Murakami v Wiryadi & Ors [2006] NSWSC 1354 | Case summary

2906/05 TAKAKO MURAKAMI v LOUISE MARIA WIRYADI & ORS JUDGMENT Introduction 1 Takako Murakami, the plaintiff, and her brother, Takao Murakami, are the only children of a relationship between the late Takashi Murakami Suroso and Yu Yun Hwa. 2 Yu Yan Hwa died in 1968 and the deceased, soon afterwards, married Louise Maria Wiryadi, the first defendant. The second defendant, Ryuji Murakami, and the third defendant, Ryuzo Murakami, are the only children of that marriage. Mrs Wiryadi and the deceased were divorced in July 1994. The deceased died in 1996. Before his death, the deceased and other members of his two families were engaged in litigation in Indonesia. The deceased executed his last will in July 1993. By it, in effect, he left all his property to Mrs Murakami and her brother. 3 Mrs Murakami is a resident of California in the United States of America. Mrs Wiryadi is an Indonesian citizen who predominantly resides in Jakarta. While she has Australian resident status and visits Australia from time to time she does not reside here on a permanent basis. Ryuzo Murakami is an Indonesian citizen who works and lives in Indonesia and only infrequently visits Australia. Ryuji Murakami is an Australian resident living at Pymble, New South Wales. For the purposes of these proceedings, however, Mrs Wiryadi and Ryuzo Murakami, in entering unconditional appearances, gave the Pymble address. 4 Probate of the will of the deceased was granted to Mrs Murakami by this court in November 2005. The real estate, the subject of these proceedings, is situated in New South Wales. The bank accounts are held in Australia. 5 Mrs Wiryadi and her children seek an order permanently staying these proceedings, or staying them until Indonesian litigation seeking a determination of the issues in these proceedings is finally determined. Such Indonesian proceedings have not yet been commenced. The Indonesian proceedings 6 There are four levels of judicial determination in Indonesia. The District Court is the court of first instance. An appeal lies to the High Court at provincial level and from there on cassation, virtually equivalent to an appeal on a point of law, to the Supreme Court, Indonesia's highest court. Most matters, even trivial ones, are appealed as a matter course to the Supreme Court. The fourth and final level of judicial determination is by way of the Supreme Court re-opening and reviewing its earlier decision, referred to as peninjauan kembali, shortened to PK. 7 The deceased commenced divorce proceedings against Mrs Wiryadi in the South Jakarta District Court. It granted the deceased's application in December 1992. Mrs Wiryadi's appeal to the High Court was rejected in July 1993 as was her cassation application to the Supreme Court in July 1994. In January 1996, the Supreme Court rejected her application for PK review. 8 In July 1993, the Central Jakarta District Court gave a judgment with respect to the ownership of shares in PT Mudaya Corporation Ltd in a suit by the deceased against Mrs Wiryadi. After an appeal to the High Court which delivered its judgment in December 1994, the Supreme Court issued a cassation decision in July 1996 that the deceased owned 50 shares and Mrs Wiryadi owned 20 shares in the company. No PK review application was made. 9 Mrs Wiryadi brought proceedings against PT Mudaya Corporation Ltd, Mrs Murakami and others over the ownership of shares in the company. A cassation decision of the Supreme Court in 1998 found that the dispute over ownership of the shares had already been decided in the earlier proceedings. It also found that a testament deed no 30, by which the deceased gave 46 of his shares to Mrs Murakami and the remaining four shares to third parties, was valid. Again, there was no PK review. 10 The Indonesian Civil Code and the Marriage Law of 1974 provide for the equal division between spouses upon divorce of all property acquired by them jointly or severally during the marriage regardless of relative contributions to acquisition costs. This process is usually part of the divorce proceedings but an application for the division of common marital property may be initiated after divorce. 11 After his divorce, the deceased initiated common martial property proceedings in the South Jakarta District Court against Mrs Wiryadi. Its decision was delivered in February 1996. Following his death, Mrs Murakami became the moving party representing the deceased's estate. A decision of the High Court on appeal was given in February 1997 and a cassation decision of the Supreme Court in June 1998. PK review proceedings were determined in February 2000. The judgment approved the application by Mrs Murakami. It set aside the decisions of the South Jakarta District Court, the Jakarta High Court and the Supreme Court. The case was re-tried and the common marital property determined. In addition to properties in Indonesia, assets in Singapore, Tokyo and the United States were declared to be common marital property. Orders were made for Mrs Wiryadi to deliver six specified properties while a further six specified properties were to become her portion. A further property was declared to be halved equally. These proceedings did not deal with the shares in PT Mudaya Corporation Ltd, the contents of a safe deposit box, the properties in New South Wales or the Australian bank accounts. 12 In July 1996, the South Jakarta District Court, in a suit by Ryuji Murakami and Ryuzo Murakami against their mother and uncle and a third party, made a declaration affirming the validity of testament deed no 30. It also made an order that Bank Daiwa Perdania in Jakarta hand over the contents of a safe deposit box in the name of the deceased to Mrs Murakami. Ryuji Murakami and Ryuzo Murakami applied for revocation of both orders. In June 1997, the High Court affirmed the District Court decision with respect to testament deed no 30. In November 1998, the Supreme Court in cassation proceedings rejected the request of Ryuji Murakami and Ryuzo Murakami for the court to declare testament no 30 null and void. No PK review proceedings were taken. 13 Mrs Wiryadi brought proceedings against Mrs Murakami in the Central Jakarta District Court. It approved Mrs Wiryadi's claim that the contents of the safe deposit box be included in the common marital property. That decision was the subject of an appeal to the High Court and to the Supreme Court by cassation proceedings. A decision was given in February 2000. Apparently, an application has been made to the Supreme Court for PK review. 14 Mrs Murakami brought proceedings against Bank Daiwa Perdania, Mrs Wiryadi, Ryuji Murakami and Ryuzo Murakami with respect to the contents of the safe deposit box. Central Jakarta District Court in January 1999 ordered the bank to assist Mrs Murakami to open and retrieve the contents of the safe deposit box. That decision was affirmed by the High Court in June 1999 and by the Supreme Court in cassation proceedings in February 2001. In October 2002 on PK review, however, all orders were revoked on the basis that the object of the dispute had already been determined in the earlier proceedings in which Mrs Wiryadi had succeeded in having the contents declared common marital property. 15 In March 1996 in Tokyo the deceased made a hibah wasiat, a gift agreement, altering testament deed no 30 by giving all his shares in PT Mudaya Corporation Ltd to Mrs Murakami. Mrs Wiryadi brought proceedings against Mrs Murakami to prevent Mrs Murakami executing the gift agreement. In March 1996, the South Jakarta District Court held the gift agreement null and void. The decision was not the subject of an appeal. 16 Like most civil law countries, Indonesia has forced heirship rules. While a testator is free to deal with his or her estate, even to the extent of disinheriting an heir, the Civil Code guarantees legitimate children a legitime portie, a legitimate portion. The children of the deceased and Mrs Wiryadi were legitimate. Mrs Murakami and Takao Murakami were born out of wedlock and required pengakuan sebagai anak sah, or recognition, in order to be considered legitimate. This the deceased did. Under the forced heirship rules each child was entitled to a quarter of the deceased's estate. 17 Ryuji Murakami and Ryuzo Murakami brought proceedings against Mrs Murakami in which the South Jakarta District Court in May 2002 declared them legitimate heirs of the deceased, declared that they were entitled to a quarter portion each of the deceased's estate comprising a number of specified Indonesian properties together with term deposits certificates with PT Mudaya Corporation Ltd and the contents of the safe deposit box with Daiwa Perdania Bank. Mrs Murakami was ordered to deliver a quarter portion to each of Ryuji Murakami and Ryuzo Murakami. That decision was affirmed by the High Court in November 2002 and in March 2005 the Supreme Court rejected a cassation application by Mrs Murakami. There is, as yet, no PK review decision by the Supreme Court. The New South Wales proceedings 18 In May 2005, Mrs Murakami sought special letters of administration ad litem which were granted ex parte. The statement of claim in these proceedings was then filed. 19 In June 2005, a notice of motion was filed seeking revocation of the special letters of administration. Windeyer J made that order and stayed the current proceedings in September 2006 on the basis that Mrs Murakami had made an incorrect statement in her affidavit that no person other than she and her brother had any interest in the estate of the deceased. 20 In November 2005, probate of the last will of the deceased was granted to Mrs Murakami and in December 2005 the orders of Windeyer J were discharged by consent and Mrs Murakami was given leave to file an amended statement of claim. In March 2006, a further amended statement of claim was filed and in April 2006 the notice of motion seeking a stay was filed. 21 Until that notice of motion was filed, Mrs Wiryadi, Ryuji Murakami and Ryuzo Murakami accepted the jurisdiction of this court. They had entered unconditional appearances specifying the Pymble address. In May 2005, orders were made by consent, Mrs Wiryadi gave an undertaking as did Ryuji Murakami. In June 2005, a notice of motion was filed on behalf of Mrs Wiryadi, Ryuji Murakami and Ryuzo Murakami. Orders were made including an order that the filing of defences be stayed until August 2005. Also in June 2005 particulars were sought of Mrs Murakami's pleading. In September 2005, the application to revoke the special letters of administration was made. In December 2005, the consent orders made included an order for the filing of a defence to the amended statement of claim. In February 2006, further consent orders were made including the filing of a defence in March 2006. In March 2006, consent orders were made including an order that Mrs Murakami give security for costs and an order that the defendants file a defence in April 2006. Security for costs was sought from Mrs Murakami at $100,000 and provided in April 2006. Mrs Murakami has issued subpoenas to various banks and to solicitors who acted for Mrs Wiryadi on the purchase of properties in New South Wales. As yet no defence has been filed. 22 Evidence was given in the probate proceedings that neither Ryuji Murakami nor Ryuzo Murakami has any intention of suing Mrs Wiryadi. 23 The further amended statement of claim seeks a declaration that Mrs Wiryadi, Ryuji Murakami and Ryuzo Murakami hold the New South Wales properties, the proceeds of sale of other New South Wales properties and the Australian bank accounts in trust for Mrs Murakami or, alternatively, that she is entitled to a half share of the assets. 24 The pleading refers to the marriage and divorce of the deceased and Mrs Wiryadi and the deceased's application to the Indonesian courts for division of the common marital property. The provisions of the Indonesian Civil Code and of the Marriage Law of 1974 relating to the division of common marital property are set out in the pleading. It is alleged that in the common marital property proceedings in Indonesia the deceased and Mrs Wiryadi had an implied obligation to disclose to the Indonesian courts all the property acquired by them during the marriage wherever that property was situated. The pleading contains the following: "16. In the Property Proceedings, the deceased and the First Defendant each had an implied obligation to disclose to the Court, and to each other, honestly, fully, and accurately, all of the property acquired by him, her, or them, during the Marriage wherever that property was situated ("the Common Property"). " Particulars i. The obligation is implied as a matter of law; ii. The obligation is implied by reference to uncodified custom and to give business efficacy to the type of proceedings; and/or iii. The obligation is implied as the failure to disclose the Common Property may have amounted to embezzlement under Article 372 of the Indonesian Criminal Code. 17. Alternatively, the deceased and the First Defendant each had an implied obligation to honestly assist, and to participate, in the processes of the Court in which the Property Proceedings were conducted, thereby enabling the Court to determine the Common Property. Particulars The obligation is implied as a matter of law and to permit the Court to act in accordance with the dictates of justice and the law." 25 Article 372 of the Indonesian Criminal Code provides that anyone who intentionally and without right possesses a thing that entirely or in part forms the property of another and that thing has come into the hands of the accused by means other than of crime, will be convicted of embezzlement and may be sentenced to imprisonment for up to four years or be fined Rp 900. 26 The pleading alleges that Mrs Wiryadi breached the implied obligations by failing to disclose the existence of the New South Wales properties and the Australian bank accounts. It is alleged that the non-disclosure was made with the intent of deceiving the deceased, Mrs Murakami and the Supreme Court of Indonesia as to the true extent of the common marital property, or with reckless indifference to the rights of the deceased and Mrs Murakami, or negligently. 27 It is alleged in the pleading that the New South Wales properties registered in Mrs Wiryadi's name were not dealt with in the common marital property proceedings in Indonesia because of her non-disclosure or, alternatively, the deceased's lack of knowledge of them. It is alleged that Mrs Wiryadi purchased the properties with the deceased's money and she holds them on a resulting trust for Mrs Murakami. Alternatively, it is alleged that the properties are held on a constructive trust for Mrs Murakami or for Mrs Murakami and Mrs Wiryadi or Ryuji Murakami and Ryuzo Murakami in such proportions as the court determines, as common marital property, as property to which the deceased made a significant contribution and thereby acted to his detriment or on the basis that the marriage was a joint endeavour to which the deceased made financial and non-financial contributions that failed on divorce or on the basis that it would be unconscionable for Mrs Wiryadi to hold the property free of any beneficial interest of the deceased. 28 It is alleged that properties registered wholly or partly in the names of Ryuji Murakami and Ryuzo Murakami constituted common marital property. In the alternative, it is alleged that Mrs Wiryadi provided the funds to acquire the properties and such portion as the court determines is held on trust for Mrs Murakami. Other features 29 It was submitted that the proceedings are in the early stage. Defences have not been filed and it is not possible to determine the issues that, ultimately, will be defined. 30 But as Brereton J pointed out in McGregor v Potts & Ors [2005] NSWSC 1098 at [85]: "In an application of this type, necessarily brought at an early stage of the proceedings, the significance of the potential prejudice ought not to be discounted by the circumstance that it remains to some extent a matter of conjecture. The court proceeds on the assumption that the case will run to trial on all issues, and considers the relative convenience of each forum on that assumption." 31 Because Indonesia does not recognize foreign judgments other countries are loathe to recognize Indonesian judgments. If proceedings were commenced in Indonesia with respect to the New South Wales properties and a judgment was obtained it would still be necessary, in the absence of agreement, to commence proceedings in New South Wales to enforce the judgment. 32 There is no bar to Ryuji Murakami and Ryuzo Murakami filing cross-claims in the New South Wales proceedings to enforce their forced heirship rights. 33 Pleadings in Indonesian court proceedings take a different form. It is not common for interlocutory processes such as discovery and inspection and interrogatories to be ordered. Interlocutory steps are often dealt with during the course of a trial. While subpoenas are not known under Indonesian law, the Indonesian courts can issue orders for parties to attend and produce documents or give evidence. There are obvious difficulties in enforcing such orders against non-residents. There is no duty imposed upon parties to Indonesian proceedings to facilitate a just, quick and cheap resolution of the real issues. There is, however, a general obligation under Indonesian law for parties to behave in good faith and there is an extensive range of court rules that set timetables for proceedings at each level. 34 The trust is a creature of equity. It is unknown in most civil law countries. In Indonesian law there is no concept of a trust express, resulting or constructive. But there is a remedy that can be used in trust like circumstances under the Civil Code. It is a right to seek damages in circumstances where a trust arises under Australian law. For example, where there is a wrongful use of funds entrusted to a person, the person who has suffered harm thereby may seek an order for a form of compensation. The remedy is expressed in broad terms and is used in a wide range of circumstances. 35 Mrs Murakami has commenced proceedings against Mrs Wiryadi in Singapore. Legal principles 36 The Civil Procedure Act 2005, s 67 provides that subject to rules of court the court may at any time and from time to time, by order, stay any proceedings before it, either permanently or until a specified day. In these proceedings the basis for the stay are the principles of forum non conveniens. 37 In Oceanic Sun Line Special Shipping Company Inc v Fay (1987-1988) 165 CLR 197 at 247 Deane J stated his view that the basis for a stay on inappropriate forum grounds was that the local court was clearly an inappropriate forum if the continuation of the proceedings would be oppressive, meaning seriously and unfairly burdensome, prejudicial or damaging, or vexatious, meaning productive of serious and unjustified trouble and harassment. 38 In Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460 at 476 it was said that a stay will only be granted on the grounds of forum non conveniens where the court is satisfied that there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of the action, in the sense that it is the forum in which the case may be tried more suitably for the interests of all the parties and the ends of justice. 39 In Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538 at 564-565 the test as formulated by Deane J in Oceanic was adopted for Australia. The High Court went on to say that in determining whether the local court is a clearly inappropriate forum, the discussion by Lord Goff in Spiliada of relevant connecting factors and a legitimate personal or juridical advantage provide valuable assistance. The statement of the principle for Australia is summarised in Henry v Henry (1995-1996) 185 CLR 571 at 586-587. 40 In Spiliada at 477-478 Lord Goff spoke of connecting factors as including factors affecting convenience or expense such as availability of witnesses, factors such as the law governing the relevant transaction and the places where the parties respectively reside or carry on business. His Lordship analysed legitimate personal or juridical advantage at 482-484 which included damages awarded on a higher scale, a more complete procedure of discovery, power to award interest, and more generous limitation periods. 41 A most instructive analysis of the cases is to be found in McGregor at [42]-[55]. To that analysis should be added the proposition that where different issues are involved in the foreign forum from those raised in the local forum, the question is not whether the Australian court is a clearly inappropriate forum but whether having regard to the controversy as a whole the Australian proceedings are vexatious or oppressive in the Voth sense (CSR Ltd v Cigna Insurance Australia Ltd (1996-1997) 189 CLR 345 at 400-401). 42 Under what has been called the Moçambique principle, it has been said that a court has no jurisdiction to entertain an action concerning rights arising out of land situated in a foreign state. Thus issues concerning the beneficial title to land in New South Wales should be dealt with in proceedings in New South Wales (Inglis v Commonwealth Trading Bank of Australia (1972) 20 FLR 30, British South Africa Co v Companhia de Moçambique [1893] AC 602, Hesperides Hotels Ltd v Muftizade [1979] AC 508, Re Doyle (dec'd), ex parte Brien v Doyle (1993) 41 FCR 40 at 56-59). 43 There are exceptions to that principle and one must be where, as in the instant circumstances, the issues relate to in personam rights and obligations according to Indonesian law. Application of principles 44 It does not seem to me that legitimate personal or juridical advantage greatly favours the New South Wales court over the Indonesian courts. Interlocutory process is available in Indonesia and while subpoenas are not available, the court may order the attendance before it of witnesses and may order the production of documents. While the Indonesian system tends to create four levels of hearing the obvious litigiousness of the parties to these proceedings suggests that a decision at first instance in New South Wales is unlikely to be accepted as a final judgment. 45 The connecting factors also do not favour New South Wales against Indonesia. Mrs Murakami is not resident in New South Wales and Mrs Wiryadi and Ryuzo Murakami do not live in Australia. The events the subject of complaint are just as much centred in Indonesia where the non-disclosure of the New South Wales assets is alleged to have occurred as in New South Wales where the assets were acquired. 46 The law governing the issues is clearly that of Indonesia. That the foreign law governs the issues was regarded as an important factor in Voth. The cause of action was an alleged tort committed in Missouri subject to the law of Missouri and the professional standards of accountants in Missouri. (See, also Puttick v Fletcher Challenge Forests Ltd [2006] VSC 370, Amwano v Parberry (2005) 148 FCR 126, El-Kharouf v El-Kharouf [2004] NSWSC 187, Official Receiver of State of Israel v Raveh [2001] WASC 289, Pacific Petroleum Corp v Nauru Phosphate Corp [2002] QSC 389 and In the Marriage of Kemeny (1998) 145 FLR 6). 47 If matters are to be determined in the New South Wales court expert evidence will be required. If the issues are to be determined in the Indonesian courts there is no need for experts. 48 Mrs Murakami's trust claims are based upon a finding that the New South Wales properties are common marital property and non-disclosure to the Indonesian courts. They also involve questions whether property purchased in the name of another person is capable of being common marital property and whether property purchased in the name of someone else with money that was common marital property remains common marital property. 49 In this case not only is the law of the issues the law of Indonesia, but also an implied obligation to the Indonesian courts is asserted based upon the possibility that embezzlement might be committed as a factor from which the implication is said to arise. The implication is also said to arise from uncodified Indonesian custom and Indonesian court business efficacy. An implied obligation to honestly assist and participate in the processes of the Indonesian courts to permit them to act in accordance with the dictates of justice and the law. It is alleged that in failing to disclose the New South Wales properties and the Australian bank accounts to the Indonesian Supreme Court, Mrs Wyriadi intended to deceive the court. 50 These are matters peculiarly within the purview of the Indonesian courts. They are not matters easily proved by an expert as a matter of fact. They depend upon the way an Indonesian court would assess Indonesian custom, its own business efficacy and what it needs to act in accordance with the dictates of justice and the law. Whether an Indonesian court would regard the prospect of the commission of a criminal offence as giving rise to the implication of a duty is not proved simply by proving the law of embezzlement. These are matters beyond the establishment of a foreign law as a question of fact. Furthermore, it would be an invidious task for a New South Wales court to make findings as to the sufficiency of the Indonesian Supreme Court common marital property proceedings or the obligations that should be implied by that court in relation to its processes. 51 To my mind these considerations far outweigh the need for New South Wales proceedings to enforce a judgment of the Indonesian courts or any limitations in Indonesian court procedure and the fact that proceedings in Indonesia have not been commenced. The lack of the concept of a trust under Indonesian law is also outweighed by these considerations. The Indonesian courts clearly have power to determine whether the New South Wales properties and the Australian bank accounts are common marital property and, if so, to order Mrs Wiryadi, Ryuji Murakami and Ryuzo Murakami to deliver up to Mrs Murakami such portion of those assets as the courts think fit. They also outweigh other countervailing matters such as the application being made well after an unqualified acceptance of the jurisdiction and after, no doubt, the incurrence of considerable costs. On the other hand defences have not yet been filed and the costs incurred thus far may be put to good effect in proceedings commenced in Indonesia. 52 In my view, it is in the interests of the parties that a proper resolution of the issues be made in proceedings to be commenced in Indonesia. The lack of entitlement to subpoena documents can be overcome by the court placing conditions upon a stay such as that Mrs Wiryadi, Ryuji Murakami and Ryuzo Murakami will consent to the tender of documents obtained thus far in the New South Wales proceedings and that Mrs Murakami be released from her implied undertaking not to use documents for purposes other than the New South Wales proceedings. 53 In my view, the connecting factors to Indonesia are such that, from an objective point of view, the continuation of the proceedings in New South Wales is vexatious or oppressive in the Voth sense. 54 As Palmer J noted in Ivanovski & Anor v Perdacher [2006] NSWSC 978 at [22] the difficulty is in applying principle to the particular facts of a case such that it has been acknowledged that decisions in this area are often really matters of ultimate impression in weighing the competing factors and in such an exercise judicial minds may differ. 55 In Oceanic at 248, Deane J said that the power to stay proceedings should be exercised only in a clear case. In my view, this is a clear case. 56 If Mrs Wiryadi, Ryuji Murakami and Ryuzo Murakami give to the court an undertaking that they will consent to the tender in evidence in any Indonesian proceedings involving the issues raised in these proceedings any documents obtained under subpoena or upon notice to produce and that they will release Mrs Murakami from her implied undertaking not to use such documents for purposes other than these proceedings, I will order that these proceedings be stayed. 57 I will hear the parties on the appropriate terms of orders and I will hear the parties on costs. I direct the parties to bring in short minutes of order reflecting these reasons.

Murakami v Wiryadi & Ors

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