Bant & Clayton
[2016] FamCA 495
•12 May 2016
FAMILY COURT OF AUSTRALIA
| CUO & MING AND ORS | [2016] FamCA 495 |
FAMILY LAW – PRACTICE AND PROCEDURE – Application for verification of pleadings – refused.
FAMILY LAW – PRACTICE AND PROCEDURE - Application by respondent to allegation of fraud to delay discovery and production of documents together with filing of affidavit material until the close of the applicant and interveners’ case – refused and directions made in limine subject to the respondent not being required to make disclosures or admissions contrary to her privilege against self-incrimination.
FAMILY LAW – PRACTICE AND PROCEDURE - Binding Financial Agreement – determination by way of construction of a term of the agreement in advance of the hearing.
| Family Law Act 1975 (Cth) s 90DA Family Law Rules 2004 (Cth) r 10.13 and 10.14 | |||
| Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited [2015] HCA 37 | |||
| APPLICANT: | Ms Cuo | ||
| 1st RESPONDENT: | Mr Ming |
| INTERVENERS: | Ms Zhou and Mr Ming Snr | ||||
| FILE NUMBER: | MLC | 8698 | of | 2013 | |
| DATE DELIVERED: | 12 May 2016 |
| PLACE DELIVERED: | Hobart |
| PLACE HEARD: | Hobart |
| JUDGMENT OF: | Benjamin J |
| HEARING DATE: | 28 April 2016 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr S R O'Ryan QC with Dr J A Watson & R J May |
| SOLICITOR FOR THE APPLICANT: | Pearson Emerson Meyer Family Lawyers |
| COUNSEL FOR THE 1ST RESPONDENT: | Mr L Glick QC with Mr G Holmes |
| SOLICITOR FOR THE 1ST RESPONDENT: | Schetzer Constantinou |
| COUNSEL FOR THE INTERVENERS: | Mr T D North SC with Mr D Sweeney & Ms Lisa Nichols |
| SOLICITOR FOR THE INTERVENERS: | Oakfair Lawyers |
Orders
Orders 8 to 12 inclusive of the directions made by this Court on 25 January 2016, as have not been complied with, are vacated.
The interveners shall file and serve a response to the wife’s amended statement in reply on or before 19 May 2016.
The interveners shall respond to any requests for further and better particulars of their claim on or before 19 May 2016.
Each of the parties shall make full disclosure and discovery on or before 31 May 2016, in the wife’s case subject to any claim for privilege.
The interveners and husband shall file and serve their affidavits upon which they rely on or before 15 June 2016.
The wife shall file and serve her material on or before 15 July 2016, subject to any claim for privilege.
The parties shall file and serve a tender book containing copies of any documents they wish to tender (in the wife’s case subject to any claim to privilege), page numbered and indexed and provide five (5) copies, one for each of the parties’ legal representatives, one for the witness and a spare copy for the Court, on or before 15 July 2016.
The issue of costs be and are reserved in relation to the wife’s 22 December 2015 notice of objection to the 21 December 2015 subpoena to W Lawyers listed for determination on 12 May 2016.
The costs of the parties’ interlocutory applications determined by these orders are reserved.
The wife’s application for verification of pleadings filed on behalf of the husband and interveners pursuant to the directions made by this Court on 25 January 2016 is dismissed.
Pursuant to Rule 10.13 of the Family Law Rules 2004 (Cth) the husband is given leave to seek a determination as to the date of separation within the meaning of recital G of the ‘Sections 90B and 90UC Binding Financial Agreement’ dated 14 October 2009.
Pursuant to Rule 10.14 of the Family Law Rules 2004 (Cth) and the oral application referred to above this Court has decided that:-
The date 7 June 2013 is the date of separation for the purposes of construction of recital G of the ‘Sections 90B and 90UC Binding Financial Agreement’ dated 14 October 2009 and signed by the wife the husband.
IT IS CERTIFIED
Pursuant to Rule 19.50 of the Family Law Rules 2004 (Cth) it was reasonable to engage both senior counsel, junior counsel and counsel to attend, including multiple counsel for each of the wife, husband and interveners.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Cuo & Ming has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT HOBART |
FILE NUMBER: MLC 8698 of 2013
| Ms Cuo |
Applicant
And
| Mr Ming |
Respondent
And
Ms Zhou and Mr Ming Snr
Interveners
REASONS FOR JUDGMENT
These are complex property proceedings between Ms Cuo (‘the wife’) and Mr Ming (‘the husband’) pursuant to Part VIIIA and Part VIII of the Family Law Act 1975 (Cth) (‘the Act’). The husband’s parents, Ms Zhou and Mr Ming Snr (‘the interveners’), have intervened in these proceedings. They seek equitable relief in terms of the legal and equitable ownership of substantial property. Such property is or may be the subject of the proceedings under the Act between the husband and the wife or which property may be sought to be sold by way of enforcement of a financial agreement dated 14 October 2009 (‘the agreement’).
This judgment, consequential directions and decision relate to interlocutory applications as to:-
a)The verification of the husband’s and the interveners’ pleadings;
b)The construction of recital G to the agreement; and
c)A determination as to whether the wife should be required to make disclosure and discovery, file affidavits and prepare a tender bundle prior to the case of the interveners and the husband being presented and their evidence tested or alternatively whether she should file and serve such material subject to any claim she has for privilege.
The substantive proceedings arise under the provisions of the Act, given the marriage relationship between the wife and the husband. The wife seeks an order declaring the agreement is binding under the Act and for subsequent enforcement of it. The husband asserts that the agreement is not binding pursuant to s 90G of the Act and/or seeks to set the agreement aside pursuant to s 90K of the Act. If the agreement is not binding or set aside the husband seeks orders to adjust property and/or declare interest in property pursuant to Part VIII of the Act.
The interveners seek a declaration as to the legal and equitable ownership of the property owned by the husband and wife and their alter egos, and include an allegation of fraud perpetrated by the husband and the wife. The husband has conceded that allegation.
On 20 October 2015 the substantive proceedings were bifurcated and the part proceedings relating to the agreement was listed for hearing commencing 15 March 2016. That hearing was to determine the husband’s application to set aside the agreement, having regard to the provisions of s 90G and/or s 90K of the Act. The wife sought a declaration that the agreement was binding. The remainder of the proceedings were to be determined at a later date, depending on the outcome of the husband and wife’s respective applications, and would comprise of either the enforcement of the agreement or the property proceedings under part VIII of the Act.
On 25 January 2016 the proceedings were listed for mention before me and the hearing dates for March 2016 were vacated. The application was listed for hearing commencing 1 August 2016 and further directions were made for hearing.
The matter was listed for directions hearing before me at Canberra on 12 April 2016. At that time senior counsel for the husband indicated that it may be necessary for a full day to be set aside for the purpose of arguing the construction of recital G to the agreement.
As at January 2016 the parties had filed statements of claim, replies and the like.
On 15 February 2016 the interveners filed an amended statement of claim in which they continued with their claim as to their entitlement to legal and equitable ownership of the property (including company and the trust assets) but those pleadings went on to assert that the husband and at times the wife made representations to the interveners upon which the interveners relied, and which induced the interveners to invest money. They asserted that:-
(a)a number of those representations were conducted in trade and commerce within the meaning of the expression used under the Trade Practices Act 1974 (Cth) or the Competition and Consumer Act 2010 (Cth) and that some of the representations made by the husband and, at times, the wife, were misleading or deceptive;
(b)the interveners, in relation to some representations, knew that they were false and were made in order to induce the interveners to transfer substantial sums to the husband and/or wife or their alter egos; and further
(c)with the wife having fraudulently induced the interveners to spend monies, the interveners are, at all material times, creditors of the wife.
These are serious allegations of fraud made against the husband and the wife.
The wife filed an amended statement in reply on 29 March 2016 and the husband filed a reply to the interveners’ amended statement of claim on 4 April 2016. In his document the husband conceded many, if not all, of the allegations made by the interveners.
BACKGROUND
In her initiating application filed 8 October 2013 in the Family Court the wife asserts that she was born in 1981, now aged 35, and she was a financial professional. She also asserts that the husband was born in 1983, now aged 32 almost 33, and is a director. The dates of birth do not appear contentious.
The wife said that the parties commenced living together in 2005, married in February 2011 and separated in June 2012. It is likely that the separation date was incorrect as in subsequent documents she has asserted that the parties separated on 7 June 2013.
In submissions made by her counsel dated 26 April 2016 it was said that certain facts do not appear to be in dispute, including that the husband and wife agree that they separated, in fact, on 7 June 2013 and from which date they were, and have been, living separately and apart.
The agreement (dated and made 14 October 2009) was expressed to be made both in the event of their de facto relationship breaking down or any subsequent marriage breaking down.[1] Consequently it was expressed to be an agreement pursuant to s 90B of the Act (made before marriage) and s 90UC (a financial agreement made during a de facto relationship).
[1] Recital F of the agreement.
The agreement provided that:-
5.Within thirty (30) days of separation (‘the date’), [the husband] will pay to [the wife] an amount equal to half of the net value of [X] Pty Ltd as Trustee for the [Ming] Family Business Trust (‘the trust’) and [Z] Pty Ltd (‘the company’) and half the net value of the assets held by the trust (‘the payment’).
The agreement went on to provide that:-
7.In the event that the payment is not made by the date, the assets of the company and the trust will be sold forthwith at market value and half the net proceeds paid to [the wife].
In the hearing of this matter there was an argument as to the meaning of separation (the date) referred to in clauses 5 and 7 of the Agreement. Recital F of the Agreement provides:-
F.This agreement is made under Parts VIIIAB and VIIIA and Sections 90UC and 90B of the Family Law Act 1975 (as amended) (‘the Act’) and deals with the following in the event of the breakdown of their de facto relationship or their subsequent marriage:-
(a)how all, or any of the property, financial resources and superannuation of either, or both of the parties, is to be distributed;
(b)the maintenance of either party.
The agreement goes on to provide a definition in recital G:-
G.For the purposes of this agreement the parties shall separate if either or both of them sign a statement to the effect that (emphasis added) they have separated; are living separately and apart; in the opinion of the parties, or either of them their relationship is broken down irretrievably and there is no reasonably likelihood of cohabitation being resumed.
Each of the parties apparently signed the agreement. Attached to the agreement were certificates of independent legal advice by lawyers purportedly asserting that they acted for the husband and the wife.
On 8 October 2013 the wife filed an initiating application, affidavit, financial statement and application in a case. In her initiating application the wife sought to be excused from further particularising her claim until such time as the husband provided full and frank disclosure and then sought interlocutory orders by way of injunction and orders for disclosure.
On 16 January 2014 the husband filed a response, again asking that he be excused from particularising his claims until such time as the wife provided full and frank disclosure of her financial circumstances. In that response he sought an interim or procedural order that the agreement be terminated and that the wife provide discovery of some financial documents.
On 14 March 2014 the wife filed a reply seeking orders that the agreement be declared a financial agreement pursuant to s 98B of the Act. Further, she sought that the agreement be declared binding pursuant to s 90G of the Act and that pursuant to s 90KA(C) of the Act, the agreement be enforced as if it were an order of the Court. She went on to provide, in the alternative, that if the agreement was set aside or declared not to be a financial agreement then there be a division of properties between the parties pursuant to s 79 of the Act.
On 2 May 2014 the wife filed an Issues Identification Affidavit.
On 4 August 2014 the interveners filed an Application in a Case seeking leave to intervene in these proceedings and, amongst other things: a declaration that the interveners intended to confer no legal or beneficial interests in all the property acquired in the name of the Ming Family Business Trust; that they are entitled to legal and beneficial ownership of all of the real property currently registered in the name of the trust; and that the interveners are entitled to be registered as sole and legal beneficial owner of all the shares in X Pty Ltd.
On 6 August 2014 orders were made that the interveners be granted leave to intervene, be added as parties to the proceedings, and that the proceedings be placed into the pool of cases awaiting determination for trial. On 11 May 2015 the proceedings were transferred to my Melbourne docket.
On 13 May 2015, I directed, amongst other things, that the parties file and serve pleadings in respect of these proceedings and I adjourned the proceedings to trial directions on 25 August 2015.
Verification of pleadings
The wife seeks directions that the interveners and the husband verify their pleadings, but seeks no direction that she verifies her pleading. The Court has a discretionary power to require the verification of pleading in appropriate cases.
Given the matters discussed later in these reasons, regarding privilege against self-incrimination and self-exposure to a penalty, this approach is logical in terms of the wife and I will not require her to verify her pleading.
The issue is therefore whether in the exercise of a discretionary power this Court should require that the husband and the interveners verify their pleadings.
In oral and written submissions, senior counsel for the wife set out a variety of reasons to persuade this Court to adopt this approach.
It was submitted that the circumstance of the wife’s employment and the nature of her academic qualifications combined with the seriousness of these allegations were such that there needed to be verification. I have had regard to her circumstances in the light of the serious allegations.
The pleadings by the husband and interveners raise serious issues including fraud which, beyond the civil context, could leave the wife exposed to criminal allegations.
It was argued that this would reduce the possibility of defamation in the context of the pleading. This is in circumstances where, in civil proceedings, all parties have the benefit of privilege against claims for defamation. That was not the strongest argument given that courts traditionally dismiss claims with costs for those who engage in frivolous and/or vexatious behaviour in the context of proceedings.
I accept that the interveners’ Amended Statement of Claim filed 15 February 2016 has significantly expanded the basis of their claim. There was a submission that the husband’s evidence is inconsistent with his pleading. I do not, at this stage, propose to proceed to the investigation of the evidence filed this far and the pleadings by the husband. That is better left to the hearing or, if there is an application to strike out all or part of the pleadings once particulars are provided, discovery made and affidavits filed. To do otherwise would seem to be premature.
The wife contends that the benefit of the verification:- [2]
… eliminates as far as possible any claim in which the Interveners have no honest belief as well as discourages them from making fanciful claims. Further, unverified pleadings have no evidentiary value but are simply a document for identifying the issues in dispute.
[2] Wife’s submissions in reply (the Privilige Against Self-Incrimination and the Interveners’ Amended Statement of Claim) dated 26 April 2016.
The wife also claims that by reason of the husband’s assertion that the wife should verify her pleading he has conceded that the wife’s request is appropriate. I do not necessarily accept that logic, particularly given the approach by the wife in terms of verification by the husband and not by her.
The Family Court is not a court of pleading. Some decades ago there was an endeavour to put in place a regime of pleadings in the Family Court, which requirement was not sustained. Unrepresented litigants, and dare I say, some members of the legal profession, had trouble with the concept and application of pleadings. In this case all the parties are represented, including senior counsel.
It was put to me, and I accept, that the rules of the Supreme Court of New South Wales require verification and that the Rules of the Supreme Court of Victoria and the Federal Court of Australia do not require verification.
The subject matter of pleading in this proceeding arose out of the claim made by the interveners pursuant to the accrued jurisdiction of this Court.
At least partly, it was in that circumstance that pleadings were initially imposed and it is the filing of the amended claim by the interveners with the serious allegations which it seems has brought about the application for verification.
Neither party provided authority as to the circumstances where pleadings ought or ought not to be verified. Senior counsel for the wife provided authority as to the need, in pleading fraud, that it be undertaken with specificity and with particularity. The wife contends that the pleadings by the interveners are vague and ambiguous. There was no application to strike out the pleadings and I see no significant relevance in this submission as to the question of verification or not.
In this jurisdiction there are generally no pleadings and as such it is usually necessary to have access to affidavit material in order to understand the substance of claims. However, in this proceeding given the nature of the claims made by the interveners the court ordered a pleading program. This was to be followed by particularisation, discovery and then affidavits, in support of the matters alleged in the pleadings.
There is and will be directions that the parties file affidavits in support of the pleadings, subject to the timing referred to later in these reasons
I am not satisfied that in the circumstances of this case verification is necessary. Each of the interveners and the husband are legally represented by solicitors, junior counsel and senior counsel and I note that the interveners’ amended statement of claim was prepared by senior and junior counsel and that the husband’s reply to the interveners’ amended statement of claim was signed off by his solicitor. The parties are or will be required to file affidavits to provide evidence supporting the matters set out in the parties’ respective pleadings.
I will not direct the verification of the pleadings filed by the husband and the interveners.
Privilege against self-incrimination
The wife, in her short minute of order, provided her submissions at the directions hearing 12 April 2016. She seeks to be excused from providing discovery and filing affidavits before the commencement of the hearing and that directions provide:-[3]
10. The hearing commencing on 1 August 2016 to involve all evidence from the Husband and Interveners in respect of any and all claims why the Financial Agreement between the Husband and Wife dated 14 October 2009 is unenforceable, or should be set aside, or any other reasons why it does not operate according to its terms, or otherwise relieves the Husband of liability under the Financial Agreement.
11. Further to order 10, and for the avoidance of doubt, evidence and determination of quantum be dealt with separately after determination of liability.
12. At the close of the Husband and the Interveners’ case, the Wife be given 21 days to:
(a)produce documents in support of her case;
(b)serve any affidavits (otherwise, statements of witnesses) upon which she intends to rely.
[3] Proposed short minutes of order by the wife.
There is no issue that the wife is entitled to rely upon the common law privilege against self-incrimination and in that regard I have considered the oral submissions made by senior counsel for the wife and the written submissions[4] provided by her counsel.
[4] The wife’s:-
The wife’s case is that the requirement for her to ‘hive off certain documents or subject matters is unimaginable because the entirety of the intervener’s claims against the wife are based on the allegation of fraud’.[5] To this end senior counsel for the wife asserted there were a series of authorities set out in the wife’s submissions in reply, including and relying upon the recently published Supreme Court of NSW decision by Harrison J in Auscity Enterprises Pty Ltd v Kismet Ventures Pty Ltd [2015] 110 ACSR 119. In particular at paragraph 32 of that decision Harrison J said:-
It is also unrealistic in my view to expect or require Mr Feng, or anyone in an equivalent position, to put on evidence or produce documents that do not expose him to the risk of prosecution whilst simultaneously holding back the evidence or documents that appear to do so. The privilege against self-incrimination is effectively indivisible and an assertion of, or claim to exercise, the privilege ought not to be conditioned upon fine choices about where it starts and ends
[5] Wife’s submissions in reply – ibid.
Senior counsel for the wife submitted further that the circumstances of the wife were more akin to that approach adopted by White J in Pascoe v Divisional Security Group Pty Ltd (2007) 209 FLR 197.
Senior counsel for the interveners made oral submission and relied upon written submissions.[6] He submitted that parts of the wife’s contentions are an over-reach. He said that the primary case of the interveners was that the husband conducted himself to the interveners that he was investing on their behalf and that he holds the property on behalf of the interveners. If they are wrong, he says that the husband and the wife mislead or deceived the interveners.
[6] Submission of the intervenors in response to the wife’s submission – privileges against self-incrimination and self-penalisation dated 26 April 2016 and intervenor’s response to the further submissions of the wife Re Abbco (1994) 52 FRC 96, filed 3 May 2016.
He rejects the submissions that the agreement has no impact upon the interveners, given the impact of clause 7 of the agreement and those matters set out in the wife’s amended statement in reply filed 29 March 2016 at paragraphs 54 to 56. I accept that submission.
He contended that the submissions contained in paragraph 19(e) of the wife’s submissions dated 12 April 2016 were an over-reach in suggesting that the wife cannot be required to take any further steps in that respect.
To that end senior counsel for the interveners referred me to Deane J in Refrigerated Express Lines (A\asia) Pty Ltd v Australian Meat and Livestock Corp and Ors (1979) 42 FLR 204 where at page 18, 486 the Court says:-
… the basis of the present proceedings is alleged contravention and involvement in contravention of divisions of Pt, IV of the Act. The applicant will only be entitled to succeed in the proceedings if it establishes against one or more of the respondents, such contravention or such involvement. In that sense, the proceedings are, in their entirety, aimed at establishing against the respondents, conduct that would make them liable to the imposition of a penalty pursuant to sec. 76 of the Act in the proceedings brought at the suit of the Minister or the Trade Practices Commission.
His Honour went on to say at page 18, 489:-
… I am unable to see that either an order for discovery or an order for interrogatories would, in the present case, in itself have or be directly productive of that effect. In those circumstances, I consider the ordinary approach would apply and the respondent’s should be left to object to producing the particular documents or in answering the particular interrogatories.
Senior counsel for the interveners said that approach was approved by the High Court in Pyneboard Pty Ltd v Trade Practices Commission [1983] 152 CLR 328 at page 335 to 336 where Mason ACJ, Wilson and Dawson JJ accepted and affirmed that approach saying:-
It is well settled that "a party cannot be compelled to discover that which, if answered, would tend to subject him to any punishment, penalty, forfeiture, or ecclesiastical censure" to use the words of Bowen L.J. in Redfern v. Redfern (1891) P 139, at p 147. See also Martin v. Treacher (1886) 16 QBD 507 ; Earl of Mexborough v. Whitwood Urban District Council (1897) 2 QB 111 ; R. v. Associated Northern Collieries [1910] HCA 61; (1910) 11 CLR 738 . Indeed, in a civil action brought merely to establish a forfeiture or enforce a penalty the rule is that neither discovery nor interrogatories will be allowed (In re A Debtor (1910) 2 KB 59, at p 66 ; Associated Northern Collieries (1910) 11 CLR, at p 747 ). See generally the discussion by Deane J. in Refrigerated Express Lines (Alasia) Pty. Ltd. v. Australian Meat and Live-stock Corp. (1979) 42 FLR 204 . There his Honour drew a distinction between discovery in a mere action for a penalty and discovery in an action which was not for a penalty the result of which might be used to establish a party's liability to a penalty in other proceedings (1979) 42 FLR, at pp 207-208 . In the first situation, the court should, in the absence of statutory provision to the contrary, refuse to make any order for discovery, production of documents or the provision of information for the reason that an intended consequence of the discovery, production of documents or provision of information is the imposition of the penalty, this being the object of the action. His Honour described this as "a broad and unqualified rule whose origins are apparently to be found in a reluctance on the part of the Court of Chancery to lend the aid of its discovery proceedings to the common informer (see Mexborough) and Heimann v. Commonwealth [1935] HCA 73; (1935) 54 CLR 126, at p 130 " (1979) 42 FLR, at p 208 ).
Further in Trade Practices Commission v Abbco Ice Works Pty Ltd & Others (1994) 123 ALR 503 the Full Court of the Federal Court of Australia, comprised of Black CJ, Davies, Sheppard, Burchett and Gummow JJ, Burchett J delivered the primary judgment and Black CJ, Davies and Sheppard JJ agreed as did Gummow J, at least in a general sense. Burchett J said:-[7]
My conclusion from the survey made in these reasons of texts and authorities since the 18th century is that the privilege against self-incrimination, and that against self-exposure to a penalty, are both reflections of the one fundamental principle. It has been stated in various ways, and with differing emphases. But, with respect, it cannot be better expressed than by the words which Deane, Dawson and Gaudron JJ used in Caltex (at 532) with reference to self-incrimination:
In the end, [the privilege] is based upon the deep-seated
belief that those who allege the commission of a crime should prove it themselves and should not be able to compel the accused to provide proof against himself.[7]Page 533.
Earlier he said:-[8]
… the two privileges were put upon the same footing. In that respect, it is consistent with what Deane J said in Refrigerated Express Lines (A/asia) Pty Ltd v. Australian Meat and Livestock Corporation (1979) 42 FLR 204 at 211 when he referred, in the singular, to "the right against self-incrimination and self-penalization"interveners.
[8] Pages 528 and 529.
Finally he said:-[9]
Substituting "the incurring of a penalty" for "the commission of a crime" and "the defendant" for "the accused", I think this statement applies to the privilege against self-exposure to a penalty. So applied, the principle may evoke less feeling, but it remains the same principle. It is therefore wrong to regard the two grounds or aspects of privilege as depending on unrelated or different considerations. They should not be seen as separate props in the structure of justice, but rather as interlocking parts of a single column. The foundation of this column is that "great justice and tenderness in the law of England", that "humane policy of the law", which Lord Hardwicke and Alexander CB expounded, and the High Court has so recently examined. In the Supreme Court of the United States, it has been said to be a matter of "protecting individual civil liberties": United States v. White [1944] USSC 109; 322 US 694 (1944) at 700.
[9] Page 533.
In reply senior counsel for the wife submitted that the interveners’ reliance on Abbco (supra) in support of their argument is contrary to the law and would lead this Court into error. Senior counsel set out a series of authorities asserting that the privileges are not the same. Accordingly, he submits that directions should be made as set out in the wife’s amended short minutes of order.
In a further submission senior counsel for the wife distinguished the decisions of White J in Pascoe v Divisional Security Group Pty Ltd (2007) 209 FLR 197 and Harrison J in Auscity Enterprises Pty Ltd v Kismet Ventures Pty Ltd (2015) 110 ACSR 119, saying that Pascoe concerned the penalty privilege wherein Auscity, as in these proceedings, concerned the self-incrimination privilege. Accordingly, this Court can reject the submissions on behalf of the interveners that that Harrison J erred in Auscity.
Finally it was submitted on behalf of the wife that the interveners’ submissions have proceeded on the wrong premise as the interveners have sought to apply the law with respect to the penalty privilege to a case concerning the privilege against self-incrimination. As such the wife does not need to show “exceptional case” in order for the Court to make the directions sought by her. Further, that the wife’s case does involve ‘an exceptional case’ such as would excuse the wife in limine. This submission is based upon the contention that the entirety of the claims contained in the interveners’ case is based on fraud. Consequently, the wife is unable to provide discovery or evidence about the circumstances surrounding entry into the agreement, because it is alleged that the wife entered into that very agreement in order to obtain a financial benefit for herself. From the pleadings of the interveners I am not satisfied that the entirety of the claims contained in interveners case is based on fraud. It seems that it is two parts, one in terms of the trust alleged by the interveners and the other in term of the fraud. There is some interaction but I do not see that it is as black and white as contended by the wife.
In response, senior counsel for the interveners submitted that Abbco is sound authority for their propositions. He further relied upon The Daniels Corporation International Pty Ltd v ACCC (2002) 213 CLR 543 where Gleeson CJ, Gaudron, Gummow and Hayne JJ said:-[10]
Today the privilege against exposure to penalties serves the purpose of ensuring that those who allege criminality or other illegal conduct should prove it. However, there seems little, if any, reason why that privilege should be recognised outside judicial proceedings. Certainly, no decision of this Court says it should be so recognised, much less that it is a substantive rule of law. Further, it should now be accepted that, as the privilege against self-incrimination is not available to corporations, the privilege against exposure to penalties is, similarly, not available to them.
[10] At [31].
Further, he repeated that to which I referred earlier in these reasons from Abbco (supra) submitting that this reasoning was affirmed by the High Court in CFMEU v Boral Resources (2015) 320 ALR 448.
I accept and adopt the submission made on behalf of the interveners that the distinction between the privilege against self-incrimination has no material significance in the context of judicial proceeding, such as this. Further that Deane J was not wrong when in Refrigerated Express Lines (A/Asia) Pty Ltd v Australian Meat and Livestock Corp and Ors he referred to and linked the two privileges or when he determined the respondents ought not to be excused in limine.
Senior counsel for the interveners submitted that in terms of the wife’s third point,[11] in which she endeavoured to apply the law with in respect of penalty privilege to a case concerning privilege against self-incrimination, it was said that this was wrong and based on too narrow a survey of the authorities. I likewise accept and adopt that submission.
[11] Further Submissions (the Wife) re Abbco (1994) 52 FCR 96, paragraph 26.
As such I accept the submissions of senior counsel for the interveners adopted by senior counsel for the husband. Given that approach, I will adopt the form of minute of order suggested by the interveners and providing that any disclosure, discovery or affidavits on behalf of the wife are subject to any claim for privilege.
What is the date of ‘separation’ for the purpose of the agreement
This an application by the husband to resolve a document construction issue as to the meaning of recital G to the agreement. I have been asked to make a determination as to what is the date of separation in the context of that recital.
There is no dispute that the actual date of separation is 7 June 2013. However, there a dispute as to whether that is the date of separation within the meaning of the agreement, or some other date. The wording of the recital is not clear and is capable of more than one construction.
The date of separation has a significant impact on the method of calculation of the money payable to the wife pursuant to the agreement. If it is binding and is not set aside, senior counsel for the husband has asked this Court to determine this issue in advance of the hearing.
I raised with the senior counsel for the parties as to my jurisdiction and power to determine that issue in advance. All three senior counsel appearing before me submitted that there was clear jurisdiction and that the Court had inherent power to do so. Senior counsel for the wife reminded me of the provisions of Rules 10.13 and 10.14 of the Family Law Rules 2004 (Cth), which provide:-
10.13 Application for separate decision
A party may apply for a decision on any issue, if the decision may:
(a) dispose of all or part of the case;
(b) make a trial unnecessary;
(c) make a trial substantially shorter; or
(d) save substantial costs.10.14 What the court may order under this Part
On an application under this Part, the court may:
(a) dismiss any part of the case;
(b) decide an issue;
(c) make a final order on any issue;
(d) order a hearing about an issue or fact; or(e) with the consent of the parties, order arbitration about the case or part of the case.
Note: This list does not limit the powers of the court. The court may make orders on an application, or on its own initiative (see rule 1.10).
There being no objection in terms of power and jurisdiction, I will give leave for the husband to make an oral application to enable the Court to decide this issue. Further, given the respective submissions, agreed facts and the outline, I have determined that:-
The date 7 June 2013 is the date of separation for the purposes of construction of recital G of the ‘Sections 90B and 90UC Binding Financial Agreement’ dated 14 October 2009 and signed by the wife and the husband.
I accept that the governing principles are as set out in by the High Court in Mount Bruce Mining Pty Limited v Wright Prospecting Pty Limited [2015] HCA 37, and are as follows:-
46.The rights and liabilities of parties under a provision of a contract are determined objectively, by reference to its text, context (the entire text of the contract as well as any contract, document or statutory provision referred to in the text of the contract) and purpose.
47.In determining the meaning of the terms of a commercial contract, it is necessary to ask what a reasonable businessperson would have understood those terms to mean. That enquiry will require consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract.
48.Ordinarily, this process of construction is possible by reference to the contract alone. Indeed, if an expression in a contract is unambiguous or susceptible of only one meaning, evidence of surrounding circumstances (events, circumstances and things external to the contract) cannot be adduced to contradict its plain meaning.
49.However, sometimes, recourse to events, circumstances and things external to the contract is necessary. It may be necessary in identifying the commercial purpose or objects of the contract where that task is facilitated by an understanding "of the genesis of the transaction, the background, the context [and] the market in which the parties are operating. It may be necessary in determining the proper construction where there is a constructional choice. The question whether events, circumstances and things external to the contract may be resorted to, in order to identify the existence of a constructional choice, does not arise in these appeals.
50.Each of the events, circumstances and things external to the contract to which recourse may be had is objective. What may be referred to are events, circumstances and things external to the contract which are known to the parties or which assist in identifying the purpose or object of the transaction, which may include its history, background and context and the market in which the parties were operating. What is inadmissible is evidence of the parties' statements and actions reflecting their actual intentions and expectations.
51.Other principles are relevant in the construction of commercial contracts. Unless a contrary intention is indicated in the contract, a court is entitled to approach the task of giving a commercial contract an interpretation on the assumption "that the parties ... intended to produce a commercial result”. Put another way, a commercial contract should be construed so as to avoid it "making commercial nonsense or working commercial inconvenience.
52.These observations are not intended to state any departure from the law as set out in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales and Electricity Generation Corporation v Woodside Energy Ltd. We agree with the observations of Kiefel and Keane JJ with respect to Western Export Services Inc v Jireh International Pty Ltd.
53.It is appropriate to consider each construction issue in turn.
This seems to be the process earlier adopted by the Full Court in Sanger & Sanger [2012] FamCAFC 210.
The primary position of the husband, and the interveners, is that 7 June 2013 being the actual date of separation is also the date of separation for the purposes of the agreement in terms of recital G. The husband argues that if that is not the case then it ought to be 8 October 2013 (being a date asserted by the wife in an affidavit of the same date) and further in the alternative it is 16 January 2014.
The husband relied upon his submissions dated 20 April 2016 under the signatures of Mr Glick QC and Mr Gerard Holmes. The interveners relied upon the outline of their submissions sealed 20 April 2016 under the hand of Mr North SC. The wife relied upon submissions dated 26 April 2016 under the hand of Mr O’Ryan QC, Dr J A Watson and R J May.
Senior counsel for the husband, wife and interveners each made oral submissions.
During his submissions, senior counsel for the wife sought to include material that had been filed and was extraneous and some of which may have involved making a determination of fact. I have not followed that course.
For the purpose of determination of this issue I have had regard to the following facts that appear not to be in dispute:-
(a)The husband and wife agree that they separated in fact on 7 June 2013 and from that date were, and have been, living separately and apart;
(b)On 8 October 2013 the wife signed a statement (in an affidavit of that date) that the parties had separated on 7 June 2013;[12]
(c)The husband signed a statement to the same effect by his affidavit of 13 July 2015;
(d)By application dated 17 November 2014 the husband applied for a divorce. The divorce order was made on 3 February 2015, with effect 4 March 2015; and
(e)While the husband did not issue a separation declaration, the wife executed one on 23 March 2015, the wife deposed:-[13]
On 26 March 2015 I served a separation declaration on [the husband’s] lawyers, Schetzer Constantinou. The separation declaration was signed by me on 23 March 2015. Annexed hereto and marked ‘13’ is a copy of the letter and separation declaration.
[12] The wife’s contentions 40(c) and her affidavit filed and sworn 8 October 2013.
[13] Affidavit of wife sworn and filed 24 August 2015 - paragraph 65.
The separation declaration provided (omitting the formal parts):-
[The wife]
1.On 14 October 2009 [the husband] and I made a financial agreement (‘agreement’) pursuant to s90UC and s90B of the Family Law Act 1975 (Commonwealth) (‘Act’), a copy of which is attached to this declaration.
2.For the purposes of s90DA of the Act:
2.1[The husband] and I separated on 7 June 2013 having lived separately and apart since the date and continued to live separately and apart at the time this declaration was signed.
2.2In my opinion there is no reasonable likelihood of our cohabitation being resumed.
Dated 23 March 2015
It is the contention of the wife that, on ordinary principals of construction, by reason of recital G of the agreement, the relevant date of separation is 23 March 2015.
Section 90DA of the Act provides for a separation declaration for certain provisions of financial agreement to take effect, it provides:-
Section 90DA - Need for separation declaration for certain provisions of financial agreement to take effect
(1)A financial agreement that is binding on the parties to the agreement, to the extent to which it deals with how, in the event of the breakdown of the marriage, all or any of the property or financial resources of either or both of the spouse parties:
(a)at the time when the agreement is made; or
(b)at a later time and before the termination of the marriage by divorce;
are to be dealt with, is of no force or effect until a separation declaration is made.
Note:Before the separation declaration is made, the financial agreement will be of force and effect in relation to the other matters it deals with (except for any matters covered by section 90DB).
(1A) Subsection (1) ceases to apply if:
(a)the spouse parties divorce; or
(b)either or both of them die.
Note:This means the financial agreement will be of force and effect in relation to the matters mentioned in subsection (1) from the time of the divorce or death(s).
(2)A separation declaration is a written declaration that complies with subsections (3) and (4), and may be included in the financial agreement to which it relates.
(3)The declaration must be signed by at least one of the spouse parties to the financial agreement.
(4)The declaration must state that:
(a)the spouse parties have separated and are living separately and apart at the declaration time; and
(b)in the opinion of the spouse parties making the declaration, there is no reasonable likelihood of cohabitation being resumed.
(5)In this section:
declaration time means the time when the declaration was signed by a spouse party to the financial agreement.
separated has the same meaning as in section 48 (as affected by section 49).The issue of construction is whether recital G is facilitative as asserted by the husband and the interveners or whether it constructs another date, perhaps more akin to the application of s 90DA of the Act in terms of a declaration.
Senior counsel for the husband submitted that the construction of recital G needs to be undertaken in the light of the context, and I accept those submissions.
In the submissions on behalf of the wife, senior counsel contends that recital G attracts the provisions of s 90DA of the Act, in particular s 90DA(4) and submits that on the reading of the document the most logical construction is that the agreement should operate from the same time which the Act says it has force and effect, namely upon the issue of the separation declaration, by either party. The submissions go on to say that by that means, any question of when the agreement obligations began, and any controversy with the operation of s 90DA(1) would be neatly avoided.
I am not sure that argument adequately addresses s 90DA(1A) which provides that sub-section(1) ceases to apply if the spouse parties divorce.
Senior counsel for the interveners observed that whilst the provisions of recital G and s 90DA of the Act are similar, there are marked distinctions between them including:-
(a)A declaration under the section uses the term ‘must state’ recital G uses the term ‘to the effect’.
(b)The section has two limbs, in sub-section (a) and (b) albeit that sub-section (a) has within it that the parties are separated and living separately and apart whereas the recital has three limbs, including a further requirement that ‘there is no reasonable likelihood of cohabitation being resumed’.
(c)The sub-section has two parts joined by ‘and’ whereas the recital uses semi colons and is not used.
I accept that there are textual similarities, but that the recital does not replicate the section.
I accept the submissions of senior counsel for the interveners that:-
a)the construction propounded on behalf of the wife flies in the face of common sense, including because it enables “separation” for the purposes of the agreement to be disconnected and temporally remote from the breakdown of the marriage as that expression is used in s 90B(2) of the Act;
b)construction has the consequence that, at least insofar as the agreement deals with the distribution of property, it does so, not in the event of a breakdown of the marriage, as s 90B(2) requires, but in the event that one or other party signs a document satisfying the requirement of recital G;
c)such a construction as promoted by the wife would be at odds with recital F; and
d)If a literal interpretation of recital G were applied it would give rise to separation occurring by reason of a declaration in circumstance where it could be done without notice to the other party. Objectively, that could not have been the parties’ intent. Obligations could have arisen in the absence of notice to the party who was required to perform some obligation under the terms of the agreement.
I generally accept and adopt the submissions by senior counsel for the husband and intervenors that the construction contended on the wife’s behalf are contrary to the purpose of the agreement. The purpose of the agreement was a financial agreement to satisfy s 90B(2) of the Act.
In summary, the agreement was expressed to set out the rights and liabilities of the husband and wife by way of contract, with terms that applied once their relationship came to an end. The agreement was expressed to be one which would apply following separation if the parties subsequently married (which they did) or if the parties had continued to live together in a de facto relationship.
In recital E(c) the agreement expresses an intent that the parties’ relationship was hoped to be permanent and that the desire of the agreement, amongst other things, was to:-
(c) define and regulate their rights and responsibilities one to the other [of the husband and wife] with respect to financial matters and reduce the possibly of litigation should they separate. [Emphasis added]
Recital F sets out that the agreement deals with both property and maintenance in the event of the breakdown of the parties’ relationship.
As such the agreement was to come into operation after actual separation and upon the breakdown of their relationship. I have considered the construction of recital G in this circumstance and in the statutory context in which the agreement was made, that is Parts VIIIA and VIIIAB of the Act. It is expressed to be an agreement created under the provisions of the Act.
Further, in determining the meaning of the term of the agreement, I considered objectively what a reasonable party to such an agreement would have understood the recital to mean. It was to operate in the context of the failure of the parties’ relationship. Given that the words contained in the recital are ambiguous and are susceptible to a variety of meanings, I believe that the context and nature of the agreement was and is a relevant consideration, and I have so considered.
Objectively, the purpose of the agreement was to put in place an agreement to resolve both property and maintenance issues that could arise between the parties following separation and the breakdown of their relationship. Thus the actual separation is or was the genesis of the operation of the agreement and its objective and intent. If there was not a breakdown of the parties’ relationship and separation did not occur the agreement would have lain dormant and perhaps would never have become operational.
Accordingly, the construction of recital G is that it is facilitative. If one, the other or both of the parties sign a statement and (by inference) communicates that statement to the other party, the provisions of the recital have been met. This would need to be in the circumstances that the parties had actually separated, that their relationship was irretrievably broken-down and there was no reasonable likelihood of cohabitation being resumed, and further that one or other of those matters was contained in the statement.
That would be sufficient compliance with the recital.
In this proceeding the parties to the agreement admit that they actually separated on 7 June 2013, notice has been given in a variety of ways and I determine that “separate” in the context of the recital is the date of actual separation.
Application for costs in respect of subpoena
On 21 December 2015 the solicitors for the husband issued a subpoena to the Proper Officer at W Lawyers, returnable for 15 January 2016. That subpoena required the production of documents.
By Notice of Objection to Subpoena filed 22 December 2015 the wife objected to the inspection and copying of some or all of the documents produced and set out reasons in her said Notice.
The objection to that subpoena was adjourned for judicial determination on 12 April 2016. The question of costs in relation to that subpoena was sought to be argued on 12 April 2016 and again on 28 April 2016.
Having regard to the complexities of the issues and the likelihood of a costs argument at the conclusion of these proceedings, I have determined that those costs ought, in the current circumstances, to be reserved. I will so order.
I certify that the preceding one hundred and three (103) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Benjamin delivered on 12 May 2016.
Associate:
Date: 12 May 2016
Submissions (Directions Hearing 12 April 2016) including Chronology of Procedural History and Proposed Short Minutes of Order (Wife),
Submissions in reply (The Privilege Against Self-Incrimination and the Interveners’ Amended Statement of Claim) dated 27 April 2016, and
Further Submissions (the Wife) re Abbco(1994) 52 FCR 96)
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