Cainer and Geller

[2010] FamCA 14

FAMILY COURT OF AUSTRALIA

CAINER & GELLER [2010] FamCA 14

FAMILY LAW – PROPERTY – Interim

Family Law Act 1975 (Cth)

APPLICANT: Mr Cainer

RESPONDENT: Ms Geller

FILE NUMBER: SYC 8564 of 2007

DATE DELIVERED: 21 January 2010

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Watts J

HEARING DATE: 30 November 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Kearney

SOLICITOR FOR THE APPLICANT: Pearson Family Lawyers

COUNSEL FOR THE RESPONDENT: Mr Simpson

SOLICITOR FOR THE RESPONDENT: Briggs & Associates

Orders

1. Paragraph 21 of the wife’s affidavit of 6 July 2009 be struck out on the basis that it is irrelevant.

IT IS NOTED that publication of this judgment under the pseudonym Cainer & Geller is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 8564 of 2007

MR CAINER

Applicant

And

MS GELLER

Respondent

REASONS FOR JUDGMENT

1. The husband by way of application in a case filed 11 November 2009 seeks an order that paragraph 21 of the wife’s affidavit sworn 6 July 2009 be struck out and a supplementary order that the wife pay the husband’s costs of and incidental to the application (no submissions have yet been made in support of the costs application).  The order is opposed by the wife who has indicated that she does not intend at the final hearing, to rely on paragraph 21.

2. Paragraph 21 of the wife’s affidavit is in the following terms:-

   “21.For a period of approximately five years from about November 2002, [the husband] undertook work as a legal consultant for an American Citizen, Mr [S].  I do not know the basis on which [the husband] was retained to carry out the work for Mr [S].  To the best of my knowledge, the professional fees paid by Mr [S] to [the husband] were received by him into an account in France and have never been transferred into Australia.  I understand these monies have never been declared by [the husband] as taxable income either in his hands or as received [sic] [R Business].  I do not know and cannot admit what overseas accounts are operated by [the husband] or in what circumstances.” [emphasis added]

3. Upon receiving this affidavit, the husband’s solicitors complained to the wife’s solicitors that in the husband’s view, the paragraph contained an allegation by the wife on her oath that in her view the husband was guilty of defrauding the Australian Tax Office and, by necessary implication, perjury in these proceedings.  The husband claimed to the wife in a letter of 14 July 2009 that it was his view that the allegations were scandalous and offensive and constituted an attack on his integrity of the most serious nature.  In the letter of 14 July 2009, the husband suggested two options.  The first was to file a substitute affidavit which deleted paragraph 21 entirely so it would not form part of the material to be read by the court at any time and offer to the husband unequivocal apology for this offensive and improper conduct or to file further affidavits setting out in admissible form all matters going to the wife’s source of knowledge and belief in respect of each of the allegations (including those which, in the husband’s view, were made by clear inference by the wife in paragraph 21).

4. On 23 July 2009 the wife responded to the letter of 14 July saying that in the wife’s view, the husband’s concern was misplaced and indicated that any assertion by the husband that paragraph 21 alleged the husband had defrauded the Australian Tax Office was misplaced.  It asserted that all it did was depose to facts that otherwise appeared to be acknowledged by the husband in his own affidavit.

5. The affidavit referred to is an affidavit filed by the husband on 6 April 2009.  Paragraphs 138 to 141 deal with the monies that the husband received from Mr S.  That evidence is in the following form:-

   “Receipt of gift from [Mr S]”

   138.Between November 2002 and February 2007 I performed work as a consultant in connection with litigation for an American, Mr [S], to recover from Westpac Banking Corporation a large sum of money which he had lost in an investment.  Litigation was completely successful. 

   139.After completion of the work, on 16 April 2007, I received the sum of US$350,000 as a gift from [Mr S], which was paid as €259,067 into my French bank account.  These funds are the only funds transferred or paid into my French bank accounts, other than the interest earned on those funds and transfers by me since 1980 from my Australian bank accounts.  The gift was confidential as Mr [S] did not make a similar gift to others involved in the litigation.

   140.The gift was not accessible income in my hands, in accordance with the decision of the High Court of Australia in Scott v Federal Commissioner of Taxation [1966] HCA 48; (1966) 117 CLR 514.

   141.Exhibited to this affidavit and marked “32” are copies of:

   32.1 file note of conversation [the husband] and [Mr G] dated 21 March 2007.

   32.2 copy of my letter dated 27 March 2007 to Mr [S].”

6. Counsel for the husband pointed to other parts of the same affidavit which he argued would have made it clear to the wife that what the husband had said in paragraph 138 was not literally true and that the husband had not in fact performed work as a consultant for Mr S but had in fact been employed by R Business which in turn provided consultancy services to Mr S. 

7. The matter was raised by the lawyer for the husband on 31 August 2009 and on that day I made the following orders:-

   2.In the event that the wife wishes to file any further evidence in relation to serious allegations she has made against the husband, then she is to do that on or before 25 September 2009.

   3.On or before 13 November 2009 the husband file an Application in a Case detailing what parts of the evidence of the wife he seeks to have struck out.  The husband’s Application in a Case can be filed without any further supporting affidavit material should he so choose. 

   4.In the event that the husband wishes to file any further affidavit material in support of that Application in a Case, he may do so, on or before 13 November 2009. 

   5.In the event that the wife wishes to file any affidavits in reply to anything further that has been filed by the husband, she can do so by 26 November 2009.

8. The husband asserts that the wife has made serious allegations against him relating to fraudulent and other activities and the husband asserts the wife has not provided any basis for the making of those allegations.

9. After the hearing of this matter, the husband’s lawyers, seemingly without the consent of the wife, sought to tender in evidence a transcript of proceedings before me on 31 August 2009.  It was asserted that that was permissible on the basis that it supported “submissions made by Mr Kearney of counsel on the hearing”.  I read the transcript and have chosen not to call the parties back.  During the proceedings on 31 August 2009, the solicitors for the wife was specifically asked by me whether the wife was making serious allegations of fraud against the husband.  She denied she was.  She seemed to be making allegations about issues relating to inconsistent disclosure by the husband rather than fraud. 

10. The wife in fact filed a further affidavit on 28 September 2009 setting out the further evidence in relation to which she relied in respect of these allegations.  Counsel for the husband made the point that the wife did not set out source of knowledge in paragraph 2(n) but it seems clear enough that the wife was simply drawing upon what the husband had said at paragraph 139 of his affidavit filed 6 April 2009. 

11. Part of the husband’s complaint was that the wife should not have filed a further affidavit but simply agreed to have paragraph 12 struck out. 

12. In response, senior counsel for the wife submitted that it was an essential part of the wife’s case that the payment of $350,000 not be categorised as a gift to the husband but rather, irrespective of its tax treatment, as a payment to the husband consequent upon personal exertions by the husband on behalf of Mr S.

13. Counsel for the husband replies that that assertion is without foundation because the husband has at all times, conceded that this amount of US$350,000 has to be brought to account as a asset generated during the period of the marriage.  That, begs the question, as to how contributions to that asset are to be assessed.  That was the point being made by senior counsel for the wife. 

14. I then return the husband’s central assertion, that is, that the two sentences in paragraph 21 (the ones highlighted above) are scandalous and offensive and should be struck out on that basis. 

15. Of the two objectionable sentences, the second is not objectionable on its own.  The husband himself deposes to the fact that the $350,000 he received from Mr S was not declared as taxable income either in his hands or the hands of the company.

16. Counsel for the husband, however, says in relation to the second sentence, that the word monies has to be read in conjunction with the words “professional fees” as they appear in the preceding sentence. 

17. In the preceding sentence, the wife asserts that to the best of her knowledge, professional fees have been paid by Mr S and were received by the husband into an account in France and have never been transferred into Australia.  She was entitled to assume that the monies had been paid by Mr S to the husband and were then received by the husband into an account in France. 

18. The dispute in the end revolves around the use by the wife in paragraph 21 of the words “professional fees”.  It is the husband’s assertion that those words give rise to an implication that tax should have been paid on those professional fees and that the wife is saying the husband has either lied to the court or to the Australian Tax Office in relation to the matter.

19. However, in my view, the words “professional fees” could be interpreted in the way indicated by senior counsel for the wife, namely, that they were the non taxable part of the emoluments the husband received as a result of personal exertion work that he had done for Mr S. Interpreted in that way, there is nothing scandalous or offensive, as the wife does no more than restate the husband’s position in respect of the payment of these monies as being non taxable. 

20. The wife made it clear in her letter of 23 July 2009 that the wife did not mean to convey any implication that the husband had defrauded the Australian Tax Office.

21. I do not find that paragraph 21 is scandalous or offensive. 

22. The wife has indicated that she does not intend to rely upon paragraph 21 at the hearing for other reasons.

23. It seems in those circumstances that paragraph 21 of the wife’s affidavit of 6 July 2009 serves no good purpose and it will be struck out on the basis that it is irrelevant.

24. The husband also seeks a cost order in relation to this application.  My preliminary view, given the findings I have made, is that no such order should be made either way but I will allow either party to make further arguments in relation to any application for costs should either choose to do so. 

I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts.

Associate: 

Date:  21 January 2010