Bhagat v Global Custodians Ltd

Case [2002] NSWCA 160

NEW SOUTH WALES COURT OF APPEAL

CITATION:     BHAGAT v GLOBAL CUSTODIANS LIMITED [2002]  NSWCA 160

FILE NUMBER(S):
40769/00
40770/00

HEARING DATE(S):    7 May  2002

JUDGMENT DATE:      29/05/2002

PARTIES:
Hari Bhagat  (Appellant)
Global Custodians Limited  (First Respondent)
John Healey Speight  (Second Respondent)
Jessee Barrie Marr Speight  (Third Respondent)
Archie Greenlees  (Fourth Respondent)
Norma Patricia Greenlees  (Fifth Respondent)

JUDGMENT OF:        Spigelman CJ Ipp AJA Brownie AJA   

LOWER COURT JURISDICTION:       Supreme Court - Equity Division

LOWER COURT FILE NUMBER(S):     SC 2539/98, 3156/99

LOWER COURT JUDICIAL OFFICER:   Justice Young

COUNSEL:
In Person  (Appellant)
G C Lindsay SC  (Respondents)

SOLICITORS:
In Person  (Appellant)
Holding Redlich  (Respondents)

CATCHWORDS:
CONTEMPT OF COURT - whether improper pressure applied to a party to withdraw from proceedings - where threatening letter sent to persons consenting to be joined as plaintiffs - where letter marked 'without prejudice' - whether letter admissible - whether communication between persons 'in dispute' - Evidence Act 1995, s131.

LEGISLATION CITED:
Evidence Act 1995
Supreme Court Act 1970

DECISION:
Appeals dismissed with costs.

JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
COURT OF APPEAL

CA 40769/00
CA 40770/00
SC   2539/98
SC   3156/99

SPIGELMAN CJ
IPP AJA
BROWNIE AJA

Wednesday 29 May 2002

Hari BHAGAT v GLOBAL CUSTODIANS LIMITED

Judgment

  1. SPIGELMAN CJ:  The Court has before it two Notices of Appeal pursuant to leave to appeal granted by the Court.  The trial judge, Justice Young, had before him two separate proceedings that were the same in substance, save as to parties.  The two proceedings raised the same single question and resulted in one set of orders made pursuant to a single Reasons for Judgment of Justice Young. 

  2. The Respondents successfully moved the Court in each proceeding for an order that the Appellant be found guilty of contempt and consequential relief.  Justice Young made the finding of guilt and made consequential orders.

    Background Proceedings

  3. Following the collapse of a financial group referred to as Estate Mortgage, a number of investors banded together to seek to recover their losses.  In 1990 a trust fund known as The Estate Mortgage Fighting Fund Trust was established with the Appellant, Hari Bhagat, and other persons as trustees.  The First Respondent, Global Custodians Limited, is a member of a group of companies that subsequently acquired rights with respect to the funds formerly managed by Estate Mortgage.  The First Respondent instituted proceedings in the Equity Division of the Supreme Court of New South Wales seeking orders relating to the administration of The Estate Mortgage Fighting Fund Trust, including orders to the effect that it was entitled to inspect books of account of the trust.  It sought these orders, inter alia, on the basis of certain Deeds of Assignment from the second and third Respondents (to whom I will refer as the “Speights”) and from the fourth and fifth Respondents (to whom I will refer as the “Greenlees”).

  4. In other proceedings, the judgment in which was tendered in evidence in the present proceedings (Global Custodians Limited v Mesh [1999] NSWSC 624), Justice…

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Details
AGLC
Bhagat v Global Custodians Ltd [2002] NSWCA 160
Case
[2002] NSWCA 160
Decision Date

CaseChat Overview and Summary

The case of *Bhagat v Global Custodians Ltd* concerned an appeal to the Supreme Court of New South Wales from a finding of contempt of court made by Justice Young. The dispute arose in the context of complex litigation following the collapse of a financial group. The appellant, Hari Bhagat, was a trustee of a fighting fund established by investors. The first respondent, Global Custodians Limited, had acquired rights concerning the former funds and initiated proceedings seeking access to trust accounts. These proceedings involved the Speights and the Greenlees, who had assigned their interests to Global Custodians. The appellant subsequently commenced his own proceedings against Global Custodians, the Speights, and the Greenlees.

The central legal issues before the court were whether the appellant had committed contempt of court by applying improper pressure to the Speights and the Greenlees to withdraw from proceedings, and whether a letter sent by the appellant to these parties, marked "without prejudice," was admissible as evidence. The court was required to consider the admissibility of this communication under section 131 of the *Evidence Act 1995* (NSW) and whether the communication was between persons "in dispute" for the purposes of that section.

Justice Young had found the appellant guilty of contempt, a decision that was upheld on appeal. The court reasoned that the letter, despite being marked "without prejudice," was admissible because it constituted evidence of conduct that might amount to contempt. The "without prejudice" privilege, the court explained, is not absolute and does not protect communications made in furtherance of a criminal or contemptuous act. The court determined that the appellant's actions in sending the threatening letter constituted an attempt to improperly pressure the Speights and the Greenlees, thereby interfering with the due administration of justice.

The appeals were dismissed with costs.

Orders

Orders of the court

Appeals dismissed with costs.

Background

Background to the litigation

The Respondents successfully moved the Court in each proceeding for an order that the Appellant be found guilty of contempt and consequential relief. Justice Young made the finding of guilt and made consequential orders.Background Proceedings Following the collapse of a financial group referred to as Estate Mortgage, a number of investors banded together to seek to recover their losses. In 1990 a trust fund known as The Estate Mortgage Fighting Fund Trust was established with the Appellant, Hari Bhagat, and other persons as trustees. The First Respondent, Global Custodians Limited, is a member of a group of companies that subsequently acquired rights with respect to the funds formerly managed by Estate Mortgage. The First Respondent instituted proceedings in the Equity Division of the Supreme Court of New South Wales seeking orders relating to the administration of The Estate Mortgage Fighting Fund Trust, including orders to the effect that it was entitled to inspect books of account of the trust. It sought these orders, inter alia, on the basis of certain Deeds of Assignment from the second and third Respondents (to whom I will refer as the “Speights”) and from the fourth and fifth Respondents (to whom I will refer as the “Greenlees”). In other proceedings, the judgment in which was tendered in evidence in the present proceedings (Global Custodians Limited v Mesh [1999] NSWSC 624), Justice Young had held that the Deeds of Assignment from the Speights and the Greenlees did not effectively transfer the right of a beneficiary to call for accounts and to inspect documents. After that judgment, Global Custodians Limited obtained the consent of the Speights and the Greenlees to be joined as parties. The proceedings to that date were proceedings No 2539 of 1998 in the Equity Division of the Court. Global Custodians Limited sought to join the Speights and the Greenlees as Plaintiffs in those proceedings by a Notice of Motion dated 12 July 1999. Out of caution, Global Custodians Limited, together with the Speights and the Greenlees as Plaintiffs, commenced proceedings No 3156 of 1999 on 12 July 1996 by way of summons seeking substantially the same relief as in proceedings No 2539 of 1998. These later proceedings were referred to in the submissions as “the parallel proceedings”. On 29 July 1999 Justice Young ordered that proceedings No 3156 of 1999 be heard together with proceedings No. 2539 of 1998 and that the evidence in one be evidence in the other. On 27 July 1999 the Appellant commenced by summons proceedings No 3354 of 1999 with Global Custodians Limited, the Speights and the Greenlees as Defendants. The Appellant, as Plaintiff, sought orders relating to the Deed of Assignment by which the Speights and the Greenlees had assigned their interests to Global Custodians and also with respect to proceedings No 2539 of 1998 and No 3156 of 1999. In the materials before this Court there is an affidavit of service of proceedings No 3354 of 1999 on the Greenlees. This affidavit indicates that the summons was served on 28 July 1999.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

SPIGELMAN CJ

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Ratio Decidendi

Legal Principle Established

Established by: SPIGELMAN CJ

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