Carmel-Fevia & Fevia - [2010] FamCA 502

FAMILY COURT OF AUSTRALIA

CARMEL-FEVIA & FEVIA

[2010] FamCA 502

FAMILY LAW – DISCLOSURE – high wealth case – Is it necessary to fulfil all of the requirements of Chapter 13 of the Rules where the assets of a party far exceed the entitlement sought by the other? – Not if an application for relief from the rules is sought and it can be shown that there is no relevance in the disclosure pursued as it relates to the substantive application
FAMILY LAW – DISCLOSURE – Applications for permission to access the file of a party's previous marriage relationship – Purpose must be shown for the current proceedings
FAMILY LAW – COSTS – Application for a party to contribute to forensic accounting costs in circumstances where there are sufficient funds in the hands of the applicant to meet those costs – Application for an order refused
FAMILY LAW – COSTS – Application for order for costs as a result of an adjournment where late material filed required a response

Family Law Act 1975 (Cth)
Matrimonial Causes Act 1973 (UK)

Aon Risk Services Australia Limited v Australian National University (2009) HCA 27
Black and Kellner (1992) FLC 92-287
Briese and Briese (1986) FLC 91-713
Clauson and Clauson (1995) FLC ¶92-595
Farmer and Bramley (2000) FLC 93-060
Figgins and Figgins (2002) FLC 93-122
Guthrie & Rushton [2009] FamCA 1144
Hickey & Hickey & Attorney-General [2003] FamCA 395; (2003) FLC 93-143
In the Marriage of Morrison (1995) FLC 92-573
Liveseyv Jenkins (1985) 1 All ER 106
McCartney v Mills-McCartney [2008] EWHC 401 (Fam)
Naczek and Dowler [2009] FamCA 304
Norbis and Norbis (1986) FLC 91-712
Papadopoulos and Papadopoulos (No 2) [2007] FamCA 1683
Russell and Russell (1999) FLC ¶92-877
Strahan and Strahan [2009] FamCAFC 166
Thyssen-Bornemisza v Thyssen-Bornemisza (No 2) [1985] FLR 1069
VAK and AK [2005] FamCA 803
Zschokke and Zschokke [1996] FamCA 79; (1996) FLC 92-693

APPLICANT:

Ms Carmel-Fevia

RESPONDENT:

Mr Fevia

FILE NUMBER:

MLC

4389

2008

DATE DELIVERED:

23 June 2010

PLACE DELIVERED:

Melbourne

PLACE HEARD:

Melbourne

JUDGMENT OF:

THE HONOURABLE JUSTICE CRONIN

HEARING DATE:

23 APRIL 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT:

MR TAUSSIG QC WITH MS VOHRA

SOLICITOR FOR THE APPLICANT:

TAUSSIG CHERRIE & ASSOCIATES

COUNSEL FOR THE RESPONDENT:

MR KIRKHAM QC WITH MR THOMPSON

SOLICITOR FOR THE RESPONDENT:

SAXBYS LAWYERS

Orders

That the oral application of the wife for discovery, the filing of a financial statement by the husband and any further issues associated with the appointment of a single expert witness is adjourned to a date to be fixed by arrangement with my Associate.
That the oral application of the wife that the husband pay the costs of the wife’s expert accountant is dismissed.
That the application of the wife that the husband pay her costs reserved on 23 April 2010 is dismissed.
That pursuant to Rule 24.13 the wife and her legal practitioners have leave to inspect and copy the court documents, family reports and final judgment of the court of the proceedings between the husband and his former wife in proceedings numbered MLF ….

IT IS CERTIFIED:

That pursuant to Order 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel, including senior counsel to attend.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 4389 of 2008

MS CARMEL-FEVIA

Applicant

And

MR FEVIA

Respondent

REASONS FOR JUDGMENT

The requirements of disclosure

Chapter 13 of the Family Law Rules 2004 requires each party to make full and frank disclosure of their financial circumstances. The rule is all-encompassing with rule 13.04 setting out some but not all of the documents that must be disclosed.
The general duty of disclosure is found in rule 13.01 and is only limited by the requirement that the information be relevant to the case. Relevance to the case, as a concept, is repeated in rule 13.07.
The disclosure requirement is treated very seriously. That can be seen in rule 13.14 which provides that a party may be found guilty of contempt of court for not disclosing a document.
However, all of these requirements are shadowed by the over-arching principle of relevance.
Thus, if there is any dispute about disclosure, the fundamental issue is that of relevance to the case.
Rule 13.22 permits the determination of any dispute about the limits and extent of disclosure. It permits a party to apply for an order that another party disclose a specified document or class of documents but it also permits a party to be partly or fully relieved of the duty of disclosure otherwise set out in the rules. It is to that rule that the parties have each turned.

The dispute

Despite, or perhaps because of, the husband’s assertion as to his wealth, the wife applied for an order for comprehensive disclosure from him which in due course would lead to a valuation of his wealth.
The husband applied for partial relief from the requirements of the rules of court on the grounds of relevance.
The relevance here arises because of the husband’s significant wealth. He says he has “total net assets” of $264 million.

The background

In this case the husband is 58 years of age and the wife 50 years. They met in early 2001 and began living together in July 2001. A financial agreement was signed in September 2001 but that was ultimately set aside by Murphy J on 3 September 2009.
In September 2001, the parties married.
Two children now aged 4 years and 7 years respectively were born to the marriage.
In February 2008, the parties separated under one roof and just over one month later, finally separated.

The substantive property applications

In her amended application for final orders filed on 19 November 2009 (consequent upon the financial agreement being set aside) the wife sought a variety of specific assets and then the following order:
That the husband make a payment to the wife, such that the total amount received by the wife from the payment and the wife’s home, and the wife’s assets, is the sum of $35 million ($35,000,000).
The husband disagreed with the wife and filed a response on 15 December 2009. He sought that she retain various real and personal property including superannuation and that otherwise her application be dismissed.
There is therefore a significant dispute about the cash entitlement of the wife.

The wife’s position

The wife said the Family Law Rules 2004 required disclosure and the husband had failed to comply.
The wife maintained that she was entitled to determine to her satisfaction what the pool was before she began the first step in the evaluation exercise of her entitlement.
Whilst she had nominated $35 million as her proposed precise order as required by the rules, she said that could change if her understanding of the husband’s wealth altered.
Insofar as there was a significant cost expense involved in the exercise, the wife’s view was that that was a small amount having regard to the size of the pool of assets and in any event, if it was a fruitless exercise, the problem of cost would fall to her.

The husband’s position

Having acknowledged his significant wealth and the financial disparity between the parties, the husband said that while he disputed the wife’s entitlement could be anywhere near $35 million, he could meet whatever was ordered. He objected to expending time, energy and costs on what he perceived to be an unnecessary exercise. He said there was no relevance in establishing his wealth precisely by the provision of many documents and also undertaking a complex valuation exercise.

The unusual features of the case

Whilst every case is different even in respect of disclosure issues, the distinguishing features here are:
(a)the husband said his wealth was in his hands at the time of cohabitation beginning and that the wife had not contributed to that wealth;
(b)the husband and the wife were in a relationship together for about 7 years during which time, the wife’s contribution was largely defined by her role as a homemaker and parent; and
(c)the wife has claimed a specific sum of $35 million by way of property settlement.
It seemed common ground that there will be a significant focus in the substantive proceedings on the factors set out in s 75(2) of the Family Law Act 1975 (Cth) (“the Act”).

Relevance

The issue of relevance gives rise to a consideration of the approach that a court should ultimately take to determine the entitlement of the wife and the obligation of the husband.
Section 79 of the Act requires the court to make such order as it considers appropriate altering the interests of the property of the parties or either of them.
Property is widely defined in s 4 of the Act to mean property to which the party may be entitled either in possession or reversion. The Court therefore needs to know that a party has property, the interest in which, it can alter.

The Family Law Act

Section 79(2) provides that the Court shall not make an order unless it is satisfied that it is just and equitable to do so.
To determine justice and equity, s 79(4) requires a court to take into account:
a.the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
b.the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last‑mentioned property, whether or not that last‑mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
c.the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
d.the effect of any proposed order upon the earning capacity of either party to the marriage; and
e.the matters referred to in subsection 75(2) so far as they are relevant; and
f.any other order made under this Act affecting a party to the marriage or a child of the marriage; and
g.any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.

The authorities as to the approach

The authority of this Court about how the two sections should be applied is Hickey & Hickey & Attorney-General [2003] FamCA 395; (2003) FLC 93-143 where the Full Court set out a four step process. The very first step in that process is to identify and give value to the assets and liabilities of the parties. That is, the court needs to work out “the pool” for division.
In Russell and Russell (1999) FLC ¶92-877 (at p 86,439) the Full Court said:
In our view, because of the impact which the amended orders would have on the wife’s financial position, the making of those orders must be said to have required an independent exercise of discretion. Furthermore, it must be remembered in this regard that under s 79(2) of the Act, the Court is required to be satisfied that it is the order to be made which is just and equitable, not just the underlying percentage division of the net value of the parties’ assets. Indeed we take the opportunity to emphasise that in what his Honour has termed ‘the fourth stage’, that is, the consideration of whether the result is just and equitable, it is the justice and equity of the actual orders not of the percentage distribution which must be considered. (original emphasis)
In Clauson and Clauson (1995) FLC ¶92-595 the Full Court (Barblett DCJ, Fogarty and Mushin JJ) said that the application of percentages did not necessarily result in a just and equitable result. Albeit that discussion was about s 75(2) factors, the principle about the use of a percentage approach remains the same. The approach can also be either global or an asset by asset basis.
One might then ask how a court could determine what is just and equitable in the fourth step without having an understanding of the size of the pool regardless of whether the approach had been based on percentages or otherwise.
In VAK and AK [2005] FamCA 803 the Full Court (Bryant CJ, Rowlands and May JJ) dealt with an appeal where the trial judge assessed the contribution in percentage terms within a range. The Full Court said:
Further, Mr St John submitted that a finding of a fixed percentage contribution could, and should, have been made based on the detailed and conceded evidence of direct financial contribution of the wife’s parents to the presently existing assets (and indirect contributions of the wife as parent and homemaker). While recognising that it is not a scientific approach, the task of assessing the respective contributions of the husband and wife does fall to the trial Judge.
Counsel also drew our attention to the implications of a range spanning 10 per cent in light of the size of the pool in this case. With a property pool exceeding $3 million, each percentage point has a financial consequence of $30,000. Therefore, where such an approach is taken it would be necessary for the trial Judge to provide sufficient reasoning that no fixed percentage is required. We recognise that there may be cases where this is acceptable. Such a case was Figgins v Figgins (2002) FLC 93-122, which involved a relatively short marriage, a huge disparity of assets resulting from assets inherited early in the marriage, and an application for a specific amount, rather than apportionment.
This Court is mindful that it should ‘avoid an overly critical, or pernickety, analysis of the primary judge’s reasons’ as per AMS v AIF (supra). We refer to the schedule of assets produced by Watt J (above) and note the ability of his Honour to identify those assets and the impact of them on the overall asset worth which the wife’s parents contributed.
We are of the opinion that a trial Judge should generally determine the contribution by each party as a percentage. This duty is compatible with that stated in Mallett v Mallett. An ability on the part of the trial Judge to arrive at a percentage contribution to the property pool by each party was present in this case in view of the clearly established facts. We are of the opinion that his Honour has erred in his approach and that in this case there is an error of principle. (emphasis mine)
In the Full Court in Figgins (referred to above in VAK and AK), Nicholson CJ and Buckley J, examined the approach to the assessment task that had been undertaken by a trial judge but also specifically looked at the second and third steps that her Honour followed. In respect of the general approach to the assessment task, their Honours acknowledged that expressing it in words was difficult but they agreed with the approach of Finn J in Farmer and Bramley (2000) FLC 93-060 where her Honour said (at 49):
It has to be said, that it is not generally possible in the exercise of the discretion under s.79 to say or to ascertain why a particular award is ultimately arrived at. Given that awards under s.79 are virtually never calculated with mathematical precision, no amount of enumeration of, or indeed of evaluation of, contributions, or of the s.75(2) matters, or indeed of any of the matters listed in s.79(4), can ever explain exactly why a particular figure, or more usually a percentage, is eventually arrived at (other than that it is within the recognised "range").
Their Honours then went on to say that despite all of that, the obligation to give reasons could not be avoided just because it was difficult to achieve. However, they said, it did not mean that figures could be plucked out of the air. Judges had to explain the broad nature of their reasoning leading to their conclusion. Having said that, their Honours went on to say that in the circumstances of that particular case they did not find it to be “strictly necessary to ascribe specific amounts to contribution and s 75(2) factors”.
Ellis J largely agreed with Nicholson CJ and Buckley J and in respect of the approach to the determination said:
In my view, it is somewhat artificial to approach the assessment of the respective contributions of the parties on the basis of a percentage of the net worth of the husband. It is more appropriate to award a monetary figure, an approach which is consistent with the submissions of counsel.
All members of the Full Court then determined an appropriate lump sum and with respect, it is arguable that consistent with discretionary principles, the quantum, whilst explained, could be seen as arbitrary.
Upon examining the trial judge’s view about contribution, their Honours were concerned that the largely unexplained quantum under-valued the wife’s contribution. Importantly, in the judgment of the trial judge, there was a reference after the stipulation of the quantum, to it being compared with the value of a real property of the parties. The Full Court could not understand the use of that comparison and thought that if it was being used as some sort of yardstick, it was inappropriate. Thus, the assessment of contributions whilst arbitrary, must still fairly reflect the contributions made by the parties.
Upon examining the trial judge’s view about the assessment of the s 75(2) factors, the Full Court made clear that using the statutory factors as an assessment of needs was wrong. Nicholson CJ and Buckley J said:
We are concerned that…her Honour approached this matter on a “needs” basis, rather than properly considering s75(2) factors.
In Guthrie & Rushton [2009] FamCA 1144 Murphy J said:
[123] It is, of course, well established that there is no "starting point" or presumption of equality of contributions. (See eg Mallet v Mallet). Equally, an assessment of inequality -- which is, and, it has been held, usually should be, expressed in percentage terms, see VAK and AK [2005] FamCA 803 -- involves a finding that, upon a consideration of all of the different contributions made by the parties in their respective spheres over a long period (including those not as readily susceptible to expression in dollar terms, such as indirect and welfare of the family contributions) there is a disparity between the two parties.
Whilst the preferred approach may be one of using percentages, it does not follow that in every case, it will lead to a just and equitable outcome. The focus must really be upon the value to be received. That does not mean that proportionality is irrelevant. It may be that in many if not most cases, proportionality in its various forms is a way of stepping back and deciding that the outcome is just and equitable.

The interluctory application of the wife

In her affidavit filed on 1 April 2010, the wife said of her desire for comprehensive disclosure, the following:
Such disclosure is necessary for me to properly put my case before the court for final determination and for the court to make a determination which is just and equitable;
I have filed an application for final property settlement pursuant to s 79 of the Family Law Act 1975. I wish to put evidence before the court about all of the matters the court is required to take into account pursuant to s 79(4) including the matters referred to in s 75(2) as far as they are relevant.

The wife’s affidavit went on to say that she had made significant non-financial contributions and contributions to the welfare of the family including the fact that she was the primary carer of the two young children. She said she raised the husband’s three children from his second marriage including at a time when the husband was involved in protracted litigation relating to those children and he was ultimately successful in achieving parenting orders with her assistance and support. She said that an adult child of the husband also lived with them during the first 18 months of the marriage and required significant support.
The wife went on to say that she provided maternal care, support (physical and emotional) and love to the husband’s children who were extremely disturbed and very needy requiring her to devote herself to their care. She provided care, support and love to the husband which was difficult having regard to the attacks upon her and the vilification by, his former wife. She said she was responsible for the on-going cohesiveness of the family unit but also assisted the husband in the development of his career to the detriment of her own aspirations as well as his business and social interests. She said she maintained the former matrimonial home and undertook domestic responsibility and also instructed, supervised and managed various paid staff.
In her affidavit, the wife argued that she was entitled to maintain and enjoy a lifestyle which was reasonable and commensurate with that which she enjoyed during the marriage. She described that lifestyle as luxurious and wanting for nothing. That lifestyle came to an end and she had to significantly curb her spending subsequent to the conclusion of the relationship. On the other hand, she said, the husband’s lifestyle had not changed.

The husband’s affidavit

In the husband’s affidavit filed on 23 April 2010, he said that the wife had made no financial contributions to his assets but that her case rested on the value to be attributed to her non-financial contributions and the financial resources she needed into the future to maintain a reasonable standard of living. From his perspective if his affidavit is an indication, the focus will be on s 75(2) factors. However, even a simplistic reading of the wife’s affidavit as I have set out above indicates a claim for contributions of substance.

The wife’s submissions

Mr Taussig QC on behalf of the wife argued that both the common law as well as the Family Law Act and the Family Law Rules 2004 required disclosure to enable the Court to properly exercise its power.
Specific reference was made to the Rules. Chapter 13 of the Rules sets out the obligations of parties in financial cases but there is a general duty of disclosure as well.
Mr Taussig argued that the 2004 rules were specifically made to create a duty of disclosure as well as to provide for discovery and pre-action protocols.
He argued that the wife was entitled to determine to her satisfaction what the pool was before she began the evaluation exercise and in this case, she could not commence even the first step. Mr Taussig drew attention to the fact that in his affidavit, the husband maintained that his total net assets were now valued at $264 million but that was significantly less than the value attributed to his financial position at the time the parties executed the financial agreement in September 2001.The invalid financial agreement will be evidence of that fact. The husband however explained the discrepancy by pointing to the global financial crisis. The wife’s position is that she should be entitled to investigate all of this.
The fact that a court could find that the husband’s net wealth is higher than he stipulated does not necessarily mean that the pursuit of a precise figure is relevant nor that it would make a difference to the outcome.
The wife relied upon Hickey and Hickey (supra) but there the Court simply set out the process that should be followed when one takes into account the pathway that is set out in s 79 of the Act.
The wife also referred to In the Marriage of Morrison (1995) FLC 92-573 which was essentially about disclosure. In that case, there were consent orders made on the basis that an abalone fishing licence which the wife accepted had a valuation of $250,000 on the basis of what the husband told her. One year after the orders were made, the husband disposed of the licence for $900,000. The wife brought an application under s 79A to set aside the orders. Ultimately, the Full Court (Fogarty, Baker and Kay JJ) said at 81,670:
The constant emphasis of the cases is that in order for there to be a just and equitable and an appropriate order altering the interests of parties in their property there must be a full and frank disclosure between them of all circumstances which may be relevant to the determination of their true financial position both presently and in the foreseeable future.
The Full Court referred to s 25(1) of the Matrimonial Causes Act 1973 (UK) and specifically to the decision of Liveseyv Jenkins (1985) 1 All ER 106 at 114 where Lord Brandon said that unless a court was provided with correct complete and up to date information on the matters to which it had to have regard, it could not lawfully and properly exercise its discretion.
Thus, all authorities make abundantly clear, all parties have an obligation to the court and to all other parties to make full and frank disclosure on matters that would enable the other party to know what to seek and to enable the court to determine the matters required of it in s. 79 of the Act. However, that means no more than each party must provide information and documents relevant to the matters to be determined.
The wife also referred to Black and Kellner (1992) FLC 92-287 where the Full Court reiterated the requirement for justice and equity to prevail by full and substantive disclosure of financial circumstances. That too must be seen in the context of what is relevant.
The wife relied on the statement of Smithers J in Briese and Briese (1986) FLC 91-713 where his Honour at 75,180 said:
I believe that a person in the position of the husband in this case has a positive obligation to set out at an early stage his financial position in a clear and comprehensive manner. The Regulations and now the Rules are not intended as a vehicle to mask the true position, or as an aid to confusion, complexity or uncertainty. They are not intended as the outer limits of the obligations of financial disclosure, but as providing avenues towards disclosure. The need for each party to understand the financial position of the other party is at the very heart of cases concerning property and maintenance. Unless each party adopts a positive approach in this regard delays will ensue with the consequent escalation of legal, accounting and other expenses, always assuming that a party has the strength to continue the struggle for information and understanding.
By inference, the wife is asserting that there is such a struggle to obtain information from the husband and that it should not be that way because he has to comply with the rules in a positive way so that she and the Court are aware of what he has.
Senior Counsel for the wife referred to a judgment of mine in Naczek and Dowler [2009] FamCA 304 where I picked up the point made by Smithers J in Briese and emphasised the importance of the disclosure of documents which would provide details to all material facts. Nothing turns on that decision because it related to a costs dispute and the wife sought a financial statement because she said she did not know what the husband’s financial position was. The issue revolved around s 117(2A) of the Act but again, the emphasis must be on material facts or relevant facts.
I was referred to Papadopoulos and Papadopoulos No 2 [2007] FamCA 1683 but that case revolved around an argument of whether the wife could have access to trust documents in circumstances where the husband was not a beneficiary of the trust but he was the appointor. The trustee was a corporate entity of which the husband was a director. The Family Law Rules provide that a copy of the trust deed has to be provided if a party is the appointor. I ruled that for the determination of such an issue, the degree of relevance to be established was not high and that all the applicant needed to show was that there was a legitimate forensic purpose in the exercise. I pointed to the fact that I could see some relevance and I found there was.

The husband’s submissions

In their written submission, counsel for the husband described the wife’s claim as one based “wholly on an alteration of the parties’ interests in the property to satisfy” the wife’s “needs”.
Mr Kirkham QC on behalf of the husband argued that the wife was not seeking a general division of the pool but rather a specific sum. He said the claim was essentially on s 75(2) factors. He described the extant substantive claim as being prima facie an ambit claim. He argued that any “compensation” claim relying on s 79(4)(c) could not net the wife anywhere near $30 million.
Mr Kirkham’s argument was that the wife was confusing the dispute in this case with the conflict in relation to discovery because it was a fixed claim in circumstances where the husband had sufficient funds to meet any obligation. He pointed to the recent decision of the High Court of Australia in Aon Risk Services Australia Limited v Australian National University [2009] HCA 27. That was a case involving issues of case management and the possible clash between effective trial management and the right of litigants to have their cases determined. It was not suggested by the High Court that the rules of court could be used as instruments of injustice. In this case, my view of the rule is that relevance is still the overriding consideration in any disclosure argument.
The husband also placed some store in the decision of Bennett J in the English case of McCartney v Mills-McCartney [2008] EWHC 401 (Fam).
The relevant provisions in the English Act empower the courts to make financial provision orders and property adjustment orders. Financial provision orders include that one party to the marriage make payments to the other party. The payments may be periodical or lump sums. Property adjustment orders provide that one party to the marriage transfer property to the other. The Matrimonial and Family Proceedings Act 1984 sets out the court shall have regard to factors which are very similar to s 75(2) of the Australian Act but the “first consideration” is to be given to the welfare of any child of the family under the age of eighteen. It is the duty of the court in deciding whether, and how, to exercise the powers to have regard to “all the circumstances of the case”. Amongst the similar factors to our s 75(2) provision however, is found the following which the court is entitled but necessarily obliged to take into account:
the conduct of each of the parties, if that conduct is such that it would in the opinion of the court be inequitable to disregard it; and
the value to each of the parties to the marriage of any benefit . . . which, by reason of the dissolution or annulment of the marriage, that party will lose the chance of acquiring.
In McCartney, Bennett J dealt with the wife’s application which included claims for compensation for the loss of career opportunity given her contributions to the husband’s career and to counselling his adult children. Expressions were used by the wife that she was entitled to “share in the marital acquest” and that it was inequitable to disregard conduct to the extent that it should be reflected in the “award”.
In the preliminary stages of the McCartney proceedings, there was a dispute between the parties as to the extent of the husband’s wealth. The husband at that stage had already undertaken a formal valuation exercise which had been given to the wife and her advisors pursued further documents. In his interlocutory judgment, Bennett J said that because of the wealth of the husband, it was not a case in which the wife was unable to formulate her claim on the basis of the information she already had.
Counsel for Sir Paul McCartney had argued it was a “needs” case. He argued that there was no relevance in the disclosure/valuation exercise because of the short marriage. Bennett J responded that it might be relevant because the evidence might affect the “matrimonial acquest”. His Honour noted that despite being unable at that point in the litigation to make any finding, the needs issue was likely to “dominate” the proceedings. His Honour then remarked that he had to have regard to proportionality. He said he thought nothing was to be gained from further investigation because of the size of the husband’s known wealth. Nonetheless, his Honour said that the wife was “entitled to investigate” the asset position as at March 2000, the time at which, on the wife’s case, the parties had begun living together. Orders were made accordingly.
The distinction between McCartney and this case on this interlocutory issue is twofold. First, on the evidence, there would appear little dispute about the size of the disparity if not the asset pool at the time when the parties began living together. It is reflected in their financial agreement. Secondly, the evidence of the wife is largely directed to non-financial contributions which do not affect the size of the pool here unlike in McCartney where it was asserted by the wife that they had.
In the interlocutory dispute before me, McCartney could have been argued by the wife had she had a similar legislative base to work from as in England and had the facts of a “marital acquest” been much the same. It was the husband who argued the relevance of McCartney on the basis that in high wealth cases, extensive investigation and disclosure is unnecessary. However, at least at the interlocutory stage, Bennett J was not only not prepared to rule out relevance and thereupon agreed to at least limited disclosure.
The decision therefore in McCartney really does not assist me because the legislation is different, the case was argued differently and the facts relating to “marital acquest” were different.

English authorities

Whilst there is a distinct dissimilarity between the Australian provision and its English counterpart, some assistance can be gained from Thyssen-Bornemisza v Thyssen-Bornemisza (No 2) [1985] FLR 1069.
Thyssen-Bornemisza was a decision of the English Court of Appeal. There, the trial judge had to deal with a very wealthy man. Sir John Arnold P observed that if the court came to the conclusion that there was sufficient admission in the evidence to justify the making of the largest order in favour of the wife which the court could reasonably make, was there any point in exercising the discretion to order further information which would render more exact the material before the court to measure the parties’ fortune. Griffiths LJ (perhaps contextually from a different time historically) said:
When the average marriage breaks up there is just not enough money for both parties to the marriage to continue their lives on the same scale as they were before. It is a sterile exercise to try and get a quart out of a pint pot. In this litigation the court is faced with a very different exercise. To use the same analogy it might be said that its task here is to extract a full barrel from a vat. There is no doubt here that there is ample wealth available in the hands of the husband to make a provision for the wife to continue to live in the most luxurious style beyond the imagination of most ordinary mortals.
Griffiths LJ asked rhetorically what possible purpose there was in mounting a very costly exercise to probe into the precise dimensions of the husband’s fortune and the precise legal rights which the wife might possess over the disposition of the fortune.

Discussion

Although I am only dealing with an interlocutory issue, its resolution is guided by the fact that the wife’s case as expressed in her affidavit relates mostly to her non-financial contributions. Those, to use the words of Murphy J are not “readily susceptible to expression in dollar terms”. Be that as it may, the assessment of a contribution and the weight given it as well as the adjustment for s 75(2) factors are tasks which ultimately have to be delivered in dollar terms. Traditionally, the assessment and determination of weight has been done in percentage terms as described by Murphy J but there is nothing in the Act nor in any authority of the Court that mandatorily requires that approach.
Proportionality is still important. The parties and the court have to have some idea of the size of the asset pool because otherwise the determination could be drawn into the “needs”-type approach for the s 75(2) factors or some form of “compensation” for contribution as a yardstick rather than an assessment of entitlement. Having said that, I do not accept that proportionality requires preciseness in a case of wealth of this magnitude.
In discussion, it was said by the wife’s counsel that if she ascertained that the husband’s wealth was greater than that which she understood, she might consider asking for more. There is no reason why she cannot do that but it still does not mean that the approach to the determination of her entitlement would be any different nor cannot be done in dollar rather than percentage terms.
Ultimately, the approach of the court is a discretionary one (See Norbis and Norbis (1986) FLC 91-712). Thus, provided a trial judge can explain why an approach was taken, the discretion may be seen to have been properly exercised.
My concern is that it is obvious that the wife needs to know as does the Court, the husband’s financial position for the purposes of ultimately deciding whether or not the ultimate outcome is just and equitable. However, in a situation in which:
(a)the husband estimates his property entitlements at $268 million; and
(b)the wife is reliant upon a modest period of years for contribution and a very clear picture of what her future economic circumstance will be, this seems to be a case in which a fixed sum can be calculated to achieve a just and equitable outcome and that a proportional or percentage division is unlikely to be of any particular use. The husband therefore ought to provide sufficient detail to enable the wife to understand how he calculates his $268 million entitlement.

Rule 13.22

Rule 13.22(3) sets out the requirements for both the husband and the wife in their respective applications. The relevant parts of it provide:
A party may seek an order that:
a.another party comply with a request for a list of documents in accordance with rule 13.20;
b.another party disclose a specified document, or class of documents, by providing to the other party a copy of the document, or each document in the class, for inspection by the other party;
…
e.the party be partly or fully relieved of the duty of disclosure.
A party making such an application must satisfy the court that the order is necessary for disposing of the case or an issue or reducing costs. In this case, I have been given valuation and forensic examination exercise costs estimates of $75,000 from the wife’s perspective for a cursory view through to as much as $1 million plus significant delays from the husband’s perspective. In addition, there will be costs and time.
In making an order , the court may consider:
(a)whether the disclosure sought is relevant to an issue in dispute;
(b)the relative importance of the issue to which the document or class of documents relates;
(c)the likely time, cost and inconvenience involved in disclosing a document or class of documents taking into account the amount of the property, or complexity of the corporate, trust or partnership interests (if any), involved in the case; and
(d)the likely effect on the outcome of the case of disclosing, or not disclosing, the document or class of documents.

There are no specific authorities of assistance in relation to Rule 13.22.
For the purposes of Rule 13.22(3), I have considered the question of the disclosure and it seems to me that it is not particularly relevant to the issue in dispute which is the wife’s entitlement. The valuation exercise will be extremely expensive. All of that of course is relative and in a pool of assets even on a conservative value of $268 million, $100,000 or thereabouts is not significant. However, where there is no dispute that the husband has whatever amount of money is necessary to pay, the Court has a responsibility to ensure that the exercise is not only cost-effective but that it does not have a significant impact upon the parties personally. The Court should also consider its own resources but I am not convinced at this stage that that creates any dilemma.
In terms of what is relevant to the disclosure process, the question that must be asked is at what point has disclosure been sufficiently and satisfactorily completed.
The husband has made a statement regarding the approximate value of his assets. He relied on an affidavit of the Finance Director of the entity Mr D. Mr D set out that the husband’s figures were true save that market values may have changed in recent months. He pointed to the fact that valuations of real properties were completed for a refinancing arrangement in late 2009. He said that not only could he rely on his own knowledge of the businesses but he had also consulted the entity’s auditors as to the appropriate valuation methodology.
The wife relied upon affidavits by Ms BY which clearly recognise the magnitude of the task. Ms BY talked of a “big picture” assessment and set out what she would need for that. She said that the approach of Mr D which had been described as “a headline” valuation was appropriate for management information or business benchmarking where there was already an intimate knowledge of the business but it was not appropriate for the purpose of determining the “value of the equity interest held by the husband” in the entities.
Having regard to all of the matters to which I have referred, it is appropriate in this case to work on a “headline” valuation because on any view, it will be somewhere in the vicinity of what the husband estimated his wealth to be. Ms BY should have the opportunity to test that by having access to the same materials upon which Mr D made his statements which obviously includes the real estate valuations and subject to any argument about privilege, the advice of the auditors as the valuation methodology used.
It is only after that consideration is undertaken by Ms BY that an indication can be obtained not about a “big picture” but whether the estimates of the husband’s wealth are within a reasonable parameter of what he declared bearing in mind the matters to which I have referred as to it being unnecessary in the circumstances to be precise. It is difficult for me to be precise therefore as to the nature of the husband’s disclosure and I propose to give the parties an opportunity to digest these reasons and discuss what documents should be exchanged for the purposes of implementing any orders.

Litigation funding

In her application, the wife also sought an order that at first instance, the husband pay the costs of the wife’s expert(s) with the ultimate responsibility being left for trial.
It is difficult to make any determination on the wife’s material not because it has not been well-prepared but because it was clearly predicated on the basis of the husband having to make much greater disclosure.
Senior counsel for the husband pointed to the wife’s current asset position which included significant money in a bank account and some shares and said she had the capacity to meet any such costs.
As was said by the Full Court in Zschokke and Zschokke [1996] FamCA 79; (1996) FLC 92-693, although s 79 is best used as a once-only exercise of power, it can be used to require the party who controls most of the assets of the parties to provide the other party with funds to conduct his or her case. The understanding if not specifically ordered is that such a payment would be taken into account in the final settlement. Here, the wife has set out her contribution and s.75(2) argument in very limited form.
The Full Court in Zschokke referred to the need to examine the financial position of the husband and his capacity to meet his own litigation costs and then consider whether there is an inability on the part of the wife to pay her costs.
It is not the wife’s evidence that she does not have the capacity to pay her costs but rather that it is an expensive exercise no doubt because of the complexity of the husband’s financial position. It is also clear on the evidence that the husband has control of the business wealth. I can also conclude that he can afford to pay his own legal expenses having regard to his concession as to his wealth.
The husband’s position is that the wife has significant assets from which to draw to pay the anticipated costs. This is not a situation where property would have to be sold or mortgaged.
In Strahan and Strahan [2009] FamCAFC 166, the Full Court clarified some of the aspects that had caused difficulty in making interim property orders. Thackray J agreed with the outcome determined by Boland and O’Ryan JJ. His Honour said:
In every defended case one of the parties will claim they are entitled to a payment or transfer of property from the other party. In many cases the other party will acknowledge they are likely to be ordered to transfer property or make a payment. That, however, could not of itself be sufficient to make it appropriate for the Court to make an interim order. Circumstances may change radically during the course of proceedings, as has been seen with recent severe fluctuations in the market. The personal circumstances of the parties may change dramatically. Furthermore, although a party may anticipate ultimately being ordered to transfer property or make a payment, they may legitimately expect to obtain an order for costs against the other party which will be satisfied from funds or property that would otherwise have been transferred.
These sorts of considerations provide a strong basis upon which the Court should maintain its traditional stance that there should ordinarily be only one hearing of disputes concerning alteration of property issues.
Thackray J then pointed to the appropriate approach to these types of application as being:
(F)irst identify circumstances that make it appropriate to give consideration to exercising (the) power to make an interim order. It is at this stage that the Court has regard to the policy consideration that it is generally in the interest of the parties and the Court for there to be only one exercise of the s 79 power. However, once the Court has determined that the interests of justice require it to exercise the power, the conditions on which the power is to be exercised are governed only by the obligation to make an order that is “appropriate” and to ensure that the proposed order is “just and equitable” by reference to the matters set out in s 79(4).
On the material, I find it would not be an appropriate case to exercise the discretion because of the financial position of the wife and the uncertainty about the exercise now foreshadowed by these orders.

Costs

On 23 April 2010, the wife’s application was before me and the husband through his counsel, sought an adjournment which was granted by me on the basis that I reserved the costs of the wife to the return date.
The wife now seeks the costs thrown away on 23 April.
At the time, the wife indicated that in respect of the disclosure dispute, she was ready to proceed.
Mr Kirkham on behalf of the husband said that the husband’s witness Mr D had difficulty accessing and collating documents that were pursued by the wife.
On 20 April, the solicitors for the husband wrote to the solicitors for the wife suggesting an adjournment for 2 weeks to enable inspection to be completed.
On 21 April, the wife’s solicitors responded saying that the wife did not wish to delay matters.
On 22 April, the solicitors for the wife filed and served an affidavit by Ms BY to which I have already referred. According to Mr Kirkham, it was received at 2.30 pm and Mr D could not be contacted for his views about Ms BY’s opinion until 6.30pm. Importantly, the affidavit said that Ms BY wanted documents that had not been initially sought. These apparently included management accounts to 31 March, budget forecasts and profit and loss statements.
Mr Kirkham told me that he was instructed that the request would take time because he had to research issues as well as respond. It was complicated because not all of the many entities provided management accounts. The exercise could not be done overnight.
Because the argument of the husband at that stage was that he wanted to restrict discovery, this new request required time to consider. Mr Kirkham’s submission was that he was just not in a position to proceed particularly as his client desired to file evidentiary material.
Mr Taussig for the wife argued that the matter should proceed because it was not going to affect the argument.
The difficulty I had at the time was that there was a late request and a desire to respond in evidentiary form. To some degree, I now have had the opportunity to see what the argument was about and whether the adjournment was necessitated by the late request.
Mr D’s responding affidavit was filed by the husband on 30 April. It responded to the evidence of Ms BY explaining his view about her “big picture” proposal and then dealing with how he saw the appropriate evidence of valuation to be presented. He challenged Ms BY’s intention of doing a “big picture” valuation on the basis of the documents that she requested in the affidavit filed just before the hearing in April.
Section 117 of the Act requires that each party pay their own costs except where the Court is satisfied that there are circumstances which justify it departing from that position. Thus the question here is whether there were justifiable circumstances which would require the Court in fairness to say that the adjournment was unnecessary.
It seems to me that the request for additional documents was the reason for the matter not being ready to proceed from the husband’s perspective. The evidence seems to me to have added something to the argument although it is difficult to be precise about it.
In the circumstances, I do not think it appropriate to make a finding that there is a justification for departing from the legislative edict that each party should pay their own costs in respect of the hearing on 23 April.

Access to previous file

The wife also sought access to the Court’s file of the proceedings relating to the parenting dispute between the husband and his former wife. Leaving aside documents in the possession of the husband, those which she sought were the welfare reports, the judgment and the husband’s submissions.
No evidence addressed the need for these documents in the proceedings but it is self-evident having regard to the matters set out above concerning the contribution argument of the wife.
The evidence that was presented by the wife related to her role in the lives of the children of the husband’s former marriage and the problems that the wife encountered from the mother of the children.
Rule 24.13(1) provides that a person with a proper interest in the case may, with the permission of the court, inspect or copy a document which contains information obtainable from a case. All of the documents sought to be inspected are court documents and therefore, there is no need for an examination of any other part of the file other than perhaps the judgment.
I am satisfied that the purpose is genuine and reasonable. There are no security issues involved particularly having regard to the evidence that the wife was an integral part of those proceedings along side the husband.
I do however propose that there be limits placed on the use of the documents so inspected and copied and that is that they be destroyed immediately after these proceedings are concluded.

I certify that the preceding One Hundred and Twenty (120) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin

Associate:

Date: 23 June 2010