Brewster and Brewster and Ors
[2016] FamCA 465
•10 June 2016
FAMILY COURT OF AUSTRALIA
| BREWSTER & BREWSTER AND ORS | [2016] FamCA 465 |
FAMILY LAW – PROPERTY – interim – where the wife seeks orders for patrial property settlement – where the husband seeks the same for payment towards his criminal proceedings – where the second and third respondent seek leave to intervene and further that there be a declaration that they have an equitable interest in the parties property and that they each receive a sum of the proceeds of sale – where the wife enters into an undertaking as to damages in respect of relief sought by the second and third respondent – where the husband and wife each receive a sum by way of interim or partial property settlement.
| FAMILY LAW – DISCOVERY – where the husband is required to produce documents in relation to the any legal proceedings relating to the husband’s alleged fraud.
Bigg & Suzi (1998) FLC 92-799 |
| APPLICANT: | Ms Brewster |
| 1st RESPONDENT: | Mr Brewster |
| 2nd RESPONDENT: | B Pty Ltd |
| 3rd RESPONDENT: | Mr C Brewster |
| FILE NUMBER: | ADC | 1992 | of | 2015 |
| DATE DELIVERED: | 10 June 2016 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Berman J |
| HEARING DATE: | 31 May 2016 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Lewis |
| SOLICITOR FOR THE APPLICANT: | David Burrell & Co |
| COUNSEL FOR THE 1ST RESPONDENT: | Ms Morosini |
| SOLICITOR FOR THE 1ST RESPONDENT: | Di Morosini & Co |
| COUNSEL FOR THE 2ND RESPONDENT: | Mr McGinn |
| SOLICITOR FOR THE 2ND RESPONDENT: | Cowell Clarke Commercial Lawyers |
| COUNSEL FOR THE 3RD RESPONDENT: | Mr McGinn |
| SOLICITOR FOR THE 3RD RESPONDENT: | Cowell Clarke Commercial Lawyers |
Orders
That the Application in a Case filed by the second and third respondents on 21 March 2016 is dismissed.
That the wife enter into an undertaking as to damages in respect of the relief sought by the second and third respondents pursuant to s 78 of the Family Law Act 1975 (Cth).
That the wife be restrained and an injunction granted restraining her from selling, transferring, assigning or in any way further encumbering the property situate at D Street, Suburb E in the state of South Australia.
That the Response to an Application in a Case filed 14 April 2016 (document 25) be dismissed.
That at the election of the husband he shall produce within 21 days of the date of this order copies of the documents as provided for in order 5.5 of orders made 15 September 2015 or in the alternative the husband shall within 21 days of the date of this order do all things necessary to bring an application in the Adelaide Magistrates Court to seek a release from the implied undertaking in respect of the documents as described in the said order.
That without admission by the second and third respondents and by way of interim or partial property settlement the husband shall receive the total sum of $100,000 to be paid from monies held in the NAB joint account with such monies to be paid to the Di Morisini & Co trust account for and on his behalf.
That without admission by the second and third respondents and by way of interim or partial property settlement the wife shall receive the total sum of $100,000 to be paid from monies held in the NAB joint account with such monies to be paid to the David Burrell & Co trust account for and on her behalf.
That the Response to an Application in a Case filed 14 April 2016 (document 23) be dismissed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Brewster & Brewster and Ors 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 ADELAIDE |
FILE NUMBER: ADC 1992 of 2015
| Ms Brewster |
Applicant
And
| Mr Brewster And B Pty Ltd And Mr C Brewster |
REASONS FOR JUDGMENT
INTRODUCTION
By Initiating Application filed 4 June 2015, Ms Brewster (“the wife”) seeks orders for settlement of property, but in particular on a 70/30 apportionment in her favour.
By Response filed 23 July 2015, Mr Brewster (“the husband”) seeks orders that the costs to be incurred by him in respect of industrial and criminal proceedings be paid from the property of the parties and that the balance be adjusted as to equality between the parties.
BACKGROUND
The husband was born in 1966 and the wife was born in 1971.
The parties commenced a relationship in October 1999 and commenced cohabitation as at the date of marriage in 2001.
There are three children of the relationship, F born in 2001, G born in 2004 and H born in 2012.
At the commencement of the marriage, the wife had an interest in modest assets comprising a motor vehicle and some furniture and effects, whereas the husband had an interest in an apartment in Sydney, a property at I Street, Suburb J, a motor vehicle, furniture and effects and an entitlement to superannuation.
The wife had employment but was also studying. The husband had a senior management position.
The parties separated on 21 March 2013.
The property of the parties has not been determined.
On 21 January 2013, the husband sold the Sydney property for $445,000. The wife accepts that the sum of $397,377 was received following the payment of associated sale and agent expenses and that a significant portion of the net proceeds was used to discharge a mortgage in respect of a property at K Street, Suburb L (“the Suburb L property”) and at I Street, Suburb J (“the Suburb J property”).
Following separation the parties sold the Suburb L property for $740,000. The net sum received was $718,418 which was used predominantly to purchase a property for the wife in her name at D Street, Suburb E (“the Suburb E property”).
The wife and children continued to reside in the Suburb E property.
THE SUBURB J PROPERTY
The husband was the registered proprietor of the Suburb J property. It seems uncontroversial that the Suburb J property was purchased in early 1998 and before the commencement of marriage and cohabitation by the parties.
The Suburb J property was sold in July 2015 and it is agreed that the net proceeds of sale were $1,694,062.
The husband asserts that he holds a 2/3rd interest in the property with the balance being held by B Pty Ltd (“the second respondent”) as to 1/6th share and Mr C Brewster (“the third respondent”) as to the remaining 1/6th share.
For her part, the wife does not accept the assertion of the husband or the claim of the second and third respondents.
Specifically, she summarises her position in paragraph 57 of her affidavit filed 4 June 2015:-
I do not accept that any third party be it the husband’s father, a Family Trust and/or the husband’s brother hold any interest in the property and I say that any such assertion is entirely on the basis to reduce the pool of assets available for division and thus my overall entitlement, in circumstances where:-
(a)The husband and I from matrimonial funds have met 100% of the expenses with respect to the property (as set out above);
(b)The husband and I have received 100% of the rental income with respect to the property (as set out above);
(c)The husband has made all decision with respect to the property;
(d)The husband has used and always treated such property as our matrimonial property (for example such property was used as a security with respect to the loan to purchase the property situated at [M Street] and the [K Street] property);
(e)That during the course of the marriage, the husband never informed me nor spoke about any alleged 1/3rd interest held by any other third party;
(f)There appears to be significant uncertainty and a lack of a clarity as to the source of the funds to which the husband refers contributed to the part of the purchase price of the [Suburb J] property;
(g)The husband is and always has been the sole registered proprietor of the property;
(h)The husband has not produced any documents, to date, that support his assertion [t]hat his ownership is limited to only 2/3rds of the property;
By Application in a Case filed 27 July 2015, the second and third respondents sought leave to intervene in the proceedings and specifically that pursuant to s 78 of the Family Law Act 1975 (Cth) (“the Act”) there be a declaration that the applicants each have an equitable interest as to 1/6th of the Suburb J property and that the husband holds 1/3rd of his interest in the property on trust for the applicants.
By order made 28 July 2015, the second and third respondents were given leave to join the proceedings and the following order was made in respect of the sale of the Suburb J property:-
3.The proceeds of sale of the [Suburb J] property shall be paid as follows:
(a)any sale and/or conveyance costs associated with the sale;
(b)in payment of the mortgages being:
(i)ME Bank Standard Home Loan Account No…;
(ii)ME Bank Standard Home Loan Account No…;
(c)the balance then remaining to be deposited in an interest bearing account in the joint names of the husband and the wife.
4.All parties are restrained from withdrawing any funds from the joint bank account established, pursuant to paragraph 3(c) of these Orders SAVE as may be agreed and confirmed in writing between all parties (or their legal representatives) or by further Order of this Court.
The second and third respondents filed an Application in a Case on 21 March 2016 seeking orders pursuant to r 10.13 of the Family Law Rules 2004 (Cth) (“the Rules”) and pursuant to s 78 of the Act specifically requiring the husband and the wife to do all things and execute all documents to be caused to be paid to each of the second and third respondents the separate sum of $394,481 from the monies invested in the names of the husband and the wife pursuant to paragraph 3(c) of the orders of 28 July 2015. The interim proceedings in part relate to that application in a case.
ORDERS MADE 15 SEPTEMBER 2015
By consent orders made with neither consent nor the opposition of the second and third respondents, that the husband and the wife each received the sum of $90,000 by way of interim or partial property settlement. The order better defines the destination of the funds and in respect of the husband the order reflects that $30,000 would be payable to the Industrial Court (SA) and $60,000 payable to his solicitors on account of anticipated legal fees. For the wife’s part, the entirety of the sum was payable to her solicitors.
A significant issue during the course of the proceedings was the extent to which the parties had made disclosure and provided discovery of relevant documents.
Orders were made in paragraphs 5.1 to 5.4 of the orders that required the husband to provide specified categories of documents to the wife.
A further category of documents as expressed in order 5.5 related to the legal proceedings of the husband “including but not limited to charges relating to the husband’s alleged fraud with respect to his employment with [N Org] and the action brought against [N Org] by the husband”.
The category of documents ordered are as follows:-
5.5.1Copies of any and all documents and or details in relation to the status and/or outcomes and the overall conduct of the matter;
5.5.2The charge sheet and Police Incident Report and/or declarations relating to the husband’s criminal proceedings;
5.5.3A copy of the List of Documents the husband’s criminal solicitors have in respect of those proceedings.
The wife filed a Response on 14 April 2016 (document 25) seeking orders that the husband deliver up the documents set out at order 5.1, 5.2, 5.4, 5.5.1, 5.5.2, 5.6 and 5.7 of the orders made 15 September 2015. That Response also forms part of the interim argument.
By Response to an Application in a Case filed 14 April 2016 (document 23) the wife seeks an order of $100,000 to be paid from the monies held in the NAB account.
Whilst there is no corresponding application or response by the husband, it is his position that if the wife is to receive the further sum of $100,000, then he should receive a similar lump sum.
DOCUMENTS RELIED UPON
For the purposes of the interim argument, I have considered the following documents:-
(1)Application in a Case filed 21 March 2016
(2)Affidavit of Mr O filed 21 March 2016
(3)Affidavit of Mr C Brewster filed 21 March 2016
(4)Affidavit of Mr P Brewster filed 27 July 2015
(5)Affidavit of Mr P Brewster filed 21 March 2016
(6)Affidavit of Ms Q Brewster filed 27 May 2016
(7)Affidavit of Ms R Brewster filed 27 May 2016
(8)Response to an Application in a Case (wife) filed 14 April 2016
(9)Response to an Application in a Case (wife) filed 14 April 2016
(10)Affidavit of Ms Brewster filed 14 April 2016
(11)Affidavit of Mr Brewster filed 12 May 2016
CLAIM OF THE 2ND AND 3RD RESPONDENTS
The second and third respondents each seek the sum of $394,841 to be released to them on the basis that the total sum of $789,682 represents 1/3rd of the net proceeds of sale of $1,694,062.
Orders were made in respect of the Suburb J property on 25 June 2015, on 28 July 2015 when an order was made that placed the proceeds of sale of the Suburb J property into an interest bearing account in the joint names of the parties and an injunction restraining all parties from withdrawing funds from the joint bank account as established.
The orders of 15 September 2015 touched on the matter tangentially in that the second and third respondents neither consented to nor objected to the consent of the parties for the payment out of funds to each of them by way of partial settlement of property.
It is argued that the second and third respondents have not as yet had an opportunity to argue the merits of their claim. In effect, it is said that the orders of 28 July 2015 whilst clearly orders of restraint, should be considered as “holding” orders in anticipation of an opportunity being afforded to the second and third respondents to argue for the release of their cumulative one third interest in the monies currently held on deposit.
The Application in a Case filed 21 March 2016 is supported by an affidavit of Mr P Brewster being a brother of the husband in the proceedings.
He alleges that the Suburb J property was purchased by way of a deposit of $45,600 which he says was paid by Brewster Pty Ltd being a company held or controlled by the husband’s father.
Specifically, it is argued that the deposit was not paid by the husband in the proceedings and that the balance due in order to complete settlement after the payment of deposit and a mortgage was in the sum of $111,594.
The contract for the purchase of the Suburb J property noted that the purchaser was Mr C Brewster and/or nominee, S Street, Suburb T.
Documents provided suggest that the amount necessary to complete the settlement was provided not by a mortgage or other finance arrangements, but rather, from accounts held in the name of the husband’s parents.
When the deposit and the amount necessary to complete settlement are considered together the total of $158,094 is almost 1/3rd of the total amount required to complete the sale namely, $475,858,
The first proposition is that the husband’s personal circumstances at the time of the purchase of the Suburb J property was such that he could not have been in a position, nor did he have the financial capacity to source the payment of $158,094.
The title to the Suburb J property recorded the husband as the registered proprietor.
The husband says that his family were keen to give him a financial start and to provide a financial base from which he could accumulate wealth. Accordingly, by placing the property in his sole name, the husband was then able to secure a mortgage to complete the settlement.
It is not contested that thereafter and certainly during the course of the relationship, the husband dealt with the property by way of unilateral decision.
The Suburb J property was utilised for commercial tenancies. Rent was received by the husband and he was responsible for outgoings.
At one stage the husband used the Suburb J property as security for the purchase of other property.
It is uncontroversial that the husband represented to the mortgage provider that he was intending to be the registered proprietor of the Suburb J property and was therefore able to offer the property as security.
The claim of the second and third respondents and supported by the husband is that a resulting trust exists as to 1/3rd of the husband’s interest in the Suburb J property and now the net proceeds of sale in their favour.
It is argued that the evidence of Mr P Brewster, Mr C Brewster and Mr O, when considered together, presents an irresistible argument that a trust exists.
The husband’s assertion of a trust is obviously not a recent contention. There is evidence that communication passed between the solicitors for the parties and notwithstanding that much of the evidence now presented was the subject of assertion in correspondence to the wife, it is her position that she disputes any interest as maybe asserted or claimed by third parties.
Her position can be summarised by reference to a portion of correspondence forwarded by her to the husband’s solicitors on 8 May 2015:-
In circumstances where it is clear the property has been registered by way of title registration in your client’s sole name and your client has not produced any evidence as to the contrary, we fail to see why our client should accept your client’s assertion.
Specifically in affidavit material, the wife joins issue with the husband’s contention that the parties hold 2/3rds of the Suburb J property and that the husband holds 1/3rd on behalf of the second and third respondents.
The second and third respondents argue that the mere denial by the wife of the existence of a trust in favour of the second and third respondents is not enough when faced with what is asserted to be overwhelming evidence.
In effect, it is argued that the onus is on the wife to put forward a prima facie case that supports her contention that a trust does not exist.
The difficulty with that argument is that the husband comes into the relationship as the registered proprietor of the Suburb J property. It is the husband and then the second and third respondents who assert their claim to a 1/3rd interest in the proceeds. They present evidence which the wife does not necessarily accept. It could not be said that there is not a separate or alternate explanation for the manner in which the Suburb J property was purchased with funds that in all probability did not come from the husband. There may have been a different intention by the husband’s family as to the purpose for the transaction and how the purported interests of other parties were to be recognised in the future if at all.
The second and third respondents seek a sum certain be released to them. There are various complexities in respect of the net proceeds currently invested, not the least of which is the extent to which capital gains tax is to be assessed.
The husband has an assessment of capital gains tax which is clearly based upon his own financial circumstances taking into account his marginal tax rates. A different set of parameters may well exist in respect of the circumstances pertaining to the second and third respondents.
Counsel argues that the determination of the claim of the second and third respondents on an interim basis should not be compared to the threshold that applies in an application for summary dismissal. It is said that the very fact that the wife cannot refute the claim of the husband and the second and third respondents as to the mechanics by which the Suburb J property was originally purchased, then enlivens the presumption of a trust. It is argued that once that step is established, then it is for the wife to argue why either a trust does not exist or there is at least a reasonable argument that can be promoted.
I consider that a live issue exists as to the existence of the purported trust and that the wife should be given an opportunity to challenge the assertions of the husband and the second and third respondents.
I do not consider that it was appropriate to deal with the matter on an interim basis and accordingly, rejected the premise of the application that it could be dealt with pursuant to rule 10.13 of the Rules.
It is argued that if the Court did not find favour with the application of the second and third respondents, consideration should be given to the potential damages that could flow from the second and third respondents being denied their entitlement.
Counsel argued that there is a disconnect between the orders made by Judge Kelly described on behalf of the second and third respondents as “mere holding orders” as distinct from the Court having given proper consideration to invoking the injunctive power of the Court pursuant to s 114 of the Act.
I do not disagree that before injunctive relief can be ordered there needs to be a serious question to be tried.
I consider that there is a serious question as raised by the wife and that it could not be said that the evidence in support of the existence of a trust is such that there is unlikely to be any contrary argument.
Part 10.3 of the Rules provides that summary judgment may be sought if parties claims one of the following:
(a)the court has no jurisdiction;
(b)the other party has no legal capacity to apply for orders sought;
(c)it is frivolous, vexatious or an abuse of process; or
(d)there is no reasonable likelihood of success.
The Full Court in Gitane & Velacruz (2007) FLC 93-309 highlighted the difficulty in respect of an application for summary dismissal. By detailed consideration of the decision in Bigg & Suzi (1998) FLC 92-799 the Court considered that it could not be said that the respondent’s case was “doomed to fail”.
The principles to be applied in respect of summary dismissal or determination on an interim basis were set out in Bigg & Suzi (supra) and were affirmed in Pelerman & Pelerman (2000) FLC 93-037 at 87,582 and summarised as follows:-
(a)The power for summary dismissal is a discretionary one;
(b)Relief “is rarely and sparingly provided”;
(c)The parties seeking summary dismissal must show that the application is “doomed to fail” or has been otherwise described “that the opponents lack a reasonable cause of action or is advancing a claim that is clearly frivolous or vexatious”;
(d)A weak case or one that is unlikely to succeed is not “sufficient to warrant termination”;
(e)“If there is a serious legal question to be determined, it should ordinarily be determined at trial”;
(f)“If notwithstanding the defects of pleadings, it appears that a party may have a reasonable cause of action in which it has failed to put in proper form, a Court will ordinarily allow that party to reframe its pleadings.”
It could not be said that on the evidence as presented the claim of the second and third respondent must inevitably succeed, or in the converse, the refusal by the wife to accept that a trust exists in favour of the second and third respondents, is “doomed to fail”.
It is further argued that if I reject the claim of the second and third respondents for summary determination, then the Court should consider an undertaking as to damages.
In this case, the wife freely offers the undertaking and the Court is also invited to make an order restraining the wife from disposing of her Suburb E property as security for the undertaking.
There is little doubt that the undertaking as proposed by the wife would provide appropriate security in respect of the potential for damages as likely to be claimed by the second and third respondents if ultimately they are successful.
PRODUCTION OF DOCUMENTS
By Response filed 14 April 2016 the wife seeks that the husband’s solicitors (sic) do deliver up to the wife’s solicitor’s copies of the documents referred to in the orders of 15 September 2015.
The wife contends that the husband has not provided documents as ordered in respect of the Sydney property (order 5.1), the Suburb U property (order 5.2), the ME Bank standard home loan account … (order 5.3) and the office of the husband employer (order 5.4). In response and by reference to the submissions of counsel for the husband and his affidavit filed 12 May 2016, attention was drawn to the informal list of documents being annexure SJB1 to the husband’s affidavit. In particular document 5 relates to the settlement statement for the Sydney property and documents 6, 7, 8, 9, 10 and 11 are comprehensive bank statements for the period 1998 through to 2015 inclusive.
In a letter to the husband’s solicitor’s being annexure SJB2 an advice is provided that the husband no longer has any documents in respect of the Suburb U property.
In respect of the ME Bank standard home loan account reference is made to the bank statements being items 6 to 10 inclusive.
In answer to the request for documents relating to the husband’s employment as documents in respect of the husband’s cessation of employment are annexures 5, 6, 7 and 8 of his affidavit filed 23 July 2015. Item 13 on the informal list of documents refers to his unsuccessful job application.
In summary, the husband considers that he has provided discovery and disclosure of all relevant documents but in particular those the subject of specific reference in the order of 15 September 2015.
It is uncertain whether the wife alleges that having considered the documents discovered in the informal list of documents there are clear omissions and that in all the circumstances the documents are the possession of the husband and that he chooses to ignore his obligation to make full and frank disclosure.
It can be assumed that the husband considers that to the best of his ability and knowledge he has discharged his general duty of disclosure. If that is the case then there can be no criticism.
Obviously the obligation on a party to give disclosure goes beyond the provision of documents in that person’s possession.
In the decision of Re Ronald Neville McGorm Ex Parte: the Co-operative Building Society of South Australia [1989] FCA 87 Von Doussa J held as follows:
[5] The obligation resting on a party obliged to give discovery requires that he make proper enquiries and efforts to identify and disclose all relevant documents that are not in his possession. The obligation extends to making enquiries from the person in whose possession the documents now are: see Mertens v. Haigh [1863] EngR 633; (1863) 3 De GJ & S 528 at 531; 46 ER 471, at 472. It was said in the nineteenth century case of Taylor v. Rundell [1841] EngR 256; (1841) Cr & Ph 104; 41 ER 429, at 433 by Lyndhurst LC. "If it is in your power to give the discovery, you must give it; if not, you must show that you have done your best to procure the means of giving it". See also Palmdale Insurance Limited (in Liquidation) v. L. Grollo & Co. Pty Ltd & Ors [1987] VicRp 8; (1987) VR 113.
[6] The scope of the enquiries which should be made will depend on the circumstances of the case having regard to the need for discovery in order to dispose fairly of the matters in question, or to save costs in the proceedings. The enquiries must be reasonable, but do not demand of the party giving discovery that he goes to lengths which are oppressive…
The husband will no doubt consider the adequacy of the documents provided and use his best endeavours to provide documents that may not necessarily be in his possession but that are able to be obtained upon reasonable enquiry.
Parties are reminded of the provisions of r 13.14 of the Rules as to the consequences of non-disclosure:
If a party does not disclose a document as required under these Rules:
(a)the party:
(i)must not offer the document, or present evidence of its contents, at a hearing or trial without the other party's consent or the court's permission;
(ii)may be guilty of contempt for not disclosing the document; and
(iii)may be ordered to pay costs; and
(b)the court may stay or dismiss all or part of the party's case.
Accordingly I do not propose to make any order in respect of the documents referred to in 5.1 to 5.4 of the orders made 15 September 2015.
IMPLIED UNDERTAKING
The following order was made in respect of the legal proceedings involving the husband in respect of charges relating to an alleged fraud with his former employer.
The order is in the following terms:
5.5In relation to any legal proceedings and/or actions (past, current and/or pending) in which the husband was and/or is involving including but not limited to charges relating to the husband’s alleged fraud with respect to his employment with [N Org] and the action bought against the [N Org] by the husband:
5.5.1 Copies of any and all documents and/or details in relation to the status and/or outcomes and the overall conduct of the matter;
5.5.2 The charge sheet and police incident report PIR and/or declarations relating to the husband’s criminal proceedings;
5.5.3 A copy of the list of documents the husband’s criminal solicitors have in respect of those proceedings.
The first observation is that it is not a matter of contention as to whether the husband is or is not under any obligation to provide the documents as set out in the order. The order has been made. It was made with the consent of the husband who was represented at the time.
There is no application to set aside the order. It is unlikely that such an application would succeed but that is not a matter that needs further consideration.
The husband’s response is to rely upon a letter from his solicitors dated 16 November 2015 being annexure E to the affidavit of the wife filed 14 April 2016 claiming that because the documents the subject of the order have been produced in other proceedings (and in particular in the criminal proceedings currently in the Adelaide Magistrates Court) there is “a substantive legal obligation not to use the documents for any purpose other than the proper conduct of the proceedings in which they are produced”. It is suggested that the obligation is as to the implied undertaking or a Harman obligation. See Hearne v Street (2008) 235 CLR 125.
The solicitors have considered that the provision of a list of the documents prepared in such a way as to not disclose the contents of any particular document satisfies the husband’s obligation pursuant to the order.
It is suggested that if the documents are pursued then the wife will need to bring application in the Adelaide Magistrates Court seeking a release from the Harman undertaking which application will be opposed.
The argument presented on behalf of the husband seems predicated upon a disconnect between the husband’s obligation and the orders, and the advice provided by his solicitors. The documents are not his solicitor’s documents but rather his documents. It may be that he is keen to accept the advice of his solicitors but in doing so it does not ignore the obligation created by order 5.5 of the orders made 15 September 2015.
The order is specific and requires the provision of copies of the specified documents not simply an advice as to what documents are held.
To some extent the issue is now resolved by the acceptance of the husband’s counsel that the discharge of his obligation in respect of the orders should be reflected by the husband bringing his own application in the relevant court for leave to release the documents in order that he can comply with the orders made in this Court.
I consider that the order places the husband under a positive obligation to do all that is reasonable to be released from the implied undertaking or Harman obligation if he genuinely considers that the circumstances are such that the implied undertaking applies.
In Hearne v Street (supra) the plurality comprising Hayne, Hayden and Crennan JJ said at [154]:
Where one party to litigation is compelled, either by reason of a rule of court, or by reason of a specific order of the court, or otherwise, to disclose documents or information, the party obtaining the disclosure cannot, without the leave of the court, use it for any purpose other than that for which it was given unless it is received into evidence.
Whilst the rule continues to be described as an “implied undertaking” I consider that it is neither implied nor an undertaking. Rather, the rule prescribes an obligation requiring a consideration of the circumstances in which documents are generated and received.
Traditionally, the implied undertaking arises and applied to documents produced by way of discovery, subpoena and search and seizure orders.
The underlying principle is that the implied undertaking is protection against the consequences of compulsion and invasion of confidentiality. See Hearne v Street (supra) at [158] – [159]. The obligation will be imposed where coercive power is used to compel the production of documents or information.
I am not convinced that the category of documents the subject of the order are in any event covered by the implied undertaking. The documents are likely to be in the public domain and have come about not as a result of any coercive process but rather arising from the husband being charged with a criminal offense and the normal criminal process that follows inexorably thereafter.
The documents the subject of the order have not been brought about as a result of subpoena or discovery and it could not be said that the husband’s criminal proceedings are similar to the application of the implied undertaking in civil proceedings.
If I am wrong in that assessment then the principles which guide the Court in exercising its discretion to modify or relive a party to the proceedings from the Harman undertaking have been summarised by the Full Court of the Federal Court in Liberty Funding Pty Ltd v Phoenix Capital Ltd (2005) 218 ALR 283 at [31] as follows;
In order to be released from the implied undertaking it has been said that a party in the position of the appellants must show “special circumstances”: see, for example, Springfield Nominees Pty Ltd v Bridgelands Securities Ltd (1992) 38 FCR 217; 110 ALR 685. It is unnecessary to examine the authorities in this area in any detail. The parties were not in disagreement as to the legal principles. The notion of “special circumstances” does not require that some extraordinary factors must bear on the question before the discretion will be exercised. It is sufficient to say that, in all the circumstances, good reason must be shown why, contrary to the usual position, documents produced or information obtained in one piece of litigation should be used for the advantage of a party in another piece of litigation or for other non-litigious purposes. The discretion is a broad one and all the circumstances of the case must be examined. In Springfield Nominees, Wilcox J identified a number of considerations which may, depending upon the circumstances, be relevant to the exercise of the discretion. These were:
·the nature of the document;
·the circumstances under which the document came into existence;
·the attitude of the author of the document and any prejudice the author may sustain;
·whether the document pre-existed litigation or was created for that purpose and therefore expected to enter the public domain;
·the nature of the information in the document (in particular whether it contains personal data or commercially sensitive information);
·the circumstances in which the document came in to the hands of the applicant; and
·most importantly of all, the likely contribution of the document to achieving justice in the other proceeding.
An order has been made that establishes that the documents are required in order to achieve “justice in the proceedings”.
LUMP SUM PAYMENT
The wife seeks a sum of $100,000 by way of partial property settlement.
It is sought in circumstances where the wife relies on government benefits in order to meet the expenses of her household including those of the three children that primarily reside with her.
She has been advised by her solicitors that the estimate of their fees will be $30,000 and counsel fees a further sum of $25,000.
She calculates that in circumstances where she does not receive child support from the husband the benefits that she receives by way of a single parent pension, carer’s allowance and a family tax benefit is insufficient to meet the day to day living expenses of herself and the children. There are outstanding accounts including school fees for terms one and two of the 2016 academic year.
The husband does not oppose the wife’s application but seeks that if the Court is so inclined to order a lump sum payment to the wife then an equivalent amount should be provided to him.
He considers that if the wife seeks a substantial component in respect of her legal fees then there is no reason why he should not be given the same accommodation.
Moreover the husband has the added burden of outstanding legal fees in respect of his criminal proceedings in the sum of $78,000 and a further $21,000 in respect of fees incurred in these proceedings.
In Strahan v Strahan (Interim property orders) (2011) FLC 93-466 the Full Court said at [79]:
The need for a party to proceedings under the Act to seek an order for the provision of funds to enable the payment of his or her legal costs of participating in the proceedings has been recognised for many years. It is a reflection of an important matter that distinguishes litigation under the Act from civil litigation between parties who are not parties to a marriage, namely that “very often the wealth of the parties is controlled by one rather than both of them”: BlueseasInvestments Pty Ltd v Mitchell (1999) FLC 92-856 at 86,128 per Full Court (Nicholson CJ, Lindenmayer and O’Ryan JJ).
Following the decision of Zschokke & Zschokke (1996) FLC 92-693 the heads of power the permit the making of an interim order are summarised as follows;
i)a maintenance order (either periodic or lump sum) under ss 72 and 74;
ii)an order under s 79 as allowed pursuant to s 80(1)(h); and
iii)a costs order under s 117.
In Zschokke (supra) the Full Court said at 83,217:
If the order is to be made under s 117(2) then, in our view, the matters contained in s 117(2A) must be addressed, and this would seem to have been recognised, if not expressly at least by implication, by the Full Court in Poletti. In saying this we acknowledge that a number of the paragraphs in the sub-section (notably paragraphs (d) failure by one party to comply with court orders; (e) total lack of success by one party in the proceedings; and (f) existence and terms of an offer for settlement) may not have relevance in an application for an order of the type in question. We also acknowledge that it may well be necessary in such an application for the Court to have regard to a range of relevant matters other than those specified in the sub-section, as is permitted by paragraph (g).
An order made by way of partial property settlement is an exercise of power pursuant to the provisions of s 79 but given that it is an interim hearing, the exercise is necessarily confined to the evidence reasonably presented to the Court. It is well understood that whilst the circumstances are not required to be compelling before an award can be made, regard must be had to the general principle that the Court and parties are better served by one hearing under s 79 than multiple hearings.
Accordingly what is required is the determination that it is appropriate and proper to exercise the power taking in to account the following:-
·That any order made under s 79 must be just and equitable and provide some underlying consideration of the matters expressed in s 79(4);
·That the application is a proper reflection of the disparity between the parties in respect of their relative financial strengths and an incapacity on the part of applicant to meet his/her own legal costs;
·The financial circumstances of the parties;
·The extent of the property settlement likely to be received by the applicant and whether it will be sufficient to cover the interim lump sum sought.
In the circumstances as presented the focus must be upon the monies that remain on deposit being represented by the net proceeds of the sale of the Suburb J property.
As is agreed the net proceeds were in the sum of $1,694,062. From that figure the sum of $180,000 needs to be deducted bringing into account the orders for partial property settlement made on 15 September 2015 leaving a balance of $1,514,062. The claim of the second and third respondent is $789,682 and if this is notionally deducted from the net balance the amount remaining is $724,380.
The husband acknowledges that there is likely to be capital gains tax of $475,000 but acknowledging on his case he is responsible for 2/3rd of that sum namely, $316,666 the notional amount available for further consideration is $407,714.
It seems therefore that there is sufficient money remaining that each of the parties could receive the further lump sum as each as requested without prejudice being caused to the orders that they each seek.
The wife seeks a division of 70/30 per cent of the property pool in her favour whereas the husband seeks an equal division.
The calculation has been considered on a worst case scenario for the wife in that the funds remaining have been notionally reduced by the extent of the claim of the second and third respondents. If that claim is ultimately unsuccessful then the property of the parties is further enhanced to $789,682 less the proportion of capital gains tax brought to account.
It is also noted that there would be an amount remaining able to be utilised pursuant to the wife’s undertaking as to damages.
CONCLUSION
I make orders as appear at the commencement of these reasons.
I certify that the preceding one hundred and twenty two (122) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 10 June 2016.
Associate:
Date: 10 June 2016
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