RADISICH V TAYLOR HC AK CIV-2007-404-3276

RADISICH V TAYLOR HC AK CIV-2007-404-3276 19 November 2007IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV-2007-404-3276BETWEEN ANTHONY STEVEN RADISICH Appellant AND DIANNE FAYE TAYLOR Respondent Hearing: 29 October 2007 Appearances: D A R Hollings and J V Bradley-Young for Appellant A E Hinton QC for Respondent Judgment: 19 November 2007 at 4:00 pmRESERVED JUDGMENT OF COURTNEY JThis judgment was delivered by Justice Courtney on 19 November 2007 at 4:00 pm pursuant to Rule 540(4) of the High Court Rules Registrar / Deputy Registrar Date Solicitors: Keegan Alexander, P O Box 999, Auckland Fax: (09) 307-2622 – J V Bradley-YoungCounsel: D A T Hollings, Lumley Centre 88 Shortland Street, Auckland Fax: (09) 307-8770 A E Hinton QC, P O Box 4092 Shortland Street, Auckland Fax: (09) 309-7988[1] Ms Taylor has applied to the Family Court for various orders relating to property owned by her and/or Mr Radisich. Mr Radisich has made an interlocutory application for a declaration under s 21H Property (Relationships) Act 1976 that an agreement made between them in 2004 is of effect. He wishes to have that application heard before the substantive matter is heard. [2] At a conference on 10 May 2007 Judge Clarkson refused to allow the s 21H application to be heard ahead of the substantive proceedings and adjourned that application, directing that it be heard with the substantive proceeding. The Judge also made orders for discovery against Mr Radisich, who now appeals against both orders. [3] There is no disagreement as to the legal principles applicable to an appeal such as this. This Court will only interfere if the Judge acted on a wrong principle or failed to take a relevant consideration into account, took account of some irrelevant consideration or was plainly wrong1 .Adjournment of Mr Radisich's s 21H applicationNature of the application and the Family Court Judge's order[4] Ms Taylor and Mr Radisich were in a de facto relationship for approximately five years between March 2000 and September 2005. In early 2004 they embarked on a lengthy mediation in order to reach agreement regarding their property. Both were legally represented and the mediation culminated in a heads of agreement under which they purported to contract out of the provisions for the Property (Relationships) Act 1976 and make provision regarding the status, ownership and division of their property. [5] However, the agreement between the parties was not certified as required by s 21 and is void as a result of that non-compliance. It is said by Mr Templeton, who was Mr Radisich's counsel at the mediation that the only reason the agreement was1 May v May (1982) 1 NZFLR 165; West v West(No 2) [2004] NZFLR 164not certified is that the counsel present (Mr Templeton and the late Mr Fardell QC) were uncertain whether barristers sole could provide the required certification. [6] Mr Radisich seeks to have the agreement declared effective under s 21H, which provides:(1) Even though an agreement is void for non-compliance with a requirement of section 21F, the Court may declare that the agreement has effect, wholly or in part or for any particular purpose, if it is satisfied that the non-compliance has not materially prejudiced the interests of any party to the agreement. (2) The Court may make a declaration under this section in the course of any proceedings under this Act, or on application made for the purpose.[7] Mr Radisich wishes to have his application heard prior to the substantive proceedings because he regards the scope of enquiry as narrow, says that all of the evidence that is required is before the Court and that if the application is resolved in his favour it will relieve him of the substantial costs of giving discovery and both parties of the costs relating to the substantive proceeding. [8] The Family Court Judge essentially declined to allow the s21H application to be determined first because she considered that determination of it would inevitably lead to a full examination of whether there is a serious injustice for the purposes of s 21J:[11] The respondent points to the enormous cost in providing discovery and preparation for a substantive hearing which he says will be reduced if this preliminary issue is determined in his favour [12] I certainly have some sympathy for that approach but as in most of these matters the determination of the matters to which the Court has to have regard under s 21 requires all of the information to be furnished as to the full extent of the asset pool and without the discovery which I have already indicated I am prepared to order and fully being before the Court, I do consider that the Court will be hampered in achieving a just outcome for these parties. Even if counsel is correct in the interpretation he advances of "not materially prejudiced" (s 21H of the Property (Relationships) Act 1976) and even if he persuades the Court to uphold the uncertified "agreement" the applicant will then seek to avoid the agreement under the provisions of s 21J. Then a full examination of whether there is "serious injustice" will be required[14] It seems to me without costly duplication or alternatively a risk of deficiencies in the evidence that the status of the purported s 21 agreement cannot be separated out from the substantive hearing.First ground of appeal – the Judge took into account an irrelevant consideration[9] Ms Hollings submitted that the Judge erred in basing her decision on an irrelevant consideration, namely the provisions of s 21J where: a) Ms Taylor had not made an application under s 21J; b) Ms Taylor's application for orders under the Property (Relationships) Act 1976 does not allege any serious injustice nor refer to s 21J; c) Ms Taylor's notice of opposition to Mr Radisich's application under s 21H does not allege any serious injustice or refer to s 21J. [10] Ms Hollings submitted that because the heads of agreement were settled after a lengthy mediation in which Ms Taylor played an active part and that she had experienced counsel advising her, it can be readily inferred that her counsel explained to her the effect and implications of the agreement. Therefore, she has not been materially prejudiced by the non-compliance. She pointed to the fact that, although Ms Taylor filed a notice of opposition to this application, she had not filed any affidavit evidence raising any prejudice as a result of the non-compliance. Nor has she made an application under s 21J for an order setting aside the agreement. [11] Ms Hollings' position was that the enquiry under s 21H would require only consideration of whether the non-compliance had materially prejudiced Ms Taylor and that since it was reasonable to think that it had not, given the circumstances in which the agreement was reached, there would be no need to go further and consider the parties' wider positions. [12] Mrs Hinton essentially made two points directed at showing that the scope of the s 21H application was not nearly as narrow as contended for by the appellant. First, she confirmed that Ms Taylor did intend to seek relief under s 21J, whichmeant that even if the application fell to be determined solely on whether Ms Taylor had been materially prejudiced as a result of non-compliance with the agreement, the full circumstances of the parties' financial arrangements would need to be properly investigated as part of the substantive proceeding and it would be inappropriate to determine the s 21H application in isolation. Secondly, Mrs Hinton submitted that when exercising its residual discretion under s 21H, it was highly unlikely that a Court would choose to declare an agreement effective which might have the effect of creating a "serious injustice" within the meaning of s 21J. [13] Mrs Hinton particularly pointed to paragraph B of the heads of agreement which recited that, for the purposes of providing for property and financial support issues:They have agreed to complete and implement this Heads of Agreement on the basis that the objectives stated herein would need to be the subject of further, relevant, professional advice and the completion of formal agreement(s) to achieve the desired outcome.[14] Under the agreement Ms Taylor was to receive (among other things) a half- share of Mr Radisich's share of the profits of a car importation and auction business based in the UK and Jersey Islands and referred to as "the UK operation". One of the issues surrounding non-compliance of this part of the agreement is, apparently, an assertion by Mr Radisich that the UK operation was not in fact profitable. This would lead to Ms Taylor receiving only a very small sum in relation to this item. However, Ms Taylor deposed (her affidavit 3 October 2006) that Mr Radisich has represented to her that her profit share was likely to be £1m per annum and that had she known the true position regarding the UK operation she would never have signed the agreement. [15] Proof that non-compliance has not materially prejudiced the interests of any party to the agreement will not, in itself, result in an agreement being declared effective. The Court must exercise its residual discretion in considering whether to validate the agreement 2 . I note that it is the view of the learned authors of Fisher on Matrimonial & Relationship Property3 that absence of material prejudice appears to2 see eg. Evans v Evans (1992) 9 FRNZ 6143 para 5.75do no more than raise a prima facie case in favour of declaring the agreement effective but that it is still open to the non-complying party to establish on broader discretionary grounds that the agreement should nevertheless be rejected. For that purpose the grounds specified in s 21J(4) are relevant by analogy. [16] In this case it seems to me the wider issues raised by the substantive proceeding are very likely to impact on the exercise of the residual discretion under s 21H. It seems very unlikely that an order would be made under s 21H if the Court considered that the agreement had been obtained through a misrepresentation by one of the parties, even if the non-compliance per se was not the cause of any prejudice. Given that the issue of misrepresentation has been raised and the fairness of the agreement is to be raised by Ms Taylor in the substantive proceeding it would be inappropriate to try and determine the s 21H application on the basis of the evidence that Mr Radisich has filed in support of it, without more. I do not consider that the Judge erred in the manner asserted.Second ground of appeal – appellant entitled to have application heard[17] The second ground of Mr Radisich's appeal was that the Judge failed to take certain relevant considerations into account, namely that Mr Radisich's application and affidavit had been filed by January 2007 and that Ms Taylor's opposition constituted only the notice of opposition as she had elected not to file affidavit evidence. The application was therefore a discreet application for which all necessary evidence was before the Court and Mr Radisich was entitled to have his application determined on its merits and without further delay, particularly taking into account Rule 3 of the Family Court Rules 2002 which identifies the purpose of the rules as making it possible for proceedings in the Family Court to be dealt with fairly, inexpensively, simply and as speedily as is consistent with justice. [18] I do not accept that this ground of appeal is made out. I have already held that, in my judgment, full consideration of the application will require consideration of issues beyond those addressed by Mr Radisich and Mr Templeton in their affidavits filed in support of the application. The mere fact that a party files an application does not of itself confer any right to have it heard at a particular timewhere the overall interests of justice in the case indicate that it ought to be heard at some other time.Third ground – no saving[19] Mr Radisich asserts that the Judge failed to have regard to the fact that determining the application prior to trial would assist in defining the issues and shortening the length of the trial, even if Ms Taylor seeks to avoid the agreement later under s 21J. However, I do not accept this ground either for the reasons already outlined.Order for discovery[20] Correspondence between solicitors for the parties prior to the conference had left Mr Radisich's counsel with the clear impression that the only matters to be dealt with at the conference would be time-tabling issues. However, on the day before the conference Mr Radisich's solicitors were served with an application for order for examination, appointment of investigator and discovery. The application specified the date of hearing as being the date of the conference, being the following day notwithstanding that Rule 229(3) Family Court's Rules 2002 required four days notice to be given of such an application. [21] The application sought wide-ranging discovery covering virtually all of Mr Radisich's financial interests. The essence of Ms Taylor's position is that during their relationship Mr Radisich represented to her and she had reason to believe from documents she saw and things that she was told by others that Mr Radisich's various businesses were very profitable but that he had ensured that profits and assets were not held in his own name. Furthermore, he operated businesses overseas and she has reason to believe that there are substantial assets held there including the profits from the UK operation of which she was to receive a share. [22] Ms Taylor seeks discovery of the accounts relating to more than 30 companies associated with Mr Radisich, two of his family trusts, bank statements foraccounts held by he or entities controlled by him, valuations relating to property owned by Mr Radisich or entities controlled by him, and applications for finance made by Mr Radisich or entities controlled by him during the course of the relationship. [23] Mr Radisich wished to oppose the application but there was insufficient time to prepare an adequate affidavit in opposition. However, his solicitor was able to produce a memorandum detailing Mr Radisich's response to some of the items in respect of which discovery was sought, together with an affidavit from his accountant deposing as to the difficulty there would be in locating all of the documents sought. At the conference Mr Radisich's solicitor sought an adjournment of the application to enable Mr Radisich to properly oppose the application. However, the Judge declined that application and, after expressing reservations about some of the assertions being made by Mr Radisich, simply directed that he provide an affidavit producing all of the documents listed in Schedule B to Ms Taylor's affidavit within 15 working days. [24] I consider that, given the apparent breadth of the discovery being sought and the fact that Rule 229(3) required four working days notice of the application, the Judge should have given an adequate opportunity for Mr Radisich to oppose the making of the order in the form it was sought. I do note, however, that Mr Radisich's solicitor apparently did not raise R 229(3) with the Judge at the conference. However, given my conclusion regarding the hearing of the s 21H application it is clear that Mr Radisich will have to give discovery in this proceeding. This Court is in as good a position to make as appropriate an order as the Family Court and it is more efficient if I deal with the issue, rather than remitting the matter to the Family Court. [25] It is undeniable that the breadth of discovery sought is unusually wide. However, when I tried to narrow the scope of the discovery by reference to Ms Hollings' concern that some of the companies were not relevant to the proceedings only a few were able to be eliminated from the list, those being companies that had been wound up or those companies in respect of which it was accepted that Mr Radisich held the shares as a trustee only. Mr Radisich's mainground for opposing the discovery sought was that it related to companies incorporated outside the period of the relationship. However, I do not regard that as a valid objection. The discovery being sought only relates to the period of the relationship. Since the object of the enquiry is to ascertain whether relationship property may have found its way into some of these companies during that period it can hardly matter when the company was actually incorporated. For the same reason there can be no objection to discovery as to the affairs of trusts on the ground that Ms Taylor is not a beneficiary. [26] At the hearing I did indicate that it seemed to me that Mr Radisich would have to give discovery and invited counsel to confer with a view to agreeing to the scope, which they did. Mrs Hinton has filed a memorandum setting out the current position. It appears that Ms Hollings was provided with a copy of the memorandum and the opportunity to sign it but declined to do so. However, since she has not filed any separate memorandum disputing the contents of Mrs Hinton's memorandum I intend to accept Mrs Hinton's memorandum as correctly recording the present position, namely that: a) Ms Taylor has offered to limit the initial discovery sought and ordered by the Family Court on an interim basis; b) Mr Radisich has agreed to discover accounts in his possession or power for entities incorporated during the term of his relationship and during the disputed start date of the relationship; c) Mr Radisich has declined to provide documents sought from the trusts, bank statements or documents regarding borrowings for the trusts; d) Mr Radisich has agreed to provide valuations currently in his possession, applications for finance for those companies for which he has agreed to discover accounts;e) Mr Radisich requires written undertakings to confidentiality but has not provided form of a suitable undertaking; f) There has been no agreement regarding discovery for entities incorporated before the beginning of the relationship or for valuations not in Mr Radisich's possession but in his power or control. [27] With the few exceptions referred to above the grounds advanced by Mr Radisich as to why he should not give discovery are not persuasive. There was no indication of other, more persuasive grounds that might exist or might require additional evidence. I consider that Mr Radisich is bound to give discovery of nearly all the documents sought. I therefore make an order that he file and serve an affidavit of documents that includes: a) All financial accounts (and if different, tax accounts) and current accounts from 1 April 2001 to 31 March 2007 for the following entities: i) Timberton Investments Limited ii) Executive Trustees Limited iii) Broadlands Finance Limited iv) Penrose Enterprises Limited v) Beneficial Insurance Limited vi) European Car Rentals (2002) Limited vii) Broadlands Limited viii) Broadlands Mortgages Limited ix) EMA Developments Limitedx) Bro'Town Production Limited xi) Broadlands Investments Limited xii) Moto Limited xiii) Whites Farm Limited xiv) Natwest Holdings Limited xv) Natwest Investments Limited xvi) Karmine Developments Limited xvii) Wesson Investments Limited xviii) Carmile Investments Limited xix) Natwest Finance Limited xx) Ron McDonald Motors Limited xxi) RAS International Limited xxii) Auto Finance Limited xxiii) Sunrise Autos Limited xxiv) Doracana Limited xxv) Japanese Import Auctions Bristol Limited xxvi) Japanese Import Auctions Tilbury Limited xxvii) Executive Imports Limitedxxviii) Radiant Trust Limited xxix) Radiant Foundation Limited xxx) Siran Limited xxxi) Spark Imports Limited xxxii) Global Vehicles Limited xxxiii) USS Auctions Limited xxxiv) Churchill Credit Company Limited xxxv) Salisbury Imports Limited xxxvi) FDC Holdings Limited xxxvii) CBA Finance Limited xxxviii) The Strip II Limited b) All financial accounts (and, if different, tax accounts) and current accounts from 1 April 2001 to 31 March 2007, details of all distributions and copies of trustee resolutions for: i) Anthony Steven Radisich Family Trust ii) Radisich Family Trust c) Copies of bank statements for bank accounts including any Cayman Island or other off-shore bank accounts held by Mr Radisich or any entity owned or controlled by him (including but not limited to those set out above) from 1 April 2001 to 31 March 2007. d) All valuations obtained during the relationship for:i) All properties owned by Mr Radisich or entities (including companies or trusts) controlled by him ii) All paintings, antiques or other valuable chattels including cars and motorcycles acquired during the relationship whether still held by Mr Radisich or not. e) Applications for finance made during the course of the relationship to any financial institution by Mr Radisich or on behalf of any entity (including companies or trusts) controlled by him together with valuations and other supporting materials provided with such applications. [28] I note that this list is not exhaustive and there may be documents relevant to the issues that Mr Radisich holds which are not included in the specific terms of this order. He is, of course, obliged to discover such documents. [29] I also note Mr Radisich's desire for an undertaking as to confidentiality from Ms Taylor. Ms Taylor is, of course, subject to the normal rules governing the disclosure of information in proceedings by the opposing party. However, the breadth of the discovery in this case is unusually wide and appears to encompass all or the majority of the vehicles through which Mr Radisich carries on his business activities. In those circumstances, I do, unusually, direct that prior to the production of any documents included in the affidavit, Ms Taylor will provide a written undertaking to the following effect:I undertake not to use or disclose the documents provided to me during the course of this proceeding for any purpose other than this proceeding. I will not provide details of the contents of the documents nor copies of any document to any person other than my solicitor, counsel and any expert adviser retained by me for the purposes of this proceeding.[30] I reserve leave to the parties to come back to the Court in the event that the wording of this undertaking creates difficulties for either party.Result[31] The appeal is dismissed. [32] Ms Taylor will be entitled to costs. Counsel may file memorandum as follows: a) On behalf of Ms Taylor by 30 November 2007; b) On behalf of Mr Radisich by 7 December 2007; c) On behalf of Ms Taylor in reply by 14 December 2007. ____________________ P Courtney J