Pond & Thurga (No 2)

[2007] FamCA 587

FAMILY COURT OF AUSTRALIA

POND & THURGA (NO. 2) [2007] FamCA 587

FAMILY LAW - INJUNCTION - Legal practitioners - Conflict of interest

Family Law Act 1975 (Cth)

Spincode Pty Ltd v Look Software Pty Ltd (2001) 4 VR 501
Geelong School Supplies Pty Ltd v Dean [2006] FCA 1404
Prince Jefri Bolkiah v KPMG [1999] 2 AC 222
Belan v Casey [2002] NSWSC 58
British American Tobacco Australia Services Ltd v Blance [2004] NSWSC 70
Asia Pacific Telecommunications Ltd v Optus Networks Pty Ltd [2005] NSWSC 550
Kallinicos v Hunt (2005) 64 NSWLR 561
McMillan v McMillan (2000) FLC 93-048
Mills v Day Dawn Block Gold Mining Company Ltd [1082] QLJ 62
In the Marriage of Thevanaz (1986) 11 Fam LR 95; FLC 91-748
Magro and Magro (1989) FLC 92-005
Griffis and Griffis (1991) FLC 92-233
Kossatz and Kossatz (1993) FLC 92-386
Grimwade v Meagher [1995] 1 VR 446
Bowen v Stott [2004] WASC 94

WIFE: Ms Pond

HUSBAND: Mr Thurga

SECOND RESPONDENT: Mr Hedger

THIRD RESPONDENT: B Pty Ltd

FOURTH RESPONDENT: X & T Pty Ltd

FIFTH RESPONDENT: S Ltd

FILE NUMBER: SYF 3665 of 2005

DATE DELIVERED: 15 June 2007

PLACE DELIVERED: Sydney

JUDGMENT OF: O'Ryan J

HEARING DATE: 8 May 2007

REPRESENTATION

COUNSEL FOR THE WIFE: Mr Batey with Ms Harris

SOLICITOR FOR THE WIFE: Cameron & Myers

COUNSEL FOR THE HUSBAND: Mr Campton

SOLICITOR FOR THE HUSBAND: York Family Law

COUNSEL FOR THE SECOND, THIRD AND FOURTH RESPONDENTS: Mr Campton

SOLICITOR FOR THE SECOND THIRD AND FOURTH RESPONDENTS: York Family Law

Orders

1. The application of the Husband and the Wife that Minter Ellison Lawyers be restrained by injunction from acting on behalf of the Second, Third and Fourth Respondents in these proceedings be dismissed.

2. The costs of all parties be reserved.

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYF 3665 of 2005

Ms Pond

Wife

And

Mr Thurga

Husband

And

Mr Hedger

Second Respondent

And

B Pty Ltd

Third Respondent

And

X & T Pty Ltd

Fourth Respondent

And

S Ltd

Fifth Respondent

REASONS FOR JUDGMENT

Introduction

1. Before me for hearing is an application by the husband in which he seeks the following:

   12.That the second, third and fourth respondents be restrained by injunction from giving instructions or retaining Minter Ellison lawyers to act on their behalf in these proceedings in the Family Court.

   13.That in the alternative to order 12 hereof, Minter Ellison lawyers be restrained by injunction from acting on behalf of the second, third and fourth respondents in these proceedings.

2. The application is opposed by Minter Ellison. 

3. There are pending proceedings for settlement of property.  In those proceedings the Wife is Ms Pond.  The Husband is Mr Thurga.  The Second Respondent is Mr Hedger.  The Third Respondent is B Pty Ltd.  The Fourth Respondent is X & T Pty Ltd.  The Fifth Respondent is S Ltd.  Minter Ellison are the solicitors for the Second, Third and Fourth respondents.

4. The property proceedings were commenced by application filed on behalf of the Wife in the Local Court at F on 5 July 2005.  The proceedings were later transferred to the Family Court.

5. The final order sought by the Wife is set out in a further amended application filed on 20 September 2006.  She seeks:

   1.      A declaration that the first respondent husband is beneficially entitled to a 50% interest in the company [B] Pty Ltd.

   2.      That the first, second, third and fourth respondents do all acts and things, pass all necessary motions, give all necessary consents and authorities and transfer all necessary shareholdings to cause the first respondent husband to hold a 50% interest in the company [B] Pty Ltd.

   3.      An order pursuant to s 79 that the husband pay to the wife an amount equal to 75% of the value of his interest in [B] Pty Ltd.

   4.      That the First, Second, Third, Fourth and Fifth Respondents pay the applicant wife’s costs of these proceedings.

6. In an amended response filed 10 January 2007 the Husband seeks the following:

   Husband’s Interests in [X & T] Pty Limited

   1.      That the transfer of the two shares owned by the First Respondent Husband, Mr Thurga, in the Fourth Respondent Company [X & T] Pty Limited, which occurred on 17 January 2005, be set aside.

   2.      That in the alternative to Order 1 hereof, within seven days from the date of the making of these Orders, the Second Respondent, [Mr Hedger], do all acts and things and pay to the First Respondent Husband the sum of $330,000 together with interest pursant to the Family Law Rules as and from the date of payment pursuant to the informal agreement reached between the First and Second Respondent of 17 January 2005, which sum represents the balance of the sum agreed between the First and Second Respondents in relation to the value of the two shares owned by the First Respondent in the Fourth Respondent Company, [X & T] Pty Limited.

   [S] Limited Bearer Share Certificates and Company Register

   3.      That the First Respondent Husband be entitled to receive the share certificates and the company register of [S] Limited being three binders seized during the execution of an Anton Pillar Order at the home of the Second Respondent.

   Reinstatement of Husband as director of 3^rd and 4^th Respondents

   4.      That the Second, Third and Fourth Respondents do all acts and things and sign all necessary documents to reinstate the First Respondent as a director of the Companies, [B] Pty Limited and [X & T] Pty Limited.

   Sale of [C] Lots

   5.      That the Third Respondent forthwith do all acts and things and sign all necessary documents and sell for the best price reasonably obtainable the balance of the blocks of land situated at [C] in the State of New South Wales as follows (“the [C] Lots”):

   (a)list the [C] Lots for sale by private treaty with such agent as the Parties may agree to appoint and in default of agreement as to agent within fourteen (14) days with such agent as the President of the Real Estate Institute of New South Wales shall appoint (“the agent”) the costs of and incidental to such appointment to be borne equally by the parties as and when same fall due;

   (b)the sale price at which the [C] Lots shall be listed shall be mutually agreed upon by the Parties or, in the absence of agreement reached within fourteen (14) days of the date of these Orders shall be the price nominated as the fair market value thereof by a valuer appointed by the President for the time being of the New South Wales Division of Australian Institute of Valuers and Land Administrators (Incorporated) (“the valuer”), the costs of and incidental to such appointment and valuation to be borne equally by the parties as and when same fall due;

   (c)the valuer shall, if requested by either the husband or the wife at a date three calendar months after the date upon which the [C] Lots are first listed pursuant to paragraph (a) hereof and thereafter at three (3) calendar monthly intervals until the [C] Lots are sold, nominate a sale price other than the originally nominated sale price;

   (d)the Parties shall each co-operate in every way with the agent including (without limiting the generality of the foregoing):

   (i)allowing inspection of the [C] Lots at all reasonable times requested by the agent;

   (ii)doing or saying nothing to hinder or prevent a sale being affected;

   (iii)ensuring the [C] Lots including the grounds are in a neat and clean condition at the time of inspection by the agent and prospective purchasers; and

   (iv)signing all documents requested by the agents in relating to the listing for sale of the [C] Lots except a contract or agreement for sale which has not been authorised by the parties solicitors;

   (e)the Third Respondent shall execute a contract for sale in the form prepared by the solicitors having the conduct of the sale at a price agreed upon by the parties or, in the absence of any agreement, at or above the price nominated by the valuer pursuant to paragraphs (b) and (c) hereof;

   (f)the parties shall instruct such solicitor as they agree upon to have the conduct of the sale on behalf of both parties or, in the absence of agreement reached within fourteen (14) days of the date of these Orders, shall instruct such solicitor as may be appointed by the President for the time being of the Law Society of New South Wales (“the solicitor”) the costs of and incidental to such appointment to be borne equally by the parties as and when same fall due;

   (g)no party to these Orders may confer on any agent without the consent of the other party any right to any sole or exclusive agency in respect of the [C] Lots or to any commission;

   (h)the party not in possession shall be entitled once per fortnight to attend upon and view the [C] Lots;

   (i)if the agent shall certify in writing to the parties’ solicitors it is reasonably necessary for the work specified in such notice to be carried out to the [C] Lots so as to assist in effecting a sale and provided the cost of any such work is less than $1,500 for each lot any of the Parties to these Orders may cause such work to be carried out and the costs thereof shall be recoverable by that party from the proceeds of sale.

   6.      In the event either or both of the [C] Lots are not sold by private treaty within three calendar months from the date of these Orders, then:

   (a)the parties shall list the [C] Lots (whichever of them not sold) for sale by public auction with the agent appointed pursuant to Order 5(a) hereof;

   (b)the reserve price for the purpose of such auction shall be such as the parties agree upon within fourteen (14) days after the date upon which the [C] Lots remaining for sale are first listed for auction in accordance with Order 6(a) hereof or in the absence of agreement a price determined by the valuer appointed pursuant to Order 5 (b) and (c) hereof;

   (c)in the event the bidding at the auction does not reach the reserve price the parties may negotiate with the highest bidders or any other interested person and effect a sale of the [C] Lots at a price which is not more than 10% below the reserve price;

   (d)if the [C] Lots remain unsold, the parties shall do all acts and things and sign all documents necessary to immediately relist the [C] Lots for sale by public auction again, on a date nominated by the said agent until the [C] Lots are sold and to this extent Orders 5 and 6 herein shall apply mutatis mutandis.

   7.      That on settlement of the sale of the [C] Lots, the proceeds of sale shall be applied in the following manner and priority:

   (a)all costs and expenses of sale including legal costs and disbursements, agents commission, valuers fees, and auction expenses (including repayment of any such expenses as have been paid by any of the Parties to these Orders);

   (b)the amounts required to pay all municipal and water rates adjustments outstanding with respect to the [C] Lots;

   (c)the amount required to repay to the party carrying out work for the [C] Lots for the cost of such work carried out in accordance with Order 5(i) hereof;

   (d)the balance then remaining shall be deposited in a controlled monies account in the names of the Parties solicitors to be disbursed in accordance with these Orders.

   Dealing with the Assets and Winding up of the 3^rd and 4^th Respondents

   8.      That within 30 days from the date of settlement of the sale of the [C] Lots, the First, Second and Third Respondent:

   (a)join in holding a meeting of the directors and then a meeting of the shareholders of the Third and Fourth Respondents;

   (b)at such meeting or meetings to pass all such resolutions as may be necessary as to solvency and a resolution resolving voluntarily to wind up the Third and Fourth Respondents;

   (c)appoint a Chartered Accountant as the Parties may agree upon within 14 days after settlement of the sale of the [C] Lots and in the absence of agreement such Chartered Accountant as appointed by the President of the Institute of Chartered Accountants to act as liquidator of the Third and Fourth Respondents; and

   (d)do all acts and things and sign all documents as may be required pursuant to the provisions of the Corporations Act or otherwise required by ASIC in respect of the winding up of the Third and Fourth Respondents.

   9.      That the Fourth Respondent, [X & T] Pty Limited, as the shareholder of the Third Respondent join in requesting the liquidator as their agent to distribute all the assets including cash, bank accounts and interest bearing deposits less any liabilities of the Third Respondent by paying or transferring in specie all such assets to the Fourth Respondent.

   10.     That the Second Respondent in his personal capacity and in his capacity as Director and shareholder of [Q] Limited, the First Respondent in his personal capacity (if Order 1 hereof is made) and in his capacity as director and shareholder of [S] Limited (if Order 3 hereof is made) or otherwise in relation to the balance of the shareholdings of the Fourth Respondent as this Honourable Court determines, join in requesting the liquidator of the Fourth Respondent as their agent to distribute all the assets including cash, bank accounts and interest bearing deposits less any liabilities of the Third Respondent by paying or transferring in specie all such assets to the shareholders of the Fourth Respondent equally after paying the liquidator’s fees expenses, all taxes including capital gains tax, income tax of the Third Respondent.

   11.     That the Parties indemnify the liquidator in respect of any liability of the Third and Fourth Respondents for any income and tax.

   12.     That the liquidator so appointed must prior to compliance with Order 10 hereof attend to the following:

   (a)Investigate the operation of the Third and Fourth Respondents and audit the accounts so as to ascertain the true trading of the Third and Fourth Respondents and in particular the sale proceeds of the whole of the [C] development site and all expenses paid towards the development site;

   (b)Investigate the operation of any loan accounts by any of the directors of the Third and Fourth Respondents and ascertain whether any loans obtained or advanced have been paid back;

   (c)Adjust the entitlement of each of the shareholders of the Third Respondent by reason of any matter that arises in the investigation of the Third Respondent’s operations pursuant to this Order.

   Property Settlement Orders between Husband and Wife

   13.     That after compliance with Order 10 hereof, and as between the Applicant Wife and the First Respondent Husband, the Wife shall be entitled to 30% of the net property pool of the Husband and the Wife taking into account the Husband and the Wife’s assets, liabilities, superannuation and financial resources as at the date of hearing of this matter.

   Costs

   14.     That the Wife pay the Husband’s costs of and incidental to these proceedings insofar as they relate to the family law issues between the Husband and the Wife and otherwise that the Second, Third and Fourth Respondents pay the husband’s costs of and incidental to the husband having to enter in relation to the proceedings against the Second, Third and Fourth Respondents.

7. Mr Hedger is the Husband’s brother in law.  He is married to the Husband’s sister.  The Husband’s father was … who is now deceased.

8. The current director of B Pty Ltd is Mr Hedger.  The Husband was a director from 3 October 1996 to 14 January 2005.  There are currently 1,595,918 issued ordinary shares.  The current shareholder is X & T Pty Ltd and an Australian Securities and Investments Commission company extract revealed that it beneficially holds all of the issued share capital.  The extract revealed that at one time X & T Pty Ltd previously held nine ordinary shares; the Husband beneficially held one ordinary share and O beneficially held one ordinary share.

9. The current director of X & T Pty Ltd is Mr Hedger.  The Husband was a director from 3 October 1996 to 14 January 2005.  An Australian Securities and Investments Commission company extract revealed that there are 20 issued ordinary shares.  The current shareholders are Q Ltd which beneficially holds eight ordinary shares, S Ltd which beneficially holds eight ordinary shares and Mr Hedger who beneficially holds four ordinary shares.  The extract revealed that previously the Husband beneficially held two ordinary shares; Q Ltd held one ordinary share and S Ltd held one ordinary share.  The address given for Q Ltd and S Ltd is […], Singapore.  There is an issue as to whether Mr Hedger presently holds two of the four shares in trust for the Husband.

10. There was no appearance by or on behalf of the Fifth Respondent.  For reasons that hereafter appear there may also be other parties to the proceedings.

11. The Husband and Wife commenced cohabitation in 1998 and were married on 14 September 2001.  They separated in February 2004.  There are two children of the marriage T born in October 1999 and L born in May 2003.  The children reside with the Wife.

12. I had a number of affidavits including of the Husband, Mr M solicitor, Mr G solicitor, Ms W, solicitor, Mr Hedger and Mr R.  Mr G is a partner of Minter Ellison.  Ms W is an employee of Minter Ellison. The Husband and Mr G were cross-examined.  I also had regard to a judgment I delivered in February 2007.  For reasons I will hereafter explain I will repeat a great deal of what I said in the earlier judgment.

13. The partner of Minter Ellison who carries out the work for the Second, Third and Fourth Respondents is Mr G and he is assisted by Ms W. 

14. The solicitors for the Wife are Cameron & Myers.  The partner who carries out the work is Mr M. 

15. It will be seen shortly that in March 2007 an affidavit was sworn by Mr R who is an advocate and solicitor and the managing director of a law corporation in Singapore called P, Solicitors.  As a result of this evidence it is now contended by the Second, Third and Fourth Respondents that through a complex structure involving corporations resident in various overseas countries, the ultimate beneficial owner of B Pty Ltd is Mr PW who is Mr R’s father.  Mr R contends that his father holds one bearer share in a company which is resident in the Pacific Islands called G Ltd.  Mr R contends that the directors of this Pacific Island company are Mr R’s father, Mr Hedger and the husband’s mother.  Mr R contends that G Ltd holds one “named share” being the whole of the issued capital of a company which is resident in the British Virgin Islands called A Ltd.  Mr R contends that the directors of this British Virgin Islands company are himself and the husband’s mother.  Mr R contends that A Ltd holds “one named share” being all of the issued capital of a company resident in the British Virgin Islands called S Ltd.  Mr R contends that he is the sole director of S Ltd.  Mr R contends that A Ltd also holds “one named share” being all of the issued capital of another company resident in the British Virgin Islands called Q Ltd.  Mark Wong contends that he is the sole director of Q Ltd.  There are 20 issued shares of X & T Pty Ltd.  Mr R contends that S Ltd owns eight shares in X & T Pty Ltd.  Mr R contends that the Q Ltd also owns eight shares in X & T Pty Ltd.  Mr R contends that Mr Hedger owns four shares in X & T Pty Ltd.  Mr R contends that X & T Pty Ltd then owns 1,595,918 shares in B Pty Ltd. 

16. As I indicated in discussion the proceedings have reached a point where it is at least now known who the Second, Third and Fourth Respondents contend is the ultimate beneficial owner of B Pty Ltd namely Mr R’s father.  There is of course an issue in relation to this.  The evidence of Mr R will require considerable and detailed investigation and enquiry and at the final hearing, in the absence of admissions, the originals of the documents to corroborate his contentions will be required.  What also now has to be undertaken, amongst other things, is a very considerable and detailed financial enquiry in relation to the financial circumstances of all of the entities named by Mr R including Mr and Mrs Hedger and Mr R’s father.

Background

1. Given the relief sought which I am currently dealing with it is necessary to put the application into some context and this requires an understanding of what this case is about, the issues involved, what has happened since the proceedings were commenced and what the evidence currently reveals.  I hasten to say that I have no doubt that in the pending proceedings there is still a great deal of evidence to be placed before the court.

2. As I have also said before given the duration of the cohabitation of the parties to the marriage, and other matters, I am concerned about the cost of the litigation.  The ultimate entitlement of the Wife will obviously depend upon what is found to be the extent and value of the assets of the Husband.  In my view, this is the significant issue. 

3. Mr Hedger was born in California in the United States in July 1961.  It may be necessary to obtain information from the Department of Immigration and Citizenship in relation to the residence status in this country of a number of relevant individuals.

4. The Husband was born in the United States in June 1971.  The Wife was born in April 1973.

5. On 9 March 1995 V Pty Ltd was registered in New South Wales.  It later changed its name to X & T Pty Ltd.  The Husband gave evidence about a conversation his late father had with the Husband and Mr Hedger.  The Husband said that in relation to X &T Pty Ltd the initial “X” stands for the Husband’s sister Xenia and the initial “T” stands for the Husband.  The principal place of business of X &T Pty Ltd is H and this is also the registered office of the company. 

6. On 16 June 1995 N Pty Ltd was registered in New South Wales.  It later changed its name to B Pty Ltd.  The registered office of the company is L and the principal place of business is H. 

7. On 26 June 1995 Mr Hedger was appointed a director of B Pty Ltd.  He resides at H.

8. Mr Hedger contends that B Pty Ltd was incorporated for the purposes of development of 31 acres at C into community title residential estate.  In the period May/June 1995 B Pty Ltd acquired three parcels of land at C which together comprised the estate which is called “K”. 

9. The Husband contends that in about 1995 his late father bought land at C.  He contends that the land was purchased with funds his father paid of approximately $3,000,000. 

10. On behalf of the Wife evidence has been given by Mr K who is an accountant.  Mr K contends that in about October 1995 B Pty Ltd purchased three blocks of land in C for a total price of $2,050,000. 

11. There was attached to an affidavit of the Husband a diagram which revealed that G Ltd owned 100% of S Ltd and Q Ltd and that it was proposed to prepare an acknowledgement of debt of $3,405,315.20 from S Ltd and Q Ltd in favour of G Ltd and that all monies for loans came from the Husband’s father.  There is a diagram attached to the affidavit of Mr R which shows that A Ltd owns 100% of S and Q Ltd.

12. The Husband contends that in 1995 his father by way of B Pty Ltd acquired land at C for $3 million.  B Pty Ltd had 10 issued shares.  Nine shares were held by X & T Pty Ltd and one share was held by the Husband’s father.  X & T Pty Ltd borrowed funds from related parties outside Australia to finance the C project.  Those funds were borrowed from companies which were resident in the British Virgin Islands being Q Ltd (incorporated as Z Ltd) and S Ltd. (incorporated as E Ltd)

13. On 23 June 1995 Mr AB was appointed a director of V Pty Ltd.  On 26 June 1995 V Pty Ltd changed its name to X & T Pty Ltd.  On 28 June 1995 Mr BB was appointed a director of X & T Pty Ltd. 

14. On 6 February 1996 Mr BB and Mr AB ceased to be directors of X & T Pty Ltd.  On 6 February 1996 the Husband and Mr Hedger were appointed directors of X & T Pty Ltd. 

15. The Wife annexed to an affidavit a copy of a letter dated 24 April 1996 from P, Advocates & Solicitors in Singapore addressed to Mr Hedger and the Husband, care of “[…], Singapore”.  The document was headed “Incorporation of Companies in the British Virgin Islands (BVI)”.  The letter was signed by Mr R.  In the letter Mr R referred to a telephone conversation he had with Mr Hedger wherein Mr Hedger requested that two companies be incorporated for Mr Hedger and the Husband.  Mr R said that on their behalf two British Virgin Island companies were purchased namely, Z Ltd and E Ltd.  Mr R requested confirmation as to which company Mr R would hold and which company the Husband would hold.  In respect of each of the companies Mr R identified certain documents he enclosed which included a share certificate and bearer share certificate.  He said that with regards to the share certificates there are normal share certificates and there are bearer share certificates and that if the shares are issued to a named shareholder the death or incapacity of the shareholder would hinder the operation of the company and it was therefore more advisable to issue bearer share certificates.  A request was made for instructions as to whether or not normal share certificates are issued or bearer certificates.  A request was made that the Husband and Mr Hedger sign various documents for each of the companies and return them to Mr R.  There was also enclosed an invoice addressed to both the Husband and Mr Hedger.

16. The Wife also annexed to an affidavit a copy of a letter dated 21 May 1996 written by Mr Hedger to Mr R in which was enclosed the British Virgin Island company documents signed as requested and as well, the bearer share certificates also signed.  It was stated by Mr Hedger that the Husband was to hold E Ltd and Mr Hedger was to hold Z Ltd.  Mr Hedger advised Mr R that the Husband wished to change the name of his company to S Ltd and Mr Hedger wished to change the name of his company to Q Ltd.  A request was also made that Mr R’s firm maintain the company books and that the address of P, Solicitors in Singapore be used to receive “official correspondence”.  The Wife also annexed a copy of a bearer share certificate which revealed one share issued on 21 May 1996 in E Holdings Ltd.  This certificate was signed by Mr Hedger as a director/secretary and the Husband as a director.

17. The Husband contends that the shelf companies Mr R obtained and established in the British Virgin Islands to own the majority of the shareholding S Ltd which he described as “my company” and the name of Z Ltd was changed to Q Ltd being Mr Hedger’s company.

18. The Husband contends that the known single issued shares in each of Q Ltd and S Ltd are “bearer shares” – that is, that the bearer of the share certificate is entitled to the said share.  The Husband held the bearer share in S Ltd and Mr Hedger held the bearer share in Q Ltd.

19. On 3 October 1996 the Husband was appointed a director of B Pty Ltd. 

20. In a letter dated 5 November 1996 written by Blake Dawson Waldron, Solicitors, to Mr Hedger it was stated that X & T Pty Ltd was introduced because the proposed development was originally proposed as a joint venture arrangement between “[O] and the [Thurga] Family”.  However the joint venture arrangement “is no longer in place”.  It was stated that consideration should be given to winding up X & T Pty Ltd and that the only rationale for retaining the company was for the company to act as the holding company of the “[Thurga] Investments in Australia”.  Elsewhere, it was stated that Mr Hedger was not proposing to wind up X & T Pty Ltd. 

21. On 5 November 1996 Blake Dawson Waldron wrote to Mr Hedger.  In this document under the heading “Structure after the proposed restructure” it was stated that all loans will be made by E Holdings Ltd (now S Ltd) and Z Ltd (now Q Ltd) to X & T Pty Ltd in equal shares and all loans to B Pty Ltd will be provided by X & T Pty Ltd.  It was stated that all shares in B Pty Ltd are held by X & T Pty Ltd (nine shares) and the husband’s father as to one share.  Obviously the matters raised will have to be investigated.  However, various documents were enclosed including powers of attorney for each of E Ltd and Z Ltd.

22. The Husband contends that from 1995-1996 Mr Hedger undertook the role of managing the development undertaken by B Pty Ltd and that the Husband was working on other projects for companies associated with his father and also the development of a software program.  He was travelling extensively around the United States, Europe and Australia.  The Husband contends that notwithstanding he was not involved on a day to day basis with the management of B Pty Ltd he and Mr Hedger had many meetings regarding the progress of the development.  However, at no time has B Pty Ltd accounted to X & T Pty Ltd in relation to the financial aspects of the development project.

23. The Wife contends that during the relationship of the parties to the marriage, the Husband spoke to her about his involvement in the subdivision of 18 or 19 blocks of land at C and that he spent “literally hundreds of hours” working on the [C] subdivision. 

24. Mr R gave evidence that in 1996 he was instructed by the Husband’s late father to set up and maintain a corporate structure for his overseas holdings.  Mr R said that he was instructed that the Husband’s late father required two British Virgin Island companies and accordingly Mr R acquired two shelf companies that had already be registered.  The companies were known as E Ltd and Z Ltd and were renamed S Ltd and Q Ltd respectively.  At that time they were bearer share companies and one bearer share for S Ltd was issued to the Husband and one bearer share for Q Ltd was issued to Mr Hedger.  Mr R annexed to his affidavit a copy of the acknowledgments of receipt of the bearer shares signed by the husband and Mr Hedger.

25. Mr R said that he was not instructed to provide any tax, commercial or estate planning advice to the Husband’s late father, nor was he instructed to provide any “structuring” advice to the Husband or Mr Hedger.  Mr R contends that he received his instructions from the Husband’s late father including advice that the Husband and Mr Hedger would be attending Mr R’s office to execute the documents.  Mr R said that it was his understanding that the Husband’s late father ultimately wished to set up a holding structure for his estate and business interests which were B Pty Ltd and X & T Pty Ltd although Mr R never had any involvement with either of these companies.

26. In an affidavit of 22 March 2007 Mr G gave evidence of the only possible relevant matters in which Minter Ellison may have acted for any of the parties to these proceedings.  The first such matter related to proceedings in the Land and Environment Court in 1996 which related to a development application for the K Development at C.  It will be seen shortly that the next matter was not until 2001.  It may be that the Husband would contend that at this time he and Mr Hedger were the ultimate beneficial owners however it is now clear that Mr R and others including Mr Hedger contend that the ultimate beneficial owner was the Husband’s father.

27. The Husband and the Wife met in October 1997 and began going out in about December 1997.  They commenced cohabitation in 1998. 

28. On 1 October 1997 Mr Hedger tendered his resignation as a director of S Ltd.  On 1 October 1997 the Husband tendered his resignation as a director of S Ltd.  According to a document which purports to be a director’s resolution signed by both the Husband and Mr Hedger, Mr R was appointed a director of S Ltd as from 30 September 1997.  The Husband contends that this was done for reasons associated with tax and estate planning and at the direction of his father.  Then, the Husband and Mr Hedger, at the direction of the Husband’s father, appointed Mr R as a director of both companies.  The Husband however, contends that the resignation notices were never put into effect and accordingly he and Mr Hedger continued to be directors of both companies referring to both S Ltd and Q Ltd.  The Husband contends that notwithstanding the Husband and Mr Hedger signed resignations as directors of the said entities in 1997, such resignations were not effected.  Between 1999 and 2003 the Husband and Mr Hedger signed a number of documents guaranteeing and indemnifying loans made between B Pty Ltd, X & T Pty Ltd, S Ltd and Q Ltd.

29. Mr R contends that in 1997 it was his understanding that the business interests of B Pty Ltd and X & T Pty Ltd had begun to progress and the Husband’s late father wanted a “proper holding company structure established”.  The Husband’s late father owned a bearer share company called G Ltd which he had initially used to use as a holding company for all his international business interests.  Mr R contends that nothing had come of the other international opportunities the Husband’s late father had been pursuing.  Mr R was instructed to use G Ltd as a holding company for the Husband’s late father’s Australian interests.  He was instructed to insert S Ltd and Q Ltd between G Ltd and X & T Pty Ltd so that if the Husband’s late father ever wished to sell X & T Pty Ltd he would not need to sell G Ltd.

30. Mr R contends that on 1 May 1997 S Ltd and Q Ltd had no assets, had never been capitalised and did not have bank accounts.  They were incurring registration fees every year but were otherwise dormant. 

31. Mr R contends that on 1 May 1997 a number of events occurred.  The Husband sold his interest in S Ltd to G Ltd for US$1.  Mr R annexed to his affidavit a copy of the transfer and register of transfers.  As well, on 1 May 1997 Mr Hedger sold his interest in Q Ltd to G Ltd for US$1 and again Mr R annexed to his affidavit a copy of transfer and register of transfers.  As well on 1 May 1997 director’s resolutions and releases were executed cancelling the original bearer shares for S Pty Ltd and Q Ltd as they had been misplaced and new share certificates were issued in the name of G Ltd.  Mr R annexed to his affidavit a copy of the director’s resolutions.

32. Mr R contends that in the result on 1 May 1997 the bearer shares for Q Ltd and S Ltd were cancelled and a share register was set up.  Mr R contends that accordingly since 1 May 1997 the bearer shares initially issued for these two companies have been worthless as ownership as recorded in the share register of each company and the bearer shares were cancelled.

33. Mr R contends that in 1997 the Husband was pursuing a business opportunity in the software industry and Mr Hedger was travelling extensively.  The Husband’s late father asked Mr R to become a director of each company so that there would not be any difficulty in the event that S Ltd and Q Ltd needed to be dealt with.

34. Mr R contends that on 30 September 1997 he became a director of S Ltd and Q Ltd and he annexed to his affidavit a copy of the director’s resolutions which confirmed his appointment as a director.

35. Mr R contends that both the Husband and Mr Hedger resigned as directors of S Ltd and Q Ltd on 1 October 1997 and he annexed to his affidavit a copy of the resignations.  In summary, Mr R contends that since 1 May 1997 the Husband has not had an interest, beneficial or otherwise, in S Ltd and since 1 May 1997 Mr Hedger has not had an interest, beneficial or otherwise, in Q Ltd.  The consequence of this evidence is that it is contended by the Second, Third and Fourth respondents that at no time have the Husband or Mr Hedger had a beneficial interest in the C development.

36. In 1998 the Husband and the Wife went to the British Virgin Islands and the Husband told the Wife that he needed to do some business setting up some companies.

37. Mr G said that Mr B of Minter Ellison “Banking and Finance Group” acted for B Pty Ltd in late 1998 and early 1999 in respect of a “finance proposal” for the K development.

38. On 31 March 1999 a Loan Agreement was entered into by I Pty Ltd as lender and B Pty Ltd as borrower for an advance of $500,000, secured by registered mortgage over C2, and guaranteed by the Husband, his father, Mr Hedger, X & T Pty Ltd, Q Ltd and S Ltd.  There were variations of the loan agreement on 27 May 1999, 10 August 1999, 7 September 1999, 13 October 1999, 12 November 1999, 7 January 1999, 2 February 2000 and 23 March 2000. 
    Mr K said that the documents were executed on behalf of Q Ltd by Mr Hedger as director and by the Husband as director and secretary and on behalf of S Ltd by the Husband as director and by Mr Hedger as director and secretary.  According to Mr R at this time the Husband and Mr Hedger were not officers of Q Ltd or S Ltd.

39. Mr K gave evidence that S Ltd and Q Ltd are companies with the registered offices in Singapore but are incorporated in the British Virgin Islands.  He said that the British Virgin Islands is a tax haven and a non financial disclosure country.  He contends it is not possible to obtain searches to determine the true owners of Q Ltd and S Ltd and that having looked at documentation he was of the belief and opinion that the companies are beneficially owned by Mr Hedger and the Husband respectively.  This is what the Husband contends.  This was made very clear in a letter dated 4 January 2005 written by Dennis and Company to Minter Ellison.  Mr K gave this evidence before Mr R gave evidence.

40. The Husband contends that in 1999 his father considered restructuring B Pty Ltd and a meeting was held between the Husband’s father, the Husband and Mr Hedger and also meetings with Y Company.  The Husband attached to his affidavit a copy of a report prepared by Y Company dated 2 December 1999 titled “Proposed restructure of [B] Group”.  The Husband contends that in 1999 a re-structuring of the shareholdings in X & T Pty Ltd occurred and extensive advice was obtained as to related party loans so that Q Ltd held eight shares; S Ltd held eight shares; the Husband held two shares and Mr Hedger held two shares.  It is contended by the Husband that Minter Ellison provided advice to the shareholders as to the taxation and other effects and impacts of the re-structuring and as to the recovery of related party loan arrangements.  This is denied by Mr G.

41. There was put in evidence a memorandum dated 11 June 1999 prepared by Mr J.  It is instructive to read this document.  It dealt with tax issues, corporate estate planning and a blind trust structure.  What is said in this document is obviously relevant and will have to be investigated.  Amongst other things the inference I draw is that loans were made by S Ltd and Q Ltd for X & T Pty Limited.  Mr J may be a barrister and solicitor resident in Victoria who, amongst other things, has extensive experience in corporate structuring, tax planning, international cross border transactions and so on.

42. Mr Hedger swore an affidavit on 27 April 2007 in relation to an application by the Wife to issue a subpoena to Mr J.  Mr Hedger said that he was introduced to Mr J in 1999 by Mr PW and the Husband’s father and that he retained Mr J to provide legal advice to B Australia Pty Ltd.  He contended that the legal services included advice with respect to financing the C development and that Mr J continued to provide legal advice to B Australia Ltd until some time in 2000.

43. On 6 February 2001 B Pty Ltd registered a plan of subdivision of blocks at C which resulted in the registration of 20 new lots in Deposited Plan … .  Since about February 2001 B Pty Ltd has sold 15 of the blocks of land for a total consideration of $10,872,500.  Mr Hedger contends that B Pty Ltd arranged for all relevant infrastructure such as roads, sewerage, water and electricity to be installed in respect of all 19 lots.  Mr Hedger said that the C properties “have been on sale” since early 2000.  It will be necessary to investigate what has happened to the proceeds of sale.

44. The Husband contended that Minter Ellison received instructions from, and were retained by B Pty Ltd as vendor in relation to the sale of five parcels of the C land between 6 March 2001 and 5 February 2004.  The transfer documents completing such sales were allegedly executed by the Husband in his capacity as a director of that entity.  The Husband contends that his signature on such documents is a forgery.

1. The Husband also contends that at no time has B Pty Ltd accounted to X & T Pty Ltd in relation to “the financial aspects of the [C] Development Project”.  Additionally, that B Pty Ltd has not attended to the preparation of statutory financial statements and/or taxation returns since 2001 and 2002, nor has B Pty Ltd declared any dividends in favour of X & T Pty Ltd.  These matters will have to be investigated.

2. Mr G contends that since 2001 solicitors in the Minter Ellison property group have acted for B Pty Ltd in respect of the sale of properties at K owned by the company.  One such solicitor was Ms B.  Mr G said that he was informed by Ms B that in relation to all of the sales of the K properties Minter Ellison was provided with signed copies of relevant documents and that they were not executed at the offices of Minter Ellison.  Mr G also said I assume based on what she told him, that Ms B had no knowledge of any allegation of forgery until Mr G contacted her. 
   Mr G said that no documents which are now the subject of the Husband’s allegation were signed at the office of Minter Ellison.

3. According to Mr K documents produced by I Pty Ltd reveal a peak debt of $4,924,000 on 14 June 2001 and interest charged of $663,978.95.  The debt was finally repaid in full on 22 June 2005.

4. There was put into evidence during the current proceedings on behalf of Minter Ellison a number of loan agreements.  One loan agreement was between I Ltd and Mr Hedger and his wife … dated 21June 2001 for an advance of $599,000.  I have no idea what the relevance of this document was. 

5. The Husband and Wife were married in San Francisco in September 2001.

6. Mr R contends that “prior to 2002” Mr PW had acquired the bearer shares in G Ltd from the Husband’s late father.  Mr R contends that in 2002 he was instructed by Mr PW and the Husband’s late father to restructure the holding companies.  He said that on 1 March 2002 G Ltd transferred its ownership of S Ltd and Q Ltd to A Ltd.  Mr R annexed to his affidavit a copy of the register of transfers which records the share transfer.  He also annexed copies of the cancelled share certificates issued to G Ltd.  He also annexed copies of the director’s resolutions for Q Ltd and S Ltd.  Mr R contends that it was his understanding that the restructure in 2002 was for the purpose of reducing maintenance costs of the corporate structure.  G Ltd was registered in the Bahamas which had higher registration costs than companies in the British Virgin Islands or the Pacific Islands.  A Ltd being a British Virgin Islands company was inserted below G Ltd with the ultimate aim of striking off G Ltd.  Mr W contends however that the removal G Ltd was held back to see if prior losses suffered by G Ltd could be set off.  The inference that I draw is that there exist documents relating to the financial affairs of G Ltd and they will have to be produced.

7. The Husband’s father died in December 2002.

8. On 16 June 2003 a Guarantee and Indemnity was entered into between I Pty Ltd as lender and B Pty Ltd as borrower for an advance of $500,000 secured by registered mortgage over C2] and guaranteed by the Husband, his father, Mr Hedger, X & T Pty Ltd, Q Ltd and S Holdings Ltd.  The address of Q Ltd was shown as H.

9. In the current proceedings there was also put into evidence on behalf of Minter Ellison a loan agreement dated 16 June 2003 between I Ltd and B Pty Ltd.  I believe that the agreement was prepared by a firm of lawyers in Victoria acting for the lender.  In the document the borrower was identified as B Pty Ltd and it related to an advance for $2,300,000 for a period of three years.  The security for the advance was a registered mortgage on the title of C1 and C2 and other properties at C identified in a schedule to the agreement.  The agreement was also between the parties named as a guarantor and according to the schedule the guarantors were Mr Hedger, the Husband, the Husband’s late father, X & T Pty Ltd, Q Ltd and S Ltd.  The loan agreement was executed by Mr Hedger, the Husband and the Husband’s mother and I believe that their signatures were witnessed by Mr Hedger’s wife.  The document was executed on behalf of Q Ltd and S Ltd by Mr Hedger and the Husband as directors and secretaries of these companies.  There was also put into evidence a Guarantee and Indemnity dated 16 June 2003 given to I Pty Ltd by Mr Hedger, the Husband, the Husband’s late father, X & T Pty Ltd, Q Ltd and S Ltd.  I am not sure what the relevance of these documents is to the current proceedings.  However, they may be important in the pending proceedings as the documents were executed by the Husband and Mr Hedger as directors and secretaries of Q Ltd and S Ltd.  According to Mr R both Mr Hedger and the Husband ceased to be directors of S Ltd and Q Ltd in October 1997.  I also assume from the evidence of Mr G that Minter Ellison played no part in and had no knowledge of these loan agreements, guarantee and indemnity and gave no advice to any of the named parties in relation to the transactions which these documents evidenced.

10. The Wife contends that the Husband and Wife separated in February 2004 although they remained residing in the same residence until 26 June 2004.

11. The Husband contends that by approximately 2004 he and Mr Hedger had a “falling out” as the Husband had not received any money from the C development and he was also concerned as to the running of B Pty Ltd and the lack of accounting by Mr Hedger.  He contends that he had numerous discussions with Mr Hedger. 

12. The Husband gave evidence about a meeting held in January 2003 at Mr Hedger’s home.  The Husband also contends that later in 2003 and in 2004 on many occasions he said to Mr Hedger that he wanted certain documents of S Ltd and share certificates and Mr Hedger stated that he did not have them and had never seen them.

13. The Husband gave evidence about a conversation he had with Mr Hedger in September 2004.  In about mid November 2004 the Husband received from Mr Hedger a document titled “Offer” stated to be “valid” until 17 November 2004.  The Husband contends that by late 2004 he was becoming desperate for money and had a lot of debts including legal expenses.  He also contends that he was suffering from significant back problems and required an operation.

14. On 13 December 2004 the Husband commenced proceedings in the Supreme Court of New South Wales for the appointment of a provisional liquidator of B Pty Ltd. 

15. Mr G said that Mr V at Minter Ellison’s “Dispute Resolution Group” acted for Mr Hedger and B Pty Ltd in these proceedings.  Mr G said that the proceedings were dismissed as the Husband was found to have no standing to bring the proceedings.

16. Mr R contends that on 21 December 2004 G Ltd was “redomociled” to the Pacific Islands to take advantage of the lower company fees.  As I have said, the inference that I draw is that there exist documents relating to the financial affairs of G Ltd and they will have to be produced.

17. Attached to an affidavit of Mr M of 27 April 2007 is a document which appears to be dated December 2004.  It will be necessary to identify the author of this document and the purpose of its preparation.  Mr M contends that he believes that it was prepared by Mr Hedger.  There is nothing, however, on the face of the document that suggests it was given to Minter Ellison or represents instructions given to that firm.

18. The Husband contends that in early January 2005 he met with Mr Hedger and they had a conversation.  The Husband contends that Mr Hedger stated that if the Husband transferred the two shares he owned in X & T Pty Ltd to Mr Hedger, Mr Hedger would pay the Husband $400,000 by instalments.  Mr Hedger would pay an amount of $45,000 and thereafter as from 1 July 2005 for a period of 12 months an amount of $2,500 per month and on 1 July 2006 he would pay the remainder in one lump sum.  The Husband agreed.

19. On 4 January 2005 Mr Bruce Dennis solicitor wrote to Minter Ellison on behalf of the Husband and complained that there appeared to be a conflict of interest for Minter Ellison to continue to act for Mr Hedger.  Mr Dennis contended that Minter Ellison has assisted in issuing notices that sought to remove the Husband as a director of X & T Pty Ltd and B Pty Ltd.  A number of other matters were identified.  It was contended that Minter Ellison was instrumental in setting up the structure whereby the Husband holds shares directly in X & T Pty Ltd and indirectly through Q Ltd.  Notice was also given that the Husband had no option to but to make an application to the Supreme Court in relation to X & T Pty Ltd seeking access to company records. 

20. On 6 January 2005 the Husband commenced further proceedings seeking that Mr Hedger hand over various records concerning X Ltd.  On 6 January 2005 the Husband swore an affidavit which was filed in proceedings in the Supreme Court of New South Wales, Equity Division.  Mr G contends that Mr V of Minter Ellison also acted in relation to these proceedings.  Mr G said that these proceedings “were resolved on 31 January 2005”. 

21. Mr G said that Mr V of the Minter Ellison “Dispute Resolution Group” acted for Mr Hedger and B Pty Ltd in 2004 and 2005 in respect of a private arbitration between B Pty Ltd and a firm of architects in relation to the development at C.  It was not explained why Minter Ellison were acting for Mr Hedger in relation to this private arbitration.

22. The Husband contends that on 17 January 2005 he again met Mr Hedger who gave him certain documents to sign which he did.  The Husband contends that he felt under duress and needed money and he reluctantly signed a resignation as a director of B Pty Ltd and X & T Pty Ltd and also signed a share transfer whereby he transferred his two shares in X & T Pty Ltd to
    Mr Hedger.  Mr Hedger then handed the Husband a cheque for $45,000.

23. The Wife annexed to an affidavit a document dated 14 January 2005 which purported to be signed by the Husband and was addressed to Mr Hedger.  In the document the Husband stated that he resigned as a director of B Pty Ltd and X & T Pty Ltd and transferred his entire shareholding in X & T Pty Ltd to Mr Hedger for two dollars.  The Wife also annexed documents titled “Notice of Resignation” dated 17 January 2005 signed by the Husband wherein he resigned as a director of B Pty Ltd and X & T Pty Ltd.  The Wife also annexed a document titled “Transfer of Shares” dated 17 January 2005 wherein the Husband transferred his two ordinary shares in X & T Pty Ltd to Mr Hedger.

24. The Husband contends that what occurred is summarised as follows.  On 6 January 2005 the Husband filed a claim in the Supreme Court for the appointment of a provisional liquidator of, and otherwise seeking the records of S Ltd.  The First Defendant to those proceedings was X & T Pty Ltd, the Second Defendant was B Pty Ltd, and the Third Defendant was Mr Hedger.  During the course of the Supreme Court proceedings, Minter Ellison held instructions to act for X & T Pty Ltd, B Pty Ltd and Mr Hedger.  The Husband objected to Minter Ellison acting for the Defendants.  However, such objection did not proceed upon a compromise being achieved later that month.  Against the background of the Supreme Court proceedings, the Husband entered an agreement with Mr Hedger to transfer his two shares in X & T Pty Ltd to Mr Hedger for a consideration of $400,000.  The Husband thereafter executed documents transferring his shareholding in X & T Pty Ltd and resigned as a director of B Pty Ltd.  Mr Hedger provided to the Husband a sum of $45,000 at the time of such transfer and subsequent sums of $15,000.

25. According to an Australian Securities and Investments Commission company extract the Husband ceased to be a director of B Pty Ltd on 14 January 2005.  He also ceased to be a director of X & T Pty Ltd on 14 January 2005. 

26. The debt owed to I Pty Ltd was finally repaid in full on 22 June 2005.

27. The Husband said that on 1 July 2005 Mr Hedger gave him $2,500.

28. The Husband said that in about August 2005 Mr Hedger gave him $2,500.

29. On 5 July 2005 the application for final orders was filed in the Local Court at F by the Wife in which she sought final parenting orders, spousal maintenance and property settlement.  By way of property settlement she sought that the Husband pay $250,000 on or before 1 July 2006 on the basis that the Husband retain all his right, title and interest in the development project at C owned by B Pty Ltd.

30. On 26 July 2005 a response was filed on behalf of the Husband.  In the response he also sought parenting orders.  In relation to the Wife’s application for property settlement and spousal maintenance the Husband sought that the application be dismissed.  On 25 July 2005 the Husband swore a Financial Statement and he gave his occupation as chef and company director.  He identified his employer as ST and CB Pty Ltd.  In relation to his assets he contended that he had “possible investment in [B] Pty Ltd”.

31. On 2 August 2005 an order was made in the Local Court that the proceedings in that Court be transferred to the Family Court.

32. On 12 September 2005 an affidavit was sworn by the Wife.  On 12 September 2005 an affidavit was sworn by Mr N on behalf of the Wife.  In these affidavits evidence was given about the behaviour of the Husband.  The affidavits appear to have been for use in the parenting proceedings although they were relied upon by Mr Hedger, B Pty Ltd and X & T Pty Ltd in earlier proceedings.  In those proceedings counsel for Mr Hedger, B Pty Ltd and X & T Pty Ltd submitted that at the time of the application for a second Anton Piller order there was no disclosure of the unreliability of the Husband’s evidence.  It was submitted that according to the Wife’s evidence the Husband is a mentally unbalanced, drug addicted and violent individual.  The Husband has now been cross examined.  However Mr Hedger has not yet been cross examined.

33. On 15 September 2005 orders were made by consent resolving the parenting proceedings.

34. A Case Assessment Conference was held on 22 September 2005 before a Registrar and during this conference the Husband said that he had transferred his shares to Mr Hedger for no consideration although he had done a handshake deal with Mr Hedger that he would pay around $350,000.  Further, Mr Hedger pays him $2,500 per month from B Pty Ltd.

35. The Husband said that in September 2005 Mr Hedger gave him a cheque for $10,000.  The Husband contends that thereafter Mr Hedger ceased making the instalments and failed to make the final payment which was due on 1 July 2006.

36. On 5 October 2005 an application was filed on behalf of the Wife in which she sought that
    Mr Hedger be joined as a party to proceedings.  I can understand why the Wife sought to involve Mr Hedger given, amongst other things, what the Husband had said about his financial circumstances and the property order he sought.  On 5 October 2005 the Wife lodged a caveat over properties owned by Mr Hedger.

37. On 31 October 2005 an amended application was filed on behalf of the Wife.  In this application, amongst other things, she sought that until further order Mr Hedger hold the two shares transferred to him by the Husband and X & T Pty Ltd upon trust for the Husband.

38. On 4 November 2005 an amended application for final orders was filed on behalf of the Wife in which she sought spousal maintenance, a property settlement of $750,000 and relief pursuant to s 106B Family Law Act in relation to the transfer by the Husband of the two shares previously held by him in X & T Pty Ltd to Mr Hedger. 

39. Mr G contends that in November 2005 he was instructed by Mr Hedger in relation to the proceedings in this Court and was later retained to act for B Pty Limited and X & T Pty Limited.

40. On 10 November 2005 Mr G received two letters from Mr M.  On 21 November 2005 Mr G wrote to Mr M setting out orders that Mr Hedger would consent to on a without admission basis.  On 21 November 2005 Mr M wrote to Mr G indicating that the Wife did not consent to the orders proposed by Mr Hedger.

41. On 21 November 2005 by facsimile transmission Mr G wrote to Mr M and contended that the Wife was funded in the Family Court proceedings by Mr N and that Mr M was in fact obtaining his instructions from Mr N.  Mr G asked Mr M certain questions and contended that the answers would enable Mr G to advise his client as to whether or not he should seek a stay of the proceedings on the basis that they are an abuse of process.  It was responded to by a facsimile transmission also dated 21 November 2005 written by Mr M to Mr G.  Mr M said that he does not and has not received instructions from Mr N in relation to the proceedings.  He went on to state that Mr Hedger had not filed a response nor filed any affidavit material “in support of his position”.  Further, that Mr G had previously contended that valuable consideration was paid for the shares transferred to Mr Hedger in X & T Pty Ltd by the Husband.  Mr M then said “for the third time we again ask that you provide us the following documentation that would support your client’s contention” and requested a stamped copy of the share transfer and a copy of any ruling with regard to stamp duty and the valuation that was used to calculate the stamp duty.  I am of the view that the request for a copy of the transfer was reasonable.  I was unable to locate a response to the request although I do not suggest that I have identified all of the correspondence.  I am also of the opinion that what Mr G contended about the relationship of the Wife and Mr N is irrelevant and the correspondence should not have been written.

42. On 23 November 2005 Judicial Registrar Johnston made the following orders:

    1.      That by consent and without admissions orders are made in accordance with paragraphs 2, 3 and 4 of the wife’s Amended Application in a Case filed on 31 October 2005 as set out hereunder:-

    “2.That [Mr Hedger] of [H] be joined as a party to proceedings no. SYF 3665 of 2005 in the Family Court Sydney Registry.

    3.That until further order [Mr Hedger] hold the two shares transferred to him by the husband in [X & T] Pty Ltd (“the company”) upon trust for the husband.

    4.That until further order [Mr Hedger] be restrained from exercising any rights or powers attaching to those shares without the prior consent in writing of the wife".

    2.      That [Mr Hedger] may be excused from these immediate proceedings.

    IT IS NOTED:

    A.     That in relation to the subpoena served on Minter Ellison solicitors the documents will be produced to this Registry today.

    IT IS FURTHER ORDERED:

    3.      That all legal representative and the husband personally may have leave to inspect all documents produced by Minter Ellison.

    4.      That [Mr Hedger’s] costs are reserved.

    5.      That all parties are given leave to inspect all documents produced on subpoena by [T] Accountants and [SC Company].

    6.      That the wife pay to [T] Accountants within 30 days their costs in these proceedings which are assessed by the Court in the amount of $1,250.

    7.      That by consent orders are made in accordance with paragraphs 5 and 6 of the wife’s Amended Application in a Case filed on 31 October 2005 as set out hereunder:

    “5.That until further order the husband be restrained from exercising any rights or powers as a shareholder of the company.

    6.That until further order the husband inform the wife in writing of notice of any proposed meeting of shareholders of the company within 24 hours of receiving such notice".

    8.      That the husband and the wife attend a financial conciliation conference at 11:00 am on 22 February 2006.

    IT IS FURTHER NOTED:

    B.     That in the event that [Mr Hedger] does not wish to attend such conference the husband and the wife are given leave to re-list these proceedings for an order requiring [Mr Hedger’s] attendance at the conciliation conference.

43. On 28 November 2005 on behalf of B Pty Ltd an application was lodged for a lapsing notice in respect of a caveat lodged over property owned by B Pty Ltd.  The lapsing notice was issued and served on the Wife on 2 December 2005 and as a consequence the caveat duly lapsed on 3 January 2006.

1. On 22 December 2005 Mr M sent a facsimile transmission to Mr G in which it was stated that unless Mr Hedger was willing to discuss settlement of the proceedings Mr M would continue to issue subpoena and make further applications seeking orders against Mr Hedger and the joinder of various companies.  Counsel for Mr Hedger, B Pty Ltd and X & T Pty Ltd described this correspondence it’s contents as confirming the Wife’s abusive purpose.

2. On 22 December 2005 the Wife sought to lodge a further caveat over various properties.

3. On 11 January 2006 an application was filed on behalf of the Wife in which she sought the following:

   1.      That [B] Pty Ltd and [X & T] Pty Ltd be joined as party to the proceedings SYF 3665 of 2005 in the Family Court Sydney Registry.

   2.      That [S] Limited a company incorporated in the British Virgin Islands be joined as a party to these proceedings SYF 3665 of 2005 in the Family Court Sydney Registry.

   3.      That until further order [B] Pty Ltd and [X & T] Pty Ltd be restrained from dealing with disposing of or encumbering any of the properties namely Lots 19, 10, 12 and 17 in Deposited Plan […] or any other asset of the companies.

   4.      That [B] Pty Ltd and X & T] be restrained from encumbering or increasing any indebtedness of the companies.

   5.      That leave be granted to serve short notice of this application.

   6.      That until further order [S] Limited hold the shares in [X & T] Pty Ltd (“the company”) upon trust for the husband.

   7.      That until further order [S] Ltd be restrained from exercising any rights or powers attaching to those shares in the company without the prior consent in writing of the wife.

   8.      That until further order the husband be restrained from exercising any rights or powers as a shareholder of the company.

   9.      That until further order the husband inform the wife in writing of notice of any proposed meeting of shareholders of the company within 24 hours of receiving such notice.

   10. That the hearing of the application of the wife pursuant to s106B of the Act be expedited.

   11.     Such further or other order as the Court seems fit.

4. On 11 January 2006 a response was filed on behalf of the Husband in which he simply said that he agreed with paragraphs 1 to 11 of the application filed on behalf of the Wife.  Mr G contended that prior to 11 January 2006 the Husband had not taken an active role in the proceedings since the joinder of Mr Hedger and at the time he was self represented.  As it transpires, in my view, what Mr G said is irrelevant and frankly was a waste of time.

5. Mr K swore an affidavit on 11 January 2006.

6. On 16 January 2006 Mr M wrote to Mr G and contended that Minter Ellison was in a position of conflict and would be a material witness in the proceedings.  A request was made that Minter Ellison withdraw from acting and if they failed to do so the issue would be referred to the Law Society of New South Wales.  On 20 January 2006 Mr G sent a letter to Mr M and stated that Minter Ellison had no record of ever acting for or in relation to S Ltd and further, no record of ever acting for or in relation to Q Ltd.  I assume that this also means that Minter Ellison gave no advice to S Ltd and Q Ltd in relation to loan transactions with I Pty Ltd and relevant documentation.

7. On 17 January 2006 an affidavit was sworn by the Wife.  On 18 January 2006 an application in a case was filed on behalf of the Wife in which she sought the following:

   1.      That the matter be heard ex-parte and be made returnable instanter in the first instance for consideration of making the following Anton Piller Order:

   2.      That forthwith upon being served with a copy of these orders, the Applicants application and supporting Affidavit, the second Respondent, [Mr Hedger] is hereby ordered to do the following acts and things:

   (a)to deliver up all keys to the premises known as and situated at [H] to [Mr A] (“[Mr A]”) (an independent Solicitor); and

   (b)Accompany [Mr A], the Applicant wife and such persons authorised by her to [H]; and

   (c)Open any safe located at the property situated at [H];

   3.      That the Second Respondent, [Mr Hedger], whether by himself or by any person appearing to be in control of the premises hereinafter mentioned, permit [the wife], [Mr M], [Mr A] and any such other person or persons duly authorised by the Applicant wife and supervised at all times by [Mr A], to enter forthwith the premises known as [H] in the State of New South Wales, for the purposes of looking for and taking into custody of the said [Mr A] the following:

   (a)all documents relating to the incorporation of the company known as [S] Limited;

   (b)All share certificates of [S] Limited.

   (c)A 3 ring white binder and contents marked [S] Limited.

   (d)Incorporation documents and register of [S] Limited;

   4.      That except as is necessary to comply with his obligation under these orders, while the Applicant wife is looking for the items referred to in orders 3 above or until 8:00pm on the day of which service of these orders is effected whichever is the earlier, [Mr Hedger] by himself his agents and servants is hereby restrained by injunction from attending at or upon the premises situated and known as [H] NSW.

   5.      That the said [Mr A] shall make an inventory at the conclusion of the execution of these Orders;

   6.      That as soon as practicable after the execution of these orders the Solicitors for the Applicant Wife shall file and serve an Affidavit of [Mr A] setting out the facts and circumstances of these orders and include a copy of the said inventory taken by him.

   7.      That [Mr A] shall keep the items taken together with the inventory in safe keeping and in trust pending further Order.

   8.      That the matter be listed in the Duty Judicial List at 10:00am on a date to be fixed by the Court.

8. On 18 January 2006 a further amended application for final orders was filed on behalf of the Wife.  The Wife sought a declaration that the shares held in X & T Pty Ltd by S Ltd are held upon trust for the Husband and further, that the Husband, Mr Hedger and B Pty Ltd and X & T   Pty Ltd transfer Lots 19, 10, 12 and 17 in Deposited Plan … to the Wife.

9. On 23 January 2006 there was further facsimile transmission correspondence between Mr G and Mr M in relation to the contention that Minter Ellison was in a position of conflict.  Mr G denied that there was any conflict of interest.  On 23 January 2006 Mr G informed Mr M that subpoenas issued to B Pty Ltd and X & T Pty Ltd lacked “legitimate forensic purpose” and an application would be made to have them set aside.  As it transpires I have no doubt that a significant amount of material held by B Pty Ltd and X & T Pty Ltd will be relevant and required.

10. On 24 January 2006 the Husband delivered a letter to Mr G in which he contended that Minter Ellison was in a position of conflict.  The Husband contended that signatures on some transfers of land were not his but had been forged by Mr Hedger or somebody acting at his request.  I note that the Husband also said that he would make a complaint to the Legal Services Commission.

11. On 25 January 2006 Mr M wrote to Mr G indicating that if the subpoenaed documents were not produced by B Pty Ltd and X & T Pty Ltd then the Wife would seek “the issue of a bench warrant”.  The subpoenas were returnable on 24 January 2006.  Mr M stated that the purpose was to enable an expert to provide a value of B Pty Ltd.

12. On 25 January 2006 Mr G received a letter from Mr M in which reference was made to the letter of 24 January 2006 that had been received from the Husband.

13. On 25 January 2006 a notice of address for service was filed on behalf of X & T Pty Ltd by Minter Ellison and on the same day a notice of address for service was filed on behalf of B Pty Ltd by Minter Ellison.

14. On 30 January 2006 Judicial Registrar Johnston made the following orders:

    1.      That orders are made in accordance with paragraphs 1, 2, 3, 5, 6, 7 and 9 of the wife’s Application in a Case filed on 18 January 2006 as set out hereunder:-

    “1.That the matter be heard ex-parte and be made returnable instanter in the first instance for consideration of making the following Anton Piller Order:

    2.That forthwith upon being served with a copy of these orders, the Applicants application and supporting Affidavit, [Mr Hedger], [Mr Hedger] is hereby ordered to do the following acts and things:

    (a)to deliver up all keys to the premises known as and situated at [H] to [Mr A] (“[Mr A]”) (an independent Solicitor); and

    (b)Accompany [Mr A] the Applicant wife and such persons authorised by her to [H]; and

    (c)Open any safe located at the property situated at [H]

    3.That the Second Respondent, [Mr Hedger], whether by himself or by any person appearing to be in control of the premises hereinafter mentioned, permit [the wife], [Mr M], [Mr A] and any such other person or persons duly authorised by the Applicant wife and supervised at all times by [Mr A], to enter forthwith the premises known as [H] in the State of New south Wales, for the purposes of looking for and taking into custody of the said [Mr A] the following:

    (a)all documents relating to the incorporation of the company known as [S] Limited;

    (b)All share certificates of [S] Limited.

    (c)A3 ring white binder and contents marked [S] Limited.

    (d)Incorporation documents and register of [S] Limited;

    …

    5.That the said [Mr A] shall make an inventory at the conclusion of the execution of these Orders;

    6.That as soon as practicable after the execution of these orders the Solicitors for the Applicant Wife shall file and serve an Affidavit of [Mr A] setting out the facts and circumstances of these orders and include a copy of the said inventory taken by him.

    7.That [Mr A] shall keep the items taken together with the inventory in safe keeping and in trust pending further Order.

    …

    9.That the parties be granted liberty to apply on 2 hours notice to the Court and to the other party".

    2.      That these proceedings are otherwise adjourned to the Judicial Registrar's Duty List at 10:00 am on 21 February 2006.

    IT IS NOTED:

    A.     That these orders have been made on the wife having given the usual undertaking to the Court in relation to damages through her solicitor.

15. On 1 February 2006 Mr G wrote to the Husband and advised that Minter Ellison had no record of having acted for the Husband let alone jointly with Mr Hedger.

16. On 1 February 2006 at 7.00 am the orders made on 30 January 2006 were executed by the Wife and others at the home of Mr Hedger.

17. On 1 February 2006 Mr G wrote to the Husband in response to his letter of 24 January 2006.

18. On 2 February 2006 Mr M sent to Mr G a copy of a subpoena addressed to Mr Hedger.  The subpoena sought a copy of the articles of association and/or constitution of Z Holdings Ltd “being a company incorporated in the British Virgin Islands”.  Mr M contended that it was believed the document was in the possession of Mr Hedger and it was not recovered at the time of the execution of the Anton Piller order.

19. On 2 February 2006 a bank account in the joint names of the Husband, Mr Hedger and X & T Pty Ltd with the Commonwealth Bank at SJ was closed.

20. On 2 February 2006 the second caveat sought to be lodged by the Wife over various properties was rejected by the Department of Lands.

21. On 3 February 2006 the Husband caused a caveat to be lodged over properties owned by B Pty Ltd.

22. On 6 February 2006 the Husband sent a letter to Mr G.  The Husband enclosed copies of transfers of 15 blocks of land and he contended that he had highlighted those signatures that were not signed by him and that had been forged.  He also contended that he had not been consulted in respect of the transfers and that Minter Ellison was or should have been on notice that the transfers required his signature.  He also contended that in previous Supreme Court proceedings Mr Hedger had given evidence that certain bearer shares were held by P, Solicitors and that this was wrong because such shares had always been in the possession of Mr Hedger or the possession of the Husband from time to time.  I note that Mr A gave evidence of the discovery of bearer shares at the home of Mr Hedger.

23. On 7 February 2006 Mr G wrote to Mr M and enquired as to whether or not the solicitors for the Wife had assisted the Husband in preparing a caveat or his letter of 6 February 2006.

24. On 8 February 2006 Mr M sent a facsimile transmission to Mr G.  It was contended that the Wife would be seeking a declaration that the shares held by S Ltd in X & T Pty Ltd were held for the benefit of the Husband. 

25. On 8 February 2006 the Husband sent a letter to Mr G again complaining about “fraudulent documents".

26. On 9 February 2006 on behalf of B Pty Ltd Mr G lodged with the Department of Lands an application for a lapsing notice in respect of the caveat lodged by the Husband.  The lapsing notice was served on the Husband on 15 February 2006 and the caveat has since lapsed.

27. On 9 February 2006 Mr G wrote to Mr M enquiring as to whether the solicitors for the Wife had assisted the Husband in relation to the lodgement of a caveat and preparation of a response that was filed on 11 January 2006.

28. On 14 February 2006 Mr M wrote to Mr G seeking assurances in relation to a possible claim by Mr C.

29. On 15 February 2006 an affidavit was sworn by Mr A.  Mr A gave evidence about what happened at the home of Mr Hedger on 1 February 2006 when the Anton Piller order made on 30 January 2006 was executed.  Mr A ascertained that documents which related to E Ltd were relevant and he saw documents which on the face of it appeared to reflect that E Ltd was the original name of S Ltd.  He said that he also looked through an envelope which contained two bearer share certificates for E Ltd and Z Ltd both incorporated in the British Virgin Islands and he asked Mr Hedger to provide a copy of the bearer share certificate for Z Ltd.

30. At this point I note that both Mr A and Mr M gave evidence about some of what happened at the home of Mr Hedger on 1 February 2006 and the behaviour of Mr Hedger.  Mr Hedger has not as yet given any evidence about what happened however, subject to such evidence the evidence of Mr A and Mr M may be relevant to an abuse of process issue as Mr Hedger appears to have attempted to hide what may be relevant evidence.

31. On 17 February 2006 Mr M wrote to Mr G.  On the same day a further letter was sent by Mr M indicating that the Wife intended to join Mr Hedger’s wife to the proceedings.

32. On 20 February 2006 an affidavit was sworn by Mr Hedger.  He said that he is the managing director of B Pty Ltd which is wholly owned by X & T Pty Ltd.  He said that neither he nor the Husband are or ever have been shareholders of B Pty Ltd.  He said that B Pty Ltd is the owner of 4 lots at C being lots 9, 10, 12 and 17 of DP … .  He contended that these properties are the sole asset and potential source of income of B Pty Ltd.  He gave no evidence in relation to the shareholding in X & T Pty Ltd or the ownership of the shares in Z Ltd or E Ltd or Q Ltd or S Ltd. 

33. As I have said before, in my view it is clear, and has been known by all parties for a considerable period of time, that the Wife and those advising her have been attempting to ascertain the ultimate beneficial ownership of X & T Pty Ltd a company which according to
    Mr G is controlled by Mr Hedger and in which the Husband was a shareholder at the time of separation.  Mr Hedger, B Pty Ltd and X & T Pty Ltd ultimately agreed to file affidavits setting out particulars and give evidence in relation to each of their contentions as to the beneficial ownership of the shareholdings of B Pty Ltd and X & T Pty Ltd and also annex all source documents supporting their contentions and assertions. 

34. On 21 February 2006 an affidavit was sworn by the Wife.  The Wife contends that during the search on 1 February 2006 at the home of Mr Hedger a letter signed by Mr Hedger was found that was written to P, Solicitors and it requested that P, Solicitors change the name of E Ltd to S Ltd.  Further, that the letter disclosed that the Husband was the owner of the company.  I note that the Husband’s first name is U.  The bearer share certificate was taken by Mr A.  There was also a letter to P, Solicitors that confirmed that the instruction to change company names to S Ltd and Q Ltd had been carried out by P, Solicitors.  The Wife contends that during her relationship with the Husband from time to time he would talk about P, Solicitors and often refer to that firm.  She contends that the Husband would often refer to P, Solicitors as “P [S]” and that the firm would undertake administrative tasks to do with companies that the Husband and Mr Hedger operated.  The Wife also said that she was aware that the solicitors for Mr Hedger had written to Mr A and advised him that he was not to provide a copy of the documents to anyone as the documents were the subject of legal professional privilege.

35. On 21 February 2006 a minute of orders sought was filed in Court on behalf of the Wife in which she sought various injunctions. 

36. On 23 February 2006 Mr G sent a facsimile transmission to Mr M.  Amongst things he complained that the affidavit of the Wife of 21 February 2006 discussed the contents of documents over which a claim for privilege was made.  Mr G did not identify the documents he was referring to or the relevant parts of the affidavit of the Wife.  I presume he was referring to what was said about S Ltd and Q Ltd.

37. On 24 February 2006 Mr M sent a response to Mr G and this further letter was responded to by letter of 6 March 2006.  Mr G contends that at no point has Mr M filed an affidavit explaining his conduct during the execution of the Anton Piller order.  Mr G contends that Mr M was familiar with the contents of documents obtained under the Anton Piller order over which a claim for privilege had been made.  In summary, on behalf of Mr Hedger it is contended that the documents in respect of which claim for privilege was made came into existence for the purpose of obtaining or receiving legal advice and that they referred to or arise directly from legal advice.  Again presumably this was referring to the documents that may demonstrate that the Husband and Mr Hedger owned S Ltd and Q Ltd.  In other words documents that may assist in ascertaining the ultimate beneficial ownership of B Pty Ltd.

38. On 23 February 2006 a Notice to Admit Facts was served on Mr Hedger on behalf of the Wife.

39. By letter dated 27 February 2006 EN & Co, Solicitors, wrote to Mr G on behalf of the Husband.  This is an important letter and I do not know if it was answered but I will presume that it was.

40. On 2 March 2006 Mr G received a letter from the Legal Services Commissioner enclosing a copy of a complaint lodged by the Husband against Mr G personally.  The Husband contended that Mr G had acted in a position of conflict of interest for the Husband in the proceedings, misled the Court, failed to properly account and failed to obtain proper authority to disburse funds.

41. On 9 March 2006 a Notice to Dispute Facts was filed by Mr Hedger.  It was in answer to the Notice to Admit dated 23 February 2006.  Mr Hedger was asked to admit whether in his own capacity or as a director he authorised and directed that the names of E Ltd and Z Ltd be charged to S Ltd and Q Ltd.  In response to this it was stated that Mr Hedger objected to the paragraph on the basis that it arose out of privileged information which was communicated to the Wife by her solicitor after it was viewed by the solicitor during the execution of an Anton Piller order and that Mr Hedger had not at any time waived any privilege that attached to the document.  Mr Hedger was asked whether or not the bearer share certificate held by Mr A for E Ltd was the bearer share certificate for the company now known as S Ltd and Mr Hedger did not admit.  Mr Hedger was asked whether or not on the date on which E Ltd changed its name to S Ltd the Husband was the beneficial owner of S Ltd and Mr Hedger said that he did not admit this paragraph.  Mr Hedger was asked whether or not the Husband gave or transferred his shares in S Ltd and shares in X & T Pty Ltd to Mr Hedger and Mr Hedger responded that he admitted that the shares previously held by the Husband in X & T Pty Ltd were transferred to Mr Hedger but did not admit that the Husband gave or transferred any bearer shares in S Ltd to Mr Hedger.  I note that in his affidavit of 20 February 2006 Mr Hedger gave no evidence in relation to the shareholding in X & T Pty Ltd nor the ownership of the shares in Q Ltd and S Ltd.

1. On 2 February 2007 by consent the proceedings were adjourned to 9 February 2007.

2. In a letter of 5 February 2007 Mr G contended that the case against Mr Hedger, B Pty Ltd and X & T Pty Ltd changed significantly and that the security for costs application and conflict of interest application should be dealt with by the Federal Court.  As well notice was given of an intention to make an application against the Husband for security for costs.

3. On 8 February 2007 a further affidavit was sworn by Mr G.  Mr G contended that it was apparent from the application of the Husband of 10 January 2007 that the dispute in so far as it relates to Mr Hedger, B Pty Ltd and X & T Pty Ltd is a complex dispute regarding share ownership of a number of companies and that he was instructed to make an application to have the matter in so far as it relates to Mr Hedger, B Pty Ltd and X & T Pty Ltd transferred to the Federal Court. 

4. On 6 February 2007 Mr G wrote to Mr M and also the Husband setting out a proposal to transfer the proceedings to the Federal Court.  Mr G also said that he was requested to seek an order for the release of $33,518.39 from the proceeds of the sale of properties owned by B Pty Ltd and held in a controlled monies account to enable the payment of invoices for legal fees dated 30 November 2006 and 22 December 2006.

5. On 16 February 2007 I made the following orders:

   1.      The Applicant Wife be granted leave to forthwith issue a subpoena to [Y] Accountants and Blake Dawson Waldron, Lawyers in the form of draft subpoena comprised in Exhibit A of 9 February 2007 and subject to any objection by [Y] Accountants and Blake Dawson Waldron, Lawyers I direct that the Second, Third and Fourth Respondents have first access to inspect any such documents produced in response to the said subpoena for seven days from the date of production of any documents.

   2.      Paragraphs 1, 2, 3, 5, 6 and 7 of the application filed on 11 September 2006 on behalf of the Second, Third and Fourth Respondents be dismissed.

   3.      The application by the Second, Third and Fourth Respondents for a variation of order 1 made on 12 September 2006 and/or order 11 made on 20 November 2006 to enable the payment of the legal costs in the invoices rendered by Minter Ellison, Lawyers identified in Exhibit B of 9 February 2007 be dismissed.

   4.      It be noted that order 11 made on 20 November 2006 will continue until further order.

6. On 22 March 2007 an affidavit was sworn on behalf of the Second, Third and Fourth Respondents by Mr R.  Mr R is advocate and solicitor and managing director of P, Solicitors, a law corporation in Singapore.  He said that he has been admitted as an advocate and solicitor in Singapore since 1994.  For a number of years he acted for the Husband’s late father.  I have already set out in various parts of this judgment what Mr R said.  As I have said the contentions of the Second, Third and Fourth Respondents as to the beneficial owner of X & T Pty Ltd and in turn the C development is now known.  As can be seen from what I have set out the amount of litigation that has transpired to get to this point has been significant and at some point there will probably be issues as to costs.

7. Mr G swore an affidavit on 22 March 2007 in which he gave evidence in relation to Minter Ellison’s representation which I have already dealt with earlier in this Judgment.  However, he said that “conflict searches” were conducted in all Minter Ellison offices and that apart from the matters that he identified there was no indication from the results that anyone from Minter Ellison had acted for the Husband, B Pty Ltd, X & T Pty Ltd, S Ltd or Q Ltd.  He also contended that the result of his enquiries reveals that he has not seen anything which indicates that Minter Ellison ever received instructions for matters in which he had acted for B Pty Ltd “from anyone other than [Mr Hedger] in his capacity as Director of [B] Pty Limited”.  Mr G also contended that to the best of his knowledge Minter Ellison has not received any confidential information from the Husband either in his personal capacity or his capacity as a Director of B Pty Ltd or any shareholding held by him in X & T Pty Ltd.

8. On 22 March 2007 an affidavit was sworn by Mr Hedger.  His evidence is consistent with the evidence given by Mr R namely he contends that S Ltd is wholly owned by A Ltd and that Mr R became a director on 30 September 1997 and Mr Hedger and the Husband resigned as directors shortly thereafter”.  He also gave evidence that Q Ltd is also wholly owned by A Ltd and that again he has been informed that Mr R became a Director on 30 September 1997 and that he and the Husband resigned as directors shortly thereafter.  He also said that A Ltd is wholly owned by G Ltd and that he has never been a director or shareholder of A Ltd and has never been a shareholder in G Ltd.  He said that the directors of A Ltd are Mr R and … who is the Husband’s mother.  Mr Hedger said that G Ltd is a bearer share company and the directors are himself, Mr PW and his mother-in-law.  He said “I do not have any personal knowledge of who holds the bearer share and is therefore the owner of [G Ltd]”.  He went on to say “I am informed and believe that my solicitor [Ms W] has asked [Mr R] who the owner of [G Ltd] is and that [Mr R] has stated that it is [Mr PW], the Principal of [P, Solicitors]”.  Thus the inference that can be drawn is that Mr Hedger is contending that he only ascertained the ultimate beneficial ownership of the bearer share from his solicitor Ms W although he did not say when he gained this knowledge.  He said that although he proposes to or will “deny on oath” a great deal of what the Husband and the Wife have said in affidavits, his affidavit was “limited to the [B Pty Ltd] corporate structure and ultimate ownership”.  I have no doubt that his evidence will have to go a lot further than what he said in this affidavit.  All of what Mr Hedger contends for will have to be investigated.  The inference that can be drawn is that Mr Hedger is contending that at the time he swore his affidavit on 20 February 2006 he had no knowledge of a number of the matters dealt with by Mr R.

Husband’s complaints about Minter Ellison

1. I had the benefit of a written outline of argument on behalf of the Husband and a number of matters were raised.  I will attempt to summarise what the contentions of the Husband are.  Minter Ellison provided advice to the shareholders of relevant entities as to taxation and other matters at the time of the “re-structuring” in 1999.  Next, Minter Ellison acted on conveyances in relation to the sale of land at C in the respect of which the Husband’s signature on the relevant transfers was forged.  Next, Minter Ellison gave advice in relation to related party loan arrangements.  Next, there is an issue as to the financial circumstances of various entities and, amongst other things; this will require consideration of what has happened to the proceeds of the sale of land at C.  Next, Minter Ellison has acted for, and still does, B Pty Ltd and X & T Pty Ltd of which companies the Husband was a director.  The Husband was also a registered shareholder of X & T Pty Ltd and may still be the beneficial owner of the shares.  However, Minter Ellison also acts for Mr Hedger and there is a significant controversy between the Husband and Mr Hedger as to the ultimate beneficial ownership of X & T Pty Ltd and thus B Pty Ltd.  As to this last matter it is submitted that Minter Ellison are acting for companies in which the Husband has an interest.

Principles

Grounds upon which legal practitioners may be restrained from acting for a party

1. There are three grounds which have emerged in the case law as a basis for restraining legal practitioners from acting for a party to litigation.  These grounds were identified in Spincode Pty Ltd v Look Software Pty Ltd(2001) 4 VR 501 by Brooking JA, a succinct summary of which is provided by Young J in the recent decision of Geelong School Supplies Pty Ltd v Dean [2006] FCA 1404:

   [24] In Spincode Pty Ltd v Look Software Pty Ltd(2001) 4 VR 501 (‘Spincode’) at 521–524 [52]–[58], Brooking JA identified three possible grounds for restraining a solicitor or counsel from acting for a particular party to litigation: the danger of misuse of confidential information; a breach of a fiduciary duty of loyalty not to act against a client, or against a former client in the same matter or a closely related matter; and the inherent jurisdiction of the court to control the conduct of solicitors and counsel as officers of the court. These three grounds represented the orthodox legal position in Australia prior to the decision of the House of Lords in Prince Jefri Bolkiah v KPMG (a firm) [1999] 2 AC 222 (‘Bolkiah’) which held that the duty of loyalty did not survive the termination of the relationship with the client.  Brooking JA’s analysis in Spincode has been consistently followed and applied in Victoria: see Sent v John Fairfax Publication Pty Ltd [2002] VSC 429; Pinnacle Living Pty Ltd v Elusive Image Pty Ltd [2006] VSC 202; and Adam 12 Holdings Pty Ltd v Eat & Drink Holdings Pty Ltd [2006] VSC 152. But it has not been followed in New South Wales.

   As Young J pointed out at [25] the position in New South Wales after the House of Lords decision in Prince Jefri Bolkiah v KPMG [1999] 2 AC 222 has consistently been that the jurisdiction of the court to intervene at the suit of a former client to restrain a solicitor from acting is founded solely on the real risk of disclosure of confidential information and not some principle of conflict of interest: see Belan v Casey [2002] NSWSC 58 per Young CJ in Eq; British American Tobacco Australia Services Ltd v Blanch [2004] NSWSC 70 per Young CJ in Eq at [97]–[104] and Asia Pacific Telecommunications Ltd v Optus Networks Pty Ltd [2005] NSWSC 550 per Bergin J at [51]–[55]. The position in Victoria has been that the equitable obligation of loyalty owed by a solicitor to a client survives the termination of the retainer.

2. In Kallinicos v Hunt (2005) 64 NSWLR 561, which was also discussed by Young J in Geelong School Supplies Pty Ltd v Dean (supra), after a thorough review of various authorities Brereton J said at [76] (citations omitted):

   [76] The foregoing authorities establish the following:

   ·          During the subsistence of a retainer, where the court's intervention to restrain a solicitor from acting for another is sought by an existing client of the solicitor, the foundation of the court's jurisdiction is the fiduciary obligation of a solicitor, and the inescapable conflict of duty which is inherent in the situation of acting for clients with competing interests (Prince Jefri Bolkiah).

   ·          Once the retainer is at an end, however, the court's jurisdiction is not based on any conflict of duty or interest, but on the protection of the confidences of the former client (unless there is no real risk of disclosure) (Prince Jefri Bolkiah).

   ·          After termination of the retainer, there is no continuing (equitable or contractual) duty of loyalty to provide a basis for the court's intervention, such duty having come to an end with the retainer (Prince Jefri Bolkiah; Belan v Casey; British American Tobacco Australia Services Ltd; Asia Pacific Telecommunications Ltd contra Spincode Pty Ltd; McVeigh; Sent).

   ·          However, the court always has inherent jurisdiction to restrain solicitors from acting in a particular case, as an incident of its inherent jurisdiction over its officers and to control its process in aid of the administration of justice (Everingham v Ontario; Black v Taylor; Grimwade v Meagher; Newman v Phillips Fox; Mitchell v Pattern Holdings; Spincode Pty Ltd; Holborow; Williamson v Nilant; Bowen v Stott; Law Society v Holt).  Prince Jefri Bolkiah does not address this jurisdiction at all.  Belan v Casey and British American Tobacco Australia Services Ltd are not to be read as supposing Prince JefriBolkiah excludes it.  Asian Pacific Telecommunications Ltd appears to acknowledge its continued existence.

   ·          The test to be applied in this inherent jurisdiction is whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a legal practitioner should be prevented from acting, in the interests of the protection of the integrity of the judicial process and the due administration of justice, including the appearance of justice (Everingham v Ontario; Black v Taylor; Grimwade v Meagher; Holborow; Bowen v Stott; Asian Pacific Telecommunications Ltd ). 

   ·          The jurisdiction is to be regarded as exceptional and is to be exercised with caution (Black v Taylor; Grimwade v Meagher; Bowen v Stott).

   ·          Due weight should be given to the public interest in a litigant not being deprived of the lawyer of his or her choice without due cause (Black v Taylor; Grimwade v Meagher; Williamson v Nilant; Bowen v Stott)..

   ·          The timing of the application may be relevant, in that the cost, inconvenience or impracticality of requiring lawyers to cease to act may provide a reason for refusing to grant relief (Black v Taylor; Bowen v Stott).

3. Although Geelong School Supplies Pty Ltd v Dean (supra) provides a recent overview of this debate Young J fell short of commenting on the preferred approach. In that case the ground relied upon was the inherent jurisdiction of the court to restrain its officers in the interests of justice. As a result Young J said at [26]-[27]:

   [26] Although the Supreme Court of New South Wales has declined to follow Spincode, insofar as Brooking JA held that the equitable obligation of loyalty owed by a solicitor to his or her client survives the termination of the retainer, the decisions in New South Wales do not cast any doubt upon the court’s inherent power to restrain solicitors from acting in a particular case having regard to the interests of the administration of justice.  Similarly, the court’s inherent supervisory jurisdiction over solicitors and counsel was not relevant to the House of Lords decision in Bolkiah.
   [27] For the purposes of this case, the controversy concerning the duty of loyalty, and whether it extends beyond termination of the retainer, can be put to one side.  Counsel for the Dean interests does not contend that his clients were formerly clients of Vogrig or WVL.  No question arises of confidential information or its potential misuse.  As I have already mentioned, the sole ground for injunctive relief is the third ground identified in Spincode, namely the inherent power of the court to restrain its officers from acting for a particular client in litigation when such a restraint is required by the interests of justice.  There is, accordingly, no need for me to consider whether the weight of authority in the Federal Court supports the Victorian approach rather than that adopted in New South Wales: see Wan v McDonald (1992) 33 FCR 491 at 512–513; PhotoCure ASA v Queen’s University at Kingston(2002) 56 IPR 86 (‘PhotoCure’);Waiviata Pty Ltd v New Millennium Publications Pty Ltd [2002] FCA 98 at [10]; Bureau Interprofessionnel Des Vins De Bourgogne v Red Earth Nominees Pty Ltd (t/as Taltarni Vineyards) [2002] FCA 588 at [18]; and Lincoln v Holmesglen Institute of TAFE [1999] FCA 601 (‘Lincoln’).

4. Rule 8.03 of the Family Law Rules 2004 provides that:

   A lawyer acting for a party in a case must not act in the case for any other party who has a conflicting interest.

   A Note to the rules makes clear that it does not purport to set out all the situations in which a lawyer may not act for a party.

5. There are number of cases where the Family Court has dealt with what I will refer to as the first and or second grounds.  The Full Court decision of McMillan v McMillan (2000) FLC 93-048 is a leading authority on the test to be applied in the family law jurisdiction. Prior to this decision it was uncertain whether a narrow test of actual prejudice or the broader test of theoretical risk of prejudice was to be applied. In this case the Full Court considered an appeal by the wife against an order restraining her solicitor from acting for her. This case involved a legal clerk that had previously been working at the firm the husband had retained in an administrative capacity. The legal clerk had worked on the husband’s file and taken his telephone calls and later moved across to working for the solicitors of the wife in the capacity of a secretary. The Full Court ultimately adopted the broad approach in Mills v Day Dawn Block Gold Mining Company Ltd [1082] QLJ 62 and In the Marriage of Thevanaz (1986) 11 Fam LR 95; FLC 91- 748 of a theoretical risk of prejudice rather than proof of actual prejudice. The Full Court found that the narrow or English approach which requires ‘real mischief or prejudice’ to follow in order to justify court intervention (an approach stemming from Rakusen v Ellis, Munday & Clarke [1912] 1 Ch 831) was inappropriate for the family law jurisdiction. The Full Court at par 56 cited with approval the summary of the law provided by Lindenmayer J in the unreported case of Stewart (unreported, 17 April 1997):

   All that is necessary is that the wife swears that she has conveyed confidential information to the solicitors and that she believes, not unreasonably, that that information may be used against her, or at least to her disadvantage, in these current proceedings.

6. Importantly, the adoption of the stricter approach in the family law jurisdiction was borne out of cases concerning practitioners that had acted for both husband and wife and reasons specific to this factual situation.  In these cases the reasons for adopting this test have been based on the sensitive nature of the jurisdiction and the in-depth factual inquiries that the court was often required to make into parties financial history, conduct and contributions.  Indeed these factors were present in McMillan v McMillan (supra).  They were also present in Thevanez and Thevanez (1986) FLC 91-748, a decision which the Full Court referred to in McMillan v McMillan (supra) as espousing the correct approach to be taken in cases regarding dismissal of legal practitioners.  See also Magro and Magro (1989) FLC 92-005; Griffis and Griffis (1991) FLC 92-233; Kossatz and Kossatz (1993) FLC 92-386.

7. In relation to the third ground the test to be applied when determining whether the inherent jurisdiction may be invoked was articulated by Brereton J in Kallinicos v Hunt (supra) at [76] namely whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a legal practitioner should be prevented from acting, in the interests of the protection of the integrity of the judicial process and the due administration of justice, including the appearance of justice. This formulation of the test was adopted and applied by Young J in Geelong School Supplies Pty Ltd v Dean (supra) in determining to restrain a solicitor from acting.

8. However the authorities stress that this inherent jurisdiction is an exceptional one and must be exercised with caution: Kallinicos v Hunt (supra) at par 76; Geelong School Supplies Pty Ltd v Dean (supra) par 35; Grimwade v Meagher[1995] 1 VR 446; Bowen v Stott [2004] WASC 94. In particular, these cases say that “due weight” should be given to the public interest in a litigant not being deprived of a lawyer of choice without due cause.

9. Further the timing of an application may be relevant because as Brereton J in Kallinicos v Hunt (supra) said at [76] said that: “…[t]he cost, inconvenience or impracticality of requiring lawyers to cease to act may provide a reason for refusing to grant relief”.

10. As to circumstances in which the court may invoke its inherent jurisdiction to restrain a legal practitioner in Geelong School Supplies Pty Ltd v Dean (supra) at par [31] Young J said

    [31] In the course of his examination of the authorities, Brereton J referred to the observations of Bergin J in Mitchell v Pattern Holdings Pty Ltd [2000] NSWSC 1015 (‘Mitchell’), Heenan J in Holborow v MacDonald Rudder [2002] WASC 265 (‘Holborow’) and Hasluck J in Bowen v Stott.  In Mitchell, Bergin J stated that, as an incident of its inherent jurisdiction, the court may decide upon the propriety of a legal practitioner representing a party in a particular case to ensure justice and the appearance of justice: at [34]. In Holborow, Heenan J said that this power had been invoked in cases where there was a potential that the legal practitioner might be a witness; where the subject matter of the litigation was likely to involve an evaluation of the conduct of the solicitor; and where the efficacy of documents prepared by the solicitor was likely to be in issue: at [23]. In Bowen v Stott, Hasluck J said that it may be appropriate to invoke the inherent power in cases where the solicitor had some direct pecuniary interest in the outcome of the case, where the solicitor might feel impelled to justify or defend his conduct in representing a client, or where the practitioner’s credibility is at stake as a potential witness: at [47], [53] and [55].

Conclusion

1. The Husband is not an existing client of Minter Ellison.  Further the evidence does not establish that the Husband is a former client of Minter Ellison and hence even adopting the Victorian approach to the ground of a breach of a fiduciary duty of loyalty not to act  against a former client in the same matter or a closely related matter this ground is not established.

2. As to the ground of the danger of misuse of confidential information again the evidence does not enable me to safetly conclude that this ground has been established.  The Husband made allegations about the involvement of Minter Ellison in giving advise about restructering of various entities however there is no evidence that prima facie supports these contentions.

3. The ground that has caused me the most concern relates to the inherent jurisdiction to control the conduct of solicitors and counsel as officers of the court.  This is an unusual case.  The Husband has in the past been a director and shareholder of corporations for whom Minter Ellison have acted, and still do, in relation to various matters.  There is now an issue as to the ultimate beneficial ownership of some of these corporations and the protaginists in this controversy are the Husband and Mr Hedger.  The corporations include the Third and Fourth Respondents for whom Minter Ellison act.  Minter Ellison also act for Mr Hedger.  In my view prima facie, when the history of what has happenned is considered including the conduct of the litigation and the difficulties of ascertaing whom Mr Hedger and the Third and Fourth Respondents contend is the ultimate beneficial owner the issue that arises is whether Minter Ellison should be acting for Mr Hewit and also the Third and Fourth Respondents or for that matter any other person or entity whose interests are relevant to this issue.  Further there is an issue as to the financial circumstances of the relevant entities and this includes what has happened to various borrowings and the proceeds of sale of various properties in circumstances where Minter Ellison acted in relation to a number of the transactions. 

4. At present the evidence does not enable me to conclude that a legal practitioner being a partner or employee or former partner or former employee of Minter Ellison may be witness in the proceedings.

5. The evidence does not enable me to conclude that a legal practitioner being a partner or employee or former partner or former employee of Minter Ellison has some direct pecuniary intererst in the outcome of the proceedings.

6. At present the evidence does not enable me to conclude that the subject matter of the litigation is likely to involve an evaluation of the conduct of a legal practitioner being a partner or employee or former partner or former employee of Minter Ellison.

7. At present the evidence does not enable me to conclude that the the efficacy of documents prepared by a legal practitioner being a partner or employee or former partner or former employee of Minter Ellison was likely to be in issue.

8. At present the evidence does not enable me to conclude that a legal practitioner being a partner or employee or former partner or former employee of Minter Ellison might feel impelled to justify or defend his conduct in representing a client.

9. One of the difficultes however will always be that whoever acts for the Third and Fourth Respondents the lawyers will obtain instructions from Mr Hedger as he is the only current director of the companies. 

10. As Young J said in Geelong School Supplies Pty Ltd v Dean (supra) the crucial question is whether on the evidence before me a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that Minter Ellison be restrained from acting for Mr Hedger and the Third and Fourth Respondents in these proceedings.  Further as his Honour said in answering this question it must be borne in mind that this is an application for a permanent injunction and it must also be borne in mind that the jurisdiction is an exceptional one; it is to be exercised with appropriate caution and due weight must be given to the public interest in a litigant not being deprived of the solicitor of its choice without due cause.

11. I have come to the conclusion that the application should be dismissed.  However there is a great deal yet to be done and considered.  Obviously as the evidence unfolds if there are relevant matters that arise then the application can be made again.

I certify that the preceding 229 paragraphs are
a true copy of the reasons for judgment
of the Honourable Justice O’Ryan

………………………………………………………..
Associate: 
Date: 15 June 2007

IT IS NOTED that this judgment for all publication and reporting purposes be referred to as POND & THURGA