Calhoun & Mercier

Case •

[2022] FedCFamC1F 411

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Calhoun & Mercier [2022] FedCFamC1F 411

File number(s): SYC 3053 of 2018
Judgment of: SCHONELL J
Date of judgment: 6 June 2022
Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Where the applicant sought compliance with orders made in November 2021, which required the respondent to complete and sign the 2021 tax returns for various entities – Where the respondent contended that the Australian Taxation Office is reviewing various matters arising out of the 2017 and 2018 years – Where the respondent contended that the 2021 returns should be completed after the review is finished – Where the applicant insisted that the 2021 returns be completed despite the review not being completed – Where the applicant conceded that there is a risk that an amended expert report will be needed if the report is prepared before the review is completed – Ordered that the respondent comply with the orders of November 2021 by 30 September 2022.  
Legislation:

Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 67, 68, 69

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 6.06, Pt 8.3

Division: Division 1 First Instance
Number of paragraphs: 16
Date of hearing: 2 June 2022
Place: Sydney
Counsel for the Applicant: Mr Roberts
Solicitor for the Applicant: Barkus Doolan
Counsel for the Respondent: Ms Cantrell
Solicitor for the Respondent: Santo Family Lawyers

ORDERS

SYC 3053 of 2018

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:

MS CALHOUN
Applicant
AND:

MR MERCIER
Respondent

ORDER MADE BY:

SCHONELL J

DATE OF ORDER:

6 JUNE 2022

THE COURT ORDERS THAT:

1.The time for compliance by the respondent with Order 5 of the Orders made by consent on 24 November 2021 (requiring the finalisation of FY2021 taxation returns and financial statements for entities being valued by the single expert accountant, Ms D) is extended to 30 September 2022.

2.In the event that the respondent does not comply with Order 1, the applicant is at liberty to make contact with my associate (via ...) requesting that the matter be relisted for case management hearing.

3.On or before 31 October 2022, each of the parties are to file and serve:

(a)an updated Financial Statement;

(b)a single consolidated trial affidavit relevant to their case;

(c)a single affidavit of each witness including expert witnesses (subject to the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) or with leave) that they intend to rely upon at trial; and

(d)an undertaking as to disclosure in accordance with r 6.06 of the Rules; and

all affidavits are to comply with Pt 8.3 of the Rules.

4.Except as already provided by these orders, the parties will not be permitted to file any further affidavits and may not rely upon any past affidavits at trial without the leave of the Court.

5.The matter be listed for mention before me at 9.30 am on 2 December 2022.

6.I dismiss the Application in a Proceedings filed by the applicant on 31 May 2022 and the Application in a Proceedings filed by the respondent on 31 May 2022.

7.I reserve the costs of the parties.

Note:   The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Calhoun & Mercier has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT

SCHONELL J:

  1. Before the Court is an application brought by the applicant seeking compliance with orders made by consent on 24 November 2021. The application is but part of wider financial proceedings that first commenced on 16 May 2018, whereby the applicant seeks orders for financial adjustment arising out of her de facto relationship with the respondent that commenced in or about May/June 2011 and concluded in or about January 2018.

  2. It is not entirely clear as to why it is that the proceedings have taken so long to come on for determination. It is a pointless exercise at this stage to attempt to ascertain why, but rather, to simply note that they have taken too long to come on for hearing and it is the obligation of the Court, consistent with the overarching purpose of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (“the FCFCOA Act”) and the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (“the Rules”), to provide a prompt resolution. To that extent, s 67(1) of the FCFCOA Act provides as follows:

    67.      Overarching purpose of family law practice and procedure provisions

    (1) The overarching purpose of the family law practice and procedure provisions is to facilitate the just resolution of disputes:

    (a)       according to law; and

    (b)       as quickly, inexpensively and efficiently as possible.

    Note 1:See also paragraphs 5(a) and (b).

    Note 2: The Federal Circuit and Family Court of Australia (Division 1) must give effect to principles in the Family Law Act 1975 when exercising jurisdiction in relation to proceedings under that Act.

  3. Likewise, s 68(1) and (2) provides:

    68.      Parties to act consistently with the overarching purpose

    (1) The parties to a civil proceeding before the Federal Circuit and Family Court of Australia (Division 1) must conduct the proceeding (including negotiations for settlement of the dispute to which the proceeding relates) in a way that is consistent with the overarching purpose.

    (2) A party’s lawyer must, in the conduct of a civil proceeding before the Federal Circuit and Family Court of Australia (Division 1) (including negotiations for settlement) on the party’s behalf:

    (a) take account of the duty imposed on the party by subsection (1); and

    (b) assist the party to comply with the duty.

  4. On 16 April 2021, orders were made for the appointment of a single expert accountant, to prepare a valuation report into the interests of the respondent in various trusts and companies controlled by him. The applicant seeks to attribute the delay in the engagement of the single expert to the respondent, while the respondent tenders, as Exhibit 2, correspondence that would appear to indicate that there may be another reason why there has been a delay in the preparation of the single expert report. It is not possible within the confines of this hearing to ascertain as to why it is that now more than four years after the commencement of proceedings, the parties are still no closer to either resolving them or obtaining a hearing date.

  5. On 24 November 2021, McClelland DCJ made a series of orders for the purposes of ensuring that the single expert was provided with the most up-to-date documents.  Order 5 provided that the respondent was to forthwith cause the FY2021 taxation returns for various entities to be completed and signed.  That order has not been complied with and the respondent advances in his affidavit as an explanation that there is currently a review being conducted by the Australian Taxation Office (“ATO”) into various matters arising out of the 2017 and 2018 financial years. He says that once that review is completed he will be able to do the 2021 returns.

  6. The respondent’s accountant Mr E says the following in his affidavit of 27 May 2022:

    28.In early 2022, [Mr Mercier’s] case officer changed from Mr F to Mr G, and the ATO has continued to ask for information as part of their review. The deadline to provide the latest tranche of information is 28 May 2022, however I anticipate that further time will be needed to provide this information, and that it will be provided in or about mid-June 2022.

    29.As far as I am aware, this is the last step in respect of the 2017 and 2018 returns to be finalised (including amendments made) and Notices of Assessment being issued by the ATO. To the best of my knowledge, once this occurs H Company, overseen my myself, can make any amendments as required for future years returns and complete the 2021 returns.

    …

    39.Despite that, I have advised [Mr Mercier] that we should not lodge and prepare 2021 returns until we are confident that the review is complete, and that it will be more efficient to turn to the 2021 returns when the current review is complete.

    …

    41.Based on my discussions with H Company, in May 2022 I advised [Mr Mercier] that we would be in a position to submit his 2021 returns within three months of the ATO review being completed.

  7. The applicant is suspicious of the delay that is occasioned in the respondent preparing the various income tax returns. She wishes the single expert to commence, without further delay, preparation of the valuation of the respondent’s interest in various companies and trust. She seeks that the respondent prepare the 2021 returns forthwith.

  8. It is conceded by the respondent, through his counsel, that he has been less than prompt in complying with directions of the Court.  In that regard, I was informed by his counsel that the respondent did not inform her until 19 May 2022 that there was a review being undertaken into the financial years ended 2017 and 2018, and that the respondent had not prepared his 2021 personal income tax returns and those of his various entities.

  9. The respondent also concedes through his counsel that he did not comply with procedural orders made 6 October 2020 in relation to the filing of a Financial Statement or preparation of a Balance Sheet in accordance with the timetable directed by the Court, nor did he comply with orders made by the Court on 16 April 2021 that he file and serve draft financial statements for various entities.

  10. Parties have an obligation to ensure that they comply with directions of the Court. The parties are reminded of the Court’s power pursuant to s 69(3) and (4) of the FCFCOA as follows:

    69.Power of the Federal Circuit and Family Court of Australia (Division 1) to give directions about practice and procedure in a civil proceeding

    …

    (3) If a party fails to comply with a direction given by the Federal Circuit and Family Court of Australia (Division 1) or a Judge under subsection (1), the Court or Judge may make such order or direction as the Court or Judge thinks appropriate.

    (4) In particular, the Federal Circuit and Family Court of Australia (Division 1) or Judge may do any of the following:

    (a)       dismiss the proceeding in whole or in part;

    (b) strike out, amend or limit any part of a party’s claim or defence;

    (c)       disallow or reject any evidence;

    (d)       award costs against a party;

    (e) order that costs awarded against a party are to be assessed on an indemnity basis or otherwise.

  11. The respondent contended that there was little utility in directing that he prepare the 2021 income tax returns, in circumstances where the review by the ATO has not been completed as it may be that amended returns would then have to be done. The respondent’s counsel frankly conceded that she was not able to indicate to the Court how long it would take the ATO to complete the review.

  12. The applicant’s counsel conceded that by insisting upon her order that the respondent complete the 2021 returns before knowing the outcome of the review of the 2017 and 2018 returns could mean that the information upon which the single expert prepares her report may change leading to the possibility of the necessity for an updated or amended report. This would add to the costs of the parties.

  13. Notwithstanding acknowledging this particular risk, counsel for the applicant urged the Court to make orders that the respondent comply with the orders that she sought.

  14. I am conscious of the significant delay in these proceedings. It is not yet known whether amended returns will need to be filed. If they are not needed, then the proceedings would have been delayed unnecessarily.

  15. I am prepared to make the orders as sought by the applicant on the basis that she has clearly accepted that one consequence of her application may be the necessity for an amended report. If this happens, then it may be at the cost of the applicant. 

  16. Otherwise I propose to make orders that the parties are to file their trial affidavits and that the matter be listed before me for mention on 2 December 2022. 

I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell.

Associate:

Dated:       6 June 2022

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