Rothschild Clothing Group Pty Ltd (recs & mgrs apptd) (in liq) v Rothschild & Anor
[2008] VSC 533
•26 November 2008
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
PRACTICE COURT
No. 6887 of 2008
| ROTHSCHILD CLOTHING GROUP PTY LTD (RECEIVERS AND MANAGERS APPOINTED) (IN LIQUIDATION) & ORS | Plaintiffs |
| v | |
| MICHAEL GARY ROTHSCHILD & ANOR | Defendants |
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JUDGE: | HANSEN J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 26 November 2008 | |
DATE OF JUDGMENT: | 26 November 2008 | |
CASE MAY BE CITED AS: | Rothschild Clothing Group Pty Ltd v Rothschild | |
MEDIUM NEUTRAL CITATION: | [2008] VSC 533 | |
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Practice and procedure – Appeal from Master’s order for summary judgment allowed.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr T. Woodward | Corrs Chambers Westgarth |
| For the First defendant | Mr J. Kohn | Madgwicks |
| No appearance by or on behalf of the Second defendant |
HIS HONOUR:
This is an appeal from a master who ordered final judgment on a summary application by the plaintiffs in the proceeding. The case concerned a list of items. The list is included in the further amended statement of claim. The items comprise a coin collection and a number of artworks.
The first plaintiff is a company in liquidation. On 1 March 2008 the Westpac Banking Corporation appointed the second and third plaintiffs as receivers and managers of all the secured and charged property of the first plaintiff pursuant to a charge dated 24 October 2003. The claim by the plaintiffs was for the delivery up of the coin collection and the artworks, as to which due demand had been made. The master ordered that within seven days of service of a copy of the judgment on them, the defendants deliver the coins and the artworks to the receivers and managers.
The first defendant is the appellant. The second defendant, being the wife of the first defendant, has not appeared on the appeal. The appeal being by rehearing de novo, counsel for the plaintiffs addressed first and relied upon the materials that were before the master.
The first defendant has, in addition to the affidavits that were before the master, relied on two further affidavits filed this morning pursuant to leave which I granted, one being by the first defendant himself and the other by an accountant, Mr Cohen.
The plaintiffs seek to establish that all of the subject items were the property of the first plaintiff. They seek to do this in a couple of ways, first, by relying upon the books of account of the company and of the trust of which it was trustee which books of account refer to coins and artworks being the property of the company. Secondly, reliance is placed upon a deed entered into by the first plaintiff and the defendants with the first plaintiff’s banker, Westpac, which acknowledged the ownership by the company of all of the subject items. It should be said that the deed was made by the company both in its own capacity and as trustee of the trust.
It has to be borne in mind that this is an application for summary judgment and the question is whether there is an arguable defence or whether there are circumstances in the case which otherwise warrant the grant of leave to defend in order that a more considered investigation of the issues can be had at a trial.
Because the case arises at this early stage, in a like sense as on an interlocutory injunction application, there is much to be said for saying less rather than more about the merits or about one's reaction to the case. I would observe only that the sooner this case gets to trial, and people are put in the witness box, the better. I make no comment about it apart from that.
It seems to me that the coin collection and the artwork called 'Tree of Life' stand in one position, for I am satisfied as to them that there is no arguable defence and that there is otherwise no good reason why there should be a trial concerning them. It is unnecessary to trace through the references in the documents that lead me to that conclusion. They were identified clearly by counsel.
So far as the other items are concerned the first defendant seeks to establish that by reason of some payments he has made, by reason of his intention and by reason of a lack of substantiation of the claim, that the plaintiff has not excluded an arguable case or, to put it another way, an arguable case as to them must be recognised.
The difficulty which this submission must face is that presented by the deed entered into with the bank. As Mr Woodward rightly says, the deed constitutes an estoppel which cannot willy nilly be set aside; see Greer v Kettle [1938] AC 156 at 171, cited with approval in Con-Stan Industries of Australia Pty Ltd v Norwich Winterthur Insurance (Australia) Pty Ltd (1986) 160 CLR 226 at 244-245. Doubtless in the case of fraud or illegality, a statement of fact in a deed, unambiguous, of course, being a requirement, could not stand and doubtless too, if a statement was false, evidence could be taken as to that. My understanding of the authorities is that that is allowed. But what is sought to be done here is to challenge the efficacy of the deed on the basis that at the time of its execution by the first defendant, he was under mental pressure such as to affect the proper and free exercise of his judgment in permitting the first plaintiff to enter into it and he and his wife to execute it.
The submission that is made by counsel for the first defendant is that the deed is liable to be set aside at his instance because of unconscionable conduct by the bank in taking the deed. The unconscionable conduct is said to be constituted by the bank knowing of the first defendant's stressed state or being so aware of such circumstances that it ought be taken as being aware of his condition, that it improperly obtained the deed in the sense that equity might recognise.
The difficulty with this submission is that it is wholly excluded by the affidavit of Mr Thomas that was before the master on the hearing of the application and is before me today. No application was made to cross‑examine Mr Thomas. There is no reason at all why leave to cross‑examine should not be sought on an application for summary judgment.
To deal with that evidence, the affidavit of Mr Cohen was filed this morning by my leave. Mr Cohen said, among other things, that he had frequent conversations with Mr Thomas in a period leading to the execution of the deed and that in one conversation he said words to the effect that Mr Rothschild was under immense pressure in relation to his dealings with Westpac and was not making rational or properly informed decisions regarding his affairs. Mr Cohen said that he also said to Mr Thomas words to the effect that Mr Rothschild was not following his advice and it was difficult to obtain proper instructions from him. I would myself take leave to doubt very much whether that evidence would get very far, if at all, in seeking to establish the ground of attack upon the binding force of the deed that Mr Kohn has foreshadowed. It is imprecise, it does not purport to state what was actually said, it does not set out the context of the conversation, and to move from that to the conclusion that a commercial instrument such as the deed is not to stand according to its terms, in this case as a concession of ownership, is an extreme step, as it would seem to me.
However, the question remains whether, despite the thinness of the materials, there is yet not sufficient there that indicates that the issue ought be left to go to trial. It may be noted too, equally with the absence of cross‑examination of Mr Thomas, that there has been no cross‑examination of Mr Cohen. It has caused me considerable concern as to whether to accept the submission of the plaintiffs based upon the deed but I think, in the end, that the proper conclusion is that enough is shown that I should conclude that the case ought to go to trial, apart from the two items which I mentioned earlier.
If it had not been for the mediation organised for later in December, I would have been inclined to raise with the Listing Master whether a trial might not be had in the immediate future.
For these reasons I will orders as follows:
(a)The appeal is allowed.
(b)Paragraphs 2, 3 and 4 of the master's order are set aside. In lieu thereof, there will be an order that within five days of this date, the defendants deliver to the second and third plaintiffs the coin collection and the artwork described as 'Tree of Life' by John Coburn, referred to in paragraph 5 of the further amended statement of claim.
(c)Otherwise there is leave to the defendants to defend the proceeding.
(d)The costs of the application both before the master and on the appeal are reserved.
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