CHIEW & ANSTEAD

[2020] FamCA 1000

FAMILY COURT OF AUSTRALIA

CHIEW & ANSTEAD [2020] FamCA 1000

FAMILY LAW – DISCLOSURE – s 106B proceeding – whether disclosure can be compelled in a s 106B proceeding – allegations of fraud made by party seeking disclosure – order for disclosure refused.

Australian Securities and Investments Commission Act 2001 (Cth)
Competition and Consumer Act 2010 (Cth), sch 2 ss 237, 240
Evidence Act 1995 (Cth), s 128
Family Law Act 1975 (Cth), ss 90SM, 106B
Family Law Rules 2004 (Cth), rr 13.02, 15.09

Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279
Controlled Consultants Pty Ltd v Commissioner for Corporate Affairs (1985) 156 CLR
Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588
Davy v Garrett (1877) 7 Ch D 473
E L Bell Packaging Pty Ltd v Allied Seafoods Ltd (1990) 4 ACSR 85
Glynn v Houston [1836] 48 ER 333
Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563
Lamb v Munster (1882) 10 QBD 110
Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705
Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 CLR 445
Pyneboard Pty Ltd v Trade Practices Commission (1983) 152 CLR 328
Refrigerated Express Lines (Australasia) Pty Ltd v Australian Meat& Livestock Corporation (1979) 42 FLR 204
Reid v Howard (1995) 184 CLR 1
Rejfek v McElroy (1965) 112 CLR 517
Sorby v The Commonwealth (1983) 152 CLR 281
W Scott Fell & Co Ltd v Lloyd (1906) 4 CLR 572

APPLICANT: Ms Chiew

FIRST RESPONDENT: Mr Anstead

SECOND RESPONDENT: B Pty Ltd

THIRD RESPONDENT: C Pty Ltd

FILE NUMBER: SYC 2858 of 2018

DATE DELIVERED: 27 November 2020

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Wilson J

HEARING DATE: 20 November 2020

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr R. Schonell SC

SOLICITOR FOR THE APPLICANT: Clinch Long Woodbridge Lawyers

COUNSEL FOR THE FIRST RESPONDENT: Not applicable

SOLICITOR FOR THE FIRST RESPONDENT: Karras Partners Lawyers

COUNSEL FOR THE SECOND RESPONDENT: Ms M. Castle

SOLICITOR FOR THE SECOND RESPONDENT: MDW Law

COUNSEL FOR THE THIRD RESPONDENT: Ms M. Castle

SOLICITOR FOR THE THIRD RESPONDENT: MDW Law

Orders

1. I dismiss the second and third respondent’s application for disclosure from the applicant wife.

Orders by consent of the applicant and first respondent

1. On or before 4:00pm on 15 December 2020 the husband must provide to the solicitor for the wife the following documents –

   (a)all documents as contained in exhibit C-3 of the wife’s affidavit filed 6 November 2020 being on page 56; and

   (b)all communications in writing including by way of electronic communication, together with any documents which record or evidence the contents of any communications between –

   (i)the husband, or any entity in which he was in acting on behalf of as a director, representative or agent; and

   (ii)B Pty Ltd and/or C Pty Ltd.

2. On or before 4:00pm on 27 November 2020 the solicitor for the wife must provide particulars of the request to the solicitor for the husband in relation to the parties’ dispute regarding discovery.

3. On or before 4:00pm on 4 December 2020 the solicitor for the husband must respond.

4. The further hearing of this proceeding is adjourned to 1:00pm on 10 December 2020, with the parties to inform the court if the matter resolves prior to the listing.

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

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: SYC 2858 of 2018

Ms Chiew

Applicant

And

Mr Anstead

First Respondent

And

B Pty Ltd

Second Respondent

And

C Pty Ltd

Third Respondent

REASONS FOR JUDGMENT

Introduction

1. On 20 November 2020 a disclosure dispute came before me for determination in this litigation, other matters having been disposed of by consent.

2. The disclosure dispute concerned the second and third respondents.  A variety of affidavits had been made setting out the relevant factual matters.

3. To better understand why I have decided to dismiss the second and third respondent’s disclosure application, it is necessary to narrate only so much of the background as puts this dispute into context.

Relevant factual background

1. The applicant wife affirmed an affidavit made 6 November 2020.  Relevantly distilled, the following were the more important matters that emerged –

   a)the wife is a finance professional by occupation;

   b)she and the husband commenced to live together in December 2006 and they separated in February 2018;

   c)the applicant and respondent operated D Pty Ltd and F Pty Ltd;

   d)other related entities included G Pty Ltd, H Pty Ltd, J Pty Ltd, K Pty Ltd, L Pty Ltd, M Pty Ltd and N Pty Ltd;

   e)B Pty Ltd allegedly entered into deeds of loans and fees agreements with the husband that she said were shams;

   f)pursuant to those arrangements, more than $1m has been expended in accountancy fees in two years after separation;

   g)the wife issued a subpoena against B Pty Ltd and P Pty Ltd for worksheets and associated documents that indicated the work actually performed by B Pty Ltd and P Pty Ltd, but no documents were produced;

   h)P Pty Ltd advanced to D Pty Ltd sums aggregating $700,000;

   i)she said she was concerned for the need for such borrowings as the D Pty Ltd accounts were usually positive as to tens of thousands of dollars;

   j)as at the end of the March 2018 quarter, the sum of $900,000 stood in credit in the bank account of D Pty Ltd;

   k)she ascertained a trust, called G Trust, was established as well as Q Trust was established to deliberately create confusion and to redirect money or transactions away from D Pty Ltd or R Pty Ltd so as to diminish the matrimonial asset pool;

   l)G Pty Ltd is trustee of G Trust and S Pty Ltd is trustee of Q Trust created by the husband;

   m)the husband paid sums of or greater than $510,000 to those two trusts; and

   n)the husband apparently borrowed $100,000 from T Pty Ltd, an associated entity to B Pty Ltd or P Pty Ltd and repaid $80,402.53 on 1 June 2020.

2. Throughout the balance of the wife’s 6 November 2020 affidavit the wife addressed the wife’s request for documentation as well as documentation requested by Ms V, the single expert.  Pursuant to certain agreements reached as have been recorded in consent minutes pronounced on 20 November 2020, many of those matters were not pressed.

3. The husband swore an affidavit on 24 August 2020 in relation to his borrowings from W Pty Ltd.  Relevantly, he addressed paragraphs 3 and 4 as follows –

   3.As at the date of this Affidavit neither me nor any company with which I am associated owe any money to T Pty Ltd.

   4.Any further evidence that I give in this Affidavit may tend to prove that I have committed an offence or am liable to a civil penalty and in respect of such evidence I claim the privilege against self-incrimination pursuant to Section 128 of the Evidence Act 1995.

4. Precisely why he sought to invoke the privilege against self-incrimination was far from immediately apparent.

5. On 22 September 2020 the husband’s legal representatives filed and served the husband’s points of claim.  Slightly later, the husband’s legal representatives filed the husband’s further amended response to the wife’s initiating application.  The further amended response was filed and served on 19 October 2020.  It is necessary to go to the points of claim as well as the further amended response.

6. Taking first the husband’s points of claim, in essence[1] the husband asserted that –

   a)B Pty Ltd engaged in unconscionable conduct contrary to Schedule 2 to the Australian Competition and Consumer Act 2010 (“ACL”); and

   b)P Pty Ltd engaged in unconscionable conduct contrary to s 12CB of the Australian Securities and Investments Commission Act 2001 (“ASIC Act”).

   [1] This paraphrasing does a disservice to Mr Karras’s pleading as the pleading is vastly better expressed than is this encapsulation of it.

7. The husband put in issue three deeds.  They were –

   a)a deed made on 14 October 2016 (called by him the 2016 deed) and described as a deed of loan and fee agreement;

   b)a deed made on or about 7 February 2018 (called by him the first 2018 deed) and described as a deed of loan facility; and

   c)a deed made on or about 27 March 2018 (called by him the second 2018 deed) and described as a deed of retainer.

8. In the points of claim “the clients” were described as the husband, R Pty Ltd, D Pty Ltd, G Pty Ltd, and J Pty Ltd.

9. In the points of claim, the husband contended that the client’s paid $955,975 to B Pty Ltd pursuant to the 2016 deed and that B Pty Ltd lodged caveats on various parcels of real property.

10. In the points of claim the husband alleged that the first 2018 deed was in truth a loan facility pursuant to which the clients and L Pty Ltd agreed to borrow from P Pty Ltd $4m on certain terms.  The borrowers alleged that P Pty Ltd lodged certain caveats including …, … and … to indicate P Pty Ltd’s interest as lender.

11. In the points of claim the husband alleged that the second 2018 deed took effect in fact and in law as a retainer pursuant to which B Pty Ltd agreed to perform certain accounting, taxation and advisory services for the clients on certain terms.  The husband further alleged that –

    a)B Pty Ltd alleges the clients owe B Pty Ltd $550,000 under the second 2018 deed; and

    b)B Pty Ltd lodged three caveats to indicate B Pty Ltd asserted a claim over land in caveats …, … and … .

12. The husband asserted that each of B Pty Ltd and P Pty Ltd was guilty of unconscionable conduct in relation to, variously, the 2016 deed, the first 2018 deed and the second 2018 deed. The husband said he was entitled to an order under s 106B of the Family Law Act setting aside each of the three deeds. 

13. The points of claim seemed to have signalled the husband’s plans to substantially alter the direction he wished this litigation to take.  In his further amended response to the wife’s initiating application, the husband proposed wholesale recalibration of his case in this litigation to include –

    a)the joinder of new parties, being Ms X, R Pty Ltd, D Pty Ltd G Pty Ltd, J Pty Ltd and L Pty Ltd as new respondents four to nine;

    b)orders against B Pty Ltd and P Pty Ltd pursuant to ss 237 and 243 of the ACL setting aside each of the three deeds;

    c)damages against B Pty Ltd and P Pty Ltd under the ACL;

    d)compensation from B Pty Ltd and P Pty Ltd under the ACL;

    e)orders for the repayment of money paid by the clients or the borrowers under the 2016 deed and the first 2018 deed;

    f)orders for the repayment of sums paid under the loan deed;

    g)orders discharging the four caveats;

    h)orders for the sale of certain real estate;

    i)orders dividing the parties’ net property pool as to 70% to the husband and 30% to the wife; and

    j)orders for costs.

14. Taken in combination, the husband’s amended response and his points of claim transferred the focus of the property aspect of this case to the involvement of B Pty Ltd and P Pty Ltd.

15. Unsurprisingly, B Pty Ltd and P Pty Ltd were spurred into causing a spokesperson for each to make affidavits in this proceeding.  The deponent was Mr Y who gave as his occupation “the authorised representative” of B Pty Ltd and P Pty Ltd.  He did not assert that he was a director, other officer of or shareholder in B Pty Ltd or P Pty Ltd.  He made two affidavits, one on 9 October 2020 and the other on 11 November 2020.  It is utile to go to the details of each.  Relevantly paraphrased the 9 October 2020 affidavit incorporated the following of the more important matters –

    a)he said in paragraph 5 that the affidavit to which he deposed did not constitute a waiver of privilege;[2]

    b)he took the view that the wife’s 31 July 2020 statement of claim was inadequate;

    c)he considered that the husband’s points of claim were inadequate;

    d)the husband’s solicitors allegedly told the solicitors representing Mr Y that the husband’s s 106B claim would be withdrawn but that the unconscionability claims were pressed;

    e)no amended response had been filed;

    f)he took the view that neither the husband nor the wife had established a prima facie case that the impugned transactions are likely to defeat my order of this court; and

    g)the wife and the husband continue to refuse to provide disclosure to B Pty Ltd and P Pty Ltd.

    [2] This witness did not give any information about his training in the law, if any.  Paragraph 5 was a flagrant contravention of Rule 15.09 of Chapter 15 of the Family Law Rules.  The deponent was required to confine the affidavit to facts (not submissions of law) in dispute.  This deponent was not qualified to express his view about whether the affidavit constituted a waiver of privilege, as he was required to do by Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705 and by Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588. Solicitors should not permit an affidavit in this form containing paragraph 5 to have been filed.

16. Certain factual deficiencies in Mr Y’s affidavit material were cured (or, better, partially corrected) by Mr Y’s affidavit made 11 November 2020.  In it Mr Y disclosed that he was a qualified accountant with teaching qualifications.  He again stated that he was the authorised representative of B Pty Ltd and P Pty Ltd yet he did not depose to his familiarity with the facts about which he purported to give evidence.  He simply stated in paragraph 2 that the source of his knowledge of the facts was his own knowledge.  Relevantly paraphrased, the following are the more important matters that arose from his 11 November 2020 affidavit –

    a)P Pty Ltd is a commercial lender providing short term loans of less than one year;

    b)B Pty Ltd carries on business providing business and financial advice services;

    c)the first respondent retained B Pty Ltd to investigate the financial affairs of the husband’s trading companies as well as the financial conduct of the wife, as financial controller, with respect to those trading companies;

    d)in paragraph 9 he stated what his contemplation was of the likely work involved;[3]

    e)in paragraph 13 he purported to set out (as a layman) defences available to B Pty Ltd and P Pty Ltd to the s 106B application brought; and

    f)as B Pty Ltd and P Pty Ltd were joined by the wife, B Pty Ltd and P Pty Ltd are entitled to all financial disclosure.[4]

    [3] His subjective state of mind was not admissible.  Again, the solicitors who prepared that affidavit should have had a keener appreciation of evidentiary matters.

    [4] At the risk of repetition, a lay person unskilled in the law has no place embedding as a fact in an affidavit a legal submission that may or may not be correct.  The solicitors preparing affidavits need to be more vigilant. 

17. On behalf of the wife, Mr Schonell SC quite properly protested about what he described as the extraordinary content of paragraph 17 of Mr Y’s 11 November 2020 affidavit.  To better understand the basis of Mr Schonell’s description, it is necessary to go to the terms of paragraph 17.  It was as follows –

    17.Part of the scope of the work when B Pty Ltd was retained was to investigate whether Ms Chiew properly allocated expenses in the accounts of the Anstead Entities. As a result of the work done by B Pty Ltd's staff, I have concluded that Ms Chiew:

    a)        Concealed company records;

    b)Caused source records and wage records for numerous years to disappear, including back up disks of these records;

    c)Caused records relating to superannuation to disappear, including back up disks of these records;

    d)Caused disks containing backup data for books and records to disappear;

    e)        Misappropriated company funds by various methods;

    f)Failed to adequately train an employee under her supervision resulting in that employee lodging a BAS which was $40,000.00 more than it ought to have been;

    g)Misallocated her personal expenses to Mr Anstead’s director's loan accounts. This caused adverse tax consequences for Mr Anstead by increasing his director loan account whilst reducing Ms Chiew's own company loan account;

    h)Allocated her sports lessons, her cosmetic goods expenses and her retail shopping expenses to Mr Anstead’s director loan accounts;

    i)Took and concealed the settlement sheets for the purchases of:

    i.BB Street, Suburb CC (Suburb CC property);

    ii.DD Street, Suburb FF; and

    iii.GG Street, Suburb HH.

    j)Locked two rooms at the family homes at the Suburb JJ and Suburb CC properties and prevented Mr Anstead from entering these rooms. It was Mr Anstead's instructions to us, upon our engagement, that these rooms contained some of the missing records listed above. Ms Chiew had a secret Post Office box to receive private mail. This included her bank statements, records and other various documents. Mr Anstead has advised me that he was not aware of this mailbox.

    k)Took and concealed originals and copies of Trust Deeds relating to:

    i.The Anstead Family Trust 1; and

    ii.The Anstead Family Trust 2,

    l)Used accountants of her choice, being Z Accountants, a predominantly Country AA firm, to prepare financial records for the Anstead Entities. Ms Chiew never supplied Mr Anstead with the financial records and tax returns prepared by Z Accountants, as advised by Mr Anstead.

    m)On 7 May 2018, we wrote to Z Accountants requesting them to provide us with the books and records they had prepared for the Anstead Entities. To date, we have not received a response from them.

18. Mr Y deposed to several letters written on his behalf seeking documentation having been unanswered.

The submissions on behalf of B Pty Ltd & P Pty Ltd, the wife and the husband

1. Ms Castle of counsel for B Pty Ltd and P Pty Ltd provided written submissions and she also provided viva voce submissions.  It is useful to condense the principle points argued on behalf of B Pty Ltd an P Pty Ltd, namely –

   a)having been joined as parties to this proceeding, B Pty Ltd and P Pty Ltd are entitled to the same disclosure as are the husband and wife as against one another;

   b)under rule 13.02 of the Family Law Rules all financial matters that the husband and wife are require to disclose to one another must be disclosed as between the “Anstead Entities” and the wife;

   c)according to Mr Y, the impugned transactions alleged are not likely to defeat an anticipated order;

   d)in determining the matrimonial pool, waste can be taken into account; and

   e)by bringing the s 106B claim, the wife has invited B Pty Ltd and P Pty Ltd to participate in this litigation and so in fairness B Pty Ltd and P Pty Ltd should have the financial information they seek.

2. On behalf of the wife, Mr Schonell SC provided written submissions as well as verbal submissions.  One of the focal points of Mr Schonell’s critiques about paragraph 17 of Mr Y’s affidavit was that Mr Y described acts of a fraudulent nature including misappropriating funds, destroying and concealing documents.  Mr Schonell SC submitted that B Pty Ltd and P Pty Ltd are not parties to the de facto relationship of relevance in this litigation.  Mr Schonell said that no reason was given why Mr Y made the allegations he did in paragraph 17 of the      affidavit and no forensic purpose was thereby served.

1. At once it must be acknowledged that B Pty Ltd and P Pty Ltd have not yet provided a response or defence to the s 106B allegation made against them by the wife. However, Mr Schonell contended that whenever an allegation of fraud is made, that allegation must be pleaded distinctly and with particularity then clearly proved. He called in aid authorities well known when fraud is alleged including Krakowski v Eurolynx Properties Ltd,[5] Davy v Garrett,[6] W Mr Anstead Fell & Co Ltd v Lloyd,[7] Banque Commerciale SA, En Liquidation v Akhil Holdings Ltd,[8] Rejfek v McElroy[9] and Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd.[10]

   [5] (1995) 183 CLR 563.

   [6] (1877) 7 Ch D 473.

   [7] (1906) 4 CLR 572.

   [8] (1990) 169 CLR 279.

   [9] (1965) 112 CLR 517.

   [10] (1992) 110 CLR 445.

2. In addition, Mr Schonell SC submitted that the wife enjoyed a common law privilege to the effect that she is not required to provide documents that may incriminate her, citing Reid v Howard.[11]

   [11] (1995) 184 CLR 1.

3. In debate I canvassed with Mr Schonell SC the learning that enables a party to not produce by way of disclosure any document that may tend to incriminate him.  At the time I had in mind the decision of the Full Court of the Supreme Court of Victoria (Young CJ, Murphy & Vincent JJ) in E L Bell Packaging Pty Ltd v Allied Seafoods Ltd.[12]  There Murphy J’s review of the key authorities revealed the following –

   a)citing Refrigerated Express Lines (Australasia) Pty Ltd v Australian Meat& Livestock Corporation,[13] a party giving discovery in a proceeding may object to produce for inspection any document which may tend to incriminate him;

   b)citing Glynn v Houston,[14] a bill of discovery cannot be sustained in any case where the matter sought to be discovered may be made the subject of a criminal charge; and

   c)citing Pyneboard Pty Ltd v Trade Practices Commission,[15] Lamb v Munster,[16] Sorby v The Commonwealth[17] and Controlled Consultants Pty Ltd v Commissioner for Corporate Affairs,[18] discovery should not be ordered if it may expose a respondent to the penalties of a crime.

   [12] (1990) 4 ACSR 85.

   [13] (1979) 42 FLR 204.

   [14] [1836] 48 ER 333.

   [15] (1983) 152 CLR 328.

   [16] (1882) 10 QBD 110.

   [17] (1983) 152 CLR 281.

   [18] (1985) 156 CLR 385.

4. Returning to Ms Castle’s contentions, she argued that s 106B may become engaged depending on the four matters set out in paragraph 11 of her submission. She put the position as follows, although she did not rely on any authority for her propositions –

   11.Whether a transaction which had been entered into is likely to defeat an anticipated order will necessarily depend on four matters:

   a.        the size of the transaction;

   b.the reasonably anticipated order which the party impugning the transaction may expect to receive;

   c.        the size of the matrimonial pool; and

   d.whether the order will be defeated if the impugned transaction is not set aside.

5. In my view it is antithetical to the due administration of s 90SM and s 106B of the Family Law Act, to order disclosure as between B Pty Ltd, P Pty Ltd and the wife especially where –

   a)B Pty Ltd and P Pty Ltd assert serious wrongdoing against the wife; and

   b)the overwhelming preponderous of the of the authorities favours the view that a party cannot be required to incriminate himself.

6. In this disclosure application I take the view that B Pty Ltd and P Pty Ltd themselves have made serious allegations of nefarious conduct as revealed in paragraph 17 of Mr Y’s affidavit.  Those allegations may translate to criminal conduct involving fraud, theft or other fiscal dishonesty.  In the face of such allegations, the authorities surveyed above in the Allied Seafoods case militate against an order for disclosure being made.  The High Court’s decision in Reid v Howard is to like effect.

7. I dismiss B Pty Ltd and P Pty Ltd’s application for disclosure from the wife.

I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson delivered on 27 November 2020.

Associate: 

Date:  27 November 2020