Gitarro and Gitarro

[2007] FamCA 1203

FAMILY COURT OF AUSTRALIA

GITARRO & GITARRO [2007] FamCA 1203

FAMILY LAW – PRACTICE AND PROCEDURE – joinder – further application to be filed by the wife – Australian Taxation Office to be notified of proceedings

Family Law Act 1975 (Cth)

APPLICANT: Mr Gitarro

RESPONDENT: Mrs Gitarro

FILE NUMBER: MLF 2754 of 2005

DATE DELIVERED: 25 September 2007

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 24 & 25 September 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Levine

SOLICITOR FOR THE APPLICANT: Issac Brott & Co

COUNSEL FOR THE RESPONDENT: Mr Grant

SOLICITOR FOR THE RESPONDENT: Pearsons

Orders

1. That the final hearing of all outstanding applications between the parties be listed to commence at 10.00am on 12 November 2007 before Justice Cronin.

2. That the wife have leave to file an amended application for final orders in the terms of the Form 2 document handed to the court this day.

3. That G2 Pty Ltd, G Pty Ltd, B Pty Ltd and M Gitarro be joined as parties to these proceedings.

4. That forthwith upon the receipt of a sealed copy of these orders, the wife serve upon the four parties referred to in paragraph (3) hereof:

   (a)       a copy of these orders;

   (b)a copy of the amended application for final orders referred to in paragraph (2) hereof;

   (c)a copy of all affidavit material relied upon by the husband for the purposes of the final hearing of these proceedings;

   (d)a copy of all affidavit material relied upon by the wife in respect of any interlocutory hearing subsequent to 1 March 2007 and any affidavit filed for the purposes of the final hearing that was to commence on 24 September 2007;

   (e)a copy of the transcript of the evidence of Mr B given to the court on 21 September 2007.

5. That the return date for a Form 2 application in a case seeking orders against National Australia Bank be listed before Justice Cronin at 9.00am on 10 October 2007 if the wife is so advised to issue it.

6. That the wife have leave to issue subpoenae returnable before Justice Cronin at 9.00am on 9 October 2007, such subpoenae to be issued by 4.00pm on 2 October 2007.

7. That the husband and his legal practitioners be excused from attending either of the foreshadowed return dates of 9 October and 10 October 2007 if the husband is so advised.

8. That the costs of the husband of these proceedings of 24 September and 25 September thrown away as a result of the adjournment of these proceedings be reserved to the final hearing.

9. That neither party file any further affidavit in the proceedings other than any affidavit by or on behalf of the wife supporting the said application in a case addressed to the National Australia Bank.

10. That the Registry Manager of the Family Court of Australia at Melbourne write to the Australian Taxation Office, Melbourne and advise that in the proceedings between the parties, allegations are made of a variety of cash transactions which may be the subject of evidence and a copy of such letter be provided to the legal practitioners for the husband and the wife.

11. That the legal practitioners for the wife provide a copy of the letter referred to in paragraph (10) to each of the additional parties joined by these orders.

12. That the parties referred to in paragraph (3) file and serve any material upon which they intend to rely by 1 November 2007.

13. That the Form 2 application of the wife dated 24 September 2007 be otherwise dismissed.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 2754 of 2005

MRS GITARRO  

Applicant

And

MR GITARRO  

Respondent

REASONS FOR JUDGMENT

1. In this matter, I have judge managed the proceedings since early in 2007 after the matter was not reached before Barry J in a February list.

2. I shall return to the history of events between February and now below.

3. The case was listed by me for final hearing to commence on 24 September 2007.  An application was made on that day for an adjournment and for a variety of reasons to which I shall refer, I determined on Tuesday 25 September 2007 to grant the adjournment and I made orders accordingly.  These are my reasons.

4. These are property proceedings between the husband and the wife.  They have a long marriage and adult children.

5. The proceedings relate only to property and spousal maintenance.

6. The wife filed her application on 8 September 2005 and the husband responded by filing a response on 4 October 2005. 

7. The parties had a case assessment conference in October 2005 and then a hearing later that month relating to injunctions.  The case then went quiet for a while and was given a trial notice listing on 15 September 2006 at which, various orders were made for the filing of affidavit material in anticipation of the final hearing.

8. On 18 October 2006, there was a valuation dispute and orders were made by a registrar which were then reviewed and heard by Mushin J on 11 December 2006.  His Honour dismissed the applications.  It now appears that the issue of the valuation of the real property is not in dispute.

9. Various procedural orders were made by consent also on 11 December 2006 and the case was listed for hearing on 5 February 2007 for four days.

10. As I have indicated, on 5 February 2007 the case was not reached.

11. On 21 February 2007, I fixed the final hearing for 2 April 2007 and importantly, set a time frame for both parties to serve any applications that they intended to rely upon. 

12. On 16 March 2007 I gave leave to the wife to withdraw part of her then application which was to join the husband’s brother.  Further discovery orders were then made.

13. On 5 April 2007 I was involved in extending time for compliance by a Mr B and D Pty Ltd in respect of subpoenae that had been served upon them.  Some five months later, compliance had still not been completed and on Friday 21 September 2007, I had Mr B give evidence and he was subjected to cross-examination by the counsel for the wife in relation to various transactions and documentation.  A transcript of that evidence was made available to all of the parties on 24 September 2007. 

14. There have been hearings subsequent to those to which I have referred and the matter was still not ready to proceed from the wife’s perspective on 24 September 2007. 

15. In simple terms, the wife argued that she was not in a position to proceed because the husband had not made full and frank disclosure and in an attempt to obtain documents from organisations such as the National Australia Bank and various parties with whom the husband had transacted, she had not been able to obtain the various documents to establish two fundamental assertions which she makes.

16. I have already mentioned two of those persons.  The National Australia Bank is a very large commercial banking operation.  It is asserted by the wife that the Bank has not complied with its obligations under a subpoena and that despite a number of letters sent to them after the return date of a subpoena, the Bank did not respond.  At the very last moment in September, the Bank indicated it would make a further search for documents and I understand that that is still happening but that its position is that it has no further documents to produce.  That however has been one of the reasons why I have agreed to adjourn these proceedings because the wife asserts that it is implausible that the Bank does not have the sort of documents that the wife has requested under subpoena.  The wife asserts that all of the advertised commercial paraphernalia of the Bank suggests that these documents should (and do) exist.  Accordingly, one of the steps which I have permitted the wife to undertake at this late stage is to issue a further application against the Bank during which it is proposed to take a similar course to that relating to Mr B to have him examined as to where the documents are if in fact they do exist and if they do not exist, why not.  The wife must understand that that is not only an enormously expensive resource issue from the Court’s point of view but also one that may be very expensive from the Bank’s point of view if it has been forthright and compliant.  Conversely, if the Bank has not provided proper responses to the subpoena then the wife will be well justified in complaining about the expense to which she has been put.

17. More fundamental to the adjournment application which has been clouded with many arguments about what documents have or have not been produced, is two issues. 

18. The wife asserts that prior to separation, the husband and others were involved in a business apparently turning over significant sums of cash and that large sums were used by those business proprietors.  Whether there is anything illegal about that remains very much to be seen.  She went on to assert however that the husband and others transacted with Mr B to sell the business.  The contract price cannot be argued about.  The document speaks for itself.  The wife’s position however is that there was much more cash sought from and paid by Mr B.  It should be noted in the transcript of Mr B’s evidence that he denied that assertion.  The wife says it was an extra $600,000.  The husband, for his part, largely supported by Mr B, says that Mr B applied pressure to settle for less than the contract price and that a cursory read of Mr B’s evidence will show that he says he saw an opportunity where there were problems between the various partners who were the vendors and he took advantage of it. 

19. The contrast between the two positions is stark. 

20. The whole transaction however on either version by the husband or the wife suggests something was very odd and for that reason, I have directed the Manager of the Registry to advise the Australian Taxation Office that those allegations have been made and to the extent that the Commissioner is interested, he or she may take whatever course of action they so desire.

21. It goes without saying that if the wife’s version is true, there should have been a substantially greater sum of money available for division between the parties.  Where that money is (presupposing it exists) is a matter that still remains a mystery and presumably is part of the discovery process upon which the wife is still proceeding.

22. The wife argued that unless an adjournment was granted, justice could not be done to her case.  She said that the lack of response in relation to the subpoenae and the husband’s lack of candour in respect of disclosure was such that she was not able to get to the bottom of the cash transaction to which I have just referred but her counsel said that given a short time further, presumably with the assistance of the National Australia Bank, that exercise may be clarified.

23. Such an allegation as that to which I have referred is very serious.  If it is true, then apart from a lack of candour and the possibility of breaches of Australian law, I am faced with a prospect that the husband may not only be not telling the truth but it may have other resources which are hidden.  It was my view therefore that the wife should be given a final opportunity to pursue that issue so that ultimately I may be in a position to make an order which is just and equitable to both parties. 

24. I have in no way taken the view that either party in this case is or is not telling the truth.  I have certainly made some comments about my dissatisfaction with the way in which the proceedings have been conducted to date and I shall turn to that in a moment. 

25. To make matters a little more complicated, on the morning of 24 September 2007 the first day of the trial, the wife filed an affidavit by a Mr P who was a former partner of the husband and his brother M Gitarro. Mr P makes reference to the fact that he had a falling out with the brothers and he asserts similarly to the wife that there was a cash payment made over and above the contract price and that he was provided with some of that money.  I raised with counsel for the wife whether or not Mr P may very well have been admitting his participation in breaches of law of the Commonwealth of Australia and counsel said that Mr P knew what he was doing.  Counsel for the husband said that the husband was interested to hear the evidence of Mr P and particularly his cross-examination.  Mr P’s evidence may very well be critical to the wife’s case and for that reason, I thought it appropriate that the adjournment application should be granted.

26. The second issue relates to the question of a transaction that is equally mystifying. The wife says that the husband and his brother, through two corporate entities, acquired a business which I understand is still subsisting and conducted by the brother’s company.  It is alleged that it is a very successful business. The husband acknowledged that the business was originally bought by his company but he and that company had no beneficial interest in the business notwithstanding the apparent legal interest. According to the husband, the appropriate transfer was made of a lease at a time when the beneficial owner required documentation to be completed. The wife asserts that this was a nonsense transaction and that the husband’s brother through his corporate entity is simply holding the interest in this successful business on behalf of the husband and even if that is not right, the husband should not have taken the course of action that he did because it had the effect of defeating the entitlement of the wife.

27. This is also an issue that is being pursued by the wife and her discovery processes appear to have been hampered for a number of reasons. 

28. In a discussion that I had with counsel in the proceedings in May, at which time the question of joining further parties was raised, I indicated that I was not of the view that a party could bring in non-marriage parties without not only some evidence of their involvement but also that there had to be some indication that orders would be sought against that person or orders which would have some impact upon those persons as a result of which those persons would be entitled to be parties to the proceedings.  The same discussion was had before me on 24 September and to some extent on 25 September 2007.

29. Persons cannot be joined to proceedings unless there is a clear indication that there is some evidence which would justify a court taking the view that orders may be made against those persons.  It is not appropriate to join persons as parties with the view that as they will then be parties, orders for discovery can be made against them.

30. As a result of my comments, I gave the wife through her counsel, an opportunity to take the course of action to which I have just referred.  On the second day of what would have been the trial, I was handed what was described as a pleading.  This Court is not a court of pleadings but I have treated the document as an amended application notwithstanding it is still on the wrong form.  I have made provision in my orders for that position to be rectified.  What is fundamental to the wife’s case is that she has now sought specific orders against persons who are not parties to the marriage and who have not been involved in the proceedings to date.  It goes without saying that natural justice requires that those parties need to be advised of this course of action and hence an adjournment must have followed.

31. Each of the four persons, three of whom are corporate entities according to the wife, are intricately involved in each of the two issues to which I have just referred. Mr Levine on behalf of the wife pointed to the various pieces of evidence which he said would justify a court making the orders which are now being sought against those persons. He made reference to the provisions of s 106B of the Family Law Act1975 (Cth) (“the Act”) as well as s 93AE.

32. Needless to say, the husband opposed the joining of these parties but the reality is that as orders are now being sought against them, natural justice requires that they be at least given the opportunity to be heard. 

33. In so far as I am critical of the wife for the way in which these proceedings have been conducted, it is because of the fact that I have indicated that there was no basis to join these third parties until such time as it was clear what course of action was going to be taken against them which might prejudice their interests.  As I have indicated, it was not appropriate to simply seek orders to join them so that some form of discovery process could then be undertaken against them.

34. In so far as the wife has relied upon the failure of the various recipients of the subpoena to respond, that also is a matter of serious concern.  Counsel for the husband pointed to the fact that several weeks went by when nothing was happening at a time when action could have been taken to force the recipients of the various subpoena to respond.  I was troubled about that issue but not to the extent that I felt it justified prejudicing the wife by refusing her application for an adjournment. 

35. Mr Grant of counsel for the husband correctly pointed out that a further adjournment by the Court prejudiced the husband.  No amount of costs could satisfy the justice issue in respect of that. To a very large degree that is right but where ultimately I have to make a decision under s 79 which is just and equitable to both parties, I think it is appropriate to adjourn the proceedings as a matter of discretion to enable the wife to pursue what are very serious allegations. 

36. Having said that, I am extremely concerned about the fact that if the wife is not successful, the pool of assets in this case is modest to say the least.  I required each party to provide me with a costs letter on 25 September and it is clear that the costs that each party has incurred is a substantial portion of the equity that is available to them. The risks and stakes for each party are therefore high.

37. In the circumstances however, exercising my discretion, I decided to give the wife a final opportunity to get her house in order notwithstanding the assertion by her that it is entirely the lack of candour and frankness of the husband that has caused the problem. That remains to be seen.

38. Mr Grant on behalf of the husband sought an order for costs.  I indicated that I was not prepared to entertain such an application at that late stage but rather to simply reserve the husband’s costs to my further determination.  The outcome of that application will depend upon what I perceive to be the outcome of what is a starkly contrasted argument between the parties.

39. In so far as parties are now to be joined, I was concerned that they should have not only the opportunity to make any applications that they so desired but also to file any affidavit material that might be of assistance to the Court.  These parties will see the various affidavits of the husband and wife in which the various assertions are clearly set out.  Accordingly, I have given the joined parties an opportunity to file material should they be so advised.

40. There was considerable angst about the fact that the solicitor for the husband is a partner of a firm of solicitors which was involved in some of the sale transactions.  No specific orders were sought in relation to the production of documents but I understand that a further request is to be made of the husband’s solicitors for those documents relating to the sale of the business to which I have referred.  I can only urge all parties to provide all relevant documents to sort the procedural issues out as quickly as possible.

41. The application of the wife handed to the Court on 24 September 2007 also included orders that the wife be permitted to file and rely upon the affidavit of an accountant Mr J. I have indicated that the Rules are intended to provide assistance to the Court in the conduct of proceedings. The wife did not seek the appointment of a single expert.  She sought permission to rely upon Mr J.  The difficulty with that situation is that the Rules still require a party to justify the need for expert evidence.  It is unclear what evidence Mr J will be giving and whether that is simply factual narrative or opinion.  Mr Levine indicated to me that the question of the appointment of a single expert may have to be contemplated.  In so far as that is the situation, I urge the parties to try and sort out that issue as quickly as possible.  This case must not be delayed any further.

1. Finally, there was a suggestion by the wife through her counsel that I had made some reference to counsel for the husband by his first name. Mr Levine candidly indicated that he had not heard it nor had Mr Grant on behalf of the husband.  I offered an opportunity for any application to be made in respect of that and Mr Levine indicated that he had instructions not to proceed with any such application.

2. In the circumstances, I make the orders as I have indicated.

I certify that the preceding Forty Three (43) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin

Associate

Date:  25 September 2007