Harris and Harris

[2013] FamCA 691

FAMILY COURT OF AUSTRALIA

HARRIS & HARRIS [2013] FamCA 691

FAMILY LAW – Financial orders – discovery – family report

Family Law Act 1975 (Cth)

APPLICANT: Mr Harris

RESPONDENT: Ms Harris

FILE NUMBER: MLC 1562 of 2012

DATE DELIVERED: 17 June 2013

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 17 June 2013

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Sweeney

SOLICITOR FOR THE APPLICANT: Mills Oakley Lawyers

COUNSEL FOR THE RESPONDENT: Mr Brown and Ms Johns

SOLICITOR FOR THE RESPONDENT: Kennedy Partners

Orders

1. That all applications for final orders be adjourned for hearing as the second case in the list commencing on 30 September 2013 but not before 10 October 2013 at 10 am as a four day matter and that the evidence in chief of all witnesses be given by affidavit.

2. That by 4 pm on 1 August 2013 the applicant file and serve upon all other parties:

   (a)the affidavits of evidence in chief of all witnesses including the applicant relied upon (noting that affidavits relied upon for previous hearings cannot be relied upon as evidence in chief); and

   (b)a financial statement that complies with chapter 13 of the Family Law Rules.

3. That the applicant pay all setting down and trial fees by 4 pm on 1 August 2013.

4. That by 4 pm on 9 August 2013 the respondent file and serve upon all other parties:

   (a)the affidavits of evidence in chief of all witnesses including the respondent relied upon (noting that affidavits relied upon for previous hearings cannot be relied upon as evidence in chief);

   (b)a financial statement that complies with chapter 13 of the Family Law Rules.

5. That no party file any further material other than as provided by these orders without leave of the Court.

6. That prior to commencement of the trial, the parties determine whether there are to be any rulings required arising out of objections to evidence and such objections be referred to in the parties’ outlines of case.

7. That pursuant to s 62G (2) of the Act, the parties and the children attend upon and at the direction of Ms S for the purposes of the preparation of a family report not to be commenced until on or after 13 August 2013 but to be completed and released by 13 September 2013.

8. That all parties have leave to issue subpoenae for the production of documents by arrangement with the registrar docketed with the management of the file.

9. That all parties have liberty to approach the registrar responsible for the management of the court file to vary the obligations under these orders to ensure readiness for trial.

10. Should any party fail to comply with these orders or the ensuing amending directions of the docketed registrar,

    (a)The Court may relist the case requiring the parties to justify why it should not be taken out of the list; and

    (b)the party who has complied may immediately thereafter file an application in a case supported by an affidavit seeking for the matter to proceed on an undefended basis.

11. That the practitioners for the parties file and serve electronically to … by 4 pm on 9 October 2013 the following:

    (a)a concise set of orders to be sought if different from those already filed;

    (b)a list of the applications and affidavits to be read and, if not the whole affidavit, the relevant paragraphs relied upon;

    (c)a list of assets and liabilities;

    (d)a list of objections to evidence upon which rulings are required; and

    (e)a bullet-point summary of argument in relation to the issues in dispute.

12. That each party provide to the court at the commencement of the hearing, a statement setting out the costs incurred to that date and from what source those funds have been paid and what costs are expected to be incurred until the completion of the hearing.

13. That within 21 days, the husband and wife do all such acts and things and sign all such documents as may be required to engage single expert valuers to prepare updated valuations of the B Town property, the C Town property and the D Town property with such valuation costs to be shared equally between the parties save where they otherwise agree on the value of it prior to the engagement of the expert valuer.

14. That by 14 August 2013, the parties do all such acts and things and sign all such documents as may be required to exchange written appraisals and/or agree to the value of:

    ·    The Country E properties and motor vehicle currently registered in the husband’s name in Country E;

    ·    The parties’ respective farm equipment and the wife’s horse/s and horse float;

    ·    The yacht registered in the husband’s name;

    ·    The motor vehicle registered in the husband’s name;

    ·    The parties’ time share interest in the ski lodge at F Town; and

    ·    The publicly listed shares currently in the husband’s name, and thereafter to forthwith engage a single expert valuer to value any items which remain in dispute and such valuation costs be shared equally between the parties.

15. That by 4.00pm on 28 June 2013, the wife provide to the husband a letter from the wife’s accountant setting out what documents he or they require(s) for inspection relating to:

    ·    The Division 7A liability;

    ·    Any alleged loan repayable by the wife to G Pty Ltd related to the long service leave payment received by the wife in 2012;

    ·    All loan account ledgers for G Pty Ltd for the period 1 January 1998 to date;

    ·    All beneficiary loan accounts relating to the Harris Family Trust; and

    ·    Any loans to the wife for the period 1 January 2008 to date in relation to G Pty Ltd that support the alleged loan account balance as at 31 March 2013 of $182,291.59 and the alleged loan account balance as at 31 March 2012 of $59,795.

16. That by 4.00pm on 5 July 2013, the husband provide to the wife or make available for inspection, the documents referred to above.

17. That forthwith, the husband instruct his accountants to prepare:

    ·    The 2012 G Superannuation Fund, financials and returns;

    ·    The Harris Superannuation Fund 2012 financials and returns;

    ·    A reconciliation of all loan account balances in G Pty Ltd for the period 1 January 1998 to date to the extent that the exercise goes back beyond 2006 if it is practicable to do so; and

    ·    A reconciliation of an all documents evidencing the alleged transactions that support the drawings by the wife from the Harris Family Trust of $37,447 as at 30 June 2012.

18. That there be liberty to apply.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Harris & Harris has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 1562 of 2012

Mr Harris

Applicant

And

Ms Harris

Respondent

REASONS FOR JUDGMENT

1. The wife, by application, seeks an order under Rule 13.22(1)(b) of the Family Law Rules 2004 but also that the husband provide through his accountant a series of documents that require the accounting work to be done before the documents are provided. For the reasons that follow I propose to make an order not using the general approach in Rule 13.22(1)(b) but rather 13.22(1)(a). The distinction, although subtle, has some relevance and significance here. Rule 13.07 provides that the duty of a party to disclose documents applies to each document that has been or is in the possession or under the control of the party disclosing the document and which is relevant to an issue in the case.

2. Rule 13.08 provides that a party by written notice may require another party to provide a copy of or produce for inspection a document which is referred to in correspondence prepared to or by another party. Rule 13.22(1)(b) provides that a party may seek an order that another party disclose a specified document or class of documents by providing to the other party a copy of the document or each document in the class for inspection by the other party. What the wife here seeks is all documents relating to a number of specific topics.

3. It concerns me that the exercise is both wide-ranging and possibly likely to lead to further disputes in the unusual situation that the wife’s advisor had been the accountant who had been involved in advising, if not preparing the documents involved or some of them, for a number of years until recently.  In my view, having regard to Rule 13.07 the better approach, and one which I favour, is that set out in Rule 13.22(1)(a).  Rule 13.22(1)(a) provides that a party may seek an order that another party comply with a request for a list of documents in accordance with Rule 13.20. 

4. Rule 13.20 provides that, after a case has been allocated the first day before the judge, a party may, by written notice, ask another party to give the requesting party a list of documents to which the duty of disclosure applies.  In other words, that the request can be quite specific in relation to a number of topics.  The parties were before me for a first day of hearing on 15 May 2013.  The case was adjourned on that day to enable them to work out some discovery issues so that the final hearing could be fixed.  The uncertainty had been apparent to the 14 May because on that date the wife’s solicitor had written to the husband’s solicitor saying that there had been a Division 7A liability under the Income Tax Assessment Act payable by the wife. 

5. The solicitor said that there had been no prior notification to the wife with respect to that liability and that the wife was not aware of it.  On that day the solicitor requested that the solicitor for the husband provide all documents evidencing the alleged tax liability.  The solicitors also wrote that they had been instructed by the wife’s accountant that the accountants acting for the husband had advised that documents had been sighted, which indicated that a particular business entity was treating money withdrawn by the wife in 2012 as long service leave and that had become a debt payable by the wife to the entity. 

6. A variety of other documents was also requested.  Despite the fact that on 15 May, counsel for the husband had said that the husband would authorise the accountants to give the wife whatever she wanted, the suggestion before me today is that that cooperation has not occurred.  On 17 May 2013 the husband’s solicitors wrote to the wife’s solicitors.  They said that in respect of the Division 7A tax liability the sensible solution was that the wife and her advisors should contact the husband’s accountants directly. 

7. In respect of the loan account that gave rise to the liability it apparently concerned funds that had been applied from an offshore company account towards the acquisition and renovation and maintenance of the various Country E properties which form part of the property dispute between the parties.  It was the accountants for the husband who had advised the husband that those transactions had created the potential Division 7A tax liability.  Rather than try and explain all of that the solicitors for the husband suggested, again, that the wife and her advisors deal directly with the accountants who had raised the question of the potential tax liability.

8. The solicitors again confirmed that the husband had no objection to approaching the husband’s accountants directly to obtain any information that she required.  On 13 June 2013, the wife’s solicitors wrote to the husband’s solicitors and said that the wife’s accountant had communicated with the husband’s solicitors on an ongoing basis between 17 May and 12 June.  They said that prior to 12 June none of the documents that they had requested had been provided by the accountants or, for that matter, by the husband.  The letter then said the following:  “We are instructed that [H Partners] did not/would not provide the documents”. 

9. It was therefore clear that the statement made by counsel for the husband at the hearing before me on 15 May, that the wife could have access to whatever she needed from the accountant, had not been carried out.  On 14 June, in other words a day later, the husband’s solicitor wrote back to the wife’s solicitor and said that this was all perplexing because the wife’s accountant had previously acted as the parties’ company accountant and he therefore had a detailed historic knowledge and understanding of the parties’ affairs including those relating to the origins of the proposed Division 7A liability.  The solicitor said that again the husband had authorised the accountants to cooperate with the provision of any information that the wife sought and that was readily available. 

10. In relation to the specific statement made in the wife’s solicitor’s letter that the accountants did not/would not provide the documents, the husband’s solicitor said that that was a misrepresentation of the position.  To support that conclusion the letter addressed to the wife’s solicitors attached an email from the accountant indicating quite clearly that what was being suggested by the wife’s solicitors was not right.  On 14 June, also, the accountant wrote to the husband’s solicitors and said that he was shocked to hear of the assertion that documents had not been provided. 

11. He reported that he had spoken to the wife’s accountant on 12 June and provided documents as requested.  He spoke again the following day to the wife’s accountant to discuss further queries that the wife’s accountant had raised that day.  It was conceded that it had taken longer than anticipated to gather together all of the requested documents, but that was in part because of the fact that the wife wanted to go back to 1998 and from a multitude of sources.  According to the accountant it was a bad time of the year for them to do so. 

12. The accountant’s letter then said that the wife’s accountant had also advised them on 12 June that they were not interested in the husband’s accountants providing any paperwork going back to when the wife’s accountant had been preparing all of the various accounts and tax returns for the corporate entities and that the wife’s solicitor’s request was a little bit unusual.  According to the husband’s accountant the wife’s accountant said that he would discuss the problem with the wife so that she would retract requesting earlier documents.  In argument before me this morning that position was said not to be at all clear. 

13. This dispute needs a resolution.  The wife’s accountant clearly has the background to the issues that are in dispute.  The husband’s accountant has the documents.  Between then they can decide amongst themselves what is relevant particularly having regard to the fact that both husband and wife are relying on their respective accountants to see the documents. I propose in those circumstances to make orders that effectively give the discovery control to the accountants so that they will know exactly what documents they need to see. 

14. I will give liberty to apply in the event that there is a further problem.  One of the difficulties that arises, apart from the generality of the documents sought, is that there are certain orders sought by the wife requiring the husband to undertake instructions to his accountant to do such things as reconcile loan account balances and to prepare various returns.  I am not at all clear on whether that can be done but I propose to, at least, ensure that it is underway by making an order that the husband instruct his accountants forthwith to undertake those tasks.

15. A second issue arose this morning in relation to the question of the appointment of a family reporter to prepare an updated family report for what is looming as a parent in dispute.  Initially, the husband wanted the exercise to commence immediately, and the wife wanted it to start in September.  It is not at all clear to me why the September date was chosen by the wife but as an alternative it has been suggested that it can be done in August.  In my view, for the trial to proceed as I expect it will in October, the exercise must be started in August. 

16. For the exercise to be done efficaciously it is important that the family reporter have the relevant affidavit material so that she knows just exactly what the parties are telling the Court.  On that basis, I therefore propose to make orders for the preparation and filing of the affidavit material to give the family report writer an opportunity to start work and have the report ready in time for a trial in October.

I certify that the preceding sixteen (16) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 17 June 2013.

Associate: 

Date:  16 July 2013