Jeeves and Jeeves (No 3)
[2010] FamCA 488
•18 June 2010
FAMILY COURT OF AUSTRALIA
| JEEVES & JEEVES (NO. 3) | [2010] FamCA 488 |
| FAMILY LAW – PROPERTY – Section 79A and S 90K application – Orders made by consent when wife represented by lawyers and had assistance from professional advisers including valuer – Wife asserts that husband misrepresented evidence to valuers – Assertion rejected – Wife asserts that husband did not provide her with details of nature and duration of his entitlement to use of land for quarrying – Assertion rejected – Wife asserts that husband misrepresented position concerning capacity of the business to increase production and that he had no intention of increasing production – Assertion rejected – Wife asserts that husband had withheld information about an application to extend his work authority on land – Assertion rejected |
| Evidence Act 1995 (Cth) Extractive Industries Development Act 1995 (Vic) Family Law Act 1975 (Cth) |
| Barker & Barker [2007] FamCA 13 Bigg v Suzi (1998) FLC 92-799 Burns v Burns [2004] EWCA Civ 1258 Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 Molier and Van Wyk (1980) FLC 90-911 Morrison v Morrison (1995) FLC 92-573 Petersen v. Moloney (1951) HCA 57 Public Trustee (as executor of the estate of Gilbert) v Gilbert (1991) FLC 92-211 Simon v. Vincent J. O’Gorman Pty. Ltd. (1979) 41 FLR 95 Suiker (1993) FLC 92-436 Taylor v Taylor (1977) FLC 90-226 Woodcock & Woodcock (1997) FLC 92-739 |
| APPLICANT: | Ms Jeeves |
| RESPONDENT: | Mr Jeeves |
| FILE NUMBER: | MLF | 10167 | of | 2000 |
| DATE DELIVERED: | 18 June 2010 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | THE HONOURABLE JUSTICE CRONIN |
| HEARING DATE: | 25, 26 & 27 May 2009; 6 July 2009; 11, 12, 13, 14, 18, 19 August 2009; 9, 10, 11, 12, 15 MARCH 2010 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | MS MOLYNEUX QC WITH MR COMBES |
| SOLICITOR FOR THE APPLICANT: | JA MIDDLEMIS |
| COUNSEL FOR THE RESPONDENT: | MR SWEENEY |
| SOLICITOR FOR THE RESPONDENT: | TAUSSIG CHERRIE & ASSOCIATES |
Orders
That save as to any applications for costs, the application of the wife filed 28 December 2006 and the response thereto filed by the husband on 25 January 2007 be dismissed.
That any application for costs be by way of written submission accompanied by either an affidavit as to facts relied upon or by reference to any affidavit already filed, to be filed and served no later than 4 pm on 25 June 2010 and any reply thereto be filed and served by no later than 4 pm on 9 July 2010 and, save as to any circumstance relating to disputed evidence as to the facts upon which the application is based, the determination of such applications be heard and determined in chambers.
Certify for the attendance of counsel including in the case of the wife, senior counsel and two counsel.
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
| MS JEEVES |
Applicant
And
| MR JEEVES |
Respondent
REASONS FOR JUDGMENT
In proceedings to set aside an order for settlement of property and a financial agreement, Ms Jeeves (“the wife”) accused her husband Mr Jeeves (“the husband”) of misleading her and this Court in 2003 about his financial position and his intentions in relation to a quarrying business. It is asserted that the consequence of the husband’s action has been a miscarriage of justice.
On 11 December 2003, Carter J made orders between the husband and the wife under s 79 of the Family Law Act 1975 (Cth) (“the Act”). Those orders were made with the consent of both parties. They finalised all outstanding property proceedings between them. Each party was then represented by experienced lawyers including senior counsel.
On the same day that the orders were made, the parties also executed a financial agreement under the Act. The formalities required by the Act relating to that agreement were also completed. No evidence was led by the wife to the contrary.
Three years later on 28 December 2006, the wife filed an application to set aside the orders and to discharge the financial agreement.
The application to set aside the orders was brought under s 79A of the Act. Specifically, the wife conducted her case on s 79A(1)(a) which reads:
(1) Where, on application by a person affected by an order made by a court under section 79 in property settlement proceedings, the court is satisfied that:
(a)there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance;
The application to discharge the financial agreement was brought under s 90K. It too was based on grounds of the husband’s misrepresentation of his financial position. Although the wife’s summary of argument suggested the application was brought under s 90K(1)(a), my understanding after a statement made by her counsel was that she was proceeding under S 90K(1)(e).
If however, both of those S 90K provisions were relied upon, they would relevantly read:
(1) A court may make an order setting aside a financial agreement or a termination agreement if, and only if, the court is satisfied that:
(a)the agreement was obtained by fraud (including non‑disclosure of a material matter); or
…
(e)in respect of the making of a financial agreement—a party to the agreement engaged in conduct that was, in all the circumstances, unconscionable; or
The subject of which provision the wife was proceeding under was not entirely clear. It was raised in final submission by counsel for the husband. Later in these reasons, I will mention the slim distinction between the two provisions and as I approach the determination, I am conscious of that distinction. The wife bears the onus of proving her case but to ensure that she has had every opportunity to present evidence that might be seen to prove either of the relevant sub-sections above, I have contemplated each.
Splitting the trial
For reasons which I gave on 27 March 2008, I bifurcated the hearing determining it was appropriate to deal first with the setting aside application.
The case begins
The final hearing began on 25 May 2009. Both parties had filed affidavit material. Each was represented by counsel.
The case opened for the wife
Ms Molyneux QC on behalf of the wife opened her case saying that the wife commenced the proceedings after discovering in 2006 that less than six months after the final orders were made in December 2003, the husband purchased and became registered as the proprietor of a farming property called “R Farm” which adjoined a farming property called “S property”. S property had been a part of the property proceedings in 2003. The purchase of R Farm cost the husband in excess of $3 million.
Ms Molyneux said the acquisition of R Farm was at odds with the documents filed by the husband in the proceedings in December 2003 that the wife relied upon. She pointed to the 2003 final orders in which it was evident that the husband had been unable to pay the wife a lump sum settlement yet, less than six months later, he bought R Farm.
Ms Molyneux went further and said that in 2003, the husband under oath, made representations to the Court as well as through his expert valuer that a “lease” on the quarry property ended in May 2011 at which point he was going to “shut the doors” on the “lease”.
It was asserted that the wife would prove that the bank records showed that the increase in the husband’s debt by the acquisition of R Farm, was going to be funded from the quarry business. That business had been valued on profit and loss statements to the end of the financial year 2003 when the husband represented that it was working to its full which could not be increased. Senior counsel said that one year later, that is, by the end of the 2003-2004 financial year, the net profit had doubled. It was during that 2003-2004 financial year that the husband bought R Farm.
In May 2009, the wife was intending to prove either that the acquisition of R Farm occurred in the first half of the 2003-2004 financial year, that is, even before the 2003 orders were made or that events were unfolding at the time of the orders such as to enable the purchase immediately after the orders. That position became evident from the cross-examination of various witnesses and the calling of a real estate salesman involved in the purchase of R Farm.
In opening, Ms Molyneux said that the Court would ultimately conclude two matters. First, in 2003 when the orders were made, the business was working at “half its capacity” but thereafter, its capacity increased sufficient to fund the additional borrowings to buy R Farm. Secondly, because of the increased borrowings and contrary to what the husband said to the Court in 2003, the quarry business could not possibly shut down by May 2011.
In summary, according to Ms Molyneux, if the Court adopted the husband’s statement of his financial affairs in December 2003, the husband had suppressed relevant financial information “when the orders were made”.
Ms Molyneux said the wife relied on the material that the husband provided to her when she consented to the 2003 orders.
As can be seen, when the case began, the focus of the wife was on the husband’s purchase of R Farm. That acquisition had triggered the wife’s interest as to how the husband presented and/or prepared his case in 2003.
The husband’s opening response
The husband adopted the position that the 2003 orders had finalised all outstanding issues between the parties and the financial agreement ended any disclosure obligations. His position was that he owed the wife no further duty and had no need to respond to her various questions. He adopted the approach that if the wife wanted to set aside the orders, she had to prove her case. I do not criticise the husband for that approach.
During the hearing, there was considerable debate between the lawyers about whether the husband was going to give evidence or call witnesses. There can be little doubt that the husband kept his powder dry. That in turn led to the wife complaining that she had to call a variety of witnesses because admissions were not made. Again, having regard to the wife’s own evidence, I could not criticise the husband.
The standard of proof
As in any proceedings of this type, the onus is on the applicant to prove what is asserted. The standard of proof is the balance of probabilities. It is that standard that I apply in these reasons. In some instances where there is a serious allegation such as misconduct or untruthfulness, I have given consideration to the matters set out in s 140(2) of the Evidence Act 1995 (Cth).
The length of the hearing
This case took an inordinate amount of time to be completed. What began as a modestly short hearing of several days turned into a trial over 17 days. Because of the calendar of the Court, and the estimates given by the wife, it was impossible to hear the case in one sitting. That necessitated several hearings over a space of a year. That occurred because of the lengths to which the wife went to prove her assertions.
Concluded view
For reasons which follow, I find that the wife cannot establish a ground under either s 79A or s 90K of the Act.
Background
By way of background, the husband and wife had a long marriage.
The husband is now 68 years old and the wife 62 years. Neither appears to enjoy good health. The long marriage began in 1969 although the parties lived together for about three years prior to that. There were three children of the marriage all of whom are now over 18 years of age.
Throughout the marriage, the husband had been employed as a builder’s labourer, farmhand and truck driver before purchasing a bulldozer and obtaining employment with the public service until 1978 or 1979 when he began working in the quarry industry. In 1986 the husband commenced the business known as G Business which I shall refer to in these reasons as “the business”.
Eventually, the marriage came to an end in late 2000 and the husband left the home. Ultimately, the separation precipitated the 2003 proceedings.
The 2003 dispute as to the value of the business
The principle dispute in 2003 concerned the value of the business. The business was conducted by a corporate entity but nothing turns on that. The quarry was conducted on land owned by a man named CE and by a corporate entity controlled by members of the CE family. Various references were made to “a lease” of the CE land. As became clear on the evidence, the land was not leased in any legal sense of the word. The use of the land was governed by a compensation agreement.
The husband and the CE family had an agreement which had two essential features. First, the husband was responsible for the payment of royalties to the CEs; and secondly, the husband had obligations to restore the land upon completion of the use of the quarry.
The husband could only operate the quarry pursuant to government regulation initially by licence and in more recent years by what has become known as a work authority.
To obtain a work authority, various government bodies had to give their approval after inquiries and consultation with the local community.
In the lead-up to the orders in 2003, there was a significant dispute between adversarial valuers for the parties as to the value of this business. The wife’s valuer assessed the value at $3.49 million on the basis that the use of the land came to an end in May 2011 but $6.3 million if the right to use the land was extended beyond that date. The husband’s valuer assessed the equity value as $1.026 million working on the basis that the agreement for the use of the land would expire in May 2011 but he also calculated the value at $1.726 million if it went beyond. Both valuers did the same exercise.
The husband’s valuer said he disagreed with the approach of his counterpart but undertook the exercise anyway. It will be seen therefore that there was a very significant but focused dispute.
THE COMPROMISE BEFORE CARTER J 2003
At the final hearing before Carter J, senior counsel then acting for the wife told her Honour that a “compromise” had been reached and that there had been a splitting of the difference.
In the proceedings before me, there was discussion about whether the splitting of the difference was between the lawyers or the valuers but it is clear that the lawyers were using the various figures given to them by the valuers. An analysis of the figures would suggest that the parties had taken the respective valuations based on the business ending in 2011 and split the difference. That might be contrasted with taking the other longer-term valuations which had the business going beyond 2011. There was no evidence before me as to precisely what did happen and in my view, it does not matter.
The wife’s outline of case document 19 June 2009
In an amended outline of case document filed on 19 June 2009 which was after the wife had already completed her evidence, she said it was her case that in 2003, the husband maintained he had a work authority which was “in effect” tied to the compensation agreement with the landowners and that the compensation agreement came to an end in May 2011. In her case until that point, both as to the opening and the wife’s evidence, it had been asserted that there had been a lease of the land.
The outline of the wife further asserted that it was the husband’s case in 2003 that he would be unlikely to be physically capable of continuing to play an active role in the business beyond 2011 because he would then be about 70 years of age. Furthermore, the landowner was already over 80 years of age as at 2003. Senior counsel for the wife said that based on the possibility of the landowner dying prior to May 2011, the husband’s case in 2003 had been that the beneficiaries of his estate may not have renewed the agreement with the husband. Thus she said, the husband’s 2003 case was that the business would cease operation in May 2011 and that was the basis used to value the business.
The wife’s outline of argument continued that the wife compromised the proceeding relying upon the husband’s sworn evidence that he did not have the intention or the possibility of conducting the business upon an area of land greater than that covered by the work authority. This became an issue known as “the pegged out land” argument.
The pegged out land becomes apparent in 2002
The quarry had been operated on land with precise boundaries for a number of years. There had been agreements with the CEs in 1991.
The quarrying had always been governed by government licences now known as work authorities.
In 2002 when the parties first came before Joske J to commence the property trial, the matter was adjourned because the wife asserted that the husband had “pegged out” some land beyond the precise boundaries about which she was ignorant and she wanted to investigate those matters.
Before me, the wife pointed to transcript before Joske J in which she expressed concern about the pegged out land. In hindsight, that indicated that the wife was of the view that the business was expanding. It obviously also meant that there was a different valuation consideration not undertaken to that point in the property proceedings. The wife and her advisers were therefore alert to a very different valuation issue to that which had been the case until then.
In the proceedings before me, the wife’s outline of case document said about the use of the pegged out land:
What the wife now knows is that the husband’s denial was false and that no later than December 1996 the husband had sought and obtained from the landowners unlimited and unconditional consent to the extension of Work Authority 279.
To make sense of that statement, the outline said:
The denial of the husband referred to was that he had operated upon the extended land or that he was expanding his business.
Thus, it was asserted that when the orders were made in 2003, the husband was already operating on the extended land or was expanding the business beyond what the valuers were considering.
In 1996, the husband applied for an extension of the work authority to cover the land outside of the defined licensed boundaries to include the “pegged out” land.
I am satisfied after hearing all of the evidence that the wife was aware of that application or if she was not personally, her advisors were.
The wife asserts that the husband stalls the extension application
It was the wife’s case that subsequent to 1996, the husband was initially pressing the relevant authorities to grant an extension of the work authority but that from November 2002 until March 2004, the husband did not take steps to pursue the approval of the extension. The inference that the wife would have me draw is that that was done deliberately to keep down the value of the business. For reasons to which I shall turn, I reject that assertion.
The wife asserts that the husband knew the business was more valuable than as assessed
The wife’s outline of case asserted that the husband knew that the business was more valuable than the value used by her when she entered into the orders. The only inference that I could draw from that assertion was that even though she compromised the valuation dispute, the valuers’ figures were irrelevant because they were not assessing the matter on the basis of the likelihood of the extension to the work authority to cover the extra land.
Finally, the wife asserted that contrary to the husband’s duty to make a full and frank disclosure of all relevant financial material which she said extended to include expected future earnings, the husband withheld or suppressed relevant material as a result of which she did not know the true value of the business.
The proceedings in July/August 2009
When the hearing before me was adjourned in May 2009, the next return date was 6 July 2009. On the return date, senior counsel for the wife described her client’s case as including an allegation that the husband had failed to disclose the application for the additional land to obtain the work authority to have three production plants. She said the husband maintained the business operation was determined by the agreement with the landowners but the husband had remained silent about the various applications.
On 12 August 2009 which was the third phase of the hearing, Ms Molyneux said that the wife would assert that part of the husband’s representation was that he would not be increasing production levels in the business. She said the wife would point to increases in wages and costs of new trucks. She said the wife’s case about the husband’s denials in 2003 was that the representations upon which the settlement in 2003 was based were false. She said that the husband’s denial of the increased water availability, new vehicles and his intentions relating to operating after 2011 were all false. She pointed to the fact that what occurred after the orders were made was evidence of the falsity of the representation.
The parties as Witnesses
Despite the fact that this case took much time, I had the opportunity to carefully observe the husband and the wife. There were few occasions where the evidence of the husband and the wife conflicted over a factual issue. That was because of the way the wife conducted her case. The wife endeavoured to prove her case through the cross-examination of the husband and his witnesses.
The wife was not a good witness. In dealing with her evidence, I find that I cannot rely on what she said. Apart from her evidence being of little assistance, it was clear she was on a mission to damage the husband and in particular, his credibility such that I could not believe any evidence he gave. In this case however, I find her evidence unreliable rather than that of the husband. In dealing with her evidence below, I shall set out my reasons.
The husband spent a number of days in the witness box in cross-examination. Most of the topics about which he was cross-examined were repetitive. He maintained his composure and rarely showed frustration. He is a man who appears to have health problems but they did not seem to have affected his recall in relation to fundamental issues. In respect of finer detail, there were issues about which he could not recall, but having regard to the time that has elapsed and the fact that he may not have been aware he was to be asked questions about those issues, it is not surprising. Notwithstanding all of the probing by Senior Counsel for the wife and the constant assertion that he was not being truthful, I found the husband an honest witness.
Where the evidence of the husband and the wife conflicted, the husband was the more reliable historian and I have accepted his evidence.
The wife’s evidence
The wife relied upon a number of affidavits notwithstanding the rules required her to present one. The process of piecing together her evidence was not easy. She relied upon an affidavit filed 19 December 2002 which obviously pre-dated the disputed final orders. She asked me to read into her case, her affidavits of 15 February 2007 and 8 October 2008 together with her financial statement filed 8 October 2008.
The wife was asked by the husband’s counsel whether she had looked at and read the outline of case document which at that stage had been filed on 22 May 2009. The wife said she agreed with what it said but there was still “a lot more to be proved”. If so, it was not apparent.
The document that the wife initially filed was principally about the husband suppressing evidence and giving false evidence about the value of the business such that it would have made it impossible for him to be able to afford to buy R Farm. The wife was asked what further matters were to be proved and by whom. She said that the husband had signed “new leases” with the CEs.
The AB Company and other conspiracies
The wife was given an opportunity to expand on what this extra evidence was and she referred to a “joint venture” with a company called AB Company which is a customer of the husband. She said that in respect of this joint venture, AB Company would be taking over the husband’s quarry but that everything was on “hold fire” until all of these proceedings were out of the way. Throughout the hearing, there was not one scintilla of evidence to suggest that the husband was in some collusive arrangement with AB Company. Counsel for the husband raised this issue in final submission.
The wife said she knew about the proposed arrangement with AB Company when the orders were made in 2003. She said she could not call AB Company in 2003 because “they are under instructions from [the husband] not to present it”.
Importantly, the wife added that the lawyers knew about the AB Company agreement made after the orders were entered into in 2003 but she was unable to explain why no evidence was presented in respect of it.
She said that there would be a lot of people “implicated”. She said a lot of people did not want their names mentioned and there was a lot of corrupt work that would implicate a lot of other people. She included the husband’s accountant in that group saying that all of the figures that he had done were wrong.
When pressed as to who else was involved in the corrupt practices involving the AB Company arrangement, the wife nominated the Westpac Bank and in particular the bank manager. When pressed again, she said there were government bodies including those associated with water responsibilities. She asserted that she was not making things up and that she had the proof. She went so far as to say that one official was “part of a conspiracy”.
According to the wife, these people were all part of a conspiracy to keep information from the Court.
The wife said that prior to the making of the 2003 orders, she was at a significant disadvantage because despite her corporate roles, she had little first hand knowledge about the financial and other details of the marriage. She said that during the marriage, she signed documents in her capacity as a director often without reading them and certainly not understanding them. She said she trusted the husband who she thought was acting in the best interests of the business to further improve the financial position of the family. However in cross-examination as I shall show in a moment, she accused the husband of being dishonest and did not accept anything that he said. Importantly, before the orders were made, she told the valuers and her solicitor that she did not accept that her husband was a truthful person. Thus, she entered into the settlement telling them that the husband’s word could not be trusted.
When her evidence was tested under cross-examination, the wife stated that she believed that her husband had been dishonest. She said she had previously trusted him but could not any longer, having regard to what she had “found out”. The difficulty with that statement is that she told her advisors in 2003 that the husband was not to be trusted.
Having regard to her limited evidence, I have no idea what she “found out” if she was referring to the conspiracies above. There is also some significance in this because in their final submissions, the wife’s counsel constantly referred to “what the wife now knows”. I could not connect the two principles.
The process of the making of the 2003 orders and financial agreement
On the subject of the making of the 2003 orders or, more importantly, the signing of minutes and the financial agreement, the wife said that because she knew the husband had lied leading up to the 2003 orders, she did not sign any documents. She maintained that she had not “signed” the minutes of orders. When challenged about that she said that someone else must have. When pressed again, she said she did sign one lot of papers but did not come back the next day because she was seriously ill in her motel.
When the wife was shown the original minutes from the court file, she confirmed that she had signed them. She said she remembered signing them after being very distraught knowing that she was signing a paper that was not correct. When asked about whether or not the documents were explained to her and the fact that she was compromising she said:
They told me that this is the deal; that is all that Mr [L] could find from the figures that [the husband] had given him and from what information they gathered I found to be true and correct but [the husband] hadn’t produced all his evidence. He lied.
She said that the advisors only knew from what evidence the husband had provided. She said she drew the conclusions herself about her husband’s truthfulness but still permitted the Court to make the orders and importantly, she executed the financial agreement.
I found it disconcerting that the wife should say that she did not sign any papers at the court in December 2003. This was significant litigation. The parties were represented by experienced and senior counsel and solicitors. None of these practitioners was called to give evidence.
In her evidence to me, the wife said that she was seriously ill at the time of the orders. When asked whether her lawyers knew that at the time, she said:
Yes, I suppose so.
In a curious twist, the wife was asked whether she still had all of her court documents from 2003 and she said initially that she thought they had been destroyed but she then repeated the point to say they had been destroyed. That occurred she said, after the case was finished. She said she could not recall having any notes or documents or solicitors’ letters other than from the current proceedings. At that point, the wife’s senior counsel interrupted and indicated that she knew that a file existed and as it transpired, it did. The wife’s evidence on this issue was untrue. Why she said what she did remains a mystery because the lie made no difference to her case other than it precipitated a disgorging of documents by the wife that may never have come to light. Amongst them was her action against her former solicitors arising out of the 2003 orders.
Importantly, the wife said that in deciding whether or not to enter into the consent orders, she relied upon the advice given to her by her lawyers and also that the valuers relied upon material provided by the husband. According to her evidence, she knew said there were four areas of dispute between the valuers.
Counsel for the husband suggested to the wife that right up until the orders were made in 2003, she was negotiating on the basis that she knew the business would continue to expand and prosper. Her unresponsive answer was that she knew the truth but her advisors could only work with the figures they had.
The wife’s evidence about the husband
It is clear that the wife had and still has, a very poor view of the husband. She described him as a compulsive liar. She said she based this belief on documents seen by her as well as her knowledge of the husband’s business practices. Apart from the documents tendered by her counsel which I find do not support any such assertion, no other evidence was led by the wife about these documents that she had seen. However, it became clear during the trial that one of the husband’s complaints about the wife was that she had broken into his premises and car and taken documents. Although the wife was vague about that, I find that she has taken documents of his on more than one occasion. Her explanation was that she was entitled to do so for discovery purposes.
In her affidavit, the wife referred to “post final orders”, the husband entered into an “extended lease” with the landowners. Having heard all of the evidence, I am satisfied that when she swore her affidavit material, she had not properly examined what it was that she was asserting. As became clear, even an examination of documents in her possession would have portrayed more accurately what the position was between the husband and the landowners.
It was also part of the wife’s case which could only arise inferentially, that negotiations between the husband and the landowners (in respect of what I now know to be a compensation agreement) had occurred before the 2003 orders but were “postponed” until afterwards. This was a significant allegation to make and if proved, would potentially give rise to a strong argument that she had been misled as had the court before the orders were made. Disturbingly however, the wife said in evidence that she knew that was going to happen.
The extended land and the extension of the compensation agreement
The wife relied upon three draft compensation agreements between the husband and the landowners to prove that in the course of the husband’s negotiations with the landowner, he was stalling for time to evade his disclosure obligations. All of these documents however were in existence before the 2003 orders.
The first document prepared by the landowners was rejected by the husband. The second document prepared by the husband’s solicitors was rejected by the landowners. The third document was prepared by the landowners’ solicitors. Having heard the evidence of the husband and his then solicitor Mr Y, I am satisfied that the husband had not been aware of the third document until the parties were at court in 2002.
The wife relied upon an affidavit prepared for Mr CE who had apparently attended at the 2002 hearing before Joske J. Mr CE said in his affidavit that he was prepared to “negotiate” with the husband. This evidence was presumably prepared to show that the husband was not being forthright.
What is clear and I so find, no agreement had been reached about any extension of the expired 2001agreement. Whilst I could draw conclusions adverse to the husband from the evidence of Mr CE in 2002, there is evidence in the form of documents annexed to the affidavit of Mr Shann that would give rise to a doubt as to what view Mr CE held in 2003. Mr CE was not called to give evidence. No document with Mr CE was signed before December 2003. I certainly do not conclude on the evidence that the husband was stalling for time but that is for reasons that appear below.
The issue of the husband delaying finalization of the compensation agreement
The wife pointed to the CE negotiations as an example of the husband delaying the extension process and/or deliberately walking away from the negotiations. I do not find that to be the case on the evidence.
As for the husband deliberately delaying finalization, the wife did not point directly to that in her evidence and the husband was emphatic in his denial.
The wife accused the husband of slowing everything down in the business so that he could “gear up” after the orders were made. No evidence was presented about this but it was the subject of cross-examination of the husband. He said it was not actually possible to do that because there were customers who relied upon his supply on a daily basis. To do what the wife was asserting would require him to “knock back” business and that he said, would make it unrecoverable. On the evidence of subsequent events, I find there was no reason for the husband to so behave and I accept his evidence on that point.
The husband said that when negotiations with the CEs broke down, he protected his position by exercising an option to continue to quarry under the 2001 agreement. He was questioned why he would do that having regard to the state of the negotiations and the absence of any contractual position. He said that exercising the option put to rest in his mind, any need to actively pursue an extension of the work authority that was still pending. There was sense in that logic.
Doing the best I can on the evidence, none of this material was new to the wife or more particularly, her expert.
The issue of the husband’s stated intentions in 2003
After the trial before Joske J was adjourned, the wife sought a “Barro” or litigation funding order. She filed an affidavit in December 2002 and said that it was evident from the “two proposed new leases” that upon the new lease coming into operation, the business would be operating a land size three to four times the size of that which was then currently operating. She told the Court that in the proceedings before Joske J, the valuation reports were of limited use because they did not deal with the asset that “appears to in all probability exist”.
The wife drew the conclusion above from what the husband said in his own trial affidavit. She swore that the husband’s affidavit was a “clear and unequivocal intention” to continue to run the business beyond 2011 and that what he was suggesting was that the only impediment was the intention of the landowners not to agree to “an extended lease”.
The husband replied to the wife’s affidavit. He said he had no “intention nor possibility” of conducting business upon the land, that is, the extended land about which the wife was granted the adjournment by Joske J.
The paragraphs of the affidavits from the Barro application are important in these proceedings for a number of reasons. First, it is clear that the wife was aware of the land extension issue. Secondly, the wife was aware of the landowner’s view albeit that no agreement was signed. Thirdly, the husband said that even if he got the land, he neither intended to use it nor could do so. These three points would have triggered inquiries by the wife and her advisers about all of the attendant possibilities.
Limited notice was taken by the wife of the husband’s statements. Certainly, no evidence was led before me about how the wife reacted nor whether the husband was questioned about what he said.
In cross-examination, the husband gave much more detail (to which I shall refer below when I deal with his evidence) as to why he had neither the intention nor the possibility of working this extra land. His explanation was plausible.
In respect of the wife’s assertions arising out of the 2002 affidavit, the husband said he not only denied the assertion about his future work life but also had no intention of working for the rest of his life. All of this information was available to the wife and her advisors to make a judgment upon prior to the orders being made.
I am satisfied there is no evidence therefore to justify the wife’s assertion that after the orders, the husband entered into an “extended lease” by an arrangement which had been “postponed” before the final orders in 2003.
The husband’s 2003 financial statement
The wife claimed in her trial affidavit in these proceedings that there were some “discrepancies” in the husband’s financial statement sworn 26 November 2003 filed for the purposes of the final hearing in December 2003. She particularly pointed to “his failure to disclose his ownership” of a real property in A. In the next sentence of that affidavit, the wife quoted the property being referred to in his trial affidavit sworn 6 June 2002.
I find there was no question of the wife being misled about the A property. She knew of it as did her professional advisors. The statement about the husband’s incomplete financial statement filed in the Court was mischievous and unnecessary.
In cross-examination, the wife conceded this was not something about which she was misled because she relied upon her advisors.
Although the wife made the concession about the husband’s financial statement, he was still cross-examined about it. He said the financial statement was drawn by his accountant.
Senior counsel for the wife cross-examined the husband about the inconsistency between the financial statement concerning his income and his income tax return for the year ended 30 June 2004 which concluded six months after the orders were made. Again, nothing turns on that point because the wife did not rely upon the husband’s financial statement.
Having regard to the complexity of the husband’s corporate enterprise, I was not convinced there was any useful basis to compare the two documents.
It is important to note that the husband said in cross-examination that he gave authority to the wife’s professional advisors permitting them access to whatever they wanted in 2003. The wife called her 2003 expert Mr L as a witness and he certainly made no complaint about requesting documents or information and being denied access. Mr L said that he was refused permission to speak to Mr CE but I do not accept that was an issue. I return to that in a moment.
Whilst it is clearly the responsibility of all litigants to ensure that their financial material is accurate, for the purposes of this hearing under s 79A, nothing turns on the wife’s point because it was certainly not the financial statement that misled the wife nor caused any miscarriage of justice.
The husband increases profitability
One of the submissions of the wife was that in 2003/2004, the husband knew the business profitability and productivity was on the rise yet did not tell the valuers.
The valuers had agreed to value the business on the discounted cash flow basis.
The wife asserted that both valuers incorrectly commenced by accepting as true and correct, the financial records for the financial year ended 2003. No evidence has been presented to me to prove that those financial records were not correct.
In hindsight, the profit and loss statements show that profitability increased but just exactly when in the financial cycle is a matter of conjecture.
The husband’s evidence was that profit increased after he altered some production activities and there was a change in the market. Accepting that statement to be correct, it must have occurred after the orders because that was when he made production alterations.
Senior counsel for the wife tendered the various financial statements of the entities in that relevant period. In between 2003 and 2004, sales rose by 17 per cent. In the first half of the financial year, the sales figure appears to be $3.44 million. In the second half, it appears to be $3.24 million. Thus, I could not conclude that prior to the December orders, any specific increasing pattern was evident.
Discounted cash flow valuations are based on the future net cash flow discounted back to a present value. How that would have been evidently different in the first half of the 2003/2004 financial year from earlier years is not apparent.
I do not find that the husband was aware of the increased profitability before the 2003 orders.
The pesonal injuries claim
I have already commented about the lack of detail in the wife’s trial affidavit material.
The wife said that the husband had received a letter dated 10 April 2002 in relation to a personal injuries claim and that he had failed to disclose this claim in his court documents prior to the 2003 orders. In respect of the claim, I found her statement perplexing. For reasons which will appear elsewhere in this judgment, that statement was mischievous and did her no credit. I am satisfied the claim was well-known to the wife before the 2003 orders. In addition, the husband did not benefit from the claim. Again, time was wasted on that issue.
Conclusion on the wife’s evidence
Despite the various changes of approach by the wife after the trial began in May 2009, it was the husband’s purchase of the R Farm property which began her journey to show he had misled her in 2003. Her theory was simple. Having regard to what the husband had explained was his financial position in December 2003, the purchase was inexplicable. To a degree, that view was supported by her expert Mr L but as I shall set out, he was not properly instructed and made some assumptions that did not help.
At the conclusion of the wife’s evidence in May 2009, few particulars were clear about the basis of her case. There followed a succession of witnesses whose evidence was not in affidavit form (at least initially) and who also shed little light on what it was that the husband was supposed to have done to give rise to a miscarriage of justice. As senior counsel for the wife acknowledged, there was no hard evidence and everything was to be drawn from inferences.
I reject the evidence of the wife for three reasons.
First, she asserted that she had destroyed the court documents from 2003 and that was clearly untrue.
Secondly, the wife conceded that on one, if not more occasions, she had gone to the husband’s premises and taken documents that belonged to him. This was a form of self-help discovery. In these proceedings, the husband complained bitterly that his office premises had been burgled and that documents associated with his case had been stolen. That required court intervention in early 2009. Although the wife was adamant that she did not steal them, the documents were delivered to her by a source that she did not divulge. I do not accept her version of how she came to possess the documents. It was implausible that someone would simply burgle the husband’s premises and dump them on the wife’s doorstep. There are proper processes to be followed and self-help is to be criticised.
Thirdly, the conspiracy theory does her no credit. She and her lawyers had access to all of the relevant witnesses and the subpoena process of the Court is effective. Nothing I heard and no document that was produced, indicated any such conspiracy at all.
Other witnesses:
The evidence of Mr Y
Mr Y is a legal practitioner who was called by the wife to give evidence by telephone. He was involved as a lawyer on behalf of the husband in respect of commercial dealings over a number of years.
Mr Y acted for the husband in respect of negotiations between the husband and Mr CE. He said that the file started in about 1991 when he prepared an innocuous compensation agreement which was due for renewal in 2001. He said in 2000, on behalf of the husband, he started to negotiate an 11 year period of extension. However, every time he made any move, it came to a “dead end”.
Mr Y said that the compensation agreement was “extended” to cover “some other lands” although he then added “sort of weren’t going to”. He said that the exercise was to extend it to get the use of more land. The issue of the extra land was raised again by senior counsel for the wife when she asked Mr Y whether, when the husband wanted to expand, he had the consent of the CEs. Mr Y agreed.
I concluded that at least Mr Y was aware that the husband had a plan to get control of the extra land but I was left with the impression that it was not necessarily going to be used.
Mr Y said that the document produced by the CEs was outlandish.
In February 2003, Mr Y prepared and swore an affidavit himself because Mr CE had attended court and produced an agreement that he had never seen. This affidavit was in evidence before me. There was no reference in that document to extended lands as it was directed to the issue of the agreements.
In the end, Mr Y was clear that there was no consensus between the husband and the CE family about an extension of their compensation agreement.
Mr Y’s view was that the CEs tried to obtain more control and they wanted more than just a compensation agreement; they wanted more money and also security. He said that once the sons of Mr CE became involved, it became “impossible” to deal with them. He pointed to the fact that the husband had an option and because he could not reach agreement with the CEs, he exercised the option in 2000.
Mr Y was asked about whether the compensation agreement as he understood it, expired in 2011 and he agreed.
The evidence of Mr Y was uncontroversial. I accept his evidence as supportive of the husband’s submission that prior to the 2003 orders, no position with the CE family had been finalised. On the evidence otherwise, I could not conclude anything about the application for an extension of the use of the CE land.
The evidence of Mr AN
Mr AN is employed by Sandhurst Trustees as the manager of properties and in his role, was responsible for a deceased estate which owned land from which the husband took water. The estate for which Sandhurst Trustees was responsible, owned the water. Mr AN said there were no documents explaining the nature of any transactions with the husband because the estate leased land to tenants and what they did with the water was their own business. The inference I drew was that the husband dealt with the tenants.
The husband did however have an agreement with the estate in 2007 in relation to the access to water but the source of that water was Goulburn Murray Water. That was well after the controversial events in these proceedings.
As with the evidence of Mr Y, this evidence was uncontroversial.
The evidence of Mr DS
Mr DS is the manager of town planning for the local Council. He was called by the wife about planning permits on the quarry land. The planning permit was an integral part of the granting of the work authority.
Mr DS gave evidence about the planning scheme and said that usually permits were required for development and use of land. In respect of the work authority application, the planning permit was issued on 19 April 2007.
Prior to the granting of the permit, Mr DS was unable to say whether there were objectors and he did not have the notes of the initial meeting in July 2000.
If the evidence of Mr DS was led to show some sort of manipulation by the husband of the process concerning the work authority, it was largely irrelevant to any issue in dispute.
The evidence of Mr B
Mr B is now a mortgage and finance broker who was employed by the Commonwealth Bank in 2004.
Whilst at the bank, Mr B dealt with the husband about financing the purchase of R Farm. His evidence was directed mostly to what happened immediately after the 2003 orders were made.
It was clear that the wife held mistrust for Mr B. Apart from the earlier suggestions of people being involved in some sort of conspiracy, senior counsel for the wife asked for details about his association with the husband. He said that his last dealing with the husband had been before September 2005.
As part of the interlocutory processes, the file of the Commonwealth Bank had been produced under subpoena and it was handed to Mr B to answer questions.
Mr B could not remember when the husband first approached him but he was able to say from the bank file that the temporary excess overdraft was increased from $100,000 to $400,000. Various terms and conditions were applied by the bank. There was a loan known as a Better Business Facility Bill for $3.050 million for a period of three years with interest only payments. According to Mr B, the husband had to make his first reduction in that bill by 1 June 2007. He confirmed that there was another facility provided to the husband of $750,000 for one year on an interest only basis and the first reduction in that was to be 1 June 2005.
From the bank’s file, a formal letter of offer dated 11 May 2004 was produced. I find accordingly that the bank was not approached about financing the purchase of R Farm until after the 2003 orders.
A search of the file by Mr B also showed that equipment had been financed to the extent of $500,000 by the bank. That too, was well after the 2003 orders.
Senior counsel for the wife pursued the question of a review of the husband’s financial position by the bank presumably on the basis that the wife was suggesting that the husband had not been open with them.
Mr B was asked why the husband’s account was being reviewed and he said that the bank always did that on an ongoing basis. As for what the bank relied upon to sign off on all of the various mentioned loans, Mr B said that it would have “appeared” to have been the business financials for the year ended 30 June 2004. These were not received until some considerable time later.
Unfortunately, the file of the bank was described by Mr B as a mess. He could not reconcile its order. I mean no criticism of the bank because it would appear that after the file arrived at the Court, it had been inspected by parties. There were long periods of silence where Mr B sifted through pages of documents looking for things that might enable him to answer questions that were put to him.
Specifically on the question of the husband’s purchase of R Farm, he said there was no reference to the husband buying it before April or May 2004. As for any period prior to that, he confirmed he had no independent recollection.
Mr B was asked why the husband purchased R Farm and he said that the idea was to run cattle on it to settle debt. If there had been no recent communication about that issue between the husband and Mr B, that answer adds considerable credibility to the evidence of the husband.
In relation to the documents setting out income, Mr B was asked why there was no reference to any income from R Farm and he responded that the documents were historical and as such, income had not been earned. He said the bank relied more on historical documents than on what might happen in the future about which little attention was paid.
Mr B was asked about selling off plant and cattle and was asked why that occurred and he responded by saying that it was to pay back the bank. He also confirmed that the husband was looking for compensation from some forestry groups and in the result, was looking for capital reductions of his debt.
Mr B was asked by senior counsel for the wife why the bank would not have required a business plan from the husband and his response was that that would not have occurred for a long standing client.
The bank’s file had not been seen by Mr B for some years. It had been pulled apart and was out of any semblance of order. Much of his evidence was based upon assumption and reconstruction.
On the second day that Mr B gave evidence, senior counsel for the wife asked for an order that I declare Mr B “hostile to the wife’s case”. This application arose after some probing questions were put to Mr B in evidence in chief about his personal relationship with the husband. He seemed taken aback by the question but acknowledged that he knew the husband to the extent that if he saw him in the street he would say “hello” but they did not drink together nor had they had a meal together. He could not remember when the last discussion had taken place apart from the day prior to the evidence when he spoke to him at the court. It was not suggested that they specifically discussed the evidence at the court.
It was put by senior counsel that Mr B’s manner and tenor were unfavourable to the wife to such an extent that she ought to be permitted to cross-examine her own witness. After discussion, the wife’s application to so treat Mr B was withdrawn. In my view, that was sensible.
Mr B told me that a customer could not collect his file so there was no suggestion that the husband had done anything untoward with the documents belonging to the bank. The bank had a copy of the “Heads of Agreement” so to that extent, was aware of the business activities of the husband. All of the documents to which my attention was drawn appeared to be of a commercial nature.
I found nothing in Mr B’s evidence to suggest that there was any prevarication or procrastination. He appeared to me to be an honest witness who had no motive for lying. Four years had gone by since he had been in any professional relationship with the husband. No personal relationship existed. As such, there was no reason to doubt his honesty.
If in so far as the evidence was adduced to prove that the husband was involved in the acquisition of R Farm prior to the December 2003 orders, it did not do so.
The evidence of Ms O
Ms O is the tenements officer of the Department of Primary Industry. She provided a proof of evidence rather than an affidavit.
Ms O was a confident witness who had some sort of supervisory role within her department. It seemed that not too many people had the sort of experience she had in conducting the affairs of the department concerning work authorities. Unfortunately, Ms O’s role meant that she had no control over the activities of other persons within the department who were responsible for reports that went into the file.
Ms O told me that in 1999, the Department received an application from the husband to construct and operate a second quarry on the land which was the subject of the existing work authority.
Ms O set out that Mr ME had sent the Department a revised plan “as part of the processing” of the application in 1999. She then set out the steps and process that culminated in the grant of the application by the minister in 2007. The Department required a bond of $335,000 from the husband before he could commence work but this was in 2007.
Ms O said the time taken for the approval of the application was a matter for the proponent because the application was driven by him. This application had taken many years.
The inference that the wife would have me draw from the evidence of Ms O was that the husband had applied for the extension of the work authority but as he was the driver of it, he could have expedited it had he so chosen. For reasons that follow, I reject that as too simplistic an analysis in this case.
Ms O said the tenure of the work authority was subject to the wishes of the landlord and the Extractive Industries Development Act 1995 (Vic). She agreed however that not only was the consent of the landowner required in the application but also for the work authority continuation. The work authority continuation, although issued by the Department of Primary Industry, was very much in the hands of the landowner who could effect a revocation at will.
In an interesting observation, Ms O was of the view that despite the husband having executed a compensation agreement with the landowner until 2011, there was no risk of revocation of the work authority. That was because there was a legal arrangement between the husband and the CEs. I am not sure of the qualification of the witness to give that evidence but it was not a subject of dispute.
Despite being called by the wife, the evidence of Ms O served to strengthen the husband’s position that beyond 2011, nothing was certain. That was because despite her optimism about the legal arrangements as she saw them, if the landowner revoked the rights of the husband to work the land, the work authority would go with him because there would be no land to work.
In relation to any inference that the husband may have manipulated the extension until after December 2003, Ms O agreed that there had been a “fair bit of activity” between 1996 and 2004 in the application. She pointed out that her witness statement was not intended to create an impression of inaction between 2000 and 2004. She said Mr ME had been active. She said that the process was lengthy albeit that the proponent drove the process. She said this application had not fallen into a “black hole”.
The matters to which I have just referred do not assist the wife’s argument about the husband deliberately delaying things because despite her confidence and optimism, Ms O was unable to explain much because as she said, she was in charge of the file but not what went into it.
Ms O was therefore unable to tell me whether anyone had been lacking in diligence. This evidence did nothing to advance the wife’s case under s 79A.
The evidence of Renee Burchell
Renee Burchell is a legal practitioner in the employ of the firm of practitioners acting for the wife.
Initially, Ms Burchell said she had the conduct of the matter on behalf of the wife. In cross-examination, she changed that to a role under which she conducted the litigation on behalf of the wife with her employer. That latter position come to the fore when it was apparent she had a limited role in and knowledge of, the wife’s case.
Ms Burchell was called to prove that documents which had come into the possession of the wife, had not been disclosed by the husband in the 2003 proceedings.
Counsel for the wife also submitted that the husband had represented that the financial circumstances of the company as represented to the financial year ended 30 June, 2003, would “not materially change after 30 June, 2003”. That submission is also dependent upon the finding in relation to the availability of the material between 30 June, 2003 and the making of the orders as well as any enquiries made by the experts.
The wife’s counsel submitted that the representations of there being no material change after 30 June, 2003 were accepted by the wife and the court. Again, that would depend upon the finding in relation to the question of whether the advisers were fulfilling their tasks.
Counsel for the wife then submitted that the financial records post 1 July, 2003 were not in evidence before the court in December 2003 and that they were:
… an essential pre-requisite to the Court making the orders so that it could be satisfied that the orders would be just and equitable.
It is not at all clear upon what basis the orders were made but it is important to note that the court did make the orders on the urging of the parties’ respective counsel. On their face and without any further evidence to contrary, I am obliged to conclude that the Court accepted the underlying value of the orders as being just and equitable to both parties.
The reply submission also made a statement that the orders of 2003 were based on a valuation of the business which did not include the asset of the stock piles of extracted resources. This matter was referred to in the initial submission but I again say that there was no evidence that the wife or her experts were misled about this issue. The experts had access to not only the documents but also, as I understand it, access to the work site. If the stockpiles were not referred to in the balance sheets of the business, presumably the experts would have understood that. That was not something attributable to the actions of the husband.
Even if I am wrong about that, I note in exhibit H-1 a document prepared by the experts showing the summary of final differences between them in December 2003, Mr. L is recorded as having noted $300,000 as “inventories of [resources]”. It would seem that the “stockpile” was at least contemplated by Mr. L.
Senior Counsel for the wife in the reply document ventured again into the R Farm issue. In my view, it was adequately dealt with in the earlier submission and the matters raised in paragraphs 48 of the submission and thereafter, do not take the earlier submissions any further. Importantly, I reiterate the findings I have made on the evidence.
The Exhibits
Over the course of the trial a large number of exhibits were admitted into evidence including over objection from counsel for the husband. I have read them all and drawn conclusions where I could. Very little of that material was of assistance to the wife.
Extractive Industries Development Act 1995 (Vic)
Much was said about the Victorian legislation that commenced in 1995. A copy of that Act was provided to me. The purpose of that Act, amongst other things, was to provide a co-ordinated assessment and approval process for extractive industries. Section 5 of that Act commences by referring to the fact that various provisions do not apply to any extractive industry exempted by the Minister including on conditions. There is no evidence before me as to whether the provisions have been exempted by the relevant Minister.
Section 17 of the relevant Act provides that a person who is proposing to apply for a work authority must lodge a work plan. Similar provisions apply in respect of the variation of work authorities. Various consultative processes are required of the departmental head, including consultation with municipal councils.
Section 19 of the Act requires the Minister to only grant the work authority if the applicant has satisfied a series of requirements, the extent of which would indicate it is not a simple process. Similarly the imposition of conditions on work authorities would similarly appear complicated because it involves the Minister imposing conditions such as rehabilitation of the land, the protection of the environment, the protection of ground water and the payment royalties.
Section 21 of the relevant Act provides that a work authority remains in force for the period permitted on the land unless it is sooner cancelled or the land owners’ consent, if required, is revoked, lapses or otherwise ceases to have effect or is otherwise varied pursuant to the relevant Act. I refer to the findings I have made in respect of the nature and extent of the agreement between the husband and the CE family. It is this particular legislation that reinforces the evidence of Ms. O to the extent that if the CEs withdrew their consent, the work authority lapses.
The relevant Act provides for the transfer of a work authority which seems not to be affected by any landowner restriction. It must follow that the work authority only remains in force whilst the land owners’ consent continues.
In this case, the legislation reinforces the position adopted by the husband.
The law to be applied in these proceedings
The wife’s case has largely but not entirely, been conducted on the basis of a suppression of evidence by the husband. The test to be applied is that set out in Taylor v Taylor (1977) FLC 90-226, that is:
“..the giving by one side of evidence amounting to the wilful concealment of matters which it is the duty of the parties to put before the Court.
In the High Court of Australia, Gibbs J (as he then was) said that there was no reason to read “false” in s 79A as meaning “wilfully false”. Thus, there still has to be an element of deceit or irrationality about the action but not necessarily capriciousness.
In this case, for both the purposes of the application under s 79A and that to set aside the financial agreement, the wife’s case does not reach the standard of establishing any deceit on the part of the husband.
There is no evidence of suppression on the part of the husband in the sense described in Taylor.
There is no evidence that the husband was of the opinion that the business had any significantly different value from that ascribed by the various experts. I have accepted his evidence that he left that to them.
There is no evidence that he concealed from the valuers, the wife or her lawyers any plans that would have objectively made a difference. The evidence of Mr L is nothing more than a subjective judgment by him based on what he interpreted the husband to be saying.
The wife did not act on the husband’s assertions but rather decried them in 2003 saying she did not believe him to be truthful yet she accepted the advice of her advisers. She did not believe the information of the husband and as she said in evidence, she told the professional advisers that. She could not therefore have acted upon the husband’s information.
There could therefore be no fraud or unconscionable conduct on the part of the husband.
In Barker & Barker [2007] FamCA 13, the Full Court succinctly set out the various authorities in relation to s 79A. The following points provide a guide:
· the miscarriage of justice must have occurred at the time of the making of the orders (Molier and Van Wyk (1980) FLC ¶90-911 at pp 75,767-75,768; Public Trustee (as executor of the estate of Gilbert) v Gilbert (1991) FLC ¶92-211 at pp 78,426-78,427, 78,428);
· all parties are under a duty to disclose to each other before consent orders are made about things that would alter their financial circumstances and what those prospective benefits would be. (Suiker (1993) FLC ¶92-436)
· the consent to an order must be informed consent. It is part of the judicial process on which the Court places reliance. If that consent is based on misleading or inadequate information, then there may be a miscarriage of justice either by reason of the “suppression of evidence” or by reason of “any other circumstance”.(Suiker supra)
· The obligation to make a full and frank disclosure is regarded as so crucial to the functioning of this jurisdiction that the deliberate failure by one party to meet that obligation may result in the Court drawing adverse inferences against the non-disclosing party where there is material upon which such inferences can be based; (Morrison v Morrison (1995) FLC ¶92-573);
· If a party is in breach of the duty of candour, whether by actively presenting a false case or passively failing to reveal relevant facts and circumstances, then the court has the power to set aside the order and do justice, whether or not the order was made by consent; (Thorpe LJ in Burns v Burns [2004] EWCA Civ 1258);
· A miscarriage of justice under s 79A(1)(a) will occur if circumstances exist which for some significant reason, make the order contrary to law and justice according to law as it relates to the integrity of the judicial process (Bigg v Suzi (1998) FLC ¶92-799);
· The words “miscarriage of justice” should not be construed narrowly and the phrase “integrity of the judicial process” should not be taken only to refer to the hearing in the court. The circumstances creating the miscarriage must nevertheless have been such as to have had an influence on the outcome of the litigation;
· Where there is some intervening factor known to one party but not the other, this may lead to a result which is unfair and unjust and can be characterised as a flaw in the judicial process by which the orders were made.
Taking all of those principles into account, on the evidence and the findings upon it, I find:
(a)there were no circumstances leading up to the making of the orders which could be said to have lead to a miscarriage of justice and as such, no miscarriage of justice occurred at the time of the making of the orders in December 2003;
(b)there was full and frank disclosure of financial matters by the husband to the Court and to the wife;
(c)there was no suppression of evidence by the husband;
(d)it could not be said that the wife’s consent was based on misleading or inadequate information;
(e)there was no intervening factor known to the husband, but not to the wife, that may be said to have created or led to a result which was unfair and unjust;
(f)nothing in the circumstances which occurred after the orders could be said to have impugned the process by which the orders were made;
(g)the consent of the wife to the orders was an informed consent; and
(h)the Court placed reliance on the wife’s consent and the submissions presented to it by both legal representatives in making the order and was entitled to rely upon that accordingly.
In respect of the financial agreement executed prior to the orders being made by the Court, the wife’s argument was inextricably linked to the material relating to the s 79A application. The words in s 90K are slightly different to those in s. 79A but the underlying concept is the same.
The simple use of the word “Fraud” in s 90K must be read widely because of the inclusion of the reference to non-disclosure of a “material matter”. Thus it encompasses knowledge and intention relating to financial matters that, if known, would create a different picture to that portrayed on the surface. It is hardly distinguishable from the s 90K(1)(e) reference to conduct that was in all of the circumstances unconscionable. Fraud no longer means just the unlawful use of pressure to enter into such an arrangement.
The wife must show that she faced what the authorities have described as “illegitimate pressure” which must be driven by an improper motive having regard to the underlying requirements of the Act for there to be full and frank disclosure of all relevant matters. She has not done so.
It is the quality of her consent rather than what the husband did, that needs consideration (see Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447 at 474). I have found nothing in her conduct to be such as to vitiate her consent.
Did the wife enter into the financial agreement on the basis of an inducement that what she was presented with was a true and accurate representation of the parties’ financial circumstances? Again, the wife faces the problem of her own evidence that she did not believe the husband to be truthful. She did not argue that she was not given the advice of her lawyer as was required by the Act as to the effect of the agreement and the various advantages and disadvantages for her.
Without the application of illegitimate pressure by the husband of saying that what the wife was presented with was as good as it was going to get and that it was truthful, which in turn, induced the wife to enter into the agreement, there can be no basis for an assertion that the husband’s conduct in this case was unconscionable or a fraud.
I find there is no evidence upon which I could say that there was a fraud or unconscionable conduct such that I could justify setting aside the agreement.
The wife’s application must fail.
I certify that the preceding Four Hundred and Ninety One (491) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin
Associate:
Date: 18 June 2010
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