Robson v Robson[2010] QCA 330

SUPREME COURT OF QUEENSLAND

[1]  MUIR JA:The appellant defendants appeal against an order of a judge of the trial division of this Court dismissing an application to stay proceeding BS 10177 of 2004 and an application for security for costs in that and related proceedings BS 7342 of 2000 and BS 8937 of 2000 ("the debt proceedings").  The reasons of the primary judge explain the nature and progress of the proceedings and the background to the appellants' application as follows:[1]

"[1]The joint trial of these three proceedings commenced in February 2010.  After six days of hearing, it had to be adjourned because the plaintiffs had failed to make proper disclosure.  The corporate plaintiffs are companies controlled by Mr Gary Robson who is the plaintiff in the third proceeding, which I will call the trust action.  In that case, he seeks to have transferred to him shares which are allegedly held for him on trust by his brother and sister-in-law.  The value of the shares is dependent upon the value of real estate held by the relevant company, but the value of the property in question is at least in excess of $5 million.  In the other proceedings, the plaintiffs claim to be owed money by the defendant in sums totalling about $1.6 million.  Those proceedings were commenced as long ago as 2000 and the trust action was commenced in 2004.

[2]The litigation has not been conducted at all times, by either side, with the expedition and diligence to be expected of modern day litigants and lawyers.  I need not detail here the unfortunate history of this litigation, but it is necessary to mention some events.  The first is that the trust action was originally set down for trial in March 2008, but within a few days of the scheduled commencement, the parties asked the Court to adjourn the trial because each was intending to substantially amend its pleading.  The trial was adjourned and the trust action was removed from the Commercial List.  That was followed by a series of attempts by the defendants to amend their pleading, each of which culminated with the amendments being struck out and with orders for costs in favour of Gary Robson being made on 3 October 2008, 26 March 2009, 1 June 2009 and 8 October 2009.  The three proceedings were then ordered to be heard together and the trial was set down for February this year.  After six days the trial had to be adjourned because the plaintiffs seriously defaulted in the performance of their obligations to make proper disclosure.  They were ordered to make that disclosure by 15 April 2010.  The defendants were awarded their costs occasioned by the adjournment of the trial upon the indemnity basis.

[3]At a directions hearing on 22 April 2010, the defendants complained that the disclosure was still inadequate.  I directed that any application by the defendants for further disclosure be brought in the period 11 to 21 May.  On 6 May, the defendants filed in the trust action an application, returnable on 21 May, for orders under r 223(2) of the Uniform Civil Procedure Rules 1999.  On 13 May, the defendants filed another application, also returnable on 21 May, for orders under r 223(2) and for further specific orders in relation to disclosure of documents, as well as an order pursuant to r 225(2) that in the event of default with compliance with those proposed orders, the trust action should stand dismissed and the defendants should be at liberty to enter judgment.  On 21 May, those applications were adjourned by consent and they were given a full day for hearing on 9 June.  After argument occupying most of that day, I made some orders upon the defendants’ application but they were only partially successful.  Their costs of that application were made their costs in the cause.  Gary Robson was ordered to file and serve affidavits as to certain matters by 18 June and 7 July.  He subsequently filed the one affidavit, responding to each of those orders, on 21 June."

[2] During the cross-examination of Gary Robson on the trial of the proceedings, it emerged that there were documents in Vanuatu which should have been disclosed by the respondents but which had not been disclosed.  It had been proposed by the respondents that an accountant from Vanuatu would give evidence on their behalf.  He had brought with him to Australia documents relating to various foreign domiciled companies controlled by Gary Robson and on 28 February 2010, disclosure was given of some 323 of these documents.  That led to the adjournment referred to in paragraph [2] of the primary judge's reasons.  The trial of the proceedings is due to re-commence on 1 December 2010.

[3] On 14 September 2010 the appellants filed applications for orders that the trust proceeding be stayed and that the respondents provide security for costs in all three proceedings.  The applications were heard on 22 September 2010.

The appellants' contentions in relation to stay application

[4] The appellants contend that the primary judge erred in failing:

(a)To make a finding of fact that there were further documents which must exist, which were relevant to the proceedings, and which had not been disclosed; and

(b)To find that the absence of those documents would cause prejudice to the appellants, such that a fair trial of the trust proceedings could not be had.

[5] In relation to the first issue, it was submitted that:

(a)The appellants identified eight categories of documents in respect of which disclosure was deficient, yet the primary judge dealt with only two; and

(b)The primary judge failed to appreciate "the obvious inferences about the existence of documents", even when the inference was supported by the unchallenged expert evidence of two witnesses and by an apparent acceptance by the primary judge that the documents existed.  A day had been set aside for the hearing of the application.  However, the primary judge sought to restrict the appellants' complaints to two of the eight categories identified in the submissions and affidavits of the appellants even though there had been sufficient time for the appellants' complaints to be fully agitated on the hearing.  Although the evidence was voluminous, it was necessary in order to establish the existence of non-disclosed documents.  The primary judge was not required to read the 1,000 pages or so of the documentary evidence as the eight categories were sufficiently identified in the appellants' written submissions.

[6] The critical point about the primary judge's failure to find the existence of further documents which should have been disclosed was that it was clear that in order for the respondents to have prepared a disclosed spreadsheet which showed precise annual gross profit figures for eight years, there must have been financial records underpinning the spreadsheet.  Those records were not disclosed despite earlier orders and their absence was unexplained.  It is those underlying records which will identify the sources of payments and transactions the subject of the litigation.  The appellants sought disclosure of these documents, not, as the primary judge seemed to think, an electronic copy of the spreadsheet.

[7] In relation to the second "central error", it was submitted that the primary judge failed to take into account the following matters:

1. Gary Robson "controlled a web of overseas based companies [which were] used in his dealings" in the subject business;
2. Gary Robson initially refused to concede that the overseas companies were controlled by him;
3. It was only when it became necessary for him to call a witness from a Vanuatu accounting firm at the trial that there was further disclosure of documents held by that firm;
4. There was still no proper explanation by Gary Robson about the lack of financial records of his overseas based companies so as to comply with the disclosure order made on 1 March 2010;
5. Gary Robson, on his own admission, is a person who lives in other countries "the majority of time";
6. In the absence of such documents, there is a serious risk that the trial of the trust proceeding, to be resumed on 1 December 2010, will miscarry.

[8] It is significant that the appellants sought a stay of the proceeding, not its dismissal.  Once Gary Robson complied with his obligations it would be open to him to apply to proceed with his claim.

[9] The "missing disclosure" is relevant to a defence of the appellants which is capable of constituting a complete answer to all of the relief claimed in the trust proceeding.  The appellants have the onus of proof in that regard and may be irretrievably disadvantaged if proper disclosure is not provided.

[10]  In relation to security for costs, it was submitted that the primary judge erred in treating delay as a factor weighing against making the orders sought against the corporate respondents.  The application was to "top-up security for costs previously ordered".  The respondents adduced no evidence to resist the applications for "top-up", merely submitting that circumstances were unchanged.  They were not unchanged.  Gary Robson had recently disclosed the existence of mining plant and equipment claimed by him to be owned by Mine and Quarry Equipment International Limited and to be worth about $3,800,000.  There was no credible reason advanced to resist topping-up the very modest security of $50,000 for both of the debt proceedings, given that the estimated length of the trial was now 13 days; and the absence of evidence that the proceedings would be stifled by security for costs orders.

Security for costs - consideration

[11]  It seems that the principal thrust of the argument at first instance about security concerned the application for the order against Mr Gary Robson.  An earlier application for an order that Gary Robson provide security for costs had failed.  There was an unsuccessful appeal from that order to this Court.[2]  The further application to the primary judge also failed and there was no appeal against that decision.

[12]  In deciding not to make the order sought by the appellants, the primary judge had regard to the strength of the respondents' cases and the duration of the proceedings:  the debt proceedings had been on foot for 10 years and the trust proceeding for about six.  In relation to the trust proceeding, the primary judge observed that it started "from the not unpromising basis of the written declarations of trust executed by the [appellants]".  His Honour noted that when Gary Robson was refused summary judgment, "Fryberg J considered that the defences then raised were so questionable that he imposed a condition that the [appellants] provide a bank guarantee for the sum of $50,000".

[13]  The primary judge did not refer specifically to the fact that the appellants were seeking to increase the security already provided by the corporate respondents in the debt proceedings, but it is difficult to accept that his Honour overlooked that fact:  the appellants' written outline of argument at first instance referred to "security for costs, dating from 2002, in the sum of $25,000 in each action".  The delay which concerned the primary judge remained relevant to the "topping-up" of the security.  His Honour referred to and was quite conscious of "the unfortunate history" of the litigation.

[14]  A point which the primary judge appeared to be making was that there were factors which should have led the appellants, acting reasonably, to have made their applications on a much earlier date.  He instanced the evidence that the financial statements lodged in Australia under the Corporations Act 2001 (Cth) revealed no Australian assets of the respondent companies during the financial years 2006 – 2008.  The proceedings are already part heard.  No top-up was sought on or immediately prior to the commencement of the trial and, despite the activity in the proceedings concerning disclosure, the security for costs applications were not made until mid September.  Another relevant factor is that the evidence in relation to each proceeding substantially overlaps with that required for the other proceedings.

[15]  The appellants' reliance on the late evidence of mining plant and equipment said to have a value of $3,800,000 is misplaced.  The primary judge consistently with the appellants' counsels' submissions, gave this evidence little or no weight.  If his Honour had accepted that there was such an asset of the value alleged available to satisfy a costs order, there would have been an additional reason for not ordering security for costs.

[16]  It also seems to me that the nature of the trust proceeding is not without relevance.  In that proceeding Gary Robson sought orders, including orders that his brother and sister-in-law ("the defendants") transfer to him 12 of the shares held by them in Yalgold Pty Ltd, and that the shares be vested in him pursuant to s 82 of the Trusts Act 1973 (Qld).  The statement of claim, consisting of a few paragraphs, alleged as follows.  On or about 28 April 1989, the defendants executed a declaration of trust under which they declared that:  they would hold a total of 24 shares in Yalgold in trust for him; they would hold in trust for him also, all dividends, distributions, profits and any return of capital arising by reason of their holding such shares; and that they would at his request transfer such shares as he might from time to time legally require or direct.

[17]  The defendants executed another trust deed on or about 23 October 1995 similar in effect to the first trust deed, and the female defendant on or about 23 October 1995 executed a third such trust deed.  Gary Robson made a request of each defendant pursuant to the first trust deed that he or she transfer 12 shares in Yalgold to him and both refused to do so.

[18]  This simple document based claim has provoked a 79 paragraph fourth further amended defence, parts of which have been struck out from time to time.  This document admits the existence of the three declarations of trust and the signing of them by the defendants.  It is alleged, however, that:

(a)the signing of the declarations of trust was procured by unconscionable conduct or undue influence;

(b)any rights and entitlements under the first declaration of trust were assigned to the defendants pursuant to an oral "separation agreement";

(c)Gary Robson has, by a particularised course of conduct, disclaimed any beneficial interest arising under any of the declarations of trust and in shares held by the defendants of Yalgold;

(d)Gary Robson is not entitled to equitable relief, as the now very substantial assets of Yalgold have been increased in value by application of moneys provided to it by companies which have obtained the moneys through the operation of a tax avoidance scheme implemented by the principal operating company through which the Robsons conducted their business;

(e)the declarations of trust were void through being unstamped and were revoked by the defendants on 17 March 2008.

[19]  The appellants have not shown that the primary judge acted upon a wrong principle, allowed extraneous or irrelevant matters to affect his reasons, misunderstood relevant facts, or failed to take into account material considerations.[3]  It is relevant also, for the reasons given in relation to the stay application, that the orders appealed against are interlocutory in nature and concern questions of practice and procedure.  It has not been demonstrated that the failure to order security for costs was productive of "substantial injustice".  The grounds of appeal have not been made out.

The stay application - consideration

[20]  There is no substance in the complaint that the primary judge erred by dealing with only two of the eight categories of documents identified by the appellants as ones in which disclosure had been deficient.  The primary judge did not, as the appellants contend, restrict the appellants' complaints to two of the eight categories.  The course taken by the primary judge was explained by him as follows:[4]

"[20]This litigation has a history which does little credit to either side.  Now there is this application, supported by more than 1,000 pages of written evidence.  In those circumstances, I asked the defendants' counsel to identify the most serious examples of the alleged defaults of Mr Gary Robson (in addition to those identified in the electronic documents argument).  I turn now to those matters.  If they do not provide a cause for staying the trust action, it is not incumbent upon the Court to trawl through the balance of the evidence in case the defendants' counsel have not identified that which is most likely to affect the likely fairness of the trial.

[21]Outside that category of electronic documents, counsel for the defendants said that their 'very best' example of non-disclosure was in respect of a certain bank account in the name of Mine and Quarry Equipment International Ltd with the ANZ Bank in Vanuatu.  Mr Robson's supplementary disclosure of April 2010 included six copy facsimile sheets, which were instructions to that bank to 'please debit the account of [MQEI] account number 524955A'.  Three of those referred to payments which are pleaded in paragraphs 55(b) to (d) of the Defence."

[21]  The primary judge proceeded to deal with these categories.  He later dealt with another category, saying in that regard:[5]

"[25]Counsel for the defendants also put forward another category, which was also said to be a particularly strong example of default, which involves documents relevant to a sale by MQEI of two machines called crushers.  There are issues as to whether MQEI sold them to a company called Lihir Gold and as to the price, the identity of their true owner, who paid what to build them and how much profit MQEI made.  In their application filed on 13 May the defendants specifically sought documents relating to these sales which are alleged by Gary Robson.  In particular, they sought an order that there be an affidavit under r 223(2) in relation to any documents showing that MQEI was the owner of the two crushers referred to in his Reply.  In the schedule to his affidavit of 25 May, in answer to the question 'has a document fitting this description ever existed?', he answered 'yes, as disclosed'.  The defendants contend that no document has been disclosed.  Similarly, he gave the same answer in respect of the category of documents described as 'documents showing that MQEI incurred expenses in respect of the transaction with Lihir'.  In his affidavit filed on 21 June, when dealing with the electronic documents point, he said this as to those categories of documents (as well as certain other categories of documents):

[T]hese documents would have been prepared by Linda or the other staff.  I do not know whether they retained electronic copies of any of these documents.  If they did, such copies would have been on a computer or computers at the Tile Street Premises and as I have not had access to or possession of the records or access to the Tile Street Premises since about May 2000, I am unaware as to whether they now exist."

[22]  The primary judge was presented with more than 1,000 pages of written evidence.  His Honour, with respect, sensibly and appropriately sought to manage the application to enable argument to take place within the time available.  The application was an interlocutory one and the primary judge no doubt discerned, rightly, that the hearing and decision consequent thereon should not be permitted to further prolong proceedings long overdue for hearing.  I can perceive no error in the approach taken by the primary judge in the circumstances under consideration, of inviting the appellants' counsel to put forward their strongest arguments so as to enable him to assess whether he should address the remaining contentions based on a morass of material.  Senior counsel for the appellants sensibly acquiesced in this course.

[23]  Contrary to the appellants' submissions, the primary judge did not overlook the argument that the electronic documents from which the spreadsheet had been derived should also be disclosed.  After rejecting assertions by counsel for the appellants that Gary Robson had sworn that the electronic spreadsheet (document 405) had never existed in electronic form and that the document was subject to the primary judge's order of 9 June, his Honour said:[6]

"[14]At that point the defendants' argument became more general.  It was that the electronic version of document 405 should have been disclosed also, and that documents in electronic form from which this spreadsheet was derived should also have been disclosed.

[15]That first submission is not immediately attractive.  These days most business documents begin their life in electronic form and some are then printed.  The argument seems to be that parties should disclose the electronic version distinctly from the paper document.  In some cases, there might be some point in that exercise.  In most cases, the present one included, it would be pointless.

[16]As to the documents from which this document 405 was compiled, it is not demonstrated that there are any such documents which are directly relevant which have not been disclosed.  It may be readily accepted that there are electronic documents from which this spreadsheet was derived, but it is incumbent upon the defendants to demonstrate their direct relevance."

[24]  It may be seen that the primary judge accepted that it could be inferred from the spreadsheet that it had been compiled from other electronic documents.  He did not find that no electronic version of the spreadsheet existed.  His findings in that regard are in paragraphs [14] and [15] of his reasons.

[25]  On the hearing of the appeal the Court was not taken to anything which falsified the primary judge's finding that it had not been demonstrated that electronic documents from which the spreadsheet had been derived were directly relevant.

[26]  In order to fully understand the primary judge's reasons it is necessary to know something of the material before him on 22 September 2010 and of the circumstances leading up to that hearing.  The primary judge pointed out in paragraph [18] of his reasons that apart from allegations about the failure to disclose electronic versions of documents, the complaints about disclosure raised on the hearing were ones which could and should have been raised on the 9 June hearing.  There had been an order requiring any applications in relation to disclosure to be made before that date.

[27]  When the trial of the proceedings was adjourned on 1 March 2010 the respondents consented to an order that they make general disclosure.  A supplementary list of documents was delivered by the respondents on 15 April 2010.

[28]  Gary Robson swore to steps taken by him to ensure full disclosure in an affidavit served on the appellants' solicitors on 21 April 2010.  The appellants made a further application seeking that Gary Robson swear an affidavit as to the existence of 181 categories of documents and as to the circumstances in which they had ceased to exist or passed out of the possession and control of the respondents.

[29]  Gary Robson addressed each of the 181 categories in an affidavit of 20 May 2010, the return date of the application.  The application was adjourned to 9 June.  On that day, Gary Robson was ordered to file a further affidavit.  The primary judge found[7] that, with one qualification, the affidavit appeared to provide the information sought.  The possible non-compliance identified by the primary judge was that it was unclear whether the affidavit addressed documents in electronic form as it was required to do.  The 9 June order addressed this ambiguity.  The primary judge found, that on the face of his affidavit filed on 21 June, Gary Robson complied with the 9 June order.

[30]  Part of the reason for providing this historical analysis is to show the primary judge's familiarity with the three proceedings and, in particular, with the disputes over disclosure.  This familiarity and the primary judge's extensive and careful reasons make it improbable that the primary judge failed to give due consideration to matters such as those set out in paragraph [7] above.  Indeed, it may be inferred from the primary judge's reasons that he did not accept the existence of a serious risk that the trial of the trust proceeding would miscarry as a result of inadequate disclosure, assuming that disclosure was incomplete.

[31]  Because of his findings the primary judge did not consider it appropriate to stay the trust proceeding.  It is not suggested that the primary judge applied any wrong principle in this respect.  His Honour referred to the observations in Mango Boulevard P/L v Spencer & Ors[8] that the jurisdiction to grant a stay or dismiss the action is "to be exercised 'with great care' and 'extreme caution'".  In appropriate cases factors such as "'the avoidance of injustice between parties in the particular case',[9] the need to prevent the administration of justice being brought into disrepute,[10] and the protection by the court of the integrity of its processes"[11] will mandate that the discretion to be exercised in favour of staying or dismissing the proceeding.  It is an incident of the right to a fair trial that "all relevant and material evidence which supports or tends to support" a party's case be available to it.

[32]  In Australian National Airlines Commission v The Commonwealth,[12] Mason J said:[13]

"… it is central to our conception of the administration of justice that documents relevant and material to the issues arising in litigation should not be withheld from the parties and that each party enjoys as an incident of his right to a fair trial the right to present as part of his case all the relevant and material evidence which supports or tends to support that case.  …"

[33]  The primary judge, however, concluded that such principles were not engaged on the material before him and no error in his findings in that regard has been demonstrated.

[34]  Other principles applicable to the determination of this appeal are expressed in the following passage from the reasons of Gibbs CJ, Aickin, Wilson and Brennan JJ in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc:[14]

"Nor is there any serious dispute between the parties that appellate courts exercise particular caution in reviewing decisions pertaining to practice and procedure.  Counsel for Brown urged that specific cumulative bars operate to guide appellate courts in the discharge of that task.  Not only must there be error of principle, but the decision appealed from must work a substantial injustice to one of the parties.  The opposing view is that such criteria are to be expressed disjunctively.  Cases can be cited in support of both views:  for example, on the one hand, Niemann Electronic Industries Ltd.; on the other hand, De Mestre v. A. D. Hunter Pty. Ltd.  For ourselves, we believe it to be unnecessary and indeed unwise to lay down rigid and exhaustive criteria.  The circumstances of different cases are infinitely various.  We would merely repeat, with approval, the oft-cited statement of Sir Frederick Jordan in In re the Will of F. B. Gilbert (dec.):

'... I am of opinion that, .... there is a material difference between an exercise of discretion on a point of practice or procedure and an exercise of discretion which determines substantive rights.  In the former class of case, if a tight rein were not kept upon interference with the orders of Judges of first instance, the result would be disastrous to the proper administration of justice.  The disposal of cases could be delayed interminably, and costs heaped up indefinitely, if a litigant with a long purse or a litigious disposition could, at will, in effect transfer all exercises of discretion in interlocutory applications from a Judge in Chambers to a Court of Appeal.'"

[35]  The above observations have particular force here.  The proceedings are on the commercial list.  They have been managed by the primary judge who is intimately acquainted with the issues in dispute as well as the evidence, much of which is in statement form.  The stay application was made a relatively short time before the trial of the three overlapping proceedings was due to commence against the background of the proceedings described earlier.  The primary judge was singularly well equipped to determine whether there had been defects in disclosure and whether, if there had been, injustice might result unless a stay was granted:  a stay, incidentally, of only the proceeding in which the respondents' claim (as distinct from the defence to the claim) was obviously soundly based and simply proven.

[36]  It should be appreciated also that the primary judge, as the trial judge, will be in a position to deal with any issues relating to disclosure which may arise on the trial and give appropriate relief.  In the circumstances I have described, strong reasons would need to be shown to warrant the intervention of an appellate court.  No such reasons have been demonstrated.

Conclusion

[37]  For the above reasons I would order that the appeal be dismissed with costs.

[38]  CHESTERMAN JA:  I agree that the appeal should be dismissed with costs, for the reasons given by Muir JA.

[39]  PHILIPPIDES J:  I agree with the reasons of Muir JA and the order proposed.