MR WILSON'S CONTENTIONS
40 Mr Wilson, in written and oral submissions, has emphasised that he possesses bona fide conspiracy claims against both Arwon and Burlington that enjoy reasonable prospects of success.
41 Mr Wilson accepts that for him to establish a claim for tortious conspiracy, he must prove:
(a) there was a combination or agreement between two or more persons;
(b) there was an intention to injure, which:
(i) must be the sole or predominant purpose for conspiracy by lawful means; or
(ii) need not be the predominant purpose if there was an unlawful act;
(c) the combination or agreement was executed in whole or in part; and
(d) some pecuniary loss as a result of the defendants' acts in furtherance of the combination or agreement.
42 There must be a combination or agreement between the conspirators. To be a party to the combination or agreement, each party must be sufficiently aware of the surrounding circumstances and share the same purpose or intention: Australian Wool Innovation Ltd v Newkirk [2005] FCA 290 per Hely J (at [62]).
43 As conspirators will ordinarily conceal their combination or agreement, it will often be the case that there is no direct evidence of the same. The combination or agreement can therefore be proved as a matter of inference from the overt acts of the relevant parties done in pursuance of the apparent common purpose between them. It is the weight which is to be given to the united force of all of the circumstances which must be considered: Chong v CC Containers Pty Ltd [2015] VSCA 137 (at [133]-[134]).
44 As noted, in March 2017, Mr Wilson resigned as chief executive officer of Quintis for the purpose of pursuing a proposal to take Quintis private. Mr Wilson's case is that:
(a) after he resigned, Arwon, Quintis and SPL entered into an agreement pursuant to which each, where able, would take steps to cause Mr Wilson loss or economic hardship and harm his reputation so as to maximise the prospects of preventing any attempts by Mr Wilson to privatise Quintis; and
(b) subsequently, the parties entered into a further agreement to implement a process whereby Arwon would continue to engage in litigation (being the Arwon Supreme Court proceeding) and Quintis and SPL would breach agreements with Mr Wilson to cause him financial harm and economic loss, such that Mr Wilson would eventually be in a financial position whereby he could no longer conduct his sandalwood plantations or manage or be involved in a co-operative that operated in direct competition with the Quintis Group.
45 The acts pleaded by Mr Wilson to have been done by the 'conspirators' from which, on Mr Wilson's case, these conspiracies can be inferred are as follows:
(a) Quintis gave false information to CMIG about Mr Wilson during the first takeover attempt so as to leave Mr Wilson out of the proposal. Quintis ultimately rejected an offer from CMIG that Mr Wilson considered to be commercially attractive;
(b) Quintis included redacted board minutes in a data room for due diligence on potential investors during the second attempted takeover which accused Mr Wilson of being in default of his loan obligations and discussed that Arwon would be instituting legal proceedings against Mr Wilson, but without mention of discussions showing the substantial dispute between Mr Wilson and Arwon over those matters;
(c) Quintis announced to the ASX that Arwon intended to take legal proceedings against Mr Wilson, despite never having announced previously that a debtor was being pursued;
(d) Arwon commenced legal proceedings against Mr Wilson on 24 July 2017, despite its longstanding policy of first foreclosing on the plantation interests secured by the loan and despite the statements made to Mr Wilson by representatives of Quintis;
(e) Quintis frustrated the attempts of the Steynton Consortium, advised by Goldman Sachs, to perform due diligence and put forward a proposal to take Quintis private by:
(i) delaying and inserting unduly restrictive terms in the confidentiality agreement;
(ii) making representations that Mr Wilson and his associates were threatening Quintis employees and were a potential danger to Quintis employees and preventing Mr Wilson from participating in due diligence site visits; and
(iii) refusing to allow the Steynton Consortium to deal with a major creditor of Quintis (and parent company of Burlington), with respect to its proposal for Quintis,
following which Quintis did not emerge with an agreement with another party but instead appointed administrators after the creditor identified at (iii) above exercised an option which Quintis could not fund;
(f) SPL took various actions to damage Mr Wilson's plantations (being the same plantations over which the respondents hold security) by:
(i) arranging for the cessation of water supply to land on which Mr Wilson's plantations were growing;
(ii) attempting to prevent water being supplied to Mr Wilson's plantations; and
(iii) intentionally damaging Mr Wilson's water infrastructure and fluming; and
(g) Burlington, acting in support of Arwon, commencing litigation against Mr Wilson itself, after the Arwon Supreme Court proceeding concluded, to increase pressure on Mr Wilson.
46 Mr Wilson argues that it is the weight of these acts considered together, and in sequence, that proves as a matter of inference a combination or agreement dating back to April 2017 with the purpose of causing harm to Mr Wilson to maximise the prospects of preventing his attempts to privatise Quintis and his involvement with the co-operative that was competing with Quintis.
47 In or about late November 2020, Mr Wilson says he became aware of 'direct' evidence of a combination or agreement between the respondents to act together or, at least, complimentarily. The pleaded terms of that agreement were to act inconsistently with the standard defaulting borrower procedures and commence legal proceedings against Mr Wilson rather than foreclose against the secured plantation interests in order to cause damage to Mr Wilson.
48 Mr Wilson's evidence is that, prior to this point, he did not have evidence supporting an agreement between Arwon and Burlington.
49 The intention to injure must be the sole or predominant purpose of a conspiracy by lawful means: McKernan v Fraser [1931] HCA 54; (1931) 46 CLR 343 (at 361-362). For a conspiracy by unlawful means, it must be an intention but need not be the sole or predominant purpose: Fatimi Pty Ltd v Bryant [2004] NSWCA 140 Handley JA (at [14]-[17], McColl JA agreeing at [83]). In general, a person uses unlawful means if they are doing an act which they are not at liberty to commit: Dresna Pty Ltd v Misu Nominees Pty Ltd [2004] FCAFC 169.
50 On Mr Wilson's case, the damage and destruction to his plantations were unlawful acts undertaken with the intention of causing economic damage to him. Even if those acts are held not to have been unlawful, Mr Wilson's case is that the summary above shows the respondents' actions, in all the circumstances, could only have been taken with the sole or predominant intention of causing economic damage to Mr Wilson. In particular, it is contended that there can be no other intention inferred from the damage or destruction to the plantations than to cause damage to Mr Wilson.
51 Accordingly, Mr Wilson argues that while it is accepted that there must be some overt act which can be pleaded as having been done in execution or furtherance of the agreement, the acts do not need to be done by each of the parties to the conspiracy. Rather, it is sufficient that one of the parties to the agreement so acted and, in reliance on the summary of contended facts above, Mr Wilson submits that both respondents were clearly involved in the conspiracies alleged.
52 Full particulars of the damages claimed by Mr Wilson in the Off-setting Claims will be the subject of expert evidence in those proceedings. However, Mr Wilson has provided evidence in the form of Mr Padmanabha's affidavit that provides a basis, he contends, for the Court to be satisfied, to the standard required for these applications that the amount of the Off-setting Claims exceeds the amounts claimed in the Bankruptcy Notices. Indeed, Mr Padmanabha's valuations greatly exceed the respondents' judgment debts, though the weight to be given to MR Padmanabha's evidence is disputed.
53 As to the question whether the Off-setting Claims could have been set up in Arwon's and Burlington's Supreme Court proceedings, Mr Wilson's main point is, as the passage quoted from Re Stokvis (at [34] above) shows, the question is not binary. A counter-claim that could not be set up in the earlier proceedings may be one where the impediment was 'from point of time, or from its nature, or from absence of empowering provisions, or from positive inhibition so to do' (Emphasis added). Only the latter of these four, it is said, could be understood to be referring to a claim that could not have been set up as a matter of law.
54 Thus, Mr Wilson contends that notwithstanding what has been said in a number of cases, it must be thought unlikely that the reference in s 40(1)(g) of the Bankruptcy Act to 'a counter-claim, set-off or cross demand that he or she could not have set up in the action or proceeding in which the judgment or order was obtained' is limited only to claims that the judgment debtor could not have set up in the earlier proceeding as a matter of law. If this were so, it is argued, then absent considerations of the jurisdiction of the court or tribunal hearing the earlier proceeding, the only circumstance in which the requirement of s 40(1)(g) could be satisfied is where the law had changed and a prohibition from making the claim that had previously existed had been changed. Such a construction of this requirement of s 40(1)(g) would render it effectively nugatory in respect of any claim other than one which arose after judgment in the earlier proceeding. No doubt many of the authorities juxtapose claims which could not have been set up as a matter of law with a mere failure to take advantage of an opportunity to make a claim because judgment debtors so commonly merely fail to take such advantage. But, Mr Wilson says that the dicta of Lukin J in Re Stokvis demonstrates these situations are not exhaustive. Rather, there are claims that from point of time, or from their nature could not have been brought as counter-claims that s 40(1)(g) attracts.
55 In this matter, Mr Wilson says he did not bring the Off-setting Claims as counter-claims in the primary proceedings because when he first became aware of facts that indicated the possibility of such claims, it was necessary for factual and other inquiries to be made before bringing them as counter-claims. For a litigant to commence legal proceedings involving allegations of conspiracy requires that the litigant be satisfied that it has a proper basis to bring such a claim. Where legal advice is sought about such action, a legal practitioner's paramount duty to the Court extends to satisfying themselves that there is a reasonable basis for instituting proceedings in respect of which they have been engaged to advise: see, for example, A159 of 2002 v Minister for Immigration & Multicultural & Indigenous Affairs [2003] FCA 1087 per Selway J (at [23]). This is said to be particularly so where allegations in the nature of tortious conspiracy or the like are made.
56 The effect of these requirements is that a debtor can be prevented by law, in the sense required by the cases, Mr Wilson says, from setting up a counter-claim in a proceeding unless there has been appropriate investigation and consideration of the basis for setting it up. Indeed, in Massih (at [32]), Flick J said that the relevant phrase in s 40(1)(g) of the Bankruptcy Act 'refers only to those causes of action which a debtor was entitled to plead up to the time of judgment'. An obvious example is set out above, where the debtor takes assignment of a debt owed by the creditor issuing the bankruptcy notice only after the conclusion of the proceedings which give rise to the debt the subject of the notice, as in Re a Debtor. In the words of Lukin J in Re Stokvis, that is a claim which, from point of time, could not have been set up in the original proceeding. But Mr Wilson says that Lukin J also recognised that a claim, from its nature, might be one which could not be set up in the original proceeding. This would include, it is said, a case where a cross-claim involved the invoking of a jurisdiction that the primary court could not exercise. That contention is not correct in my view, especially in circumstances where it is open to transfer a proceeding to a court that does have jurisdiction, and particularly having regard to the rulings in Tzovaras (at [37]-[52]) and Re Ling (at 134A and 137B) that effecting that transfer may require an order to be sought from the other court or indeed the claim itself commenced in the other court and an application for a remitter made. In my view, a claim that 'from its nature' could not have been set up would include situations of the kind described in Eastick. Either way, that is not so in this case. The Supreme Court clearly would have dealt with the conspiracy claims.
57 Mr Wilson notes by way of comparison that the issue of the time required to investigate and assess a cause of action has been recognised in a limitations context. In Shire of Toodyay v Merrick [2016] WASC 29, the Court considered an application to extend the time in which an action could be brought under s 38(2) of the Limitation Act 2005 (WA) on the basis of fraudulent or other improper conduct of the defendant. A question for the Court was when the action ought reasonably to have been commenced. In considering this question, the Court allowed for the time required to further investigate and obtain legal advice on the issues raised in a report received in April 2012, holding that the action ought reasonably to have been commenced 'probably sometime towards the end of 2012' (at [124]). I would pause only to observe that the question of when an action ought reasonably to have been commenced is quite different from the question posed by the words 'could have been set up' in s 40(1)(g) of the Bankruptcy Act. I do not consider this comparison assists Mr Wilson.
58 Mr Wilson asserts that similarly, the question of when a debtor was 'entitled to plead' a counter-claim demand should allow for the time to investigate and take advice on, and then plead, a cause of action following the discovery of the relevant evidence. This is particularly so in circumstances where the cause of action is tortious conspiracy which, by its nature:
(a) involves serious allegations that, in general, must be inferred from the acts of the conspirators, and so requires careful investigation and consideration in order to determine whether there is a proper basis to plead a case; and
(b) as recognised in the cases, ordinarily involves the concealment by the conspirators of their combination or agreement.
59 Mr Wilson's evidence is that he only became aware of the attempts by the Quintis Group to damage and destroy his plantations in around August 2018. He then sought legal advice in respect of this evidence. That advice was to the effect that he did not have a case against Arwon. He did, however (after the trial in the Arwon Supreme Court proceeding), commence the Queensland Water proceeding against SPL and Quintis on 26 June 2019.
60 On receiving subsequent advice in early 2020, Mr Wilson gave instructions to prepare and commence the Arwon Conspiracy proceeding. This process took approximately four months, in addition to the time that had already been spent investigating and taking advice in respect of the Queensland Water proceeding.
61 Mr Wilson deposes to the fact that the lawyers originally instructed by him did not initially consider there was a claim against Arwon. Presumably the advice was oral. No written advice to that effect has been produced unlike the subsequent advice he received. However, he says, from its nature, tortious conspiracy is a complex cause of action, particularly in respect of the evidentiary basis for pleading it. When regard is had to the time it took to investigate the matters set out above, and to the requirements to ensure a proper basis before pleading a cause of action, Mr Wilson submits that he could not reasonably have been expected to have set up the claim in the Arwon Supreme Court proceeding having regard to the time he discovered the evidence that allowed the Off-setting Claims to be brought in relation to the time of trial.
62 Mr Wilson argues that his circumstances can be distinguished from the case of Re Vicini. There, the debtor claimed that despite best endeavours, he was unable to obtain and present the evidence required to establish the counter-claim. The Court held that this was not a reason why, as a matter of law, the counter-claim could not have been set up in the original proceeding. However, that counter-claim had been pleaded and was before the Court in the original proceeding. The issue was that the debtor, for practical reasons, and despite the machinery presumably available under the Court's rules such as subpoenas, was unable to substantiate the claim by presenting supporting evidence to the Court. Indeed, the Court found that the debtor had, in fact, set up the counter-claim in the original proceeding. The debtor failed to take advantage of a counter-claim that had already, in effect, been set up. In contrast, Mr Wilson's submission is that he was, by reason of the matters set out above, unable to set up his counter-claim at all until appropriate investigation and consideration had occurred.
63 As noted above, the evident policy underlying s 40(1)(g) of the Bankruptcy Act is to prevent a debtor standing by while judgment is obtained and later seek to use that claim to set aside a bankruptcy notice founded upon that judgment: Re Ling (at [32]).
64 Mr Wilson says he did not simply stand by. The evidence that started his enquiries only came to his knowledge in August 2018. Upon becoming aware of relevant evidence, he sought advice and pursued the claims available to him. Ultimately, the Off-setting Claims, from their nature, took time to properly investigate and consider before proceedings could be commenced. Advice from multiple legal practitioners was obtained. Mr Wilson's position is that, given the legal constraints on commencing proceedings without proper investigation, he could not reasonably have set up his counter-claim in the Arwon Supreme Court proceeding.
65 In the case of Burlington, Mr Wilson's evidence is that he only became aware of the evidence he relies on to establish Burlington's involvement in the conspiracy after he had consented to judgment in the Burlington Supreme Court proceeding. For that reason, in light of the legal constraints set out above, he could not have set up his counter-claim against Burlington in those proceedings.
66 In those circumstances, Mr Wilson says it would be unjust not to allow Mr Wilson to pursue his Off-setting Claims and force him to comply with the Bankruptcy Notices or face bankruptcy.