The plan or strategy being pursued
85 It is, however, concluded that this alternative way in which the other Defendants sought to advance their abuse of process submission is also to be rejected.
86 According to this alternative submission, Senior Counsel for the other Defendants maintained that the chronological sequence of events did not stand alone. If that sequence of events did not of itself expose an abuse of process, an abuse of process was exposed when viewed as against the actual "plan" or "strategy" being pursued by the American attorneys.
87 Two aspects of the procedure of the present proceeding should be noted.
88 First, a question arose even before Mr Coleman entered the witness box. Left unresolved was whether any cross-examination at all was to be permitted. Presumably, given the reliance placed upon submissions as to an abuse of process, that was a legitimate area of factual inquiry. Whether or not any cross-examination was to be permitted, the pragmatic course which was ultimately pursued was that Mr Coleman did travel to Sydney from San Francisco to give evidence and was cross-examined. Given his attendance in Sydney, the Plaintiffs did not resist calling him as a witness. He was cross-examined on all such issues as Senior Counsel for the other Defendants presumably thought appropriate and relevant.
89 Second, an application had been made prior to the hearing commencing by the Plaintiffs for any cross-examination of Mr Coleman to be conducted by way of a video link. Such a course may be permitted if directed or allowed by the Court pursuant to s 47A of the Federal Court of Australian Act 1976 (Cth) ("Federal Court of Australia Act"). Instances can be provided where the cross-examination of an overseas witness has been permitted (e.g, Joyce v Sunland Waterfront (BVI) Ltd [2011] FCAFC 95 at [60] per Keane CJ, Dowsett and Greenwood JJ) and where it has been refused (e.g., Australian Competition & Consumer Commission v Storesonline International Inc [2009] FCA 717). See: Cremean, "Comity and Video-link Evidence" (2011) 19 AJ Admin L 4. Given the seriousness of the propositions that inevitably had to be put to any American attorney who was to be cross-examined, there was a reluctance to accede to the application being made. In retrospect, the view previously expressed is maintained. It was best for Mr Coleman to attend in person. A true appreciation of the care with which Mr Coleman gave his evidence, it is respectfully considered, could probably not have been gained had his evidence been given by way of a video link.
90 Moreover, Mr Coleman's oral evidence also served to reject (or at least qualify) a number of the steps in the sequence relied upon by the other Defendants.
91 Thus, for example, an issue arose in the present proceeding as to the extent to which the parties to the American proceeding had an opportunity to canvas the facts upon which the American summary judgment application was to proceed. The reasons for decision of the Honourable Judge Bardwil addressed in part the principles he was to apply as follows:
Summary judgment is appropriate when there exists "no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The Supreme Court discussed the standards for summary judgment in a trilogy of cases: Celotex Corp. v. Catrett, 477 U.S. 317 (1986); Anderson v Liberty Lobby, Inc., 477 U.S. 242 (1986); and Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986). In a motion for summary judgment, the moving party bears the initial burden of persuasion in demonstrating that no issues of material fact exist. Anderson, 477 U.S. at 255. A genuine issue of material fact exists when the trier of fact could reasonably find for the non-moving party. Id. at 248. The court may consider pleadings, depositions, answers to interrogatories, and any affidavits. Celotex at 323. To demonstrate the presence or absence of a genuine dispute, a party must cite to specific materials in the record, or submit an affidavit or declaration by a competent witness based on personal knowledge. See Fed. R. Civ. P. 56(c)(1), (4). Where the movant bears the burden of persuasion as to the claim, it must point to evidence in the record that satisfies its claim. Anderson, 477 U.S. at 252. Once the moving party has met its initial burden, the non-moving party must show specific facts demonstrating the existence of genuine issues of fact for trial. Id. at 256.
The other Defendants accepted that the principles being applied there were much the same as those applied by this Court when entertaining a summary judgment application.
92 But, with specific reference to the opportunity to present evidence which would or could give rise to a "genuine issue of material fact", the following exchange occurred between Mr Coleman and his cross-examiner after reference had been made to the amendment of the American proceeding:
And at the time that it was amended it was part of the strategy that if the summary application was successful it would be deployed in this proceeding in Australia to shut this proceeding down on a summary basis?---I think - yes.
And if that strategy was successful it would result in there never having been a trial to determine the underlying factual matters. Correct?---No, because in the United States if the defendants - if the respondents to a motion for summary judgment come forward with evidence to show that there is a genuine issue for trial the court must deny the motion for summary judgment and then schedule a trial. What wound up happening is that the Salyer parties failed to introduce any evidence from which Bardwil J could conclude that there was a - a reason to go to trial. They just hadn't disputed the facts.
An application was then made that the last answer be "struck out" on the basis that it was not responsive to the question or that the answer should be disregarded. Having reviewed the transcript, it is concluded that the answer was responsive and that regard may be had to the answer given. The cross-examination then continued as follows:
Mr Coleman, what you described as Salyer interests did assert in the US proceeding there was a genuine dispute, didn't they?---Yes, they did.
And they did put forward material, did they not?---Yes, they did.
And what happened was that Bardwil J took your view that the material didn't constitute a genuine dispute?---Bardwil J reviewed the evidence that they had submitted and concluded that the - it did not create a triable issue. The judge - I mean, that was an argument we were making, certainly, that what they had put before the court didn't create a triable issue, and he agreed with us. Yes.
What the "material" was that had been placed before the American Court was not further explored.
93 The evidence of Mr Coleman is accepted. The submission advanced by Senior Counsel on behalf of the other Defendants that there had been no opportunity to put in issue the facts upon which the American Court was being asked to proceed when entertaining the summary judgment application is rejected. "Material" was advanced for consideration and the Honourable Judge Bardwil concluded that there was no "triable issue".
94 Of more immediate relevance to the abuse of process argument being advanced by the other Defendants is the evidence sought to be adduced from Mr Coleman as to the "plan" or "strategy" being pursued by the American attorneys.
95 The content of this "plan" or "strategy" said to have been pursued in the United States, with respect, was never formulated with any degree of precision. Notwithstanding this lack of certainty, the other Defendants sought to intertwine a number of themes or contentions, including the following:
that the American proceeding was amended in July 2012 so as to ensure an "overlap" of the issues with the Australian proceeding such that any American judgment could then be relied upon for the purpose of "shutting down" the current Australian proceeding;
that the American proceeding was amended in July 2012 at a time when the other Defendants became unrepresented, those Defendants having become unrepresented in May 2012, and at a point of time when the Australian liquidators decided in June 2012 that the issues as to ownership were to be resolved in favour of the other Defendants; and
that a deliberate decision was made not to join SK Foods Australia or the Australian liquidators as parties to the American proceeding.
In one way or another, these issues were pursued in the cross-examination and evidence of Mr Coleman.
96 The objective of "overlapping" the issues in both the American and Australian proceedings and the objective of "shutting down" the Australian proceeding was a theme returned to on a number of occasions during the cross-examination of Mr Coleman. On one occasion, after referring to Mr Sharp, the cross-examination of Mr Coleman continued:
And he's one of the plaintiffs in this proceeding?---Yes.
He filed the amended complaint in the US proceeding, and that amended complaint sought declarations in relation to the intercompany debt and the relevant shares that are in dispute?---That's correct.
And it was part of a strategy to make sure that the US proceeding overlapped with issues that were before the court in Australia, correct?---I'm having a little - I'm struggling a little bit with your - your question. There's certainly, we would acknowledge, overlap in some of the issues in the US proceedings and the proceedings here. There's no question about that. We had other claims for relief in our first amended complaint that arose out of the same factual grounds. But I'm - I'm struggling with this concept that we were - well, I'm sorry, can you rephrase your question because I'm …
All right?---I apologise for the - I've been on a plane for …
Well, Mr Coleman, part of the strategy was that if the US summary judgment application was successful, the US summary judgment would be deployed in the Australian proceeding?---Yes. Yes.
All right. Therefore, I suggest to you, it was an essential part of the strategy that the US proceeding be amended so as to sufficiently overlap with the Australian proceeding so that when you were successful or if you were successful in the US summary judgment application, it could be deployed in Australia?---Not necessarily because we had alternative theories under the Bankruptcy Code where - which would entitle us to those assets even if the courts in Australia concluded that equitable transfers of those assets should be recognised, fraudulent conveyance theories and so forth.
Not necessarily, I suggest to you, means that in this particular context that was one of the elements of the strategy to make sure there was sufficient overlap. That's correct, isn't it, Mr Coleman?---In order to establish our claims, we wanted all the facts to be brought out. And - and I'm not sure how else I can respond to that question. I mean, yes, we wanted to include the claims with respect to, you know, what the facts were on who owned the - the shares and the intercompany debt. That was unquestionably part of the US proceedings as well as our bankruptcy claims.
Mr Coleman, at the time of the - you've already agreed with this, I suggest - which is at the time of the amendment to bring the US summary judgment, it was part of the intention to use that judgment to shut down the proceedings in Australia if you were successful in the US? Yes.
And I want to suggest that you knew that to do that you would have to make sure that the American proceeding and the Australian proceeding were sufficiently overlapping otherwise it wouldn't have the result of shutting down the Australian proceeding.
It was then contended by Senior Counsel for the Plaintiffs that that proposition was "wrong as a matter of law…". The cross-examiner regrouped and continued:
I want to suggest to you that one of the reasons for the strategy behind amending the US proceeding was a concern that if there was a hearing in Australia on all the evidence the liquidators would appear as the relevant contradictors, correct?--- It - if, at the time - are you saying that if there was a trial in Australia the liquidators would be acting as the contradictors, yes.
And one of the reasons for the strategy to amend the US proceeding was to avoid that outcome, correct?--- I would say no. I mean, it's - I'm speaking very narrowly about avoiding the - the liquidators.
The outcome - I'm sorry, avoiding the outcome that you just agreed with a moment ago, do you or don't you accept that?--- I'm sorry, now - now I'm a little confused.
One of the reasons for the strategy was the concern that the liquidators if the matter proceeded in Australia on a full [hearing] would act as contradictors, that's correct, isn't it?--- If there was a full trial, if there was a need for a full trial in Australia, it was my understanding that the liquidators would be acting as the contradictors in that proceeding.
And one of the advantages of the strategy that was devised was that that particular eventuality would not take place?---It was not an intended outcome, but it would be - it would be a consistent outcome.
Well, it was an outcome that you were aware of at the time the strategy was being devised. Call it a collateral benefit, if you like, it was certainly part of what was contemplated, wasn't it?--- Well, I - I would - I would with the characterisation that it was a collateral benefit.
But you won't accept that it was actually one of the main reasons, is that right?--- That's correct.
Again, this evidence of Mr Coleman is accepted.
97 Whether it be correct to characterise the conduct being pursued as a "plan" or a "strategy", which may have some negative or pejorative connotations, may be left to one side. That which is manifestly apparent from the evidence of Mr Coleman is that steps were deliberately being taken in the American proceeding with a view to there obtaining summary judgment if possible. At the same time as taking those steps, the American attorneys were being kept up to date with the steps also being pursued in this proceeding in Australia. That is hardly surprising. Indeed, criticism could potentially be directed at a legal adviser who did not keep themself so informed. It may also be accepted that the American attorneys were also conscious of any "collateral benefit" that may be achieved if they were successful in obtaining summary judgment in the United States. Again, that is hardly surprising. All that has been established is the professional pursuit of a client's legal interests in a forum having jurisdiction to grant the relief being sought.
98 What is missing from the conduct being pursued in the American proceeding is any feature sufficient to provide a foundation for concluding that that conduct trespasses from the area of professional conduct in the conduct of litigation into the realm of an "abuse of process" for the purposes of the present proceeding. Mere consciousness of "collateral benefits" or forensic advantages that may follow upon success in the American proceeding, it is considered, is not sufficient. A "collateral benefit" - albeit not an "intended outcome" - was that:
if the course being pursued in the American proceeding (including the joinder of "the Salyer interests") was successful, there would then be no "full trial".
But no finding should be made that:
there was any "rush to judgment" in the American proceeding, the timing of the decisions being taken as to the course to be pursued in that proceeding largely having their origins in the entry of a guilty plea by Mr Salyer in March 2012 and not in the timing of when (for example) the other Defendants became unrepresented or when the Australian liquidators reached their final conclusions as to ownership of the shares and the Intercompany Loan;
or that:
any step taken in the American proceeding was taken for the purpose of precluding this Court from exercising jurisdiction - notwithstanding an awareness of such "collateral benefits" as may flow from success in the American proceeding.
Nor should any finding be made that:
the Australia liquidators, for example, were deliberately not joined and not joined so as to ensure that there was no "genuine dispute as to the facts".
These findings are not an exhaustive statement of what conduct could attract a characterisation of "abuse of process". Indeed, given the ill-defined perimeters of that doctrine, no exhaustive statement could or should be attempted. The pursuit of a forensic course which achieved a desired outcome without the necessity for a "full trial" - and a forensic course which had acknowledged "collateral benefits" - it is respectfully concluded falls short of conduct which evidences an "abuse of process". Indeed, a forensic course which exposed a party to unnecessary expense could well attract the criticism of both that party and the Court itself. There is no necessity for a forensic course to be pursued by a party which ensures that there is a fully contested hearing on the facts and for a forensic course to be pursued which ensures that there are no consequential "collateral benefits". The ultimate guardian against a party impermissibly or inappropriately seeking (for example) summary judgment remains the Court that is exercising jurisdiction - the parties to the present proceeding having to confront two guardians : the first being the United States Bankruptcy Court and the second being this Court.
99 All that has been established, it is respectfully concluded, is the pursuit of the American proceeding in a manner designed to achieve a forensic objective, relevantly the obtaining of relief in respect to the shares and the Intercompany Loan. Such "collateral benefits" as would flow from the obtaining of that relief in America was obviously not a matter of indifference to the American attorneys advising the Plaintiffs. But the recognition of there being a "collateral benefit" certainly does not transform a legitimate forensic objective into an abuse of process.