CHANG & MALLESON

[2012] FamCA 622

FAMILY COURT OF AUSTRALIA

CHANG  & MALLESON [2012] FamCA 622

FAMILY LAW - PROPERTY – Where a party is in breach of financial Orders – Whether the party in breach should be heard on an application for further Orders – Approach to be taken

FAMILY LAW - PROPERTY – Interim property Orders – whether permission for expert evidence ought be granted

FAMILY LAW - PROPERTY – Whether case for interim Orders made out on competing evidence that cannot be tested on interim hearing – need for issues to be resolved at a trial

FAMILY LAW - PROCEDURE – Permission for expedited trial of final financial proceedings

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)

F & F (1995) FLC 92-637
FAI Insurances Ltd v Pioneer Concrete Services Ltd (1987) 15 NSWLR 552
Hadkinson v Hadkinson (1952) P 285

APPLICANT: Ms Chang

RESPONDENT: Ms Malleson

FILE NUMBER: SYC 2496 of 2011

DATE DELIVERED: 3 August 2012

PLACE DELIVERED: Brisbane

PLACE HEARD: Sydney

JUDGMENT OF: Kent J

HEARING DATE: 24 November 2011, 7 February 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Othen

SOLICITOR FOR THE APPLICANT: Barkus Doolan Kelly

COUNSEL FOR THE RESPONDENT: Mr Givney

SOLICITOR FOR THE RESPONDENT: Brischetto & Ford Solicitors

Orders

1. In respect of the interim applications, the Applicant have permission to adduce the evidence of Mr P.

2. Save in the respects that they are dealt with by Orders made, the Applications in a Case filed by the Applicant on 9 November 2011 and on 23 August 2011 and the Application in a Case filed by the Respondent on 10 August 2011 otherwise be dismissed.

3. The parties’ costs of and incidental to these interim applications be reserved to the trial judge.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Chang & Malleson 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 BRISBANE

FILE NUMBER: SYC 2496 of 2011

Ms Chang

Applicant

And

Ms Malleson

Respondent

REASONS FOR JUDGMENT

Introduction

1. The substantive proceedings concern the parties’ competing claims for alteration of property interests pursuant to s 90SM of Part VIIIAB of the Family Law Act 1975 (Cth) (“the Act”) initiated by an application filed by the Applicant on 21 April 2011.

2. In May 1997, the parties began living together in a same-sex de facto relationship. In 1999, the company S Pty Ltd (“the company”) was incorporated, with each party holding an equal shareholding. Subsequently, both parties became the only directors. Initially, the company traded in short term real estate, but then expanded its business to include other aspects of the property industry. Each party holds or held qualifications in the property industry.

3. Whilst there are issues to be agitated at trial as between the parties as to the roles each performed with respect to the company and thus the contribution each made to the development of their financial position, it is not in issue that between 1997 and 2011 the parties significantly improved their financial position and that of the company and that there has been a significant increase in the company’s property development and property management. As at the time of the parties’ separation at the beginning of 2011, the company’s property management division was substantial.

4. The Balance Sheet dated 24 November 2011, handed up at the interim hearing before me on that date, whilst reflecting significant dispute between the parties as to the divisible net pool of assets, also reflects that on either of the parties’ positions, the value of the net pool exceeds $5,000,000.00. Included in the Balance Sheet referred to was the valuation of the company as at 30 June 2010 by Ms W, the single expert valuer appointed to prepare a report in relation to the company.[1]

   [1] See affidavit of Ms W filed  21 November 2011.

5. In December 2010, shortly prior to the breakdown of the parties’ relationship and their separation on 1 January 2011, the Respondent purchased two properties, namely Property G and Property M respectively. After the parties’ separation, but before settlement of these two purchases, issues arose between the parties as to the execution of further financial documentation. The Respondent, in altering arrangements for these purchases to proceed, unilaterally acted to remove funds held by the company and/or diverted income of the company to complete these purchases as well as to purchase a $65,000.00 motor vehicle.[2]

   [2] See paragraphs 68 and 72(i) of the affidavit of the Respondent sworn 19 May 2011.

6. In February 2011, the Respondent caused the company to employ one Ms B, who commenced to receive a salary and the benefit of a company loan. In March 2011, the Respondent caused the company to engage Ms B’s brother, one Mr J, in an IT role in the company. Neither the employment of Ms B nor the engagement of her brother, Mr J, occurred with the knowledge or consent of the Applicant who, as already noted, is a co-director in the company. The Applicant contends that Ms B is the Respondent’s new partner so that these steps assume, at least from the Applicant’s perspective, particular significance in the context of these interim applications.

7. Because of issues which arose concerning the management of the company, negotiations led to the parties executing a deed and entering into undertakings regulating the management of the company and the payment of directors’ fees on 4 March 2011.

8. It is the Applicant’s case that the Respondent breached the deed in numerous ways, leading to the Applicant commencing the substantive proceedings on 21 April 2011, which also sought interim relief which, the Applicant contends, was intended to give effect to the terms of the deed that the parties had signed on 4 March 2011.

9. There have been a number of interim applications and Orders made as these proceedings have progressed, including on 6 June 2011 when interim Orders were made by his Honour Justice Fowler which, inter alia, regulated the manner in which the business conducted by the company should be managed. Those Orders also contained a number of injunctions and set out the manner in which three real properties owned by the parties’ trust, known as the GP Trust (“the Trust”), of which GP Pty Ltd is the corporate trustee, be sold, and the manner in which the proceeds of sale were to be disbursed.

10. On 29 August 2011, his Honour Justice Watts made further Orders, including an injunction restraining the Respondent from dealing with any commission from the sale of the property known as Unit P and an injunction restraining the Respondent from commencing a business in the property industry in competition to the business operated by the company.

11. By her affidavit filed 18 November 2011, the Respondent acknowledges her breaches of the Orders to which I have referred in several respects. First, the Respondent acknowledges that, in breach of the Order of 6 June 2011, the Respondent did not cause the net deposit paid upon the sale of the property known as Property K in the net amount of approximately $186,000.00 to be paid into the nominated controlled monies account pursuant to Order 17 of the Orders made on 6 June 2011.

12. Second, by her affidavit, the Respondent acknowledges dealing with commission upon the sale of Property K.

13. Thus, despite the injunction granted by his Honour Justice Watts on 29 August 2011, the Respondent dealt with the commission upon the sale of Unit P in the amount of $6,655.00 and dealt with substantial funds in a manner contrary to that ordered by his Honour Justice Fowler on 6 June 2011, who had ordered those funds be paid into the controlled monies account.

14. The Applicant’s case is that aside from the breaches of the Orders referred to, the Respondent, in breach of paragraph 10 of the Orders of 6 June 2011, failed to make the office of the company and the company bookkeeper available to the Applicant every second Friday and to have all entity financial records available for inspection; and in breach of paragraph 9.5 of the Orders of 6 June 2011, the Respondent failed to facilitate viewing access to entity bank accounts for the Applicant.

15. In relation to the last of these alleged breaches, agreement was reached during the course of the hearing before me as to the manner in which arrangements could be rectified within 14 days of that date to ensure that the Applicant had the facility to access the accounts contemplated. As to the inspections, I raised during the hearing that the difficulties that had arisen would probably be avoided if the Respondent had vacated the office during these inspections and that was an obvious solution to be employed.

16. On 10 August 2011, the Respondent filed an Application in a Case seeking interim financial Orders in relation to the disbursement of funds held from the sale of Property K. In summary, the Respondent sought that she be permitted by Order to cause the company to receive $200,000.00; the amount of $168,000.00 to be paid into a St George offset account; and for the sum of $200,000.00 each to be paid to each party by way of partial property settlement. Finally, it was sought that a further sum of $100,000.00 be paid into an account to be used by the parties in equal proportions for renovation costs.

17. The Respondent filed an amended Application in a Case on 15 November 2011. The essence of the Respondent’s case for the making of further interim financial Orders when the proceedings came before me on 24 November 2011 was that there were significant shortfalls in cashflow of the company and thus a need for substantial capital injection to the company which could be provided from the deposit funds held from the sale of Property K referred to. Moreover, the Respondent sought Orders for the payment of sums to each party by way of partial property settlement to provide the parties with finances rather than continuing to hold the whole of the funds in the controlled monies account pending final trial.

18. The Applicant opposed the application of the Respondent on a number of bases. The Applicant contended that no application from the Respondent ought be entertained unless and until the Respondent remedied her breaches of Orders, both the breaches acknowledged by the Respondent and further breaches contended for by the Applicant. Further, the Applicant contended that the Application ought be adjourned pending the Applicant having some further opportunity to properly investigate matters raised by her accountant, Mr P, in relation to the Respondent’s management of business affairs. Finally, the Applicant’s position was that the Respondent’s case that there were significant shortfalls in cashflow to the company was not made out or, if there were any difficulties, that they were created by the Respondent herself by conduct such as renting alternate premises for the company at a much higher rental cost; deploying significant capital to renovate such premises; buying the expensive motor vehicle referred to above; employing Ms B and her brother as referred to previously; engaging accountants and several other such matters. The Applicant relied upon the evidence of Mr P to demonstrate that there was or ought be sufficient cashflow resources for it to be unnecessary for the Respondent to use the retained funds.

19. Moreover, in circumstances where the Applicant contended that at the trial there would be a case mounted by her to the effect that the Respondent had unreasonably expended or wasted money, that the tracing type exercise that would be needed to explore this aspect would be rendered all the more difficult if yet further capital was made available to the Respondent to deploy.

20. As already noted, the Orders of 6 June 2011 included specific Orders in paragraphs 17, 18 and 19 regulating what was to occur with the proceeds of sale of Property K and Unit P. Those Orders, containing 30 paragraphs, were detailed and, amongst other things, regulated the payment of directors’ fees to the parties and regulated the continuing operation of the company and its business operations, the Trust and the sales of property referred to. Specifically, paragraph 19 regulated the payment into the Controlled Monies Account and the Respondent was restrained by injunction from withdrawing any funds from the Controlled Monies Account or causing the trustee to do so, “…without the written consent of [the Applicant] or further order of this Court.” The Respondent acknowledges that her dealings with the proceeds were in plain breach of the Orders.

21. It was open to the Respondent to apply to the Court to vary Orders expressed to be interlocutory, as the subject Orders were, rather than acting in contravention of them. As the Respondent would have it, “…commercial reality…” dictated that she access funds knowingly in breach of Orders of this Court. However, it was the legal reality that the Respondent confronted, and when it comes to Orders of a Court, there is little scope for the approach taken by the Respondent to the effect that it is better to ask for forgiveness than permission.

22. On 7 February 2012, pursuant to leave given for that purpose, I undertook a further hearing of the interim applications. In the course of that hearing, agreement was reached between the parties that, so far as partial property settlement to each party was concerned, each ought receive the sum of $200,000.00 from the Property K proceeds as and by way of partial property settlement.

23. For reasons which are outlined further below, I also made an Order on 7 February 2012 to facilitate the parties obtaining a date from the Listing Judge for an expedited trial date.

24. In relation to the release of $200,000.00 to each party, I note that, as Mr Othen of Counsel for the Applicant observed, if the Respondent is bona fide as to the cash flow needs of the company, she could elect to apply all or part of that $200,000.00 provision to the company to be taken into account in the contributions assessment to be undertaken at trial.

Preliminary Issue – Whether the Respondent Should be Heard

1. So far as decided authority is concerned, Counsel for each party confined their submissions to reference to the decision of his Honour Justice Young in the Equity Division of the New South Wales Supreme Court in FAI Insurances Ltd v Pioneer Concrete Services Ltd (1987) 15 NSWLR 552.

2. In that case, Young J considered whether or not an Order ought be made setting aside a voidable allotment of shares. His Honour was called upon to consider competing equities to determine whether it was just and equitable that what might otherwise be considered the stronger equity should be postponed because of the lack of clean hands. Mr Givney of Counsel for the Respondent drew particular attention to p 561 of the judgment, where Young J, after a careful analysis of the authorities on the maxim in equity of  “clean hands”, observed:

   I have gone through such a lengthy history in examination of the rule because, it seems to me, with great respect, that the submissions of the defendants are too shallow, but yet have the temptation to induce a judge (who has, after all, some characteristics common with jurors), by appeal to the emotions, to think that these matters should be left to the trial to be ventilated. However, the more one examines the rule and its application in the cases, the more one can see that it is only if the right being sought to be vindicated by the plaintiff in a court of equity, is one which if protected, would mean the plaintiff was taking advantage of his own wrong, that the court will either debar him from relief or perhaps say he is not a proper plaintiff in a representative suit.

3. Mr Givney contended on behalf of the Respondent that, in seeking the further interim financial relief, the Respondent was not taking advantage of her own wrong in terms of her breaches of the Orders of 6 June 2011. That is, Mr Givney contended that it would be just and equitable for further Orders as sought by the Respondent to be made, notwithstanding the Respondent’s acknowledged breaches of the Orders referred to.

4. Unsurprisingly perhaps, Mr Othen of Counsel for the Applicant contended otherwise by reference to the decision of Young J. Mr Othen sought to emphasise Young J’s analysis of the authorities at pages 559 and 560 of the judgment and highlighted the cited passage from Moody v Cox [1917] 2 Ch 71. Mr Othen submitted that, in this case, there was a clear connection between the Respondent’s breach of Orders and the relief the Respondent now sought for further interim financial Orders.

5. Neither Counsel referred the Court to any other authority on this point.

6. With respect to both Counsel, it seems to me that the principles to be applied where there are competing equities and where the conduct dictates the result that the stronger equity is postponed, is irrelevant to the issue here. The question here is whether the Respondent, being in breach of Orders of the Court, ought be able to advance the applications she now makes whilst her breach or breaches of Orders remain extant.

7. In F & F (1995) FLC 92-637 (“F”), the Full Court of this Court considered the question of whether there is any rule which prevents the Family Court from hearing, or which confers on the Court a discretion as to whether or not to hear, an application for dissolution of marriage in circumstances in which the applicant for dissolution is in contempt or in breach of earlier Orders of the Court made in financial proceedings between the parties. In answering that question, the Full Court considered a number of authorities not limited to instances involving the exercise of family law jurisdiction and considered the historical approach at common law of what may conveniently be termed the rule that a person in contempt will not be heard.

8. At p 82,425, the Full Court made reference to Hadkinson v Hadkinson (1952) P 285 as, “…the leading modern case in relation to the question of whether a person in contempt will be heard.” As the reasons of the Full Court record, in Hadkinson, the Wife had been granted custody of the child of the marriage, but she had been ordered not to take the child out of England. She did so, and the Husband obtained an Order requiring the Wife to return with the child. The Wife appealed against that Order and, at the commencement of the appeal, a preliminary objection was taken on behalf of the Husband that the Wife was not entitled to be heard on the ground that she was in contempt.

9. As the Full Court noted, all three members of the Court of Appeal upheld the objection, but the plurality held that there was a strict rule against hearing a person in contempt (subject only to certain limited exceptions), whilst Denning LJ regarded the matter as discretionary. The Full Court recorded the following in relation to the judgment of Denning LJ:

   The judgment of Denning LJ largely comprises a discussion of the history of the rule “that a party in contempt will not be heard”, which was a rule not of the common law but of the ecclesiastical courts. Following that discussion Denning LJ concluded:

   “…It is a strong thing for a court to refuse to hear a party to a cause and it is only to be justified by grave considerations of public policy. It is a step which a court will only take when the contempt itself impedes the course of justice, and there is no other effective means of securing his compliance…

   Applying this principle, I am of opinion that the fact that a party to a cause has disobeyed an order of the court is not of itself a bar to his being heard, but if his disobedience is such that, so long as it continues, it impedes the course of justice in the cause, by making it more difficult for the court to ascertain the truth or to enforce the orders which it may make, then the court may in its discretion refuse to hear him until the impediment is removed or good reason is shown why it should not be removed.”[3]

   [3] At p 298.

1. After discussion of further authorities, the Full Court noted at p 82,427:

   In light of the above authorities and texts, we are satisfied that the rule that a party in contempt may not be heard is a discretionary rule and is limited, at least in its modern operation, to circumstances in which the person in contempt makes an application in the same proceedings or in the same cause in which the contempt has been committed….

2. At p 82,428, the Full Court observed:

   In the Morgan-Grampian case, which was a case where a journalist, who refused to comply with an order which would result in revelation of his sources, sought to be heard on appeal against that order, Lord Bridge in considering the question of whether a contemnor can be heard, and having referred to the judgments of Romer L J and Denning LJ in Hadkinson went on to say:

   “I cannot help thinking that the more flexible treatment of the jurisdiction is one of discretion to be exercised in accordance with the principles stated by Denning LJ better accords with contemporary judicial attitudes to the importance of ensuring procedural justice than confining its exercise within the limits of the strict rule subject to defined exceptions. But in practice in most cases the two different approaches are likely to lead to the same conclusion, as they did in Hadkinson itself…” (P 46)

   Lord Oliver, in agreeing with Lord Bridge, set out as follows:

   “Whilst, therefore, there must clearly be a strong indication in favour of preserving a litigant’s right to appeal, even though he may be in contempt of court, I am in entire agreement with my noble and learned friend Lord Bridge of Harwich in thinking that there must also be a discretion to refuse to hear the contemnor and in favouring the flexible approach suggested by the judgment of Denning LJ in Hadkinsonv Hadkinson [1952] P. 285. One can, of course, envisage, as he did in that case, circumstances in which the Court would be unlikely to exercise its discretion in favour of hearing a contemnor – he instanced the case of an abuse of the process or of disobedience to the order impeding the course of justice – but I would not be in favour of laying down any rules for the exercise of discretion, though it can do no harm to give examples which may serve as guidelines. For instance, where the appeal is grounded on alleged lack of jurisdiction to make the order at all, it would seem, in general, right that the contemnor should be heard. At the other end of the scale, if the contempt consisted of a contumacious refusal to reveal the whereabouts of a ward of court, it would be likely to require a strong case before the court would consider entertaining a contemnor’s appeal.”

   We have quoted the relevant passages from the judgments of Lord Bridge and Lord Oliver because they make clear that the discretionary approach is now the preferred approach in circumstances where the question arises as to whether or not a person in contempt should be heard when that person seeks to appeal the order in respect of which that person is in contempt. We would respectfully agree that this is the correct approach in the circumstances of an appeal or in other circumstances which can be categorised as being in the same cause or the same proceedings as that in which the order, which is the subject of the contempt, was made.

3. In my view, from the detailed discussed by the Full Court in F of various authorities and the express or implicit acceptance by the Full Court of particular statements of principle or approach, the following propositions emerge:

   a)No question as to a party in alleged contempt being heard arises:

   i)On an appeal by the party to set aside the Order on which the alleged contempt is founded;

   ii)If that party is defending, rather than bringing, an application;

   iii)If the application by that party is not in the same proceedings or in the same cause of action in which the contempt has been committed. Whether the application is in the same proceeding or the same cause is determined by reference to the structure and content of the definition of “matrimonial cause” in the Act, the parts of the Act and the Family Law Rules 2004 (Cth) (“the Rules”);

   iv)Where a party applies for the purpose of purging the party’s contempt;

   v)Where a party against whom contempt is alleged seeks to be heard on a submission that, having regard to the true meaning and intent of the Order which the party is said to have disobeyed, the party’s actions did not constitute a breach of it, or having regarding to all the circumstances, the party ought not to be treated as being in contempt;

   b)Procedural justice dictates that the fact that a party has disobeyed an Order of the Court is not of itself a bar to the party being heard on a subsequent application by that party;

   c)The Court may, in its discretion, refuse to hear a party in breach of an Order if that party makes an application in the same proceedings or in the same cause in which the disobedience of an Order has occurred;

   d)In exercising that discretion, the balance is between that party’s right to procedural justice, including the right to be heard, and public policy considerations;

   e)Those public policy considerations include that if the party’s disobedience is such that, so long as it continues, it impedes the course of justice in the cause by making it more difficult for the Court to ascertain the truth, or to enforce the Orders which it may make, or the party’s further application constitutes an abuse of process in the circumstances, then the Court is unlikely to exercise its discretion in favour of hearing the party or entertaining the application of the party.

4. As already noted, the Respondent acknowledges her breaches of the Orders referred to. The subject Orders are not merely procedural, and the breaches are substantial. I do not accept that assertions to the effect that, “…commercial reality…” dictated that conduct amounts to circumstances justifying that the Respondent may be regarded or treated as not being in contempt.

5. There is no doubt that the Respondent’s present applications are made in the same cause or proceeding in which the Respondent acknowledges being in breach of Orders. Thus, a discretion arises as to whether the Respondent’s applications should be entertained by the Court.

6. The fundamental question in this case becomes whether or not it can be concluded that the Respondent’s disobedience impedes the course of justice in the sense described above. In the context of this case, and the final relief sought, the Respondent’s disobedience impedes the course of justice if its effect is to make it more difficult for the Court to ascertain and enforce final property Orders which are just and equitable.

7. As already noted, the property pool of the parties to be considered for the purpose of final Orders is substantial. Whilst the Respondent’s breach of the Order requiring the deposit is in respect of a substantial sum (the subject commission being a relatively modest sum) there would not appear to be any reason that this would impede the Court in ascertaining and enforcing final Orders for final property division.

8. Put another way, the Respondent’s conduct can be addressed or taken into account (to the extent necessary) in framing final Orders given the extent of the available pool of assets. There are disputed issues of fact concerning further alleged breaches by the Respondent in terms of access to the office for inspections by the Applicant and access to records so that it cannot be concluded whether the Respondent is in contempt of those Orders on this hearing, given its limitations.

9. In the result, I consider the discretion should be exercised in favour of entertaining the Respondent’s application.

Expert Evidence of Mr P

1. For the purpose of the hearing on 24 November 2011, the Applicant sought to rely upon the affidavits of Mr P filed 3 May 2011 and 23 November 2011 respectively. By the time of the hearing on 7 February 2012, the Applicant had filed the further affidavit of Mr P on 6 February 2012.

2. The Respondent objected to the Applicant relying upon the evidence of Mr P based on the expert evidence rules set out in Part 15.5 of the Rules.

3. As already noted, Ms W is the expert accountant who was appointed as the single expert to prepare a report and who provided a report in relation to the value of the company. Like Ms W, Mr P is a Chartered Accountant, but unlike Ms W, Mr P was retained solely by the Applicant for the purpose of providing expert evidence in relation to the issues agitated on the Respondent’s interim applications.

4. The purpose of Part 15.5 of the Rules is expressed in r 15.42. Relevantly, sub-paragraph (e) of that rule enables a party to apply for permission to tender a report or adduce evidence from an expert witness appointed by that party, “…if necessary in the interests of justice.”

5. The circumstances which confronted the Applicant on the applications of the Respondent on these interim applications included the Respondent’s significant non-compliance with previous Orders of the Court and, more particularly, allegations of the need to supply the company with significant funds for its cashflow against the background of financial complexity. Part of the matters agitated by the Applicant were limitations upon her capacity to undertake inspections of records and to access records as had been provided for in previous Orders, and the issues to be addressed were necessarily of an expert accounting kind.

6. Indeed, part of the reason the Applicant sought an adjournment on 24 November 2011 was the acknowledgement that Mr P’s then-available reports had been produced upon incomplete material, and that further time would assist the endeavour.

7. Whilst Ms W was the single expert accountant for the purpose of providing valuation evidence with respect to the company, she was not charged with any forensic role in terms of a specific examination of the cashflow issues raised by the Respondent on these applications.

8. In all the circumstances, I am satisfied that it is necessary in the interests of justice that the Applicant be permitted to tender the reports and evidence of Mr P and that the Applicant ought be granted permission within the meaning of r 15.52(4) to tender the reports and evidence of Mr P referred to for the purpose of these interim proceedings.

Resolution

1. The Respondent seeks to establish, on her evidence, that the company has cashflow problems and that there is a need to inject capital by way of a distribution from the sale proceeds held in trust referred to in order to address those problems.

2. The Applicant relies upon, principally, the evidence of Mr P for the proposition that the alleged cashflow problems are illusory or at least that serious questions attend the propositions advanced by the Respondent on her application for interim Orders.

3. Obviously, on an interim hearing such as this, the evidence on each side cannot be tested by cross-examination, and there are thus significant limitations upon the forensic examination of fundamentally competing propositions as would enable firm conclusions to be reached. Those limitations assume prominence where the issues involve financial matters of some complexity, as here. For the same reasons, the Court must be conservative and cautious about the findings that can be made.

4. Whilst he is retained solely by the Applicant, Mr P, I am satisfied, is an expert Chartered Accountant. I am satisfied that, on his affidavits, he has carefully reviewed (within the limitations he identifies in his affidavits and reports) the relevant financial information with which he has been provided and also from inspecting various records of the company by reference to the contentions contained in the Respondent’s affidavit material, which he has also reviewed.

5. I am satisfied that the numerous questions raised by Mr P in his various affidavits and reports are legitimately raised and that, on his evidence, there are significant questions as to the Respondent’s primary contention that cashflow problems dictate the need for the company to receive capital from the monies held on trust; and as to the underlying reasons as to why cashflow problems, if they exist, have come about.

6. I emphasise that at a trial, the questions raised by Mr P may be appropriately examined and answered. It may prove to be the case that the doubts expressed by Mr P, for example, as to the veracity of record-keeping or inconsistencies in records may be sensibly explained or be of no substance in the end result.

7. However, the competing contentions are such that I cannot be satisfied that it is reasonable to conclude, on an interim hearing, that the Respondent makes out the case for the interim relief she seeks.

8. Given my acceptance that this matter requires a trial for these fairly complex questions to be answered, I made the Order earlier referred to in February in an effort to facilitate an early trial.

9. Beyond that, I am not satisfied that, on an interim basis, the Respondent establishes by uncontroverted facts or contentions, that her claims for relief are made out.

10. I have already observed that in the context of this case, the failure by the Respondent to deposit the sale proceeds as ordered and the charging of a commission contrary to an Order; whilst breaches of substance; do not constitute of themselves impediments to the course of justice of the case given the size of the asset pool and the capacity for these matters to be accounted for in the framing of final Orders at trial.

11. For the same reasons, and given that I cannot reach firm conclusions on the disputed issues of fact, the competing evidence as to which is untested, I do not accede to the Applicant’s applications seeking Orders that these breaches be remedied now. Obviously, the trial judge will ultimately be in a position to determine these issues and address any consequences which follow those breaches.

12. For these reasons, I order that otherwise than as specifically ordered, the respective interim applications be dismissed, and that the costs of each party of and incidental to those applications be reserved to the trial judge. I make the Orders as set out at the commencement of these reasons.

I certify that the preceding sixty-two (62) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Kent delivered on 3 August 2012.

Associate: 

Date:  3 August 2012