Skycity Darwin Pty Ltd v Groote Eylandt Aboriginal Trust Incorporated (Statutory Manager Appointed)

• Jurisdiction: Northern Territory
• Court: Court of Appeal
• Judge: Riley CJ,Blokland,Barr JJ
• Judgment Date: 16 December 2015
• Docket Number: AP 6 of 2014 (21412262)
• Date: 16 December 2015

[2015] NTCA 4

COURT OF APPEAL OF THE NORTHERN TERRITORY

Judgment of:

Riley CJ, Blokland and Barr JJ

AP 6 of 2014 (21412262)

Between:

Skycity Darwin Pty Ltd

Appellant

and

Groote Eylandt Aboriginal Trust Incorporated (Statutory Manager Appointed)

Respondent

REPRESENTATION:

Counsel:

Applicant: T W Anderson

Respondent: S Brownhill SC

Apache Northwest Pty Ltd v Newcrest Mining Pty Ltd (2009) 182 FCR 124 ; Baden and others v Soci?t? G?n?rale pour Favoriser le D?veloppement du Commerce et de l'Industrie en France SA [1993] 1 WLR 509; [1992] 4 All ER 161; Farah Constructions v Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; Grimaldi v Chamelean Mining NL and Anor (No 2) (2012) 200 FCR 296, referred to.

Benchmark Certification Pty Ltd v Standards Australia International and anor [2004] FCA 1489 ; (2005) 212 ALR 464; George v Rockett (1990) 170 CLR 104; Iskandar v Merpati Nusantera Airline (No. 2) (2006) 16 NTLR 22; K & S Corporation Ltd v Sportingbet Australia (2003) 86 SASR 312; Mercantile Mutual Insurance (Australia) Ltd v Household Financial Services Ltd, unreported, 22 May 1997, matter 5967 of 1994, Supreme Court of Victoria, Court of Appeal; Nationwide News Pty Ltd (t/as) Centralian Advocate and Ors v Bradshaw and Anor (1986) 41 NTR 1; Northern Territory of Australia v GRD Kirfield Ltd & Anor [2003] NTCA 01; Northern Territory of Australia v Roberts [2009] NTCA 5; Paxus Services Ltd v People Bank Pty Ltd (1990) 99 ALR 728; Rogerson v Law Society of the Northern Territory (1993) 88 NTR 1; Wright Engineers Pty Ltd and Anor v BTR Trading (Qld) Pty Ltd and Anor [1987] NTCA 4, applied.

Supreme Court Rules, r 32.05.

Supreme Court Act, s 53(2) & (3).

PRACTICE AND PROCEDURE — Appeal — application for leave to appeal from Master's interlocutory judgment ordering pre-action discovery against prospective defendant pursuant to r 32.05 — possible action based on first limb of Barnes v Addey — applicant for leave contended evidence insufficient to establish reasonable cause to believe that requisite knowledge element might be made out — Court satisfied that knowledge might be made out — Master's decision interlocutory, in a matter of practice and procedure — applicant failed to establish that decision was wrong or attended with sufficient doubt as to warrant leave to appeal — no substantial injustice — application dismissed.

THE COURT:

1 Rule 32.05 of the Supreme Court Rules deals with obtaining discovery from a prospective defendant, or “pre-action discovery” as it is commonly called.

2 On 14 August 2014, the Master made an order under r 32.05 requiring the applicant to give pre-action discovery of documents relating to, inter alia, the gambling activities of Rosalie Lalara at the Skycity Darwin Casino (‘the Casino’) and the “high roller” status accorded to her by the applicant under its loyalty program. 1 The applicant immediately applied to this Court for leave to appeal from the Master's interlocutory judgment and formal orders. 2 The application for leave to appeal was heard by a single judge, who dismissed the application. 3 After that refusal, the applicant exercised its right under s 53(3) Supreme Court Act to have the application determined by a Court of Appeal consisting of three judges.

3 The only ground of appeal pressed by the applicant is as follows: 4

The Master erred in finding that there was a positive basis to believe that it might be established that the Applicant had the requisite knowledge that Ms Lalara was gambling with and losing money misappropriated from the respondent at its casino in Darwin.

Application for leave to appeal — principles

4 The Master's interlocutory judgment 5 was a discretionary judgment in relation to a matter of practice and procedure. 6 In general, in an application for leave to appeal from a discretionary judgment, it must be shown that the judgment appealed from is either wrong, or at least attended with sufficient doubt so as to warrant the granting of leave. Further, if the judgment sought to be appealed is a discretionary judgment in a matter of practice and procedure, then, notwithstanding that error may be shown, leave may still be

refused unless it can be shown that substantial injustice will be done by leaving the erroneous decision unreversed. 7

The proposed ground of appeal in context

5 To properly understand the applicant's proposed ground of appeal, it is necessary to consider r 32.05, and the respondent's proposed cause of action.

6 Rule 32.05 provides as follows:-

32.05 Discovery from prospective defendant

Where:

• (a) there is reasonable cause to believe that the Plaintiff has or may have the right to obtain relief in the Court from a person whose description he has ascertained;

• (b) after making all reasonable inquiries, the Plaintiff has not sufficient information to enable him to decide whether to commence a proceeding in the Court to obtain that relief; and

• (c) there is reasonable cause to believe that the person has or is likely to have or has had or is likely to have had in his possession a document relating to the question whether the Plaintiff has the right to obtain the relief and that inspection of the document by the Plaintiff would assist him to make the decision,

the Court may order that the person shall make discovery to the Plaintiff of a document of the kind described in paragraph (c).

7 The Master ascertained that the present respondent's proposed cause of action, based on Barnes v Addy, 8 was knowing receipt of trust property in breach of trust. The elements of that cause of action are:-

1

Trust property was disposed of in breach of trust; 2. The proposed defendant (applicant herein) received the trust property; 3. The proposed defendant had knowledge that the property was received in breach of trust.

8 Knowledge that property has been received in breach of trust may be established by any one of the following: 9

1

actual knowledge; 2. wilfully shutting one's eyes to the obvious; 3. wilfully and recklessly failing to make such inquiries as an honest and reasonable person would make; 4. knowledge of circumstances which would indicate the facts of the breach of trust to an honest and reasonable person.

9 Rule 32.05(a) refers to ‘reasonable cause to believe’ (that the Plaintiff has or may have the right to obtain relief). In George v Rockett, 10 the High Court considered the conditions precedent to the issue of a search warrant under Queensland legislation 11 which referred to both of the expressions ‘reasonable grounds for suspecting’ and ‘reasonable grounds for believing’. The Court noted that “suspicion” and “belief” are different states of mind. 12 After explaining that “suspicion” is a state of conjecture or surmise where proof is lacking, and that the facts which can reasonably ground a suspicion may be quite insufficient to ground a reasonable belief, the Court made the following observations in relation to “belief': 13

The objective circumstances sufficient to show a reason to believe something need to point more clearly to the subject matter of the belief, but that is not to say that the objective circumstances must establish on the balance of probabilities that the subject matter in fact occurred or exists: the assent of belief is given on more slender evidence than proof. Belief is an inclination of the mind towards assenting to, rather than rejecting, a proposition and the grounds which can reasonably induce that inclination of the mind may, depending on the circumstances, leave something to surmise or conjecture.

10 The above extract is instructive because the expression ‘reasonable cause to believe’ in r 32.05(a) has the same or a very similar meaning as the expression ‘reasonable grounds for believing’ considered in George v Rockett. To believe something is to accept the truth of a proposition, rather than being undecided about that proposition or rejecting it. However, the

proposition which the Court must have reasonable cause to believe under r 32.05 need not be the fact that the plaintiff has the right to obtain relief, but need only be the possibility, that the plaintiff may have the right to obtain relief. We agree, with respect, with the following observations of Emmett J in Benchmark Certification Pty Ltd v Standards Australia International and anor, 14 in relation to the corresponding Federal Court pre-action discovery rule:

The first prerequisite requires a consideration of the elements that are necessary to establish the putative causes of action relied upon to support the right to obtain relief. That will require the court to conclude, at least, that there is reasonable cause to believe that each of the elements of such a cause of action might be made out. The test for whether there is such reasonable cause for belief is an objective one. It is not necessary to prove that each of the elements exists. The rule contemplates only that there be reasonable cause to believe that an applicant may have a right to obtain relief. On the other hand, mere speculation that the relevant elements might exist is not sufficient. There must be some positive basis for the belief. …’.

11 As explained in [8] above, and with reference to the third and fourth bases for third party liability, knowledge that property has been received in breach of trust may be established by wilfully and recklessly failing to make such inquiries as an honest and reasonable person would make; or by having knowledge of circumstances which would indicate the facts of the breach of trust to an honest and reasonable person. Therefore, for the purposes of r 32.05(a), it is sufficient that the Court have reasonable cause to believe that the applicant may have wilfully and recklessly failed to make such

inquiries as an honest and reasonable person would have made...