Scott & Munayallan
[2021] FamCA 79
•26 February 2021
FAMILY COURT OF AUSTRALIA
Scott & Munayallan [2021] FamCA 79
File number(s): SYC59/2010 Judgment of: HENDERSON J Date of judgment: 26 February 2021 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Abuse of process – Where the applicants seek to set aside orders of Justice Berman alleging them to have been obtained by fraud pursuant to rule 17.02 of the Family Law Rules 2004 (Cth) – Where the counts of fraud alleged by the applicants are not made out – Where the Court found the application was brought by the applicants for an ulterior purpose namely an attempt to re-litigate proceedings determined to finality in the Supreme Court of New South Wales inter alia – Finding of abuse of process – Applications dismissed. Legislation: Family Law Act 1975 (Cth) s 45A
Family Law Rules 2004 (Cth) r 17.02, r 19.26, r 19.30(1)(b)
Cases cited: Cleary v Jeans [2006] NSWCA 9
D’Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1
Ebner v Official Trustee In Bankruptcy (2000) 176 ALR 644
Munayallan & Scott [2019] FamCA 549
Patch v Ward LR 8 Ch App 203
Secretary of State of Trade and Industry v Bairstow [2004] 4 All ER 325
Wan Ze Property Development (Aust) Pty Ltd (in liquidation) [2013] NSWSC 189
Wentworth v Rogers(No 5) (1986) 6 NSWLR 534 at 539
Number of paragraphs: 106 Date of hearing: 19 February 2021 Place: Sydney Counsel for the First Applicant: Self-Represented Litigant Counsel for the Second Applicant: No appearance Counsel for the Respondent: Self-Represented Litigant ORDERS
SYC59/2010 BETWEEN: MR SCOTT
First ApplicantI PTY LTD
Second Applicant
AND: MR PHONG
Respondent
ORDER MADE BY:
HENDERSON J
DATE OF ORDER:
26 FEBRUARY 2021
THE COURT ORDERS THAT:
1.The Application in a Case filed by I Pty Ltd on 25 August 2020 is dismissed.
2.The Application in a Case filed by Mr Scott on 21 September 2020 is dismissed.
3.The question of costs of this application and the application for costs by Mr Phong is reserved.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Scott & Munayallan has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
This is a judgment in relation to two interim applications heard on 19 February 2021.
Mr Scott represented himself. I refused a person who purported to represent I Pty Ltd to participate in the proceedings given she was not a lawyer on the Roll of Solicitors in New South Wales, was not a director or otherwise a company executive of the company and had been, to use her words, "sent along to represent the company because one of the directors could not attend." I permitted her to listen to the proceedings but not participate.
Mr Phong represented himself and his wife.
There were ultimately three matters before me.
The first was an application filed by Mr Scott on 20 September 2020 to review a decision of Registrar Turner of 3 September 2020 which I Pty Ltd supported.
The second was the applications of I Pty Ltd and Mr Scott to set aside/vary orders of Justice Berman made 18 June 2019.
The third was Mr Phong’s submissions as to costs of a withdrawn appeal initially filed by Mr Scott and withdrawn by him in May 2020.
The entirety of the documents I have read in respect of all the applications before me are as follows:
(1)Application in a Case filed by Mr Scott on 21 September 2020 in relation to the setting aside of Justice Berman’s orders;
(2)Application in a Case filed by Mr Scott on 20 September 2020 seeking a review of Registrar Turner’s decision;
(3)Affidavit of Mr Scott sworn 4 September 2020 and sealed on 20 September 2020 in support of the review of Registrar Turner’s decision;
(4)A case outline prepared by Mr Scott in relation to the review application;
(5)Application in a Case filed by I Pty Ltd on 25 August 2020 and sealed on 21 September 2020 seeking orders to stay/set aside Justice Berman’s orders of 18 June 2019;
(6)Affidavit of Mr M sworn 7 September 2020 and sealed 20 September 2020 together with annexures in support of the review of Registrar Turner’s decision;
(7)Affidavit Mr M sealed 21 September 2020 and sworn 12 September 2018 together with annexures in support of the application to stay and/or vary Justice Berman’s orders;
(8)Mr Scott relied on Mr M’s affidavit in support of his Application in a Case to set aside/vary Justice Berman’s orders and he spoke to that affidavit in his submissions. He had only filed an affidavit in support of his review application;
(9)Amended Application in Case filed by Mr Scott on 24 August 2018 in relation to the matters before Justice Berman;
(10)Application in a Case filed on behalf of I Pty Ltd on 22 August 2018, the application Justice Berman was determining;
(11)Affidavit of Mr M sealed 24 September 2019 and sworn 12 September 2018 in support of his Application in a Case that was ultimately heard by Justice Berman;
(12)An affidavit sworn by Mr Phong on 23 June 2020 in relation to the costs he sought against Mr Scott;
(13)Written submissions tendered by Mr Phong in Court and received by Mr Scott on 18 February in relation to his costs of an abandoned appeal filed by Mr Scott. Mr Phong’s affidavit of 23 June 2020 supported the chronology had he had set out in his written submissions regarding his costs application against Mr Scott;
(14)The published Reasons for Judgment of Justice Berman of 2 August 2019 and 23 October 2019;
(15)I note that Mr M’s affidavits contained many annexures including extracts from affidavits of Mr Scott, his father Mr A Scott and Mr Phong filed in the Supreme Court of NSW and in this Court together with copies of each other’s Applications in a Case. It is clear that the respective positions and evidence relied upon by Mr Scott and Mr M on behalf of I Pty Ltd was intimately interconnected, supporting Justice Berman’s finding in his decision of 2 August 2019 that I Pty Ltd is the alter ego of Mr Scott.[1]
[1] Munayallan & Scott [2019] FamCA 549 at [51].
THE REVIEW
Evidence supporting the granting of the review was overwhelming and Mr Phong assented to this position.
Justice Berman had by Orders of 23 October 2019 ordered that:
(1)I Pty Ltd and Mr Scott be jointly and severally liable for the costs of:
(a)The wife Ms Munayallan in the sum of $4,800; and
(b)Costs as agreed or taxed on an indemnity basis of Mr and Ms Phong in respect of the application he had dismissed on 18 June 2019.
The review relates to order (1)(b).
Pursuant to the rules relating to taxation commencing at rule 19.26 of the Family Law Rules 2004 (Cth) (“the Rules”) on 10 August 2020 Registrar Turner determined the preliminary costs to be paid by Mr Scott and I Pty Ltd pursuant to order (1)(b) of Justice Berman's orders was $61,816.
That decision was received by Mr Scott and I Pty Ltd by email on 10 August 2020.
Pursuant to rule 19.30(1)(b) of the Rules Mr Scott and I Pty Ltd had 21 days to lodge a notice of objection to the Assessment (by 31 August 2020) and pay into the Court a sum amounting to 5 per cent of the preliminary assessment, being $3,335.30.
Mr M as the manager of I Pty Ltd filed an affidavit sworn 7 September 2020, and commencing at paragraph 11 he describes what he did upon receipt of the preliminary assessment.
He says:
On…31 August 2020 I came into the Sydney Family Court…to pay the sum of $3,335.30…in the form of a company cheque, but I also had my credit card with me if required.
When he arrived at the Registry he says nobody was at the counter and there were no staff. This is correct as at this time, due to COVID-19 restrictions, there were no staff present at the Registry and only limited capacity to have people attend the Registry. He was unable to pay the sum into Court, there being no-one to receive his cheque or debit his credit card. He left the Court.
From the affidavit of Mr Scott sworn 4 September 2020 he tells the Court that he received the cheque from Mr M on 1 September 2020, attended the Court the next day, found someone in the subpoena room and gave them the cheque. The Court records indicate this money was received on 3 September 2020.
In chambers, Registrar Turner noted by her Order of 3 September 2020 the following:
(1)The preliminary costs assessed in the sum of $61,816.00;
(2)The matter was before her in chambers in the absence of the parties;
(3)The parties were given notice of the preliminary assessment on 10 August 2020;
(4)A written notice of objection to the preliminary assessment was received on behalf of I Pty Ltd from Mr M on 14 August 2020;
(5)A written notice of objection to the preliminary assessment was received from Mr Scott on 21 August 2020;
(6)On 3 September 2020 at approximately 11:15 AM the Court received a personal cheque delivered to the Sydney Registry by Mr Scott in the amount of $3,335.30; and
(7)The payment above was received out of time.
The payment was received three days later than the Rules prescribed.
I accept the payment was received late. However, in circumstances where the physical Registry at Sydney was closed at this time it behoved the Registrar to ensure that there was an option for paying this money into the Court given it could not be done via a credit card in person in the usual course due to COVID-19 restrictions.
Given that the payment was made, albeit three days late, and no provision was made for the money to be able to be paid by credit card as is the usual course in the difficult circumstances surrounding the Registry being effectively closed, I have formed the view that the Review must succeed and therefore the orders made by Registrar Turner on 3 September 2020 are dismissed.
This matter must now be dealt with pursuant to the Rules having regard to the notices of objection filed by I Pty Ltd and Mr Scott.
THE REMAINING APPLICATIONS
The first matter is Mr Phong's submissions contained in a case outline supported by an affidavit for his indemnity costs in the sum of $5,496 or on a party-party basis in the sum of $4,700 for costs thrown away by an appeal filed by Mr Scott on 19 November 2019 which appeal was withdrawn on 4 May 2020 just prior to its listing for hearing on 7 May 2020.
The tortuous path for the appeal filed on 19 May 2019 to its putative hearing date on 7 May 2020 was as follows.
Mr Scott's initial appeal filed 19 November 2019 had been taken to have been abandoned pursuant to rule 22.21 of the Rules as he did not file appeal books by the date ordered by Registrar Cameron and the appeal was dismissed.
When that decision was made, Mr Scott filed an Application in an Appeal seeking to review Registrar Cameron's decision dated 20 March 2020 that the appeal had been abandoned.
The Application in an Appeal was listed for hearing on 7 May 2020 before Justice Aldridge.
The Application was withdrawn by Mr Scott on 4 May 2020.
I gave Mr Scott 14 days to file his written submissions in answer to Mr Phong's costs submissions given this document was only received by him the night prior to this hearing commencing and was, in reality, Mr Phong’s Application in a Case for his costs. I will deliver a separate costs decision once I have received Mr Scott's written submissions and any response by Mr Phong.
THE FINAL APPLICATIONS
Mr Scott filed an Application in a Case on 21 September 2020 mirroring a similar application filed by I Pty Ltd on 25 August 2020 seeking orders as follows:
1.Order to vary the orders 1 and 1(b) made on 23 October 2019 by Justice Berman.
I note that the orders sought to be varied relate to a costs order his Honour made against Mr Scott and I Pty Ltd in favour of the wife and Mr and Ms Phong. This particular order can only succeed if I set aside Justice Berman's primary judgment.
2.Order to stay [all the] orders made 2 August 2019 by Justice Berman.
3.Order that the orders that were delivered on 2 August 2019 were obtained from fraud, Family Law Rules 2004 17.02 [(1)(b)].
4.Order that the orders that were [delivered] on…2 August 2019 [were] recourse of equity fraud
5.Order that Counsel Ben Zipser assisted Mr Phong in preparation [of] misleading statements while knowing the statement is false and Ben Zipser is in breach of Bar Rules NSW 2015 Sections 8 (a) (b) (c), 9(a) 13(a), (c ) 24, 23, 28.
6.Order that Mr Phong has provided fabricated and misleading statements while know[ing] the statement is false. That Mr Phong is in breach of Legal Profession Uniform Law Australian Solicitors (Conduct Rules 2015) Section 5, 19(1), 4(1.2) (1.4), (1.5).
7.Based on obtaining above orders 2, 3, 4 and 5 obtained. Then order that orders made on the 18 June 2019 and 2 August 2019…be set aside by the Family Court of Australia.
Or
8.If the Order 7 is not obtained, then order that the variation of the Judgement delivered on the 2 August 2019 under Family Law Rules 17.02A.
9. Order that all costs in the application heard on the 17 and 18 June 2019 to be paid by Mr Phong.
I note Justice Berman heard this matter on 17 and 18 June 2019, pronounced orders on 18 June 2019 and delivered reasons in a written judgment delivered on 2 August 2019. His Honour’s costs decision was published in reasons dated 23 October 2019.
Interestingly, the Application in Case filed by I Pty Ltd did not seek a variation of Justice Berman's costs order, otherwise that application sought the same relief as that filed by Mr Scott save that they also sought an order that Justice Berman recuse himself from further hearing this matter. Mr Scott relied upon Mr M’s affidavit in support of his application and spoke to the evidence contained in that document in his submissions to me.
Procedural history
Mr Scott’s application for a review of Registrar Turner’s decision was filed on 20 September 2020.
The Application in a Case of I Pty Ltd and the Application in a Case of Mr Scott relating to a stay and/or variation of Justice Berman’s orders of 2 August 2019 and 23 October 2019 were filed on 25 August 2020 and 21 September 2020 respectively (“the applications”).
On 18 September 2020, an order was made in chambers listing the matter generally for directions in relation to the property matter and listing I Pty Ltd’s Application in a Case filed 25 August 2020 for mention only on 15 December 2020.
The application of Mr Scott seeking a review of Registrar Turner’s decision was subsequently listed on 18 November 2020 in the Judicial Duty List.
On 18 November 2020, the applications were set down for interim hearing on 19 February 2021. All parties were ordered to attend the Court in person on this occasion except for the wife who was excused from attending. The listing date of 15 December 2020 was vacated.
On 26 November 2020, and following an opening in the judicial calendar, Mr Scott’s application for a stay of Registrar Turner’s decision was listed for interim hearing on 3 December 2020. This date was vacated following Mr Scott being unavailable to attend. All applications were then re-listed for interim hearing on 19 February 2021.
The applications were heard on 19 February 2021, where the review application was granted and judgment reserved in relation to the outstanding applications of Mr Scott and I Pty Ltd.
Orders sought that were incompetent
Dealing with the orders sought in the applications filed by Mr Scott and I Pty Ltd and initially dealing with the matters that can be easily dealt with and using the same numbering as that contained in Mr Scott’s Application in a Case.
I have no power to order a Judge be recused in a matter and that is an application made to a particular Judge at a particular time.
Orders 5 and 6: I cannot make any findings in relation to whether Mr Phong or Ben Zipser are in breach of their professional code of conduct. I note Mr Scott informed me in his submissions that complaints by him and/or I Pty Ltd to these two gentlemen’s professional bodies have been made and are under investigation.
Orders sought that the Court is competent to deal with
Thus the substance of the applications before me was that pursuant to my powers under rule 17.02 of the Rules I should vary or set aside Justice Berman's orders of 18 June 2019 and 23 October 2019.
Rule 17.02 is as follows:
(1) The court may at any time vary or set aside an order, if:
(a) it was made in the absence of a party; or
(b) it was obtained by fraud; or
(c) it is interlocutory; or
(d) it is an injunction or for the appointment of a receiver; or
(e) it does not reflect the intention of the court; or
(f) the party in whose favour it was made consents ; or
(g) there is a clerical mistake in the order; or
(h)there is an error arising in the order from an accidental slip or omission.
Mr Scott and I Pty Ltd complains that the orders of Justice Berman of 18 June 2019 supported in his reasons of 2 August 2019 were obtained by fraud. If this be correct his Honour’s decision relating to costs delivered in published reasons on 23 October 2019 would also be tainted.
The particulars of this fraud are set out in Mr M’s affidavit sworn on 12 September 2018. The allegations of fraud begin at page 7 of 41 of Mr M's affidavit.
I took Mr Scott to each of these counts to ensure that I had correctly read this affidavit and gave him an opportunity to ensure that I had discovered all the counts he and I Pty Ltd had alleged and mirrored in both applications before me and they are as follows.
The first count of fraud is found at page 7 of 41 of Mr M’s affidavit being an extract of Mr Scott’s affidavit of 25 June 2019 filed in the Supreme Court proceedings and is as follows:
At paragraph 111 of Mr Phong's affidavit [of] 14 May 2019, Mr Phong made false statement while knowing the truth that he denied service of that document. He has now deceived two further courts judicial officers, Justice Slattery (SC) and Justice Berman (FCA).
This allegation is almost a restatement of count four as appears later.
The second count of alleged fraud and/or misleading conduct appears at page 9 of 41 and is as follows:
Mr Phong a legal practitioner engaged in [f]raud upon the court to destroy my credibility in the eyes of Justice Pembroke. It has been determined by 4 Experts that Mr Phong or a member from his office has fabricated an email dated the 11 February 2015 and altering attached documents to…that email including an altered Secure Loan Agreement.
Mr Scott agreed with me that this allegation bore no relation to the decision before Justice Berman and was in relation to a decision in the Supreme Court of New South Wales by Justice Pembroke.
The third count of alleged fraud is found at page 9 of 41, paragraph 10 and is as follows:
Annexed hereto and marked with the Letter “A” is a Document Transaction Ref. FAM171924 prepared by Ben Zipser for Mr Phong. At paragraph 2 of the document he highlights a passage from the Judgement of Justice Pembroke which demonstrates that my credibility was destroyed in the opinion of Justice Pembroke. Mr Phong falsely claimed that I had fabricated key documents before Justice Pembroke.
(As per the original)
Mr Scott agreed that this allegation had nothing to do with the judgments of Justice Berman and related to Supreme Court proceedings before Justice Pembroke.
The fourth count is found at page 10 of 41, paragraph 11 and is as follows:
On the 6 September 2018, Mr Phong lied while at the court bench to your honour Justice Loughnan. He stated “I have not been served with Mr Scott's Application in a Case, I have never seen it before.[”] While in fact it was served to Mr Phong via email…at 12:18pm on 30 August 2018 and also cc'ed to the Associate of Justice Knuc. Then at 2:20pm I attended the court room of Justice Knuc, I pleased [sic] a hard copy of the same Application in a Case on Mr Phong's lap, Ben Zipser whom sitting right next to him picked it up and said "we have been served[”] and laughed…A few moments later my affidavit (with the same application in case was handed) was handed up to Justice Knuc whom read that document. I have attached the affidavit of service including the email to send to both judges.
The fifth count is found at page 16 of 41, paragraph 111 and is an annexure of an affidavit of Mr Phong sworn 14 May 2019 and is as follows:
At page 18 of an exhibit to the affidavit of Mr A Scott dated 26 September 2018 is a document titled “Loan (Heads of Agreement)” dated 31 August 2005. This document was not served on my wife and me in the Consolidated 2015 Supreme Court Proceeding prior to the trial in April 2017, and was not tendered by Mr Scott or any other party at the trial . The first occasion on which I saw a copy of this document was in about March 2018. Prior to March 2018 I had never seen or been served with this document.
(As per the original)
The sixth count is found at page 18 of 41 and is contained in an email from Mr Scott dated 10 June 2019 to a plethora of people including Justice Berman's associate and is as follows:
On 6 September 2017, I also served via email to all above parties and hand delivered to your honour['s] chambers, my Exhibit S-1 "Court book April 2017 Pages Missing from Defendant Affidavits” (this included over 10 references where Mr Phong tampered with defendants evidence, denial of service of the defendants evidence, removed affidavits, removed annexures of affidavits, changed documents, this also included Mr A Scott's affidavit affirmed 1 July 2016). Mr Phong took advantage of my lame understanding of the court system, also fact that I was heavily medicated at that time.
(As per the original)
The seventh count is found at page 38 of 41 and is virtually a repetition of the fourth ground and is an email from Mr Scott to the associates to Justice Loughnan and Justice Knuc and is as follows:
On the 6 September 2016 during a court hearing at the Family Court, Mr Phong repeatedly and falsely stated to your honour Justice Loughnan that he has not been served nor seen my Amended Application in Case in the Family Court dated and filed on the 24 August 2018, then requested the matter to be adjourned on the agreed date of 6 December 2018. While I stated the contra, that I did serve him in person with both applications at the Supreme Court of NSW in court room in front of the Honourable Justice F Kunc. I placed the documents on Mr Phong's lap, then Mr Ben Zipser who was sitting next to him picked up the document and said “we have been served”.
(As per the original)
I asked Mr Phong's position in relation to these counts of fraud and he replied “yes” in answer to my question:
You would agree that the applications filed by Mr Scott and I Pty Ltd should be struck out as an abuse of process under section 45A of the Act [Family Law Act 1975 (Cth)]?”
The Relevant Legislation
I can strike the proceedings out as part of my power under section 45A(4) of the Act which is as follows:
The court may dismiss all or part of proceedings at any stage if it is satisfied that the proceedings or part is frivolous, vexatious or an abuse of process.
Further, sub section (7) of section 45A of the Act permits the Court to take action under this section on its own initiative and I will so act of my own motion as I informed Mr Scott I would
I propose to also consider on my own motion subsection (2) of section 45A of the Act which is as follows:
The court may make a decree for one party against another in relation to the whole or any part of a proceedings if:
(a) the first party is defending the proceedings or that part of the proceedings; and
(b)the court is satisfied that the other party has no reasonable prospect of successfully prosecuting the proceedings or that part of the proceedings.
In so doing I must consider subsection (3) of section 45A of the Act which is as follows:
For the purposes of this section a defence, or proceedings or part of proceedings not be;
(a) hopeless; or
(b) bound to fail
to have no reasonable prospect of success
In order to determine whether the applications of Mr Scott and I Pty Ltd that Justice Berman's decisions of 2 August 2019 and 23 October 2019 were obtained by fraud is made out I must analyse his Honour’s Reasons for Judgment.
Justice Berman's Reasons for Judgment
His Honour's decision of 2 August 2019 determined that a cross-claim filed by I Pty Ltd in the Supreme Court in July 2018 sought almost identical relief to that sought in an Application in a Case filed in the Family Court on 22 August 2018 by I Pty Ltd.
Mr M gave evidence at the hearing before Justice Berman in his capacity as the manager of I Pty Ltd acting on instructions of Mr A Scott and Ms Scott, the husband's parents who are the directors of I Pty Ltd. Mr Scott, Mr Phong and the Applicant wife were also present at the hearing. I note from a reading of paragraph 48 of his Honour’s judgment it is clear Mr Scott was involved in the hearing as his Honour says:
During the proceedings he [Mr M] deferred in all things to the husband and was prevented by the husband from making any submission inconsistent with the husband's case.
The application before his Honour and filed by I Pty Ltd sought the following orders and declarations:
1.A declaration that the applicant, I Pty Ltd has at all material times in and after September 2005 had equity and an charge interest in the land described in folio identifier … and known as J Street, Suburb E (“the Property”).
2.A declaration that the said equity and charge interest operates in priority to any interest in the Property held by the respondents 1-4 (Mr Scott, Mr Phong, Ms Phong, Ms Munayallan).
3.A declaration that the said the applicant, I Pty Ltd.’s equity and charge interest operates in priority to any interest in the Property held by the respondents 1-4 (Mr Scott, Mr Phong, Ms Phong, Ms Munayallan.
4.A declaration that the respondent 2-3 (Mr Phong and Ms Phong) holds the property on trust for the first applicant I Pty Ltd in respect of, or to the extent of first applicant I Pty Ltd equitable interest in the property.
5.Order that the transfer to the property from the respondents 2-3 (Mr Phong and Ms Phong) dated in May 2018 be set aside or rescinded.
6.A declaration that the said the applicant, I Pty Ltd has subrogated the right of the Bank Mortgage in or about July 2015 and has a second secured sum of $504,709 (“the Second Loan”) in respect to priority over the interests of the respondents 1-4 (Mr Scott, Mr Phong, Ms Phong, Ms Munayallan).
7.A declaration that the applicant, I Pty Ltd is, and at all material times has been, entitled pursuant to section 74F of the Real Property Act 1900 to lodge and maintain a caveat or mortgage in respect of the Property.
8.Order that the second and third respondents be restrained from registering, or attempting to register, any interest in the Property unless and until the applicant, I Pty Ltd.’s security interest in the Property has been satisfied or otherwise released.
9.The applicant I Pty Ltd has Possession of the whole of land in title folio identifier … situated at and know as J Street, Suburb E in the state of New South Wales (LAND);
10.A declaration that the second and third respondents had knowledge of the first and applicant’s interest in the land in or before October 2014.
11.A declaration that the second and third respondents equitable interest in the property, defeasible for fraud within the meaning of sections 42 and 43 of the Real Property [Act] 1900.
12.A declaration that the second and third respondents hold the property on trust for the applicant in respect of, or to the extent of applicant’s equitable interest in the property.
13.Leave to issue a writ of possession;
14.The applicant I Pty Ltd, judgement against the respondents 1-3 (Mr Scott, Mr Phong, Ms Phong) in the sum of $2,910,000,06 being the amount owning as of 9 January 2018;
15.Interest in the sum referred to the preceding sub-paragraph in accordance with the provisions of the agreement from 9 January 2018;
16.Charges and expenses in accordance with the agreement.
Funds in Court Trust
17.Order that if the applicant, I Pty Ltd.’s is not successful in the above orders 5, then applicant, I Pty Ltd.’s obtain full funds which were placed in the court trust on the 2 May 2018.
18.Declaration that the proceeds of sale of J Street, Suburb E which occurred on the 2 May 2018 are the subject to equity and charge in favour of the applicant, I Pty Ltd.
19.Declaration that the said equity and charge operates in priority to any claim upon such proceeds of sale by the respondents 1-4 (Mr Scott, Mr Phong, Ms Phong, Ms Munayallan).
20.Order that such proceeds of sale as are held in Court to be paid to the applicant I Pty Ltd.
21.Such further or other orders as the Court considers appropriate.
22.Costs.
(As per the original)
Nothing in the reasons supporting the orders of Justice Berman refers to or mentions as a matter impacting upon his Honour's decision whether Mr Phong had or had not been served with an application and supporting material filed by Mr Scott on 24 August 2018. This is unsurprising given what his Honour was determining was the application filed by I Pty Ltd on 22 August 2018 for various declarations and setting aside of transactions inter-alia.
I asked Mr Scott to take me to any fact in his Honour’s judgment where this issue was even mentioned, let alone formed part of his Honour’s reasoning. He correctly pointed out that his Honour had not listed the material he had read for the purposes of the judgment. He took me to paragraph 14 and submitted that this paragraph indicated he had read Mr Phong’s affidavit of 14 May 2019 and relied upon it. I could not see that connection or that the fact Mr Phong's assertion of not being served with Mr Scott's application and affidavit of 24 August 2018 was raised or referred to.
Mr Scott did not provide any evidence or make any submissions in relation to ground six, namely that Mr Phong had in any way tampered with any affidavits filed in the Family Court or removed documents from annexures that had been filed in the Family Court or that this assertion formed part of the evidence before his Honour. Nor did his Honour make any reference to this allegation or the affidavit of Mr A Scott filed 6 September 2017.
Justice Berman determined that at all material times I Pty Ltd was aware of the litigation in the Supreme Court and in those circumstances his Honour determined the application filed by I Pty Ltd was an abuse of process and dismissed the application for the following reasons.
In his decision at paragraph 60 he cited the decision of Cleary v Jeans [2006] NSWCA 9 (“Cleary”), a decision of the New South Wales Court of Appeal in which they had adopted the reasoning in Secretary of State of Trade and Industry v Bairstow [2004] 4 All ER 325 (“Bairstow”) relating to abuse of process applications. The concern in those matters was whether there could be a finding that an application was an abuse of process in current proceedings where a party had not been a party to the earlier proceedings.
Justice Berman carefully set out the facts before him which are as follows:
2. If the Court does not set aside the transfer of the Suburb E property to Mr and Mrs Phong then I Pty Ltd seeks a declaration that the proceeds of sale of the Suburb E property are subject to “equity and charge” in favour of I Pty Ltd and that the net proceeds of sale currently held in the Supreme Court fund be paid to I Pty Ltd.
3. By their Response filed 8 November 2018 Mr and Mrs Phong sought that the application be dismissed as “an abuse of process, frivolous or vexatious”, or for want of jurisdiction. In the alternative they sought that I Pty Ltd provide security for costs in the amount of $100,000 and that the application be stayed until the security was paid.
4. By her Response filed 23 November 2018 the wife sought that the application by I Pty Ltd be dismissed and that “no further applications are to be lodged in these proceedings by I Pty Ltd without leave of this Honourable Court”. The wife supports the orders sought by Mr and Mrs Phong.
5. On 18 June 2019, following submissions, I dismissed I Pty Ltd’s application.
6. The proceedings between the husband and the wife involved property settlement and parenting orders in respect of C born … 2007 (“C”) and D born … 2010 (“D”) (collectively “the children”).
7. On 26 March 2019 Loughnan J made trial direction orders listing all applications before me for trial commencing 17 June 2019. In addition to the substantive proceedings between the parties, the wife’s Contempt Application filed 10 April 2019, the Application in a Case filed by I Pty Ltd and an Amended Application in a Case by the husband filed 15 May 2019 were also listed.
8. For reasons that will become apparent, the substantive proceedings could not be heard and determined until the interim applications had been resolved.
9. Ex-tempore reasons were delivered on 18 June 2019 for orders made dismissing the husband’s Amended Application.
10. Given the limited time available, I considered that it would be of assistance to the parties and in the best interests of the child that the parenting aspect of the proceedings be heard. Accordingly, the orders made dismissing the application of I Pty Ltd were without reasons being delivered. These are the reasons for judgment.
BACKGROUND
11. The dispute between the parties, Mr and Mrs Phong and I Pty Ltd relate to the Suburb E property and the proceeds of sale currently held in the Supreme Court.
12. The parties married in 2010 and separated on 14 February 2014. There is some dispute between the parties as to the date upon which cohabitation commenced. The wife’s position is that she and the husband commenced cohabitation in 2006 while he considers that cohabitation occurred from 2009.
13. The husband commenced proceedings in the Federal Circuit Court on 7 January 2010, however, following a reconciliation the application was discontinued. Following their separation the wife commenced proceedings on 30 April 2014 with the file being transferred to the Family Court on 31 August 2016.
14. The Suburb E property was purchased by the husband in September 2005. There is no agreement nor has there been a determination of the evidence as to how the property was acquired by him. The husband contends that he acquired a loan from I Pty Ltd. The wife maintains that the husband was the sole director and shareholder of I Pty Ltd at the time. She considers that at all material times I Pty Ltd was the alter-ego of the husband.
15. The wife’s contention is rejected by the husband. He refers to an ASIC search to support his position that his mother Ms Scott was appointed a director on 25 June 2003 with his sister Ms L as the sole shareholder.
16. The husband’s father Mr A Scott was appointed a director on 26 January 2018.
17. The husband entered into a contract of sale of the Suburb E property to Mr and Mrs Phong on 29 October 2014 for the sum of $2,200,000. The settlement funds were paid, however Mr and Mrs Phong alleged that the father had not complied with the contract for sale and they commenced proceedings in the Supreme Court of New South Wales.
18. In July 2015 the husband transferred the Suburb E property to P Pty Ltd. The husband’s brother Mr K Scott was the director of P Pty Ltd.
19. It appears that the transfer was made despite the orders made by Judge Kemp on 25 June 2015 that the husband was not to transfer, mortgage or encumber the Suburb E property.
20. In early 2017 the Supreme Court of New South Wales held that the transfer of the Suburb E property from the husband to P Pty Ltd was fraudulent and was done in an attempt to defeat the entitlement of Mr and Mrs Phong to possession pursuant to the contract. A new Certificate of Title for the Suburb E property was issued which recorded the husband as the registered proprietor and he was compelled by order to execute all documents necessary to perform the contract.
21. The wife filed a Further Amended Initiating Application on 3 August 2016 seeking that the Suburb E property be transferred to her and the contract for sale of the property to Mr and Mrs Phong be set aside. The wife now recognises that the landscape has changed significantly as a result of the Supreme Court proceedings and seeks that the net proceeds of sale be included in the property of the parties to be distributed 70 per cent to her and 30 per cent to the husband.
The First Supreme Court Proceedings
22. The Supreme Court proceedings commenced by Mr and Mrs Phong were heard and determined in early 2017.
23. The plaintiffs sought specific performance of the contract for the sale and purchase of the Suburb E property. During the course of the proceedings I Pty Ltd had lodged an encumbrance over the Suburb E property and were joined as additional defendants.
24. His Honour found that the husband had without notice to the plaintiff taken steps to remove the caveat lodged over the property by Mr and Mrs Phong and “dishonestly” transferred the Suburb E property for no consideration to P Pty Ltd. The husband’s brother Mr K Scott was the sole director of P Pty Ltd.
25. His Honour was also asked to consider the conduct of the husband in transferring the property in breach of an order made by the Federal Circuit Court on 25 June 2015.
26. In October 2015 Mr and Mrs Phong became aware of the transfer of the Suburb E property to P Pty Ltd and sought orders seeking an extension of time for a second caveat to be lodged.
27. The proceedings were consolidated and the claim by Mr and Mrs Phong was contained in their Statement of Claim filed 15 March 2016.
28. It was noted that the husband relied upon a number of affidavits deposed to by him and further affidavits from other persons.
29. His Honour dealt with important matters of chronology and held that I Pty Ltd had been registered in June 2003 with the husband as its sole director and shareholder until 2007. His Honour noted that Ms L became the sole director and shareholder. The involvement of Ms L was a matter of some critical importance to the husband. He relied upon an ASIC search to support his contention that his mother Ms Scott had been appointed as a director as early as 25 June 2003.
30. There was no concession on the part of Mr and Mrs Phong or the wife that the ASIC search represented the correct position as to the identity of relevant directors in 2003.
31. His Honour found that the husband was the sole director and shareholder at all relevant times.
32. His Honour considered the manner in which the husband removed the caveat of Mr and Mrs Phong to enable the Suburb E property to be transferred to P Pty Ltd. His Honour found that the husband and Mr K Scott had acted dishonestly.
33. The husband was warned by Mr and Mrs Phong that unless settlement took place by 6 February 2015 they would issue proceedings for specific performance.
34. The settlement was further complicated by the existence of a mortgage to the Commonwealth Bank of Australia and a caveat lodged by I Pty Ltd.
35. The husband argued that he had entered into a secure loan agreement with I Pty Ltd to borrow monies necessary for the purchase of the Suburb E property. The loan agreement document was dated 5 September 2005. Its import was the contention that the loan was secured over the Suburb E property. The signature of the witness to the two signatures on the loan agreement (those of the husband and Ms L on behalf of I Pty Ltd) was witnessed by Ms N. His Honour found that the signatures of the witnesses were a forgery and the only signature that was “legitimate” was that of the husband.
The second Supreme Court proceedings
36. In early 2017 Mr and Mrs Phong sought orders that the proceeds of sale be paid into the Supreme Court pending further order and that any costs order in their favour be paid from the proceeds.
37. Orders were made in those terms.
38. Following the dismissal of an appeal by the husband, he made an application in the Family Court against Mr and Mrs Phong seeking to transfer the settlement funds paid into the Supreme Court to the Family Court and to re-litigate the matters that had been heard and determined in the Supreme Court.
CROSS CLAIM
39. In July 2018 I Pty Ltd filed a cross claim in the NSW Supreme Court against the husband, the wife and Mr and Mrs Phong. The relief sought is as follows:-
1. Declaration that the proceedings of sale of J Street, Suburb E are the subject of a charge in favour of the Cross Claimant;
2. Declaration that the said charge operates in priority to any claim upon such proceeds of sale by the Second and Third Cross Defendants or by the Fourth Cross Defendant;
3. Declaration that the Fourth Cross Defendant has no interest in such monies;
4. Order that such proceeds of sale are held in Court be paid to the Cross Claimant;
5. Such further or other orders as the Court considers appropriate;
6. Costs.
40. Mr and Mrs Phong successfully applied to the Supreme Court that the cross claim should be stayed pending the payment of $100,000 by I Pty Ltd for security in respect of costs. Payment was made in March 2019.
41. There is no impediment to I Pty Ltd pursuing the relief as sought.
42. The basis for the relief sought by I Pty Ltd is better understood by reference to the following extract from the pleadings:-
2. In or about September 2005 the Cross Claimant and the First Cross Defendant ([the husband]) entered into an agreement whereby:
(i) the Cross Claimant would lend to [the husband] the sum of $1,379,315 (“the First Loan”);
(ii) [the husband] would give to the Cross Claimant a security interest in the Property to secure the First Loan and interest accruing on the First Loan.
3. Thereafter, in or about September 2005:
(i) the Cross Claimant advanced to [the husband] the First Loan; and
(ii) [the husband] became the registered proprietor of the Property.
4. By reason of the matters hereinabove pleaded, the Cross Claimant obtained a security interest in the Property upon [the husband] becoming the registered proprietor of the Property.
43. It is further argued that the cross claimant paid out the mortgage to the Commonwealth Bank in the sum of $504,709 and thereby entitled to subrogation with the result that it had priority over the interests of the cross defendants.
44. I Pty Ltd filed a Notice of Motion seeking to lift the stay that had been imposed pending the payment of the security sum. As at the date of hearing the application had not been heard and it is conceded that given the elapse of nine months before the security sum was paid, it cannot be assumed in the absence of explanation that I Pty Ltd will be able to pursue the relief sought in their costs claim.
45. The relevant consideration is that I Pty Ltd have evinced an intention to pursue the relief sought in the cross claim in the Supreme Court.
46. Whilst I Pty Ltd was not a party in the various Supreme Court proceedings after its release, it could not be said that the conduct of the proceedings were not known to I Pty Ltd. I Pty Ltd was a party in the appeal proceedings and the connection between the directors and shareholders of I Pty Ltd with the husband is self evident.
47. When the matter came on for hearing Mr M appeared in his capacity as a manager of I Pty Ltd acting on instructions of Mr A Scott and Ms Scott. He sought to rely upon a document sworn 27 August 2018 but not filed which annexed a number of miscellaneous documents.
48. Mr M was unimpressive in his presentation to the Court. He lacked any knowledge of the circumstances of the proceedings and the clear impression gained was that the documents upon which he relied were not authored by him. During the proceedings he deferred in all things to the husband and was prevented by the husband from making any submission inconsistent with the husband’s case.
…
50. As a result of the inability of Mr M to properly present the case on behalf of I Pty Ltd, the proceedings were adjourned to enable Mr A Scott to attend. Contact was made initially by telephone, however, it was immediately apparent that Mr A Scott was suffering from significant impediment and was not able to engage in the proceedings remotely. The proceedings were further adjourned to enable Mr A Scott to attend. He did. However, he was not able to make submissions on behalf of I Pty Ltd and I Pty Ltd’s solicitor Mr Q appeared who provided valuable assistance to the Court.
51. The evidence supports the finding that between 2003 and 2007 the husband was the sole director of I Pty Ltd and the conduct of Mr M and that of Mr A Scott would invite a finding that I Pty Ltd is the alter-ego of the husband.
ABUSE OF PROCESS
52. It is argued that the application of I Pty Ltd should be struck out on the basis of abuse of process, issue estoppel or anshun estoppel.
…
60. At [26] the following summary is provided:-
In Jeans, the New South Wales Court of Appeal adopted the reasoning in Bairstow in finding that abuse of process can apply where parties to later civil proceedings were not parties to the earlier proceedings. However, “it would only be an abuse of the process of the court to challenge the factual findings and conclusions of the judge or jury in the earlier action if it would be manifestly unfair to a party to the later proceedings that the same issues should be relitigated, or if to permit such relitigation would bring the administration of justice into disrepute.” administration of justice into disrepute.”
61. In the present case I find that I Pty Ltd stood in the background of the Supreme Court proceedings and were aware of the arguments being ventilated by the husband and Mr K Scott in his capacity as director and shareholder of P Pty Ltd. The focus of the husband, P Pty Ltd and I Pty Ltd has been common in that its focus is on the status of the Suburb E property.
62. The cross claim filed in the Supreme Court by I Pty Ltd seeks effectively the same relief as the proposed application for intervention in the Family Court proceedings.
63. The proceedings before the Court relates to settlement of property as between the husband and the wife. A relevant consideration will be the extent to which there are net proceeds of sale of the Suburb E property available for consideration by the Court and distribution pursuant to s 79 of the Act.
64. It is likely that the net proceeds of the Suburb E property will represent almost the entirety of the asset pool that may be available for consideration.
65. The Supreme Court is properly seized of the dispute as between I Pty Ltd and Mr and Mrs Phong. But for the cross claim and the question of the costs of Mr and Mrs Phong arising from the previous litigation, the net proceeds of sale would be determined and would at least in part crystalize the pool.
66. The resolution of the cross claim will determine all outstanding matters as to the Suburb E property.
67. Whilst I do not bring to account the findings made in the various Supreme Court proceedings, the gravamen of the proceedings and the arguments that were ventilated are relevant considerations in determining whether I Pty Ltd has an ulterior motive in attempting to bring proceedings in the Family Court.
68. It is a convenient device that I Pty Ltd should argue that because they were not a party to the various Supreme Court proceedings they are not now prevented from bring an application in this Court.
69. For reasons that I have expressed, I consider that I Pty Ltd were at all material times aware of the issues being considered and had the opportunity to participate and be heard when the interests of I Pty Ltd may have been adversely affected. At some point they did become involved to be heard in respect of the appeal relating to interlocutory matters.
70. That consideration is irrespective of my finding that I Pty Ltd is the alter-ego of the husband.
71. It must be an abuse of process arising from a consideration of the proper administration of justice for I Pty Ltd to seek relief in respect of matters that have been heard and determined simply on the basis that they were not a party to the proceedings when at all material times application could have been made that they be joined and/or opportunity sought to be heard.
The substance of the fraud claim by Mr Scott and I Pty Ltd is firstly that Mr Phong did not tell the truth to Justice Loughnan on 6 September 2018 in that he had not been served with a copy of a particular Application in a Case.
Secondly, that at paragraph 111 of Mr Phong's affidavit of 14 May 2019 he denied service of that document and he has now deceived two further court judicial officers: Justice Slattery and Justice Berman.
First, I note that both I Pty Ltd and Mr Scott had a right to appeal Justice Berman’s decision and did not do so. That avenue is likely closed to them now.
Secondly, I note this application only came about after the Supreme Court proceedings had been determined to finality and not in favour of neither I Pty Ltd nor Mr Scott.
Relevantly I find that whether the assertion regarding Mr Phong having been or not having been served with an application has no bearing on the decision Justice Berman made on 2 August 2019 for the following reasons.
His Honour at no time mentioned in his judgment or at any point that which Mr Scott alleges occurred before Justice Loughnan as being a salient or relevant factor in his determination to dismiss the application before him. Further, whether Mr Phong had or had not been served with a particular Application in a Case some time ago and thus whether Mr Phong was telling the truth or not on this particular issue formed no part of his Honour's reasoning process or factual basis upon which he determined to dismiss the application of I Pty Ltd then before him.
The basis of his Honour’s dismissal of I Pty Ltd's application was that the relief sought mirrored or was substantially the same as proceedings commenced by I Pty Ltd by way of a cross-claim in the Supreme Court one month earlier and that the Supreme Court of NSW was seized with the determination of those issues.
His Honour found at paragraph 71 that merely because I Pty Ltd had chosen not to participate in the Supreme Court proceedings, consistent with the decision of Cleary:
It must be an abuse of process arising from a consideration of the proper administration of justice for I Pty Ltd to seek relief in respect of matters that have been heard and determined simply on the basis that they were not a party to the proceedings when at all material times application could have been made that they be joined and/or opportunity sought to be heard.
It is clear from his Honour’s decision that his Honour found that the application brought by I Pty Ltd sought to challenge the factual findings and conclusions of the judge in the earlier action in the Supreme Court, and consistent with the principles espoused in Cleary:
It would be manifestly unfair to the party in the later proceedings [Mr Phong] that the same issue be litigated, or to permit such a litigation would bring the administration of justice into disrepute.
This is the clear ratio decidendi from a reading of his Honour’s judgment.
As his Honour said at paragraph 61 of his judgment:
In the present case I find that I Pty Ltd stood in the background of the Supreme Court proceedings and were aware of the arguments being ventilated by the husband and Mr K Scott in his capacity as director and shareholder of P Pty Ltd. The focus of the husband, P Pty Ltd and I Pty Ltd has been common in that its focus is on the status of the Suburb E property.
At paragraph 62:
The cross claim filed in the Supreme Court by I Pty Ltd seeks effectively the same relief as the proposed application for intervention in the Family Court proceedings
At paragraph 65:
The Supreme Court is properly seized of the dispute as between I Pty Ltd and Mr and Ms Phong. But for the cross claim and the question of the costs of Mr and Ms Phong arising from the previous litigation, the net proceeds of sale would be determined and would at least in part crystalize the pool.
At paragraph 66:
The resolution of the cross claim will determine all outstanding matters as to the Suburb E property.
I note “the pool” referred to in paragraph 65 was the pool of assets between the husband and the wife. The Supreme Court proceedings needed to be finalised as part of the process of crystallising the matrimonial pool for division between Mr Scott and his former wife in this Court. The proceedings before the Supreme Court have now been determined to finality and the value of the parties’ matrimonial pool is now crystallized in so far as the Suburb E property is concerned. The property proceedings between the husband and wife have been listed for final hearing in September this year.
The Law
The making of allegations of fraud against any person, particularly a lawyer in court proceedings, is a serious matter. Secondly, it goes to the very heart of a tenet of our judicial system namely finality of disputes between parties after a judgment has been delivered, findings made and orders issued.
Dealing with the issue of fraud.
Justice Black in Wan Ze Property Development (Aust) Pty Ltd (in liquidation) [2013] NSWSC 189 (“Wan Ze Property Development”) delivered a judgment in respect of an application for leave under section 471B of the Corporations Act 2001 (Cth) to set aside a judgment alleged to have been procured by fraud or by conduct in bad faith.
In that matter his Honour did not find fraud was made out, but conduct in bad faith was made out and granted leave. In reaching his decision his Honour discussed in some depth the evidence required to substantiate a fraud claim to enable the setting aside of a judgment of a Court by another judge, as both Mr Scott and I Pty Ltd seek I do in their applications before me.
At paragraph 15 of his judgment his Honour commences a discourse under the heading:
When a judgment will be set aside for fraud
At paragraph 16 his Honour states:
There is, of course, no doubt that the Court has a jurisdiction to set aside a judgment procured by fraud. The authorities emphasise that what is required is actual fraud, involving "a mediated and intentional contrivance to keep the parties and the Court in ignorance of the real facts of the case": Patch v Ward (1867) LR 8 Ch App 203 at 207, where Sir John Rolt LJ there also observed that acts tending possibly to deceive or mislead without any such intention or contrivance" would "probably not be sufficient" to set aside such an order." A party alleging fraud bears the onus of establishing the fraud alleged and will fail unless that onus is discharged: Cabassi v Vila (1940) 64 CLR 130 at 147, where Williams J noted that in an action based on fraud the allegation must be established by strict proof that such a charge requires; McDonald v McDonald (1965) 113 CLR 529 at 535.
At paragraph 19 his Honour refers to the decision of Wentworth v Rogers(No 5) (1986) 6 NSWLR 534 at 539, quoting as follows:
"... The burden of establishing the components necessary to warrant the drastic step of setting aside a judgment, allegedly affected by fraud or other relevant taint, lies on the party impugning the judgment. It is for that party to establish the fraud and to do so clearly. In summary, he or she must establish that the case is based on newly considered facts; that the facts are material and such as to make it reasonably probable that the case will succeed; ... and that the opposing party who took advantage of the judgment is shown, by admissible evidence, to have been responsible for the fraud in such a way as to render it inequitable that such party should take the benefit of the judgment."
At paragraph 21 his Honour refers to the decision of D’Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1 at [34] where the plurality of the High Court observed that:
A central and pervading tenet of the judicial system is that controversies, once resolved, are not to be reopened except in a few, narrowly defined, circumstances. That tenet finds reflection in the restriction upon the reopening of final orders after entry and in the rules concerning the bringing of an action to set aside a final judgment on the ground that it was procured by fraud. The tenet also finds reflection in the doctrines of res judicata and issue estoppel. Those doctrines prevent a party to a proceeding raising, in a new proceeding against a party to the original proceeding, a cause of action or issue that was finally decided in the original proceeding. It is a tenet that underpins the extension of principles of preclusion to some circumstances where the issues raised in the later proceeding could have been raised in an earlier proceeding. (citations omitted)
Although not directly on point in relation to an allegation of fraud upon the Court, the discussion in the High Court's decision of Ebner v Official Trustee In Bankruptcy (2000) 176 ALR 644 (“Ebner”) in relation to the test for apprehended bias is illuminating of this matter.
Their Honours at paragraph 6 state the test as to apprehension of bias which is as follows:
Where, in the absence of any suggestion of actual bias, a question arises as to the independence or impartiality of a judge (or other judicial officer or juror), as here, the governing principle is that, subject to qualifications relating to waiver (which is not presently relevant) or necessity (which may be relevant to the second appeal), a judge is disqualified if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide.13 That principle gives effect to the requirement that justice should both be done and be seen to be done,14 a requirement which reflects the fundamental importance of the principle that the tribunal be independent and impartial. It is convenient to refer to it as the apprehension of bias principle.
At paragraph 8 their Honours speak of the two step approach as follows:
…First, it requires the identification of what it is said might lead a judge (or juror) to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits. The bare assertion that a judge (or juror) has an “interest” in litigation, or an interest in a party to it, will be of no assistance until the nature of the interest, and the asserted connection with the possibility of departure from impartial decision-making, is articulated. Only then can the reasonableness of the asserted apprehension of bias be assessed.
The statement of the second principle espoused in Ebner, being an “articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits” is relevant to the application brought by Mr Scott and I Pty Ltd.
I find no connection between the assertions of fraud and misleading statements and the decision made by his Honour and delivered on 2 August 2019. There is no causal link or connection and the basis of his Honour's decision was clear and had nothing to do with Mr Scott and I Pty Ltd’s assertions of fraud and/or misleading statements by Mr Phong. The ratio of his Honour's decision was clear and has been set out by me in this judgment at paragraphs 79 and 80.
Secondly, I am not satisfied that any fraud has been perpetrated upon the Court by Mr Phong's alleged assertions that he had not been served with documents. He may not have been served with documents in accordance with the Rules however that does not mean in the scheme of things he did not ultimately receive the documents and know precisely what the documents asserted or related to. Secondly, this mere assertion by Mr Scott and I Pty Ltd that Mr Phong was telling an untruth is merely that, an unsupported assertion and could not possibly ground such a serious finding as that of fraud perpetrated upon the Court.
The assertions raised by Mr Scott and I Pty Ltd do not even come to the standard in Patch v Ward LR 8 Ch App 203 (“Patch”) as follows.
In Patch at [207], Sir John Rolt LJ observed that acts tending possibly to “deceive or mislead without any such intention or contrivance would "probably not be sufficient" to set aside such an order. A party alleging fraud bears the onus of establishing the fraud alleged and will fail unless that onus is discharged” (in Wan Ze Property Development at [16]).
The assertions of fraud raised by Mr Scott and I Pty Ltd do not even reach an act tending possibly to deceive or mislead let alone amount to one of fraud and thus they have failed to establish the onus upon them.
The assertions of fraud were of no consequence whatsoever in this matter. They played no part in Justice Berman's decision in June 2019 and written reasons of 2 August 2019.
I find these assertions were raised by Mr Scott and I Pty Ltd for an ulterior motive, namely:
(1)To re-litigate a decision they disagreed with and which had been finalised in a decision of the Supreme Court of New South Wales;
(2)To appeal against Justice Berman’s orders; and
(3)To thereby delay the wife being able to obtain her entitlement as to property.
In so finding it is clear that these proceedings amount to an abuse of process, had no reasonable prospects of success and were vexatious having been brought for an ulterior purpose, and the Application in a Case filed by I Pty Ltd on 25 August 2020 and Application in a Case filed by Mr Scott on 21 September 2020 are dismissed.
I reserve the question of costs of this application.
I certify that the preceding one hundred and six (106) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Henderson. Associate:
Dated: 26 February 2021
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