Russo v Russo (No. 3)

[2015] NSWSC 1849

Supreme Court

New South Wales

Medium Neutral Citation:	Russo & Ors v Russo & Ors (No. 3) [2015] NSWSC 1849
Hearing dates:	3 December 2015
Date of orders:	03 December 2015
Decision date:	03 December 2015
Jurisdiction:	Equity
Before:	Slattery J
Decision:	Order that the third defendant produce all primary accounting records in his possession so that the plaintiffs may perform an accounting in respect of the three joint ventures the subject of these proceedings.
Catchwords:	EQUITY – equitable relief – production of accounts – where defendant ordered to produce an account in common form – where defendant had failed to produce an account – where defendant had failed to produce primary documents for purposes of accounting – whether plaintiffs may themselves produce accounting.
Cases Cited:	Russo v Russo [2015] NSWSC 17 Russo v Russo (No. 2) [2015] NSWSC 449
Category:	Consequential orders (other than Costs)
Parties:	First plaintiff: Angelo Phillip Russo Second plaintiff: Rosemary Russo Third plaintiff: Anros Consulting Pty Ltd Third defendant: John Russo
Representation:	Solicitors: Plaintiffs: David Matthew Farrar, Farrar Lawyers Third defendant: John Russo
File Number(s):	2011/280915
Publication restriction:	No

EX TEMPORE Judgment

1. This is the Court’s third judgment in these proceedings. The earlier judgments are Russo & Ors v Russo & Ors [2015] NSWSC 17 and Russo & Ors v Russo & Ors (No. 2) [2015] NSWSC 449. Events, matters and things are referred to in this judgment in the same way as they are in the Court’s prior judgments.

2. These proceedings are before the Court today for the enforcement of the Court's orders. The proceedings took place between August and November 2014. After a contest of some six days, on 2 February 2015 the Court gave judgment and then ordered an account in common form in the plaintiffs’ favour against the defendants, Joseph Russo, John Russo and Joseph's wife, Suzanne Russo. There has now been a settlement of the proceedings between Joseph Russo and Suzanne Russo on the one side and the plaintiffs on the other.

3. The plaintiffs now seek to enforce the Court's orders against Mr John Russo. In an attempt to comply with the Court’s orders for the production of accounts in common form, Mr John Russo has filed today and read two affidavits, one of 1 December 2015 and the other of 3 December 2015. Those affidavits are an attempt of sorts to produce a set of accounts in respect of the three projects. But it is quite clear by reading this evidence that the material does not amount to a conventional accounting for the three relevant development projects. It is difficult to understand just by reading through the material what profits were made from and what moneys were applied to which of the three projects.

4. Perhaps the chief complaint of the plaintiffs is that Mr Russo’s evidence includes: no source documentation, no evidence as to how source documentation has been used; and few primary accounting records that were used to produce these accounts. It is not clear what records were used to record the receipt of moneys for each joint venture. There is no consistent organisation of vouchers which would indicate what money were expended during the joint venture projects. Nor is there any clear accounting as to the distributions to each partner at the conclusion of each project, and any reinvestment into the succeeding project. And, the accounts do not show how financing costs, from either equity or debt finance, have been accounted for.

5. The result of what is produced does not give the Court confidence that the form of accounts produced give an accurate record of the profitability of these projects and the respective entitlements of the joint-venture parties. Mr Farrar, on behalf of the plaintiffs, says that his clients are now left in the position that they will have to do their best with the material that has been supplied, together with their own accounting advice to try to produce some accounts so that a final dollar figure can be calculated as to what is said to be owing to the plaintiffs. There seems to be no good reason why the plaintiffs should not be at liberty to do this in light of John Russo’s failure to do so.

6. In light of what has now been received and to further enforcement of the Court's judgment for the provision of an account, the Court is prepared to require Mr John Russo to produce documents that can be used to make up accounts of an acceptable standard. In this regard I would observe that Exhibit JRR-4 and the other primary documents that Mr John Russo has already produced do not appear, even upon a relatively quick perusal, to be a complete account of all the documents one would have expected to have been created in the course of these projects. Mr Russo has said in Court today that he has other primary accounting records in his possession, which he is prepared to produce.

7. So the Court will make orders for Mr Russo to produce documents. Over the Court’s vacation it should then be possible for the plaintiffs to use their own resources to construct some basic financial accounts so that this matter can be brought to finality and a judgment sum of some sort can be calculated. I will order, therefore, the production of such primary records by Mr John Russo to the plaintiffs by Tuesday, 15 December 2015. I will re-list the matter the following day.

8. By consent, the Court makes the following orders:

1. By 9.30am on 16 December 2015 the third defendant is to produce to the Court the following documents in his care, custody, or control:

1. All primary accounting records (including but not limited to) cheques, cheque butts, bank statements, credit card statements, invoices, receipts, memoranda, transfer documents, contracts of any type, credit notes, loan documents (including any applications whether refused or accepted), drawdown notices, bank trace document quantity surveyor reports in relation to the following:

1. the Parramatta Project which is the subject of these proceedings; and

2. the Mosman Project which is the subject of these proceedings; and

3. the Balmoral Project which is the subject of these proceedings (collectively referred to as “the Projects”); and

2. A list of all documents produced in relation to order 1(a) arranged in order using the following format:

1. Document number; and

2. Date of document; and

3. Number of pages; and

4. Brief description of the document,

in respect of the Projects.

2. The proceedings are adjourned for further directions to 16 December 2015 at 9.30am before Slattery J.

3. To the extent that the third defendant reasonably believes that there was once in his possession documents of the kind described in order 1 of these orders, but those documents are no longer in his possession, he should to the best of his ability before 9.30am on 16 December 2015 identify those documents or classes of documents to the plaintiffs and inform the plaintiffs where he believes they, or copies of them, may be located.

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Decision last updated: 04 December 2015