Jess & Garvey
[2021] FedCFamC1F 189
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Jess & Garvey [2021] FedCFamC1F 189
File number(s): BRC 2175 of 2016 Judgment of: BAUMANN J Date of judgment: 12 November 2021 Catchwords: FAMILY LAW – PRACTICE & PROCEDURE – Application for adversarial expert – Application granted – experts to confer – Late application for leave to amend Initiating Application and any consequential amendments to Statement of Claim – Application refused Legislation: Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 7.08 Cases cited: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175
Dillon & Dillon [2012] FamCA 319
Garvey & Jess [2021] FamCA 102
Kennon v Spry [2008] HCA 56
Division: Division 1 First Instance Number of paragraphs: 29 Date of hearing: 2 and 5 November 2021 Place: Brisbane Counsel for the Applicant: Mr P Hackett Solicitor for the Applicant: Hirst & Co Counsel for the Respondents: Mr M Kearney Solicitor for the Respondents: Barry.Nilsson Lawyers Counsel for the Respondents: Mr G Richardson Solicitor for the Respondents: Mills Oakley ORDERS
BRC 2175 of 2016 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS JESS
Applicant
AND: MR GARVEY
First Respondent
MR Z GARVEY AND MR Z GARVEY AS LEGAL PERSONAL REPRESENTATIVE FOR MS GARVEY
Second Respondent
ORDER MADE BY:
BAUMANN J
DATE OF ORDER:
5 NOVEMBER 2021
THE COURT ORDERS UNTIL FURTHER ORDER:
FF Testamentary Trust
1.That the Application in a Proceedings filed 22 October 2021 seeking that the Second Respondent provide a scheduled to the wife particularising the property interests held by the FF Testamentary Trust, be dismissed.
Adversarial expert
2.That the husband be granted leave to rely upon the affidavit of Mr GG sworn and filed 29 September 2021.
3.That forthwith the husband and the wife join in instructing Mr HH and Mr GG to confer and prepare a joint statement in relation to their respective opinions as to the current value of the property at K Street, Suburb L, setting out:
(a)the matters upon which they agree; and
(b)in the event of disagreement, the matters upon which they disagree and in each instance the reasons that disagreement remains and for the position maintained by each of them.
Leave to amend Initiating Application
4.The Applicant’s application for leave to amend the Initiating Application and any consequential amendments to the Statement of Claim relied upon by the Applicant is refused and in particular relating to the application to:
(a)seek to set aside, pursuant to s 106B of the Family Law Act 1975 (Cth) the Form of Transfer lodged 13 February 2018 in relation to the T Street, Suburb M property (paragraph 35 of the Amended Initiating Application filed 1 November 2021);
(b)claim a declaration be made on the basis of a resulting trust in the alternative (paragraph 36 of the Amended Initiating Application filed 1 November 2021); and
(c)claim declarations in respect of the alleged offset loan (paragraphs 37(a), (b) and (c) of the Amended Initiating Application filed 1 November 2021).
Costs
5.That the costs of the Application are reserved.
IT IS NOTED:
A.That the Reasons for Judgment will reflect that the remaining amendments to the Initiating Application are either unnecessary, mere drafting amendments and/or uncontroversial.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Jess & Garvey has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BAUMANN J:
A flurry of interlocutory activity has caused the Court to consider urgently four separate Applications in a Proceeding (two made orally) in these proceedings, in which a five day Final Hearing is scheduled to commence on 18 November 2021.
On 2 November 2021, the Court considered the Application in a Proceeding filed on 22 October 2021 by the wife, Ms Jess, seeking inter alia that:
1.That the Second Respondent [Mr Z Garvey] forthwith provide disclosure to the Wife of the last will and testament of [Mr Z Garvey].
2.That within 7 days of these orders, the Second Respondent provide a schedule to the Wife particularising the property interests held by the [FF Testamentary Trust].
A background to the litigation between the Applicant wife (represented by Mr Hackett of Counsel), the First Respondent husband, Mr Garvey (represented by Mr Kearney of Senior Counsel) and the Second Respondent, Mr Z Garvey, who now is engaged in his own right and a personal representative for his late wife, Ms Garvey (represented by Mr Richardson of Senior Counsel), is summarised in the Reasons for Judgment delivered 12 March 2021 (see Jess & Garvey [2021] FamCA 102). In the main, those Reasons dealt with issues relating to discovery.
Relevantly however, the competing substantive applications were listed for hearing on 9 April 2021 for a trial commencing on 15 November 2021, varied to commence on 18 November 2021. It bears noting that throughout these lengthy financial proceedings, commenced as far back as March 2016, all parties have been legally represented. Although the initial applications only involved the husband and wife, at the initiation of the wife on 23 December 2019, the wife joined the husband’s parents in the proceedings and sought relief against them. The financial proceedings are complex and for Mr Z Garvey, who is now aged 81 years, it has been distressing for him to be drawn into the litigation by his former daughter-in-law. For much of the litigation, he had acted for his wife, as well as her litigation guardian. Ms Garvey’s death on … 2021 caused Mr Z Garvey to be substituted as the personal representative of Ms Garvey – he being the Executor of Ms Garvey’s Will made on 28 February 2005.
On 2 November 2021, I received oral and written submissions in respect of the principal relief sought in the said Application in a Proceeding. I delivered ex tempore Reasons for dismissing the Application for the disclosure of Mr Z Garvey’s Will. Although I indicated to the parties that the further application for Mr Z Garvey to provide details of the property interests held by the FF Testamentary Trust would also be dismissed, time did not permit the giving of Reasons at the time. The Reasons which now follow seek to succinctly set out the pathway to that decision, and the order subsequently made, namely:
(a)on 28 February 2005, Ms Garvey executed her last Will and Testament;
(b)she appointed her husband, Mr Z Garvey, as Executor and Trustee (clause 3.1) and at clause 8, by her Will, the FF Estate Trust (not as described by the Applicant) was constructed;
(c)Mr Z Garvey has confirmed he has accepted the appointment as Trustee of the FF Estate Trust upon the Trusts set out at clause 8.3 of the Will, and with the discretionary powers vested in him as Trustee. It is not in dispute that the FF Estate Trust is a discretionary trust where the husband is a capital and income beneficiary, as are Mr Z Garvey and the Testator’s “children, grandchildren and great grandchildren” at least;
(d)the vast majority of the assets of Ms Garvey’s estate will pass to the FF Estate Trust;
(e)because of the recent death of Ms Garvey, the FF Estate Trust has probably not secured control of the estate residuary yet, and of course, the Trustee has made no discretionary decisions as to the vesting of any benefits to the husband or other beneficiaries (including himself). This situation distinguishes the facts from those relied upon in Dillon & Dillon [2012] FamCA 319, where previous distributions had been made by the wife’s father as Trustee;
(f)I am satisfied that the husband’s interest is as a “mere beneficiary” and it is not guaranteed he will receive any distribution in the future;
(g)Mr Z Garvey is permitted, at his sole discretion, to pay or apply capital and income of the Trust to himself. Although, I accept it is early days, Mr Z Garvey, at paragraph 22 of his recent affidavit filed 1 November 2021, deposes that:
22.Whilst my only child is [Mr Garvey], I have two grandchildren who are the subject of these proceedings. Their beneficial interest in [Ms Garvey’s] estate is of significant importance to me, given that [Mr Garvey] is in a reasonably comfortable financial position and my grandchildren have always been a source of joy for [Ms Garvey] and I during our lives. My grandchildren are worthy recipients of my and [Ms Garvey’s] estates and I will consider their needs and goals as beneficiaries at the appropriate time.
The sworn testimony of Mr Z Garvey at paragraph 13 of his recent affidavit, makes it clear that he feels “deeply disappointed and feel betrayed by Ms Jess’ claim against Ms Garvey and my assets”. He says defending the wife’s claims “has cost me a significant sum” and he is “determined, and have resolved, that Ms Jess shall have no further claim against my assets”;
(h)not surprisingly, the husband supports the position articulated by Mr Richardson SC on behalf of Mr Z Garvey; and
(i)Mr Hackett, on behalf of the wife, contended that the husband being a capital and income beneficiary of the FF Estate Trust has an interest in the due administration of that Trust and is “a property interest” (see Kennon v Spry [2008] HCA 56). The composition of the FF Estate Trust is relevant to the proceedings.
I am not persuaded by these submissions and additional oral submissions of Mr Hackett, that the assets in the FF Estate Trust are relevant to the dispute, already narrow because of the Binding Financial Agreement, and dismiss the application accordingly.
ORAL APPLICATION BY THE HUSBAND TO ADVANCE ADDITIONAL EXPERT EVIDENCE
I allowed Mr Kearney SC, on 2 November 2021, to make an oral application to rely upon the affidavit of Mr GG filed 29 September 2021, as an adversarial expert, as to the current value of the family owned property at K Street, Suburb L. The application is made pursuant to Rule 7.08 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”), and if the Court’s permission is granted, then the husband seeks an order that the two experts, the single expert Mr HH and Mr GG, confer prior to the trial. The application is opposed by the wife. I heard oral submissions (the Second Respondent, Mr Z Garvey, not participating in this issue) from Counsel at 1.00pm on 4 November 2021. Credit should be extended to Counsel for being able to also file written submissions so quickly.
On 4 November 2021, at the close of submissions, I indicated I would make a decision the following day, but provide Reasons later this week. These are the Reasons for the Order, in terms sought by the husband and pronounced on 5 November 2021.
On 9 April 2021, Mr HH was appointed by Court Order as a single expert to assess the current value of K Street, Suburb L (“the Suburb L property”). The property is jointly owned by the husband and wife – a significance not lost on the parties when considering the terms of the Binding Financial Agreement.
As at 25 June 2021, Mr HH, in his written report, and after inspecting the property and using six identified properties sold between 2 September 2020 and 29 May 2021, initially assessed the market value of the Suburb L property at $1,300,000.
As he was permitted to do under the Rules, the husband raised issues with Mr HH’s opinion by providing to the single expert questions on 21 July 2021, which were answered on 2 August 2021 (see the affidavit of Ms JJ). Despite the propositions put to Mr HH, which seemed to raise questions about the alleged deterioration in the interior and surrounds (the husband asserts since separation in 2015), Mr HH explained why he did not see that there “is any significant variation and reduction in the value of the property taking into account the existing presentation of the subject property”.
Clearly unhappy with this response, on 24 September 2021, the husband’s solicitors retained Mr GG to prepare a valuation of the property “limited to a kerbside valuation”. Subsequently, on 27 September 2021, the wife confirmed she (being the person occupying the property) does not agree to facilitate the inspection by an alternate valuer of the Suburb L property.
Mr GG inspected (from the kerbside) the property on 28 September 2021, and the valuation opines that the market value of the subject property at 28 September 2021, is $1.7 million – a difference of $400,000 or a 30% increase over the value assessed by the single expert.
In his written submissions, Mr Kearney SC points to the “limitations” raised by Mr HH at clauses 23.3 and 24 of his valuation and that included:
(a)that liability for the opinion is precluded where the valuation is sought to be relied upon after 25 September 2021 (which is before the trial commences); and
(b)A “significant valuation uncertainty” is expressed due to “market uncertainty” caused by the Covid-19 pandemic.
At paragraph 3, Mr Kearney SC identifies the reasons why it is appropriate to grant the husband leave to rely upon Mr GG’s evidence.
In response, Mr Hackett contends that:
(a)the requirements of sub-rule (2) of r 7.08 are not satisfied and that to allow the evidence of Mr GG to be adduced would undermine the original purpose of appointing a single expert;
(b)Mr GG confirmed that his inspection was limited to a partial external inspection from the street frontage and relied upon the description of the state of the interior set out in the single expert’s report;
(c)Mr GG relied upon five comparative sales – none of which correspond with the six sales relied upon by Mr HH;
(d)At paragraphs 13 to 16 of the written submissions filed 4 November 2021, Mr Hackett again returns, understandably, to the Rule and the failure, in questions put to the single expert by the husband, to raise the different comparable sales – each which predated Mr HH’s report.
On balance, I have come to the conclusion that the stated limitations in the report of Mr HH, and his expressed concern about reliance on it after 25 September 2021 because of market uncertainty, coupled with the substantial difference in valuations, amounts to a special reason for adducing adversarial evidence.
The Suburb L property represents the major “joint” asset. The wife wishes to retain the property and a lower valuation would, I infer, assist her cause. The husband, who has not been in the property since 2015, is assisted by a higher valuation. Although the wife has extended her claims to assets of the Second Respondent in effect – the Suburb L property represents the major asset.
In my view, the uncertainties generated by a strong market and the other factors identified by the husband through his Counsel’s submissions, have persuaded me that the interests of justice are served by allowing the husband’s application, including compelling the experts to confer. I so ordered on 5 November 2021.
THE WIFE’S APPLICATION TO AMEND THE INITIATING APPLICATION AND STATEMENT OF CLAIM
Although Mr Hackett orally mused on 2 November 2021, when making his oral application, that his instructions were that leave was not required, sensibly by the time of his written submissions on 4 November 2021, it was conceded that leave is required to amend pursuant to r 2.50 – as is plainly the case.
The amendments are set out in the Initiating Application served on 1 November 2021 and the amendments to the Statement of Claim are contained within the amended document served on 28 October 2021, and whilst some are minor drafting variations to which objection could not reasonably be taken, three substantial variations are raised – and raised, it seems, for the first time less than three weeks before a trial is to commence.
On 5 November 2021, I made the following order, including the notation (which notation was, in the limited time available, a form of “short hand” an indication that mere drafting corrections should not be a concern), in the following terms:
[FF Testamentary Trust]
1.That the Application in a Proceedings filed 22 October 2021 seeking that the Second Respondent provide a scheduled to the wife particularising the property interests held by the [FF Testamentary Trust], be dismissed.
Adversarial expert
2.That the husband be granted leave to rely upon the affidavit of [Mr GG] sworn and filed 29 September 2021.
3.That forthwith the husband and the wife join in instructing [Mr HH] and [Mr GG] to confer and prepare a joint statement in relation to their respective opinions as to the current value of the property at [K Street, Suburb L], setting out:
a. the matters upon which they agree; and
b. in the event of disagreement, the matters upon which they disagree and in each instance the reasons that disagreement remains and for the position maintained by each of them.
Leave to amend Initiating Application
4.The Applicant’s application for leave to amend the Initiating Application and any consequential amendments to the Statement of Claim relied upon by the Applicant is refused and in particular relating to the application to:
a. seek to set aside, pursuant to s 106B of the Family Law Act 1975 (Cth) the Form of Transfer lodged 13 February 2018 in relation to the Clarence Road property (paragraph 35 of the Amended Initiating Application filed 1 November 2021);
b. claim a declaration be made on the basis of a resulting trust in the alternative (paragraph 36 of the Amended Initiating Application filed 1 November 2021); and
c. claim declarations in respect of the alleged offset loan (paragraphs 37(a), (b) and (c) of the Amended Initiating Application filed 1 November 2021).
Costs
5.That the costs of the Application are reserved.
IT IS NOTED:
A.That the Reasons for Judgment will reflect that the remaining amendments to the Initiating Application are either unnecessary, mere drafting amendments and/or uncontroversial.
The order reveals, in my view, that three significant issues arise, and despite the strong and considered submissions of the wife, I refuse leave at this late stage of the proceedings for the following reasons:
(a)The wife now wishes to seek to set aside, pursuant to s 106B of the Family Law Act 1975 (Cth), the severance of the joint tenancy in respect of the T Street property perfected by the husband on 13 February 2018. The wife concedes this is new relief (paragraph 25 of the submissions) but says no prejudice flows from this clearly late amendment. The wife knew of the severance and, although the wife has maintained the deceased, Ms Garvey, held her interest in the T Street property for the husband (which claim is properly pleaded and will be dealt with by the Court), the wife seeks to expand her claim. I am persuaded by the submissions of Counsel for Mr Z Garvey, that this does create prejudice to the 81 year old Second Respondent;
(b)Similarly, with all evidence now before the Court, to allow the wife to claim, as an alternate basis for relief, that a resulting trust to the long argued sole relief of a constructive trust, is not a mere slight variation. The legal principles are quite distinct and no satisfactory explanation for now seeking this alternate relief is offered. Prejudice flows against the husband and Mr Z Garvey if this amendment were permitted; and
(c)Whilst the facts surrounding the creation and use of the “offset loan” have been the subject of discovery, evidence and pleadings, the attempt at this late stage to seek different relief in relation to those transactions, creates prejudice.
Both Counsel draw to the Court’s attention the well-known decision of the High Court in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 where the Court supported robust case management but that whilst factors such as the nature and importance of the amendments to the party applying cannot be overlooked, justice is the paramount consideration.
In my view, it cannot be argued that the recent death of Ms Garvey is the catalyst of the new significant claims being made so late. Although none of the parties seek an adjournment of the trial if the amendments are permitted or if they are not permitted, if permitted some additional evidence may need to be adduced.
I do not adopt the colourful language of Mr Richardson SC (for Mr Z Garvey) that the amendments being sought so late in these lengthy proceedings are not only “unfair but cruel”.
I do however find that the prejudice, particularly to Mr Z Garvey, but also to the husband, outweigh the rights of the wife on this issue, to seek leave to amend.
In dismissing the application for leave to amend, I wish to make one final point. Even without having seen the parties in the witness box – or having yet read in full the trial affidavits – I have a strong sense that this is a case where the emotional tensions are extremely high. All parties have conducted their cases hard, with few compromises apparent. I will expect the experienced Counsel, who I have the benefit of appearing before me in this complex matter, to not allow the clear angst of their clients to flow through the conduct of the case and the cross-examination. I am sure I can rely upon them to do so.
I make these observations in light of the recent changes in respect of the parenting arrangements for the children who had previously navigated an agreed equal time arrangement for many years. This change has necessitated, in an attempt to deal with all issues in the one trial, directions to file new evidence – again within the last 14 days before the trial commences. In the parenting proceedings, the wife represents herself – which is not an easy task, where overall emotions are running high.
I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Baumann. Associate:
Dated: 12 November 2021
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