Distinctive FX Pty Ltd v Van Der Slot
[2015] VSCA 328
•7 December 2015
SUPREME COURT OF VICTORIA
COURT OF APPEAL
S APCI 2015 0101
| DISTINCTIVE FX PTY LTD (ACN 075 098 609) AND ORS | Appellants |
| v | |
| ELIZABETH ANNE VAN DER SLOT | Respondent |
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| JUDGES: | BEACH and McLEISH JJA and GINNANE AJA |
| WHERE HELD: | MELBOURNE |
| DATE OF HEARING: | 20 November 2015 |
| DATE OF JUDGMENT: | 7 December 2015 |
| MEDIUM NEUTRAL CITATION: | [2015] VSCA 328 |
| JUDGMENT APPEALED FROM: | [2015] VSC 454 (Elliott J) |
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INJUNCTIONS – Interlocutory injunction – Freezing order – Injunction over life insurance proceeds pending trial – Trust property – Appeal – Application for leave to appeal, and appeal, against order permitting access to life insurance proceeds – Interlocutory order – Prima facie case – Access to alleged trust monies where no significant other assets – Discretionary decision – Whether decision affected by error – Foskett v McKeown [2001] 1 AC 102 applied – Application for leave to appeal granted – Appeal allowed.
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| APPEARANCES: | Counsel | Solicitors |
| For the Appellants | Ms C M Kenny QC with Mr A F Solomon-Bridge | Millens Pty Ltd |
| For the Respondent | Mr P D Crutchfield QC with Mr J Kohn | Tony Hargreaves and Partners |
BEACH JA
McLEISH JA
GINNANE AJA:
Introduction
The applicants are the plaintiffs in a proceeding in the Trial Division in which they seek to recover various sums alleged to have been misappropriated from them by one Jason van der Slot, now deceased. The respondent, Mrs Elizabeth van der Slot, was married to Jason van der Slot at the time of his death. The respondent is the second defendant in the applicants’ proceeding.
The present dispute between the applicants and the respondent concerns the respondent’s ability to deal with proceeds of a policy of insurance taken out on Jason van der Slot’s life, pending the trial of the applicants’ proceeding. On 10 July 2015, Elliott J ordered that the balance of those proceeds be paid into a trust account maintained by the respondent’s solicitors, and preserved in their entirety, until further order. The applicants seek leave to appeal and, if leave is granted, to appeal against orders made by the judge on 11 September 2015. The orders sought to be appealed are as follows:
2.The orders made by the Honourable Justice Elliott on 10 July 2015 are varied so that subparagraphs (1) and (2) of order 3 do not prevent the second defendant from using the balance of the life insurance proceeds paid to the second defendant by TAL Life Limited (‘the Life Insurance Proceeds’) to:
(1)Pay up to $2,500 per week on account of the second defendant’s, and her children’s combined ordinary living expenses, including the payment of rent.
(2)Subject to the ongoing supervision of the court, pay up to the sum of $373,247 on account of her legal expenses (without prejudice to the second defendant’s right to seek a further sum for costs at some future time).
…
6.The orders made by the Honourable Justice Elliott on 10 July 2015 are further varied so that subparagraphs (1) and (2) of order 3 do not prevent the second Defendant from using the balance of the life insurance proceeds to pay the second Defendant’s Legal Costs of Appeal.
…
8.The plaintiffs’ summonses dated 2 June 2015 and 8 July 2015 are otherwise dismissed.
Paragraph 2 of these orders has, save for the respondent’s entitlement to withdraw $2500 per week for living expenses and $60,000 for the costs of the present application and appeal, been stayed pending the hearing and determination of the applicants’ present application for leave to appeal and appeal.
The applicants seek orders granting leave to appeal, allowing the appeal and an order that:
Until the hearing and determination of the trial, the balance of the life insurance proceeds paid to the Second Defendant by TAL Life Ltd be preserved in its entirety by the Second Defendant’s solicitor in a separate trust account opened for that purpose.
In particular, the applicants seek to appeal against the parts of the order of 11 September 2015 that permit the use of the life insurance proceeds for ordinary living expenses and to pay the respondent’s legal expenses.
The orders made on 11 September 2015 followed judgments delivered on 22 June 2015 (‘the first judgment’) and 31 August 2015 (‘the second judgment’).
Background
The background to this proceeding was summarised in the first judgment as follows:[1]
[1]Distinctive FX Pty Ltd v Wright [2015] VSC 299 (‘First Reasons’), [1]-[12] (footnote omitted).
This proceeding was commenced in mid-2013. Broadly speaking, the proceeding is concerned with allegations of millions of dollars being misappropriated by an employee. It is alleged substantial amounts of unlawfully obtained funds were paid into the bank accounts of 2 companies, and then withdrawn and dissipated. The allegations not only relate to large amounts of money, but also allege the unlawful conduct occurred over an extended period of time.
The first plaintiff, Distinctive FX Pty Ltd (‘Distinctive FX’), is the employer of staff of the Salvo Property Group. Jason van der Slot (‘Jason’) was an employee of Distinctive FX from July 2004 to 29 February 2012. He was employed as what might loosely be described as a bookkeeper. Part of his role was to authorise payments for suppliers and contractors.
Jason was originally joined as the first defendant. He committed suicide on 8 November 2013. The whole of Jason’s estate was bequeathed to his widow, Elizabeth van der Slot. The trustees of his estate and Elizabeth are now defendants in his stead. Elizabeth was appointed under the will as executrix and trustee of Jason’s will. Trustees were also appointed to the estate under the Bankruptcy Act 1966 (Cth).
Elizabeth is also the second defendant in her own right.
…
In essence, the plaintiffs alleged Jason falsified invoices, which were purportedly issued by both non-existing companies and also by NKT Holdings and JLG Holdings. It is further alleged that the invoices were directed to the plaintiffs, and that Jason approved the false invoices on their behalf, and then authorised cheques or electronic transfers to pay the invoices. It is alleged conversions of the plaintiffs’ funds occurred in 133 different transactions, totalling over $8 million. It is further alleged that in excess of $1.3 million of these moneys were deposited into a JLG Holdings bank account.
With respect to Elizabeth and JLG Holdings, allegations are made that they, either individually or together, knowingly received or benefitted in the amount of approximately $5.5 million of the moneys misappropriated by Jason. In addition, it is alleged that Elizabeth and JLG Holdings knowingly assisted in the relevant transactions.
In addition, … it is alleged that some of the misappropriated funds were paid into a joint savings account, from which Jason paid premiums for a life insurance policy. It is alleged that at least 34 premiums were paid from this bank account. It is further alleged that by reason of the payment of the premiums of a life insurance policy from that bank account, the plaintiffs had a propriet[ar]y interest in the life insurance policy; and now have a proprietary interest in any proceeds paid out by reason of the existence of the policy.
The conversions relating to JLG Holdings are said to have occurred from 8 September 2004 to 5 May 2008.
In addition, conversions referable to NKT Holdings are alleged to have occurred from 12 December 2008 to 16 March 2012.
On 25 July 2013, Macaulay J granted the plaintiffs a freezing order against Jason, the respondent, NKT Holdings Pty Ltd (‘NKT’) and JLG Holdings Pty Ltd (‘JLG’). The freezing order has since been varied.
On 26 August 2014, the respondent notified the applicants that she had received $1,736,437.50 in proceeds from her late husband’s TAL Life Insurance policy.
On 19 December 2014, the respondent filed an application seeking an order that the life insurance proceeds be excluded from the freezing order on the basis, inter alia, that she had no other means by which to pay her legal expenses to fund the defence of this proceeding. Alternatively, she asked that the freezing order be varied to allow her to pay up to a further $75,000 for legal expenses.
The applicants allege that, by reason of the payment of the life insurance premiums out of misappropriated moneys, they are entitled to a proprietary interest in the TAL Life Insurance policy and the proceeds paid out pursuant to it.
In her amended defence dated 14 August 2015, the respondent does not admit the applicants’ claim. She asserts that if funds were transferred from NKT’s Commonwealth Bank of Australia account as alleged, which she did not admit, and if money was withdrawn from that account and transferred to the BankWest joint savings account from which the premiums were paid, which she also did not admit, then those funds were mixed with other money that was also paid into the latter account.
The applicants have sought further and better particulars of the allegation in that defence, that ‘legitimate’ money was deposited into the BankWest joint savings account, but they have not yet been provided. Counsel for the respondent stated during the hearing before us that such particulars could be provided within about three weeks but had been delayed because of the respondent’s lack of funds.
On 20 August 2015, the respondent gave notice of an application for orders releasing funds from the life insurance proceeds to pay her current and future legal expenses. An affidavit filed by her solicitor estimated that her and JLG’s total costs and disbursements until the end of the trial would be $373,247.
In his reasons of 31 August 2015, the trial judge found that the balance of convenience favoured the respondent having the right to access the life insurance proceeds to pay her ordinary living expenses and legal fees.
Reasons of the trial judge
In his reasons for making the orders now sought to be impugned, the judge said:[2]
The plaintiffs correctly pointed out the differences between the considerations that apply to a freezing order, under what traditionally are referred to as the Mareva principles, and those that apply to injunctive relief where a plaintiff seeks to establish and trace a proprietary interest in a fund. Given the former usually includes an exception for ordinary living expenses of a natural defendant and legal fees in defending the proceeding, I will consider Elizabeth’s position in that regard before turning to the issue concerning from where the permitted drawings may be taken.
[2]Distinctive FX Pty Ltd v Wright (No 2) [2015] VSC 454 (‘Second Reasons’), [9] (citations omitted).
The judge noted that the applicants opposed any allowance for payments for legal fees if access to the life insurance proceeds was involved, but they submitted in the alternative, that it should not include the cost of senior counsel which would amount to the sum of $140,800.
The judge described the case as complex and involving millions of dollars. He stated:[3]
In the circumstances, it is not only in the interests of Elizabeth, but also the court and the due administration of justice, that Elizabeth is properly represented. In my view, the allowance for legal costs should also include senior counsel. However, I am conscious of avoiding unnecessary costs before the matter is ready to be set down for trial. Accordingly, while I will make a ruling in favour of Elizabeth in relation to senior counsel, I will not permit costs to be incurred until the interlocutory steps have been completed to the extent that the proceeding is ready to be set down for trial.
[3]Second Reasons [24].
In the first judgment, the judge said:[4]
Given the premiums for the life insurance policy were paid out of an account into which converted funds were paid, in the absence of any evidence from Elizabeth, the plaintiffs are entitled to contend that the moneys used to pay the premiums were the subject of a trust in favour of the plaintiffs notwithstanding the fact that there were mixed funds in the account.
[4]First Reasons [40(3)] (citations omitted).
The judge stated that hardship to the respondent was a relevant circumstance and he referred to the hardship that he considered that she had suffered. He noted that the respondent did not have significant assets.
The judge referred to the fact that, if the life insurance proceeds were dissipated, the respondent was unlikely to be able to replenish them.
He then stated:[5]
However, although the plaintiffs have established a prima facie case, there is still some work to be done in relation to the tracing of funds. The account from which the premiums were paid contained mixed funds. The extent to which the life insurance premiums may have come from legitimate sources remains uncertain. Even if the plaintiffs succeed, it ultimately may be found that they are only entitled to a proportionate amount of the Life Insurance Proceeds. A further relevant matter is that there has been delay on the part of the plaintiffs in prosecuting this proceeding.
[5]Second Reasons [34] (citations omitted).
The judge also took into account that proper provision should be made for the upkeep of the respondent’s two school-aged children until the proceeding was determined. He concluded:[6]
In summary, the justice and convenience of this case requires that Elizabeth be able to maintain the family and to have the means of properly defending herself.
[6]Ibid [36].
Applicants’ submissions
The applicants submitted that the orders made were unjust and unreasonable. Once it was established that the premiums for the life insurance policy had been paid partly with trust funds, it was for the respondent to prove the extent to which premiums were paid with her husband’s money in order to claim a proportionate share in the proceeds. The respondent had no entitlement to any of the proceeds in the absence of evidence establishing her proportionate share. The applicants relied on the House of Lords decision in Foskett v McKeown.[7] They also relied on the general principle that a defendant should not be permitted to use money belonging to another in order to pay legal costs or expenses.[8]
[7][2001] 1 AC 102 (‘Foskett’).
[8]Polly Peck International plc v Nadir (No 2) [1992] 4 All ER 769, 784.
The applicants distinguished the principles applicable to the payment of a defendant’s legal costs where a freezing order is made from the present circumstances, where there was a prima facie case that the funds sought to be used for legal costs were subject to a trust. In those circumstances, the Court should protect the trust property.[9] This is the substance of the first ground of the applicants’ proposed appeal.
[9]His Eminence Metropolitan Petar, Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand v The Macedonian Orthodox Community Church St Petka Incorporated & Anor [2006] NSWCA 277, [59]–[61] (‘His Eminence Metropolitan Petar’); Palmer v MacDonnell Shire Council (2011) NTLR 90.
The applicants, in written and oral submissions, identified what they contended were four errors in his Honour’s judgment in evaluating the balance of convenience. The first of these errors, that collectively constituted ground two of the applicants’ proposed appeal, was his Honour’s finding that to defend the proceeding properly, it was necessary for the respondent to access the life insurance proceeds. Secondly, complaint was made about the judge’s finding that the sale of the respondent’s personal assets would be insufficient to fund her ongoing legal expenses and legal costs. Thirdly, the applicants challenged the judge’s finding that the respondent had no assets other than household and personal effects, jewellery and a car: it was contended that the judge should have found that she also had $47,051.84 in superannuation. Fourthly, the applicants attacked the judge’s conclusion that the respondent should have access to the life insurance proceeds even though she had not established that there were no other funds or assets available to her.
The third ground of the applicants’ proposed appeal alleges that the judge, in evaluating the balance of convenience, took into account an irrelevant consideration, namely that it was in the interests of the Court and the administration of justice that senior counsel be briefed on behalf of the respondent.
The fourth ground of the proposed appeal is that his Honour erred in law when weighing the balance of convenience by failing to give predominant consideration to the respondent’s inability to replenish the life insurance proceeds and in failing to draw a distinction between payment of her past costs and future costs.[10] The applicants contended that the costs that his Honour permitted the respondent to withdraw wrongly included the costs of JLG.
[10]Reliance was placed on the decision in Ryan v Ryan [2012] NSWCA 636.
The fifth ground of the proposed appeal is that his Honour, in evaluating the balance of convenience, failed to balance the strength of the applicants’ prima facie case against the weakness of the respondent’s case, and had taken into account hardship that was legally irrelevant. Despite the fact that the judge had found that there was a strong prima facie case that the trust arose when the premiums were paid, it was contended that he made no real determination of the strength of the respondent’s case. In discussions about the adequacy of the pleading in the defence, at the hearing on 28 August 2015, the judge stated that the respondent should re-plead paragraph 16B and said that, ‘At the moment it’s not clear at all what’s being alleged and why it’s relevant’.[11]
[11]Transcript of proceeding, Distinctive FX Pty Ltd v Wright (Supreme Court of Victoria, S CI 2013 03774, Elliott J, 28 August 2015), 63.
Sixthly, the applicants contended that his Honour’s refusal of the injunction that they sought was upon the facts plainly unjust or unreasonable.
In support of their contentions, the applicants submitted that a defendant should not be entitled to draw on a fund which may belong to a plaintiff until the defendant shows that there is no fund or assets on which he or she can draw for payment of legal fees and other legitimate expenses, other than assets to which the plaintiff maintains a proprietary claim.[12]
[12]Fitzgerald v Williams [1996] QB 657, 669–70 (Sir Thomas Bingham MR).
They submitted that the judge did not give proper weight to the principle that a court of equity will use its strongest powers to preserve a trust fund in interlocutory proceedings and will see ‘that the stable door is locked before the horse has gone’.[13]
[13] A v C [1981] 1 QB 956, 959 (Goff J quoting from an earlier judgment of Templeman LJ).
Finally, the applicants submitted that the judge had wrongly taken into account that they might only be entitled to a proportion of the life insurance proceeds, whereas they said that, on the authorities, it was incumbent upon the respondent to demonstrate that legitimate moneys had been used to pay for the policy in order to claim a proportionate share of the proceeds of the policy. This the respondent did not do, not having put forward any evidence of any premiums being paid from ‘untainted’ moneys.
Respondent’s submissions
The respondent argued that the judge’s order was not unjust or unreasonable.
The respondent relied on the judge’s finding that the applicants might only be entitled to a proportion of the life insurance proceeds. She contended that he correctly balanced factors weighing in the balance of convenience. The judge rightly took into account in assessing the strength of the respondent’s defence that, although the applicants had established a prima facie case, they still had some work to do in relation to the tracing of funds. There was no allegation of converted funds being paid directly into the BankWest account.
Further, the respondent noted that more than 13 monthly premiums had been paid for which there was no evidence that the source had been converted moneys. The NKT Commonwealth Bank account and the BankWest joint savings account into which the trust funds had been paid had gone into overdraft before all the premiums had been paid and therefore had ceased to contain any converted money. It was not possible to trace into a mixed fund after it has been exhausted.[14]
[14]In re Diplock; Diplock v Wintle [1948] Ch 465, 521.
The respondent submitted that the applicants had never contended before his Honour that her personal assets included superannuation of $47,051.84. The judge had correctly decided to allow for senior counsel for the respondent in estimating the respondent’s costs, because of the complexity of the case.
Next, the respondent submitted that the judge correctly took into account, in assessing hardship, that she had been required to liquidate a number of assets after her husband’s death. The applicants had accepted that she was impecunious. The judge’s analysis of hardship was directed at the hardship that the respondent was likely to suffer from being unable to defend the case. His Honour did not consider that she should sell assets that, if sold in a hurry, might not yield their true value. A number of the respondent’s assets were bound by the freezing order.
Finally, the respondent submitted that, contrary to the applicants’ submissions, the judge did take into account that the life insurance proceeds may not be replenished by the respondent, if used to pay legal costs. The respondent accepted that while this was a relevant consideration, the judge was not obliged to treat it as decisive.
Analysis
During the hearing before us, and in submissions and notes provided by the parties after the conclusion of the hearing, considerable attention was given to various calculations that were said to show that particular premiums could be shown (or not shown) to have been sourced from misappropriated funds. The parties’ various submissions about the percentage of the life insurance proceeds that could (or should) be attributed to premiums paid with converted funds produced significantly different figures. Some of the calculations were performed on the basis of a forensic accountant’s ability to trace only 19 of 34 (or more) premiums back to converted moneys. On the other hand, merely because the accountant (Mr Fettes) had not yet been able to trace particular payments of premium back to converted moneys at this stage was said not to establish that those premiums came from untainted sources. Further, the ‘first in, first out’ analysis used by the accountant to trace particular funds to particular payments was not agreed between the parties as being appropriate in any event.
Whatever calculations might ultimately be done at trial, the evidence disclosed that there is a very real prospect that the judge’s orders would permit the respondent to have paid to her, from the proceeds of the insurance policy, considerably more than any share that the respondent might be able to establish if she leads evidence. Further, as the applicants noted, although the judge’s order permits payment of legal costs of $373,247.00 from the life insurance proceeds, the order was made ‘without prejudice to [the respondent’s] right to seek a further sum for costs at some further time’.
To obtain leave to appeal, the applicants must establish that the appeal has a real, as opposed to a fanciful, prospect of success.[15] In this case, to succeed on appeal, the applicants have to establish that the judge made an error in the exercise of discretion of the kind identified in House v R.[16]
[15]Kennedy v Shire of Campaspe [2015] VSCA 47, [12].
[16](1936) 55 CLR 499, 504–5.
The judge recognised that the applicants’ case was based on the protection of trust property and not on the exceptions that may be made to a freezing order in order to permit payment of legal costs. The making of a freezing order or asset preservation order has a different juridical base than an injunction to protect trust property.[17]
[17]His EminenceMetropolitan Petar [12].
His Honour considered that the extent of the parties’ interest in the life insurance proceeds was uncertain. It was not possible on the material before him to make findings about that fact. Nor in such a complex case, could the parties at an interlocutory stage have been expected to provide evidence that traced every payment. They were factual issues to be determined at trial.
We accept that a person who mixes his own money with money to which a trust may attach bears the onus of distinguishing the part or amount that belongs to him or her.[18] The authors of the current edition of Lewin on Trusts state the principle as follows:
Wherever the trust property is placed, if a trustee amalgamates it with his own, the beneficiary will be entitled to every portion of the blended property which the trustee cannot prove to be his own. This principle does not absolve the claimant from the need to prove that his property can be traced into a particular mixed fund, nor allow the claimant to proceed on the basis that all property held by the trustee belongs to the claimant unless the trustee can prove to the contrary. The principle is of narrow application and concerns identification of property in a particular mixed fund into which it can be proved by the claimant that his money or property went, and the inferences that can properly be drawn from the evidence before the court, the burden on the defaulting trustee being no more than a balance of probabilities. Where this principle applies, the remedy will apply in the same way as though the trust property had not been blended, because it will not have been proved that any part of the property belongs to the trustee. But the principle normally applies only where the amalgam of assets cannot be sufficiently distinguished and treated separately: it is based on the fact that the lack of evidence to do so is attributable to the trustee’s fault. There may, however, be cases involving mixtures where the inability of the trustee to assert any interest in the mixture, even an undivided share, does not turn upon lack of evidence but on the character of the mixture which has taken place.[19]
[18]Re Tilley’s Will Trust [1967] 1 Ch 1179, 1183; John McGhee QC (ed), Snell’s Equity (Sweet & Maxwell, 33rd ed, 2015) 789.
[19]Lynton Tucker, Nicholas Le Poidevin QC and James Brightwell, Lewin on Trusts (Sweet & Maxwell, 15th ed, 2015) 1980.
For the purposes of this application, it is not necessary or appropriate to resolve the issues raised by the respondent’s submission that the relevant bank accounts fell into overdraft from time to time, so as to affect the tracing of converted money. The applicants contended that after the accounts were overdrawn, they appear to have been replenished with trust moneys. Mr Fettes had identified an amount of at least $1,167,206.00 of misappropriated moneys that he had been unable to trace. The significance of accounts being overdrawn was not raised before his Honour and the applicants contend that they were therefore deprived of the opportunity to lead evidence that the defaulting trustee later deposited money into the overdrawn accounts to restore the trust. The applicants submitted that, irrespective of the merits of the argument, their claim is to a beneficial interest in all of the life insurance proceeds and that they are prima facie entitled to treat those proceeds as an asset. These submissions of the applicants should be accepted.
Nor is it appropriate for the Court to attempt to determine what part of the insurance proceeds can be traced to premiums paid with converted money at this stage. That may well be a complex task.[20] It is sufficient to note that the evidence before his Honour did not suggest that all premiums had necessarily been paid with converted funds. It would have been inappropriate on an interlocutory application to expect either party to establish definitively their proportionate shares to the life insurance policies. At the same time, however, the respondent did bear an evidentiary onus to displace the prima facie entitlement of the applicants to the monies.
[20]Foskett [2001] 1 AC 102, 141–5 (Lord Millett).
The differing calculations put to us by the parties suggest a basis for contending that the respondent may ultimately be able to call and/or give evidence that some of the insurance premiums used to purchase the insurance policy were not sourced from misappropriated funds. Thus, if the respondent goes into evidence, it may be that she will establish that a significant part of the proceeds of the policy belongs to her. However, that again does not detract from the fact that, as matters stand, the applicants have established a prima facie entitlement to the proceeds of the insurance policy.
In our view, with respect, the judge erred by approaching the interlocutory application on the basis that the extent to which the life insurance premiums might have come from legitimate sources remained uncertain.[21] The applicants were correct to contend, in accordance with Foskett, that in the absence of evidence to the contrary, the whole of the proceeds were to be taken to be trust monies. The respondent has provided no evidentiary material showing that it was arguable that any of the premiums were paid out of legitimate funds. She had the opportunity of doing so, and then applying to the Court to allow access to the life insurance proceeds.
[21]See Second Reasons, [34].
While we acknowledge that the judge correctly stated the principle in Foskett, we do not think, in light of the emphasis he placed on the uncertainty of the ultimate state of the evidence, that he correctly applied that principle. On the evidence as it stood, it was necessary to proceed on the basis that the whole of the proceeds were trust monies.
We would therefore grant leave to appeal and allow the appeal.
The applicants seek an order, in place of the impugned orders of the trial judge, that the balance of the life insurance proceeds be preserved in their entirety by the respondent’s solicitor in a separate trust account pending the hearing and determination of the trial. In our view it is not necessary to make such an order. As earlier mentioned, the trial judge made an order in those terms on 10 July 2015. The effect of the orders now set aside was to vary that order. The varying orders themselves being set aside, the relevant order of 10 July 2015 will continue to operate in its previous form.
Consistently with that order, the application for access to the insurance proceeds being interlocutory, the respondent (subject to any abuse of process considerations) may make a further application for access to the policy funds, either on fresh and up to date evidence or on the evidence already filed. We express no opinion as to whether, if the current state of the evidence remains the same, a judge could release part of the proceeds to the respondent, including for living expenses and legal fees.
In all the circumstances, we think that the question of what, if any, amount of the insurance proceeds the respondent should be permitted to access should be left to a judge of the Trial Division, upon any application being made, for hearing and determination in accordance with these reasons.
Having determined that the judge’s order as to the payments to which we have referred, being permitted to be made out of the proceeds of the insurance policy, should be set aside and the issue left to the Trial Division, we can deal briefly with the remainder of the applicants’ grounds. Put shortly, the applicants’ remaining grounds of appeal are not made out. A number of the applicants’ grounds are in essence challenges to the weight that his Honour chose to give to particular considerations. While we have concluded that the judge erred in making the order he made when the applicants had established a prima facie entitlement to the whole of the proceeds of the policy, we do not consider that his Honour erred in his assessment of the other matters relied on by the applicants as relevant to the balance of convenience.
Specifically, we do not think his Honour erred by failing to have regard to moneys held for the respondent in superannuation. Their existence was mentioned during the hearing. To access those funds, the respondent would have to apply on hardship grounds to the superannuation fund trustee. There is no evidence as to how long that process might take, or the likelihood that her application would be successful. Further, we see no specific error in the judge’s treatment of the issues concerning the assets that the respondent still possessed (principally jewellery and household effects). It fell within the bounds of a proper exercise of discretion for his Honour to determine that she should not be required to liquidate them for the purposes of paying legal costs and, in the case of the household effects, to consider what sum they would achieve if sold.
Additionally, we do not consider that his Honour’s reference to hardship, even if read as meaning personal hardship, when viewed in context, disclosed error. We read his Honour as considering the practicalities of the respondent being able to use her remaining assets, including household effects, to fund her defence. It was open for his Honour to take into account the respondent’s responsibilities for her two school-age children. He took into account that the respondent was permitted by the freezing order to spend $2500.00 per week on ordinary living expenses, which sum had been agreed between the parties.
The judge allowed senior counsel’s fees to be paid out of the life insurance proceeds. Although it is now unnecessary to decide if that was appropriate, we would say the following. His Honour pointed to the complexity of the case, which concerned 133 financial transactions with the current statement of claim running to 91 pages. We see force in the view that the engagement of appropriate senior counsel is likely to shorten the litigation and therefore the costs of the litigation by achieving a focusing on the real issues in dispute. His Honour’s reference to the retention of senior counsel as a benefit to the Court was, in our view, no more than a statement of the obvious. In any event, it was a statement in accord with a proper application of a main purpose of the Civil Procedure Act 2010: to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute in civil proceedings.[22] There is no substance in the suggestion that the judge took into account an irrelevant consideration in making the impugned order.
[22]Section 1(1)(c).
Conclusion
We will grant the applicants leave to appeal, allow the appeal, and set aside paragraphs 2, 6 and 8 of the orders made on 11 September 2015.
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