Ex Parte - [2021] WASC 288

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   QMW INVESTMENT PTY LTD; EX PARTE CHRISTINA HILLIER as trustee for CHRISTINA AND ROBERT HILLIER FAMILY TRUST [2021] WASC 288
CORAM:   ACTING PRINCIPAL REGISTRAR MCDONALD
HEARD:   12 AUGUST 2021
DELIVERED          :   24 AUGUST 2021
FILE NO/S:   CIV 1086 of 2020

QMW INVESTMENT PTY LTD
Plaintiff
EX PARTE
CHRISTINA HILLIER as trustee for CHRISTINA AND ROBERT HILLIER FAMILY TRUST
ROBERT HILLIER as trustee for CHRISTINA AND ROBERT HILLIER FAMILY TRUST
First Defendants
ROBERT JOHN HILLIER
Second Defendant
ELIZABETH MACKENZIE
Third Defendant
CHONG LEONG CHOE
Fourth Defendant

Catchwords:

Practice and procedure - Subpoena - Leave to issue subpoena - No defence filed - Default judgment entered against defendant - Defendant applies to set aside default judgment - No exceptional circumstances

Legislation:

Bankruptcy Act 1966 (Cth)
Corporations Act 2001 (Cth)
Rules of the Supreme Court 1971 (WA)

Result:

Leave refused

Category: B

Representation:

Counsel:

Plaintiff	:	Mr K Dundo
First Defendants	:	No appearance
Second Defendant	:	No appearance
Third Defendant	:	No appearance
Fourth Defendant	:	No appearance

Solicitors:

Plaintiff	:	KD Legal (Perth)
First Defendants	:	McKenzie & McKenzie & In Person
Second Defendant	:	No appearance
Third Defendant	:	Robertson Hayles Lawyers
Fourth Defendant	:	Robertson Hayles Lawyers

Case(s) referred to in decision(s):

Crayden v Ottaviano [2003] WASCA 20
Palmer v Prince [1980] WAR 61
Sandy v Yindjibarndi Aboriginal Corp RNTBC [2019] WASC 322
Song v South Beach Management Pty Ltd [2020] WASC 402
Stanley v Layne Christensen Co [2004] WASCA 50
Starrs v Retravision (WA) Ltd [2012] WASCA 67
TSW Analytical Pty Ltd v University of Western Australia [2017] WASCA 67
Vautier Holdings Pty Ltd v Kagioulis Trading Pty Ltd [2014] WASC 209
Wildflower Electrical Refrigeration Service (WA) v Refrigid Pty Ltd [2014] WASC 382

ACTING PRINCIPAL REGISTRAR MCDONALD:

The plaintiff seeks leave to issue a subpoena prior to the filing of a defence in the action pursuant to Order 36B rule 2(2B)(b)(ii) of the Rules of the Supreme Court 1971 (WA) (RSC). For the reasons that follow I decline to grant leave.

Background

These proceedings were commenced by writ indorsed by Statement of Claim dated 20 January 2020 (the Writ). The Statement of Claim was amended on 21 December 2020. The first and second named first defendants are Christina Hillier and Robert Hillier in their capacities as trustees of the Christina and Robert Hillier Family Trust. With no disrespect intended to the parties I will refer to the first and second named first defendants as Christina and Robert respectively. Christina and Robert are married. Robert is an undischarged bankrupt.[1]
[1] Affidavit of Christina Hillier sworn 6 July 2021 (Hillier Affidavit) [3], [31].
On 11 September 2017, the plaintiff as lender and mortgagee entered into a loan agreement with Christina and Robert as trustees of the Christina and Robert Hillier Family Trust (the Trust),[2] pursuant to which the plaintiff advanced the sum of $1,500,000 to the Trust.[3] The loan was secured by a registered mortgage over a mortgaged property owned by the third and fourth defendants[4] and guaranteed by the second, third and fourth defendants (the Loan Agreement).[5]
[2] Amended Statement of Claim dated 21 December 2020 ('ASOC') [5].
[3] ASOC [7(a)].
[4] ASOC [4]-[5], [7(e)].
[5] ASOC [3].
On 19 February 2020, Christina was personally served with the Writ.[6]
[6] Affidavit of Gregory Henryk Uscinski sworn 20 February 2020.
No appearance was filed by Christina. On 6 May 2021, Master Sanderson entered judgment in default of appearance against Christina pursuant to RSC Order 13 rule 1 and granted leave to enter default judgment against Robert pursuant to section 58(3) of the Bankruptcy Act 1966 (Cth).
Christina and Robert were ordered to pay the plaintiff the sum of $1,987,896.28, being the amount outstanding under the Loan Agreement and mortgage including interest.
A copy of the judgment entered by Master Sanderson on 6 May 2021 was served on Christina on 19 May 2021.[7]
[7] Affidavit of Gregory Henryk Ocinski sworn 25 May 2021.
The action continues against and is defended by the third and fourth defendants.

Application to set aside Default Judgment

On 7 July 2021 by chamber summons supported by the affidavit of Christina Hillier sworn 6 July 2021 (the Hillier affidavit), Christina applied to set aside default judgment. That application is due to be heard on 6 October 2021.
It is apparent from the Hillier affidavit that Christina's defence to the action is she was not a trustee of the Trust, therefore should not have been sued in that capacity.[8] Further, Christina deposes that she did not sign the Loan Agreement as a party, but merely signed it as a witness to Robert's signature.[9]
[8] Hillier affidavit [26], [42]-[44].
[9] Hillier affidavit [11], [22].
As to her reasons for not entering an appearance, Christina deposes to a conversation she had with the plaintiff's solicitor, namely:[10]
[10] Hillier affidavit [10]-[15].
10.I think it was in the middle of May 2020. I explained to Ms Lai that at the time I had no money. I explained to her that I lived with my husband and children on a cattle station and principally we work for food and board.
11.I also told her that I had nothing to do with the Loan agreement, I told her I had not read it, I just witnessed Rob's signature. I told her I knew nothing about the Loan. She said but your signature is on it. I told her I just witnessed Rob's signature.
12.I offered to sign an Affidavit or a Statutory Declaration to that effect for her.
13.Ms Lai seemed very reasonable and understanding of my position.
14.At the end of the phone conversation with her she said she would get back to me.
15.Because she said that to me I never took any legal advice or did anything about the original Writ.
…
26.I cannot comprehend how the plaintiff has sued me pursuant to this Agreement when I am not a party to it and I am not now and never have been the Trustee of the Christina and Robert Hillier Family Trust.
…
Christina annexed the signed Loan Agreement and an undated and unsigned trust deed to the Hillier affidavit. The trust deed names the trustee of the Trust as Christina & Robert Hillier Pty Ltd, of which Christina is described as the sole director and secretary.
While this is not the forum to determine whether the judgment is likely to be set aside, it is necessary to identify the principles which apply to such an application, to determine if exceptional circumstances exist for the issue of a subpoena for the purposes of opposing that interlocutory application.
Order 13 rule 14 of the RSC provides that the court may set aside or vary default judgment 'on whatever terms it thinks just'.
Where the judgment is regularly entered, the 'most cogent' consideration is whether the defendants have a defence on the merits.[11] It is proper to consider the merits of any proposed defence, because defendants should only be denied the opportunity to proceed in the ordinary way, and after taking advantage of the usual interlocutory processes, if there is a high degree of certainty about what the outcome would be, should the matter go to trial.[12]
[11] Crayden v Ottaviano [2003] WASCA 20 [16], [53] (Templeman J, Murray J and Rolfe AJ). agreeing); Starrs v Retravision (WA) Ltd [2012] WASCA 67 [36] (Allanson J, Pullin and Murphy JJA agreeing).
[12] Starrs v Retravision (WA) Ltd [2012] WASCA 67 [51] (Allanson J, Pullin and Murphy JJA agreeing).
In order for it to be appropriate to set aside a default judgment, it must appear from the affidavit material before the court that the defendant's case is not inherently incredible and that, if their evidence were accepted at trial, they would have a real prospect of success.[13]
[13] TSW Analytical Pty Ltd v University of Western Australia [2017] WASCA 67, [46] (Buss P and Newnes JA).
In addition to the merits of the proposed defence, the authorities are to the effect that the following factors are relevant:
(i)the explanation given by the defendant for allowing judgment to be entered against the defendant;
(ii)the length of the delay between the judgment being entered and the application to set it aside, and the defendant's explanation for that delay;
(iii)the extent of any prejudice, in particular irreparable prejudice, that the plaintiff would suffer if the judgment is set aside.[14]

Application for leave to issue a subpoena

[14] Wildflower Electrical Refrigeration Service (WA) v Refrigid Pty Ltd [2014] WASC 382 [11] (Gething AM). See generally Palmer v Prince [1980] WAR 61, 62 (Jackson CJ, Virtue SPJ agreeing) 64 (Burt J); Vautier Holdings Pty Ltd v Kagioulis Trading Pty Ltd [2014] WASC 209 (Master Sanderson).

By letter dated 22 July 2021 the plaintiff brought an ex parte application for leave to issue a subpoena to the Proper Officer of the Commonwealth Bank of Australia ('the Bank') to produce:
1.  Copies of all bank statements between 27 July 2017 and 6 May 2021 in respect of the following bank account:
Account name: Christine & Robert Hillier Pty Ltd as trustee for Christina & Robert Hillier Family Trust
BSB number: 006-163
Account number: 1070-9731
(referred to as 'Bank Account').
2.  In respect of the Bank Account, copies of all documents evidencing all authorised signatories, persons authorised to deal with the account and internet banking account users (together referred to as 'Authorised Persons').
3.  Copies of all correspondence and documents between the Authorised Persons and the Commonwealth Bank of Australia in respect of the Bank Account between 27 July 2017 and 6 May 2021.
Pursuant to RSC Order 36B rule 2 an officer of the Court is empowered to issue a subpoena requiring the production of documents otherwise than at trial. Under RSC Order 36B rule 2 (2B)(b)(ii), the officer of the court empowered to issue a subpoena to produce documents in a proceeding in which a defence is required to be filed, must not do so unless the defence has been filed or the Court has given leave for the subpoena to be issued.
This is a proceeding in which a defence is required to be filed. The Court must not give leave unless satisfied there are exceptional circumstances.[15]
[15] RSC Order 36B rule 2(2D).
An application for leave under RSC Order 36B rule 2(2B)(b) may be made without giving notice to any other party.[16]

Exceptional circumstances

[16] RSC Order 36B rule 2(2C).

The issue on an application for leave to issue a subpoena is whether there are exceptional circumstances that justify the issue of the subpoena before the defence has been filed.[17]
[17] Song v South Beach Management Pty Ltd [2020] WASC 402, [16] (Allanson J).
The plaintiff relies on Sandy v Yindjibarndi Aboriginal Corp RNTBC.[18] In that case Le Miere J held:
The words 'exceptional circumstances' have their ordinary meaning. 'Exceptional' means 'out of the ordinary' or 'unusual', rather than 'unique'. The party requesting the issue of a subpoena should be able to demonstrate the precise issues in respect of which the documents are required. In general, when the applicant seeks the production of documents for the purposes of an interlocutory hearing, the applicant should be able to demonstrate that the documents are necessary to fairly prepare and present its case at the interlocutory hearing. [19]
[18] Sandy v Yindjibarndi Aboriginal Corp RNTBC [2019] WASC 322
[19] Sandy [4].
In Song[20] Allanson J said:
While Le Miere J referred to the documents being necessary for the applicant to fairly prepare and present its case, I do not understand that his Honour intended to state an exhaustive rule. Where the court is satisfied that there is a legitimate forensic purpose for a party to seek production of specified documents before the defence is filed, the question of whether there are circumstances which are out of the ordinary which justify the court exercising its discretion to grant leave. [21]
[20] Song v South Beach Management Pty Ltd [2020] WASC 402
[21] Song [19].
A legitimate forensic purpose for the issue of a subpoena for a particular document will be established if the document gives rise to a line of enquiry which is relevant to the issues before the trier of fact.[22]

Disposition

[22] Song citing Stanley v Layne Christensen Co [2004] WASCA 50 [9].

The documents sought on subpoena are said to be necessary to contradict statements made by Christina in the Hillier affidavit. The plaintiff submits it is 'unusual' that Christina is now able to and seeks to participate in these proceedings having received a Bankruptcy Notice[23] and given she deposes that she 'had no money' and 'lived on a cattle station and principally worked for food and board.'[24]
[23] Plaintiff's Outline of Submissions filed 6 August 2021.
[24] Hillier affidavit [10].
The submission appears to proceed on the basis that the inference to be drawn from engaging lawyers is that she had or has access to funds. Without knowledge of the retainer between Christina and her lawyers I do not consider that is necessarily an inference that should be drawn. I do not consider there to be anything unusual or out of the ordinary about a defendant, impecunious or otherwise, seeking to instruct lawyers to set aside a judgment of $1,987,896.28 entered against her.
The submission also assumes that the documents produced under subpoena might refute Christina's claim that she had nothing to do with the Trust or her assertion that she had no money. Whether Christina had access to the bank account in which the loan monies were deposited does not establish that she is a party to the Loan Agreement or the trustee of the Trust in her personal capacity, which is the capacity in which she is sued. The fact that the subpoenaed documents might establish Christina had access to the loan funds is not a sufficiently exceptional circumstance that warrants leave to issue a subpoena.
The plaintiff also relies on an alleged inconsistency between Christina's assertion that 'anything to do with the Trust and the Loan was done by my husband'[25] and the following:[26]
(a)     from the date of its registration until its deregistration, Christina was the sole director, secretary, and shareholder of the corporate trustee, Christina & Robert Hillier Pty Ltd;
(b)     the Trust Deed names Christina as the only 'Appointer' of the Trust;
(c)     Christina had full control of the bank account(s);
(d)     Christina had failed to disclose who is the current trustee of the Trust.
[25] Hillier affidavit [31].
[26] Plaintiff's Outline of Submissions filed 6 August 2021 [14]-[15].
The affidavit of Ms Frances Lai affirmed on 22 July 2021 (the Lai Affidavit) states the corporate trustee of the Trust was registered on 27 July 2017 and deregistered on 15 December 2019. During that time Christina was the sole director, secretary and shareholder of the company.[27]
[27] Lai affidavit [5].
Pursuant to the Loan Agreement, the loan amount was advanced to the Commonwealth Bank Account named the Christina & Robert Hillier Pty Ltd as trustee for Christina & Robert Hillier Family Trust.[28]
[28] Lai affidavit [7].
The plaintiff submits the subpoena is necessary to show who is the authorised signatory to the Bank Account and who was appointed trustee upon the trustee company being deregistered. It is submitted that as the appointer of the Trust, Christina would have had to appoint a new trustee thereby providing evidence inconsistent with her claim that she had nothing to do with the Trust.
However, even if Christina did appoint a new trustee and even if she appointed herself, there is no evidence before me that the Bank, as part of its standard operating practice, would require the account name or signatories to be updated if a new trustee was appointed or that its documents would reveal who is the new trustee.
It appears to be accepted that the Trustee at the time the Loan Agreement was entered into was the corporate trustee.[29] It is unclear how evidence of who was the authorised signatory to the Bank Account into which loan money was deposited would assist in establishing Christina's liability in her personal capacity.
[29] Lai affidavit [5]; ASOC [5].
At the hearing of the application, counsel for the plaintiff relied on s 197 of the Corporations Act 2001 (Cth), which provides that a director of a corporate trustee when it incurs a liability while acting as a trustee is liable to discharge the whole or part of the liability in prescribed circumstances. However, default judgment was not entered against Christina in her capacity as director of the corporate trustee and s 197 of the Corporations Act is not pleaded as the basis of Christina's liability.
The evidence provided in support of the fact that Christina had full control of the Bank Account is a series screenshots of text messages purportedly from Robert to the plaintiff making various assertions about Christina's involvement in making repayments from an unnamed bank and an unidentified account(s).[30] There is no affidavit from Robert. The screenshots are not evidence against Christina. Again, even if the documents produced under subpoena show Christina had access to the Bank Account, that fact is not out of the ordinary or unusual as to make inherently incredible Christina's defence that she did not sign the Loan Agreement as a party or as trustee. Leave to issue the subpoena therefore should not be granted on that basis.
[30] Lai affidavit at FL-3.
Turning to the plaintiff's next submission, Christina's failure to depose who is the current trustee of the Trust is, of itself, a basis upon which leave to issue a subpoena should be granted. There is no evidence before me to establish why the documents to be produced under subpoena would provide this information.
It is not an exceptional circumstance that the documents sought by the subpoena may disclose matters relevant to the issues in the interlocutory hearing. Something more is required.[31] Whether Christina was a person authorised to make transactions or had access to the Bank Account in which the loan monies were deposited does not answer the question of whether she was a party to the Loan Agreement and in what capacity.
[31] Sandy [11].
I am not satisfied there are exceptional circumstances to warrant the grant of leave to issue the subpoena prior to the filing of any defence in the action for the purpose of opposing the application to set aside default judgment.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
CC
Secretary
24 AUGUST 2021