by reference to the evidence that this question must be resolved.

22. As to the direction given on 25 November, 1991 that Mr Goodhew file an account and verifying affidavit regarding the three groups of transactions on the "Jackwitz" account, evidence was called at the trial by the applicants that linked Mr Goodhew with the "Jackwitz" account. A handwriting witness gave evidence that a withdrawal form in respect of the withdrawal of $24,000.00 from a Union Metway account upon which form the name "N. Jackwitz" was written was in Mr Goodhew's handwriting and that $24,000.00 was deposited into the "Jackwitz" account on the same day as this withdrawal was made. There is also evidence in the applicants' case that at a number of Union committee meetings in mid-1989, Mr Goodhew declined to answer questions concerning the "Jackwitz" account or to respond to accusations by the man Gannon that Mr Goodhew was connected with the "Jackwitz" account in a number of respects, that he had arranged "withdrawals" (that is, more than one) from a Union account and the transfer of the money withdrawn into the "Jackwitz" account. Mr Goodhew declined to give evidence at the trial.

23. It is submitted that I should not treat this failure to give evidence as an admission by conduct by Mr Goodhew of the various allegations I have summarised and the correctness of the other evidence I have referred to which connected him with the "Jackwitz" account because that failure could be explained by the fact that Mr Goodhew was then "in considerable jeopardy with respect to criminal charges". It was also submitted that there was no evidence at the trial that Mr Goodhew was involved in the withdrawal of any money from the "Jackwitz" account. It was submitted that all the evidence at the trial justified was an inquiry as to whether Mr Goodhew was liable to account to FEDFA in respect of funds deposited into and withdrawn from the "Jackwitz" account, but that it could not justify a finding in that regard.

24. Notwithstanding the submissions advanced on behalf of Mr Goodhew, it is I think clear that an issue litigated at the trial was the transfer of money from Union accounts into the "Jackwitz" account and Mr Goodhew's connection with and control of that particular account. I think a reading of the judgment against the relevant surrounding circumstances in which it was given shows that the investigation as to whether Mr Goodhew was liable to account to FEDFA in respect of the "Jackwitz" account was conducted at the trial and determined adversely to Mr Goodhew by his Honour's judgment of 1 June, 1990. The subsidiary directions his Honour gave on 25 November, 1991 pursuant no doubt to Order 39, rule 3, cannot therefore be understood as impermissibly leaving it to the District Registrar to determine that main issue: it had already been determined by the judgment. All the Registrar was required to do by the directions of 25 November, 1991 was to conduct such an investigation as would enable him to quantify the amount, if any, of Mr Goodhew's liability to FEDFA in respect of the "Jackwitz" account transactions, which liability had been established by the judgment of 1 June, 1990.

25. As to the directions of 25 November, 1991 concerning the Suncorp account number 20511118609, while this account was opened in FEDFA's name, the evidence showed that Mr Goodhew was the sole signatory and there was evidence that he had instructed Union clerical staff not to disclose the existence of this account to the Union auditors. It is conceded that the evidence before Pincus J was sufficient to entitle him to find that Mr Goodhew had withdrawn funds from this account and was liable to account to FEDFA in respect of any apparent deficiency. However, it was submitted that, because the evidence showed that Mr Goodhew had supplied an explanation for the disbursement of the first sum the subject of the directions concerning this account which the auditors did not at the time challenge, his Honour could not find that Mr Goodhew's explanation in respect of that sum was untrue.

26. Be that as it may, this is not an appeal from the judgment of 1 June, 1990 and it is quite clear, having regard to the circumstances in which judgment was given on 1 June and which I have summarised, that the judgment must be understood as establishing Mr Goodhew's liability to account to FEDFA in respect of deposits to and withdrawals from this particular Suncorp account. All the relevant directions require of the Registrar is for him to conduct such an investigation as is necessary to establish the quantum, if any, of Mr Goodhew's liability in that regard.

27. As to the two withdrawals from the two "J. Ware" Metway accounts the subject of other directions, there is evidence from Union clerical officers that they were aware of the existence of a Metway account in the name of "J. Ware", having seen at the Union offices a passbook on that account; there was also evidence that at a Union committee meeting in mid-1989, Mr Goodhew said "the Union, through the auditor, is well aware of it and knows that FEDFA money went into the James Ware account because of the SEQEB dispute." There was hearsay evidence, admitted without objection, that this "J. Ware" account was "looked after" by Mr Goodhew. There are, however, two different Metway accounts in the name of "J. Ware" referred to in the directions. The auditors' letter to the Committee of Management of the Union dated 21 August, 1989 which was in evidence does not (despite submissions made to the contrary) refer to either of the two Metway accounts the subject of Pincus' J directions. While the judgment, read against the relevant surrounding circumstances, can be seen to involve a determination that Mr Goodhew was liable to account to FEDFA in respect of a withdrawal from the particular "J. Ware" account referred to in the evidence, it is not possible to identify which of the two accounts it is that answers this description. I will therefore order that the directions given on 25 November, 1991 with respect to these two transactions be set aside.

28. As to the direction concerning the "transfer to K.W. Wilson (Goodhew account)", the only evidence given at the trial to which I have been referred in which mention was made of this particular account was evidence from the Union auditors that Mr Goodhew had in effect told them that he opened this account in the name of "K.W. Wilson", that he used it to protect his own personal assets and that no Union funds ever passed through this account. Even if it is assumed that his Honour rejected this statement by Mr Goodhew, there is no basis upon which the judgment of 1 June, 1990 can be construed as establishing Mr Goodhew's liability to account to FEDFA in respect of the transfer of $8,000.00 to this account. I will order that this direction be set aside.

29. As to the direction concerning the "Bass and Wilson" account, in exhibit 5 (which was a copy of a paragraph from one of Mr Goodhew's affidavits, tendered on behalf of the applicants at the trial, in which Mr Goodhew identified what he described as "the various undisclosed accounts operated by the State Union"), there was included an account with Metropolitan Permanent in the name of "Bass and Wilson"; this is the same account described in the Union auditors' letter of 21 August, 1989 to which I have already referred as the "Metway account - Bass and Wilson". In exhibit 5, Mr Goodhew identified the two signatories to this "Bass and Wilson" account as Gannon, under the name of "Bass", and himself, under the name of "Wilson"; he also there stated that $25,000.00 was withdrawn from this account in 1986 and used to purchase a bond with Occidental Life Insurance in the names of "Maskey" and "Kelso". He identifies "Maskey" as an alias of Gannon and "Kelso" as an alias for himself. He repeated this information to the auditors, according to their letter of 21 August, 1989. The evidence before Pincus J was sufficient to show that Mr Goodhew was involved in the operation of this account as one of two signatories to it, it being an account in which Union funds were concealed. There is also the evidence, already referred to, that Mr Goodhew told the Union auditors that the particular "K.W. Wilson" account into which the transfer of the $2,302.40 here in question was made and in respect of which the direction requires Mr Goodhew to account to the Union was an account opened by Mr Goodhew for his own personal purposes. The judgment should therefore be construed as involving a determination that Mr Goodhew is an accounting party vis-a-vis FEDFA in respect of operations on the "Bass and Wilson" account. There is no reason to interfere with the direction given with respect to the one transfer in question from this account.

30. As to the direction given with respect to the transfer from a nominated "J. Ware" Metway account to a "K.W. Wilson" account of $15,534.69, the evidence goes no further than showing that while there were two accounts in the name "J. Ware" with Metway, Union funds were deposited to only one of those accounts, but that account is not identified. I do not think the judgment of 1 June, 1990 can be construed as involving a determination that Mr Goodhew is liable to account to FEDFA in respect of this transaction. I will order that this direction be set aside.

31. As to the withdrawals from the "K.W. Wilson" account number 346286499-5, it is not disputed that this particular account is the Metway account number 6286499/5 referred to on page 5 of the letter from the Union's auditors of 21 August, 1989. There was evidence at the trial that Mr Goodhew admitted to the auditors that he established this particular account, upon which he was the sole signatory, as "a transfer account for Union business". Mr Goodhew told the auditors that withdrawals totalling $6,500.00 from this account between 25 March, 1988 and 26 July, 1988 were used for a Union purpose. There is also evidence that Union funds were deposited into this account and that Mr Goodhew made various withdrawals from it for various Union purposes. There was no other evidence concerning this matter. However, I think the judgment of 1 June, 1990, construed against the background of this evidentiary material, involves a determination that Mr Goodhew was an accounting party vis-a-vis FEDFA in respect of all withdrawals from this account. There is no ground for interfering with this direction (otherwise than to check whether the reference to $8,000.00 in the direction is in error for $6,000.00).

32. As to the direction with respect to the transfer from this "K.W. Wilson" Metway account to another "K.W. Wilson" Metway account of $500.00, the same comments as apply to the previous direction are applicable here, with the addition of the fact that the "K.W. Wilson" account into which the $500.00 is said to have been paid was admitted by Mr Goodhew to be one which he set up for his own private use.

33. I should also mention that it was submitted on behalf of Mr Goodhew that his Honour's directions, insofar as they required the Registrar to determine substantive issues, were void as running "foul of the requirement that the judicial power of the Commonwealth is to be exercised by the Federal Court". Counsel for Mr Goodhew disclaimed any challenge to the validity of Order 39 on the ground that the order purported to confer judicial power on the Registrar, a disclaimer fully justified in view of the provisions of Order 39, rule 10: cf. the differing views of Mason C.J. and Deane J, on the one hand, and of Brennan J, on the other, in Harris v Caladine [1991] HCA 9; (1991) 172 CLR 84 at 95 and 110-111. No issue arises to which s. 78B of the Judiciary Act 1903 (Cth) would apply: it is not suggested that Order 39 is beyond power, all that is challenged is an order of the Federal Court which was said to go beyond what Order 39 permits by delegating to the Registrar power to determine substantive issues. No question of constitutional invalidity arises in relation to a judgment.

EX TEMPORE REASONS FOR JUDGMENT - 11 DECEMBER, 1992

34. One of the directions given by Pincus J on 25 November, 1991 was that Mr Goodhew file and serve an account and verifying affidavit regarding a particular item described as "transfer to K.W. Wilson (Goodhew account) on 23 July, 1987" in an amount of $8,000.00. In the reasons which I have just published, I dealt with this particular matter and concluded that, having regard to the evidence which was before his Honour, the judgment of June 1990 could not be regarded as establishing that Mr Goodhew was liable to account in respect of that particular transaction.

35. However, in the course of those reasons, I explained why I thought the judgment of June 1990 should be regarded as settling Mr Goodhew's liability to account to FEDFA in respect of all deposits into and withdrawals from the Suncorp undisclosed FEDFA account no. 20511118609. I have now been referred to the evidence of Mr Procopis, which was first put before me on behalf of FEDFA on 23 November last, in which he said that on 23 July, 1987 a sum of $8,000.00 was withdrawn from this particular Suncorp account and deposited to the "K.W. Wilson" account.

36. It is clear that it is this particular transaction that was intended to be the subject of the direction given on 25 November, 1991. What the direction plainly was concerned with was that Mr Goodhew should account to FEDFA in respect of the source of the $8,000.00 which was transferred to the "K.W. Wilson" account on the day in question. For the reasons earlier given, I think that the issue of Mr Goodhew's liability to account to FEDFA in respect of this particular Suncorp account was settled by the judgment of June 1990 and that FEDFA has at all relevant times clearly been seeking an account from Mr Goodhew in respect of the source of this particular sum of $8,000.00. It is therefore appropriate that I should not make the order foreshadowed by my published reasons setting aside the direction of 25 November, 1991 in respect of this transaction. In view of what Mr Goodhew has already said about this transaction in his affidavit filed 9 December, 1991, I will not give a direction that Mr Goodhew file a further affidavit dealing specifically with this transaction.

37. Given that I regard the judgment of 1 June, 1990 as settling the question of Mr Goodhew's liability to account to FEDFA in respect of a range of transactions, it is, in theory at least, open to FEDFA to make applications to the Court for directions that Mr Goodhew account in respect of any particular transactions that FEDFA may now want to pursue, so long as they are transactions in relation to which the judgment settles Mr Goodhew's liability to account to the union. I say FEDFA can do that in theory, but it seems to me that save in wholly exceptional circumstances the union has had its opportunity, when it sought directions from Pincus J on 25 November, 1991, to ask for directions requiring Mr Goodhew to account in respect of any particular transaction that it is interested in pursuing and it should not be allowed to keep the matter open indefinitely.

38. So far as concerns the costs of the proceedings on 23 November, 1992 and the costs incurred today in relation to those same proceedings, they involve a discrete dispute in the litigation: Mr Goodhew sought to terminate a potential liability to pay the sum of $113,530.32, the subject of the 25 November, 1991 directions, by arguing that the directions should not be further enforced. He failed very largely on that, although he did achieve a modest measure of success. The cause, however, of that particular dispute seems to me to fairly arise from the confused form in which the directions were proposed by FEDFA to Pincus J on 25 November.

39. I am aware that Mr Goodhew then agreed with the making of the directions in that form, but I think it is clear enough that it was FEDFA that had the carriage of formulating the directions and, as I have said, it chose to formulate them in a way which was confusing and, indeed, unjustifiable in a number of respects.

40. I therefore think that the proper order to make is that there be no order as to costs in relation to the proceedings of 23 November last and so much of the proceedings of today as relate to those proceedings.

Re Cyril Sharpe; Arthur Smith; John Burton and Patrick Keane v Kenneth Goodhew; Barry Day; Ian Barton; Ralph Roots; Barry Glover; Graham Smith; Stan Hardwick; Les Summers; PK Brady; Hughcombe Pty Limited; Michael Slade; Federated Engine Drivers and [1992] FCA 616

At a glance

Court

Decision date

Before

Source

Judgment (65 paragraphs)

Re Cyril Sharpe; Arthur Smith; John Burton and Patrick Keane v Kenneth Goodhew; Barry Day; Ian Barton; Ralph Roots; Barry Glover; Graham Smith; Stan Hardwick; Les Summers; PK Brady; Hughcombe Pty Limited; Michael Slade; Federated Engine Drivers and [1992] FCA 616 (11 December 1992)

Parties

Cases Cited (4)