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Australian Stainless Distributors Pty Ltd v Stacey[2021] QSC 278

Australian Stainless Distributors Pty Ltd v Stacey[2021] QSC 278

SUPREME COURT OF QUEENSLAND

CITATION:

Australian Stainless Distributors Pty Ltd v Stacey [2021] QSC 278

PARTIES:

AUSTRALIAN STAINLESS DISTRIBUTORS PTY LTD

ACN 097 677 980

(plaintiff)

v

ADAM PAUL STACEY

(defendant)

FILE NO/S:

BS No 717 of 2020

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

28 October 2021

DELIVERED AT:

Brisbane

HEARING DATE:

1 October 2021

JUDGE:

Ryan J

ORDER:

Summary judgment for the plaintiff

Orders and declarations as per paragraph [107] of the reasons

CATCHWORDS:

PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – ENDING PROCEEDINGS EARLY – SUMMARY DISPOSAL – SUMMARY JUDGMENT FOR PLAINTIFF OR APPLICANT – where the defendant was an employee of the plaintiff  company – where the plaintiff claims the defendant acted dishonestly and in breach of his contractual, fiduciary, and statutory duties – where in pursuance of an agreement made between the parties, the plaintiff applies for summary judgment – where the defendant neither supports nor opposes the application – where the defendant did not appear at the application – whether summary judgment should be granted

EVIDENCE – ADMISSIBILITY – EXCLUSIONS: PRIVILEGES – SELF-INCRIMINATION PRIVILEGE – where the plaintiff produced evidence from “accomplice” employees on the application for summary judgment – where the defendant does not challenge the evidence produced by the plaintiff – where the unchallenged affidavit evidence produced by the plaintiff established the pleaded allegations – where the defendant did not suggest that there was a need for a trial of the claim – whether a trial of the claim was required to determine whether the “accomplice” employees would seek to rely on the privilege against self-incrimination at trial and decline to give oral evidence for ASD – whether, notwithstanding a claim of privilege, a witness, having made a self-incriminatory statement, may be directed to identify the statement as their own – whether such a statement is admissible under section 92 of the Evidence Act 1977 (Qld) even if the statement maker successfully claims the privilege and gives no oral evidence (in chief or under cross-examination)  

Corporations Act 2001 (Cth), s 9, s 180, s 181, s 182, s 1317H

Evidence Act 1977 (Qld), s 92, s 98, s 102

Uniform Civil Procedure Rules 1999, r 292

Accident Insurance Mutual Holdings v McFadden & another (1993) 31 NSWLR 412, considered

ASIC v King (2020) 376 ALR 1, cited

Australian Securities and Investments Commission v Managed Investments Pty Ltd (No 6) [2013] QSC 355, considered

Australian Securities and Investments Commission v Managed Investments Pty Ltd & Ors (No 7) [2014] QSC 72, considered

Hilton v Lancashire Dynamo Nevelin Ltd, considered

Macks v Viscariello (2017) 130 SASR, cited

Thompson v Bella-Lewis [1997] 1 Qd R 429, considered

COUNSEL:

D Piggott QC for the plaintiff

No appearance for the defendant

SOLICITORS:

Talbot Sayer for the plaintiff

No appearance for the defendant

  1. [1]
    The plaintiff, Australian Stainless Distributors (ASD), is a distributor of stainless steel and aluminium products.  The defendant, Mr Stacey, was its State Manager.  By way of claim and statement of claim, ASD alleged that, in serious breach of his contractual, fiduciary, and statutory duties, Mr Stacey acted dishonestly in various ways, causing loss to ASD.  ASD claimed $200,000 in compensation from Mr Stacey and sought declarations about his alleged dishonesty and breaches of duty.
  2. [2]
    Mr Stacey’s conduct as alleged in ASD’s amended statement of claim amounted to criminal offences and contraventions of the Corporations Act 2001 (Cth).  In his amended defence, Mr Stacey denied, or did not admit, that conduct.  However, he did not plead any factual basis for his denials or non-admissions, relying upon the privilege against self-incrimination and self-exposure to penalty.  In its amended statement of claim, ASD alleged that Mr Stacey’s dishonesty was facilitated in different ways by other ASD employees who were junior to him (his “accomplices”). 
  3. [3]
    In pursuance of an agreement made between ASD and Mr Stacey, ASD applied for summary judgment.  Mr Stacey neither supported nor opposed the application.  Nor did he appear at it personally, or by way of legal representation. 
  4. [4]
    ASD’s application for summary judgment was amply supported by the affidavit evidence upon which it relied which included corroborated evidence from Mr Stacey’s accomplices.  The accomplices’ evidence tended to, or did, implicate the accomplices themselves, as well as Mr Stacey, in dishonesty.  Nothing in the evidence before me raised any real defence to ASD’s claim.  However, I was concerned about whether it might be said that there was a need for a trial of the action to see if, at trial, all or any of Mr Stacey’s accomplices would, relying upon privilege, decline to give evidence against him for fear of incriminating themselves.  If that were to occur, then ASD’s case would be significantly weakened.
  5. [5]
    Ultimately, for the reasons which follow, I concluded that there ought to be summary judgment for the plaintiff and that it was appropriate to make the declarations sought.   Even if the accomplices were to successfully claim privilege at a trial of the claim, their affidavits would be admissible in ASD’s case against the defendant; their evidence would not be challenged and, in combination with other evidence, it would persuasively establish ASD’s claim. 

Overview of application

  1. [6]
    ASD applied for summary judgment under rule 292 of the Uniform Civil Procedure Rules 1999 (UCPR), the requirements of which are well known.  It nominated the following issues for the court –
    1. (a)
      Whether there was a need for a trial of the action?
    2. (b)
      Whether, having regard to the unchallenged evidence read on the application, there was any real prospect of Mr Stacey succeeding in his defence of some or all of ASD’s claims?
    3. (c)
      Whether the court should make a money order for $200,000 by way of damages for breach of contract, or equitable or statutory compensation?
    4. (d)
      Whether the court should exercise its powers to make declarations?
  2. [7]
    ASD identified certain “peculiarities” of its application as follows –

“There are peculiarities about the Application.  They arise from the serious nature of the allegations made by ASD, from privilege claims made and maintained by Mr Stacey in the proceeding, and from an agreement reached between the parties (with which the bringing of this Application is consistent).  These matters are of primary relevance to the issue of whether there is a need for a trial.”

  1. [8]
    ASD invited me to first consider the need for a trial in the face of Mr Stacey’s privilege claims.

Is there a need for a trial of the action?

  1. [9]
    As noted above, in his amended defence, Mr Stacey made some limited admissions, but otherwise denied, or did not admit, the allegations made against him by ASD.  Rather than plead the factual basis for his denials or non-admissions, Mr Stacey claimed the privilege against self-incrimination or self-exposure to penalty.  ASD did not challenge his privilege claim, effectively acknowledging that Mr Stacey would be, objectively, at a real and appreciable risk of self-incrimination or self-exposure to civil penalty if he were required to comply with the relevant rules of the UCPR.  ASD acknowledged that Mr Stacey would not have to disclose his defence until ASD had closed it case against him at trial.  ASD further acknowledged that “in the ordinary course the Court would not grant [summary] judgment against a defendant who is continuing to maintain privilege claims on the basis that there is a need for a trial so as to put the defendant to their election”.  But, ASD submitted, even though Mr Stacey maintained his privilege claim on this application for summary judgment, there was no need for a trial of the claim, having regard to the evidence of Mr Stacey’s solicitor, James Conomos.
  2. [10]
    It is worth setting out, almost in full, the evidence of Mr Conomos.  Broadly, by way of affidavit, he informed the court that it was not contended by Mr Stacey that there was a need for a trial of the claim; and that, at any trial, Mr Stacey would maintain his privilege; not object to any of ASD’s evidence; and not cross-examine any of ASD’s witnesses. 
  3. [11]
    Mr Conomos stated on oath –
  1. I am a solicitor admitted to practice in this Honourable Court and a director of the firm James Conomos Lawyers Pty Ltd A.C.N. 169 902 318 (JCL).
  1. Together with Mr Anthony Angeli of JCL, I act for the defendant, Adam Paul Stacey (Mr Stacey).
  1. I am authorised to swear this affidavit on behalf of the Defendant.

Summary Judgment Application

  1. JCL, as solicitors on record for the Defendant, was served with the Application for Summary Judgment filed 31 August 2021 (the Application) by email on 1 September 2021 …
  1. I am instructed by Mr Stacey that for the purposes of the Application:
  1. (a)
    he maintains the claims for privilege identified in the Amended Defence filed 2 November 2020 (Amended Defence)
  1. (b)
    he does not make any admissions to the allegations contained within the Amended Statement of Claim filed 21 August 2020 (Amended Statement of Claim), save for those made in the Amended Defence …
  1. (c)
    he was served with the Application and the following affidavits on 1 September 2021:
  1. (i)
    affidavit of Mark Philips sworn 23 December 2020;
  1. (ii)
    affidavit of Hok Wong sworn 5 May 2021;
  1. (iii)
    affidavit of Kruze Anania sworn 10 May 2021;
  1. (iv)
    affidavit of Patrick Faulkner sworn 10 May 2021;
  1. (v)
    affidavit of Alisha Kennedy sworn 10 May 2021;
  1. (vi)
    affidavit of Andrew Morgan sworn 12 May 2021;
  1. (vii)
    affidavit of Richard Barclay sworn 6 August 2021;

(Collectively referred to as, the Plaintiff’s Affidavits)

  1. (d)
    he understands that this affidavit, which has been sworn by me on his instructions, may be read on behalf of the Plaintiff at the hearing of the Application;
  1. (e)
    he does not object to the Court hearing and determining the Application;
  1. (f)
    he confirms that the parties have entered into an agreement to resolve the claims made by the plaintiff in this proceeding, and that the making of the Application is consistent with the terms of the parties’ agreement;
  1. (g)
    he neither opposes, nor consents to:
  1. (i)
    the Court making the orders sought by the plaintiff in the Application; or
  1. (ii)
    the Court making other such orders it sees fit at the hearing of the Application.
  1. (h)
    for the purposes of the Application, he:
  1. (i)
    does not contend for the purposes of Rule 292(2)(b) of the Uniform Civil Procedure Rules 1999 (Qld) that there is a need for a trial of the claim or any part of the claim made in this proceeding;
  1. (ii)
    does not object to the Plaintiff’s Affidavits, or this affidavit, being read on behalf of the Plaintiff;
  1. (iii)
    does not object to any evidence contained within the Plaintiff’s Affidavits’ or this affidavit.
  1. (i)
    at any trial in this proceeding, he will:
  1. (i)
    maintain throughout the trial, the claims for privilege made in the Amended Defence, including after the plaintiff has closed its case;
  1. (ii)
    not admit any allegations made in the Amended Statement of Claim, save for those made in the Amended Defence;
  1. (iii)
    not object to any evidence being adduced on behalf of the plaintiff to the effect set out in the Plaintiff’s Affidavits, and in this affidavit sworn by me;
  1. (iv)
    not cross-examine any witnesses called by the plaintiff to give evidence;
  1. (v)
    not adduce evidence in his own defence;
  1. (vi)
    subject to any contrary order of the Court, not appear in person or by legal representative.
  1. Other than by filing this affidavit, Mr Stacey has instructed me that he does not wish to be heard on the Application and, subject to any contrary order of the Court, he will not appear at the hearing of the Application in person or by legal representative.
  1. All the facts and circumstances herein deposed to are within my knowledge save such as are deposed to from information only and my means of knowledge and sources of information appear on the face of this my affidavit.
  1. [12]
    Mr Conomos’ affidavit was sworn on 10 September 2021.  The application was heard by me on 1 October 2021.  I did not require Mr Stacey to appear (in person or by legal representation) at this application (cf paragraph 6 of Mr Conomos’ affidavit).  Nor did he appear (in person or by legal representation) when I had his name called at the start of the hearing.
  2. [13]
    On the strength of Mr Conomos’ evidence, ASD submitted that there was no need for a trial of the action because this court was materially in the same position as any trial court would be – that is, left to determine ASD’s claim on the unchallenged evidence produced by ASD.

The relevance – if any – of the self-incriminating nature of the evidence relied upon by ASD in support of its application for summary judgment

  1. [14]
    On the strength of Mr Conomos’ affidavit, it may be accepted that, if this case followed the normal procedural route, there would be no challenge by the defendant to any of the evidence upon which ASD wished to rely.  However, ASD did not deal with the fact that the evidence of the accomplices either did, or tended to, incriminate them, as well as Mr Stacey, in wrongdoing. 
  2. [15]
    Although it was obvious that the accomplices’ statements had been taken by ASD’s solicitors, there was no evidence before me about the circumstances in which they had agreed to give statements about Mr Stacey’s and their own misconduct; or their preparedness to waive their privilege against self-incrimination (or self-exposure to penalty) if called to give evidence.  I was initially concerned that it might not be possible for me to conclude that there was no need for a trial of the action, because –
  • the accomplices were critical witnesses;
  • the evidence before me said nothing about what they might do (that is, assert a privilege claim or not) if called to give evidence for ASD at a trial of ASD’s claim;
  • it would only be at such a trial that the evidence available to ASD would be known – in that, if an accomplice were to successfully claim the privilege, then they could not be directed to give oral evidence for ASD; and
  • therefore, it was not possible to evaluate the defendant’s prospects of success prior to trial.
  1. [16]
    At my request, Queen’s Counsel for ASD made further written submissions to me about the following question –

On an application for summary judgment, based substantially on the self-incriminatory evidence of a witness, can it be said that there is no need for a trial when the court has no evidence before it that the witness would not claim the privilege against self-incrimination at trial?

  1. [17]
    In its further written submissions, ASD acknowledged that it was possible that one or more of the accomplices might claim the privilege against self-incrimination at a trial of the claim.  However, it submitted that such a possibility did not prevent me from concluding that (for the purposes of rule 292) there was no need for a trial.  This was because –
    1. (a)
      Whether an accomplice intended to make a claim for privilege or not, they would be compelled by subpoena to attend court and give evidence;
    2. (b)
      Having already provided a sworn or affirmed affidavit, the court could direct them to identify their affidavits because to do so would not place them in further jeopardy of incrimination – following Australian Securities and Investments Commission v Managed Investments Pty Ltd (No 6) [2013] QSC 355 (Douglas J) (Managed Investments (No 6));
    3. (c)
      Their affidavits would be admissible under section 92(1)(a) of the Evidence Act 1977 (Qld);
    4. (d)
      Mr Stacey would not object to the admission into evidence of the affidavits, nor would he cross-examine the accomplices; and
    5. (e)
      The court would not exclude the affidavit evidence, either under section 98 of the Evidence Act or under the common law discretion to exclude evidence obtained “unlawfully”.
  2. [18]
    I hasten to add that nothing in the evidence before me suggested that the accomplices' affidavits had been obtained unlawfully.  Queen’s Counsel’s reference to that common law discretion reflected an observation by Douglas J in Australian Securities and Investments Commission v Managed Investments Pty Ltd & Ors (No 7) [2014] QSC 72 (Managed Investments (No 7)), discussed below.
  3. [19]
    On further consideration, I wondered whether I had unduly complicated things by raising the issue of the witnesses’ privilege.  However, having considered the additional submissions and the relevant authorities, as explained below, I concluded that, even if the accomplices successfully claimed privilege at trial, their affidavit evidence would be admissible in support of ASD’s claim.

Consideration of authorities

  1. [20]
    In Managed Investments (No 6), to which ASD referred, ASIC had obtained an affidavit from a witness (X).  After giving his affidavit, X was charged with offences against the Securities Act 1978 (NZ).  ASIC called X to give evidence at trial, but X refused to identify the affidavit as his, claiming the privilege against self-incrimination.  ASIC accepted that X had a valid claim for privilege but wished only to ask him whether he had signed the affidavit.  Douglas J held that requiring X to identify the affidavit (by answering the question whether he had signed it) did not add to the jeopardy in which X already stood because the witness to X’s affidavit could be called to prove it.  His Honour directed X to answer the question whether he signed the affidavit, before receiving submissions as to whether X’s affidavit ought to be admitted into evidence under section 92 of the Evidence Act 1977 (Qld). 
  2. [21]
    Section 92 states –

92 Admissibility of documentary evidence as to facts in issue

  1. (1)
    In any proceeding (not being a criminal proceeding) where direct oral evidence of a fact would be admissible, any statement contained in a document and tending to establish that fact shall, subject to this part, be admissible as evidence of that fact if—
  1. (a)
    the maker of the statement had personal knowledge of the matters dealt with by the statement, and is called as a witness in the proceeding; or
  1. (b)
    the document is or forms part of a record relating to any undertaking and made in the course of that undertaking from information supplied (whether directly or indirectly) by persons who had, or may reasonably be supposed to have had, personal knowledge of the matters dealt with in the information they supplied, and the person who supplied the information recorded in the statement in question is called as a witness in the proceeding.
  1. (2)
    The condition in subsection (1) that the maker of the statement or the person who supplied the information, as the case may be, be called as a witness need not be satisfied where—
  1. (a)
    the maker or supplier is dead, or unfit by reason of bodily or mental condition to attend as a witness; or
  1. (b)
    the maker or supplier is out of the State and it is not reasonably practicable to secure the attendance of the maker or supplier; or
  1. (c)
    the maker or supplier can not with reasonable diligence be found or identified; or
  1. (d)
    it can not reasonably be supposed (having regard to the time which has elapsed since the maker or supplier made the statement, or supplied the information, and to all the circumstances) that the maker or supplier would have any recollection of the matters dealt with by the statement the maker made or in the information the supplier supplied; or
  1. (e)
    no party to the proceeding who would have the right to cross-examine the maker or supplier requires the maker or supplier being called as a witness; or
  1. (f)
    at any stage of the proceeding it appears to the court that, having regard to all the circumstances of the case, undue delay or expense would be caused by calling the maker or supplier as a witness.
  1. (3)
    The court may act on hearsay evidence for the purpose of deciding any of the matters mentioned in subsection (2)(a), (b), (c), (d) or (f).
  1. (4)
    For the purposes of this part, a statement contained in a document is made by a person if—
  1. (a)
    it was written, made, dictated or otherwise produced by the person; or
  1. (b)
    it was recorded with the person’s knowledge; or
  1. (c)
    it was recorded in the course of and ancillary to a proceeding; or
  1. (d)
    it was recognised by the person as the person’s statement by signing, initialling or otherwise in writing.
  1. [22]
    In arguing (unsuccessfully) that X did not have to identify his affidavit, X relied upon the decision of Clark JA in the New South Wales Court of Appeal in Accident Insurance Mutual Holdings v McFadden & another (1993) 31 NSWLR 412.  That decision considered inter alia whether the primary judge was correct in refusing to admit into evidence in the appellant’s case the written statements of its witness who claimed privilege at trial. 
  2. [23]
    McFadden and his brother ran a smash repair business.  They insured the cars they had onsite, including from theft.  They made a claim on their insurance, asserting that a certain Ford had “gone missing”.  Their insurer refused to pay out on the claim because, it said, it was fraudulent.  The insurer had obtained written statements from a person (Y) who said he had been instructed by the McFaddens to “get rid of” the Ford.  The McFaddens were successful against the insurer at first instance because Y did not give evidence against them.  After being called by the insurer, Y successfully claimed the privilege against self-incrimination, and his statements were not admitted into evidence under the equivalent of section 92.  The insurer appealed, arguing that the primary judge erred in granting the privilege claim and in refusing to admit Y’s written statements.  The insurer was successful (by majority and for different reasons, Kirby P (as his Honour then was) dissenting) and a new trial was ordered. 
  3. [24]
    Y gave three statements to the insurer’s investigator.  The first did not implicate the McFaddens in fraud; the second did; and the third added a few more details to the second.  The second statement included the following –

I wish to make this statement in relation to the alleged theft of [the Ford] …

I understand that I do not have to make this statement and anything I do state can be used as evidence.

I have been cautioned with regard to making this statement by [the insurer’s investigator]…

  1. [25]
    Kirby P held that the primary judge was correct in upholding Y’s privilege claim in so far as it concerned oral evidence which might tend to incriminate him beyond that which he had already admitted in his written statements and in respect of which he had expressly waived his privilege.  His Honour said at page 424 (my emphasis) –

The witness may have been fixed with the written statements which he had already signed.  But he was not obliged to go beyond those statements, to provide elaborated oral testimony which could be used in later criminal proceedings or could afford the prosecuting authorities evidentiary leads with which to enlarge the prospects of obtaining his conviction ought of his own mouth. 

The giving of a written statement (whether to police or to an insurance investigator) on the general subject matter of certain criminal activities does not forever waive the privilege against self-incrimination in respect of other crimes which may arise from the oral elaboration of the written document.  Of course, what is involved raises a question of degree.  Each question put must be judged by reference to the matters already admitted and the waiver already expressed.  But because of the prosecution for a wide range of offences which this witness potentially faced and the great latitude normally allowed to a witness to be protected from self-incrimination, I consider that the course adopted by [the primary judge] was proper.  It was certainly open to his Honour.  I see no error in it …

  1. [26]
    However his Honour held that Y’s written statements fell within the provisions of the New South Wales equivalent of section 92(1)(a) of the Evidence Act 1977 (Qld), that is, section 14B(1) of the Evidence Act 1898 (NSW) (now repealed).  The statements were admissible because Y was “called as a witness in the proceeding”, as required by that section, even though he claimed privilege and could not be cross-examined. 
  2. [27]
    His Honour then considered whether the statements fell within the statutory exception contained in section 14B(3) of the Evidence Act 1898 (NSW).[1]  In general terms, that section rendered a statement inadmissible if the statement maker was “interested in” the proceedings when the statement was made.  His Honour considered that Y was relevantly “interested”: he was far from impartial and had an interest to distort the truth.  His Honour would have therefore excluded his written statements under section 14B(3) and would have dismissed the appeal.
  3. [28]
    An identical statutory exception to admissibility does not exist in Queensland, but the self-interest or impartiality of a statement maker would be relevant to the exercise of the discretion to reject a statement, otherwise admissible under section 92, provided by section 98 of the Evidence Act 1977. 
  4. [29]
    Section 98 states –

98 Rejection of evidence

  1. (1)
    The court may in its discretion reject any statement or representation notwithstanding that the requirements of this part [which includes section 92(1)(a)] are satisfied with respect thereto, if for any reason it appears to be inexpedient in the interests of justice that the statement should be admitted.
  1. (2)
    This section does not affect the admissibility of any evidence otherwise than by virtue of this part.
  1. [30]
    Also, the self-interest or impartiality or similar of the statement maker would be accommodated by section 102 of the Queensland Evidence Act which concerns the weight to be given to a statement admitted under section 92. 
  2. [31]
    Section 102 states –

102 Weight to be attached to evidence

In estimating the weight (if any) to be attached to a statement rendered admissible as evidence by this part, regard shall be had to all the circumstances from which an inference can reasonably be drawn as to the accuracy or otherwise of the statement, including—

  1. (a)
    the question whether or not the statement was made, or the information recorded in it was supplied, contemporaneously with the occurrence or existence of the facts to which the statement or information relates; and
  1. (b)
    the question whether or not the maker of the statement, or the supplier of the information recorded in it, had any incentive to conceal or misrepresent the facts.
  1. [32]
    Clarke and Meagher JJA allowed the appeal in McFadden and ordered a re-trial.
  2. [33]
    Clarke JA held that the primary judge was correct to treat Y’s claim as bona fide and to uphold it.  Y had not waived his privilege by signing the three statements, even in respect of matters covered by them.  His Honour said at page 432 –

… In principle it would seem to me that that conduct could not constitute a waiver of a right to decline to provide self-incriminating answers to questions put during the course of a trial.  If it were otherwise it would mean that persons who had made admissions to police could be taken to have waived the right to remain silent.  This has never been suggested and, if correct, it would constitute an enormous infringement of an ancient and fundamental right of all citizens.    

  1. [34]
    His Honour held that there could be further prejudice to Y even if he gave evidence which corresponded with his statements, because there was a material distinction between sworn and unsworn statements.  The fact that Y had earlier admitted a crime in his signed statements – which he may or may not wish to disavow – did not mean there was no additional prejudice in his giving sworn testimony to like effect.  However, Clarke JA held that Y’s written statements were admissible under the equivalent of section 92(1)(a).  The primary judge was wrong to have excluded the written statements on the basis that, although Y could be called as a witness, he might decline to answer questions. 
  2. [35]
    Meagher JA agreed with the insurer that the primary judge ought not to have upheld Y’s claim for privilege because Y had waived it in the statements he gave to the insurer’s investigator.  Meagher JA could not understand why his Honour did not admit the documents under the equivalent of section 92(1)(a). 
  3. [36]
    Relying on the distinction between a sworn and an unsworn statement drawn by Clarke JA, X submitted to Douglas J that he should not be required to identify his affidavit, a sworn document, because of the greater reliance that could be placed on it than on the signed statement given by Y.  Douglas J observed that the New Zealand authorities would be able to prove X’s affidavit by calling the witness to it.  Thus, X was already in jeopardy having made the affidavit; and he could not on a privilege basis decline to identity it.  Douglas J also considered Thompson v Bella-Lewis [1997] 1 Qd R 429 and concluded that its practical effect supported the view that X could be directed to identify his affidavit. 
  4. [37]
    In Thompson v Bella-Lewis, a witness (F), having been sworn to give evidence, initially declined to identify her affidavits, relying upon the privilege against self-incrimination.  She was then directed to; and did so.  Over objection, her affidavits were admitted into evidence under section 92.  Her claim of privilege was, at that point, allowed and she gave no further evidence, nor was she cross-examined.
  5. [38]
    On appeal it was argued that in the face of F’s privilege claim: (a) her affidavits ought not to have been admitted; or (b) the jury ought to have been directed to consider whether her claim of privilege gave rise to the inference that her affidavits were untrue.  The majority, Fitzgerald P and Davies JA, allowed the appeal on one or the other of those grounds.  McPherson JA dissented. 
  6. [39]
    Fitzgerald P said nothing to suggest that the primary judge ought not to have directed F to identify her affidavits.  As to their admissibility, his Honour said, at page 434, that the judge had a clear duty to exercise his discretion to admit or exclude F’s affidavits “under sections 92 and 98” of the Evidence Act “in a manner which did not unfairly advantage one party and correspondingly disadvantage the other”.  In his Honour’s view, admitting the affidavits and allowing the claim of privilege unfairly permitted the plaintiff to rely upon unchallengeable evidence and the primary judge did not seek to restore the balance in the summing up, including by permitting the jury to infer, from F’s privilege claim, that the affidavits were untrue. 
  7. [40]
    Davies JA suggested that, in the face of a privilege claim, the primary judge might not have required F to identify her affidavits.  Regardless, in his Honour’s view, they ought to have been excluded under section 98.  His Honour said at page 438 (my emphasis) –

The trial judge required [F] to give evidence of her signature on her affidavits notwithstanding his apparent intention of allowing the privilege claim.  Having regard to that apparent intention his Honour could have refrained from requiring [F] to give that evidence or he could have excluded the affidavits pursuant to s. 98 of the Evidence Act 1977.  There was, in the circumstances, a good argument that it was inexpedient in the interests of justice to admit those affidavits because a likely inference from [F’s] claim of privilege, or at least the allowance of that claim, was that they were false. 

  1. [41]
    McPherson JA explained the operation of section 92 and, as noted, dissenting, held that the affidavits were admissible and were not to be excluded under section 98.  At pages 452 – 453, his Honour said (my emphasis) –

… It is a consequence of the statutory provision, which has been recognised and acted on in Queensland ever since the decision in Hilton v Lancashire Dynamo Nevelin Ltd [1964] 1 WLR 952, that a witness’s own statement or proof of evidence may if signed be put in evidence through him by the party calling him when he gives evidence. 

In these circumstances [including the circumstances that F had personal knowledge of the matters contained in her affidavit], his Honour was on the face of it bound to admit into evidence the two affidavits of [F].  Section 92(1)(a) uses the mandatory expression “shall … be admissible”.  It is true that it is expressed to be “subject to this Part”, including s. 98 which confers on the court a discretion to reject any such statement “if for any reason it appears … inexpedient in the interests of justice that the statement should be admitted”.  However, his Honour was plainly correct in interpreting s. 92(1)(a) as requiring the statement to be admitted subject to the exercise under s.98 of the discretion conferred to reject it if its admission would be “inexpedient in the interests of justice”.  As to that, his Honour was surely correct in holding that it was no reason for rejecting [F’s] affidavit that it would or might be difficult for defence counsel to cross-examine her effectively if (as in the event proved to be the case) she maintained her claim to privilege when questioned. 

  1. [42]
    In Hilton v Lancashire Dynamo Nevelin Ltd, Megaw J (as his Honour then was) ruled that a written statement made and signed by a witness was admissible under the English equivalent of the section 92(1)(a) – section 1(1) of the Evidence Act 1938 (UK).  Megaw J concluded “with hesitation and with reluctance” that, on the true construction of the section, which, like section 92, used the phrase “shall be admissible”, the witness’ statement was admissible as of right and not of discretion – though its weight was a matter for the court.  This was so even if the witness was available and prepared to give evidence on oath.
  2. [43]
    As noted above, in Managed Investments (No 6), Douglas J directed X to identify his affidavit and then heard submissions about its admissibility.  After hearing those submissions, his Honour admitted X’s affidavit into evidence, publishing his reasons for doing so at Managed Investments (No 7).  His Honour’s reasons in No 7 discussed the historical use of affidavits in civil cases; the English Evidence Act as the progenitor of section 92; and the cases referred to above. 
  3. [44]
    His Honour explained that the well-entrenched power to direct that affidavits might be read as evidence at a trial was separate from the proof of statements in civil proceedings permitted by section 92.  His Honour explained that it was likely that section 92 was “aimed at facilitating the proof of contemporaneous statements relating to events observed by a witness as well as of business records” (see section 92(1)(b)).  It created exceptions to: the rule against hearsay; the rule against self-corroboration; and the rule that a previous inconsistent statement of a witness did not constitute evidence of the facts stated therein.  It did not supersede, but rather overlapped, the provisions of the UCPR which permit the giving of evidence by affidavit. 
  4. [45]
    After referring to Thompson v Bella-Lewis and Accident Insurance Mutual Holdings Ltd v McFadden, his Honour stated that it was not a pre-condition to admissibility under section 92 that the statement maker be available for cross-examination – although that might affect the weight of the evidence.  His Honour held at [25] that there was no common law discretion to exclude evidence admitted under section 92 unless perhaps the evidence was similar fact evidence or evidence obtained illegally (cf the applicant’s submissions at [17](e) above).  Even if such a common law discretion existed, his Honour would not have excluded X’s affidavit under it, nor under the discretion conferred by section 98.
  5. [46]
    In relation to the present application, the UCPR and the weight of the authorities establish the following –
    1. (a)
      A “statement maker” may be subpoenaed to appear as a witness under rule 414 of the UCPR.
    2. (b)
      The fact that the statement maker made a self-incriminatory statement prior to being called as a witness did not mean that he or she had waived the privilege against self-incrimination insofar as the contents of the statement were concerned.
    3. (c)
      A written statement – sworn or unsworn – which meets the pre-requisites of section 92(1)(a) (or 92(1)(b)) is admissible as of right.
    4. (d)
      In the case of a witnessed statement, the making of the statement by the statement maker may be proved by the witness to it.
    5. (e)
      If a statement maker, who is called as a witness, declines to identify their statement, they may be directed to do so.
    6. (f)
      In the case of a witnessed statement which does, or tends to, incriminate the statement maker, because the witness to the statement may prove it –
      1. identification of the statement by the statement maker does not add to the jeopardy already created by the written statement; and
      2. the statement maker cannot therefore rely upon the privilege against self-incrimination to refuse to answer questions asking the statement maker to identify the statement as their own.
    7. (g)
      The pre-requisite to admissibility of the statement under section 92, that the statement maker be “called” as a witness in the proceeding, is met upon the statement maker having been “called”, without more – that is, even if the statement maker –
      1. successfully claims the privilege over the matters covered by the statement; and
      2. gives no oral evidence in chief (beyond identifying their statement); and
      3. is not, because of the privilege claim, able to be cross-examined.
    8. (h)
      A statement otherwise admissible under section 92(1)(a) may be rejected by the court in the exercise of its direction under section 98 and the court has a clear duty to consider whether the statement ought to be rejected under that section.
    9. (i)
      If a judge considers it inexpedient in the interests of justice to admit the statement, he or she may either refuse to direct the statement maker to identify it[2] or, after it has been identified, exclude it under section 98.[3] 
    10. (j)
      The weight to be attached to the statement admitted under section 92 is to be estimated having regard to inter alia the matters stated in section 102.
    11. (k)
      The unavailability of the statement maker for cross-examination may affect the weight to be attached to the statement admitted under section 92.
  6. [47]
    Applying those principles to the present case, I was satisfied that there was no need for a trial of the claim. 
  7. [48]
    If there were to be a trial of the claim, the accomplices could be subpoenaed to give evidence and they could not rely upon the privilege of self-incrimination to refuse to identify their affidavits.  Once identified, the affidavits would be admissible as of right (including because the statement maker had been called as a witness) – subject to a discretion to reject or exclude them. 
  8. [49]
    Bearing in mind a court’s clear duty to consider whether a statement rendered admissible by section 92 ought to be rejected under section 98: nothing in the material before me suggested that it would be considered inexpedient in the interests of justice to admit the accomplices’ affidavits.  Indeed, in my view, it was in the interests of justice to admit them.  The content of the affidavits was persuasively plausible; the evidence was consistent as between accomplices; and the accomplices’ evidence was supported, if not corroborated in the technical sense, either by the evidence of other witnesses or by documents.  Any suggestion that the accomplices (or an accomplice) had an incentive to falsely implicate the defendant in criminality or misconduct could only come from the defendant himself.  Obviously, no such suggestion was made by the defendant on this application, nor (on the evidence of Mr Conomos) would it be made at any trial of the claim.  Further, in my view, in this particular case, there would be no basis upon which a civil trial court would infer, from any claim of privilege which might be made by an accomplice, that the accomplice’s affidavit was unreliable.  In my view, a trial court would infer nothing more from a privilege claim than that the accomplice appreciated the self-incriminatory nature of the content of their affidavit.
  9. [50]
    In those circumstances, I considered it appropriate to proceed on the basis that, at any trial of the action, if it were necessary (because an accomplice claimed privilege), the accomplice would be directed to identify his affidavit; and his affidavit would be admitted into evidence to support, without challenge or contradiction or further context, the plaintiff’s claims.
  10. [51]
    With respect to section 102, objectively considered, it might be thought that the accomplices had an incentive to conceal or misrepresent the facts by minimising their role, and exaggerating the defendant’s role, in the dishonesty.  But, as noted, the defendant did not and would not suggest that that was the case – nor is there any hint of it on the face of the affidavits.  And, as already noted, the accomplices’ evidence (particularly Mr Phillips’ evidence) was supported if not corroborated.  In my view, at any trial of the claim, evidence admitted under section 92 would be treated as of considerable weight.  Nor would the unavailability of the statement maker for cross-examination detract from their evidence in this particular case, given the defendant’s intention not to cross-examine at a trial of the claim.

Does the defendant have a real prospect of a defence to the claim?

  1. [52]
    Summary judgment applications will not be granted if the respondent is able to establish some real prospect of succeeding at trial. 
  2. [53]
    The present defendant has declined to appear at this application and has made no attempt to establish any prospect of succeeding at trial.  Nevertheless, ASD bore the legal burden of positively satisfying me that it had an entitlement to judgment.  It had to demonstrate that it was able to prove its claim on the balance of probabilities.  ASD acknowledged that, in terms of the standard of proof, Briginshaw v Briginshaw (1938) 60 CLR 336 applied because it alleged that Mr Stacey had engaged in serious misconduct.
  3. [54]
    The misconduct which ASD alleged against the defendant included allegations that he –
    1. (a)
      Misappropriated ASD’s stock by selling it to ASD’s customers at a discounted price, for cash, which he kept for himself;
    2. (b)
      Made remuneration overpayments to employees, and recovered the overpayment in cash for himself;
    3. (c)
      Caused ASD to make payments to third parties for services not provided to ASD – but instead provided to himself;
    4. (d)
      Reimbursed an employee for claims made upon ASD for items which were for personal use;
    5. (e)
      Retained money properly due and owing to ASD; and
    6. (f)
      Obtained personal goods and services at ASD’s expense.

The assertions made in the plaintiff’s amended statement of claim

  1. [55]
    The plaintiff made the following assertions in its amended statement of claim, all of which, in my view, bar one (in (b)(ii) and (e)(i) below), were established by the evidence, as the law applied to it, on the application –
    1. (a)
      Mr Stacey was employed under an employment contract with ASD;
    2. (b)
      The law implied into his contract of employment the following duties –
      1. a duty to act in the best interests of ASD;
      2. a duty to exercise reasonable case in performing his role for ASD;
      3. a duty to act towards ASD with good faith and fidelity;
      4. a duty not to make any pecuniary profits from third parties without ASD’s approval; and
      5. a duty not to engage in misconduct, including not to act dishonestly, in performing his role for ASD.
    3. (c)
      Also, as an ASD employee, Mr Stacey owed fiduciary duties to ASD, implied by law, including –
      1. a duty to act honestly, in good faith, in the interests of ASD and for a proper purpose; and
      2. a duty not to improperly use his position to gain an advantage for himself or someone else or to cause detriment to ASD.
    4. (d)
      Additionally, Mr Stacey was an “officer” of ASD as that term is defined in section 9 of the Corporations Act as interpreted by ASIC v King (2020) 376 ALR 1.  At the relevant time, ASD had two service centres, one in Brisbane and one in Melbourne.  Mr Stacey was the Queensland State Manager.  He had broad authority in all commercial areas of the operation of the business from the Brisbane Service Centre.  This included (inter alia) authority to authorise payroll, sales and purchases, and anything required to run the business – subject to certain limits.  He made or participated in the making of decisions which affected a substantial part of ASD’s business (cf section 9(b)(i)).
    5. (e)
      Sections 180, 181 and 182 of the Corporations Act imposed certain duties on Mr Stacey as an officer of ASD.  These included –
      1. a duty to exercise his powers and discharge his duties with the degree of care and diligence that a reasonable person would exercise if they were an officer of ASD, in ASD’s circumstances and occupying the position held by Mr Stacey, with his responsibilities;
      2. a duty to exercise his powers and discharge his duties in good faith in the best interests of ASD and for a proper purpose; and
      3. a duty to not improperly use his position to gain advantage for himself or someone else, or cause detriment to ASD.
  2. [56]
    ASD alleged that Mr Stacey engaged in a variety of dishonest conduct as summarised above; and that his dishonest conduct breached one or more of the duties he owed to ASD. 

Evidence establishing the claims

  1. [57]
    In proving the dishonest conduct, and in turn, the allegation that Mr Stacey had breached relevant duties, ASD relied heavily on the unchallenged affidavit of Mark Phillips, an internal sales representative at ASD, who reported directly to Mr Stacey and facilitated his dishonesty.  It also relied upon the unchallenged evidence of other ASD employees, including other lesser-involved accomplices; the evidence of a senior manager at ASD (Hok Wong); the evidence of a director of ASD (Richard Barclay); and the affidavit of its solicitor, concerning documents produced by non-parties such as banks, ASD customers, and a courier company (Capital Transport). 
  2. [58]
    I have outlined the evidence below: setting out Mr Phillips’ evidence about Mr Stacey’s dishonesty, followed by the evidence which supported or corroborated it.  The unchallenged evidence persuasively established the pleaded allegations.  It left me positively satisfied that Mr Stacey’s dishonest conduct was in breach of one or more of the duties he owed ASD, and caused ASD loss.  However, in my view, none of Mr Stacey’s dishonest conduct entailed a breach of his duty as an employee to exercise “reasonable care”.
  3. [59]
    ASD’s evidence established the following.  Mr Stacey was employed in 2012 as ASD’s Queensland State Manager, on an annual base salary of $90,000, rising to $110,000 by May 2019.  He managed the Brisbane Service Centre and had financial authority up to certain limits, including authority over payroll, purchases, and sales.  He was paid superannuation, and provided with a company car, mobile phone, and computer.  He was entitled to, and did, participate in ASD’s profit share scheme. 
  4. [60]
    Mr Phillips was an internal ASD sales representative whose role included taking customer orders, sourcing material to fulfill orders, ensuring the timely delivery of orders and maintaining customer records and accounts.  He was employed by ASD from January 2011 until March 2016.  During his employment, he reported directly to Mr Stacey.
  5. [61]
    From late 2016, as well as working for ASD, Mr Phillips operated a consulting business (“MJP”) which offered consulting services to smaller companies within the steel industry.  Mr Stacey was aware of MJP, which he permitted Mr Phillips to run, as long as Mr Phillips did not sell stainless steel directly to ASD’s customers.
  6. [62]
    I note that it was also from late 2016 that Mr Phillips began assisting Mr Stacey in his dishonesty, including (but not only) by facilitating Mr Stacey’s dishonest misappropriation of ASD’s stock in exchange for a “cut” of the price paid by third parties for the stock. 
  7. [63]
    In about December 2016, Mr Stacey spoke to Mr Phillips about selling “leftover” stock to Sheet Metal Improvement and Design Pty Ltd (SID), one of ASD’s customers.  Mr Phillips ascertained that SID was interested “if there was an invoice to pay”.  On Mr Stacey’s instructions, on several occasions, between March 2017 and April 2019, Mr Phillips sold ASD’s stock to SID at a discount.  Each occasion is described in detail in Mr Phillips’ affidavit.  Each followed a broadly similar pattern.  Mr Stacey set the sale price, and, on Mr Stacey’s instructions, Mr Phillips issued an MJP invoice for the transactions.  Copies of those invoices are exhibited to Mr Phillips’ affidavit.  Occasionally, SID generated Recipient Created Tax Invoices for the product, copies of which are also exhibited to Mr Phillips’ affidavit. 
  8. [64]
    Mr Stacey determined the way in which the amount paid for the product by SID would be split between Mr Phillips and himself.  Sometimes, Mr Phillips was paid in cash: some of which he kept for himself, the balance of which he gave to Mr Stacey.  Other times, money was deposited into Mr Phillips’ bank account: some of which Mr Phillips would pass on to Mr Stacey including by depositing it into Mr Stacey’s bank account.  Mr Stacey instructed Mr Phillips about the timing of, and the amount of, those deposits.
  9. [65]
    In March 2017, Mr Stacey approached Mr Phillips about selling ASD’s stock to Admax at scrap value.  Admax was an ASD customer.  Mr Phillips made enquiries and informed Mr Stacey that Admax was interested.  On Mr Stacey’s instructions, Mr Phillips sold ASD’s stock to Admax, on several occasions between March 2017 and April 2019.  Each occasion is detailed in Mr Phillips’ affidavit.  Each followed a broadly similar pattern.  Sometimes Mr Phillips delivered the stock to Admax himself.  Other times he organised Capital Transport Group to pick up the stock and deliver it to Admax.  Relevant Admax invoices are exhibited to Mr Phillips’ affidavit.
  10. [66]
    On each occasion Admax paid cash for the stock.  On most occasions, Mr Phillips handed the cash to Mr Stacey who then decided how much of a “cut” he (Mr Phillips) would get, before handing Mr Phillips that amount.  Sometimes, instead of receiving cash from Mr Phillips, Mr Stacey asked Mr Phillips to deposit a nominated amount into Mr Stacey’s bank account. 
  11. [67]
    Admax created “Recipient Created Tax Invoices” for each sale, copies of which are exhibited to Mr Phillips’ affidavit.  Those invoices set out the type and quantity of steel purchased; the transaction date, and the price paid.
  12. [68]
    On Mr Stacey’s instructions, Mr Phillips facilitated the sale of ASD’s product to DVO Furniture Design Pty Ltd (DVO) at a discounted price on several occasions between October 2017 and March 2019.  The transactions are set out in detail in Mr Phillips’ affidavit.  Each followed a broadly similar pattern.  The DVO representative agreed to buy the product but said he would need an invoice for each transaction.  Mr Stacey instructed Mr Phillips to say that the product was from Mr Phillips, not from ASD.  Mr Phillips generated MJP invoices accordingly.  The price paid by DVO for the product was divided between Mr Phillips and Mr Stacey as per Mr Stacey’s instructions.  Relevant MJP invoices are exhibited to Mr Phillips’ affidavit. 
  13. [69]
    Virginia Sheet Metal (VSM) was a longstanding ASD customer.  On Mr Stacey’s instructions, Mr Phillips facilitated the sale to VSM of ASD’s product at a discounted price on several occasions between October 2017 and April 2019.  Each sale transaction is detailed in Mr Phillips’ affidavit.  Each followed a broadly similar pattern.  Mr Stacey instructed Mr Phillips to issue MJP invoices to VSM for “consulting” in relation to each sale, and he did so.  The relevant invoices are exhibited to Mr Phillips’ affidavit.  VSM paid the sale prices into Mr Phillips’ bank account (on the basis of MJP’s “consulting” invoices) and he withdrew, at Mr Stacey’s instruction, a portion of the amount paid and gave it to Mr Stacey.
  14. [70]
    In April 2019, Mr Stacey asked Mr Phillips to approach the representative of Radius Fabrications to ask whether it wished to buy steel products at a good price.  Mr Phillips did so, and several sale transactions were arranged.  Each sale transaction is detailed in Mr Phillips’ affidavit.  Each followed a broadly similar pattern.  Mr Phillips told the Radius Fabrications representative that there was no need for invoicing and that he would instead text to the representative “his boss’s” bank account details for payment.  Mr Phillips provided an excuse to the representative as to why the payment had to be directly into “his bosses (sic)” account.  In fact, the money was paid into Mr Phillips’ bank accounts.  After payment was made, Mr Phillips transferred cash from his account to Mr Stacey, as and when instructed by Mr Stacey.  Relevant pages from Mr Phillips’ bank statements are exhibited to his affidavit. 
  15. [71]
    Patrick Faulkner is ASD’s Brisbane Warehouse Supervisor.  He reported to Mr Stacey.  He recalled more than one occasion on which he and other ASD staff were asked by Mr Stacey to stay back late to pack orders for customers, which they did.  On those occasions, the orders were “gone” the next morning.
  16. [72]
    Hok Wong, the Business General Manager of Whiting Holdings Australia, is responsible for the oversight of ASD.  He gave evidence that –
    1. (a)
      ASD did not authorise any of the transactions with SID, Admax, VSM or Radius Fabrications referred to above;
    2. (b)
      ASD did not receive payment in relation to any of the transactions;
    3. (c)
      ASD lost the value of the stock sold in the course of those transactions; and
    4. (d)
      the transactions were not in ASD’s interests.
  17. [73]
    Mr Faulkner’s evidence supports, in a general sense, Mr Phillips’ affidavit about his (Mr Phillips’) and Mr Stacey’s misappropriation of ASD’s stock.  In my view, Mr Wong’s evidence, in combination with the documents evidencing the unauthorised transactions, corroborated this aspect of Mr Phillips’ evidence. 
  18. [74]
    Mr Phillips’ affidavit details occasions on which the defendant orchestrated remuneration over payments, ultimately to his own benefit.
  19. [75]
    Mr Phillips explained that in January 2019 the defendant borrowed money from another ASD employee, Kruze Anania.  In mid-February, Mr Anania asked for the money back.  In March 2019, the defendant told Mr Phillips to tell Mr Anania that he (the defendant) would put extra hours on his time sheet to “make up” for some of the money he owed him.  Also, on the defendant’s instructions, Mr Phillips transferred money to Mr Anania from his own bank account. 
  20. [76]
    ASD obtained an affidavit from Mr Anania.  He is employed as a storeman at ASD.  He recalled a conversation with Mr Phillips in January 2019, in which Mr Phillips discussed a $2,000 loan to Mr Stacey.  Mr Anania told Mr Phillips that he did not have that money to spare.  Not long thereafter, Mr Stacey approach Mr Anania.  He asked Mr Anania to approach “Matt from the warehouse” and ask for a loan – saying it was for himself (Mr Anania).  Mr Anania asked Matt (Stevenson) for a $2000 loan.  Mr Stevenson gave him the money.  Mr Anania gave it to Mr Stacey the same day.  Mr Stacey told him that he would get the money back when bonuses were paid in March.
  21. [77]
    Halfway through February, Mr Phillips approached Mr Anania about the loan and asked him what he thought about an arrangement in pursuance of which Mr Stacey would add “extra overtime” to his pay, to help him pay Mr Stevenson back.  Mr Anania agreed to be a part of that arrangement and in March, he was given payment for overtime hours he had not worked.  In mid-March, Mr Phillips told Mr Anania that he would transfer $1,350 to him, and that he was to take $650 from the amount paid to him in overtime to repay Mr Stevenson ($1,350 + $650 = $2,000).  Mr Anania repaid $2,000 to Mr Stevenson in late March.  Mr Anania’s relevant payroll processing slip and bank statements are exhibited to his affidavit.
  22. [78]
    In early 2019, Mr Phillips lent $600 to Mr Stacey.  In April, he spoke to Mr Stacey about repayment.  Mr Stacey told Mr Phillips that he could “get the money off Andrew”, explaining that he would overpay Andrew Morgan (another ASD employee) and that Mr Phillips could explain to Mr Morgan that the overpayment was on the basis that Mr Morgan would transfer $600 to Mr Phillips.  The transactions occurred as discussed.
  23. [79]
    Andrew Morgan’s affidavit explained that he was employed by ASD between 8 December 2018 and 16 January 2020.  He reported to Patrick Faulkner.  Mr Morgan outlined four separate overpayments which were made to his account by Mr Stacey between February and May 2019.  These overpayments purported to be for overtime hours that Mr Morgan did not work.  On each occasion, after receiving the direct credit from ASD into his bank account, he gave Mr Stacey $600 (either in cash or by way of direct bank deposit).  Relevant bank statements are exhibited to Mr Morgan’s affidavit. 
  24. [80]
    Mr Wong gave evidence to the effect that ASD did not authorise the overpayments referred to above.  Nor did it receive any benefit from the overpayments.  It therefore lost the amount of the overpayment, and the transactions were not in ASD’s interests.
  25. [81]
    In my view, Mr Anania and Mr Morgan may be characterised as “low level” accomplices.  I did not consider it necessary to delve into the question whether their evidence was available as technical corroboration of the evidence of Mr Phillips about the fake overtime payments.  In my view, at the least, it was persuasively supportive of it. 
  26. [82]
    Mr Phillips’ affidavit details occasions on which payment was made to Mr Stacey for services not provided.
  27. [83]
    In about May 2017, the defendant spoke to Mr Phillips about dishonest transactions involving Morgo’s Marine Welding (Morgo’s).  Essentially, on four occasions, Morgo’s agreed to invoice ASD for welding services which Morgo’s did not provide.  Mr Stacey authorised the payment of those invoices.  Then, Morgo’s paid the amounts it received to Mr Phillips, on MJP invoices issued by Mr Phillips for “consulting” work which MJP did not provide to Morgo’s.  Mr Phillips received $38,150.20 from Morgo’s and gave $24,180 of it to Mr Stacey.   Mr Phillips exhibited to his affidavit the MJP invoices issued to Morgo’s.  ASD’s evidence includes other documentary evidence showing the payments authorised by Mr Stacey.
  28. [84]
    Mr Phillips described another variant of Mr Stacey’s dishonesty involving a false “maintenance” invoice.  Mr Stacey asked Mr Phillips to ask the representative of SID whether he would create an invoice for maintenance work for ASD (which was not performed).  The SID representative agreed to provide an invoice for maintenance work (not performed) in return for the plaintiff’s stock.  A copy of the relevant invoice is exhibited to Mr Phillips’ affidavit.  Mr Stacey authorised the invoice for payment.
  29. [85]
    Suez Recycling and Recovery Australia (SUEZ) supplied skip bins to the plaintiff.  In August 2018, Mr Stacey asked Mr Phillips whether Mr Phillips could arrange for SUEZ skip bins to be delivered to his (Mr Stacey’s) house.  Mr Phillips arranged for the skips to be delivered.  (Mr Stacey was then in the process of building two houses: one for himself, and one for wife’s parents.)  Mr Phillips’ understanding was that the defendant approved payment of the SUEZ invoices for skip bins which included charges for the skips used at his house.  Mr Phillips asked SUEZ to change the delivery address on the invoice it issued for the job to falsely state that the bins had been left at the plaintiff’s service centre, rather than at Mr Stacey’s house.
  30. [86]
    In November 2018, Mr Stacey told Mr Phillips that he needed a truck large enough for his guttering.  He asked Mr Phillips to ring and organise a crane truck to collect the guttering “on” the plaintiff’s account, which Mr Phillips did.  Australian Crane and Truck provided an appropriate truck.
  31. [87]
    Mr Wong gave evidence that ASD did not authorise the transactions referred to above with Morgo’s, SUEZ or Australian Crane and Truck.  ASD received no benefit from those transactions.  ASD lost the amounts paid to those entities.  The transactions were not in ASD’s interests.
  32. [88]
    In my view, Mr Wong’s evidence, in combination with relevant documentary evidence, corroborated Mr Phillips’ account of this aspect of the defendant’s dishonesty.  The absence of the deposit stub did not matter.
  33. [89]
    During his employment with the plaintiff, Mr Phillips submitted to the defendant, for approval, claims for work related expenses which in fact concerned personal use expenses. 
  34. [90]
    On 12 April 2017, Mr Stacey spoke to Mr Phillips about Mr Phillips purchasing alcohol for Mr Stacey.  Mr Stacey said to Mr Phillips something like “get beer (for me) and get yourself something and claim it”.  Mr Phillips did just that.  On several occasions, all detailed in his affidavit, between April 2017 and March 2019, Mr Phillips submitted, and the defendant approved for reimbursement by the plaintiff, expense claim forms which included claims for expenses that were not work-related expenses.  Mr Phillips exhibited to his affidavit the relevant claim forms.
  35. [91]
    Mr Wong gave evidence to the effect that the expenses referred to above were not legitimate employee expenses which might have been claimed from ASD.  ASD lost the amount of their reimbursement; and their reimbursement was not in ASD’s interests.  Mr Wong’s evidence supported, if not corroborated, Mr Phillips’ evidence in this regard.
  36. [92]
    In late 2018, Mr Stacey rang Mr Phillips and told him that he had sold a Prado, owned by ASD, to Mr Faulkner’s parents for $7,000 and that he had kept for himself the money received from the purchasers.  As noted above, Mr Faulkner was ASD’s Warehouse Supervisor.
  37. [93]
    Mr Faulkner’s affidavit explained that although his parents paid $7,000 in cash to the defendant in October 2018, they were issued with a receipt for the transaction for only $1,000.  He exhibited the receipt to his affidavit.  Further, in May 2019, the defendant asked Mr Faulkner to ask his brother (who owned a mechanical business) to say that the Prado was only worth $3,000 because “a lot of things needed fixing”.  Mr Faulkner said he would “see” but did not follow through. 
  38. [94]
    On 8 May 2019 (or thereabouts), the defendant handed Mr Faulkner $3,100 cash and as ASD deposit stub, filled out as follows –

Car 3100.30

Ute 600

  1. [95]
    Although Mr Faulkner said a copy of the stub was exhibited to his affidavit, I could not find it.
  2. [96]
    Mr Wong explained that ASD received only $2,500.30 of the Prado sale proceeds.  ASD did not authorise the defendant to retain the balance.  It lost, therefore, the balance of the purchase price.  The sale of the Prado was not therefore in ASD’s interests.  Mr Wong’s evidence and Mr Faulkner’s evidence corroborated Mr Phillips’ account of this aspect of the defendant’s dishonesty.
  3. [97]
    Finally, Mr Phillips described an occasion in September 2018 where Mr Stacey instructed him to arrange a “contra” deal with Southern Stainless Pty Ltd for a new teppanyaki barbeque in exchange for which he would provide Southern Stainless with the plaintiff’s labour (in polishing certain steel products).  Mr Phillips arranged such a deal.  In support of his evidence about this conduct, Mr Phillips exhibited to his affidavit an email which he sent to the defendant about a barbeque in September 2018.
  4. [98]
    Mr Faulkner recalled Mr Anania arriving at work with a barbeque on the back of the “work ute” in September 2018.  He heard the defendant tell Mr Anania to drop the barbeque at the defendant’s father-in-law’s place, which was next door to the defendant’s residence.  The next morning, Mr Faulkner and Mr Anania delivered the barbeque as directed.  Mr Anania recalled being instructed to collect the barbeque and deliver it to Mr Stacey’s father-in-law’s house in September 2018. 
  5. [99]
    Mr Wong gave evidence to the effect that ASD did not authorise this “contra”;  ASD received no benefit from it;  ASD lost the value of the polishing work its employees performed for Southern Stainless Pty Ltd; and the transaction was not in ASD’s interests.  Mr Wong’s evidence, in combination with the evidence of Mr Faulkner and Mr Anania, corroborated Mr Phillips’ account of this aspect of the defendant’s dishonesty. 

Loss suffered by ASD

  1. [100]
    Having been positively satisfied that ASD’s claims were made out on the evidence, I then considered the loss suffered by ASD.  Mr Stacey’s misappropriation of ASD’s stock for his own use involved the sale of $146,947.70 in stock to third parties and transport costs of $1,147.20 (borne by ASD).  He arranged for overpayments to Mr Anania and Mr Morgan of $4,400.  He caused ASD to pay for services totalling $45,120.70 which were not rendered to ASD.  He caused ASD to “reimburse” Mr Phillips for personal use items in the amount of $12,382.15.  He dishonestly retained $4,499.70 from the proceeds of sale of the Prado.  And he obtained personal goods worth $2,420 at ASD’s expense. 
  2. [101]
    The quantum of the claims made and proved is $216,917.45.  ASD seeks a money order of $200,000 – as I understand it – in accordance with the agreement reached between the parties.  I consider it appropriate to make a money order for $200,000 by way of damages to the plaintiff.

The declarations

  1. [102]
    ASD sought declarations concerning Mr Stacey’s breaches of duty owed under contract and as a fiduciary, under section 10 of the Civil Proceedings Act 2011 (Qld).  (It noted that the court had inherent power to make declarations also.)  It sought declarations that Mr Stacey contravened the duties it owed to ASD as an “officer” under the Corporations Act.  ASD referred me to Macks v Viscariello (2017) 130 SASR 1 in which the Full Court upheld the decision of the Supreme Court to make similar declarations and to remove a liquidator.  In that case, the Full Court undertook a detailed consideration of the Supreme Court’s power to make declarations similar to those sought by ASD concerning contraventions of the Corporations Act, bearing in mind ASIC’s power under that legislation to seek declarations about contravening conduct.  The Full Court concluded that the Supreme Court had such a power and that it had not been excluded (in this context) by the legislation ([748]).  At [795] the Full Court observed that “plainly” the Supreme Court had power to make declarations that a company officer had breached the general law.  The Full Court also explained the nature of declaratory relief; the need for standing; and the need for utility, all of which I have borne in mind in deciding to make the declarations sought. 
  2. [103]
    ASD sought the declarations as a mark of the court’s disapproval of Mr Stacey’s conduct, which it submitted was egregious and sufficiently serious as to warrant the court’s express disapproval.  It also submitted that declarations would record, in a formal way, the basis for the order for compensation. 
  3. [104]
    ASD relied on the evidence of one of its directors as to the utility of the declarations from ASD’s point of view – namely, the fact that ASD sought and obtained relevant declarations would: (a) demonstrate that it was committed to promoting standards of behaviour in its employees consistent with its Workplace Behaviour Policy; and (b) promote the reputation of ASD (and others in its company group) as good employers and good business partners.
  4. [105]
    Employers must be able to trust their employees – particularly those who hold senior roles and positions of responsibility, particularly financial responsibility.  Too many businesses fail because employees dishonestly breach the trust reposed in them by their employers.  Mr Stacey’s dishonesty was brazen.  It was frequent.  It involved a relatively large amount of money.  He held a senior position in the company.  He was imbued with duties at common law and under the Corporations Act which he treated with contemptHe embroiled other employees, inferior to him in the ASD hierarchy, in it.  Indeed, he attempted to keep his “hands off” most of his dishonesty – relying on Mr Phillips to facilitate it.  He embroiled third parties, or the representatives of third parties, in his dishonesty, thereby tainting the reputation of ASD in the industry. 
  5. [106]
    In the exercise of my discretion, I considered it appropriate to make the declarations sought to convey the court’s disapproval of Mr Stacey’s conduct, and for the benefit of the plaintiff.  I was satisfied that ASD had a sufficient and real interest in obtaining declaratory relief.  The declarations did not concern theoretical matters.  They dealt with the matters in contest between the parties and concerned the duties owed by Mr Stacey (cf [769] in Macks v Viscariello).  In addition to marking the court’s disapproval of Mr Stacey’s conduct, they appropriately served ASD’s reputational purposes.

Orders and declarations

  1. [107]
    For the reasons discussed above, it is appropriate to make orders and declarations in the following terms, noting that the plaintiff does not seek costs:
  1. Pursuant to rule 292 of the Uniform Civil Procedure Rules 1999 (Qld), judgment is given in favour of the Plaintiff against the Defendant.
  2. The Defendant is to pay to the Plaintiff the sum of $200,000, by way of compensation pursuant to section 1317H of the Corporations Act 2001 (Cth), as equitable compensation for breach of fiduciary duties, and damages for breach of his employment contract with the Plaintiff dated 24 May 2012.
  3. I make no order as to costs.
  4. I declare that –
    1. (a)
      Between on or around December 2016 and on or around 8 May 2019 by his conduct as an officer and an employee of ASD in causing ASD stock to be misappropriated as pleaded in paragraphs 10 to 38 of the Amended Statement of Claim filed 21 August 2020 (Misappropriated Stock Transactions) in circumstances where:
      1. (i)
        The Defendant knew that the payments made as part of the Misappropriated Stock Transactions were going to be, or had been, made to, and retained by himself or another employee of ASD, and not made to or retained by ASD; and
      2. (ii)
        The Defendant intended the Misappropriated Stock Transactions to benefit himself and another employee of ASD,

the Defendant:

  1. (iii)
    Contravened section 180, section 181 and section 182 of the Corporations Act 2001 (Cth);
  2. (iv)
    Breached his fiduciary duties to ASD to act honestly, not to improperly use his position to gain an advantage for himself to the detriment of ASD, and to act towards ASD with good faith and fidelity; and
  3. (v)
    Breached his contractual duties to ASD to act in the best interests of ASD, not to make pecuniary profits from third parties without ASD’s approval, to act towards ASD with good faith and fidelity, and not to engage in misconduct, including not to act dishonestly, in performing his role for ASD.
  1. (b)
    Between in or about January 2019 and in or about May 2019 by his conduct as an officer and an employee of ASD in causing ASD to make overpayments of remuneration entitlements to two employees of ASD as pleaded in paragraphs 39 to 53 of the Amended Statement of Claim filed 21 August 2020 (Wage Overpayments) in circumstances where:
    1. (i)
      The Defendant knew the Wage Overpayments were payments to which the two ASD employees were not lawfully entitled; and
    2. (ii)
      The Defendant intended the Wage Overpayments to provide pecuniary benefits to himself or the two ASD employees,

the Defendant:

  1. (iii)
    Contravened section 180, section 181 and section 182 of the Corporations Act 2001 (Cth);
  2. (iv)
    Breached his fiduciary duties to ASD to act honestly, not to improperly use his position to gain an advantage for himself to the detriment of ASD, and to act towards ASD with good faith and fidelity; and
  3. (v)
    Breached his contractual duties to ASD to act in the best interests of ASD, to act towards ASD with good faith and fidelity, and not to engage in misconduct, including not to act dishonestly, in performing his role for ASD.
  1. (c)
    Between in or about May 2017 and in or about March 2019 by his conduct as an officer and an employee of ASD in causing ASD to pay third parties for services which were not provided to ASD as pleaded in paragraphs 54 to 76C of the Amended Statement of Claim filed 21 August 2020 (Services Payments) in circumstances where:
    1. (i)
      The Defendant knew that the Services Payments were for services not provided to ASD;
    2. (ii)
      The Defendant knew that the Services Payments were payments ASD was not obliged to make; and
    3. (iii)
      The Defendant intended the Services Payments to provide pecuniary benefits to himself and to third parties,

the Defendant:

  1. (iv)
    Contravened section 180, section 181 and section 182 of the Corporations Act 2001 (Cth);
  2. (v)
    Breached his fiduciary duties to ASD to act honestly, not to improperly use his position to gain an advantage for himself to the detriment of ASD, and to act towards ASD with good faith and fidelity; and
  3. (vi)
    Breached his contractual duties to ASD to act in the best interests of ASD, to act towards ASD with good faith and fidelity, and not to engage in misconduct, including not to act dishonestly, in performing his role for ASD.
  1. (d)
    Between in or about April 2017 and in or about March 2019 by his conduct as an officer and an employee of ASD in causing and approving payments by ASD to an ASD employee for personal goods and services as pleaded in paragraphs 78 to 81 of the Amended Statement of Claim in circumstances where:
    1. (i)
      The Defendant knew that the personal goods and services were obtained for the Defendant;
    2. (ii)
      The Defendant knew that the personal use items had been included in monthly expense claims made to ASD by the ASD employee;
    3. (iii)
      The Defendant knew that ASD had no obligation to reimburse the employee for the personal use items; and
    4. (iv)
      The Defendant knew that the amounts for the personal use items should not be reimbursed by ASD,

the Defendant:

  1. (v)
    Contravened section 180, section 181 and section 182 of the Corporations Act 2001 (Cth);
  2. (vi)
    Breached his fiduciary duties to ASD to act honestly, not to improperly use his position to gain an advantage for himself to the detriment of ASD, and to act towards ASD with good faith and fidelity;
  3. (vii)
    Breached his contractual duties to ASD to act in the best interests of ASD, to act towards ASD with good faith and fidelity, and not to engage in misconduct, including not to act dishonestly, in performing his role for ASD.
  1. (e)
    Between on or around 10 October 2018 and on or around 8 May 2019 by his conduct as an officer and an employee of ASD in retaining for himself part of the sales proceeds from the sale of a Toyota Prado motor vehicle owned by ASD as pleaded in paragraphs 82 to 86 of the Amended Statement of Claim filed 21 August 2020 (Vehicle Retention Amount) the Defendant:
    1. (i)
      Contravened section 180, section 181 and section 182 of the Corporations Act 2001 (Cth);
    2. (ii)
      Breached his fiduciary duties to ASD to act honestly, not to improperly use his position to gain an advantage for himself to the detriment of ASD, and to act towards ASD with good faith and fidelity;
    3. (iii)
      Breached his contractual duties to ASD to act in the best interests of ASD, to act towards ASD with good faith and fidelity, and not to engage in misconduct, including not to act dishonestly, in performing his role for ASD.
  2. (f)
    Between in or around September 2018 and 29 March 2019 by his conduct as an officer and an employee of ASD in obtaining from a third party for his personal use a barbeque teppanyaki plate in exchange for the supply of polishing services by ASD as pleaded in paragraphs 87 to 91 of the Amended Statement of Claim, the Defendant:
    1. (i)
      Contravened section 180, section 181 and section 182 of the Corporations Act 2001 (Cth);
    2. (ii)
      Breached his fiduciary duties to ASD to act honestly, not to improperly use his position to gain an advantage for himself to the detriment of ASD, and to act towards ASD with good faith and fidelity;
    3. (iii)
      Breached his contractual duties to ASD to act in the best interests of ASD, to act towards ASD with good faith and fidelity, and not to engage in misconduct, including not to act dishonestly, in performing his role for ASD.

Footnotes

[1] Section 14B(3) Evidence Act 1898 (NSW) provided: “Nothing in this section shall render admissible as evidence any statement made by a person interested at a time when proceedings were pending or anticipated involving a dispute as to any fact which the statement might tend to establish.”

[2]Per Davies JA in Thompson v Bella-Lewis [1997] 1 Qd R 429.

[3] Thompson v Bella-Lewis [1997] 1 Qd R 429; ASIC v Managed Investments Pty Ltd (No 7) [2014] QSC 72.

Close

Editorial Notes

  • Published Case Name:

    Australian Stainless Distributors Pty Ltd v Stacey

  • Shortened Case Name:

    Australian Stainless Distributors Pty Ltd v Stacey

  • MNC:

    [2021] QSC 278

  • Court:

    QSC

  • Judge(s):

    Ryan J

  • Date:

    28 Oct 2021

  • Selected for Reporting:

    Editor's Note

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

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