Amir Ashrafinia v Mohammad Reza Ashrafinia; Parvaneh Karami Fakhrabadi v Mohammad Reza Ashrafinia (No. 3) [2014] NSWSC 385

Supreme Court New South Wales

Medium Neutral Citation: Amir Ashrafinia v Mohammad Reza Ashrafinia; Parvaneh Karami Fakhrabadi v Mohammad Reza Ashrafinia (No. 3) [2014] NSWSC 385 Hearing dates: 31 March 2014 Decision date: 31 March 2014 Jurisdiction: Equity Division Before: Slattery J Decision: See paragraph [17] of decision. Catchwords: PROCEDURE - orders sought consequential upon the Court's principal judgment: Ashrafinia v Ashrafinia [2013] NSWSC 1442 - contest over the administration of the remaining trust funds after the sale of the principal trust asset - whether funds should be paid into Court pending application for administration. Cases Cited: Ashrafinia v Ashrafinia [2013] NSWSC 1442 Ashrafinia v Ashrafinia [2014] NSWSC 145 Category: Costs Parties: First Plaintiff:- Amir Hossain Ashrafinia First Defendant:- Mohammad Reza Ashrafinia; Second Defendant:- Ashrafi Persian Trading Company Pty Limited

First Plaintiff:- Parvaneh Karami Fakhrabadi First Defendant:- Mohammad Reza Ashrafinia Second Defendant:- Amir Hossain Ashrafinia Third Defendant:- Abbas Ashrafinia Fourth Defendant:- Ashrafi Persian Trading Company Pty Limited Representation: Mr G. McGrath SC (for Parvaneh Karami Fakhrabadi) Solicitors: S.Hedge (for trustee for sale) Mohammad Reza Ashrafinia File Number(s): 2008/281524; 2011/166674 Publication restriction: No

Judgment 1The Court gave its principal judgment in these proceedings on 30 September 2013: Ashrafinia v Ashrafinia [2013] NSWSC 1442. On 14 and 31 October 2013 the parties put oral argument as to appropriate orders consequent upon the principal judgment. O 31 October 2013 the Court made orders to give effect to the Court's reasons in the principal judgment. The Court gave its second judgment on 27 February 2014: Ashrafinia v Ashrafinia [2014] NSWSC 145. The proceedings were then adjourned until today. There are several issues still to be resolved. 2Events matters and things are referred to in this judgment in the same way as they are in the principal judgment. Both judgments should be read together. 3The first of the remaining issues relates to the sale of the Marsfield property. Mr Hedge on behalf of Mr Hayes, the trustee for sale, reports to the Court that the Marsfield property has been sold. The net proceeds of sale before deduction of the trustee's costs are some $551,000. Various legal and other costs associated with the sale amount to approximately to $73,000. The Court's approval for these expenses is sought before the net balance is paid out. 4An oral application for approval has been made by Mr Hedge on behalf of Mr Hayes this morning. He seeks orders: (1) that the costs and expenses of Mr Hayes as trustee for sale be approved; (2) that such costs and expenses be able to be deducted from the proceeds of sale of the Marsfield property; and, (3) that the balance be applied according to the Court's direction. 5The Court has not had an opportunity this morning to look through Mr Hayes' affidavit. I will deal with the issue of the approval of Mr Hayes' expenses in chambers, unless any application is made for disapproval of any part of his fees. But to allow this to occur smoothly in the next few weeks, I will direct the trustee to provide a copy of the affidavit of Alan John Hayes to each of the parties to the proceedings, together with a letter giving notice of the motion which has been moved orally today. 6The Court will hear any submissions that Mr McGrath SC, on behalf of Karami, wishes to make in relation to Mr Hayes' fees. The Court will also hear any application from any other party who wishes to apply by motion for leave to put submissions on that issue. With respect to Mr Hayes' fees, all the parties apart from Mr Hayes, have identical interests. There is no need for more than one party to speak against Mr Hayes' claim for fees. If any other party wishes to challenge those fees they can do so by motion. But if they wish to take up that separate challenge they will do so at the risk as to costs, if the challenge fails. 7And as Karami is the successful plaintiff in the proceedings, she is the appropriate person to be the prime contradictor of Mr Hayes' claim for fees. So the Court will direct that any motion Karami wishes to advance to challenge Mr Hayes' fees should be filed and served by Friday 4 April 2014 at 5pm, and such motion may be made returnable before me at 9.30am on 6 May 2014. Any other party may file a motion seeking leave to put submissions in relation to Mr Hayes' fees. 8The second remaining issue is an application by Mohammad for indemnity costs in the 2008 proceedings. As to that matter, Mohammad attempted this morning to file further evidence and to pursue the matter of whether the costs order, (order number 4 already made in his favour in the 2008 proceedings), should be made on the indemnity basis. Order 4 of the orders made by the Court on 27 February 2014 was for the plaintiff to pay the defendant's costs of the 2008 proceedings on the ordinary basis. But in order 5 on that day the Court reserved for further argument the issue whether the costs in order 4 should be paid on the indemnity basis. 9Notwithstanding direction 8 the Court made on 27 February, Mohammad has not sought to file a motion seeking costs on the indemnity basis nor to serve notice of such an application on Amir, the plaintiff in the proceedings. If he wishes to pursue that matter, that would ordinarily be the appropriate way for him to do so. 10But as prior notice of this issue has been given no motion will be necessary. I will give leave to Mohammad to file by 4pm on Friday 4 April 2014 and serve on Amir any further evidence he wishes to rely upon in support of his application for indemnity costs. He should also serve that evidence on Amir. He has the Court's leave to argue that issue at 9.30am on 6 May 2014. 11All additional evidence upon which Mohammad relies in relation to that application should be contained any affidavit served on Amir by 4 April. I will make this direction, because Amir is not present today, because there is no evidence before me that notice has been given to him that the matter was going to be argued today, and because Mohammad is seeking to file and rely on additional evidence to support his claim for indemnity costs. 12The third remaining issue is what should be done to appoint a new trustee of the trust, and the related question of what should be done with the balance of the fund. There are several competing views about this which have been canvassed in my several judgments. One option is that Mr Hayes should be appointed as the trustee of the trust. Mohammad supports this course, principally because of the neutrality of Mr Hayes. Karami opposes it, principally on the grounds of its probable expense. Karami again puts herself forward as a trustee in order to save expense and because she submits that she is likely to be the prime beneficiary of the funds that remain. Mohammad opposes this course. He submits that Karami is not capable of being an independent trustee. No one has advanced either a professional trustee or anyone else prepared to act in this role either on a volunteer basis, or at reduced cost. The only other option, also canvassed in the submissions, is that the balance of the funds be paid into Court to allow parties to apply for the balance of the funds to be administered by the Court. 13At this stage, the best course seems to me is to direct the payment into Court, pending the parties applying for the Court's administration of that fund, or for appointment of a new trustee, if one can be found. 14How much should be paid into Court? It seems to me that the sum of $450,000 is what should be paid into Court at this stage. That will allow Mr Hedge's client, Mr Hayes, ample scope to be able to recoup any further fees out of the monies retained, especially if there is any further contest involving him. Otherwise, the balance of the funds above $450,000 can be paid into Court later. Thus, the order will be that $450,000 of the funds in the control of Mr Hayes, being the proceeds of sale of the Marsfield property shall be paid into Court. I will also direct that any application for the disposition of that fund in Court (or the appointment of a trustee) should be filed and served by 5pm on 4 April, 2014. Any claims for just allowances that are still being pursued will be considered with issues of the disposition of the fund in Court. 15There is one final remaining issue. At [39] of the Court's judgment of 27 February 2014 the Court indicated that it was prepared to make an order against Mohammad to the effect there set out, that is, an order restraining Mohammad from disposing of or dealing with any interest he holds Ashrafi Richards Nominees, the Ashrafi Richards Hybrid Trust or CBB Management Pty Ltd. But the Court indicated on that occasion that it would only be prepared to make that order on an interim basis pending further resolution of issues on that subject, if Karami were to give an undertaking as to damages. Mr McGrath SC indicates today that his client is not prepared to give that undertaking as to damages. But Mr McGrath SC submits that the expenditure of legal costs and other costs associated with any contest about CBB Management Pty Limited (or about the funds sent to Iran) risks the further depletion of the remaining funds of this trust. Therefore his client does not wish to take this issue any further. 16For that reason I will not make the order set out in paragraph [39] of my judgment of 27 February: