G & G

[2001] FamCA 495

FAMILY LAW ACT 1975

IN THE FAMILY COURT OF AUSTRALIA

AT No. SY3678 of 2000

IN THE MATTER OF:	G	Husband
AND	G	Wife

REASONS FOR JUDGMENT

CORAM:	O’Ryan J
DATE OF HEARING:	21 June 2001
DATE OF JUDGMENT:	22 June 2001

APPEARANCES:

Mr Grieve of Queens Counsel	Of Queens Counsel (instructed by Price & Company, Solicitors, DX 260 Sydney) appeared on behalf of the Applicant Wife.
Mr Meyer	Solicitor of Meyer Pigdon, Solicitors, DX 11578 Sydney Downtown, appeared on behalf of the Respondent Husband.

Catchwords

FAMILY LAW – DISCOVERY - Discovery of Documents

Legislation considered

Richie’s Supreme Court Procedure NSW, Butterworths

Proceedings

Before the Court are pending Applications for final orders for settlement of property and parenting orders.
The Applicant is Ms G (“the wife”). The Respondent is Mr G (“the husband”).
An oral Application was made on behalf of the wife that the husband provide discovery of documents identified in a document titled “Documents Required to be Discovered by Husband” (Exhibit D). The hearing of this Application took place before me on 21 June 2001.
On 21 June 2001 there was filed on behalf of the husband an unverified document titled “Schedule of Responses to Wife’s Schedule Headed ‘Documents Required to be Discovered by Husband’ ”. There was also filed a document titled “Husband’s Chronology of and in Relation to his Discovery”.
In support of the Application the wife relied upon affidavits sworn by her on 17 November 2000 and 25 January 2001. She also relied upon an affidavit sworn by Mr A, Chartered Accountant on 1 March 2001 and portions of affidavits sworn by the husband on 6 and 7 March 2001.
On 21 June 2001 I made the following orders:
“1. That the husband file and serve an affidavit of documents providing discovery of the documents in Exhibit D (“Documents required to be discovered by husband”) by 26 July 2001 and indicating in the affidavit where the documents referred to in Part I of Schedule 1 may be inspected.”
I made the orders on the basis that reasons for judgement would be delivered at a later time.

Short History

The husband was born in 1957 and the wife was born in 1959. The parties commenced cohabitation in April 1980 and were married in October 1982. The parties separated on 25 January 2000.

Children

There are four children of the marriage, T born in August 1986, M born in April 1988, E born in April 1990 and R born in November 1992.

Background

On 23 March 2000 an Application for final orders was filed on behalf of the wife.
On 15 May 2000 a Response to Applications for final orders was filed on behalf of the husband.
A Directions Hearing was conducted on 16 May 2000.
By letter dated 23 May 2000 the solicitors for the husband wrote to the solicitors for the wife enclosing documents relating to C Trust, L Pty Limited, H Pty Limited and M Pty Limited.
A Conciliation Conference was conducted by a Deputy Registrar on 25 July 2000.
On 23 August 2000 a Request for Discovery was served on the husband on behalf of the wife.
On 24 August 2000 the solicitors for the husband wrote to the solicitors for the wife objecting to the wording in the Request for Discovery as a result of which on 28 August 2000 a further Request for Discovery was served on the husband.
On 5 October 2000 the husband was served with the wife’s verified list of documents. On 18 October 2000 the wife’s discovered documents were inspected.
On 20 October 2000 an Affidavit of Documents was sworn by the husband.
On 24 October 2000 the wife was served with the husband’s Affidavit of Documents.
On 26 October 2000 the wife attended the husband’s business premises with her solicitor in an attempt to inspect documents. The wife said that the husband had little or no idea of where any of the documents were located.
On 30 October 2000 a Pre Hearing Conference was conducted. The husband did not attend. No dates for final hearing were allocated.
On 17 November 2000 an Application was filed on behalf of the wife in which she sought further discovery by the husband. On 17 November 2000 an affidavit was sworn by the wife in support of the Application.
On 22 November 2000 the wife’s Application filed on 17 November 2000 came before a Senior Registrar however, it could not be dealt with.
On 8 December 2000 the husband swore an affidavit in relation to the issue of discovery.
On 11 December 2000 an order was made that the husband provide the wife with an Affidavit of Documents by 10 January 2001 in relation to the matters set out in his affidavit of 8 December 2000.
On 11 December 2000 the Application filed on behalf of the wife on 17 November 2000 was adjourned to 29 January 2001.
On 5 January 2001 an amended Affidavit of Documents was sworn by the husband.
On 5 January 2001 the wife was served with a copy of the husband’s amended Affidavit of Documents. The husband discovered 5 marbig storage boxes containing documents.
On 8 January 2001 the husband was served with a request for inspection of the documents.
On 11 January 2001 inspection of the husband’s documents commenced and continued on 15 January 2001. The wife also sought to continue inspection on 16 January 2001 however, this did not take place. By letter dated 16 January 2001 the solicitors for the wife wrote to the solicitors for the husband requesting inspection as and from 19 January 2001. On 19 and 24 January 2001 inspection of discovered documents continued.
The wife said that inspection of documents revealed that the existence of numerous companies and trusts in which husband has an interest or involvement, and is respect of which little to no financial information or other relevant documentation has been provided.
Further, that following inspection of the documents it is apparent that the husband or entities in which he has an interest owns some 40 properties which she identified. The wife said that no discovery has been made in respect of all the properties with the husband limiting his discovery to six properties.
On 25 January 2001 a further affidavit was sworn by the wife with respect to the issue of the extended discovery by the husband ( pa 4-11, 13-16).
On 29 January 2001 the wife’s discovery Application was listed and the Court was told by the solicitor for the husband that he had discovered all of his financial interests. The Application was dismissed.
On 15 February 2001 a subpoena to produce documents was issued on behalf of the wife addressed to the solicitors for the husband and the G Group of Companies. On 26 February 2001 the subpoena issued on behalf of the wife came before the Court.
On 1 March 2001 a further affidavit was sworn by the wife in which she complained about the extent of discovery by the husband.
On 1 March 2001 an affidavit was sworn by Mr A on behalf of the wife. Mr A has been retained by the wife for the purposes of preparing a report for the property settlement proceedings. He said that from the husband’s Affidavit of Documents sworn 5 January 2001 he discovered documents relating to M Pty Limited, L Pty Limited, H Pty Limited, The O Trust, the C Trust and the J Provident Fund and that inspection of these documents evidenced the husband’s inter-relationship with another twenty companies and trusts. Further, that in addition to the properties disclosed by the husband there are another forty properties in which the husband and his companies either directly or indirectly appear to have an interest.
The husband swore an affidavit on 6 March 2001 in which he said that he had complied with the court’s orders as to discovery. He referred to the letter dated 23 May 2000 sent by his solicitors to the solicitors for the wife and said that he does not have any beneficial interest in any other company, and is not in a position to exercise control over any other trust. He said that he has a beneficial interest in:
·C Property.
·B1 Property.
·E Property.
·B2 Property.
·H Property.
On 7 March 2001 Senior Registrar Gersbach made an order that a final hearing fixed to commence on 2 April 2001 be vacated and that the matter be referred to the List Judge with a recommendation that it be considered as a complex case.
On 7 March 2001 an affidavit was sworn by the husband setting out his evidence in chief. This affidavit was filed in May 2001. He said that he is the managing director of JI. Also that R Pty Limited “runs the business, [JI].” He said that he is employed by companies controlled by his family. He said that approximately forty percent of his time is spent managing JI and that the balance of his time is spent managing “the family investments”. He gave evidence about the business of JI. However, he gave no evidence about the “family investments.” He annexed a diagram that he complied of the Trusts and companies “involved in this group”.
He said that he is shareholder of:
·     H Pty Limited.
·     M Pty Limited.
·     L Pty Limited.
He said that he is a discretionary beneficiary of:

G Trust No.16.
G Trust Queensland.
G Trust No.1
The O Trust.

On 8 March 2001 an Application for Review was filed on behalf of the husband in which he sought that the orders made by Senior Registrar Gersbach on 7 March 2001 be reviewed and that the dates for hearing commencing 2 April 2001 be reinstated.
On 13 March 2001 the proceedings came before me and were adjourned to 14 March 2001. On 14 March 2001 I dismissed an Application filed on behalf of the husband seeking to reinstate the trial dates and adjourned the Applications for mention before me on 6 April 2001.
On 6 April 2001 I made the following orders by consent:
“1.     That orders on or before 20 April 2001 the husband cause to be discovered at the husband’s office at […] Sydney all annual financial accounts, tax returns, loan account records, balance sheets and profit and loss statements for financial year ending 30/6/97, 30/6/98, 30/6/99 and 30/6/00 inclusive as well as all existing BAS returns for the following entities:
(a)[DI] No. 18 Pty Limited
(b)[CI] No. 9 Pty Limited
(c)[EU] Partnership
(d)[W] Management
(e)[C] Partnership
(f)[GM] Pty Limited (if available)
(g)[G] Trust No. 1
(h)[G] Property Pty Limited
Notes that the husband states that he has no knowledge or cannot identify any of the following entities:
(a)[G] Trust No. 2
(b)[G] Trust No. 6
(c)[G] Trust No. 7
(d)[G] Trust No. 8
(e)[G] Trust No. 7
(f)[RI] No. 8 Pty Limited
(g)[RI] No. 9 Pty Limited
(h)[DI] No. 19 Pty Limited
(i)[JR]
(j)[D] Joint Venture
3.       Orders that the parties file and serve their affidavit of their respective evidence in chief and their respective updated statement of financial circumstances pursuant to O17 r2 on or before 4.00 pm 11 May 2001.
4.       Orders that the parties file and serve their respective lay witnesses affidavit evidence in chief on or before 4.00 pm 11 May 2001.
5.       Orders that the parties file and serve their respective expert witnesses affidavit evidence in chief on or before 4.00 pm 18 May 2001.
6.       Orders that the matter stand over for further directions to 10.00 am/9.30 am on 25 May 2001.”
On 18 April 2001 the husband’s solicitors supplied to the wife’s solicitors tax returns for the year ended 30 June 2000 for five entities.
On 14 May 2001 the husband filed and served his affidavit of evidence in chief that he swore on 7 March 2001.
I told the parties that I had gone through the court file for the purposes of ascertaining the history of the proceedings and I note that on 24 May 2001 an affidavit was sworn by Mr A. On 16 May 2001 Mr A attended the husband’s office premises for the purposes of inspecting further trust deeds and other company records which have been discovered by the husband. In his affidavit Mr A said that inspection of the documents disclosed that no documents had been discovered in respect of the Benevolent Fund which the husband only recently disclosed in his affidavit filed on 14 May 2001. Further, that no documentation was discovered to support any payments by RI No. 6 Pty Limited to the associated entities which documentation would assist in valuing the goodwill component of JI Business as conducted by RI No. 6 Pty Limited. Further, that the husband appears to have a financial interest in various discretionary trusts which hold substantial real estate and other assets.
On 25 May 2001 I adjourned the proceedings to 1 June 2001.
On 1 June 2001 I adjourned the proceedings for short hearing before me at 9.30 am on Wednesday 20 June 2001. Subsequently the proceedings were adjourned to 21 June 2001.

Conclusion

I have no doubt that the issues in the property settlement proceedings are complex and will involve consideration of matters such as to the extent and value of the financial circumstances of the parties and in particular the husband.
I have examined in some detail the unverified schedule of responses to the orders sought by the wife. I do not propose to deal with each item, however, I shall refer to some of them.
In Order 1 the wife sought discovery of documents in relation to the CL Trust (1.12). In the unverified response it was said that the husband has neither documents nor knowledge in relation to this trust. This was clearly incorrect. The husband attached to his affidavit sworn on 7 March 2001, and filed on 14 May 2001, a diagram, which he said he compiled, of the trusts and companies involved in “this group”. He did not identify precisely what “group” he was referring to. However, it appears from the diagram that CI No. 9 Pty Limited holds 2 “A” class shares in a company called I Pty Limited. I Pty Limited in turn may be the trustee of the LV Trust and this trust in turn holds shares in a company called X Nominees Pty Limited which may be the trustee of the CL Trust. The husband is a director of CI No. 9 Pty Limited.
The wife sought discovery of documents relating to various properties, for example item 8.41. In the unverified response it was said that so far as the husband is aware the property is owned by CI No. 9 Pty Limited and D Pty Limited in partnership. Further, that the husband believes the documents are in Queensland. He acknowledged that he is a director of CI No. 9 Pty Limited and “…will use his best endeavours to make available for inspection in Queensland such documents as exist”.
The wife also sought discovery of documents relating to properties that were identified by a Certificate of Title reference (8.55 to 8.95 inclusive). In the unverified response it was said that husband was unable to identify the properties by title reference. However, there was produced in evidence a schedule from the Land Titles Office which disclosed that these properties or a number of them are owned by CI No. 9 Pty Limited of which the husband is a director.
In relation to a number of the documents of which the wife seeks discovery the husband said that he does not know whether he is entitled as of right to access the documents. In relation to one category it was said that the husband believes that he has no power to call on the unit trust for any documents. In relation to some documents it was said that the husband has no documents, he is not a trustee, is not an appointor, holds no office in any corporation, trustee or is an appointor, a beneficiary and that to the best of his knowledge and belief he is not a beneficiary whether discretionary or otherwise.
I accept that there may be unintentional errors in the unverified response given the amount of time that the husband and the lawyers representing him have had to address this Application.
There is no doubt, from the chronologies that were provided to me on behalf of each party, that there have been difficulties, and significant dispute, about discovery by the husband since at least August 2000. As well, it is apparent from the evidence of the wife in her affidavit sworn on 17 November 2000 that there have been difficulties in relation to the inspection of discovered documents. It is also apparent that the husband has difficulty knowing where documents may be located. This is corroborated by the unverified response.
I am concerned about the history of the litigation since proceedings were commenced in March 2000. As the solicitor for the husband pointed out an earlier hearing was vacated and I declined to reinstate that hearing for reasons set out in Reasons for Judgment delivered on 14 March 2001.
Order 20 rule 9 Family Law Rules provides that where at any stage of proceedings it appears to the Court from evidence or from the nature or circumstances of the case or from any document filed in the proceedings that there are grounds for belief that some documents or class of documents relating to any matter in question in the proceedings may be or may have been in the possession, custody or control of the party order that party to file an affidavit stating whether that document or any document of that class is or has been in the possession, custody or control of that party and if it has been but is not then in the possession, custody or control of that party when that party parted with it and what has become of it.
In Richie’s Supreme Court Procedure NSW, Butterworths, the learned editors said at pa [2.3.20]:
“Although the present rule puts the onus on the discovering party to provide full discovery, it says nothing about whether the other party may challenge the sufficiency of the discovery or the contents of any verifying affidavit. Notwithstanding their submission, it is likely that the Court will permit an application for further discovery to be made provided that the party making the application specifies the document, or class of documents, in respect of which further discovery is sought. The party making such an application order specify the document, or pass of documents, in respect of which particular discovery is sought. The party must also make out a reasonable ground for believing that the documents were, or have been, in the opponents possession.”
Senior Counsel for the wife also relied upon what was said in Richie (supra) namely,:
“An order for further discovery may be made where the basis on which the first list made obviously involves a misconception of the issues by the person who provided the list: British Association of Glass Bottle Manufacturers Ltd v Nettlefold (1912) 1KB 369, Affd (1912) AC 709(HL). Otherwise the justification for an order for a further list of documents may arise where it appears from:
(a)     The form of the original list,
(b)     The documents referred to in it, or
(c)     Admissions made either in the pleadings of the party making discovery,
That the party making discovery has, or has had, other relevant documents in his possession, custody or power: Jones v Monte Video Co Above; Kent Cole Concessions vDugid (1910) 1KB 904, Affd (1910) AC 452 (HL).
I have no doubt that I have the power to make the orders sought by the wife and this was not put in issue by the solicitor for the husband.
In this matter there are pending proceedings for settlement of property. The parties to such proceedings have an obligation to make a complete and exhaustive disclosure of his or her financial circumstances and all matters relevant thereto. The Court has the jurisdiction and power to make orders adjusting the interests of parties in property as defined in s.4 Family Law Act. In making such orders however, the Court also takes into account, by reason of s.75(2) of the Act, the financial resources of each party. The financial resources of a party may, as I pointed out in discussion, include a benefit or entitlement that a party may have no legal or beneficial interest in as defined in s.4 of the Act. Further, it may be that such an interest is ultimately found by the Court to have no value or confer no benefit on the party who has been attributed with the financial resource. However, the obligation is to make full disclosure of such interests and, subject to agreement, it is ultimately a matter to be adjudicated upon at the final hearing what value or benefit it confers and whether or not, in the circumstances of a particular case, it ought to be taken into account.

In this case, there will be a dispute about the full extent and value of the husband’s financial circumstances. The husband is the party who has the capacity to provide the necessary information and documentation so that the wife, and those advising her, and ultimately the Court, can understand precisely the extent and value of his financial circumstances.
I have before me evidence from an accountant who said that the documentation inspected discloses a complex and sophisticated structure of inter-related companies and trusts in which the husband is involved and appears to have an interest. This opinion of the accountant may be corroborated by what the husband has said and the diagrams that he attached to his affidavit. Further, the accountant identified various entities and properties in respect of which he seeks access to the relevant books and records to enable him to be in a position to determine the true extent of the husband’s financial position.
In Richie (supra) the editors said:
An admission made in any manner will suffice, for example a letter referred in a letter disclosed in the list will itself be presumed to be relevant until the contrary is shown: Ormerod Grierson & Co v St George’s Ironworks (1906) 96LT 694.”
In Family Law financial litigation such as this where there are numerous entities and assets, and the structure of the entities for holding the assets is complex, the discovery process may involve discovery of documents relating to entities or assets in which a party does not directly or even indirectly have an interest or position of control but are necessary to be discovered to fully understand the financial circumstances of the relevant party. It is not acceptable to simply say that he/she will use his/her best endeavours to make available for inspection such documents as exist.
I accept that the Discovery process is very costly and that there is a need for reform. However, in the context of Family Law litigation there are two important matters to consider namely:
· The requirement to make a full and frank disclosure;
· That one of the parties usually does not have access to the relevant documents.
Difficulties do arise where there are interests involved of parties who are not parties to the litigation.
Independently of the opinion of the wife’s accountant it is apparent to me from the unverified response that there are documents which the husband has not discovered that may ultimately be relevant in determining the extent of his financial position.
I am also satisfied that the husband has failed to comprehensively provide all relevant documents.
In conclusion, I am of the opinion that in this case the wife has established a reasonable ground for seeking the orders sought. I am satisfied that it is not a matter of mere speculation by the wife. At the final hearing the husband may establish that he has no interest in a number of the entities, either directly of indirectly, which the wife asserts he does have an interest in. It may be that the court ultimately finds that the entities in which the husband does have an interest in, either directly or indirectly, are not relevant or that the interest is of no benefit or value to the husband. If this happens, and the husband has incurred significant and unnecessary cost, then that situation could be addressed. However, at this time I am satisfied, for the reasons I have given, that the orders should be made.

[2001] FamCA 495

22 June 2001

Key Legal Topics

Areas of Law

Civil Procedure

Legal Concepts

Appeal

Jurisdiction

Stay of Proceedings