Timms v Matthews & Ors No. Scgrg-99-46 Judgment No. S156

[1999] SASC 156

LISA M.  TIMMS V BARRY MATTHEWS, SA MARINE & SALVAGE PTY LTD, BIRKENHEAD DEVELOPMENT CORPORATION PTY LTD AND THE SHERIFF OF SOUTH AUSTRALIA

[1999] SASC 156
Magistrates Appeal
1 MARTIN J.      (Ex tempore)       The Official Trustee in Bankruptcy seeks leave to intervene, or to be added as a respondent to this appeal.  In addition the Trustee seeks leave to adduce fresh evidence on the hearing of the appeal.  The first, second and third respondents have also sought leave to adduce the same fresh evidence.  From a practical point of view I understand that if the Trustee is given leave to be added as a party and to call fresh evidence it will be the Trustee who will lead that fresh evidence and bear the expense of doing so. 
2 On 7 August 1997 the first, second and third respondents obtained judgment against the appellant's husband, Rowan Timms, in the amount of $12,676.92.  An appeal against that judgment was dismissed in October 1997.   On behalf of the judgment creditor, Barry Matthews, the Sheriff seized a Volvo semi-trailer (the Volvo) and a car-carrying trailer (the trailer) and sold them at public auction on 23 March 1998.  The proceeds of sale were paid into the Magistrates Court, where they are currently held. 
3 The appellant applied to the Magistrates Court claiming an entitlement to the proceeds of the sale.  She asserted she was the Trustee of the McEwan Family Trust and that the sale proceeds were the property of that trust.   Her claim was dismissed by a magistrate, but the appellant was successful on appeal and the matter was remitted back to the Magistrates Court for rehearing. 
4 The trial of the appellant's application took place before a magistrate in 1998.  In a judgment delivered on 21 December 1998 the claim was dismissed.  In essence, his Honour found that the alleged trust had not been "legally and factually constituted". 
5 The appellant has appealed against that decision on the basis that the magistrate erred in law in holding that she was not the lawful owner of the Volvo and trailer in her capacity as Trustee for the McEwan Trust.  She alleges that the magistrate erred in law in ordering that the Sheriff not recognise her claim to the proceeds of sale. 
6 The appellant's husband became bankrupt on 3 June 1992 and the Trustee was appointed the Trustee of his bankrupt estate.  The Volvo and trailer were initially seized on the basis that there was evidence to suggest that they belonged to the appellant's husband personally.  Subsequently, and without any admission, they were delivered to the appellant and stored on premises leased by the appellant's husband until seized by the Sheriff on behalf of the judgment creditor, Mr Matthews. 
7 The Trustee alleges it is entitled to legal ownership of the proceeds of sale for and on behalf of the creditors of the bankrupt estate of the appellant's husband.  The Trustee does not submit, however, that it has an over-riding entitlement to the proceeds over the Sheriff's costs, nor to the amount owed to the judgment creditor. 
8 It is on the basis of that proprietary interest that the Trustee submits it is entitled to be heard on the appeal in opposition to the appellant's claim for entitlement to those proceeds. 
9 The appeal is pursuant to s40 of the Magistrates Court Act 1991 and is governed by rule 96B.04 of the Supreme Court Rules which applies rule 97. The various powers of the court on appeal are specified in rule 97.18 and they include all the powers and duties as to amendment that were possessed by the magistrate. Rule 23.3B of the Magistrates Court (Civil) Rules 1992 empowered the magistrate to order the joinder of any person beneficially interested in the property.
10 The appellant did not appear today.  During the last appearance on 1 April 1999 the appellant indicated she was about to take a holiday in Deniliquin for ten days.  She clearly understood, however, that the present application would be heard today.  Yesterday the court received by facsimile a six page written submission from the appellant.   Mr Timms appeared today and confirmed that the appellant had sent that submission to the court from Deniliquin.   That much is apparent from the imprint left on the facsimile message by the sending machine. 
11 This morning the court received by facsimile a letter from the appellant indicating that she is,  "stuck in New South Wales with sick children" and unable to return to Adelaide for this application.  Mr Timms has informed the court this morning that she is in New South Wales and unable to return because of the illness of children.  He explained that the appellant had difficulty in sending the letter and E-mailed it to him, whereupon he forwarded it to the court.  In the letter the appellant indicates she has nothing to add to the written submissions.  In those circumstances I have determined in the exercise of my discretion to proceed in the absence of the appellant.  Mr Timms has been present throughout. 
12 In her written submission the appellant objects to the Trustee being joined.  In essence, she submits that the Trustee is precluded by its own prior conduct from intervening.  She does not allege any unfair prejudice would ensue if the Trustee was joined. 
13 In response, counsel for the Trustee denies that any estoppel arises.  In particular, he argued that much of what is put in the written submission from the appellant is not in evidence and evidence would be required before the court could take it into account.  If that exercise was undertaken, counsel indicated there would be a debate along equity lines of who came to the court with clean hands. 
14 The Trustee made an application to be joined in the proceedings before the magistrate but withdrew it. The withdrawal was on the basis that the Trustee would, in essence, continue with a watching brief and participate in submissions if the magistrate found that the trust was not in existence. The Trustee intended to do so on the basis that once such a finding was made it had the effect of establishing that the property belonged to Mr Timms and, therefore, the Trustee had a proprietary interest pursuant to ss58 and 116 of the Bankruptcy Act 1966. I understand that the Trustee participated in submissions once the magistrate found that the trust did not exist.
15 The Trustee now submits that following the ruling by the magistrate it has an established proprietary interest and is entitled to leave to intervene in order to protect that proprietary interest.  From a practical point of view the Trustee argues it would be fair to allow this application because, if it was refused, the expense of leading this evidence would fall to the judgment creditor who does not have a large judgment in his favour. 
16 In all the circumstances, in the exercise of my discretion, I have determined that the Trustee should have leave to intervene.  Accordingly, leave is granted and the Trustee is added as a party in the form of a respondent. 
17 As to the application to call fresh evidence, rule 97.18(b) of the Supreme Court Rules provides that the appeal court may, in its discretion, receive further evidence upon any question of fact.  This application is somewhat unusual as it is the respondents who seek to adduce the fresh evidence on a critical question of fact, namely, whether the McEwan Trust was ever in existence or was a sham invented by the appellant and her husband in order to gain access to the proceeds of sale. 
18 In my opinion, the court has the discretion to receive further evidence from any party to the appeal.  While such applications are most commonly made by appellants, the general wording of the rule indicates it is not intended that the discretion can be exercised only on the application of an appellant. 
19 I have been referred to various authorities concerning the tests to be applied when a party who is unsuccessful at trial seeks to adduce fresh evidence on appeal. In particular, I have been directed to the three tiered test enunciated in Orchard v Orchard (1972) 3 SASR 89 at 98-100, which has been adopted in numerous subsequent decisions.
20 First, the new evidence must come to the knowledge of the party seeking to adduce it after the period in which use could have been made of the evidence in the suit and it must appear that the evidence could not, with reasonable diligence, have been discovered sooner. 
21 Secondly, the evidence must be of such a character that if it had been adduced in the proceedings "it might probably have altered the judgment".  It is pointed out that this second requirement has the dual aspects of materiality and credibility.  Bray CJ appears to have approved the proposition that the evidence must be such that, if given, it would probably have had an important influence on the result of the case, although it need not be decisive. 
22 As to the third element of credibility, the Chief Justice approved of the test that the evidence, without hearing cross-examination or rebuttal, must result in the feeling that it is "not an unlikely story".  In other authorities it is suggested that the evidence must be apparently credible, although it need not be incontrovertible. 
23 In support of the application to call fresh evidence, the Trustee has filed affidavits of Jeremy Gordon Peel, John Edward Pearson, Frank Boyes, Bessie Nadine Green and Annette Denise Lewis.  From records extracted from computers used by the appellant's husband in his accountancy business and the evidence of former employees of that business, Green and Lewis, the Trustee seeks to prove that the alleged trust document was not drafted in October 1991, but in April 1992 after the appellant's husband had been served with a bankruptcy notice.  That evidence is to be considered in conjunction with the intended evidence from Mr Boyes, a solicitor who the appellant and her husband say created the trust and the trust document and gave them advice about it.  According to his affidavit, neither the appellant nor her husband sought his advice in the matter of a trust and he did not create a trust as alleged in evidence by the appellant and her husband. 
24 The evidence is directly relevant to the critical issue that was determined adversely to the appellant by the magistrate.  If accepted as reliable, it will clearly have a significant impact on the credibility of the appellant and her husband, but the primary relevance is in its tendency to disprove the appellant's claim about the existence of the trust.  It is highly probative of that central issue between the parties.
25 The evidence is apparently credible.  Mr Boyse deposed that he never acted for the appellant and her husband, or gave them advice in connection with the formation of the alleged trust.  Green and Lewis explain the system.  Lewis deposes to drafting a number of trust deeds on the instructions of the appellant's husband.  It is a combination of her evidence and the records maintained on computer that the Trustee will rely upon in its endeavour to prove that the document was drafted after the appellant's husband had been served with the bankruptcy notice. 
26 As to why the evidence was not presented before the magistrate during the trial, the affidavit of Mr Peel demonstrates the difficulty that the Trustee experienced in endeavouring to gain access to the records held on the computer that had been operated by the appellant's husband. That difficulty centred on a lack of knowledge of the required passwords. In addition, it is pointed out that the evidence of the appellant and her husband before the magistrate as to the creation of a verbal trust was the first that the Trustee knew of that alleged creation, notwithstanding that the appellant's husband had been publicly examined on four prior occasions in the Federal Court pursuant to s81 of the Bankruptcy Act.
27 Mr Peel deposes to inquiries continuing in the light of the evidence given by the appellant and her husband.  Those inquiries included making contact with Mr Boyse, Lewis and Green, all of whom were, at the time of the trial before the magistrate, considered as likely to be in the camp of the appellant and her husband.  In my opinion, it would not be realistic to suggest that the application should be refused because the Trustee could have pursued this evidence during the trial and after being put on notice by the appellant and her husband. 
28 There is no evidence before me that the respondents were unaware of the existence of the fresh evidence during the course of the trial.  Given the manner in which it was discovered, however, I am prepared to infer that the respondents were not aware of it and could not, by reasonable diligence, have become aware of it during the course of the trial.  There is no criticism of the respondents in not putting that evidence before the court as their application is, in a practical sense, a fall-back position if the Trustee is not given leave either to intervene or to call the evidence.  If necessary, I would have given leave to the respondents to produce the necessary evidence as to their lack of knowledge of the fresh evidence and their inability to have discovered it sooner.
29 While acknowledging that some of the allegations raise serious issues about her evidence and that of her husband which, if true, would have had a serious impact on the decision of the magistrate, the appellant opposes the application.  She submits that the matter should be remitted to the Magistrates Court for a fresh trial.
30 From a practical point of view, it might appear preferable that the appeal be determined on the existing evidence.  However, whichever unsuccessful party appealed, the Trustee and the respondents would be likely to seek to introduce that evidence before the Full Court.  Obviously, such a result would be undesirable.
31 In all the circumstances, I am satisfied it is appropriate to exercise my discretion in favour of the applications.  I am satisfied it would be unfair to the Trustee and the respondents to refuse the applications.  I grant leave to the Trustee and to the respondents to lead such admissible fresh evidence as they deem appropriate from Jeremy Gordon Peel, John Edward Pearson, Frank Boyse, Bessie Nadine Green and Annette Denise Lewis, including the contents of the records maintained on computer by the appellant's husband relevant to the existence or otherwise of the McEwan Trust and the date on which the alleged trust and trust document were created and prepared and to the ownership of the Volvo and trailer as affected by the allegation that they are trust property.