Allan and Allan & Ors (No 2)

Case •

[2015] FamCA 589

•

17 July 2015

FAMILY COURT OF AUSTRALIA

ALLAN & ALLAN AND ORS (NO 2) [2015] FamCA 589

FAMILY LAW – PRACTICE AND PROCEDURE – Adjournment – Where the 14th respondent made an oral application for adjournment – Where the 14th respondent has had ample opportunity to be in a position to pursue his application – Adjournment refused.

FAMILY LAW – PRACTICE AND PROCEDURE – Where the 14th respondent seeks that the Receivers provide voluminous documents in relation to items sold at auction which were the subject of the receivership of assets of another trust – Where there is no particularity in that claim – Where the claim by the 14th respondent would put the Receivers to substantial cost – Where no security has been proffered by the 14th respondent – Where the application by the 14th respondent is found to be in substance an application for pre-action discovery against a non-party – Where that application is dismissed for want of any proper basis for the orders – Where the court has declined to exercise its discretion to make the orders on the basis that was is claimed is oppressive.

FAMILY LAW – COSTS – Where the 14th respondent has been wholly unsuccessful – Where the Receivers had made a previous written offer and have been wholly successful in the position advanced by them – Order made that the 14th respondent pay the Receiver’s costs as agreed or assessed.
Family Law Act 1975 (Cth)
APPLICANT: Ms Allan
1st RESPONDENT: Mr W Allan
3rd RESPONDENT: Ms B Allan
4th RESPONDENT: Mr C Allan
5th RESPONDENT: Ms D Allan
6th RESPONDENT: Ms E Allan
7th RESPONDENT: F Nominees
8th RESPONDENT: Ms G
9th RESPONDENT: Mr H
10th RESPONDENT: Mr J
11th RESPONDENT: Mr K
13th RESPONDENT: Mr L
14th RESPONDENT: Mr CC as trustee for AM Trust
INTERVENORS  : Mr D & Mr CP (Receivers)
FILE NUMBER: SYC 3842 of 2008
DATE DELIVERED: 17 July 2015
PLACE DELIVERED: Sydney
PLACE HEARD: Sydney
JUDGMENT OF: Watts J
HEARING DATE: 16 June 2015

REPRESENTATION

SOLICITOR FOR THE 13TH RESPONDENT: Delaney Lawyers
COUNSEL FOR THE 14TH RESPONDENT: Mr Silver
SOLICITOR FOR THE 14TH RESPONDENT: Gye Associates  
COUNSEL FOR INTERVENORS: Mr Roberts
SOLICITOR FOR INTERVENORS: HWL Ebsworth Lawyers

Orders

(Part of orders made on 16.6.15)

  1. Leave granted to the 14th respondent to make an oral application for an adjournment of the hearing today. I dismiss that application and I reserve my reasons in respect of that application.

  2. The application by the 14th respondent which was originally contained in the 14th respondent’s Application in a Case filed 9 April 2015 but amended by way of orders 5 to 9 sought in Exhibit 44 is dismissed, and orders are made in accordance with the Response to the Application in a Case filed by the Receivers on 21 May 2015 which are in the following terms:

    2.1.The Intervenor/Receivers disclose to the 14th respondents the following documents within 14 days:

    2.1.1.Any or all files entitled “[AM Trust] – permanent folder”, being the files described in paragraph 10 of the affidavit of Mr L made 19 February 2015;

    2.1.2.A true copy of all documents within the black books in the possession of the Intervenor/Receivers relating to the 23 items described in the schedule to the orders of the court made in this action on 17 June 2010 (copies of which are agreed to be provided by the Intervenor/Receivers to the 14th Respondent within 14 days from today’s date).

  3. The 14th respondent pay the Intervenor/Receivers’ costs of and incidental to the Application in a Case filed 9 April 2015 and the Intervenor/Receivers’ Response filed 21 May 2015, such costs to be as agreed or assessed.

  4. I reserve my reasons for judgment in respect of orders 2 and 3.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Allan & Allan and Ors has been approved by the Chief Justice 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

Ms Allan

Applicant

And

Mr W Allan

1st Respondent

And

Ms B Allan

3rd Respondent

And

Mr C Allan

4th Respondent

And

Ms D Allan

5th Respondent

And

Ms D Allan

6th Respondent

And

Ms E Allan

6th Respondent

And

F Nominees

7th Respondent

And

Ms G

8th Respondent

And

Mr H

9th Respondent

And

Mr J

10th Respondent

And

Mr K

11th Respondent

And

Mr L

13th Respondent

And

Mr CC

14th Respondent

And

Mr D & Mr CP (Receivers)

Intervenors

REASONS FOR JUDGMENT

  1. On 16 June 2015 I made the orders set out above. These are the reasons for making orders 1, 2 and 3.

ADJOURNMENT APPLICATION

  1. At the commencement of the hearing on 16 June 2015, the 14th respondent made an oral application for an adjournment of the hearing between the 14th respondent and the Receivers. The application before the court was originally filed by the 14th respondent on 9 April 2015 but was amended by way of orders sought in Exhibit 44, handed up in court on 22 May 2015. The issues between the 14th respondent and the Receivers had been articulated in written submissions filed by the 14th respondent on 28 April 2015. Because the Receivers had filed and sought to rely upon an affidavit of Mr Duncan of 21 May 2015 and written submissions of 22 May 2015, counsel for the 14th respondent on 22 May 2015 indicated that he wanted an opportunity to file and serve an affidavit in response to the affidavit of Mr Duncan filed 21 May 2015 and made an adjournment application for that purpose. That adjournment application was granted. As a result of an exchange between counsel for the 14th respondent and myself towards the end of the proceedings on 22 May 2015, a direction was made that the 14th respondent file and serve any written submissions in response to the Receivers’ written submissions by 2 June 2015. No affidavit was filed by the 14th respondent pursuant to the opportunity provided by order 2 of 22 May 2015. No submissions were filed pursuant to the opportunity given by order 9 of 22 May 2015. Although some submissions were filed, they did not deal with any controversy between the 14th respondent and the Receivers.

  2. It was known on 22 May 2015 that Mr Elliott, counsel for the 14th respondent who appeared on 22 May 2015, would not be available to appear for the 14th respondent on 16 June 2015, but Mr Elliot indicated that the matter could be listed for hearing on 16 June 2015 despite his unavailability.

  3. Counsel for the 14th respondent, who appeared on 16 June 2015, indicated that a lawyer who had been involved in helping to prepare the matter on behalf of the 14th respondent had been recently absent. A concession was made however that Mr Gye (the solicitor who appeared to receive the judgment on 10 June 2015 and who has filed affidavits on behalf of the 14th respondent) was available throughout the period of the adjournment.

  4. Senior counsel for the Receivers opposed a further adjournment of the hearing on the basis that this was the second occasion where the 14th respondent was indicating that he was not in a position to proceed with the argument on his application. No offer was made to pay the Receivers’ costs. Senior counsel for the Receivers submitted that the application was untenable in any event. I do not need to go to the prima facie merits of the controversy to determine the adjournment application. The 14th respondent had ample opportunity to be in a position on 16 June 2015 to pursue the application that he originally filed on 9 April 2015, supported by written submissions filed 28 April 2015. In those circumstances, the adjournment application was refused.

ORDERS SOUGHT BY THE 14TH RESPONDENT

  1. The 14th respondent seeks the following orders (orders 5 to 9 in Exhibit 44):

    …

    5.The receivers arrange for the black books to be produced to the Registry of the Family Court in Sydney on or before 29 May 2015.

    6.The black books are to be held by the Registry and may be inspected by the 14th respondent and those advising and assisting him in relation to his defence of the 13th respondent’s claim, such inspections to be completed by 12 June 2015.

    7.Following completion of the inspection of the black books in accordance with order 6, the 14th respondent is to liaise with the Court Registry staff in order to arrange for the black books to be sent back to the receivers, and pay the cost of doing so.

    8.By 26 June 2015 the 14th respondent is to provide the solicitors for the receivers and the 13th respondent with a completed list of the items which he claims were the property of the AM Trust.

    9.By 24 July 2014 the receivers are to disclose to the 14th respondent documents described in annexure “B” to these orders by arranging for copies of the documents to be made by Law In Order (or such other third part photocopying service as is agreed or ordered) and for the copies to be sent to the solicitors for the 14th respondent. The 14th respondent is responsible for paying the costs of that copying.

  2. Annexure B to Exhibit 44 states:

    1. Any and all files entitled “AM Trust – Permanent File”, being the files described in paragraph 10 of the affidavit of Mr L made on 19 February 2015.

    2. The black folders described in paragraphs 19 and 21 of the affidavit of Mr L made on 19 February 2015 to the extent they contain records about an Item.

    3. Documents recording any one or more of the price for which each of the Items was sold or the purchaser of each of the Items.

    4. Documents recording or relating to any one or more of the following:

    (a) any and all attempts made by any person to determine the owner and/or value of any of the Items, including without limitation the inquiries made and the results of any such attempts.

    (b) any claim or assertion of any kind made that any of the Items was an asset of the AM Trust (or that all or any part of the proceeds of sale of any one or more of the Items should be paid to the AM Trust), including without limitation the claim or assertion itself, any materials provided in support or otherwise in respect of the claim, any consideration given or response made to that claim by or on behalf of the receivers.

    (c) the negotiations through which the claims referred to in Deed of Settlement dated 14 February 2012 were compromised;

    (d)  consideration given by the receivers to the terms upon which they would or may be prepared to compromise any or all of the claims referred to in the said Deed.

    In this annexure “Items” means the items that are identified in a list to be served by the 14th respondent in accordance with these items.

  3. The Receivers seek that the orders sought by the 14th respondent be dismissed on the basis that the orders sought in the Response to the Application in a Case filed by the Receivers on 21 May 2015 be made. Those orders are in the following terms:

    2.1 The Intervenor/Receivers disclose to the 14th respondents the following documents within 14 days:

    2.1.1 Any or all files entitled “AM Trust – permanent folder”, being the files described in paragraph 10 of the affidavit of Mr L made 19 February 2015;

    2.1.2 A true copy of all documents within the black books in the possession of the Intervenor/Receivers relating to the 23 items described in the schedule to the orders of the court made in this action on 17 June 2010 (copies of which are agreed to be provided by the Intervenor/Receivers to the 14th Respondent within 14 days from today’s date);

    …

BACKGROUND

  1. The 14th respondent is the current trustee of the AM Trust. The Receivers were appointed as Receivers and Managers of the assets of W (No. 2) Pty Ltd.

  2. There has been a long running dispute in respect of the ownership of various antiques and collectables. In 2010 the former trustee of the AM Trust, the 13th respondent, was unsuccessful in seeking an order to restrain the Receivers from selling the antiques and collectables at auction. In the course of those proceedings, the 13th respondent put in dispute the possible ownership by the AM Trust of 23 items. The 13th respondent was unsuccessful in preventing an auction proceeding in relation to those 23 items but an order was made that the proceeds of sale of those 23 items be preserved.

  3. At auction, those 23 items achieved sale proceeds in the order of $1,570,000.

  4. The dispute between the Receivers and 13th respondent was resolved by way of negotiation with the Receivers agreeing to leave in the AM Trust an amount of $600,000, and the 13th respondent, by way of compromise, allowing the Receivers to take the remaining funds. A Deed of Settlement was entered into between the 13th respondent, the Receivers and the wife in February 2012, and was ratified by orders made 14 April 2014. The 14th respondent sought to appeal those orders out of time but the Full Court on 2 September 2014 dismissed that application on the basis that the 14th respondent’s grounds of appeal were devoid of merit.

  5. There is a continuing dispute in relation to the ownership of the remaining amount of $600,000 in the AM Trust. Those funds are subject to a number of claims by:

    13.1.The 3rd to 6th respondents who are the beneficiaries of the trust.

    13.2.The 13th respondent, who claims he has a right to be indemnified out of the trust assets in respect of his costs and expenses and has a lien over the trust assets. For all intent and purposes, the 13th respondent claims the balance of what is in the trust by way of monies that he owes primarily to his lawyers for work his lawyers did for him in his capacity as trustee of the AM Trust.

    13.3.The wife who has an extant application under s 85A Family Law Act 1975 (Cth) seeking that the whole of the property be dealt with as property in the s 79 application between the husband and wife.

  6. The 14th respondent says in his written submissions that he seeks to defend any claim by the 13th respondent in relation to the assets in the trust by contending that the 13th respondent:

    14.1.Did not proceed with an appeal against orders I made relating to the auction in 2010.

    14.2.Allowed property of the AM Trust to be sold at undervalue.

    14.3.Surrendered assets to the Receivers by way of entering into a compromise with the Receivers and seeking a sanction of that arrangement from the court.

  7. It is also the 14th respondent’s contention that equity would not permit the 13th respondent to exercise any right and indemnity in circumstances where the 13th respondent acted beyond power or failed to execute the trust with reasonable diligence and care, resulting in losses to the trust in excess of the amount of his claim.

THE RECORDS SOUGHT FROM THE RECEIVERS

  1. The documents sought from the Receivers are described in Annexure B to paragraph 9 of Exhibit 44 (set out above).

  2. The 14th respondent claims access to these records for a number of reasons:

    17.1.The Receivers will have their own records of communications between themselves and the 13th respondent relating to the ownership of assets and the terms of the Deed of Settlement.

    17.2.The Receivers ceased and hold documents bearing on the ownership of the property which was sold at auction.

    17.3.It is said that issues will arise as to what price the Receivers obtained for the property, whether they sold the property at undervalue and what the 13th respondent did or did not do about that.

  3. Pausing there, I note that the Receivers no longer have any active role as a party in these proceedings. That role ended when I gave effect to the Deed of Settlement of February 2012 by way of orders made 14 April 2014.

DISCUSSION

  1. Whilst I have set out in general terms what the 14th respondent says is his claim, I find there is no particularity in that claim.

  2. The sole question for determination is the extent to which there may be some relevance in the records that the 14th respondent seeks from the Receivers.

  3. I accept that the Receivers have no documents that would go to the 13th respondent’s involvement with his own lawyers relating to issues of costs. The 14th respondent has not demonstrated that any documents, in respect of which there is a controversy, could bear upon the question of whether or not the 13th respondent had properly incurred costs.

  4. It follows that the only relevance of documents that could be sought from the Receivers goes to an unspecified claim that in some way the 13th respondent failed to preserve the assets of the AM Trust.

  5. This matter has had a lengthy history. The only claim that has ever been articulated in respect of the ownership of any items that are owned by the AM Trust relates to the 23 items. As I have said on previous occasions, some evidence would point in the direction of some of those 23 items not being items owned by the AM Trust which, as I have explained in previous reasons, was a matter that I accepted the 13th respondent had taken into account when settling the matter with the Receivers by way of the Deed of Settlement in February 2012.

  6. Senior counsel for the Receivers submits that the application made by the 14th respondent for provision of documents is far wider in scope and goes well beyond the documents that may on any view, relate to the purchase and ownership of items by the AM Trust.

  7. The husband has previously sworn evidence to the effect that the last antique acquired by the AM Trust was prior to 30 June 1984 and that the AM Trust did not trade, acquire or dispose of any assets after 30 June 1985.

  8. Consequently, what happened at the auction by Z Auction House in 2010 in relation to any item which was acquired after 1985 can have nothing to do with any controversy, as yet unparticularised, but generally set out above, involving the 13th respondent as trustee of the AM Trust.

  9. In the past five years, the 13th respondent, the 14th respondent and the husband have only been able to adduce evidence in relation to 23 items which they have argued were purchased by the AM Trust. Up until a settlement was reached with the Receivers (and to the present date), the Receivers had always denied that claim.

  10. No other evidence has been adduced to date by or on behalf of the AM Trust in relation to the collectables extending beyond those 23 items.

  11. The 14th respondent seeks that the Receivers provide voluminous documents in relation to all items sold at the auction held by Z Auction House. The 14th respondent is in effect seeking disclosure of all documents that relate to all collectable items that were the subject of the receivership over W Nominees assets.

  12. Senior counsel for the Receivers raised an issue in relation to the 14th respondent’s bona fides by reference to a statement made by the 14th respondent in an affidavit sworn by him on 28 June 2012. Senior counsel for the Receivers submits that there is a prima facie case that the 14th respondent is utilising his office as trustee to advance what is seemingly the interests of his close confident, the husband. I note that the 14th respondent, having been given an opportunity to respond to this assertion by way of affidavit in reply, did not take up that opportunity. I do not need to express an opinion about the bona fides of the 14th respondent to determine this application.

PREJUDICE TO THE RECEIVERS

  1. I accept that what is proposed (even on the basis that photocopying be done by a third party) would put the Receivers to substantial cost. No security has been proffered by the 14th respondent, nor any other arrangement proposed whereby the Receivers’ costs of compliance would be safeguarded. I accept that that is a significant concern for the Receivers given that the 14th respondent has wholly failed to satisfy the costs orders awarded in favour of the Receivers by the Full Court.

A PREVIOUS ORDER FOR DISCOVERY

  1. By way of order 26 of orders made by me on 28 May 2010, I ordered discovery of black books as they related to acquisitions on or before 30 June 1985. That order was complied with by the Receivers. By virtue of that discovery order being complied with, the 13th respondent, the children and the husband have all been given the opportunity to inspect all of the acquisitions up to the point in time where the husband has asserted that the AM Trust finished making acquisitions (namely, July 1984).

CONCLUSION

  1. The application before me is in substance an application for pre-action discovery against a non-party.

  2. At some point, the 14th respondent will have to articulate the claim of breach of duty by the 13th respondent in his role as trustee of the AM Trust. There can, however, be no claim for breach of duty in relation to items that could never have been the property of the AM Trust.

  3. The 14th respondent seeks a large number of documents for an unspecified purpose. It seems that he wishes to trawl through records to ascertain whether or not there is a case of some sort that can be mounted. That can be the only explanation for seeking records from 1985 to 2009.

  4. The application of the 14th respondent stands to be dismissed on the basis of want of any proper basis for the orders and that it is a request for documents without demonstrating their relevance and leads to the conclusion that the 14th respondent is simply fishing.

  5. If I am wrong about that, on the question of exercise of discretion, given outstanding unsatisfied costs orders by the Full Court against the 14th respondent in favour of the Receivers, I would decline to make the order on the basis that what has been asked for is oppressive.

  6. I have set out above the documents the Receivers are prepared to disclose. In my view those categories of documents satisfy the 14th respondent’s genuine inquiries.

  7. Accordingly I dismiss the application made by the 14th respondent and make orders as sought by the Receivers.

COSTS

  1. The 14th respondent has been wholly unsuccessful in the application that he has pursued. The Receivers have made a timely written offer and have been wholly successful in the position advanced by them. The Receivers are a non-party. They are entitled to an order for costs, such costs to be agreed or assessed.

I certify that the preceding forty (40) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts delivered on 17 July 2015

Associate: 

Date: 17 July 2015

Key Legal Topics

Areas of Law

  • Family Law

  • Civil Procedure

Legal Concepts

  • Costs

  • Discovery

  • Jurisdiction

  • Remedies

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