Grimson v O'Donnell
[1999] FCA 245
•19 MARCH 1999
FEDERAL COURT OF AUSTRALIA
Grimson v O’Donnell [1999] FCA 245
JUDGMENTS AND ORDERS – action to set aside judgment – motion to have action permanently stayed or wholly dismissed on the grounds that it discloses no reasonable cause of action, and is frivolous and vexatious and an abuse of the process of the Court – principles which govern entitlement to an order to set aside a judgment on the basis of fraud
PRACTICE AND PROCEDURE – action to set aside judgment - fraud
General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125, cited
Wentworth v Rogers (No. 5) (1986) 6 NSWLR 534, followed
Monroe Schneider Associates (Inc) v No. 1 Raberem Pty Ltd (No. 2) (1992) 37 FCR 234, followed
McDonald v McDonald (1965) 113 CLR 529, cited
Banque Commerciale SA (In Liquidation) v Akhil Holdings Ltd (1990) 169 CLR 279, citedMARTIN HAROLD GRIMSON, RICKY MARTIN GRIMSON v GARRY FRANCIS O’DONNELL, EVENLONG PTY. LIMITED, ENIMA PTY. LIMITED and LEONARD CECIL MARJASON
No. NG 979 of 1998BRANSON J
19 MARCH 1999SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG 979 OF 1998
BETWEEN:
MARTIN HAROLD GRIMSON
First ApplicantRICKY MARTIN GRIMSON
Second ApplicantAND:
GARRY FRANCIS O'DONNELL
First RespondentEVENLONG PTY LIMITED
(ACN 051-752-277)
Second RespondentENIMA PTY LIMITED
(ACN: 008-619-298)
Third RespondentLEONARD CECIL MARJASON
Fourth RespondentJUDGE:
BRANSON J
DATE OF ORDER:
19 MARCH 1999
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1. The proceeding be dismissed.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG 979 OF 1998
BETWEEN:
MARTIN HAROLD GRIMSON
First ApplicantRICKY MARTIN GRIMSON
Second ApplicantAND:
GARRY FRANCIS O'DONNELL
First RespondentEVENLONG PTY LIMITED
(ACN 051-752-277)
Second RespondentENIMA PTY LIMITED
(ACN: 008-619-298)
Third RespondentLEONARD CECIL MARJASON
Fourth Respondent
JUDGE:
BRANSON J
DATE:
19 MARCH 1999
PLACE:
SYDNEY
REASONS FOR JUDGMENT
Introduction
The respondents have moved to have this proceeding permanently stayed or alternatively wholly dismissed on the grounds that it discloses no reasonable cause of action and is frivolous and vexatious and an abuse of the process of the Court. The relief sought by the applicants in the proceeding is an order setting aside the judgment entered in Federal Court proceeding number NG 737 of 1994 (“the judgment”) and damages consequent upon the entry of that judgment.
Federal Court proceeding number NG 737 of 1994 (“the earlier proceeding”) was heard by Lindgren J in 1996. The parties to the earlier proceedings were, as applicants, the present applicants, and as respondents, the first, second and third respondents in the present proceeding. His Honour in his reasons for judgment delivered on 8 November 1996 described the claim in the earlier proceeding as one arising out of the purchase by the applicants in 1991 from Evenlong Pty Limited (“Evenlong”) of the business of the Royal Hotel, Bungendore (“the Hotel”) and the entering into by them of an associated lease from Evenlong of the Hotel premises. The applicants in the earlier proceeding principally claimed relief under the Trade Practices Act1974 (Cth) (“the TP Act”) for allegedly misleading and deceptive conduct constituted by misrepresentations concerning the value of the Hotel and the respondents’ knowledge of matters relevant to the value of the Hotel.
The principal basis upon which the applicants now claim to be entitled to have the judgment set aside is that-
“[t]he First Respondent and/or the Second and Third Respondents and/or the Second and Third Respondents by their … agent the First Respondent, and the Fourth Respondent did conspire to mislead the Court”
in the earlier proceeding by reaching an agreement, in effect, that the fourth respondent would give false evidence in support of a valuation of the Hotel. The applicants also place reliance on allegations that certain evidence given before Lindgren J was false or misleading.
The applicants’ proceeding may only be permanently stayed or wholly dismissed if it is manifestly without merit (General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 138). In considering whether the applicants’ case has been shown to be manifestly without merit I bear in mind that, although represented before me by senior counsel, the applicants’ pleadings bear endorsements which indicate that they were prepared by the applicants themselves and not by a legal practitioner. Care must therefore be taken to ensure that the unfamiliarity of the applicants with the rules of pleadings and other legal technicalities does not disadvantage them (Wentworth v Rogers (No. 5) (1986) 6 NSWLR 534 per Kirby P at 536).
However, in considering the applicants’ case, consideration must be given to the public interest in the finality of litigation. Parties are not ordinarily entitled to relitigate matters the subject of earlier proceedings giving rise to judgment (Wentworth v Rogers at 538 Monroe Schneider Associates (Inc) v No. 1 Raberem Pty Ltd (No. 2) (1992) 37 FCR 234). They may do so, where the appellate processes in the earlier proceeding have been exhausted, only in strictly limited circumstances. The better view appears to be that an action lies to set aside the earlier decision in such circumstances only where it can be shown that the earlier judgment was tainted by fraud (Monroe Schneider v No. 1 Raberem Pty Ltd at 238-240).
In the present proceedings the applicants do claim that the judgment of Lindgren J is tainted by fraud. They allege by their Amended Statement of Claim that the respondents, or some of them, entered into a conspiracy to mislead Lindgren J. This is an allegation of fraud. To establish an entitlement to an order setting aside the judgment of Lindgren J on this basis the applicants must show:
(a)that this proceeding is based on newly discovered evidence which could not have been discovered by reasonable diligence before the judgment was delivered;
(b)that the evidence is so material that its production at trial would probably have affected the outcome; and
(c)as the fraud charged consists of perjury, that the evidence is so strong that it would reasonably be expected to be decisive at a rehearing, and if unanswered must have that result.
It will not be sufficient to establish merely that a witness was possibly guilty of perjury; a deliberate plan to defraud is necessary (see Monroe Schneider v No. 1 Raberem Pty Ltd at 241-2).
The applicants’ Amended Statement of Claim in the proceeding heard by Lindgren J pleaded two sets of representations said to constitute misleading and deceptive conduct upon which the applicants allegedly relied in purchasing the business of the Hotel and entering into the lease of the Hotel premises. The Amended Statement of Claim relevantly pleaded as follows:
“8.In or about July, 1991, the First Applicant entered negotiations with the First and Third Respondents with a view to obtaining a lease of and purchasing the business operated at premises known as the Royal Hotel in Bungendore in the State of New South Wales (“the Royal Hotel”). The negotiations were conducted with the First Respondent.
9.In July, 1991, during the negotiations referred to in paragraph 8, the First and Third Respondents represented orally and by their conduct to the First Applicant:
(a)The First Respondent had no prior connection with or prior knowledge of the business of “the Royal Hotel”;
(b)The First Respondent had no prior connection with or prior knowledge of the then directors of Sedore Pty. Limited, the vendor of “the Royal Hotel”;
(c)The Third Respondent had no prior knowledge of the business of “the Royal Hotel”;
(d)The Third Respondent had no prior knowledge of the then Directors of Sedore Pty. Limited, the vendor of “the Royal Hotel”;
(e)A valuation of the Royal Hotel by L.C. Marjason & Associates, dated 8 July, 1991 (“the Marjason valuation”), was an accurate document in all respects;
(f)The Marjason valuation was obtained by the First and Third Respondents;
(g)The Royal Hotel would be a highly profitable business.
10.In or about June or July, 1991, the First Respondent by himself or with either or both of the Second and Third Respondents supplied or caused to be supplied to Mr L.C. Marjason, the author of the Marjason valuation, information to be used in the preparation of the Marjason valuation. Information supplied to Mr Marjason for the preparation of the Marjason valuation was false.
PARTICULARS
(a)Revenue – Gross profit for amusements was $372.00 per week;
(b)The public telephone takings were $68.00 per week;
(c)Total weekly turnover for the Royal Hotel of $11,993.00;
(d)Total liquor purchases for the Royal Hotel from 1 July, 1989 to 30 June, 1990 was $140,700.00;
(e)The quantity of liquor purchased by the Royal Hotel as set out in the Marjason valuation was misstated;
(f)Takings of Draw Poker Machines was $1,470.00 per week.
11.In August, 1991, the First Applicant on behalf of himself and the Second Applicant, entered into negotiations with the Second Respondent for the purpose of obtaining a lease of and purchasing the business of the Royal Hotel.
12.During the negotiations referred to in paragraph 10 and then those referred to in paragraph 12, the First and Second Respondents orally and by their behaviour, in addition to the matters particularised in paragraph 10, represented to the First Applicant:
(a)The Royal Hotel was a very profitable business;
(b)The Royal Hotel was a successful business;
(c)The purchase price of the business as a going concern at the Royal Hotel of $200,000.00 was a true indication of the profitability of the business as a going concern;
(d)The purchase price of $200,000.00 of the business as a going concern at the Royal Hotel would produce an annual return in accordance with industry standards;
(e)The trading figures for the years ending 30 June, 1989, 1990 and 1991 were as represented in financial statements supplied to the Applicants;
(f)The Marjason Valuation was an accurate document in all respects;
(g)The quantity of alcoholic drinks sold by the Royal Hotel as represented by Liquor Licensing fees paid by the Royal Hotel was understated by between $20,000.00 to $30,000.00, as at July, 1991;
(h)The number of customers of the Royal Hotel would substantially increase in the immediate future as the population of Bungendore was increasing substantially as a result of a new subdivision of land in the town;
(i)The trading situation of the Royal Hotel was adversely affected by the incompetent management of the Royal Hotel;
(j)The First Respondent was a person who by himself or by his companies, successfully leased, operated and managed licensed hotels and/or other licensed premises;
(k)The Second Respondent had no prior connection with or knowledge of the then directors of Sedore Pty. Limited.
The claim in the present proceeding against the third respondent (“Enima”) can, in my view, be shortly dealt with. Lindgren J in his reasons for judgment in the earlier proceeding found that Enima had not been involved in the purchase by the applicants in 1991 from Evenlong of the Hotel or the associated lease. He concluded:
“For the foregoing reasons, if for no others, the application must be dismissed as against Enima.”
Nothing contained in the pleadings in this proceeding suggests that the alleged conspiracy or the allegedly false and misleading evidence could have influenced his Honour’s above finding concerning Enima. The proceeding must be struck out so far as it seeks relief against Enima.
I turn to consider the applicants’ case against the first and second respondents. To the extent that the applicants seek to set aside the earlier judgment of the Court on the basis that the respondents, or some of them, as the applicants allege, gave false or misleading evidence before Lindgren J, their claim is bound to fail. As Kirby P explained in Wentworth v Rogers (No. 5) at 539:
“… although perjury by the successful party or a witness or witnesses may, if later discovered, warrant the setting aside of a judgment on the ground that it was procured by fraud, and although there may be exceptional cases where such proof of perjury could suffice, without more, to warrant relief of this kind, the mere allegation, or even the proof, of perjury will not normally be sufficient to attract such drastic and exceptional relief as the setting aside of a judgment: Cabassi v Vila (at 147, 148); Baker v Wadsworth (1898) 67 LJQB 301; Everett v Ribbands (at 145, 146). The other requirements must be fulfilled. In hard fought litigation, it is not at all uncommon for there to be a conflict of testimony which has to be resolved by a judge or jury. In many cases of contradictory evidence, one party must be mistaken. He or she may even be deceiving the court. The unsuccessful party in the litigation will often consider that failure in the litigation has been procured by false evidence on the part of the opponent and the witnesses called by the opponent. If every case in which such an opinion was held gave rise to proceedings of this kind, the courts would be even more burdened with the review of first instance decisions than they are. For this reason, and in defence of finality of judgments, a more stringent requirement than alleged perjury alone is required.”
(See also Monroe Schneider v No. 1 Raberem Pty Ltd at 242 and McDonald v McDonald (1965) 113 CLR 529 partic. per Windeyer J at 544). Even if I am wrong in this regard, the applicants’ case, to the extent that it is based on allegations of the giving of false and misleading evidence before Lindgren J, must fail for the reasons given below in respect of the allegation of perjury.
I turn to consider the allegation that the respondents, or some of them, conspired to mislead Lindgren J. In particular it is necessary to consider the materiality of the allegation in the sense of considering whether the alleged conspiracy can be shown to have been likely to have affected his Honour’s judgment.
The representations upon which the applicants relevantly placed reliance before Lindgren J are identified above.
As to the representations pleaded in paragraph 9, of the Amended Statement of Claim in the earlier proceeding, his Honour found, with one exception, that the evidence before him did not establish the making of the representation. The one exception concerned an alleged representation that the Hotel “would be a highly profitable business”. His Honour found that if the first respondent did make statements concerning the profitability of the Hotel business they were in the nature of “puffery” and “all but devoid of meaning”. His Honour further found that, if he had wrongly characterised the statements, they were statements of opinion actually held by the first respondent and it had not been shown that he lacked reasonable grounds for holding the opinion.
As to the representations pleaded in paragraph 12, Lindgren J found that the first two were governed by what he had had already held concerning the representation that the Hotel “would be a highly profitable business”. His Honour found no evidence to support the allegation that the next two pleaded representations were made.
As to the fifth alleged representation Lindgren J found:
“… Grimson gave evidence that the Commonwealth Development Bank asked him to obtain three years’ figures for the Hotel, that he told O’Donnell about this request and that O’Donnell replied in a way which, I have previously said, made it clear that he (O’Donnell) would have to obtain the figures from Sedore’s representatives. Thus, the balance sheets and profit and loss accounts for the Hotel for the years ended 30 June 1989, 30 June 1990 and 30 June 1991 which O’Donnell couriered to Grimson on or about 19 September 1991, were known to Grimson to be figures which O’Donnell had obtained from others and was passing on, as the following passage from the cross examination of Grimson shows:
Your evidence is therefore, you told Mr O’Donnell you needed the financial statements of Sedore for the past three years, and you understood Mr O’Donnell would ask Sedore to provide them to him so he could pass them on to you, is that right?--- That’s right.”
O’Donnell did not participate in the preparation of the figures and gave Grimson no reason to think that he had done so. Grimson did not give evidence that he understood that O’Donnell was warranting the correctness of the figures.”
His Honour’s findings concerning the fifth alleged representation said to have been made in August 1991 also reached to the sixth alleged representation.
As to the seventh alleged August 1991 representation, his Honour found that the evidence did not support its being made but that, in any event, it had not been shown to be false. His Honour found the eighth alleged August 1991 representation to be a statement of opinion giving rise to no cause of action under s 52 of the TP Act. His Honour found that the evidence did not establish the making of the remainder of the alleged August 1991 representation.
No other representations were alleged in the earlier proceeding to have induced the applicants to purchase the business of the Hotel and enter into the lease. It is thus the case that, even if it be assumed that the respondents entered into a conspiracy pursuant to which the fourth respondent gave false or misleading evidence before Lindgren J in support of a valuation of the Hotel, no causal link between that conspiracy and the dismissal by Lindgren J of the application in the earlier proceeding has been shown. That is, the alleged conspiracy has not been shown to have been likely to have affected his Honour’s judgment.
It is appropriate to note that the allegations made against the respondents by the Amended Statement of Claim in the proceeding before me are serious in nature involving fraud and conspiracy. Such allegations should not be made without sufficient cause, and if made, they are required to be pleaded precisely and with proper particulars. The Amended Statement of Claim does not properly particularise the allegations of fraud as required by O 12 r 2 of the Federal Court Rules. Such allegations ought to be made only where they can be properly particularised (Banque Commerciale SA (In Liquidation) v Akhil Holdings Ltd (1990) 169 CLR 279 partic. per Mason CJ and Gaudron J at 285). However, as I am otherwise satisfied that the proceeding should be dismissed, it is not necessary for me to give consideration to whether the Amended Statement of Claim, or certain paragraphs of it, ought in any event to have been struck out on the basis of failure to comply with O 12 r 2 of the Federal Court Rules.
Since argument was heard on the respondents’ motion, my Associate has received a letter from Mr Martin Grimson requesting that a decision not be delivered on the motion until certain matters concerning the “1991 trading figures of Sedore P/L” have been examined by “the concerned parties”. I do not consider it appropriate to accede to this request. Nothing currently before me suggests that an examination by any person of the 1991 trading figures of Sedore Pty Limited, the company from which Evenlong purchased the Hotel, could lead to a different result on the present motion. No application to amend the Amended Statement of Claim in this matter has been made.
Since preparing the above reasons, my Associate has received a further letter from Mr Grimson. I am not satisfied that the letter discloses any matter which suggests those reasons ought to be disturbed.
The present proceeding must be dismissed.
I certify that the preceding twenty-two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Branson.
Associate:
Dated: 19 March 1999
Counsel for the Applicant:
Mr S.C. Rothman SC
Counsel for the Respondent:
Mr A. Leopold
Solicitor for the Respondent:
Clayton Utz
Date of Hearing:
16 December 1998
Date of Judgment:
19 March 1999
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