Garner and Garner

[2009] FamCA 644

FAMILY COURT OF AUSTRALIA

GARNER & GARNER [2009] FamCA 644

FAMILY LAW – PRACTICE AND PROCEDURE – Leave to Reopen – failure to make full and frank financial disclosure – application granted

APPLICANT: Ms Garner

RESPONDENT: Mr Garner

FILE NUMBER: SYC 4681 of 2007

DATE DELIVERED: 16 July 2009

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: The Hon. Justice Rose

HEARING DATE: 16 July 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: M Bateman

SOLICITOR FOR THE APPLICANT: Pritchard Law Group

COUNSEL FOR THE RESPONDENT: M Wong

SOLICITOR FOR THE RESPONDENT: Warren McKeon Dickson

Orders

1. That the Wife be granted leave to re-open her case for the purpose of adducing the evidence of the Husband’s income tax returns for the years 30 June 2005 to 30 June 2008 inclusive and his written estimate of tax refund incorporated in her affidavit sworn 5 June 2009.

2. That the Wife lodge with Associate to Justice Rose and serve a true copy of her income tax return for the year 30 June 2008 and the written estimate of tax refund in her favour on or before 4 pm 23 July 2009.

3. That the Wife have leave to issue a subpoena endorsed by Justice Rose directed to Mr M, Accountant, to produce the documents called for, returnable before a Registrar on a date prior to 12 August 2009.

4. That counsel for the Wife lodge and serve a further supplementary written submission limited to the issues of he late disclosure by each of the parties of income tax returns and estimates of tax refunds on or before 4 pm 19 August 2009.

5. That counsel for the Husband lodge and serve a further supplementary written submission in relation to the same issues together with the treatment of the potential tax penalty likely to be imposed upon the Husband by Orders of the Local Court on 12 August 2009, such written submission to be lodged and served on or before 4 pm,26 August 2009.

6. That counsel for the Wife may lodge and serve any written submission in reply on or before 4 pm 2 September 2009.

7. That judgment will continue to be reserved pending the receipt of such written submissions and the further evidence the subject of these Orders.

8. Costs reserved.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 4681 of 2007

MS GARNER

Applicant

And

MR GARNER

Respondent

REASONS FOR JUDGMENT

introduction

1. Before me is the application of the wife filed 11 June 2009 in which orders are sought inter alia that she be granted leave to re-open her case.  The case that is still pending is represented by the property settlement proceedings between the parties.  There had been earlier contested parenting proceedings between them.  To their credit those proceedings were ultimately resolved by agreement.

2. Following completion of the evidence on 15 May 2009, directions were made for the lodgement and service of supplementary written submissions.  On 11 June 2009 on the application of the wife, I made orders granting her leave to file and serve an application to re-open her case with an affidavit in support and fixing time limits for that to occur, as well as for the husband to file and serve his response and any affidavit in support.  I fixed the hearing of the wife’s then proposed application, now before me, to take place today.  Costs were reserved.

3. I have read the application, the response and the affidavits that each of the parties have sworn.  The case for the wife is that the husband failed to carry out his obligation to make a full and frank financial disclosure by seeking to have adduced into evidence copies of his income tax returns for the years ended 30 June 2005 to 2008 inclusive, and the written estimates of tax refunds that he received.

issues

1. The husband’s evidence at the trial had been that he had failed to lodge tax returns for those years and, that his accountant was in the process of preparing the returns and any other necessary documentation.  He provided other evidence of his income for those financial years.  There is no issue that the husband has not complied with his obligation to make a full and frank financial disclosure, in that such an obligation continues both for him as well as the wife until such time as the proceedings are determined.  That point will only be reached when judgment is given and orders made.  That has yet to occur, given the receipt of written submissions and the application of the wife to re-open her case.

2. It was also conceded by counsel for the wife that she had remedied her tax position in that she has now lodged her income tax return for the year ended 30 June 2008 and had received an estimate of a tax refund.  As previously emphasised, the obligation to make a full and frank financial disclosure applies to both parties.  It is rather curious to say the least that the wife’s case, which emphasises that obligation so far as the husband is concerned, was not observed by her.  I was informed by counsel that the estimates of tax refund for the husband and wife are approximately $16,700 and $5000 respectively.

3. Further issues were raised, in that counsel for the husband informed me that his client is the defendant in proceedings instituted against him presumably by the Deputy Commissioner of Taxation in the Local Court arising out of his failure to lodge his income tax returns for the years to which I have referred.  Those proceedings are apparently listed for hearing in August 2009.  It is anticipated that there will be a penalty imposed upon the husband.  The husband’s case is that should such a penalty be imposed, then it should be taken into account and treated in a way which may have the effect of the liability, represented by the penalty, being taken into calculation of the parties’ net property.  That will have the effect of course that the wife indirectly contributes to the penalty so imposed.  The penalty likely to be imposed as counsel conceded is solely due to the lack of fulfilment by the husband of his lawful obligations for the lodgement of the tax returns.  There is no allegation made that the wife contributed in any way to that unfortunate state of affairs.  Counsel was unable to refer me to any authority to support the proposition to which I have referred.  Nonetheless, I propose to make directions to enable further written submissions to be lodged and served on the question of the treatment of the estimated tax refunds and any tax penalty that may be imposed on the husband given his failure to lodge his income tax returns on time.

4. In addition, leave is also sought on behalf of the wife to issue a subpoena to produce documents directed to the husband’s accountant.  It is quite properly conceded that any material that may be produced is only in relation to the matter of credit.  The credit issue arises as to whether the husband had either deliberately sought to delay the final preparation of his income tax returns because of some perceived forensic advantage in the proceedings before me, or for similar or same reasons did not disclose any oral or other written estimate of tax refund to which he might be entitled.

conclusion

1. I have drawn counsel’s attention to the further legal costs and time which will be incurred by the parties pursuing these matters.  It is a poor reflection on the lack of focus of a pragmatic approach to this matter which could have saved both time and legal costs, no doubt far exceeding an approach which sensible people, properly advised may have taken.  That approach could have been by an order sought by consent that copies of the relevant income tax returns for the parties and their respective estimates of tax refunds be included in the evidence, which I would then ultimately take into account when making relevant findings of fact.  It seems that the parties are hell-bent on utilising every possible avenue to explore matters, oblivious to the practical consequences and the legal costs that may be incurred.  I was informed that the issue of the proposed subpoena is a matter not opposed.  Were it not for that position being taken I would have refused leave to issue the subpoena.

2. Consequently, I have concluded in accordance with the established principle of furthering the interests of justice,  that I will receive into evidence a copy of the income tax returns for the husband for the years ended 30 June 2005 to 2008 inclusive and his estimate of tax refund, together with a copy of the wife’s income tax return for the year ended 30 June 2008 and her estimate of tax refund. 

3. Given that the further delay of these proceedings is not opposed for the purpose of additional evidence being given of the tax penalty likely to be imposed upon the husband at the hearing in the Local Court in August 2009, I will make orders which enables evidence of that penalty to be provided, as well as further written submissions from counsel regarding the treatment of the details contained in the income tax returns, the lodgement of them and the estimates of tax refunds as well as the penalties likely to be imposed upon the husband to which reference has been made.

I certify that the preceding ten (10) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rose

Associate: 

Date:  24 July 2009