Lamb v Ariss
[2006] FMCA 510
•13 April 2006
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| LAMB v ARISS & ANOR | [2006] FMCA 510 |
| BANKRUPTCY – Application pursuant to s.81 of the Bankruptcy Act – ex parte application – urgency – duty of disclosure – whether s.81 examination a ‘proceeding’ in Federal Court – s.19 Federal Magistrates Act 1999 –whether relevant evidence provided to court arising from s.81 examination at ex parte hearing – duty of lawyer when making ex parte applications. PRACTICE AND PROCEDURE – Whether appropriate form used for bankruptcy proceeding. |
| Bankruptcy Act 1966, ss.5, 81 Federal Magistrates Act 1999, s.19 Federal Magistrates Court Rules 2001, r.4.01 |
| Thomas A. Edison Ltd v Bullock (1912) 15 CLR 679 Milcap Publishing Group AB & Ors v CorantoCorporation Pty Ltd & Ors (1995) 32 IPR 34 |
| Applicant: | KENNETH WAYNE LAMB |
| First Respondent: | STEPHEN GORDON ARISS |
| Second Respondent: | SIRA PROPERTIES PTY LIMITED (ACN 007 339 460) |
| File Number: | MLG 1709 of 2005 |
| Judgment of: | McInnis FM |
| Hearing date: | 30 March 2006 |
| Delivered at: | Melbourne |
| Delivered on: | 13 April 2006 |
REPRESENTATION
| Counsel for the Applicant: | Mr G Bigmore QC |
| Solicitors for the Applicant: | Arnold Bloch Leibler |
| Counsel for the Respondents: | Mr S Rosenzweig |
| Solicitors for the Respondents: | Charles Fice |
ORDERS
The application filed 23 December 2005 be dismissed.
The Orders made on 23 December 2005 be discharged.
Any property held by the Applicant pursuant to Orders made on 23 December 2005 be returned to the Respondent’s Solicitors within 14 days.
The Respondents shall file and serve affidavits in support of an application for damages arising from the undertaking given on 23 December 2005 on or before 27 April 2006.
The Applicant shall file and serve any affidavits in reply on or before 11 May 2006.
The Respondents shall file and serve an outline of submissions in relation to the issue of costs on or before 27 April 2006.
The Applicant shall file and serve an outline of submissions together with affidavits in relation to the issue of costs on or before 11 May 2006.
Liberty to apply shall be granted to the parties in relation to any matters arising out of these Orders.
The hearing of the application for damages and costs shall be fixed for 25 May 2006 at 10.15am.
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLG 1709 of 2005
| KENNETH WAYNE LAMB |
Applicant
And
| STEPHEN GORDON ARISS |
First Respondent
| SIRA PROPERTIES PTY LIMITED (ACN 007 339 460) |
Second Respondent
REASONS FOR JUDGMENT
The Applicant is the Trustee in bankruptcy of the estate of Maria Olga Ariss (the bankrupt). The First Respondent is the former spouse of the bankrupt and relevantly a director of the Second Respondent.
An application filed on 23 December 2005 sought interim orders in the following terms:-
a)Pursuant to s.129 of the Bankruptcy Act 1966 (Cth), Stephen Gordon Ariss and/or Sira Properties Pty Ltd deliver up or cause to be delivered up to Kenneth Wayne Lamb the items numbered 1 to 12 in the schedule of items in attachment A to this order.
b)Liberty to apply on seven days' notice is reserved to each of Maria Olga Ariss, a bankrupt; Stephen Gordon Ariss; and Sira Properties Pty Ltd.
The application filed by the Applicant on 23 December 2005 was claimed to be urgent, and accordingly the matter was referred to this court by a Registrar for urgent hearing on 23 December 2005. Before this court, the Applicant relied upon an affidavit affirmed by Alexander William King on 23 December 2005 (the first King affidavit). Mr King deposed that he was a solicitor employed by the solicitors for the Applicant in this proceeding, and that he had the care and conduct of the proceeding on behalf of the Applicant.
In the first King affidavit, the deponent states that the bankrupt became bankrupt on her own petition on 6 May 2003. A Statement of Affairs, it was claimed, disclosed "no interests of substance in any jewellery or furniture". In the first King affidavit, the deponent further states the following:-
Examinations have been held pursuant to section 81 of the Bankruptcy Act 1966 (Commonwealth) in relation to the administration of the bankrupt's affairs ("examinations") including examinations of
(a) the bankrupt on 19 September 2005 and 22 December 2005, and
(b) her husband Stephen Gordon Ariss on 22 November 2005.
In the first King affidavit, the deponent stated that examinations had been before a Deputy District Registrar of the Federal Court.
It is appropriate to note at this point that one of the examinations held pursuant to s.81 of the Bankruptcy Act 1966 (the Bankruptcy Act) had occurred just the day before the current proceeding was filed in this court. Hence it is of some concern that there was what might be described as at least another procedure then undertaken in the Federal Court at the time when the application was filed in this court.
It is perhaps significant to note that pursuant to relevant provisions of the Federal Magistrates Act 1999 an application should not be commenced in this court where there is an associated matter before the Federal Court. So much is clear from s.19 of the Federal Magistrates Act 1999 which provides as follows:-
“19 Proceedings not to be instituted in the Federal Magistrates Court if an associated matter is before the Federal Court or the Family Court
(1) Proceedings must not be instituted in the Federal Magistrates Court in respect of a particular matter if proceedings in respect of an associated matter are pending in the Family Court or the Federal Court.
(2) Subsection (1) does not apply to:
(a) proceedings for a decree of dissolution of marriage; or
(b) proceedings instituted in the Federal Magistrates Court under:
(i) Division 13A of Part VII of the Family Law Act 1975; or
(ii) Part XIII or XIIIA of that Act.
(3) If:
(a) proceedings are instituted in the Federal Magistrates Court in contravention of subsection (1); and
(b) the proceedings are subsequently transferred to the Federal Court or the Family Court;
the proceedings are taken to be as valid as they would have been if subsection (1) had not been enacted.”
The s.81 examination under the Bankruptcy Act however relates to the administration of the bankrupt's affairs and for the present purposes, I am satisfied does not of itself constitute "proceedings" for the purposes of s.19 of the Federal Magistrates Act, even though I am mindful that "proceeding" is defined in s.5 of that Act as follows:-
"proceeding means a proceeding in a court, whether between parties or not, and includes an incidental proceeding in the course of, or in connection with, a proceeding, and also includes an appeal.”
The examination which is undertaken pursuant to s.81 of the Bankruptcy Act is one which is undertaken by, in most circumstances, a Registrar of the court. It is a process which more often than not requires examination under oath, and is designed to endeavour to determine the whereabouts of documents or property and otherwise examine persons in relation to matters that are relevant to the administration of a bankrupt estate.
Whilst an examination may be conducted by either a Registrar or a magistrate, as defined in s.5 of the Bankruptcy Act, which provides:-
“magistrate means:
(a) a person who holds office as a Magistrate of a State, being a person in respect of whom an arrangement under subsection 17B(1) applies;
(b) a person who holds office as a Magistrate of the Northern Territory, being a person in respect of whom an arrangement under subsection 17B(2) applies; or
(c) a person who holds office as a Magistrate of a Territory of the Commonwealth (other than the Northern Territory).”
“Registrar means:
(a) the Registrar, a Deputy Registrar, a District Registrar or a Deputy District Registrar of the Federal Court; or
(b) a Registrar of the Federal Magistrates Court.”
In practical terms, examinations are usually conducted before a Registrar. It would be noted that the definition of "magistrate" refers to a Magistrate of a state or a person holding office as a Magistrate of a Commonwealth territory other than the Northern Territory. I am satisfied that that examination could properly be regarded as an administrative function, properly exercisable by a Registrar.
Given that it is an administrative function, I am satisfied that it was appropriate for the Applicant to at least commence the application in this court and that s.19 of the Federal Magistrates Act has not been breached. It should further be noted, however, that the application filed in this instance does not appear to seek any final orders.
During the course of submissions, counsel now appearing for the Applicant sought leave of the court to amend the application to replicate the interim orders as final orders sought by the Applicant in the application. That was sought no doubt as a result of consideration of the Federal Magistrates Court Rules 2001 (the Rules) where provision is made in relation to the contents of an application and where specifically rule 4.01 of the rules provides as follows:-
“(1) Unless otherwise provided in these Rules, a proceeding must be started by filing an application in accordance with the form of application set out in Part 1 of Schedule 2.
(2) An application for final orders may include an application for interim or procedural orders.
(3) A person may not file an application for an interim or procedural order unless:
(a) an application for a final order has been made in the proceeding; or
(b) the application includes an application for a final order.”
During the course of proceedings, however, the court drew to the attention of the parties chapter 4 of the rules and, relevantly, rule 29.03 which provides as follows:-
“(1) Unless otherwise provided in this Chapter, a proceeding must be started by filing an application in accordance with Form 5.
(2) The application must state each section of the Bankruptcy Act under which the proceeding is brought.”
When the matter came before the court on 23 December 2005, the Applicant was represented and the proceedings then continued as an ex parte urgent application. The court has before it transcript of the proceedings of 23 December 2005, and it is relevant in understanding the application to refer to that transcript in due course.
On 23 December 2005 the court made the following orders:-
“Upon the Applicant undertaking:
(a) to submit to such order (if any) as the Court may consider to be just for the payment of compensation, to be assessed by the Court or as it may direct, to any person, whether or not a party, adversely affected by the operation of the interlocutory order or undertaking or any continuation (with or without variation) hereof
(b) to pay the compensation referred to in (a) to the person there referred to; and
(c) that until further order he will hold in safe custody any and all items delivered up to him pursuant to Order 1,
THE COURT ORDERS THAT:
1. Pursuant to section 129 of the Bankruptcy Act 1966 (Cth), Stephen Gordon Ariss and/or Sira Properties Pty Ltd forthwith deliver up or cause to be delivered up to Kenneth Wayne Lamb, c/- Arnold Bloch Leibler at Level 21, 333 Collins Street, Melbourne, Victoria, the items numbered 1 to 12 in the ‘Schedule of items’ in attachment ‘A’ to this order.
2. A sealed copy of this order together with a copy of the application filed 23 December 2005 and the affidavits of Alexander William King affirmed 23 December 2005 and exhibits be served upon the Respondents and upon Maria Olga Ariss, the bankrupt, on or before 9 January 2006.
3. The application filed 23 December 2005 be adjourned to 9.45am on 1 February 2006 before Federal Magistrate McInnis.
4. The Applicant shall file and serve any further affidavit(s) to be relied upon, together with an affidavit or affidavit of service in relation to service in accordance with Order 2 hereof on or before 18 January 2006.
5. The Respondents and, if so advised, Maria Olga Ariss, the bankrupt, shall file and serve any affidavits to be relied upon on or before 25 January 2006.
6. Liberty to apply on 7 days notice is reserved to each of Maria Olga Ariss, the bankrupt, Stephen Gordon Ariss and Sira Properties Pty Ltd.
7. Costs reserved.”
Before this court, counsel now appearing for the respondents has, in relying upon a response, filed on 31 January 2006 sought orders that the ex parte orders of the court on 23 December 2005 be set aside on the basis that they were obtained irregularly because:-
“(a) the Applicant failed to bring to the notice of the Court all facts material to his right to the orders; and/or
(b) in breach of rule 4.01(3) of the Federal Magistrates Court Rules, the Applicant did not file an application for an interim order that included an application for a final order.”
In the response, the respondents further sought directions in relation to the filing of material, and otherwise sought an order that the Applicant's application be dismissed on the merits.
In support of the Applicant's application on 23 December 2005, as indicated earlier, reliance was placed upon the first King affidavit. It is relevant to note that in brief terms, the Application concerned items of jewellery claimed to be valued at over $23,000 collectively which were not listed in the balance sheet of the Second Respondent during the period of the directorship of that company by the bankrupt. It was further noted that no jewellery was listed in any of the balance sheets of the Second Respondent's accounts signed by the bankrupt.
Reference was otherwise made to evidence given by the bankrupt at the examinations which occurred pursuant to s.81 of the Bankruptcy Act referred to earlier in this judgment.
Ultimately a schedule of items was referred to (the jewellery schedule) which was claimed to comprise 12 items of jewellery, and according to the first King affidavit, "each of which are ladies' jewellery to a total insured value of $226,755". It is not necessary in this application to deal with the valuation issue.
It should be noted that three of the items are claimed to be acquired during the period in which the bankrupt was the sole director and secretary of the Second Respondent, and it is those items referred to earlier in the judgment which were valued at over $23,000 collectively.
In any event, it is significant to set out the following relevant paragraphs from the first King affidavit:-
“8. In the course of his Examination on 22 November 2005 the Bankrupt’s husband gave evidence that he and the Bankrupt separated on 17 July 2005.
9. The Bankrupt also gave evidence on 22 December 2005 that she asked her husband for the items numbered 1 to 12 in the Jewellery Schedule (as she believed she was entitled to them) but that he had said that the jewellery items were the property of Sira Properties Pty Limited (‘Sira Properties’) and that she could not have them.
…
11. In the course of her evidence given on 22 December 2005, the transcript of which is not yet available, the Bankrupt said in substance in relation to the jewellery listed in the Jewellery Schedule: ‘He gave them to me as a gift, they were mine’. Further, the Bankrupt gave evidence that in 2005 she had had a discussion with her husband as to whereabouts of the gold Rolex watch (item 4 on the Jewellery Schedule), that he had accused her of having the watch (which she said she did not), and she said further that she believed he was ‘playing games’ as to its whereabouts.
12. In the course of his evidence given on 22 November 2005 the Bankrupt’s husband asserted in substance that he had given certain items of jewellery to or both of his daughters (which the Trustee apprehends may include items of jewellery listed in the Jewellery Schedule) but that the items of jewellery so ‘given’ remain at the property at Latitude 16, Apartment 8, cnr Murphy and Grant Streets, Port Douglas.
13. The Bankrupt also gave evidence on 22 December 2005 in relation to the contents of the property in which she and her husband had resided prior to the end of the 2003 calendar year, being a property at 413 Esplanade, Mount Martha in Victoria. The Bankrupt acknowledged that at some stage when she and her husband lived at that property there was present at that property contents (or some of them, at least) the subject of a valuation dated 16 March 2001 by Andrew Broadway Valuations at the property. Produced and shown to me marked ‘AWK-3’ is a true copy of that valuation. The valuation itemises contents valued at $393,730 then said to be situated at the property at Mount Martha.
…
15. The Bankrupt gave evidence that she has asked her husband to disclose the location at which the contents are in storage, in particular, because she wishes to have some of those items for her own use, but that he has refused to disclose the location of the items so stored. Further, the Bankrupt gave evidence that she believed the items of contents to be those of herself and her husband personally.”
The court when hearing the ex parte urgent application on 23 December 2005, which I note was the Friday before Christmas Day, made a number of comments in relation to the application, both in terms of the urgency and the fact that the Applicant sought to proceed on an ex parte basis. Specifically the following exchanges occurred:-
“HIS HONOUR: Why is it urgent?
MR DELANY: It's urgent for these reasons. Perhaps if I go to the affidavit. You'll see from Mr King's affidavit in paragraph 2 that the bankrupt became bankrupt on 6 May 2003 and she signed a statement of affairs, and that statement of affairs disclosed ‑ ‑ ‑
…
HIS HONOUR: Sorry, what date was it held?
MR DELANY: 22 November, so a month ago the husband was examined. It's not in the affidavit, but the situation is that the trustee was unable to find Mrs Ariss. It had been intended to examine her also on 22 November and orders were made for substituted service on her which enabled her to be examined again yesterday.
HIS HONOUR: Why isn't she here now?
MR DELANY: She has returned to Port Douglas where she resides.
HIS HONOUR: So why should it be ex parte?
MR DELANY: The relief that's sought is for delivery up of property. She was on notice yesterday of an application that we made to the registrar and it turned out that the registrar did not have jurisdiction to make an order.
HIS HONOUR: When you say "on notice", I'm just concerned, I don't like making ex parte orders, particularly where it's going to involve, I would have thought, interfering with property.
MR DELANY: If I perhaps explain to you the situation.
HIS HONOUR: You can understand why I'm a bit apprehensive about it.
MR DELANY: Yes.
HIS HONOUR: People are normally entitled to attend. What's so special about this case?
MR DELANY: The situation is really this: that the items that are in question are items of jewellery and they're ladies jewellery and they're referred to in paragraph 6. In the course of the examination yesterday the bankrupt gave evidence that each of the items of jewellery were gifts to her.
HIS HONOUR: Where is that in the affidavit?
MR DELANY: This is in paragraph 7(a).
HIS HONOUR: I'm looking at that - so in the course - so this witness was present.
MR DELANY: She was present yesterday.
HIS HONOUR: The deponent was present when this evidence was given.
MR DELANY: Yes, that's right.
HIS HONOUR: The evidence was that the items referred to in the jewellery schedule, which is AWK1 - let me just find that. You no doubt know all about this. So you'll just have to forgive me.
MR DELANY: No, I well understand that.
HIS HONOUR: But I'm very concerned not to make orders ‑ ‑ ‑
MR DELANY: The jewellery schedule is actually exhibit 2. It's an error there.
HIS HONOUR: Is it? Well, that's why I can't find it. All right, let's start again.
MR DELANY: If I just take you to that, what you'll see from that ‑ ‑ ‑
HIS HONOUR: I see them. I just wanted to see what the numbers referred to. So if I cross-reference that to 7, we've got then numbers 4 to 12. So you've got the watch $45,000, 15,000 to ‑ ‑ ‑
MR DELANY: I'm sorry, item 4, she gave evidence, was gifted to her on 3 February 2004, which is after her bankruptcy, and item 12 was gifted to her, she said, on about 23 December 2004. The other items of jewellery, she said, were gifted to her on about the dates in the - sorry, they were earlier gifted to her and they are all on her evidence items that were given to her before her bankruptcy. So there's before after acquired property in relation to the two items - that's items 4 and 12 - and property of the bankrupt at the date of her bankruptcy being the remaining items. She said in - I'm looking at 7(c) - that she last saw the items in the schedule at what's called the insured situation described in the renewal notice. That's latitude 16, apartment 8.
You'll see from that exhibit 2 that the persons who are named as insured there are three persons: a company, Sira Properties Pty Ltd, Stephen Ariss, who's the husband of the bankrupt, and Olga Ariss, who's the bankrupt. What has occurred and what emerged in the evidence at 7(d) is that the bankrupt has separated from her husband and she doesn't wish her current address to be disclosed to him.
HIS HONOUR: She regards these as a gift to her and they're hers.
MR DELANY: That's so, and the items in question were all last seen by her when she - or prior to her separation from her husband, which in paragraph 8 - the husband at his earlier examination said they had separated on 17 July this year. Frankly, when we examined the husband we didn't know whether that evidence was accurate or whether he was refusing to disclose the wife's whereabouts. But yesterday she also gave evidence that they separated, although she couldn't be precise as to the date. Now, given that the matter is ex parte, it is important to also tell you, as item 9 does, that the bankrupt yesterday gave evidence that when she asked her husband for the jewellery - that's items 1 to 12 in the schedule - as she believes she was entitled to them, he said the jewellery items were the property of the company Sira Properties Pty Ltd and she couldn't have them.”
I have deliberately set out in some detail the extracts from the transcript of the proceedings before me on 23 December 2005 as it demonstrates in my view in clear terms the concern expressed by the court in relation to the urgency of the matter and the reservations the court had in relation to dealing with this application on an ex parte basis. During the course of the hearing, reference was made to other material including the first King affidavit.
In brief terms, the court after considering the further submission and before making arrangements to make the orders set out earlier in this judgment stated the following:-
“HIS HONOUR: I should say that I - so that there's no misunderstanding I've now read the material, I've considered the issues that are relevant to the granting of an interim ex parte order. I'm satisfied that, subject to the filing that further affidavit and the modification for the orders proposed, that it's appropriate to exercise the discretion I have to grant the order, albeit that I had some reservations at the commencement which I've no doubt expressed to you during the course of it. But I don't regard ex parte interim orders as something to be made lightly.”
(Transcript page 13 lines 10 to 18)
Although the court did not provide formal written reasons, it otherwise then set out the following, given the urgency of the matter,
“HIS HONOUR: You'll get details of that in a moment. I will indicate for the transcript without formally delivering a decision that I'm prepared to make the orders now presented in the form and have regard to the further affidavit of Alexander William King which I read in addition to the earlier affidavit from the same deponent as I'm satisfied that although this is an ex parte - an urgent interim order - that the balance of convenience favours the order being made on the material before me. I'm also satisfied that although, quite properly, on an ex parte order counsel and the solicitor for the applicant brought to my attention that there may be a dispute over the subject matter of the order, that is, the property and the ownership of the property, but nevertheless there is a case, a strong arguable case, for and on behalf of the applicant that, combined with the balance of convenience, and further, the evidence which is before me which I find to be sufficient that there is a degree of risk which attaches to that property, then in my view consistent with your obligations of a court in bankruptcy in the exercise of its powers under the Bankruptcy Act 1966, and in particular section 129, would be acting appropriately in the interests of justice to grant the orders now sought, albeit on an ex parte basis.
I'm satisfied that the orders now provided give the parties an adequate opportunity to provide further material to the court and I'm particularly satisfied that in the circumstances the undertakings given by the applicant should avoid any undue prejudice which may otherwise occur as a result of any ex parte order. For those reasons I'm prepared to grant the order. Now, if you make arrangements for those to be forwarded.”
(Transcript page 17 lines 16 to 39)
It will be evident from those extracts from the transcript that the court was cognisant of the primary basis upon which the claim was made, that is an assertion by the bankrupt regarding ownership of the jewellery in question, and that as a result of the s.81 examination, which had occurred on the previous day, that there was a degree of urgency which was of a sufficient basis to encourage the court on the information then before it to make the ex parte orders. Specifically the court had relied upon the first King affidavit, and in doing so had regard to paragraph 11 of that affidavit set out above, which specifically stated in quotations and italicised that during the course of the bankrupt's evidence on 22 December 2005, she stated:
“He gave them to me as a gift. They were mine.”
Mr King gave evidence before the court and was cross‑examined. During the course of his evidence, he confirmed that he was present during the course of the s.81 examination when those words set out in the previous paragraph were uttered by the bankrupt. He continued to remain in court, and when asked questions arising from the transcript which both parties relied upon from the Registrar's examination of 22 December 2005, agreed that he was present during the following exchange which appears in the transcript:-
“Well, perhaps you can tell the Registrar what facts or circumstances you say cause that evidence to be true? In other words, how it is that you say Sira Properties owned the jewellery?---Because when I left you asked what I could take, what was mine, and he told me that that jewellery was never mine in the first place.
I see. So the only thing - - -?---And he told me - - -
- - - you rely on in relation to – sorry. So when you said on the last occasion that you believed, or that the jewellery was Sira Properties’ jewellery, or that it was the owner, that was solely on the basis of what your husband had told you. Is that right?---No. Yes and no. There was – on the insurance documents it was always under Sira Properties. Now, just because it was under Sira Properties. Now, just because it was under Sira Properties I still felt it was mine. He gave them to me as a gift. They were mine. But – but they weren’t. They were owned by Sira Properties.
Well, we have been through the insurance documents and what they tell us is that initially you and your husband were listed as the sole owners of the household contents, including the jewellery. Then on about the day that Mr Lucas filed his further and better particulars of claim. Or a little afterwards, suddenly you and your husband cease to be the insured persons and Sira Properties became the insured person, and then when you had moved to Latitude there was notification that you and your husband were to go back on the list?--- That is what that – I don’t think that is correct though. We changed insurance brokers there. It was always Sira Properties. I was never under the impression that it was mine legally. But emotionally, it should have been mine.”
(Transcript p.255 lines 35-47 and p.256 lines 1-14)
It will be immediately apparent from the extract above that the evidence of the bankrupt clearly included the words, "He gave them to me as a gift. They were mine." However, the bankrupt then significantly stated "But - but they weren't. They were owned by Sira Properties."
During the course of the evidence before the court, Mr King indicated that he had made notes of the evidence on 22 December 2005, and at the critical point of noting the evidence referred to in paragraph 11 of the first King affidavit, he changed pens, and for present purposes, I accept that evidence. However, it should also be noted that senior counsel appearing before the court on 23 December 2005 was also the senior counsel who appeared and asked questions of the bankrupt at the section 81 examination conducted before the Registrar on 22 December 2005.
In my view, it is perfectly clear from a reading of the transcript of the Registrar's examination which took place on 22 December 2005 that the bankrupt had stated a belief that the jewellery was given to her as a gift and, as she described it, "They were mine." But also it is equally clear that she immediately proceeded to say "But - but they weren't" and that "They were owned by Sira Properties". Elsewhere in the material, it is clear that the bankrupt confirmed that on the previous occasion when she gave evidence, the evidence was to the effect that the jewellery might be the property of Sira Properties.
Whilst the court is prepared to make due allowance for the fact that when the application was made before this court on 23 December 2005 the transcript of the previous day's examination was not available, the fact remains that both senior counsel and Mr King were present both on 22 December 2005 before the Registrar and before this court upon the hearing of the urgent ex parte application on 23 December 2005.
Whilst a number of submissions were made for and on behalf of the respondents in support of the application that the orders made by this court on 23 December 2005 should be set aside, it was this principal issue which I regard as a key issue that was specifically agitated before the court. Reference was made to the decision of the High Court of Australia in Thomas A. Edison Ltd v Bullock (1912) 15 CLR 679 (Edison v Bullock) where in that case the court relevantly states the following:-
“… The law in such a case is well established. There is a primary precept governing the administration of justice, that no man is to be condemned unheard; and therefore, as a general rule, no order should be made to the prejudice of a party unless he has the opportunity of being heard in defence. But instances cover where justice could not be done unless the subject matter of the suit were preserved, and if that is in danger of destruction by one party, or if irremediable or serious damage be imminent, the other may come to the Court, and ask for its interposition even in the absence of his opponent, on the ground that delay would involve greater injustice than instant action. But, when he does so, and the Court is asked to disregard the usual requirement of hearing the other side, the party moving incurs a most serious responsibility.
Dalglish v Jarvie (1), a case of high authority, establishes that it is the duty of a party seeking for an injunction ex parte to bring under the notice of the Court all facts material to the determination of his right to that injunction, and it is no excuse for him to say he was not aware of their importance. Uberrima fules is required, and the party inducing the Court to act in the absence of the other party, fails in his obligation unless he supplies the place of the absent party to the extent of bringing forward all the material facts which that party would presumably have brought forward in his defence to that application. Unless that is done, the implied condition upon which the Court acts in forming its judgment is unfulfilled and the order so obtained must almost invariably fail. I add the word ‘almost’ in defence to such an exceptional case as Holdren v Waterlow (1). The obligation is stated by Turner LJ in that case (2) to be to ‘state their case fully and fairly,’ and so by Sugden LC in Deuse v Plunkett (3), where he said: - ‘The Plaintiff had not fully and fairly disclosed the entire facts of the case.’ Lord Cottenluon LC in Brown v Newall (4), observes that the power to grant such an injunction should exist in indispensable, but, from the liability to injustice, must be exercised with caution. Then he says (5): - ‘The Court can have no ground upon which it can proceed, in granting an ex parte injunction, but a faithful statement of the case.’ The learned Lord Chancellor distinguishes between mis-statement, or suppression likely to influence the Court in acceding to the application, and that which is immaterial.”
Reference was further made to the application of similar principles when considering an Anton Piller order found in the Federal Court decision of Davies J in Milcap Publishing Group AB & Ors v CorantoCorporation Pty Ltd & Ors (1995) 32 IPR 34, and in particular the following extract:-
“Whether, if that disclosure had been made, the Anton Piller would not have been granted, is not something I can say. To be material, a fact does not have to be such as would have caused the application to be refused. I have myself sat on a full court which has set aside an ex parte order because of a non-disclosure and the matter has then been remitted back to the trial judge or to a judge and the application for an injunction heard again.
The relevant point is simply that a matter was not disclosed which ought to have been disclosed. The affidavit of Mr Collins gave a false impression. It gave the impression that Mr Lark and Mr Collins were selling the Milcap products as new products, and it said nothing whatever about the fact that in their shops which carry on an exchange business, the taking in of cassettes and the exchange of cassettes is part of the ordinary course of business. If that had been disclosed, I think that further attention would have had to have been given by the court to a number of matters.”
It was submitted by the respondents that in the present case, having regard to the affidavit material set out in the first King affidavit when compared with the transcript of the proceedings before the Registrar during the course of the examination held on 22 December 2005 that this court was clearly misled in relation to what could be described as a crucial issue leading the court to draw a conclusion which then in turn led to the making of the ex parte interim orders.
I should note in passing that although the orders made by the court on 23 December 2005 may at least in order 1 have the appearance of a final order, it is clear to me that that order, albeit an order in the form requested by the Applicant, is no more than an interim order based as it was on what was then an application for interim orders, and what then appeared to be orders made in the context of other directions which clearly contemplated that the application would return to the court and that those parties absent would not only be served with the relevant documents, but would otherwise have the opportunity of filing and serving other material.
The matter returned to court on 1 February 2006 and was then listed for hearing on 30 March 2006 and other orders made in relation to discovery, the filing and service of a list of documents and affidavits by the parties. The parties were given the opportunity to seek the attendance of any deponent to an affidavit to be made available for cross‑examination. Hence in my view, a proper reading of the orders made on 23 December 2005 when read in the context of the orders made that day and subsequent orders clearly indicates that it was no more than an interim order.
Counsel for the Applicant before this court had sought to rely upon other affidavit material including affidavits of service complying with the orders of the court made on 23 December 2005 and a short affidavit of a solicitor for the Applicants, setting out additional material by way of emails passing between the parties. The First Respondent has sought to rely upon an affidavit sworn by him on 10 March 2006, and otherwise was required to give evidence and be cross‑examined. His evidence, in brief terms, both in the affidavit and before this court, in substance asserted that the jewellery in question at all material times was purchased for the Second Respondent and was not gifted to the bankrupt.
It is not necessary in my view to refer in further detail to the affidavit material other than to note that a second affidavit by Alexander William King affirmed on 24 March 2006 was not sought to be relied upon, save that documents annexed to that affidavit were referred to in the course of cross‑examination. Again, however, it is not appropriate to refer to that material, although it is noted that counsel for the Applicant has foreshadowed further substantive proceedings which may be issued either in this court or in the Federal Court pending the outcome of the court's consideration of whether or not it should set aside the orders it made on 23 December 2005.
In my view, the making of ex parte orders by any court is a significant and serious process to be undertaken, and it should be undertaken with due care. Applying the High Court authority of Edison v Bullock to the present case, it is clear in my view having regard to a comparison between the first King affidavit and in particular paragraph 11 thereof and the limited extract of the evidence of the bankrupt that the court was not at the ex parte hearing provided with all the evidence which was then known to either the deponent and/or his client, and indeed counsel who appeared both before this court and the s.81 examination.
For a bankrupt's evidence to be limited in the way it is sought to be limited in the first King affidavit, in my view can only result in the court being misled. It is the responsibility of parties seeking to make an ex parte application, to bring to the notice of the court all facts material to the determination of the right to that order and I accept that it is no excuse for any party to indicate that he or she was not aware of the importance of the material.
As indicated by the High Court in Edison v Bullock, uberrima fides is required. If a party induces a court to act in the absence of another party, and in doing so fails in its obligation, in my view, to paraphrase the words of the High Court, unless he supplies the place of the absent party to the extent of bringing forward all the material facts which that party would presumably have brought forward in his defence to that application.
It seems logical to me and irresistible that if the bankrupt or indeed if the First Respondent had been present upon the hearing of the application by this court on 23 December 2005, then the complete extract of the bankrupt’s evidence would have been referred to along with other extracts during the course of the examination before the Registrar, indicating that a concession was made by the bankrupt that the jewellery was owned by the Second Respondent, even though the bankrupt believed the jewellery had been a gift and that it belonged to her or, to use her words, was "mine".
I do not accept that in the present case this could be regarded as an exceptional case, or that the general principle should not apply in relation to the making of an ex parte order. It will be evident from the extract of the transcript of the proceedings before this court, that this court had indicated in clear terms the reservations it had in making an urgent ex parte order. The material before the court primarily set out in the first King affidavit, in my view was material which was incomplete and which had the effect of misleading the court in relation to the true state of evidence which had been given by the bankrupt on the previous day.
In my view it is of little or no concern to the court whether those who had misled the court did so knowingly or intentionally. The issue for this court to determine is whether the material which was evident at the hearing before the Registrar could or should have been brought to the attention of the court. I can see no basis upon which this court could conclude that the material should not have been brought to its attention.
During the course of his evidence, Mr King in my view seemed in one sense to "latch onto" part of the statement by the bankrupt which he then reproduced in paragraph 11 of the first King affidavit as set out earlier in this judgment. Whilst there may be some allowance made for lawyers perhaps interpreting the reliability of evidence and then seizing upon material which confirmed a view then held by a lawyer as to the unreliability of evidence, that does not mean that in placing material before this court, that an incomplete version of the evidence can be relied upon on an ex parte application.
Whether the solicitor hearing the evidence had interpreted it correctly is irrelevant. The court is entitled to know and be advised of the complete extract rather than a selective account, which may be more suitable and more convenient for the purposes of an application.
The decision to proceed on an ex parte basis is a significant decision which should not be regarded as a decision to be taken lightly by legal practitioners. In this instance, the proceedings commenced arguably on the wrong form, failed to seek substantive relief, and more significantly relied upon what I find to be inadequate and misleading affidavit evidence in relation to the full extent of the evidence given concerning a crucial issue of significance to the court's deliberation, based upon the bankruptcy evidence of the previous day's section 81 examination.
Having embarked upon the ex parte urgent application, then the Applicant does so at the Applicant's peril. The duty to act with utmost good faith is a significant duty, and for the reasons stated I am satisfied in this instance that that duty has not been discharged. In my view it follows that the orders made by the court on 23 December 2005 should therefore be discharged.
That leaves the question of whether the court should in the circumstances grant leave to the Applicant to now amend the application retrospectively, to replicate the orders sought as interim orders in that part of the application referring to final orders. In my view, in the exercise of the discretion, whilst the court from a practical point of view may be tempted to permit the amendment, it would seem to be unfair and contrary to the interests of justice to permit an Applicant who has failed to exercise the utmost good faith in bringing an ex parte application to then convert that application, flawed as it clearly has been found to be, to an application for substantive relief. In my view the proper course is to refuse the application to amend and to simply dismiss the application and otherwise discharge the orders made by the court on 23 December 2005.
I shall hear the parties in relation to any further orders required in this application.
I certify that the preceding fifty-one (51) paragraphs are a true copy of the reasons for judgment of McInnis FM
Associate:
Date: 13 April 2006
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