KKL (Kangaroo Line) Pty Ltd v Beaufort Shipping Agency & Anor

[2008] NSWSC 663

CITATION:	KKL (Kangaroo Line) Pty Ltd v Beaufort Shipping Agency & Anor [2008] NSWSC 663 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	13 June 2008
JUDGMENT DATE :	2 July 2008
JUDGMENT OF:	Smart AJ at 1
DECISION:	See paragraph 64
CATCHWORDS:	Court's Records - Whether Court's order made on 28 May 1986 and entered on 22 March 1988 - Regard to be had to original documents on Court's files - Cogent discretionary factors against granting relief in addition - Refusal to set orders aside
LEGISLATION CITED:	Companies (New South Wales) Code
PARTIES:	KKL (Kangaroo Line) Pty Ltd v Beaufort Shipping Agency Pty Ltd and Anor Trygve Vangsnes v Ernst & Young
FILE NUMBER(S):	SC 10780/1986
SOLICITORS:	Mr Vangsnes (In Person) Mr G Scarcella (Blake Dawson Waldron)

IN THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION

SMART AJ

Wednesday, 2 July 2008

10780/1986:

KKL (KANGAROO LINE) PTY LTD

v
BEAUFORT SHIPPING AGENCY PTY and ANOR
JUDGMENT

1 KKL (Kangaroo Line) Pty Limited ("KKL") has been in liquidation since January 1986 (Provisional Liquidator appointed 14/15 January 1986; Liquidator appointed 17 February 1986). Mr Trygve Vangsnes, a creditor and former managing director of KKL filed his motion of 15 January 2008 which was in unusual terms. Amongst other things, it stated:

"Filed in relation to 1. Justice McDougall's 1 May 2006 judgment that Mr Vangsnes be given the opportunity to consider the relief sought in a more detailed fashion by way of another notice of motion which the liquidator moved that Mr Vangsnes be not permitted to file.
2. The Authenticity of the order allegedly made and entered on 22 March 1988 pursuant to judgment made by Justice Rogers on 28 May 1986, which according to the Court's records and reports and directions between 1999 and 2001 is a phantom order that on the evidence before the Court as of 11 May 2001 was never made."

2 Under the heading "Persons Affected by Orders /Sought" the Notice of Motion stated in summary:

1. This Court which applied the subject order in judgments by Bryson J, McLaughlin M and Einstein J and Court of Appeal between 1995 and 1998 [who were unaware of the Court's subsequent investigation and reports that no judgment or order was made on the Liquidator's 28 May 1986 application before Rogers J] which may otherwise not have been given and which further caused Judge Politan of the United States District Court in 1988 and US 3rd
Circuit Court of Appeals on 25 June 1999 to deny comity to this Court on the ground that Australian Courts which ratified the Liquidators confidential settlement agreements on 28 May 1986 without the creditors prior knowledge, violate United States Law and US citizens and creditors rights to a fair treatment of their claims. In this Court's reports and proceedings on 3 February 1999 and 11 May 2001 the Orders purporting to be made on 28 May 1986 were never made.


2 United States and other creditors of KKL were the victims of the purported order some of whom had their notices of motion dismissed [in 1995] by this Court on the ground that the order moved to be set aside had been entered into with the leave and direction of this Court which it now says never happened.

3. Australian Government has had its free trade agreement with the United States investigated by United States agencies to determine the US/Australia free trades agreement applicability.

3 The following orders were sought in Mr Vangsnes' Notice of Motion:

"1. The entry on 22 March 1988 in the Court's File No. 10780 of 1986 of the only order in evidence by the liquidator, exhibit 'JMM 13' to James M Millar's 20 July 1994 affidavit before the Court, which purports to have been made and entered on 22 March 1988 pursuant to judgment by Honourable Justice Rogers on 28 May 1986, but which the Court denied in its reports and directions between 1999 and 2001 as identified under 'A' through 'l' and in the balance of the attached Outline of Arguments of Trygve Vangsnes dated 7 January 2008, was ever made – be expunged or set aside by the Court on its own motion.
2. The reopening, if need be, of the files of 10780 of 1986 and 5003 of 1986.
3. Such other orders as the Court may seem fit."

4 The motion did not name a respondent. A Registrar directed that Mr Robert George Dunn, the former liquidator be served. Mr Scarcella, a partner of Blake Dawson, Solicitors, who had acted for Mr Dunn in years gone past advised the Court that he was instructed that Mr Dunn had died and it was believed at least a couple of years ago. He had ceased to be a practitioner some years earlier. The firm of Ernst & Young of which he was a member had appointed Mr James Millar, also a partner and an Official Liquidator to handle a lot of the matters in the office. The firm was concerned about the allegations being made. Mr Scarcella said that he was appearing for the former Liquidator. That may be technically incorrect. However, Mr Scarcella was present at previous Court hearings, had acted for Mr Dunn and was familiar with the intricate details of the matter. In other circumstances it would have been necessary to define who should have been joined as respondent. Mr Vangsnes suggested Mr James Millar because of all the work he had done in the liquidation. The evidence does not enable the Court to say who should have been joined nor was an application made to it on this point of joinder. Mr Scarcella appeared for the firm.

5 Mr Vangsnes said that he was discharging his duty as a citizen to bring to the Court's attention its own concern about its integrity in its documents and its proceedings. He added. "My purpose is not here to sue anybody. My purpose is to bring to the court's attention."

6 Mr Vangsnes, in a Notice Disputing Facts and Authenticity of Documents, filed on 15 January 2008, which repeats some of the matters in the Notice of Motion, asserted:

"Prepared for Trygve Vanngsnes - Creditor of KKL and according to the Court a party to at least one of the 14 May 1986 agreement[s] before Justice Rogers on 28 May 1986, without the prior knowledge of any of KKL's creditors for order by the Court to approve the KKL liquidator's 14 May 1986 confidential settlement agreements with Wah Kwong."

7 Particulars were given by Mr T Vangsnes:

Disputed Authenticity of Documents

(a) Order which is attachment "JMM 13" to the affidavit of James Millar of 20 July 1994
(b) Mr Millar's affidavit that Justice Rogers on 28 May 1986 approved by order made the KKL liquidators 14 May 1986 settlement agreements with Wah Kwong and the attachment JMM 13 to that affidavit is a copy of such order

(c) The Liquidator's 14 August 1986 First Report to Creditors that this Court had approved his 14 May 1986 settlement agreements with Wah Kwong

Disputed Facts

That the Liquidator's confidential settlement agreements with Wah Kwong, without the creditors' prior knowledge, were ever approved by such judgment or order as is required under Australian law (s 377(2A) of the Companies (NSW) Code for such settlement agreements to be lawfully entered into).
Attachment JMM 13 to the affidavit of 20 July 1994 of J M Millar being an order purporting to approve KKL Liquidator's confidential compromise with Wah Kwong, without the creditors' prior knowledge.
The order purported to be made on 28 May 1986 and entered on 22 March 1988

In support of his challenge Mr Vangsnes relied on the following:

(a) Copy FAX of 3 February 1999 to Trivet Vanganes ( sic ) from V M Cataldo, a clerk in the Supreme Court Registry on the Court's official letterhead in these terms:

"We have conducted a thorough search of Supreme Court Records, The Court Reporting Branch of the Attorney General's Department, Law Court Library Archives And Other Areas of Possible Interest in relation to a Judgment handed down by Justice Rogers on or after 28 May 1986. The parties in this matter were KKL Pty v Beaufort Shipping. No such document was found."

( b) Attorney General's Office on 12 and 13 June 2001. It appears from the copy letter of Trygve Vangsnes of 12 June 2001 that the Court Reporting Branch (Services) prior to 12 June 2001 that Branch sent to Mr Vangsnes a copy of the Court Reporting transcript of the proceedings before Justice Rogers on 28 May 1986, It comprised 2 pages.

Mr Vangsnes wrote "I believe that the enclosed copy which was earlier (sent) from your office, is not a complete documents (sic) which I believe may instead be a 5 or 6 page document".

He added:

"Finally, please note that the three circle "closing off sign" which are on all other transcripts inspected is missing on the enclosed transcript, which seems to confirmed (sic) that it is only a part of a wider document."

Ms Rita Doran, probably an officer of the Court Reporting Branch, has written on the letter of 12 June 2001:

"12/6/01
Mr Vangsnes
I have confirmed that there is no more transcript, other than the 2 pages you have.
Before the three circles were used, which started in approximately 1988, dashes were often used. In any case, even if there was more involved it cannot be ordered, as the shorthand notes etc have been destroyed.
Regards,
Rita Doran"
PS. This office cannot supply Supreme Court judgments. They can be obtained from the Judgment Clerk at the Supreme Court Registry, ph 9 230 8056.
We have no record of any judgment being typed in this matter of 28/5/86, so therefore the Judgment Clerk will not have a Judgment to supply, but by all means ring and find out."
There appears to have been a further endorsement on 13/6/01 by Ms Rita Doran. On the copy supplied to me it is partly obscured but appears to be to the effect of "There is no record of transcript of judgment typed in this matter".
(Mr Vangsnes has not drawn the correct inferences from the material available to him. The position will be explained later)

(c) Registrar Jupp's email to the Attorney General's Office on 19 September 2000:

Mr Vangsnes told me that Registrar Jupp wrote in an email to the Attorney General's office on 19 September 2000 that no order was filed with or entered by the Court as of 19 months after the Liquidator's First Report to Creditors that his 14 May 1986 Settlement agreements with Wah Kwong had then been approved by Order of the Court as in the best interest of all creditors in all circumstances of the case.

(d) On the matter being mentioned before Justice Simos on 10 July 1997 that judge stated that he needed to know what was before Justice Rogers. Mr Vangsnes had made a series of allegations which that judge thought required a response. During the course of the skirmish before Justice Simos he asked " Is there a judgment of Mr Justice Rogers". Mr R H Fisher, the solicitor for the Liquidator replied, "No. There was an application to compromise under the Code. They are exhibited to Mr Miller's ( sic) affidavit but not included in these documents."

(There was an application before Justice Rogers to approve a compromise under the Code).

(e) The transcript of the proceedings before Registrar Berecry on 11 May 2001

At p5, lines 48-57 the Registrar observed that he and Mr Vangsnes spent a whole Friday afternoon going through three boxes looking for a particular order but it could not be found and that no order was ever made although foreshadowed. The Registrar said that he could not find the judge's Bench Book. He also searched in the library for unreported decisions with the librarian but none could be found. There appeared to be a lacuna .

At p6 the Registrar continued:

"Prima facie, on looking at the files as we did a month or two ago, and without me having the knowledge that the company had been deregistered, I thought all parties still existed, it seemed to me that in the absence of any further evidence what you [Vangsnes ] were saying was right. His Honour never made an order on that particular day. …"
[During the hearing before the Registrar Mr Scarcella (wrongly shown as Cassaro in the transcript) for the Liquidator submitted that Mr Vangsnes had no standing. KKL had been de-registered, the Liquidator had resigned and the documents of the liquidation had been destroyed pursuant to orders of Justice Einstein in November 1997.]
At p7, lines 30-51 of the transcript before Registrar Berecry, Mr Scarcella is recorded as telling the Registrar that there was a 2 page transcript recording what Justice Rogers had done, including his reasons. That said that if Norton Smith write to the Registry saying that they've got it orders will be made. (The judge put it in different language). Mr Scarcella added that he could adduce evidence from those who appeared at the hearing that orders to the effect indicated in the transcript of proceedings before Rogers J and as subsequently entered had been made. The Registrar indicated that he would refer the matter to a judge.

(f) The Court's Record of Processing does not record the Order in question being made.


(That record related to Equity Proceedings 005003/86 being the winding-up proceedings. It does not purport to relate to the steps taken in the Commercial List matter 10780/86 between KKL (Kangaroo Line Ltd v Beaufort Shipping Agency P/L & Anor).

(g) The report of 27 September of Forensic Document Services Pty Ltd

(This was based on the examination of copy documents of poor quality. Original documents are available in the Court file. This report is of little weight).

8 Mr Vangsnes replied on additional matters.

First, he attached importance to the note of the Associate to Justice Rogers of 5/6/1986 addressed to The Office Manager, Document Office Level 5. The note has the typed words "File Copy of Judgment" but these have been struck out and the following written underneath:

"Please put with file 10780/86"

9 That probably refers to the 2 page transcript of the proceedings on 28May 1986. It was the practice in those days to return the file to the Registry on the day on which the matter was heard or on the following day or possibly in this case on 30 May 1986. The transcript from the Court Reporting Branch usually arrived a day or so later and was then sent to the Registry (Document Office) to be placed with the file.

I do not think that this point assists Mr Vangsnes.

10 Secondly, he relied on a copy of the Report As To Affairs lodged by the Liquidator with the National Companies & Securities Commission. That purported to be "Receipts And Payments Of the Liquidator to 19 June 1986" and these were set out in summary form. The realised Cash Book Balance was stated to be Aus $365,516 and US $90,177 and these amounts were also stated:

To Be Distributed
Priority & Preferential Creditors
Group Tax Aus $ 85,000
Employees Aus $250,276


Available for Unsecured Aus $ 30,240 US $ 90,177

The following further entries appeared:

Estimated Unsecured Creditors other than Wah Kwong

A $33,346,256

US $57,000,000

Provisions for Claim by Wah Kwong

Not yet claimed or admitted by the Liquidator

The making of any claim by Wah Kwong

may be influenced by Wah Kwong to pay

expenses of KKL ahead of Charterhire.

11 Mr Vangsnes' point was that there was no reference to the agreements of compromise or the order or transcript before Justice Rogers of 28 May 1986 and that this pointed to no order having been made.

12 Mr Vangsnes placed considerable reliance upon the judgment of the US 3rd Circuit Court of Appeals of 25 June 1999 in Southern Cross Overseas Agencies Inc & Anor v Wah Kwong Shipping Group Ltd. That judgment stated that the plaintiffs' claim sprang from a series of agreements between Wah Kwong, its subsidiaries and KKL. At p 16 the judgment records that KKL went into liquidation in January 1986 when it lacked funds to pay its creditors. A Court appointed Liquidator assumed control and discontinued KKL's operations. Reference was made to the agreements of 14 May 1986 being submitted to Australian Courts and approved.

13 After considering the factual evidence available to it the Court of Appeals held that there was evidence that there was a joint venture or partnership between KKL and Wah Kwong and that Wah Kwong might have acted illegitimately. That Court expressed the view that prima facie there appeared to be substantial allegations of insider machinations. The Court held:

"Both the laws and the public policy of the United States will be violated if the case is permitted to proceed under Australian law. The claims of the creditor may have already been prejudiced by the dealings between the Liquidator and Wah Kwong and this Court does not intend to stand idly by while United States citizens and creditors are harmed."

14 The United States Courts were not enamoured of the Australian liquidation proceedings being conducted ex parte as they felt that this made it highly unlikely that the rights of US creditors would be properly respected under the circumstances.

15 As I read the Court of Appeals judgment it proceeded on the basis that the compromises reflected in the agreement of 14 May 1986 were approved by this Court but there was available to the Court of Appeals prima facie evidence of insider machinations involving Wah Kwong and KKL. The Court of Appeals referred to the District Court noting that the Australian liquidator had agreed that Wah Kwong was a creditor in the 1986 settlement agreement and that the District Court had reasoned that Mr Vangsnes was involved in the Australian liquidation on behalf of KKL and was aware of the arguments Wah Kwong was making to the liquidator.

16 It is apparent that there was considerably more material available to the United States Courts and that the possibility of the alleged misrepresentations as to Wah Kwong's position was not brought to the attention of Justice Rogers. There was material available to the United States Courts that did not reflect well on Mr Vangsnes.

17 The Court of Appeals judgment highlights the difficulties and possible lack of wisdom of confidential settlements being approved by this Court.

18 Mr Vangsnes also relied on action stated to be taken in the Executive Office of the President of the United States with reference to a report on "US common law's applicability to the US Australia free trade agreement." There was said to be an ongoing federal investigation as to this matter.

19 Mr Vangsnes has appeared on a number of applications before judges of this Court.

20 At the hearing of this application Mr Vangsnes has submitted that I should proceed on the basis of what had been stated in the message of Mr Cataldo, the advice of the Court Reporting Branch, the observations of Registrar Jupp, the observations of Registrar Berecry, the remarks of Mr R Fisher to Justice Simos, the Court's Record of Processing and the report of Forensic Document Services Pty Ltd. I indicated to Mr Vangsnes that I thought the Court should proceed mainly on the documents contained in the 1986 Court file and the well known practice of the Court in 1986.

21 The Court file discloses an original motion dated 26 May 1986 returnable on 28 May 1986 at 9.30am seeking leave to discontinue proceedings 10780 of 1986 and that the Liquidator have authority to compromise the various claims which he and/or KKL have against the defendants and others on the terms and conditions set forth in the agreements made on 14 May 1986.

22 That motion was accompanied by the affidavit of 26 May 1986 of Mr R G Dunn, the original of which remains on the Court file. That affidavit exhibited copies of three agreements made between him, KKL, the Second Defendant and various other parties. Mr Dunn requested the Court to grant him authority to enter those agreements for the reasons set forth in the letter dated 23 May 1986 from Dawson Waldon, his solicitors, to him.

23 The first deed, being the only one to which Mr Vangsnes was a party, related to the prosecution of the Weyco claims then being arbitrated and the disbursal of the moneys received in the Arbitration. The second Deed involved companies which were members of the Wah Kwong Group. The Deed recited that the parties wished to resolve their various claims arising out of the liquidation of KKL. It also recited some 5 charterparties between certain members of Wah Kwong Group and KKL. It dealt with charter hire and the calculation of the amounts payable and the admission of Proofs of Debt, payment of guarantees of $4 million and the admission of Proofs of Debt and the repayment of $6 million and the admission of Proofs of Debt and amounts paid to US creditors of KKL totalling US $2,071,939 and various other substantial claims against KKL. There are detailed provisions and some of the amounts mentioned are large. The third Deed deals with unpaid freights, payment thereof and collection of the goods. The parties are six companies in the Wah Kwong Group, the Liquidator and KKL (In Liquidation)

24 This was a case with which Justice Rogers was familiar. He had granted interlocutory relief ex parte. Thereafter it had been before him twice on 28 January 1986 and also on 29 January 1986. There was a contested application for relief which was ultimately resolved by consent of the parties. Court transcripts are available to verify what occurred.

25 There is a transcript available of the proceedings on 28 May 1986. It records that Mr Fisher (of Dawson Waldon) appeared for KKL (In Lliq) and Mr Hurst of Norton Smith for the first and second defendants. The second defendant was part of the Wah Kwong Group.

26 Justice Rogers would have noted the settlement embodied in paragraphs 1 and 2 of the Motion and then proceeded to deal with paragraph 3 of the Motion. The transcript of 28 May 1986 reveals that on that day he dealt with the application for the Court's approval to the Liquidator compromising with the creditors. Section 377(1) of the Companies (New South Wales) Code as at May 1986 provided:

"The liquidator may, with the authority of the Court, of the committee of inspection or of a resolution of the creditors
…
(c) make any compromise or arrangement with creditors or persons claiming to be creditors or having or alleging themselves to have any claim (present or future, certain or contingent, ascertained or sounding only in damages) against the company or whereby the company may be rendered liable'"

Section 377(1)(d) confers wide powers to compromise any debts and any claims.

27 I attach as the Schedule to this judgment a copy of the transcript of 28 May 1986 which shows why Justice Rogers approved the compromise. The concluding paragraph states:

"In all the circumstances, what I will do is this: conditional upon Mr Hurst being provided with so much of Ex B as relates to the advice that no proceedings be taken against Mr Vangnes (sic) in respect of the possible breach of duty, and conditional upon Mr Hurst sending to my Associate a letter indicating that after perusal of that advice, the Wah Kwong Group accepts the advice given that no proceedings be taken for breach of duty, and that there be a settlement with Mr Vangnes (sic) in terms of the agreement, I will make orders 1, 2 and 3 in the notice of motion. These orders will come into force once Mr Hurst delivers to my Associate the letter of which I have spoken."

28 On 30 May 1986 Norton Smith & Co (by Mr Hurst) wrote to the judge. It confirmed that they acted for the "Wah Kwong group" specified in Recital C to the Deed of 14 May 1986 between KKL (In Liq) and R G Dunn, the Liquidator of KKL and the Wah Kwong Group of companies That letter stated:

"In accordance with Mr Justice Rogers' instructions, Messrs Dawson Waldron have passed to us extracts from their letter of 23 May, 1986 to R.H. Dunn (sic) Esq. relating to the possibility of Mr Vangsnes, who was Managing Director of KKL, being in breach of fiduciary duty to that company in that he acquired an interest in the proceeds of a claim which had been assigned to KKL by Karlander (Australia) Pty Limited (now named Kestrel (Australia) Pty Limited) against Weyerhaeuser Company for possibly no consideration. Wah Kwong has been advised of and is aware of the possibility of the Liquidator successfully pursuing an action against Mr Vangsnes.
The Wah Kwong group is also aware of the arrangement which has been reached between the Liquidator and, inter alia, Mr Vangsnes, as set out in the Deed dated 14th May 1986 to ensure Mr Vangsnes' continued assistance in the prosecution of the claim against the Weyerhaeuser Company.
Having carefully considered this matter and Mr Vangsnes' actions as a whole during the time that he was managing director of KKL, the Wah Kwong group has no objection to the Liquidator entering into the agreement with him, as set out in the Deed dated 14 May, 1986, a copy of which is annexed hereto."

29 Mr Justice Rogers was not appraised of the adverse matters in the judgment of the US 3rd Court of Appeals. It may be doubted if the Liquidator was aware of them. Mr Vangsnes and the Wah Kwong Group would dispute them.

30 In 1987 Norton Smith & Co sought to have the orders of 28 May 1986 passed and entered. There is no explanation why Dawson Waldron had not done this but not having done so Norton Smith & Co sought to have the orders passed and entered.

31 On 8 October 1986 Allen Allen & Hemsley , who acted for Weyerhaeuser (Aust) Pty Limited, wrote to the Registrar of the Court :

"Under an Order delivered by Mr Justice Rogers on 28 May 1986 the Liquidator of KKL was given authority to compromise various claims in accordance with an agreement dated 14 May 1986.
As this order clearly affects our client's position, we request photocopies of the Notice of Motion, the Order of 28 May 1986, the Agreement of 14 May 1986 and any other accompanying documentation."

It seems from certain notations on this letter that the Registry complied with this request.

32 On 23 February 1988 Norton Smith & Co wrote to "The Head Clerk, Supreme Court of New South Wales" enclosing copies of the Notice of Motion , the Transcript of 26 May 1986 and their letter of 30 May 1986 to the Associate to Justice Rogers. The letter to the Head Clerk asserted that on 28 May 1986 Justice Rogers made the orders in the Notice of Motion conditional upon Norton Smith & Co delivering a letter in the terms specified to the judge's Associate and that that was done. The letter of 23 February 1988 continued:

"On 16th September 1987 we lodged with the Court Draft Orders to be sealed. Having heard nothing further from the Court, on 4th February last we enquired as to whether the Draft Orders had been sealed and were advised that this had not been done and that we should write to you so that you could look into the matter.
We should be grateful if you would look into the matters for us and arrange for the draft orders to be sealed."

33 Apparently Norton Smith & Co received no written reply as there is a note on the copy letter on the file that "An enquirer wanted to know about a reply to this letter."

34 On further examining the Court file there is an original Order filed 22 March 1988 and entered that day. The original order is signed by C F Abood Chief Clerk and bears the Court's seal. It is also apparent that the draft Order lodged by Norton Smith & Co is in slightly different terms.

35 The draft Order, which was widely circulated and used starts with the words "BY CONSENT it is hereby ordered as follows" The draft also has the word "Judge" at the bottom. The copies erroneously circulated and used in subsequent proceedings have "G F Abood" written on them but do not bear his signature. The word "Judge" is crossed out and the words "Chief Clerk" substituted. Whoever made the copies used the draft and did not notice that the commencement of the original Order differed in that the words "BY CONSENT" did not appear and the Order began "The Court Orders that"

36 The judge did not purport to make the orders "BY CONSENT" and that would have been unusual and inappropriate in respect of an order under s 377(1) of the Companies (New South Wales) Code made pursuant to an application by the Liquidator. The Chief Clerk picked up these points when settling signing and entering the original Order.

37 During the hearing before me I showed both parties the documents in the Court file, that is, Mr Vangsnes and Mr Scarcella. Mr Vangsnes wished the Court to proceed on the basis of the copy order which I have found to be defective and the reports to the effect that no order had been made and there was no judgment of Justice Rogers.

38 There is no document headed "Judgment" but the transcript of 28 May 1986 sets out relatively briefly but adequately the reasons why the judge acted as he did and the orders which he made. The judge was anxious to minimise costs. Whether he should have approved the compromises is another question but in my opinion he did approve the compromises and make the orders mentioned in the transcript of 28 May 1986 and embodied in the original orders entered on 22 March 1988. The copies of the draft order used contained errors. It is a pity that the erroneous copy orders were used by the Liquidator and his solicitors. Perhaps they were supplied by Norton Smith & Co.

39 It follows that the basis of the attack of Mr Vangsnes is unsound and incorrect. His case fails at the start.

There are other considerations.

40 In 1994 Mr Dunn filed a motion in proceedings 5003/86 in Equity seeking, inter alia, directions that it was proper for him to distribute the assets of KKL to its creditors by way of first and final dividend. On 16 May 1995 Justice Bryson rejected applications by Mr Vangsnes and Engum Finance Pty Ltd seeking leave to appear. He gave five companies, being alleged creditors leave to appear. Justice Bryson in refusing leave found no evidence of fraud or misrepresentation on the part of Wah Kwong which could lead to rescinding the settlement.

41 On 18 August 1995 Justice Bryson held that there were no substantial grounds for maintaining that the settlement reached in 1986 ought to be re-opened. On the Liquidator's Motion the judge directed that it was proper for the Liquidator to distribute the assets of KKL to the creditors of KKL by way of first and final dividend. On 23 August 1995 the judge gave reasons for the orders he made. He proceeded on the basis that the Liquidator entered into the settlement of the 1986 proceedings with the leave and directions of the Court. The judge remarked that distribution would be a simple matter as all moneys available for distribution would be payable to the Commissioner of Taxation as preferential creditor.

42 In November 1997 in proceedings 5003/86 in Equity in which Mr Vangsnes figures prominently Justice Einstein dealt with a large number of complaints by Mr Vangsnes. In the course of his lengthy judgment Justice Einstein embarked upon a comprehensive review of the matter and had detailed regard to the remarks of Justice Rogers on 28 May 1986, the judgment of Justice Bryson in 1995, the matters which had weighed with the Liquidator and his administration of the affairs of KKL.

43 Justice Einstein

(a) dismissed Mr Vangsnes' application to inspect certain documents held by the Liquidator; and

(b) held that the Court should not cause a report to be prepared by an auditor pursuant to s 382(1) of the Companies Code (that is, on the accounts of the Liquidator); and

(c) granted the Liquidator's application that he be released as Liquidator and that KKL be dissolved pursuant to s 381(d) of the Companies (New South Wales) Code .

44 Justice Einstein remarked at p 76 of his judgment:

"KKL's assets have been distributed and the Liquidator is now devoid of funds. Accordingly, the Liquidator is now exposed to personal expenses not only for the present applications but also on account of any further applications which Mr Vangsnes might make."

45 On 11 May 1998 the Court of Appeal dismissed Mr Vangsnes' application for leave to appeal from the judgment of Justice Einstein with costs. The Court stated:

"On 28 May 1986 the liquidator sought orders that he be authorised to compromise the various claims on a number of conditions. Rogers J, after hearing the solicitor for the plaintiff company in liquidation and counsel for the defendants, gave leave to discontinue on various conditions. One of those conditions involved being satisfied that a threatened claim against Mr Vangsnes for alleged breach of duty would itself not be prosecuted.
Subsequently, the orders of the Court pronounced by Rogers J were entered. They gave Mr Dunn, in his capacity as liquidator of KKL, the authority to compromise the various claims brought in those proceedings on the terms and conditions set forth in certain agreements made on 14 May 1986.
Mr Vangsnes was party to at least one of those agreements. However, he was or became dissatisfied with the settlement of the proceedings and effectively challenged the liquidator for having effected the settlement."

46 The Court also stated that it was not suggesting any basis for doubting the propriety of the Order made by Rogers J or the discontinuance of the commercial proceedings.

47 On 1 May 2006 McDougall J considered two Notices of Motion of Mr Vangsnes and said:

"In substance, each notice of motion seeks an order that the orders of this Court entered on 22 May (sic) 1988 pursuant to the judgment of Rogers CJ CommD given on 28 May 1986 be set aside. In substance, the basis on which that relief is sought is that the making of the orders was subject to the occurrence of certain events or the satisfaction of certain conditions, that there is no demonstration of the occurrence of those events or the satisfaction of those conditions, and that the file from the 1986 proceedings does not demonstrate by way of judge's notes or otherwise the process by which the orders were made and entered."
(22 May 1988 should read 22 March 1988)

48 The judge outlined a number of cogent discretionary factors which would lead to the orders sought being refused. The judge also relied on Mr Vangsnes' having no standing to seek to set aside or challenge the orders made in the commercial proceedings. This was on the basis that Mr Vangsnes was not a party to the proceedings before Justice Rogers, the proceedings being brought by the company in liquidation through the liquidator.

49 The judge expressed the view that no substantive ground on which the Court might intervene had been shown.

50 McDougall J dismissed both of the Motions of Mr Vangsnes and ordered him to pay the costs of Mr R G Dunn of the Notice of Motion of 27 April 2006.

51 Mr Vangsnes submitted that Justices Bryson, Einstein and McDougall and the Court of Appeal proceeded on the basis that the Orders of 28 May 1986 had been made and entered. A careful examination of the Court files reveals that they were correct to so hold. The transcript of 28 May 1986, the letter of 30 May 1986 of Norton Smith & Co and the original sealed Order in the file signed by the Chief Clerk and the circumstances in which it came to be executed (that is, after submission of a draft and its correction) establish that there is no reason to doubt that orders were made on 28 May 1986 and subsequently entered on 22 March 1988. No sufficient evidence of fraud or misrepresentation had been adduced. I agree with Justice McDougall that no sufficient cause has been shown to set aside the orders of Justice Rogers made on 28 May 1986 and entered on 22 March 1988.

52 I also agree that the discretionary factors against intervening are very strong, in any event They include:

(a) It is now 22 years since the Orders were made and 20 years since they were entered

(b) It would be inappropriate to call into question the validity of agreements made so long ago, approved by the Court and acted upon for so long

(c) In 1995 Bryson J, on hearing Mr Vangsnes was not satisfied that any sufficient ground existed to call into question the compromises which had been reached and authorised the Liquidator to distribute the assets of KKL

(d) In November 1997 Justice Einstein granted the Liquidator's application that he be released as Liquidator and that KKL be dissolved. Leave to appeal was refused in May 1998. The documents would have properly been destroyed following these orders.

(e) As at November 1997 the Liquidator was devoid of funds

(f) The judgment of the US 3rd Circuit Court of Appeals did not become available until 25 June 1999, four years after the Liquidator had been released and KKL dissolved and many years after the compromise agreements were made

(g) Mr Vangsnes was a party to one of the original agreements made on 14 May 1986 and did not seek to set aside those agreements within a reasonable time.

53 An examination of the Court files reveals that there is no sufficient basis for the Court of its own motion to seek to set aside the Orders entered on 22 March 1988

54 Mr Vangsnes' motion of 12 February 2008 must be dismissed.

Costs and Future Action

55 Mr Scarcella sought an order that Mr Vangsnes pay the costs of the Liquidator's firm. That firm had a continuing interest in upholding what the Liquidator and Mr J M Millar had done under his delegation. I did not insist on the executor or administrator of Mr Dunn's estate being joined as a party as that would have increased costs.

56 Mr Vangsnes has been unsuccessful in his action on what was done by Mr Dunn and his solicitors. It is a pity that Mr Dunn's solicitors did not cause the Orders made by Justice Rogers on 28 May 1986 to be passed and entered shortly after they were made. That would have avoided a lot of the problems.

57 It is also a pity that a copy of the Draft Order and not a copy of the sealed Order was attached to affidavits relied on by the Liquidator. That led to suggestions that it was a phantom Order especially as it did not bear Mr Abood's signature. It was the practice in the years prior to the 1980s and in the 1980s for the Chief Clerk to settle and sign Orders that were passed and entered. Usually, but not invariably judges did not sign Orders and affix the Court seal to Orders except urgent interlocutory injunctions when the Registry was closed.

58 The reports of the Court officers did not reflect the correct position. Perhaps they did not have access to the original file in the Commercial proceedings which was before me.

59 While I appreciate the invidious position in which Mr Dunn's firm has been placed and the expense they have to bear as a result of Mr Vangsnes' unsuccessful applications I decline to order costs on an indemnity basis. The use of the Draft Order as if it were the actual Order caused difficulties and raised questions. A lot of these problems would have been avoided if the orders made by Justice Rogers on 28 May 1986 had been taken out by the solicitors for the Liquidator within three months of their being made and not left to Norton Smith & Co.

60 I have taken into account Mr Vangsnes' submission that he should not be ordered to pay any costs as he was acting in the public interest and seeking to maintain the integrity of this Court's processes. The proceedings instituted reflected adversely on the former Liquidator and his firm and it was reasonable for that firm to appear as a contradictor. Mr Vangsnes' allegations were, after a detailed investigation, rejected. Costs should follow the event in accordance with the normal principle. There are no free challenges, especially when other interested persons are put to expense.

61 Mr Scarcella sought an order that Mr Vangsnes be prohibited from making any further applications involving the Liquidator of KKL and the compromise approved by Justice Rogers on 28 May 1986 in proceedings 10780/1986 unless and until Mr Vangsnes pay the costs of the former Liquidator's firm of these proceedings. The Liquidator had to bear the costs of the sundry proceedings before Justice Einstein in the first instance. The former Liquidator's firm had to bear the costs of the proceedings before Justice McDougall at least in the first instance. Over the years the former Liquidator had to face and refute allegations of wrongly agreeing to the compromise arrangements approved by Justice Rogers and challenges to his administration of the liquidation. They have not succeeded as the evidence adduced did not sustain them.

62 It is a serious step to place barriers in the way of a citizen approaching the Courts. I do not have the power to make the Orders sought or modified orders partially to the desired effect under any Statute, Rule of Court or in the exercise of the Court's inherent jurisdiction. Section 84 of the Supreme Court Act 1970 sets out when vexatious litigant orders may be made and the facts presently known to the Court would not justify such an order. I express no view on the issue whether if Mr Vangsnes institutes further proceedings relating to the liquidation or the approved compromise or the alleged acts or omissions, such proceedings would be stayed pending payment of outstanding costs.

63 Mr Scarcella sought copies of the documents in the Court files (10780/1986) to be supplied at his firm's expense and an Order will be made to this effect.

64 I make the following Orders:

1. Motion of Mr Trygve Vangsnes of 15 January 2008 dismissed.
2. Order Mr T Vangsnes to pay the costs of the former Liquidator's firm (Ernst & Young) of the Motion.
3. Order that Blake Dawson Waldron (including Mr Scarcella) are at liberty to inspect the Court files in proceedings 10780 of 1986 and are authorised to obtain copies of such documents in such files as they request at their expense.

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10/07/2008	-	Incorrect file number on judgment and coversheet - Paragraph(s) N/A
15/07/2008	-	Incorrect file number on cover sheet and page 1 - original number was correct - SC 10780/1986 - Paragraph(s) N/A