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- Appeal Determined (QCA)
Thomson v Tremco Pty Ltd QCA 18
SaUPREME COURT OF QUEENSLAND
Thomson v Tremco Pty Limited  QCA 18
CAROLYN MARY THOMSON
Appeal No 7342 of 2018
DC No 3868 of 2017
Court of Appeal
General Civil Appeal
District Court at Brisbane –  QDC 101;  QDC 109 (Porter QC DCJ)
12 February 2019
23 October 2018
Sofronoff P and Gotterson and Morrison JJA
APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – RIGHT OF APPEAL – WHEN APPEAL LIES – FOR BIAS IN JUDICIAL PROCEEDINGS – where Mr and Mrs Thomson set up a company, Kadoe Pty Ltd, to carry on a waterproofing business – where Kadoe’s main supplier of waterproofing products was Tremco Pty Ltd – where Kadoe ceased paying Tremco’s invoices – where Tremco sued Kadoe in the District Court and, after a trial, obtained a judgment in its favour – where Kadoe was wound up on Tremco’s application – where Tremco sought to recover compensation against Mrs Thomson, on the basis that she was a de facto director of Kadoe – where judgment was given in favour of Tremco against Mrs Thomson – where the appellant contends that the Court should conclude there was apprehended bias in relation to the learned trial judge’s handling of the trial – where the trial judge had five months prior to being appointed, made public statements containing negative views of litigants in person – whether the public statements made by the trial judge amounted to apprehended bias
APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – INTERFERENCE WITH JUDGE'S FINDINGS OF FACT – PROOF AND EVIDENCE – OTHER MATTERS – where the appellant advanced that the claim for loss and damage was for the judgment debt under the judgment of 27 February 2015, and not the loss and damage sustained by Tremco – where there is the contention that there was a lack of evidence proving each debt and it was therefore not possible to reach a conclusion that the appellant’s company was insolvent – where it is contended that the trial was conducted on the basis that the debts were incurred between March 2010 and December 2010, but the learned trial judge’s decision was based on debts being incurred between March 2010 and January 2011 – where the managing director had not provided copies of the invoices, proof of the deliveries or proof of listed invoices – whether s 588G of the Corporations Act was satisfied – whether the debts were incurred when the appellant claims – whether the non-supply of invoices is an issue
APPEAL AND NEW TRIAL – APPEAL – GENERAL PRINCIPLES – INTERFERENCE WITH DISCRETION OF COURT BELOW – PARTICULAR CASES – OTHER MATTERS – OTHER CASES – where the appellant contends that the decision of the trial judge was not decided on cases referred to – where the trial judge was prompting some consideration of a necessary causal link between the debts incurred and the loss and the event which caused it – whether it was a necessity to raise necessity to consider a question of causation such as raised in March v Stramare
APPEAL AND NEW TRIAL – NEW TRIAL – IN GENERAL AND PARTICULAR GROUNDS – PARTICULAR GROUNDS – FURTHER EVIDENCE – AVAILABILITY OF EVIDENCE AT TRIAL – PARTICULAR CASES – where the appellant issued subpoenas to various employees of the ATO – where the trial judge did not call those ATO employees as witnesses – whether the trial judge in not calling those witnesses resulted in unfairness to the appellant
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – PROCEDURAL ASPECTS OF EVIDENCE – EXPERT REPORTS AND EXPERT EVIDENCE – OTHER MATTERS – where expert evidence was adduced at trial – where the appellant contended that expert evidence was not obtained in accordance with r 429G of the UCPR – whether r 429G of the UCPR is the only way an expert can be called
Corporations Act 2001 (Cth), s 588G
Uniform Civil Procedure Rules 1999 (Qld), r 429G
Amos v Wiltshire  QCA 70, cited
Australian National Industries Ltd v Spedley Securities Ltd (in liq) (1992) 26 NSWLR 411, cited
Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337;  HCA 63, cited
Jelin Pty Ltd v Johnson (1987) 5 ACLC 463, considered
March v Stramare (1991) 171 CLR 506;  HCA 12, considered
Re Polites; Ex parte Hoyts Corporation Pty Ltd (1991) 173 CLR 78;  HCA 3, cited
Ross v Hallam  QCA 92, considered
The appellant appeared on her own behalf
M de Waard for the respondent
The appellant appeared on her own behalf
Mills Oakley for the respondent
- SOFRONOFF P: I agree with Morrison JA.
- GOTTERSON JA: I agree with the orders proposed by Morrison JA and with the reasons given by his Honour.
- MORRISON JA: Mr and Mrs Thomson set up a company, Kadoe Pty Ltd (Kadoe), to carry on a waterproofing business. It traded under the name of Kadoe Commercial Coatings. The sole appointed director was Mr Thomson, the husband of the appellant.
- Kadoe’s main supplier of waterproofing products was Tremco Pty Ltd (Tremco). From about March 2010 Kadoe ceased paying Tremco’s invoices, and by December of that year Kadoe’s debt to Tremco totalled $146,410.20. The debts were not paid, and Kadoe disputed that it was indebted in that amount.
- Tremco sued Kadoe in the District Court and, after a trial, obtained a judgment in its favour on 27 February 2015. No appeal was lodged against that order.
- Kadoe was wound up on Tremco’s application, on 29 April 2015.
- Its judgment being unsatisfied, Tremco sought to recover compensation against Mrs Thomson, on the basis that she was a de facto director of Kadoe. The claim was brought under s 588M(3) of the Corporations Act 2001 (Cth), being a claim for the loss it suffered in relation to the Tremco debts.
- After a nine day trial, in which Mrs Thomson represented herself, judgment was given in favour of Tremco against Mrs Thomson in the sum of $372,016.10 plus interest pursuant to s 58 of the Civil Proceedings Act 2011 (Qld). A subsequent decision by the learned trial judge resolved the question of interest and costs of the trial.
- Mrs Thomson appeals against both decisions.
- The learned trial judge set out the details of the factual background, including the way in which Kadoe was set up, how it traded, its dealings with Tremco and the difficulties which led to its failure. What follows is largely taken from the matters found by his Honour.
- Mr and Mrs Thomson were each involved in conducting businesses prior to Kadoe. Mr Thomson was a waterproofer by trade, and Mrs Thomson conducted a knitwear business, and then they jointly conducted a bed and breakfast business in Victoria. In about 2003 they moved to Queensland where, eventually Kadoe was set up.
- Mrs Thomson said in an affidavit filed in the District Court that she was the General Manager of Kadoe between March 2009 and November 2014. She said Kadoe was incorporated in March 2009 for the purpose of being a corporate trustee of the For Three Trust (the Trust). Advice was given to Mrs Thomson by accountants in respect of the business structure, and particularly the establishment of the Trust. Mrs Thomson said she had advice from the accountants that Kadoe should not trade in any other capacity than as the Trustee of the Trust. As a result Mrs Thomson engaged them to set up Kadoe, establish the Trust, and apply for an ABN and Tax File Number for Kadoe.
- When Kadoe was incorporated in March 2009 copies of the Trust Deed creating the For Three Trust were provided for execution, and the business name Kadoe Commercial Coatings was registered.
- Mr Thomson was appointed as a sole director of Kadoe. It had 100 shares, owned equally between Mr and Mrs Thomson.
- As matters transpired, the settlement sum for the Trust was not paid and therefore there was an issue at the trial as to whether the Trust had been validly created, and if not, whether that mattered to Tremco’s claim.
- Kadoe lodged a credit application with Tremco in September 2009. It gave its trading name as Kadoe Commercial Coatings and Mrs Thomson’s email as the contact email. The application revealed that Kadoe was acting as the trustee for the For Three Trust, and listed Mr Thomson as the sole director.
- Kadoe began to trade in the last few weeks of the 2009 financial year, with Tremco as the key supplier of the products it required to carry on its business.
- Kadoe traded from the Thomson’s family home. Most days Mr Thomson was usually onsite somewhere, carrying on the waterproofing work in which the company engaged. From about February 2010 Tremco’s dealings with Kadoe were dealt with by a Ms Willson. She gave evidence at the trial which was accepted by the learned trial judge.
- Ms Willson said she dealt exclusively with Mrs Thomson in relation to Kadoe’s affairs. She said Mrs Thomson had a good knowledge of Tremco’s business and margins, and negotiated specific pricing which differed from the standard price list. Mrs Thomson managed the Kadoe operations on a day to day basis, including ordering products, ascertaining work in the marketplace, organising staff, dealing with other contractors and developers, deliveries, accounts, contract tenders, market research and marketing. So far as Ms Willson knew, Mr Thomson performed no role for Kadoe other than carrying out the labour.
- The dealings between Ms Willson and Mrs Thomson from February 2010 until about January 2011 were on a very regular basis. Topics that they dealt with included prices, differing types of products for Kadoe and the use of those products, warranties, the jobs Kadoe was performing, the different job sites and the different people in the marketplace. Mrs Thomson discussed the work that she had personally secured and arranged for Kadoe, which included more than 14 different jobs on different job sites.
- Kadoe’s 2010 financial statements showed a small profit, but the balance sheet showed a deficiency. The main assets were trade debtors, but there was a substantial loan to the Thomson Family Trust and no cash on hand. The main liabilities were trade creditors, an overdraft account, a loan from the ANZ Bank and a GST debt owed to the Commissioner of Taxation.
- Based on the evidence from an expert, Mr Hudson, the learned trial judge concluded that if the loan to the Thomson Family Trust was not reasonably recoverable then Kadoe was insolvent. His Honour found that the loan was not recoverable. Further, Kadoe was consistently indebted to the Commissioner of Taxation from at least March 2010 and never cleared its taxation liabilities. Finally, there was no cash available as at 30 June 2010 to pay any distribution to the beneficiaries of the Trust.
- By November 2010 Mrs Thomson told the representatives at Tremco that Kadoe’s account with Tremco had been put on hold. It appears that decision was made in the Sydney office of Tremco. At that time the outstanding account was about $140,000. Thereafter there was considerable contact between Ms Willson and Mrs Thomson, making various attempts to retrieve the debt by Tremco, and various excuses made on behalf of Kadoe as to why payment could not be made. Finally, on 11 November 2010, Mrs Thomson sent a message saying that she could commit to pay $12,500 by 7 December 2010, and a further $12,500 by 19 December 2010.
- That second payment was not paid as promised and in February 2011 Mrs Thomson wrote to Tremco explaining why payment could not be made.
- The learned trial judge found that there were numerous examples of Mrs Thomson apparently conducting the affairs of Kadoe in a manner which was indicative of her having primary responsibility for those affairs and exercising independent judgment in respect of them. His Honour found that the negotiations with Tremco were carried out by Mrs Thomson independently on behalf of Kadoe, with Mr Thomson willing to acquiesce in any arrangement she reached.
- The learned trial judge accepted the evidence from Kadoe’s former accountants that it was Mrs Thomson who was responsible for the affairs of Kadoe, and gave instructions to them in that respect. According to Ms Jeppesen from the accountancy firm, Mrs Thomson was primarily responsible for the day to day business activities and finances of Kadoe, banking and postage, entering financial data into the computer and accounting software, placing orders, paying bills, directing the employees of Kadoe, paying wages, managing tender processes and the like.
- Kadoe ended up in a dispute with the accountants as to the fees for their work. That led to the termination of the retainer of the accountants and the retention of documents held by them in respect of Kadoe’s affairs.
- A dispute arose with the accountants as to whether the For Three Trust had been validly created or not. The issue centred around the non-payment of the settlement sum. Eventually proceedings were brought against Kadoe by the accountants in late 2012, for unpaid fees.
- Mrs Thomson gave evidence that Kadoe ceased trading on 30 June 2013. Tremco instituted proceedings to recover its debt. It was successful in those proceedings and received a judgment of $146,410 plus interest of $44,914.60, and Kadoe was ordered to pay costs on the standard basis. The Tremco Judgment was not appealed.
- Kadoe failed to comply with a statutory demand issued on behalf of Tremco and it was wound up in insolvency on 29 April 2015. Mr Terrence Rose and Ms Ann Meagher were appointed as liquidators.
- Mr Thomson was made a bankrupt in June 2015. Tremco’s proceedings against Mrs Thomson were commenced on 28 April 2016.
- Mrs Thomson raised numerous points in support of the various grounds of appeal. In some respects her outlines were convoluted and repetitious, at least in so far as the apprehended bias grounds were concerned. I intend to deal with the points as they appeared at the end of oral address.
- Before this Court Mrs Thomson advanced a contention that it should conclude there was apprehended bias in relation to the learned trial judge’s handling of the trial. The point centred around two issues; that Mrs Thomson was self-represented in the trial proceedings, and the learned trial judge had, five months prior to being appointed, made “public statements containing his clear and unfavourable views of litigants in person”.
- The point as developed in Mrs Thomson’s outline, and orally, was that a fair-minded lay observer would have a reasonable apprehension of bias by the learned trial judge because:
- (a)on 25 March 2017, whilst still a member of the Bar, his Honour publicly stated what his opinion of litigants in person was based on his own experience, as well as the experiences of Douglas J and a psychiatrist, Dr Gates; these were expressed in a paper entitled “Advocacy and the Litigant in Person”;
- (b)those public statements were clear and unfavourable, and totally negative towards litigants in person, “to the total exclusion of any positive profile of a litigant in person”;
- (c)the statements were in terms that: litigants in person were not in touch with reality, and remain insane for the bulk of their life because they hold on to grievances for losses that are not real; and compared them to Don Quixote, fighting their opponents on fantasised images or suffering from pathological symptoms like schizophrenia, where 150 years of medical research into querulous paranoia has not provided any true pathological reason for that querulousness.
- The contention was that the paper was presented to the Bar Association of Queensland 2017 conference, “including barristers that might be the opponents of litigants in person. The Bar Association then subsequently made the full paper available for anyone to access”.
- The paper in question focused on the issue of advocacy when dealing with a litigant in person. In the introductory section the paper identified that cases involving a litigant in person presented particular challenges for a judge, calling for more focussed advocacy on the barrister’s part. For example, it was said:
“… dealing with an LIP throws up a number of novel issues which the advocate must take into account in conducting his or her case, both in an ethical manner and to the best advantage of his or her client. The purpose of this paper is to identify some of those issues.”
- Then followed a passage of the paper entitled “Sizing Up Your Opponent”. The thrust of this section was to identify the need for an advocate to gain some insight into the character and motivation of the litigant in person. In that context one particular well known category of litigant in person was referred to, namely “the so-called ‘querulous’ litigant or ‘vexatious’ litigant”. The querulous litigant was one who was said to be “obsessed with a particular issue or grievance”. It was the querulous litigant that was compared to Don Quixote and in respect of whom a passage from a paper by a psychiatrist was quoted. I pause to observe that on no basis whatever could Mrs Thomson be described as falling into the category of querulous litigant.
- The balance of that section of the paper dealt with two other categories of litigant in person. The first was “The Misguided or Misled LIP”. This category was identified as those who have obtained informal advice, often from people without legal qualification, who lead them to believe they have a good ground of defence or claim. That category was said to be people who are “usually more gullible than malicious”. The second category was those litigants in person who simply could not afford legal representation, or for whom the risk posed by the litigation did not justify the cost of legal representation.
- The paper suggested that in respect of all categories it would be helpful for an advocate to get some insight into the background of the opponent and their motivation and character.
- The paper then went on in the next section to discuss “Some Particular Ethical Considerations”. None of that part of the paper was said to ground any complaint by Mrs Thomson and it can therefore be put aside. The next section discussed “The Role of the Judge”. By reference to authorities various matters were outlined as to how a judge should approach dealing with litigation involving a litigant in person. These included the well-known prescriptions to ensure procedural fairness, to keep the litigant in person informed as to the proceeding and how it should progress, explain relevant procedures, and within limits assist the litigant in person. The duty to ensure a fair trial was highlighted on more than one occasion in this section. Having done that the focus returned to the point of view of the advocate:
“It is counsel’s duty to assist the Court, including (in the writer’s view) assisting with navigating the shoals and reefs of the ‘duty to assist’. Further, it is the writer’s view that it is good advocacy to assist the Court with these issues. It gives the Court confidence that the advocate is not going to conduct the matter in a way which leads the Court into error. On the other hand, it is important to advance the interests of counsel’s own client.”
- All of that section was directed as advice to barristers and how to conduct proceedings from that point of view. However, once again, the role of the court was referred to, by reference to a decision of this Court in Ross v Hallam. The passage referred to the duty of the court, emphasising the duty to act impartially and ensure procedural fairness to all parties, not merely the party who may be disadvantaged through lack of legal representation. As well, the purpose of the rules of civil procedure, namely to facilitate the just and expeditious resolution of the real issues between the parties, was highlighted.
- The principles in respect of apprehended bias were not in issue before this Court. Each side referred to Ebner v Official Trustee in Bankruptcy where the High Court stated the principle as being the “a judge is disqualified if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide”. The High Court held that an analysis of the question involved two steps:
“First, it requires the identification of what it is said might lead a judge (or juror) to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits. The bare assertion that a judge (or juror) has an ‘interest’ in litigation, or an interest in a party to it, will be of no assistance until the nature of the interest, and the asserted connection with the possibility of departure from impartial decision making, is articulated. Only then can the reasonableness of the asserted apprehension of bias be assessed.”
- Once reference is had to the paper it becomes clear that the passage to which Mrs Thomson referred was confined to identifying aspects of only one particular category of litigant, namely the querulous litigant. Further, the comments were advanced as suggestions to an advocate as to the need to make out the underlying motivation of the litigant in person, as a way of informing the most efficacious way of performing the role and duty of barrister.
- There is no suggestion that Mrs Thomson ever fell into the category of querulous litigant. The fair-minded lay observer, knowing that fact and knowing the paper was delivered prior to the learned trial judge’s appointment, would not possibly have an apprehension of bias; that is, the fair-minded lay observer would not consider that the learned trial judge could not bring an impartial mind to the issues in the trial.
- Further, the fair-minded lay observer would be aware of what happened in the trial. I have read the trial transcript. There is no suggestion that the learned trial judge treated Mrs Thomson other than fairly, calmly and in accordance with the duties he had previously identified in the paper delivered when he was at the Bar. There is not the slightest hint in the conduct of the trial that the learned trial judge considered Mrs Thomson a querulous litigant, as opposed to simply a litigant who could not afford legal representation.
- There are many instances where the learned trial judge intervened to assist Mrs Thomson and explain matters to her, and where his Honour stated openly that the trial was to be conducted so that it was fair to each side, and in accordance with law. And that was repeated during the course of addresses.
- In this case Mrs Thomson’s contention fails at each step. There is nothing in the paper that would suggest the learned trial judge might decide the case other than on its legal and factual merit. Further, there is simply no basis to find a logical connection between that publication and any deviation from the course required. The paper was not “unfavourable and totally negative” to [litigants in person], let alone to the total exclusion of any positive profile of a [litigant in person]”. To the contrary, the paper simply identified categories of litigant in person and explored ways in which a barrister would approach litigation concerning that person. Those parts of the article to which Mrs Thomson points are not concerned with litigants such as herself but one particular category of litigant in person. Even in respect of that category, the paper does not warrant the description given to it by Mrs Thomson.
- There is no merit in this point.
Apprehended bias – disclosure during the trial
- On day three of the trial an issue arose which prompted Mrs Thomson to consider whether to make an application that the learned trial judge recuse himself.
- The issue arose in the course of cross-examination of one of the liquidators, Mr Rose.
- Late in the day the learned trial judge adjourned to permit Mrs Thomson to collect her thoughts. When the court resumed at 3.56 pm the learned trial judge said he needed to make a disclosure. He then made these points:
- (a)between August 2016 and March 2017 he had been instructed by a firm in Toowoomba to act for Hilltops Pastoral Group Pty Ltd (in liquidation), and for the liquidators of that company, who were partners in a firm called SV Partners;
- (b)the proceeding related to a claims by Hilltops and the liquidators against a Mr Neville, arising out of the winding-up of Hilltops; the proceedings were resolved in March 2017 by way of a settlement;
- (c)as far as his Honour could recall, that was the end of his involvement in the matter; the proceedings obviously had nothing to do with Mrs Thomson’s litigation;
- (d)Mr Rose, who was an employee of SV Partners, had some tangential involvement but not as a liquidator of Hilltops or as someone theoretically or practically giving instructions; so far as his Honour could recall, Mr Rose was a liquidator of another company which was a creditor of Hilltops;
- (e)his Honour had not met or taken instructions from Mr Rose, or had any dealings with him in respect of Hilltops; and
- (f)his Honour had only recalled the previous night that Hilltops involved liquidators who were partners of SV Partners.
- The learned trial judge then made the point to Mrs Thomson that he had made the disclosure so she knew about it, but he was being “a bit more careful about it than I otherwise might have been because you’re not familiar with the practices in courts”. His Honour then explained to Mrs Thomson that if she formed the view, given what he had said, that a fair minded observer might reasonably form the view that he could not bring an independent mind to the case, she could make an application for recusal. Then followed this exchange between Mrs Thomson and the learned trial judge:
“Mrs Thomson: I don’t know what to say.
His Honour: Well ---
Mrs Thomson: I don’t really want to make an application. I think that ---
His Honour: Can I take ---
Mrs Thomson: I think that I have been treated fairly, as Mr Rose has been treated fairly.
His Honour: Well, that’s very kind of you, but can I tell you this. It’s awkward because my job is to assist you with the law, so far as I can, to ensure a fair trial and practice, while at the same time not descending into the arena, remaining impartial and ensuring the plaintiff gets the benefit.
Mrs Thomson: Sure.
His Honour: And when it involves a disclosure of this kind, it puts me in a particularly awkward position. But can I tell you this: based on my experience, it’s not unusual for a commercial barrister to work for any number of liquidators. In fact, I may have worked on instructions from SV Partners before Hilltops. I couldn’t even possibly remember. I’ve worked for a lot of liquidators over the years. It’s not an unusual scenario. I didn’t have anything to do with Mr Rose.
Neither of the liquidators have anything to do with this case and, in any event, I should add to my disclosure, I mainly dealt with Mr Matthew Booklis, who was the, sort of the person who primarily ran the Hilltops litigation, although, I did meet one of the others at some point. So that’s not an unusual thing. It’s not something, as far as I see, that’s – well, it’s got nothing to do with this case, it was a Papua New Guinean man who was running some kind of business, anyway, to do with farms somewhere. That’s about the best I can do.
But I make this disclosure so you can consider your position. I’m content for you to say ‘No. I don’t really care. Let’s move on.’ If you wanted to think about it and, you know, say something about it in the morning, that would be okay too. But can I tell you, the fact that I’ve disclosed this doesn’t mean I would recuse myself … Or that I wouldn’t.”
- What then followed was an exchange between Mrs Thomson and the learned trial judge as to when, if she decided to make an application for recusal, that application would be heard. Mrs Thomson indicated that she would like to consider her position overnight and was given that opportunity.
- The following morning Mrs Thomson said she wished to make some submissions. The learned trial judge responded that he wanted to know if she was making an application for recusal, or some other kind of application. Mrs Thomson responded: “No, I’m not making that. I’m actually asking you if you will recuse yourself based on the following points”.
- Mrs Thomson then recited some points and asked the learned trial judge to “consider, on that basis, that you actually recuse yourself without the need for me to make that application”. The learned trial judge refused, saying that she had to make the application or not. Mrs Thomson then said she would make the application. The exchange continued, clarifying whether she was making the application at that time or not. Mrs Thomson confirmed that she was making the application for recusal.
- As the exchanges continued, it became apparent that Mrs Thomson required further time to make the application. The learned trial judge said that he would give more time but that in the meantime the trial should proceed. Mrs Thomson asked for an additional 24 hours, which prompted a discussion about when submissions might be supplied. Mrs Thomson made reference to the fact that she was simply one person trying to conduct the litigation, with limited manpower. Then followed this exchange:
“Mrs Thomson: If that disclosure was not made yesterday afternoon, I would have finished the cross-examination yesterday afternoon. I would have been back here this morning to do exactly the same thing. I have turned up every day to do the right thing. It wasn’t me that made that disclosure.
His Honour: Well, it’s just part of the ordinary incident of commercial litigation, Mrs Thomson.
Mrs Thomson: I understand, but I’m one person.
His Honour: It’s not an unusual thing and I have to be fair to the plaintiff. A represented party would have no difficulty dealing with this matter and there is a limit to the extent to which advantages and indulgences can be given to someone who is a litigant in person and that limit is when it starts to cease to be fair to the other party.
Mrs Thomson: But, your Honour, [P]ractice [D]irection 10 of 2014 in the Supreme Court – and I know this is the District Court – it actually requires that self-represented litigants are given adequate time for the proper administration of justice.
His Honour: For the proper administration of justice.
Mrs Thomson: Exactly. And I understand that that phrase can be turned either way. I understand that.
His Honour: Well, it’s not turned either way, Mrs Thomson, it applies evenly to both parties.
Mrs Thomson: Please, please do not put this back on me. Please do not put this back on me because if this hadn’t occurred, I wouldn’t be here asking for this to happen.
His Honour: Okay. Alright. I hear what you say. It’s an ordinary incident of commercial litigation. There’s nothing particularly remarkable about it and a represented party, in my view, could’ve dealt with it in the time available, the time that had been discussed yesterday. I hear that you seek an adjournment of the trial until 10 am tomorrow so that you can bring an application that I recuse myself. That’s your application.
Mrs Thomson: Yes.
His Honour: All right. Anything else on that?
Mrs Thomson: No.”
- The adjournment of the trial was opposed by counsel appearing for the respondent. The learned trial judge then pressed Mrs Thomson to articulate, as best she might in general terms, what it was about the disclosure that made her think a fair-minded observer would consider that his Honour could not bring an independent mind to the resolution of the issues. More than once his Honour pointed out that he was trying to decide if there was sufficient merit in the application for recusal to warrant adjourning the trial. Mrs Thomson responded that she could not do that at that time and needed the extra day. His Honour reminded Mrs Thomson that what was being considered was the application to adjourn the trial.
- Submissions from both sides continued and when they concluded his Honour adjourned for a brief time. On resumption his Honour gave reasons for refusing to adjourn the trial for a day to allow Mrs Thomson to consider her application for recusal. His Honour concluded:
“In all the circumstances, particularly bearing in mind the application can be brought at any time at least up until the end of the trial, and, as Mr de Waard suggests, probably at any time prior to judgment, I refuse the application to adjourn the trial. Of course, as I have made clear a number of times, Mrs Thomson can bring an application for recusal when she wishes.”
- Mrs Thomson submitted that the question to be addressed was whether the fair minded lay observer might apprehend that the learned trial judge could not bring an impartial mind to the issues in the trial by reason of his Honour’s “unwillingness to give me an additional 24 hours to research recusal and to make an application for recusal …”.
- In Mrs Thomson’s outline a number of factual matters were added to what had transpired at the trial. They included:
- (a)that there had been no disclosure by the learned trial judge of the name of the creditor of which Mr Rose was liquidator of in the Hilltops proceeding;
- (b)it was not disclosed that one of the liquidators of Hilltops was also a liquidator of Hilltops’ unnamed creditor;
- (c)it was not disclosed that the name of that creditor was NK Collins Pty Ltd (in liquidation), and that Mr Rose and Mr Van der Velde of Hilltops, were both liquidators of that creditor;
- (d)it was not disclosed that NK Collins was the creditor that made the application to have liquidators appointed to Hilltops;
- (e)it was not disclosed that all the liquidators for both Hilltops and NK Collins were partners of SV Partners;
- (f)it was not disclosed that a different solicitor’s firm had raised the issue of a conflict of interest in relation to the partners of SV Partners appointing each other in both liquidations, and that correspondence was included in affidavits for court hearings in which his Honour had appeared as a barrister;
- (g)his Honour did not disclose that he had given an opinion to the liquidators of Hilltops which, by order of the court, was put into a sealed envelope only to be opened by order of the court or a judge, when his Honour knew that Mrs Thomson would not be able to get a copy of the judgment in 24 hours; and
- (h)his Honour did not disclose that he had presented submissions to the court in the Hilltops proceedings that differentiated between the role of a trustee company of a trust and that trustee company acting in its own capacity as well.
- For a number of reasons I consider that Mrs Thomson’s contentions in respect of this aspect of the case lack merit.
- First, the disclosure was made because Mr Rose was in the witness box, and being cross-examined. It was, no doubt, possible that questions of credit would arise, but even if they did not, findings might be required as to substance of Mr Rose’s evidence. What was being disclosed was the possible connection between the learned trial judge and Mr Rose. As it turned out that connection was quite tenuous. Nothing has been advanced to the Court to suggest otherwise. Mr Rose was not one of the liquidators of the company for which his Honour acted, and there was no interaction of any meaning between them. To say that the disclosure was made out of an abundance of caution is an understatement. In my respectful view there was no need for a disclosure at all.
- Secondly, disclosure of interests and associations by a judge should normally occur if there is a serious possibility that they are potentially disqualifying. Here there is no serious possibility that what was disclosed was potentially disqualifying. The learned trial judge was ultra cautious because he had an unrepresented litigant before him, but the mere fact that he made that disclosure does not turn something that was not disqualifying into something that was.
- Thirdly, the liquidators of Kadoe were Mr Rose and Ms Meagher. Neither of the liquidators of Hilltops was said to be involved in relation to Kadoe, and the fact that partners of SV Partners might have been liquidators of both Hilltops and one of Hilltops creditors had no relevance to the issues in the proceedings between Mrs Thomson and Tremco. Nor was it relevant, or necessary to disclose, that Hilltops or one of its creditors might have had common liquidators. To indulge in speculation about those matters is to lose sight of the fact that the disclosure made in the proceedings between Mrs Thomson and Tremco was in relation to any possible connection with the witness, Mr Rose.
- Fourthly, the fact that some other lawyers raised issues of conflict of interest because partners of the same firm were being appointed in the liquidation of Hilltops and its creditor, N K Collins, is of little consequence. It seems from the material filed by Mrs Thomson that the issue was ventilated in court, or at the least raised in material filed in court.
- Fifthly, none of the matters raised engage with the second step required by Ebner, namely the articulation of a logical connection between the matter raised and the feared deviation from the course of deciding a case on the merits. None of the matters raised by Mrs Thomson have that degree of connection which would suggest to any fair minded lay observer that his Honour could not bring an impartial mind to the issues in the proceedings between Mrs Thomson and Tremco. The fact that a judge has acted in a professional capacity in another matter (or matters) for a party to the proceeding will not normally provide grounds for disqualification. Here the case does not even reach that point, because the learned trial judge was not acting, when in the Hilltops proceedings, for a party to the proceeding in the litigation between Mrs Thomson and Tremco.
- Sixthly, Mrs Thomson’s contentions do not grapple with the fact that whilst the learned trial judge did not grant a 24 hour adjournment, the effect was to grant a longer one. As demonstrated in the passage set out at paragraph  above, the learned trial judge made it very clear that the recusal application could still be brought at any time thereafter. All that happened was that his Honour declined to hold up the trial for 24 hours. In the end result Mrs Thomson was denied nothing. She could still have applied for the judge to recuse himself, but did not do so.
- This ground lacks merit.
Basis for the claimed loss and damage – judgment debt?
- The contention advanced under this ground had several elements. First, that Tremco’s claim for loss and damage was for the judgment debt under the judgment of 27 February 2015, and not the loss and damage sustained by Tremco. The second was that there was a lack of evidence proving each debt, and therefore it was not possible to reach a conclusion that Kadoe was insolvent at any relevant time. The third was that the trial was conducted on the basis that the debts were incurred between March 2010 and December 2010, but the learned trial judge’s decision was based on debts being incurred between March 2010 and January 2011.
- Mrs Thomson submitted that at the trial Tremco had only provided evidence of a judgment, and that was not sufficient as a debt to satisfy s 588G of the Corporations Act.
- In the course of oral argument Mrs Thomson identified her first point as being that Tremco may have proved Kadoe’s liability to pay those debts when it sued Kadoe, but Tremco did not prove those debts when it sued Mrs Thomson. The judgment entered was as between Tremco and Kadoe, and did not bind Mrs Thomson. It proved that Kadoe had a debt, but not when the debt was incurred.
Discussion – proof of debt
- Resolution of this issue requires reference to the pleadings. They were identified in the reasons below by the learned trial judge as being paragraph 15(a) of the Statement of Claim, paragraph 20 of the Defence, and paragraphs 20 and 21 of the Reply.
- Paragraph 15(a) of the Statement of Claim pleaded:
“Between 30 September 2009 and 29 April 2015, the Company incurred debts to unsecured creditors in the amount of $345,369.74 in the following amounts:
- (a)between October 2009 and July 2011, the amount of $146,410.20 to the Plaintiff …”
- The debt referred to in paragraph 15(a) of the Statement of Claim was part of the greater amount of $345,369.74, defined as “Unsecured Debts”. Mention should be made of paragraph 16(b) which pleaded that at the time the “Unsecured Debts” were incurred by Kadoe, Kadoe was insolvent for reasons pleaded in paragraphs 8 to 12 of the Statement of Claim.
- Paragraph 20 of the Amended Defence responded:
“The defendant admits that the allegations contained in paragraph 15.a. of the plaintiff’s statement of claim because a judgment was made in favour of the plaintiff for $146,410.20 in District Court proceedings number 2152/11.”
- Until it was struck out (as to which see paragraph  below) paragraph 21 of the Defence pleaded a further response to paragraph 15(a) in these terms:
“Further and in the alternative the defendant denies the allegation contained in paragraph 15.a. of the plaintiff’s statement of claim, that this amount is owing to the plaintiff by the defendant because:
a. by the plaintiff’s own admissions, it was not able to provide proof of deliveries for invoices it had supplied to the trading trust.
b. The plaintiff never provided evidence of those proof of deliveries to the court in District Court proceedings number 2152/11.
c. The plaintiff did not provide evidence of those proof of deliveries to the Court at trial, stating that the courier companies did not keep those proofs of deliveries for longer than six months, when the plaintiff had disclosed documents during the legal proceedings, that proved they could be printed from couriers’ websites more than 12 months after the date of the alleged delivery.
d. Those documents were also provided to Rackemann DCJ pursuant to Court orders made by His Honour, during a hearing of a direction’s application made by the Company in February 2014, which hearing spanned several weeks to accommodate the plaintiff time to make the required disclosure.”
- Paragraph 20 of the Reply responded to paragraph 20 of the Defence. It pleaded that the Plaintiff “adopts the express admission of paragraph 15(a) of the Statement of Claim contained in paragraph 20 of the Defence … and will rely upon the express admission at the trial of this proceeding.”
- Paragraph 21 of the Amended Defence was struck out before the completion of the trial. The circumstances were that it became evident on the first day of trial that what Mrs Thomson sought to do by paragraph 21 was to allege that the judgment in 2015 had been obtained by fraud, thus going behind the admission in paragraph 20. Leave to amend was refused on the basis that there was no arguable case of fraud. On day four of the trial counsel for Tremco applied to strike out paragraph 21 and that course was not opposed.
- At the trial Mrs Thomson challenged the incurring of the debt in three ways, each of which was replicated before this Court. The first was that Tremco had failed to establish when the debts had been incurred, because there was no identification of when each debt became due and owing. Secondly, Tremco had failed to establish that each debt had arisen, in the sense that each individual invoice represented goods sold and delivered. And thirdly, if Tremco was relying on the Tremco 2015 judgment, the debt incurred for the purposes of s 588G, Tremco must fail in its claim because a judgment debt is not incurred by the company within the meaning of s 588G(1).
- The learned trial judge rejected those contentions. As to the first, his Honour held that the effect of the admission in paragraph 15(a) of the Statement of Claim was to admit not only that the Tremco debts were incurred, but also that they were incurred over a specific period, being October 2009 to July 2011. In that respect the learned trial judge was, in my respectful view, completely correct.
- Paragraph 15(a) alleged that Kadoe “incurred debts to unsecured creditors”, one of which was the sum of $146,410.20 incurred to Tremco between October 2009 and July 2011. The admission in paragraph 20 of the Defence included all those elements, even if it was unnecessarily accompanied by a reference to the judgment made in 2015.
- In the Reasons below the learned trial judge held that it was common ground at the trial that the period in which Kadoe incurred unpaid liabilities with Tremco was March to December 2010. The learned trial judge gave references to a number of parts of the transcript. There was no challenge to that finding on this appeal. His Honour held that the invoices giving rise to the Tremco debts were in evidence, and some of them indicated that the invoices might not have been due for payment until January 2011. For that reason his Honour treated the relevant period as being March 2010 to January 2011.
- The learned trial judge referred to the invoices again in his Reasons, noting that they were in evidence at the trial. His Honour also found that Mrs Thomson “did not lead any evidence to rebut the inferences arising from those business records of the plaintiff that goods were sold and delivered in accordance with those invoices”.
- The invoices were put into evidence via an affidavit of Mr Rose, sworn 21 March 2018. In that affidavit Mr Rose deposed to the fact that he corresponded with the solicitors for Tremco seeking substantiation of the debt claimed. In addition to being referred to the judgment in 2015 Mr Rose asked for and was given the tax invoices to support the claim. The solicitors provided copies of invoices from Tremco to Kadoe between 16 March 2010 and 10 May 2011, together with an Excel spreadsheet detailing the differences between the amount pleaded compared with the statement. Mr Rose reviewed the invoices that had been provided to him, as well as the other documents, and formed the view that Tremco’s claim to $146,410.28 was reasonable. An examination of a sample of those invoices indicates that each invoice was accompanied by a courier delivery label, the date of which matched the date of the invoice. The invoices also have copies of the courier labels on their face, and the numbers match those of the labels. The invoices also include the terms governing when payment was due. The spreadsheet matched dates, invoices, courier numbers and, where applicable, payment dates. As to the latter there were relatively few, consistent with the fact that there was a substantial outstanding debt.
- The affidavit of Mr Rose includes a copy of the Tremco Judgment. Mrs Thomson appeared on behalf of Kadoe in that trial. As appears from the reasons given by Andrews SC DCJ the issues in that trial were whether goods for which payment was demanded were not ordered, not delivered, not picked up, already paid for, returned or donated. For certain items there were issues about whether, if delivery was proved, the defendant was entitled to certain credits. As is evident, as between Tremco and Kadoe there was a full litigation of whether the debts were incurred. Issues fully litigated include whether and when debts were incurred, delivered and paid or unpaid. In that context it is, perhaps, not surprising that Mrs Thomson did not re-litigate those issues in the trial the subject of this appeal.
- In any event, it is implicit in the findings by the learned trial judge that there was no challenge to the fact that the invoices attached to Mr Rose’s affidavit were those as between Tremco and Kadoe, nor that they were proper business records of goods sold and delivered in accordance with the invoices. The evidence of Mr Rose, if unchallenged, provided a basis upon which it could be found that during the period March 2010 to January 2011 Kadoe had incurred debts to the extent of $146,410.20 to Tremco.
- The combination of the admission in the pleading, the level of proof offered through Mr Rose, and the lack of challenge by Mrs Thomson, meant it was open to the learned trial judge to find, as he did, that Kadoe incurred debts to Tremco totalling $146,410.20 over the period March 2010 to January 2011.
- These contentions lack merit.
Primary decision not decided on cases referred to
- One of Mrs Thomson’s contentions was that during the trial the learned trial judge referred to two decisions thereby indicating that they would govern the result. The decisions were Jelin Pty Ltd v Johnsonand March v Stramare. The contention advanced was that by referring to them the learned trial judge gave “directions … to the parties during [the] trial stating that two cases would form the basis of his decision”, but the respondent made no reference to them in closing submissions.
- Although couched in terms of being an aspect of apprehended bias Mrs Thomson put the case slightly wider by contending that in truth Tremco relied upon the judgment debt, and a judgment debt was not a debt incurred for the purposes of s 588G(1). It was that which was said by Mrs Thomson to make Jelin relevant.
- In that respect Mrs Thomson pointed to paragraph 20A of the pleading where Tremco quantified its loss.
- The commencement point for this consideration is the Statement of Claim. As mentioned earlier paragraph 15(a) pleaded that Kadoe incurred debts to Tremco in the amount of $146,410.20, between October 2009 and July 2011. That allegation was admitted. Then, in paragraph 20, Tremco pleaded:
“By reason of the Company’s insolvency and the matters pleaded in paragraph 19 herein, the Plaintiff has suffered loss and damage (the “Loss”) in the amount of $416,730.78, being:
- (a)a judgment debt in the amount of $191,124.88 from the Proceeding; and
- (b)costs incurred in prosecuting the proceeding in the amount of $225,605.90.”
- The “proceeding” referred to was that in the District Court which resulted in the 2015 judgment. The sum of $191,124.88 was principally comprised of the amounts of the invoices ($146,410.20) and the interest ($44,914.60).
- In my view, Mrs Thomson’s contentions on this point are misconceived. Tremco did not plead that their debt for the purposes of s 588G was the judgment debt. Paragraph 15(a) pleaded the incurring of the debt of $146,410.20 over a period of time which ended many years prior to the judgment. It could not possibly have referred to the judgment debt. Then, for the purposes of a claim under s 588G, Tremco quantified its loss, in paragraph 20, as being the amount of the judgment debt and the costs of the proceedings leading to it.
- During the course of the trial the learned trial judge referred the parties to Jelin. However, it was not suggested that anything was said by his Honour at that time to the effect that the decision would bind the result. Rather, Mrs Thomson’s argument is put on the basis that the learned trial judge having referred to Jelin, a fair minded lay observer might apprehend the possibility that it would be an important case when reaching the conclusion.
- Reference to Jelin reveals it was a decision on an application to dismiss an action on the basis that the pleading disclosed no reasonable cause of action, or alternatively the pleading would prejudice a fair trial. The pleading in that case sought to recover damages under the West Australian analogue of s 588G. The plaintiff sought to recover damages because it had been deprived of a judgment debt obtained in proceedings which it commenced and which resulted in a judgment based on misleading or deceptive conduct by virtue of fraudulent misrepresentations. The contention was that neither the giving of judgment nor deceptive conduct could constitute the incurring of a debt for the purpose of deception. Master Seaman, QC, expressed the view held that a company which made fraudulent representations, which in turn led to proceedings resulting in a judgment, cannot be said to have thereby incurred a debt for the purposes of the section. It may have incurred a liability for damages, but not a debt. He said:
“In my opinion a company which by its servant or agent in August 1981 made fraudulent representations to the plaintiff which led to proceedings which resulted in a judgment in the Federal Court on 11 April 1985 cannot be said to have thereby incurred a debt on either day or on any day between those days.
Upon some day in 1981 a cause of action for general damages arose and has since been established, giving rise to a judgment debt. The distinction between the incurring of a debt and the incurring of a liability for damages for the purposes of a provision of this sort is made plain by Deputy Commr for Corporate Affairs v Abbott & Anor (1980) ACLC 40-667, …”
- Whilst Jelin may have been of interest, in the sense that the learned trial judge thought the parties should give consideration to it, it was irrelevant to the outcome below. It might have been if the judgment debt was relied on as the debt for the purpose of s 588G. But it was not. For that purpose the debts relied on was the incurring of the debts as between Tremco and Kadoe, and the loss was quantified by reference to the judgment debt. That is a wholly different situation.
- By referring the parties to March v Stramare the learned trial judge was obviously prompting some consideration of a necessary causal link between the debts incurred and the loss and the event which caused it. That may have been of interest if it was to be contended that it was the judgment debt which caused the loss, but that was not the case. The case litigated was that Tremco incurred a loss because it supplied goods under invoices for which it was not paid. It incurred costs in pursuing that claim in the District Court, and interest accrued on the outstanding debt. The debts themselves and the interest accrued on them constituted the two components of the judgment debt. It was by reference to that debt that the loss was quantified, but that did not involve the necessity to consider a question of causation such as raised in March v Stramare.
- There is nothing in this point.
List of invoices for goods not delivered?
- This contention was raised in Ms Thomson’s outline on the appeal, paragraph 27. It centres around an argument that Tremco’s managing director (Mr Millar) provided evidence in chief that he was aware, from the books and records of Kadoe, that there were substantial invoices that Kadoe did not have. Ms Thomson’s point was that the managing director had not provided copies of the invoices, proof of the deliveries or proof of any evidence whatsoever to the invoices on that list.
- Not surprisingly, Mr Millar’s affidavit only deposed to his knowledge and control of matters to do with Tremco, not Kadoe. In that way he was able to swear that his review of Tremco’s books and records revealed that Kadoe did not adhere to repayment arrangements, and the account was never paid. Throughout his affidavit he deposed to the fact that Kadoe had failed to pay the account with Tremco, which eventually led, in June 2011 to Tremco no longer offering to supply product.
- One of the documents exhibited to Mr Millar’s affidavit was his exhibit SM-4, which constituted a letter from Mrs Thomson on behalf of Kadoe to Tremco, dated 21 December 2010. The letter was exhibited to his affidavit in support of the proposition that Kadoe had not adhered to payment arrangements. The letter states:
“Please find attached a list of invoices that we have not received to date.
Could you please send through a copy as soon as possible to assist us with Bill’s request for payment arrangement.
Also to date we have not received any further information in regard to the credit requests that we previously sent through. Likewise, the information in regard to the seam tape problem.
If these could all be addressed as soon as possible so that we can provide Bill with an accurate arrangement to move this forward on a positive note.”
- Attached to the letter was a list of invoices, the dates on which they were created, the delivery number and the amount of them.
- Mrs Thomson’s contention is misconceived. Mr Millar did not exhibit the letter as proof that the list was an accurate list of items not received by Kadoe. He simply attached it as proof of what was in the second paragraph, namely a request for a payment arrangement because, as he deposed in paragraph 22 of this affidavit, Kadoe did not adhere to payment arrangements. Therefore the contention that somehow Mr Millar was obliged to do any more than he did is misconceived. Further, contrary to Mrs Thomson’s contention, Mr Millar was not giving evidence in chief that he was aware that there were invoices for goods which had not been received.
- It is plain that Tremco did not set out to adduce that evidence, nor did it need to, given that the debts upon which they relied were admitted on the pleadings.
- There is nothing in this point.
The trial judge did not call ATO witnesses
- This is a contention advanced by Mrs Thomson concerning subpoenas which she issued, directed to various employees of the ATO. What appears from Mrs Thomson’s outline is that at the commencement of the trial the ATO made an application to set aside subpoenas which Mrs Thomson had served on their officers. The learned trial judge asked Mrs Thomson her view on whether the application should be heard at that time, or later. Mrs Thomson elected to have the application heard immediately, and counsel for the ATO handed up an outline of submissions and a list of authorities. When it became apparent that the outline had only been recently served upon Mrs Thomson, and she had not had time to prepare for it, the learned trial judge indicated that he would hear the application at a later time. However, some submissions continued in the course of the learned trial judge reading the outline and coming to grips with what was being contended. In the course of that process his Honour asked Mrs Thomson to outline the scope of the evidence she expected to call from at least one of the witnesses. As those submissions developed it became apparent that one of the points Mrs Thomson wanted to make through the subpoenaed witnesses was to do with a change in attitude of the ATO as to the significance or otherwise of the fact that the For Three Trust had not been properly established.
- A short time later Mrs Thomson made the point again that she was in a difficult position in terms of being able to respond to the outline of submissions. As a consequence the learned trial judge decided not to set aside the subpoenas at that point, but to adjourn the application to a date to be fixed. His Honour explained to Mrs Thomson and counsel for the ATO that the application could be re-enlivened unless some arrangement was made, and that Mrs Thomson could seek leave to require the attendance of any of the subpoenaed witnesses.
- Given those circumstances, there is no basis to contend that the learned trial judge should have called the officers of the ATO. As it happened Mrs Thomson did not take advantage of the opportunity to re-enliven the subpoenas.
- I am unpersuaded that there was any unfairness or disadvantage caused to Mrs Thomson in relation to that cause. The point that she wished to agitate concerned the significance of the fact that the For Three Trust had not been properly created, and the ATO had expressed some view about that. That was irrelevant to the issues in the trial.
- This ground of appeal should be rejected.
Expert evidence and UCPR rule 429G
- This contention is that expert evidence on the part of Tremco was not obtained in accordance with r 429G of the UCPR. Mrs Thomson contends that the request for expert evidence was made while the proceedings were still in the Supreme Court, and before its transfer to the District Court. For that reason r 429G of the UCPR applied, contrary to the finding by the learned trial judge in his Costs Reasons at .
- UCPR r 429G is contained in Division 3 of Part 5, Chapter 11 of the UCPR. That division applies only to proceedings in the Supreme Court: r 429E. Rule 429G deals with the appointment of experts and provides:
“(1) If, after a proceeding has started, 2 or more parties agree that expert evidence may help in resolving a substantial issue in the proceeding, subject to rule 429H, those parties may in writing jointly appoint an expert to prepare a report on the issue.
- (2)If parties to a proceeding are not able to agree on the appointment of an expert, subject to rules 429I and 429K, any party who considers that expert evidence may help in resolving a substantial issue in the proceeding may apply to the court for the appointment of an expert to prepare a report on the issue.
- (3)Subject to rules 429J and 429K, the court may, on its own initiative and at any stage of a proceeding, if it considers that expert evidence may help in resolving a substantial issue in the proceeding, appoint an expert to prepare a report on the issue.”
- Mrs Thomson’s contention is wholly misconceived. The relevant expert referred to is Mr Hudson, a member of SV Partners, and Tremco’s expert witness. There was no occasion upon which Tremco and Mrs Thomson discussed the appointment of Mr Hudson or any other expert to prepare a solvency report.
- The parties never jointly appointed an expert, so that r 429G(1) was inapplicable. There was no occasion on which they were not able to agree on the appointment of an expert, and therefore r 429G(2) was inapplicable. There was no occasion where the court, on its own initiative, considered the appointment of an expert.
- The contention proceeds upon the mistaken basis that the only way a party can call an expert is by utilising r 429G, or Division 3 more generally. That is not the case as parties can select their own experts provided that the requirements of Division 2 of Part 5 are complied with.
- There is nothing in this point.
Attack on the expert report by Mr Hudson
- Mrs Thomson raised a contention concerning the expert report put into evidence by Tremco. It was completed by Mr Hudson, who was an employee of SV Partners. The criticism advanced at trial, and again on appeal is that the report was not based on a complete set of financial statements as Mr Hudson only used one MYOB database and not the two that were in the possession of Kadoe’s liquidators.
- The learned trial judge dealt with the issue of Kadoe’s insolvency at paragraphs  to  of the Reasons below. The first section consisted of a statement of preliminary observations and the relevant legal principles. No challenge is made before this Court as to his Honour’s statement of legal principle.
- Then his Honour embarked upon an analysis of whether Kadoe was insolvent from March 2010. His Honour recited the evidence in support of the conclusion that it was insolvent from that time. In doing so his Honour referred to a number of factual matters, none of which are challenged on this appeal. They were:
- (a)the liability of Kadoe to pay GST to the Commissioner of Taxation, and its inability to do so; this included an examination of whether there was any relevant payment arrangement with the ATO;
- (b)the fact that Tremco’s debts were not paid in the period March 2010 until January 2011, and the BAS was not paid;
- (c)that the payment problems were not the result of temporary illiquidity, and Mrs Thomson’s proposals for payment were consistent with Kadoe not having the funds to pay either the ATO or Tremco;
- (d)the fact that Kadoe did not have the resources, by way of funding from a bank or otherwise, to meet the repayments it had to make; in that respect the evidence showed that a debt lent to another entity (Peradena) was worthless, a conclusion not challenged at trial; his Honour found that the financial statements demonstrated that Kadoe had no material cash on hand at the end of either financial year and without the Peradena loan as an asset, was hopelessly insolvent on a balance sheet basis; and
- (e)there was no evidence that Kadoe had available support either from the Thomsons or from its bank, or any other bank; there was no evidence that the Thomsons could have lent to the company.
- The learned trial judge expressed his view that a consideration of the commercial realities of Kadoe’s financial situation established that it was insolvent from March 2010, and became more so as the Tremco debts were incurred without being paid over the period to January 2011. Kadoe was simply unable to pay its major supplier and its primary tax obligations, and had no reliable external or internal finance options that permitted it to do so.
- What is plain from that part of the Reasons below is that the learned trial judge made his own analysis of the evidence and concluded that Kadoe was insolvent from at least March 2010. His Honour expressly said that he had reached his own conclusion on the evidence, quite separately from any consideration of the expert report of Mr Hudson.
- Notwithstanding that, the learned trial judge considered Mr Hudson’s report. In the course of that consideration the learned trial judge examined the challenges to Mr Hudson’s report, finding that none of those challenges undermined either the ultimate conclusion reached by Mr Hudson, but more specifically did not undermine the learned trial judge’s reasoning as shown in the Reasons below, paragraphs -.
- The issue of the dual MYOB databases was specifically considered. Whilst his Honour found that the evidence about the MYOB database issue was unsatisfactory, he accepted that Mr Hudson was provided with a MYOB database of Kadoe from which he could extract the financial statements he analysed in his report. His Honour identified the real issue as being whether the differences between the database made any difference to the reliability of Mr Hudson’s conclusions. The main point made by Mrs Thomson at the trial in relation to this issue was that the balance sheet Mr Hudson relied upon as at 30 June 2013 was erroneous because it stated the ATO debt as $202,399.99, while the running balance account exhibited by Mr Rose showed the liability at that time as $64,868.60. Mrs Thomson’s argument was that the figure in the balance sheet relied upon by Mr Hudson had been adjusted to reflect the ATO’s proof of debt.
- The learned trial judge rejected that contention for several reasons, none of which are challenged on appeal. His Honour pointed out that the figure in the balance sheet was a gross figure, not a net figure, and the figures were presented in the same format as for the 2012 balance sheet derived from the MYOB database made available to Mr Hudson. The discontinuity between the figures could have been the result of a timing issue, or errors in data entry. The learned trial judge accepted it was unclear what the true position was, but that simply meant that there was doubt about the true balance sheet for Kadoe for the 2013 year. As his Honour pointed out, there was no suggestion that after 30 June 2013 Kadoe’s position improved. It had ceased trading in mid-2013, and lost the ability to earn any other income to meet its liabilities. For that reason his Honour considered it difficult to see how any ambiguity in the balance sheet assisted Mrs Thomson in rebutting the strong inference of insolvency arising from the other evidence in Mr Hudson’s report.
- I respectfully agree with his Honour’s observations in that regard. Further, as mentioned above, consideration of Mr Hudson’s report was secondary to the primary findings of insolvency made by his Honour based upon his own analysis of the evidence.
- His Honour’s conclusion as to the challenge to Mr Hudson’s report was summarised as follows:
“In my view, none of the matters raised by Mrs Thomson are sufficiently material to impugn the basic reasoning or assumptions of Mr Hudson’s report. The best that could be said is that Kadoe’s position might not have been quite as bad as he identified in 2012 and 2013. Mr Hudson’s report provides a further basis to conclude that [Kadoe] was insolvent from at least March 2010 until it’s winding up in April 2015.”
- In my respectful view, the reasoning of the learned trial judge in respect of Mr Hudson’s report is compelling. But even if it were not, it does not matter. As pointed out, the findings of insolvency were made without regard to Mr Hudson’s report, and those findings have not been challenged on appeal.
- This point lacks merit.
- There were four subsidiary points raised by Mrs Thomson, three in her Notice of Appeal, and one in her Reply outline. The first was that parts of her pleading were struck out on 3 May 2018. The second, transcripts from a public examination were admitted into evidence. The third, that during closing submissions the learned trial judge tried to have Mrs Thomson admit that her defence was deficient. The fourth (in the Reply) was that Mrs Thomson had tendered evidence which went against the finding that Kadoe ceased to pay Tremco’s invoices in about March 2010.
- None of these points raise matters of greater moment than the points dealt with above. Therefore they can be dealt with in short order.
- The suggestion that in closing addresses the learned trial judge took steps to strike out part of Mrs Thomson’s pleadings is not sustained by a reading of the transcript. There was certainly some debate during the course of submissions as to whether Mrs Thomson could mount arguments contrary to facts which had been admitted on the pleadings. In particular, that was applicable to the admission of paragraph 15(a) of the Statement of Claim. But there is nothing else in the transcript which suggests any strike out of any part of Mrs Thomson’s pleading.
- That answers the third point, where Mrs Thomson contended that the learned trial judge attempted to get her to state that her amended defence was deficient. Having read the entire transcript of the closing address there is nothing of the kind that was raised. True it is that there was a debate about whether the admission of paragraph 15(a) of the Statement of Claim could be departed from, but nothing arises out of that relevant to the appeal.
- The second point concerned Mrs Thomson’s contention that transcripts from a public examination were admitted into evidence. The point raised by Mrs Thomson seems to be that the public examination took place prior to the issue of the proceedings by Tremco, and that somehow that had an impact on whether it should have been admitted. Plainly that is in error.
- The transcript of the public examination consisted of exhibits LN-3 and LN-4 to the affidavit of Ms Nyhan. Reference to the public examination was made in Tremco’s opening. But apart from that any reference to the public examination thereafter seems to have been only on peripheral issues, such as when documents were produced. Having perused the full extent of the trial transcript in the appeal record, the public examination transcript does not seem to have featured much at all. If it had featured at the trial one can infer that it was to cross-examine on prior inconsistent statements, or to tender admissions by Mrs Thomson. There is no hint in the Reasons below of either being a matter of moment.
- Mrs Thomson has not articulated any basis upon which use of the public examination transcript affected the trial, much less giving rise to an appellable point. I can see nothing in it of merit.
- As to the fourth point, Mrs Thomson referred to an exhibit to one of her own affidavits, namely a general ledger. This, she contended, showed that Kadoe paid Tremco a total of $59,138.47 between April, August, September, October and December 2010. The contention was that this evidence was not challenged, and falsified the finding that Kadoe ceased to pay Tremco in about March 2010.
- There are considerable difficulties with the contention. First, it is not in the notice of appeal, and raised for the first time in reply. Therefore the learned trial judge’s finding is not the subject of formal challenge. Secondly, even if the finding is subject to challenge, it goes nowhere to overturning the finding of insolvency, which turned on unchallenged findings as to Kadoe’s inability to pay the mounting debt, not just of Tremco but the ATO as well. Thirdly, the book entries were done by Kadoe, so their veracity was not proven. All that Mrs Thomson deposed in the affidavit exhibiting the general ledger was that the copy exhibited was a record provided by the accountants to the liquidators, and disclosed by the liquidators. Fourthly, the fact that some invoices were paid does not contradict the finding that many others remained unpaid, and that there were fruitless attempts to put in place repayment arrangements. Fifthly, it does nothing whatever to erode the admission of paragraph 15(a) of the statement of claim.
- The point has no merit.
- For the reasons given above the appeal points lack merit. The appeal should be dismissed. I propose the following orders:
- Appeal dismissed.
- The appellant is to pay the respondent’s costs of the appeal.
Tremco Pty Ltd v Kadoe Pty Ltd trading as Kadoe Commercial Coatings  QDC 40.
Tremco Pty Ltd v Thomson  QDC 101 (Reasons below).
Tremco Pty Ltd v Thomson  QDC 109 (Costs Reasons).
 Reasons below at .
 Reasons below at  and .
Tremco Pty Ltd v Kadoe Pty Ltd trading as Kadoe Commercial Coatings  QDC 40 (Tremco Judgment).
 Notice of Appeal para 2(a).
 Outline on Appeal para 19.
 Appeal Book (AB) 1944.
 Referred to in the paper as a LIP.
 Para 5.
 Para 7.
 Para 13.
 Para 14.
 Paras 27-38.
 Para 36 (internal citations omitted).
 Paras 39-45.
 Para 46-56.
 Paras 57-60.
 Paras 61-70.
  QCA 92 at -, see para 48 of the paper.
 (2000) 205 CLR 337.
Ebner at ; citation omitted.
Ebner at ; see also Michael Wilson & Partners v Nichols (2011) 244 CLR 427 at .
 At least so much of it as was included in the appeal record.
 For example, at AB 2041, 2066, 2067, 2069, 2090, 2094, 2121, 2124, 2138, 2143, 2166 and 2168.
 For example, at AB 2047, 2070, 2162 and 2164.
 AB 2153-2154.
 AB 2154 line 20.
 AB 2154 line 33 to AB 2155 line 21.
 AB 2160 line 13.
 AB 2160 line 41.
 AB 2161 line 11.
 AB 2163 line 20.
 AB 2164 line 28 to AB 2165 line 16.
 AB 2166 lines 21-30.
 AB 2168 line 4.
 AB 2174 lines 32-36.
 Outline on Appeal para 19(b).
Amos v Wiltshire  QCA 70 at .
 Referring here to a Mr Stimpson and a Mr Van der Velde.
Re Polites; Ex parte Hoyts Corporation Pty Ltd (1991) 173 CLR 78; Australian National Industries Ltd v Spedley Securities Ltd (in liq) (1992) 26 NSWLR 411.
 Para 2(aa) of the Notice of Appeal.
 Appeal Transcript T 1-10 lines 8-12.
 Reasons below at -.
 AB 115.
 The reference to “the Company” was to Kadoe, and the plaintiff was Tremco.
 AB 177.
 AB 178.
 AB 240.
 See the reasons below at .
 Reasons below at .
 Reasons below .
 AB 1576.
 Affidavit of Mr Rose paras 15 and 16(b); AB 1578-1579.
 Affidavit of Mr Rose para 17, AB 1580.
 An example is at AB 1628 and 1629.
 AB 1597.
 Tremco Judgment paragraph .
 Reasons below at .
 (1987) 5 ACLC 463.
 (1991) 171 CLR 506.
 Outline on Appeal paras 19(f)-(h).
 AB 116.
 Outline in Reply, Schedule A, p 3.
Jelin at p 4.
 Affidavit of Mr Millar, AB 416-417.
 Outline on Appeal para 27.
 AB 409 para 22 .
 AB 411 para 33.
 AB 416.
 Outline on Appeal para 28.
 AB 2040 line 45.
 AB 2042 lines 21-26.
 AB 2050 lines 1-4.
 AB 2051 lines 4-23.
 AB 2051 lines 32-41 and AB 2052 lines 23-29.
 Outline on Appeal para 28, penultimate sentence.
 Outline on Appeal paras 21-22.
 Appellant’s submission on costs para 6, AB 390.
 Appellant’s outline on costs, para 12(b), AB 392.
 Appellant’s outline at para 23.
 Reasons below, -.
 Reasons below, -.
 Reasons below, -. There is an aspect relating to this finding that is dealt with below at paragraphs  to .
 Reasons below, -.
 Reasons below, -.
 Reasons below, -.
 Reasons below, .
 Reasons below at .
 Reasons below at -.
 Reasons below at .
 Reasons below at -.
 Reasons below at .
 Appellant’s Outline on Appeal, para 24.
 Appellant’s Outline on Appeal, para 25.
 Appellant’s Outline, para 26.
 Outline in reply, Schedule A, p 3.
 AB 2178-2273.
 AB 1059 and AB 1181.
 AB 257 para 57.
 Paragraph 23ppp, AB 1709.
- Published Case Name:
Thomson v Tremco Pty Limited
- Shortened Case Name:
Thomson v Tremco Pty Ltd
 QCA 18
Sofronoff P, Gotterson JA, Morrison JA
12 Feb 2019
- White Star Case:
|Event||Citation or File||Date||Notes|
|Primary Judgment|| QDC 101||12 Jun 2018||Judgment for the plaintiff in the amount of $372,016.10 as compensation pursuant to s 588M(3) of the Corporations Act 2001 (Cth): Porter QC DCJ.|
|Primary Judgment|| QDC 109||21 Jun 2018||Costs and interests judgment: Porter QC DCJ.|
|Appeal Determined (QCA)|| QCA 18||12 Feb 2019||Appeal dismissed: Sofronoff P and Gotterson and Morrison JJA.|