Bulleen and Bulleen (No. 3)
[2010] FamCA 859
•28 September 2010
FAMILY COURT OF AUSTRALIA
| BULLEEN & BULLEEN (NO. 3) | [2010] FamCA 859 |
| FAMILY LAW – PROPERTY SETTLEMENT – After a finding as to appropriate percentages on a final hearing but before overall final orders were made, could and should final orders relating to specific property be reconsidered and a different methodology for division be employed? Where neither party had proposed a methodology for division of specific assets, was a party denied procedural fairness? Court declined to alter its orders. Where a pool has been agreed and determination made upon it, for the purposes of the ultimate percentage division of the pool, should the real properties be revalued? Is the introduction of new valuation evidence a re-opening of the case? Fresh evidence refused on the basis that it was such a re-opening. Should a court being concerned about allowing parties to maximise the asset pool by legitimate tax minimisation by the joinder of their corporate entity where that entity had not been a party throughout the trial but in circumstances where it is common ground that both parties control the corporate entity absolutely? As the entity was the owner of significant property, it could and should be treated as a legal person and joined as a party to the proceedings |
| Family Law Act 1975 (Cth) Income Tax Assessment Act 1997 (Cth) |
| Aon Risk Services Australia Limited v Australian National University [2009] HCA 27 DJL v Central Authority [2000] HCA 17; 201 CLR 226 Equuscorp Pty Ltd v Wilmoth Field Warne (a firm) [2007] VSCA 280 Gelley and Gelley (1992) FLC 92-290 KPR & MRS [2007] FamCA 1334 Lamrock & Lamrock [2008] FamCAFC 79 McDonald and McDonald (1976) FLC 90-047 Molier and Van Wyk (1980) FLC 90-911 Ravasini & Ravasini (1983) FLC 93-312 Re Commissioner of Tax v Rabinov [1983] FCA 143 Sirius Shipping Corporation v The Ship “Sunrise” & Ors [2007] NSWSC 766 Slapp & Slapp (1989) FLC 92-022 Smith v New South Wales Bar Association [1992] HCA 36 State of Queensland v JL Holdings Pty Ltd [1997] HCA1 Suell and Suell (Reopening) [2009] FamCA 55 |
| APPLICANT: | Ms Bulleen |
| RESPONDENT: | Mr Bulleen |
| FILE NUMBER: | MLC | 12431 | of | 2007 |
| DATE DELIVERED: | 28 September 2010 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | THE HONOURABLE JUSTICE CRONIN |
| HEARING DATE: | 24 June 2010 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | MR GEDDES QC WITH MR DICKSON |
| SOLICITOR FOR THE APPLICANT: | GILLIAN COOTE FAMILY LAW |
| COUNSEL FOR THE RESPONDENT: | MR KIRKHAM QC WITH MR STRUM |
| SOLICITOR FOR THE RESPONDENT: | GADENS LAWYERS |
Orders
That if by 4 pm on 8 October 2010, the husband has not advised the wife by email of his first selection of artist for the purposes of completing the requirements of paragraph 2 of the orders made 12 March 2010, the wife shall be entitled to have the first pick of the works of which artist she desires to retain.
That unless otherwise agreed to the contrary, after each party has made their first selection, their subsequent selections shall be made on an alternating basis by email on successive days until the completion of the process.
That if a party fails to make a daily selection as set out, the other party shall be entitled to presume that no further selection is to be made and make a decision as to what artworks are to be retained by them and what is to be sold.
That upon completion of the division of the artwork, the relevant pieces shall be collected by agreement and failing agreement, collected by the party entitled to the artwork at their own expense upon 7 days written notice.
That to the extent that any artwork remains unselected by the processes set out in these orders, it shall be sold as soon as practicable and the net proceeds shall be divided according to the orders made on 12 March 2010.
That B Holdings Pty Ltd (B Holdings) be joined as a party to the proceedings.
That the wife serve upon B Holdings, a copy of these orders and the reasons for judgment this day. That such service occur by ordinary post addressed to the registered office of B Holdings.
That B Holdings have 7 days from the date of service upon it of these orders to file and serve any application to set aside the orders.
That to give effect to paragraph 3 of the orders made 12 March 2010, each of the husband and the wife forthwith do all things necessary and sign any required document to distribute such funds of B Holdings as may be necessary to satisfy the order or as much of it as can be so satisfied.
That the husband forthwith transfer to the wife at her expense, all of his interest in the holiday home property.
That the wife forthwith retain and the husband relinquish any interest in, the M Street property.
That the husband forthwith retain and the wife relinquish any interest in, the L Street property.
That the wife forthwith transfer to the husband at his expense, all of her interest in the suite in O Street.
That the husband forthwith retain and the wife relinquish any interest in, the farm property.
That save as otherwise provided in these orders, the husband retain and the wife relinquish any interest in:
a)K Nominees Pty Ltd;
b)B Holdings Pty Ltd;
c)The Bulleen Investment Trust.
That for the avoidance of doubt, the husband retain and the wife relinquish any interest in:
a)Q Street;
b)F Street;
c)C Street; and
d)B Street.
That upon completion of the obligations under these orders, the wife do all acts and things and sign any required document at the expense of the husband to:
a)Resign as a director of the said companies;
b)Transfer to the husband or at his direction, any shareholding she may have in the said companies;
c)Consent to her removal as a beneficiary of the trust(s) referred to;
d)Resign from any office she may hold as appointor or guardian including any such office that may only take effect upon the death of the husband; and
e)Assign to the husband or at his direction, all claims and entitlements standing to her credit in any loan accounts in the said companies or trusts.
That all extant applications be otherwise dismissed.
IT IS CERTIFIED:
That pursuant to Order 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend.
IT IS NOTED that publication of this judgment under the pseudonym Bulleen & Bulleen is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 12431 of 2007
| MS BULLEEN |
Applicant
And
| MR BULLEEN |
Respondent
REASONS FOR JUDGMENT
In November 2009, I heard a property dispute between the husband and the wife.
On 12 March 2010, I delivered reasons and made property orders. Those concerned the division of the parties’ artwork and who should retain a development property. As to the remainder of a very large pool of assets, I made a general order dividing the total property on a percentage basis as to 53.3% to the husband and 46.7% to the wife. I did so saying:
195.The fourth step in the process requires the Court to be satisfied that the outcome is just and equitable to both parties. To reflect that appropriately and as part of the fourth step which is referred to in Hickey (supra), the husband should receive 53.3% of the pool whatever it turns out to be in net terms and the wife 46.7%. In my view, that represents a just and equitable outcome for both parties. Because of the fact that there may be a requirement for the liquidation of assets including [the farm], I propose to give the parties an opportunity to initially divide the assets amongst themselves. Failing agreement, I will determine the precise orders for division.
Because there were unclear issues about who would keep certain designated property such as a farm, I gave the parties the opportunity to work out between themselves not only the farm but also how the large payment of cash to the wife would be organised. I provided that failing agreement, a determination be made by the Court.
Despite some months of discussion, the parties were unable to resolve all of the outstanding issues and they sought a determination involving three main issues. They were:
1.Could and should the order relating to the artwork be reconsidered and a different methodology for division be employed?
2.For the purposes of the ultimate percentage division of the pool, should the real properties be revalued?
3.For the purposes of the wife obtaining her percentage entitlement, should the entity B Holdings Pty Ltd be wound up and its assets distributed or should the wife be allowed to wait for a ruling from the Australian Taxation Office about tax liabilities arising from any distributions of company cash to enable her to consider her options to maximise the asset pool and thus increase her cash entitlement?
The hearing was resumed in June 2010 with affidavit material filed by both parties and written submissions from counsel to which they spoke. The issues were complicated and I again reserved judgment.
The third of the three issues changed significantly after I reserved judgment because on 4 August 2010, the Taxation Commissioner delivered his ruling to the wife. The wife now seeks the joinder of B Holdings rather than an opportunity to contemplate her position. With the Commissioner’s ruling, a distribution of company money can be made to the wife without the previously anticipated taxation liability. However, reading the Commissioner’s ruling as set out in the wife’s affidavit filed 1 September 2010, it is a precondition to the successful implementation of the ruling that B Holdings be joined as a party to the proceedings.
It is reasonable to conclude that the Commissioner’s ruling precipitated the wife applying for the joinder of B Holdings. The husband neither consented to nor opposed the joinder.
The case was relisted on the wife’s application to consider the new issue of joinder but, by letter dated 3 September 2010, both parties’ practitioners requested that I determine the wife’s new application “on the papers” and presumably so, in the context of the reserved judgment from June.
The wife’s earlier application had been filed on 22 June 2010 setting out proposed orders which, in essence, were along the lines of the issues referred to above.
The wife’s position about the artwork was that the husband should elect which artists’ works he wanted to acquire and a division of the artwork should follow within seven days.
The wife also sought orders for an updating of the real property valuations and thereafter for the matters to be relisted for further determination of the division based on the percentages mentioned earlier.
The husband filed a response on 24 June 2010 seeking a dismissal of the wife’s application but he sought orders relating to the artwork other than those I had determined. He suggested that a coin be tossed to see who would take a first pick of one painting and thereafter on an “alternate pick” basis.
Other orders that the husband sought orders included a return of his personal belongings and that B Holdings sell its shares and the proceeds then be used to satisfy the wife’s cash entitlement. This latter point arose because he did not want to involve or wait for the Taxation Commissioner to give a ruling.
The return of the husband’s personal belongings had not only not been an issue in the trial and I do not think it appropriate to consider that further having regard to what I shall shortly say about other assets. Having said that, after so many years of marriage, I comment that it is sad if the parties cannot work out the delivery of those personal items.
In terms of the property orders I had anticipated the parties would draw, the husband sought that the wife retain the home and the holiday home and he retain the L Street residence, the farm and the A Building. None of those was controversial as the positions of the parties were clear. In the trial, neither party had wanted the farm.
The taxation problem
The evidence of both parties concerning the taxation issue revolved around their experts being unable to agree on the best course of action for them. That led to the wife’s advisers saying that the ruling of the Commissioner was the solution. The wife said that her advice was that there were many different taxation provisions for the various scenarios and that there may be a variation in overall taxation liabilities in excess of $10 million.
The wife had the advice of Mr F who is a chartered accountant and partner of a large accounting firm. Mr F had provided evidence in the trial. His evidence was that “Given the complexity of issues as to the ownership of assets and the income tax consequences” he met with the husband’s accountant so that the wife “could be advised of the most efficient distribution of the assets”. That meeting occurred but no agreement was reached.
The husband complained that the wife had left the pursuit of advice too late. He said the financial arrangements were simple.
Notwithstanding the Commissioner’s ultimate ruling and the husband declining to agree or disagree to the joinder of B Holdings, I think it is important to record his position. His solution was that in relation to the funds in B Holdings, the risk of tax “penalties” could be avoided if payments were made to the wife under the court order and franked as dividends. This suggestion gave rise to two options. The first was that all shares in B Holdings be transferred to the wife and she could then deal with the entity as she chose. The second option was to sell the shares owned by B Holdings and pay whatever taxation was required. The husband pointed to the income and tax consequences over the last 12 months saying those matters needed to be considered. Thus, the pool of assets would fluctuate to take into account income earned and tax to be paid subsequent to the trial.
The husband proposed a solution that the capital from the sale of public company shares be paid into the Bulleen Investment Trust. They could be distributed to him as a beneficiary, he pay the tax on them taking into account the franking credit attached to the dividend from B Holdings and then dispose of the funds to the wife.
The wife rejected the husband’s position on the basis that if the Australian Taxation Office treated the payment as an unfranked dividend, the taxation liability would be much greater.
Whilst there was the potential for the payment of a huge amount of tax at stake, it must be remembered there was also a multi-million dollar pool of assets for division.
The husband had always made clear that he did not want to be involved in the private ruling because it may be seen as some form of scheme. He reiterated that in his affidavit filed 2 September 2010 whilst at the same time saying that he neither opposed nor consented to the joinder.
The wife desired to investigate the company financial situation in an endeavour to maximise her asset entitlement. Her optimism about the success of her proposal would now seem well-founded but that must be subject to the joinder of B Holdings.
There is nothing wrong with the Court being involved in assisting the parties to maximise their assets provided that any discretion is exercised according to law.
The function of the Court is to apply strictly and correctly the legislation which the parliament enacted. That legislation in this case is the Family Law Act 1975 (Cth) and the Income Tax Assessment Act 1997 (Cth). If parliament disagreed with the solution as to how the Court might interpret the Income Tax Assessment provisions it could legislatively resolve the problem. Concerns about minimisation of tax are matters for the parliament. (See Re Commissioner of Tax v Rabinov [1983] FCA 143).
Thus, there is nothing wrong with the Court enabling the parties to do what the legislature permits. It may be inappropriate for a court to determine something which is clearly artificial even if legitimate. That is not the position here because the assets of the company have been a part of the pool for division; it is just that B Holdings has been given scant consideration in the property proceedings.
Chapter 6 of the Family Law Rules 2004 provides that if the rights of a person may be affected by an issue in a case and their participation is necessary for the Court to determine all issues in a dispute, that person must be included as a party (emphasis mine). The Rules regulate joinder after a case has started including requiring service on the person. Neither party had addressed this issue in the proceedings presumably because it was common ground that the company was in reality, the parties’ corporate vehicle. The parties control the company if not treat it as an alter ego, but it must still be treated as a legal person. In 2008, the Full Court in Lamrock & Lamrock [2008] FamCAFC 79 said:
44.We accept that many cases are conducted in this Court on the basis of a concession that net assets of either a company or a trust, which is effectively controlled by a party to a marriage, will be regarded as the property of that party.
45.However, in S & M & Ors [2003] FamCA 1387 the Full Court (Ellis, Coleman and O’Ryan JJ) discussed, amongst other matters, the issue of unsecured creditors of a company, such as the husband’s family members are in this case, and said:
97.A basic premise of company law is that a company is a legal entity separate from its shareholders and directors: Salomon v Salomon & Co Ltd (1987) AC 22. Thus, even where a company has only one shareholder and director, the company nevertheless retains its rights, privileges, duties and liabilities separate from those of its constituent director(s) and shareholder(s), as the case may be. A necessary consequence of this principle is that company property remains separate from that of its director(s) and shareholder(s).
98.However, the alter ego concept for the purposes of proceedings under s 79 of the Act, recognised in Ascot Investments (supra), does not mean in the case of a company that the separate entity doctrine is abandoned. The company remains a separate legal entity and its rights, privileges, duties and liabilities are separate from those of its sole member. It does not mean that a party to the marriage can deal with the interests of the company in a way that is contrary to the general law or the Corporations Act…
46.The Full Court’s reference to Gibbs J’s judgment in Ascot Investments Pty Ltd v Harper (1980-1981) 148 CLR 337; (1981) FLC 91-000 was, it appears, to the following passages at 354-355:
The position is, I think, different…if a company is completely controlled by one party to a marriage, so that in reality an order against the company is an order against the party, the fact that in form the order appears to affect the rights of the company may not necessarily invalidate it.
Except in the case of shams, and companies that are mere puppets of a party to the marriage, the Family Court must take the property of a party to the marriage as it finds it. The Family Court cannot ignore the interests of third parties in the property, nor the existence of conditions or covenants that limit the rights of the party who owns it...
Whilst the wife’s approach has an air of artificiality about it, the difference for the parties amounts to many millions of dollars. The company as the holder of those assets is entitled to be treated as a person and as such, this is not just an artificial arrangement.
Notwithstanding the husband’s non-committal position and the eagerness of the wife to join B Holdings, the company must still be accorded the legal status to which it is entitled if it is to be affected by orders in the proceedings.
Chapter 1 of the Rules directs that the main purpose is to ensure cases are resolved in a just and timely manner enabling Courts to overcome strict compliance with other rules if necessary. In this case, the unusual feature is that the hearing is at an end, but not completed, in circumstances where the significant assets are held by the company. There is no impediment in the rules to joinder at this stage and it is obvious that the company is to be affected by an order. The effect of such an order impacts on both parties but more so the wife than the husband. Rule 1.10 permits the Court to vary rule requirements such as service but on conditions. The company should be joined but also be given an opportunity to be heard. If the parties do not require the service of significant documents and the company to file material or to be heard, they will make that decision as controllers of B Holdings. I propose therefore to waive the requirements for service as a prelude to the making of orders but on the basis that the company is given leave to seek within 7 days of service of the relevant orders, to set aside those orders to be heard.
Thus, B Holdings should be joined.
The artwork
The evidence of the parties about the artwork was simple. They disagreed on what the orders meant and how things should be implemented. A synopsis of their respective positions is as set out in the submissions of counsel.
In my reasons for judgment concerning the artwork, I said:
139.It is impossible in the circumstances to distinguish between the parties in relation to the emotional attachment to the artwork. In those circumstances, the only appropriate fair way of resolving the problem is for the parties to pick the artwork that suits them best on a pick-about basis. However, the unusual feature of this case is that it would potentially breakup part of a collection by a particular artist. Doing the best I can, in the circumstances, I propose that the art be dealt with on the basis of particular artists and each party have a pick and the appropriate amount be adjusted against their share from the valuation undertaken and agreed. I propose that the wife have the first pick on the basis that the artwork remains in her home.
The wife’s submission was that the Court had made final and binding orders as to the process of dividing the collection. She said the husband had had the orders for three months and had not appealed. She said it was not open to him now to revisit that issue.
The husband’s submission was that neither party sought any particular applications or argued for orders in terms of the methodology contained in the orders. The submission then said that:
(a)neither party had had the opportunity of having the procedural aspect of the order determined on its merits;
(b)the Court had resolved an issue that was not before the Court;
(c)the Court had jurisdiction to reopen the proceedings after giving the parties an opportunity to be heard; and
(d)in the alternative, the order was a machinery order rather than a substantive order in which case the methodology for division could be implemented according to the way the husband wanted it.
The artwork dispute raised a number of principles. First, were the March 2010 orders final in respect of that particular property?
In McDonald and McDonald (1976) FLC 90-047, the Full Court held that “there is ample power to modify the machinery provisions of a property order provided this does not affect the substantive property rights or cause undue hardship to either party”. This view was followed Molier and Van Wyk (1980) FLC 90-911.
In Slapp & Slapp (1989) FLC 92-022 the Full Court discussed the limitations on the power of the Court to vary an order made under s 79 and said at 77,360:
It is not open to a court to make a substantive variation to orders previously made under sec. 79. That proposition can today no longer be doubted. It is based upon the principle, endorsed by the High Court in the case of Taylor v. Taylor (1979) FLC 90-674; 5 Fam. L.R. 289, that an order under sec. 79 is a once and for all proposition.
Such an order can only be varied on appeal or, where the circumstances warrant the same, pursuant to sec. 79A.
The distinction between a machinery and a substantive order was discussed in Ravasini & Ravasini (1983) FLC 93-312 where the Full Court at 78,126 said:
Counsel for the appellant referred to McDonald and McDonald (1976) FLC 90-047, Kaljo and Kaljo (1978) FLC 90-445 and Molier and Van Wyk (1980) FLC 90-911 as authority for the power of the Court to make what is termed a machinery order. There is no question of the power of the Court to make what we would with respect suggest is more properly called a consequential order. The real questions are what is the proper definition of a consequential or machinery order and where is the dividing line between a consequential order which may be varied or modified and a substantive order which the Act gives no power to the Court to modify or vary. Counsel for the appellant was unable to refer the Court to any authority on this point but argued the submission rather by comparison with the facts of the cases referred to.
...
It is appropriate then to look at what a consequential order is. The Shorter Oxford Dictionary defines “consequential” as meaning “Following esp. as an effect, immediate or eventual, or as a logical inference”.
The Universal English Dictionary defines the word as “Following as a consequence, on what has gone before, resultant: consequential alteration in wording of a document, those made necessary by others already made.” The same dictionary defines “consequence” as “Event which follows upon something else which is, or appears to be, the cause; a result, outcome of what has gone before.”
A consequential order then, in a property matter, would include an order following logically or of necessity from a prior substantive order.
What a consequential order is not is an order the effect of which is to vary the prior order for property settlement. It is not possible to suggest that even the slightest variation of the original order is a consequence of it. What is being submitted in this appeal is that the original order should be amended not as a consequence of that order itself, not as a necessary follow up of that original order but rather as a consequence of events which have happened in the market place since that order was made rendering the facts on which it was based no longer accurate.
A determination was made which I found to be just and equitable. It was not a machinery order but rather a substantive division of the parties’ property because I divided the artwork on the basis of each party having the work of particular artists but left them to work out which artists they desired. My orders gave rights of ownership and the alteration of the entitlements to the paintings. The orders were therefore an exercise of the s 79 power in respect of those assets and should not be re-opened except by agreement.
Even if I was wrong about that, neither party had been able to agree upon a methodology which in my view would have led to a just and equitable outcome. At trial, the husband sought that virtually all of the artwork be delivered to him. What he now proposes is an option suggested by the wife during the trial but he rejected it. The wife sought an order for delivery of specific items or that there be a “pick about” basis. It is clear that the wife does not wish to return to that issue and relies upon the orders I made. The disagreement between the parties would require a complete re-arguing of the matter and as there is still no agreement, I see no basis to reconsider it. Section 79(2) of the Act requires that the Court shall not make an order unless it is satisfied that, in all the circumstances, it is just and equitable to do so. That is something that I have already found.
The second matter is that there is a dispute about the implementation of the order particularly as the wife says that the husband will not make his selection. The orders were silent on the subject of what was to occur in default of a party making an election save that in the event that there was a residue of paintings, they were to be sold.
To permit the “stand-off” to continue would mean that the wife could not have access to her property. The solution is to give the husband a limited time in which to make his selection failing which, the wife can presume he does not want any of the paintings. She can then determine which she desires and the balance can be sold as envisaged. An order to that effect is a consequential order to ensure the wife obtains the assets to which she is entitled.
The husband argued that this was a matter not before the Court in the trial. In my view, the parties had contemplated the various alternatives but had not been able to agree on not only the alteration of the property but also the method. Neither of those methods was found to be just and equitable to both parties. It was therefore appropriate to determine the alteration of the property interests by a method, albeit not necessarily contemplated by either, which would achieve a just and equitable outcome. To the extent that the husband argues now that there was an issue determined which was not before the Court, I reject the husband’s position because the very issue of a methodology for division was canvassed in cross-examination and the husband would not agree to any course other than that he have all of the artwork.
The third issue related to the question of procedural fairness and the fact that the husband had not been given an opportunity to be heard on the method of the division. It was submitted by the husband that neither party had the opportunity to have their case heard on the method of determining the ownership.
Counsel for the husband relied upon a judgment of Palmer J in Sirius Shipping Corporation v The Ship “Sunrise” & Ors [2007] NSWSC 766. That judgment referred to a number of other authorities including the dissenting judgment of Gibbs J (as he then was) in Bailey v Marinoff (1971) 125 CLR 529. More recently, in DJL v Central Authority [2000] HCA 17; 201 CLR 226, the jurisdiction of the Full Court of this Court was examined. In agreeing with the orders proposed by the majority, Kirby J said (citations omitted):
(B)ecause courts comprise decision-makers who are fallible human beings, not machines, occasionally errors and oversights will occur which can clearly be demonstrated and which produce a result that would be "manifestly unjust if the judgment were allowed to stand". Where the earlier decision has been announced but not yet "perfected" (in the sense of translated into a formal order entered in the records of the court) it is usually possible to repair the mistake and prevent the injustice by restraining (or securing agreement to withhold) the perfection of the order in question; relisting the matter before the court concerned; and attempting to persuade it to change its opinion and the orders which follow from it. In the course of judicial life it can happen that a party, receiving reasons for a decision pronounced in open court, notices a fundamental mistake, quickly calls it to the attention of the judge or judges involved and, before perfection of the orders, gains correction and even reversal of the previously announced decision. This has happened to most judges.
Kirby J referred specifically to the slip rule (then Family Law Rules, O 31 r 6) which enabled correction of the formal record for accidental mistakes or omissions of no substantive significance. His Honour went on to say:
In addition to these methods of overcoming the mistakes and injustices that can sometimes arise in perfected orders, the law has devised means of permitting collateral attack on such orders. This can be mounted in separate proceedings where it is alleged that the judgment was obtained through fraud. But it can also arise where it can be shown that there has been a serious denial of procedural fairness. Such remedies are necessary to maintain the integrity of the court process.
The procedural fairness to which Kirby J referred does not apply in this case for the reasons set out above unless it can be shown that an order made was not contemplated.
In KPR & MRS [2007] FamCA 1334, Coleman J exercising the appellate jurisdiction of the Court at paragraphs 60 to 63 of his reasons set out extracts from a number of authorities concerning the principles of natural justice and procedural fairness. They included that:
(i)natural justice does not require the inflexible application of a fixed body of rules; it requires fairness in all the circumstances, which include the nature of the jurisdiction or power exercised and the statutory provisions governing its exercise (National Companies and Securities Commission Ltd v News Corporation Ltd [1984] HCA 29; (1984) 156 CLR 296 at 312 Gibbs CJ.);
(ii)It is a principle of justice that a decision-maker, at least one exercising public power, must ordinarily afford a person whose interests may be adversely affected by a decision an opportunity to present material information and submissions relevant to such a decision before it is made (Allesch v Maunz [2000] HCA 40; (2000) 203 CLR 172 at 184 – 185 Kirby J);
(iii)That the Court’s role may go beyond the mere choice between two or more proposals by the parties, appears expressly, for example, from the provisions of s 68L which empower the Court to make an order for separate representation of a child on the Court’s own initiative. Other sections of the Family Law Act which also, if in some instances rather broadly, define the issues, should be noted.( U v U [2002] HCA 36; (2002) 211 CLR 238; (2002) FLC 93-112 Gummow and Callinan JJ)
For the reasons earlier set out, the parties had a variety of options to enable a division of the artwork and were unable to agree. Each had the opportunity to argue what was a just and equitable division and that included the methodology for its implementation. Each had the opportunity to put submissions. Ultimately, the parties left the Court to determine what was just and equitable and as such, this was not a case where the Court was simply bound to choose either of the two presented options.
There is therefore no basis for me to revisit the artwork issue.
The property revaluation
The crux of the wife’s argument to have the various real properties revalued arises largely because of the evidence of the wife’s new valuer, Mr W.
Mr W is a director of a valuation company. He prepared a report for the solicitor for the wife on 21 June 2010. He set out a number of limitations on his advice because he had been working on other valuers’ valuations, external inspections and the acceptance of “land, building and tenancy” descriptions.
In summary, the valuation increases in respect of the former matrimonial home and the L Street property were modest. The commercial properties however were significantly different involving millions of dollars.
In relation to the property at C Street, Mr W noted that the venue comprised five retail outlets together with tabaret access. He was aware of the expiry of the lease in 2010 and he understood that there had been some recent changes in respect of gaming machines which may have had some implications in respect of the tenancy. He noted that the rent had not been reviewed since February 2005.
In respect of the F Street and B Street properties, he noted that there was a potential to extend the existing buildings which in turn would yield apartments. Similar evidence was given in respect of the Q Street property.
Overall looking at a range, Mr W thought that the C Street, F Street, B Street and Q Street properties could have gone up as much as almost $30 million.
Senior counsel for the wife argued that there had been a significant increase in the value of these properties and they needed to be considered to ensure the wife received a just and equitable outcome.
Senior counsel for the husband argued that this was an endeavour to reopen the case. He argued that the increase in valuations would mean a change of the financial amount due to the husband and possibly a percentage variation for the parties. He argued that this was relitigating the whole case. He pointed to Mr W’s evidence as being vague in the extreme and that this was fresh evidence because of the fact that these sorts of arguments had always been available to the wife. In her affidavit, the wife had said that her valuer during the trial would no longer give her advice.
Whilst the argument revolves around the issue of the valuation, the principle is essentially the question of whether this is an application by the wife to reopen her case. She denies that it is.
Senior counsel for the wife relied upon the decision of the Victorian Court of Appeal in Equuscorp Pty Ltd v Wilmoth Field Warne (a firm) [2007] VSCA 280. Equuscorp was a case in which there was a dispute between a solicitor and client. After the close of the evidence, the client sought to reopen his case to amend the pleadings to argue that the costs agreement about which there had been obvious litigation was void under the Legal Practice Act 1986 (Vic). The solicitor argued that this was a “wholesale restructuring and revision of the plaintiff’s case”. The client submitted that the validity of the costs agreement was a discrete point that could have been raised in the alternative so that by permitting the client to reopen the case was not a “wholesale reconstitution” of his case.
The trial judge allowed the case to be reopened. An appeal followed.
The Victorian Court of Appeal said that a party would normally be given leave to make amendments to pleadings necessary to enable the real questions in controversy between the parties to be determined provided that any consequential prejudice to the other party could be compensated by the imposition of terms such as a costs order. Reference was made to State of Queensland v JL Holdings Pty Ltd [1997] HCA1 (but I note that subsequently, the High Court has placed a slightly different emphasis on that decision in Aon Risk Services Australia Limited v Australian National University [2009] HCA 27). The Court of Appeal distinguished between a matter where evidence had been accidentally overlooked from one in which a party had not done all that was timely and appropriate. The Court of Appeal said that the trial judge was required to consider the competing objectives of promoting finality in litigation and promoting the interests of justice. Prejudice was one of the issues that the trial judge had to consider in terms of whether the solicitors could have been compensated with an order for costs.
Ultimately, the Victorian Court of Appeal found that the reopening of the case did not require the admission of new evidence and there was a public interest in having the issue of the interpretation of the Legal Practice Act determined. That is not the case here.
A similar situation arose in Gelley and Gelley (1992) FLC 92-290. There, Treyvaud J considered the circumstances in which a court should reopen evidence after the conclusion of the trial. His Honour noted that the evidence sought to be adduced went directly to the quantum of the order that may have been anticipated by the party opposing its admission. In that case however, Treyvaud J was satisfied that there was no prejudice to either party and there had been an inadvertence in not adducing the evidence. In this case, it was not inadvertence and the calling and consideration of the evidence may mean further time in court and delays.
Recently, Murphy J in Suell and Suell (Reopening) (2009) FamCA 55 looked at the question of granting leave to reopen after a six day hearing of parenting issues where judgment had been reserved but not delivered. His Honour said:
8.Prior to the introduction of Division 12A, it might broadly be said that common law principles governed applications to reopen in this Court. (see eg Gelley & Gelley (1992) FLC 92-290 and the cases there discussed).
9.Those principles make it clear that the granting of leave to reopen is discretionary. That discretion is guided by the interests of justice. The essential question is, is the court more able to do justice in the facts and circumstances of the particular case if the application is granted. (see eg Smith v Transport Authority v NSEISER (1992) 28 NSWLR 471 at 478 and EB v CT (No. 2) [2008] QSC 306)
Senior counsel for the husband relied on Smith v New South Wales Bar Association [1992] HCA 36 where in the High Court, the majority, Brennan, Dawson, Toohey and Gaudran JJ said of the application for reopening:
The power is discretionary and, although it exists up until the entry of judgment, it is one that is exercised having regard to the public interest in maintaining the finality of litigation. Thus, if reasons for judgment have been given, the power is only exercised if there is some matter calling for review.
Their Honours went on to say:
It is again necessary to distinguish between the considerations which may bear on a decision to reopen and the processes involved in reconsideration once a case has been reopened. If an application is made to reopen on the basis that new or additional evidence is available, it will be relevant, at that stage, to inquire why the evidence was not called at the hearing. If there was a deliberate decision not to call it, ordinarily that will tell decisively against the application.
The wife wishes to call new evidence. It is evidence different to that upon which the parties conducted the trial. It is not just evidence of an increasing value. This was evidence available at the trial. It is evidence in relation to the question of a different methodology for valuation. It has many qualifications. The husband is entitled to expect the Court to conclude his trial after the hearing. The admission of new evidence will not only protract the hearing but may require a rearguing of the fundamental concepts of contribution. In the exercise of my discretion, I refuse to admit the evidence.
Accordingly, I propose to make orders for the joinder of B Holdings subject to the qualification mentioned, order the resolution of the artwork issue quickly and end the proceedings accordingly.
I certify that the preceding Seventy One (71) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 28 September 2010.
Associate:
Date: 28 September 2010
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