Paris King Investments Pty Ltd v Rayhill

[2006] NSWSC 578

CITATION:	Paris King Investments Pty Ltd & 1 ors v Michael Norman Rayhill & 2 ors [2006] NSWSC 578 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	2 June 2006
JURISDICTION:	Equity Division
JUDGMENT OF:	Brereton J
EX TEMPORE JUDGMENT DATE:	06/05/2006
DECISION:	Orders making provision for raising funds for litigation expenses of husband and wife in family law proceedings and varying interlocutory injunctions previously granted so as to permit such funds to be raised.
CATCHWORDS:	PROCEDURE – Consolidation – Cross-vesting – whether family law proceedings transferred from Family Court should be heard with equity proceedings which may affect pool of matrimonial property - FAMILY LAW – COSTS – Interim provision for litigation expenses – relevant considerations on an application for interim or preliminary costs – whether limited to scale costs – whether limited to future costs - INJUNCTIONS – Interlocutory injunctions – Mareva injunctions – variation to provide for litigation expenses – third parties – relevance of impact of injunctions on third parties.
LEGISLATION CITED:	Family Law Act 1975 (Cth), ss 74, 79, 80, 117 Family Law Rules 1984 (Cth), Sch 3, Pt 2 Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) Trade Practices Act 1974 (Cth), s 80
CASES CITED:	A v C (No 2) [1981] 2 All ER 126 Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc (1981) 148 CLR 170 Ascot Investments Pty Limited v Harper (1981) 148 CLR 337 Breen v Breen (1990) 65 ALJR 195 Clark Equipment Credit of Australia Ltd v Conto Factors Pty Ltd (1988) 1 NSWLR 552 Clout (Trustee) v Anskor Pty Ltd [2001] FCA 174 Elders Rural Finance v Westpac (NSWSC, 24 May 1989, unreported) Frigo v Culhaci (NSWCA, 17 July 1998) Glenwood Management Group Pty Ltd v Mayo [1991] 2 VR 49 Goumas v McIntosh [2002] NSWSC 713 Harrison Partners Construction Pty Ltd v Jevena Pty Ltd [2005] NSWSC 1225 Harrison Partners Construction Pty Ltd v Jevena Pty Ltd [2006] NSWSC 317 In the Marriage of Bailey and the Estate of Bailey (1989) 13 Fam LR 652; [1990] FLC 92-117 In the Marriage of Biltoft (1995) 19 Fam LR 82 In the Marriage of Chester (1995) 19 Fam LR 281 In the Marriage of Columb (FamCA, Fogarty J, 27 November 1987, unreported) In the Marriage of Coomes (1995) FLC 92-558 In the Marriage of Harris (1993) 16 Fam LR 579 In the Marriage of Poletti (1990) 15 Fam LR 794 In the Marriage of Rowell and Rowell; Deputy Federal Commissioner of Taxation (Intervener) (1989) 96 FLR 449; (1989) FLC 92-026 In the Marriage of Tiley (1980) 6 Fam LR 528 In the Marriage of Wilson (1989) 13 Fam LR 205 In the Marriage of Zschokke (1996) 20 Fam LR 766 Lewis v Nortex Pty Ltd (In Liq) (NSWSC, Hamilton J, 16 February 2004) Liati v Warren (1995) DFC 95-161 Official Trustee in Bankruptcy v Donovan (1996) 20 Fam LR 802 Paris King Investments Pty Ltd v Michael Norman Rayhill [2006] NSWSC 403 Parker v Parker (1992) 16 Fam LR 458, DFC 95-123 Prince v Prince (1984) 54 ALR 467; (1984) 69 FLR 150; (1984) 9 Fam LR 481; (1984) FLC 91-501 R v Dovey; ex parte Ross (1979) 141 CLR 526 Semmens v Commonwealth (1989) 13 Fam LR 715; [1990] FLC 92-116 Southern Cross Exploration NL v Fire & All Risks Insurance Co Ltd [1985] 1 NSWLR 114 Thomson Australian Holdings Pty Limited v Trade Practices Commission (1981) 148 CLR 150 Thomson Publications Australia Pty Limited v Trade Practices Commission (1979) 27 ALR 551 Dickey, Interim Financial Provision for Litigation Expenses: In the Marriage of Zschokke (1997) 11 AJFL 231
PARTIES:	2564/05: Paris King Investments Pty Ltd (first plaintiff) Louise Ann Karen Lewis (second plaintiff) Michael Norman Rayhill (first defendant) Syfurn Pty Ltd (second defendant) Colleen Anne Rayhill (third defendant) 3029/06: Colleen Anne Rayhill (plaintiff/wife) Michael Norman Rayhill (defendant/husband)
FILE NUMBER(S):	SC 2564/05; 3029/06
COUNSEL:	2564/05: Mr V Bedrossian (plaintiffs) Mr D E Grieve QC & Ms D M Coulton (first & second defendants) 3029/06: Mr J R Dupree (plaintiff/wife) Mr D E Grieve QC & Ms D M Coulton (defendant/husband)
SOLICITORS:	2564/05: Bellissimo & Associates (plaintiffs) Coyne & Whittemore (first and second defendants) 3029/06: Russo & Partners (plaintiff/wife) Coyne & Whittemore (defendant/husband)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRERETON J

Monday, 5 June 2006

2564/05 Paris King Investments Pty Limited & anor v Michael Norman Rayhill & 2 ors

3029/06 Colleen Anne Rayhill v Michael Norman Rayhill

JUDGMENT (ex tempore)

1 HIS HONOUR: In proceedings 2564 of 2005, which I shall call "the Trust Proceedings", the plaintiffs Paris King Investments Pty Ltd and Louise Anne Karan Lewis - who claims to be beneficially entitled to one half of the equity shares in Paris King, pursuant to trusts said to have been originally established by her father John Lewis, and her mother the third defendant Colleen Anne Rayhill, whom I shall call "the Wife" - allege that, in breach of her fiduciary duties as a director of Paris King and/or in breach of her duties as trustee of those trusts, the Wife in 1980 acquired from Paris King, in her own name and at an undervalue, that company's property at 42A Bay Street, Mosman, and that she has since applied it, or property into which it can be traced, to the acquisition in her own name of a property at Erina (which she retains), the acquisition of a property at Kenthurst (in the name of Apinville Pty Ltd, apparently upon trust for herself and her descendants), and a loan to the second defendant Syfurn Pty Ltd of some $800,000, upon the security of a mortgage by Syfurn to her which remains unregistered, and which I shall call "the Wife's Syfurn mortgage". The plaintiffs further allege that those breaches of trust and/or fiduciary duties were aided, abetted, counselled or procured by the Wife's second husband, Michael Norman Rayhill, whom I shall call "the Husband", and they claim declarations that the Wife holds the Erina property and her Syfurn mortgage upon trust for one or other of them, and equitable compensation - presumably corresponding to the difference between the value which the Mosman property would have had today, and the value of such property as can be recovered and restored to the company or the trusts.

2 On 31 March 2006, on the application of the plaintiffs, in a judgment with which these reasons should be read [Paris King Investments Pty Ltd v Michael Norman Rayhill [2006] NSWSC 403], I made interlocutory orders to the effect that Syfurn be restrained from alienating, encumbering, further encumbering or otherwise adversely dealing with the property comprised in folio identifier B/108585 (which I shall call "folio B"), and that the Wife be restrained from doing any thing or taking any step calculated to diminish the value of her shareholding in Syfurn, including by causing permitting or suffering the assets of Syfurn or any of them to be paid (by way of loan or otherwise) to, or used as security for obligations of, herself or any director or shareholder of Syfurn. At that time, I expressly reserved liberty to the Husband and Syfurn to apply for any interlocutory variation of those orders, and in particular for an order which would permit the raising of funds for the defence of these proceedings, as in the first instance the order would not make provision for defence costs. On 28 April 2006, Syfurn, pursuant to that leave, made application for an order permitting it to borrow $341,550 on the security of its property at 553 New Canterbury Road, Dulwich Hill; it is that motion which is now before the Court.

3 Proceedings 3029 of 2006, which I shall call "the Matrimonial Proceedings", are proceedings for alteration of property interests pursuant to Family Law Act 1975 (Cth), s 79, between the Husband and the Wife. On 16 May 2006, the Family Court (Le Poer Trench J) made an order pursuant to the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth), transferring those proceedings to this Court, to be listed with the Trust Proceedings. At the time of their transfer, there were pending interlocutory applications in the Matrimonial Proceedings by the Husband for orders permitting the raising of $1.2 million on the security of Syfurn's properties for loan to him and the Wife to fund their costs of the Matrimonial Proceedings, and by the Wife for orders requiring the Husband to raise on the security of Syfurn's properties a sum sufficient to discharge all existing encumbrances and then to pay her $600,000 (for the purpose of funding her costs of the Matrimonial Proceedings).

4 Consequent upon the transfer order, Mr Grieve QC, who with Ms Coulton appears for the Husband and Syfurn, sought and was granted leave to amend Syfurn's motion, so as to seek orders to the effect (a) that the Trust Proceedings be heard with the Matrimonial Proceedings, (b) that Syfurn be at liberty to mortgage its properties at 553, 565 and 567 New Canterbury Road, Dulwich Hill to secure repayment of loans (in addition to those the subject of existing mortgages) totalling $1.2 million and to advance the proceeds equally to the Husband and the Wife to enable them to meet their costs of the consolidated proceedings, and (c) directions for the further conduct of the proceedings. Mr Bedrossian, who appears for Paris King and Louise, whom I shall also call "the Plaintiffs", opposes the variation of the injunctions granted on 31 March 2006 to permit compliance with order (b) now proposed in the amended motion. Mr Dupree on the other hand, who appears for the Wife, at least in the Matrimonial Proceedings, supports the Husband's application in that respect.

5 However, Mr Dupree at first limited his appearance to the Matrimonial Proceedings. He announced, as was the case, that the Wife had never filed an appearance in the Trust Proceedings, and had not done so in order to avoid exposure to costs. In the course of the hearing, I made an order that the proceedings be heard together, and that evidence in one be evidence in the other. As Mr Dupree opposed that course, and Mr Bedrossian submitted that the Trust Proceedings should be heard before the Matrimonial Proceedings, I shall briefly state my reasons for so ordering.

6 First, as will become apparent, the most significant asset of the matrimonial parties is their shareholding in Syfurn. The first step in the alteration of property interests between spouses is the identification and valuation of the matrimonial estate - that is, the property and liabilities of the parties. In the context that their most significant property is their shareholdings in Syfurn, the existence of any liability of Syfurn to the Wife and/or the Plaintiffs will be an issue - and an important issue - in the Matrimonial Proceedings. In that way, the issues in the Trust Proceedings are intertwined with the valuation issues in the Matrimonial Proceedings. Indeed, the apportionment issues between the Husband and the Wife - although they include contentions about special contributions, waste, and the extent of each party's respective financial and non-financial contributions - are unexceptional; the pool issues, including in particular those relating to the Syfurn mortgage, are likely to form a very significant, if not decisive, part of the matrimonial litigation.

7 Mr Dupree at least at one stage submitted that what he called "the debt claim" - by which I understood him to encompass the question of whether Syfurn was indebted to the Wife, and thus essentially the validity and effect of the Wife's Syfurn mortgage, but to exclude the questions whether there was a trust, and any question of breach of trust and accessorial liability - could be decided in a hearing of a day or two, and once decided would define the matrimonial pool and might well result in resolution of the remaining litigation. But such a determination would not resolve the third party claims, and so would not define the matrimonial pool at all - because, if the mortgage were held to be enforceable, then it would be a liability of Syfurn's, but an asset of the Wife's, so that the matrimonial pool would remain unchanged. Thus the matrimonial pool could not be defined until it was determined whether or not the mortgage, if enforceable, was held by the Wife for herself, or upon trust for the Plaintiffs. It would remain necessary to determine the third party claims - including the issues of trust, breach of trust and accessorial liability - before the matrimonial property case could be resolved. Moreover, the history of the litigation to date provides little ground for optimism that determination of a single issue would lead to resolution of the whole litigation.

8 Secondly, two additional circumstances accentuate the interconnection of the issues in the Trust Proceedings with those in the Matrimonial Proceedings. The first is the defence of impoundment raised by Syfurn and the Husband: they contend that Louise has been complicit in any breach of trust, and that her beneficial interest should be impounded. If that argument succeeds, then any property that is prima facie held upon trust for the Plaintiffs and excluded from the pool available for division between the matrimonial parties may be restored to it. The second is that if, as appears to be the case, the settlement of Paul's claim against the Wife was on terms that the Wife acquired his interest in Paris King, then she will be indirectly entitled to half of the benefit of any claim which the Plaintiffs may sustain against her.

9 Thirdly, the circumstances of the alleged breach of trust and the Barnes v Addy claim will necessarily involve exploration of significant tracts of matrimonial history, which will also have to be explored in the Matrimonial Proceedings to determine how in justice and in equity the remaining property and liabilities of the matrimonial parties should be divided.

10 Finally, the Husband and the Wife separated in April 2000 and, since later that year, have been engaged in the Matrimonial Proceedings, until recently in the Family Court of Australia, which have been contentious and protracted. The Husband alleges that the plaintiff's claim in the Trust Proceedings is brought in concert with the Wife, in order to defeat his claim for property adjustment in the Matrimonial Proceedings. The Trust Proceedings were instituted in this Court by Louise and her brother Paul in 2000, then as proceedings 5002 of 2000, and in or about late 2001, were transferred to the Family Court of Australia, where they were either actually, or treated as, consolidated with the s 79 proceedings in that court. Paul's claim, corresponding with Louise's claim in these proceedings, was apparently settled in the course of the proceedings in the Family Court. Louise's claim continued there, in conjunction with the Matrimonial Proceedings, until March 2005 when, on the objection of the Husband - who had initially sought to have all proceedings transferred to and heard in the Family Court - O'Ryan J held that that court did not have jurisdiction to entertain them. Thus, in the judgment delivered on 8 March 2005, his Honour refused leave to the present plaintiffs to intervene in the proceedings in the Family Court, dismissed the application which had been filed on their behalf, held that that court had no jurisdiction to entertain the claims now sought to be agitated in the Trust Proceedings and, alternatively, held that even if that court had had jurisdiction, it would have been appropriate to transfer the Trust Proceedings to this Court. On 1 August 2005, Boland J in the Family Court extended time for Louise and Paris King to appeal from the orders of O'Ryan J. The Full Court of the Family Court has since heard the appeal, but judgment has not yet been delivered. In short, the progress of the litigation to date has been hindered by jurisdictional differences and the clashing requirements of litigation in different courts. No doubt the difficulties were exacerbated by the orders of this Court of 31 March this year. For a substantial period, however, all parties appear to have proceeded on the basis that the issues were all part of one dispute and would be resolved together. The parties to these intertwined disputes are entitled to a just, quick and as inexpensive as practical resolution of their disputes, by the mechanism that our laws have put in place for that purpose, so they may get on with the rest of their lives. Now that all these proceedings are together in one court, which undoubtedly has jurisdiction to deal with all of them, that end is most likely to be secured if they all proceed together, and it was plainly with that in mind that the Family Court transferred the Matrimonial Proceedings to this Court.

11 It was for those reasons that during the hearing on 2 June, I ordered that the Trust Proceedings and the Matrimonial Proceedings be heard together and that evidence in one be evidence in the other. I turn then to the application for the order permitting the matrimonial parties to raise $1.2 million on the security of Syfurn's property.

12 The application in its present form is, in substance, one for preliminary provision for litigation costs in the Matrimonial Proceedings. However, to the extent that it otherwise might succeed, it would also require the variation of the interlocutory injunction against Syfurn, and of the Mareva injunction against the wife. As I explained in my earlier judgment, the order made on 31 March against Syfurn is a conventional interlocutory injunction by way of preservation of a proprietary claim pending hearing, whereas the order against the Wife is a Mareva order.

13 The circumstances and basis on which interlocutory relief is granted means that it is not to be regarded as immutable pending the final hearing, but may be reconsidered when the justice of the case so requires. To warrant reconsidering interlocutory relief will usually require that there has been some relevant change of circumstances since it was last granted or considered, which change may bear on the criteria governing the grant of interlocutory relief - typically, whether there was a seriously arguable case for relief, or the balance of convenience. As Bryson J said in Elders Rural Finance v Westpac (NSWSC, 24 May 1989, unreported), the nature of claims for interim injunctions means that they are usually made on a basis which admits of some debate or reargument, though repeated returns to the Court for reconsideration of a claim for an interim injunction cannot be regarded with favour. Nonetheless, there are circumstances where reconsideration may well be appropriate and in Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc (1981) 148 CLR 170, Gibbs CJ and Murphy, Aickin, Wilson and Brennan JJ mentioned, at 178, circumstances where new facts had come into existence or were discovered which rendered the enforcement of an interlocutory order unjust. As Bryson J commented in Elders:

Their Honours did not, of course, endeavour to give an exhaustive statement of which reconsideration would be appropriate and it would hardly be possible to do so. However, there ought in my view for this as for other discretionary applications to be some new matter to be raised which could represent a sound and positive ground or otherwise a good reason for embarking upon reconsideration.

14 In my opinion, as outlined in Harrison Partners Construction Pty Ltd v Jevena Pty Ltd [2005] NSWSC 1225, [16]-[17], acknowledging that it is impossible to state a principle capable of universal application, nonetheless the general rule is that interlocutory relief is not to be reconsidered if all that is involved is a review on the same facts as prevailed when it was originally granted or declined or on facts which ought then reasonably have been in contemplation, but that if new facts have emerged which may affect the arguability of the case for final relief or the balance of convenience, then the grant of interlocutory relief may be reconsidered. If it were not so, it would be open to a defendant to make repeated applications for variation of an interlocutory injunction, requiring consideration of the matter de novo, for no stronger reason than dissatisfaction with the previous decision [Harrison Partners Construction Pty Ltd v Jevena Pty Ltd, [13]].

15 Some more particular rules have sprung up in relation to the variation of Mareva orders. Some cases suggest that where a defendant applies to vary a Mareva order to permit legitimate expenditure such as legal costs, at least where the order binds part only of the defendant's assets, the defendant bears some onus of showing that there are no other assets to which resort might be had to pay the legal costs, and that the proposed expenditure is reasonable [A v C (No 2) [1981] 2 All ER 126 (Goff J); Clout (Trustee) v Anskor Pty Ltd [2001] FCA 174, [19]-[20] (Drummond J); Goumas v McIntosh [2002] NSWSC 713, [22] (Barrett J)]. Other cases suggest that, at least where the order relates to the whole of the defendant's property, the order should be imposed in terms which exempt reasonable living and legal expenses, or be modified to do so at the first opportunity [Clark Equipment Credit of Australia Ltd v Conto Factors Pty Ltd (1988) 1 NSWLR 552, 569; Frigo v Culhaci (NSWCA, 17 July 1998)]. In the context of an application to vary a Mareva order to release funds, demonstration that circumstances have sufficiently changed to warrant reconsideration of the matter will normally involve showing that there is a new need for expenditure which cannot be satisfied other than by resort to the frozen assets. While that onus does not necessarily require the applicant to account for all its expenditure from its other assets and resources, how it has spent its other resources may be relevant to the exercise of discretion, and if resources that could have been used for the purpose proposed have been expended wantonly, that may well weigh against permitting access to the asset that has been the subject of the preservation order [Harrison Partners Construction Pty Ltd v Jevena Pty Ltd [2006] NSWSC 317, [11]-[14]].

16 Although this is a case in which the interlocutory order against Syfurn binds only a specified part of Syfurn's property, namely 553 New Canterbury Road, Dulwich Hill, that order is not, as I have explained, a Mareva order. The order, which is a Mareva order, against the Wife, also binds only part of her property, namely her interests in Syfurn. But much more significantly, I expressly reserved leave to Syfurn and the Husband to make an application of this kind when I made the order on 31 March, because in the urgent circumstances of the previous hearing, consideration was not able to be given to provision for defence costs. Moreover, the Matrimonial Proceedings are now in this Court, with the consequences, first, that additional and different considerations now arise on the application for interim provision for litigation costs and, secondly, that it is possible now to balance in these proceedings the interests of the matrimonial parties with those of the plaintiffs. In those circumstances, I am satisfied that it is plainly appropriate to reconsider the interlocutory relief granted on 31 March.

17 That reconsideration should commence, however, from the starting point of the earlier decision. No party suggested that any other approach should be taken [cf Harrison Partners Construction Pty Ltd v Jevena Pty Ltd, [21]].

18 In my previous judgment, and after reference also to the balance of convenience and other discretionary factors, I concluded:

· First, that there was a seriously arguable case that the Wife is entitled to a mortgage, substantially to the effect of her unregistered Syfurn mortgage, over folio B; that it was also seriously arguable that the Wife held that mortgage upon trust for Paris King or, at least as to half of it, for Louise; and that the plaintiffs had a seriously arguable case against Syfurn on the basis that either Paris King, or the Louise Trust as to 50 percent, was beneficially entitled to the Wife's Syfurn mortgage, securing what is now probably in the order of $1.6 million, and thus have a proprietary interest, in the nature of a security as equitable mortgagee, in Syfurn's property in folio B. Thus the plaintiffs have established a case for an interlocutory injunction restraining Syfurn from acting in a manner inconsistent with their rights under the Wife's Syfurn mortgage, or which would defeat the claimed priority of that mortgage. That injunction, as I have said, is not a Mareva injunction, but a traditional interlocutory injunction preserving, on an interlocutory basis, the rights which the plaintiffs seek to enforce on a final basis. It is in aid of a proprietary right, namely, their claimed interest as a secured creditor of Syfurn, but is properly to be limited only to folio B, and does not extend to all of the Syfurn properties.

· Secondly, that the plaintiffs also have a seriously arguable case against the Wife for equitable compensation, of at least in the order of $2 million (if due to Paris King) or $1 million (if due to the Louise Trust). Thus the plaintiffs have established a case for a Mareva injunction against the Wife, restraining her from dealing with her assets in a way that would reduce her capacity to satisfy the claim against her for equitable compensation.

· Thirdly, however, I was not prepared to find that the plaintiffs had a seriously arguable case against the Husband, because the sole basis of his liability was said to be that of knowing assistance, and the evidence did not suggest that he knew of the existence of the relevant trusts so as to be capable of being implicated in knowingly assisting a breach of them. Thus there was no case for an injunction against the Husband, although the practical effect of an injunction against Syfurn and against the Wife would probably be to prevent him too from using assets of Syfurn to raise funds for his own personal costs (though he would remain free to use his own shareholding in Syfurn, if he could raise funds on the security of his own shares, as distinct from on the security of Syfurn's assets for that purpose). This was not the result of finding any arguable case against him in respect of knowing assistance of the Wife's breach of trust, but a consequence of the circumstance that the assets of Syfurn were not his own, and the plaintiffs’ claims were such as to justify prohibiting Syfurn from using its assets to secure separate borrowings of its shareholders for their private purposes.

19 Although some attempts were made to revisit the strength of the cases, which I had found to be sufficiently arguable to support an interlocutory injunction, I did not understand Mr Grieve to submit that I should no longer be satisfied that there was a serious question to be tried against Syfurn and the Wife. Whilst some further evidence has emerged - in the form of a deed of about 1997 between the Husband, the Wife and Syfurn, which recites the circumstances in which the instrument of mortgage was apparently executed (which appears to have been in 1998, not 1992 as I incorrectly suggested in my previous judgment), it does not detract from the other matters referred to in paragraphs 29 and 30 of my previous judgment and, in particular, the handwritten document of May 1992.

20 However, it does suggest that the quantum of the claim may be reduced. In the light of the 1997 deed, it seems likely that on 28 January 1998, the Wife borrowed $800,000 from Citibank, partly for the purpose of refinancing her (or Paris King's) Mosman property, and partly for the purpose of assisting Syfurn, and that, as part of the advance was to be used for the benefit of Syfurn, the Wife took a mortgage from Syfurn in substantially identical terms to her mortgage to Citibank. The Syfurn mortgage does not state the amount of the advance (although it is stamped to $800,000), and the deed envisages that there will be an accounting between the parties for the amounts advanced by Syfurn for the benefit of the Wife, against the loans by the Wife to Syfurn. This does not seem to me to change the position that the starting point was an advance of $800,000 in 1992, as recorded in the handwritten document, with subsequent advances of at least $75,000 and possibly more for the benefit of Syfurn, but it does reinforce the possibility that there have been offsetting loans reducing the total amount owed by Syfurn to the Wife. On the other hand, Mr Bedrossian has provided some calculations which tend to show that my estimate, that with market interest the original advance of $800,000 might now at least have doubled, may be conservative, although those calculations are themselves somewhat overstated by use of judgment as opposed to market interest rates, or by the use in some cases of compound interest where the handwritten document did not provide for compounding. Ultimately I remain of the view that there is an arguable claim against Syfurn for at least about $1.6 million. It may well turn out to be less, and it may turn out to be more, but on the available evidence, a claim for that amount is seriously arguable.

21 What is perhaps more significant is that, given the terms of the settlement between Paul and the Wife, it would seem that the Wife is now entitled to half of the equity shares in Paris King, so that half of the benefit of the Plaintiffs’ claim against her will return in that way to the matrimonial estate.

22 An attempt was made late in the proceedings to revisit my refusal to find a serious question to be tried on the Barnes v Addy claim against the Husband, when Mr Dupree, at the close of submissions in reply, endeavoured to reopen to consider evidence which was said to go to that issue. I rejected that application, and I remain of the view that, on the material before me, no seriously arguable case against the Husband in that respect is demonstrated. This judgment proceeds on that basis.

23 Syfurn's assets, so far as the evidence goes, comprises three properties in New Canterbury Road at Dulwich Hill: Number 553, which is folio B; number 565, which is lot 4; and, number 567, which is lot 5. Syfurn previously also owned number 569, which is lot 6, but a mortgagee sold lot 6 in late 2005 or early 2006 for about $375,000, and after discharge of the mortgage and payment of costs, there remained a surplus of about $35,000, which is now held by or under the control of the solicitors for the matrimonial parties.

24 As to Folio B, there are three valuations. The most recent, obtained by the plaintiffs from LJ Hooker on 31 May 2006, is $2.8 million; it is a "drive-by" opinion, with no supporting detail or sales evidence, and for that reason is entitled to little weight. The other two are formal valuations. Mr Brook valued the property, it appears, as a jointly instructed valuer in the Matrimonial Proceedings, as at 5 May 2004; he expressed the view that the property was worth $5.1 million. RV Dimond valued the property, it seems, for the Husband (although the valuation was tendered in these proceedings by the plaintiffs) on 15 August 2005, for $3.29 million. While this dispute cannot and should not be resolved on an application of this type, yet I must form some view as to the value of Syfurn's assets to inform my decision. I do not accept Mr Bedrossian's submissions that either of those valuations is vitiated by the lapse of the development approval. The development approval had lapsed before each of those valuations was performed. Both valuers referred to the circumstance that there had been a development approval that had lapsed; both thought it likely that another substantially equivalent development application could be obtained under existing zoning, and there is nothing before me to contradict that. Prima facie, however, the sales evidence relied on by Mr Brook does not appear to support the assumptions he makes as to proceeds of sale for the purpose of his hypothetical development. On the limited material present before me, I do not think that for present purposes I can safely act on the basis that Folio B is worth more than the $3.29 million attributed to it by RV Dimond. It is subject to a registered first mortgage securing a debt now of, the parties agree, about $1.35 million; thus the equity, before any claim under the Wife's Syfurn mortgage, is $1.94 million.

25 Lots 4, 5 and 6, which are similar though not identical in size, were valued by Mr Brook as at 5 May 2004 en globo at $1,050,000, on the basis of sale in one line for redevelopment; while that implies $350,000 approximately for each lot, it may be less if the lots are sold separately. However, Lot 6 was in fact sold separately, for about $375,000, and although there is a cottage on it, the cottage did not contribute any additional sum to Mr Brook's valuation. The recent LJ Hooker "drive-by" opinion is that each is worth $250,000, but that is quite out of line with the sale of Lot 6. I think I can act on the basis that Lots 4 and 5 are worth at least $350,000 each. They are subject to a registered first mortgage securing a total of $250,000; thus, the equity in them is about $450,000.

26 Upon sale of Lot 6, a surplus of $35,000 was, as I have mentioned, deposited with or under the control of the solicitors for the matrimonial parties; and when that is added, it follows that the total equity in Syfurn may be in the order of about $2.425 million, before any allowance is made for the Wife's Syfurn Mortgage.

27 I was informed from the Bar table, without objection, that the other assets of significance of the matrimonial parties are said to be:

· the Wife's Erina property, said to be worth about $1.2 million and subject to a mortgage securing about $1 million, so that the equity would be about $200,000;

· the Wife's property at Kenthurst, said to be worth about $2 million and subject to a mortgage securing about $1.7 million, so that the equity would be about $300,000;

· a motor vessel, which the Husband alleges the Wife owned and may have disposed of, said to be worth about $700,000. At this stage, there is no evidence before me as to whether the motor vessel is in fact owned or retained or has been old or what is its present value, as distinct from what its cost price is, and if sold, what has become of the proceeds;

· the Husband's half interest in a block of residential flats at Ashfield. Mr Brook values this property as at 21 March 2006 at $783,153, after allowing for costs of renovation. He makes no provision for risk or time associated with the renovations. The Husband has only a half interest, as joint tenant with his daughter, and is obliged to pay half of the income of his share to his aunt during her lifetime. He is in dispute with his aunt, who has lodged caveats in respect of the title. For present purposes, I will assume that the Husband's interest is worth about $350,000, but there is no realistic practical prospect of it being a resource from which funds can be realised in the short-term.

28 If all these values were established, there would be a net matrimonial estate of about $3.975 million. However, in addition to the liabilities of the parties already taken into account above, there are the claims of the plaintiffs, which if established, may result in Syfurn having a liability to them in the order of $1.6 million, secured on Folio B, and the Wife being liable to them for equitable compensation for a further amount in the order of $2 million. I do not overlook that such interest as the Wife has in Erina and Kenthurst may in that event be held on trust for the plaintiffs, but that would pro tanto satisfy the claim for equitable compensation and is subsumed in the assessment of the total potential liability at about $2 million. On the other hand, should the plaintiffs sustain those claims, it is probable that the Wife, if entitled to half the equity in Paris King, would have an asset worth $1.8 million, which would be restored indirectly to the matrimonial estate. All of this would result in a net matrimonial estate of about $2.175 million.

29 The juridical bases for an order for preliminary provision for litigation costs in matrimonial proceedings are diverse. Such an order may be made as a costs order under Family Law Act, s 117, or as an interim or partial property order under s 79 and s 80(1)(h), or perhaps as a maintenance order under s 74 [see In the Marriage of Poletti (1990) 15 Fam LR 794; Breen v Breen (1990) 65 ALJR 195; Parker v Parker (1992) 16 Fam LR 458, DFC ¶95-123 (a decision of Bryson J in this court, upheld in the Court of Appeal); and In the Marriage of Zschokke (1996) 20 Fam LR 766].

30 The Full Court of the Family Court of Australia reviewed the authorities and principles relating to the making of interim provision for litigation costs in Zschokke. That case establishes that it is important, when contemplating an order for interim provision for litigation expenses, to identify the relevant source of power - because it is the source of power that determines the necessary preconditions and relevant considerations for making the order. Thus, where an interim order for litigation expenses is to be made as an interim costs order under s 117(2), and probably also if it is to be made as a maintenance order under s 74, there are at least three requirements: first, a position of relative financial strength by the respondent; secondly, a capacity on the part of the respondent to meet his or her own litigation expenses; and thirdly, an inability by the applicant to meet her or his litigation expenses from her or his own income assets or financial resources. In addition, it has been said that such an order should be made only if the applicant has at least an arguable case for substantive relief which deserves to be heard [In the Marriage of Chester (1995) 19 Fam LR 281, 287], and that there should be evidence of what the applicant's likely costs of the litigation [In the Marriage of Wilson (1989) 13 Fam LR 205, 208-9; Chester, 288]. But it is not an essential precondition to the making of a such an order that an applicant first prove that his or her legal representatives will not continue to act unless their costs are paid or secured on an ongoing basis [In the Marriage of Columb (Family Court of Australia, Fogarty J, 27 November 1987, unreported); but cf In the Marriage of Coomes (1995) FLC ¶92-558, in which Cohen J declined to make an order where the Wife's lawyers had expressly said that she would not be required to pay their costs until she had received funds from the final property order].

31 Although there is some authority for the view that financial provision for litigation expenses should be calculated in accordance with the authorised scale of costs [Chester, 288], the better view – consistent with the approach that in my view applies in Mareva cases, that a party’s recourse to its assets for the purpose of funding its defence should not be limited to the bare minimum [Harrison Partners Construction Pty Ltd v Jevena Pty Ltd [2006] NSWSC 317, [11], and see [50] below] - is that a Court may make provision for litigation expenses at a rate that appears reasonable in all the circumstances [A Dickey, “Interim Financial Provision for Litigation Expenses: In the Marriage of Zschokke” (1997) 11 AJFL 231, 233]. While there is some dispute whether, at least where s 117 is the source of power, an order can be made which provides for past costs, as distinct from future costs - in Liati v Warren (1995) DFC 95-161, Master McLaughlin (as his Honour then was) declined to order provision to cover costs already incurred - the distinction is often semantic in practice, where there is a running account between solicitor and client for the ongoing costs of legal proceedings, though it may be relevant in calculating the amount of an order. As the practice of making orders for interim costs derives from the earlier practice of requiring husbands to provide security for their wives’ costs, and as it is established that security for costs may be ordered in respect of costs already incurred as well as of future costs [Southern Cross Exploration NL v Fire & All Risks Insurance Co Ltd [1985] 1 NSWLR 114], in my opinion an order can be made in respect of costs already incurred, though whether the order is to be in respect of costs already incurred or costs to be incurred, and whether the applicant’s lawyers will continue to act in the absence of provision for costs to be incurred, may be relevant to the discretion to make an order, and its quantum.

32 In Breen v Breen, the High Court emphasised that any such order should be framed to protect the parties from any risk of injustice arising from the manner in which the funds are expended. This is often done by requiring that the funds be administered solely by the applicant's solicitors and applied only to meet the expenses referred to in the order, with detailed records being maintained to permit review by the Court at the time of the exercise of its discretion in the substantive property proceedings or on the final determination of the issue of costs [Dickey, 11 AJFL 231, 233; Poletti, 795; Parker, 462].

33 But many of the foregoing considerations are less important, though not necessarily irrelevant, where what is relied on as a source of power is not s 117 or s 74, but an interim property order under s 79 and s 80(1)(h). In that respect, the Full Family Court said in Zschokke (780-781) that while the requirements of s 79(2) and (4) must be observed in the same manner as for any interim property order, if it appeared that the applicant would likely receive by way of property settlement a sum sufficient to cover the advance, then an interim order may be made [Zschokke, 780-781; see also In the Marriage of Harris (1993) 16 Fam LR 579, 586].

34 In the present case, Mr Grieve founded his application squarely on the basis that it was one for an interim property order. In such circumstances, although the evidence of the Husband's outstanding and anticipated future legal costs is broad-brush, and the evidence of his financial circumstances limited, the deficiencies in that evidence are less significant than they would be had the application been brought under s 117 or s 74.

35 So far as his financial circumstances are concerned, the evidence and admissions made in the course of the proceedings establish that he is a solicitor, but that his practice is practically, if not entirely, defunct, and that he receives a very small amount of rents from his interest in the Ashfield property. There is some evidence that he has unpaid legal costs of about $370,000. His anticipated future costs of preparing for and conducting a ten-day trial in these proceedings are said to be $392,900. That evidence does not descend to much detail, but the estimate includes the costs of two counsel and a solicitor at fees significantly above the scale authorised by the Family Law Rules 2004 (Cth), Sch 3, Pt 2. As I have said, all else being equal, that does not mean that the claim should not be allowed, nor that the Husband should not be entitled to incur costs at that level, but it becomes relevant when balancing the competing interests of the parties.

36 There is no evidence before me of the Wife's costs to date, nor of her anticipated costs. However, it appears to be common ground that the final hearing will be in the order of ten days - perhaps longer - and will require a considerable amount of preparation. It appears that a gross pool of property of about $4 million, and a net pool perhaps of around $2 million, is in issue. It is obvious that the matrimonial history is lengthy and contentious; that there will be complex issues concerning the plaintiffs' trust claim and the Wife's Syfurn mortgage; and that third parties will be involved. Even allowing only a total of $10,000 per day per side for a ten day trial would produce $100,000 each; and preparation and interlocutory applications would probably double that.

37 It appears probable that the parties in these proceedings will require a determination of the Court, following a lengthy, complex and expensive contested hearing, to resolve their disputes. They are entitled to no less, and in order for each of them to achieve justice and for the Court best to afford them it, it is highly desirable that they have the benefit of competent legal representation. That necessarily comes at a cost, but it is a cost that has to be incurred if justice is to be done.

38 This was a relatively lengthy marriage. If the plaintiffs' claim were for the moment disregarded, and although I know little about the cases of each of the matrimonial parties yet, I can proceed fairly safely on the basis that, though it certainly could not be assumed that each party would probably receive 50 percent of the pool, I can comfortably conclude that it is highly likely that each will receive at least $250,000 from a prospective net pool of in the order of $2 million.

39 Accordingly, as between Husband and Wife, I would conclude that there were sufficient grounds for making an order under s 80(1)(h) which had the effect that each party receive, on account of their ultimate property entitlement, a sum equivalent to about $200,000.

40 The position is complicated at this point by the circumstance that neither has a realisable asset from which such an order could be satisfied, save their shares in Syfurn. Cases such as R v Dovey; ex parte Ross (1979) 141 CLR 526; and In the Marriage of Tiley (1980) 6 Fam LR 528, make clear that it is no objection to an order against a spouse who happens to be a company director that the order may affect the spouse in the performance of his or her functions as a company director (or for that matter shareholder). An order binding a person who is a company director or shareholder enjoins him or her in that capacity from exercising or to exercise his or her voting power in a particular way, though it may have a practical impact on the company, and even if it indirectly affects the rights of the company, is not beyond power, although those circumstances are relevant to the exercise of the discretion to make the order. In R v Dovey, Gibbs J (as he then was) said, of the broad statutory power in the Family Law Act, s 114(3), to grant an injunction “in any case in which it appears to the court to be just or convenient to do so and either unconditionally or upon such terms and conditions as the court considers appropriate”, (at 533):

… it was submitted that the circumstance that the home was owned by the company meant that the court lacked jurisdiction. It was said that there is no jurisdiction in the Family Court to restrain a third party (even a family company) from dealing with its own property, and no jurisdiction to achieve that object by restraining a husband, in his capacity as a director or shareholder, from exercising his voting power as such in a particular way. However, it is not right to say that the order sought by the wife and made by the learned judge in the present case prevents the company from dealing with its own property. The order is not directed to the company and does not bind it. It is true that the practical effect of the injunction will be that there will be no sale, but that will be because the husband, who controls the company, is prevented from exercising his control in such a way as to bring about a sale, and not because the company is forbidden to do anything which those who control it have resolved to do. Even if the injunction did indirectly affect the rights of the company, that would not mean that it was beyond power: see Sanders v Sanders (1967) 116 CLR 366; [1968] ALR 43 and Antonarkis v Delly (1976) 51 ALJR 21 at 23–4; 10 ALR 251 at 255; 1 Fam LR 11,334 at 11,337, which, although decisions on the Matrimonial Causes Act 1959 (Com), provide a guide to the meaning of the present Act.

The alternative argument on behalf of the husband was that there is no jurisdiction to make an injunction which would circumscribe the performance by the husband of his fiduciary duties as a director of the company — which, it was said, include a duty to take account of the interests of the creditors of the company: see Walker v Wimborne (1976) 50 ALJR 446 at 449. There is no justification in the words of the Act, or in principle, for limiting the jurisdiction of the Family Court in the manner suggested. Once the proceedings are found to be of the kind referred to in para (c) or para (e) of the definition, the court has jurisdiction, and the fact that the husband may be affected in the performance of other duties which do not arise out of the matrimonial relationship, although relevant to the question how the jurisdiction should be exercised, is no ground for holding that jurisdiction does not exist. In a case such as the present the argument has an air of unreality. It is impossible to suppose that the Parliament intended that a husband might place the matrimonial home beyond the jurisdiction of the Family Court simply by vesting it in a private company which he himself controls: such a result would make it impossible for the Family Court properly to perform its functions in many cases.

41 In Tiley, the Full Court of the Family Court (Evatt CJ, Emery SJ and Treyvaud J) said (at 535):

It is established by Re Dovey; Ex parte Ross … that the court has power to restrain a party from using his powers of control over a company to the detriment of his spouse. It seems logical to conclude also that the court could, in an appropriate case, issue a mandatory injunction requiring a party to exercise his powers of control over a company in a particular way, if this was necessary to protect the interests of the other spouse. It does not follow, however, that the court could order the transfer of assets held by a company [ Suli v Suli (1974) 25 FLR 113] or alter the interests of shareholders in the assets of the company, other than those of the husband and wife.
The power to make orders which affect the assets or interests in a company must be used with caution. …

42 In Ascot Investments Pty Limited v Harper (1981) 148 CLR 337, the High Court identified constraints on the ability of the Family Court to make orders which increased the obligations or reduced the rights of third parties, but it did not overrule R v Dovey. The Court held that, although in some circumstances the Court had power to make an order or injunction directed to a third party, third parties may not - except in the case of shams or alter egos - be ordered, either directly or indirectly, to do what they are not legally bound to do, so that a company and its directors (not parties to the marriage) could not be ordered to do something in relation to the shareholding which the Husband, by dint of his shareholding, could not compel them to do. But the Court did not depart from the position adopted in R v Dovey that it was permissible to order a party to a marriage to do whatever was within his power to comply with an order from the Court, even if what he was required to do may have some effect on the position of third parties. Thus, a party to a marriage may be ordered to do whatever is within his or her power to cause a third power (including a company) to do or refrain from doing something, and to exercise his or her voting power to that end, even though to do so may have some effect on the position of the third party. It is true that in Ascot, Gibbs J said that the concluding sentence of the first paragraph in the passage cited above from his Honour's judgment in R v Dovey was unnecessary for the purposes of the decision of that case, "since it does not appear that the rights of the company were in any way affected by the order made against the Husband", and that the use of the word "rights" in that sentence, taken from the two earlier cases, was not strictly accurate. But it is notable that his Honour expressed no reservation about any part of the second paragraph in the passage cited from R v Dovey, and as the order in R v Dovey did constrain how the Husband could exercise his voting power as a director, it must follow that his Honour did not regard such a constraint as impermissibly infringing the legal rights of the company. This is unsurprising. In the context of the duties of company directors, while a director is bound to act with care and diligence, and bona fide in the best interests of the company for a proper purpose, that does not mean that the company has a legal right to have the director vote in any particular way on any proposal.

43 These are not quaint idiosyncrasies of the family law, but reflect a general principle, namely that where there is a wide power to grant injunctive relief and the conditions for its exercise are attracted, then although the circumstance that an injunction may affect the party bound in the performance of other duties and obligations is relevant to the question of how the discretion to grant or withhold relief should be exercised, it is no basis for holding that jurisdiction does not exist. Thus, in the context of Trade Practices Act 1974 (Cth), s 80, in Thomson Australian Holdings Pty Limited v Trade Practices Commission (1981) 148 CLR 150, the High Court said that it was no objection to the grant of an injunction or the acceptance of an undertaking that damage would be occasioned by a third party, so long as that damage does not constitute an infringement of that third party's legal rights. In the proceedings in the Federal Court [Thomson Publications Australia Pty Limited v Trade Practices Commission (1979) 27 ALR 551], Deane and Fisher JJ explained (at 565-566) that the circumstance that injunctive relief granted in favour of one party against the other in adversary proceedings might result in damage (short of an unlawful injury) to a third party was not a bar to the granting of the injunction.

44 While these passages, like the qualification by Gibbs J in Ascot of his Honour's remarks in R v Dovey, leave open what is the position if the injunction would require the party bound to act inconsistently with obligations owed by it to a third party, the unqualified paragraph in R v Dovey suggests that that is not an absolute objection to the grant of such an injunction. It is not unknown for injunctive relief to be granted in equity which requires the infringement of legal rights of a third party, or which may put the party bound in breach of obligations to a third party. One common illustration of this is an injunction restraining a breach of a covenant in restraint of trade, compliance of which requires that the party bound breach an employment contract already entered into with a new employer, and could expose him or her to liability for breach of contract to that new employer. Mareva injunctions may result in the party bound being forced into default of obligations that it owes to third parties. That the party bound may effectively be required to default in obligations to a third party does not deny jurisdiction to grant such an injunction, though it is a significant and important discretionary consideration.

45 It follows from that consideration of the authorities to which I have referred that, in my opinion, an order can be made requiring the Husband as sole director of Syfurn, and the Husband and Wife as sole shareholders of Syfurn, to take steps to exercise their powers as such, and in those capacities, to raise funds on the security of Syfurn's assets for the purpose of advancing those funds by way of loan to themselves to fund their costs in these proceedings. Subject to the rights of the plaintiffs to which I shall come, the Court should otherwise make an order which requires the husband and the wife to exercise their powers as director and shareholders of Syfurn to raise on the security of its properties and advance to them equally, charged upon such an order as might be made ultimately in their favour for property adjustment, amounts of up to about approximately $200,000 each.

46 But it is at this point that the interests of the plaintiffs intervene. It remains a relevant and important consideration, in exercising the discretion to make or refuse such an order, that such an order may impact on the rights of third parties - not just of Syfurn, which is the matrimonial parties' alter-ego, but of the plaintiffs.

47 The cases to which I have already referred make clear that the rights and interests of third party claimants such as the plaintiffs must be taken into account. Further, In the Marriage of Rowell and Rowell; Deputy Federal Commissioner of Taxation (Intervener) (1989) 96 FLR 449; (1989) FLC ¶92-026 shows that a third party claimant who has a Mareva injunction over the assets of a matrimonial party is entitled to notice before an order which would have the effect of removing assets from the frozen pool is made, and that the existence of the third party claim is a matter to be taken into account in determining what if any order should be made between the matrimonial parties [see also In the Marriage of Bailey and the Estate of Bailey (1989) 13 Fam LR 652; [1990] FLC 92-117; Semmens v Commonwealth (1989) 13 Fam LR 715; [1990] FLC 92-116; In the Marriage of Biltoft (1995) 19 Fam LR 82; Official Trustee in Bankruptcy v Donovan (1996) 20 Fam LR 802]. In this case, the requirement for notice is satisfied, because the plaintiffs have been given notice and have been heard and have made powerful submissions on the application. As to taking their claim into account, it is also necessary to bear in mind that an unsecured third party claimant does not have any claim to priority over the claim under s 79 of a spouse [Prince v Prince (1984) 54 ALR 467; (1984) 69 FLR 150; (1984) 9 Fam LR 481; (1984) FLC ¶91-501]. Indeed, Rowell seems to admit of an order being made by the Family Court inconsistent with a Mareva order of the Supreme Court, so long as the rights of the third party claimant are taken into account as a relevant discretionary consideration.

48 At present, the plaintiffs have a seriously arguable claim to an interest in the nature of an equitable mortgage, being the Wife's Syfurn mortgage, ranking after the existing registered first mortgage, over folio B. While theoretically an order could be made that any further mortgage for the purpose of raising funds for costs would be on terms that preserved the priority of the Wife's Syfurn mortgage, realistically there is no prospect of funds being advanced by a lender on that basis, and it can be discounted as a practical solution. Any mortgage which took priority over the Wife's Syfurn mortgage would potentially cause irremediable detriment to the plaintiffs by defeating the priority to which their claim as a potential secured creditor would be entitled and reducing the value of their security. I cannot see how in the context of this case that can be addressed in respect of folio B. In short, unless security that took priority to the plaintiffs’ claim was authorised, there will be no utility in making an order authorising dealing with folio B, whereas allowing such dealing would potentially cause irremediable prejudice to the plaintiffs' proprietary rights.

49 Lots 4 and 5 are in a different position. The Wife's Syfurn mortgage does not extend to them. The only restraints on dealing with them are the Mareva injunction made in this Court on 31 March binding the wife and, possibly, although I have not been taken to it, an order earlier made in the Family Court limiting the Husband's capacity to deal with his assets. The plaintiffs’ claims, as I have said, insofar as they support the existing Mareva order against the Wife, are in the nature of unsecured claims for equitable compensation.

50 Generally speaking, the proper legal costs of the defence should be exempted from the scope of an asset preservation order [Clark Equipment Credit of Australia Ltd v Conto Factors Pty Ltd, 569; Glenwood Management Group Pty Ltd v Mayo [1991] 2 VR 49; Frigo v Culhaci]. It is a principle of Mareva relief that it should not be allowed to stultify the proper defence of the proceedings [Clark Equipment Credit of Australia Ltd v Conto Factors Pty Ltd, 569; Lewis v Nortex Pty Ltd (In Liq) (NSWSC, Hamilton J, 16 February 2004)]. In this context, the proper legal costs of the defence should not be viewed in any narrow way, and are not limited to the bare minimum allowable on a party/party taxation or assessment. The proper purpose of the Mareva jurisdiction is not to confer on the plaintiff any priority or security or anticipatory execution, nor to constrain the legitimate conduct of the defendant, but only to prevent an abuse by the defendant of its dispositive power in a manner calculated to produce the result of defeating an anticipated judgment in favour of the plaintiff. Generally, it is not an abuse of a defendant's dispositive power to fund its own defence, even on a lavish scale, so long as the expenditure is bona fide for that purpose. Courts should not deny such expenditure, even if the defence chooses to engage the most expensive law firm and counsel, unless the expenditure is not bona fide for the purpose of defending the proceedings [Harrison Partners Construction Pty Ltd v Jevena Pty Ltd [2006] NSWSC 317, [11]].

51 No solution to the present situation satisfactorily provides for the requirements of all parties, nor avoids prejudice to any. However, while any useful variation of the injunction in respect of folio B would potentially cause irremediable prejudice to the plaintiffs' proprietary rights, a variation in respect of lots 4 and 5 would jeopardise only their unsecured claim, and would do so only in the way that any unsecured claim may be affected when a defendant is permitted to use assets, which would otherwise be available to satisfy an unsecured claim, to fund its defence. On the other hand, refusing to make any order at all would deprive both the Husband and the Wife of the wherewithal to conduct this litigation to finality; and, to my mind, making provision for them to do so is of very great importance, in order that they may have a just, quick and as inexpensive as practicable resolution of their disputes by the mechanism which our laws have put in place for just that purpose. In this respect it is not without relevance that the dispute in the Trust Proceedings is a subset of the whole matrimonial dispute, arose contemporaneously with the breakdown of the marriage, and has for the most part travelled with it to this point.

52 In my opinion, the least injustice to all participants is risked if the matrimonial parties are authorised and required to deal with lots 4 and 5 in order to raise funds for their costs of the conduct of the proceedings.

Orders

53 I make the following orders:

1. Order that notwithstanding the orders of 31 March 2006, and notwithstanding any order previously made in the Family Court of Australia which might otherwise prohibit any such dealing, the defendants do all things, execute all documents and give all consents necessary or convenient to cause and permit the sale or refinancing or further mortgage of the properties situate at and known as 565 and 567 New Canterbury Road, Dulwich Hill, and the application of the net proceeds, after discharge if required of any existing mortgage and transaction costs, by way of advance equally to each of the Husband and the Wife, by way of loan to them from Syfurn Pty Ltd, repayment of such loans to be a first charge on the entitlements of each of the Husband and the Wife by way of property settlement in these proceedings.

2. Order that notwithstanding the orders made on 31 March 2006 and notwithstanding any order previously made in the Family Court of Australia which would otherwise prohibit any such dealing, the defendants do all things, execute all documents and give all consents necessary or convenient to cause the application of the sum of $35,000 presently held by or under the control of their solicitors by way of advance equally to each of the Husband and the Wife, by way of loan to them from Syfurn Pty Ltd, repayment of such loans to be a first charge on the entitlements of each of the Husband and the Wife by way of property settlement in these proceedings.

3. Order that costs of the application be reserved.

4. Further order that:

(1) the Husband not cause Syfurn to enter into binding arrangements for any sale refinance or further mortgage referred to in order 1 without having first given 7 days written notice to the Wife’s solicitors of his intention so to do, such notice to specify the parties to, quantum of, and terms of the proposed dealing;

(2) the Husband notify the Wife’s solicitors of any significant development in the implementation of order 1;

(3) the defendants cause the proceeds of any such sale refinancing or further mortgage as is referred to in order 1 to be paid into an account under the joint control of their respective solicitors for application from that account in accordance with order 1.

5. Provisionally fix the matter for hearing before me for two weeks commencing Monday 4 December 2006 (and reserve week of 27 November 2006), and appoint 9.30 on Thursday 20 July 2006 for pre-trial directions.

6. Reserve leave to all parties to apply by arrangement with my Associate in the event of any difficulty arising in implementing order 1, and otherwise for directions in connection with the proceedings.

7. Reserve leave to the Husband to raise any objection to my hearing the matter, such objection to be taken if at all within seven days of this day, by communication with my associate.

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