Brayton & Brayton (No 3)
[2022] FedCFamC1F 622
•22 August 2022
Federal Circuit and Family Court of Australia
(DIVISION 1)
Brayton & Brayton (No 3) [2022] FedCFamC1F 622
File number(s): SYC 5516 of 2017 Judgment of: WILSON J Date of judgment: 22 August 2022 Catchwords: FAMILY LAW – MAJOR COMPLEX FINANCIAL PROCEEDING LIST – application to vacate trial date – application to vacate trial dismissed – application for costs pursuant to s 117(2A)(e) of the Family Law Act – application to vacate trial was wholly unsuccessful – costs warded on a party-party basis. Legislation: Family Law Act 1975 (Cth) ss 117(2) and 117(2A)(e) Cases cited: Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588
Deiter & Deiter [2011] FamCAFC 82
Eaby & Speelman [2015] FamCAFC 104
Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361
Marvel v Marvel (2010) 43 Fam LR 348
Redmond & Redmond [2014] FamCAFC 155
Division: Division 1 First Instance Number of paragraphs: 82 Date of last submission/s: 22 August 2022 Date of hearing: 16, 17, 18 and 22 August 2022 Place: Melbourne Counsel for the Applicant: Mr G. Richardson SC Solicitor for the Applicant: Barkus Doolan Counsel for the Respondents: Mr E. Cox SC Solicitor for the Respondents: Landerer & Company Solicitors Counsel for the Respondents: Mr B. Roberts QC and Mr M. Wong Solicitor for the Respondents: WRP Legal & Advisory ORDERS
SYC 5516 of 2017 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS BRAYTON
Applicant
AND: MR BRAYTON
First Respondent
MS AA BRAYTON
Second Respondent
MR TOBLER (and others named in the Schedule)
Third Respondent
order made by:
WILSON J
DATE OF ORDER:
22 AUGUST 2022
THE COURT ORDERS THAT:
1.On or before 4:00pm on 25 August 2022, the husband must complete, file and serve his trial affidavit.
2.On or before 4:00pm on 30 August 2022, all respondents other than the husband must file and serve all trial affidavits other than expert evidence.
3.Pursuant to s 117(2) of the Family Law Act, the respondents must pay the applicant’s costs of and incidental to the appearances on 16, 17, 18 and 22 August 2022 on a party-party basis and I certify that the appearance of Senior Counsel on those dates was appropriate.
4.The further hearing of this proceeding is adjourned to 10:00am on 24 August 2022 and thereafter at 9:30am on 31 August 2022 for directions in the Major Complex Financial Proceeding List.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Brayton & Brayton is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
EX TEMPORE REASONS FOR JUDGMENT
WILSON J
Between 16 and 18 August 2022 and on 22 August 2022 a pitch battle was waged in this proceeding in which the respondents sought orders vacating the trial, presently fixed for 5 September 2022. The wife resisted the respondents' application. It was argued –
(a)by the husband, that by reason of his retaining new legal representation consequent upon his former solicitors’ retainer being terminated, he had insufficient time to prepare for the trial as presently fixed; and
(b)by the husband and all other respondents that expert evidence may well not be filed prior to 5 September.
Conversely the wife argued –
(a)the recent loss by the husband of his solicitors may well be a contrivance;
(b)the husband had previously been ordered to take steps to prepare for trial that should have been completed by now such that he should be ready for trial; and
(c)expert evidence is unlikely to be provided as late as the respondents say.
For the reasons that follow, I refuse the respondents' application to vacate the trial date.
In accordance with my directions previously given, during weekly directions hearings in the lead-up to the trial the ongoing state of preparation by all parties will be assessed. I expect, dare I say, require all parties to diligently and earnestly prepare for the trial. Three weeks remain, or thereabouts, ahead of the commencement of trial. It would be extraordinary if able counsel, retained immediately, could not prepare this case for trial in three weeks. They would need to be focused exclusively on this case and not be distracted by other fee-paying activities. The interests of justice in this case rather than their personal convenience demands as much.
Mr Cox SC, who appeared for the husband warned me against overreaching and making any findings of fact on this application that might affect credit findings. That much was true. Mr Richardson SC submitted that on the material presently before me it was sufficient for me to state that I was not persuaded that the respondents had demonstrated an entitlement to orders vacating the trial date. Consistent with authorities such as Marvel,[1] Eaby,[2] Redmond,[3] Deiter[4] and others, a judge in my shoes should make factual findings on a contested interlocutory application with great circumspection and I have proceeded on that basis.
[1] (2010) 43 Fam LR 348.
[2] [2015] FamCAFC 104.
[3] [2014] FamCAFC 155.
[4] [2011] FamCAFC 82.
It is necessary to divide these reasons into portions relating to the so-called conflict application and those relating to the expert evidence, which I now do.
The conflict application
According to Mr Richardson who made this submission without objection, the husband is not only a sophisticated businessman, but the husband is also a qualified solicitor having obtained a law degree some years ago. He retained Ms CF as his solicitor. This litigation was commenced in 2017, although it was not said whether Ms CF had represented the husband since 2017. This litigation has been on foot for five years or thereabouts. Most cases in this court are concluded in five years.
The husband asserted that in early August this year, he became concerned that his solicitor may not be promoting his best interests in this litigation so he decided to terminate her retainer. The timing of that decision was relevant. On 9 August 2022 I handed down reasons consequent upon the joinder of new parties. During debate prior to those reasons, the respondent agitated the question of adjournment which was then addressed. As is recorded in paragraph 4 of my reasons of 9 August 2022, ultimately the position was reached that weekly directions hearings will be conducted until trial to see precisely how each party is coping with trial preparation. All parties enthusiastically agreed with the concept of a weekly directions hearing.
The husband's conflict application was said to have been grounded in his lack of confidence in Ms CF. While not put as highly as there being a bilateral romantic relationship between the husband and Ms CF, the husband relied on the information in an exhibit called "confidential exhibit SB1" exhibited to the husband's affidavit made 15 August 2022. The body of that affidavit contained the husband's assertions that he became concerned that Ms CF was not acting independently and in the best interests of the husband. He further deposed to his loss of confidence in Ms CF to not only prepare his trial affidavit due 16 August 2022 but to continue to represent him at the trial of this proceeding on 5 September 2022.
The information in confidential exhibit SB1 was difficult to understand. Chronologically it commenced on 16 July 2022. On a line-by-line basis it purported to set out in transcript form extracts from text messages between Ms CF and the husband. The relevant mobile phone numbers from which the text messages were taken was not given in evidence. Some lines of text messages ended with the letter x seemingly revealing that the particular line of that message emanated from Ms CF. Yet the lines did not appear to represent a back-and-forth exchange of text messaging as between the writers revealing what one usually sees, for example, a statement by one followed by a response from the other. Further, the dates were not sequential although the transcribed portions covered the dates 16, 17, 19, 22, 23, 24, 26, 27, 28, 29 and 30 July as well as 1, 2 and 3 August. Some entries were redacted. Some entries were pictorial showing an animal and in very few instances, entries to the right of the sequence showed a response. One line with an x at the end read “I am in love with you. I feel I knew it the moment we met”. Another read “I love u x”. Another read “I just broke up with my boyfriend”. It was readily apparent that the exchanges set out in confidential exhibit SB1 were selective, incomplete and sanitised.
That led to the issue of a subpoena directed to the firm of solicitors which employed Ms CF. The subpoena called for the production of copies of all text message exchanges between Ms CF and the husband in the period 26 July to 11 August 2022. A bundle of documentation was produced in answer to the subpoena. That bundle was marked as exhibit B. In that bundle, text messages in blue were set out emanating from Ms CF and text messages in grey were set out emanating from the husband. The chain of text messages commenced on 16 July 2022 and ended on Wednesday 10 August 2022. The last date was significant having regard to my reasons handed down the day before on 9 August 2022.
Equally significantly was the fact that many entries in the documents produced by subpoena were not among the entries in confidential exhibit SB1. Mr Richardson SC took me to the entries in the text message chain produced by subpoena and he compared them to the entries in confidential exhibit SB1. They were in large number. Mr Richardson SC submitted that the husband was prepared to rely on the incomplete entries in a confidential exhibit and in so doing to propound an incomplete and erroneous portrayal of the exchange between Ms CF and the husband when, in fact, the more expansive version showed the actual exchange. It was true that only when the text message exchange recorded in the document produced by subpoena was before me did I have the actual version of events. It was not as the husband put forward in confidential exhibit SB1. Some of the entries that appeared in the text exchange produced by subpoena revealed that the husband's communications with Ms CF disclosed no loss of confidence, contrary to the husband's assertions.
That was of relevance because, in answer to a question from me, Mr Cox SC submitted that by 17 July 2022 a conflict had emerged between the husband and Ms CF. Aside from the emergence of rights enlivened by that conflict arising on that date, the test messages seem to support the concept that any conflict (if one arose at all) was largely ignored by both Ms CF and the husband. For example, on 16 July 2022, the husband sent a text to Ms CF in the following terms –
I do trust you and I am very pleased that we met and that you represent me.
On 19 July 2022 Ms CF sent a text message to the husband with an x stating that she had just provided her "lawyer’s advice" to him. The husband responded on that day stating “You make me smile [Ms CF]”. Later that same day the husband sent a text to Ms CF stating that he would love to take Ms CF to lunch in the then following week. He also sent Ms CF separate photographs of his son and his daughter on that day.
On 21 July 2022 the husband sent a text to Ms CF expressing his concern about the position in which he was being put by the legal team Ms CF retained to represent the husband. It was not said but that may be a reference to her selection of barristers, although the point was not developed nor was the basis of the husband's concern revealed. Then followed that day with a collection of text messages from Ms CF in which she stated she was in crisis that day. The husband's response was “Life after death”, which while making little sense, was very far from being assertive, angry or hostile.
On 23 July 2022 the husband sent Ms CF a text message in philosophical terms, but not hostile or assertive, in which he expressed his thoughts that Ms CF was a good person and that life can provide many unexpected challenges.
The date 23 July 2022 was a Saturday. Two days earlier, on 21 July 2022, the parties had appeared before me. No mention was made, or even faintly hinted at, that there was some disquiet between the husband and his solicitor. In the course of the text messages on 23 July 2022 Ms CF referred to the husband as "babe". She also stated that the husband would not fund her to do the things that were very important (her words). She also included a separate text as follows –
I'm going to say it I am in love with you. I've tried to hold back so much you don’t know
She repeated her statement of love for the husband several times in texts that day. Ms CF also advised the husband to pay the wife to end this litigation. She also told the husband she had broken up with her boyfriend.
The string of text messages on 23 July 2022 were mostly from Ms CF. The exhibit recording the text messages obtained by subpoena reveals 24 pages of text messages in blue from Ms CF to the husband with no response from the husband. Yet a close examination of the messages from Ms CF suggests (and I put it no higher) that the husband may have sent Ms CF one or more text messages, to which Ms CF was responding, and which text messages from the husband were not recorded. The point can only be investigated by cross-examination, not on this application.
The husband responded on Monday 1 August. It was innocuous. Yet there was no suggestion in it that the husband took umbrage in the very many text messages sent slightly earlier. Nor did he say he had lost confidence in Ms CF. The statement by Mr Cox SC that on 17 July 2022 a conflict emerged between Ms CF and the husband was not manifest in the text messages.
On 1 August 2022 Ms CF sent another barrage of text messages to the husband. One of those was as follows (with errors in the original) –
So strategy is everything we need the adjournment be sensible listen to what u are being told from those that have your back x
She sent another the same day. It was as follows –
I've lined it up I know who is who and what they can do and how to play it so listen x
Then there was this –
Remember I told you litigation is a moving game of chess please trust me x
On Wednesday 3 August the parties appeared before me. On that day no mention was made of a disintegration in the relationship between the husband and Ms CF.
Prior to that day, by the end of the day on 1 August 2022 Ms CF sent a text message to the husband. It read as follows (with errors in the original) –
That's why I fell n love with you we have the same purpose x
Rather than responding aggressively in hostile terms or in any way asserting a need for professional propriety in the relationship between the two, the husband wrote the following –
You do make me smile a lot.
Text messages were put in evidence for events on 3 August (when this proceeding was before me) but they were out of sequence. I cover them below.
On 4 August 2022 Ms CF requested the husband to contact her concerning counsel. He said he was onto it (whatever that meant).
The text message chain on 4 August 2022 included messages that were omitted from the confidential exhibit SB1. So far as those omissions were concerned Mr Richardson SC relied on the principles espoused by the High Court in Kuhl v Zurich Financial Services Australia Ltd[5] where it was held that a witness is required to tell the whole truth and not merely selected excerpts of the truth. There is considerable force in that submission.
[5] (2011) 243 CLR 361.
At all events, in the text message exchange on 4 August 2022 the husband stated to Ms CF that certain unidentified persons showed the husband disrespect and were "deliberately manipulative" (her words). Ms CF stated that a person called Sinclair was “incredibly condescending and manipulative” (her words). Mr Richardson SC submitted that the reference to "Mr CG" is a reference to a barrister by the name of Mr CG and the reference to Mr CH was a reference to a barrister called Mr CH.
At 11:56am on 5 August 2022 Ms CF sent a text message to the husband requesting the husband to sign the BV Company engagement letter to which the husband replied stating that he would do so. Rather than there being a retort by the husband expressing his view about the collapse of his professional relationship with Ms CF, his agreement to do as she asked in relation to the engagement of BV Company suggested the subsistence of a valid professional relationship.
The text messages on 3 August 2022 revealed a shift in tone in the communication by Ms CF. She wrote with the usual barrage of text messages. Ms CF provided her views in the aftermath of the directions hearing. She provided an unsolicited view of counsel including her expression that the husband had been lucky that his counsel, Mr CP “got u there” (her words) and that –
This is hard core litigation and your empire is at stake and you bring that to the table
Then followed a photograph of some of the husband's cats.
Ms CF sent a text message stating (with errors in the original) –
At the moment we have [Mr CP] in our corner we are strong but I'm working fucking hard
The husband sent her some philosophical text with a photograph of a likeness to Albert Einstein to which the husband added “Thank you for caring so much”. Then followed Ms CF's suggestion of attending a piano recital to which the husband responded stating it sounded good and he wished her sweet dreams.
On 8 August 2022 Ms CF sent an array of text messages about aspects of the ongoing progress of this case. They mention Ms BX and that Mr CP (Mr CP I presume) was “very happy everything had been done that needed to be done” (her words). Ms CF also stated that she needed to file an affidavit but she thought she would ask for seven days. She incorporated an image of a Star Wars character to which the husband responded stating “I love it” with an image of a red rose.
On 9 August 2022, prior to my judgment, the husband sent Ms CF an email thanking her for all the support. At 10:45 she told the husband to attend to an affidavit that needed to be provided to my associates. He did that.
At 8:44pm on 9 August2022 Ms CF sent a text message to the husband following the husband's stance that he would not provide funds for counsel or to provide proper instructions. In a long one-sided narration, Ms CF told the husband she needed to withdraw.
The text message chain ended at 9:21pm on 10 August 2022.
On 15 August 2022 the husband's application in the case was filed.
Ms CF signed a notice ceasing to act on 9 August 2022. That document was filed on 16 August. The husband contended he terminated Ms CF's retainer.
As matters presently stand, the husband's new solicitors say they need more time than is available to them to prepare for the trial presently fixed for 5 September.
The husband has asserted that his trial affidavit is incomplete. That may be true. However he has many days available to him to get it to finality. Mr Richardson SC urged me to make orders requiring the husband to file and serve his trial affidavit within very short compass. The husband will have until 4:00pm on 25 August 2022 to complete, make, file and serve his trial affidavit.
The text messages traced earlier in these reasons seem to reveal a particular nature of the relationship between Ms CF and the husband. The submission by Mr Cox SC that their professional relationship entered conflict on and from 17 July 2022 is not borne out by the tenor and content of the husband's own communications with Ms CF even up to 10 August 2022. I find it difficult to accept that the conflict had arisen in the manner asserted by Mr Cox SC in circumstances where the husband –
(a)provided information to Ms BX;
(b)provided an engagement letter to BV Company;
(c)filed an affidavit near 3 August;
(d)received information about the state of satisfaction with preparation, as expressed by Mr CP; and
(e)failed to record in any manner between 16 July and 10 August that he would exercise whatever rights he had (he being legally trained) consequent upon his perception of conflict.
It seems remarkable that a sophisticated litigant would conceive of the notion that the fiduciary duties owed by his solicitor had been so badly violated as to warrant jettisoning the trial of this proceeding yet he took no step until the very last minute to stop funding his counsel. It must not be overlooked that Mr CJ of Ms CF's firm wrote to the husband's new solicitors by email on 16 August 2022 in the following terms –
By way of general note, your client, prior to us ceasing to act for him, persistently instructed our firm to apply for an adjournment of the hearing, especially over the past 2 months in circumstances where he had no right to seek the said adjournment. Your client became frustrated with our advice and unwillingness to assist him in pursuing a course of action that was inappropriate, including not providing our office sufficient instructions to prepare his evidence in preparation for the hearing.
Whatever may be said of the probative value of that email, it is admissible on this application and represents a statement by a person I am willing to accept on this application as having authority and knowledge to say as he does.
It is not necessary for me to rule definitively now on the legitimacy of the husband's purpose in seeking an order vacating of the trial date. Whether it is a tactic, a device or a ruse need not be so decided and therefore I shall not. The simple fact is that his new legal representatives say they need time to get on top of the material ahead of trial. They should have that. The commencement of the trial on 5 September accommodates that. Regular weekly directions hearings will assist in learning about the progress of all respondents' preparation. But it is erroneous to think that the husband or the respondents generally come to the task of preparing their trial evidence now for the first time. The husband's affidavit is partly prepared in any event.
On 15 June 2022 orders were made by me requiring the husband and the wife to file their trial affidavits by 4:00pm on 1 August 2022. Those orders required the respondents for whom Mr Roberts QC appeared to file their trial affidavits by 8 August 2022.
On 26 July 2022, all parties consented to orders extending the date for the filing of trial affidavits by the husband and wife to 8 August 2022.
On 9 August 2022 orders were made granting the husband and wife an extension to 16 August for their filing of affidavit material. The second to 10th and 12th to 18th respondents had until 23 August 2022 to file their material.
On behalf of his clients, Mr Roberts argued that his clients' lay evidence should be staggered in such manner that all parties' expert evidence is filed and served then two weeks later non-expert evidence is to be adduced on behalf of the second to 10th and 12th to 18th respondents.
Mr Richardson pointed out that at no stage prior to the trial adjournment applications being made did Mr Roberts's clients advance any submissions about their filing trial affidavits after the filing of expert evidence.
That enlivened the issues Mr Roberts QC raised, with which Mr Cox SC agreed, about the existence of the expert evidence as a reason for vacating the trial date. To that I now turn.
The state of the expert evidence
It was common ground that Ms BX conferred in accordance with my request made on 9 August 2022. Despite any aspiration that such a conference may speed up the production of expert evidence, nothing emerged.
The affidavit of Mr CK sworn 2 August 2022, on which Mr Roberts relied, was a mix of submission and fact. Only factual matters are the proper province of affidavits, at least, in accordance with the Federal Circuit Court and Family Court of Australia (Family Law Rules) 2021. Mr CK made that affidavit in support of his clients’ application to vacate the trial of 5 September 2022. Some of the more pertinent issues (not correctly called facts) set out in that affidavit were as follows –
(a)on 25 July 2022 the wife sought to rely on her fourth further amended initiating application pursuant to which she sought to reintroduce claims under s 85A and s 90AE of the Family Law Act for each trustee to pay the wife an amount totalling $350,000,000 "to be determined following receipt of the single-expert report of valuations";
(b)between 11 May and 25 July 2022, Mr CK's clients prepared for trial on the basis that no monetary relief was sought;
(c)his clients cannot now prepare for trial in circumstances where a monetary claim is now being made in an amount to be determined following receipt of single expert valuations collectively totalling $350,000,000;
(d)on 25 July 2022, the wife's fifth further amended initiating application was brought seeking joinder of the children;
(e)Mr CK's client cannot comply with the orders for the filing of trial affidavits in accordance with the orders made on 15 June 2022 if the wife has leave to rely on the fifth further amended initiating application; and
(f)as at the date on which that affidavit was filed, outstanding single-expert reports were required from Ms BX, BU Company, CL Company, BW Real Estate, BV Company and one other person who had not been identified so as to value furniture and artwork.
Mr CK made a collection of assertions in the balance of his affidavit. They included the assertion that his clients were unable to comply with orders made on 15 June 2022 if the wife were to be granted leave to rely on the fifth further amended initiating application. No reason was offered for that contention. In paragraph 28 of his affidavit he asserted, without stating why, there was no prospect of matters being properly prepared by 5 September 2022. He alluded to the taxation effect of the impact of s 90AE(4) of the Family Law Act. He asserted he needed expert evidence on that matter without which he asserted his clients were unfairly prejudiced. In paragraph 32 of his affidavit he made the following sweeping and unsubstantiated assertions –
The late amendment also now gives rise to a specific consideration under subsection 90AE(4)(f) of the Act that the Court must have regard to, being the economic, legal or other capacity of the Trustees to comply with any other order made against them. That raises the issue of that the likely quantum of the section 79 order may be. As formulated in paragraph 6 of the [fourth further amended initiating application], the order sought by the Wife is $350,000,000. Based upon my understanding of the values of the assets available to the Trustees, that relief is wholly unrealistic. This inhibits my ability to properly address the matters referred to in paragraph 27 above.
His assertion that a particular sum is "wholly unrealistic" is not a proper matter for an affidavit. I refuse to rely on it. I therefore disregard what he says about the inhibition of his ability to address other matters. It is not for him to refuse to prepare for trial based on his assessment of an amount being "wholly unrealistic".
Mr Roberts QC advanced a collection of submissions to the effect that his evidence should await the production of expert evidence. In précis form, he argued as follows –
(a)the wife now makes a direct monetary claim against his client;
(b)relief against trusts is now being sought;
(c)secured creditors are now affected;
(d)significant tax implications are enlivened;
(e)it is logical for his clients to ask precisely how much is being sought so that the relevant trust can address the consequences of the creditors seeking to enforce their security or so that the relevant trust can assess whether sufficient net equity in the trust exists;
(f)the AE Pty Ltd property has an equity of $42,000,000 based on a recent valuation;
(g)the New Zealand property was valued at $22,000,000 less that the wife's valuation;
(h)the wife is overstating the AE Pty Ltd valuation by $22,000,000;
(i)with a $22,000,000 differential, the question of what evidence is to be adduced is brought into sharp focus;
(j)when s 90AE mandatory considerations are taken into account, his clients need to adduce evidence on whether the economic interests of third parties can properly sustain the orders;
(k)single-expert evidence is still not received;
(l)Ms BX has stated that she can meet a report filing date by 5 September and she can provide a preliminary report before that;
(m)on principles set out in Dasreef Pty Ltd v Hawchar,[6] a preliminary report will not be useful;
(n)if his clients have details of loan to value ratios, covenants, current liabilities and whether a bank will likely continue to support the provision of financial accommodation then his clients can adduce evidence in this case;
(o)his clients ought not to be shut out from giving that evidence;
(p)Ms BX will only be able to guess at matters with the consequence that her evidence is thereby rendered inherently unreliable in the absence of evidence from BU Company which is expected in September 2022;
(q)his clients’ evidence can only be adduced two weeks after the valuation evidence is provided;
(r)unlike a personal injuries case where liability can be separated from quantum, here, it is essential for the claims against the trusts to be properly articulated before the trial commences;
(s)if the trial starts on 5 September and his client's evidence was required to be filed before expert evidence is filed, credit issues may very well arise; and
(t)a mediation could occur on 5 September.
[6] (2011) 243 CLR 588.
When I put to Mr Roberts that his clients' positions reflected that of parties hellbent on resisting the commencement of this trial, he said such a characterisation was not fair. I disagree. Mr Roberts suggested that I procure the appearances of the experts to explain directly to the court what is taking so long.
Mr Cox SC embraced the submissions advanced by Mr Roberts.
Mr Richardson SC urged me to refuse the respondent's application to vacate the trial date. Among his submissions were the following –
(a)while the respondents represented by Mr Roberts sought to distance themselves from the husband, the fact remained that the husband is the CEO and managing director of each and every corporate entity represented by Mr Roberts;
(b)very few cases in the Major Complex Financial Proceedings List compared to this case when so much effort is devoted to explaining why something cannot be done rather than getting on with the task of doing it;
(c)after an order was made requiring the parties to confer with Ms BX they did meet on 10 August when Ms BX indicated she was able to do a valuation with placeholder valuations and, in the running of the trial, she can provide precise arithmetic;
(d)if the new legal representatives were unable to prepare for the trial of this proceeding on 5 September 2022, they should never have accepted the retainer to represent the husband;
(e)the argument advanced by Mr Roberts concerning the reintroduction of s 90AE claim is a fallacy because the wife has contended from day one that all property of all trusts is the husband's property for the purposes of s 79;
(f)if the respondents represented by Mr Roberts proceeded in this case on some different basis, they did so at their own peril;
(g)evidence from lenders about the lenders’ position in case of default is available right now;
(h)the submission that Ms BX's report is inadmissible if it refers to placeholders is wrong having regard to the operation of s 57 of the Evidence Act;
(i)so far as it may be argued by the husband that his new solicitors cannot prepare because they do not have a file, that is wrong because the file was handed over by Mr CJ even without that firm's fees having been paid;
(j)Mr CJ also stated that the husband had for two months prior to mid-August instructed Mr CJ’s firm to seek an adjournment;
(k)the wife will say at trial that the adjournment application was put forward by the husband as a contrivance;
(l)between 24 August 2017 and 22 November 2019 the husband did not file a financial statement; and
(m)at no stage has the husband explained the circumstances surrounding the creation of the documents dated 21 January 2005.
Mr Richardson contended that the husband's obfuscation should not be indulged any further and that the case should remain fixed for trial.
Today, that is to say on Monday 22 August 2022, the respondents represented by Mr Wong and the husband applied to reopen their application to vacate the trial date. In the interests of avoiding any later complaint that they had been shut out from putting before me everything they wanted to say I heard their application to put further material before me. Expressed most basically, the respondents (all of them) contended that BV Company provided an update of its valuation of AL Pty Ltd, that update being dated 18 August 2022. In the BV Company email, Mr CM reported that in his belief significant uncertainty existed about the actual performance and outlook of the business. He set out certain profitability metrics. He said significant variances in the EBITDA existed at various dates. He said volatility existed leading to his statement that uncertainty exists about the performance of AL Pty Ltd. He said he needs, as a minimum, audited financial statements to 30 June 2022.
It was put that without those audited financial statements BV Company was unable to provide its expert report.
The wife rejected those contentions.
The wife relied on a tender bundle. It incorporated not only Mr CM 's email of 16 August 2022 but email communications on Saturday 20 August 2022 in which Mr CM stated that he would prepare a limited scope engagement which, so the respondents submitted, would be of limited use to the parties and to the court. It must be recognised that Mr CM may well be cross-examined in a manner that goes beyond his limited scope of engagement. Mr Richardson SC pressed for the dismissal of the reopening application. He contended that the valuation of AL Pty Ltd was requested to be done for a different financial year. Mr Richardson further submitted that respondents other than the husband had no interest in the valuation of AL Pty Ltd. He further submitted that the respondents other than the husband had themselves caused the complications under which Mr CM had laboured. The husband controls 83 per cent of the shares of AL Pty Ltd. In a recent newspaper article AL Pty Ltd is reported to be likely to derive $100,000,000 in revenue. Having heard all parties on the reopening application I have concluded that it is appropriate to receive the material in support of it and I heard the parties in respect of it.
Mr CM did not say when audited financial statements of AL Pty Ltd would be submitted to him, who was to provide those audited financial statements, how long it would take to prepare them, how long it would take to consider them, and why this request was raised at this late stage. Precisely why BV Company was unable to do its job without those audited financial statements was not said. It is an everyday occurrence in courts across the Commonwealth of Australia in federal and state jurisdictions that valuation evidence is not perfect. Valuers must do the best they can with the information available to them. In formulating his evidence Mr CM will, by definition, proceed on a variety of assumptions and forecasts. He will offer his opinion on a range of valuations, each premised on certain assumptions coming to pass. It is also an everyday occurrence in courts that valuations are given in circumstances where imperfect documentation is proffered to the valuer or where, in the case of a company, audited accounts are not available. That does not hold up the valuation process. It may mean that the valuer provides certain caveats to his or her valuation. But it does not prevent the valuer performing the task set of her or him.
I found the submissions advanced by the respondents as supporting BV Company’s deferral of its report as being of little persuasive value.
Consideration
This case remains fixed for trial commencing on 5 September 2022. No order will be made at this time vacating the commencement date of the trial. The following is my reasoning for that outcome.
Whatever may be said of the wisdom of a romantic relationship forming between a client and his solicitor during the currency of the solicitor's retainer by that client, laypersons usually see that such a course is fraught with problems. In this case, the husband has some legal training. He is not an uninformed or ignorant layperson. To the contrary, he is an extremely successful businessman who, as it happens, is legally trained. If a romantic relationship formed between him and Ms CF, it is not easily discerned from the text exchanges that were put in evidence. Ms CF pledged her love for the husband. Whether that was reciprocated was unclear. For the purposes of this application it is not necessary for me to decide that and so I do not. The retainer of Ms CF came to an end. But when she was retained, orders had been made and were operative commanding the husband to file and serve his trial material. Some steps, but not all, had been taken to prepare that material. The husband adopted that approach at his peril.
The taxation consequences of orders being made in this case along particular lines should have been the subject of investigation by the husband well before now, especially when the case included claims under s 90AE and s 85A. I am unable to accept that it is legitimate for the husband to endeavour to vacate the trial of this case on the basis claimed namely ss 85A and 90AE have been reinstated into the relief sought by the wife. Those claims were advanced earlier. The husband should have earlier ascertained his position in fact and in law on the issue.
Equally, I am unable to accept that the husband cannot now file his trial material unless he sees dollar precise expert evidence. Evidence of factual matters can and must be adduced by the husband and for that matter, by the respondents represented by Mr Roberts. If that evidence requires correction or revisiting once the expert evidence is filed, then the respondents can apply for leave to adduce further evidence. But it is altogether too general and imprecise for a submission to be made and to be taken seriously that the respondents’ credit will be compromised if they are forced to file their evidence ahead of expert evidence. I reject that submission out of hand.
I order all respondents other than the husband to file and serve all affidavits on which they rely other than expert evidence by 4:00pm on 30 August 2022. They have had an abundance of time within which to have done so before now. A great deal of truth exists in Mr Richardson's submissions that the respondents have spent longer telling me why something cannot be done than is involved in the task of doing what has been ordered to be done.
So far as the expert evidence is concerned, regular directions hearings will see how that evidence is progressing. It is premature to vacate the trial date unless I know when expert evidence is provided and if a party is thereby disadvantaged, why.
In the course of debate I informed counsel as I informed them ahead of my 9 August 2022 reasons that they would be most unwise to proceed on the assumption that an adjournment was a foregone conclusion. Whether Mr Richardson is ultimately correct is in his contention to be advanced at trial that the so-called conflict between the husband and Ms CF was a contrivance remains to be seen.
Shortly after 2.30pm on 18 August 2022 a person recorded on the transcript as being unidentified said the following in reference to my making orders vacating the trial –
If he does let us it's a fucking miracle.
Mr Richardson identified the speaker as the husband. Having admitted the husband into the Teams broadcast I am able to verify that the speaker of those words was in fact the husband. The husband is hereby denied the miracle of which he spoke.
The application to vacate the trial date is dismissed.
The respondents other than the husband must file and serve trial affidavit material on which they rely other than expert evidence by 4 pm on 30 August 2022.
In addition to the directions hearing on 24 August 2022 a further directions will be conducted by me at 9.30 am on 31 August 2022.
Costs
After delivery of those reasons, Mr Richardson said on behalf of the wife that he sought an order that the respondents pay his client's costs of and incidental to appearances on 16, 17, 18 and 22 August. The submission is grounded in s 117(2A)(e) on the basis the respondents were wholly unsuccessful in their application to vacate the trial date. Costs were sought on a party-party basis and Mr Richardson asked for a specific order certifying for the appropriateness of the appearance of Senior Counsel. On behalf of the respondents other than the husband (although, on behalf of the husband, no submissions were made) Mr Wong contended that, in respect of the application to vacate, the respondents were wholly unsuccessful. He said they had been partially successful, or at least not wholly unsuccessful, insofar as the hearing on those dates for which costs are sought related to expert evidence.
I do not agree. The expert evidence has assumed the character of a sideshow for much longer than it should have. Orders ought to have been complied with by now. They have not. Repeat attempts have been made to put up trojan horses in respect of an allegedly legitimate basis for adjournments, which have been dashed. This is one, yet again. In my view, there is considerable force in the submission that the respondents were wholly unsuccessful on all aspects and that it is appropriate for a costs order in the form sought by Mr Richardson to be made which I do.
I certify that the preceding eighty-two (82) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Wilson. Associate:
Dated: 22 August 2022
SCHEDULE OF PARTIES
SYC 5516 of 2017 Respondents
Fourth Respondent:
AM PTY LTD
Fifth Respondent:
CC HOLDINGS PTY LTD
Sixth Respondent:
DD GROUP PTY LTD
Seventh Respondent:
EE INVESTMENTS PTY LTD
Eighth Respondent:
FF PTY LTD
Ninth Respondent:
GG HOLDINGS PTY LTD
Tenth Respondent:
AN HOLDINGS PTY LTD
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