Sims v Jooste & Ors (No.3)
[2016] FCCA 1751
•15 July 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SIMS v JOOSTE & ORS (No.3) | [2016] FCCA 1751 |
| Catchwords: COSTS – Application for indemnity costs – whether indemnity costs payable. WORDS AND PHRASES – “scandalous”. |
| Legislation: Criminal Code Act 1995 (Cth) Corporations Act 2001 (Cth), ss.674, 1311(1), 1317E Federal Circuit Court of Australia Act 1999 (Cth), s.17A |
| Cases cited: Cavill Business Solutions Pty Ltd v Jackson [2005] WASC 138 |
| Applicant: | DOUGLAS ARTHUR SIMS |
| First Respondent: | PETER INNES JOOSTE (DEC’D) |
| Second Respondent: | MICHAEL ROBERT STEWART |
| Third Respondent: | MARTIN LAWRENCE BENNETT |
| File Number: | PEG 30 of 2014 |
| Judgment of: | Judge Antoni Lucev |
| Hearing date: | 9 June 2016 |
| Date of Last Submission: | 9 June 2016 |
| Delivered at: | Perth |
| Delivered on: | 15 July 2016 |
REPRESENTATION
| For the Applicant: | In person |
| Counsel for the Third Respondent: | Mr S Popperwell |
| Solicitors for the Third Respondent: | Denman Popperwell Lawyers |
ORDERS
Pursuant to r.15.29 of the Federal Circuit Court Rules 2001 (Cth) paragraph 7 of the affidavit sworn by Douglas Arthur Sims on 19 May 2016 be struck out as scandalous and inadmissible.
The applicant pay the costs of the third respondent on an indemnity basis, with the actual quantum, if not agreed, to be determined by a Registrar of this Court.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PERTH |
PEG 30 of 2014
| DOUGLAS ARTHUR SIMS |
Applicant
And
| PETER INNES JOOSTE (DEC’D) |
First Respondent
| MICHAEL ROBERT STEWART |
Second Respondent
| MARTIN LAWRENCE BENNETT |
Third Respondent
REASONS FOR JUDGMENT
Introduction
By an Application in a Case filed on 31 May 2016 the third respondent, Martin Lawrence Bennett (“Mr Bennett”) seeks orders that:
1.Pursuant to Rule 15.29 paragraph 7 of the affidavit made by Douglas Arthur Sims (the Applicant) on 19 May 2016 be struck out as scandalous and inadmissible.
2.The Applicant pay the Third Respondent’s costs of this application assessed on an indemnity basis.
Objectionable material may be struck out of affidavits
Rule 15.29 of the Federal Circuit Court Rules (Cth) (“FCC Rules”) provides as follows:
(1) The Court or a Registrar may order material to be struck out of an affidavit at any stage in a proceeding if the material:
(a) is inadmissible, unnecessary, irrelevant, prolix, scandalous or argumentative; or
(b) contains opinions of persons not qualified to give them.
(2) Unless the Court or a Registrar otherwise directs, any costs caused by the material struck out must be paid by the party who filed the affidavit.
Affidavit in support
The Application in a Case is supported by an affidavit of a legal practitioner, Mr Popperwell, a partner in the firm representing Mr Bennett in the proceedings, who indicates that he has instructions to seek the orders set out in the Application in a Case.
The affidavit of the applicant
On 23 May 2016 the applicant, Douglas Arthur Sims (“Mr Sims”) filed an affidavit sworn by him on 19 May 2016 (“Mr Sims’ Affidavit”) purporting to relate to further evidence in the substantive proceedings.
In Sims v Jooste & Ors [2016] FCCA 1343 (“Sims v Jooste (No. 1)”) this Court dismissed the substantive application as against the first respondent, the late Peter Innes Jooste QC (“Mr Jooste”) and the third respondent, Mr Bennett, pursuant to s.17A of the Federal Circuit Court of Australia Act 1999 (Cth) on a number of bases, including the following:
a)that the Court had no jurisdiction to hear the claims made therein;
b)that the claims made therein had no reasonable prospect of success in any event; and
c)that the proceedings instituted by Mr Sims were frivolous, vexatious and an abuse of process.
Sims v Jooste (No.1) at [149(a)-(c)] per Judge Lucev.
In Sims v Jooste (No. 1) the Court also observed that Mr Sims’ Affidavit was one of three affidavits filed by Mr Sims after the hearing of the Application in a Case the subject of the judgment in Sims v Jooste (No. 1), in relation to which there were no orders permitting the filing of those three affidavits, and no application made seeking leave to file further affidavits, and no application made to re-open the Application in a Case to accept further evidence. In the circumstances, the Court took no account of those three affidavits, including Mr Sims’ Affidavit, in Sims v Jooste (No. 1): Sims v Jooste (No. 1) at [9] per Judge Lucev.
Mr Sims’ Affidavit at [4] makes an allegation of a contravention of what is described as “Australian Corporations and Securities Legislation S 674 (2)”, which is presumably a reference to s.674(2) of the Corporations Act 2001 (Cth) (“Corporations Act”). The substance of that alleged contravention would appear to be an alleged failure to inform the ASX of the issue of a demand against Suda Ltd (then known as Eastland Medical Systems Ltd (“EMS”)) for a sum of €8 million, and the Board’s conclusion that in the Board’s opinion the demand only related to a value of €3 million to €4 million: Mr Sims’ Affidavit at [5].
Annexed to Mr Sims’ Affidavit is a copy of an email said to be from the second respondent, Michael Robert Stewart (the “Stewart Email” and “Mr Stewart” respectively), the text of which provides as follows:
Doug
I refer to your email concerning Berlin Pharma claims against Norwich Pharma that relate to Fentanyl and Nicotine
You need to be aware that Berlin Pharma (Mr Wildner) and the Liquidator have made claims against EMS for 8.0m euro related to the in-kind capital contribution.
We are currently trying to assess the value of the manufacturing rights only and have no basis at this time to believe the value of the rights will exceed 3-4m euro.
In such a case EMS could be exposed, and, based on your contention that it was agreed that 2m of the 8m shares issued to EMS were received by EMS on behalf of WRD/ETA, EMS would have a cause to seek proportional compensation from WRD/ETA – which is not our preferred position.
You would also understand that EMS is compromised in relation to Nicosorb, and that Berlin Pharma has not fulfilled its obligations to EMS under the NicoSorb Contract, giving rise to claims.
We attempted to defuse this by giving and obtaining a mutual release from Berlin Pharma during our May 2010 (Berlin) discussions without success.
As such, and as a direct result of the 8.0m euro claim pursued after Berlin against EMS by BP, we as a public company will have to serve a Notice of Claim against Berlin Pharma in relation to Nicosorb. This is consistent with the claim you are serving against NP12 and for the same reasons.
You should appreciate this is not our preferred course of action, as such actions cannot assist in ending the Liquidation process and going for resolve. It has been for this reason that we have not initiated any action to date despite being served by Berlin Pharma.
The above text is preceded by the following note:
On Fri Jul 30 14:14, michael stewart sent:
The above text is followed by a date and time as follows:
31/10/2010 6:02 PM
The Stewart Email appears on the bottom half of what appears to be an email screen with the top half of the page of the email screen blanked out. The Stewart Email contains no “From”, “To”, “Date” or “Subject” lines.
Mr Sims’ Affidavit then proceeds to assert that despite Suda Ltd’s failure to inform the ASX of the above matters, the late Mr Jooste and Mr Stewart continued to issue Suda Ltd script for investment, which investment funded defences against Mr Sims. Mr Sims then asserts that Mr Bennett was aware of the offences and continued to profit from those offences: Mr Sims’ Affidavit at [7].
Section 674 of the Corporations Act
Section 674(2) of the Corporations Act imposes an obligation on a listed disclosing entity to disclose information to the market operator which is not generally available, and which if it were generally available would cause a reasonable person to expect it to have a material effect on the price or value of the entity’s securities. A failure to comply is an offence under s.1311(1) of the Corporations Act, and also a civil penalty provision under s.1317E of the Corporations Act. Section 674(2A) of the Corporations Act provides that a person involved in a listed disclosing entity’s contravention of s.674(2) of the Corporations Act contravenes s.674(2A) of the Corporations Act. Section 674(2B) provides that a person does not contravene s.674(2A) of the Corporations Act if they took all reasonable steps in the circumstances to ensure that the listed disclosing entity complied with its obligations under s.674(2) of the Corporations Act, and after so doing believed on reasonable grounds that the listed disclosing entity was complying with its obligations under s.674(2) of the Corporations Act.
Jurisdiction
For reasons set out in Sims v Jooste (No. 1) this Court does not have jurisdiction to deal with any alleged contravention of the Corporations Act: see Sims v Jooste (No. 1) at [40]-[62] per Judge Lucev, nor any general jurisdiction with respect to criminal offences: Sims v Jooste (No. 1) at [64]-[66] per Judge Lucev.
Proper pleading and particularisation of allegations
In these proceedings, Mr Sims’ allegation appears to be that a lawyer was aware of an offence under s.674(2) of the Corporations Act, and that that lawyer has profited from the offence or offences.
On all of the authorities, such a serious allegation must be properly pleaded and particularised: Sims v Jooste QC [2013] WASCA 245 (“Jooste QC”) in which the Supreme Court of Western Australia, Court of Appeal (“WA Court of Appeal”) observed as follows at [12] per Pullin and Newnes JJA:
The indorsement was also deficient in another way. Allegations of dishonesty or impropriety may have a serious impact on a litigant. It is well established that such allegations should not be made unless there is a proper factual basis for them, and where such allegations are made, they must be clearly and distinctly alleged. A party should not be obliged to defend any legal proceedings for any period based on generalised allegations of dishonesty or impropriety. It is improper for a party to make generalised allegations of fraud: Glew v Frank Jasper Pty Ltd [2010] WASCA 87. It is true that an indorsement on a writ is not the place for full particularisation, but an allegation of fraud must not be alleged in such generalised terms that it is impossible to ascertain from the indorsement the nature of the allegation.
and at [17] per Pullin and Newnes JJA:
In Glendinning v Cuzens , the deficiencies in the indorsement were not obviously incapable of being cured by appropriate amendments. That is not the situation in this case. The indorsement in this case, and its collection of disparate and unparticularised complaints, makes it impossible to detect what causes of action might support the claim for damages. Although, on the one hand, the appellant submitted to this court that the master should have exercised his discretion by permitting the appellant to amend the indorsement of claim, on the other hand, he said that he stood by the claims made in the indorsement. The appellant, in his oral submissions, said that he wanted “justice”. He did not seem to appreciate that justice required a disclosure of the legal basis for a claim put in a form that the respondent and court could understand in order to adjudicate fairly between the parties.
(Footnotes omitted).
Jooste QC was handed down just over three months before these proceedings were commenced.
The observations of the WA Court of Appeal in Jooste QC have been repeated numerous time since then and prior to Mr Sims’ Affidavit being filed on 23 May 2016: see, for example, Sims v Suda Ltd (No. 2) [2015] FCA 281 (“Sims (No. 2)-2015”) at [9] per Gilmour J; Suda Ltd v Sims [2013] FCCA 1833 at [72] per Judge Lucev (the last case preceding the institution of these proceedings by more than two months).
Mr Sims’ awareness of the necessity to properly plead such allegations, and not merely to make unparticularised assertions, here in an affidavit, was also brought to his attention by the Federal Court in Sims (No. 2)-2015 (delivered more than 13 months prior to the swearing of Mr Sims’ Affidavit) where the Federal Court at [35]-[37] per Gilmour J observed as follows:
35. The applicant alleges a “Fraudulent Act imposed upon the Applicant by the Respondent” and sets out a number of factual assertions in apparent support of this plea. They do not support it. Allegations of fraud must be distinctly alleged and distinctly proved.
36. A party should not be obliged to defend any legal proceedings, for any period, involving unspecified causes of action based on generalised allegations or impropriety: Oldfield Knott Architects Pty Ltd v Ortiz Investments Pty Ltd [2000] WASCA 255 at [41] per Ipp J with Wallwork J agreeing and see the Court of Appeal’s comments in Sims v Jooste QC at [12].
37. Even if the word “fraud” is used in the pleading, it is insufficient if it is no more than a bald assertion, absent reasonable particularity of the circumstances which are said to constitute the fraud: The Australian Metropolitan Life Assurance Company Ltd v Ure [1923] HCA 29; (1923) 33 CLR 199 at 219-220.
In this case, despite Mr Sims being aware of the necessity to properly plead or particularise an allegation as serious as that of alleging that a lawyer was profiting from offences said to have been committed by the late Mr Jooste and Mr Stewart, there is no proper pleading or particularisation of the allegation of Mr Bennett’s alleged involvement in the alleged offences, or how it is that Mr Bennett is said to have profited from them.
The Stewart Email is a most unsatisfactory document. Significantly, Mr Sims gives no explanation of its provenance. Nor is its provenance discernible from the content of what is obviously a document which has been either cut and pasted or redacted (but for which no explanation of the cut and paste or redaction is proffered), and which contains no proper detail of from whom it was sent, to whom it was sent, when it was sent or any subject line. The “Jul 30” date which appears on the email does not detail what year it was sent, and the reference to “31/10/2010 6:02 PM” in the bottom right hand corner of the email does not make it apparent whether that is a reference to the date upon which the Stewart Email was opened, or read, or printed, or more than one of the above, or none of the above. Nor does the Stewart Email give any clue as to what is said to have been Mr Bennett’s alleged involvement in the alleged offences, or how it is said that Mr Bennett is said to have profited from those alleged offences.
The prior evidence filed by Mr Sims in these proceedings was insufficient to establish any reasonable prospect of success in relation to the allegations then made, which did not include, specifically, the present allegation of offences contrary to s.674(2) of the Corporations Act. That evidence, however, does not link Mr Bennett to the issues raised now by Mr Sims’ Affidavit in any comprehensible manner. Indeed, on a reading of all of the evidence in these proceedings, including the affidavits for which no leave was given to file (which includes Mr Sims’ Affidavit), it is not apparent what the actual basis is for the allegations against Mr Bennett. The most that could be inferred is that Mr Bennett acted as a lawyer for certain parties (and the particularisation of which parties in relation to which actions is not clear) and received remuneration in the form of fees for the provision of his services. That is not an offence under s.674(2) (or s.674(2A)) of the Corporations Act, and for reasons which follow, to suggest otherwise is scandalous. There is therefore no “underlying admissible evidentiary material to set a proper platform”: Sims v Jooste [2013] WASC 425 at [33] per Kenneth Martin J, for Mr Sims’ bare assertion concerning Mr Bennett’s conduct.
In the circumstances, to simply assert, as Mr Sims has done in paragraph 7 of Mr Sims’ Affidavit, that Mr Bennett:
a)“was aware of the offences”; and
b)“continued to profit from those offences”,
without proper pleading or particularisation of any alleged awareness of, involvement in, or profiting from any alleged offences under s.674(2) (or s.674(2A) for the sake of completeness) of the Corporations Act by Mr Bennett means that the allegations would, in any event, have no reasonable prospect of success.
Whether matter scandalous
In Cavill Business Solutions Pty Ltd v Jackson [2005] WASC 138 at [25] per Hasluck J it was said that:
… the mere allegation of a scandalous fact does not render the pleading liable to be struck out as scandalous, for material which is degrading and therefore scandalous will not be struck out unless it is also irrelevant. Scandal consists in the allegation of anything which is unbecoming to the dignity of the Court to hear or is contrary to good manners or which charges some person with a crime not necessary to be shown in the cause: to which may be added that any unnecessary (not relevant to the subject) allegation bearing purely upon the moral character of an individual is also scandalous.
In C2C Investments Pty Ltd, in the matter of C2C Investments Pty Ltd v Leigh (No. 3) [2012] FCA 680 at [5]-[6] per Yates J the Federal Court observed as follows:
5 As a matter of general approach, it does not follow from the fact that scandalous matter has been stated in a document or affidavit filed in the Court that the matter is “scandalous” within the meaning of these rules. The question is really whether the scandalous matter, so stated, is extraneous to the issues raised in the proceeding on which evidence could properly be brought forward: Millington v Loring (1880) 6 QBD 190 at 195; 196-197. If the scandalous matter is extraneous, then, generally speaking, it should be struck out: see, for example, Wu v Avin Operations Pty Ltd (No 2) [2006] FCA 792; Kowalski v Mitsubishi Motors Australia Ltd [2009] FCA 1289. This is but an example of the Court remedying an abuse of its process. However, if the matter is relevant to the issues in the proceeding, such that evidence of it could properly be given, it would not normally be struck out under these rules. In short, the statement of a scandalous matter in a filed document or affidavit will not be struck out simply because it is scandalous.
6 Whether a matter can be characterised as scandalous depends on whether it would be perceived to be such according to generally recognised and accepted community standards at the time of the application. The assessment is an objective one. It does not rest simply on the idiosyncratic perceptions of the person challenging the statement of the matter in the document or affidavit. Still less is a matter scandalous because the person objecting to it disagrees with its content.
In Zaghloul v Woodside Energy Ltd (No. 2) [2013] FCA 947 (“Zaghloul”) the Federal Court dealt with an application which alleged, in effect, that the applicant’s solicitor and Senior Counsel had been involved in negotiations with the respondent to obtain monies unlawfully, and had used his consent to transfer the proceedings from the Federal Court’s Australian Capital Territory Registry to the Western Australian Registry as a successful bargaining chip, or as the applicant put it, he “was, once again, used as a fair game to extract money from the Respondent”. The Federal Court found the allegation to be unsupported by evidence, and to be scandalous: Zaghloul at [52]-[53] per Gilmour J.
In Sims (No. 2)-2015 the Federal Court found that unsupported and unsupportable allegations of fraud alleged to constitute a criminal offence made by Mr Sims in relation to both the late Mr Jooste and Mr Stewart in those proceedings, and which were not capable of constituting either fraud or misleading and deceptive conduct, were scandalous: Sims (No. 2)-2015 at [44] and [47] per Gilmour J.
In McPherson v Kerr, Ex Parte Lewis (1893) 19 VLR 23 (“McPherson”) the deponent of an affidavit believed that a contract would have been cancelled if a solicitor had not interfered and commenced litigation not in the interests of the solicitor’s client. The allegation was one which did not have anything to do with the proceedings. The Victorian Supreme Court struck the allegation out as scandalous observing that:
… it is about as serious a charge (not criminal) as could well be made against a solicitor to say that he commenced litigation not in the interests of his client.
McPherson at [25] per Hodges J.
In the circumstances of this case where:
a)there can be few allegations more scandalous than that a lawyer, who is an officer of the Court, has profited from an offence;
b)the allegation of Mr Bennett’s involvement in the alleged offence and his having profited from it is neither properly pleaded nor particularised; and
c)the application filed by Mr Sims on 5 February 2014 has previously been dismissed against Mr Bennett in Sims v Jooste (No. 1), because, amongst other things, this Court had no jurisdiction to hear claims of alleged breaches of the Corporations Act or the Criminal Code Act 1995 (Cth),
the allegations now made in Mr Sims’ Affidavit must be both scandalous, and irrelevant, and, therefore, inadmissible: Evidence Act 1995 (Cth), s.56(2), in the already dismissed substantive proceedings.
For all of the above reasons, the Application in a Case to strike out paragraph 7 of Mr Sims’ Affidavit will be granted. There will therefore be an order that paragraph 7 of Mr Sims’ Affidavit be struck out pursuant to r.15.29 of the FCC Rules as it is both scandalous, and also, in the circumstances, inadmissible.
Whether indemnity costs to be ordered
The circumstances in which indemnity costs might be ordered, and the circumstances in which indemnity costs were ordered in Sims v Jooste (No. 1), are set out in Sims v Jooste (No. 1) at [144]-[148] per Judge Lucev. The Court adopts what was said there with respect to the basis for granting indemnity costs, both generally and specifically. Those bases are likewise applicable in relation to the present Application in a Case, and perhaps even more so where the application has already been struck out, and the material in Mr Sims’ Affidavit, which was not an affidavit which the Court ordered or granted leave to be filed, is both scandalous and inadmissible. It follows that there must be an order for indemnity costs in favour of Mr Bennett.
Conclusion and orders
For the reasons set out above there will be orders that:
a)pursuant to r.15.29 of the FCC Rules, paragraph 7 of Mr Sims’ Affidavit sworn 19 May 2016 be struck out as scandalous and inadmissible; and
b)Mr Sims pay Mr Bennett’s costs on an indemnity basis, with the actual quantum, if not agreed, to be determined by a Registrar of this Court.
I certify that the preceding thirty-two (32) paragraphs are a true copy of the reasons for judgment of Judge Antoni Lucev
Date: 15 July 2016
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