FEDERAL COURT OF AUSTRALIA

Commonwealth of Australia v Endresz [2019] FCA 301

ORDERS

THE COURT ORDERS THAT:

1.    The parties are to bring in Short Minutes of Orders to give effect to these reasons within seven days.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

FLICK J:

1    There are presently before the Court four separate proceedings. Each of the proceedings was initially commenced in the Federal Circuit Court of Australia. But each proceeding was transferred to this Court on 21 June 2018.

2    In each proceeding the Applicant, the Commonwealth of Australia, seeks a sequestration order under s 43 of the Bankruptcy Act 1966 (Cth). The four separate proceedings and the applications for sequestration orders arise out of the failure on the part of the following four persons to satisfy Bankruptcy Notices, namely:

    Mr Allan Paul Endresz;

    Ms Dawn May Endresz;

    Mr Jozsef Endresz; and

    Mr William Arthur Forge.

Each of these persons is the Respondent to a separate proceeding brought by the Commonwealth.

3    Each of the Bankruptcy Notices (in turn) arises out of a separate proceeding commenced in the Supreme Court of the Australian Capital Territory by the Commonwealth. In August 2013 a Judge of that Court, Refshauge J, concluded that the Commonwealth had made out claims for relief against each of the Respondents: Commonwealth v Davis Samuel Pty Ltd (No 7) [2013] ACTSC 146, (2013) 282 FLR 1 (‘August 2013 judgment’). In November 2014 final orders were made by that Court against each of these persons in the following amounts:

    Mr Allan Endresz – $18,633,178.47;

    Ms Dawn Endresz – $12,715,615.17;

    Mr Jozsef Endresz – $18,633,178.47; and

    Mr William Forge – $12,715,615.17.

Reasons for decision were published: Commonwealth of Australia v Davis Samuel Pty Limited (No 8) [2014] ACTSC 312 (‘November 2014 judgment’). Appeals by some of the defendants against these final orders were filed in December 2014 but were dismissed in June 2016 by the Court of Appeal of the Australian Capital Territory for want of prosecution: Davis Samuel Pty Ltd v Commonwealth of Australia [2016] ACTCA 22. There has been no further appeal. Applications were thereafter made in the inherent jurisdiction of the Court to have the judgment and final orders set aside. In January 2017 Refshauge ACJ dismissed those applications: Commonwealth of Australia v Davis Samuel Pty Limited (No 11) [2017] ACTSC 2, (2017) 316 FLR 159 (‘January 2017 judgment’). An application seeking relief in the High Court of Australia has also been apparently rejected.

4    Applications made in the Federal Circuit Court of Australia to have the Bankruptcy Notices set aside have also been dismissed.

5    In opposing the making of the sequestration orders, the Respondents seek to have this Court “go behind” the judgments of Refshauge J published in August 2013, November 2014 and January 2017. Although there was some discrepancy between the written and oral submissions advanced on behalf of the Respondents, the fundamental proposition sought to be advanced was that the sole issue to be resolved by the Supreme Court of the Australian Capital Territory, and the only issue in respect to which it could make orders, was whether or not monies had been paid without authority by the Commonwealth to CTC Resources NL and to a partnership of two companies. That sole issue depended upon the application of the principles set forth in Auckland Harbour Board v R [1924] AC 318. Viscount Haldane, speaking for the Privy Council, there said:

…it has been a principle of the British Constitution now for more than two centuries, a principle which their Lordships understand to have been inherited in the Constitution of New Zealand with the same stringency, that no money can be taken out of the Consolidated Fund into which the revenues of the State have been paid, excepting under a distinct authorisation from Parliament itself… Any payment out of the Consolidated Fund made without Parliamentary authority is simply illegal and ultra vires, and may be recovered by the Government if it can, as here, be traced…

So much, it was submitted, flowed from the description of the “nature of action” set forth in the Amended Originating Application that was before the Supreme Court.

6    In expanding upon that fundamental proposition, the four arguments advanced on behalf of the Respondents were arguments directed to whether or not:

    the pleaded causes of action as set forth in the Sixth Amended Statement of Claim, being the form of pleading upon which the hearing before the Supreme Court was conducted, fell within the “nature of action” set forth in the Amended Originating Application, that being referred to as “the indorsement on the writ”;

    the manner in which Refshauge J dealt with and resolved other causes of action, albeit not causes of action of advanced against the Respondents before this Court, so undermined his Honour’s reasoning and judgment that reliance could not be placed upon the manner in which the liability of the present Respondents was resolved;

    there were “inconsistent judicial findings” as between the findings made by Foster AJ in ASIC v Forge & Ors [2002] NSWSC 760 and the findings made by Refshauge J; and

    the manner in which Refshauge J resolved other causes of action, albeit not causes of action of immediate relevance to the present respondents, was such as to cause his Honour’s judgment and orders to be so “tainted” that no reliance could now be placed upon the orders made as against the present four Respondents. The “taint” was such, so it was argued, to render the judgments and orders ultra vires.

There was a considerable degree of overlap as between the second and fourth arguments.

7    Mr Allan Endresz was granted leave to appear on behalf of the other Respondents. Very much at the fore in the granting of such leave was that each of the submissions being advanced were common to all Respondents; no submission was advanced that the bases upon which one or other of the Respondents had been found liable gave rise to any different considerations. Mr Allan Endresz maintained that he had the authority of the other Respondents to make submissions on their behalf.

8    It is concluded that none of these arguments prevail.

9    The Commonwealth is entitled to the sequestration orders it seeks against each of the four individuals.

THE FINDINGS & ORDERS AS AGAINST THE RESPONDENTS

10    The proceeding resolved by Refshauge J was one of considerable complexity.

11    For present purposes, however, the facts are within a narrow compass.

12    The facts start with Mr David Muir, who was an employee of a company, Callform Pty Ltd. He was a contractor to the Department of Administrative Services and later to the Department of Finance and Administration. During his contract with these Departments there occurred two transfers of moneys to a company in which he had a financial or other interest. One transfer, in April 1998, was the transfer of $6 million to CTC Resources NL. This became known as “the April Funds”. The other transfer, in September 1998, was a transfer of $2.75 million to a bank account in the name of Davis Samuel, a partnership of two companies – Kamanga Holdings Pty Ltd and Quancorp Pty Ltd. This became known as “the September Funds”.

13    Of relevance is the involvement of the four Respondents to the present proceedings before this Court. Each was a defendant to the proceedings before Refshauge J:

    Mr Allan Endresz, being the fifth defendant;

    Ms Dawn Endresz, being the eighth defendant and the wife of Mr Jozsef Endresz;

    Mr Jozsef Endresz, being the seventh defendant and the father of Mr Allan Endresz; and

    Mr William Forge, being the ninth defendant.

Each of these now-Respondents had been, at various points of time, directors of CTC Resources NL. CTC Resources NL was the sixth defendant.

14    In the August 2013 judgment [2013] ACTSC 146, (2013) 282 FLR 1, Refshauge J summarised the claims made by the Commonwealth as against all the defendants to that proceeding as follows (at 44 to 45):

THE COMMONWEALTH CLAIMS

[249]    The Statement of Claim filed by the Commonwealth is a complex, but carefully drafted document showing, in a relatively easy to follow format, the nature of the claims that have been made. It is divided into parts which are helpful to comprehension, and the allegations against each defendant are then set out in a section relating to that defendant, even though some of the facts and circumstances show that more than one defendant is liable in respect of a particular transaction.

[250]    There are five causes of action pleaded:

(1)    The principal cause of action is in respect of a breach of fiduciary duty said to be owed by Mr Muir and Callform to the Commonwealth, being the making of the April payment and the September payment. I shall deal with that claim below.

Out of this claim, it is alleged that a number of the defendants either received funds, which were improperly paid in breach of the fiduciary duty owed by Mr Muir and Callform to the Commonwealth, or assisted in the transfer of funds which constituted the breach. Again, this will be dealt with further below.

(2)    Secondly, it is alleged that Mr Muir and Callform breached their equitable duties of confidence which they owed to the Commonwealth by misusing confidential information which had been entrusted to them. It is then asserted that those defendants who participated in the breach of confidence were liable in equity to the Commonwealth as constructive trustees of property acquired as a result.

(3)    Thirdly, it is claimed that the April payment and the September payment were made without power and that they were, therefore, money had and received by CTC Resources (the April Funds) and Davis Samuel or the Davis Samuel Partnership (the September Funds) and, as paid illegally and ultra vires, could be recovered by the Commonwealth and traced into the hands of the holder of those moneys.

(4)    Fourthly, the Commonwealth claimed that the moneys paid in the April payment and the September payment were paid under an operative mistake and that the Commonwealth is entitled to restitution of the funds.

(5)    Finally, the Commonwealth claimed that the making of certain accounts payable invoice entries by Mr Muir, which enabled the making of the April payment and the September payment, was conduct in trade and commerce, and was misleading and deceptive, in contravention of s 52 of the Trade Practices Act 1974 (Cth). To the extent that certain of the defendants participated in the breach of duty of Mr Muir and Callform, it is claimed that, under s 84 of the Act, these contraventions were made with the authority of those defendants.

His Honour then set forth the defences, and commenced this exposition as follows (at 45):

THE DEFENCES

[251]    The defendants who were active parties (that is, excluding those defendants with whom the Commonwealth has settled, and Kamanga and Quancorp, which are in liquidation), save for TNG, each filed defences which were in relevantly identical terms. I shall refer to these defendants as the Primary Defendants. TNG filed a quite different defence. I shall deal with the proceedings in respect of TNG separately.

[252]    So far as the Primary Defendants are concerned, they admitted formal matters, such as the registration of companies, but refused to admit all the other allegations in the Statement of Claim.

Each of the Respondents to the present proceeding were what Refshauge J described as “active parties”.

15    Justice Refshauge, in his reasons for decision, separately addressed the claims against “certain of the Defendants”, including the Respondents to the present proceeding in this Court: August 2013 judgment [2013] ACTSC 146 at [2017] to [2165], (2013) 282 FLR at 282 to 299. The findings made by his Honour centre – at least in part – upon a series of four resolutions passed at a meeting held on 23 October 1998. His Honour summarised the allegations made in respect to these resolutions as follows:

The improvidence of the 23 October Resolutions

[1362]    The 23 October Resolutions were decisions made by de facto directors of TNG who had not been validly appointed. TNG says, in these proceedings, that the 23 October Resolutions were not in the interests of TNG and, indeed, were against its interests in that they resulted in its impoverishment. The Primary Defendants disagree and say that the transactions, made in accordance with the resolutions, were for the benefit of TNG. The Commonwealth pleaded that parts of the transactions flowing from the 23 October Resolutions were:

(1)    a scheme devised by Mr Allan Endresz, Mr Jozsef Endresz, Mr Muir, Mr Forge and Mr Cain for their personal benefit;

(2)    a scheme devised by Mr Muir and Mr Forge to purchase, at greater than market value, the options in Kanowna Lights, from which they stood to derive a personal benefit;

    (3)    not a genuine commercial transaction;

(4)    not transactions that Mr Muir and Mr Forge could believe were genuine commercial transactions;

    (5)    not consistent with a genuine commercial transaction.

TNG Ltd, formerly known as Hallmark Gold NL, was the twenty-seventh defendant.

16    His Honour ultimately expressed his conclusions in respect to “certain of the Defendants” as follows:

Conclusion of the claim by TNG

[2165]    Having regard to the nature of the 23 October Resolutions, their effect, the circumstances in which they were passed and the context as noted above, and the transactions which gave effect to them, I am satisfied that:

(1)    Mr Muir, Mr Forge and Mr Clark breached their fiduciary duties to TNG by passing the 23 October Resolutions and implementing them to the extent they did so;

(2)    Mr Allan Endresz and Mr Cain both knew that Mr Muir, Mr Forge and Mr Clark were breaching their fiduciary duties to TNG by passing the 23 October Resolutions and implementing them to the extent they did so;

(3)    Mr Allan Endresz and Mr Cain assisted Mr Muir, Mr Forge and Mr Clark in breaching their fiduciary duties to TNG by passing the 23 October Resolutions and implementing them to the extent they did so; indeed, they could be said to have knowingly induced or procured them to breach their duty;

(4)    Mr Jozsef Endresz and Mrs Dawn Endresz knowingly assisted Mr Muir, Mr Forge and Mr Clark breach their fiduciary duties to TNG by causing CTC Resources to sell shares in Kanowna Lights at a gross overvalue to TNG and thereby benefitting from the transaction made in breach of those duties;

(5)    Mr Jozsef Endresz assisted Mr Muir, Mr Forge and Mr Clark breach their fiduciary duties by causing Kamanga to sell options in Kanowna Lights at a gross overvalue to TNG and thereby benefitting from the transaction made in breach of those duties.

These findings include the relevant findings made against the four Respondents to the present proceeding. Other than by reference to one or other of the four arguments now presented for resolution by this Court, none of these findings were put in issue for the purposes of the present proceeding. Nor was the quantification of the relief which flowed from these findings put in issue in the present proceeding. The existence of the fiduciary duties; the breaches; the knowledge or assistance provided; and the quantification of the liabilities were thus accepted by the Respondents – subject only to the resolution of their four arguments.

THE POWER TO GO BEHIND A JUDGMENT

17    A judgment of a superior court may be regarded as satisfactory proof of a petitioning creditor’s debt.

18    But a Court hearing an application for a sequestration order may “go behind” a judgment and determine if there is “in truth and reality a debt due to the petitioning creditor”: Wren v Mahoney (1972) 126 CLR 212 at 224 (‘Wren’). Barwick CJ, with whom Windeyer and Owen JJ agreed, there concluded:

The judgment is never conclusive in bankruptcy. It does not always represent itself as the relevant debt of the petitioning creditor, even though under the general law, the prior existing debt has merged in a judgment. But the Bankruptcy Court may accept the judgment as satisfactory proof of the petitioning creditor’s debt. In that sense that court has a discretion. It may or may not so accept the judgment. But it has been made quite clear by the decisions of the past that where reason is shown for questioning whether behind the judgment or as it is said, as the consideration for it, there was in truth and reality a debt due to the petitioning creditor, the Court of Bankruptcy can no longer accept the judgment as such satisfactory proof. It must then exercise its power, or if you will, its discretion to look at what is behind the judgment: to what is its consideration.

These observations were cited with evident approval by Kiefel CJ, Keane and Nettle JJ in Ramsay Health Care Australia Pty Ltd v Compton [2017] HCA 28 at [42], (2017) 261 CLR 132 at 144 (‘Ramsay Health Care’).

19    The circumstances in which a Court may “go behind” a judgment are not confined to circumstances where there is “fraud, collusion or miscarriage of justice”: Ramsay Health Care [2017] HCA 28 at [97], (2017) 261 CLR at 160. Further, Kiefel CJ, Keane and Nettle JJ observed (at [47]) that the decision in Wren “stands as a rejection of Ramsay’s proposition that the circumstance that a judgment of the Supreme Court was obtained without collusion or fraud after a contested hearing precludes the possibility of sufficient reason for questioning whether behind that judgment there was, in truth and reality, a debt due to the petitioner”. Their Honours further concluded as follows:

[54]    In point of principle, scrutiny by a Bankruptcy Court of the debt propounded by a judgment creditor seeking a sequestration order in no sense involves an attempt to impeach the judgment. A Bankruptcy Court is not concerned with whether the judgment should be set aside as upon an appeal, or even as a default judgment or a judgment obtained by fraud may be set aside; nor is a Bankruptcy Court concerned to deny the effect of the judgment as “res judicata” between the parties to it. A Bankruptcy Court is not concerned to prevent the judgment creditor from invoking the ordinary processes of execution available under the general law. Rather, a Bankruptcy Court is concerned with whether the debt on which it is based is truly a basis for the making of a sequestration order. A Bankruptcy Court has a statutory duty to be “satisfied” as to the existence of the petitioning creditor’s debt; a creditor should not be able to make a person bankrupt on a debt which is not provable.

[55]    The scrutiny required by s 52 as to whether there is, in truth and reality, a debt owing to the petitioning creditor serves to protect the interests of third parties, particularly other creditors of the debtor. It is of critical importance to appreciate that such persons were not parties to the proceedings that resulted in the judgment debt. It has long been recognised that their interest in being paid their debts in full should not be prejudiced by the making of a sequestration order in reliance on a judgment debt which does not reflect the true indebtedness of the debtor to the petitioning creditor...

(footnotes omitted)

In a separate judgment, Edelman J observed, at [97]:

I agree with the reasons of Kiefel CJ, Keane and Nettle JJ that neither precedent nor principle constrains the power of a court under s 52(1)(c) of the Bankruptcy Act 1966 (Cth) to go behind a judgment obtained after a contested trial. In particular, the power is not confined to circumstances of fraud, collusion, or miscarriage of justice. This conclusion was not a new creation by this Court in the twentieth century. Nor was it a new power created by s 52(1)(c). The power to go behind a judgment has a long history. It was developed by reference to the analogous power which was recognised by the Court of Chancery for hundreds of years under the rubric of “conscience”. The principle upon which the power was exercised by a Bankruptcy Court was to protect the rights of creditors who were not parties to the litigation giving rise to a judgment debt.

20    A curious feature of the present proceeding is that the Respondents:

    advance no submission that Refshauge J erred in making any of his findings as to the legal and factual basis upon which any of them was held to be liable and make no submission as to any error in the quantification of that liability

other than:

    the errors said to have been committed by Refshauge J in resolving claims that did not fall within the terms of the Amended Originating Application; errors as to the manner in which his Honour resolved causes of action against other defendants to the proceeding before the Supreme Court, those errors being said to have “tainted” that part of the judgment dealing with the liability of the Respondents to the present proceeding; and the argument as to “inconsistent judicial findings”.

If each of the arguments relied upon as a reason to “go behind” the judgments of Refshauge J fail, the findings as to the liability of the four Respondents to the proceeding in this Court stand unimpeached. Other than the four arguments relied upon, the Respondents did not otherwise contend that there was not in “truth and reality” a debt owing to the Commonwealth.

21    Although Counsel for the Commonwealth flirted with a proposition that the arguments now relied upon would more appropriately be dealt with on appeal, and should have been resolved in that manner, Counsel did not press that the arguments relied upon could not provide a basis upon which this Court could “go behind” the judgments of Refshauge J. Although a submission was put by Counsel that the present proceedings were “misconceived”, there was no opposition to the Court entertaining and resolving the arguments presented by the Respondents.

22    In entertaining each of the arguments, however, it is to be constantly recalled that the task now entrusted to this Court is not to consider “whether the judgment should be set aside as upon an appeal”: Ramsay Health Care [2017] HCA 28 at [54], (2017) 261 CLR at 147. Kiefel CJ, Keane and Nettle JJ there emphasised that “a Bankruptcy Court is concerned with whether the debt on which it is based is truly a basis for the making of a sequestration order” and that a “Bankruptcy Court has a statutory duty to be ‘satisfied’ as to the existence of the petitioning creditor’s debt”.

23    On the facts of the present case it is concluded that none of the four arguments advanced by Mr Endresz provide any or sufficient reason to “go behind” the judgments and the orders of Refshauge J and that in “truth and reality” there remains a debt owing to the Commonwealth: cf. Wren (1972) 126 CLR at 224.

A FAILURE TO FURTHER AMEND THE ORIGINATING APPLICATION

24    One of the principal bases upon which the Respondents seek to “go behind” (in particular) the August 2013 judgment and the final orders made in November 2014 rests upon the fact that the Statement of Claim had been the subject of a series of amendments. The causes of action as ultimately advanced against the Respondents in the Sixth Amended Statement of Claim, it was argued, went beyond the indorsements set forth in the Amended Originating Application. The amendments to the Originating Application, it was said, did not keep up with the amendments to the Statement of Claim. This deficiency or deficiencies, it was argued, rendered the proceeding and judgment a nullity. Construed differently, the argument was that the deficiency or deficiencies were such that this Court should not be “satisfied” as to the existence of the debt owed to the Commonwealth.

25    The starting point for the argument advanced by the Respondents was that it was the Amended Originating Application which determined the “essential nature” of the claims being made and that the Statement of Claim was but a “specific way of stating the claim… endorsed on the writ”: Renowden v McMullin (1970) 123 CLR 584 at 595 (‘Renowden’). Barwick CJ and McTiernan J, in dissent, there observed in respect to a proceeding commenced in the Supreme Court of Victoria and that Court’s Rules:

The indorsement on the writ not being a statement of claim is not in the nature of a pleading. In our opinion, it should not be construed as such but read for what it is, namely, a notice of the nature of the plaintiff's claim, of the cause thereof and of the relief sought in the action. It suffices if it conveys that information generally and without particularity save where and to the extent to which particularity is indispensable to notify the required elements of the endorsement, e.g. on some occasions identification of the instrument upon which a claim is founded. But insufficiency of the indorsement does not render the writ a nullity… On the other hand, the indorsement marks out the perimeter or range of the area within which the plaintiff may express his claim in a formal fashion in his statement of claim whether as originally filed or as sought to be amended…

(citations omitted)

Their Honours continued (at 596):

But, while the indorsement of the writ determines the essential nature of the action, it does not define, nor necessarily form part of the definition of the issues for trial. That is done by the pleadings of which the writ does not form part. When a statement of claim has been delivered it will in its finally amended form determine the issues for trial. It will not normally be necessary to refer to the indorsement on the writ of summons to ascertain such issues. Possibly, however, where there is ambiguity in the statement of claim the indorsement may serve to throw light upon the meaning of the statement of claim or of expressions in it. Only inasmuch as the statement of claim can be said to be the initiation of specific issues for trial in the action, can it be properly said that the statement of claim supersedes the indorsement of the writ …

26    In resolving this argument in the January 2017 judgment [2017] ACTSC 2, (2017) 316 FLR 159, Refshauge ACJ concluded that:

    the causes of action as pleaded did not go beyond the terms of the indorsement;

and that, assuming that conclusion be erroneous, further concluded that:

    any deficiency in the indorsement in the Amended Originating Application did not render the proceeding a nullity, any deficiency being a procedural “irregularity”; and

    the now-Respondents had lost any entitlement to make an application pursuant to O 69 r 2 of the Supreme Court Rules 1937 (ACT) to have the judgment set aside.

The latter part of the argument was more fully addressed in the Respondents’ written submissions than in their oral submissions. But it was not understood to be an argument that was abandoned for the purposes of the present proceeding.

The indorsement on the Amended Originating Application & the causes of action

27    The indorsement on the Amended Originating Application relevantly stated as follows:

28    The argument for the Respondents, and the argument underpinning most of the arguments being advanced by the Respondents, was that the only pleading which could properly fall within the terms of the Amended Originating Application was that set forth in para (a), namely a payment “without the authority of the” Commonwealth. Whatever be the other causes of action that may be pleaded in a statement of claim, and irrespective of the manner in which a hearing was conducted and no matter how long that proceeding may have taken, the Court – on this submission – lacked any power or jurisdiction to make any order giving effect to any claim for relief other than one which fell within Auckland Harbour Board v R [1924] AC 318. Paragraphs (b) and (c) of the Amended Originating Application, on this approach, were but a foreshadowed means of giving effect to any liability that may have arisen by reason of monies being paid “without authority”.

29    It is unclear whether such an argument, expressed in such stark terms, was ever advanced before Refshauge ACJ.

30    The submissions before Refshauge ACJ seemed more directed to arguments as to whether the five causes of action advanced for resolution before that Court – i.e., a breach of fiduciary duty, breach of confidence, mistake, trade practices and ultra vires – fell within the terms in which the Amended Originating Application was expressed.

The reasons of Refshauge ACJ – metes and bounds

31    The causes of action pleaded in the Sixth Amended Statement of Claim, according to Refshauge ACJ, remained within the “metes and bounds” of the indorsement of the Amended Originating Application.

32    In the January 2017 judgment [2017] ACTSC 2, (2017) 316 FLR at 179 Refshauge ACJ referred to the amendments to the Statement of Claim and the failure to amend the Originating Application as follows:

[93]    There is no doubt that the amendments made by the Amended Statements of Claim after 11 February 1999 did not result in the Originating Application, which had then been amended, being further amended. It is a pity that Crispin J did not expressly address that issue. On the other hand, no party, including the Applicant Defendants, raised that issue either before his Honour or inter partes. The title to the proceedings was, however, regularly amended by the addition of the added defendants.

His Honour then proceeded to resolve the submission as to whether the judgment should be set aside. Before resolving that submission, his Honour referred to the power of the Court to vary a judgment before it had been entered. His Honour continued (at 181):

[104]    This is not, however, the power which the Applicant Defendants seek to have exercised here. They seek that the order and judgment be set aside because of a fundamental defect that, they submit, so infects the judgment that it cannot stand; it is, they assert, a nullity.

[105]    Such an application is sometimes described as based on the entitlement to relief from an injustice; that is, the Applicant Defendants are entitled ex debito justitiae to have the judgment set aside…

…

[108]    The consequence of a finding that the judgment is a nullity is that it must be set aside without any consideration of the merits: … That is because there has, in effect, been no trial.

(citation omitted)

His Honour then turned his attention as follows (at 188) to whether the proceedings were a “nullity”:

Were the proceedings a nullity?

[145]    I shall, for the purposes of the proceedings, proceed as if the principles in Renowden v McMullin apply to these rules; I am by no means convinced that they do but further consideration of that issue can await another day.

[146]    The determination of this issue turns on two questions:

1.    Was the pleadings in the Sixth Further Amended Statement of Claim within the terms of the indorsement on the Originating Application?

2.    If not, was the Sixth Further Amended Statement of Claim a nullity?

His Honour proceeded to resolve these questions in favour of the Commonwealth.

33    With reference to the former of these two questions, and in concluding that the claims against the now-Respondents fell within the “metes and bounds” of the indorsement on the Amended Originating Application, Refshauge ACJ held (at 189):

[152]    It is clear from the nature of the action together with the relief claimed in the Amended Originating Application that the factual base is that funds being $8 525 000 belonging to the Commonwealth were paid without proper authority to Davis Samuel Pty Ltd and CTC Resources NL. These are the facts on which the proceedings were conducted. This is not a case, like Rubenstein v Truth & Sportsman Ltd [1960] VR 473, where an additional cause of action or a claim made outside the factual terms of the indorsement has been made.

[153]    The accounting claimed in the relief sought in the indorsement under the nature of the action is, of course, an equitable claim which arises consequent upon a breach of a fiduciary obligation. See Warman International Ltd v Dwyer (1995) 182 CLR 544 at 556–562. This seems to me to specify adequately the principal cause of action, namely breach of fiduciary duty.

…

[158]    The Commonwealth also pointed out, correctly, that the claim for damages would include equitable damages and that the accounting claim was apt to include alternate remedies such as the payments of compensation or, indeed, proprietary relief: Grimaldi v Chameleon Mining NL and Another (No 2) (2012) 200 FCR 296 at [553]–[559].

[159]    Equitable compensation serves the same purpose as a claim for damages at law; it directs the defendant to restore the monetary value of the loss which he, she or it has caused to the plaintiff: Nocton v Lord Ashburton [1914] AC 932; Re Dawson; Union Fidelity Trustee Co Ltd v Perpetual Trustee Co Ltd [1966] 2 NSWLR 211. The Applicant Defendants conceded in the oral hearing of the application before me that the claimed relief in the indorsement was adequate to encompass equitable damages. This was probably sufficient to justify the judgment in any event.

His Honour then concluded (at 189 to 190):

[160]    As indicated in Glendinning v Cuzens [2011] WASC 247 at [21]–[23], the indorsement sets out the “metes and bounds” of the claim. So far as the Sixth Further Amended Statement of Claim was concerned, it pleaded in greater detail claims than were set out in the indorsement; they, so far as they were upheld, came within those metes and bounds. It seems to me that the approach of the Western Australian Court of Appeal in Watch Tower Bible Society and Tract Society of Australia v Sahas (2008) 36 WAR 234 at [19]–[23]; [53]–[62] justifies this conclusion.

[161]    That they did so by a much more detailed pleading is not to the point. Indeed, as held in Renowden v McMullin at 608, it is to the Statement of Claim and not to the indorsement that regard should be had in defining what the claims were that the plaintiff wished to litigate.

[162]    By remaining within the metes and bounds of the indorsement on the Amended Originating Application, the Statement of Claim, in this case the Sixth Amended Statement of Claim, becomes the pleading on which the proceedings are conducted without any need to refer to the indorsement or, indeed, to amend it.

[163]    That the Originating Application was not amended when each iteration of the Statement of Claim was amended is then irrelevant. Indeed, it was within what was permitted under O 24 r 3 of the Supreme Court Rules.

The Sixth Amended Statement of Claim & the Amended Originating Application

34    It is concluded that:

    the reasons provided by Refshauge ACJ as to why the causes of action in the Sixth Amended Statement of Claim fell within the “metes and bounds” of the Amended Originating Application are persuasive;

and thus concluded that:

    the terms in which the Amended Originating Application were expressed did not confine the only causes of action that could be thereafter pleaded to a cause of action confined to payments of money without authority (cf: Auckland Harbour Board v R [1924] AC 318).

As pointed out by Barwick CJ and McTiernan J in Renowden (1970) 123 CLR at 596, the indorsement on the writ did not “define, nor necessarily form part of the definition of the issues for trial”. It is the statement of claim which “will in its finally amended form determine the issues for trial”. And, no submission was advanced on behalf of the Respondents that:

    the legal and factual issues as resolved by Refshauge J did not fall within the terms of the Sixth Amended Statement of Claim; or

    the findings made by Refshauge J in the August 2013 judgment as to the bases upon which each of the Respondents had been found to be liable ([2013] ACTSC 146 at [2165], (2013) 282 FLR at 299 to 300) were not open on the evidence before his Honour or that those findings were not findings open to be reached given the manner in which the hearing was conducted.

35    The present argument advanced on behalf of the Respondents, accordingly, provides no reason to “go behind” the judgment and orders finding each of the Respondents liable. The argument provides no reason to conclude other than that the Respondents are indebted to the Commonwealth and that the Court can be “satisfied” as to the existence of that indebtedness.

36    Any error made by his Honour, assuming for present purposes that there was error in concluding that claims advanced in the Statement of Claim (as amended) remained within the “metes and bounds” of the Amended Originating Application, provides no sufficient reason to question the manner in which his Honour resolved the claims for relief as set forth in the Sixth Amended Statement of Claim.

A procedural irregularity – a fall back submission

37    The second of the two questions posed by Refshauge ACJ in the January 2017 judgment ([2017] ACTSC 2 at [146], (2017) 316 FLR at 188) focussed upon the now-Respondents contention before the Australian Capital Territory Supreme Court that the Sixth Further Amended Statement of Claim was a nullity by reason of the asserted deficiency in the indorsement.

38    Given his Honour’s conclusions as to the causes of action against each of the now-Respondents falling within the “metes and bounds” of the indorsement on the Amended Originating Application, it was – of course – unnecessary to resolve this question. His Honour nevertheless proceeded to essentially rely upon three reasons for rejecting the now-Respondents’ submission, namely that:

    “…the failure, if it is so, to amend the Amended Originating Application is an irregularity and not a nullity” (at [177]);

    the now-Respondents had lost the right to have the proceeding set aside for an irregularity pursuant to O 69 r 2 of the Supreme Court Rules 1937 (ACT) because they had “not made this application within a reasonable time and have made it after taking significant steps in the proceedings” (at [180]); and

    the now-Respondents had waived the irregularity (at [195]).

The now-Respondents take issue with each of these reasons.

39    Order 69 of the Supreme Court Rules 1937 (ACT), as at the commencement of the Supreme Court proceeding (cf. January 2017 judgment [2017] ACTSC 2 at [74] to [75]), provided in part as follows:

Order 69 Effect of noncompliance

1    Noncompliance with rules not to render proceeding void

Noncompliance with any of these rules, or with any rule of practice for the time being in force, shall not render any proceeding void, unless the court so directs, but such proceedings may be set aside, either wholly or in part, as irregular, or may be amended or otherwise dealt with, in such a manner, and on such terms as the court thinks fit.

2    Application to set aside for irregularity

An application to set aside any proceeding for irregularity shall not be allowed unless it is made within a reasonable time, or after the party applying has taken any fresh step with knowledge of the irregularity.

40    Given the conclusion that there is no reason to question the earlier conclusion of Refshauge ACJ as to the causes of action giving rise to the liability of each of the now-Respondents falling within the “metes and bounds” of the indorsement on the Amended Originating Application, it is equally unnecessary for this Court to consider in any great detail each of the present arguments. But they should each be briefly addressed. In very summary form, concurrence is expressed with the reasons provided by Refshauge ACJ.

41    Insofar as the first argument, that the failure to amend the Amended Originating Application resulted in a nullity, is concerned, his Honour reviewed the authorities and reasoned (in part) as follows (at 192):

[172]    The decisions on which the Applicant Defendants rely are all decisions where proceedings were sought to be struck out before judgment. In those cases the Court has to decide whether to do so. In many cases, the Court has a discretion.

[173]    That discretion has been rendered into statutory form in O 69 r 1 of the Supreme Court Rules.

[174]    None of those decisions describe a Statement of Claim, which exceeds the indorsement on the writ, as a nullity, though many of them require claims that do exceed the indorsement to be struck out. Much of that was because the claims were added when the relevant limitation period had expired, a proper reason for striking them out in the interests of justice. That does not apply here as, save for a small, but resolved problem with the claim under the Trade Practices Act, all the amendments were made before expiry of the limitation period.

[175]    There is much authority to the effect that an inadequate indorsement on a writ is an irregularity and does not render the writ a nullity. See, for example, Glendinning v Cuzens (Court of Appeal decision) at [27]; Ruzeu v Massey-Ferguson (Aust) Ltd [1983] 1 VR 733. Indeed, the fact that the inadequacy can be cured by delivery of a proper Statement of Claim, as pointed out in Pontin v Wood, makes it clear that it is not a nullity.

[176]    As made clear in Harkness v Bell’s Asbestos & Engineering Ltd at 735–736, provisions in the rules such as O 69 r 1 of the Supreme Court Rules, have resulted in the position that the rules very largely do away with the distinction between irregularities and nullities. See also Pilbara Infrastructure Pty Ltd v BGC Contracting Pty Ltd (2007) 35 WAR 412 at [47]–[52].

[177]    It is also relevant that, apart from a reference at 595 to an insufficient indorsement or a writ not being a nullity, there was no reference in Renowden v McMullin to nullity at all.

[178]    Accordingly, the failure, if it is, to amend the Amended Originating Application is an irregularity and not a nullity. …

Concurrence is expressed with those reasons.

42    In rejecting the second argument, founded upon O 69 r 2, Refshauge ACJ concluded (in part) as follows (at 192 to 193):

[180]    In my view, the Applicant Defendants have not made this application within a reasonable time and have made it after taking significant steps in the proceedings.

[181]    Mr Allan Endresz, however, deposed in his affidavit that when, on 15 August 2015, the Commonwealth gave notice of its intention to apply to have the appeal dismissed for want of prosecution, he “felt compelled to conduct a thorough investigation of the proceedings” during which he “uncovered” a number of “serious and profound legal issues” which he submitted were “irregularities” and also some which rendered the proceedings “null and void”. These included the matter the subject of this application.

[182]    Thus, it is submitted that there was no “knowledge” of the relevant breaches of the Supreme Court Rules. I have been unable to find any direct authority on the meaning of “knowledge” in O 69 r 2 of the Supreme Court Rules.

[183]    There is no doubt that the Applicant Defendants will have been aware that no further Amended Originating Application was filed as it was required to be served (O 32 r 12 of the Supreme Court Rules) and this would have been known. They did not receive such a document.

[184]    Further, at all relevant times, the Applicant Defendants were represented by solicitors and senior counsel. There can be no doubt that they had knowledge of the fact that no further Amended Originating Application had been prepared.

[185]    While I accept that the Applicant Defendants may not personally have been aware of the precise terms of all the Supreme Court Rules, that cannot be the relevant consideration, especially given the steps since taken and the fact that they were relevantly represented at the time by lawyers who can be expected to have been aware. That does not seem to have been relevant when a failure to challenge an irregularity was regarded as waived in Perez v Transfield (Qld) Pty Ltd [1979] Qd R 444.

43    Part of his Honour’s reasoning for concluding that the now-Respondents had lost any entitlement to invoke O 69 r 2 was the fact that they had “tak[en] significant steps in the proceedings” (at [180]). These steps were described by his Honour as follows (at 193):

[188]    … The Applicant Defendants proceeded vigorously with pursuit of not only their defence but also their counter-claim. There was no protest or reservation of rights as occurred in decisions such as Emeris v Woodward (1889) 43 Ch D 185 at 186 and Hadley & Co v Henry (1896) 21 VLR 646 at 649.

[189]    Certainly, steps that have been considered to be a relevant waiver in such circumstances include filing an unconditional appearance (Ewing v Orr Ewing (No 1) (1882) 22 Ch D 456), though this only strictly applies to Mrs Joy Endresz, arguing the merits of the proceedings on an application to set aside service (Boyle v Sacker), and making an application for security as to costs (Assunta, The [1902] P 150). All of these took place in these proceedings.

[190]    The fact is that the Applicant Defendants have permitted the proceedings to be conducted at great expense to all without paying any attention to this issue which, apparently in desperation following the judgment against them and the dismissal of their counterclaim, they have now tried to resolve separately. To allow the Commonwealth to have proceeded in this way is clearly unreasonable: Lerga v Susa [1991] ACTSC 105.

Given the steps taken by the now-Respondents in their conduct of and participation in the Supreme Court proceedings, this conclusion of Refshauge ACJ was – with respect – inevitable.

44    Insofar as the last argument that the Respondents’ had not waived the irregularity, his Honour concluded (at 194):

Waiver

[192]    The Applicant Defendants submitted that, as the defects were fundamental defects, they could not be waived. Reference was made to cases such as SS Constructions Pty Ltd v Ventura Motors Pty Ltd [1964] VR 229 at 235–236, where Gillard J made the point that, while a directory provision may be waived, a mandatory direction may not. The Applicant Defendants say the relevant requirements were mandatory and rely on s 146 of the Legislation Act 2001 (ACT).

[193]    Of course, the use of the terms “directory” and “mandatory” are no longer in common use, following the comments made by the High Court about their lack of utility in Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 374 at [38].

[194]    In any event, for the reasons set out earlier, none of the challenged defects are fundamental. The Applicant Defendants could not identify for me any prejudice that they have suffered, such as a failure to know the case they were required to meet or to have had a proper chance to meet it and to make out their case.

[195]    In any event, so far as O 69 r 2 of the Supreme Court Rules amounts to a waiver, I have considered that, given the circumstances, the Applicant Defendants did waive the irregularities.

The reasons of Refshauge J on this point are persuasive.

INCONSISTENT JUDICIAL FINDINGS

45    A further submission advanced on behalf of the Respondents is that there is an inconsistency between the judgment and final orders made by Refshauge J and findings of fact made by a Judge of the Supreme Court of New South Wales, Foster AJ, in ASIC v Forge & Ors [2002] NSWSC 760.

46    But the actual “inconsistency” remained elusive.

47    There was, it may be accepted, a common substratum of facts as between the two proceedings.

48    The proceeding before Foster AJ, however, was a proceeding commenced by the Australian Securities & Investments Commission. There were a number of defendants to that proceeding. Mr Forge was the first defendant; Mr Jozsef Endresz was the second defendant, Ms Dawn Endresz was the third defendant. And Mr Allan Endresz was the fourth defendant. A series of transactions were said by the Commission to give rise to contraventions of ss 232(2), 232(4), 232(6), 243ZE(2) and 243ZE(3) of the Corporations Law Act 1997 (Cth). A series of declarations were made, including declarations as to contraventions against the four Respondents to the present proceeding before this Court. Orders were also made (inter alia) banning Mr Allan Endresz from managing a corporation for a period of sixteen years. Penalties were also ordered to be paid by (inter alia) the four Respondents to the present proceeding. Those declarations, orders and the imposition of penalties are set forth in a Schedule to his Honour’s reasons for decision.

49    The proceeding before Refshauge J was a proceeding commenced by the Commonwealth of Australia. The five causes of action relied upon in the Sixth Amended Statement of Claim and the basis upon which his Honour found the four Respondents now before this Court to be liable centred upon breaches of fiduciary duty and knowledge or assistance in those breaches: August 2013 judgment [2013] ACTSC 146 at [2165], (2013) 282 FLR at 299 to 300.

50    The basis upon which an inconsistency in judicial findings arises, given the different nature of the two proceedings, is not self-evident.

51    If reference is made to the written submissions advanced on behalf of the Respondents, it emerges that the Respondents contend that:

    “declarations and orders of corporate statutory breaches where the funds received from the Applicant are beneficially owned by CTC and subsequently dispersed as related party transactions to the Respondents”.

Before Refshauge J, in the August 2013 judgment, the Respondents:

    “claimed that the April and September payments constituted contracts with CTC Resources (the April payment) and Davis Samuel (or the Davis Samuel Partnership) (the September payment) and that these contracts created debts which the respective payees owed the Commonwealth”: [2013] ACTSC 146 at [1474]; (2013) 282 FLR at 211. Refshauge J went on to observe that the Respondents, “seemed to say that as ASIC was, relevantly, the Commonwealth, its acceptance of the Notification must have constituted an acceptance by the Commonwealth of the issue of shares to it and thus an affirmation of the contract by which they were issued”: [2013] ACTSC 146 at [1489], (2013) 282 FLR at 212 to 213.

There are difficulties with either contention.

52    As to the first, Foster AJ made no finding that the funds were “beneficially owned by CTC”. Indeed, it was no part of the case before that Court to resolve any such issue. And CTC was not a party to the proceeding before the Supreme Court of New South Wales.

53    As to the second, and as noted by Refshauge J, Foster AJ did not found any part of his reasoning upon the existence of any contract. His Honour thus relevantly concluded in the August 2013 judgment [2013] ACTSC 146, (2013) 282 FLR at 230:

[1610]    The second claim is that the claims by ASIC in the 2002 NSW proceedings were based on — indeed fundamentally required as a basis — the relationship between the Commonwealth and CTC Resources in the April payment was a contractual one.

[1611]    That, however, cannot stand much scrutiny. In ASIC v Forge, Foster AJ said (at [10]–[11]):

The events with which these proceedings are concerned occurred in April 1998. In that month CTC received into its funds the amount of $6,000,000.00. This amount was received from the Commonwealth of Australia and was characterised as payment for 60[0],000 redeemable convertible non-cumulative A-Class preference shares called CTC Capital Bonds Series 1, the issue price being $10.00 per share. A dividend of 6.5% was to be paid annually and there was to be a guaranteed redemption of the capital at the end of four years.

The circumstances attending the entry into of this capital raising exercise and the receipt of the payment are not in issue in these proceedings. It is the manner in which the amount received was dealt with, by way of disbursement, that is called in question.

[1612]    It cannot be clearer than that, that the question of whether there was a contract between the Commonwealth and CTC Resources was not a necessary part of the claims of ASIC.

His Honour continued (at 230 to 231):

[1613]    It is a fact that $6 m was paid out of Commonwealth funds and received into the bank account of CTC Resources. It is also a fact that, consequent upon receipt of those funds, CTC Resources issued 600,000 redeemable convertible non-cumulative “A”-Class preference shares. Those undeniable — and undenied — facts gave rise to various legal consequences, including duties imposed on the directions of CTC Resources.

[1614]    To test that, one might contemplate alternate scenarios of the genesis of these facts. For example, if $6 m had been (unknown to CTC Resources or its directors) stolen or paid by a third party, it would have made no difference to the duties of the directors of CTC Resources in respect of the use and distribution of the funds and, having read the relevant decisions, I consider it would have resulted in the same consequences.

[1615]    Had CTC Resources issued the shares to the Commonwealth gratis (such as by way of a donation) or by mistake (until rectified), or at the inquiry of and with payment by a third party, the obligations it owed to the Commonwealth as a shareholder would have been the same and the circumstances would have impinged on the directors of CTC Resources in an identical way as that found by the New South Wales courts.

[1616]    The provenance of the funds and the genesis of any arrangement was in no sense determinative of the outcome in those proceedings and, as his Honour made clear, was not a matter that he considered. I note, too, that in Forge v ASIC, McColl JA, with whom Handley and Santow JJA agreed, set out as the statement of the case (at [13]), an excerpt from the final judgment of Foster AJ consisting of [2] (in large part) to [11] which, of course, includes the two paragraphs I have set out above (at [1611]).

[1617]    The attempts of the Primary Defendants to show otherwise did not succeed. They referred to the fact of the shares being issued to the Commonwealth. That the issuing of the shares brought obligations on CTC Resources says nothing about the circumstances under which they were issued or the existence or otherwise of a contract under which they may or may not have been issued. Thus, they relied on statements from an affidavit filed in support of ASIC’s claim. It referred to what I have referred to above (at [1613]), as the undenied and undeniable facts. None of the excerpts support the contention of the Primary Defendants.

Justice Refshauge then concluded (at 231):

[1618]    In my view, the 2002 NSW proceedings do not, even were there to be a relevant identity of parties (or their privies), which I doubt to be so, give rise to an estoppel based on a judicial determination or assertion (and, thereby, an affirmation) of the alleged contract between CTC Resources and the Commonwealth.

No error is exposed in these conclusions of Refshauge J.

54    The asserted inconsistency relied upon by the Respondents, with respect, remains elusive.

55    There are, in any event, at least two further difficulties in accepting the Respondents’ present argument.

56    First, the two proceedings were commenced by different entities. Although Refshauge J found it unnecessary to resolve this point, such was also most likely the conclusion to which his Honour would have come. His Honour thus said (at 230):

[1609]    I am inclined strongly to the view that for the doctrine of estoppel (or, indeed, res judicata), the Commonwealth in these proceedings was not a privy of ASIC in the 2002 NSW proceedings (see [31]), nor were they the same parties. Because, however, of the findings I make on the other claims, I do not need finally so to decide.

57    Second, any inconsistency between the judgments of Foster AJ and Refshauge J was not raised when the judgment of Foster AJ came before the New South Wales Court of Appeal (cf: Forge & Ors v ASIC [2014] NSWCA 448). At that point of time the Respondents were represented by Mr Biscoe QC.

58    But these latter two difficulties can be left to one side.

59    The fundamental problem confronting the Respondents – and a problem they cannot overcome – is that they have failed to establish the basis upon which they assert inconsistency.

60    The argument now advanced before this Court as to there being an inconsistency between the findings made by Foster AJ and those by Refshauge J is without substance. The argument that Refshauge J’s judgment and final orders cannot be relied upon as evidencing the indebtedness to the Petitioner Creditor in the present case is thus rejected. There remains a certain basis upon which the Court can be “satisfied” as to the existence of the indebtedness to the Commonwealth.

A TAINTED/ULTRA VIRES JUDGMENT

61    The second and fourth of the arguments advanced by Mr Allan Endresz on behalf of the Respondents can be dealt with together – each overlapping one with the other.

62    The arguments had at their core:

    the recurring reliance placed upon the pleadings as set forth in the Sixth Amended Statement of Claim going beyond that which was permitted by the terms of the Amended Originating Application – such that the proceeding before the Supreme Court was little more than a farce to the extent that that Court purported to resolve claims such as breach of fiduciary duty, those claims having nothing to do with an argument as to money being paid by the Commonwealth without authority; and

    irregularities or inconsistency in the manner in which Refshauge J resolved claims separate and distinct from the claims against the Respondents.

The reliance placed by the Respondents upon the confining nature of the Amended Originating Application has been rejected and can be placed to one side for present purposes. It adds nothing to the second and fourth arguments.

63    Instances of perceived deficiencies in the manner in which Refshauge J resolved claims separate and distinct from the claims against the present Respondents can be found (by way of example) in:

    the observation in the January 2017 judgment that breach of confidence claim was “perhaps, the least adequately specified cause of action in the indorsement as it does not in terms refer to the involvement of other of the defendants” ([2017] ACTSC 2 at [154], (2017) 316 FLR at 189); and

    the conclusion in the August 2013 judgment that “CTC Resources, Kamanga, Quancorp and Davis Samuel are liable to the Commonwealth under the Trade Practices Act” ([2013] ACTSC 146 at [1777], (2013) 282 FLR at 252) and the conclusion in the January 2017 judgment that the claim under the Trade Practices Act “failed” ([2017] ACTSC 2 at [157], (2017) 316 FLR at 189).

These perceived deficiencies in the reasoning of Refshauge J, it is said on behalf of the Respondents, so “taint” the balance of his Honour’s judgment that reliance cannot be placed upon the manner in which he resolved the claims against the Respondents. Taken together with the confining nature of the Amended Originating Application, it is said the deficiencies render the balance of his Honour’s judgment and orders ultra vires. The judgment and orders, so the submissions ran, were such that no reliance can be placed upon them as to found any conclusion as to the liability of the Respondents to the Commonwealth.

64    These arguments are rejected.

65    Irrespective of whether or not the matters relied upon expose error on the part of Refshauge J, any error in resolving causes of actions and claims against other defendants to the Supreme Court proceeding provide no reason to question the resolution of the claims against the Respondents to the present proceedings. Indeed, the careful manner in which his Honour resolved those claims only serves to provide a firm foundation for concluding that those Respondents are indeed indebted to the Commonwealth. Especially is this the case where the Respondents make no separate challenge to the factual or legal basis upon which his Honour reached his conclusions in the August 2013 judgment [2013] ACTSC 146 at [2165], (2013) 282 FLR at 299 to 300.

66    There is, moreover, substantial reason to question the basis upon which the present arguments of the Respondents proceeded. Thus, for example, if reference is made to the January 2017 judgment ([2017] ACTSC 2 at [157], (2017) 316 FLR at 189), the submission was that his Honour’s acknowledgement that the claim advanced under the Trade Practices Act “was not easily identifiable in the indorsement” stood in contrast to the manner in which he concluded that the claims against the Respondents did fall within the indorsement. Similarly, the observations made by Refshauge ACJ as to the breach of confidence claim ([2017] ACTSC 2 at [154], (2017) 316 FLR at 189) stand in contrast to the manner in which the breach of fiduciary claims were resolved. But little turns on such difference in language. A difference in terminology employed by a judge in reasons for decision when dealing with different causes of action against different defendants does not, of itself, occasion any reason to conclude that the orders made against the present Respondents were ultra vires or so “tainted” that reliance cannot now be placed upon those orders by the Commonwealth in the present proceeding.

CONCLUSIONS

67    In concluding that there is no reason to “go behind” the judgment of Refshauge J, it is of importance to note the bases upon which this Court was urged to do so. Those bases did not put in question any of the findings made by Refshauge J in the August 2013 judgment [2013] ACTSC 146 at [2165], (2013) 282 FLR at 299. The final orders made in the November 2014 judgment simply gave effect to these findings.

68    The bases upon which this Court was urged to “go behind” the judgment of Refshauge J accepted that all such findings were open to be made by reference to the facts before the Supreme Court and by reference to the pleadings set forth in the Sixth Amended Statement of Claim.

69    Each of the bases upon which the Respondents urged this Court to “go behind” the judgments and orders of Refshauge J have been rejected.

70    In reaching this conclusion, considerable reliance has been placed upon the findings and reasoning of Refshauge J. That, after all, is not surprising. It was his Honour’s judgment which this Court was invited to “go behind”. Appreciation is nevertheless expressed for the care with which his Honour resolved the issues as against the present four Respondents. There is little point, with respect, to be served in repeating the same analysis of the authorities as was carried out by his Honour. It is sufficient for present purposes to identify the relevant parts of his Honour’s reasons which go to the liability of the now-Respondents, to separately consider those reasons and express agreement with them.

71    Although the judgments of Refshauge J are not “conclusive in bankruptcy”, it is concluded that in the circumstances of this case that this Court should “accept the judgment as satisfactory proof of the petitioning creditor’s debt”: Wren (1972) 126 CLR at 224. That state of satisfaction is only reinforced in circumstance where the Respondents do not put in issue – other than by reference to their four arguments:

    the facts as found by Refshauge J; or

    the existence of the duties owed or the legal analysis his Honour applied to those facts.

None of the four arguments presented provide any reason for this Court not to be “satisfied” that there is an indebtedness which can found the making of sequestration orders: cf. Ramsay Health Care [2017] HCA 28 at [54], (2017) 261 CLR at 147. Indeed, the Court is so satisfied.

72    There is no reason to question the fact that in “truth and reality” each of the Respondents to the present proceeding are indebted to the Commonwealth.

Sequestration orders should be made

THE ORDER OF THE COURT IS:

The parties are to bring in Short Minutes of Orders to give effect to these reasons within seven days.

Associate:

Dated:    8 March 2019