Freer & Freer (No. 3)

[2008] FamCA 516

FAMILY COURT OF AUSTRALIA

FREER & FREER (NO. 3) [2008] FamCA 516

FAMILY LAW – PROPERTY SETTLEMENT – Bankruptcy of party - application by husband to deal with proceeds of sale of property – property settlement proceedings are in relation to vested bankruptcy property and therefore are between the trustee and the wife – wife not seeking any order about the proceeds – application dismissed.

FAMILY LAW – PROPERTY SETTLEMENT – Trust – adult beneficiaries of the trust should be served with proceedings pursuant to Family Law Rules 2004 r 6.02 – adult beneficiaries not yet in that category but prima facie fall into the category of Family Law Act 1975, s79(10)(b).

FAMILY LAW – PRACTICE AND PROCEDURE – DISCOVERY– application by husband for discovery - husband only entitled to discovery of documents relevant to issues in which he is able to take part in the proceedings.

FAMILY LAW – PRACTICE AND PROCEDURE – PRIVILEGE – some communications between the trustee and the previous solicitors of the wife are discoverable – discovery to be made subject to any documents the subject of any privilege.

Family Law Act1975 (Cth) s 79(10)
Family Law Rules 2004 (Cth) r 6.02

APPLICANT: Mrs Freer

RESPONDENT: Mr Freer

TRUSTEE IN BANKRUPTCY: Mr Smith

INTERVENOR: Mr Rickards

FILE NUMBER: ADF 1629 of 2005

DATE DELIVERED: 24 April 2008

PLACE DELIVERED: Adelaide

JUDGMENT OF: Strickland J

HEARING DATE: 24 April 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr D Berman

SOLICITOR FOR THE APPLICANT: Lynch Meyer

COUNSEL FOR THE RESPONDENT: Mr M Pickhaver

SOLICITOR FOR THE RESPONDENT: Swan Lawyers

COUNSEL FOR TRUSTEE IN BANKRUPTCY: Mr G Gretsas

SOLICITOR FOR TRUSTEE IN

BANKRUPTCY:

Gretsas & Associates

COUNSEL FOR THE INTERVENOR

SOLICITOR FOR THE INTERVENOR

Mr G Howe

Howe Martin & Associates

Orders

1. That the Trustee in bankruptcy make discovery within fourteen [14] days of the date hereof of all written communications between the Trustee and Cowell Clarke and of any file notes made by the Trustee in relation to that communication.

2. That forthwith the applicant wife serve the adult children of the marriage, P Freer and K Freer with the Amended Application filed on 19 September 2007.

3. That the Application in a Case filed by the respondent husband on 18 April 2008 be dismissed and removed from the active pending cases list.

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

FAMILY COURT OF AUSTRALIA AT ADELAIDE

FILE NUMBER: ADF 1629 of 2005

MRS FREER

Applicant

And

MR FREER

Respondent

And

MR SMITH

Trustee in Bankruptcy

And

MR RICKARDS

Intervenor

EX TEMPORE REASONS

1. I have before me an Application in a Case filed by the husband in which he seeks a number of orders, including for discovery and for leave to make submissions to the Court in relation to the proceeds of sale of a property at B.

2. I have heard submissions from all parties in relation to this application.  Mr Pickhaver has explained to me why he is making the submissions in the way that he does but, with all due respect to Mr Pickhaver, I consider there is a misunderstanding on his part as to how this matter will proceed at trial.  Putting that aside, in my view there is no basis to grant the applicant leave to make submissions to the Court in connection with the proceeds of sale of the B property.  No order about those proceeds is sought by the wife, and the property settlement proceedings in relation to the vested bankruptcy property, of which it is conceded that those proceeds comprise part, is purely and simply a matter between the trustee and the wife. To repeat, the wife is not seeking any order in relation to that and, in particular, no order seeking that those proceeds be added back to the asset pool which is to be divided between the trustee and the wife.  Thus, I dismiss paragraph 1 of the application.

3. I note that paragraph 5 is not being pursued, so that leaves paragraphs 2, 3 and 4.  Dealing first with paragraph 3.  The husband seeks that the trustee make discovery of all file notes and communications in respect to the B property.  Given that I am not prepared to give leave to the husband to make any submissions about those proceeds, there is no basis for him to obtain discovery of file notes and written communications in relation to that property.  Thus I dismiss paragraph 3.

4. Paragraph 2 is what I have described as a wide paragraph, in that the trustee seeks discovery of records kept by the trustee of all communications with the wife, including file notes and written communications.  Mr Pickhaver tells me that, if his client were successful in having that order made, that would clearly encompass the documents sought in paragraph 4. Just dealing with paragraph 4, though, as I understand it, and I stand to be corrected, the trustee's position is that he has made discovery of all documents in relation to that topic and there has been no submission to the contrary. 

5. However, I have heard a lot about the Adelaide property this morning and discovery in relation to that.  The husband seeks discovery of all relevant written communications, records and file notes et cetera in relation to that property.  The trustee's position about that is that he says he has discovered all documents that would be discoverable.  There are documents though in respect of which the trustee claims privilege.  No submission has been put to me to challenge that privilege, and thus as it stands I accept what the trustee through his counsel tells me today about that.  Therefore, I proceed on the basis that there is no further discovery to be made in relation to the Adelaide property.

6. That still leaves, of course, the balance of paragraph 2, which is, as I say, an application which has substantial width.  In my view, the husband is only entitled to discovery of documents relevant to the issues in respect of which he can take a part in the proceedings, and at this point in time I have given him leave to make submissions as to the Adelaide property, and I have just dealt with the issue of discovery there.  I have dismissed his application for leave to make submissions in relation to the B property, and thus there is no further order that I would make. 

7. Mr Pickhaver has correctly put to me that the husband would be entitled to make submissions and present evidence and cross‑examine in relation to any property which is the subject of the proceedings but not included within the vested bankruptcy property.  However, Mr Pickhaver has been unable to identify any property in that category, save and except the Adelaide property and the proceeds of the B property.  Thus, as it stands at the moment, there is nothing further that I can deal with in relation to paragraph 2.

8. I am not prepared simply to make a general order for discovery in anticipation that something will be relevant in what is discovered.  What the husband has to do, if he wishes to pursue that, is actually identify the topic of the discovery that he seeks before I am prepared to consider making any order about that.

9. Although it was not the subject of a specific application by the husband, in the course of submissions the issue of the discovery of communications passing between the trustee and Cowell Clarke, the previous solicitors for the wife, has been raised.  Mr Gretsas has indicated that there would be such documents and some of those documents would be discoverable, and his client is prepared to discover them subject to Mr Gretsas looking at the issue as to whether any of those documents are the subject of any privilege.  Thus I propose to make an order about that. 

10. The husband in his affidavit raises the issue of the adult beneficiaries of the trust being involved in these proceedings. There are apparently two adult children in that category. I am told that, as I would expect in most discretionary trusts, there are other beneficiaries, but these are the two that have been particularly highlighted, and the issue has been raised as to whether they should be served with the proceedings or not. In my view, they should be and, indeed, Rule 6.02 of the Family Law Rules2004 provides that:

    A person whose rights may be directly affected by an issue in a case, and whose participation as a party is necessary for the court to determine all issues in dispute in the case, must be included as a party to the case. 

11. I am not suggesting that these adult beneficiaries are in that category yet, but the section of the Family Law Act 1975 I refer to in this context is Section 79(10), which identifies those persons who are entitled to become parties to proceedings. Subparagraph (b) says:

    any other person whose interests would be affected by the making of the order.

12. Prima facie I accept that the adult beneficiaries may be in that category and, for other reasons which I elaborated on during the course of the submissions and as Mr Berman himself highlighted, it would be a difficulty which no‑one wants to have occur if at the last minute one or both of those adult beneficiaries suddenly decided that they wanted to be involved, and that then lead to an adjournment of the hearing.  In my view, it is appropriate for those adult beneficiaries to be served and they should be served by the applicant wife.  Thus I propose to make an order about that.

13. I now turn to when this matter can be listed.  The one order I am making about discovery can be relatively quickly complied with.  I would anticipate the beneficiaries can be served relatively quickly.  There are no other outstanding issues that I understand would impact upon this matter now being listed for trial.  Accordingly, having heard from counsel as to their availability I will fix this matter for trial and make an order about that in chambers and make appropriate orders about the filing of summaries of argument and lists of objections to affidavits.

I certify that the preceding 13 paragraphs are a true copy of the reasons for judgment of the Honourable Justice Strickland delivered 24 April 2008.

Associate