Jess & Jess (No 11)
[2023] FedCFamC1F 1027
•8 December 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Jess & Jess (No 11) [2023] FedCFamC1F 1027
File number MLF 3444 of 2006 Judgment of WILSON J Date of judgment 8 December 2023 Catchwords FAMILY LAW – MAJOR COMPLEX FINANCIAL PROCEEDINGS LIST – practice and procedure.
FAMILY LAW – DISCLOSURE – applicant pressing for orders appearing in the annexure to these reasons – orders made.
Legislation Corporations Act 2001 (Cth) s 50AA
Family Law Act 1975 (Cth) ss 79, 106B
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 r 6.03(b)
Cases cited Barnes v Addy (1874) LR 9 Ch App 44
Dare v Pullham (1982) 148 CLR 658
Flight v Robinson (1844) 50 ER 9
Goodridge v Beadle (2017) 57 FamLR 425
ICT Pty Ltd & Buquebus International Ltd v Sea Containers Ltd (1995) 39 NSWLR 640
Jess & Jess (No 4) [2023] FedCFamC1A 189
Jess & Jess (No 7) [2023] FedCFamC1F 291
Jess & Jess (No 9) [2023] FedCFamC1F 713
Lazarus Estates Ltd v Beasley [1958] 1QB 702
Odtojan v Glynn [2023] NSWCA 276
Peate v Federal Commissioner of Taxation (1964) 111 CLR 443
Pigozzo v Mineral Resources Ltd [2022] FCA 1166
Reddaway v Banham [1896] AC 199
Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 18 FCR 449
Tarkington Pty Ltd v Kingdrake Pty Ltd [2000] VSCA 98
Wheeler v Le Marchant (1881) 17 Ch D 675
Division Division 1 first instance Number of paragraphs 91 Date of last submission 6 December 2023 Date of hearing 18 September, 15 November, 1 and 6 December 2023 Place Melbourne Counsel for the applicant Mr Dickson KC Solicitors for the applicant Kenna Teasdale Lawyers Counsel for the second respondent Mr J Mereine and Mr C Lum Solicitors for the second respondent HWL Ebsworth Lawyers Counsel for the interveners Ms N Papaleo Solicitors for the interveners Lander and Rogers ORDERS
MLF 3444 of 2006 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN MS JESS
ApplicantAND MR J AS LEGAL PERSONAL REPRESENTATIVE FOR MR JESS SNR (DECEASED)
First RespondentMR JESS JNR & ORS (SECOND TO TWENTY-NINTH RESPONDENTS - THE REPRESENTED THIRD PARTIES)
Second RespondentMR K AND MR L AS TRUSTEES OF THE BANKRUPT ESTATE OF MR JESS SNR
First Intervener
ORDER MADE BY
WILSON J
DATE OF ORDER
8 DECEMBER 2023
FOR THE PURPOSE OF THESE ORDERS THE FOLLOWING DEFINITIONS APPLY -
A.Mr Jess Jnr Entities refer to Mr Jess Jnr personally and all entities -
(a) controlled by Mr Jess Jnr as defined in s 50AA of the Corporations Act 2001 (Cth); and of which Mr Jess Jnr is a director and/or shareholder (beneficially or otherwise).
B.Schedule B entities refer to the respondents to proceedings MLF3444/2006 listed in the attached schedule B.
C.Schedule C entities refer to the entities listed in the attached schedule C.
D.Schedule D entities refer to the entities listed in the attached schedule D, being respondents to proceedings MLF3444/2006 that are now deregistered and are removed as parties to the proceedings pursuant to these orders.
THE COURT ORDERS AS FOLLOWS -
1.That the 10th, 12th, 14th, 15th, 20th, 22nd, 23rd, 24th, 25th and 26th respondents are removed as parties to the proceeding.
2.By 30 January 2024, the relevant respondents shall provide to the applicant wife the discovery as required by paragraphs 3 to 11 of these orders.
3.Each of the respondents listed in the Schedule B Entities shall provide to the applicant wife the following documents from 1 July 2009, to the extent that they have not already been provided:
(a)signed taxation returns;
(b)financial accounts;
(c)profit and loss statements;
(d)signed minutes of meetings;
(e)loan account ledgers;
(f)company registers;
(g)signed trust deeds and amending trust deeds;
(h)valuation of assets owned by the entity; and
(i)details of all trademarks owned by the entity;
(j)all documents relating to all changes in corporate ownership and structure including but not limited to –
(i)changes of directors; and
(ii)changes of ownership of shares.
4.Insofar as any of the Schedule C Entities have received funds directly or indirectly from any Schedule B entity, any Schedule C Entity or any schedule D entity, or from the 2nd, 4th or 29th respondents, the second respondent provide signed copies of the following documents from 1 July 2009 to date -
(a)signed taxation returns;
(b)financial accounts;
(c)profit and loss statements;
(d)signed minutes of meetings;
(e)loan account ledgers;
(f)company registers;
(g)signed trust deeds and amending trust deeds;
(h)valuations of assets owned by the entity;
(i)details of all trademarks owned by the entity;
(j)all documents relating to all changes in corporate ownership and structure including but not limited to -
(i)changes to directors; and
(ii)changers of ownership of shares.
5.In respect of the Schedule D Entities, the second respondent shall provide to the applicant wife the following documents from 1 July 2009 to date, to the extent they have not already been provided -
(a)signed taxation returns;
(b)financial accounts;
(c)profit and loss statements;
(d)signed minutes of meetings;
(e)loan account ledgers;
(f)company registers;
(g)signed trust deeds and amending trust deeds;
(h)valuations of assets owned by the entity;
(i)details of all trademarks owned by the entity;
(j)all documents relating to all changes in corporate ownership and structure including but not limited to -
(i)changes of directors; and
(ii)changes of ownership of shares.
6.The second respondent shall provide to the applicant wife copies of all documents, including but not limited to authorities and discharges, that he signed and completed in order to enable Mr Jess Snr to make the payment to the applicant wife in accordance with Order 2 of the orders dated 24 September 2009.
7.In respect of the Mr Jess Jnr Entities, the second respondent shall provide to the applicant wife the following documents, to the extent not already provided -
(a)signed copies of all documents executed on 20 September 2009;
(b)signed copies of all documents executed on 24 September 2009;
(c)tax returns and financial statements for the period 1 July 2009 to date;
(d)for the period 1 July 2009 to date all documents relating to -
(i)receipt of income, remuneration and emoluments from any related corporate source identifying the date and amount of each receipt;
(ii)acquisition and/or disposition of real property including the name of the parties, identity of the asset, consideration paid, whether such acquisition or disposition is of a legal or beneficial interest, the date the asset was acquired or disposed of, whether the asset is currently held and copies of all valuations;
(iii)acquisition and/or disposition of real property overseas including the names of the parties, identity of the asset, consideration paid, whether such acquisition or disposition is of a legal or beneficial interest, the date the asset was acquired or disposed of whether the asset is currently held and copies of all valuations;
(iv)copies of all loan account ledgers;
(v)identification and copies of trust deeds, including all deeds of amendment, of any trust of which that party/entity is an appointor, shareholder of a trustee company, trustee or beneficiary;
(vi)dispositions of real property or income provided to Ms D Jess; and
(vii)dispositions of real property of income provided to Ms LL.
8.The second respondent shall provide to the applicant wife copies of any declarations of trust between -
(a)Mr Jess Jnr or any of the Mr Jess Jnr Entities as to one parts and
(b)Ms LL, Ms D Jess, Mr CK, Mr CL, Mr CM and/or any other person or entity as to the other part from 1 July 2009 to date in relation to any shares held;
(c)the twenty-ninth respondent shall provide to the applicant wife copies of the following documents -
(i)signed copies of all documents executed on 20 September 2009;
(ii)signed copied of all documents executed on 24 September 2009;
(iii)personal tax returns and financial statements for the period 1 July 2009 to date;
(iv)for the period 1 July 2009 to date, all documents relating to -
A.receipt of income, remuneration and emoluments from any corporate source or any individual identifying the date and amount of each receipt;
B.acquisition and/or disposition of real property including the name of the parties, identity of the asset, consideration paid, whether such acquisition or disposition is of a legal or beneficial interest, the date the asset was acquired or disposed of, whether the asset is currently held and copies of all valuations;
C.copies of all loan account ledgers; and
D.identification and copies of trust deeds, including all deeds of amendment, of any trust of which that individual is an appointor, shareholder of a trustee company, trustee or beneficiary;
(d)the fourth respondent shall provide the applicant wife copies of the following documents -
(i)signed copies of all documents executed on 20 September 2009;
(ii)signed copies of all documents executed on 24 September 2009;
(iii)personal tax returns and financial statements for the period 1 July 2009 to date;
(iv)for the period 1 July 2009 to date all documents relating to -
A.receipt of income, remuneration and emoluments from any corporate source identifying the date and amount of each receipt;
B.acquisition and/or disposition of real property including the name of the parties, identity of the asset, consideration paid, whether such acquisition or disposition is of legal or beneficial interest, the date the asset was acquired or disposed of, whether the asset is currently held and copies of all valuations;
C.acquisition and/or disposition of real property overseas including the name of the parties, identity of the asset, consideration paid, whether such acquisition or disposition is of a legal or beneficial interest, the date the asset was acquired or disposed of whether the asset is currently held and copies of all valuations;
D.copies of all loan account ledgers; and
E.identification and copies of trust deeds, including all deeds of amendment, of any trust of which that individual is an appointor, shareholder of a trustee company, trustee, or beneficiary.
(e)by 30 January 2024, the second respondent shall file and serve an affidavit, with supporting documentation, disclosing -
(i)in relation to the units in the Jess Retail Unit Trust following their transfer to him pursuant to the Deed of Settlement dated 20 September 2009 ("the Units") -
A.whether he remains the legal and/or beneficial owner of all, or if not, how many of the Units;
B.for the period from 20 September 2009 to date, dealing with and/or treatment of the Units; and
C.in the event the Units (or any of them) have been disposed of or transferred, the details of any such disposal or transfer including any terms of sale or transfer, date of same, identity of purchaser or transferee, and consideration paid;
(ii)for the period from 20 September 2009 to date, the property, income, remuneration, emoluments payments, dividends, consideration or benefits arising from the Units and/or traceable to those Units, together with the current estimated value of the Units.
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 a pseudonym Jess & Jess has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
WILSON J
INTRODUCTION
These reasons address the various disclosure applications made by the wife in her amended application in a proceeding filed 15 September 2023.
The hearing of the application took a course that was less than lineal having regard to the timing at which the debate before me progressed on 18 September, 15 November, 1 and 6 December 2023 including the date when the Full Court handed down its decision in Jess & Jess (No 4),[1] namely on 3 November 2023. To better understand the application before me on those days, it is necessary to put the application in a chronological context.
[1] [2023] FedCFamC1A 189.
On 15 September 2023 the wife filed her amended application in a proceeding. In paragraph 1 of that amended application in a proceeding the wife sought orders abridging all times for the listing of her application and for the application to be heard as a matter of urgency. In paragraph two of her amended application in a proceeding the wife sought orders to be made in the form of annexure A to her application.[2] Paragraphs 3 and 4 addressed costs and consequential orders.
[2] Annexure A to her application in a proceeding is annexed to those reasons.
THE DEREGISTERED RESPONDENTS
The wife’s amended application filed 15 September 2023 followed, in part, upon various observations I made in my reasons handed down on 24 August 2023[3] about the status in this litigation of certain of the respondents which were deregistered. The wife’s amended application in a case filed 15 September 2023 also raised discovery issues that had been adjourned, but not decided, by the reasons dated 24 August 2023.
[3] Jess & Jess (No 9) [2023] FedCFamC1F 713.
The solicitors for the wife sought an urgent hearing of her amended application in a proceeding. In keeping with the philosophy of case management in respect of cases in the Major Complex Financial Proceedings List, that urgent application was listed before me on 18 September 2023. No opposition was advanced on 18 September for orders to be made in accordance with paragraph 1 of annexure A the effect of which was to order the removal from this litigation of the sixth, 10th, 12th, 14th, 15th, 20th, 22nd, 23rd, 24th, 25th and 26th respondents. Mr Dickson KC submitted that at no stage since 2013 when the represented third parties were introduced into this litigation had an appearance been announced on behalf of the respondents proposed to be removed.
In those circumstances an order is appropriately made for the removal from this litigation of the respondents recorded in paragraph 1 of annexure A.
THE CURRENT PLEADINGS
In their current form, that is to say, there being no order yet made on the represented third parties’ amendment application dated 29 November 2023, the extant pleadings of the wife and the represented third parties are constituted by –
(a)the wife’s amended statement of claim dated 13 October 2022; and
(b)the represented third parties’ defence dated 10 November 2022 to the wife’s 13 October 2022 amended statement of claim.
By 18 September 2023, the represented third parties had not sought leave by formal application to amend their defence to the wife’s 13 October 2022 iteration of the statement of claim. In other words, when the disclosure debate was before me on 18 September 2023, the pleadings confining the parameters of the debate, were the wife’s 13 October 2022 amended statement of claim and the represented third parties’ defence to that document being their 10 November 2022 defence. In debate before me on 1 December 2023 Mr Dickson KC submitted that the pleadings delineating the arena of debate between the wife and the represented third parties was as I put to him namely the pleadings dated 13 October 2022 and 10 November 2022. That was important because junior counsel appearing for the represented third parties on 1 and 6 December 2023 attempted to persuade me that the arena of debate between the wife and the represented third parties included the amendments in respect of which the represented third needed leave to introduce, which leave had not then been granted when I heard debate in this case on 18 September, 15 November, 1 or 6 December 2023, especially the assertions the represented third parties wished to introduce by the inclusion of paragraphs 31(aa) and 32(b) of their proposed latest iteration of their defence.
When this case was before me on 15 November 2023 junior counsel for the represented third parties said that his clients would formally apply for leave to amend their defence when I told him I required his clients to formally apply to amend.[4]
[4] Transcript 15 Nov 2023 T 71 L 43.
The wife’s amended statement of claim dated 13 October 2022 was brief, 10 pages in all and bereft of the particulars one might see in a case where fraud of considerable magnitude is alleged. Counsel for the wife explained the economy with which the wife’s latest iteration of her claims proceeded, namely that she was not privy to many of the impugned transactions, she has not had access to documents revealing any such fraud and until she obtains proper disclosure the task of particularising her case will be impaired. Conversely, counsel for the represented third parties argued that unless the wife’s claims were adequately particularised, the represented third parties should not be subjected to the invasive process of disclosure.
Between paragraphs 5 and 18 of her amended statement of claim, the wife made allegations about her deceased husband’s legal and beneficial ownership of various units in the Jess Retail Unit Trust Trust (“JRUT”). She pleaded that –
(a)as at 18 December 2006 the husband was the legal and beneficial owner of various units in the JRUT;
(b)for the first time, on 18 June 2007 the husband asserted that on 28 February 2022 the husband had executed a deed of declaration of trust pursuant to which the husband declared that he would act as trustee in respect of Mr Jess Jnr for each of his units in the JRUT, that Mr Jess Jnr would be entitled to the husband’s unitholding upon the 13th respondent generating EBIT of an amount greater than $10,000,000, that the husband had no beneficial interest in the husband’s unitholding and that the units did not form any part of the husband’s property interests in the s 79 application;[5]
(c)in the period until 31 May 2010 the husband’s assertions were made dishonestly and fraudulently knowing that each was calculated to mislead the Family Court of Australia, the Supreme Court of Victoria and the wife;
(d)in 2007, Mr Jess Jnr commenced a proceeding in the Supreme Court of Victoria in which Mr Jess Jnr asserted that the husband executed the deed of declaration of trust on 28 February 2002, that it was valid and enforceable, that the deed of declaration of trust had vested in Mr Jess Jnr who was beneficially entitled to the husband’s unitholding and that Mr Jess Jnr was entitled to declaratory relief to that effect;[6]
(e)until 17 February 2022 Mr Jess Jnr continued to maintain that the Mr Jess Jnr assertions were true;
(f)the Mr Jess Jnr assertions were made fraudulently and dishonestly, calculated to mislead the Supreme Court of Victoria, the Family Court of Australia and the wife;
(g)in truth and in fact, the deed of declaration of trust was not executed on 28 February 2002, the deed of declaration of trust was not a valid and enforceable document, it had not vested because it was fraudulent and of no legal effect, the husband’s unitholding was not transferred to Mr Jess Jnr, the husband retained his interest in the husband’s unitholding and the deed of declaration of trust was part of a scheme entered into by the husband and Mr Jess Jnr designed to mislead the Family Court of Australia, the Supreme Court of Victoria and the wife;
(h)the husband’s allegations and Mr Jess Jnr’s allegations were false and at all relevant times the husband and Mr Jess Jnr knew them to be false;
(i)each of the husband’s assertions and Mr Jess Jnr’s assertions was part of a fraudulent and dishonest design calculated to cause the wife to believe that she would be at significant risk of being unable to prove to the satisfaction of the Supreme Court of Victoria and the Family Court of Australia that the deed of declaration of trust was a sham;
(j)the deed of declaration of trust was made by the husband to defeat an anticipated order in this proceeding or was likely so to do; and
(k)under s 106B of the Family Law Act the deed of declaration of trust should be set aside.
[5] These compendious allegations were called “the husband’s assertions” in the amended statement of claim.
[6] These compendious allegations were called “Mr Jess Jnr’s assertions” in the amended statement of claim.
Pausing at that juncture, so much of the amended statement of claim just narrated is redolent with allegations of fraud. No application has been brought seeking orders for the striking out of the amended statement of claim.
Between paragraphs 19 and 25 of the amended statement of claim, the wife pleaded the existence of the instrument executed by the husband styled the “Jess Retail Unit Trust: Transfer of Units”[7] pursuant to which the husband purported to transfer the husband’s unitholding to Mr Jess Jnr. The wife contended that the transfer of units was made to defeat an anticipated order and ought to be set aside under s 106B of the Family Law Act.
[7] This instrument is described as “the transfer” in paragraph 19 of the amended statement of claim.
Between paragraphs 26 and 29 of the amended statement of claim the wife pleaded that the deed of settlement made between the husband and wife ought to be set aside pursuant to s 106B of the Family Law Act.
In paragraph 30 the wife pleaded that she is unaware whether –
(a)Mr Jess Jnr remains the legal or beneficial owner of the husband’s unitholding;
(b)Mr Jess Jnr has transferred any of the husband’s unitholding by sale or otherwise or on what terms; and
(c)if he has transferred any of the husband’s unitholding, to whom any of those transfers were effected.
She pleaded that any of the units still held by Mr Jess Jnr are held on a constructive trust in favour of the husband or his trustees in bankruptcy. She pleaded that if Mr Jess Jnr has transferred the husband’s unitholding or the income derived therefrom (whether to his corporate interests or otherwise) Mr Jess Jnr has acted in breach of trust and those corporate interests have received any such assets with knowledge of breach of trust.[8] The wife pleaded that any traceable proceeds of the husband’s unitholding or the income derived therefrom are held by the corporate entities of Mr Jess Jnr and they are impressed with a constructive trust in favour of the husband or his trustees in bankruptcy.
[8] This may additionally found reliance upon the first limb of the rule in Barnes v Addy (1874) LR 9 Ch App 44 although only a remedy under s 106B is alleged.
By way of defence (that is to say, according to their defence dated 10 November 2022) the represented third parties advanced a collection of pleadings to the wife’s amended statement of claim. Many paragraphs of their defence contained assertions of their inability to plead to the relevant paragraphs by reason, so it was said, of the vague nature of the wife’s pleading. The represented third parties have not brought a strike out application in respect of the paragraphs of the amended statement of claim to which they say they are unable to plead. They deny most of the pleaded contentions advanced by the wife in respect of –
(a)the deed of declaration of trust;
(b)the husband’s assertions;
(c)Mr Jess Jnr’s assertions;
(d)the fraudulent creation of the deed of declaration of trust;
(e)the fraudulent transfer of the units in the JRUT; and
(f)that a basis exists to set aside the 20 September 2009 deed of settlement.
They contested the wife’s entitlement to an order under s 106B of the Family Law Act in relation to any instrument put in issue in this case.
Pausing at that juncture, the represented third parties squarely put in issue each of the wife’s contentions in her amended statement of claim save for relatively unimportant matters such as the incorporation of various respondents.
THE WIFE’S AFFIDAVIT
The wife made an affidavit on 13 September 2023 in support of her amended application in a proceeding filed 15 September 2023. To her affidavit she exhibited tables setting out –
(a)corporations said to be involved in this litigation;[9] and
(b)real property owned by the entities[10] set out in the earlier table.
[9] This table was exhibited as “WJI” to her affidavit made 13 September 2023.
[10] This table was exhibited as “WJ2” to her affidavit made 13 September 2023.
In formulating the evidence in the wife’s affidavit, she deposed to having carefully examined the transcript of the preliminary question tried by Bennett J, one witness who gave evidence before her Honour being Ms LL, Mr Jess Jnr’s book-keeper. The wife deposed to creating the table exhibited by the wife as exhibit WJI from evidence adduced before Bennett J from Ms LL. The wife deposed that Ms LL gave evidence that 100% of her work and income came from Mr Jess Jnr, that Ms LL was a director of and shareholder in up to 29 companies which shareholding she held on trust for Mr Jess Jnr, that those 29 entities related to Mr Jess Jnr, declarations of trust existed in respect of the shareholding held by Ms LL for Mr Jess Jnr and that Ms LL is a director of or shareholder in various companies that themselves are trustees of trusts referable to Mr Jess Jnr.
The wife deposed to Ms LL’s evidence before Bennett J in which Ms LL addressed how BE1 Pty Ltd and BE2 Pty Ltd were beneficiaries under trusts established at Mr Jess Jnr’s request. The wife also deposed to a man called Mr CK, a director of and shareholder in CN Pty Ltd as well as being a director of the trustee of the CO Trust.
Some of that evidence was abstract because the significance of her assertions was not altogether easy to follow. That said, it was evident that a high degree of analysis had been devoted to the corporate interconnection of various entities, many of which were said to involve Mr Jess Jnr, whether directly or indirectly.
The wife deposed to the role of Ms D Jess, Mr Jess Jnr’s mother, a woman said to be 79 years of age according to various ASIC searches of companies connected to her. The wife deposed to Ms D Jess being a shareholder in a company called BL Pty Ltd, the trustee of various trusts that own real property and the shareholder in various companies on the first table exhibited by the wife to her affidavit. The wife deposed to Ms D Jess having no involvement in the operation of the business prior to the 2009 settlement.
The wife deposed to seeking disclosure of declarations of trust between Ms LL, Mr Jess Jnr, Ms D Jess and Mr CL. Her counsel submitted that Mr CL held shares in a representative capacity.
THE DISCLOSURE SOUGHT IN ANNEXURE A
The structure in the regime of disclosure sought in annexure A was well ordered. It was divided into schedules, called respectively “schedule B entities”, “schedule C entities” and “schedule D entities”. The schedule B entities were the fifth to 28th respondents. Having regard to the removal of a number of respondents pursuant to paragraph 1 of the orders sought in annexure A,[11] schedule B had been amended to recognise the removal of respondents 6, 10, 12, 14, 15, 20, 22, 23, 24, 25 and 26. Pursuant to paragraph 3 of the orders sought by the wife in annexure A, she applied for an array of documents held by each of the schedule B entities. The documents sought from the schedule B entities included signed taxation returns, financial accounts, profit and loss statements, signed minutes of meetings, loan account ledgers, company registers, signed trust deeds, amending trust deeds and valuations of assets owned by the relevant entity and trademarks owned by the relevant entities.[12]
[11] Those were respondents 6, 10, 12, 14, 15, 20, 22, 23,24, 25 and 26.
[12] Precious little if any debate was focused on trademarks of any entity in this case.
The wife also sought all documents relating to changes to corporate ownerships and structures including changes of directors and changes to share ownerships.
In debate with Mr Dickson KC on both 18 September 2023 and 15 November 2023, Mr Dickson KC emphasised that disclosure was sought of Mr Jess Jnr in respect of the schedule B entities, not from the entities themselves.
Paragraph three of annexure A was fixed by reference to a temporal limitation 1 July 2006 to date. The significance of the date 1 July 2006 was not readily apparent, especially by reference to other dates alleged in the amended statement of claim. In that document the following dates were made relevant –
(a)18 December 2006 being the date on which this proceeding was commenced;
(b)18 June 2007 being the date on which the husband first made the husband’s assertions;
(c)23 February 2002 being the date on which the husband said he executed the deed of declaration of trust;
(d)Mid-2007 being when Mr Jess Jnr commenced his proceeding in the Supreme Court of Victoria; and
(e)Early 2022 being when Mr Jess Jnr’s application for special leave to appeal to the High Court of Australia from the decision of the Full Court of the Federal Circuit and Family Court of Australia was refused.
On any of those dates 1 July 2006 was not enlivened. Mr Dickson KC conceded that the relevant date was 2009 not 2006. That seemed to be for the reason that the transfer of units in JRUT was executed by the husband on 20 September 2009. It seemed arguable that the wife contended that the operative date of the fraud they alleged was 20 September 2009.
In debate on 18 September 2023 Mr Dickson submitted that the schedule B entities were the respondents from which payees have received funds, whether directly or indirectly.[13]
[13] Transcript 18 September 2023 T16 L 10.
The represented third parties complained that the wife had not articulated in her amended statement of claim how or in respect of which entity it was said by the wife that funds to which the husband may have been entitled had any connection to the schedule B entities. While it was true that the amended statement of claim was not a pleading of the precision one may see in a Barnes v Addy claim for example, nevertheless in paragraph 4(b) the wife alleged that at all relevant times the fifth to 28th respondents are and were under the control of Mr Jess Jnr. Consequent upon the removal of the sixth, 10th, 12th, 14th, 15th, 20th, 22nd, 23rd, 24th, 25th and 26th respondents, the schedule B entities now represent the respondents that the wife says are and at all relevant times have been controlled by Mr Jess Jnr and which are the entities from which funds have been disbursed to one or more of the entities recorded in schedule C.[14]
[14] Ibid.
Expressed most basically, that seemed to be a contention that –
(a)each of the remaining respondents are and at all relevant times have been controlled by Mr Jess Jnr;
(b)one or more of the entities listed in schedule B transferred funds;
(c)one or more of the entities listed in schedule C received funds transferred from one or more of the entities listed in schedule B.
The wife wants disclosure of the categories of documents set out in paragraph 3 in respect of the schedule B entities.
Junior counsel for the represented third parties complained at the breadth of the disclosure sought. Once the operative date was recognised as being a date in 2009, the issue then became one of relevance and in that regard, the represented third parties submitted that relevance had not been made out for the simple reason that the disclosure sought had not been tied to a pleaded issue.
I do not agree.
This case squarely and unambiguously pleads allegations of fraud and dishonesty in express terms.
So far as the touchstone for enlivening the obligation to make disclosure or to give discovery was concerned, the document sought must be relevant to an issue in dispute,[15] as Mr Dickson submitted. He contended the issue is simple – where has all the money gone? He submitted that discovery was sought against Mr Jess Jnr, not against the trustees in bankruptcy. One entity, BL Pty Ltd, was directed by Mr Jess Jnr but owned by Ms D Jess, yet BL Pty Ltd owned a very large number of properties and it controlled trusts that owned a number of properties. The wife wanted to investigate that.
[15] T 22 L 4.
In debate, I canvassed with Mr Dickson KC the wife’s allegations of sham and fraud. Mr Dickson submitted that the rationale for the creation of the companies and trusts recorded on the table was part of those allegations of sham and fraud.[16] Mr Dickson argued that Ms D Jess who was recorded on the table to the wife’s affidavit is Mr Jess Jnr’s mother and was an elderly woman in respect of whom it could not seriously be contended that in fact, in law and in reality, she was validly registered in her sole legal and beneficial capacity as the owner of a large number of parcels of real estate set out on the table. The same submission (bereft of their ages) was made in respect of Mr CK, Mr CM and Mr CL.
[16] T 25 L 8 – 10 and Rule 6.03(b) of the Federal Circuit and Family Law Court of Australia (Family Law) Rules 2021.
Mr Dickson submitted that the trial of this proceeding will not be bifurcated so the wife needs the totality of the information she seeks now.
On behalf of the represented third parties it was submitted on 18 September that a great deal on this discovery application depended on whether the Full Court gave leave to appeal against my 24 August 2023 ruling in this litigation. Since the debate on 18 September 2023, the Full Court refused leave to appeal from my decision.
So far as the concept of discovery subsequent to 2009 being ordered was concerned, the represented third parties contended that no pleadings currently exist to enable the represented third parties to see the relevance of the discovery sought. Counsel for the represented third parties submitted that allegations of nefarious conduct were made in connection with schedule C and it was insufficient for those allegations to be made from the bar table without being pleaded. He submitted that the applicant’s affidavit made 13 September 2023 (filed 15 September 2023) did not establish any link between Ms LL and any of the schedule C entities nor that the husband’s unitholding or income was derived therefrom.[17] He contended that based on the cross-examination of Ms LL before Bennett J, the applicant was already possessed of information which enabled the applicant to plead her case in relation to the schedule C entities. Ms Mereine argued that nearly half of the schedule C entities had been deregistered prior to this proceeding being commenced in 2006.
[17] T 44 L 23.
Then followed a debate premised on a characterisation styled by Mr Dickson KC “the chicken and egg point”. The represented third parties argued that the discovery process is invasive and ought not to be ordered unless a factual scenario in respect of which discovery is sought had been fully factually pleaded. To that, the applicant argued that at its core this case involves the movement of money for no apparent commercial reason as between companies owned and controlled howsoever tenuously by Mr Jess Jnr in respect of which the applicant says she needs documents to plead to the specific allegations.
By way of reply, Mr Dickson conceded that the wording of the third line of subparagraph 2 should stop after the word “units”.
So far as the relevant date was concerned, Mr Dickson conceded that the year 2006 could not be justified but rather that 2009 was the correct starting point.
After lengthy debate on 18 September 2023, the gravamen of the dispute about disclosure reduced to the breadth of the disclosure sought and in particular, whether the latest iteration of the statement of claim had set out in sufficient detail the relevant factual allegations as to make the orders sought appropriate or, conversely whether the orders sought were too wide based on the existing pleadings.
No dispute emerged about the ambit and content of the duty of disclosure set out in rule 6.01 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (“the rules”). The main arena of debate turned on the proper application of rule 6.03(b), namely whether the documents sought are “relevant to an issue in the proceeding”.
Stripped to its essence, this litigation is grounded in the applicant’s contention that the deceased first respondent executed a collection of documents in 2009 that purported to effect a transfer of units in the JRUT to Mr Jess Jnr when in reality that purported transfer was a sham and the product of a fraudulent design. The applicant says that the deceased husband is the beneficiary under a constructive trust pursuant to which all benefits (in money or otherwise) inure in his favour. She says she has encountered significant difficulties in articulating precisely what benefits have in fact inured by reason of the staggering complexity of the corporate arrangements established in and from 2009 by Mr Jess Jnr. She says the task of identifying the flow of funds as between the entities she says are involved has been formidable. The represented third parties from which disclosure is sought adopt an approach that the case pleaded thus far against them is bereft of details to enable them to meaningfully assess the relevance of the disclosure sought because, so they say, the issues in dispute to which the disclosure sought is said to relate, has not been adequately articulated. Conversely, the wife has argued that in order for her to exhaustively plead the allegations she intends to advance at trial, she requires disclosure of the documents sought, without which she cannot properly perform the task she must undertake. This was described by her counsel by the aphorism “chicken and egg”.
At its heart in this litigation is a bald faced allegation of fraud as found by Bennett J. Mr Dickson in debate on 18 September 2023 described some of the participants in the relevant activities as “fraudsters”, using that precise word.
The relevant entities that have been deployed in the allegedly nefarious activities have been set out with precision in the various schedules attached to the latest version of the statement of claim. Considerable examination has already been devoted to the corporate entities said to be involved in the flow of funds from or to those entities. The date of incorporation of those corporate entities varies, some much later than 2009, explaining why counsel for the represented third parties submitted that the date 2009 was not relevant to those entities because some were not then even incorporated. That much may well be true for some, but not all. To the extent that some corporate entities were not incorporated until after 2009, then disclosure prior to 2009 may not be relevant. But the year 2009 is significant, as I explained in Jess & Jess (No 7)[18] because the relevant instruments that gave effect to the fraud were executed on 20 September 2009. The wife alleges that the benefits that accrued in pursuance of the fraud subsequent to 20 September 2009 are impressed with a constructive trust in her favour. She seeks disclosure of documents in this case using September 2009 as a starting point.
[18] [2023] FedCFamC1F 291.
For the purpose of rule 6.03(b) one of the issues in the proceeding is fraud, commencing from 20 September 2009 and the transactions done allegedly in pursuance of that fraud. On the applicant’s case, the number of corporate entities involved in the fraud is vast, each having a connection to Mr Jess Jnr. According to the wife, at least one component of the fraud alleged has involved installing persons as directors of the relevant entities who are not Mr Jess Jnr but who act at his direction in directing the relevant corporate entity. Another component of the fraud alleged is that one or more persons has been installed as the shareholder in the relevant entity who holds the relevant shareholding on trust for Mr Jess Jnr with the consequence that Mr Jess Jnr remains the full beneficial owner of the relevant company, even though the registered legal shareholder is someone else. That has the consequence that any financial benefit of the shareholding in the relevant entity inures to Mr Jess Jnr. The network of companies alleged by the wife is seemingly labyrinthine.
In my view no pedantic approach should be countenanced when fraud is alleged.[19] It cannot be doubted that fraud unravels everything[20] yet understanding the subtle integers of acts said to constitute the fraud can be more difficult. The following statement made in 1896 by Lord Macnaghten in Reddaway v Banham[21] is as true then as now –
“But fraud is infinite in variety; sometimes it is audacious and unblushing; sometimes it pays a sort of homage to virtue, and then it is modest and retiring; it would be honesty itself if it could only afford it. But fraud is fraud all the same; and it is the fraud, not the manner of it, which calls for the interposition of the Court.”
[19] Pigozzo v Mineral Resources Ltd [2022] FCA 1166 (at [19]).
[20] Lazarus Estates Ltd v Beasley [1958] 1QB 702. This is not unqualified as the Court of Appeal of the Supreme Court of New South Wales held in Odtojan v Glynn [2023] NSWCA 276.
[21] [1896] AC 199.
At the risk of pointing out the self-evident, the applicant is doing her best to comprehend the full magnitude and manner of the fraud she says was perpetrated upon her. If there be fraud found, and of course I cannot say ahead of trial that there was any nor the form it precisely took, the wife is unlikely to know it now, despite the length of time this litigation has been on foot. There is enough in the pleadings so far to allege a prima facie case of fraud. The wife needs documents to prove her case. True, disclosure is an invasive process calling for the person giving disclosure to delve deeply into his, her or its documents, sometimes over a long period about which disclosure is sought.[22] Sometimes, complying with duties of disclosure calls for persons who have acted at the direction or the instruction of the person from whom or from which disclosure is sought, especially, servants and agents,[23] to provide the documents to the person from whom disclosure is sought on the basis that those documents are or have been in the control of the person from whom disclosure is sought. But in a case of fraud, in my view is it no answer for the party from whom disclosure is sought to refuse to give that disclosure on the basis that circumstances of the existence of fraud have not been adequately pleaded. To uphold such a submission is to countenance the very mischief that the case of fraud is intended to eradicate.
[22] Flight v Robinson (1844) 50 ER 9 (Lord Langdale MR) is an old authority in which this concept was early recognised.
[23] Wheeler v Le Marchant (1881) 17 Ch D 675.
In my view the schedules adequately identify the party in respect of which disclosure is said to relate. The disclosure is sought from Mr Jess Jnr, not from the deregistered third parties. The relevant date parameters are defined, commencing from September 2009. Complying with the disclosure duties is likely to be time-consuming and labour intensive. That is not a valid reason for the task not to be done.
So far as the deregistered entities in schedule D were concerned, in paragraph 5 of annexure A the wife did not press for orders that deregistered companies give disclosure. One wonders how she could seek such an order having regard to the fact that upon their deregistration litigation against those respondents came to a halt.[24] The wife’s position was that she requires Mr Jess Jnr to provide disclosure in respect of the schedule D entities of the documents enumerated in paragraph 5(a) to (j) inclusive of annexure A.
[24] Tarkington Pty Ltd v Kingdrake Pty Ltd [2000] VSCA 98.
Paragraph 6 of annexure A recorded the wife’s request for Mr Jess Jnr to provide her with copies of all documents including authorities and discharges he signed and completed to enable the husband to make the payment to the wife that was made in pursuance of paragraph 2 of the orders dated 24 September 2009. The circumstances underpinning the wife’s requests for disclosure of the documents specified in paragraph 6 of annexure A were not narrated on 18 September 2023. However, it was plain enough that the wife was pursuing documentation from Mr Jess Jnr that addressed the seemingly contradictory factual scenario in which the husband asserted that he had divested himself of the units in the JRUT prior to the settlement in September 2009 yet the husband was sufficiently well funded in September 2009 to enable him to pay a large sum to the wife allegedly in pursuance of the settlement reached between the husband and the wife. It must not be overlooked that the wife contends[25] that she entered into the deed of settlement with her husband in September 2009 because (among other reasons) she believed she would be unable to demonstrate that the deed of declaration of trust was a sham. This was set against a pleaded factual backdrop that –
(a)this litigation was commenced in December 2006;
(b)in June 2007 the husband asserted for the first time that five years earlier he had executed the deed of declaration of trust pursuant to which, on and from 28 February 2002, the husband was the trustee for Mr Jess Jnr in respect of each of the husband’s units in the JRUT;
(c)on and from 28 February 2002 the husband held no beneficial interest in the husband’s unitholding in the JRUT;
(d)the husband’s assertions were made fraudulently and dishonestly until 31 May 2010; and
(e)on 20 September 2009 the deed of settlement was executed.
[25] Paragraph 27 of her amended statement of claim.
On the pleaded chronology set out above, even recognising that a large portion of it is challenged, the husband had transferred the beneficial interest he enjoyed in his units in the JRUT well prior to his execution of the deed of settlement in September 2009. The wife seeks disclosure from Mr Jess Jnr of all documents Mr Jess Jnr signed or completed to enable the husband to make the payment to the wife for which the deed of settlement provided.
To my mind, that is squarely relevant to a fact in issue, namely, how the husband possessed the financial capacity to pay the wife the sum he allegedly paid in circumstances where, on his own version of events, he had disposed of the beneficial interest in his units in the JRUT several years earlier. I take the view that the disclosure sought is in fact relevant. An order in the form of paragraph 6 of annexure A is appropriately made.
Paragraph 7 of annexure A concerned the defined term “[Mr Jess Jnr] entities”, being all entities he controlled within the meaning of s 50AA of the Corporations Act and entities of which he is a director or in which he is a shareholder, whether legally or beneficially. The categories of documents in respect of which disclosure was sought was broad as to both date and content. The represented third parties complained about the invasive nature of disclosure generally, especially in circumstances where no finding has yet been made that dates prior to 2009 are properly regarded as being forensically maintainable. Mr Dickson’s concession that the relevant date was 2009 may not have been intended to apply to paragraph 7 of annexure A.
Paragraph 7 of annexure A called for Mr Jess Jnr to provide to the wife the documents in sub paragraphs 7(a) to (d)(vii) but in relation only to what are described as the “[Mr Jess Jnr] entities”. As has already been observed, entities meeting the appellation “[Mr Jess Jnr] entities” are all entities of which Mr Jess Jnr is a director or in which he is a shareholder (beneficially or otherwise) as well as being entities controlled by Mr Jess Jnr as defined in s 50AA of the Corporations Act.
In my reasons handed down on 24 August 2023 I observed that the complaint advanced by the represented third parties to the effect that disclosure requiring a layperson to make an evaluative judgment against a specific statutory provision of the Corporations Act may be problematic. On 6 December 2023 when this proceeding was last before me, Mr Dickson KC submitted that Mr Jess Jnr is a very sophisticated businessman who is very well advised for whom an understanding of the concept of control in s 50AA of the Corporations Act is unlikely to be problematic.
According to the defined term “[Mr Jess Jnr] entities”, not only must Mr Jess Jnr control the relevant entity for the purposes of s 50AA of the Corporations Act but he must additionally be a director of or shareholder in the relevant entity. It is not easy to comprehend a company which Mr Jess Jnr might be said to control for the purposes of s 50AA of the Corporations Act if he were not additionally a shareholder of that company (beneficially or legally) or a director of it. In other words, paragraph 7 would apply to an entity of which Mr Jess Jnr is a director. It would also apply to an entity in which Mr Jess Jnr holds a beneficial interest so long as that beneficial shareholding is controlling, even if Mr Jess Jnr were not a director of that company in which he held a beneficial interest. But if Mr Jess Jnr held office only as a director of the relevant company, paragraph 7 of annexure A would not apply unless he also controlled the relevant entity and it may well be arguable that control of a company is not conferred merely by directorship. In its current form, Mr Dickson KC conceded that the relevant date to which the categories in the subparagraphs of paragraph 7 related was 2009, not 2006.
With the alteration to the date 2006 to 2009, to my mind paragraph 7 of annexure A is appropriate. The observations recorded in paragraph 30 of my 24 August 2023 reasons were made without the benefit of debate provided by counsel on 6 December 2023.
Paragraph 8 of annexure A calls for Mr Jess Jnr to provide to the wife copies of any declarations of trust between Mr Jess Jnr or a Mr Jess Jnr entity of the one part and any one of Ms LL, Ms D Jess, Mr CK, Mr CL or Mr CM of the other part. The relevant dates against which that disclosure request was bookended was 1 July 2006 and “to date”. As was explained by Mr Dickson on 6 December 2023, the reference to the year 2006 was erroneous because Mr Jess Jnr acquired what he theatrically described as “the keys to the city” in September 2009. The relevant dates therefore were 2009 to date and continuing.
The relevance of declarations of trust was debated on 18 September 2023. In essence, it was said on behalf of the wife that Mr Jess Jnr had installed persons to act in a representative capacity mostly as the trustee of trusts of which Mr Jess Jnr or one or more of the companies called the Mr Jess Jnr entities was the beneficiary. During debate on 18 September 2023 counsel for the wife directed my attention to a collection of trusts in that category.
The represented third parties resisted the disclosure sought in paragraph 8 of annexure A. In keeping with their overall, thesis, they submitted that no allegation had been pleaded by the applicant that mentioned Ms D Jess, Mr CK, Mr CL or Mr CM.[26] They argued that insofar as Ms LL was relevant at all to the declarations of trust, she had not been mentioned in the amended statement of claim when such an allegation could have been pleaded, but was not.[27] The represented third parties asserted that no fact in issue was enlivened on the pleadings to make disclosure of declarations of trust relevant.
[26] Transcript 18 September 2023 T 57 L 20.
[27] Transcript 18 September 2023 T 57 L 40.
In debate most recently on 6 December 2023, Mr Dickson KC submitted that the case for the applicant in this litigation include a contention that Mr Jess Jnr engaged in a dishonest and fraudulent scheme, part of which involved the interpositioning of trusts pursuant to which the involvement of Mr Jess Jnr was disguised, concealed or rendered opaque. The applicant contended she was not privy to that fraudulent scheme or design, with the consequence that she is presently unable to articulate her claim beyond the manner in which it appears in the amended statement of claim.
The precise nature of the fraud in which the wife alleges Mr Jess Jnr engaged is presently unknown to her. That is unsurprising. She was not privy to it. But the wife asserts she has identified that Mr Jess Jnr employed a scheme by which his involvement in the flow of funds was concealed by the use of trusts in which any one of the persons named in paragraph 8B of annexure A was included. It is true, those persons are not presently named, in terms, in the amended statement of claim. But it must not be overlooked that a distinction exists between pleading allegations of fact as opposed to pleading particulars. [28]
[28] Dare v Pullham (1982) 148 CLR 658.
I do not accept the contention by the represented third parties that the amended statement of claim is bereft of details of fraud. It may be true that particulars have not yet been given of the minutiae of the manner of the fraud.[29] But that presupposes a requirement on the wife to particularise allegations in circumstances where the represented third parties could have, but have failed to, request particulars of the allegation of fraud, sham, dishonest design or dishonest scheme. Mr Dickson has repeatedly argued that his client simply does not presently know of the details of the fraud, yet she knows a fraud has been committed. To my way of thinking the exquisitely precise method of linking an allegation of fact to a particular sub-joined to that allegation connected to a paragraph of a witness statement in, for example, a complex building case has no application to a case such as this where the applicant can only plead the existence of a fraudulent design or scheme or a sham yet the details of the dishonesty or fraud lies beyond her control. In those circumstance, it would stultify this litigation and stymie its whole purpose to do as the represented third parties say by refusing disclosure on the basis that an expansive pleading has not been proffered.
[29] Reddaway v Banham (op cit).
In my view, paragraph 8 is maintainable. I make an order in accordance with its provisions, subject to the date 1 July 2006 being replaced by 1 July 2009.
Paragraph 8D of annexure A related specifically to Ms C Jess, the 28th respondent. The wife sought from Ms C Jess signed copies of all documents executed on 24 September 2009, tax returns and financial statements for the period 1 July 2006 to date and all documents relating to the receipt of income remuneration from any corporate source, or relating to the acquisition or disposal of real property (whether in Australia or overseas), copies of all loan account ledgers and the identification of trust deeds of any trust.
The involvement of Ms C Jess was said to be relevant for two reasons. First, she is the wife of Mr Jess Jnr. Second, she is alleged to own real property at CP Street. The wife recorded in the table exhibited to her affidavit in respect of real property that the property at CP Street was once owned by Mr Jess Jnr yet it is currently registered in the name of Ms C Jess. Counsel for the wife cast the wife’s contentions on the basis that the parcel of real property in CP Street having once been registered in Mr Jess Jnr’s name then later in Ms C Jess’s name, it was entirely conceivable that the transfer to Ms C Jess was pursuant to an express declaration of trust in which Ms C Jess is the registered proprietor of the legal fee simple estate yet Mr Jess Jnr is the beneficial owner of that real property. To my mind, that was arguable.
The represented third parties resisted disclosure from Ms C Jess, asserting the wife was engaging in “an attempt to build a foundation outside of the pleadings for wide ranging invasive discovery in respect of [Ms C Jess]”[30], for which no foundation existed. Junior counsel for the represented third parties added surplusage to that submission stating “in fact, it’s highly questionable”.
[30] Transcript 18 September 2023 T 58 L 20.
I do not agree.
A fraudulent design involving Mr Jess Jnr is alleged by the wife. She asserts that the arrangement documented on 20 September 2009 is a sham. She points to real property once registered in the name of Mr Jess Jnr. The wife points to other persons (Ms LL, Mr CK, Mr CL and Mr CM) occupying roles as directors of companies associated with Mr Jess Jnr or occupying roles as shareholders in those companies and the wife asserts as against Ms C Jess that she is likely to be similarly involved in what Mr Dickson KC called “chicanery”.[31] The relevant exchange unfolded in the following manner –
[31] Transcript 18 September 2023 T 25 L47.
MR DICKSON: [Ms LL], again, and Mr Mereine will no doubt answer this at some point, is it seriously contended by [Mr Jess Jnr] that, “My mother, 79 years old, never worked in the business is the owner of head office and multiple trusts and sites – [Y Business] sites”, that she’s the real owner of those things. Is that what’s really alleged?
HIS HONOUR Well, let’s say he says yes, and would he not be entitled at this present stage to rely on the presumption of regularity in respect of any landholding registrations or corporate registrations?
MR DICKSON They are owned by the entity that’s registered on title. Yes, they are.
HIS HONOUR Yes. That’s right.
MR DICKSON They are. It’s one of the reasons why we’re looking for things like declarations of trust. Now
HIS HONOUR Well, that’s why I’m asking you, and you might have picked up I’m searching for your answer to give me a legal framework that says in cases of this sort courts adopt a particular approach and I would be willing to bet that there’s a lot of learning on this.
MR DICKSON Well
HIS HONOUR It won’t be in this court, but it will be in other courts that routinely – and the UK is famous for it – dealing with cases of commercial – well
MR DICKSON Chicanery.
HIS HONOUR Whatever. I don’t want to call it that, but things having the appearance of being something that they’re not.[32]
[32] Transcript 18 September 2023 T 25 L 19 to T 26 L 2.
The wife put this as a species of a sham transaction. While her counsel did not rely on the key authorities on point, they are well known.[33]
[33] Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 18 FCR 449, ICT Pty Ltd & Buquebus International Ltd v Sea Containers Ltd (1995) 39 NSWLR 640, Peate v Federal Commissioner of Taxation (1964) 111 CLR 443.
To my way of thinking it is no answer for the represented third parties to advance pointed pleadings technicalities to support their resistance to giving disclosure when the wife is endeavouring to uncover the fraud she asserts was committed by Mr Jess Jnr.
Returning to paragraph 8C(3), the date 1 July 2006 must be amended to 1 July 2009 as with paragraph 8C(4). In all other respects, paragraph 8C should be ordered.
Paragraph 8D of annexure A sought the same documents from Mr Ban as were sought from Ms C Jess in pursuance of paragraph 8C. Ms C Jess’s name appeared on many entries in exhibit WJ2 in relation to relevant real property yet the name Mr Ban appeared nowhere. The transcript disclosed certain references in relation to Mr Ban. They included –
(a)Mr Ban was very close to Mr Jess Jnr;[34] and
(b)Mr Jess Jnr may have funnelled money to Mr Ban post 2009 to thank him for his role in depriving the wife of what she may have received.[35]
[34] Transcript 18 September 2023 T 61 l 15.
[35] Transcript 18 September 2023 T 61 L 25.
Mostly for reasons comparable to those advanced in relation to Ms C Jess, counsel for the wife argued that declarations of trust and documents evidencing transfers of funds involving Mr Ban were “on the cards” (his words, even though that is a test used in relation to the subpoena test for relevance).
The represented third parties opposed any orders being made that required Mr Ban to provide disclosure. They argued that no pleadings implicated him.
The logic of requiring Mr Ban to make disclosure mirrors the logic of requiring Ms C Jess to make disclosure. Neither is named in the wife’s amended statement of claim. However, the wife contends that each is implicated in the fraud in which Mr Jess Jnr engaged in respect of which she is the victim.
In Goodridge v Beadle[36] I surveyed the learning to 2017 on the requirements of pleading fraud, pointing out that the High Court in Banque Commerciale SA, en Liquidation v Akhil Holdings Ltd[37] held that fraud may take a variety of forms. However the court was silent on the issue confronting me in this application where an applicant alleging fraud is the victim of the fraud but not a participant in it with the consequence that the applicant is unable to particularise the fraud in such manner as to render applicable conventional orthodoxy about defining the issues on which the parties join issue thereby confining the parameters of disclosure.
[36] (2017) 57 FamLR 425.
[37] (1990) 169 CLR 279.
If I were to accede to the submissions of the represented third parties, the wife would be faced with being denied the disclosure she needs to prove her case. That may lead to a very unjust result for her in this litigation. After all, it must not be forgotten that she alleges she is the victim of fraud in which her former husband and Mr Jess Jnr engaged. Mr Jess Jnr is endeavouring to stymie her in her proving the fraud she says he perpetrated on her. Such as outcome would be wholly antithetical to the attainment of a just and equitable result for the purposes of s 79 of the Family Law Act. Further, such an outcome would enable an alleged fraudster to exploit his alleged fraud by denying the alleged victim the ability to prove the fraud using the alleged fraudster’s own documents. The law should not operate in that manner.
Mr Dickson placed heavy reliance in his submission about the relief sought by the wife in the taking of accounts. He submitted that the documentation sought in the wife’s annexure A addresses the taking of accounts and therefore that the disclosure sought should be ordered. I agree.
Paragraph 8E of annexure A contained the wife’s application for Mr Jess Jnr to make an affidavit in which he deposed to certain matters. The first of those matters related to the units in the JRUT following their alleged transfer to Mr Jess Jnr pursuant to the deed of settlement. The wife wanted orders compelling Mr Jess Jnr to depose to whether Mr Jess Jnr remained the legal or beneficial owner of the units and if so, how many. She wanted Mr Jess Jnr to depose the dealings with the units from 20 September 2009 to date at Mr Jess Jnr’s direction or on his behalf. She also wanted Mr Jess Jnr to depose to the details of any transfer of the units.
As a separate issue, the wife sought orders for Mr Jess Jnr to depose to the property, income, remuneration, emoluments, dividends and benefits arising from the units from 20 September 2009 to date or traceable to the units. It was put that this case involves tracing and the taking of accounts. It was also put that the information sought from Mr Jess Jnr was permitted by the rules and that it was sought in pursuance of the taking of accounts and tracing.
The represented third parties opposed the application in paragraph 8E, contending principally that no pleaded case emerged to require such orders.
Contrary to those submissions of the represented third parties, the wife’s prayer for relief includes the taking of accounts. Precisely what became of the units once they passed into Mr Jess Jnr’s hands is squarely relevant as is the question of the fate of benefits derived from the units once the units passed to Mr Jess Jnr. I reject the contentions of the represented third parties in that regard.
Part 6.3 of the rules authorises questions of fraud to be asked. It also provides a time limit on the answering of those questions.
ORDERS
The orders I make are as set out at the commencement of these reasons.
I certify that the preceding ninety-one (91) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Wilson. Associate:
Dated: 8 December 2023
ANNEXURE A
IN THE FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
AT MELBOURNE
File No (P) MLF 3444/2006
BETWEEN:
MS JESS
(Applicant Wife)
and
MR J as Legal Personal Representative of MR JESS SNR (Deceased)
(First Respondent)
and
MR JESS JNR & ORS
(Second to 29th Respondents - the Third Parties)
and
MR K and MR L as Trustees of the Bankrupt Estate of MR JESS SNR
(Interveners)
APPLICANT WIFE'S AMENDED PROPOSED ORDERS
Pursuant to paragraph 4 of the Orders dated 27 April 2023
FOR THE PURPOSE OF THESE ORDERS, THE FOLLOWING DEFINITIONS APPLY:
A.Mr Jess Jnr Entities refer to Mr Jess Jnr personally and all entities:
(a)controlled by Mr Jess Jnr as defined in section 50AA of the Corporations Act 2001 (Cth); and
(b)of which Mr Jess Jnr is a director and/or shareholder (beneficially or otherwise);
and
(c) to which payments have been made by Mr Jess Jnr since 1 July 2006 (personally
or on his behalf).
B.Schedule B Entities refer to the Respondents
5th – 28th Respondentsto proceedings MLF 3444 / 2006outlinedlisted in the attached Schedule B.A.Schedule C Entities refer to the entities outlined listed in the attached Schedule C.
B.Schedule D Entities refer to the entities listed in the attached Schedule D, being Respondents to proceedings MLF 3444/2006 that are now de-registered and are removed as parties to the proceeding pursuant to these orders.
IT IS ORDERED THAT:
1.The Sixth, 10th, 12th, 14th, 15th, 20th, 22nd, 23rd, 24th, 25th and 26th Respondents are removed as parties to the proceeding.
DISCLOSURE
2.By 16 October 2023, the relevant Respondent/s shall provide to the Applicant Wife the discovery as required by paragraphs 3 to 11
2 to 7of these orders.3.Each of the Respondents listed in the Schedule B Entities shall provide to the Applicant Wife the following documents from 1 July 2006 to date, to the extent they have not already been provided:
(a)Signed Taxation Returns;
(b)Financial Accounts;
(c)Profit and Loss Statements;
(d)Signed Minutes of Meetings;
(e)Loan Account Ledgers,
(f)Company Registers;
(g)Signed Trust Deeds and amending Trust Deeds;
(h)Valuations of assets owned by the entity;
(i)Details of all trademarks owned by the entity;
(j)All documents relating to all changes in corporate ownership and structure including but not limited to:
(i)Changes of directors; and
(ii)Changes of ownership of shares.
4.Insofar as any of the Schedule C Entities have received funds directly or indirectly from any Schedule B entity,
orany Schedule C entity or any Schedule D entity or from the 2nd, 4th or 29th Respondents, the Second Respondent provide signed copies of the following documents from 1 July 2006 to date:(k)Signed Taxation Returns;
(l)Financial Accounts;
(m)Profit and Loss Statements;
(n)Signed Minutes of Meetings;
(o)Loan Account Ledgers,
(p)Company Registers;
(q)Signed Trust Deeds and amending Trust Deeds;
(r)Valuations of assets owned by the entity;
(s)Details of all trademarks owned by the entity;
(t)All documents relating to all changes in corporate ownership and structure including but not limited to:
(i)Changes of directors; and
(ii)Changes of ownership of shares.
5.In respect of Schedule D Entities, the Second Respondent shall provide to the Applicant Wife the following documents from 1 July 2006 to date, to the extent they have not already been provided:
(a)Signed Taxation Returns;
(b)Financial Accounts;
(c)Profit and Loss Statements;
(d)Signed Minutes of Meetings;
(e)Loan Account Ledgers,
(f)Company Registers;
(g)Signed Trust Deeds and amending Trust Deeds;
(h)Valuations of assets owned by the entity;
(i)Details of all trademarks owned by the entity;
(j)All documents relating to all changes in corporate ownership and structure including but not limited to:
(i)Changes of directors; and
(ii)Changes of ownership of shares.
6.The Second Respondent shall provide to the Applicant Wife copies of all documents, including but not limited to authorities and discharges, that he signed and completed in order to enable Mr Jess Snr to make the payment to the Applicant Wife in accordance with Order 2 of the Orders dated 24 September 2009.
7.ln respect of the Mr Jess Jnr Entities, the Second Respondent shall provide to the Applicant Wife the following documents, to the extent not already provided:
(a)Signed copies of all documents executed on 20 September 2009;
(b)Signed copies of all documents executed on 24 September 2009;
(c)Tax returns and financial statements for the period 1 July 2006 to date;
(d)For the period 1 July 2006 to date all documents relating to:
(i)Receipt of income, remuneration and emoluments from any related corporate source identifying the date and amount of each receipt;
(ii)Acquisition and/or disposition of real property including the name of the parties, identity of the asset, consideration paid, whether such acquisition or disposition is of a legal or beneficial interest, the date the asset was acquired or disposed of, whether the asset is currently held and copies of all valuations;
(iii)Acquisition and/or disposition of real property overseas including the name of the parties, identity of the asset, consideration paid, whether such acquisition or disposition is of a legal or beneficial interest, the date the asset was acquired or disposed of whether the asset is currently held and copies of all valuations;
(iv)Copies of all loan account ledgers;
(v)Identification and copies of Trust Deeds, including all Deeds of Amendment, of any Trust of which that party/entity is an appointor, shareholder of a trustee company, trustee, or beneficiary;
(vi)Dispositions of real property or income provided to Ms D Jess; and
(vii)Dispositions of real property or income provided to Ms LL.
9.The Second Respondent shall provide to the Applicant Wife copies of any declarations of trust between;
(A)Mr Jess Jnr or-any of the Mr Jess Jnr Entities as to one part
sand(B)Ms LL, Ms D Jess, Mr CK, Mr CL, Mr CM and/or any other person or entity as to the other part from 1 July 2006 to date in relation to any shares held.
(C)The Twenty-Ninth Respondent shall provide to the Applicant Wife copies of the following documents:
1. Signed copies of all documents executed on 20 September 2009;
2. Signed copies of all documents executed on 24 September 2009;
3. Personal tax returns and financial statements for the period 1 July 2006 to date;
4. For the period 1 July 2006 to date, all documents relating to:
(i)Receipt of income, remuneration and emoluments from any corporate source or any individual identifying the date and amount of each receipt;
(ii)Acquisition and/or disposition of real property including the name of the parties, identity of the asset, consideration paid, whether such acquisition or disposition is of a legal or beneficial interest, the date the asset was acquired or disposed of, whether the asset is currently held and copies of all valuations;
(iii)Acquisition and/or disposition of real property overseas including the name of the parties, identity of the asset, consideration paid, whether such acquisition or disposition is of a legal or beneficial interest, the date the asset was acquired or disposed of whether the asset is currently held and copies of all valuations;
(iv)Copies of all loan account ledgers; and
(v)Identification and copies of Trust Deeds, including all Deeds of Amendment, of any Trust of which that individual is an appointor, shareholder of a trustee company, trustee, or beneficiary.
(D)The Fourth Respondent shall provide to the Applicant Wife copies of the following documents:
1. Signed copies of all documents executed on 20 September 2009;
2. Signed copies of all documents executed on 24 September 2009;
3. Personal tax returns and financial statements for the period 1 July 2006 to date;
4. For the period 1 July 2006 to date, all documents relating to:
(i)Receipt of income, remuneration and emoluments from any corporate source or any individual identifying the date and amount of each receipt;
(ii)Acquisition and/or disposition of real property including the name of the parties, identity of the asset, consideration paid, whether such acquisition or disposition is of a legal or beneficial interest, the date the asset was acquired or disposed of, whether the asset is currently held and copies of all valuations;
(iii)Acquisition and/or disposition of real property overseas including the name of the parties, identity of the asset, consideration paid, whether such acquisition or disposition is of a legal or beneficial interest, the date the asset was acquired or disposed of whether the asset is currently held and copies of all valuations;
(iv)Copies of all loan account ledgers; and
(v)Identification and copies of Trust Deeds, including all Deeds of Amendment, of any Trust of which that individual is an appointor, shareholder of a trustee company, trustee, or beneficiary.
(E)By 9 October 2023, the Second Respondent shall file and serve an affidavit, with supporting documentation, disclosing:
1. In relation to the units in the Jess Retail Unit Trust following their transfer to him pursuant to the Deed of Settlement dated 20 September 2009 (“the Units”):
(i)whether he remains the legal and/or beneficial owner of all, or if not, how many of the Units;
(ii)for the period from 20 September 2009 to date, dealings with and/or treatment of the Units (including but not limited to transfer or disposal) at his direction or on his behalf; and
(iii)in the event the Units (or any of them) have been disposed of or transferred, the details of any such disposal or transfer including any terms of sale or transfer, date of same, identity of purchaser or transferee, and consideration paid.
2. For the period from 20 September 2009 to date, the property, income, remuneration, emoluments payments, dividends, consideration or benefits arising from the Units and/or traceable to those Units, together with the current estimated value of the Units and his interest in the X Group of companies and his direct and indirect interests in all assets and financial resources that he controls.
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