Lowe v Pascoe - [2012] NSWSC 151

Supreme Court

New South Wales

Medium Neutral Citation: Geoffrey Alan Lowe & Anor v Scott Pascoe & Ors [2012] NSWSC 151
Hearing dates: 30 September 2011; 28 October 2011
Decision date: 29 February 2012
Jurisdiction: Equity Division
Before: Bergin CJ in Eq
Decision:
Fresh trial before a judge to be nominated by the Chief Justice pursuant to s 88 of the Civil Procedure Act 2005

Catchwords:
[JUDGES] - where trial judge is unable to complete hearing of proceedings - where numerous judgments - incomplete part-heard application to re-open findings in judgments and to allow re-opening of cases to call additional evidence previously allegedly unavailable to the parties - where parties do not consent to procedure to be adopted in the circumstances - application for declarations and orders to be made by another judge pursuant to process adopted in Smartec Capital Pty Ltd v Centro Properties Ltd & Anor (2011) ACSR 461 and Smartec Capital Pty Ltd v Centro (CPL) Limited & Anor [2011] NSWSC 644.

[FRESH TRIAL] - whether there should be a fresh trial under s 88 of the Civil Procedure Act 2005 - nomination by "senior judicial officer" that the proceedings be listed for trial before "some other judicial officer" of the Court.
[PROCEDURE ON FRESH TRIAL] - nature of directions in relation to evidence at fresh trial - consideration of procedure in context of history of the proceedings and the overriding purpose of the Civil Procedure Act 2005 and the Uniform Civil Procedure Rules 2005.
Legislation Cited: Civil Procedure Act 2005
Courts of Judicature Act 1964 (Malaysia)
Federal Court of Australia Act 1976 (Cth)
Supreme Court Act 1970
Supreme Court Act 1995 (Qld)
Uniform Civil Procedure Rules 2005
Cases Cited: Bagshaw v Scott [2005] FCA 104
Bolton v Bolton (1949) 2 All ER 908
Brennan v Brennan (1953) 89 CLR 129
Chua Chee Chor v Chua Kim Yong [1962] 1 WLR 1464
Coleshill v Manchester Corporation (1928) 1 KB 776
In re Application of British Reinforced Concrete Engineering Co Ltd (1929) 45 TLR 186
Lowe v Pascoe [2010] NSWSC 388
Lowe & Anor v Pascoe & Ors (Unreported, Supreme Court of New South Wales, Smart AJ, 25 June 2010)
Lowe & Anor v Pascoe & Ors (Unreported, Supreme Court of New South Wales, Smart AJ, 11 February 2011)
Lowe & Anor v Pascoe & Ors (No. 3) [2011] NSWSC 192
Mermaids Cafe and Bar Pty Ltd v Elsafty Enterprises Pty Ltd [2010] QSC 80
Smartec Capital Pty Ltd v Centro Properties Ltd & Anor (2011) ACSR 461
Smartec Capital Pty Ltd v Centro (CPL) Limited & Anor [2011] NSWSC 644
Wentworth v Rogers & Anor (No. 3) (1986) 6 NSWLR 642
Category: Principal judgment
Parties: Geoffrey Lowe and Mary Lowe (Plaintiffs)
Scott Pascoe (Administrator of the Estate of the late Kut Sze Tu) (1st Defendant)
Margaret Sze Tu (2nd Defendant)
Helen Sze Tu (3rd Defendant)
Janet McNamara (4th Defendant)
Shiu Shing Sze Tu (5th Defendant)
Shiu How Sze Tu (6th Defendant)
Stella Sze Tu (as representative of the Estate of the late FC Chow) (7th Defendant)
Representation: FM Douglas QC (28 October 2011 only) AA Henskens SC/AR Zahra (Plaintiffs)
J Stoljar SC (1st Defendant)
D Williams SC/Ms J Little (5th and 6th Defendants)
Colin Biggers & Paisley (Plaintiffs)
Argyle Lawyers (1st Defendant)
2nd Defendant -unrepresented
3rd Defendant - unrepresented
4th Defendant- submitting appearance
CLS Legal (5th and 6th Defendants)
7th Defendant - submitting appearance

File Number(s): 2005/00262284

Judgment

These proceedings relate to property that forms part of the estate of the late Kut Sze Tu (referred to in the proceedings as "KST"). The plaintiffs are Geoffrey Lowe and his wife Mary Lowe. Mrs Lowe is the daughter of KST. The first defendant, Scott Pascoe, is the trustee of KST's estate. The other defendants are Mrs Lowe's siblings. Margaret Sze Tu and Helen Sze Tu are the second and third defendants, respectively. Janet McNamara is the fourth defendant and filed a submitting appearance on 28 November 2008. Shiu Shing Sze Tu (known as Sunly) and Shiu How Sze Tu (known as Gordon) are respectively the fifth and sixth defendants and are the sons of KST and his second wife, the late Fung Chun Chow (referred to in the proceedings as "FC Chow"). Stella Sze Tu as representative of the estate of the late FC Chow is the seventh defendant and filed a submitting appearance on 17 April 2008. Without any disrespect, I will refer to most of the parties by their first names.

By Further Amended Statement of Claim filed on 15 November 2008 the plaintiffs sought a declaration that they, KST, FC Chow, Margaret, Helen and Janet operated two family businesses in the 1970s and 1980s pursuant to a partnership (the Partnership). The businesses were a grocery shop known as Wing Yuen Tai (referred to in the proceedings as "WYT") and the Yee Sing Butchery (referred to in the proceedings as "YS") and were located in Haymarket in Sydney, New South Wales. The plaintiffs sought an order that the Partnership be wound up. The plaintiffs also sought a declaration that the interests of each of the defendants in the three properties are held on trust for the Partnership. Two properties are in Maroubra and are referred to in the proceedings as "Maroubra Road" and "Haig Street". The other property is in Campbelltown and is referred to in the proceedings as "Queen Street" (referred to together as "the three Properties"). The plaintiffs also sought consequential relief including the taking of accounts or equitable compensation.

There were 25 days of hearing before Acting Justice Smart on various dates in 2009, 2010 and 2011. His Honour delivered judgments on 7 May 2010, 25 June 2010, 1 February 2011 and 24 March 2011. Unfortunately, in mid 2011 whilst part-heard in applications, inter alia, to call further evidence, his Honour suffered an illness that rendered him incapable of finalising the proceedings. An order was made on 25 August 2011 terminating the proceedings before his Honour.

On 30 September 2011 and 28 October 2011 I heard competing applications on the way forward in these proceedings. The plaintiffs made applications for final declarations and orders as reflected in Smart AJ's judgments. The defendants made application for an order pursuant to s 88 of the Civil Procedure Act 2005 for a fresh trial before a new Judge on the conditions that all the evidence adduced to date would be before the new Judge and the parties would have liberty to adduce further evidence and cross-examine witnesses including witnesses who have already given evidence. These reasons are in respect of those applications.

On 30 September 2011 Mr AA Henskens, of counsel, leading Mr AR Zahra, of counsel, appeared for the plaintiffs, Mr J Stoljar SC appeared for the first defendant. Mr D Williams SC, leading Ms J Little, of counsel, appeared for Sunly and Gordon. Margaret appeared unrepresented. The only changes to the appearances on 28 October 2011 were that Mr FM Douglas QC led for the plaintiffs (and by that time Mr Henskens, who remained retained, had taken silk). Helen also appeared unrepresented.

The proceedings before Smart AJ

On 6 November 2008, Smart AJ ordered a separate hearing on liability in respect of the following issues: (a) the existence of a partnership between the plaintiffs and the defendants or any predecessors; (b) the dissolution of the partnership; (c) the fiduciary duties, if any, owed by KST to the plaintiffs and the breaches of any of those duties; (d) whether the three Properties are held on trust; (e) the defences of laches, including gross laches and acquiescence; (f) the defences based on the Limitation Act 1969 (sections 15, 47, 48 and 68A); (g) the defences based on estoppel; and (h) the defences based on indefeasibility of title.

The May Judgment

Smart AJ delivered judgment on 7 May 2010: Lowe v Pascoe [2010] NSWSC 388 (the May Judgment). The relevant events with which his Honour was dealing dated back to the 1970s. There was a paucity of contemporaneous documents coupled with allegations of receipts of large amounts of cash allegedly undisclosed to the taxation authorities. His Honour referred to the impact of the "lapse of time" on the parties' recollections and the difficulty in determining "the truth and what happened" [1].

His Honour described the issues in the litigation as follows:

8 These proceedings arise out of allegations that KST and Geoffrey entered into an agreement to purchase two businesses conducted by the late KST, namely WYT, a general store and mixed business, often referred to as a grocery business, in "Chinatown", Sydney and YS Butchery located around the corner from WYT; the conduct of those businesses and allegations that there was a partnership involving the plaintiffs, KST, his second wife and Margaret, Helen and Janet; allegations that KST used partnership funds to purchase a property in Haig Street in December 1978 for $129,000 in his name, Sunly's name and Gordon's name each as tenants in common as to a one third share (both Sunly and Gordon still being infants aged respectively about 12 and 13), a property in Maroubra Road in February 1983 for $585,000 in the name of KST as to four one-fifth shares and Margaret as to one one-fifth share as tenants in common, and a property in Queen Street in July 1988 for $1.58 million in KST's name as to six one-tenth parts with Margaret, Gordon, Helen and Sunly as to the remaining one-tenth parts each and as tenants in common.

9 It is alleged that these three last-mentioned properties were impressed with trusts and held on behalf of the alleged partnership.

His Honour found that the assets of the estate of the late KST relevantly included: a 4/5 th share in Maroubra Road as tenants in common with Margaret; a 1/3 rd share in Haig Street; and a 6/10 th share in the Queen Street property [37]. Maroubra Road was sold to a third party in 2005 and the proceeds of sale are held in trust, pending the outcome of the proceedings. Haig Street was transferred to Sunly and Gordon in 2004 for $367,000. KST's interest in Queen Street was sold to Margaret and Helen with the consequence that Margaret has a 5/10 th share, Helen has a 3/10 th share and Gordon and Sunly each have a 1/10 th share.

Smart AJ referred in detail to the history of the family, the purchasing of the businesses (including moneys allegedly contributed by Geoffrey), the manner in which the businesses were operated (including extensive involvement of family members), formation of the partnership agreement, the finances of the business and the purchasing of the three properties by KST ([57]-[307]). Smart AJ dealt in detail with the different versions of events given by the parties in respect of the operation of the businesses.

His Honour found that the Partnership Agreement was entered into on 1 October 1975 by KST, Geoffrey, Mary, Margaret, Helen, Janet and FC Chow. His Honour said:

96 Under clause 3, which specified the shares held by each person in the alleged partnership, it is stated "and the capital of such shares shall be contributed by the partners in accordance with the share or shares taken up by them". That did not occur.

97 Clause 7 provides:

"The profits of the partnership shall be divided between the partners in accordance with the share or shares of the capital taken up by the partners respectively and the losses of the partnership shall be borne by them in the same shares and proportions."

While, according to the tax returns, there were distributions of profits, these did not occur in fact.

...

102 Clause 20 provides:

"All property and assets purchased and acquired or contracts or leases entered into by a partner in his own name as agent for the partnership shall become partnership property and all such property and assets so purchased and acquired shall be held in trust by such partner or partners in trust for the partnership."

The plaintiffs contended that KST did acquire property out of the partnership assets and was acting as agent for the partnership. This clause reflects the general law. It also creates an express trust of the property and assets purchased and acquired.

After consideration of all the circumstances, Smart AJ found that there probably was a partnership substantially as alleged by the plaintiffs in the Further Amended Statement of Claim [325]. His Honour said he was "inclined to consider at this stage" a declaration that the plaintiffs, the late KST and FC Chow, Margaret, Helen and Janet were partners as from 1 August 1975 and operated the WYT and YS businesses pursuant to a partnership in the following shares: KST as to 20%; Geoffrey Lowe as to 10%; Mary Lowe as to 10%; Margaret as to 10%; Helen as to 10%; Janet as to 10 %; and FC Chow as to a 30 per cent share [573].

A major issue in the proceedings was the amount of cash received by the businesses. Smart AJ said, "There was no dispute that retail customers of WYT and YS paid in cash. The cash payments by the retail customers of WYT were not included in the WYT notebooks in which Mary and Margaret made entries" [287]. However, his Honour noted that there was a dispute as to the number of retail customers of WYT and YS (at [288]) and therefore the amount of cash that was received. His Honour said (at [289]):

The [recorded] wholesale sales of WYT probably accounted for a substantial portion of its business and income, but I would not dismiss the income received in cash from the retail customer sales and other cash customers. That income was substantial over the years and probably greater over the period August 1975 - January 1981 than in later years. It is probable that KST did not disclose to [his accountant] Mr Wong the total amounts received in cash by WYT.

His Honour was satisfied that "substantial" amounts of cash were received in the operation of WYT and YS, but concluded that it was not possible to determine accurately how much was received [294]. His Honour was not satisfied that the YS accounts for the financial years 1984, 1985 and 1986 were accurate or that the income tax returns included the receipt of the cash [297; 305]. The WYT business was closed and the YS business was sold but the evidence was such that his Honour was unable to determine the sale price or what had happened to the proceeds of sale [306; 463].

His Honour said (at [306]):

Two difficult questions remain, that is, what was the sale price of YS and what happened to the proceeds of sale? The evidence does not enable me to answer those questions. There is no evidence from any of the defendants of the amount or amounts received by KST from Mr Tony Lam on the sale of the YS business. Mr Wong was not told. Gordon was probably told, but does not remember the amount. I did not regard this as untruthful evidence. It was many years ago and Gordon has other interests. I do not know if the sale price was paid in a lump sum about the time the sale was completed or over a period of time. Nor do I know if the sale price was paid in cash in whole or in part.

His Honour observed at [312]-[313]:

... Whatever legal forms may have been created, KST regarded the two businesses as his and his complete control as a very important factor. He did not favour the interposition of companies and trusts.

KST was an astute businessman who knew how to make and save money. He was interested in Chinese-style businesses which, at least in part, dealt in cash. Stock processes, costs, sales and purchases may be adjusted. Splitting business incomes amongst family members is not unusual. It was not a cause of surprise that Johnson Wong, his firm or company was not told by KST or any of his four daughters that no distributions of profits ever took place. KST probably only told Mr Wong and his daughters what KST believed they needed to know.

The plaintiffs relied upon a report of Mr Michael Hill, a chartered accountant. Smart AJ noted that Mr Hill's "report depended, in large measure, upon the assumption he was asked to make that KST had access to no other assets of consequence than the Wiley Park and Fairfield flat properties and the Coogee Bay Road unit" (at [332]). Mr Hill outlined his instructions as follows (at [332]):

I have been instructed to consider the following matters in relation to the Wing Yuen Tai partnership (the partnership) and Mr Sze Tu for the period from 1 August 1975 to 30 June 1988 (the relevant period):

a) Estimate the annual and total profit and cash flows generated by the businesses operated by the partnership, Wing Yuen Tai (WYT) and Yee Sing Butchery (Yee Sing);

b) Estimate the annual and total profit and cash flows of the rental properties acquired by Mr Sze Tu;

c) Estimate the annual and total profit and cash flows of the partnership;

d) Estimate the total funds which were likely available to Mr Sze Tu; and

e) If possible, determine the source of funds used to purchase the rental properties acquired by Mr Sze Tu during the relevant period.

His Honour said of Mr Hill's report (at [355]):

From Mr Hill's report, it is possible to consider the position on the basis of whether KST, apart from the rental income, had access to funds other than the funds generated by WYT and YS to purchase the Haig Street property in late 1978, the Maroubra Road property in February 1983 and the Queen Street property in 1988. That involves considering the financial position at each of those times of KST and whether Margaret made the contribution she claims in February 1983 to about one-fifth of the purchase price of the Maroubra Road property. The financial position of WYT and YS, so far as known, also has to be considered.

At [357] his Honour observed:

Mr Hill concluded that, after deductions were made from the total cash flow of $1,757,627.00 for income tax and living expenses and interest was added, the total net cash flow available was $1,088,162.00. Mr Hill wrote that the shortfall between the net cash flow available to KST of $1,088,162.00 and the costs of the properties acquired was $1,294,146.00 (rounded to $1.3 million). Mr Hill was not provided with any information on the affairs of KST, the partnership and family affairs, other than in relation to the "partnership" businesses. He was not provided with any information on any other activities, businesses, assets or related matters so he could not form a view on any of these matters. Mr Hill noted that it may be possible that the net income generated by the two businesses was understated in the "partnership" tax returns to minimise the tax that its "partners" would have had to pay. Mr Hill said that this was one possibility. He had no knowledge that, specifically, there was an understatement of the net income of the "partnerships". I appreciate the force of Mr Hill's overall approach. ...

However, Smart AJ then made the following remarks (at [372]):

While I value the evidence of Mr Hill, I have taken a different approach. I have not accepted all the assumptions which Mr Hill was asked to make, nor his use of the ABS figures as to living expenses. Whichever approach is taken, there was a significant unexplained shortfall. I have taken the view, on the balance of probabilities, that KST made up the shortfall out of partnership funds including cash receipts received by WYT and YS which were not disclosed.

His Honour was satisfied that KST could not have purchased his 4/5 th share in the Maroubra property "using the moneys legitimately available to him" [362]. His Honour said he was "prepared to assume" that KST "must have had assets and money or resources of which his family were not aware" [369]. However, his Honour was not prepared to assume that such assets, money or resources were in the sums required to fund the purchase of the Maroubra Road and Queen Street properties. His Honour referred to the size of the amounts and the absence of any mortgages and concluded that KST probably "used partnership funds" to make the purchase [369].

At [445 e)], Smart AJ said:

The plaintiffs have established that KST, in order to purchase his shares in the Maroubra Road property and the Queen street property, utilized a sum of about $1 million or a little less which did not come from the disclosed income of WYT and YS. The rental incomes from the Wiley Park and Fairfield properties were not sufficient to make up the balance. Some of the moneys used to purchase "his" share in the Maroubra Road property and the Queen Street property probably came from the cash received by WYT and YS and controlled by KST but not disclosed. Some of such moneys may have come from stock manipulation but I am unable to make a finding on this point. KST was not entitled to appropriate the proceeds of sale of YS to his own use.

His Honour said that he was "inclined to consider" making an order winding up the partnership and declaring that five-sixths of Maroubra Road and the whole of Queen Street were acquired by KST using partnership moneys, and that the legal interests of the defendants in those properties were held on trust for the partnership [573].

His Honour also said that he did not propose to make a declaration as to the portion of the Haig Street property because the portion had not been defined. However, his Honour said that "provisionally, and subject to argument" he had in mind "on a broad assessment about $60,000.00 or about 45 per cent of the cost of purchasing the Haig Street property probably came from partnership funds" [574].

His Honour said he was concerned that there may need to be a taxation review of WYT and YS for the financial years 1975-1989 and ordered that his reasons be forwarded to the Commissioner of Taxation (the Commissioner).

His Honour referred to the difficulties of making an order for the taking of accounts in respect of the partnership. Those difficulties included the fact that both KST and FC Chow were deceased and that the first to seventh defendants may not be in a position to account, as they would not have the requisite knowledge as to the operation of WYT and YS. His Honour also referred to the fact that the events in question occurred many years ago and there had been much delay with the consequence that the availability and reliability of evidence had been affected. His Honour also referred to the differing positions of the interests of the children in the Haig Street property because Sunly and Gordon were minors at the time of the purchase.

His Honour said that he envisaged that various matters required attention once the taxation issues were resolved. They included the net rental receipts of the properties, estimates or assessments of the value of the occupation of the Haig Street property, estimates or assessment of the sale value of YS as at June 1986, directions as to the disposition of the moneys held by the administrator, determination of where the burden of any additional tax penalties and interests should lie and the provision for the costs and expenses of the administrator and any receiver and manager of the partnership business [583]. His Honour said that he did not propose to make any consequential orders "at this stage" and that the question of what relief should be ordered "remains to be decided". His Honour also observed that in view of the lack of evidentiary materials and the length of time that had elapsed it may become necessary to make a number of broad assessments and concluded "I doubt if the conventional orders would be appropriate" [584].

His Honour adjourned the matter for further hearing as to declarations and orders "to be made at this stage". He also said that he was considering fixing a date in September to enable directions to be given as to the future course of the proceedings noting that it may not be practicable to appoint a receiver and manager of the partnership businesses on the next occasion. His Honour said that he was contemplating "giving all parties liberty to apply on seven days' notice because of the matter being stood over to 9 September 2010 to allow the ATO to consider the position". His Honour also said that rather than referring the matter to an Associate Justice, consideration should be given to whether it may be preferable to refer the matter to a Referee.

The June Judgment

Smart AJ heard submissions on 8 June 2010 and delivered a second judgment on 25 June 2010 (the June Judgment). At [7], his Honour discussed his findings in relation to the Maroubra Road property in the May Judgment in the following terms:

(a) I dealt with the issue of the source of funds for the purchase of the Maroubra Road property in paragraphs 369, 425 - 428 and 573(3) of the earlier Judgment. In paragraph 425 I noted that there was no explanation of how the late Kut Sze Tu ("KST") could have acquired between 30 June 1980 and 14 February 1983 about $400,000.00 to $500,000.00 in savings. In paragraph 426 I wrote that Mr Hill's analysis of the available cash had satisfied me that the money provided by KST for the purchase of five-sixths interest in the Maroubra Road property probably came from receipts from the businesses of Wing Yuen Tai ("WYT") and the Yee Sing butchery ("YS"). I next referred to the substituted Appendix N (part of Exhibit Y) to Mr Hill's report. That Appendix includes both available cash from WYT and YS and the Wiley Park units and the Fairfield units. For the years ended 30 June 1979, 1980, 1981 and 1982 the income from the businesses of WYT and YS greatly exceeded the income from the Wiley Park and Fairfield units, that is, by several times. The available cash figures referred to in the substituted Appendix N included both sources of income. The figures for the year ended 30 June 1979 were affected by the purchase of the Haig Street property and Mr Hill calculated that the surplus of funds after purchase of the Haig Street property was $82,727.00.

(b) It was a mistake to treat the substituted Appendix N as only containing the moneys received from WYT and YS. To reach his conclusion in paragraph 6.3.3 of his report, that the partnership would have had sufficient funds to purchase the Maroubra Road property, Mr Hill appears in substituted Appendix N to have combined the moneys received from WYT and YS with those received from the Wiley Park units and the Fairfield units. I did not pick this up in the Judgment of 7 May 2010. This means that there will have to be an enquiry as to the amount of partnership moneys used in the purchase of the Maroubra Road property. From the figures set out in the substituted Appendix N, it would seem that the majority of the moneys used to purchase the five-sixths interest held by the late KST in the Maroubra Road property probably came from WYT and YS. I did not draw this matter to the attention of counsel on 8 June 2010 and will hear them before finalising the terms of the declaration.

(c) My provisional view is that the declaration should read:

"2. A declaration as at 20 October 1997 that five-sixths of the Maroubra Road property was acquired by the late Kut Sze Tu (in his name and that of the second defendant) substantially using moneys of the partnership."

(d) On my calculations, based on substituted Appendix N, moneys received from the Wiley Park and Fairfield units for the years ended 30 June 1979, 1980, 1981 and 1982 totalled $162,075.00. Further adjustments would reduce the moneys received and available in the year ended 30 June 1979 to allow for the purchase of the Haig Street property in late 1978.

His Honour then said of the Maroubra Road and Queen Street properties (at [8]):

Ms Helen Sze Tu submitted that, while the Court had found that a partnership existed, it had made no assessment whether some of the moneys used by the late KST to buy the five-sixths share of the Maroubra Road property and the entire Queen Street property had been, on the balance of probabilities, that of the late KST, as distinct from partnership moneys. That submission is correct. I had no intention of making such an assessment. It was not an issue which I resolved. I anticipated that the enquiry which was to follow would determine, inter alia, how much of KST's money and how much partnership money was used to purchase the five-sixths share of the Maroubra Road property and the Queen Street property respectively. I was satisfied on the balance of probabilities that partnership moneys had been used in the purchase of the Maroubra Road and Queen Street properties. I regret that any words I used have misled the parties.

In relation to findings regarding the Queen Street property made in the May Judgment, his Honour commented as follows (at [9]):

(a) The plaintiffs sought a declaration that the whole of the Queen Street property was acquired by the late Kut Sze Tu in his name and that of the second, third, fifth and sixth defendant using moneys of the partnership.

(b) The fifth and sixth defendants submitted that the declaration should read

" A declaration that the late Kut Sze Tu acquired the Queen Street property using moneys some of which were partnership property."

(c) A study of substituted Appendix N reveals that, in the years ended 30 June 1984, 1985, 1986, 1987 and 1988, substantial moneys were received from the Wiley Park and Fairfield units. An enquiry will need to be held to determine the amount of partnership moneys used in the purchase of the Queen Street property. This will be complicated by endeavouring to calculate the moneys received from the Maroubra Road property. Two adjustments will be needed. First, the starting figure will be five-sixths of the money received. Secondly, it will have to be ascertained what proportion of the moneys to purchase the five-sixths interest came from WYT and YS and what proportion came from the money received from the Wiley Park and Fairfield units. Some broad assessments may have to be made.

(d) I invite the parties to check my figures and my understanding of substituted Appendix N, both as to the Maroubra Road and Queen Street properties.

His Honour also made the following comments about his findings in relation to the Queen Street and Maroubra Road properties:

14 It was submitted that it was not possible for the Court on the evidence, on the balance of probabilities, to reach concluded decisions on the amounts of partnership moneys used in the purchase of the Maroubra Road and Queen Street properties. There was some inter-relation between these properties. It was suggested that some of the moneys received from the Maroubra Road property had been used in the purchase of the Queen Street property. I was satisfied that partnership moneys had been used in the purchase of each of these properties but I was not able, on the balance of probabilities, to determine the amounts of partnership funds so used. The late KST had other sources of income, especially from the Wiley Park and Fairfield properties (subject to any outstanding issues as to the entitlement to the rents of these properties).

15 I did not accept Mr Hill's assessment that there was a shortfall of about $1.3 million when the Queen Street property was purchased and that a sum of this order came from partnership funds. However, I was satisfied that a substantial sum came from partnership funds. Some of the moneys may have come from the proceeds of sale of the YS butchery business. In my Judgment of 7 May 2010 I dealt with the broader issues in accordance with my Judgment of 6 November 2008 (as later supplemented). I was, in general, not concerned with ascertaining particular financial details. The taking of an account or the assessment of equitable compensation was to follow.

16 My statement in paragraph 569 of the Judgment of 7 May 2010 holding that there was a breach of an express breach of trust created under the partnership agreement of the Maroubra Road property (excluding Margaret's share) and the whole of the Campbell town property was intended to indicate that there were breaches of trust in both instances in that partnership moneys had been used by KST in both purchases. The quantification of the partnership moneys so used should be determined by the enquiry which follows.

With regard to the Haig Street property, his Honour said as follows (at [13]):

The plaintiffs sought a declaration that 45 per cent of the Haig Street property was acquired by the late Kut Sze Tu (in his own name and that of the fifth and sixth defendants) using moneys of the partnership. See paragraph 574 of my Judgment of 7 May 2010. Reference was also made to paragraphs 358 - 360. Counsel for the fifth and sixth defendants submitted that, as the Court was not able to determine on the evidence, on the balance of probabilities, the exact amount of partnership moneys contributed to the purchase of the Haig Street property, it was properly the matter of further enquiry and that I should not pre-empt such an enquiry by making a broad assessment. It is possible that some further evidence may become available if there is a taxation review. I did not accept the submission that if the exact amount of partnership moneys employed by KST in the purchase of the Haig Street property could not be quantified on the balance of probabilities, no allowance should be made. On the current materials the percentage and amount provisionally mentioned in paragraph 574 of the Judgment is a cautious assessment of the amount of partnership moneys used in the purchase of the Haig Street property. I thought, on the balance of probabilities, that some partnership moneys had been used by KST in the purchase of the Haig Street property and that an assessment should be made of the moneys likely to have been so used. The Court has to do the best it can on the available material. I have not overlooked the loan account of KST to which counsel made reference. I am prepared to receive further evidence and to hear further argument on this issue. It is an issue that should probably be resolved after the conclusion of any taxation review and prior to any enquiry.

His Honour remained of the view that no final orders should be made pending the Commissioner of Taxation's response to the May Judgment. He said at [12]:

The Commissioner of Taxation has extensive powers of investigation and may seize relevant documents. While the findings of the Commissioner may have limited relevance, the material uncovered and available from any taxation review may be relevant. The administration of the estate and resolution of these proceedings probably cannot satisfactorily progress until the taxation review, if any, has occurred and any amended assessments have been issued.

A declaration was made as to existence of the partnership, as foreshadowed in the May Judgment (at [573]), at [27] of the June Judgment as follows:

1. A declaration that the first and second plaintiffs (Geoffrey and Mary Lowe) the second to fourth defendants (Margaret Sze Tu, Helen Sze Tu, Janet McNamara) the late Kut Sze Tu and the late Chow Fung Chun were partners as from 1 August 1975 and operated the businesses of Wing Yuen Tai and Yee Sing Butchery pursuant to a partnership in the following shares:

(a) the first plaintiff as to a 10 per cent share

(b) the second plaintiff as to a 10 per cent share

(c) the second defendant as to a 10 per cent share

(d) the third defendant as to a 10 per cent share

(e) the fourth defendant as to a 10 per cent share

(f) the late Kut Sze Tu as to a 20 per cent share

(g) the late Chow Fung Chun (also known as the late Fung Chun Sze Tu) as to a 30 per cent share

His Honour said that two additional declarations were "contemplated" being [26]:

(a) A declaration that five-sixths of the Maroubra Road property was acquired by the late Kut Sze Tu in his name and that of the second defendant substantially using moneys of the partnership.

(b) A declaration that the Queen Street property was acquired by the late Kut Sze Tu in his name and that of the second, third, fifth and sixth defendants using moneys some of which were partnership property.

His Honour also said that, "the parties are at liberty to propound further drafts as to the terms of the declarations which they contend should be made and any orders." His Honour ordered that a copy of the June Judgment be sent to the Commissioner. The matter was listed on 23 September 2010 for further hearing as to the declarations and orders to be made after the Commissioner considered the position. The Commissioner subsequently informed the Court that a taxation review was not proposed.

Further hearing

Further submissions were made on 23 September 2010 as to the appropriate relief. However the matter "became part heard" and was listed for further submissions on 20 December 2010.

On 20 December 2010, Sunly appeared with new counsel, Mr Williams SC, leading Ms Little of counsel. The Court was informed that Sunly had become aware that his discovery was not complete and that he had found "some five books of account" for the WYT and YS businesses covering the period 1975 to 1981. Smart AJ ordered that Sunly serve an affidavit of explanation for non-discovery and an affidavit or expert report in relation to the financial aspects of the partnership. Sunly was also to advise whether he sought to adduce further financial evidence.

There was a further hearing on 31 January 2011 when two questions were posed as to the "current stage of the proceedings". The first question was whether Sunly and Gordon had an entitlement to utilise further evidence subject to any discretionary considerations. The further evidence was that of an expert, Mr JJ Murray, and some further evidence of Sunly. The second question was whether they had to apply to reopen.

February Judgment

His Honour delivered a judgment in respect of this application on 1 February 2011 in which the following was said [8]:

During the hearing (T 35 of 31 January 2011) I entertained doubt whether the liability stage of the hearing was still alive and encouraged the fifth and sixth defendants to concentrate on the application to reopen. Inter alia, the fifth and sixth defendants foreshadowed that they intended to advance the expert evidence and report and the five books of account on the separate hearing as to accounts or compensation in any event. It was submitted, in effect, that either on the liability hearing or the hearing on the next leg (enquiries, accounts or compensation), the Court would have to deal with the issues being raised. It was submitted that what would tell against the ordinary course and allow the reopening was the very close intertwining of the liability issues and the quantum issues. By quantum issues I am referring to the stage involving an enquiry, accounts or compensation.

His Honour then referred to the application for an adjournment made by the plaintiffs so that they could consider their position and made orders including the following ([15]):

1. The plaintiffs and the fifth and sixth defendants notify all other parties in writing (with a copy to the Associate to Smart AJ) by 5pm on 4 February 2011;

(a) whether they apply to reopen any of the judgments delivered by Smart AJ, and if so, identifying which judgments are sought to be reopened and in what respects;

(b) what particular findings in the judgments it is proposed be challenged prior to the making of orders;

(c) what further evidence is proposed to be relied upon in the event that leave to reopen any of the judgments is granted, and;

(d) what evidence is proposed to be relied on in the application to reopen.

1A. Additionally, the plaintiffs and the fifth and sixth defendants should notify all other parties in writing (in view of the fact that we have litigants in person) on or before 4 February 2011 with a copy to the Associate to Smart AJ:

(a) of the respects in which they apply to reopen their evidence and their case;

(b) the orders to be sought from the Court on the current evidence and findings and no reopening;

(c) and the orders to be sought from the Court if the evidence or judgments are reopened.

2. The plaintiffs notify all other parties in writing (with a copy to the Associate of Smart AJ) by 5pm on 4 February 2011 of the parts of the judgment or judgments of Smart AJ dated 7 May 2010 and 25 June 2010 that they wish to make further submissions about or to lead evidence about.

3. The fifth and sixth defendants serve any further evidence proposed to be relied upon in respect of their re-opening application by 5 pm on 4 February 2011.

4. All parties (other than the fifth and sixth defendants) serve any evidence proposed to be relied upon in relation to the re-opening application by 25 February 2011.

5. The fifth and sixth defendants serve any evidence in reply by 4 March 2011.

6. The proceedings be listed for hearing of the fifth and sixth defendant's reopening application for four days commencing on 15 March 2011. This includes determining whether the fifth and sixth defendants should be permitted to lead on the liability hearing the evidence that they have foreshadowed (the affidavits of the fifth defendant, the five books of account recently discovered and the affidavit evidence and report of Mr JJ Murray).

Responses to the Orders

In respect of the matters raised in Order 1, Sunly and Gordon notified the Court that they wished to make further submissions on the significance or otherwise of findings currently made and reasons contained in the May Judgment and the June Judgment and the appropriate consequential relief. They advised that they wished to seek leave to read the affidavit of Jason Murray sworn on 20 January 2011 and to tender the exhibit to his affidavit and the journals referred to within it. Mr Murray had analysed the books produced by Sunly and had reached different conclusions from those that Smart AJ had reached on the financial material previously before the Court.

They also advised that they wished to have the Court publish further reasons for judgment dealing with the submissions that they wished to make (a copy with which the Court was provided) "clarifying findings already made and making any further findings" necessary to dispose of all liability issues. They advised that they did not wish to make any challenge to the declaration in respect of the partnership. They drew attention to the question of whether the application was appropriately categorised as a "reopening of the judgments". However, to the extent that it was appropriate to so categorise it that way, they sought to reopen the matter and/or the judgment for the purposes of advancing the arguments and relying upon the additional evidence.

Sunly and Gordon also notified the Court that the particular findings that they wished to have the Court revisit were its observations in paragraphs [569] and [570] of the May Judgment that purported to refer to findings made earlier in the Judgment that there were breaches of an express trust created under the Partnership Agreement as to the three properties. Reference was also made to paragraphs [424] and [571] of the May Judgment. Sunly and Gordon contended that there were no "such findings earlier made". Sunly and Gordon also advised that they wished to challenge what appeared to be implicit assumptions in paragraphs [359(b)], [360], [362], [372], [426] and [571] of the May Judgment and paragraphs [7(b)], [8], [14] and [15] of the June Judgment. Sunly and Gordon also advised that they sought to have the Court revisit its observations that KST received large amounts of cash from the business without disclosing that receipt in the income tax returns or accounts. They specified the paragraphs the subject of this application as [3], [215(d)], [289], [295], [297], [305], [359(c)], [372], [426], [433], [445(d)], [462] and [565]. They advised that they sought to have the Court adopt Mr Murray's conclusions on the understanding that this would be dependent upon that the additional evidence being allowed.

Sunly and Gordon also advised that if the Court did not grant leave to reopen or to call evidence they would seek various orders including judgment in their favour on the balance of the proceedings, albeit that alternative formulations were put forward.

Further hearing

The plaintiffs objected to the process on the grounds that the Court did not have jurisdiction to entertain the application. The hearing of this objection occurred on 15, 16 and 17 March 2011.

March Judgment

Smart AJ delivered judgment on 24 March 2011, overruling the plaintiffs' contention that the Court lacked jurisdiction to entertain the application: Lowe & Anor v Pascoe & Ors (No. 3) [2011] NSWSC 192 (the March Judgment). The March Judgment included the following:

36 The plaintiffs concentrated on the judgment of 7 May 2010. I did not regard that as concluding the Court's consideration of the controversy. The relief to be granted was important. That had not been resolved although I had endeavoured to resolve many of the factual issues. I thought that the parties had led all the evidence they desired and while some further evidence may emerge from taxation review by the ATO, I anticipated that after delivering the judgment of 7 May 2010 I would hear detailed submissions from the parties as to the relief which the Court should grant at that stage. On being appraised that there was to be no taxation review it became necessary to focus closely on the terms of any relief to be granted. Such relief has not been resolved to date.

His Honour referred to the course of the litigation and the question of the incomplete discovery. He referred to the period during which Sunly was representing himself when he found two of the books that were the subject of the application. His Honour said:

49 At this point I am confined to the question whether the Court had completed its consideration of the controversy. I answer that question in the negative. I have not made final orders. The fifth and sixth defendants do not seek to challenge the declaration of partnership of 25 June 2010.

50 I am conscious of the importance of the principle of finality and the public interest in the finality of litigation. I have deliberately not determined the question whether the fifth and sixth defendants should be permitted to reopen the matter by reopening the evidence and relying on further limited evidence, namely the SSST1-5 (the five journals or cash books) and Mr Murray's report. On the view I have taken it is not a question of reopening final judgments or orders and I do not think that r 36.11 and r 36.16 apply accept as to the partnership declaration.

51 I would overrule the objection to jurisdiction. This does not mean that I would allow the fifth and sixth defendants to lead further evidence. That remains to be determined.

Further hearing

There has been some debate about the nomenclature and nature of the application made by the defendants, Sunly and Gordon, upon which Smart AJ had embarked at the time he fell ill. After the jurisdictional objection was decided against the plaintiffs in the March Judgment, the matter was further listed on 7 April 2011. On that day, Mr Henskens sought to clarify the nature of the procedure and said (tr 2-3):

Can I just by way of communication with your honour and the other parties to say that we understand that the procedure today is a continuation of the voir dire as to the reception of the further evidence that Mr Williams seeks to lead, and that the evidence will be on the voir dire.

We understood, consistent with the manner in which the matter was argued before your Honour prior to your Honour's recent decision on 24 March, that your Honour has decided that Mr Williams is not shut out by reason of r 36 of the rules from seeking to re-open any of your Honour's previous findings, or lead further evidence, but your Honour still has to exercise discretion with regard to those matters.

The defendants read Sunly's affidavits of 23 December 2010 and 31 January 2011. Sunly was then cross-examined for the balance of 7 April 2011 and was further cross-examined on 27 April 2011. The defendants read Mr Murray's affidavit of 18 January 2011 and his Report became an Exhibit (#VD6) without objection. Mr Murray was then called to give evidence and was cross-examined on 27 April 2011 and 28 April 2011. The second defendant, Margaret, was then called by the plaintiffs and was cross-examined by Mr Williams on 28 April 2011. On 12 July 2011, the third defendant, Helen, was called by the plaintiffs and was cross-examined by Mr Williams. The evidence concluded on 12 July 2011 and his Honour heard submissions during the afternoon of 12 July 2011 and on 13, 18 and 19 July 2011.

Late on 19 July 2011, Mr Henskens submitted that the application that was before the Court was for the re-opening of evidence. However, Smart AJ indicated to Mr Henskens that he understood that Mr Williams was also challenging the findings that his Honour had made in the May Judgment. The following exchange then took place (tr 460):

HIS HONOUR: I had understood from the beginning that Mr Williams' clients were challenging - going right back to 20 December 2010 - were challenging the findings that I have made.

HENSKENS: Yes.

HIS HONOUR: Mr Williams' problem, he put at one stage, that he was trying to suggest that I had misapplied the onus of proof. That was the theme of what he said to me initially.

HENSKENS: Yes. But we are taking this application in stages and in steps.

HIS HONOUR: I think there is a real problem about that in the sense that I deal with both of them together.

HENSKENS: Well, in my submission, you can't deal with them both together because we can't sensibly - if your Honour re-opens the evidence then your Honour has to give us an opportunity to respond to it.

HIS HONOUR: I certainly would.

HENSKENS: Your Honour is only in voir dire and then your Honour would then, having heard all of that evidence and any response to it, only then would your Honour be able to consider whether your Honour would change findings that have been made by your Honour previously.

HIS HONOUR: I would give the parties a full opportunity.

HENSKENS: And then consider the orders that ultimately your Honour would make.

HIS HONOUR; I have got time constraints in the sense that I can't go past 30 January.

HENSKENS: I understand that but relevant to this application which is receipt of evidence or not - -

HIS HONOUR: I don't think I would deal with that on that basis because that would just mean I would be dumping a problem in the Chief Judge in Equity's lap, and I don't think I would do that. What I would do is deal with the whole matter as I have understood - two things, first of all that there was a challenge to the findings that I had made. I certainly understood that.

HENSKENS: Yes.

HIS HONOUR: And particularly the onus of proof finding and I certainly would not order an inquiry at this stage without sort of tidying the matter up, if I can put it that way, and I think the real difficulty that I have got is that I'm going to run out of time at 30 January 2012. This isn't the only matter that I have got to deal with.

HENSKENS: Yes. We understood that we were dealing with a voir dire to admit fresh evidence.

HIS HONOUR: Well, I would not deal with that separately. I would certainly want to take the whole evidence.

HENSKENS: Then we need to be given an opportunity to respond to the other matters.

After further debate his Honour said that he had to provide an opportunity to Mr Henskens to address the "major point" which appeared to be the attack on the findings his Honour had made in the May Judgment. His Honour then listed the matter for further submissions on 30 August 2011.

In the intervening period his Honour fell ill.

Consideration

On 6 November 2008, Smart AJ made an order for the separate hearing of eight questions. Although his Honour referred to these questions as "issues" it is clear that what was contemplated was that this order was made pursuant to Part 28 r 28.2 of the Uniform Civil Procedure Rules 2005 (the Rules) that provides:

The court may make orders for the decision of any question separately from any other question, whether before, at or after any trial or further trial in the proceedings.

The order was framed in very broad terms using the expression "issues" rather than precise questions to be answered in the litigation. It appears that it was intended that the question of liability was to be decided prior to the question of any damages. I have no doubt that the intention was to adopt an approach that would give effect to the overriding purpose of the Civil Procedure Act 2005 and the Rules to facilitate the just, quick and cheap resolution of the real issues in the proceedings. Sadly that intention has not been fulfilled. However, it is appropriate to determine on these applications what separate questions are left undecided.

First Question

The first question was "the existence of a partnership between the plaintiffs and the defendants or any predecessors". That question has been finally determined and his Honour made a declaration in paragraph [27] of the June Judgment in respect of which there is presently no controversy between the parties.

Second Question

The second question, "the dissolution of the partnership", was not finally decided. His Honour said in paragraph [573] of the May Judgment that he was inclined to consider an order winding up the partnership under the direction of the Court. His Honour observed that if a Receiver and Manager were not appointed, questions may be raised as to whether an order winding up the partnership should be made. No order was made in respect of the dissolution of the partnership.

Third Question

The third question, "the fiduciary duties, if any, owed by KST to the plaintiffs and the breaches of any of those duties" was not expressly decided although his Honour found that there were breaches of express trusts in paragraphs [569] and [570] of the May Judgment. His Honour returned to this topic in paragraph [16] of the June Judgment and in particular dealt with paragraph [569] of the May Judgment stating that what he intended to indicate in that paragraph was "that there were breaches of trust in both instances in that partnership monies had been used by KST" in the purchases of the Maroubra Road property and Queen Street property. The breaches of express trust were part of the controversy with which his Honour was dealing in the part-heard application to re-open his findings. The defendants were propounding an argument that, although his Honour made a finding of breaches of an express trust in paragraphs [569] and [570] of the May Judgment on the basis of "earlier findings", there were no such earlier findings. This issue or question remains undecided.

Fourth Question

The status of the fourth question, "whether the three properties are held on trust" is the subject of dispute between the parties on this application. The plaintiffs contend that declarations should be made in respect of the Maroubra Road and Queen Street properties. However, they concede that further steps need to occur in the litigation before a declaration could be made in respect of the Haig Street property. The defendants contend that declarations should not be made and a fresh trial should be ordered.

His Honour said in paragraph [573] of the May Judgment that he was inclined to consider making a declaration that "five-sixths of the Maroubra Road property and the whole of the Queen Street property were acquired" by KST "using monies of the partnership". He also said in paragraph [574] that he did not propose to make a declaration "as to the portion of the Haig Street property because that portion has not been defined". However, his Honour said that, subject to argument, he was provisionally of the view that "on a broad assessment about $60,000.00 or about 45 per cent of the cost of purchasing the Haig Street property probably came from partnership funds."

In the June Judgment, his Honour noted that he had been satisfied from Mr Hill's analysis that the money provided by KST for the purchase of five-sixths of the Maroubra property "probably came from receipts" from WYT and YS [7(a)]. His Honour observed that Appendix N included both "available cash" from the businesses and the Wiley Park units and the Fairfield units. His Honour then said that it was "a mistake to treat the substituted Appendix N as only containing the monies received from" the two businesses. His Honour said that he did not pick that up in the May Judgment and he did not draw that matter to the attention of Counsel on 8 June 2010 when submissions were made in respect of the consequential relief. His Honour then said [7(b)]:

This means that there will have to be an inquiry as to the amount of partnership monies used in the purchase of the Maroubra Road property.

In paragraph [26] of the June Judgment his Honour "contemplated" a declaration that five-sixths of the Maroubra property was acquired by the late KST "substantially using monies of the partnership"; and a declaration that the Queen Street property was acquired by KST "using monies some of which were partnership property" [26]. These two declarations as "contemplated" by his Honour were different to that which his Honour had indicated in the May Judgment that he was inclined to make; that both properties were acquired "using monies of the partnership".

The plaintiffs submitted that his Honour was mistaken in reaching the conclusion that there had been a "mistake". It was submitted that Appendix N contained the rental income from Wiley Park and Fairfield and therefore his Honour's analysis included those amounts. It was submitted that in those circumstances the Court could ignore his Honour's concern in relation to the "mistake" and make the declaration his Honour said he was inclined to make in paragraph [573] of the May Judgment.

It is apparent that his Honour changed his mind in the way reflected by the proposed declarations in the June Judgment. That is, his Honour qualified the declaration by the insertion of the word "substantially" in relation to the Maroubra Road property and the words "some of which" in relation to the Queen Street property. This change was accompanied by the additional observations and findings that it would be necessary to have enquiries as to the amount of Partnership monies used in the purchase of the Maroubra Road property and the Queen Street property. It is not clear what caused his Honour to reach the conclusion that a substantial portion of monies used to purchase Maroubra Road came from the Partnership and that "some of the" Partnership monies were used to purchase Queen Street. It is clear that his Honour differentiated between the two purchases but the reasons for that distinction are not apparent.

This question remains undecided.

Fifth Question

The fifth question, "the defences of laches, including gross laches and acquiescence" was dealt with by his Honour in paragraphs [510] to [554] of the May Judgment. His Honour rejected these defences at paragraph [553].

Sixth Question

The sixth question, "the defences based on the Limitation Act 1969", was dealt with by his Honour in paragraphs [492] to [509] of the May Judgment. His Honour decided that the plaintiffs' claims were not barred [509].

Seventh Question

The seventh question, "the defence based on estoppel" was dealt with by his Honour in paragraphs [555] to [562] of the May Judgment. His Honour found that this defence failed [562].

Eighth Question

The eighth issue "the defences based on the indefeasibility of title" were dealt with by his Honour in paragraphs [486] to [491] of the May Judgment. His Honour rejected these defences at paragraph [491].

Part-heard application

Although there was apparently some misunderstanding of the process upon which the parties were embarked, I am satisfied that his Honour intended to decide whether he should re-consider his findings in the light of the matters put to him on behalf of the fifth and sixth defendants and whether he should allow those defendants to re-open their cases for the purpose of relying upon the financial journals and the evidence of Mr Murray.

The additional evidence may be relevant to the third and fourth questions that remain undecided. It is to be contended that the journals and the evidence of Mr Murray will demonstrate that Partnership monies were not used to purchase any of the three properties. It will also be contended that as there was no Partnership money used to purchase any of the three properties there were no express trusts in respect of which there could have been any breaches.

Although such evidence might have been relevant to the question of the existence of the Partnership at a particular time, the fifth and sixth defendants have indicated that they do not make any submissions in relation to the declaration of partnership made by his Honour.

Even if the additional evidence is not allowed, the fifth and sixth defendants contend that there is a proper basis for not making any declarations in relation to breaches of trusts.

All of these matters remain undecided.

The plaintiffs submitted that Smart AJ has made findings of fact and law in relation to all outstanding matters save for the proportion of contribution by the Partnership to the purchase of Haig Street. It was submitted that all that remains is for another judicial officer to grant any further relief that flows from the delivery of the May Judgment. However, the plaintiffs conceded that the other judicial officer would need to consider the findings and the evidence that was before Smart AJ on the question of the percentage contribution made by the Partnership to the acquisition of the Haig Street property before any declaration could be made in respect of that property.

In support of their submission the plaintiffs relied upon the process that was adopted by Barrett J in Smartec Capital Pty Ltd v Centro Properties Ltd (2011) 83 ACSR 461 and followed by White J in Smartec Capital Pty Ltd v Centro (CPL) Limited & Anor [2011] NSWSC 644. That was an application under s 247A(1) of the Corporations Act 2001 (Cth) for an order to authorise the inspection of various documents of a corporation. Barrett J said:

91. There will be a limited order in favour of Smartec as outlined at [83] above, subject to terms as to confidentiality as there stated. Otherwise, there will not be any order authorising either Smartec or anyone on its behalf to inspect books of the company or the managed investment scheme.

92. CNP, Smartec and the entities granted leave under r 2.13 should attempt to agree the form of order giving effect to this decision, including the terms as to confidentiality.

93. Because I have now entered on long leave, it will be necessary for the final orders to be settled and made by another judge: Wentworth v Rogers (No 3) (1986) 6 NSWLR 642.

94. The parties therefore have leave to approach the Corporations Judge for the time being for that purpose and for the determination of the costs of the proceedings.

The defendants submitted that in Smartec v Centro Properties , Barrett J had completed his consideration of the controversy and all that was required was the mechanical step of making the appropriate orders. However, it was submitted that in the present case Smart AJ had not completed his consideration of the controversy and the appropriate course is for a fresh trial to be ordered pursuant to s 88 of the Civil Procedure Act 2005 with relevant directions being made under s 89 of the Act.

Prior to the introduction of the Civil Procedure Act 2005, the Courts approached the difficulty with which these parties are confronted on the basis that any reconstitution of the Court during proceedings would be an irregularity unless the parties had consented to such reconstitution. In Brennan v Brennan (1953) 89 CLR 129, the High Court dealt with an appeal from the Supreme Court of New South Wales in its matrimonial causes jurisdiction. The proceedings in the Supreme Court had commenced before Edwards J and the whole of the oral evidence had been taken when unfortunately his Honour died. The further hearing of the suit came before Clancy J and the parties asked his Honour not to hear the oral evidence de novo but to have the transcript of the evidence already taken before Edwards J tendered as an exhibit and read. The parties suggested that the reading of the evidence could occur either in open Court or in Chambers. Clancy J chose the latter course and then recalled two of the witnesses who had been called before Edwards J for further examination.

The High Court referred to a number of cases in which Courts had proceeded not to hear the whole suit de novo : Coleshill v Manchester Corporation (1928) 1 KB 776 (a case in which the trial judge died part way through a civil trial with a jury and at the request of and with the consent of the parties, another judge heard the remainder of the trial with the same jury resuming the hearing two days later); In re Application of British Reinforced Concrete Engineering Co Ltd (1929) 45 TLR 186 (a case in which the presiding judge of the Railway and Canal Commission (constituted by the judge and two commissioners) died part way through a hearing and with the consent of the parties a new presiding judge completed the hearing with those same commissioners); and Bolton v Bolton (1949) 2 All ER 908 (a case in which the magistrate who was part-heard was not sitting on the resumed date and the parties "assented" to the magistrate sitting on that date hearing the balance of the case). The Court said at 136-137:

In all these cases the Court on appeal criticized the course that had been followed but accepted what had been done and did not order a new trial. There are, we think, in most cases grave objections to such a course and the objection becomes graver when there is, as in the present case, a serious conflict of evidence. But the parties were all represented by counsel or solicitors and they all requested his Honour to take the course he did. It was open to any of the parties to apply to his Honour for leave to recall any of the witnesses for examination if they thought fit, but they all elected not to do so and the two witnesses who were further examined were recalled at his Honour's request.

In Chua Chee Chor v Chua Kim Yong [1962] 1 WLR 1464, the provision of the relevant Procedure Code of Trengganu (a sultanate of Malaya) under consideration provided that if a judge was unable to sit by reason of leave, sickness or transfer, a further hearing of a suit may be continued before another judge. The Procedure Code also provided that the replacement judge could adopt the evidence taken by the original judge and proceed from the stage at which the original judge left it. There was also provision for the replacement judge to recall witnesses and "hear the suit". There is a similar provision in s 18(2) of the Courts of Judicature Act 1964 (Malaysia).

The original judge in Chua Chee Chor v Chua Kim Yong heard evidence from 17 witnesses and the final submissions of counsel. The original judge then reserved judgment but retired on medical grounds without delivering judgment. The parties made application for a replacement judge to decide the case on the evidence as recorded by the original judge who had taken a full note. The replacement judge was concerned about the process. However, the Judge decided to proceed in accordance with the wishes of the parties and gave judgment on the material provided to him by the parties. The appeal to the Privy Council on the ground that the trial judge had no jurisdiction to act as he did was dismissed. Their Lordships observed that the course adopted was "plainly undesirable" but that the circumstances were very unusual.

In Wentworth v Rogers (No. 3) (1986) 6 NSWLR 642 the judge hearing the application in relation to a subpoena made an order and adjourned the question of costs. In the meantime, the judge became ill and, without objection form the parties, a different judge determined the matter. Kirby P (as his Honour then was) reviewed the relevant cases and said inter alia that if "specific provision is made by statute for the reconstitution of the court following the death, illness, resignation, prolonged absence or other incapacity of a judge who has part-heard a case, the legislation will govern the substitution" (at 649).

Section 45AA of the Supreme Court Act 1970, introduced in 1999, provides for the continuation of an appeal where a Judge of Appeal "dies, resigns from office or otherwise becomes unable to continue as a member of the Court of Appeal for the purposes of the appeal". However there was no similar provision in relation to a trial judge. The Civil Procedure Act 2005 provides relevantly:

88 Fresh trial

(1) If a trial of proceedings has commenced before a judicial officer and he or she is unable to continue the trial or give judgment in the proceedings, by reason of death, resignation or incapacity, the senior judicial office r of the relevant court may nominate some other judicial officer of that court as the judicial officer before whom the proceedings are to be listed for trial.

(2) In this section, a reference to a trial of proceedings includes a reference to a trial of one or more questions in the proceedings.

89 Procedure on fresh trial

(1) If:

(a) any proceedings have been listed for tria l pursuant to section 88, or

(b) an appellate court has made an order for a fresh trial generally (being an order given on an appeal after a trial of any proceeding s ), or

(c) a judicial officer before whom a trial of any proceedings has commenced has discharged himself or herself from the trial without having given judgment in the proceedings,

the court may give such directions as it thinks fit as to the evidence to be used in the fresh trial.

(2) In particular, the court may give either or both of the following directions:

(a) a direction that all or any part of the evidence given at the previous trial is to be taken to be evidence in the fresh tria l without the need for the witnesses to be recalled,

(b) a direction that all or any of the witnesses are to be recalled for examination or cross-examination, or both, either generally or as to a particular question or questions in the proceedings.

(3) In subsection (1), a reference to a trial of proceedings includes a reference to a trial of one or more questions in the proceedings.

Queensland is the only other State in which there is a similar statutory provision for the substitution of a trial judge in these circumstances: s 297 Supreme Court Act 1995 (Qld); Mermaids Café and Bar Pty Ltd v Elsafty Enterprises Pty Ltd [2010] QSC 80. In the Federal jurisdiction the only relevant statutory provision relates to the Full Court of the Federal Court of Australia: s 14(3) Federal Court of Australia Act 1976 (Cth) (similar to s 45AA of the Supreme Court Act 1970). There is no provision for the replacement of a trial judge in such circumstances. However, replacement Judges have been appointed in the Federal Court in accordance with the principles outlined in the cases referred to above: Bagshaw v Scott [2005] FCA 104.

There was no discussion in Parliament in relation to the provisions of sections 88 and 89 of the Civil Procedure Act at the time that the Civil Procedure Bill 2005 was debated nor was there any discussion in the Explanatory Note to the Bill . These sections are in Part 6 of the Act that introduced a number of new provisions relating to the conduct of court proceedings. The Parliamentary debate included reference to "increasing the efficiency of the court system and for reducing the cost of litigation" (Hansard, 6 April 2005, p 15115).

The expression "senior judicial officer" in s 88 of the Civil Procedure Act is not defined. The expression "judicial officer" in the Civil Procedure Act has the same meaning as defined in the Judicial Officers Act 1986, relevantly "a Judge or associate Judge of the Supreme Court" (s 3). That Act defines the "relevant head of jurisdiction" as including the Chief Justice of the Supreme Court of New South Wales (s 3(5)). It seems to me that the legislature intended that where a fresh trial is to be ordered under s 88 of the Civil Procedure Act in the case of a trial conducted in the Supreme Court of New South Wales, it is the Chief Justice who may nominate the judicial officer of the Court before whom the proceedings are to be listed for trial.

I am not persuaded, nor has it been suggested, that the legislature intended that the Chief Justice would have to decide whether a fresh trial should be ordered. Rather, the legislature appears to have intended that the role of the Chief Justice is limited to nominating the new trial judge in circumstances where a fresh trial is to occur. Obviously in this Court, where there are two trial Divisions each headed by a Chief Judge, the process of nomination would involve consultation with the relevant Chief Judge.

Section 88 and s 89 are governed by the overriding purpose of the Civil Procedure Act expressly stated in s 56, "to facilitate the just, quick and cheap resolution of the real issues in the dispute or proceeding s ". It is necessary to keep that purpose in mind when dealing with applications under s 88 and in particular in giving directions under s 89 of the Act.

Although the heading to s 88 is "Fresh trial", there is no use of that expression in the body of the section. However, that expression is used in s 89 in particular giving the court power to give such directions as it thinks fit "as to the evidence to be used in the fresh trial" (s 89(1)). There is a curiosity to s 89(2). It provides that the Court may give "either or both" of the directions in subparagraphs (a) and/or (b). Yet if the Court were to give both directions without amendment there would be an internal inconsistency. The direction in subparagraph (a) provides that there is no need for the witnesses to be recalled. The direction in subparagraph (b) is that all or any of the witnesses are to be recalled. This inconsistency could be removed by the insertion of the words "with or" before the word "without" in subparagraph (a). In any event, these provisions are facultative and the Court may give such directions as it thinks fit in the circumstances of the particular case.

The circumstances in which the Chief Justice may nominate some other judicial officer before whom the trial is to be listed pursuant to s 88 are limited to the unavailability of a judge to continue with a trial or give judgment by reason of "death, resignation or incapacity" (s 88(1)). It does not include unavailability of the trial judge for other reasons, for instance, by reason of extended leave that is "one of the regular incidents of judicial office": Wentworth v Rogers (No 3) at 648 per Kirby P. There has been recent discussion in relation to the increasing length and complexity of trials and the risks of a judge becoming unavailable may be greater than in earlier years. It may be thought appropriate to accommodate those risks by an amendment to s 88 of the Civil Procedure Act 2005 to incorporate a provision similar to s 45AA of the Supreme Court Act 1970 by the inclusion of the words "or otherwise becomes unable to continue the trial" after the word "incapacity".

There may be many different circumstances to consider when a trial judge becomes unavailable to complete the proceedings. It will depend upon the stage at which the proceedings have reached. For instance, whether judgment has been given or whether judgment has been merely reserved, or whether evidence is still being heard at the time the judge becomes unavailable. It will be necessary to consider the time that will be needed for the "other judicial officer" to complete the proceedings, whether by way of reading the evidence that has already been given and/or recalling some or all of the witnesses and/or hearing the balance of evidence that was yet to be called. It will also depend upon whether the parties are able to agree on facts that are not in dispute.

As outlined in the earlier authorities, many parties who found themselves in the predicament in which these parties find themselves, consented to a replacement judicial officer proceeding with the trial with agreement as to how that judicial officer would deal with the evidence already given. Thus far these parties have been unable to agree on the way forward.

Although the plaintiffs opposed an order for a "fresh trial" under s 88 of the Civil Procedure Act , their concession that there would have to be further consideration of evidence and findings to deal with the fourth question, at least as it affects Haig Street, suggests such opposition is without foundation. Their submission that the Court is able to make declarations in relation to Maroubra Road and Queen Street ignores the stage at which the proceedings had reached when Smart AJ fell ill. His Honour was part heard in an application to reopen his findings and to allow further evidence to be called. The outcome of that application may well impact upon the declarations that his Honour had "contemplated" in the June Judgment. In any event, the plaintiffs seeks to have the Court ignore that contemplation and return to the original declaration Smart AJ suggested he was inclined to make before he identified what he referred to in the June Judgment as the "mistake". To press on for these declarations in the circumstances that have been outlined is in my view unjustified.

Conclusion

I am satisfied that there should be a "fresh trial" of the proceedings with directions given under s 89 to ensure that the most cost-effective and fair processes are adopted to assist the parties to reach finality of this litigation. The questions that have not been decided are questions two, three and four, together with the part heard application. However, orders have not been made in respect of those aspects of the proceedings covered by the other questions and accordingly it is appropriate that the proceedings be listed for trial before the "other judicial officer" to be nominated by the Chief Justice.

It is inappropriate to give directions at this stage under s 89 of the Civil Procedure Act . The new trial judge must be given the flexibility to consider and make whatever directions are appropriate in the circumstances of the fresh trial. However, it appears that the first decision to be made in the fresh trial would be to determine the part-heard application upon which Smart AJ was embarked at the time he fell ill. All of the evidence had been completed and the parties have now filed all their submissions in writing. Without in any way wishing to fetter the new trial judge's discretion in relation to further directions, it would seem that the most cost-efficient method for the parties would be for the new trial judge to read all of the evidence in the part-heard application and, if thought fit, to recall any of the witnesses who had given evidence.

The parties should co-operate and meet for the purpose of agreeing on proposed directions for the future conduct of the proceedings before the new trial judge.

The next step in the proceedings is for the Chief Justice to nominate the judicial officer before whom the proceedings are to be listed for trial.

I refuse the plaintiffs' applications for declarations and orders. When the Chief Justice has nominated a judicial officer of this Court before whom the proceedings are to be listed for trial, the matter will be listed for directions before that judge.

I will hear the parties on the costs of these applications should they not be able to agree on a cost order. The parties are to make contact with my Associate by no later than 30 March 2012 to re-list this aspect of the matter to finalise a cost order.

*********************************

Decision last updated: 01 March 2012

Actions

Download as PDF Download as Word Document

Citations

Lowe v Pascoe [2012] NSWSC 151

Most Recent Citation

Lowe v Pascoe [2012] NSWSC 740

Cases Citing This Decision

4

Sze Tu v Lowe [2014] NSWCA 462

Lowe v Pascoe (No 7) [2018] NSWSC 333

Lowe v Pascoe (No 4) [2012] NSWSC 1493

Cases Cited

9

Statutory Material Cited

6

Lowe v Pascoe [2010] NSWSC 388

Lowe v Pascoe (No 3) [2011] NSWSC 192

Smartec Capital Pty Limited v Centro (CPL) Limited [2011] NSWSC 644

Medium Neutral Citation:	Geoffrey Alan Lowe & Anor v Scott Pascoe & Ors [2012] NSWSC 151
Hearing dates:	30 September 2011; 28 October 2011
Decision date:	29 February 2012
Jurisdiction:	Equity Division
Before:	Bergin CJ in Eq
Decision:	Fresh trial before a judge to be nominated by the Chief Justice pursuant to s 88 of the Civil Procedure Act 2005
Catchwords:	[JUDGES] - where trial judge is unable to complete hearing of proceedings - where numerous judgments - incomplete part-heard application to re-open findings in judgments and to allow re-opening of cases to call additional evidence previously allegedly unavailable to the parties - where parties do not consent to procedure to be adopted in the circumstances - application for declarations and orders to be made by another judge pursuant to process adopted in Smartec Capital Pty Ltd v Centro Properties Ltd & Anor (2011) ACSR 461 and Smartec Capital Pty Ltd v Centro (CPL) Limited & Anor [2011] NSWSC 644. [FRESH TRIAL] - whether there should be a fresh trial under s 88 of the Civil Procedure Act 2005 - nomination by "senior judicial officer" that the proceedings be listed for trial before "some other judicial officer" of the Court. [PROCEDURE ON FRESH TRIAL] - nature of directions in relation to evidence at fresh trial - consideration of procedure in context of history of the proceedings and the overriding purpose of the Civil Procedure Act 2005 and the Uniform Civil Procedure Rules 2005.
Legislation Cited:	Civil Procedure Act 2005 Courts of Judicature Act 1964 (Malaysia) Federal Court of Australia Act 1976 (Cth) Supreme Court Act 1970 Supreme Court Act 1995 (Qld) Uniform Civil Procedure Rules 2005
Cases Cited:	Bagshaw v Scott [2005] FCA 104 Bolton v Bolton (1949) 2 All ER 908 Brennan v Brennan (1953) 89 CLR 129 Chua Chee Chor v Chua Kim Yong [1962] 1 WLR 1464 Coleshill v Manchester Corporation (1928) 1 KB 776 In re Application of British Reinforced Concrete Engineering Co Ltd (1929) 45 TLR 186 Lowe v Pascoe [2010] NSWSC 388 Lowe & Anor v Pascoe & Ors (Unreported, Supreme Court of New South Wales, Smart AJ, 25 June 2010) Lowe & Anor v Pascoe & Ors (Unreported, Supreme Court of New South Wales, Smart AJ, 11 February 2011) Lowe & Anor v Pascoe & Ors (No. 3) [2011] NSWSC 192 Mermaids Cafe and Bar Pty Ltd v Elsafty Enterprises Pty Ltd [2010] QSC 80 Smartec Capital Pty Ltd v Centro Properties Ltd & Anor (2011) ACSR 461 Smartec Capital Pty Ltd v Centro (CPL) Limited & Anor [2011] NSWSC 644 Wentworth v Rogers & Anor (No. 3) (1986) 6 NSWLR 642
Category:	Principal judgment
Parties:	Geoffrey Lowe and Mary Lowe (Plaintiffs) Scott Pascoe (Administrator of the Estate of the late Kut Sze Tu) (1st Defendant) Margaret Sze Tu (2nd Defendant) Helen Sze Tu (3rd Defendant) Janet McNamara (4th Defendant) Shiu Shing Sze Tu (5th Defendant) Shiu How Sze Tu (6th Defendant) Stella Sze Tu (as representative of the Estate of the late FC Chow) (7th Defendant)
Representation:	FM Douglas QC (28 October 2011 only) AA Henskens SC/AR Zahra (Plaintiffs) J Stoljar SC (1st Defendant) D Williams SC/Ms J Little (5th and 6th Defendants) Colin Biggers & Paisley (Plaintiffs) Argyle Lawyers (1st Defendant) 2nd Defendant -unrepresented 3rd Defendant - unrepresented 4th Defendant- submitting appearance CLS Legal (5th and 6th Defendants) 7th Defendant - submitting appearance
File Number(s):	2005/00262284