Case: Cardile v LED Builders Pty Ltd [1999] HCA 18 ; (1999) 198 CLR 380
Outcome: cited
My reading of his Honour's reasons here was that he was far from satisfied with the nature or extent of the purported offshore structures and transactions to the extent apparent from the evidence, involving as they did the creation of a trust estate somewhat cognate to what have often been described as 'blind trusts'. Concerns of that nature appear to have persuaded or assisted to persuade the primary judge of the need to order that Ms Hemming submit to cross-examination on her disclosure affidavits. In determining to take that approach, his Honour paid regard to the relevant authorities dealing with both the grant of Mareva relief, and the making of orders ancillary to the same, including orders requiring the swearing of disclosure affidavits and cross-examination on those affidavits. After reviewing the relevant principles enunciated in those authorities, his Honour concluded at [28]: '...ultimately the cautionary words of the four members of the High Court in [ Cardile v LED Builders Pty Ltd [1999] HCA 18 ; (1999) 198 CLR 380 at 403-404] set out at [18] above must be heeded. Orders made in the Court's ancillary jurisdiction must be founded on a doctrinal and principled basis. A Mareva order is protective of the Court's processes, including the efficacy of execution of those orders. Orders concerning disclosure affidavits and cross examination can, in turn, be made to render the Mareva order more efficacious. This is the touchstone for determining whether leave should be given to cross examine. A relevant consideration in determining whether leave should be given might, in an appropriate case, be the failure of the deponent of a disclosure affidavit to disclose assets completely or promptly or both. In such a case, leave might be given because doubts might arise about whether the deponent had understood and accepted the obligations and burdens imposed by the Mareva order and the ancillary order requiring the disclosure affidavit. Cross examination might be appropriate to test whether the disclosure affidavits fully revealed all assets on which the Mareva order operated and which might be available to satisfy any judgment. However, in other cases, other more significant factors might support the granting of leave to cross examine.' The 'cautionary words' of the High Court in Cardile earlier extracted by his Honour at [18] of his reasons below referred to the need for courts to exercise caution in making Mareva orders and to only do so upon a principled basis, having regard to the impact that those orders may have on respondents and third parties. 28 It was submitted nevertheless on behalf of the Sharman applicants that the premise upon which the application for an order for cross-examination order proceeded here was that Ms Hemming had breached the order requiring her to disclose her assets, and that the basis upon which the Music companies litigated the proceedings below was to seek to convince the primary judge that there had occurred inadequate disclosure, on the footing that Ms Hemming did have a substantial asset, namely beneficial interests in the Sharman companies, and further that the loan transaction with TIL was in truth a sham arrangement. Those issues were to have been debated before his Honour at length below 'but were never resolved'. Certainly the premise upon which the order is sought, as I have already sought to explain, was an inadequacy of disclosure of such matters in circumstances that indicated the need for further exploration and inquiry. 29 It was next asserted by the Sharman applicants that the high point of his Honour's conclusion below, both as to the so-called 'putative ownership by Ms Hemming of the Sharman Trust' and as to 'the existence or otherwise of the loan made by TIL to Ms Hemming repaid in February 2005', was that there was 'a lack of clarity' about the matter. My observation is however, that any such lack of clarity about the alleged loan and its repayment or partial repayment derives from its inherently commercially, inexplicable origins and purposes in the first place. It was submitted therefore to be an unprincipled exercise of discretion for his Honour to have ordered cross-examination in circumstances where the Music companies had not convinced his Honour upon either of those conditions which they had raised. In truth, so the submissions continued, his Honour fell into the error of making an order for cross-examination in circumstances where no basis had been demonstrated to the Court to make such an order. For reasons I have already ventured, the concerns relevantly expressed by his Honour were more than some mere 'lack of clarity'. 30 In conclusion therefore, it was the case of the Sharman applicants that Moore J failed correctly to apply the relevant legal principles in committing Ms Hemming to cross-examination on her disclosure affidavit, and that it must follow that the Sharman applicants would inherently suffer 'substantial injustice' if Ms Hemming be so required to submit to cross-examination in accordance with the relief granted by the primary judge. In short, the complaint was that Moore J gave leave for the cross-examination to take place because the Court might 'be left with a greater measure of certainty' [36], and further 'because cross-examination may lead to greater clarity' [37], and that so much exemplified errors in principle in the exercise of his discretion. 31 In my opinion, and for the reasons I have largely foreshadowed in my observations upon the submissions already recorded, the application for leave to appeal brought by the Sharman applicants has not sufficient cogency to justify the grant of any such leave. The case of the Music companies presented to the primary judge (Moore J) for relief of the nature and to the extent granted was sufficiently in line with established principle as to be clear from 'sufficient doubt'. I do not think that the United Kingdom and Australian authorities establish inflexible requirements to the extent postulated by the Sharman applicants, in particular concerning the Court's jurisdiction to grant leave to cross-examine the deponents of disclosure affidavits in Mareva contexts. His Honour's approach in particular to the issue of granting leave to the Music companies to cross-examine Ms Hemming was soundly justified in the light of the evidentiary circumstances concerning the Sharman applicants' offshore trust structure, and the circumstances of and context in which such a substantial sum of money was transferred to an offshore company in the amount and in the context that occurred.