Benefit Strategies Group Inc v Prider - [2004] SASC 365

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
BENEFIT STRATEGIES GROUP INC & ANOR v PRIDER
Judgment of The Honourable Justice Gray
15 November 2004
PRIVATE INTERNATIONAL LAW - FOREIGN JUDGMENTS - EFFECT AND ENFORCEMENT - GENERALLY - JUDGMENTS IN PERSONAM
EQUITY - GENERAL PRINCIPLES - REMEDIES AND PROCEDURE - FRAUD OR MISREPRESENTATION AS A DEFENCE OR ANSWER
Application for immediate relief - plaintiffs seek recognition and enforcement of a foreign judgment of the Superior Court of California - default judgment entered in favour of the plaintiffs in the Californian proceedings against a number of defendants including the defendant in these proceedings - defendant claimed real issues to be tried - triable issues identified as fraudulent evidence of service of the Californian proceedings on the defendant, fraudulent version of events presented to the Californian Court, breach of international rules of natural justice, breach of public policy in relation to the form of the judgment and punitive damages - discussion of enforcement of foreign judgments in Australian Courts - consideration of merits of defence of fraud - consideration of credibility of the defendant - consideration of public policy issues.
Held - no arguable case of fraud or breach of natural justice - form of judgment not to prevent enforcement - punitive aspects of Californian judgment not enforced - no serious question to be tried - application for immediate relief granted - Californian judgment enforced in part.
Foreign Judgments Regulations 1992 (Cth); Supreme Court Rule 1988 (SA) r 25.02; Californian Code of Civil Procedure s 585, s 415.20, s 416.30, s 685.010(a), referred to.
Settlement Wine Co Pty Ltd v National & General Insurance Co Ltd (1988) 146 LSJS 150; Emanuel & Ors v Symon [1908] 1 KB 302 at 309; Meyers v Casey (1913) 17 CLR 90 at 114-115; Blohn v Desser [1962] 2 QB 116; Codd v de Lap (1905) LT 510; Monroe Schneider v No 1 Rarebem (No 2) (1992) 37 FCR 234; Adams v Cape Industries Pty Ltd [1990] Ch D 433; Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87; Webster v Lampard (1993) 177 CLR 598, considered.

WORDS AND PHRASES CONSIDERED/DEFINED
"fraudulent service"

BENEFIT STRATEGIES GROUP INC & ANOR v PRIDER
[2004] SASC 365
Civil
GRAY J
Introduction
The Application

This is an application for immediate relief.
The plaintiffs, Benefit Strategies Group Incorporated and Astrotech Enterprises Incorporated, seek the recognition and enforcement in this Court of a foreign judgement of the Superior Court of California. Both plaintiffs are United States of America incorporated entities. The defendant in the present proceedings, Trevor Laurence Prider (Mr Prider), was one of a number of defendants to the California proceedings. Specifically the plaintiffs seek that:
-judgment be entered for the plaintiffs against [Mr Prider] in the sum of US$16,439,593.53 (comprising damages in the sum US$2,265,000.00, punitive damages of US$13,125,000.00, prejudgment interest in the sum of US$626,261.96, attorneys’ fees in the sum of US$75,500.00 costs in the sum of US$14,696.77 less amounts recovered in partial satisfaction), or in the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2004] SASC 365
Decision Date: 15 November 2004

CaseChat Overview and Summary

In the case of Benefit Strategies Group Inc v Prider, the plaintiff, Benefit Strategies Group Inc, sought recognition and enforcement of a foreign judgment from the Superior Court of California. This judgment was a default judgment entered in favor of the plaintiff against several defendants, including the defendant in this proceeding, Trevor L Prider. The defendant claimed that there were real issues to be tried, specifically focusing on allegations of fraudulent evidence of service, a fraudulent version of events presented to the Californian Court, breaches of international rules of natural justice, breaches of public policy in relation to the form of the judgment, and the punitive damages awarded. The case required the court to decide on the enforceability of the foreign judgment in Australia, particularly in light of the defendant's defence of fraud and other claimed breaches of justice.

The legal issues before the court involved determining whether the Californian judgment could be enforced in Australia, considering the defendant's allegations of fraud and breaches of justice. The court had to assess whether there was an arguable case of fraud or breach of natural justice that would prevent the enforcement of the judgment. Additionally, the court needed to consider whether the form of the judgment or the punitive damages awarded in the Californian judgment would affect its enforceability in Australia. The court also needed to consider the credibility of the defendant's evidence and the public policy implications of enforcing the judgment.

The court found that there was no arguable case of fraud or breach of natural justice that would prevent the enforcement of the Californian judgment. The form of the judgment and the punitive aspects of the judgment did not prevent enforcement, as the court could selectively enforce the judgment. The court concluded that there was no serious question to be tried and granted the application for immediate relief. Consequently, the Californian judgment was enforced in part. The court found that the defendant had failed to establish a triable case of fraud or a denial of natural justice, and his credibility was significantly undermined by his evasiveness and lack of frankness in his affidavit of assets.

The final orders of the court granted the application for immediate relief and enforced the Californian judgment in part. The court determined that the judgment sum was certain and that the requirements for enforcement of a foreign judgment in Australia were met. The punitive damages awarded in the Californian judgment were not enforced, and the court did not recognize the joint liability of the defendant to the plaintiffs.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

It is against this background that the Court, came to finally consider the other evidence tendered in opposition to the plaintiffs claim.Plaintiffs’ Evidence The plaintiffs relied on a number of affidavits when making submissions in relation to their application for immediate relief.[9] Alan Asher Greenberg was the deponent of two of the affidavits.First Affidavit of Alan Asher Greenberg[9]The affidavits relied on by the plaintiff were sworn by Alan Asher Greenberg on 20 August 2002 and 3 September 2003; Ronald Hugh Snyder on 3 September 2003 and Vanessa Anita Varga on 11 March 2004. In an affidavit sworn 20 August 2002, Alan Asher Greenberg outlined the background to the California proceedings. Annexed to this affidavit were documents relating to those proceedings. The annexures relating to the California action were received as evidence on the application with the qualification that the truth of the matters alleged in the annexures were not proved before this court. However, it was accepted that the annexures accurately recorded what had occurred in the Californian proceedings. Mr Greenberg deposed that on 21 May 2001 the plaintiffs filed a Summons of Complaint with the Superior Court of California, thereby commencing proceedings against Trade Direct Corporation, Trevor L Prider, T G Whitbread, Barony Holdings Inc, Eurovest Inc and Does 1-100 seeking compensation for breach of written contract, fraud, conversion, and breach of fiduciary duty. In relation to service of the California proceedings on Mr Prider, the affidavit asserted:On 24 May 2001 at 7.41am, a process server attended at 25732 Bucklestone Court, Laguna Hills, California and served the Summons, Complaint, Civil Cover Sheet, Complex Litigation Panel Information Guidelines - Complex Departments, Department C 42 Information in the California Proceedings on an adult male who described himself as the son of the Defendant. That same day, the process server mailed copies of the documents served on the Defendant’s son to the Defendant at his address at Laguna Hills, by pre-paid post from Santa Ana, California … .In accordance with sections 415.20(b) and 416.90 of the California Code of Civil Procedure, where a copy of the summons and complaint cannot with reasonable diligence be personally delivered to the person to be served, a summons may be served 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 shall be informed of the contents; and- by thereafter mailing a copy of the summons and of the complaint to the person to be served at the place where the copy was left.I believe that the Defendant had actual knowledge of the California Proceedings prior to judgment being entered against the Californian defendants. A copy of the proof of service sworn by the process server and filed in the California proceedings on 8 June 2001 was attached as an annexure to the affidavit. The completed proof of service indicated that Rey Warburton served Trevor L Prider of 25732 Bucklestone Court, Laguna Hills, California. The proof provided that service was effected by:LEAVING the copies with or in the presence of (name and title or relationship to person indicated in 2a): (Name): Mr Mr Prider (SON OF MR PRIDER) Age:22yrs/Ht:5’10”/Wgt: 160Lbs/Hr:.Brn/Eyes: Brn

Decision

Reasons for decision

In order for an Australian court to recognise a foreign judgment, the parties to the foreign judgment and the enforcement proceedings must be identical and in the same interest.[6] Counsel for the plaintiffs submitted that, although the default judgment in the California Court was entered jointly and severally against six defendants,[7] the parties in the present proceedings are relevantly identical and were suing and being sued in the same capacity. This was said to be the case notwithstanding that in the present proceedings, Mr Prider was the only named defendant. This proposition was not challenged by counsel for Mr Prider. Relevantly it should be concluded that there is an identity of parties.[6] Blohn v Desser [1962] 2 QB 116[7]The six defendants were Trade Direct Corp, Trevor Laurence Prider, Barony Holdings Inc, Eurovest Inc, Capital Underwriter Limited, Poptech Inc and Presto Financial Corporation.Judgment for a Fixed Sum In order for a foreign judgment to be enforced by an Australian court, the judgment must be for a fixed sum. Counsel for the plaintiffs submitted that the judgment of the California court fixed a certain sum of money and a readily calculable amount of interest on that sum. The California judgment provided that the plaintiffs recover from the defendants:[T]he 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 attorney’s 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. It was submitted that the post judgment interest has accrued at a rate of 10% and is readily calculable pursuant to section 685.010(a) of the Californian Code of Civil Procedure. As at the commencement of the present proceedings, US$27,138.20 has been recovered by the plaintiffs from the defendants. As a result, the plaintiffs seek judgment against Mr Prider for the Australian equivalent of the whole of the judgment sum less the amount recovered.Consideration of the issues arisingThe Parties’ Submissions It was submitted by counsel for Mr Prider that the California judgment was voidable on the ground of fraud. In particular, it was contended that there had been no valid service on Mr Prider of the California proceedings. It was said that fraudulent evidence was presented by the process servers as well as by Messrs Synder and Stewart in the California proceedings. It was argued that a foreign judgment obtained by fraud or misrepresentation cannot be enforced in a court of common law.[8] It was asserted that the allegations of fraud gave rise to triable defences sufficient to warrant refusal of the application. It was also argued that this court as a matter of public policy would not enforce the award of punitive damages nor any joint liability of Mr Prider to the plaintiffs.[8]Codd v de Lap (1905) 92 LT 510; Monroe Schneider v No 1 Rarebem (No 2) (1992) 37 FCR 234, 238-243

Ratio Decidendi

Legal Principle Established

As at the commencement of the present proceedings, US$27,138.20 has been recovered by the plaintiffs from the defendants. As a result, the plaintiffs seek judgment against Mr Prider for the Australian equivalent of the whole of the judgment sum less the amount recovered.Consideration of the issues arisingThe Parties’ Submissions It was submitted by counsel for Mr Prider that the California judgment was voidable on the ground of fraud. In particular, it was contended that there had been no valid service on Mr Prider of the California proceedings. It was said that fraudulent evidence was presented by the process servers as well as by Messrs Synder and Stewart in the California proceedings. It was argued that a foreign judgment obtained by fraud or misrepresentation cannot be enforced in a court of common law.[8] It was asserted that the allegations of fraud gave rise to triable defences sufficient to warrant refusal of the application. It was also argued that this court as a matter of public policy would not enforce the award of punitive damages nor any joint liability of Mr Prider to the plaintiffs.[8]Codd v de Lap (1905) 92 LT 510; Monroe Schneider v No 1 Rarebem (No 2) (1992) 37 FCR 234, 238-243 It was submitted by counsel for the plaintiffs that under applicable principles of private international law, the plaintiffs were not required to establish that valid service had occurred. It was said that the plaintiffs are only required to establish the four well-established requirements of jurisdiction, finality, identity and certainty of the judgment sum in order to have the foreign judgment enforced in Australia. Counsel argued that Mr Prider had failed to discharge the onus of establishing a triable case of fraud or a denial of natural justice. It was said that no triable defence to the present proceedings had been established. Counsel did not pursue the recognition and enforcement of the punitive damages awarded by the Californian Court. Counsel also did seek the recognition of a joint liability.Credit of Mr Prider On October 2003 Mr Prider provided an affidavit of assets. This affidavit was relied on by Mr Prider as being relevant to the consideration of any terms that might be imposed as a condition, should the court find the defendant had identified a triable defence. The plaintiffs sought leave to cross examine Mr Prider on the affidavit of assets. This was not opposed. Following cross examination it was submitted by counsel for the plaintiffs that Mr Prider was not a witness of truth either in his affidavit of assets or in his oral testimony. The affidavit had suggested that Mr Prider had very few assets and that those assets were of little value. The evidence adduced under cross examination ultimately disclosed that Mr Prider had assets of substantial value. Counsel for the plaintiffs submitted that Mr Prider’s evidence was deliberately incomplete and evasive. The cross examination demonstrated that Mr Prider had not been frank about his assets. Mr Prider’s credibility was substantially damaged. This lack of credibility will be discussed in detail later in these reasons. Counsel for the plaintiffs contended that the demonstrated lack of credibility was relevant to the weight that the court should attach to the other affidavit evidence of Mr Prider. As a result, detailed submissions were developed and the other affidavit evidence filed by and on behalf of Mr Prider was closely scrutinised.