Field and Kingston
[2019] FamCA 14
•21 January 2019
FAMILY COURT OF AUSTRALIA
| FIELD & KINGSTON | [2019] FamCA 14 |
| FAMILY LAW – PROPERTY – Interim Hearing – Where the wife seeks orders that a joint letter of instruction be sent for the valuation of assets – where the wife seeks an order for cross-examination of a witness prior to the final hearing due to the witness’s ill health – where the husband seeks leave to provide financial documents to Centrelink and the Australian Taxation Office – where orders are made as sought by the wife – where valuations of the assets are ordered to prepare the matter for final hearing. |
| Evidence Act 1995 (Cth) s 128 |
| Field & Kingston [2017] FamCA 208 Field & Kingston (No. 2) [2017] FamCA 1071 Field & Kingston [2018] FamCAFC 145 Ascot Investments Pty Ltd v Harper and Anor [1981] HCA 1; (1981) FLC 91-000 In the Marriage ofBiltoft (1995) 19 Fam LR 82; (1995) FLC 92-614; (1995) FamCA 45 Malpass & Mayson [2000] FamCA 1253 |
| APPLICANT: | Ms Field |
| RESPONDENT: | Mr Kingston |
| FILE NUMBER: | PAC | 2095 | of | 2014 |
| DATE DELIVERED: | 21 January 2019 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Hannam J |
| HEARING DATE: | 22 May 2018, 14 September 2018 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Campton SC |
| SOLICITOR FOR THE APPLICANT: | Matthews Folbigg Pty Ltd | |
| COUNSEL FOR THE RESPONDENT: | Mr Williams | |
| SOLICITOR FOR THE RESPONDENT: | Barkus Doolan |
Orders
That the wife shall and is hereby authorised to forthwith sign and send the joint letter of instruction to the expert Mr E such letter dated 19 February 2018 and annexed to the application in a case and marked A.
That the Order made on 21 August 2015 requiring a valuation of CC or the Company F be discharged.
That the wife shall and is hereby authorised to forthwith sign and send the joint letter of instruction to the expert Mr G for the valuation of H Pty Ltd., such letter dated 24 February 2018 and annexed to the application in a case and marked B.
That pursuant to Part 11.1 of the Family Law Rules, that the wife be permitted to call her father Mr J Field as a witness and make him available for cross examination prior to the balance of the trial if such an order is required due to his state of health.
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 Field & Kingston 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 PARRAMATTA |
FILE NUMBER: PAC 2095 of 2014
| Ms Field |
Applicant
And
| Mr Kingston |
Respondent
REASONS FOR JUDGMENT
Introduction
The parties’ proceedings for property settlement orders have been extensively delayed and highly litigious since they were commenced in May 2015. However, by December 2017 the proceedings reached the point that trial directions were made, in particular directing that affidavits be filed prior to a final trial date being fixed. The wife filed a number of affidavits including one of her father (“the wife’s father”). It is also proposed that evidence be given by two expert witnesses as to valuation, but these affidavits have not been settled.
The wife in her latest application seeks an order that she be permitted to call her father as a witness in the proceedings for cross examination in advance of the final hearing. She also seeks orders that she be authorised to sign and send joint letters of instruction to the two expert valuers and that the order for her business to be valued be discharged as that business has ceased to operate.
The husband opposes the orders sought by the wife in relation to the expert reports and seeks that her application for these orders be dismissed. The husband did not oppose the order sought by the wife that her father give evidence and be cross examined prior to the final hearing in the course of the interim hearing but seemed to resile from that position subsequently.
In his Response to the wife’s Application in a Case the husband seeks that he be granted leave to provide various documents disclosed to him in the proceedings and/or produced under subpoena to Centrelink and the Australian Taxation Office (“ATO”).
The wife’s application being an Application in a Case filed 16 January 2018 and amended 10 May 2018 was made in the context of there having already been an interim judgment delivered in April 2017[1] (“the April 2017 Judgment”) and another in December 2017[2] (“the December 2017 Judgment”). There was also at the time this application was heard an outstanding appeal from orders made in the April 2017 Judgment.
[1]Field & Kingston [2017] FamCA 208
[2]Field & Kingston (No 2) [2017] FamCA 1071
Subsequent to the present application for determination being reserved, the Full Court delivered judgment in August 2018[3] (“the August 2018 Judgment”) dismissing the wife’s appeal of my decision not to grant her a certificate under s 128 of the Evidence Act 1995 (Cth) (“the Evidence Act”).
[3]Field & Kingston [2018] FamCAFC 145
Following dismissal of the appeal, as the matters related to the appeal may also be relevant to the applications under consideration, there was a further court event on 14 September 2018. On this occasion I granted liberty to each of the parties to make further submissions in relation to the impact, if any, of the August 2018 Judgment on the application under consideration. Each of the parties subsequently provided further submissions in writing directly to chambers with 21 days of that court event.
Background
The relevant background to the matter is set out in the April 2017 Judgment at [3]-[14] and [17]-[19] as follows:
3. The husband, who is 49, and the wife, who is 42, were married in 2002 and have three children who primarily live with the husband in the former matrimonial home.
4. The parties separated on a final basis in January 2011 and were divorced in July 2014.
5. The wife commenced property settlement proceedings by Initiating Application filed 4 May 2015.[4] The matter has progressed very little since the initiation of proceedings.
[4] The wife seeks orders that would see her receive 50 per cent of the matrimonial property and the husband seeks that her application be dismissed.
6. It appears that the matrimonial property broadly consists of the former matrimonial home in Suburb B, a business owned by the husband and a business owned by the wife.
7. During the marriage the husband ran his own business. In 2008 the husband established a business in which he asserts the wife was not involved.
8. The wife is the owner and operator of a business which includes among other activities training given by the wife. The business was established by her in 1994 and was run by the wife alone throughout the marriage.
9. There is no dispute that the former matrimonial home was used by the wife for the purposes of her business from early 2002. However there are factual disputes between the parties as to who paid for various expenses associated with running the business from the matrimonial home.
10. The wife deposes in her affidavit filed 8 December 2016 that she cannot and does not currently work due to a physical injury and is unable to operate the business from the former matrimonial home due to the conduct of the husband. The wife still operates the business but currently employs a replacement to attend the matrimonial home and conduct the business.
11. There are significant matters in dispute between the parties regarding financial and non-financial contributions to the relationship.
12. The husband contends that the wife indulged in an extravagant lifestyle during the marriage and that there are significant discrepancies between the wife’s expenditure and the financial losses of the wife’s business outlined in her business records.
13. The husband further contends that the wife may have sources of income outside her business that she has not disclosed that allowed her to maintain this high level of expenditure.
14. In 2015 the parties were ordered to obtain valuation of each of the businesses prior to a conciliation conference being held.
…
17. In June 2016 the parties received correspondence from the single expert engaged for the purposes of valuation requesting further information and documents in relation to each of their businesses in order to progress his valuation.
18. It appears to be common ground that the wife needs to disclose the information and documents requested by the expert in order to provide full disclosure.
19. On 14 July [2016] the husband filed a Response to the wife’s Application in a Case opposing the orders sought by the wife and seeking orders as to costs. The husband asserts that the wife has failed to provide full and frank disclosure of her financial circumstances.
The decision in the April 2017 judgment related to an application brought by the wife that she be granted a certificate pursuant to section 128 of the Evidence Act in order to respond to requests made by the husband for her to disclose particulars relating to her financial circumstances. I dismissed the wife’s application for the reasons given in the April 2017 Judgment.
The wife appealed the orders in the April 2017 Judgment.
The proceedings were again before me in August 2017 with each party seeking further interim property orders despite the then pending appeal. I reserved judgment as to orders relating to litigation funding and restraints on the husband dealing with certain property and the wife bringing further applications.
The proceedings in relation to the last-mentioned applications were briefly reopened in November 2017 to allow the husband to adduce further evidence. At this time trial directions were also made to ready the matter for final hearing. Before trial dates were allocated there was to be a compliance hearing before a Registrar in February 2018.
In the December 2017 Judgment the issue of non-disclosure by both parties, but in particular the wife, was a significant factor in my dismissal of the wife’s application for litigation costs as can be seen in the following passage from that Judgment:
58. In summary, both the husband and the wife contend that the other has not properly disclosed their own financial circumstances. It appears on the documents available to me that it is likely that such a finding is open with respect to both parties. At this stage in the proceedings and for the purposes of this application I am unable to make any definitive findings with respect to the parties’ financial circumstances except to say that each of them seems to have access to sufficient funds to pay for their legal fees in these proceedings and it appears that they have done so to date.
59. I am not able on the available evidence to make a determination that the husband has access to a greater portion of the parties’ financial resources and that the “dollar for dollar” order sought by the wife is required to “level the playing field” for the purposes of the litigation.
60. The parties’ failure to make full disclosure concerning their financial circumstances is also relevant to the consideration contained in section 117(2A) (c) being the conduct of the parties to the proceedings in relation to the proceedings. In particular, in my view, it is relevant in this application that the wife provided to the husband documents which appear to have been in her control and which are relevant to the issue of her financial circumstances one day after the proceedings in relation to the order sought by her were heard. This necessitated the husband seeking to reopen the proceedings and incurring further legal costs.
61. The wife’s disclosure of some further documents just days after judgment was reserved following the interim hearing is suggestive of the wife providing disclosure only when it suits her to do so and that there is merit to the husband’s contention that the wife has further sources of income.
62. While I cannot find, as the husband submits, that the wife has access to significant assets or financial resources on the evidence available, I also cannot find, as the wife submits, that there is a significant disparity between the financial resources of the husband and those of the wife.
Disclosure, or lack thereof, remains a significant area of dispute between the parties.
On 16 January 2018 the wife filed the Application in a Case that is presently under consideration.
When the parties came before the Registrar for a compliance check in relation to the trial directions in February 2018 valuations of the parties’ respective businesses had not yet been commenced as the parties could not reach agreement about the terms of engagement of the experts. At that stage the husband again raised the issue of the wife’s non-disclosure. The time for the parties’ compliance with trial directions was extended.
On 19 February 2018 the Full Court reserved judgment in relation to the appeal from the April 2017 orders.
In March 2018 the husband indicated to the Registrar at the adjourned compliance check that he was unwilling to proceed with obtaining valuations of the respective businesses until the issue of the wife’s non-disclosure was settled. The wife subsequently amended her Application in the Case and the current applications were listed for hearing on 22 May 2018.
On 22 May 2018 after hearing submissions from counsel for both parties I reserved judgment with respect to the competing applications noting that the husband did not oppose the order sought by the wife for her father to give evidence and be cross examined prior to the final hearing due to his ill health with arrangements for same to made directly through chambers.
On 7 August the Full Court dismissed the wife’s appeal. The parties were given a further opportunity to make submissions in light of the August 2018 decision of the Full Court.
The Applications
The wife seeks orders as set out in her Amended Application in a Case filed 10 May 2018 that she be authorised to sign and send a letter of instruction to the a named expert valuer for an updated valuation of the former matrimonial property and a further letter of instruction to another named expert valuer for valuation of the husband’s business. She also seeks to have the order made on 21 August 2015 that her business be valued be discharged or in the alternative that the husband meet the costs of that valuation.
The husband opposes the orders sought by the wife substantially on the basis that valuations should not be conducted until the wife has made full disclosure and that valuation of the wife’s business is still required despite the fact that she does not currently operate that business.
The husband, in his Response to the wife’s Application in a Case, seeks orders that the wife’s application be dismissed and that he be granted leave to provide to Centrelink and the ATO copies of pleadings, documents produced under subpoena and documents produced by way of discovery by the wife in these proceedings. He also seeks an order that the wife pay his costs of and incidental to the application.
The wife opposes the order sought by the husband in respect of providing documents to Centrelink and the ATO substantially on the basis that the necessity for such an order has not been demonstrated.
Valuations
In August 2015 orders were made for the valuation of the former matrimonial home and each of the party’s businesses. One expert was to value the real property (“the real property valuer”) and another was to value each of the parties businesses (“the business valuer”). At this stage the valuations were to be prepared for the purposes of a Conciliation Conference.
In support of these orders, the wife submits that the allocation of trial dates for the proceedings has been delayed by the husband’s refusal to instruct the two valuers to undertake valuations despite the terms of their instructions being agreed. These orders for valuation and other trial directions were made in November 2017, when it was the husband’s position that proceedings should be urgently listed for final hearing.
As is clear from the December 2017 judgment[5] it was the husband’s position that although he continued then to maintain that the wife is yet to provide adequate disclosure this should not be an impediment for preparing the matter for trial but would simply be a matter to be dealt with at the final hearing. Rather than suggesting that the valuations could not be prepared due to the wife’s non-disclosure, the husband was then urging that the matter be prepared for trial including obtaining the valuations of the businesses and an updated valuation of the real property.
[5] In particular paragraphs [21]- [24] Field & Kingston (No 2) (2017) FamCA 1071
As previously indicated when the proceedings were before a Registrar on 22 February 2018 for the purposes of checking compliance with the trial directions, neither the updated real property valuation nor the valuation of either parties’ respective businesses had been undertaken. In relation to both valuations, it was put to the Registrar that the parties were unable to reach agreement in relation to the letters of instruction to be sent to each expert.
It is submitted on the wife’s behalf that she is in urgent and dire financial circumstances as a result of the husband’s actions in locking the gates to the former matrimonial property from which her business was conducted and erecting signs announcing the closure of the business which has resulted in its closure and excluding her from the patrimony of the parties.
Finally, the wife submits that the husband has not provided any valid reason for his refusal to instruct the valuers or for his insistence on requiring her business to be valued even though there is no dispute that his actions in excluding her from her place of business caused its demise.
With respect to the wife’s application for orders that she be authorised to send joint letters of instruction to each of the valuers the husband submits that such valuations are premature in circumstances where the wife has not made full disclosure and the proceedings are not ready for final hearing.
In relation to the valuation of the former matrimonial property, the husband also submits that as the rental value of a cottage situated on the property was not included in the valuer’s first report it is incorrect for the wife to suggest that a valuation which includes this cottage can be characterised as an “updated” valuation.
Although the husband maintains that orders for valuation of the wife’s business should remain, he also seeks to have such orders stayed pending full financial disclosure by the wife. When questioned as to the purpose of valuing a business that no longer exists, counsel for the husband submitted that the business had a value prior to its closure and could be re-started by the wife following the conclusion of the family law proceedings.
There is no dispute between the parties that two significant items of property to be considered by the court in these proceedings are the former matrimonial home and the husband’s business. There is as I understand no agreement as to the value of either asset and the valuation evidence is required to determine the dispute. There seems to be no reason why these two items of property should not be valued at the appropriate time. When orders were made for the valuations to proceed (or in the case of the real property to be updated), the proceedings were to be readied for final hearing. The fact that the cottage situated on the former matrimonial property was not included in the first valuation (when both parties accept that it is a property of value in the hands of the parties) is no impediment to the valuation being carried out and the cottage included in the valuation.
So far as the wife’s business is concerned, there seems little logic in seeking that the order for valuation remain but also be stayed, particularly where the business no longer exists. I accept the husband’s contention that the wife’s skill as a trainer and generally in respect to her business may provide a resource to her which she may utilise by setting up a similar business from a different location at some time in the future. This does not require that the order for valuation of the business remain. Rather, the wife’s capacity to recommence her business may be considered in the final proceedings as a financial resource available to her which is unable to be valued. There seems little utility and it may not be possible to value the particular business operated by the wife prior to its closure.
In the foregoing circumstances when no explanation has been provided by the husband as to his change in position, nor is it explained how the alleged failure by the wife to provide full financial disclosure is an impediment to proceeding to final trial, I propose making the orders sought by the wife, as it is necessary in preparing the matter for trial that all issues as to valuation be attended to.
Provision of documents to government agencies
The husband submits that the order he seeks granting him leave to uplift documents in the proceedings and provide them to relevant government authorities is also necessitated by the wife’s failure to provide full and frank disclosure and comply with court orders and directions.
In support of his contention that the wife has failed to provide full disclosure and comply with court directions the husband raises the wife’s failure to provide an updated Financial Statement (her last filed Statement being dated April 2016) and failure to file a complete trial affidavit. He also submits that she has failed to provide him with copies of all relevant bank and credit card statements as ordered by a Registrar in July 2017.
The husband claims this failure to disclose has been deliberate on the part of the wife and has delayed the proceedings, put him to unnecessary expense and caused prejudice to him by preventing him from investigating certain relevant matters. In particular the husband relies upon the wife’s application that she be granted a s 128 certificate and her appeal of orders dismissing that application. The husband submits that regardless of whether the wife is granted a certificate under s 128 of the Evidence Act, the granting of such certificate does not abrogate her obligation to provide full and frank disclosure.
The wife deposes in her affidavit 10 May 2018 in support of this application that she owes almost $29 000 to the ATO but this does not include the tax that will be payable when she lodges amended returns. In the course of his submissions, the husband’s counsel referred to a letter from the wife’s solicitor of 1 February 2018 in which it is explained that the wife has not filed an amended tax return because she would be liable to pay additional tax as a result, and she has no capacity to do so at this stage and requires funds from the property settlement proceedings to meet any such liability.
The husband submits that the potential for the Court to make orders to the detriment of a third party is a material consideration[6] and requires notice of the family law proceedings to be given to that third party creditor.
[6]Ascot Investments Pty Ltd v Harper and Anor [1981] HCA 1; (1981) FLC 91-000
The husband similarly submits that the interests of Centrelink will also be materially affected by these proceedings as the wife has been claiming government benefits during the period she has allegedly misrepresented her income to the ATO.
In support of this submission the husband relies on the decision of the Full Court in In the Marriage ofBiltoft[7] (“Biltoft”) in which the Full Court held:
There is an obligation on both parties to disclose any significant creditors or any significant claim against either of them by a third party. If, as a result of the order of the Court in the property proceedings, the ability of a creditor or claimant to recover his or her debt or claim is likely to be affected, notice of the Family Court proceedings must be given to that creditor or claimant. He/she may then intervene in the Family Court proceedings and either seek a stay of those proceedings or some appropriate order which recognises his/her rights.
[7] (1995) 19 Fam LR 82; (1995) FLC 92-614; (1995) FamCA 45
In my view, the husband is seeking to elevate an extract from a letter written by the wife’s solicitor together with an extract from the wife’s affidavit to suggest that the ATO is a “significant creditor”.
In Malpass & Mayson[8], a decision of the Full Court upon which the husband also relies, the Full Court considered an order made by a trial judge in property settlement proceedings which directed that the Commissioner of Taxation be provided with a copy of the judgment. The appellant husband contended that this direction denied him procedural fairness. When reviewing the authorities in relation to alleged revenue misconduct in family law proceedings, the Full Court said the following at [46] – [47]
…Their Honours then made reference to the decision of Chemaisse (1997) FLC 91-812 and Rowell (1989) FLC 92-026 where the Commissioner of Taxation was allowed to intervene in proceedings and have orders set aside on the basis that as a known creditor they had not been given an opportunity to be heard. What their Honours concluded is as follows at 77,774:
"The question is simply, what is the property of the parties that the order seeks to effect? The nature and extent of this property cannot be determined until proper liabilities have been ascertained. If the liabilities are not presently fully ascertained, then it may be that in the appropriate case the family law proceedings should be stayed until such time as the liabilities are so determined."
It is clear that once a trial Judge has determined that there is a prospect of the pool of assets being diminished because of some contingent liabilities, namely, potential arrears of income tax, the trial Judge should normally invite the parties to make submissions on the effect that such liabilities might have in relation to either the future conduct of the proceedings or its outcome. This is not an invariable rule however and questions of proportion and the remoteness of the risk that such liabilities will be incurred should be taken into account in determining to invite such submissions. There may be other circumstances, such as those outlined hereafter, when we consider that a trial Judge is not under such a duty.
[8] [2000] FamCA 1253
In making submissions in relation to this order, the husband’s counsel relied heavily upon the husband’s contention that the wife has still not allegedly provided full disclosure as to her financial matters. This however falls well short of proving an evidentiary foundation for a determination “that there is a prospect of the pool of assets being diminished because of some contingent liabilities.”
In my view, the point not been reached in the proceedings that a determination could be made. Further, it is also unclear what it is suggested that the ATO or Centrelink are to do with the large volume of documents that the husband seeks to provide to those agencies nor how the referral of the documents to them will impact on the progress of the proceedings.
At various times, both of the parties have complained that the actions of the other is causing delay in the proceedings and have agitated for steps to be taken to prepare the matter for trial. Most recently, this was the position of the husband who in November 2017 through senior counsel then briefed sought that trial directions be made. At that stage, it was argued by the wife that listing the matter for trial was premature but she now adopts the position that she is in difficult financial circumstances due to the husband’s delay in preparing the matters for final proceedings. Concern arises with respect to both of the parties that they have adopted a strategic approach to the final determination of their dispute when it has suited them.
I am of the view that the circumstances referred to in cases such as Biltoft and Malpass & Mayson not apply to these proceedings, or at least not at this stage.
For this reason the application for leave to provide certain documents to the ATO and Centrelink is refused.
Summary and conclusion
In November 2017, the husband pressed for trial directions to be made in the property proceedings. At that time, the wife was not seeking for trial directions to be made on the basis as I understand it that her appeal in relation to my refusal to grant her a s 128 certificate was still pending. That matter has now been resolved and the wife now wishes for the matter to proceed to final hearing especially as she contends that she is in difficult financial circumstances.
Although the husband accepted in November 2017 that his contentions in relation to the wife’s disclosure would be a matter to be dealt with at the final trial, he now relies upon those contentions as a reason that the matter should not progress to preparation for final trial and seeks to delay final resolution further by providing documents to Centrelink and the ATO on the basis that those agencies may wish to consider the documents and intervene in the proceedings.
For the reasons given, I dismiss the husband’s application for leave and propose making the orders sought by the wife in relation to obtaining valuations for the purposes of preparing the matter for trial.
The husband previously consented to an order that the wife’s father give evidence in advance of the final hearing due to the precarious state of his health and as indicated I was inclined to make such an order. However as the now matter involves further preparation prior to trial, and the court may be assisted by updated information in relation to that witness’s health, I propose making the order sought with some minor adjustments having regard to the current circumstances.
For the foregoing reasons, I make the orders set out at the forefront of this Judgment.
I certify that the preceding fifty-five (55) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hannam delivered on 21 January 2019.
Associate:
Date: 21 January 2019
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