Brennan v McGuire (No 3)
[2011] FCA 505
•16 May 2011
FEDERAL COURT OF AUSTRALIA
Brennan v McGuire (No 3)
[2011] FCA 505
Citation: Brennan v McGuire (No 3) [2011] FCA 505 Parties: ROBERT GEORGE BRENNAN v GLENYS FREYA MCGUIRE File number: NSD 1147 of 2010 Judge: RARES J Date of judgment: 16 May 2011 Catchwords: PRACTICE AND PROCEDURE – reopening of final orders – s 28 Domestic Relationships Act 1994 (ACT) – power to reopen final orders under s 28 and the inherent or implied power to do so – actions by one party having potential to adversely affect compliance with final orders – necessary to amend final orders to ensure other party not adversely affected – unsatisfactory evidence led by parties – possible misapprehension by court of the facts creating unnecessary difficulties with final orders – time for appeal from final orders expired –– necessary to amend final orders to avoid both risk of injustice and further proceedings between parties Legislation: Civil Procedure Act 2005 (NSW) s 56
Domestic Relationships Act 1994 (ACT) ss 14, 15, 25 and 28
Federal Court of Australia Act 1976 (Cth) ss 5(1) and (2), 37M
Federal Court Rules O 35 r 7(2) and (3)Cases cited: Brennan v McGuire [2010] FCA 1443 referred to
Brennan v McGuire(No 2) [2011] FCA 148 referred to
De L v Director-General NSW Department of Community Services [No 2] (1997) 190 CLR 207 followed
Grassby v The Queen (1989) 168 CLR 1 followed
Metwally v University of Wollongong (No 2) (1985) 60 ALR 68 referred to
Newmont Yandal Operations Pty Ltd v The J Aron Corporation and The Goldman Sachs Group Inc (2007) 70 NSWLR 411 referred toDate of hearing: 11 May 2011 Date of last submissions: 11 May 2011 Place: Sydney (via video link to Canberra) Division: GENERAL DIVISION Category: Catchwords Number of paragraphs: 34 Solicitor for the Applicant: Ms M Reid of Phelps Reid Counsel for the Respondent: Respondent appeared in person
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1147 of 2010
BETWEEN: ROBERT GEORGE BRENNAN
ApplicantAND: GLENYS FREYA MCGUIRE
Respondent
JUDGE:
RARES J
DATE OF ORDER:
16 MAY 2011
WHERE MADE:
SYDNEY (VIA VIDEO LINK TO CANBERRA)
THE COURT ORDERS THAT:
1.Each of the respondent (“Ms McGuire”) and Wayne Kaufline (“Mr Kaufline”) show cause by filing and serving an affidavit on or before 24 May 2011 deposing as to:
(a)what, if any, interest each asserts he and she now has in the Rob Brennan Superannuation Fund and the basis of that assertion (“the fund”);
(b)the documents each received in or about August 2009, and annexing copies thereof, that relate to or identify all sums paid to each of them, MKF SuperFund or any other person or superannuation fund nominated by him or her, received as a rollover or other payment by the fund before 26 August 2009, together with all documents by which he or she requested, or caused to be requested, that each such payment by the fund be made.
2.Ms McGuire serve Mr Kaufline with these orders on or before 16 May 2011 and file and serve an affidavit of service on or before 17 May 2011.
3.Each party and Mr Kaufline serve and provide a copy to the associate to Rares J on or before noon on 26 May 2011 written submissions as to the orders, if any that the Court should make on 27 May 2011.
4.The proceedings stand over to 27 May 2011 at 8:30am for hearing to determine:
(a)whether cause has been shown by each person referred to in Order 1;
(b)what, if any, further orders ought be made including, but not limited to, orders to give effect to or vary the orders made on 24 February 2011.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 1147 of 2010
BETWEEN: ROBERT GEORGE BRENNAN
ApplicantAND: GLENYS FREYA MCGUIRE
Respondent
JUDGE:
RARES J
DATE:
16 MAY 2011
PLACE:
SYDNEY (VIA VIDEO LINK TO CANBERRA)
REASONS FOR JUDGMENT
Both parties requested the Deputy District Registrar to relist these proceedings before me. I made final orders on 24 February 2011 for the reasons I gave on 17 February 2011 (Brennan v McGuire(No 2) [2011] FCA 148) to give effect to the relief I had found was appropriate in my principal reasons of 21 December 2010 (Brennan v McGuire [2010] FCA 1443). On and after 17 February 2011, the parties proposed various amendments to draft orders I prepared on 7 February 2011 that my associate had circulated to them on the same day. The draft orders were largely to the effect of the orders made on 24 February 2011 and the amendments dealt with some minor changes to the draft before I made the final form of the orders. I will continue to use the same terms I used in my earlier judgments to describe the persons and entities involved in these reasons.
On 5 May 2011, the Deputy District Registrar reported to me that she had appointed settlement to occur on 31 March 2011 and, later 18 April 2011. However, settlement did not proceed on either date principally because of:
·difficulties in finalising the superannuation entitlements of Mr Brennan, Ms McGuire and her bother, Mr Kaufline, in the fund and the fund’s superannuation tax returns;
·Ms McGuire’s insistence that, despite my orders and reasons for those orders (Brennan (No 2) [2011] FCA 148 at [12]) she was entitled to withhold, or have security set aside in, an amount to cover her possible entitlement to 50% of her (yet to be) taxed costs; and
·Ms McGuire’s complaint that Mr Brennan had not caused to be delivered to her more property than he did in compliance with order 5 made on 24 February 2011;
·disagreements as to the ongoing management of the fund, including the appointment of two new trustees being Ms McGuire’s son, Ben McGuire, and a Peter Lyons and a meeting of trustees that had been called from 8 May 2011 to consider a resolution to remove Mr Brennan as trustee for the fund. (This was in circumstances where the fund was to be one of the principal assets that the final orders determined would be Mr Brennan’s sole property after payment at settlement of any entitlements of Ms McGuire and Mr Kaufline.)
THE FINAL ORDERS OF 24 FEBRUARY 2011
The orders of 24 February 2011 were entered on 2 March 2011. In substance they provided as follows:
1.Settlement occur at the Court in Canberra on 31 March 2011 or such other time as was fixed by the Registrar and, subject to each party complying fully with his and her obligations in the orders:
(a)Mr Brennan would deliver to Ms McGuire a registrable transfer of his share of their joint property at Forrest, the certificate of title to it and any unpaid rate notices he had received;
(b)Ms McGuire would deliver to Mr Brennan her resignations as a director and secretary of their company (Rob Brennan Facilitation and Training Services Pty Ltd), a share transfer of all her shares in it, an assignment of all her rights and interests in the company including as a trustee of the Rob Brennan Superannuation Fund (the fund), and an indemnity for any unpaid rate notices (Order 1).
2.Also at settlement:
(a)Mr Brennan would deliver to Ms McGuire a member’s statement in respect of Mr Kaufline’s interest in the fund together with a bank cheque in that sum in favour of Mr Kaufline or his nominee and executed indemnities in favour of Ms McGuire and Mr Kaufline in respect of any claim the company may make against either of them as trustee or in respect of the fund;
(b)Ms McGuire would deliver to Mr Brennan, Mr Kaufline’s resignation as a director of the company and an assignment by him to Mr Brennan of his rights and interest in it and, subject to Order 3(b), a bank cheque for $775,000 in favour of Mr Brennan or his nominee (Order 2).
3.If either party failed to perform an obligation under Orders 1 or 2 the Registrar was appointed to prepare, settle the terms and sign any document he or she had been ordered to sign and to do what was necessary to give effect to the orders. Additionally, if Mr Brennan failed to deliver a bank cheque to Mr Kaufline pursuant to Order 2, Ms McGuire would deduct the sum payable from what she was to pay Mr Brennan and deliver a bank cheque in the deducted amount to the Registrar to be given to Mr Kaufline together with the documents that Ms McGuire was to deliver under Order 2 (Order 3).
4.Both parties had to sign and authorise their respective accountants, superannuation fund managers and financial advisors to prepare by no later than 20 February 2011, all such documents as were necessary to enable, first, the parties to prepare any outstanding tax returns, and, secondly, the parties and Mr Kaufline to prepare any outstanding superannuation returns, failing which the Registrar was to sign any such documents (Order 4).
5.Mr Brennan was to cause to be delivered to Ms McGuire, by 30 March 2011, such of her personal records as were in his possession, custody or power and certain identified effects (Order 5).
6.Mr Brennan was to pay 50% of Ms McGuire’s taxed costs (Order 6).
7.Upon compliance with the orders, all rights in any real or personal property remaining in the possession of each party would vest in that party and neither would have any further right against, or liability to, the other in respect of the fund, the company or any interest in any real or personal property that could have been made the subject of a claim in the proceedings (Orders 7 and 8).
THE ORDERS IN RELATION TO SUPERANNUATION
During the final hearing Ms McGuire tendered a letter to Mr Brennan dated 17 October 2008 from Certus Law, on behalf of Ms McGuire and Mr Kaufline. The letter stated that they resigned as members of the fund and sought to “transfer their entire member benefit to a new complying superannuation fund”. That new fund was MFK SuperFund. However, Mr Brennan refused to sign the necessary consents for a protracted time. Ultimately, Ms McGuire received a partial payout from the fund of $200,000 on 29 July 2009. Then, on 26 August 2009, MFK SuperFund banked in one of its accounts $1,899,429 being rollovers of the entitlements of Ms McGuire of $1,103,480 (after deducting SuperGuardian’s fees of $3,485) and of Mr Kaufline of $795,949 (after deducting fees of $2,128). There is no direct evidence of when or to whom the fund paid these rollover sums or when MFK SuperFund first received those funds.
As I had noted in the principal reasons, despite its significant value to each party, neither tendered up to date evidence of his or her superannuation entitlement at the final hearing. The evidence tendered on superannuation was and remains incomplete and sketchy. Subsequent to their final submissions, and before I delivered my principal reasons, I granted each party leave to file an affidavit as to his and her current superannuation entitlement. That material revealed that each had drawn down amounts of superannuation that he and she had not previously disclosed and for which omission or drawdown neither offered any explanation. I considered that these non-disclosures and omissions of a full and satisfactory explanation were matters to take into account in formulating my assessment of the final relief to be granted: Brennan [2010] FCA 1443 at [91]-[96].
In her affidavit of 13 December 2010 Ms McGuire said:
“15.Wayne Kaufline and I each have ongoing interests in the Rob Brennan Superannuation Fund. We remain members and Trustees of the Fund. We will do so until the outstanding loan to the Company of $134,645.20 is resolved by way of either the Liquidation process or the NSD 1147/2010 judgement.
16.The Rob Brennan Superannuation Fund carries forward a very considerable capital loss, the precise sum I am unable to access until the 2009/2010 tax returns have been provided by SuperGuardian. That very considerable benefit that will be lost to exiting members.
17.The members of the Rob Brennan Superannuation Fund bear the loss in relation to that outstanding loan of $134,645.20 in the following proportions:
Glenys McGuire 50.03%
Wayne Kaufline 30.55%
Robert Brennan 19.42%18.A reallocation of those liabilities is sought by way of the [judgement in these proceedings].” (emphasis added)
On 7 February 2011 Ms McGuire swore an affidavit dealing with the scheme of orders I had proposed in my primary reasons that were designed to extract her brother from further involvement with Mr Brennan, the company and the fund. She attached a member’s statement for Mr Kaufline’s interest in the fund as at 30 June 2009 as evidence of his then “active membership balance” of $41,783. Ms McGuire then asserted that Mr Kaufline was also owed $79,970.73 being 30.55% of “… the outstanding [fund] loan to the company” of what she asserted was $261,769.97. She gave no explanation of how the member balances of the fund had not already included, as an asset, whatever was the value of the debt owed by the fund to the company. Prima facie, the amount of Mr Kaufline’s member account balance of $41,783 at 30 June 2009 would have included whatever was his aliquot share of the value of the asset comprising any debt due to the fund by the company. Thus, any claim by a member to some further sum, over and above the value of that asset forming part of his or her balance would appear to have had no legal or accounting justification.
One reason why I made Order 4 in the final orders was so that each party’s and Mr Kaufline’s present entitlement to a member’s balance in the fund could be ascertained. I said (Brennan (No 2) [2011] FCA 148 at [8]):
“8Both parties complained about the time my draft orders had allowed them to obtain final information as to Mr Kaufline’s interest in, or debt due to him by, the superannuation fund. The orders I foreshadowed offered a means for him to be extricated from further involvement in the parties’ financial affairs. If Mr Kaufline chooses not to co-operate, I have provided, so far as possible, that once his financial position in relation to the superannuation is ascertained, he will deal with his sister, Ms McGuire, for any debt or interest previously due or held by the superannuation fund to or for him. Obviously, it would be desirable for all three adults to co-operate and rationalise the present chaotic state of the superannuation fund’s affairs in a sensible and practicable manner.”
No such co-operation occurred. Instead, Ms McGuire and Mr Kaufline decided that they did not accept the 2009 fund returns, tax return and member statements prepared after 24 February 2011 by SuperGuardian. This was in circumstances where Ms McGuire had not expressed any qualification in her affidavit of 7 February 2011 about the accuracy of Mr Kaufline’s member balance of $41,783 at 30 June 2009 that she annexed to that affidavit. But, in her affidavit sworn on 10 May 2011 Ms McGuire annexed three subsequent versions of the member statement of Mr Kaufline, Mr Brennan and herself at 30 June 2009. None of these reconciled precisely with Mr Kaufline’s member balance on 30 June 2009 of $41,783 to which Ms McGuire had referred to in her affidavit of 7 February 2011, albeit that it differed by only a small amount from the first new version. The different versions came about because of instructions that I infer Ms McGuire and Mr Kaufline gave SuperGuardian.
Member Balances at 30 June 2009 attached to Ms McGuire’s
affidavit of 11 May 2011
Mr Brennan
Ms McGuire
Mr Kaufline
1
First version
$ 531,403
$ 68,420
$ 41,788
2
Second version of 15 April 2011
$ 552,727
$ 69,130
$ 31,945
3
Third version of 27 April 2011
$ 529,688
$1,387,482
$ 836,977
Based on the third version of the member balances at 30 June 2009 attached to Ms McGuire’s affidavit of 10 May 2011 and the other evidence of payments and rollovers, the member balances of herself and her brother would appear to be $80,517 and $38,900, if my calculations below are accurate:
Mr Brennan
Ms McGuire
Mr Kaufline
Third version attached to the affidavit of 27 April 2011
$ 529,688
$ 1,387,482
$ 836,977
Less:
(a)
(b)
(c)
Payment made 29 July 2009
SuperGuardian fees
Rollovers to MKF SuperFund excluding SuperGuardian fees as at 26 August 2009
$ 200,000
$ 3,485
$ 1,103,480
$ 2,128
$ 795,949
Apparent net balance at 26 August 2009
$ 529,688
$ 80,517
$ 38,900
Ms McGuire’s evidence during the proceedings did not refer to her having any balance in the fund after September 2009 and accordingly, I did not take any such entitlement into account in adjusting the parties’ rights. If any one of the three new versions of Ms McGuire’s member balances in the fund attached to her affidavit of 10 May 2011 is accurate, she failed to explain what, if anything, she did with between about a further $68,000 to $80,000. Rather than asserting any current entitlement to any amount in the fund, her affidavit of 13 December 2010, as I have set out above, referred to allocating a loss in respect of the fund’s loan to the company.
I allocated the loss of the loan moneys in arriving at my finding that Mr Brennan’s actual superannuation entitlements were about $565,000. I included in that sum, $26,481 held by the fund in an Ord Minnett account. I also had regard to the contingent asset of $134,645.20 held by the fund, being the loan due to it by the company of $100,000 with interest. Because I proposed that Mr Brennan would retain control of the fund and any residual interest in the company after due course of liquidation, it was not necessary to make any further adjustment for that loan in his entitlement. I did this because he had used the loan to help pay for the unsuccessful investment in the yacht, “Nebo” and was to bear that loss (Brennan [2010] FCA 1443 at [91]-[92], [125]-[131]).
If the rollover payments were only made out of the SuperGuardian accounts after 30 June 2009, then it may be that the version of member balances at 27 April 2011 is closer to the correct position. Alternatively, it may be that Ord Minnett or SuperGuardian allocated the rollovers requested in October 2008 by Ms McGuire and Mr Kaufline to separate accounts or ledgers out of the fund at that time but did not pay the rollovers out until Mr Brennan authorised this in August 2009. The parties chose to litigate at the final hearing on limited material, and that caused them to fail to identify the complete position. I referred in my principal reasons to Ms McGuire’s unsatisfactory evidence concerning her superannuation position.
Based on all the evidence, it now appears to me that I overlooked the likelihood that payments made, first, to Ms McGuire in July 2009 and, secondly, banked by MFK SuperFund, at latest on about 26 August 2009, represented the whole of the member balances in the fund as at the latter date of both Ms McGuire and Mr Kaufline. On the material before me now, I am unable to accept that Ms McGuire has paid real attention to being frank or accurate in giving her recent instructions to the superannuation advisors or in her evidence as to the superannuation position. I had made the final orders expecting that the professional advisors would prepare accounts, tax returns and member entitlements based on the material they had, without the parties influencing the outcome of that task.
The best I can make of what Ms McGuire asserted was her and her brother’s continuing interest in the fund and the consequences of that asserted interest is the following:
·financial statements and tax returns of the fund need to be finalised for the years ended 2009 and 2010;
·despite the rollover of the whole of their member balances banked by MFK SuperFund by no later than 26 August 2009, they still have a continuing interest in the fund. They asserted that this interest consists of proportionate shares as members of the fund prior to its payment of the rollover in:
(a)the amount of the fund’s loan to the company of $100,000 and its accruing interest;
(b)a tax refund for the year ended 30 June 2009 that Ms McGuire anticipated that the fund will receive.
Unfortunately, I did not appreciate at any time prior to reserving these reasons, that these claims may have misapprehended the effect of the payment by the fund of the rollover sums that came to be banked by MFK SuperFund into one of its accounts on 26 August 2009.
On the material now before me, and after reflection to prepare these reasons, I have difficulty in understanding how each of Ms McGuire and Mr Kaufline had any continuing interest in the fund after, at the latest, 26 August 2009. By then, their entire member balances in the fund appear to have been rolled over to the MKF SuperFund. At the moment, all I can infer is that the fund acted on the request of Certus Law of 17 October 2008, so that those rollover sums represented the entire value of their membership. If so, upon payment of those rollovers, Ms McGuire and Mr Kaufline ceased to be members of the fund or to have any interest in it. The fund continued in operation and its future gains and losses accrued for the benefit, or to the detriment, of its current member, who appears to be Mr Brennan.
Lest this preliminary view be incorrect because of the incomplete evidence or some misunderstanding by me, I will make orders to summon Mr Kaufline to show cause why he has any present interest in the fund and to produce the documents relating to the rollover payments made by the fund. I will also require Ms McGuire to do the same. This should assist in determining whether those payments in fact represented the entirety of their member balances at no later than 26 August 2009. That evidence may enable me to make appropriate adjustments to the final orders.
WHAT ORDERS ARE NOW NEEDED TO FINALLY RESOLVE THE PROCEEDINGS?
At sometime after 6 December 2010, Ms McGuire closed the account which the fund had at 6 December 2010 with Ord Minnett. At that date it held a credit balance for Mr Brennan of $26,481.45 that I intended be applied for his benefit as I found in Brennan [2010] FCA 1443 at [91], [125]-[130]. There is no evidence of the exact sum in the Ord Minnett account or when or how it was removed, but in her written submissions of 10 May 2011 Ms McGuire said:
“The Ord Minnett Fund Trust account is closed. The balance was deposited into the Rob Brennan Super Fund account in the St George Bank, and for safekeeping, on Trustee instruction, rolled into the MFK Super Fund. That sum is quarantined until Fund financial obligations and expenses are met, and final, valid member balances and adjustments are determined by way of the 2010 audited tax reports.” (emphasis added)
There is no evidence that Mr Brennan was or is a member of or entitled to any interest in the MFK SuperFund. Indeed, that fund was set up by Ms McGuire and Mr Kaufline well after the acrimony between them and Mr Brennan started. Ms McGuire had no authority to cause the Ord Minnett account to be closed. She was aware of my finding that the money in it would be part of Mr Brennan’s entitlement. By placing it in the MFK SuperFund “for safekeeping” those moneys were removed from Mr Brennan’s control and put into the MFK SuperFund so as to be beyond his reach. It will be necessary to adjust the final order for payment of $775,000 to Mr Brennan to restore him to the position he would have had but for Ms McGuire’s actions.
In addition, if my preliminary impression as to the effect of the 2009 rollover payments by the fund to the nominee of Ms McGuire and Mr Kaufline is correct, then the problems generated by those of the final orders that involved Mr Kaufline will be irrelevant and can be set aside.
Since I made the final orders, Ms McGuire and her brother decided to appoint two new trustees to the fund, her son Ben and Mr Lyons. Her explanation for this was that she could not get any co-operation from Mr Brennan. I accept that the degree of acrimonious feeling between Mr Brennan, Ms McGuire, her brother and son was likely to make co-operation between them on any issue difficult, if not, impossible. However, that does not appear to justify Ms McGuire and her brother appointing two other trustees to the fund and subsequently proposing a motion for a meeting on 8 May 2011 that Mr Brennan be removed as a trustee. Ms McGuire informed me at the hearing on 11 May 2011 that the removal of Mr Brennan did not occur. I assume that this remains the position.
REOPENING FINAL ORDERS
Both parties suggested that the final orders be varied to take account of issues and circumstances that have arisen subsequent to 24 February 2011. Under s 28 of the Domestic Relationships Act 1994 (ACT) the Court has power, on application by a party, to vary or set aside an order made under s 15 (such as the final orders) and make an order in substitution. The power granted by s 28 may be exercised, relevantly, where the Court is satisfied that in the circumstances that have arisen since the original order was made, make it impractical for the order, or part of it, to be carried out or a party has defaulted in carrying out the order and it is just and equitable to vary it or set it aside and make a substitute order (s 28(b) and (c)).
The powers conferred by s 28 represent a statutory departure from the principle of finality that is a feature of the exercise of judicial power. Ordinarily, a court of record has no power to reopen or set aside its final orders once they have been entered. However, there are exceptions to this principle. This Court is constituted as a superior court of record and a court of law and equity exercising the judicial power of the Commonwealth: ss 5(1) and (2) of the Federal Court of Australia Act 1976 (Cth). It is not necessary for a decision here to explore the precise extent of the limitations that the division of powers between the States and the Commonwealth has on the inherent or implied powers of this Court as a superior court of record, as compared with those of similar courts, such as those powers enjoyed by the courts at Westminster in England.
A superior court of record established under Ch III of the Constitution is presumed, unless there is a specific statutory limitation imposed on its powers or jurisdiction, to exercise the full plenitude of the judicial power of the Commonwealth. In this sense, all those powers can be said to be inherent or, perhaps, implied: cp Grassby v The Queen (1989) 168 CLR 1 at 16-17 per Dawson J, with whom Mason CJ, Brennan, Deane and Toohey JJ agreed on the nature of a superior court’s powers at common law.
In De L v Director-General NSW Department of Community Services [No 2] (1997) 190 CLR 207 at 215, Toohey, Gaudron, McHugh, Gummow and Kirby JJ said that the High Court had power to reopen its judgments or orders if it is convinced, first, that, in its earlier consideration of the point it has proceeded on a misapprehension as to the facts or the law, secondly, where there is some matter calling for review or, thirdly, where the interests of justice so require. However, they cautioned that an applicant has a particularly heavy burden to establish that such an exceptional course is required because the need for reopening occurred without fault on his part. Their Honours explained that the power to reopen departs from the principle of finality by recognising that accidents and oversights can sometimes occur which, if left unrepaired, can cause injustice: see too Metwally v University of Wollongong (No 2) (1985) 60 ALR 68 at 70 per Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ.
It may be that the introduction of the provisions in s 37M of the Federal Court of Australia Act has expanded the power the power of this Court to correct or amend entered orders under the “slip rule” in its inherent or implied power or under O 35 r 7(2) or (3) of the Federal Court Rules. This may follow from what Spigelman CJ, with the agreement of Santow JA and Handley AJA, reasoned was a consequence of the amendment of the powers of the Supreme Court of New South Wales worked by the analogous s 56 of the Civil Procedure Act 2005 (NSW): Newmont Yandal Operations Pty Ltd v The J Aron Corporation and The Goldman Sachs Group Inc (2007) 70 NSWLR 411. It is not necessary to decide if this is so for present purposes.
Here, four principal factors justifying supplementation, or perhaps reopening, of the final orders are at work. First, the time for appeal from the final orders has expired and no appeal from them was filed. Secondly, because of Ms McGuire’s actions in appropriating the money in the Ord Minnett account, it is necessary to supplement or amend the final orders to ensure that the value of that sum, as a functioning superannuation investment since its appropriation, is restored to Mr Brennan and to ensure that he has not been adversely affected in terms of what he is to receive by the delay in settlement. Thirdly, the final orders relating to Mr Kaufline may have been otiose and, contrary to my intention when I made them, may have caused and might continue to cause unnecessary difficulties in achieving the settlement of the parties’ rights that I intended. Fourthly, I am satisfied that Mr Brennan has been made to incur substantial legal costs by Ms McGuire’s conduct since 17 February 2011. I gave my second reasons for judgment on an advanced draft of the final orders that the parties debated prior to and at the hearing of 17 February 2011. In light of what has since occurred, I am satisfied that it would be unjust to require Mr Brennan to pay 50% of Ms McGuire’s costs without a recognition of his entitlement to a costs order for the period after 17 February 2011.
By supplementing or reopening the final orders, under s 28 of the Domestic Relationships Act or the inherent or implied power of the Court, I will be able to avoid the risk of injustice that would flow by leaving the final orders as they are and achieve a settlement of the parties’ rights in accordance with my principal reasons in Brennan [2010] FCA 1443.
SUGGESTED FURTHER ORDERS
On 11 May 2011, Ms McGuire asked for an order that the estimated amount due to her brother of $47,350 as at 18 April 2011 be retained by her. Mr Brennan’s affidavit of 5 May 2011 referred to the absence of Mr Kaufline as a party to these proceedings, his and his sister’s appointment of new trustees, their attempt to remove Mr Brennan as a trustee of the fund and the vexation which these matters have caused him.
The difficulties that have occurred in implementing the final orders, including the involvement of Mr Kaufline, have made it essential to ensure that, if possible, a bright line is drawn between Mr Brennan’s financial affairs and those of Ms McGuire and her brother. This accords with the legislative command of s 14 of the Domestic Relationships Act which provides:
“As far as practicable, a court shall make orders under this part that will end the financial relationship between the parties to the domestic relationship and avoid further proceedings between them.” (emphasis added)
In addition, s 25 of that Act authorises the Court to make orders appointing or removing trustees, to protect, or otherwise that relate to, the property or financial resources of either or both parties to the domestic relationship or that aid enforcement of any other order made by the Court in respect of the proceedings, and “that it considers necessary to do justice” (ss 25(g), (h), (l)).
In order to assist the parties at the further hearing on the nature of relief that I am considering may be appropriate, given my present understanding of the factual position, I provide the following suggested form of further orders to amend the final orders. These suggestions assume, without me having yet reached any conclusion on the point, that the preliminary view I have expressed as to the effect of the August 2009 rollover payment will prove correct. If that or any other assumption is shown to be wrong, obviously the following suggestions will have to be reconsidered. I appreciate that neither party has suggested orders that resolve the position of the trustees of the fund. But, in light of what has occurred, I am concerned that Mr Brennan will be denied control, of the fund despite my intention in the final orders that it be under his control, after making full and proper provision for payment out of all Mr Kaufline’s remaining interest in it, if any.
Unless some provision is made in the further orders that are necessary to finalise, if possible, the relationship between the fund and Ms McGuire together with Mr Kaufline, they will continue to engage in the acrimony their conduct has displayed through their asserted position as trustees and members of the fund. Accordingly, if one or both parties seek such relief, it seems to me appropriate that orders of the kind suggested as 10 and 11 below will enable such a final separation of this conflict to occur.
THE COURT ORDERS THAT:
1.The orders made on 24 February 2011 and entered on 2 March 2011 be varied by:
(a)in Order 1, deleting “31 March 2011” and substituting “3 June 2011”;
(b)deleting Orders 2 and 3(b) and substituting
“2.At the settlement appointment Ms McGuire shall deliver to Mr Brennan a bank cheque or bank cheques in his favour or in favour of such persons as he nominates in writing on or before 27 May 2011 in the total sum of $ , as from 31 March 2011 [being (as he elects by 27 May 2011) the value that $775,000 and the sum withdrawn from the Ord Minnett account as from the date of its withdrawal would have earned based on the actual rate of earnings of the fund in the periods between those dates and 3 June 2011 or any other date for settlement fixed by the Registrar, or based on the rate earned by the MKF SuperFund in those periods, or interest under s 51A of the Federal Court of Australia Act 1976 (Cth)].”
(c)in Order 4, deleting “20 February 2011” and substituting “30 May 2011” and deleting “and Mr Kaufline”;
(d)in Order 6, adding after “proceedings”:
“up to 17 February 2011 and that thereafter Ms McGuire pay Mr Brennan’s costs as taxed other than the costs of attending to the obligations he had to perform to settle on 31 March 2011, and the taxed costs payable by each party may be set off against the other to produce a net amount owed by one of them”;
(e)adding the following:
“AND THE COURT DECLARES THAT:
9.Upon payment by the fund on or about 26 August 2009 [or whatever was the date] of rollover amounts totalling $1,899,429 to Ms McGuire and Wayne Kaufline (“Mr Kaufline”) or as they directed (including to MKF SuperFund) each of Ms McGuire and Mr Kaufline ceased:
(a)to be a member of the fund;
(b)to be owed any money by or to hold any interest in the fund.
AND THE COURT ORDERS THAT:
10. Ms McGuire and Mr Kaufline:
(1)cause a meeting of trustees of the fund to be called on short notice on 1 June 2011 to pass resolutions that:
(a)all persons other than Mr Brennan cease to hold office as trustee forthwith;
(b)any person nominated by Mr Brennan in writing on or before 30 May 2011 be appointed a trustee of the fund forthwith;
(2)exercise their votes in favour of those resolutions and cast a proxy on behalf of, or otherwise permit, Mr Brennan to vote in writing in favour of those resolutions;
(3)record and forthwith inform the Registrar in writing of each of the following, namely that first, the meeting has been called and, secondly, the resolutions were passed, in default of which the Registrar shall forthwith call the meeting and vote in the stead of both Ms McGuire and Mr Kaufline;
(4)deliver all books and records of the fund held by them or any of the trustees to the Registrar on 3 June 2011 for delivery to Mr Brennan or his nominee;
(5)indemnify the fund and Mr Brennan in respect of all costs incurred by the fund between 17 March 2011 and 1 June 2011 unless they satisfy the Registrar that such costs were necessary for the proper administration of the fund in the interests of Mr Brennan as its sole member.
11.Up to and including the conclusion of the meeting of trustees of the fund referred to in Order 10, each of Ms McGuire and Mr Kaufline by themselves their servants and agents be restrained from or permitting any person, including Ben McGuire and Peter Lyons, other than Mr Brennan, from acting as a trustee of the fund or dealing with its property or investments or incurring any liabilities on its behalf or otherwise executing any function as trustee or in any other capacity on behalf of the fund except to act in accordance with Order 10 and any written direction of Mr Brennan as a trustee.
12.Ms McGuire pay $100,000 into Court by delivering a bank cheque to the Registrar no later than 4.00pm on 27 May 2011, or as the Registrar may direct, as security for the performance of her obligation to repay the money of the fund that she caused to be removed from the control of Ord Minnett on or after 6 December 2010 and any additional payment that she will have to make to supplement the payment of $775,000 to Mr Brennan the subject of Order 2(c) as made on 24 February 2011.
13.On settlement, the Registrar shall cause such sum as is needed to be added to $775,000 to equate to the amount payable under Order 2 as varied on 27 May 2011 to be paid to Mr Brennan from the money held pursuant to Order 12 and shall pay the balance, if any, after payment of all bank charges to Ms McGuire.”
In the meantime, Ms McGuire and Mr Kaufline should not seek to do more to affect Mr Brennan’s assets, especially after Ms McGuire’s unjustified appropriation of his superannuation entitlement from Ord Minnett. However, no application has been made that she and Mr Kaufline be restrained from interfering in the administration of the fund. I will make orders to enable me to consider what, if any, further orders are necessary to be made at a further hearing on 27 May 2011.
I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Rares. Associate:
Dated: 16 May 2011
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