Jeeves and Jeeves

[2008] FamCA 277

FAMILY COURT OF AUSTRALIA

JEEVES & JEEVES [2008] FamCA 277

FAMILY LAW – PROPERTY – Section 79A – split final hearing; discretionary issue – Question of the Court be able to isolate discrete issues as well as contemplate significant savings of costs and time for both the Court and the parties – Production of documents and the completion of financial statement in circumstances where party argues that current financial circumstances are not relevant under s 79A even allowing for discrete hearing.

Evidence Act 1995 (Cth)
Family Law Act 1975 (Cth)

A & A [2006] FamCA 102
G & G [2005] FamCA 1171
Killorgan Investments Pty Ltd v Baycorp Advantage Business Information Services Limited and Ors (2002) VSC 270
Patching and Patching (1995) FLC 92-585
White and Tulloch v White (1995) FLC 92-640

APPLICANT: MS JEEVES

RESPONDENT: MR JEEVES

FILE NUMBER: MLF 10167 of 2000

DATE DELIVERED: 27 MARCH 2008

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: THE HONOURABLE JUSTICE CRONIN

HEARING DATE: 27 MARCH 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT: MS MOLYNEUX QC

SOLICITOR FOR THE APPLICANT: J A MIDDLEMIS

COUNSEL FOR THE RESPONDENT: MR SWEENEY

SOLICITOR FOR THE RESPONDENT: TAUSSIG & CHERRIE

Orders

1. Subject to any order of the trial judge to the contrary, there be a separate hearing in respect of the following issues contained in the wife’s application filed 28 December 2006 as to:

   (a)Whether there has been a miscarriage of justice by reason of suppression of evidence including the failure to disclose relevant information or the giving of false evidence and whether in the circumstances, the Court in its discretion, should vary or set aside the orders made on 11 December 2003;

   (b)Whether pursuant to s 90K of the Family Law Act 1975, the financial agreement executed by the parties should be set aside on the basis that it was obtained by fraud including non-disclosure of a material matter or that the conduct of a party to the agreement was in all of the circumstances unconscionable.

2. That by 6 June 2008, the husband file a financial statement in a form that satisfies Chapter 13 of the Family Law Rules 2004.

3. That by 2 May 2008, the husband provide to the solicitors for the wife:

   (a)All documents indicating legal costs incurred by him (if any) for the period from 11 December 2003 until 30 June 2005; and

   (b)All documents as to the acquisition of the farming land referred to in the proceedings as adjoining his property at S, New South Wales and the extension of the quarry lease together with the financial statements of any entity with which the husband is associated by ownership, shareholding or directorship up to and including the end of the financial year 30 June 2005.

4. That all interim applications be otherwise dismissed.

5. That the substantive proceedings be otherwise referred to Registrar Kaur at a time to be determined by her for the management and the making of orders and directions for the final hearing.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 10167  of 2000

MRS JEEVES

Applicant

And

MR JEEVES

Respondent

REASONS FOR JUDGMENT

1. On 11 December 2003, Carter J made final orders between the husband and wife. 

2. The 2003 orders are recorded as having been made by consent of the parties at a time when they were both represented by Senior Counsel and otherwise ready to embark upon what the Court was led to believe would have been a lengthy financial hearing.

3. On the same date that the parties consented to orders, they executed a financial agreement within the meaning of Part VIIIA of the Family Law Act 1975 (Cth).

4. On 28 December 2006, the wife filed an application seeking to:

   (a)set aside the 2003 orders pursuant to s 79A(1)(a); and

   (b)set aside the financial agreement pursuant to s 90K(1)(a).

5. On 10 October 2007, I dismissed an application by the husband for summary dismissal of the wife’s substantive application.  The husband then applied for the final hearing to be split into two parts.  The wife opposes that course of action.  That is principally what I am now asked to determine by these reasons. 

6. There is an additional dispute between the parties about the extent of discovery.  I am also asked to decide whether or not the husband should file a financial statement at this point of time.  I shall deal with these issues here. 

7. Both parties were represented before me and in addition to having the advantage of their written submissions, I also heard oral argument.  I dealt with a preliminary issue about the admissibility and extent of the evidence that the husband relied upon.  I shall incorporate my reasons for those rulings in these reasons.

8. When the substantiative s 79A application came before the Court on 30 January 2007, the husband made his position clear by filing a response in which he sought that the wife’s application be dismissed. At the first hearing, the Registrar ordered the wife to file an affidavit setting out the particulars of her grounds under s 79A and S 90K(1)(a) of the Act. The wife filed an affidavit on 15 February 2007. I am understandably not determining anything about those grounds in these proceedings but by way of background, she said:

   My ability to fully state the grounds for my claim is limited by the fact that the majority of relevant documents are in the husband’s possession. 

   …

   The husband refuses to file a Form 13 Financial Statement in these proceedings and that also inhibits my ability to accurately set out for (sic) my case.

9. Both of those statements are relevant to the discovery issue that the wife now pursues. 

10. In her affidavit of particulars, the wife went on to say:

    …the husband disclosed ownership of a farming property located at [S] in New South Wales.

    I now know that the husband has (on or about 1 July 2004) purchased a second property in the [S] area adjoining the property already owned by him.

    …

    …I now know that on or about 1 July 2004 the husband had settled the purchase of a rural property in New South Wales at a purchase price of $3,670,000.

    …

    I do not accept the assertions made by the husband through his solicitors that the property is self-funding.

    …

    It is my belief that the husband has been able to purchase this new property because his financial position at the time the Orders were made was far superior than disclosed to this Honourable Court.

    …

    It is now my belief that post final Orders being made the husband entered into an extended lease thereby increasing the value of the quarry business.

    It is my belief that negotiations between the husband and the land owner had occurred prior to final Orders being made but such negotiations were postponed until after the Orders were made.

    I base this belief on documents seen by me and on my knowledge of the husband’s business practices.

    I am now concerned that the Court was not fully and properly apprised of the husband’s true financial position when final Orders were made.

11. In summary, as I understand the wife’s case, in addition to the matters to which I have just referred and the submissions put by senior counsel for the wife in this hearing before me, the husband was aware of information during the period from 1 July 2003 to 30 June 2004 which, with or without professional advice, enabled him to confidently say that the business income was secure for a number of years into the future.  Thus, she says, the husband suppressed vital evidence which, if she and her advisors had been aware of it, she would not have consented to the orders nor executed a financial agreement.

12. In support of her proposition, she filed an affidavit by a forensic accountant who concluded that because of the purchase price and the consequent borrowings, the husband could not have sustained his obligations on the basis of the income he had disclosed to the Court.  To add to the wife’s dilemma, she now asserts that she does not have the documents she wishes to see and the husband remains mute.

13. As a matter of general principle, a hearing of an application pursuant to s 79A will generally not be split into two or more parts.  To do so can create difficulties as described in the Full Court’s decision in Patching and Patching (1995) FLC 92-585. In Patching, the Full Court gave reasons behind the general principle pointing out the difficulty that a court faced in trying to exercise its discretion to set aside or vary orders in the absence of potentially relevant evidence.  The Full Court urged caution about dividing s 79 applications.

14. In G and G [2005] FamCA 1171 the Full Court, Kay, Warnick and Guest JJ said:

    20.Whilst there appear to be strong arguments as to why it might be inappropriate to hold split hearings in s 79A applications to determine firstly whether there is any basis for interfering with the existing orders, and then if there is such a basis what order it is then appropriate to make, there can be no doubt that there is a discretion to make an order for a split hearing.  In a case where the financial circumstances of the parties are very complicated, the cost of obtaining up to date valuations and of litigating over the size of the asset pool can be very substantial indeed.  Much of the cost involved in preparing for such litigation would be entirely wasted in a s 79A application if the applicant is unable to satisfy the Court of the existence of one of the necessary pre-conditions to the Court varying or setting aside the original order. 

15. The same logic obviously applies to an application under s 90K albeit that the grounds are different and it might be argued that the proofs and onus are also different. Although this point was not argued before me, I think I can take that issue into account when contemplating the potential duration of one or in this case, two hearings.

16. An analysis of the background of the facts in G and G is useful.

17. Joske J was asked by the respondent to the s 79A and s 90K applications to split the hearing in the same way as I am here. The basis of the wife’s application, inter alia, was that she had had problems with the English language which precluded her from fully participating in the hearing without an interpreter as well as understanding the true nature and effect of the consent orders that she signed. The same logic obviously applied to the financial agreement which was executed.

18. Joske J said that the splitting of the hearing had advantages for both parties and particularly the wife, if she failed to establish the facts which amounted to a miscarriage of justice.  He pointed out that a rehearing of the property application would “probably take up to ten sittings days and that the necessary preparation would be costly”.

19. Joske J referred to Patching in which the Full Court referred to s 79A(1)(a) and quoted the Full Court as referring to the four step process in a s 79A application.  Those four steps were:

    (a)whether there had been a suppression of evidence or “other circumstances”;

    (b)whether that amounted to a “miscarriage of justice”;

    (c)whether in the exercise of discretion, the court should “vary the order or set the order aside”; and

    (d)whether it should make another order under s 79.

    The Full Court referred to Oastler (1993) FLC 92-390 where it emphasised that it is generally preferable to deal with all of the steps in the one hearing because even if the court concluded that there had been circumstances amounting to a miscarriage of justice, it had to consider whether in all of the circumstances, it should exercise its discretion to vary or set aside the orders and/or make a new s 79 order. The Court pointed out that in the exercise of that discretion, it would have to have regard for the degree and nature of the miscarriage of justice which included the alteration of the positions of the various parties subsequent to the making of the orders.

20. Joske J referred to the Full Court in Patching as saying:

    Of course there will be cases where it is convenient to divide the procedure into several hearings; for example, where there is a discrete issue under the first and or second step and the property circumstance (sic) of the parties are complex.

21. Joske J felt that the case fell within what he described as “the guidelines made by the Court of Appeal in Patching’s case”.  He said:

    31.I accept that the issues involved in the property dispute between the parties are indeed complex and that this issue alone could easily occupy up to ten sitting days. 

    32.Furthermore, I regard that the issues which are identified by the wife in her Particulars of Miscarriage of Justice raise basically discrete issues…

    …

    38.It appears clear that the wife’s Applications pursuant to s.90K(1) and/or s.90KA also present as matters which involve discrete issues. Accordingly, these too should also be granted a separate hearing pursuant to the provisions of Chapter 10 Rule 13 of the Family Law Rules 2004.

22. The emphasis of Joske J was therefore not just on time and hence cost, but also significantly, the capacity to deal with the matters as discrete issues.

23. It was not just the authorities that Joske J reviewed. His Honour also examined Chapter 10 Rule 13 of the Family Law Rules 2004. Rule 10.13 reads:

    After the final resolution event, a party may apply for a decision on any issue, if the decision may:

    (a)dispose of all or part of the case;

    (b)make a trial unnecessary;

    (c)make a trial substantially shorter; or

    (d)save substantial costs.

24. Joske J held that the separate hearing request sat comfortably with the purpose for which that Rule was drafted insofar as:

    (a)It will dispose of either all or part of the case.

    (b)It may make a further trial unnecessary.

    (c)It may save substantial costs.

25. It is interesting to note that all of the authorities until that time were cautious about taking the step that Joske J took. The Family Law Rules came into operation on 1 April 2004. The explanatory memorandum clause relating to Rule 10.13 gave as an example the splitting of an application under s 79A.

26. Having split the hearing albeit leaving the final discretionary issue to the trial judge, the matter was taken on appeal to the Full Court on an application for leave to appeal against the interlocutory order.  The Full Court noted:

    14.His Honour concluded that the property issues were complex and that the trial could occupy up to ten sitting days.  It would appear that his Honour was concerned to avoid the expenditure of unnecessary costs in the event that the wife was unsuccessful in persuading the Court of the existence of grounds upon which it would be appropriate to set the orders aside.  His Honour appeared to be conscious of the concern expressed in the reported cases of the wisdom or otherwise of ordering a split hearing on a s 79A application but nonetheless decided it was appropriate in the circumstances of this case.

27. I have already referred to the Full Court view about the law above. The emphasis I have mentioned about time and cost issues was reinforced by the Full Court’s use of the word “wasted”. With that emphasis, little was said about the question of the capacity to deal with discrete issues. To a large degree, that depends upon how the applicant for s 79A orders and s 90K orders has particularised the claim because those matters affect the issues that the Full Court referred to of complexity, costs and valuation.

28. In this case, the wife says that there has been a suppression of evidence but that is only the first step.  The second step relates to establishing that the suppression gave rise to a miscarriage of justice. 

29. In my view, these issues on what was submitted on behalf of the wife, could be determined as preliminary issues.  In his affidavit in support of the application, the husband says:

    (a)the wife’s evidence does not attempt to identify any precise evidence on which to re-agitate the property issues;

    (b)a separate hearing would limit the issues and ensure the hearing could be accommodated by the court as a 2-3 day hearing; and

    (c)it will be expensive to meet the cost of valuations and be a complicated, time-consuming and expensive exercise for him to provide updated disclosure of his financial circumstances.

30. The husband sets out in his affidavit (see paragraph 14) the various structures, entities and work authorities under which he operates.  This is a reason for a separate hearing but not for an avoidance of the obligations that he might otherwise have to file a financial statement.

31. In his affidavit (at paragraph 12) the husband says that the cost of obtaining the valuations of the quarry interests at the previous trial were tens of thousands of dollars and could be expected to be substantially more today.  He went on to say that there would be the added financial burden of obtaining real estate valuations on several properties both in Victoria and interstate and that that exercise would not be necessary if the wife did not succeed on the preliminary application. 

32. In reply, the wife disagreed with what the husband had to say but in respect of the accusation that she did not set out her precise evidence, she said little.  She disagreed that the issues would be limited and made the following comment:

    It is my advice that the cross-examination of the husband alone as to his financial affairs will take at least two to three days.

    That concession in itself seems to me to point to the need for a separate hearing on the basis that the wife has identified or isolated a discrete issue.  The question of the relevance of that issue or the admissibility of the evidence that relates to that issue is not a matter that I am required to determine here and my determination in this interlocutory proceeding is not to be read as an acknowledgement that I necessarily agree with the wife’s assertion based on the advice she says she has received.  It is a matter about which I will hear submissions if it is an arguable matter at trial.

33. The wife’s affidavit goes on to reply to the husband’s assertions by saying that the valuation of the business is a central “element” of her application.  Again for the same reasons which I have just set out, this seems to me to confirm that there are discrete issues between the parties that could be examined without the necessity of the parties preparing for a full hearing and the Court allocating all of that judicial time at this stage.

34. In respect of the question of the expense of the valuation, the wife says that it will be limited.

35. It must be remembered that this case was ready to start as a long and complex trial in 2003 before it settled. Logic dictates that if the orders were set aside, there would possibly be a re-run of that complex hearing. To compound matters, both counsel conceded that the valuations issue would, under the 2004 Family Law Rules, require the appointment of a single expert witness. In her affidavit, the wife says:

    I say that if this Honourable Court requires the preparation of single expert valuations for both the quarrying business and the other significant assets then our expenses will be limited and if the independent single expert witness provides an appropriate investigation and analysis into the quarrying business and other relevant assets then proceedings should be shortened.

36. Each counsel agreed that it was conceivable that in the event of a dispute about what the wife has just said, adversarial witnesses might be sought.  These complexities compound my concern about time and cost.

37. Initially Ms Molyneux QC in her oral submissions said that a separate hearing looked attractive but she later withdrew that concession.  Her written position was:

    The husband’s explanation in answer to the wife’s case will be determinative of the length of a trial in the event that there is a split hearing.

    …

    Accordingly, without an explanation from the husband in to (sic) answer the wife’s case, the Court is left to only speculate as to whether or not there should be a split hearing and to further speculate as to the length and cost of a first hearing in the event the Court accedes to the husband’s application.

1. Senior Counsel for the wife referred to the material relied upon by the husband.  Notwithstanding the orders I made in January in anticipation of the hearing of the discrete issue, the wife sought to initially say that the affidavit of Michael Peter Taussig as to costs and expenses ought not be read (see paragraph 36 of the wife’s submission).  However this point was not pursued in oral argument.  On the contrary, it was put that the evidence was speculative and needed to be tested because it was a hypothesis based upon what instructions the husband had given Mr Taussig.  It was said by Senior Counsel for the wife that the affidavit was not evidence.  I rejected that.  Under s 55 and s 56 of the Evidence Act 1995, evidence which is relevant is admissible but that does not mean it is necessarily accepted. For reasons that I gave in the discussion, I can draw inferences from the evidence other than the one that the deponent wishes me to draw. In this case, to say that the discrete hearing of a splitting of the hearings would take two to three days is an underestimate but based upon the logic set out in the evidence as to what needs to be done in preparation for the hearing which I accept, I can and do draw the inference that the hearing may take longer than two to three days. When I sought some indication from senior counsel for the wife about her own estimate, she was unable to give me any. That in itself seems to me to support the argument for a separate hearing on the basis that if the wife was successful in the s 79A hearing, there would still be a substantial period of time required to determine any s 79 application whether the 2003 orders were set aside or only varied.

2. The wife wanted to cross-examine the husband and Mr Taussig about these assertions but as I indicated, commonsense dictated that this was an issue about which I could draw inferences from the evidentiary facts.  Rule 5.10(2) makes clear that the circumstances under which cross-examination should be allowed in an interlocutory hearing have to be “exceptional”.  That could not said to be the case here where in my view, the matter is one of commonsense.

3. Accordingly, it is ultimately a matter for the exercise of discretion based upon the evidence that I have and the inferences I have drawn from it.  I am satisfied on the material that the issues can be discretely discerned at this stage and that my assessment of resources, cost and time will mean that subject to anything else that may become apparent at the final hearing, it is in the interests of justice that the hearing be split.  In addition to that, all of the matters referred to in Rule 10.13 seem to cover this case.

4. Accordingly, I propose to order that subject to any order at the final hearing based upon material then available, the hearing should be determined in the two parts.

5. Turning then to the other issues raised by the parties.  A subpoena has been served upon the solicitor for the husband to produce trust records concerning costs incurred by the husband subsequent to the orders of 2003 until now.  The wife also seeks the production of documents by the husband.  Apart from the fact that the husband objects on the basis of the lateness of the request, he also objected on the grounds of relevance.

6. Rule 13.07 relates to the question of the duty of disclosure of a party. It reads:

   The duty of disclosure applies to each document that:

   (a)is or has been in the possession, or under the control, of the party disclosing the document; and

   (b)is relevant to an issue in the case.

7. The husband argues that the documents sought by the wife are not relevant to any issue in dispute.  To overcome any point of contention about the obligation to provide this information, the wife issued the subpoena.  The husband seeks, in effect although not formally argued, to set aside the subpoena. 

8. In A & A (2006) FamCA 102 Guest J referred to the fact that a party seeking to uphold the issue of a subpoena seeking documents must demonstrate that those documents have an apparent relevance to the issue or issues before the Court and in respect of which the subpoena was filed.

9. The principle of what is relevant is a discretionary but also elusive one. 

10. In Killorgan Investments Pty Ltd v Baycorp Advantage Business Information Services Limited and Ors (2002) VSC 270 Byrne J said:

    The degree of relevance for this purpose is not high: the inspecting party need only show a legitimate forensic purpose in the inspection.  A party is entitled to inspect documents not only to see if they contain relevant facts, but also to see if they contain information which may be proved otherwise than through that document.

11. As against that position however the Full Court of this Court in White and Tulloch v White (1995) FLC 92-640 said in respect of the subpoena to a party’s parent to produce a will:

    It appears to us oppressive to (the recipient of the subpoena) to have to disclose detailed financial records in circumstances where they may prove ultimately to be of no more than marginal relevance.  It is likely to widen the scope of these proceedings far beyond what is legitimate or useful and it not in accordance with a proper practice in these matters.

12. Although the bar is not set high as suggested in Killorgan Investments, the person defending the subpoena needs to be able to point to some relevance to the issue. 

13. In respect of the documents required of Mr Taussig concerning costs incurred by the husband, I do not accept the argument of the wife that they are relevant on the basis that they tend to show some sort of hypocrisy on the part of the husband in that he now claims a single trial would be extraordinarily expensive having regard to the amount of money that he has already spent since the 2003 orders.  The same principle of apparent relevance must apply and accordingly, the information need only apply at this stage in respect of the period up until about the settlement of the purchase of the land the subject of the wife’s concern or just after it.

14. The same logic must apply in respect of the documents required of the husband.  Having regard to the orders that I have made in relation to the question of the separate hearings and the fact that the wife has referred to the specific argument about suppression of evidence, the only matters that can be relevant at this stage relate to documents in the possession or control of the husband during the period shortly prior to the 2003 orders or up to the time that he acquired the land about which the wife has concern.  Accordingly, I find there is apparent relevance in relation to that period and I propose to so order.

15. Finally, turning to the question of the filing of a financial statement by the husband.  In his application in a case filed in April 2007, the husband sought that he not file such a statement until the summary dismissal application had been determined.  His new position is that he wishes to extend that to the final hearing.

16. Rule 13.05(1) reads:

    (1)A party starting, or filing a response or reply to, a financial case (other than by an Application for Consent Orders) must file a Financial Statement at the same time.

17. That particular rule however is governed by Rule 13.01(1) so to that extent the obligation under the rule is wide-ranging and focuses on the parties’ financial position as at this point in time.  Until such time as the first hearing is completed, much of the husband’s current financial circumstances to the extent that they are within the definition set out in Rule 13.04(1) may not be relevant.  However, the Court always has a discretion to override the specific rules because of Rule 1.12 taking into account the whole purpose of the Rules, the administration of justice and what impact it would have on a case to not have such a document.  I am not sure what it is that the wife says is relevant about the husband’s financial position other than the fact that she asserts that the consistency and security of income in the last few years subsequent to 2004 will corroborate an assertion that the husband knew of the security of the quarry business income as a result of what he was told or saw and which he suppressed. 

18. There may be other reasons why the wife would want the husband’s financial statement which are not readily apparent.  I place some significance on the fact that the rule requires a financial statement in all matters and notwithstanding all of the matters that I have just referred to, the sort of application under s 79A by the wife has not been excluded.  The husband’s argument that leaving aside immediate relevance, there is a large amount of work to be done carries little weight and by comparison to the other costs likely to be incurred, pales into insignificance.  There is nothing in the case of either the husband or the wife to say that it is unusual such as to justify the Court departing from the mandatory rule. 

19. In the circumstances, I propose to order the husband to file a financial statement within six weeks.

I certify that the preceding Fifty Six (56) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin

Associate: 

Date:  18 April 2008