Y v NI

[2007] QSC 325

[2007] QSC 325

SUPREME COURT OF QUEENSLAND

CIVIL JURISDICTION

ATKINSON J

No 2959 of 2005

Y

Applicant

and

NI

And

SI

And

MAINRIVER PTY LTD

And

FUJISAWAIKAKOBYO PTY LTD
ACN 059698255

Respondent

Defendant

Respondent

Defendant

BRISBANE

..DATE 22/10/2007

ORDER

HER HONOUR:  The hearing today concerned a number of

applications made in a part 19 of the Property Law Act matter

which concerns the property settlement on the breakdown of a

de facto relationship between the applicant Y and

the first respondent NI.

This matter commenced in 2005 and has been making a slow and

sometimes tortured progress through this Court.  Many orders

have been made in this matter, including a declaration that

there was a de facto relationship between the couple,

opportunities for the first respondent Mr NI to obtain

expert evidence as to his apparently extensive assets in Japan

which in the end proved wholly unsatisfactory, and orders made

by me on 8 March 2007, then consent orders for directions in

this matter made on 12 July 2007.

I shall endeavour to deal with each of the applications in

this matter seriatim.

The first matters I shall deal with are the applications made

by the first, second and third respondents.  The second and

third respondents are companies under the control of the first

respondent.

The first, second and third respondents seek an order that

pursuant to section 333 or 341 of the Property Law Act that

they pay the outstanding invoice of Ernst & Young out of the

Australian assets restrained by an order made on the 13th of

May 2005 on account of the current invoices rendered with

respect to the report being prepared by Ernst & Young with

respect to the valuation of the Japanese assets.

To understand that application one has to go to the order of

the Court made on 8 March 2007.  On that date the Court

ordered that in relation to the assets held by the first

respondent, including any company or trust with which he was

associated which were held in Japan, Grant Murdoch of Ernst &

Young was to be engaged as a joint expert to undertake a

valuation of each asset.

There were other subsidiary orders, but with regard to the

cost of obtaining that expert report, particularly in view of

the history of the matter, it was ordered that in relation to

the various appointments of a single expert witness the costs

of such valuation could be borne initially by the first

respondent provided that the issue of the costs and

proportionate liability of the same be an issue reserved to

the trial Judge.

The first respondent now essentially seeks a variation of that
order.  I accept that the Court has the power to vary an
interlocutory order which has been made; see R v. Pettigrew
[1997] 1 QdR 601 at 608 to 610; Fylas Pty Ltd v. Vynal Pty Ltd
[1992] 2 QdR 593 at 599; and re Rothwells Limited [1990] 2 QdR
181 at 187.  That power is exercised where the administration
of justice requires it or where it is in the interests of
justice to do so.  See also O v. L [2005] Family Court of
Australia.

So accepting that I have the power to do so, the question is
ought I do so in this case having made that order after
hearing argument on the previous occasion? 

In support of the application the first respondent has provided what can only be described as the barest of material.  He has exhibited an invoice for $70,000 which has been received from the expert, but does not exhibit the document which was an attachment to that invoice which sets out the work that's been done.  The invoice is dated 26 July 2007 and has 14 days for payment.  No explanation has been given for any attempts to pay it, of any correspondence about nonpayment.  The material which has been provided from Ernst &
Young was not provided to the Court by the first respondent,
but some of that material was provided to the Court by the
plaintiff over the objection of the first respondent.

Essentially the first respondent argues that he cannot afford
to pay for the accountant's report.  The evidence of that is
found only in his affidavit filed on the 3rd of October 2007.
In paragraph 10 he asserts that he does not have sufficient
cash moneys to meet his current day-to-day living expenses and
"to fund the report of Ernst & Young and my own legal costs as
well as the legal costs associated with the other parties to
these proceedings", and at paragraph 21 he more or less
repeats that statement.  He exhibits no documents in an
endeavour to try and make good what is essentially an
assertion.

The plaintiff has exhibited a copious amount of material which
suggests that the first respondent is, in fact, extremely
wealthy with a large amount of property in Japan.  The
preliminary investigations by Ernst & Young appear to support
that.  I am not satisfied on the evidence presented to me that
the interests of justice require me to vary the order as to
the payment of the costs of the expert made by me on 8 March
2007.

The second application made by the first, second and third
respondents is that they receive $300,000 from the Australian
assets restrained by the order made on 13 May 2005 on account
of their anticipated legal costs and outlays.  There are
circumstances, of course, in which the legal costs of a party
who has moneys restrained ought to be paid out of those
restrained moneys.  However, of course, it is necessary for
proper evidence to be put before the Court to justify such a
claim.

In this case there is no affidavit from a solicitor as to the
likely legal costs.  The only estimate appears to be provided
by the first respondent who is not a solicitor and does not
reveal the source of his estimates.  His estimates vary
widely.  The preparation for attendance in mediation he
estimates to be from 20 to $50,000, engaging and briefing
junior counsel with respect to settlement negotiations in the
mediation 20 to $30,000, and preparing a brief and jointly
instructing a mediator for the purposes of formal mediation,
including paying the mediator for mediation up to two days,
estimated further costs approximately 20,000 to $40,000.
...
HER HONOUR:  I deviate to mention that the fourth respondent
has also sought her costs through to the end of the mediation
and for the most part that is properly supported by an
affidavit from her solicitor and seems to me to be in the
terms of quantum entirely reasonable.

It therefore seems to me that it would be reasonable to allow
$50,000 to the first, second and third defendants for their
anticipated legal costs to the end of the mediation.

I should mention, lest it be thought that this is the thin end
of the wedge, that by the time of the mediation the expert
report from Ernst & Young should have been received and any
doubts as to the first respondent's financial position in
Japan should have been resolved.  This is not meant to be the
first of a series of rolling orders for the payment of the
legal costs out of the Australian assets, but it is intended
that the matter is able to be financed through to the end of
the mediation.

I should say with regard to the legal costs that any
suggestion that the Court would order the payment out of the
Australian assets of $100,000 to review the expert report is
misconceived.

The third order sought is the payment of further funds from
the Australian assets which have been restrained to meet "the
expenses associated with the report being prepared by Grant
Murdoch of Ernst & Young".  That matter has already been
covered in these reasons and for the reasons given will not be
allowed.

The fourth order sought is that the first respondent receive
sufficient funds from the Australian assets restrained to meet
his land tax liabilities or any taxation liabilities as may be
assessed by the Australian Tax Office or the relevant land tax
regulatory body from time to time.

In my view, it is appropriate to order that the land tax
assessed on the property which has been restrained be able to
be paid from the assets which have been restrained.  Those
liabilities are known and are in the amount of $38,636.40 and
$27,490.60 and I will order that those land tax liabilities
are able to be paid from the restrained sum.

Any liability of the taxation office has not been crystallised
and I will not make any order with respect to it.

The plaintiff seeks an order for further disclosure against
the first respondent.  Not many arguments were raised in oral
argument against this application and no answer was given to
the rule 444 letter that was sent with regard to that.  The
arguments raised in oral argument today were that various
financial records and statements relating to the first
respondent and his companies in Japan didn't need to be
provided to the plaintiff because they had been provided to
the expert.  That argument is, of course, lacking in
substance.  Of course, a duty of disclosure applies to them.

I am prepared to make all the orders for disclosure which are
sought by the applicant with the exception of subparagraph (j).
I'm not convinced that the way in which those documents have been described , if they exist, makes them disclosable by
the first defendant.  Mr Hackett conceded that they could have
been better described, which is perhaps a gentle way of saying
that they have been wrongly described and I will make no order
with regard to paragraph (j), but the other orders for
disclosure will be made in accordance with the submission made
by counsel for the applicant.  The respondents
will have till the 21st of December 2007 to make such
disclosure.

A guillotine order was sought in respect of nondisclosure and
given the history of this matter, it is certainly a case in
which the parties should be put on strict compliance, however,
given the complexity of the disclosure requirements a judicial
decision would, in my view, have to be made that the
disclosure had not been made in accordance with the order.  If
such disclosure is not made, then the applicant should apply
to the Court to have the first, second and third respondents'
defence struck out.

The applicant has also sought an order for the payment of the
sum of $7,000 ordered to be paid by way of costs on 17 May
2007 and an order that the first, second and third defendants
defence be struck out if no such payment is made.  It seems to
me that that payment ought be made.

The first, second and third defendants have not made that
payment in spite of the fact that the order was made by me on
17 May 2007.

The first, second and third respondents have a duty to make
that payment and in my view if it is not made within a
reasonable time then it is appropriate to strike out the
first, second and third defendants' defence.
...
HER HONOUR:  In accordance with the submissions made by
counsel on behalf of the first and second and third
respondents, the first respondent has until 4 p.m. on the 16th
of November 2007 to make that payment.  If the payment is not
made to the solicitors for the applicant by that date, upon the solicitors for the applicant filing an affidavit to that
effect, the first, second and third defendants' defence will
be struck out.

The next application is an application for disclosure against
the fourth defendant.  The fourth defendant does seem to be in
a different position to the first, second and third
defendants.  So far as her attempts to comply with her duty of
disclosure, her solicitors appear to have been endeavouring to
comply with the requirements.

There does appear to be some documents which still need to be
disclosed, but the rule 444 request made by the applicant has some difficulties with it in that it describes some documents which prima facie appear to be privileged and there has been a
detailed response to it.  There are still some matters to be
worked out between the parties, but with professional diligence on both sides it appears to me there should be no difficulty in that disclosure being made and I order that the fourth respondent make any further disclosure by 21 December 2007.

The reason for the length of time given for that is that it
was submitted by counsel for the fourth respondent that given
the distance and language difficulties further time would be
required to do that and so I have given the fourth respondent
all the time that should be necessary to comply with the duty
of disclosure.

I have also been asked to allow the fourth respondent to
receive money out of the restrained moneys to allow her to
fund the litigation through to the end of the mediation.  As I
previously observed, that application is supported by an
affidavit from her solicitor and I accept that the costs
estimates are reasonable and that she appears to have no
assets and that the pleadings to date disclose that she has an
arguable interest in the assets in Australia.

In those circumstances, I am prepared to allow for $50,000 to
be paid out of the restrained assets in the first instance to
fund her appearance in this litigation through to the end of
the mediation.
...
HER HONOUR:  I will order that the costs of the mediator be
paid out of the restrained funds.

I direct that the plaintiff provide a case plan to me
containing all of these orders plus any other orders to get
the matter through to the end of mediation with the consent of
the other parties, if possible, if not, then the case plan
proposed by the plaintiff in addition to the orders made by me
today.  If the respondents do not agree to a reasonable case
plan and I find that that consent was not reasonably given,
then the respondents will have to pay the costs of any
application to me to make that case plan the order of the
Court.
...
HER HONOUR:  I order that the costs of today be the
plaintiff's and the fourth respondent's costs in any event.
...
HER HONOUR:  The case plan should include an order that if it doesn't settle at mediation, the directions that need to be given to take it right through to request for trial dates.
...
HER HONOUR:  What I am saying to the plaintiff's solicitor in
preparing up the case plan is that you would have to work on
the assumption that all parties will comply with orders made
by the Court.