Loosli v Shelton
[2003] VSC 127
•24 April 2003
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 6489 of 2002
| PETER LOOSLI | Plaintiff |
| v | |
| BRIAN SHELTON | Defendant |
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JUDGE: | HARPER J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 24 APRIL 2003 | |
DATE OF RULING: | 24 APRIL 2003 | |
CASE MAY BE CITED AS: | LOOSLI v SHELTON | |
MEDIUM NEUTRAL CITATION: | [2003] VSC 127 | |
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Contempt of Court – Order for the production and delivery into safe keeping of the opal the subject of the proceedings – Failure by the defendant to produce the opal – Assertion that opal sold - Refusal by the defendant to answer questions about the whereabouts of the opal or to disclose the details of sale – Fiduciary duty of defendant to plaintiff – Requirement that defendant answer questions or be committed into custody.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr T Di Lallo | Russell Kennedy |
| For the Defendant | Mr P Pickering | Hamilton & Telford |
HIS HONOUR:
I propose to outline my reasons for coming to the tentative conclusion to which I have come. I propose then to give Mr Shelton an opportunity to take and give further instructions. I will thereafter make whatever orders seem appropriate.
By writ issued 16 July 2002, the plaintiff claimed among other things that he was the owner of an opal known by both parties as the "Galaxy Opal". It is on any view a very valuable gemstone. One valuation mentioned during the course of the proceedings before me puts the value of the opal at about $1.75 million. The defendant now claims that he sold it on or about 29 March for $600,000. No evidence has been put before me thus far to explain the apparent diminution in the value.
The plaintiff alleges that by an agreement made in or about December 1989 in Zurich, Switzerland, he agreed with the defendant that the defendant would keep the opal on a sale or return basis. In particulars of the agreement, given under paragraph 3 of the statement of claim, the plaintiff alleges that the agreement was partly oral, partly in writing, and partly to be implied. The written portion, consistently with what I understand the defendant to say about the very loose arrangements commonly come to in the trade in gemstones, is on the evidence presently before me threadbare at best. As I understand it, the only documentation consists of a “receipt” with minimal indication of the terms pursuant to which the defendant obtained custody of the opal.
The plaintiff pleads that by the express terms of the agreement the defendant would within 6 or12 months of December 1989 sell the opal at the best possible price. The statement of claim further alleges that if the opal was not sold within that initial period, it would be returned to the plaintiff upon demand. The plaintiff alleges that the opal had not been sold up to the time of issue of the writ, but that on or about 28 March 2002 he, through his solicitors, demanded in writing that the opal be returned. It is alleged that that demand has not been complied with.
By his prayer for relief, the plaintiff claims certain declarations and injunctions, and alternatively, damages for either retention of the opal or for its conversion.
A defence and counterclaim was filed on behalf of the defendant on 5 September 2002. It was suggested this morning that that document is not one which the defendant now accepts as appropriately representing his position. It does contain an admission that the plaintiff has a half interest in the opal. If that admission was properly made, and if, as the defendant on his sworn evidence this morning asserts, the opal was sold by him to an undisclosed purchaser for $600,000, then the plaintiff is entitled to $300,000, being half of that sum. On one eminently reasonable view of the defendant's case, therefore, it can be concluded that the defendant is in a fiduciary position in relation to the plaintiff in the sum of $300,000 or thereabouts; that is, putting the case as it is pleaded by the parties.
As a fiduciary, the defendant has certain duties in relation to this money. Even if he is not a fiduciary, the position nevertheless is that a claim not said to be an abuse of process has been made by the plaintiff in relation to the opal or, alternatively, to the proceeds of its sale. Even in those circumstances, a party to litigation would in normal circumstances be entitled to be told what had become of those proceeds, and under what circumstances they were being held. The party would be entitled to seek from the court orders appropriate to ensure that the proceeds of sale were not improperly dissipated.
The defendant was asked questions under cross-examination by counsel for the plaintiff this morning going to the last matter. He was asked where the proceeds of sale were, and the circumstances in which they were currently being held. He refused to give any but generally unhelpful answers to those questions. He has therefore left the court in the position where the court is unable to make an informed decision about what should be the fate of the proceeds of sale, assuming that the defendant has truthfully asserted that the opal has been sold. More particularly, if on the case as pleaded by the defendant himself, he is a fiduciary in relation to some $300,000 of the proceeds of sale, then as a fiduciary he is obliged to place the plaintiff in a position from which the plaintiff can best protect his interests in that money.
By refusing to answer the relevant questions, the defendant has acted not only in breach of such fiduciary duty as he may have in relation to the opal or the proceeds of its sale, but also in defiance of his obligations as a litigant. In those circumstances, I propose to give the defendant an opportunity after further consultation with his counsel toanswer the questions to which I have referred. If he fails to give truthful answers to those questions, or at least if he fails to give sensible answers to those questions, then I propose that he be committed into custody and be held in custody until a date to be fixed.
As I mentioned at the outset of this explanation for my present position, however, I will hear counsel on the orders that might be made should the defendant decline to answer the questions.
On the defendant's undertaking to produce at the offices of Guardian Vaults Pty Ltd, 100 William Street, Melbourne, at 10 am on Monday 12 May 2003 either the opal described in the orders made in this proceeding on 27 March 2003, or the proceeds of the sale of the said opal, order that:
(1) (a) In the event that the opal is produced it be thereafter dealt with in accordance with the said orders;
(b) In the event that the proceeds of sale are produced, they be paid by the solicitors for the parties into an interest bearing account in the joint names of the plaintiff and the defendant with neither party having the right to access that account without the consent of the other.
(2) That the plaintiff's summons dated 4 April 2003 seeking orders in relation to an alleged breach of the orders made on 27 March 2003, be adjourned to - given my commitments in Warrnambool I will have to ask that that be adjourned to 1.30 pm on 12 May 2003.
(3) Will be that the plaintiff's summons issued on 23 April 2003 be adjourned to 1.30 pm on 12 May 2003.
(4) Liberty to apply.
(5) Costs reserved.
I must now formally ask you to give the undertakings to which I have referred, that is, an undertaking that you will produce to the offices of Guardian Vaults Pty Ltd, 100 William Street, Melbourne, at 10 am on Monday 12 May 2003 either the opal described in the orders which were made on 27 March, or the proceeds of sale of the opal, do you understand that undertaking? --- Yes. Are you prepared to give it? --- Yes.
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