Magarditch, Gerier Agop & Ors v Australia & New Zealand Banking Group Ltd & Anor [1998] FCA 49

IN THE FEDERAL COURT OF AUSTRALIA) NEW SOUTH WALES DISTRICT REGISTRY) No. NG 1065 of 1997 GENERAL DIVISION ) Between: GERIER AGOP MAGARDITCH First Applicant And: JAKE SOURIAN Second Applicant And: MAGIC AUSTRALIA PTY LIMITED (IN LIQUIDATION) Third Applicant And: AUSTRALIA & NEW ZEALAND BANKING GROUP LIMITED First Respondent And: IAN LAWRENCE STRUTHERS "THE APPOINTED LIQUIDATOR" FOR MAGIC AUSTRALIA PTY LIMITED Second Respondent REASONS FOR JUDGMENT EINFELD J SYDNEY 12 JANUARY 1998

The applicants' motion seeks, inter alia, an interim payment by the respondents of $350,000, an order granting leave to the second applicant to approach the Australian Taxation Office to investigate possible tax credits standing to the credit of the third applicant, and an order that the first respondent pay to the second applicant the sum of $136,993 which represents the proceeds of the sale of a home unit by the second applicant paid to the first respondent in reduction of a debt of the third applicant. The funds are sought to permit the applicants to retain lawyers for this action, cross-vested from the Supreme Court for the most extraordinary of reasons, which is fixed for hearing in this Court on 9 March 1998. I shall deal firstly with the second order sought in the motion regarding the investigation of tax credits. I direct that: 1. the liquidator authorise the second applicant in writing to approach the Australian Taxation Office with a view to ascertaining whether the third applicant has standing in the Taxation Office any funds by way of tax credits 2. Mr Sourian's first application to the Tax Office be to ascertain what information the Tax Office needs in order to determine whether such credits exist 3. the requisition for such information be then supplied by Mr Sourian to the liquidator 4. the liquidator then supply to Mr Sourian, to the best of his ability, the documents and information sought by the Tax Office 5. Mr Sourian then supply this information to the Tax Office and request the Tax Office to provide in writing a statement of what credits, if any, exist. I will fix a nominal date of Monday 9 February for the parties to report to the court on the result of this activity. As I will not be here that day, the matter will be listed before the Duty Judge or such other Judge as the Court may determine. In the event that the parties are not in a position to inform the Court of anything useful on that day but require further time, the Duty Judge is to be informed by not later than 4.00pm on Friday 6 February and a further date obtained for this information to be reported to the Court. There will be liberty to apply on three days notice in respect of these orders. With regard to the balance of the notice of motion, the evidence at the present time is quite inadequate to found either order 1 or 3. So far as order 1 is concerned, Mr Sourian identifies, in paragraph 34 of his affidavit in support of the motion, two sums of money totalling $132,286 as being sums he says from the bar table are included in the $350,000 claimed. The balance is unparticularised. As to this $132,000 odd, it appears from the submissions that the assertion is that the liquidator has wrongly claimed his remuneration and that the liquidator's solicitors have wrongly claimed legal fees. Whether there is an attack on the total extent of the amounts referred to or something less, I am not sure but certainly there are no particulars given of those assertions. There are some statements in the written submissions which the applicants have presented to the Supreme Court (Court of Appeal) in another current matter but these submissions are not evidence and there is therefore no evidence that would enable me to make any such order as is sought in paragraph 1 of the motion. So far as paragraph 3 is concerned, the affidavit of the second applicant in support of the motion identifies the sum of money referred to as having been paid by him voluntarily into the bank in April 1991. The affidavit does not give any further particularisation of why that sum of money would now be ordered to be paid out but it would appear from submissions made from the bar table that it is alleged that the bank in some way mishandled this sum and that it should now be recredited to the account of the second or one or more of the applicants. The bank's legal representative has informed the Court today that this amount of money has been credited to the company's account with the bank but the applicants argue that they have taken many years to make this crediting, and that in some way the bank has lost its right to do so such that the money should be paid back. There is no material before the Court on which any such order could be contemplated, certainly not on an interlocutory or interim basis and even less without hearing the answers of the bank to the assertions made in this regard. If the applicants continue to seek the orders set out in paragraphs 1 and 3 of the motion, it would therefore mean that there would have to be a substantial hearing on the motion in order to try to establish the facts. This would require more affidavit evidence on behalf of the applicants and, of course, a full reply on behalf of the respondents. Clearly, the contentions are likely to be fairly confrontational, such that it could be anticipated that cross‑examination -- even extensive cross-examination -- would be required. So far as I am able to glean from the argument, the matters that would be raised in this connection go to the heart of at least part of the whole litigation before the Court. The Court is unlikely to favour a partial hearing of the substantive issues in advance of the hearing and, as a practical matter, could not in fact undertake such a hearing, and have it resolved, prior to the proposed hearing of this litigation in March, as is presently fixed. On the other hand, the applicants say that they need funds in order to pay lawyers to present this case to the court. The case is complex, it has had a long history in the Supreme Court, and obviously raises a number of matters that are going to be strongly disputed. The Court would of course be assisted if the applicants were legally represented. It seems that they have been represented at times in the past before the Supreme Court but the applicants claim that they had to remove the lawyers or the lawyers removed themselves because they were, or it was alleged that they were, not presenting the case competently. Having heard the second applicant now on two occasions, I can understand that it might be difficult for lawyers to provide representation that was regarded by the applicants as adequate. But that does not mean that it is not possible for them to do so or that the Court would not be considerably assisted if the applicants' case was presented by competent prepared lawyers. The problem is that, even if I have the power to do so -- and power has not yet been argued -- I cannot, for the reasons I have given, make orders to fund the costs of lawyers in the way that the applicants have sought in this motion from the sources they have identified. It is possible that the motion can be reconstituted or that the evidence in support of it can be expanded so as to make out a better or clearer case for funds to be made available for legal representation from some other source. Alternatively, it may be possible for the applicants to take advantage of the various schemes that exist to enable impecunious litigants to present their cases with the benefit of legal representation. But much as I would be tempted to do so if it were possible, I cannot make orders that require findings of fraud, misconduct, misrepresentation or impropriety without giving the impugned parties the opportunity of being heard. As it will not be possible to give them that opportunity in time to maintain the present hearing date, the applicants are, as it seems to me, therefore faced with three major choices. Either (1) they will have to fund legal representation for this litigation from some other source, (2) they will have to obtain legal representation through one or other of the schemes that exist for assisting impecunious litigants, or (3) they will have to produce a significant body of evidence, and be willing to undertake an extensive interlocutory hearing. If the third choice is made, it will come at the expense of losing the existing hearing date for the reasons, already given, that a full fledged interlocutory hearing of this kind could not be constituted and resolved before 9 March. As with the orders made in relation to order 2, I will therefore stand over the balance of the motion to the Duty Judge on 9 February or such other day as may be appointed consistent with the orders that I have earlier made, if the parties are not ready. The liberty to apply earlier granted may be exercised in this regard as well. Costs will be reserved.