DUDLEY & RYECROFT

[2018] FamCA 1176

FAMILY COURT OF AUSTRALIA

DUDLEY & RYECROFT [2018] FamCA 1176

FAMILY LAW – PROPERTY – Interim – Where the parties were unable to reach agreement on a few outstanding interim property matters – Where no order is made for disclosure at the present time despite the Court emphasising the importance of such a duty upon the parties – Where the $17,000 held by the applicant should be repaid to the company it is said to belong to as there is no reason as to why it should be retained in her solicitor’s trust account – Where the car should also be returned to the company which owns it – Where the Court cannot order the parties to attend mediation, unless the Order is made with the parties’ consent – Where the commencement of the valuation process should not be delayed – Where there is little prospect of resolution if valuations of the parties’ property interests and interests in companies and trusts are not determined.

Evidence Act 1995 (Cth)
Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)

APPLICANT: Ms Dudley

RESPONDENT: Mr Ryecroft

FILE NUMBER: BRC 7473 of 2018

DATE DELIVERED: 12 November 2018

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Forrest J

HEARING DATE: 30 October 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Alexander

SOLICITOR FOR THE APPLICANT: NR Barbi Solicitors

COUNSEL FOR THE RESPONDENT: Mr Williams

SOLICITOR FOR THE RESPONDENT: Hirst & Co

ORDERS

IT IS ORDERED UNTIL FURTHER ORDER

BY CONSENT

For the purposes of these Orders it is noted that:

A.“ordinary course of business” in respect of these Orders and the Entities is only the existing business activities, including property development, building and construction and not other business ventures such as beauty salons; and

B.the Entities referred to are defined as:

a.The B Trust;

b.The C Trust;

c.The D Trust;

d.The E Trust;

e.F Pty Ltd;

f.G Pty Ltd;

g.H Pty Ltd;

h.J Pty Ltd;

i.K Pty Ltd;

j.L Pty Ltd;

k.The L Trust;

l.N Pty Ltd;

m.O Pty Ltd.

1. That paragraph 4 of the interim orders sought in the Further Amended Initiating Application filed 3 August 2018, be adjourned to the final hearing of the matter.

2. That the Applicant’s application for interim spouse maintenance and interim legal cost funding be dismissed. 

IT IS FURTHER ORDERED

1. That save in respect of the companies, K Pty Ltd and N Pty Ltd, and other than in the ordinary course of business, the Respondent be restrained and an injunction hereby issue, restraining the Respondent from dealing, in any way, with the real property described as:

   (a)1, 2 and 3 T Street, Suburb S in the State of Queensland more particularly described as Lot 1 on RP … title reference …, Lot 2 on RP … title reference … and lot 8 on RP … title reference …; and

   (b)units 1-10 at P Street Suburb S in the state of Queensland more particularly described as lot 105 on SP … title reference …, lot 106 on SP … title reference …, lot 108 on SP … title reference …, lot 110 on SP … title reference …, lot 205 on SP … title reference …, lot 206 on SP … title reference …, lot 408 on SP … title reference …, lot 503 on SP … title reference …, lot 1 on SP … title reference … and lot 2 on SP … title reference … (“the Properties”).

2. That the Respondent provide to the Applicant a copy of any written offer for purchase of any of the Properties, within 48 hours of receipt of the offer.

3. That the Respondent provide to the Applicant a copy of any signed contract for sale in respect of any of the Properties, within 24 hours of the contract date.

4. That the Respondent provide to the Applicant seven (7) days prior written notice of any transaction(s) which has the effect of increasing any indebtedness in respect of any existing loan facilities in respect of himself personally, or in relation to the Properties, the Entities or any other entity in which he has an interest. 

5. That the Respondent advise the Applicant, in writing, of how he intends to deal (either personally or by any entity he controls or in which he has an interest) with any sale proceeds of the Properties, not less than seven (7) days prior to settlement.

6. That the Respondent, both personally and in respect of any entity that he controls, or in which he has an interest, including the Entities, must keep the Applicant informed not less than seven (7) days prior to obtaining any further loan in respect of the Properties or the Entities.

7. That save in respect of the companies, K Pty Ltd and N Pty Ltd, other than in the ordinary course of business, the Respondent is hereby restrained from investing funds and/or establishing any new business, with the use of any funds the subject of these proceedings, without first obtaining the Applicant’s written consent, or order of the Court. 

8. That the Respondent, in his capacity as a director and/or shareholder of any entity, including the Entities, is restrained by injunction from:

   (a)selling, transferring, assigning, encumbering or otherwise dealing with his shares;

   (b)in his capacity as appointor of:

   (i)The B Trust;

   (ii)The C Trust;

   (iii)The D Trust;

   (iv)The E Trust; and

   (v)The M Trust;

   or any other trust of which he is appointor (the trusts) from taking any steps to accept resignations and/or exercise power of appointment in respect of the trusts without providing to the Applicant not less than 14 days written notice.

IT IS FURTHER ORDERED BY CONSENT

1. That by 4.00 pm on 2 November 2018, the Applicant shall do all acts and things to withdraw the registered caveats lodged against the real property owned by the companies and the trusts and provide notification of such withdrawal to the Respondent.

2. That the Applicant be at liberty to arrange for a condition report to be obtained on the R Street Property from a third party that in this regard she is to provide a panel of three persons to the Respondent with him to select one such person within seven days of receipt, failing which she be at liberty to nominate. Further the Respondent will permit access to the R Street Property and for this purpose the Applicant shall be responsible for the payment of the person’s fees.

3. That the Respondent personally attend to payment of the municipal rates, water charges, insurance and maintenance for R Street, Suburb S (“the R Street Property”) and indemnify the Applicant against any liability that may arise from any claim made against the household insurance for the R Street Property whilst the Respondent has been in residence (since May 2015).

4. That within seven days the Respondent will take all steps to cause the present tenants to vacate the R Street Property and must confirm in writing to the Applicant that they have done so. Thereafter, the Respondent is restrained by injunction from permitting any further persons (other than family members and personal relationships) to reside in the premises, without first providing seven days notice to the Applicant of whomever it is that is intended to reside in the R Street Property.

5. That until such time as the present occupants vacate the R Street Property, or in the event that the Respondent permits any other persons to occupy the premises, the Respondent indemnifies by this order the Applicant and keeps her indemnified in respect of any expenses and liabilities arising in consequence of the present occupants or any further occupants.

IT IS FURTHER ORDERED

1. That within 14 days hereof the Applicant shall cause the $17,000 cash held by her to be paid into the bank account of the company whose asset that money is, the details of that company’s bank account to be provided to her by the Respondent.

2. That within 14 days hereof the Applicant shall cause the motor car held by her and her daughter to be returned to the company whose asset that car is, the details of where the car is to be returned to be provided to her by the Respondent.

IT IS FURTHER ORDERED BY CONSENT

1. That within seven days of the date of this order, the Respondent must provide to the Applicant an updated Financial Statement that includes all bank accounts for which he has an interest, either personally or otherwise, including the Entities.

IT IS FURTHER ORDERED

1. That within seven (7) days of the date of this order, the Applicant provide to the Respondent a list of three (3) valuers, being separate lists for land valuation and for company/business valuation, to undertake a valuation of all real property and company/business entity/trusts operated by the Applicant and Respondent jointly and/or by the Respondent solely.

2. That the Respondent must select a valuer from the respective lists and communicate his selection to the solicitor for the Applicant within a further seven (7) days.

3. That the parties jointly instruct the selected valuers and agree to appoint same as court experts pursuant to the Family Court Rules.

4. That the parties are to share equally in the costs of the valuations so obtained.

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 Dudley & Ryecroft 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 BRISBANE

FILE NUMBER: BRC 7473  of 2018

Ms Dudley

Applicant

And

Mr Ryecroft

Respondent

REASONS FOR JUDGMENT

1. The parties to these contested property adjustment proceedings were previously in a de facto relationship. They were before the Court on 30 October 2018 for the hearing of an application of the applicant seeking various interim orders.

2. At the outset of the hearing, counsel asked me to stand the matter down for them to have some discussions about it. I did that and after a while they returned with a draft of orders that they joined in asking me to make with the consent of the parties. I will make those orders.

3. Despite the efforts of the barristers and solicitors, the parties remained in dispute about a number of matters at the end of those discussions. I heard submissions from each side in respect of those remaining disputes.

4. Of relevance, the respondent is a property developer with interests in many private companies and trusts through which his business is conducted. Many of the orders the parties agreed for me to make relate to these entities and their business. A couple of the remaining matters about which they could not agree, also relate to the respondent’s business interests.

5. Some of the orders the parties agreed for me to make impose obligations on the Respondent in respect to certain trust and corporate entities he has interests in. Included is an injunction restraining him from dealing with certain real property other than in the “ordinary course of business”. I apprehend that the parties mean that to apply to the entities that the respondent has interests in, but counsel for the respondent made it clear that he does not consent to that applying to two entities in which he only has non-controlling, minority interests.

6. Counsel for the applicant did not make submissions to the contrary, so I accept the point made for the respondent and will make it clear in the Orders that the restraint directed at the respondent only targets the entities that he actually has controlling interests in. Otherwise, I consider that the remaining notice obligations imposed by the Orders I will make apply equally to the two named companies. Just because the respondent does not have controlling interests in them does not mean that he cannot give notice to the applicant of proposed increased indebtedness, proposed sale of property assets and the like. I will specifically mention the two companies in the Orders where the obligation imposed on the respondent is not meant to catch the two companies that he does not control.

7. Also disputed was the following order sought by the applicant:

   Without prejudice to the Respondent’s duties of disclosure, the Respondent must provide to the Applicant by the tenth day of each month, a transaction list for the preceding month for each account operated by the Respondent, both personally and/or from any and all related entities, including the Entities, together with the detailed MYOB/XERO/BAS print out/report containing all background transaction information to prepare BAS documentation.

8. Counsel for the applicant, in his oral submissions, asserted that what is sought by this proposed order are copies of the ledgers of the accounts that show the transactions that are otherwise accounted for as business expenses

9. In response, counsel for the respondent referred to the comprehensive disclosure orders made over nearly three pages of orders of Registrar Coutts on 29 August 2018. He also submitted that this particular order sought by the applicant at the end of the hearing before me had not been sought in her Application in a Case and that the applicant had led no evidence that supported the need to make such an order and counsel had not taken the Court to any such evidence. I accept that is correct.  

10. However, the limits of the disclosure obligation are not imposed by orders the Court might or might not make. The limits are more broadly set by the Family Law Rules 2004 (Cth) (“Family Law Rules”). Rule 13.01(1) of the Family Law Rules does provide:

    [e]ach party to a case has a duty to the court and to each other party to give full and frank disclosure of all information relevant to the case, in a timely manner. (my emphasis)

11. Rule 13.04(1) provides:

    A party to a financial case must make full and frank disclosure of the party’s financial circumstances, including:

    and then it sets out a long list of relevant matters.

12. Rule 13.07 provides the duty of disclosure applies to each document that:

    (a) is or has been in the possession, or under the control, of the party disclosing the document; and

    (b)      is relevant to an issue in the case. (my emphasis)

13. The Explanatory Statement, issued in 2004 by the authority of the Judges of the Family Court of Australia, states, inter alia:

Rule 13.01:  General duty of disclosure

This rule sets out the general duty of disclosure and provides that it applies from pre-action procedures to the finalisation of the case.

This rule reinforces these principles:

(a)        the duty applies in all cases;

(b)the duty applies to the disclosure of information and documents; (my emphasis)

(c)it is a duty which the Court regards as very important and will scrutinise and enforce;

(d)       it is a continuing duty starting with the pre-action procedure.

The importance of the duty of disclosure is emphasised in the Rules by the introduction of the following:

1.the parties are required to read the duty of disclosure before swearing the affidavit in the Form 1 and Form 1A;

2.the parties are required to acknowledge the duty of disclosure and give an undertaking as to their compliance with it at a certain stage of a case. Breach of this undertaking may be punishable as a contravention of a parenting order under the Act (section s 112AA (c) and 70 NB (c)) and may amount to contempt of court; and

3.Rule 13.14 which is intended to send a clear message that the Court will take a serious view of non-compliance with the duty of disclosure and the Rules.

Rule 13.04:  Full and frank disclosure

This rule was formerly O17 r3 (FLR 1984) which has been extended to ensure it is contemporary, relevant and useful in relation to complicated financial structures as well as not so complicated arrangements.

Rule 13.07:  Duty of disclosure - documents

This rule imposes a duty on a party to disclose documents in the party’s possession or control that are “directly relevant” to an issue. Gone are the days where the Court will allow “general discovery” ie “an order that a party produce all documents in the party’s possession or control relating to the issues in dispute.”

This follows the lead taken in the United Kingdom and Queensland in eliminating the extremely wide test established by The Compagnie Financiere du Pacifique v. The Peruvian Guano Company (1882) 11 QBD 55 which required discovery of documents which may (not must) either directly or indirectly enable the party requiring the affidavit either to advance his own case or to damage the case of his adversary. “ The results of this test was to make virtually unlimited the range of potentially relevant (discoverable) documents which parties were obliged to review and list forcing the other party to read, against the knowledge that only a handful of such documents would affect the outcome of the case. It is a monumentally inefficient and costly process.” (Lord Woolf:  Access to Justice Final Report 1996)

The requirement to disclose “directly relevant” documents will introduce a higher standard of assessment in the sifting and examination of a client’s documents.  This will oblige parties and lawyers to focus attention at an early stage upon the real issues in dispute and the documentary evidence that goes directly to those issues.

1. Clearly, as is said there, the duty applies to “directly relevant” documents and information. Relevance, at least in so far as it applies to evidence in proceedings in this Court, is defined in s 55 of the Evidence Act 1995 (Cth). Subsection (1) of that section provides:

   (1)The evidence that is relevant in a proceeding is evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding.

2. Of course, as there are no pleadings in this jurisdiction it is more difficult to accurately determine what is or is not relevant in proceedings brought pursuant to the property adjustment provisions of the Act before the parties’ trial affidavits are filed and the issues are actually joined. This makes the requirement for filing Undertakings as to Disclosure prior to any trial more important, as well as requiring very careful consideration of the consequences of non-disclosure of relevant documents and information at the time such non-disclosure is satisfactorily proven.

3. Although I am not persuaded in this particular case, because of the lack of any evidence going to the issue, to make the order that the applicant’s counsel asked for, I do stress that the duty of disclosure imposed upon parties by the Rules is to be taken seriously by the parties. That duty is not to be selectively met by parties. If it is that the particular documents sought by the applicant from the respondent are relevant to matters in issue in the proceedings then they must be disclosed even though the order sought has not been made. Failure to get the order this time, does not mean it could not be obtained in the future on proper application supported by evidence.

4. The next issue the parties remained in dispute about was what is to happen with $17,000 cash held by the applicant that she does not dispute she took from the home she shared with the respondent when she left a couple of years ago. The respondent asserts in his affidavit that the money is an asset of one of the companies he controls and he seeks to have it paid back to that company. The applicant does not concede that it belongs to one of the companies, though, as counsel for the applicant submits, she does not assert that it is her money. Her position is that it should simply be held in her solicitors’ trust account pending resolution of dispute as to its ownership.

5. However, as noted, the applicant does not assert that it is cash that belonged to her, to the respondent or both of them. The respondent does not assert that it is his money. He asserts that it is company money. His evidence is that it was the proceeds of sale of some small items of plant and equipment belonging to that particular company that he had not yet banked. In the circumstances, I see no reason as to why it ought to be retained in the applicant’s solicitors’ trust account as opposed to simply being repaid to the company that it is said to belong to. I will order that it be repaid to the company by deposit to the company’s bank account.

1. There was dispute about the possession of a motor car that the applicant and the parties’ daughter retain. The respondent asserts that the motor car, like the cash, is an asset of one of the companies he controls and that he wants it returned to the company so that the company can sell it and use the proceeds in the course of its business. The applicant made no case against the assertion that it is a company asset. For her, it was just pointed out that the parties’ 16 year old daughter is learning to drive using that car.

2. The evidence is that the applicant has another good quality motor car in her possession, as well as access to large amounts of money through a line of credit facility that is in place. I am persuaded that the car, as a company asset, should be returned to the company. I will make such an order.

3. The remaining orders that are sought by the applicant and opposed by the respondent provide for a process of valuation of the parties’ real property and corporate interests to commence and for mediation to take place. As the Court cannot order the parties to attend mediation, unless the order is made with the parties’ consent, I will not be making the mediation orders sought by the applicant.

4. As for the orders providing for the valuation process to commence, counsel for the respondent opposed them on the basis of the respondent’s evidence that he and the entities he controls are currently involved in certain legal action and/or disputes, the outcomes of which may have an impact on the value of some of those entities. The most significant one of those is said to be a Workplace Health and Safety prosecution of one of the companies in relation to an accident that occurred on a development construction site that resulted in a worker being injured. The respondent’s evidence is that he is defending the charge; it could take up to a year to be finalised; it could result in a fine of up to $1.5 million dollars; and it could result in loss of the builder’s license with which he undertakes his development business. He argues, therefore, that it is premature to obtain expensive valuations at this point.

5. I do not accept that this evidence justifies delaying the valuation process commencing for up to one year from today. This case has little prospect of resolution if valuations of the parties’ property interests and interests in companies and trusts are not determined. I consider that the process should start. If and when the valuations of any of the entities are impacted upon by losses or gains resulting from any of the legal actions or disputes, those can be considered and reported upon by the single expert engaged to provide the valuation opinion at the appropriate time. In this way, the matter can continue to move towards trial rather than being ‘parked’ for an indeterminate period.

6. I will order that each of the parties shares equally in the costs of obtaining the valuations. There was no dispute that the applicant has access to sufficient funds through a secured line of credit.

7. I make the Orders set out at the commencement of these written reasons.

I certify that the preceding twenty-five (25) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Forrest delivered on 12 November 2018.

Associate: 

Date:  12 November 2018