Bolitho v Banksia Securities Limited (No 17)
[2021] VSC 132
•16 March 2021 (Reasons: 23 March 2021)
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
GROUP PROCEEDINGS LIST
S CI 2012 07185
| LAURENCE JOHN BOLITHO | First Plaintiff |
| AUSTRALIAN FUNDING PARTNERS PTY LIMITED (ACN 167 628 597) | Second Plaintiff |
| v | |
| BANKSIA SECURITIES LIMITED (ACN 004 736 458) (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) & ORS (according to the attached Schedule) | Defendants |
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JUDGE: | John Dixon J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 16 March 2021 |
DATE OF RULING: | 16 March 2021 (Reasons: 23 March 2021) |
CASE MAY BE CITED AS: | Bolitho v Banksia Securities Limited (No 17) |
MEDIUM NEUTRAL CITATION: | [2021] VSC 132 |
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PRACTICE AND PROCEDURE – Application by defendant for leave to re-open case to tender evidence and make limited closing submission – Defendant capitulated at trial after opening, did not contest allegations and did not give evidence – Allegations of serious dishonesty and disentitling conduct – Where defendant formerly senior counsel at the inner bar – No evidence supporting the exercise of the discretion.
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APPEARANCES: | Counsel | Solicitors |
| As Contradictor | Mr P Jopling QC with Ms J Collins | Corrs Chambers Westgarth |
| For the Second Plaintiff | Mr S Horgan QC with Mr C Tran | Arnold Bloch Leibler |
| For the First Defendant | Mr R Dick SC with Mr J Redwood SC and Mr M Grady | Maddocks |
| For the Second Defendant | Mr A Myers AC QC with Mr J Rudd | Hope & Co |
| For the Fourth Defendant | Mr C Juebner with Ms G S J Berlic | Colin Biggers & Paisley |
| For the Fifth Defendant | Mr A Palmer QC with Mr A Aleksov and Mr A Christophersen | Garland Hawthorn Brahe Lawyers |
For the Sixth Defendant | Mr A P Trichardt | Lander & Rogers |
HIS HONOUR:
On the opening day of oral final submissions in this remitter,[1] and somewhat surprisingly, Mr Allen Myers AC QC, appearing with Mr Jesse Rudd of counsel, applied on behalf of the second defendant (‘Mr O’Bryan’) to tender a document into evidence and to make a short submission in closing. Mr O’Bryan provided informal notice of this intention through the earlier exchange of a written outline of that submission.
[1]The background of which is covered in detail in previous interlocutory rulings, including Bolitho v Banksia Securities Ltd (No 6) [2019] VSC 653 and Bolitho v Banksia Securities Ltd (No 8) [2020] VSC 174.
As I recounted in Bolitho v Banksia Securities Limited (No 16),[2] Mr O’Bryan has not taken any steps in this proceeding as a party since 3 August 2020, when his counsel then stated:
[2][2021] VSC 9 (‘Bolitho No 16’).
Your Honour, we have received instructions of significance which it is incumbent upon us to inform the court of forthwith. Your Honour, we are instructed as follows by Mr O'Bryan. First, Mr O'Bryan will not maintain any further defence of the allegations that have been made against him in this proceeding by the contradictor in the revised list of issues dated 21 July 2020 and its particulars. In those circumstances, Mr O'Bryan would not be entitled to, and he will not, contend against the court making findings in respect of him in accordance with those allegations.
Secondly, your Honour, Mr O'Bryan consents to the entry of judgment against him (a) for money liability under s.29 of the Civil Procedure Act in such amount as the court determines on the evidence before it and (b) otherwise on the terms the court sees fit.
Thirdly, your Honour, Mr O'Bryan will not oppose this honourable court removing his name from the Supreme Court roll. He accepts that that should occur.
Fourthly, Mr O'Bryan will not seek payment of any of his unpaid fees in this matter. He abandons any right to such payment.
Your Honour, our instructing solicitors will shortly confirm these matters in writing in a letter to all parties which will be provided to the court. Your Honour, we are instructed to record that in taking this course Mr O'Bryan seeks to convey and give some measure of effect to his contrition and his very deep regret at his actions and to do what he is now able to do to assist in these proceedings being brought to conclusion.
Consistently with the foregoing, (a) there will be no cross-examination of any witness on behalf of Mr O'Bryan; (b) Mr O'Bryan's affidavits will not be read and he will not be giving evidence; and (c) no submissions will be made on Mr O'Bryan’s behalf in closing.
Finally, your Honour, those matters being the case, Mr O'Bryan has no further part to play in the proceeding. As a result, Mr O'Bryan has withdrawn our instructions to appear hereafter for him in the proceeding and Mr Costello and I would therefore ask to be excused from further attendance when the court rises this afternoon. Those are the remarks and instructions that I wish to convey, if the court please.
Those instructions were confirmed by Mr O’Bryan’s former solicitors, MinterEllison, in a letter to the other parties dated 3 August 2020, that was tendered in evidence in the proceeding.
Consistently with the position disclosed to the court by counsel, Mr O’Bryan then took no part in the proceeding until he was served with a subpoena by the fifth defendant (‘Alex Elliott’) to give evidence on his behalf. I limited the scope of the evidence that Mr O’Bryan could give and my reasons for doing so are set out in an earlier ruling.[3] In that ruling, I observed that it was perfectly clear that Mr O’Bryan understood and intended the consequence of his actions in instructing his legal representatives to take the course that he did in the proceeding, and noted that at that time he was subpoenaed by Alex Elliott, Mr O’Bryan made no application or otherwise attempted to resile from or act inconsistently with his earlier stated position. I then noted that had he chosen to do so, a formal application, supported by evidence, that the court exercise its discretion to permit him to change his position would need to be carefully considered.
[3]Bolitho No 16 (n 2).
No such application was made at that time, or at any subsequent time, until Mr Myers’ oral application. In particular, Mr O’Bryan did not seek to introduce the document that he now seeks to tender when in the witness box answering the Alex Elliott subpoena. For reasons I will shortly explain, not giving oral evidence about the transactions that he wishes to open up is a matter of some significance.
Having heard Mr Myers, and having already read both his written submissions and a submission in response from the Contradictor, who opposed Mr O’Bryan’s application, I refused the application for reasons to be published in due course. These are those reasons.
Mr Myers accepted that, in substance, Mr O’Bryan’s application was an oral application — made without notice and unsupported by affidavit evidence — to introduce a document into evidence and to make submissions. In substance, it was an application to open, a least in part, a defence to the Contradictor’s allegations.
Mr O’Bryan sought to make submissions on two issues:
(a) the Contradictor’s contention that Mr O’Bryan’s family had impermissibly retained an interest in the second plaintiff (‘AFP’), then named BSL Litigation Partners Limited, following the ruling of Ferguson JA (as the Chief Justice then was) in Bolitho v Banksia Securities Limited (No 4) (‘Bolitho No 4’);[4] and
(b) the proper quantification of any loss and damage occasioned by group members as a result of the allegations made by the Contradictor.
[4][2014] VSC 582.
Mr O’Bryan wished to submit that he had complied with the ruling in Bolitho No 4, as Noysue Pty Ltd (an entity controlled by his wife, Ms Sue Noy) disposed of its interest in BSL Litigation Partners Limited on 14 December 2014, by transferring its shares to Regent Support Pty Ltd. Mr O’Bryan contended that the contemporaneous documentary evidence before the court, particularly the instrument of transfer and the register of members, precluded any inference being drawn that he (or any other person or entity connected with him) had any economic, financial or other interests in AFP after Noysue disposed of its shares in AFP. The document that Mr O’Bryan sought to tender was said to relevantly establish his submission that Noysue Pty Ltd had not retained any beneficial interest in AFP.
The document - ‘Notice of Beneficial Ownership’ addressed to ‘The Secretary, BSL Litigation Partners Limited’ - had been discovered by AFP on 8 September 2020 (‘Notice’). I accept that AFP discovered the document to the Contradictor after the completion of the eighth day of the trial and after Mr O’Bryan’s capitulation. There are significant issues about irregularities in discovery presently before the court for consideration in its final judgment. When, how, and from whom, the document, or a copy of it, came into the possession of Mr O’Bryan was not explained. The provenance of the Notice, which is also dated 14 December 2014, was unexplained. It was to be propounded as a business record. What has been produced is a scanned version that bears an unidentified signature. It purports to give notice that Regent Support Pty Ltd holds the shares entered on the register of members (that were transferred to it by Noysue Pty Ltd) beneficially for AMEO Investment Pty Ltd.
Other evidence in the proceeding demonstrates that each of Regent Support Pty Ltd and AMEO Investment Pty Ltd (which changed its name to MCM (Mt Buller) Developments Pty Ltd) were at all relevant times companies under control of the late Mr Mark Elliott, the former managing director of AFP. Mr O’Bryan proposed to invite the court to reject any contention that Noysue Pty Ltd or Mr O’Bryan retained any beneficial interest by drawing inferences from the Notice, in conjunction with other evidence.
That submission would direct inquiries towards AMEO Investment Pty Ltd, which was wholly owned and controlled by Decoland Holdings Pty Ltd. There was no evidence of a payment of the stated consideration on the share transfer form from these (or any) Elliott-controlled companies to Noysue Pty Ltd or at its direction, either in the sum of $500,000 or at the relevant time. Mr O’Bryan proposed to focus on two payments of $300,000 each made to, or at the direction of, Ms Noy, in 2016. The first of those payments was some 13 months after the date of the share transfer and the second payment was some four months after the first payment. These two payments and other transactions on relevant bank accounts are in evidence.
The crux of Mr O’Bryan’s submission was:
The $300,000 was not a payment of legal fees. Moreover, there is no evidence that Regent Support, AMEO Investment Pty Ltd, Decoland Holdings Pty Ltd or any other entity associated with Mr Elliott had previously paid the $500,000 payable by Regent Support for the transfer of Noysue’s shares on 11 December 2014. Accordingly, it is submitted that the natural inference is that $500,000 of the $600,000 in payments made to Noysy and Ms Noy in February and May 2016 was referrable to Regent Support’s liability to pay for the shares transferred to it by Ms Noy’s entity, Noysue, in December 2014.
What remained unexplained, and unexplored during the trial, were any financial transactions involving AMEO Investments Pty Ltd, and other Elliott entities, that may have related to the share transfer.
The principles governing the exercise of the court’s discretion to permit a party to reopen its case are not contentious. Those principles were recently summarised by the Court of Appeal in Ezra Abrahams Pty Ltd v Milburn.[5] The overriding principle is whether, taken as a whole, the justice of the case favours the grant of leave to reopen.[6] There are four recognised categories of case in which a court may grant leave to reopen a party’s case:
[5][2017] VSCA 355 (‘Ezra Abrahams’). See also Di Stasio Pty Ltd v R K Services Pty Ltd [2018] VSCA 340 and Giurina v Giurina (No 2) [2018] VSCA 311.
[6]Ezra Abrahams, [45] (n 5).
(a) where fresh evidence, unavailable or not reasonably discoverable previously, becomes known and available;
(b) where there has been inadvertent error;
(c) where there has been a mistake in apprehension of facts; and
(d) where there has been a mistake of apprehension of the law.[7]
[7]Ibid [47].
These categories are not closed. If a party relies on the ‘inadvertent error’ category in applying to reopen its case, the nature and reasons for the error are relevant in assessing the interests of justice.[8]
[8]Ibid [48].
The court’s discretion must be exercised judicially. In Smith v NSW Bar Association,[9] Brennan, Dawson, Toohey and Gaudron JJ stated:
If an application is made to reopen on the basis that new or additional evidence is available, it will be relevant, at that stage, to enquire why the evidence was not called at the hearing. If there was a deliberate decision not to call it, ordinarily that will tell decisively against the application [to reopen].
[9](1992) 176 CLR 256, 266.
In Aon Risk Services Australia Limited v Australian National University, Gummow, Hayne, Crennan, Kiefel and Bell JJ stated:
Generally speaking, where a discretion is sought to be exercised in favour of one party, and to the disadvantage of another, an explanation will be called for. The importance attached by r 21 to the factor of delay will require that, in most cases where it is present, a party should explain it. Not only will they need to show that their application is brought in good faith, but they will also need to bring the circumstances giving rise to the amendment to the court's attention, so that they may be weighed against the effects of any delay and the objectives of the Rules. There can be no doubt that an explanation was required in this case.[10]
[10](2009) 239 CLR 175, 215 [103].
Mr Myers submitted that considerations of fairness to Mr O’Bryan clearly warranted leave to reopen his case and that no prejudice was alleged by any of the other parties. That submission does not survive a careful reading of the Contradictor’s written submission. However, in the absence of any evidence explaining the provenance of the document, why it had not been discovered in accordance with case management directions, why Mr O’Bryan sought to resile from his previously stated position and why a proper application to do so had not been made in a timely fashion, I was not in a position to exercise judicially a discretion that involved the assessment of issues of delay, prejudice, strategy, and fairness.
In any event, exercising the discretion as Mr O’Bryan contended would be futile, given the limited probative value of the Notice. That was because the inferences about beneficial ownership would need to be drawn from a contestable evidentiary base. On the other hand, the prospect of prejudice was clear, unless the evidence in the trial was reopened more widely. The Notice, if admitted into evidence, would necessarily, as a matter of fairness, involve reopening an enquiry into whether it was genuine, given the strong, well-grounded submissions made in this proceeding by both the Contradictor and the first defendant that Mr Elliott and Mr O’Bryan have acted dishonestly. Further, the financial trail revealed by the evidence is more complex than Mr Myers intended to submit and inconsistent with the inference about payment of the consideration for the share transfer that he contended for. In particular, the payment of $300,000 in February 2016 was made four days after Noysue paid $400,000 to Decoland, a payment that was in evidence but not explained at trial. The Contradictor asserted in opening, prior to Mr O’Bryan’s capitulation, that the second payment of $300,000 made in May 2016 related to a different proceeding, a contention that was not disputed.
Accordingly, while the Notice was not irrelevant, its probative value was weak, and it raised the need for further investigation, with attendant cost and delay, before the court could draw the inferences for which Mr O’Bryan contended.
However, more significantly, either Mr O’Bryan or his wife could have directly and unambiguously explained these transactions in evidence and submitted to cross‑examination. While avoiding the witness box, Mr O’Bryan asked the court to draw speculative inferences on the basis of an incomplete documentary and financial trail. Absent his explanation for not doing so at an appropriate time, this application appeared to involve reshaping a strategy to which Mr O’Bryan had deliberately committed, with consequences for all other parties in the proceeding.
Bearing in mind that what is in issue in this proceeding is whether Mr O’Bryan has contravened his paramount duty to the court and his overarching obligation under the Civil Procedure Act 2010 (Vic), the following observation of Tobias JA in NSW Bar Association v Meakes, is apposite:
It is also pertinent to observe that the appellant’s senior counsel was unable to provide a responsive answer when asked what inferences the Court should draw as to how or why the respondent charged fees which were grossly excessive, and as to the basis on which he charged the fees he did.
Yet these were the very matters which were wholly within the knowledge of the respondent and which he did not offer to answer in the witness box. On the contrary, he chose the safety of the well of the Tribunal. Notwithstanding the advice of his then senior counsel, the respondent’s refusal to enter the witness box and provide evidence with respect to the matters referred to should have been the subject of harsh criticism by the Tribunal. Moreover, if that evidence had otherwise been relevant to the issue, his refusal to provide it would have significantly detracted from the weight to be attached to the tendered character references. In these circumstances, the only inference one can draw from the respondent’s refusal to give sworn testimony in this matter was that his evidence would not have assisted his case in resisting a finding of professional misconduct.
The Tribunal should not have been required to speculate as to the basis upon which the respondent charged the fees he did. As an experienced barrister with an unblemished record, one would have expected him, as Meagher JA expressed it in Coe, to have mounted the witness box and explained the mysteries surrounding charges which had been found to be grossly excessive. In my opinion the failure of the respondent to give sworn evidence was inexcusable.[11]
[11][2006] NSWCA 340, [76]–[78]. See also Coe v NSW Bar Association [2000] NSWCA 13, [21]–[22].
Mr O’Bryan’s failure to give evidence on these matters is similarly inexcusable and strongly weighs against acceding to his application.
Mr O’Bryan also sought to put a submission before the court in relation to the quantification of any compensation that he might be ordered to pay under s 29 of the Civil Procedure Act. On this issue, Mr O’Bryan’s position raises common questions with the position of other defendants in the litigation. The submission was effectively stated both in the written outline and in the application for leave to reopen his case. Subsequent to my ruling, the submission was referred to by other defendants. It was unnecessary to grant leave to reopen for the purpose of putting that submission.
In these circumstances, I was satisfied that, taken as a whole, the justice of the case did not favour the grant of leave to reopen.
SCHEDULE OF PARTIES
S CI 2012 07185
BETWEEN:
| LAURENCE JOHN BOLITHO | First Plaintiff |
| AUSTRALIAN FUNDING PARTNERS PTY LIMITED | Second Plaintiff |
| - and - | |
| JOHN ROSS LINDHOLM IN HIS CAPACITY AS SPECIAL PURPOSE RECEIVER OF BANKSIA SECURITIES LIMITED (ACN 004 736 458) (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) | First Defendant |
| NORMAN O’BRYAN SC | Second Defendant |
| MICHAEL SYMONS | Third Defendant |
| ANTHONY ZITA AND PORTFOLIO LAW PTY LTD | Fourth Defendant |
| ALEXANDER CHRISTOPHER ELLIOTT | Fifth Defendant |
| KATERINA PEIROS, AS THE REPRESENTATIVE OF THE ESTATE OF PETER TRIMBOS, DECEASED | Sixth Defendant |
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