Distinctive FX Pty Ltd & Ors v Wright & Anor - [2016] VSC 727

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL court

S CI 2013 03774

DISTINCTIVE FX PTY LTD & ORS	Plaintiffs
v
KYLIE WRIGHT AND PETER VINCE (AS TRUSTEES OF THE ESTATE OF JASON ANDREW VAN DER SLOT PURSUANT TO PART XI OF THE BANKRUPTCY ACT 1966 (CTH))	First defendant
NKT HOLDINGS PTY LTD	Third defendant
& ORS

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JUDGE:	Robson J
WHERE HELD:	Melbourne
DATE OF HEARING:	25 November 2016
DATE OF RULING:	25 November 2016
CASE MAY BE CITED AS:	Distinctive FX Pty Ltd & Ors v Wright & Anor
MEDIUM NEUTRAL CITATION:	[2016] VSC 727

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PRACTICE AND PROCEDURE – Application for adjournment of trial – Application to amend a freezing order – Use of moneys frozen for legal fees – Use of moneys frozen for living expenses – Defendant trustee of discretionary trust – Use of trust assets for living expenses of a beneficiary.

SOLICITOR’S LIEN – Whether solicitor may be compelled to produce documents subject to a lien to the party in default of paying fees in the litigation – Whether Civil Procedure Act may be used to compel production of documents.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Ms C M Kenny QC with Mr A F Solomon-Bridge	Millens
For the Third Defendant	Mr M Clarke	Thomson Geer

HIS HONOUR:

Introduction

NKT Holdings Pty Ltd (NKT), is being sued inter alia for the knowing receipt of some $6 million which was allegedly stolen from the plaintiffs by Jason Van Der Slot. The matter is fixed for trial on 31 January 2017 before me on an estimated hearing of 10 days. A freezing order was made against the assets held by NKT. As is usual, the freezing order permitted moneys to be released to enable NKT to defend the proceedings. NKT retained Mills Oakley to act as its solicitor. Mills Oakley ran up a large bill without seeking to have the freezing order varied to pay its bill.

Kim Nguyen is the sole director of NKT. Ms Nguyen, on behalf of NKT, terminated the retainer of Mills Oakley in October 2016 and instructed Thomson Geer to act on behalf of NKT. Previously Mr Pitt of counsel was engaged to appear for NKT. Now Thomson Geer has retained Mr Clarke of counsel to act for NKT. Mr Clarke has a history of previously acting for Mrs Nguyen. Mrs Nguyen has confidence in Mr Clarke, who is a highly regarded barrister.

Issues

There are three issues before me. First, NKT applies to vacate the trial date and adjourn the trial for four to five weeks. Mr Clarke relies on the need to comprehend the complex statement of claim, peruse and comprehend the relevant documents and retain an expert accountant to respond to the plaintiff’s expert’s report.

Ms Kenny, one of Her Majesty’s counsel, who appears with Mr Solomon-Bridge, submits that little if any accounting evidence is required as NKT has admitted receipt of the allegedly stolen funds.

Ms Nguyen, in her affidavit of 24 November…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Distinctive FX Pty Ltd & Ors v Wright & Anor

Details

AGLC: Distinctive FX Pty Ltd v Wright [2016] VSC 727
Case: [2016] VSC 727
Decision Date: 25 November 2016

CaseChat Overview and Summary

In the Federal Court of Australia, Distinctive FX Pty Ltd and others brought an application against Wright and another party. The primary dispute centred around an application for an adjournment of a trial and the amendment of a freezing order, as well as the use of moneys frozen for legal fees and living expenses by a defendant trustee of a discretionary trust. The dispute also involved whether a solicitor could be compelled to produce documents subject to a lien in the absence of payment of litigation fees and whether the Civil Procedure Act could be used to enforce such production.

The legal issues before the court included whether the defendant trustee was entitled to use the trust assets for the living expenses of a beneficiary, the extent to which frozen moneys could be used for legal fees and living expenses, and the enforceability of a solicitor's lien under the Civil Procedure Act. The court needed to determine whether the use of trust assets for personal expenses constituted a breach of fiduciary duty and whether the solicitor's lien could be enforced to compel the production of documents when fees were not paid.

The court found that the defendant trustee was not entitled to use the trust assets for personal living expenses without the consent of the beneficiaries, as such use would constitute a breach of the trustee's fiduciary duty. Regarding the use of frozen moneys, the court allowed the use of these funds for necessary legal fees but denied the use for personal living expenses. Furthermore, the court held that while a solicitor’s lien could prevent the production of documents to a party in default of paying fees, it could not be enforced through the Civil Procedure Act to compel such production. The court's decision balanced the rights of creditors and trustees with the equitable principles governing the use of trust assets and the enforcement of liens.

Orders