Allan and Allan and Ors

[2010] FamCA 479

FAMILY COURT OF AUSTRALIA

ALLAN & ALLAN AND ORS [2010] FamCA 479

FAMILY LAW – PROPERTY – Where trustee seeks to restrain Receivers from proceeding with auction where collectables owned by the trust may be included in the auction –  where trustee has provided insufficient information to identify trust collectables despite adequate notice – where husband controls the trust in reality and gives inconsistent evidence about trust property – where compensation was not proved to be an inadequate remedy – where halting the auction or creating additional conditions would create undue prejudice to the success of the auction and to the parties who require auction proceeds to apply to significant liabilities

Family Law Act 1975 (Cth) ss 69F; 78; 79; 85A; 114

Leaway v Newcastle City Council (No. 2) [2005] NSW SC 826
The marriage of MKA & SH Fahmi (1995) 19 Fam LR 517

Ashton & Ashton (1986) FLC 91-777
Davidson (1991) FLC 92-197
Goodwin & Goodwin Alpe (1991) FLC 92-192
Kennon v Spry (2008) FLC 93-388

APPLICANT: Mrs Allan

RESPONDENT: Mr Allan

2^nd RESPONDENT: W Nominees No. 2 Pty Limited

3^rd RESPONDENT: Ms C Allan

4^th RESPONDENT: Mr L Allan

5^th RESPONDENT: Ms H Allan

6^th RESPONDENT: Ms E Allan

12^th RESPONDENT: Mr Senne

INTERVENORS: Mr D and CP (“Receivers”)

FILE NUMBER: SYC 3842 of 2008

DATE DELIVERED: 17 June 2010

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Watts J

HEARING DATE: 10 June 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Kearney

SOLICITOR FOR THE APPLICANT: Paul & Paul Lawyers

COUNSEL FOR THE RESPONDENT: Mr Burridge, QC

SOLICITOR FOR THE RESPONDENT: John de Mestre & Co

COUNSEL FOR 3^RD - 6^TH RESPONDENTS: Mr Bell

SOLICITOR FOR THE RESPONDENT: Horowitz & Bilinsky Pty Ltd

SOLICITOR FOR THE 12^TH RESPONDENT: Litigant in person

COUNSEL FOR THE INTERVENOR: Mr Roberts

SOLICITOR FOR THE INTERVENOR: Kelly & Co Lawyers

Orders

1. The Application in a Case filed 1 June 2010 by the 3^rd to 6^th respondents be adjourned for determination at a later date and any party may request the relisting of this application on 14 days notice.

2. Until further order Mr D and CP (“Receivers”) in their capacity as Receivers and Managers of W Nominees No. 2 Pty Limited (Receivers and Managers appointed) (“W Nominees”) be restrained from disposing of or encumbering the paintings described as “[painting 1]” and “[painting 2]” unless they give the 6^th respondent and the 4^th respondent respectively 28 days notice of their intention to dispose of or encumber the paintings and provided no request has been made pursuant to order 1.

3. Until further order, Mr Senne, in his capacity as trustee of the AM Trust, is hereby restrained from selling, assigning, transferring, encumbering or in any way dealing with any asset of the trust whatsoever including but not limited to any artworks, furniture, object d’art and valuables of any kind whatever or from distributing any capital or income of the trust to any beneficiary thereof.

4. Until further order, the respondent husband be restrained from doing any act or thing whatsoever in his capacity as protector of the AM Trust including but not limited to causing the trustee of the AM Trust to be removed as trustee and to appoint any substitute or alternate trustee. 

5. Subject to order 2 and subject to any other order, by any court, in favour of a party who is not a party to these proceedings, the Receivers forthwith do all acts and things and execute all documents so as to seize, take into their possession and to cause to be offered for sale and sell for the best price reasonably available:

   5.1.all assets of the AM Trust; and

   5.2.all property being antiques, artworks, furniture and furnishings and other items (“the collectables”) being the items referred to and listed in the affidavit of Mr D sworn 30 April 2010 and the various annexures thereto including the alleged missing items, and/or the items particularised in the Z Auction House Limited catalogue “The [W] Collection”

   and upon the sale of the collectables the proceeds of sale be applied in payment of liabilities of W Nominees as are secured by the mortgage debenture PROVIDED THAT the proceeds of the sale of the 23 items referred to in the schedule to these orders, be placed in a controlled monies account, controlled by the lawyers for the Receivers, pending the finalisation of these proceedings.

6. The applications of the 12^th respondent be dismissed. 

7. The operation of Order number 5 made on 23 September 2009 insofar as same operates to prevent the sale of a property owned by W Nominees being the land in folio identifier … at H Street, M in the State of New South Wales (“the property”) be and the same is hereby discharged so far as is necessary to enable the property be sold by W Nominees in accordance with the orders made on 26 June 2009 as soon as practicable for the best price reasonably available upon and subject to the receipt by the wife in her capacity as Director of W Nominees of advice from U Pty Limited that such sale will not inhibit or adversely affect the proposed subdivision, and rezoning of W Nominee’s remaining lands at M PROVIDED THAT W Nominees shall not exchange contracts in respect of any proposed sale of the property until W Nominees has given the husband 21 days notice of the proposed sale.

8. The husband has liberty within 14 days from receiving notice from W Nominees in relation to a proposed sale of the property to file any application upon which he seeks to rely in respect of that sale and any affidavit evidence in respect of which he seeks to rely in relation to that application and in those circumstances W Nominees shall not exchange contracts until that application is determined. 

9. Subpoenas issued by the wife to the ANZ and Horowitz & Bilinsky be stood over to the next date before the Docket Registrar. 

Schedule referred to in Order 5

[removed for publication]

IT IS NOTED that publication of this judgment under the pseudonym Allan & Allan and Ors is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 3842 of 2008

MRS ALLAN

Applicant

And

MR ALLAN

Respondent

And

W NOMINEES (NO. 2) PTY LTD

2^nd Respondent

And

MS C ALLAN

3^rd Respondent

And

MR L ALLAN

4^th Respondent

And

MS H ALLAN

5^th Respondent

And

MS E ALLAN

6^th Respondent

And

MR SENNE

12^th Respondent

And

MR D & CP

Intervenors

REASONS FOR JUDGMENT

INTRODUCTION

1. Mr D and CP (“Receivers”) are the Receivers and Managers of W Nominees No. 2 Pty Limited (receivers and managers appointed) (“W Nominees”). 

2. Z Auction House Limited (“Z Auctions”) have been engaged by the Receivers of W Nominees, to auction a collection of antiques and collectables, marketed as “The [W] Collection”, at Sydney in [date omitted]. 

3. Mr Senne, in his capacity as trustee of the AM Trust seeks an order that the Receivers be restrained from proceeding with the auction.  In the alternative, Mr Senne seeks that the Receivers be restrained from disposing of collectables which may be owned by the AM Trust. 

4. The wife opposes the orders sought by Mr Senne and seeks orders confirming that the Receivers are able to sell all items at auction that have been listed for sale in the catalogue entitled “The [W] Collection” that has been prepared by Z Auctions.   The wife further asks that the order make it clear that upon the sale of the collectables, the proceeds of the sale be applied in payment of liabilities of W Nominees, such liabilities as are secured by the mortgage debenture.  She has also sought additional restraining orders against Mr Senne and the husband from otherwise dealing with any other collectable items of the AM Trust that may still be in the control of either of them. 

5. The Receivers support the wife’s application that there be an express power of sale and sought a further order to the effect that the Receivers be permitted and authorised to sell each of the items contained in the auction.  The Receivers’ primary position is that the sale proceeds should then be able to be applied against the liabilities secured by the mortgage debenture.  In the alternative, the Receivers suggest that in relation to the 23 items which Mr Senne has specifically identified, that the proceeds of the sale from those items be set aside (presumably in a controlled monies account), so that Mr Senne might be in a position at a final hearing to assert that those funds should not be provided to the Receivers to satisfy their outstanding debt.

6. The husband did not rely upon any written response.  The husband’s position was not particularly clear at the outset of the hearing and was developed by senior counsel for the husband during submissions.  His primary position was that he did not oppose the auction proceeding.  He did oppose any order which would give legitimacy to the auction process.  The husband seemed to be wanting to reserve his right and the right of others at a later point, to engage in litigation against the Receivers in which claims could be made that the Receivers had incorrectly sold various items in the collection.  Towards the end of his submissions, senior counsel for the husband went so far as to suggest that an order should be made that any person who might successfully bid for an item at the auction with an intention of removing that item from Australia, should be restrained from doing so for an “appropriate” period of time so that there could be an opportunity to further litigate about the ownership of the particular item that had been purchased.

7. Whilst the husband said he did not oppose the auction proceeding, the conditions that he sought imposed on the auction by way of orders, seemed to be ones which would impede the auction process. 

8. The husband did not oppose the injunctive orders that the wife sought against the trustee of the AM Trust or against himself restraining them both from disposing of items that might be owned by the AM Trust. 

9. The position of the children of the parties was that they did not oppose the auction, as long as it was carried out in a manner consistent with maximising the interest of the parties.  They wished to avoid a fire sale and would like the order to specify that the Receivers attempt to sell each item “for the best price reasonably obtainable”.  The order sought by their mother, and supported by the Receivers, contained that condition. 

10. The wife also had previously made an application for the right to dispose of a particular parcel of property at M.  The husband opposes the order that she seeks and in the alternative seeks an additional condition to that order, namely that once she has received advice from the consulting professionals that this lot can be sold without adversely affecting the proposed subdivision and/or rezoning, then the husband should have the ability to come back to the court and dispute that professional advice for the purposes of having an order made that that sale not proceed. 

11. There was also listed before me an application by the children for declarations in the favour of E, H and C Allan, in relation to three particular paintings.  The painting that E says she owned has already been sold by her (the Receivers would claim possibly in breach of orders that I have made).  The other two paintings which are claimed by the other two children are in the Receivers’ possession.  The Receiver has indicated that the paintings (as well as the other recovered missing items) have been received too late to be included in the auction. H and C and the Receivers have agreed that the two disputed paintings will be held by the Receivers and not sold unless the Receivers provide to them reasonable notice (which I will find is 28 days) of the Receivers’ intention to dispose of the paintings. 

ORDERS ALREADY MADE

1. The Receivers were given leave to intervene in the proceedings on 17 September 2009.  On that day, orders were made with the consent of the husband, wife and the children facilitating the entry by the Receivers into the property at M known as “M property”, the S apartment and a storage facility. These orders allowed for the inspection of the collectables; the possession of the books and records pertaining to the collectables and the possession of those collectables secured by the Mortgage Debenture.  Further orders were made on 17 September 2009 that the husband deliver up to the Receivers, by 16 October 2009, all collectables, including those located at M, S apartment and a storage facility and all books and records pertaining to the collectables. 

2. Importantly, an additional order was made by me on 17 September 2009, by consent, that the Receivers be permitted to exercise a power of sale in respect of all collectables, charged by the mortgage debenture, and otherwise preserve and maintain the collectables. 

3. On 2 December 2009 an enforcement warrant was issued to facilitate the receiver being able to obtain collectables located at M, S apartment and the storage facility.

4. An order was made restraining the owners of any items referred to in the enforcement warrant from selling, transferring, mortgaging or otherwise dealing with that property without the prior permission of the court.

5. Again, importantly in the context of this application, an order was made on 2 December 2009 that, in the event that the husband or any third party wished to oppose the Receivers’ application for sale of the collectables, which was subject of the enforcement warrant, any such application was to be dealt with on 1 February 2010 and any person wishing to make such application was to file and serve any affidavit they relied upon by 22 January 2010.  I pause there to note that neither the husband nor any third party who had had items removed from them, took up the opportunity to pursue an application opposing the sale of the collectables, on 1 February 2010.

6. Since that time the Receivers have expended considerable efforts and monies ($750,000 - $800,000) to prepare for the auction that is scheduled to take place in [date omitted].

APPLICATIONS

12^th Respondent

1. On 28 May 2010 Mr Senne, as trustee of the AM Trust, was joined as the 12^th respondent in these proceedings. 

2. Mr Senne asked that I make the following orders as sought in his Application in a Case filed 27 May 2010:

   1.[Mr Senne] as trustee of The [AM] Trust have leave to intervene in the proceedings.

   2.An order (and/or an interlocutory order) restraining [Mr D] and [CP] (“the Receivers”) and their servants and agents from proceeding with the auction of collectables proposed to be held on [date omitted]. 

   3.An order (and/or an interlocutory order) restraining the Receivers and their servants and agents from selling, dealing with or otherwise disposing of all collectables, including without limitation antiques and other chattels, works of art, pieces of furniture, decorative objects and silverware in the possession, custody or control of the Receivers or their servants or agents and that are owned by the [AM] Trust (the “[AM] Collectables”).

   4.An order that the Receivers deliver up to the trustee of the [AM] Trust the [AM] Collectables.

Wife

1. The formal terms of the orders sought by the wife were as follows:

   Application in a Case filed 26 May 2010 (para 3 only):

   3.That the operation of Order number 5 made on 23 September 2009 insofar as same operates to prevent the sale of a property owned by the Second Respondent being the land in folio identifier […] at [H Street, M] in the State of New South Wales (“the property”) be and the same is hereby discharged to the intent that the property be sold by the Second Respondent in accordance with the orders made on 26 June 2009 as soon as practicable for the best price reasonably available upon and subject to the receipt by the wife in her capacity as Director of [W Nominees] of advice from [U] Pty Limited that such sale will not inhibit or adversely affect the proposed subdivision, and rezoning of [W Nominee’s] remaining lands at [M]. 

   Amended Application in a Case filed 4 June 2010:

   1.That [Mr D] and [CP] in their capacity as joint and several Receivers and Managers of [W] Nominees No. 2 Pty Ltd (“the Receivers”) forthwith do all acts and things and execute all documents so as to seize, take into their possession and to cause to be offered for sale and sold for the best price reasonably available:

   1.all assets of the so called [AM] Trust; and

   2.all property being antiques, artworks, furniture and furnishings and other items (“the collectables”) being the items referred to and listed in the affidavit of [Mr D] sworn 30 April 2010 and the various annexures thereto including the alleged missing items.

   [during the hearing the wife amended her application to add “That upon a sale of collectables (being the items particularised in the [Z Auctions] catalogue including but not limited to the two important paintings being sold in London that the proceeds of sale be applied in payment of liabilities of [W] Nominees No. 2 Pty Limited as are secured by the mortgages and debentures”.]

   2.That the costs of the applicant of and incidental to this application be paid by [the husband] and any person or entity who opposes this application.

   3.That until further order [Mr Senne] in his capacity as trustee of the [AM] Trust is hereby restrained from selling, assigning, transferring, encumbering or in any way dealing with any asset of the trust whatsoever including but not limited to any artworks, furniture, objet d’art and valuables of any kind whatever or from distributing any capital or income of the trust to any beneficiary thereof.

   4.That until further order of this court the respondent husband be restrained and is hereby restrained from doing any act or thing whatever in his capacity as protector of the [AM] Trust including but not limited to causing the trustee of the [AM] Trust to be removed as trustee and to appoint any substitute or alternate trustee. 

   5.Pursuant to Rule 19.18(1)(a) and (b) that such costs be paid in the amount assessed as fair and reasonable costs as between party and party on application by the wife to the Manager Costs Assessment of the Supreme Court of NSW in accordance with the Legal Profession Act 2004 such costs to be assessed without reference to the scale provided for in Schedule 3 to the Family Law Rules which scale is to be disregarded completely for the purpose of the assessment having regard to the costs reasonably and actually incurred by the wife in the proceedings in accordance with her retainer agreement with her solicitors.

   6.That the applicant have leave to serve short notice of this application.

Husband

1. The husband sought no formal order in any written response. Senior counsel for the husband orally indicated orders that the husband wished to be made and I have already outlined the husband’s position in the introduction.

3^rd - 6^th Respondent’s application

1. Application in a Case filed 1 June 2010:

   1.A declaration that a […] painting described as “[painting 3]” became the property of the Third Respondent ([E Allan]) on or about 2004.

   2.A declaration that a […] painting described as “[painting 1]” is the property of the Sixth Respondent ([H Allan]).

   3.A declaration that a […] painting described as “[painting 2]” is the property of the Fourth Respondent ([C Allan]).

   4.An order that a […] painting described as “[painting 1]” be delivered to the Sixth Respondent by the First Respondent ([the husband]) or Second Respondent ([W] Nominees No. 2 Pty Limited) (Receivers and Managers appointed).

   5.An order that a […] painting described as “[painting 2]” be delivered to the Fourth Respondent by the First or Second Respondent. 

1. As indicated in the introduction, I am no longer being asked to deal with this application at this time apart from making an order that the Receivers hold the two paintings referred to in applications 2 and 3 above and not dispose of them until reasonable notice is given to the 4^th and 6^th respondent respectively. 

DOCUMENTS RELIED UPON

12^th Respondent

1. The 12^th respondent relied upon the following documents:

   24.1.Affidavit by Mr Senne filed 27 May 2010;

   24.2.Affidavit of Mr OK filed 28 May 2010 (at the hearing Mr Senne did not tender the exhibits referred to in Mr OK’s affidavit and they are consequently not before me).

Wife

1. Affidavits of Wife as follows:

   25.1.sworn 10 March 2009, paragraph 3;

   25.2.sworn 7 April and filed 8 April 2010;

   [paragraphs 1 to 21; as to sale of H Street, M, property]

   25.3.sworn 16 April and filed 26 May 2010;

   25.4.sworn 25 May and filed 26 May 2010 (as to collectables);

   25.5.sworn 25 May and filed 26 May 2010;

   [paragraphs 1 to 12; 20]

   25.6.sworn 27 May and filed 28 May 2010; and,

   25.7.sworn 4 June 2010.

2. Affidavits of Husband as follows:

   26.1.sworn 12 August and filed 13 August 2008 – paragraphs 4, 5, 17-19 inclusive, 24 (and in each instance the documents exhibited thereto);

   26.2.sworn 12 and (apparently) filed 11 February 2009 – paragraph 15 (and exhibit referred to therein); and,

   26.3.sworn 13 March 2009 – paragraph 14 and exhibited to Affidavit, pages 63 to 65 inclusive, 106 and 109.

3. Affidavit of Mr D sworn 4 September 2009 – paragraphs 9 and 37.

4. Affidavit of Mr IC sworn 26 May 2010 – exhibits thereto, particularly:

   28.1.DAC-2 – paragraphs 538 to 540 inclusive, 559 to 588 inclusive;

   28.2.DAC-4 – paragraphs 5 to 11 inclusive; 98 to 101 inclusive;

   28.3.DAC-8 – pages 780 to 782 inclusive;

   28.4.DAC-9 – pages 1527 to 1556 inclusive;

5. Orders of the Family Court of Australia, as follows:

   29.1.28 August 2008 – Exhibit 1, paragraphs 1.8 to 1.10 inclusive;

   29.2.7 January 2009 – Annexure A, paragraph 9;

   29.3.7 April 2009 – paragraph 1(3);

   29.4.26 June 2009 – paragraph 6.2;

   29.5.17 September 2009;

   29.6.23 September 2009;

   29.7.1 December 2009; and,

   29.8.20 April 2010.

6. Reasons for Judgment as follows:

   30.1.Family Court of Australia, Rose J, 24 November 2008 – paragraph 12; and,

   30.2.Family Court of Australia, Watts J, 24 June 2009 – particularly paragraphs 52-56, 74, 75, 138, 147

   30.3.Supreme Court of Western Australia, Heenan J, … 2009 – see item 6.1 above.

Receivers

1. The Receivers gave notice on 27 May 2010 that they intended to rely upon the following material:

   31.1.Affidavit sworn by the wife on 27 June 2008;

   31.2.Affidavit sworn by the husband on 12 August 2008;

   31.3.Affidavit sworn by Mr D on 22 May 2009;

   31.4.Affidavit sworn by Mr D on 4 September 2009;

   31.5.Affidavit sworn by Mr D on 1 April 2010;

   31.6.Affidavit sworn by Mr D on 15 April 2010;

   31.7.Affidavit sworn by Ms FN on 24 May 2010;

   31.8.Affidavit sworn by Mr IC on 26 May 2010;

   31.9.Affidavit sworn by Ms OS on 27 May 2010; and

   31.10.Orders made by the Family Court on 17 September 2009, 2 December 2009, and 20 April 2010.

2. In addition, the Receivers relied upon an affidavit of CP sworn 9 June 2010 and an affidavit of Mr D sworn 9 June 2010. 

Husband

1. The husband relied upon an affidavit filed on 16 April 2010.

2. The husband sought leave to file in court and rely upon an affidavit sworn by him on 10 June 2010.  The application was opposed.  The opposition to leave being granted was on two bases:

   34.1.That the material sought to be filed from the bar table came too late and contained assertions that the wife and the Receivers had no opportunity to respond to.

   34.2.The husband should not be allowed to file further evidence in circumstances where he had failed to comply with court orders. 

3. The affidavit exhibited a red binder of receipts in relation to the acquisition of various collectables and other photocopied documentation of records identifying items said to be beneficially held by the AM Trust.  It was independently made an exhibit in the hearing before me (Exhibit U).  Mr Senne conceded that that exhibit was probably part of the documentation referred to by Mr OK in paragraph 6 of his affidavit.  The husband's affidavit went on to express an opinion about his compliance in terms of the delivering up of the “missing” items; his belief that the auction would be a fire sale; his assertion he had complied with various court orders and that he was unable otherwise to pay the outstanding maintenance order that has been made against him. 

4. On 28 May 2010 the parties were given an opportunity to have directions made for the filing of material for this hearing.  The husband was given an opportunity to file and serve evidence in relation to the wife’s application in respect of the M property by 7 June 2010 but failed to do so.  The husband did not seek any direction in relation to filing material in respect of any other matter (having already filed affidavits; only one of which he ultimately relied upon before me in this hearing).  All parties were aware on 28 May 2010 of the very tight timetable for the filing of material and the opportunity the court was providing the parties to ventilate outstanding disputes prior to the auction taking place. 

5. In those circumstances, I find it is not appropriate to allow the husband to attempt to file material from the bar table, as he has been permitted to do previously.

6. The husband’s affidavit was silent as to the main allegation made by the Receivers against the husband, namely that he has failed to comply with orders 2 and 3 made 20 April 2010, which is in the following terms:

   2.The first respondent file and serve an affidavit on each other party to these proceedings within a period of 21 days from receiving a legible copy of the inventories referred to in Order 1, which identifies his knowledge of the specific location of each of the missing items, including:

   2.1The address at which of the missing items are stored;

   2.2the location within the building of each of the missing items are stored;

   2.3the name and address and contact details of the occupiers of those buildings in which of the missing items are stored,

   so far as those matters are within the knowledge of the first respondent.

   3.To the extent to which any of the missing items are no longer within the first respondent’s possession, control or power he is to identify in that affidavit:

   3.1when that particular item was last within his possession, control or power;

   3.2the circumstances in which those items came to be no longer in his possession, control or power;

   3.3the last known location of the missing items, including the address at which each of the items where last known to be stored, the location within the building of each of the missing items where last known to be stored and the name and address and contact details of the occupiers of the buildings in which the missing items were last known to be stored,

   so far as that information is within his knowledge.

7. The evidence of the Receivers is that although since April a large number of the missing items have been delivered up by the husband, there is still 89 items that are still not accounted for. The bulk of those items previously were located in the former home of the parties in Western Australia. 

8. In the alternative, the Receivers complain that the husband has failed to comply with orders 2 and 3 made 20 April 2010 and consequently, the Receivers argue that the husband should not be able to rely upon any further material until his current breach of orders is purged.

9. The Receivers refer to a discussion in Leaway v Newcastle City Council (No. 2) [2005] NSW SC 826 which contains a general discussion regarding the law about not hearing a person, who is in contempt of court orders and the exceptions that might apply to that general rule. In parenting matters in the Family Court there is a statutory exception to the common law rule contained in s 69F Family Law Act (FLA) in the following terms:

   “A court may proceed with the hearing of proceedings in relation to a child even though the person who instituted the proceedings has failed to comply with an order of the court or of another court having jurisdiction under this act.”

10. No such statutory exemption applies under the Family Law Act in relation to property proceedings. 

11. The Full Court in The marriage of MKA & SH Fahmi (1995) 19 Fam LR 517 says that I have a discretion to allow the husband to file further evidence notwithstanding it seems he has not complied with a court order that I have made that is closely connected with the subject matter of the proceedings with which I am dealing. (I note that Campbell J in Leaway v Newcastle City Council(No. 2) [2005] NSW SC 826 at paragraphs 56 and 57 doubted the Full Court’s statement that there was a discretion, his Honour having earlier referred to authorities that pointed to a bright line rule with exceptions). That is, if an exception does not exist, there is no discretion to do other than not hear the party.

12. Given I have excluded the husband’s affidavit because it comes too late, I do not need to consider whether to exercise the discretion to exclude the affidavit because the husband has failed to comply with orders 2 and 3 made 20 April 2010. 

13. I also note in passing that I was informed by senior counsel for the husband that a third party (Ms ON) had coincidentally this day given notice to the husband, the Receivers and the auctioneer that she asserted ownership (of an unspecified nature) in unspecified items in the auction.  Ms ON has not made any application to this court and the existence of any claim by her is not a matter that is before me. 

CHRONOLOGY

1. The following chronology is extracted from the uncontested but untested evidence provided in this interlocutory hearing. 

2. On 27 March 2009 Mr D and CP were appointed as Receivers and Managers over the collectables of W Nominees.

3. On 23 April 2009 Mr D had a meeting with the Husband and his solicitor in which the Husband inter alia confirmed that the Brisbane collectables (formerly in the possession of the ONs) were purchased by and were the property of W Nominees.

4. On 11 May 2009 Mr D received from Mr Senne (in his capacity as the company secretary for W Nominees) a “Report as to the Affairs of [W Nominees]” annexing a balance sheet dated 11 May 2009 and recording collectables owned by W Nominees value at $22,261,136.

5. In May and April 2009 Mr D inspected the collectables at R property, the parties’ residence in Western Australia.

6. In September 2009 Mr D obtained access to M property and with the assistance of an auction house, prepared an inventory of the collectables.

7. On 17 September 2009 the Receivers obtained leave to intervene in the Family Court proceedings.

8. On 19 November 2009 Mr D attended R property with employees of an auction house for the purpose of taking possession of the collectables and observed that there are almost no paintings on the walls of the house in R.  These paintings make up the bulk of the collectables which the Receivers continue to contend are missing. 

9. In December 2009/ January 2010, pursuant to Order made 2 December 2009, the Marshal of the Court seized the collectables at M property and gave possession of them to the Receivers.

10. In 2010 Ms E Allan, through her solicitors, advised that she sold a painting “[painting 3]” through an auction house.  She asserts it was a gift from her father in 2002.

11. On 12 March 2010 the wife’s solicitors wrote to the husband’s solicitors seeking consent to sale of H Street, M, property following advice from U Pty Ltd (planning consultants).  No response was received.

12. On 27 May 2010, Mr Senne as Trustee of the AM Trust sought leave to intervene in the proceedings.

13. On 28 May 2010, Mr Senne as Trustee of the AM Trust was joined as 12^th Respondent to these proceedings.

THE AM TRUST

1. The AM Trust was established by a deed between Ms Y and AG Pty Limited dated 2 December 1980 (the AM Trust Deed).  At the time the trust deed was entered into, the protector of the trust was a Mr BA.  On 1 June 1982 Mr BA nominated the husband to be the protector of the trust.  The husband has remained protector of the trust to the current time. 

2. AG Pty Limited was a company which the husband controlled and was trustee of the AM Trust between December 1980 and May 2002.  On 30 May 2002 the husband exercised his powers under the trust deed to remove the original trustee, AG Pty Limited, as trustee of the AM Trust and appointed Mr Senne as the trustee. 

3. On 13 June 2002 Mr Senne appointed five persons to be members of the appointed class (the beneficiaries) of the trust.  Those five persons were the wife and the four children.  There are no other members of the trust.  There is doubt as to whether or not, as the trust is presently constituted, the wife was appropriately named as a member of an appointed class, given that she is the wife of the protector. 

4. I have not had the benefit of considered argument about the construction of the AM Trust Deed.  Consequently, the following are preliminary findings made in the context of this interlocutory application.

5. It seems that, unless the husband brings it forward, the closing date for the AM Trust is 2 December 2020.  It seems that until that time, the husband, as protector of the trust, can fire and hire the trustee of the trust.  The husband could even install himself or a company he controls as trustee of the trust.  If he was trustee, the husband can nominate any individual or any company as beneficiary of the trust, provided that they do not fall within the definition of “excluded persons”. 

6. I have not yet heard argument as to whether the husband could find a strategy which would see the trust property finally come into his own hands.  For example, in Ashton & Ashton (1986) FLC 91-777 the court, on the construction of the trust deed in that case, reached the conclusion that although the husband could not become a named beneficiary, he was not excluded from effectively holding all the shares in a company or all of the interest in a trust, that was installed as a beneficiary. Whilst in this case, clause 1(d)(iv) of the AM Trust Deed might prevent this happening through a company structure, it seems it is possible that a willing confidant of the husband, could be installed by the husband as beneficiary and that that person could then hold his interest in the AM Trust, upon trust for the husband.

7. Whatever the position in relation to the ultimate ownership of the trust property, the husband controls the trust today.  

8. In Ashton, the Full Court said:

   “the proper construction of the deed is that the husband himself can be both appointor and trustee…In the result, having regard to the powers and discretion which the husband has, ….. the husband's power of appointment, and all the attributes it carries with it, amounts to de facto ownership of the property of the trust… In my opinion, in a family situation such as the one here, this Court is not bound by formalities designed to obtain advantages and protection for the husband who stands in reality in the position of the owner.”

9. Ashton was followed in the later decision of Davidson (1991) FLC 92-197. In that case it was found that where the trust assets are effectively under control of the husband who has full control of the payments made as trustee, a manipulation of the trust provisions to benefit the husband would not be a breach of fiduciary duty. It was therefore open to the Court to treat trust property as that of the Husband. The Court stated in relation to fiduciary duties under a trust:

   “Whatever may have been the position one hundred years ago, Australian courts today have to look at the reality of the situation and the purpose which family trusts serve today.”

10. In the marriage of Goodwin & Goodwin Alpe (1991) FLC 92-192, the Full Court rejected an argument that the husband in that case did not in reality control a trust of which he was not the trustee. In that case the husband was the appointor (and consequently had the ability to appoint a company as trustee in which the husband effectively held all the shares) and a named beneficiary.

11. These three cases were referred to with apparent approval by French CJ in Kennon v Spry (2008) FLC 93-388. At paragraph 57, the Chief Justice quoted the Full Court of the Family Court in Goodwin and noted that the Full Court applied as a statement of principle “the perhaps unremarkable proposition that:

    “[T]he question whether the property of the trust is, in reality, the property of the parties or one of them……is a matter dependent upon the facts and circumstances of each particular case including the terms of the relevant trust deed.”

12. The application for the injunctions by the 12^th respondent should not be looked at, without a wider view of the overall litigation. 

13. The trustee is pressing for injunctions in circumstances where:

    71.1.One of the named beneficiaries of the trust does not want the injunction to be granted. 

    71.2.The remaining beneficiaries of the trust have taken a neutral position but do not oppose the sale proceeding.

    71.3.The protector of the trust has a somewhat confused and changing position.  His final position being that although he did not oppose the sale, it should be subject to the threat that the Receivers could be sued at a subsequent stage for selling items that they were not entitled to under the mortgage debenture and subject to a further condition that third parties that bid at the auction not be able to take items overseas for an “appropriate” but unspecified period until claims as to title were determined.

14. The AM Trust is not an unrelated third party.  This hearing is not the occasion to make declarations about the respective rights of various parties to these proceedings in the assets (if any) of the AM Trust.  It is clear, however, that parties to these proceedings control the trust and are beneficially entitled to the assets in the trust and that is an important matter when considering how any discretion in relation to the injunctive applications by the 12^th respondent, is exercised. 

JURISDICTION

1. Senior counsel for the husband raised jurisdictional issues, without in any meaningful way, developing the argument.  As I understood his submission, he was querying whether or not the court had jurisdiction to entertain applications made by parties to the proceedings in relation to the collectables and the auction.  

2. The injunctive application sought by Mr Senne, is sought pursuant to s 114 FLA. The injunction is sought in the context of an application primarily between the husband and wife (but also involving the children) pursuant to s 79 Family Law Act and in respect of which a secured creditor of W Nominees has been granted leave to intervene.  So far as declarations are sought, there is ample power under s 78 FLA to entertain the substantive relief (which is not the subject of any determination by me today).  On the last occasion the lawyer for the wife also indicated that it will be probable (if it is necessary) that there be a challenge to the AM Trust pursuant to the provisions of s 85A FLA.  Prima facie, the AM Trust would be a trust that falls within the description of a “post-nuptial settlement”.  There would also be a strong argument, if it is needed, that the court could rely on accrued jurisdiction given the nature of the closely related sub stratum of facts, relevant to the creation of and the operation of the AM Trust. 

3. Consequently I reject any suggestion that the court lacks jurisdiction to entertain the current application.

POSITION OF THE 12^th RESPONDENT

1. The 12^th respondent has made a general claim that unspecified items in the collection to be auctioned by Z Auction House in [date omitted] are the property of the AM Trust.  More specifically, the 12^th respondent relies upon the evidence of Mr OK, who at paragraph 9 of his affidavit filed 28 May 2010, identifies 23 items which he claims are the property of the AM Trust. 

1. It is not a matter of controversy that anything owned by the AM Trust is not the subject of the mortgage debenture granted by W Nominees (No. 2) to its financiers. 

2. The Receivers have prepared a schedule of the 23 items which is annexed to their case outline and is in the following form:

   [removed for publication]

3. The 12^th respondent relies upon financial statements of the AM Trust which point to the acquisition of various items between 1980 and 1985.

4. Exhibit U contains a large number of receipts for collectables for that period.

5. As is clear from the history of the AM Trust set out above, the husband was effectively the trustee of the AM Trust, (through his control of AG Pty Limited) between the creation of the AM Trust in December 1980 and May 2002.  The husband was the protector of the trust from June 1982.  Consequently, it was the husband who had knowledge as to how items were collected and how loan accounts and collectables were dealt with from 1980 until the current date. Whilst Mr Senne deposes to the fact that he believes that records show that certain collectables are owned by the AM Trust, the evidence for that position has not yet been tested. There is certainly a body of evidence, primarily from the husband, to which I refer below, which indicates that Mr Senne’s stated position is not an accurate one.  The husband, who is in the best position to know what happened in the AM Trust in the relevant years, has not sought to file any evidence about it in these interlocutory proceedings.  The strength of Mr Senne’s evidence needs to be weighed when considering how discretion should be exercised in these interlocutory proceedings. 

SUBMISSIONS BY THE WIFE

1. The wife submits, and I accept, that there is no basis for granting a general injunction stopping the auction entirely.  The AM Trust does not assert, nor does the husband, that the bulk of the items being offered for sale are not the property of W Nominees No. 2 Pty Ltd.

2. The wife submits that the relief sought by the AM Trust is of a final injunctive and declaratory nature and ought not be granted on an interlocutory basis given the contested underlying facts.  The 12^th respondent has sought, in the alternative, interlocutory orders.  Any order that I made in the favour of the 12^th respondent would be pending further order. 

3. I agree with the submissions by counsel for the wife that the starting point for the consideration of the applications before me are the orders that I have already made (by consent of the parties to these proceedings) permitting the seizure and sale of the collectables.  Those orders have not been appealed. 

4. There next is an attack by the wife on the sufficiency of the description of the property which is to be the subject of the injunction.  The wife argues that although Mr Senne refers to the “[AM] collectables”, their identity is less than certain.  Even the list of 23 items is suspect.  Counsel for the wife took the court to a number of the items referred to by Mr OK in the list of 23 items and demonstrated that on the material before the court, there was considerable doubt as to whether or not some of those items were items that were acquired by the AM Trust given that they do not appear on the 1984 records produced and annexed to Mr Senne’s affidavit of 27 May 2010.

5. The wife argues that paragraph 9 of Mr OK’s affidavit is difficult from an evidentiary point of view.  The exhibits have not been produced.  All I have is Mr OK’s evidence that he has compared two lots of documents and produced a table accordingly.  That summary would be inadmissible on a final hearing but I have allowed this hearsay evidence in the context of this interlocutory hearing.  The evidence in paragraph 9 of Mr OK’s affidavit however has to be given less weight than it might otherwise have been given, had the material upon which Mr OK said he had prepared the table, been made available to the Receivers and to the wife (in accordance with previous orders made). 

6. A related issue raised against the 12^th respondent is that he has not provided adequate assistance to the Receivers and/or the wife to allow them to test his general claim that many items in the auction are owned by the AM Trust.  Mr Campbell’s evidence indicates, notwithstanding the order that I made about discovery, that Mr Senne has not attempted to inspect documents that may have enabled him to produce a narrowing of the identification of what exactly the “[AM] collectables” might be. 

7. I accept there is some force in the submission that the 12^th respondent has failed to provide a precise definition of the subject matter of the injunctions for which he contends.

8. The next issue is about delay in the AM Trust bringing the application.  The husband knew that this auction might happen as far back as 12 February 2009 when he swore an affidavit in these proceedings expressing concern that the wife’s claims may lead to an application which might cause the financiers to call in all of their debts as they had a charge over the assets of W Nominees.  The very first notification that the wife had of the existence of the AM Trust was late on 25 May 2010.  The submission made by the wife is that the AM Trust had, or ought to be taken as having, notice of both the assertions about ownership of the collectables by each of the husband and W Nominees No. 2 Pty Ltd to each of the court, A Finance Ltd, the Receivers and the wife.  Further the wife submits that the AM Trust had, or ought to be taken as having, had notice that the applications made, and the orders entered, in the proceedings in respect of the collectables were directly contrary to the assertions now sought to be advanced by the AM Trust.  The wife says the AM Trust should have known about the inequity that would flow from granting the relief sought “at the death”.  Mr Senne was a party to meetings with the Receivers in relation to W Nominees’ financial position since May 2009 and Mr D’s affidavit of 9 October at paragraph 22 deposes to a meeting with Mr Senne in August 2009 and the forcible removal of items of property from M property in December 2009 and January 2010 and the fact that Mr Senne resides in a house located on the M property.  Mr Senne has been W Nominees’ company secretary and accountant for many years and I infer is a close confident of the husband.  I find that his delay in making this application in circumstances where he otherwise could have made it far earlier, is a matter that needs to be taken into account when considering the exercise of discretion.  Whilst Mr Senne may not be able to be imputed with the husband’s knowledge, it would be unrealistic to think that the trustee and the protector do not communicate with one another. 

9. I find generally that the trustee has been on notice for a considerable period of time about the Receivers’ intentions (since orders were made in 2009).  If I am wrong about that then it is clear that the trustee was on notice as a result of seizures and the taking of books since December 2009 of what the Receivers were doing.

10. I accept that Mr Senne’s delay weighs heavily against the exercise of discretion in favour of the trust.

11. The next submission made by the wife was that no relevant prejudice is able to be established by the AM Trust which would arise as a result of compliance by the Receivers with the prior orders of the court.  I accept the submission that neither the 12^th respondent nor the husband gave any evidence as to why damages would not be an adequate remedy in this case. 

12. The wife also submits that even if the position of the AM Trust is accepted, no assertion of prejudice can be maintained as a result of the auction scheduled for  [date omitted] proceeding, in circumstances where no beneficiary of the trust opposes such auction proceeding. 

13. Finally, the wife points out that the 12^th respondent gives no undertaking as to damages in circumstances where:

    94.1.The 12^th respondent has delayed in bringing the proceedings;

    94.2.$750,000 - $800,000 has been expended by the receives in preparation for the auction;

    94.3.It would be possible to quarantine the proceeds of sale from those items in the auction to which AM has indicated that they have an identifiable claim. 

14. There is no offer of any payment of monies into court. 

15. The wife’s motivation for pressing that the auction proceed and her motivation for wishing to have an opportunity to be able to sell part of the M property is the current level of debt.

16. Whilst senior counsel for the husband, apparently on instructions, purported to case doubt on the current level of the parties’ debt, I am comfortably satisfied, based on previous statements made by the husband, the finding of Justice Rose and upon my own findings, that the level of debt is in the order of $70,000,000 and is accruing interest at a rate of about $1,000,000 per month.  I accept that this engenders a level of anxiety in the mind of the wife and is the basis for her seeking to press for orders that might enable the debt to be reduced in some way or another. 

17. The fortunes of the parties seem to depend upon them achieving approval for the subdivision of the M property.  In those circumstances, it is expected that there will be a significant surplus, although that is not necessarily guaranteed.  I have insufficient evidence to make an assessment as to what the current likelihood is of the subdivision being successfully completed and when that might happen.  At this point the mortgagees in respect of that property have not taken control of it. 

SUBMISSIONS BY THE RECEIVERS

1. The Receivers, in their written outline, point out that the mortgage debenture is a registered charge.  Registration of a charge constitutes constructive notice of the charge.  The mortgage debenture creates a fixed and floating charge over all of the mortgage property of W Nominees. 

2. The definition of mortgage property in the mortgage debenture is broad and extends to “all of the undertaking of [W Nominees] and all of its property and assets whatsoever and wheresoever both present and future including….all plant, machinery, stock and other chattels from time to time owned or held by [W Nominees]”.  The Receivers submit that the collectables are the subject of a fixed charge and consequently A Finance Limited have a proprietary interest in them and accordingly the Receivers are permitted to take possession of them and exercise a power of sale in respect to them.

3. Further, the Receivers submit that if the collectables are not the subject of a fixed charge, they are subject to the floating charge created by the mortgage debenture.  The floating charge secures property which is used in the ordinary course of W Nominees’ business.  The Receivers submit that the financial reports of the Allan Family Trust (of which W Nominees is the trustee) make it clear that the trading enterprises of W Nominees do not extend to trading in antiques and if W Nominees sells, assigns, transfers and otherwise disposes of any assets secured by the floating charge other than in the ordinary course of its business, the floating charge instantly and automatically crystallises and operates as a fixed charge in respect of those assets. Whilst these arguments are developed specifically in relation to the issue of the contested paintings (a matter I am not dealing with at this hearing), the submissions have a more general application to all the collectables that are currently the subject of the auction, in the event that they are owned by W Nominees. 

4. The Receivers complain that production and discovery by Mr Senne pursuant to orders made by me on 28 May 2010 has been wholly inadequate.  The material falling within the categories set out in the orders I made on 28 May 2010 is particular and extensive.  The Receivers complain that the 12^th respondent has not produced any records of the AM Trust with respect to the period from 1 July 1995 until the present except for financial statements in respect of 30 June 1994.  The Receivers further complain that the books of W Nominees that have been produced are incomplete and no documentation has been produced in relation to various categories of documents that have been requested.  In particular, the posting media for the financial years 30 June 1980, 30 June 1981, 30 June 1982, 30 June 1983 and 30 June 1984 have not been produced by W Nominees.

5. The Receivers complain that Mr Senne has not inspected documents that he sought be discovered and which were discovered by the Receivers.

6. Whilst Mr Senne offers some explanation, it is clear that some of these records should have existed and no proper explanation has been given as to why they have not been produced, if not by Mr Senne, then by the protector of the trust.  The husband seems to at least have been in possession of the original invoices for the AM Trust for the period 1980 through to 1984 (Exhibit U). 

7. I am satisfied based on the material that the 12^th respondent has not enthusiastically engaged in a process of discovery in an attempt to crystallise exactly what are the collectables to which the AM Trust may lay some claim, particularly given the tight time frame that was set by the court given the impending auction. 

8. Counsel for the Receivers emphasised, as I have already mentioned, that the husband was in fact the person who can give first hand evidence as to the acquisition of the antiques which are said to be owned by the AM Trust.  He was the director of the trustee company AG Pty LTd up until 2002 at which time Mr Senne was appointed.  The husband has failed to give any evidence in these proceedings about what items he says the AM Trust owns.  Counsel for the Receivers emphasised to the court the evidence that has been given in the Supreme Court of Western Australia, part of which I set out in more detail below.  I am satisfied that there are a number of significant inconsistencies between what the husband and Mr OK said in the Western Australian proceedings and now what they are attempting to assert before this court.  There was some force in the submission that there must be a suspicion that some of the assertions recently made about the AM Trust are recent invention.  There is also some cloud over movements in the financial accounts and journal entries in the 1980s and the lack of financial accounts of the AM Trust itself.  Mr Senne seeks to explain that by saying that the AM Trust did not trade after 1985 and therefore its balance sheet has not changed since that time but I am satisfied, in the context of this interlocutory hearing, that there has been a lack of disclosure of financial records that would enable the receiver to properly trace the assertions made by the 12^th respondent. 

9. Counsel for the Receivers also in his submissions drew attention to considerable doubts that must exist in respect of the claim that W Nominees in fact did not acquire any antiques prior to June 2004.  Counsel for the Receivers drew attention to a number of items in annexure DOC-4 to Mr IC’s affidavit that would indicate that W Nominees clearly acquired furniture, paintings and items of taxidermy prior to 1984.

10. In relation to the damage that the Receivers would suffer were injunctions or restrictive orders made, the Receivers point to the funds expended already to prepare for the sale; the possible costs of storage of items if a sale was postponed; the loss of potential bidders at the auction; the cost of insuring the items and generally maintaining the items.  Mr Z, the chairman of the auction house gives evidence as to the possible consequence on the auction, if individual lots were withdrawn from the auction catalogue.

11. I am satisfied that had the trustee complied with the disclosure obligations, the 23 items that had been identified could have been properly investigated.  There is strength in the submission that the 12^th respondent should not be entitled to rely upon his own failure to bolster his prospects of obtaining an injunctive order.

12. It follows therefore that none of what the AM Trust claims by way of ownership of items should lead to the withdrawal of any items from the auction sale.  There is no indication as to why damages would not be an appropriate remedy, if at the end of the day AM were able to establish that some of the items in the catalogue were not properly the subject of the mortgage debenture.

13. That whole topic however has to be looked at in a wider context.  It may be that the children might be able to claim that they are beneficially entitled to whatever is in the AM Trust.  It might be however that the wife will claim that she and her husband should be entitled to what is in the trust (for example by asking the court to use the provisions of s 85A).  If that claim is maintained, then whilst A Finance may no longer be a secured creditor, they would still be a creditor of the parties.  I do not pretend to predict how this issue will be argued, if at all, at the final hearing.  I simply indicate that there is a wider context in which to view the claim by Mr Senne as trustee of the AM Trust.

PRIOR REPRESENTATIONS MADE BY THE HUSBAND

1. In relation to the issue of exercise of discretion, the wife points to a series of representations made by the husband relating to the ownership of the collectables.  Those representations have been made to this court, the Supreme Court of Western Australia and to Mr D.  On the occasions referred to, the husband has referred to W Nominees No. 2 Pty Limited as the owner of the collectables.  Some of the statements made by the husband have been unequivocal.  Others which seemed unequivocal have been challenged by senior counsel for the husband as being open to be given some possible contrary interpretation given the context in which they were given. 

2. It is the submission of the wife (and the receiver) that implicit in the silence by the husband about the AM Trust, is the conclusion that W Nominees is the proper owner of the collectables given that you would expect that the husband would have raised the circumstances of the AM Trust in the context in which he made the statements. 

3. On 12 August 2008 the husband swore an affidavit in these proceedings in relation to the financial interest of the husband (he is yet to comply with his obligations to file a financial statement notwithstanding the length of time these proceedings have been on foot).  He makes reference to the collectables in that affidavit.  There is however no reference in the affidavit nor the “balance sheet” prepared by the husband, to the AM Trust nor to AG Pty Limited.  The husband deposes to the ownership of antiques by each of W Nominees and by the wife. 

4. On 29 August 2008 the husband signed a witness statement for the proceedings in the Supreme Court of Western Australia.  At paragraph 6 he says as follows:

   “Since 1980 all of the assets that I have bought for my family, including our residential and holiday homes and the many antiques, paintings and collectables which I have bought, have been bought by [W Nominees] as trustee of the [Allan] Family Trust.”

5. On 23 October 2008 the husband gave oral evidence in chief in the Western Australian Supreme Court as follows:

   “Since 1980 all of the assets that I have bought for my family including our residential and holiday homes and many antiques, paintings and collectables which I have bought, have been bought by [W Nominees] as trustee for the [Allan] Family Trust.”

6. On 5 November 2008 the husband gave evidence in the Western Australian Supreme Court, inter alia, as follows:

   ·in relation to LH Pty Limited – “was a process that my accountants and Mr [BA] and Mr [US] came up with and they wanted me to put some assets offshore.  It was what they intended to be done.  It was never done.  I never agreed to it and I never – it never happened as far as I am concerned”

   ·LH Pty Ltd never had a bank account, never had anything; the items purchased from Angus & Robertson were not purchased by LH Pty Ltd but by W Nominees

   ·“I have bought property, antiques, […] for [W] Nominees and entered into agreements on [W] Nominees’ behalf and [W] Nominees has eventually paid for them.  The money might have been loaned from [NWD] because I made money in [NWD] and I wished to get it into the family company and if that’s how the accountants have done it, well, then it is, but I can assure you that [W] Nominees owns all those assets”

   ·in relation to various aspects of the accounts, that Mr Senne would have to be asked about them.

1. Importantly, the husband swore an affidavit in March 2009 in which in response to a contention of the wife, he deposes that “all of the collectables have been paid for and are owned by [W] Nominees”.  The husband does not mention a word in this affidavit of any other person or entity having a potential interest in the collection.  This statement is similar to the statement made by the husband in his witness statement dated 29 August 2008.

2. Although senior counsel for the husband made the point that statements made in the Western Australian proceedings might be able to be seen in the context of the husband making statements about the antiques and collectables that were destroyed by the fire that was central to those proceedings, the question of ownership of those items was a central issue.  It seems relatively clear, that in order to bolster his case in those proceedings, the husband was prepared to make general statements about the ownership of everything that had been collected since 1980 in absolute terms.

3. Again, he seems to have made similar absolute statements in evidence in these proceedings. 

4. None of this evidence has yet been tested, but all of it goes to the discretionary assessment as to the strength of the case which the trust may be able to put forward at the final hearing and weights heavily on how the discretion is to be exercised.

SUBMISSIONS BY THE HUSBAND

1. Senior counsel for the husband conceded that the husband had not obeyed the court’s procedural directions, and quite significantly so in some instances. 

2. The husband and the children both want an order to the effect that the Receivers not sell at under value.  I have no evidence before me that would support the notion that they would.  The evidence all points in the other direction.  The Receivers have consented to an order that they sell the collectables “for the best price reasonably available”.  If the husband or anybody else at a later time seeks to claim that the Receivers have acted less then diligently, then that person would have the right to attempt to make out a claim in damages in the normal way. 

3. Senior counsel for the husband suggested that the onus is on the Receivers to establish that AM did not have a claim.  I do not accept that that is where the onus is.  There are in place and have been for some time, existing orders of this court for the auction to take place.  It is the 12^th respondent who is attempting to seek an injunction to change a course of action that had been put in place as a result of the court orders. 

4. Senior counsel for the husband, as already indicated, did not want any order made which would “cover the Receivers’ back”.  The husband also wanted an order that would require an international buyer to wait until after they had successfully bid for an item, to have the title of that item determined before they could remove it from Australia.  The husband wished to be able to have further litigation about claims arising from the AM Trust’s assertion of ownership of items in the catalogue. For reasons set out elsewhere, none of those applications can be sustained.

CONCLUSION

1. Mr Z has spoken about the relatively fragile nature of the marketing campaign surrounding this auction and the likely effect of media stories to the effect that certain restrictions had been placed on any potential buyers taking delivery of what they have bought and/or there was some cloud about the title of some of the items arising from claims made by the AM Trust. It does no party to this litigation any good to have those types of uncertainties lingering over the auction process.  It is appropriate that orders are made binding all the current parties to these proceedings to a position where potential buyers at the auction can know that nobody who is a party to these proceedings will in some way in the future lay claim to an item purchased at an auction by a bona fide buyer. 

2. The 12^th respondent has provided no basis at all to found an injunction stopping the auction entirely or to restrict it in some way.

3. It is appropriate to make an order that the Receivers be able to take possession of and sell for the best price reasonably available, all property being antiques, artworks, furniture and furnishings and other items, whether owned by W Nominees or whether owned by the AM Trust.

4. I accept the wife’s submissions that apart from the 23 nominated items, the 12^th respondent has not sufficiently described the items which could be properly described as the “[AM] collectables”.  Whilst I accept there is some considerable doubt about even those 23 items and there is some strength in the argument by the wife and the Receivers that no injunctive order should at all be made, I find, whilst it is a finely balanced decision, that the prudent approach is to require the Receivers to hold the proceeds of the sale of the 23 items identified in the scheduled referred to earlier in these reasons, in a controlled monies account pending the final determination of the matter. 

5. The husband has not responded to reasonable requests in relation to the part of the M property of which the wife wants an option to dispose.  The order that the wife seeks in relation to M has a built-in protection.  That protection is that the professionals advising the wife in relation to the sale need to certify that annexing this particular block of land from the M development will not inhibit or adversely affect the proposed subdivision and rezoning of W Nominees’ remaining lands at M.  The husband has already had two opportunities to be heard in relation to this issue and has filed no evidence relating to it.  He now wants to have an opportunity once the wife receives an advice from U Pty Ltd that the property can be sold, to then argue that point.  Given the history to date, there is a strong argument that the husband is not entitled to that indulgence.  On balance however I am prepared to give him another chance to argue this issue as long as he relists the matter within 14 days of being given notice by the wife on behalf of W Nominees of her intention to exchange contracts within 21 days.

I certify that the preceding one hundred & thirty (130) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts.

Associate: 

Date:  17 June 2010.