Hunt v Numa
[2000] VSC 218
•19 May 2000
| SUPREME COURT OF VICTORIA | |
| COMMERCIAL & EQUITY DIVISION COMMERCIAL LIST | Not Restricted |
R U L I N G
No. 5278/2000
F5157
| REX HUNT & Anor |
| v |
| GREGORY CHARLES NUMA & Ors |
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JUDGE: | Warren J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 19 May 2000 | |
DATE OF RULING: | 19 May 2000 | |
CASE MAY BE CITED AS: | Hunt & Anor v Numa & Ors | |
MEDIUM NEUTRAL CITATION: | [2000] VSC 218 | |
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Receiver – appointment under s.37 of the Supreme Court Act 1986 – mandatory injunction for account of monies – breach of fiduciary duty – claim of privilege – whether privilege claimed so as to mislead the court upon relevant facts – fairness of claiming privilege – application of "Maurice" principle.
APPEARANCES: | Counsel | Solicitors |
For the Plaintiff | Mr S. Wilson QC with | Mills Oakley |
| For the Defendant | Mr P. Hayes QC with Mr R.N. Cameron | Brown & Co. |
HER HONOUR:
In this matter the first plaintiff Mr Hunt is a media identity. Some years ago, during the 1980s he developed a friendship or relationship with the first defendant, Mr Numa. At that time, Mr Hunt's media career was in its early and developing phase. In the early 1990s Mr Numa apparently recognised the attraction and potential of Mr Hunt as a media performer, especially in the area of fishing and the related interests of those who enjoy fishing as a hobby and leisure activity.
As a consequence, discussions occurred between Mr Hunt and Mr Numa that led to the establishment of a business relationship between the two men. Essentially the relationship was one of Mr Numa acting as Mr Hunt's agent, manager and promoter in the media and the advertising sector. Their arrangement was surprisingly simple. Mr Numa arranged the work for Mr Hunt, often for large sums, moneys were paid by the particular media outlet or advertiser to Mr Numa directly who kept 20 per cent of the moneys inclusive of expenses and Mr Hunt received in turn from Mr Numa the balance of 80 per cent of those moneys. There were no formal arrangements or terms otherwise between them.
The arrangement was set in place on such an informal basis, it seems, largely at the behest of Mr Hunt who, as a result of earlier business experiences and enterprises, wanted to keep his affairs very simple. It seems also that Mr Hunt trusted Mr Numa to act in his best interests, in good faith and with the utmost honesty and integrity. The relationship persisted on an amicable and uninterrupted basis throughout the 1990s. During that time Mr Hunt's star rose to great heights such that he was able to command substantial amounts of money for his performances and appearances and even more so for his endorsement and personal promotion of products and services.
Mr Hunt was offered sums on occasions running to hundreds of thousands of dollars for his endorsement and promotion of particular products. For example, a home loan provider, RAMS, agreed to pay Mr Hunt over a period of three years for his endorsement of its home loan service, $400,000 in the first year $450,000 in the second year and $500,000 in the third year. After the second year, RAMS apparently terminated its contract.
Commercial interest in Mr Hunt's services extended far and wide. However, concerns arose in his mind apparently towards the end of 1999 as to the handling of his affairs and the accounting of moneys that he believed to be his, by Mr Numa through which Mr Hunt. Essentially Mr Hunt appears to have formed the belief that large sums of money that were properly his were not accounted for. There was an underlying suggestion of dishonesty made against Mr Numa by Mr Hunt.
As a consequence, these proceedings were instituted, essentially seeking an accounting of moneys and the appointment of a receiver of the companies associated with Mr Numa through which Mr Hunt's affairs and monies were managed. There are underlying serious allegations in the proceedings of dishonesty, deception and breach of trust.
An application has been brought before me today on an interim basis before trial, seeking the appointment of a receiver of Mr Numa's companies under s.37 of the Supreme Court Act 1986, and alternatively that arrangements be set in place by way of a mandatory injunction to preserve moneys pending trial. Those matters have been put to one side at the moment to deal with a preliminary issue.
The preliminary issue is that in the evidence put before me to support today's application, Mr Hunt in his affidavit seeks to rely upon a letter dated 18 April 2000 from Mr Brown, the solicitor for Mr Numa, and attachments to that letter. The defendants challenge and dispute the entitlement of the plaintiff to rely upon the letter of 18 April 2000, on the basis that privilege attaches to the document.
The principles are well stated in relation to the attachment of privilege in the High Court judgment in Field v. Commissioner for Railways (NSW) (1957) 99 CLR 285, and were more recently explored in a thorough analysis of all the authorities in Trade Practices Commission v. Arnotts Limited & Ors (1989) 88 ALR 69. Fundamentally the established principle is that where parties enter into discussions and negotiations with a view to settling their differences, privilege will attach to those discussions.
However, as was made clear by the judgment of His Honour Justice Beaumont (at 71) in the Arnotts case, the rule excludes proof of admissions made with a genuine intention to reach a settlement. As was further observed by His Honour in that authority (at 73), the privilege is not absolute and cannot be relied upon to put a party in the position of being able to cause a court to be deceived as to the facts. In other words, the court cannot allow a party to rely upon privilege to shut out evidence that would rebut inferences upon which that party seeks to rely.
In this matter one of the primary allegations made by Mr Hunt against Mr Numa is that there has been a breach of fiduciary duty. In my view a fiduciary agent cannot purport to give an account of his conduct to his principal, rely upon that account as being the satisfaction of his duty, and then claim that the account cannot be looked at because it is privileged.
Once these proceedings were instituted, and indeed beforehand there was an extensive course of correspondence between the solicitors for the respective parties, essentially whereby Mr Hunt sought to obtain an account and explanation from Mr Numa as to the disposition of the relevant moneys, and Mr Numa through his solicitors, sought to provide an explanation. The correspondence culminated in the letter from Mr Numa's solicitors of 18 April 2000, and enclosed in that letter were various schedules and documents said to provide in essence the information that was requested by Mr Hunt.
In my view, in light of the principles as stated in the authorities, privilege does not attach to the letter of 18 April 2000 or its attachments and enclosures. This is borne out by the course of correspondence before the letter and more so by the course of correspondence that followed the letter.
Having dealt with the issue of privilege, I make the additional observation that in any event, in the overall context of this matter, it is appropriate to apply the "Maurice principle": Attorney-General (NT) v. Maurice (1986) 161 CLR 475. I am satisfied that as a matter of fairness it would not be appropriate for the defendants to be permitted to rely upon privilege to deprive the plaintiffs of the opportunity of putting these matters as contained in Exhibit RH11 (the letter of 18 April 2000 and enclosures) properly before the court.
In those circumstances, the objection of the defendants that privilege attached to Exhibit RH11 is rejected, and the exhibit will stand.
I turn to consider the substantive interlocutory application, that is the plaintiffs' amended summons seeking the appointment of a receiver of the companies associated with Mr Numa, alternatively orders that the moneys held and/or received by Mr Numa in the future on behalf of Mr Hunt and his interests be paid into a joint account pending trial. The plaintiff also seeks an order that an accountant be appointed to investigate the records of Mr Numa in relation to the Hunt interests.
I consider first the receivership application. The principles in relation to the appointment of a receiver are well known and well stated, particularly in light of the observations of the Appeal Division of this court in National Australia Bank v. Bond Brewing Holdings (1991) 1 VR 386. It is a well established principle that the appointment of a receiver is an old remedy and one that must be approached with caution. As observed by His Honour Justice Brooking in the Bond case, often rather than a receiver being the doctor, the receiver can in fact prove to be the undertaker of the subject company. The Appeal Division held that the remedy is drastic and should only be allowed in pressing circumstances.
The court further observed that before ordering the placement of a company in receivership, the court considering the application must look at the alternative remedies that are potentially available, such as the granting of an injunction and other types of orders.
In this matter on the basis of the material before me, I am satisfied that there is no doubt that there is a serious question to be tried as to whether or not there was a breach of the fiduciary duty allegedly owed by Mr Numa to Mr Hunt, and their commensurate commercial interests.
Essentially the issue for me to determine with respect to the appointment of a receiver is where the balance of convenience lies. In my view, having considered all the matters very carefully, I am satisfied that there is serious inconvenience to the Hunt interests if a receiver is not appointed. On the other hand, in my view, the consequences to the Numa interests are far more drastic and severe if a receiver is appointed. So much is apparent from the ramifications with respect to the banking arrangements of the Numa interests. There is also the fact that the appointment of a receiver may have an impact on third parties, such as other clients of Mr Numa. It may also potentially have an impact on the existing contractual relationships between outside parties and Mr Numa on the part of Mr Hunt.
Finally, in the exercise of the discretion, I take into account the fact that I have indicated to the parties that I will fix this matter for trial on 13 June, three weeks hence. Weighing all these matters up I consider that the balance of convenience tips in favour of Mr Numa, and accordingly I will not order the appointment of a receiver in relation to the Numa interests.
Next I consider the alternative application for the holding of the funds. I am satisfied that there is a serious question to be tried in relation to this matter.
I turn to consider the balance of convenience. It is apparent that moneys are still being received by Mr Numa of a substantial amount on behalf of the Hunt interests. Those moneys need to be protected pending the trial of the proceeding. The plaintiff also seeks the appointment of an accountant to go into the Numa companies to investigate matters prior to the trial. In my view this course would be undesirable unless the parties are agreeable to it. At this point it is apparent from the submissions that that is not the case. In the absence of agreement I will not impose the appointment of an accountant to go in, because it would in effect be tantamount to a quasi receivership. Furthermore, I fear that if I embarked on that course, it would necessarily give rise to a further dispute between the parties. The arrangements and relationship between the parties are at a delicate stage, and in my view these matters ought proceed towards trial for the reasons I have already indicated, as soon as possible.
The defendants have indicated a preparedness to provide the court with an undertaking as to the holding of disputed moneys in a joint account provided and conditional upon the plaintiffs giving an equivalent undertaking. No such joint undertaking is volunteered by the plaintiffs. I would not order the holding of funds in a joint account. In all the circumstances and given the level of dispute between the parties and the fact of the pending trial three weeks hence, I consider it appropriate to order that the moneys received by the defendants on and after the making of this order, on behalf of or in relation to the plaintiffs, henceforth be paid into court pending trial.
With respect to moneys that have allegedly already been received by Mr Numa and his associated interests on behalf of Mr Hunt and his interests, they are not matters that I consider ought be the subject of an order at this point, unless the parties agree to an order or set an arrangement in place by way of undertaking. They are matters that will be dealt with at trial, as I say, three weeks hence.
Of itself, these arrangements are not entirely satisfactory. For the reasons I have said, the matter should go to trial as soon as possible, and accordingly I will fix the matter for trial on 13 June and impose an expeditious time table upon the parties.
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