Henke & Ors v Federal Court of Aust

[2002] HCATrans 144

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Melbourne  No M108 of 2001

B e t w e e n -

IAN SIDNEY HENKE, LANCE STEWART MILLER,
ROBYN DIANE CONINGHAM and
FRANCIS JOHN CONINGHAM

Plaintiffs

and

THE FEDERAL COURT OF AUSTRALIA as THE COMMONWEALTH

First Defendant

FINLAYSONS (A firm)

Second Defendant

BRUCE JAMES CARTER

Third Defendant

Application to strike out

GAUDRON J

(In Chambers)

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON MONDAY, 22 APRIL 2002, AT 11.29 AM

Copyright in the High Court of Australia

__________________

MR D.C. FITZGIBBON:   I appear with my learned friend, MR J. PRYS‑BUTWILOWICZ, for the plaintiffs.  (instructed by Waters Timms)

MR P.V. SLATTERY:   I appear with my learned friend, MR M.J. MILLER, for the applicants to the application, the defendants in the proceeding, being Finlaysons and Bruce James Carter.  (instructed by Finlaysons)

HER HONOUR:   I should say that there is a certificate in this matter from the Deputy Registrar who informs the Court that she has been informed by the first respondent that the Federal Court will abide by the decision of the Court.

Now, Mr Fitzgibbon, you seek the same indulgence?

MR FITZGIBBON:   I seek the same type of application, your Honour, and the same orders.

HER HONOUR:   And you make the same submissions?

MR SLATTERY:   Yes, your Honour, in relation to any application that may be made in relation to repleading.  There is another point here, your Honour.  Your Honour would have noticed that Finlaysons is the second defendant.  No assertion whatsoever has ever been made against Finlaysons in any proceedings.  It is just almost beyond understanding why a firm of solicitors would be a party to these proceedings.

HER HONOUR:   What do you say about ‑ ‑ ‑

MR FITZGIBBON:   The only matters are the matters I raised in front of your Honour this morning – the fact, of course, that the affidavit in this matter was prepared apparently by Finlaysons and with the knowledge – they were, of course, the parties who prepared the original agreement.

HER HONOUR:   Yes, but one does not ordinarily sue the solicitors, does one?

MR FITZGIBBON:   Yes.  It is a matter, your Honour, I would need to consider at considerable length before I took it beyond – to replead that as part of the action.  As I say, I would simply be in the position I would like to reserve my position.

MR SLATTERY:   Your Honour, that is not an answer.  It is just not an answer.

HER HONOUR:   What is asserted against Finlaysons?

MR SLATTERY:   There is nothing, your Honour, that we can find on the face of the statement of claim that involves Finlaysons.

HER HONOUR:   Before we go to this, am I right in thinking that central to this question is an attempt to agitate the validity of the winding‑up order?

MR FITZGIBBON:   No.

HER HONOUR:   No.

MR FITZGIBBON:   No, it is the actions taken, we say, against my clients.

MR SLATTERY:   Your Honour has struck onto a central point.  This is an application in this statement of claim to reagitate the question of the propriety of issuing summonses under section 596A and 596B against officers and former officers of ITR.  That matter has been canvassed and decided upon by Justice Gray in the Federal Court in V1166.  It has been reconsidered by Justice Goldberg in an action only last week.  The propriety of those summonses has been tested and has been upheld.  No appeal has been filed in relation to them.  There is in fact no work – there is no work for this proceeding to do at all.

HER HONOUR:   Yes.  Well, it does look to me to be in a slightly different position.  Mr Fitzgibbon, this action looks to be in an entirely different position from the one that you might replead in M71.

MR FITZGIBBON:   Only to this extent, your Honour:  my friend has raised the action in front ‑ ‑ ‑

HER HONOUR:   And if it is not completely different, then it should be, should it not, if it is to maintain a separate cause of action?

MR FITZGIBBON:   No, your Honour, not if as a result of the disclosure of the secret agreement, then it can be said – and that was something, of course, that was not in front of Justice Gray, and my friend knows that.

HER HONOUR:   It does not matter whether it was front of Justice Gray or not, does it?

MR FITZGIBBON:   Well, it does to this extent, your Honour, because as a result of the discovery of this document, of course, the actions we say are the actions of all the parties as against directors ‑ ‑ ‑

HER HONOUR:   What separate cause of action do you assert in this as distinct from what you have told me about M71?  You see, I am looking at this:

The Plaintiffs seek the full disclosure of financial arrangements –

Now, I mean, that is not an order you seek by way of final relief, I should not have thought.

MR FITZGIBBON:   No, it is not.

HER HONOUR:   At best, that is an application for discovery which depends on there being a proper action.

The Plaintiffs seek a permanent stay of proceedings S3005 –

what you have to do is demonstrate – I mean, one could not give a permanent stay in any such sense but presumably under 75(v) if the proceedings in the Federal Court are without jurisdiction, one could grant prohibition.  But without jurisdiction is an entirely different proposition from what you are asserting about a conspiracy between the parties, I would have thought.

MR FITZGIBBON:   Yes.

HER HONOUR:   Then you say you:

request orders to remove . . . secret affidavits filed –

that is not anything we can deal.  It has either jurisdiction or it has not jurisdiction.  You seek to have them joined with M71, but to what effect?  If you can replead 71, you can replead 71.  You have Mr Carter in the 71 proceedings. 

MR FITZGIBBON:   That is right.

HER HONOUR:   You want to join ASIC, you say.  There is just not a thing in here that brings Finlaysons into the game; just not a thing in this document.  Mr Fitzgibbon, the more I look at this, I am thinking, given that you have M71 stood over, leave to make an application to amend, you do not need ‑ ‑ ‑

MR FITZGIBBON:   Yes, I know what your Honour is saying.

HER HONOUR:   I will tell you what I will do.  I will take a brief adjournment.  But it just seems to me you do not need anything in M108.  I will take a brief adjournment while you consider your position in respect of M108.

MR FITZGIBBON:   Thank you, your Honour.

AT 11.38 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.46 AM:

MR FITZGIBBON:   Your Honour, I have taken instructions on the matter, and thank you for your helpful comments.  I am instructed to withdraw 108.  If there are matters within that, they can necessarily be repleaded within 71.  The only concern I have is – I know your Honour has given seven days liberty to the other side.  I would not want to be propelled into this at the end of a very short period. 

HER HONOUR:   Yes, I understand that.

MR FITZGIBBON:   It would be of grave concern because I believe ‑ ‑ ‑

HER HONOUR:   Yes, I understand that, but what I am thinking is:  let us assume three months go by and you have done nothing.

MR FITZGIBBON:   I agree with that.

HER HONOUR:   Then they should be able to ‑ ‑ ‑

MR FITZGIBBON:   That would be the only concern I would have and I do not wish to be heard on the issue of costs.

HER HONOUR:   No.  Well, in that case in this one I give you leave to withdraw on terms that you pay the respondents’ costs.  You want to ask for indemnity costs?

MR SLATTERY:   I certainly do, your Honour, yes.

HER HONOUR:   Yes.  Well, I will hear you on that.  That is M108?

MR SLATTERY:   Yes, your Honour.  Your Honour, I have already made some submissions in relation to the firm of Finlaysons and I can leave that on the basis that no allegation is made at all against Finlaysons and there was no reason to joint them to the proceedings.  We would say that, ipso facto, there is a basis for indemnity costs in relation to that firm.

The second is that having regard to the content of the statement of claim, the orders that were sought – and can I take your Honour to our submissions.  Your Honour will need for the purposes of our application for indemnity costs to understand our submissions.  As we were able to identify it, that it is alleged – if I can take your Honour to paragraph 11.  Does your Honour have our submissions?

HER HONOUR:   Yes, I have your submissions, yes.

MR SLATTERY:   The two issues are, first of all, as we describe in paragraphs 11 and following, that the entire proceedings in S3005 of 2001 before the Federal Court constitute a contempt of the High Court in relation to M71.  Your Honour has already identified M71 as an action involving the taxation officers and the liquidator.  S3005 involve the liquidator.  It involves none of the taxation officers.  It involves applications by the liquidator in relation to seeking orders from the court for the preservation and seizure of assets and other ancillary orders.  So that there has never been a connection between S3005 of 2001 in the Federal Court and action M71, as we were able to understand it. 

Now, your Honour, we could only act upon what we saw in the face of M71 in any event.  So, first of all, there is no connection.  It also suggests that 3005 was procured by an application which was suggested to have been false.  Your Honour, first of all, S3005 relates to the orders that were sought, first of all, in concerning the summonses issued under 596A and 596B of the Corporations Act.  Those orders were made after the summons and application were issued in the normal course under section 596C.  That summons is sealed and held by the Court.  That is the usual process under the Corporations Act where a liquidator seeks an examination.  In other words, that affidavit has never been seen.  It follows, as a matter of simple logic, it is impossible to say that that affidavit contains information known to be false because if you have never seen it, you cannot say so, and, of course, that is denied by Mr Carter in paragraph 8 of his affidavit of 30 January which we read

The second point in relation to that is that Justice Gray considered that point in the V1166 action.  V1166 was an application on appeal taken by the respondents to the orders seeking a review of the decision to issue the summonses.  His Honour made an order for the reissue of the summonses and dismissed the review application.  His Honour said, “I have examined the affidavit.  I can find no falsity whatsoever.”  We would say, therefore, in those two respects, first of all, it is impossible to say a foundation of evidence absent and the second thing is we say under the principles enunciated by this Court in Rogers v The Queen, particularly – and you see in paragraph 14.4 the comments made by Justices Deane and Gaudron at page 273.  What is attempting to be done here is to relitigate those issues which have been decided upon by another court, opening up the possibility of conflicting decisions.

The second ground appears to be that there is an interference in action M31 and M100.  As I have already told your Honour, M31 was dismissed by Justice Hayne.  M100 was the application for leave to appeal against that decision.  That leave application was refused.

It is also alleged that Mr Carter acted ‑ in paragraph 12 of the statement of claim, Mr Carter acted ‑ on the instructions, he acted as liquidator on instructions of Commonwealth officers.  That was also considered by Justice Gray in V1166 and his Honour found that, in fact, there was no ulterior purpose – those issues were raised on the question of ulterior purpose for the prosecution of the application for the examinations.  His Honour found no ulterior purpose; more importantly, found no predominant ulterior purpose which may have given him grounds to interfere with those orders.  Again, the issue has been considered.  It has been dismissed.  We would say Rogers v The Queen principles apply.

The third basis appears to be section 545.  That is the provision in relation to the question of the reports to be filed by the liquidator and in these circumstances where the liquidator has shown a return of nil assets.  Again, your Honour, the matter was considered by Justice Gray and was dismissed on the basis that there was nothing in the point.  That was considered again by Justice Goldberg last week.  He, also, for the same reasons and, particularly on the basis of issue estoppel, dismissed the application.

Your Honour, this application is worse than M71.  There is nothing in it and there is certainly nothing in it that relates to Finlaysons.  It is almost the definition of “abuse of process” and, as we say commencing at paragraph 31 of our submissions following, it is in circumstances where it is impossible for these plaintiffs and their advisers not to have known all of the issues that I have just raised before your Honour in circumstances where they have been responsible over a series of about two years for taking, time and time again, proceedings, all of which have been found to be an abuse of process.

Your Honour, our submission ultimately is that this proceeding could never have succeeded, on any view, and ought to be visited with indemnity costs.

HER HONOUR:   Yes, thank you.  Yes.

MR FITZGIBBON:   Your Honour, I think it is important to point out again ‑ and my friend knows this – that, of course, what was in front of Justice Gray certainly did not include the secret agreement – absolutely did not, according to my instructions.  As I say, it only came into the light of day literally last week.  That, of course, applies to the actions that my friend refers to in saying that it has taken, as I say, over 12 months when at all times we have said that, in fact, there has been this secret agreement in existence.  So, I would resist, to that extent, your Honour, the question of costs.  Costs, yes; indemnity costs, no.

HER HONOUR:   Nothing really to reply to?

MR SLATTERY:   Nothing to reply to, no, your Honour.

HER HONOUR:   I am not minded to grant an order for indemnity costs in this matter.  There is some possibility that some of the matters raised in connection with it might be repleaded in M71. 

You sought leave to discontinue but, I think, really, the appropriate order is that the proceedings be dismissed with costs.

MR FITZGIBBON:   Yes, yes.  I think that is – I agree with that, your Honour.

HER HONOUR:   Thank you.  Well, M108 will be dismissed with costs.

I dare say we will ‑ ‑ ‑

MR FITZGIBBON:   ‑ ‑ ‑ meet again. 

HER HONOUR:   Yes, thank you.  I should certify for the attendance of counsel in relation to M108 today.  So, it will be the costs of the action and the costs of the notice of motion.

AT 11.57 AM THE MATTER WAS CONCLUDED