Rouse v IOOF Australia Trustees (No.4) No. Scgrg-98-257 Judgment No. S218

ROUSE & ORS v IOOF AUSTRALIA TRUSTEES (NO.4)
[1999] SASC 218

CIVIL

LANDER J. On 25 February 1998 the plaintiffs, except for the sixteenth and seventeenth plaintiffs, commenced proceedings against the defendant seeking orders that Mr Alan Henry Herald, a chartered accountant be appointed as an inspector, pursuant to s84C of the Trustee Act 1936, in respect of certain trusts of which the defendant is trustee and that the inspector investigate the administration of the trust by the defendant and prepare a written report for the Court and the Attorney-General of this State upon the result of the investigation. The sixteenth and seventeenth plaintiffs were joined as plaintiffs on 8 May 1998.
On 11 May 1998, the defendant came into possession of some of the plaintiffs’ documents when the plaintiffs’ solicitors left those documents at the premises of the defendant whilst they were taking inspection of the defendant’s documents.
The defendant advised its solicitors in this action and in another action (the management action) in which the defendant is plaintiff that it had the documents and in due course the solicitors in both actions and counsel in both actions came into possession of those documents.
The defendant did not advise the plaintiffs or its solicitors that it had these documents.
On 16 July 1998, Mr Huxtable, an employee of the defendant, swore an affidavit exhibiting copies of those documents to that affidavit. At the same time the defendant through its solicitors advised the plaintiffs’ solicitors that it had the documents and that the originals were available to be collected.
They were collected on the same day.
On 17 July 1998, the defendant applied for an order that the plaintiffs’ action be stayed until further order. The application did not say so but the stay was sought upon the basis that the proceedings were an abuse of process. The application sought the stay of the whole of the proceedings. Importantly the stay was directed to all plaintiffs.
That application together with an oral application by the plaintiffs for the return of all copies of the documents exhibited to Mr Huxtable’s affidavit came before the Chief Justice on 20 July 1998. At a further hearing of those applications on 23 July 1998 he ordered, by consent:
“1..... That the defendant by close of business on Wednesday 29 July 1998 deliver to my associate/chambers all copies of the document LJH10 to the affidavit of Mr Huxtable sworn on 16 July 1998.

2...... That the defendant’s solicitors, Johnson Winter & Slattery be permitted to retain one copy of that document and counsel, Mr Abbott QC, be permitted to retain a further copy of the documents and that the content of the document is not to be communicated by the solicitors or by counsel to any other person except to the extent that it is necessary to do so for the purpose of obtaining instructions from their client in connection with the application for the return of the remaining documents.”

On 21 September 1998, the Chief Justice made further orders in the following terms.
“1..... By close of business on 30 September 1998 the defendant provide full particulars in writing of the matters relied upon by it in support of its application for a stay of the within proceedings.
2.By close of business on 30 September 1998 the defendant provide particulars of any evidence to be adduced by it in support of its application for a stay of these proceedings.”
The defendant, I think, complied with par1 of the order but certainly did not comply with par2. In respect of par1 the defendant provided the following particulars:
“In these particulars, the 13th, 14th and 15th defendants are referred to “Auspine”.
1...... Auspine are defendants in proceedings in the Supreme Court of South Australia numbered 480/93 and 1299/96 (collectively referred to as “the management dispute”) in which the defendant herein (“IOOF”) is the plaintiff.
2. Auspine has instituted these proceedings for the purposes of:
2.1deflecting IOOF from devoting an appropriate level of effort and resources to the management dispute;
2.2obtaining information to be used in the management dispute which information would not otherwise be available to them by procedures which can be invoked in the management dispute.”
Unlike the application the particulars allege that only the thirteenth, fourteenth and fifteenth plaintiffs (which the particulars identify as Auspine) have instituted these proceedings for an improper purpose. The particulars do not allege that the personal plaintiffs or Deep Creek Holdings Pty Ltd (the remaining plaintiffs) have brought these proceedings for any improper purpose.
On 4 November 1998 the plaintiffs’ claim came on for hearing before Williams J. He isolated an issue in the case which on 17 December 1998 he decided contrary to the plaintiffs. The plaintiffs appealed against that decision and on 13 May 1999 the Full Court dismissed the plaintiffs’ appeal except in so far as it made certain amendments to the order made by Williams J.
In the meantime the plaintiffs made an oral application to me for the return of the documents not otherwise comprised in the order of the Chief Justice of 23 July 1998. That matter came on before me on 15 March 1999 concluding on 19 March 1999. On 30 March 1999, I published reasons for upholding the plaintiffs’ application for the return of the copies of those documents.
On 31 March 1999 and 1 April 1999 I made orders directed to the defendant and its legal advisers for the return of all copies of the documents comprised in Exhibit LJH10.
On 13 April 1999, the defendant filed and served a notice of appeal against that decision. On 27 April 1999, the plaintiffs applied to have the notice of appeal dismissed as incompetent. They also sought orders prohibiting the defendant from having recourse to the trust funds for the purpose of the defendant paying its costs and an order for costs which I made in favour of the plaintiffs on 1 April 1999.
Those two applications came before me on 6 May 1999 and on 20 May 1999 I delivered reasons for holding that the appeal was incompetent. On the same day I dismissed the plaintiffs’ application for a declaration that the defendant was not entitled to have recourse to the trust funds in payment of the plaintiffs and its costs.
On 20 May 1999 the plaintiff sought further consequential orders in relation to the orders made by me on 31 March 1999 and 1 April 1999. Those orders were made on that day.
On that same day I heard the defendant’s application of 17 July 1998 to have this matter stayed as an abuse of process.
There is a certain irony in hearing an application for a stay of proceedings in circumstances where, since the application, the principal relief has been subject of a judgment, albeit only in respect of part of the plaintiffs’ claim, and where that judgment has been the subject of an appeal to the Full Court and a decision of that court, and in circumstances where I have determined the other interlocutory matters to which I have referred.
The application is to stay these proceedings only in respect of the three Auspine plaintiffs. Even if the defendants application was successful the remaining plaintiffs’ application would go forward. Mr Whitington QC suggested that if I was disposed to stay the Auspine plaintiffs’ proceedings I might also stay the remaining plaintiffs’ action or impose terms upon the plaintiffs in the further proceedings.
In the absence of any claim that the remaining plaintiffs have brought their proceedings for an improper purpose no order could be made staying their proceedings. There would simply be no reason to stay their proceedings. Moreover, in the absence of any claim that the remaining plaintiffs might use any information obtained in these proceedings for an improper purpose, it would not be appropriate to impose any terms upon the remaining plaintiffs’ claim. Therefore even if the defendant succeeds on this application the defendant will still have to deal with the remaining plaintiffs’ applications.
Nevertheless because the defendant presses this application, before the matter proceeds any further, it is necessary to deal once and for all with the defendant’s application for a stay of the Auspine plaintiffs’ proceedings.
As I have indicated the defendant complied in part with the Chief Justice’s order of 1 September 1998 but did not provide particulars of the evidence to be produced by it in support of its application for a stay of these proceedings by 30 September 1998.
It was not until 5 May 1999 that the defendant purported to comply with that order.
At that time it wrote a letter to the plaintiffs in the following terms:
“We refer to our letter dated 3 May 1999 in which we advised that we would simply ask the Judge to rule in light of the evidence already before him (excluding, of course, LJH10).
Specifically, the evidence upon which we will ask the Judge to rule is the following:
·....... D8 - consolidated trust deed.
·....... D9 - Schedule of Associations.
·....... D10 - exhibits FFL3 to FFL16 of affidavit of Frank Fausta Lancione.
·....... D11 - paragraphs 1, 9, 22 and jurat of affidavit of Andrew Alfred Burdett sworn 6 November 1998.
·....... D12 - paragraphs 1, 7 and 12 and jurat of affidavit of Winston Ooi sworn on 17 November 1998.
·....... D13 - paragraphs 1, 9 and 14 and jurat of affidavit of Lynton John Cram sworn 19 November 1998.
·....... D14 - letter from Phillips Fox to Johnson Winter & Slattery dated 17 July 1998.
·....... Affidavits of Dean Charles Bowen sworn 30 September 1998 and 20 October 1998 which we are informed were items 10.7 and 10.8 respectively of the second volume of your book documents.”

The exhibits referred to were exhibits tendered in the application for the return of the copies of LJH10.
It can be seen that particulars were not given until more than a month after I had given my decision in relation to LJH10.
The particulars of the evidence given by the solicitors for the defendant make reference to Exhibit LJH10. The defendant accepted in those particulars that, because of my decision on 30 March 1999, it was not entitled to rely upon LJH10 as evidence of the alleged abuse of process.
When this matter came on before me the defendant tendered all of the documents referred to in the letter of 5 May 1999. It also tendered, over the objection of Mr Gray QC, a document entitled Seas Sapfor Forests Pty Ltd “List of Holders” as at 1 April 1999.
The plaintiffs did not seek to tender any evidence in answer to the defendant’s application.
The defendant’s evidence, apart from the formal evidence contained in Exhibit D8, and correspondence which preceded these proceedings, was mainly directed to the relationship between each of the plaintiffs and each of the remaining plaintiffs with the Auspine plaintiffs. The evidence discloses that some of the plaintiffs have been employed by Auspine. Some others had professional relationships. Some of the plaintiffs, apart from the Auspine plaintiffs expect that the Auspine plaintiffs will meet their costs of these proceedings.
The association of the remaining plaintiffs with the Auspine plaintiffs is relevant, so it is said, to show that the Auspine plaintiffs recruited the remaining plaintiffs to bring these proceedings.
It must be remembered that the defendant does not claim that the remaining plaintiffs are actuated by an improper purpose. It is only the Auspine plaintiffs that is said to have brought these proceedings as an abuse of process.
If the remaining plaintiffs have not brought these proceedings for improper purposes, and that must be assumed in the absence at least of a claim of improper purposes, it is difficult to see how the evidence of their association is very relevant to the application. It was put that it shows that the Auspine plaintiffs recruited the remaining plaintiffs to disguise the improper purposes of these proceedings. I cannot agree with that. The association of the remaining plaintiffs with the Auspine plaintiffs is not relevant, in my opinion, to the two improper purposes particularised. Neither of these improper purposes were in the least bit advanced by the recruitment of the remaining plaintiffs.
A claim that a party has been guilty of an abuse of process is a most serious claim. It is a claim that a party has used the court’s own procedures for improper purposes. In this case it is said that the Auspine plaintiffs are using the court procedures to obtain some collateral advantage: Re Majory [1955] Ch 600 at 523; Packer v Meagher [1984] 3 NSWLR 486.
It behoves those making the claim to bring forward evidence to establish that most serious claim.
None of the evidence which has been adduced by the defendant addressed the two improper purposes which the defendant claims underlie the bringing of these proceedings.
There is no evidence which would directly establish that Auspine instituted these proceedings for the purpose of deflecting IOOF from devoting an appropriate level of effort and resources to the management dispute.
Mr Whitington said I should infer from the fact that the plaintiffs are continuing to press these proceedings that that must be the purpose for which the proceedings are brought. I am not prepared to draw that inference simply because the plaintiffs have continued to prosecute these proceedings.
I suppose it might have been possible to draw such an inference if the plaintiffs had conducted themselves within this litigation in a manner which showed that the defendant would have had to devote such resources to the litigation that it must have been deflected from the management action.
The plaintiffs, however, have not behaved that way. Most of the interlocutory activity has been generated by the defendant in failing to advise the plaintiffs that the defendant had possession of the plaintiffs’ documents. The defendant used these documents for the purpose of bringing this application. It then vigorously opposed the return of the copies of the documents. It then appealed. The defendant has caused almost all the interlocutory activity. If it had allowed this matter to be heard on its merits the matter would have probably been disposed of by the Chief Justice in July 1998. By objecting to having the matter heard on its merits the defendant has prolonged the litigation.
I am not prepared to infer, simply because the plaintiffs have prosecuted their proceedings, that the plaintiffs must be motivated by an improper purpose.
There is no evidence tendered on this application which would directly establish that these proceedings were brought for the purpose of obtaining information to be used in the management dispute which information would not otherwise be available to them by procedures which can be invoked in the management dispute.
The particular is precise. It not only claims that the purpose is to obtain information which would not otherwise be available to the plaintiffs by procedures which can be invoked in the management dispute but that the proceedings have been brought for the particular purpose of obtaining the information to use in the management dispute.
There is no evidence that the Auspine plaintiffs intend to use any information which they might obtain in these proceedings in the management dispute.
In any event simply because the Auspine plaintiffs might in these proceedings obtain an advantage which a litigant would ordinarily not obtain does not mean that the courts procedures are being abused. If the law provides these plaintiffs with an advantage not otherwise available to other plaintiffs, the seeking of such an advantage cannot be an abuse.
The defendant submits on this application that if the Auspine plaintiffs succeed in these proceedings these plaintiffs will have access to documents which would not be available to them in the management action. That, it is said, would be an abuse. But that is not so. If the plaintiffs succeed in these proceedings it is because the law says that, notwithstanding the management action, the Auspine plaintiffs are entitled to the documents or entitled to have an inspector appointed. In other words the Auspine plaintiffs will have established their rights. That cannot be an abuse of process.
The arguments put will be very relevant on the question of whether the plaintiffs or any of them should succeed on their principal claims. The defendant, of course, will then argue that the plaintiffs do not have any right to access to its documents whilst the management action is proceeding or that if any of the plaintiffs have any right to access to the defendant’s documents that right should be suspended.
However, the argument does not support a claim that the Auspine plaintiffs, by seeking these documents, must be motivated by the second improper purpose alleged. When these particulars talk of the information being used in the dispute, in my opinion, it is suggested that the information will be improperly used in the management dispute itself. There is simply no evidence, in my opinion, to support that particular.
The defendant therefore has not, in my opinion, adduced any evidence to support either of the particulars of the improper purposes given on 30 September 1998.
Of course the decision at which I have arrived is inevitable having regard to my earlier decision on 30 March 1999. In that decision I found that the documents which were the subject of LJH10 did not add colour to the claim by the defendant that the Auspine plaintiffs have been motivated by improper purposes. Mr Whitington recognised that on this application his case was no stronger and indeed had to be weaker than it was on the earlier occasion.
The application for a stay of the Auspine plaintiffs’ proceedings must be dismissed.

[1999] SASC 218

27 May 1999