STOKES v MCCOURT

Judgment Ex Tempore 1I am dealing with a notice of motion filed by Ms Stokes on 13 June 2012, which seeks discovery plus an interim payment by the defendant of an amount to enable expert accountants to analyse the documents discovered. All this is in the context of an application under the Property (Relationships) Act 1984. 2There is no doubt at all that for a period of at least 7 years, it may well be longer, the plaintiff and the defendant were in a de facto relationship and there are five children of their union. It is also clear that that relationship came to an end in 2007 and that in February 2009, the parties entered into a termination agreement. There is no need to go into details about that agreement save that for a six figure sum, the plaintiff relinquished all her interest in the parties' joint property and it was agreed that that was a final resolution. 3In these proceedings, the plaintiff seeks to set aside that termination agreement and then to seek the Court's orders under the Property (Relationships) Act, presumably because she thinks that the Court will more likely than not give her much more. She raises a number of reasons why the agreement should be set aside, either under the general law or under the Contracts Review Act. One of the matters that would come into account is whether there was proper appreciation of the financial worth of both parties. However, the main thrust of the particulars seems to be that there was inequality and bargaining power and that the defendant took the plaintiff to a supposedly independent solicitor, and that she was entering into the termination agreement under some sort of illegitimate pressure. 4The paperwork suggests that there are two aspects of this case: (a)the application to set aside the termination agreement and (b)the application for an order under s 20 of the Act. 5An application was made to the Court to split the trial, but for reasons, which he gave, Macready AsJ refused the application. His Honour's reasons for judgment of 26 November 2010 are included on page 310 of the court book. 6The main grounds of his Honour's decision were that the financial interests of the parties was a relevant matter to both the termination aspect and the s 20 aspect and it would not be appropriate to deal with either without looking at the whole of the evidence. Mr Galloway, of counsel, who today appeared for the defendant, forecasts that he may seek at some stage, to review that decision but at the moment, it stands, not having been the subject of any appeal. Mr Dupree, who appears for the plaintiff, puts that this is a case, which should be case managed by a judge. I agree with that submission and I do not think Mr Galloway opposes it. Accordingly, after discussion, I do not need to deal with much of the notice of motion as the remainder of it can be very sensibly dealt with, as counsel have suggested, in a way that I will note later in these reasons. The matter which I do have to consider is whether moneys should be allowed to the plaintiff to investigate the financial affairs of the respondent. 7It would seem from what is available, that the probabilities are that the net worth of the respondent at the present time is probably between $3 million and $4 million. However, his fortune is tied up in a number of proprietary companies and ventures. 8A notice to produce was given which was returned before the deputy registrar and many documents have been produced. However, Mr Dupree complains that documents for various years, particularly 2005, 2006, 2007, 2011 have not been produced. 9It would seem more likely than not that this is the case, and the way to deal with it is to have those documents returned before the judge dealing with the case management on the next day, rather than making any other order. 10There is also complaint about 2012, but as I understand it, Mr Galloway is prepared to undertake to the plaintiff that they will be produced as soon as reasonably practical after they have created. 11The matter that I have to consider is proposed order 6 in the notice of motion, which is that, "The defendant pay to the solicitor for the plaintiff the sum of $53,700 (the expert's fees) within fourteen days." The so-called experts are (a) a set of accountants, and (b) valuers. 12The evidence shows that the accountants have given a rough estimate that, "our fees may be in the vicinity of $50,000 plus GST". The valuers say their fees would be $3,700 plus GST. 13There are two questions: one, whether any such order should be made at this stage; and (b) if it should be, what is the form of the order. 14Mr Galloway points to s 47(1) of the Property (Relationships) Act 1984 NSW that, "The court shall not...make an order under part 3 insofar as the order would be inconsistent with the terms of the (termination) agreement." 15He says that an order providing for costs of an expert to evaluate material and report is either an interim property order, one that is made under the Property Relationships Act pt 3, or alternatively is an order under s 8 under the Act, which is also within pt 3. 16Mr Dupree, on the other hand, points to the decision of this court in Parker v Parker (1992) 16 FamLR 458. That was a decision of Bryson J, but the report also deals with the application for leave to appeal before the Court of Appeal, where leave was refused. 17At p 463 of the report, dealing with the reasons of Kirby P (with whom Priestly and Meagher JJA agreed) for refusing special leave. The learned President said: "The jurisdiction of a judge of the Supreme Court to fashion an order for costs is extremely wide. Two sources of jurisdiction were relied on in this case by the opponent: viz s 76(1) of the Supreme Court Act 1970, and ss 27 and 38 of the De Facto Relationships Act 1984. His Honour appears to have contented himself with relying upon the former head of power." 18Kirby P said that the order of Bryson J was correct. 19Since then, this sort of order has been the subject of other consideration. For instance, in this court in Paris King Investments Pty Ltd v Rayhill [2006] NSWSC 578 at para 29 and following, Brereton J analyses the cases. The actual decision in that case is not of particular relevance, as it would appear that from para 34 that the application before his Honour was based squarely on the fact that it was an interim property order that was being sought. 20Mr Galloway also referred me to the decision of the full Family Court in Strahan v Strahan [2009] FamCAFC 166, where it appears the view was taken that this sort of order should be more properly construed as a property order rather than an order for costs. If it is so construed, of course, the present application would fall foul of s 47 of the current Act. 21In my view, I am bound to follow what the Court of Appeal said, and that was that the matter can properly be considered to be one of interim costs under what is now s 98 of the Civil Procedure Act 2005. That being so, it is competent for me to make the order. 22Should such an order be made at this stage? I have some conflicting thoughts about that. The first is that it is rather premature because, until one sees the documents, and at least the very experienced solicitor who appears for the plaintiff analyses them at least on a surface basis, one just doesn't know whether the requirement is to have them analysed by an accountant. However, on the other hand, the fact that assets are tied up in proprietary companies usually means that it is necessary to go behind the figures and to work out the asset value by applying capitalisation of income or other assessments which need some expert help. 23However, again, the accountants have merely said that the estimate is $50,000. That sounds a very large amount of money, and nothing this court should do should encourage accountants to charge that much. 24It seems to me that the way forward is to indicate that some such order is appropriate, but that when the documents are produced and the accountants have a chance to view them, and if at that stage they put forward a detailed, reasoned assessment of their proposed costs, rather like what solicitors have to do when they accept a retainer, at that stage an order should be made that the defendant pay into the plaintiff's solicitor's trust account a proper amount, so that when the accountants have done that work, rendered an invoice which has been shown to the defendant, and fourteen days have gone by, the money can then be paid out of the trust account to the accountants. 25So that it seems to me all I need do at the moment is to stand the matter over to the duty judge's list on 10 December 2012, which is a date convenient to both counsel, with the proviso that the chief judge, whom I will inform of this ruling, may consider that it should be allocated to some other judge and some other day, seeing that 10 December is the last week of term. 26Accordingly, I order as follows: (1)No later than 23 November 2012, the defendant is to file an affidavit of discovery in the court and serve the same on the plaintiff solicitors; (2)No later than 30 November 2012, the parties are to exchange draft directions, which they seek to be made by the judge managing this case when it comes before him or her on 10 December 2012, and file a copy in the registry; (3)The notice to produce is adjourned and to be finalised before the duty judge on 10 December 2012, subject to the Chief Judge's concurrence; (4)The court stands over the notice of motion insofar as it deals with interim costs to be considered by the judge managing this case; (5)Direct that the case be case managed by a judge; (6)Costs of the notice of motion is reserved. COUNSEL ADDRESSED 27Order 3 is subject to the concurrence of the Chief Judge, who may nominate some other judge or return day with notification to counsel. 28So we will just sort of add that, so far as valuation of land is concerned, the court would only allow a joint experts opinion, probably in this particular case in the first instance, that fees should be paid by the defendant. But that is a matter for the judge who is managing the case. 29So far as accountants are concerned, my view at this stage is that the court would be justified in having an independent accountant assist the plaintiff, as doubtless the accountant who prepared the accounts for the defendant has done the best he or she could for that side.