Morse v Riley (No 3)

[2014] NSWSC 236

Supreme Court

New South Wales

Medium Neutral Citation:

Morse v Riley (No 3) [2014] NSWSC 236

Hearing dates:

13 March 2014

Decision date:

13 March 2014

Jurisdiction:

Common Law

Before:

Beech-Jones J

Decision:

1. Order, subject to Order 2, that the first defendant :

(a) Before 27 March 2014 swear and serve on the plaintiffs an affidavit setting out:

(i) all his assets worldwide, giving their value, location and details (including any mortgages, charges or other encumbrances to which they are subject) and the extent of his interest in the assets;

(ii) all assets which he has disposed of, dealt with, or encumbered in the 24 months preceding this order, save for ordinary living expenses of up to $1000 per week, giving their value, location and details and the extent of his interest or former interest in the assets

(iii) the value of his shares in Altroy Pty Limited;

(iv) the identity of assets held by Altroy Pty Ltd, and their value.

(b) To produce to the plaintiffs' solicitor all documents relating to any change of status of Altroy Pty Limited to a superannuation trustee company.

2. If the first defendant wishes to object to complying with paragraph 1 on the grounds that some or all of the information required to be disclosed may tend to prove that he:

a) has committed an offence against or arising under an Australian law or a law of a foreign country; or

b) is liable to a civil penalty

he must:

(i) disclose so much of the information required to be disclosed to which no objection is taken; and

(ii) prepare an affidavit containing so much of the information required to be disclosed to which objection is taken, and deliver it to the Court in a sealed envelope; and

(iii) file and serve on each other party a separate affidavit setting out the basis of the objection.

3. Grant liberty to apply.

Catchwords:

ASSET PRESERVATION ORDER - disclosure of information - no question of principle.

Cases Cited:

Morse v Riley (No 2) (Supreme Court (NSW), Button J, 12 February 2014, unrep)

Category:

Interlocutory applications

Parties:

Joanna Louise Morse (First Plaintiff)
Joanna Chapman Investments Pty Ltd (Second Plaintiff)
Michael Thomas Riley (First Defendant)
Julianne Riley (Second Defendant)
LawCover Insurance Pty Ltd (Cross Defendant)

Representation:

Counsel:
T. Molomby SC, M. Fraser (Plaintiffs)
No appearance (Defendants)
J. Downing (Cross Defendant)
Solicitors:
Castagnet Lawyers (Plaintiffs)
Submitting appearance (First Defendant)
HWL Ebsworth (Cross Defendant)

File Number(s):

2011/177707

ex tempore Judgment

1. On or about 28 January 2014, the plaintiff filed a notice of motion seeking various orders. One of the orders sought was an asset preservation order against the then sole defendant to the proceedings, Michael Thomas Riley. In the proceedings the first plaintiff, Joanna Louise Morse, and the second plaintiff, being a company controlled by her, Joanna Chapman Investments Pty Limited, have sued their former solicitor in respect of the loss of monies that Ms Morse had recovered in respect of a serious car accident when she was young.

1. Around the time that the notice of motion was filed, Mr Riley had indicated that he was proposing to withdraw his earlier defence and file what he described as a form of submitting appearance in respect of the plaintiffs' claim.

1. The application for an asset preservation order was successful. On 12 February 2014 Button J made various asset preservation orders in respect of Mr Riley (Morse v Riley (No 2) (Supreme Court (NSW), Button J, 12 February 2014, unrep)). That part of the motion filed on or about 28 January 2014 which sought the provision of information concerning Mr Riley's assets was stood over.

1. In the course of seeking to execute the asset preservation order, the plaintiff's solicitor learned that, apparently in the immediate days before Button J made his order, Mr Riley had purported to transfer his interest as a joint tenant in property at Avoca to his wife, Julie Anne Riley. The consideration recorded for the transfer was $1. This circumstance was brought to the plaintiffs' solicitor's attention by letter from a legal practitioner who had been acting on behalf of Mr Riley and who had appeared on 12 February 2014. The legal practitioner felt compelled to disclose this fact because it appears that he had made some statement to the Court about the absence of evidence of dissipation of assets. He sought to correct the position.

1. Upon being apprised of the transfer, the plaintiffs took two steps. The first was that they sought and were granted leave to amend their statement of claim to join Mrs Riley, and to seek an order voiding the disposition of property in her favour on the basis that it was undertaken with the intention of defrauding the plaintiffs. The second was that they sought and were granted an asset preservation order against Mrs Riley in respect of the property the subject of the transfer.

1. This brief recitation of the factual background is, in my view, in itself to demonstrate the strong case of the plaintiffs for an order that they now seek compelling the provision of information from Mr Riley concerning his assets. The fact that he has already apparently dissipated one asset in circumstances that suggest it may have been done to defeat the plaintiffs' claim, and the fact that he appears to no longer be seriously contesting the plaintiffs' claim more than amply justify an order requiring that the plaintiffs learn of his true asset position.

1. When this application was called on, Mr Riley did not appear to oppose the order being made. Accordingly, I will make an order requiring the provision of information by Mr Riley about his assets. I will stand the balance of this application down to enable the plaintiffs to bring in a revised wording to that set out in prayers six and seven of the notice of motion filed on or about 28 January 2014.

1. In that regard I note three matters. First, the times that need to be inserted in the order for compliance cannot be ascertained until further consideration is given to the next application, which involves leave to join Mr Riley's professional indemnity insurer.

1. Second, the form of prayer six in the notice of motion is such that it addresses Mr Riley's current assets. At the time the notice of motion was filed there was presumably no firm belief that he would start dissipating assets. The order that is brought in can, if the plaintiff chooses, address a requirement to disclose not just current assets, but assets that may have been dissipated other than in the ordinary course of business over a recent period.

1. Third, the efforts of the plaintiffs' solicitors have revealed that Mr Riley and Mrs Riley are shareholders in a company that own the property from which Mr Riley's legal practice was formerly conducted. There is reason to believe that that company is now operating as a superannuation trustee. The orders can, if the plaintiff chooses, be drafted so as to specifically include a requirement on the part of Mr Riley to disclose all his assets in any such superannuation trust, as well as his shareholding in that company and material concerning the value of that shareholding which will in turn address the assets of that company.

1. For the present, it is only necessary to note that the matter will be stood down to enable appropriate forms of order to be brought in.

[Matter stood down.]

1. I have now received a proposed form of order from Senior Counsel for the plaintiffs. It gives effect to the matters that I have noted. Accordingly, I will make orders one to five in the form of the document entitled "Order", handed to me by Senior Counsel bearing his handwritten annotations, but with the addition of the words "to the plaintiffs' solicitor" after the word "produce" in order 1(b), and by the addition of the words "to Beech-Jones J" after the word "apply" in order 3. They will be signed by me, dated today and placed with the papers.

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Decision last updated: 17 March 2014