Esteem Holdings Pty Ltd as trustee for the Esteem Trust v Caratti
[2012] WASC 260
•19 JULY 2012
ESTEEM HOLDINGS PTY LTD AS TRUSTEE FOR THE ESTEEM TRUST -v- CARATTI [2012] WASC 260
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2012] WASC 260 | |
| 19/07/2012 | |||
| Case No: | CIV:1372/2011 | 4 & 13 JULY 2012 | |
| Coram: | EM HEENAN J | 13/07/12 | |
| 9 | Judgment Part: | 1 of 1 | |
| Result: | Directions given in preparation for trial Trial judge appointed to withdraw | ||
| B | |||
| PDF Version |
| Parties: | ESTEEM HOLDINGS PTY LTD AS TRUSTEE FOR THE ESTEEM TRUST ALLEN BRUCE CARATTI WEDGEPOINT PTY LTD |
Catchwords: | Application for recusal of trial judge Application for directions for trial Application for leave to amend Orders for filing of witness statements, list of documents and other usual preparations |
Legislation: | Nil |
Case References: | Antoun v The Queen [2006] HCA 2; (2006) 224 ALR 51 British American Tobacco Australian Services Ltd v Laurie [2011] HCA 2 Ebner v Official Trustee in Bankruptcy [2000] HCA 63; (2000) 205 CLR 337 Johnson v Johnson [2000] HCA 48; (2000) 201 CLR 488 MTI v SUL (No 2) [2012] WASCA 87 Pollock v The State of Western Australia [2011] WASCA 133 R v Kearns [2003] NSWCCA 367 Re JRL; Ex parte CJL [1986] HCA 39; (1986) 161 CLR 342 The State of Western Australia v Pollock [2010] WASC 56 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
ALLEN BRUCE CARATTI
First Defendant
WEDGEPOINT PTY LTD
Second Defendant
Catchwords:
Application for recusal of trial judge - Application for directions for trial - Application for leave to amend - Orders for filing of witness statements, list of documents and other usual preparations
Legislation:
Nil
(Page 2)
Result:
Directions given in preparation for trial
Trial judge appointed to withdraw
Category: B
Representation:
Counsel:
Plaintiff : Mr C P Stokes
First Defendant : Mr D H Solomon
Second Defendant : Mr D H Solomon
Solicitors:
Plaintiff : Chris Stokes & Associates
First Defendant : Sonia Edwards Legal
Second Defendant : Sonia Edwards Legal
Case(s) referred to in judgment(s):
Antoun v The Queen [2006] HCA 2; (2006) 224 ALR 51
British American Tobacco Australian Services Ltd v Laurie [2011] HCA 2
Ebner v Official Trustee in Bankruptcy [2000] HCA 63; (2000) 205 CLR 337
Johnson v Johnson [2000] HCA 48; (2000) 201 CLR 488
MTI v SUL (No 2) [2012] WASCA 87
Pollock v The State of Western Australia [2011] WASCA 133
R v Kearns [2003] NSWCCA 367
Re JRL; Ex parte CJL [1986] HCA 39; (1986) 161 CLR 342
The State of Western Australia v Pollock [2010] WASC 56
(Page 3)
1 EM HEENAN J: This action had been set down for trial and listed by the court for hearing before me on 26 and 27 July 2012. Strangely, although the certificate for readiness indicated the possibility that expert evidence may be adduced at the trial, there had been no directions sought or given with respect to expert evidence nor had there been any other pre-trial directions sought or given in relation to the usual requirements for the parties to file and exchange written witness statements before trial, to prepare an agreed list of documents or another list of documents which may be used at the trial or for objections to the admissibility of the evidence or documents to be filed or exchanged. Consequently, when the file first became available I caused notice to be given to the solicitors for all parties that there would be a directions hearing held before me on 4 July 2012 to deal with these matters.
2 The issues in the action and the pleadings as they stood up to that point can simply be stated. The papers for the Judge consist of the plaintiff's statement of claim dated 11 March 2011 and a defence by both defendants dated 8 April 2011. From these it emerges that the plaintiff contends that at all material times it was a duly incorporated company and trustee of 'the Esteem Trust'. It also alleges that at material times the first defendant, Mr Allen Caratti was the sole director of the second defendant, another duly incorporated company. The pleading also asserts that the first defendant, Mr Allen Caratti, became the holder of the only two issued shares in the second defendant on 14 July 2003 and by written declaration of trust dated 31 July 2003 declared that he held one of those shares in the second defendant on trust for the plaintiff. The plaintiff then alleges that by a letter from its director to the first defendant of 10 January 2011 it requested and directed the first defendant as trustee to transfer to the plaintiff the one share held on trust but that the first defendant refused to do so, claiming that there was no such trust and that he was entitled to that share both legally and beneficially. The relief sought by the plaintiff include a declaration that the first defendant held one of the shares in the second defendant on trust for the plaintiff and consequential orders requiring the transfer of that share to the plaintiff. Other consequential relief in the form of compensation and/or damages and injunction is also sought.
3 By their defence the defendants admit certain of the allegations in the statement of claim but, critically, deny that the first defendant ever agreed to hold or held the one share in the second defendant on trust for the plaintiff; never agreed to give to the plaintiff any beneficial interest whatsoever in the second defendant and plead specifically that the first defendant did not sign the alleged declaration of trust.
(Page 4)
4 Clearly, therefore, apart from some peripheral issues which need not be examined, the major issue in the case will be whether or not the alleged declaration of trust bearing date 31 July 2003 apparently evidencing that one share in the second defendant was held by the first defendant on trust for the plaintiff is valid and/or whether it was signed by the first defendant as, from mere inspection, appears to be the case.
5 One not insignificant difficulty in the way of resolving these issues of fact is that the original of the alleged deed of trust bearing date 31 July 2003 and any counterparts of that deed are believed by the parties to have been lost or destroyed. The plaintiff has been able to obtain access to a photocopy of the alleged deed of trust which, for some reason or other which need not be investigated at this point, forms part of the record of documents or dealings deposited at the Land Titles Office in relation to transactions with certain land which the second defendant was developing (and in which the plaintiffs alleged they had a one-half share beneficial interest). This photocopy of the single page document, while legible and while containing an apparent signature of the first defendant and an identifiable witness, is not of sufficient quality, so counsel informed the court, to be subjected to any useful handwriting or other expert analysis or comparison. It follows, therefore, that the probabilities are high that the question of whether or not this is a valid declaration of trust executed by the first defendant will depend on an evaluation of the evidence of witnesses for the plaintiff who are said to claim that they were present and saw the first defendant sign the declaration of trust, and the first defendant's denial that he ever signed the declaration of trust or at least ever signed a document in that form or to that effect and purpose. The evidence to be led from the plaintiff to prove the signature to the alleged deed of trust is to be adduced by Mr Jamie Pollock, the identifiable subscribing witness, and his father, Mr Kevin James Pollock who, it is said, was present at the time the document was signed and saw Mr Allen Caratti sign it. On the other hand, it is to be expected that Mr Allen Caratti will deny signing the document as alleged or at all.
6 Shortly before the directions hearing first listed for 4 July the solicitors for the plaintiff wrote to the court asking that I should recuse myself from hearing the trial in this matter and that arrangements should be made for the matter to be listed before a different trial judge. The reason for this request, and the application to that effect first made at the directions hearing on 4 July was as follows:
A key witness for the plaintiff at the trial in this matter will be Mr Kevin Pollock, who will give evidence as to the circumstances surrounding the
(Page 5)
- execution of the declaration of trust. In view of that central issue in dispute we anticipate that the credibility of each of Mr Pollock and the first defendant will be directly relevant to the findings of fact to be made by the trial judge.
Our client notes that Justice Heenan was the presiding judge at the criminal trial of Mr Pollock on nine charges of fraud contrary to s 409(1)(d) of the Criminal Code in March 2010. We are instructed that in both his summing up to the jury and in his sentencing remarks following Mr Pollock's conviction, his Honour made comments highly critical of the honesty of Mr Pollock. Mr Pollock unsuccessfully appealed against the sentences imposed by his will [sic] on the grounds, inter alia, that they were manifestly excessive.
In these circumstances, our client holds a reasonably based apprehension of bias that his Honour may not bring an objective assessment to the resolution of the matters in dispute in these proceedings. We note, in this regard that a reasonable apprehension of bias may arise where a judge who has previously heard a case expresses views about the credibility of the character of a person who is involved in a subsequent case: MTI v SUL (No 2) [2010] WASCA 58 at [37].
7 I should set out that at the criminal trial to which reference is made in those submissions Mr Kevin Pollock was the sole accused but did not lead evidence at his trial. Nevertheless, his honesty and credit was very much in question and in the course of the summing up to the jury it was necessary to draw to the attention of the jury factors relied upon by the prosecution for its challenge to his honesty and credibility. Mr Pollock was subsequently sentenced to lengthy terms of imprisonment in March of 2010: The State of Western Australia v Pollock [2010] WASC 56. In the course of doing so I observed that I had reached the view that each of the six offences of fraud, the subject of counts four to nine in the indictment, constitutes a serious fraud that was deliberate, contrived and in respect of a substantial financial transaction [79]. I also referred to Mr Pollock's conduct in relation to the offences as being 'conscious and planned dishonesty involved in these convictions of fraud' [97].
8 Mr Pollock appealed from the sentences so imposed but his appeal was dismissed by the Court of Appeal: Pollock v The State of Western Australia [2011] WASCA 133. No challenge was made to any of the factual findings in relation to the sentence imposed when the appeal was before the Court of Appeal.
9 Having received written notice of the plaintiff's application in this respect, I directed that it should be included as a matter to be addressed at the directions hearing listed for 4 July.
(Page 6)
10 At that directions hearing counsel for the defendants submitted that I should not withdraw as the trial judge appointed and referred to authority, including MTI v SUL (No 2) [2012] WASCA 87 and R v Kearns [2003] NSWCCA 367 in support of the proposition that a judge should not lightly withdraw on such a ground. Counsel for the defendants also foreshadowed his desire to apply for leave to amend the defence.
11 In view of these submissions, I determined that I should defer, for a short time, any decision on whether or not to recuse myself as the trial judge until more was disclosed as to the actual details of the factual contest which would require decision at the trial. To this end, and also to make necessary preparations for the forthcoming trial, I then ordered and directed as follows:
(1) that the directions hearing be adjourned until Friday, 13 July 2012;
(2) that the application that I should excuse myself as trial judge would be adjourned for hearing on 13 July;
(3) within seven days the plaintiff is to give inspection of the documents to the solicitors for the defendants as requested; and the plaintiff is to file and serve written statements of the evidence of all witnesses to be called by the plaintiff at the trial, including expert witnesses, without being obliged to call any of the witnesses at the trial; and the defendant should file and serve any application seeking leave to amend the defence within seven days, proposing the terms of the amendment, any such application to also be heard on 13 July;
(4) the parties should confer with a view to preparing a list of agreed documents and, failing agreement, a list itemising those documents the admissibility of which is in dispute and asserting the grounds of dispute; and
(5) costs to be reserved.
12 The matter came on for hearing again on 13 July. By then written statements (not all signed) of the evidence to be given by witnesses for the plaintiff had been filed. No such documents had been filed by the defendants although they had not been ordered. The photocopy of the alleged deed of trust was then produced. A minute of further proposed amendments to the defence for which the defendants sought leave was filed. Counsel for both parties also submitted that in view of the issues emerging from the witness statements which had been filed it was likely
(Page 7)
- that the two-day period set aside for the trial would be insufficient and foreshadowed an application to vacate the dates for the trial set for 26 and 27 July and an adjournment of that trial to a later date when five days for hearing would be sought.
13 A further complication arose in that counsel for the defendants sought, by the amendments desired of the statement of claim, to allege that at the date of the alleged declaration of trust (31 July 2003) the beneficiary of the alleged trust, the first plaintiff, Esteem Holdings Pty Ltd, had not been incorporated and, as the submission went, for that reason the declaration of trust was void or ineffective. Alternatively, even a backdating on the alleged deed of trust made possibly with a view to avoid or minimise duty payable on the instrument, would render it void or unenforceable or otherwise of no effect. An amended pleading to that effect has not yet been made and the whole question of whether leave should be granted at this late stage to make such an amendment is likely to raise contentious questions. Accordingly, I expressly refrain from expressing any view, one way or the other, upon whether or not, if it should emerge that the plaintiff was not incorporated at the date appearing on the alleged deed of trust that renders the deed void, ineffective or illegal. That issue may need to be determined later or at trial.
Withdrawal as trial Judge
14 In the administration of justice in Australia the parties do not (at least normally) have an entitlement to choose amongst the judicial officers who will conduct their trial.
15 It is well established that the test to be applied in determining whether a Judge is disqualified by reason of the appearance of bias is whether a fair-minded lay observer might reasonably apprehend that the Judge might not bring an impartial and unprejudiced mind to the resolution of the question the Judge is required to decide: Johnson v Johnson [2000] HCA 48; (2000) 201 CLR 488, 492. This test involves two essential propositions. The first is that a fair-minded lay observer should be taken to be reasonable; and the second is that the judicial officer whose appearances are being scrutinised is a professional Judge whose training, tradition and oath or affirmation require the rejection of any irrelevant, immaterial or prejudicial factors. This principle was closely examined in Ebner v Official Trustee in Bankruptcy [2000] HCA 63; (2000) 205 CLR 337. Initially, counsel for the defendants drew attention to the frequent warnings in the authorities that a Judge should avoid any tendency to be over-ready to disqualify himself or herself from presiding
(Page 8)
- over an appointed trial. In Antoun v The Queen [2006] HCA 2; (2006) 224 ALR 51, 34 the court referred to the oft-repeated and oft-applied words of Mason J in Re JRL; Ex parte CJL [1986] HCA 39; (1986) 161 CLR 342, 352 that the High Court has loudly and clearly expressed a corrective against any view that a Judge should too readily accept a recusal because a party has demanded it. This principle has been reasserted and applied in many cases and has been re-emphasised in British American Tobacco Australian Services Ltd v Laurie [2011] HCA 2 [70] - [72]. I have, of course, had regard to these principles in the present case and to the initial submissions by counsel for the defendants that I should not recuse myself.
16 The witness statements which were before the court on 13 July, and submissions from both counsel made it unmistakably clear that a major issue for resolution at the trial would be the credit and reliability of the evidence of Mr Kevin Pollock who, according to the statement filed by him, would give evidence to the effect that he was present and saw Mr Allen Caratti sign the alleged deed of trust.
17 I consider that my adverse determinations about the credit of Mr Kevin Pollock in the criminal proceedings mentioned were of sufficient effect and seriousness to give rise to a need that in the present case where the significance of his testimony is to be determined it is both desirable and necessary that that should be done by another Judge. As I do not think it is appropriate for me to preside over the trial of this action, I therefore have decided to recuse myself and arrangements are being made for another Judge of the court to hear the trial fixed for 26 and 27 July 2012.
18 At the request of the parties, I did deal with a number of further procedural matters and gave directions on 13 July as follows:
(1) The defendants are to file and serve written statements of all witnesses who are to be called to give evidence on their behalf in accordance with the consolidated practice directions.
(2) Any application for further amendment of the defence or for adjournment of the trial or for any other interlocutory relief by the defendants should be filed and served within seven days.
(3) The plaintiff should file written submissions in opposition to any application for leave to amend or to adjourn the trial, if so desired, within 10 days and be in a position to apply for leave to file a reply in the event that leave to amend the defence is granted.
(Page 9)
- (4) There will be liberty to apply generally, subject to the directions of the Judge appointed to hear this trial.
(5) All further applications will be adjourned until the first morning of the trial.
(6) Costs are to be reserved.
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