Hera Project Pty Ltd (ACN 163 685 041) v Gino Andrew Bisognin and Leah Joan Bisognin
[2018] VSCA 170
•27 June 2018
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2016 0117
| HERA PROJECT PTY LTD (ACN 163 685 041) | Applicant |
| v | |
| GINO ANDREW BISOGNIN and LEAH JOAN BISOGNIN | Respondents |
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| JUDGES: | FERGUSON CJ, SANTAMARIA JA and RIORDAN AJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 27 June 2018 |
| DATE OF JUDGMENT: | 27 June 2018 |
| MEDIUM NEUTRAL CITATION: | [2018] VSCA 170 |
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APPEALS – Procedure – Application to adduce fresh evidence – Where allegation that judgment of trial judge and by Court of Appeal procured by fraud – Where applicant seeks to overturn orders as to costs – Application dismissed.
JUDGMENTS – Setting aside for fraud – Nature of proceeding to set aside judgment on ground of fraud – Whether appropriate for Court of Appeal to determine issue of fraud – Clone Pty Ltd v Players Pty Ltd (in liq) (2018) 353 ALR 24 applied.
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| APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr N Pane QC | Russell Kennedy Lawyers |
| For the Respondent | Mr A Fronis | A Ace Solicitors |
FERGUSON CJ
SANTAMARIA JA
RIORDAN AJA:
Introduction
At issue in this application is whether this Court should receive fresh evidence and, on the strength of that evidence, set aside a costs order made by the primary judge and by this Court on the ground that the judgment below and the judgment of this Court were procured by fraud.
On 27 June 2018, this Court made orders that the application be dismissed and that the applicant, Hera Project Pty Ltd (‘Hera’), pay the costs of the respondents, Gino Andrew Bisognin and Leah Joan Bisognin. At the time of making those orders, we indicated that we would provide reasons in due course. These are our reasons.
The factual background to this proceeding is somewhat involved and has been set out elsewhere in comprehensive form.[1] For the purposes of the present application, it is necessary only to summarise that background in so far as it is relevant to the present application.
[1]Bisognin v Hera Project Pty Ltd [2018] VSCA 93.
Summary of factual background
The Bisognins are the registered proprietors of rural land in Cranbourne. The southern portion of that land was originally a lot on an unregistered plan of subdivision (‘the land’). In March 2015, the Bisognins entered into a contract for the sale of the land to Hera for $3.6 million (‘the 2015 contract’).
In July 2015, unbeknown to Hera, the Bisognins entered into a contract for the sale of the land to CMJ Property Group Pty Ltd (‘CMJ’) for $7.1 million (‘the CMJ contract’). The CMJ contract was to become legally binding on the condition that the Bisognins terminated the 2015 contract.[2] The existence of the CMJ contract was not disclosed until 30 March 2017.
[2]By that stage, two proceedings between the Bisognins and Hera were extant, and judgments and rulings on various issues had been delivered by different judges both in the Trial Division and in the Court of Appeal in both proceedings. These proceedings, and the circumstances surrounding the disclosure of the CMJ contract, is described more fully below.
In August 2015, the parties fell into dispute about certain obligations under the 2015 contract. The Bisognins issued a proceeding by way of originating process in which they sought answers to three questions about the parties’ contractual obligations, pursuant to s 49(1) of the Property Law Act 1958 (‘the 2015 proceeding’).[3]
[3]Proceeding S CI 2015 04285.
The first question was answered by Cameron J, sitting in the Practice Court.[4] The remaining questions were remitted to Sloss J, who delivered her reasons on 4 March 2016 and made final orders on 22 June 2016.[5] Relevantly, Sloss J ordered that each party bear its own costs in the 2015 proceeding.
[4]Bisognin v Hera Project Pty Ltd [2015] VSC 647.
[5]Bisognin v Hera Project Pty Ltd [2016] VSC 75.
On 29 August 2016, the Bisognins filed an application for an extension of time within which to bring an application for leave to appeal in this Court from the decision of Sloss J.[6] On 16 December 2016, this Court published reasons indicating that it would grant the Bisognins leave to appeal and allow the appeal.[7] On 31 January 2017, we made orders giving effect to those reasons. In particular, we set aside the costs order made by Sloss J and, in its place, ordered that Hera pay the Bisognins’ costs of the 2015 proceeding, including any reserved costs.
[6]Proceeding S APCI 2016 0117.
[7]Bisognin v Hera Project Pty Ltd [2016] VSCA 322 (Santamaria and Ferguson JJA and Riordan AJA).
Shortly before the Bisognins filed an application for an extension of time within which to bring an application for leave to appeal in this Court, on 26 August 2016, Hera issued a new proceeding seeking to restrain the Bisognins from terminating the 2015 contract and an order for specific performance of that contract (‘the 2016 proceeding’).[8] Macaulay J, sitting in the Practice Court, granted an interim injunction restraining the Bisognins from terminating the 2015 contract until further order. He subsequently granted an interlocutory injunction restraining the Bisognins from terminating the 2015 contract.[9]
[8]Proceeding S CI 2016 03457.
[9]At the time of pronouncing its orders in the appeal in the 2015 proceeding, this Court noted that it had not considered whether the Bisognins would have a basis for applying to discharge this injunction or whether Hera had any basis for continuing the restraint imposed on the Bisognins.
Between 27 and 30 March 2017, Riordan J heard Hera’s application to restrain the Bisognins from terminating the 2015 contract and the application for an order for specific performance. On the fourth day of trial, in answer to a subpoena issued by Hera, the Bisognins produced the CMJ contract. Over the course of the hearing, Mr Bisognin gave oral evidence and was cross-examined, including in relation to the CMJ contract.
On 22 May 2017, Riordan J delivered judgment in favour of Hera against the Bisognins and made an order for specific performance of the 2015 contract.[10] The Bisognins sought leave to appeal from that decision.[11] On 17 April 2018, this Court dismissed the appeal.[12]
[10]Hera Project Pty Ltd v Bisognin (No 3) [2017] VSC 268. Among other things, Riordan J ordered that the Bisognins sign certain documents to facilitate the registration of a plan of subdivision and that Hera should have reasonable access to the land. He also ordered that the Bisognins pay the costs of Hera on an indemnity basis: see Hera Project Pty Ltd v Bisognin (No 7) [2017] VSC 439.
[11]Proceeding S APCI 2017 0079.
[12]Bisognin v Hera Project Pty Ltd [2018] VSCA 93 (Tate, Kyrou and Coghlan JJA). On 18 May 2018, the Court refused an application by Hera for its costs to be paid on an indemnity basis. It ordered that the Bisognins pay Hera’s costs of the application for leave to appeal on the standard basis: see Bisognin v Hera Project Pty Ltd (No 2) [2018] VSCA 129.
The present application
On 2 October 2017, Hera made an application to this Court, in the 2015 proceeding,[13] to adduce fresh evidence and for an order that both the costs order made by Sloss J on 22 June 2016 and the costs order made by this Court on 31 January 2017 be set aside on the basis that they were obtained by fraud on the part of the Bisognins. Hera also applied for an order, in lieu of the costs order made by Sloss J, that the Bisognins pay Hera’s costs of the 2015 proceeding on an indemnity basis, or alternatively on the standard basis.
[13]It will be recalled that the judge at first instance in the 2015 proceeding, for all intents and purposes, was Sloss J; and that the Court of Appeal that heard the appeal from the decision of Sloss J was constituted by the members of the current Court.
Hera’s application is supported by two affidavits. The first affidavit was affirmed on 2 October 2017 by Mr David Kazatsky of Russell Kennedy Lawyers, the solicitors for Hera. In his affidavit, Mr Kazatsky describes the background to the proceedings and the purpose of the present application. In particular, he deposes that the ‘fresh evidence’ comprises (a) the CMJ contract; (b) a letter dated 19 February 2016 from Gadens Lawyers, the solicitors for CMJ, to Waters Lawyers, the solicitors for the Bisognins, varying the CMJ contract; (c) a bundle of documents subpoenaed from Contour Consultants Aust Pty Ltd; and (d) aspects of the oral evidence given by Mr Bisognin at the hearing before Riordan J between 27 and 30 March 2017.
Mr Kazatsky deposed that the reasons for adducing the fresh evidence are threefold. First, the fresh evidence demonstrates that the Bisognins failed to discover critical documents both in the 2015 proceeding and in the 2016 proceeding, despite applications for discovery made by Hera. Secondly, it contradicts key aspects of the Bisognins’ evidence and submissions in both proceedings. Thirdly, it indicates that, had Hera and the Court known of the documents and information constituting the fresh evidence, the 2015 proceeding ‘would have proceeded on a substantially different basis’. Mr Kazatsky also deposed that Hera discovered the fresh evidence after this Court’s judgment in the 2015 proceeding on 31 January 2017 and that it could not have discovered that evidence before then.
The second affidavit was affirmed on 1 September 2017 by Mr Leonard Warren, a principal of Russell Kennedy Lawyers. It exhibits a file note of a telephone conversation between Mr Warren and one Noel Waters. For reasons that will become apparent, it is not necessary to say anything further about the contents of this affidavit.
In its written submissions in support of the present application, Hera contended, relevantly, that the costs order made by Sloss J and by this Court were procured by fraud on the part of the Bisognins. It particularised that fraud as (a) the Bisognins’ failure to discover relevant documents despite applications for discovery; (b) a denial by the solicitors for the Bisognins in correspondence that the Bisognins had relevant documents; (c) certain statements made by the solicitors for the Bisognins to the solicitors for Hera; (d) the deliberate destruction of certain relevant documents; and (e) the apparent inconsistency between evidence given by witnesses called on behalf of the Bisognins in the hearing before Sloss J in the 2015 proceeding and subsequent oral evidence given by Mr Bisognin, among others, before Riordan J in the 2016 proceeding.
Hera also contended that, had Sloss J known of the matters contained in the fresh evidence, (a) she would not have made certain findings of fact in her judgment; (b) she would not have accepted certain evidence and rejected other evidence; (c) she would have reached certain conclusions of law; and (d) she would have ordered that the Bisognins pay Hera’s costs of the 2015 proceeding on an indemnity basis or on the standard basis. Hera said that these matters would have also been relevant to this Court’s exercise of discretion in relation to costs.
On 21 December 2017, the Bisognins filed a notice of opposition to Hera’s application. The grounds for their opposition were twofold. First, the Bisognins said that, had Sloss J and this Court known of the fresh evidence previously, the results both at first instance and on appeal would have been the same. Secondly, they said that, if fraud were established, Hera did not incur any additional expense at the trial as a consequence of that fraud. The written submissions filed on behalf of the Bisognins were largely devoted to explaining why the results at first instance and on appeal would have been the same in any event.
Submissions
On 25 June 2018, this Court directed the Registrar of the Court of Appeal to issue a letter to the parties. The letter drew to the parties’ attention the decision of this Court in Heaney Enterprises Pty Ltd v Just Cuts Franchising Pty Ltd[14] and of the High Court in Clone Pty Ltd v Players Pty Ltd (in liq)[15] and asked the parties to consider whether this Court had jurisdiction to determine the present application and, if so, the appropriateness of its exercising that jurisdiction.
[14][2018] VSCA 25.
[15](2018) 353 ALR 24 (‘Clone’).
During oral argument, counsel for Hera referred to the two decisions to which the Court had referred in its correspondence. He accepted that the High Court in Clone said that ‘if fraud is alleged then a fresh action will generally be the appropriate application’.[16] However, he contended that, the present case was one in which that general approach need not be followed. Counsel submitted that the appropriate course was for this Court to set aside the orders that it made in which it set aside the costs orders made by Sloss J. He said that the effect of such an order would be to reinstate the orders made by Sloss J. Thereafter, he said, this Court should remit the matter to Sloss J in the Trial Division for it to be determined whether her orders should be altered.
[16]Ibid 31 [32].
Allegations, and proof, of fraud are serious matters. For this reason, proper pleading and particularisation of such allegations is required. Further, while an allegation of fraud in a civil proceeding need only be proved on the balance of probabilities, the fact that the claim is one of fraud, and the gravity of such an allegation, may be taken into account in determining whether the requisite proof is established.[17] Counsel contended that the present application and the affidavit in support of it were the equivalent of a pleading and particularisation of fraud and were adequate in the circumstances. Counsel noted that there was no material in opposition to the application to explain the Bisognins’ conduct. Counsel contended that the decisions made both by Riordan J[18] and by the Court of Appeal in the 2016 proceeding[19] were, in substance, findings of fraud that were sufficient for this Court to set aside its orders and to remit the matter to the Trial Division. He noted that there had been no appeal in relation to the findings of Riordan J.
[17]Evidence Act2008 s 140(2)(c). See Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449, 449–50 (Mason CJ, Brennan, Deane and Gaudron JJ).
[18]Counsel referred to Hera Project Pty Ltd v Bisognin (No 3) [2017] VSC 268 [91]–[100] and Hera Project Pty Ltd v Bisognin (No 7) [2017] VSC 439 [21]–[24].
[19]Counsel referred to Bisognin vHera Project Pty Ltd [2018] VSCA 93 [205]–[209]. However, neither of these cases involved an allegation of fraud or an application to set aside a perfected judgment on the ground of fraud.
Counsel for the Bisognins submitted that the findings made by Riordan J had not been made in the context of allegations of fraud. He said that the appropriate course was for a new action to be commenced. In such an action, he said, there would be oral evidence and cross-examination. He suggested, by way of example, that it may be necessary to adduce evidence from the Bisognins as to their motives for concealing the CMJ contract.
Analysis
The present application seeks, in effect, to rescind certain perfected orders of Sloss J and of this Court on the ground of fraud. The orders that the present application seeks to rescind on the ground of fraud are orders as to costs. No other order has been impeached.
One of the issues in Clone was the extent of the equitable power of the Supreme Court of South Australia to set aside its own perfected judgments outside a statutory appeal. For present purposes, it is useful briefly to set out the procedural background in that case, as well as the High Court’s statement on the proper application to have the Supreme Court rescind its own perfected judgment on the ground of fraud.
In 2005, a trial judge in the Supreme Court delivered judgment in favour of Clone against Players. Players appealed to the Full Court of the Supreme Court. The Full Court overturned one of the trial judge’s findings and remitted the matter to the trial judge to determine a discrete claim made by Players. The trial judge subsequently rejected that claim on the remitter. After the proceedings had concluded, a disciplinary board located certain documents that were relevant to the proceedings but that were not discovered at any time during the proceedings.
In 2010, Players brought two applications to set aside the judgment against it and to obtain an order for a new trial. The first application was brought in the same proceedings that had been the subject of the trial judge’s perfected judgment, as amended by the Full Court. The second application was a new proceeding before a single judge of the Supreme Court to set aside the judgment.
In the course of setting out this background, the High Court observed that the second application was the appropriate way to proceed:
Even where the separate procedure of a motion for a new trial might be concurrently available, if fraud is alleged then a fresh action will generally be the appropriate application relying upon the power to set aside a perfected judgment of any court for fraud. Independent proceedings, even where the application is to set aside an appellate court’s decision, can permit ‘the whole issue [to] be properly defined, fought out, and determined’.[20]
[20]Clone (2018) 353 ALR 24, 31–2 [32] (citations omitted).
Later in its reasons, the High Court again made it plain that the proper application to have the Supreme Court rescind its own perfected judgment on the ground of fraud ‘was a fresh action to rescind the perfected orders’.[21] It added that, even if there had not already been an appeal from the orders of the Supreme Court, the proper course was to bring such an application to the same court rather than to the Full Court of the Supreme Court for a new trial.[22]
[21]Ibid 40 [61].
[22]Ibid 41 [61].
The applications brought by Players were heard by Hargrave AJ, who was appointed on an auxiliary basis to hear and determine them. Relevantly, one of the questions that fell for determination was whether the result at trial would have been different if one of the documents that constituted the fresh evidence in that case had been in evidence before the trial judge.[23] Hargrave AJ ultimately set aside the orders of the trial judge and ordered a new trial on certain issues. The Full Court dismissed an appeal. For reasons with which we need not presently concern ourselves, the High Court allowed the appeal.
[23]Players Pty Ltd (in liq) (recs apptd) v Clone Pty Ltd [2015] SASC 133 [242]–[250].
While the issue does not arise squarely in the present application, it is worth noting the High Court’s conclusion that the general power of a court to set aside a perfected judgment requires actual fraud, although there are other discrete grounds to set aside a perfected judgment that were not in issue.[24] The exercise of the power by a court to set aside its own decision on the ground of fraud requires ‘a pleading, and proof, of actual fraud’.[25]
[24]Clone (2018) 353 ALR 24, 25 [2], 41 [62].
[25]Ibid 41 [62].
In our view, there is no basis in the present case to depart from the procedure endorsed in Clone. The proper application by Hera would have been a fresh action to rescind the perfected orders of Sloss J. This would have enabled ‘the whole issue [to] be properly defined, fought out, and determined.’[26] Hera has not brought such an action.[27]
[26]Hip Foong Hong v H Neotia & Co [1918] AC 888, 894, cited in Clone (2018) 353 ALR 24, 32 [32].
[27]Nor, we would add, has Hera made an application in the 2015 proceeding for a new trial.
We are satisfied that it is not appropriate for this Court to deal with the present application as it stands. This Court is not in a position to determine whether the conduct of the Bisognins of which Hera now complains amounted to fraud.
We are not satisfied that the factual findings of Riordan J with respect to the credit of Mr Bisognin, or any other finding for that matter, were adequate to establish that the judgment of this Court or the judgment of Sloss J were procured by actual fraud. Moreover, when Riordan J came to making his findings, Mr Bisognin was not on notice of any allegation that those judgments had been procured by fraud.
Conclusion
It was for these reasons that we dismissed the application brought by Hera and ordered that Hera pay the costs of the Bisognins.
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