Benefit Strategies Group Inc v Prider
[2005] SASC 194
•1 June 2005
SUPREME COURT OF SOUTH AUSTRALIA
(Full Court: Civil)
BENEFIT STRATEGIES GROUP INC & ANOR v PRIDER
Judgment of The Full Court
(The Honourable Justice Bleby, The Honourable Justice Vanstone and The Honourable Justice Anderson)
1 June 2005
PRIVATE INTERNATIONAL LAW - FOREIGN JUDGMENTS - EFFECT AND ENFORCEMENT
EQUITY - GENERAL PRINCIPLES - REMEDIES AND PROCEDURE - FRAUD OR MISREPRESENTATION AS A DEFENCE OR ANSWER
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PRACTICE UNDER RULES OF COURT - SUMMARY JUDGMENT
Enforcement at common law of default judgment of the Superior Court of California – Judgment included punitive damages and joint and several judgment for two plaintiffs on separate causes of action – Application for immediate relief – Rule 25.02 Supreme Court Rules – Appellant alleged judgment fraudulently obtained and unenforceable by reason of public policy – Whether issues properly determined on summons for immediate relief – Onus of proof under r 25.02 and where fraud alleged – Whether fraud must be fraud of the original plaintiffs – Matters to be established to deny enforcement on grounds of fraud – Whether triable issue of fraud – Whether foreign judgment for punitive damages enforceable – Whether allegedly erroneous foreign judgment enforceable – Whether plaintiffs can seek to enforce part only of foreign judgment – Whether foreign judgment can be severed – Appeal against judgment for plaintiffs dismissed.
Supreme Court Rules 1987 r 25.01, r 25.02 and r 25.03; Supreme Court Rules 1947 o 10 and o 14; California Code of Civil Procedure s 415.20, s 416.90 and s 3294; Foreign Judgments (Reciprocal Enforcement) Act 1933 (UK), referred to.
Godard v Grey (1870) LR 6 QB 139; Huntington v Attrill [1893] AC 150; Raulin v Fischer [1911] 2 KB 93; Ronald v Harper [1913] VLR 311; McHarg v Woods Radio Pty Ltd [1948] VLR 496; Merker v Merker (1963) P 283; Uren v John Fairfax & Sons Pty Ltd (1966) 117 CLR 118; Australian Consolidated Press Ltd v Uren (1966) 117 CLR 185; Australian Consolidated Press Ltd v Uren [1969] 1 AC 590; Bellas v Kipouros (1974) 8 SASR 418; Wicklow Enterprises Pty Ltd v Doysal Pty Ltd & Anor (1985) 124 LSJS 225; Wentworth v Rogers (No 5) (1986) 6 NSWLR 534; Lamb v Cotogno (1987) 164 CLR 1; Settlement Wine Co Pty Ltd v National & General Insurance Co Ltd (1988) 146 LSJS 150; United States of America v Inkley [1989] 1 QB 255, applied.
Rookes v Barnard [1964] AC 1129; Broome v Cassell & Co Ltd [1972] AC 1027; Adams v Cape Industries Pty Ltd [1990] Ch D 433; Schnabel v Lui (Unreported, 1 February 2002), [2002] NSWSC 15, distinguished.
Price v Dewhirst (1837) 8 Sim 279; 59 ER 111; SA Consortium General Textiles v Sun and Sand Agencies Ltd [1978] 1 QB 279; Keele v Findley (1990) 21 NSWLR 444, discussed.
Abouloff v Oppenheimer & Co (1882) 10 QBD 295; Vadala v Lawes (1890) 25 QBD 310; Wisconsin v The Pelican Insurance Company 127 US (20 Davis) 265; Baker v Wadsworth (1898) 67 LJQB 301; Briginshaw v Briginshaw (1938) 60 CLR 336; Cabassi v Vila (1940) 64 CLR 138; Everett v Ribbands (1946) 175 LT 143; Syal v Heyward [1948] 1 KB 443; McDonald v McDonald (1965) 113 CLR 529; Nagle v Feilden [1966] 1 All ER 689; Adelaide Steamship Industries Pty Ltd v The Commonwealth of Australia (1974) 8 SASR 425; Attorney-General of New Zealand v Ortiz (1984) 1 AC 1; Lawrence v Griffiths (1987) 47 SASR 455; Jet Holdings Inc v Patel [1990] 1 QB 335; House of Spring Gardens Ltd v Waite [1991] 1 QB 241; Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALJR 170; 110 ALR 449; Owens Bank Ltd v Bracco [1992] 2 AC 443; Close v Arnot (Unreported, 21 November 1997), [1997] NSWSC, BC9706194; Ki Won Yoon v Young Dung Song (2000) 158 FLR 295; Benefit Strategies Inc & Anor v Prider [2004] SASC 365; "Daniell's Chancery Practice" (8th Edition), vol II; "Dicey and Morris on the Conflict of Laws" (13th Edition, 2000); "Conflict of Laws in Australia" Nygh and Davies (7th Edition); "Private International Law" Cheshire and North (11th Edition); Perry v Meddowcroft (1846) 10 Beav 122; 50 ER 529; Sheddon v Patrick (1854) 1 Macq 535; 9 Scotts Revised Reports HL 396, considered.
BENEFIT STRATEGIES GROUP INC & ANOR v PRIDER
[2005] SASC 194Full Court: Bleby, Vanstone and Anderson JJ
BLEBY J:
Introduction
On 1 May 2002 the plaintiffs obtained judgment by default against the present appellant and some companies with which he was associated in the Superior Court of the State of California for the County of Orange in the United States of America. The plaintiffs brought an action in this Court at common law to enforce the judgment against the appellant. At the same time they made application pursuant to r 25.02 of the Supreme Court Rules for immediate relief.
The summons for immediate relief was opposed by the appellant on the grounds that:
1.There was an arguable case that the United States judgment was obtained by fraud;
2.That the judgment would not be enforced by this Court on grounds of public policy because –
(a) the judgment included an award of punitive damages which would not be awarded in South Australia and should not be enforced; and
(b) the California judgment was a judgment for the whole amount in favour of both plaintiffs jointly, whereas the plaintiffs had alleged separate causes of action against the defendants, each claiming different and lesser amounts by way of compensatory damages.
The trial Judge acceded to the plaintiffs’ application but awarded separate judgments for the two plaintiffs for the amounts that each had claimed in the California proceedings, but excluding any award of punitive damages, making his own apportionment to each plaintiff of the amount included in the California judgment for attorney fees, costs and lump sum interest.
The appellant now appeals against that judgment on the following principal grounds:
1.That the trial Judge made errors of law in the application of r 25.02. In particular, the trial Judge erred in holding that the appellant bore an onus to show that there was a serious issue to be tried.
2.That the trial Judge erred in failing to find that there was a triable issue that the judgment was obtained by fraud, and that in finding that there was no arguable case of fraud, the Judge took into account a finding of credit adverse to the appellant when he was not cross-examined on the issues going to the alleged fraud.
3.That the Judge erred in failing to hold that there was a triable issue in respect of the enforcement of a joint and several judgment in favour of the two plaintiffs and in entering a judgment in this Court which was not the judgment of the Californian court.
There were other and incidental grounds, some of which were not pursued.
Besides seeking to justify the reasons of the trial Judge, the plaintiffs filed a notice of alternative contentions that the appellant had not established an arguable case that the plaintiffs were complicit in the fraud alleged by the appellant.
The California proceedings
In the United States proceedings a number of causes of action were alleged by each of the plaintiffs against the defendants. They included breach of contract, fraud, conversion, breach of fiduciary duty, violation of the relevant Corporations Code and money had and received. The first plaintiff Benefit Strategies Group Inc claimed compensatory damages of US$1,575,000, interest thereon and punitive and exemplary damages “according to proof”. The second plaintiff Astrotech Enterprises Inc claimed the sum of $1,050,000 compensatory damages, interest and punitive and exemplary damages “according to proof”.
At the time of the filing of the summons in the California proceedings the appellant was a resident of the State of California, living at 25732 Bucklestone Court, Laguna Hills, California. In support of the judgment by default there was filed a proof of non-personal service of the proceedings. The relevant sections of the California Code of Civil Procedure[1] provided that service could be effected by leaving a copy of the summons and complaint at the person’s dwelling house, usual place of abode or usual mailing address in the presence of a competent member of the household over 18 years of age who is to be informed of the contents, and thereafter by mailing a copy of the summons and the complaint to the person to be served at the place where the copy was left.
[1] Sections 415.20 and 416.90
A number of other documents were filed in support of the application for judgment by default. They included declarations and documents constituting prima facie evidence of the allegations contained in the summons. It will be necessary to refer to some of those documents later when considering whether there was a triable issue of fraud.
Included in the documents filed was the Plaintiffs’ Brief in Support of Request for Entry of Default Judgment dated 29 April 2002. That included a summary of the case against the defendants by reference to the other documents which had been filed. It set out the calculation of pre-judgment interest being sought, details of costs and attorney’s fees and a section relating to punitive damages as follows:
Pursuant to section 3294 of the Civil Code, where it is proven by clear and convincing evidence that the defendant has been guilty of oppression, fraud, or malice, the plaintiff, in addition to the actual damages, may recover damages for the sake of example and by way of punishing the defendant. Civ. Code §3294(a).
In this case, there is no doubt that Prider and his alter ego corporation are guilty of oppression, fraud, and malice. Prider represented to Plaintiffs that he would place their funds in certain investments which would be completely safe and would yield a high rate of return. Instead, Prider intended all along to abscond with Plaintiffs’ funds, and that is exactly what he did. He spent Plaintiffs’ funds on whatever his heart desired, including the immediate purchase of a new car for his woman friend, the refinance of his own house in Nellie Gail, and the funding of a loan transaction as part of another fraud he committed against another victim, Keyline.
Prider failed to account for the Plaintiffs’ funds, and once he was served with this lawsuit, fled the country back to his castle in Australia.
Plaintiffs served Prider with written notice that they would be seeking a default judgment with punitive damages in the amount of $13,125,000.00, which is five times the amount he stole from Plaintiffs, and Prider elected to default knowing that he would likely be hit with a judgment for that amount.
There should be no question of Prider’s net worth or ability to pay since he admits to being a billionaire baron who is living in a castle he recently refurbished, presumably with the Plaintiffs’ money. [Greenberg Decl., Exhibit “8” (Mueller Dep. 58:10-61:13, 70:7-71:24, 76:378:6), Exhibit “31” (Jones Depo. 39:20-40:16), Exhibit “36].
The court should send a message to Prider that his brazen and fraudulent conduct will not be tolerated in the United States, or in the State of California specifically, and should therefore impose punitive damages as requested. [Footnote omitted]
Judgment by default was entered in the California proceedings against all defendants on 1 May 2002. The judgment recites that the defendants were properly served with copies of the summons, complaint and a Notice of Reservation of Right to Seek Punitive Damages on Default Judgment. The judgment provides that the two plaintiffs “shall recover from Defendants … (including the appellant) … jointly and severally, the sum of $2,625,000.00 for actual damages, plus prejudgment interest thereon in the amount of $626,261.96, plus punitive damages in the amount of $13,125,000.00, and the further sums of $75,500.00 for attorneys’ fees, and $14,969.77 for costs, for a total judgment in the amount of $16,466,731.73, which amount shall bear interest hereafter at the legal rate of interest until the judgment is fully satisfied”.
There was no stay of execution ordered, no appeal and no application to set the judgment aside.
Proceedings to enforce the judgment
As there are no statutory provisions enabling the registration and enforcement of a Californian judgment in South Australia, an action was brought at common law by the plaintiffs in the California proceedings to enforce the Californian judgment, seeking judgment in favour of the plaintiffs for the sum of US$16,439,593.53 or its equivalent in Australian dollars, after giving credit for US$27,138.20 which had been recovered from some of the Californian defendants in partial satisfaction of the judgment.
The plaintiffs’ application under r 25.02 was supported by an affidavit of the plaintiffs’ US attorney exhibiting all the relevant documents filed in the California proceedings, including declarations as to proof of service. There was also evidence that under California law the judgment was a judgment in personam against the defendants, that it was final and conclusive, that it could be executed immediately by the plaintiffs, that there was no requirement of prior service of the judgment before taking steps to execute it and that as the judgment was obtained against the defendants jointly and severally, the plaintiffs were able to obtain execution of the total judgment sum from any of the defendants, including the appellant. The plaintiffs also claimed interest at the rate of 10% from 1 May 2002 to the date of judgment in this Court, being the statutory rate of interest payable on unsatisfied judgments of the Californian court.
Affidavits of the appellant, his wife and his son were filed in opposition to the plaintiffs’ application. Those affidavits denied that there had been proper service of the California proceedings. From the content of those affidavits the appellant argued that there was a triable issue as to perjury on the part of the California process servers in their declarations as to non-personal service in purported compliance with California law. Although fraud was not mentioned in the affidavits, the appellant’s argument that there was a triable issue that the judgment was obtained fraudulently was based on the alleged untrue statements of the California process servers on which the California court had relied in entering judgment by default. It will be necessary to consider in more detail the affidavits filed by the appellant when considering the appellant’s appeal against the finding of the trial Judge that the appellant had not demonstrated a serious issue to be tried in respect of the claim of fraud in connection with the proof of service of the documents.
During the course of the hearing before the trial Judge, a question arose as to whether, if immediate relief were to be refused, the appellant should be granted leave to defend on terms. For that purpose, the appellant filed an affidavit as to his assets within the jurisdiction on which he was cross-examined. He was not cross-examined as to his assertions concerning service of the documents or on any other facts or events relevant to the claim of fraud by the process servers.
The trial Judge’s judgment
Having made some observations on the operation of r 25.02 and having stated the relevant facts, the Judge identified the question before him as follows:[2]
In substance, the question for determination by this Court is whether triable issues have been identified, whether the proceedings should continue in relation to any issue, and whether there should be security provided by the defendant.
[2] [2004] SASC 365 at [19]
The Judge referred to the four well established common law requirements for the recognition and enforcement of foreign judgments in personam:
·that the foreign court must have exercised jurisdiction over the judgment debtor which Australian courts will recognise;
·that the foreign judgment must be final and conclusive;
·that there must be an identity of parties; and
·that the foreign judgment must be for a certain sum.
The trial Judge found that those requirements had been satisfied in this case. That finding was not disputed on appeal.
The Judge referred to the cross-examination of the appellant on his affidavit of assets, making the finding that his credibility was substantially damaged, and that it was against that background that the Court came to consider the other evidence tendered in opposition to the plaintiffs’ claim. The Judge summarised the affidavit evidence before him as it related to service of the documents in California. I will return to that in due course. He then discussed the oral evidence of the appellant under cross-examination and concluded:[3]
Mr Prider deliberately misled the court. He was an unreliable witness. His performance under cross examination was evasive. He was a dissembler. I am satisfied that Mr Prider deliberately set out creating a false impression of his financial position. The court is unable to place any reliance or weight on Mr Prider’s uncorroborated evidence. [Footnote omitted]
[3] At [74].
The Judge then discussed the evidence said to point to an arguable case of fraud in relation to service of the documents. He did not reject any of the affidavit evidence of the appellant other than to place qualifications on the admissibility of some of it, being evidence of which the deponents could have had no direct knowledge. In fact, as the Judge pointed out, there appeared to be limited direct conflict arising from the evidence in relation to service. However, based on the affidavit evidence tendered by the appellant the Judge concluded that no arguable case of fraud by the process servers had been made out. The appellant had been unable to demonstrate that there was a triable issue.
The Judge then considered the issue of punitive damages. He noted the argument of the appellant that, should the plaintiffs be otherwise successful, the Court should refuse to enforce the judgment to the extent that it included an award of punitive damages as being “an affront to Australian law and to public policy”. The Judge noted that it was accepted by counsel for the plaintiffs that the award of punitive damages would not be enforced by an Australian court and that the plaintiffs did not seek judgment in relation to that part of the Californian judgment. For that reason the judgments awarded in this Court related only to the compensatory damages, interest and costs.
On the issue of joint and several judgment, the Judge considered that the form of the Californian judgment did not accord with Australian law. He noted that counsel for the plaintiffs conceded that this Court should only enforce the California judgment insofar as it related to the entitlement of each separate plaintiff. Counsel for the plaintiffs submitted that the Court should enforce the Californian judgment by awarding separate judgments in favour of the two plaintiffs. The trial Judge accepted that submission.
As a result of that decision two separate judgments were entered by the Court, one in favour of each plaintiff. In the case of the first plaintiff the formal order is as follows:
1.The First Plaintiff is to recover form the Defendant in the Australian dollar equivalent as at Monday 15 November 2004 of:
1.1 $US1,575,000.00 by way of damages, being $A2,046,783.63;
1.2 60% of the attorney fees and costs awarded by the California Court, that 60% being $A70,541.73;
1.3 lump sum interest on the above amounts from 1 May 2002 to 15 November 2004 of $A305,000.00.
2.There be one order for costs in this action, awarded on a party/party basis.
In the case of the second plaintiff the following order was made:
1.The Second Plaintiff is to have judgment in the Australian dollar equivalent as at Monday 15 November 2004 of:
1.1 $US1,050,000.00 by way of damages, being $A1,364,522.42;
1.2 40% of the attorney fees and costs awarded by the California Court, that 40% being $A47,027.82;
1.3 lump sum interest on the above amounts from 1 May 2002 to 15 November 2004 of $A205,000.00.
2.There be one order for costs in this action, awarded on a party/party basis.
In each case the amount recorded as damages is the amount of compensatory damages claimed by each of the plaintiffs in the California proceedings. There is no reference in the Judge’s reasons as to his apportionment of 60% of the attorney fees and costs being awarded to the first plaintiff and 40% to the second plaintiff. There was no comment in the reasons which related to the figure of pre-judgment interest awarded by the California court. Nothing in respect of that item appears to have been awarded by the trial Judge. The lump sum interest contained in the order appears to be related to a calculation of interest at the rate of 10% from the date of judgment in California to the date of the trial Judge’s order, calculated at the statutory rate of interest due on unpaid judgments of the California court.
Rule 25, Supreme Court Rules
Rule 25 of the Supreme Court Rules relevantly provides as follows:
25.01Where a plaintiff wishes to obtain an order to dispose of the action, or any part thereof, summarily he may:
(a) endorse a statement to that effect on the summons prior to its issue; and
(b) at the time of issuing his summons file an affidavit setting out in detail the particulars of the plaintiff’s claim; and
(c) inform the defendant that unless within the time specified in the summons for filing a notice of address for service the defendant files an affidavit that he has a good defence to the action on merits specifying the grounds of such defence the plaintiff may apply to enter judgment summarily on the claim without further notice to the defendant.
25.02(1) In the alternative to Rule 25.01 the plaintiff may after the time of issuing his summons take out an application for immediate relief.
(2)The application shall be supported by an affidavit verifying the plaintiff’s claim and exhibiting all relevant documents.
(3)The application shall be returnable not less than two days after service.
25.03On the summons under Rule 25.01, or on the hearing of an application under Rule 25.02, the Court may make an order that judgment be entered for the plaintiff for the whole or any part of the relief claimed in the action and may order that the proceedings continue in relation to any issue or part of the action not disposed of, or may treat any application as an application for directions in the action.
The Rules have been in that form since 1987. It has been pointed out on many occasions[4], Rule 25.01 is analogous to the former Order 14 of the Supreme Court Rules 1947 whereby a plaintiff, with a specially endorsed writ claiming a liquidated sum, the claim being verified by affidavit, could apply for summary judgment and was entitled to judgment unless the defendant satisfied the court that he had a good defence to the action on the merits, in which case the court could grant leave to defend, if necessary on terms. At the same time it has been pointed out that r 25.02 is analogous to the former Order 10, a uniquely South Australian provision whereby, after issue of a writ of summons, the plaintiff could apply to a Judge for any relief which he claimed or to dispose of the action summarily. On the hearing of the summons the Judge could make an order that judgment be entered for the plaintiff. However, it was never intended that Order 10 should be applied to secure an early trial other than in cases of urgency.[5] In Wicklow Enterprises Pty Ltd v Doysal Pty Ltd[6] King CJ said:
The Summons for Immediate Relief is a convenient vehicle for disposing expeditiously of cases in which there is not substantial dispute or in which the nature of the dispute is such that it can be resolved readily and speedily in Chambers. An attempt to determine by means of the Summons for Immediate Relief issues of fact and law requiring substantial hearing time produces mischiefs which are well illustrated by the course which the present case took.
[4] See, for example, Lawrence v Griffiths (1987) 47 SASR 455, White J at 461, Legoe J at 475-478, von Doussa J at 486; Settlement Wine Co Pty Ltd v National & General Insurance Co Ltd (1988) 146 LSJS 150, King CJ at 152, Legoe J at 158.
[5] Bellas v Kipouros (1974) 8 SASR 418 at 419.
[6] (1985) 124 LSJS 225 at 226.
He then went on to demonstrate the mischiefs that can occur.
It has also been pointed out that there are material differences between r 25.01 and r 25.02 and their respective predecessors.[7] However, there is a certain overlap between the two rules, as there was between Order 14 and Order 10. In Bellas v Kipouros[8] Bright J said:
The Master in his comments on the matter says that Order 10 serves at least two purposes. One is to enable applications to be made for relief in cases of urgency, which is the most common use, and the second is as an alternative to Order 14 in cases where the writ is generally endorsed and where the plaintiff considers the defendant has no defence or that any defence which he puts up is illusory or is simply put up as a delaying tactic. The Master also refers to the use of Order 10 by consent as a simple and expeditious way of having issues tried. I am not concerned with the last named use because the present is an opposed application.
I agree with the Master. Order 10 was devised as a South Australian expedient and like all procedural short cuts has to be used with caution. I think that with one proviso the same principles may well apply on the subject of whether there is any real defence to the action as apply in applications for summary judgment under Order 14. I discussed these in Adelaide Steamship Industries Pty Ltd v The Commonwealth of Australia;[9] and see Nagle v Feilden.[10] The proviso is that whereas there is an onus on a defendant in an application under Order 14 to satisfy the Master or Judge that there is a ground of defence, I cannot see that there is any such onus in an application under Order 10.
[7] Lawrence v Griffiths (1987) 47 SASR 455, von Doussa J at 486-487; Settlement Wine Co Pty Ltd v National & General Insurance Co Ltd (1988) 146 LSJS 150, Legoe J at 158-159.
[8] (1974) 8 SASR 418 at 419.
[9] (1974) 8 SASR 425.
[10] [1966] 1 All ER 689.
That approach has continued under r 25. In Settlement Wine Co Pty Ltd v National & General Insurance Co Ltd[11] King CJ, with whom von Doussa J agreed, said:
Rule 25.02 is the successor in the 1987 Supreme Court Rules to Order 10 in 1947 Rules. It provides a procedure whereby in circumstances of urgency a judge can decide issues which are capable of speedy resolution without lengthy hearing and give judgment without trial.[12] Another purpose of the procedure is to operate as an alternative to an Application for Summary Judgment under Rule 25.01 where the Rule 25.01 endorsement has not been made but where the plaintiff considers that there is no serious issue to be tried, Bellas v Kipouros.[13] This latter purpose is emphasised by the language of the 1987 Rules which express the Rule 25.02 procedure as an alternative to the Rule 25.01 procedure. … Immediate Relief may be justified not only by circumstances of urgency requiring speedy decision of issues which are capable of resolution without lengthy trial, but also by the lack of any credible defence in the sense of real issue to be tried, irrespective of the existence of circumstances of urgency.
[11] (1988) 146 LSJS 150 at 152-153.
[12] Wicklow Enterprises Pty Ltd v Doysal Pty Ltd and the Registrar-General (1985) 124 LSJS 225; Lawrence v Griffiths (1987) 47 SASR 455.
[13] (1974) 8 SASR 418 at 419
The trial Judge’s application of Rule 25.02
The plaintiffs’ application was clearly made under r 25.02. It was not an application under r 25.01. The appellant complained that the trial Judge had misapplied r 25.02 by entering judgment when there was a triable issue on the question whether the California judgment had been obtained by fraud, and that the trial Judge had reversed the onus of proof under r 25.02.
I turn first to the question of onus of proof. Bright J in Bellas v Kipouros[14] in the passage quoted above considered that, under the previous Order 10, there was no onus on the defendant. This was by way of contrast with the requirements of Order 14. In Lawrence v Griffiths[15] von Doussa J considered, in the light of the differences between Order 14 and r 25.01, that the onus on the plaintiff to establish an entitlement to immediate relief now extended to satisfying the court that the defendant does not have an arguable defence when r 25.01 is invoked.
[14] Ibid.
[15] (1987) 47 SASR 455 at 486.
King CJ in Settlement Wine Co Pty Ltd v National & General Insurance Co Ltd[16] recognised that, in an application under r 25.02 brought on the footing that the plaintiff alleges that there is no serous issue to be tried, the onus of proof lies on the plaintiff. However, King CJ made some other relevant observations applicable to a case like the present. In that case, the respondent was a company which carried on business as a wine maker. The winery premises were severely damaged by fire. The respondent sued under the policy of insurance whereby the appellant had agreed to indemnify the respondent for loss or damage caused by fire. The appellant insurer was relying on an exclusion clause in the policy. Against that background King CJ said:[17]
The respondent proved by affidavit the existence of the policy and the occurrence of loss insured against. The onus of proving that the circumstances rendered General Exclusion 3 applicable so as to exonerate the appellant from liability, lay on the appellant. So, although the onus of demonstrating that there was no triable issue lay on the respondent, the only potentially triable issue was one in respect of which the onus of proof lay on the appellant. I consider that in those circumstances but slight evidence would be required from the respondent. A statement in an affidavit by a director in quite general terms to the effect that to the best of the deponent’s knowledge and belief there was no substance in the allegation would be sufficient to cast an onus on the appellant to produce evidence raising a triable issue.
[16] (1988) 146 LSJS 150 at 152.
[17] Ibid at 152.
A similar situation prevails in this case. The plaintiffs filed an affidavit proving the judgment, apparently regularly obtained, from the Superior Court of California for the County of Orange. One of the defences raised by the appellant was that the judgment was fraudulently obtained. The onus of proving fraud lay on the appellant. He was required to produce evidence raising a triable issue. Therefore, in holding that no arguable case of fraud by the process servers had been made out or established, or in using other like expressions, the Judge was not reversing the onus of proof. There was an evidentiary onus which lay on the appellant. It was that to which the trial Judge was referring in saying that no arguable defence of fraud in relation to service had been made out.
The defence of fraud
Before examining the evidence led by the appellant, it is necessary to consider a submission of the plaintiffs that if a defence of fraud is to be relied on, it must be fraud on the part of the plaintiffs, and that even if a triable issue of perjury on the part of the process server were raised, there was nothing in the evidence to link it to the plaintiffs.
Dicey and Morris on the Conflict of Laws cites[18] two types of fraud which will justify setting a foreign judgment aside. It may be fraud on the part of the party in whose favour the judgment is given, or fraud on the part of the court pronouncing the judgment. The only authority cited in this and other texts in support of the second type of fraud is Price v Dewhurst.[19] In that case certain persons, acting under Danish law, formed themselves into a court for the purpose of administering the property of a deceased testator. The evidence showed that they or some of them were interested parties. It is correct that Shadwell VC described the judgment as “fraudulent and void”.[20] However, earlier the Vice Chancellor had said:[21]
It would be idle to say that any regard or attention ought to be paid to such a proceeding as this. I apprehend that, wherever it is manifest that justice has been disregarded, and that the parties are merely making use of legal proceedings as a matter of form, for the purpose of doing that which is contrary to all notions of justice, namely, of deciding for themselves and in their own favour, the court is bound to treat their decision as a matter that is of no value and no substance.
As the authors of Dicey and Morris on the Conflict of Laws observe[22] that type of fraud tends to merge with the defence that the proceedings were contrary to natural justice.
[18] L. Collins QC (ed), Dicey and Morris on the Conflict of Laws (13th Edition, 2000), at 518.
[19] (1837) 8 Sim 279; 59 ER 111.
[20] (1837) 8 Sim 279 at 309; 59 ER 111 at 122.
[21] Ibid at 308; 122.
[22] At 522.
Leaving aside that aspect of “fraud” if it be properly categorised as such, one is left only with fraud on the part of the party in whose favour the judgment is given. Proof of perjury by a witness will be insufficient. In McHarg v Woods Radio Pty Ltd[23] Herring CJ[24] stated the well established rule that a judgment procured by the fraud of one party to a proceeding may be set aside at the suit of the other party in the same court. He spoke of the strict proof that such a charge requires and said:[25]
No doubt Courts will subject to the closest scrutiny cases, where perjury solely is relied upon, and will require clear proof that by this means the defendant did perpetrate the fraud complained of. And so, where the perjured evidence relied upon is that of a witness for the defendant, the plaintiff must establish to the Court’s satisfaction that the defendant either procured the perjury or was privy to procuring it; that is to say that the defendant knew the true state of affairs and knowing it, called a witness to give a false and perjured account: Daniell’s Chancery Practice (8th ed), vol II, pp 1332-3.
[23] [1948] VLR 496.
[24] Ibid at 497.
[25] Ibid at 499.
This approach would appear to do no more than give effect to the principle which gives rise to the setting aside of judgments obtained by fraud, namely that no-one shall be permitted to take advantage of his own wrong.[26]
[26] Abouloff v Oppenheimer (1882) 10 QBD 295, Coleridge LCJ at 300.
Even perjury on the part of an agent of a party by itself will be insufficient to set aside a judgment. In Ronald v Harper[27] Cussen J said:
Secondly, with regard to plaintiff’s argument that a person must be held responsible for the fraud of his agent, while this is true in some circumstances, it does not, I think, support a claim against a person because he has employed another to collect evidence, and that other has set out and procured persons to commit perjury. In such a case the thing done would not, I think, be within the scope of the authority, or, what is the same thing, the scope of employment. Those cases in which a person employed to make a contract incidentally makes a fraudulent misstatement have, I think, no application. Plaintiff, therefore, to succeed on this ground, must show something more than that defendant employed a person to procure evidence. Plaintiff must in some way connect defendant with the subornation.
[27] [1913] VLR 311 at 318-319.
In Wentworth v Rogers (No 5)[28] Kirby P stated a number of principles governing an action to set aside a judgment on the grounds of fraud. He included in those principles the following:[29]
Fourthly, although perjury by the successful party or a witness or witnesses may, if later discovered, warrant the setting aside of a judgment on the ground that it was procured by fraud, and although there may be exceptional cases where such proof of perjury could suffice, without more, to warrant relief of this kind, the mere allegation, or even the proof, of perjury will not normally be sufficient to attract such drastic and exceptional relief as the setting aside of a judgment: Cabassi v Vila (1940) 64 CLR 138 at 147, 148); Baker v Wadsworth (1898) 67 LJQB 301; Everett v Ribbands (1946) 175 LT 143 at 145, 146). The other requirements must be fulfilled. In hard fought litigation, it is not at all uncommon for there to be a conflict of testimony which has to be resolved by a judge or jury. In many cases of contradictory evidence, one party must be mistaken. He or she may even be deceiving the court. The unsuccessful party in the litigation will often consider that failure in the litigation has been procured by false evidence on the part of the opponent and the witnesses called by the opponent. If every case in which such an opinion was held gave rise to proceedings of this kind, the courts would be even more burdened with the review of first instance decisions than they are. For this reason, and in defence of finality of judgments, a more stringent requirement than alleged perjury alone is required.
Fifthly, it must be shown by admissible evidence that the successful party was responsible for the fraud which taints the judgment under challenge. The evidence in support of the charge ought to be extrinsic: cf Perry v Meddowcroft (1846) 10 Beav 122 at 136-139; 50 ER 529 at 534, 535. It is not sufficient to show that an agent of the successful party was convicted of giving perjured evidence in the former proceeding, the result of which it is sought to impeach. It must be shown that the agent, in so acting, was in concert with the party who derived the benefit of the judgment: Ronald v Harper (at 318); Sheddon v Patrick (1854) 1 Macq 535 at 643; 9 Scotts Revised Reports HL 396 at 448.
[28] (1986) 6 NSWLR 534.
[29] Ibid at 539.
That the principles enunciated by Kirby P in Wentworth v Rogers (No 5) with respect to setting aside local judgments should be applied equally to the enforcement of foreign judgments was convincingly advocated by Rogers CJ Comm D in Keele v Findley.[30] Rogers CJ declined to follow UK authority that a court can re-try an issue of fraud already decided by a foreign court, even if there is no fresh evidence of fraud relied on.[31] Despite widespread criticism of the UK approach,[32] it has been accepted in decisions of single judges in Australia.[33] However, even if those decisions correctly represent the law of Australia, they are confined to one aspect of setting aside foreign judgments on the ground of fraud. The other principles enunciated by Kirby P in Wentworth v Rogers, including the ones quoted above, have not been qualified in relation to the setting aside or non-enforcement of foreign judgments. I can see no reason why they should be. It follows that the fraud relied on must be that of the parties seeking to enforce the judgment.
[30] (1990) 21 NSWLR 444 at 449, 458.
[31] See Abouloff v Oppenheimer & Co (1882) 10 QBD 295; Vadala v Lawes (1890) 25 QBD 310; Syal v Heyward [1948] 1 KB 443; Jet Holdings Inc v Patel [1990] 1 QB 335; House of Spring Gardens Ltd v Waite [1991] 1 QB 241; Owens Bank Ltd v Bracco [1992] 2 AC 443.
[32] See Keele v Findley (supra); “Dicey and Morris on the Conflict of Laws” (13th edition) at 519-520, 521; Nygh and Davies, “Conflict of Laws in Australia” (7th edition) at 193; Cheshire and North, “Private International Law” (11th edition) at 373.
[33] McDonald v McDonald (1965) 113 CLR 529 at 533; Close v Arnot (unreported) SC(NSW), Graham AJ, 21 November 1997, BC9706194; Ki Won Yoon v Young Dung Song (2000) 158 FLR 295.
It follows that mere proof of perjury on the part of the process server will be insufficient defence to the enforcement of the California judgment. The perjury, if it exists, will need to have been procured by or at the instance of the plaintiffs. It is not clear from the evidence who engaged the process server. I am prepared to assume for present purposes that it was the plaintiffs. If the process server was guilty of perjury, the mere fact that he was the plaintiffs’ agent will be insufficient to create the necessary link.
It is conceivable that a fraud on the plaintiffs, and therefore on the California court, could have been perpetrated by the process servers charging a usual fee for effecting service, not in fact carrying out service at all, and then concocting an untrue declaration of service on which the plaintiffs relied. If I am wrong in holding that the relevant fraud must be the fraud of the plaintiffs, and that fraud of the process server alone would be sufficient defence to the enforcement of the judgment, the appellant would still have to go further than proving perjury alone on the part of the process server. He would have to prove fraudulent activity of some kind and fraudulent intent. There is no evidence in this case of any intention on the part of the process server to defraud anyone.
Although this is not the subject of any findings by the trial Judge, assuming for present purposes that there is evidence of perjury on the part of the process server, there is nothing to link that in any way to the plaintiffs or to any fraudulent activity of the process server, and the appellant’s defence of fraud could not succeed. It is not strictly necessary, therefore, to analyse the evidence to determine whether there was a triable issue of perjury on the part of the process server. However, this was the subject of findings by the trial Judge and was argued before us. It is therefore appropriate that I express a view on those findings.
Whether there was a triable issue of perjury on the part of the process server
It was never asserted that the appellant had been served personally with the California proceedings. The affidavit filed on behalf of the plaintiffs exhibited copies of declarations of the process server to the effect that service had been effected in accordance with the requirements of the Californian Code of Civil Procedure by leaving a copy of the summons and of the complaint at the appellant’s-
“dwelling house, usual place of abode … in the presence of a competent member of the household … at least 18 years of age who shall be informed of the contents thereof, and by thereafter mailing a copy of the summons and of the complaint (by first-class mail, postage pre-paid) to the person to be served at the place where a copy of the summons and of the complaint were left. Service of the summons in this manner is deemed complete on the tenth day after mailing.”[34]
[34] See s 415.20(b) and s 416.90 of the California Code of Civil Procedure.
The declaration of service indicated that the process servers claimed to have served an adult male person, Caucasian, aged 22 years, 5 foot 10 inches in height, 160 lbs, with brown hair and brown eyes and who claimed to be Trevor Prider’s son. The same day copies of the documents were posted by pre-paid post to the appellant’s address.
Information contained in the process server’s declaration indicated that, on an earlier occasion when he visited the premises shortly before, the process server had been introduced to a person who was identified to him as the appellant’s wife, the appellant then being in Europe. The description given by the process server on the occasion of service was as follows:
5-24-01 6.00AM-7.45AM #2 AS THE DRIVER WAS SITTING IN THE DRIVEWAY. A YOUNG MAN CAME OUT OF THE HOUSE, WE ASKED FOR MR PRIDER. THE YOUNG MAN STATED HE WAS TREVOR’S SON AND TREVOR WAS NOT HERE. WE GAVE THE SON ALL THE DOCUMENTS AND TOLD HIM HE WAS SERVED ON BEHALF OF HIS FATHER AND HIS FATHERS COMPANIES. AS THE DRIVER WAS PULLING OUT OF THE DRIVEWAY MRS PRIDER WAS RUNNING TOWARDS HIM WITH THE DOCUMENTS IN HER HANDS SAYING SHE WOULD NOT ACCEPT ANY DOCUMENTS FOR HER HUSBAND AND TRIED TO SHOVE THE PAPERS THROUGH THE WINDOW. THE DRIVER STATED ONCE AGAIN THAT THE DOCUMENTS WERE SERVED.
In his affidavit in opposition the appellant was careful to choose and define the words he used. For the purpose of the affidavit he defined “the Documents” as being the originating documents allegedly served by the process server. His affidavit asserts that the California proceedings “were never served personally on me or any members of my family prior to the entry of the default judgment on 1 May 2002”. (Emphasis added.) He did not use the expression “household” being the expression used in the California Code of Civil Procedure. He was only in a position to be able to say that no member of his family in his presence was served on that day. He was in no position to assert anything as to what members of his family did otherwise. He did not attempt to assert that no member of his household was served. He asserted that only one of his three sons was resident in California at the material time. That son was aged 34 and lived at Irvine, a number of miles away. The appellant merely asserted:
I do not know who the person allegedly claiming to be my son and handed the Documents could have been.
He refers to the fact that the process server stated that “the Documents” were also posted by first-class pre-paid mail to Bucklestone Court on the day of service. Leaving aside hearsay which the trial Judge ruled inadmissible, the appellant asserted that he had never “received” any documents fitting that description. He claims to have returned to his home “in early June 2001”, and subsequently left to come to Australia in September 2001. The way the affidavit was prepared would indicate that the appellant claimed that he had never received any documents fitting the description of the original documents. However, even if it is taken as an assertion that he never received copies of any of the original documents through the post, that is not sufficient to raise a serious question as to whether the documents were in fact posted, particularly given the appellant’s absence from the house.
The appellant’s wife also swore an affidavit denying that the originating process was ever served on her. She asserted that she and her husband did not have a 22 year old son fitting the description given by the process server, and that none of her three sons could have been taken to be of that age or description. As to the suggestion that she ran down the driveway in an attempt to “shove the papers through the window” of the process server’s vehicle, she claimed that this was wrong, that she never received the documents but added that she did not specifically recall where she was on 24 May 2001, the day of the alleged service. She also said that she did “not recall seeing anything arrive by post at Bucklestone Court resembling the Documents”. The expression “the Documents” was also defined in her affidavit to mean the originating documents.
An affidavit of Michael Prider, the appellant’s youngest son, was also filed. He asserted that he was the only son who was living in California at the time and that he was then aged 34 years with receding black hair. On the morning of service he claimed to have been at his own home in bed.
In his affidavit the appellant also referred to a number of incidents which he perceived to be threats to the security of himself and his family, including his 16 year old daughter, who was then living at home. These incidents took place between January and April 2001. After the incidents in January and February the appellant arranged for a martial arts expert to “live in” at Bucklestone Court and also borrowed a Pit Bull Terrier from a friend to guard the property, the implication being that the martial arts expert continued to live in the property until the appellant’s wife and daughter left for Australia for their own safety in June 2001. There was no affidavit from the martial arts expert or from the appellant’s daughter. The appellant had also said in evidence that a Stacey Mueller was a resident of Bucklestone Court “for a while”.
The process server never claimed to have served the appellant or a member of his family. The claim was that he served the man who claimed to be the appellant’s son and who appeared to be a member of his household. The appellant did not seek to exclude the possibility that the martial arts expert was the person served who claimed to be his son. He did not seek to exclude Stacey Mueller as a person who may have been taken to be Mrs Prider or who may have taken delivery of documents in the post. There was no affidavit from his daughter resident in the house at the time as to her knowledge of events or of others living or not living in the house at the time. The appellant’s wife did not refer at all in her affidavit either to the martial arts expert or to the presence of their daughter or Stacey Mueller. She did not seek to traverse the essential assertion of the process server as to service upon the male person he described.
In short, if there were a genuine dispute as to service, particularly given the standard of proof necessary for proof of fraud[35], further evidence from crucial witnesses could have been provided but was not, and the evidence contained in the affidavits of the appellant, his wife and his son was insufficient, as the trial Judge held, to raise a serious issue as to whether the originating documents had been served.
[35] Briginshaw v Briginshaw (1938) 60 CLR 336, Rich J at 350, Dixon J at 362-363; Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 67 ALJR 170; 110 ALR 449.
There was also evidence from the appellant’s attorney that a large number of documents had been posted or sent by overnight courier to the appellant at his address between 25 June and 27 July 2001 concerning progress of the proceedings and including notices of depositions being relied upon. These were never mentioned by the appellant. There was also evidence contained in a deposition file in the California court of Stacey Mueller who knew and worked with the appellant and who deposed to conversations with him in which he admitted to knowledge of the proceedings in the California court before he left the US.
The trial Judge decided the question whether there was a triable issue only by reference to the facts contained in the affidavits. Having made findings adverse to the appellant as to his credibility when he was cross-examined as to his statement of assets, the Judge was entitled to scrutinise his affidavit with care. The trial Judge’s summary of his reasons for holding that no arguable case of fraud by the process servers had been made out was as follows:
- the process servers claim to have served an adult male of the household at Bucklestone Court. The Priders do not deny that such service occurred.
- there was a live-in martial arts expert at Bucklestone Court at that time. That person would appear to be a member of the household. The Priders do not identify that person.
- in the statements filed in court by the process servers, a description of the person served is provided with particularly. There is no suggestion that the live in martial arts expert did not meet his description.
- the 27 originating court documents sent by prepaid post to Bucklestone Court were not returned to sender. There is no direct denial that the documents were received by post at that address.
- the evidence from Mr Prider suggests that another woman was also living at the Bucklestone Court premises apart from Mrs and Mr Prider.[36]
[36] Benefit Strategies Group Inc & Anor v Prider [2004] SASC 365 at [92].
These findings were open to the Judge and were justified on the evidence. The evidence did not exclude or qualify the essence of the process server’s account. The affidavits filed were prone to evasiveness and to being selective. In my opinion the trial Judge was correct in reaching the conclusion that an arguable case of fraud by the process servers had not been established and that there was no triable issue. Subject to the other defences raised by the appellant, the plaintiff was entitled to immediate relief under r 25.02.
The public policy issues
The appellant raised two issues by which it was said that the California judgment could not be enforced in this State. One related to the issue of punitive damages contained in the judgment and the other related to the joint and several judgment in favour of both plaintiffs for the full amount. These were discrete issues which required no evidence other than the form of the judgment itself and some analysis of the documents filed in the California court by which the award of punitive damages was said to be justified.
In the absence of a triable issue of fraud, I consider that it was appropriate for these issues also to be determined on a summons for immediate relief under r 25.02. They were both susceptible of concise argument and summary determination. As argued before the trial Judge they did not require further evidence. There can be no substantial objection to the determination of those issues under r 25.02.
Punitive damages
Before the trial Judge, counsel for the plaintiffs conceded that the award of punitive damages would not be enforced by an Australian court. It appears that it was for that reason that the plaintiffs did not seek judgment in relation to that part of the California judgment. While it is not necessary to decide the issue, and it was not fully argued before us, I am not sure that the concession was properly made.
The general principle is that English courts will not enforce foreign penal or revenue laws through the recognition of a foreign judgment.
In Huntington v Attrill[37] the creditor of a company carrying on business in the State of New York sued on a section of a statute of that State which imposed a liability on directors of a corporation for all the debts of the corporation contracted while they were directors if the corporation, while they were its directors, gave any certificate or report that was false in any material representation. The creditor obtained judgment against the directors under that provision in the State of New York. The Privy Council held that an action brought in the Canadian province of Ontario for enforcement of the judgment of the court of the State of New York should succeed as it was not enforcing a penal or revenue law of the State of New York.
[37] [1893] AC 150
Lord Watson, speaking on behalf of the Privy Council, said:[38]
The rule has its foundation in the well-recognised principle that crimes, including in that term all breaches of public law punishable by pecuniary mulct or otherwise, at the instance of the State Government, or of some one representing the public, are local in this sense, that they are only cognisable and punishable in the country where they were committed. Accordingly no proceeding, even in the shape of a civil suit, which has for its object the enforcement by the State, whether directly or indirectly, of punishment imposed for such breaches by the lex fori, ought to be admitted in the Courts of any other country.
…In its ordinary acceptation, the word “penal” may embrace penalties for infractions of general law which do not constitute offences against the State; it may for many legal purposes be applied with perfect propriety to penalties created by contract; and it therefore, when taken by itself, fails to mark that distinction between civil rights and criminal wrongs which is the very essence of the international rule.
[38] Ibid at 156
Lord Watson[39] quoted with approval the following passage from the judgment of the Supreme Court of the United States in Wisconsin v The Pelican Insurance Company.[40]
The rule that the Courts of no country execute the law of another applies not only to prosecutions and sentences for crimes and misdemeanors, but to all suits in favour of the State for the recovery of pecuniary penalties for any violation of statutes for the protection of its revenue or other municipal laws, and to all judgments for such penalties. (Original emphasis)
[39] Ibid at 157.
[40] 127 US (20 Davis) 265.
Lord Watson continued:[41]
A proceeding, in order to come within the scope of the rule, must be in the nature of a suit in favour of the State whose law has been infringed. All the provisions of Municipal Statutes for the regulation of trade and trading companies are presumably enacted in the interest and for the benefit of the community at large; and persons who violate these provisions are, in a certain sense, offenders against the State law, as well as against individuals who may be injured by their misconduct. But foreign tribunals do not regard these violations of statute law as offences against the State, unless their vindication rests with the State itself, or with the community which it represents. Penalties may be attached to them, but that circumstance will not bring them within the rule, except in cases where these penalties are recoverable at the instance of the State, or of an official duly authorized to prosecute on its behalf, or of a member of the public in the character of a common informer.
[41] Huntington v Attrill [1893] AC 150, 157-158.
What Lord Watson said in Huntington v Attrill was adopted and acted upon by the Court of Appeal in Attorney-General of New Zealand v Ortiz.[42]
[42] (1984) 1 AC 1. The appeal to the House of Lords was dismissed on other grounds.
In United States of America v Inkley [1989] 1 QB 255, Purchas LJ, delivering the judgment of the Court of Appeal, referred to a number of earlier cases and text writers and concluded:[43]
From these authorities the following propositions seem to emerge which are relevant to the present appeal: (1) the consideration of whether the claim sought to be enforced in the English courts is one which involves the assertion of foreign sovereignty, whether it be penal, revenue or other public law, is to be determined according to the criteria of English law; (2) that regard will be had to the attitude adopted by the courts in the foreign jurisdiction which will always receive serious attention and may on occasions be decisive; (3) that the category of the right of action, ie whether public or private, will depend on the party in whose favour it is created, on the purpose of the law or enactment in the foreign state on which it is based and on the general context of the case as a whole; (4) that the fact that the right, statutory or otherwise, is penal in nature will not deprive a person, who asserts a personal claim depending thereon, from having recourse to the courts of this country; on the other hand, by whatever description it may be known if the purpose of the action is the enforcement of a sanction, power or right at the instance of the state in its sovereign capacity, it will not be entertained; (5) that the fact that in the foreign jurisdiction recourse may be had in a civil forum to enforce the right will not necessarily affect the true nature of the right being enforced in this country.
[43] Ibid at 265.
The judgment sought to be enforced in this case, although described as “punitive damages”, was a judgment in respect of a private right for his alleged “brazen and fraudulent conduct”. There was no public element in the remedy being sought. In my view, it did not fall within the type of judgment which this Court would refuse to enforce on public policy grounds relating to the non-enforcement of foreign penal or revenue laws.
This gains further support from a dictum of Lord Denning MR in SA Consortium General Textiles v Sun and Sand Agencies Ltd.[44] The Court of Appeal was considering relevant provisions of the Foreign Judgments (Reciprocal Enforcement) Act 1933 (UK) and their possible application to a judgment of a French court said to be “in respect of a fine or other penalty” or “contrary to public policy” in England, being expressions used in that Act. By way of obiter dictum, Lord Denning MR said:[45]
It was said that the 10,000 francs were claimed as punitive or exemplary damages which amount to a penalty and would have been outlawed in England by Rookes v Barnard [1964] AC 1129 and Broome v Cassell & Co Ltd [1972] AC 1027: and therefore it should not be enforced as part of a foreign judgment.
I cannot accept this view. The word “penalty” in the statute means, I think, a sum payable to the state by way of punishment and not a sum payable to a private individual, even though it is payable by way of exemplary damages. Likewise I see nothing contrary to English public policy in enforcing a claim for exemplary damages, which is still considered to be in accord with the public policy in the United States and many of the great countries of the Commonwealth.
[44] [1978] 1 QB 279.
[45] Ibid 299-200.
The trial Judge referred to a dictum of Scott J in Adams v Cape Industries Pty Ltd[46] to the effect that judgments of a foreign court would not be enforced where they “offend against English views of substantive justice”. However, Scott J was there dealing with an alleged breach of natural justice in the proceedings giving rise to the foreign judgment sought to be enforced. In my opinion the dictum has no relevance to the question whether this Court will enforce a foreign penal or revenue judgment.
[46] [1990] Ch D 433 at 497.
Our attention was drawn to an unreported judgment of Bergin J in the Supreme Court of New South Wales in Schnabel v Lui.[47] Bergin J declined to enforce a judgment of a United States court for punitive damages. However, the United States judge in that case had stated that the purpose of the punitive damages was to “penalise the first defendant and to deter others from failing to comply with the court’s orders”.[48] While Bergin J held that the purpose of the award of the damages was “to punish the first defendant and was a sanction”, the decision was made on the footing that the punitive damages were not compensation for a detriment but to punish the defendant and was in the form of a sanction. The damages were “the penal consequence for the first defendant’s failure to comply with the court’s orders”.[49]
[47] Unreported, 1 February 2002, [2002] NSWSC 15.
[48] Ibid at [176].
[49] Ibid at [176].
I do not pass on the correctness of that decision. If correct, it is distinguishable on the footing that it was a penal award, having an obvious “public” connotation, for failing to comply with an order of the United States court. I have already set out the circumstances in which the penal damages came to be claimed in this case. They were claimed and awarded on the same basis on which this Court might occasionally exercise its jurisdiction to award punitive or exemplary damages.
Although the House of Lords has severely restricted the circumstances in which exemplary damages may be awarded in the UK[50], that approach has been rejected in Australia.[51] The amount awarded in this case is substantially more than might be awarded by this Court, but that is not the point. In this country an award of exemplary or punitive damages may be justified where the defendant’s conduct shows a cruel and reckless disregard of the plaintiff, thereby demonstrating the defendant’s callousness and indifference towards the plaintiff in committing the wrong.[52] Such an award of punitive damages is not contrary to public policy in Australia. It is not for this Court to question the amount awarded by the United States court.
[50] Rookes v Barnard [1964] AC 1129; Broome v Cassell & Co Ltd [1972] AC 1027.
[51] Uren v John Fairfax & Sons Pty Ltd (1966) 117 CLR 118; Australian Consolidated Press Ltd v Uren (1966) 117 CLR 185, affirmed by the Privy Council [1969] 1 AC 590.
[52] Lamb v Cotogno (1987) 164 CLR 1 at 12-13.
I have said it was not necessary for the resolution of this appeal to decide this question, as the plaintiffs before the trial Judge did not press for the inclusion in the judgment of this Court of any component which reflected the award of punitive damages in the California court. The plaintiffs have not cross-appealed against the failure to include such damages in the judgment below. However, if the judgment of the foreign court is one which this Court would not enforce as a matter of public policy, the whole of the judgment will be tainted unless it is possible to sever the judgment and enforce only part of it. If I am wrong, and the judgment for punitive damages of the California court is not enforceable by courts in this country, then the question of severance necessarily arises.
In Raulin v Fischer[53] an offender was prosecuted for a crime under French law. Under French law it was possible for a person who was injured by a crime to intervene in the prosecution and include a claim for damages, to be tried along with the criminal charge. The same judgment would then reflect conviction, punishment for the offence and damages for the injury to be awarded. The French court’s order included an award of damages which the injured party sought to enforce by action in the UK. Hamilton J held that the award of damages to the injured person was not within the rule of international law which prohibited the English courts from executing the penal judgment of a foreign court. The civil part of the judgment not subject to public policy constraints was severable and enforceable in England. In this case, given the form of the judgment, it is practicable, if necessary, to sever the award of punitive damages from the balance of the judgment and to include in the award, as was done here, the component of the judgment which relates only to compensatory damages and costs.
[53] [1911] 2 KB 93.
The joint and several judgments in favour of the plaintiffs
The trial Judge held that the judgment did not accord with Australian law because each plaintiff had its separate claim. Neither claimed to be entitled to the total sum of compensatory damages awarded. The plaintiffs conceded before the trial Judge that the court should only enforce the California judgment insofar as it related to the entitlement of each separate plaintiff. In my opinion, that approach was wrong in law, but it does not necessarily follow that the judgment of the trial Judge should be set aside.
It is immaterial that the judgment does not accord with Australian law. The efficacy of the judgment is to be judged not according to Australian law but according to the law of California. However, even then, if there have been mistakes as to fact or law by the foreign court, assuming that those mistakes are made within jurisdiction, it is not possible to impeach the merits of the judgment in this Court.
In Godard v Grey[54] an action was brought in a French court on a English contract in respect of which the French court had jurisdiction. According to English law, the French court erroneously construed the contract in awarding damages to the plaintiff. The defendant was unable to set up by way of defence to an enforcement action that the judgment proceeded on a mistake as to the English law. It made no difference that the mistake appeared on the face of the proceedings.
[54] (1870) LR 6 QB 139
Likewise in Merker v Merker,[55] a German court declared a marriage to be “null and void” in circumstances where, under German law, it should have been declared to be a “non-existent marriage”. There was evidence that the decree in Germany would be regarded as a nullity by other German courts. It was nevertheless recognised in England. Sir Jocelyn Simon P said:[56]
It therefore appears to me that I am debarred from entertaining any evidence to the effect that the decree of the Aurich court was a nullity, in that the marriage should have been declared non-existent rather than void. I must accept the actual decision, and exclude any evidence impugning it which falls short of showing that it was obtained by fraud or is contrary to natural justice. No such thing is suggested.
[55] (1963) P 283.
[56] Ibid at 298-299.
Many other cases could be cited to like effect.[57] In this case there was not even any evidence that the judgment of the California court was not in accordance with California law. The justification for awarding separate judgments in favour of each of the plaintiffs was therefore not to be found in the reasons given by the trial Judge, being reasons which were then being advocated by the plaintiffs.
[57] See, for example, cases cited in Cheshire and North, Private International Law (11th edition) at 361-363.
On appeal, however, Mr Wells QC for the plaintiffs did not seek to justify the separate judgments on that basis. His submission was, in effect, that it was open to each of the plaintiffs to determine the extent to which they would seek enforcement in this Court of a judgment in favour of each of the plaintiffs. There was no requirement that the full amount of the judgment in favour of each of the plaintiffs should necessarily be claimed by the plaintiffs in this Court. I accept the submission.
Either plaintiff could have sued the defendant individually in this Court for whatever portion of the judgment, otherwise enforceable by this Court, that that plaintiff might elect to recover. A plaintiff is not required to sue for the full amount that might otherwise be recoverable. It is of no consequence in this case that the amount claimed in the judgment happens to be the amount claimed by that plaintiff in the United States proceedings by way of compensatory damages, notwithstanding that a much larger amount was awarded. It was open to each plaintiff to elect how much it would seek to recover. As the judgments are for substantially less than the amounts claimable under the California judgment, it matters not that the amounts include what are said to be arbitrary proportions of the costs awarded by the California court.
However, each plaintiff has now obtained a final judgment in this Court in respect of the appellant’s liability to each plaintiff under the California judgment. There was no reservation that some part of the relief claimed by either plaintiff should continue by way of further proceedings after determination of the summons for immediate relief under r 25.02. While it is not necessary to express any final view as to the plaintiffs’ further entitlement, it appears to me that the plaintiffs having made their election, without reservation, to seek judgment for a lesser sum than they might otherwise have been entitled to, could not now seek to recover the balance of the United States judgment.
As the judgments entered in favour of both plaintiffs are for amounts which are less than the judgment in favour of each plaintiff which could have been enforced by order of this Court, there are no grounds on which this Court can interfere with the judgments.
Conclusion
In summary, it was appropriate for the trial Judge to proceed in the manner in which he did, and to determine, on the affidavits before him and on the application for immediate relief under r 25.02, whether the appellant had demonstrated that there was a serious issue to be tried as to whether the California judgment had been obtained by fraud.
Although the onus is on the plaintiff in an application under r 25.02 to show that there is no triable issue, sufficient evidence had been led by the plaintiffs in this case to discharge that onus. The appellant bore an evidentiary onus to demonstrate that there was a triable issue on that question. In my view the Judge was correct in holding that the appellant had failed to do that. Having decided the issue solely on the content of the affidavits, there was no misuse of the Judge’s findings as to the credit of the appellant following cross-examination of the appellant on a collateral issue. Having made the findings of credit that he did, the Judge was entitled to examine closely what was and what was not included in the affidavits filed on behalf of the appellant in determining whether there was a triable issue.
Having rejected the contention that there was a triable issue on the question of fraud, the remaining defences were appropriate for final resolution on a summons for immediate relief under r 25.02. While there were unnecessary concessions made by the plaintiffs on which the trial Judge acted, these did not vitiate the orders made. The defences of the appellant on these issues failed both before the trial Judge and before this Court. In my opinion the judgments were lawfully entered and the appeal should be dismissed.
VANSTONE J: I agree that the appeal should be dismissed and with the reasons given by Bleby J.
ANDERSON J: I agree that the appeal should be dismissed for the reasons set out by Bleby J.
34
15
1