Jess & Jess (No 5)
[2024] FedCFamC1A 85
•16 May 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Jess & Jess (No 5) [2024] FedCFamC1A 85
Appeal from: Jess & Jess(No 11) [2023] FedCFamC1F 1027
Jess & Jess (No 12) [2024] FedCFamC1F 58
Appeal numbers: NAA 360 of 2023
NAA 42 of 2024File number: MLF 3444 of 2006 Judgment of: ALSTERGREN CJ, AUSTIN & WILLIAMS JJ Date of judgment: 16 May 2024 Catchwords: FAMILY LAW – APPEAL – LEAVE TO APPEAL – Where the respondents in the substantive proceeding (“the respondents”) seek to appeal from financial disclosure orders – Where the respondents seek to appeal from the dismissal of their application to stay the financial disclosure orders – Where the respondents contend leave to appeal is not required when the orders infringe their substantive right to keep documents confidential – Where the respondents’ desire for the retention of confidentiality is not the same thing as the enjoyment of a right to the retention of confidentiality – Whether the primary judge denied the respondents procedural fairness by rejecting their application to amend their Defence – Where the doctrine of procedural fairness is concerned only with the fairness of the hearing, not with the fairness of the result – Where not every departure from a stated intention necessarily involves unfairness, even if it defeats an expectation – Where this ground is devoid of merit – Where the primary judge ordered one respondent to file an affidavit requiring his opinion as to the estimated value of certain unit holdings – Where this order did not reflect the intentions of the primary judge and should not extend so far as to require expert valuation opinion evidence – Where the respondents conceded the application of the slip rule is appropriate – Order varied under the slip rule – Leave to appeal refused – Where the applications were wholly unsuccessful – Where the respondents did not cavil with the wife’s application for costs – Respondents ordered to pay the wife’s costs in a fixed sum. Legislation: Bankruptcy Act 1966 (Cth) s 58
Corporations Act 2001 (Cth) s 50AA
Family Law Act 1975 (Cth) Pt VIII, ss 78, 79, 79A, 90AE, 106B
Federal Circuit and Family Court of Australia Act 2021 (Cth) s 26 and s 28
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 10.13
Federal Court and Federal Circuit and Family Court Regulations 2022 (Cth) r 4.02
Cases cited: Amann Aviation Pty Ltd (in liq) v Continental Venture Capital Ltd [2005] NSWCA 154
Apache Northwest Pty Ltd v Newcrest Mining Ltd (2009) 182 FCR 124; [2009] FCAFC 39
Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (2000) 202 CLR 588; [2000] HCA 25
Bevan v Bevan (2013) 279 FLR 1; [2013] FamCAFC 116
Bienstein v Bienstein (2003) 195 ALR 225; [2003] HCA 7
Carr v Finance Corp of Australia Ltd (No 1) (1981) 147 CLR 246; [1981] HCA 20
Commonwealth v Mullane (1961) 106 CLR 166; [1961] HCA 28
Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 14 FCR 434
DL v The Queen (2018) 266 CLR 1; [2018] HCA 26
Dupont v Chief Commissioner of Police & Anor (2015) FLC 93-648; [2015] FamCAFC 64
Hall v Nominal Defendant (1966) 117 CLR 423; [1966] HCA 36
Hancock Prospecting Pty Ltd v DFD Rhodes Pty Ltd (No 2) [2023] WASCA 108
Hearne v Street (2008) 235 CLR 125; [2008] HCA 36
House v The King (1936) 55 CLR 499; [1936] HCA 40
Jess & Jess (2021) FLC 94-055; [2021] FamCAFC 159
Jess & Jess (No 3) [2023] FedCFamC1A 2
Jess & Jess (No 4) (2023) 67 FamLR 615; [2023] FedCFamC1A 189
Jess & Jess [2022] HCASL 24
Jess & Jess [2024] HCASL 47
Licul v Corney (1976) 180 CLR 213; [1976] HCA 6
Lin & Ruan (2021) FLC 94-024; [2021] FamCAFC 90
Lyons v Kern Konstructions (Townsville) Pty Ltd (1983) 47 ALR 114
Medlow & Medlow (2016) FLC 93-692; [2016] FamCAFC 34
MG Corrosion Consultants Pty Ltd v Gilmour [2011] FCA 1514
Milltec Australia Pty Ltd v Burnes [2006] NSWCA 13
Mobil Oil Australia Ltd v Guina Developments Pty Ltd (1996) 33 IPR 82; [1996] 2 VR 34
O’Brien v Komesaroff (1982) 150 CLR 310; [1982] HCA 33
Penrith Whitewater Stadium Ltd v Lesvos Pty Ltd [2007] NSWCA 103
Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6
RnD Funding Pty Ltd v Roncane Pty Ltd (2023) 297 FCR 91; [2023] FCAFC 28
Sarto & Sarto (2022) 65 Fam LR 605; [2022] FedCFamC1A 16
Stead v State Government Insurance Commission (1986) 161 CLR 141; [1986] HCA 54
SZBEL v Minister for Immigration and Multicultural Affairs (2006) 228 CLR 152; [2006] HCA 63
Tame v NSW (2002) 211 CLR 317; [2002] HCA 35
The Commonwealth v John Fairfax and Sons Ltd (1980) 147 CLR 39; [1980] HCA 44
Thorne v Kennedy (2017) 263 CLR 85; [2017] HCA 49
Trade Practices Commission v CC(NSW) Pty Ltd (No 4) (1995) 58 FCR 426
Whisprun Pty Ltd v Dixon (2003) 200 ALR 447; [2003] HCA 48
Wiki v Atlantis Relocations (NSW) Pty Ltd (2004) 60 NSWLR 127; [2004] NSWCA 174
Number of paragraphs: 134 Date of hearing: 30 April 2024 Place: Melbourne Counsel for the Applicants: Mr Myers KC with Mr Mereine and Mr Lum Solicitor for the Applicants: HWL Ebsworth Lawyers Counsel for the First Respondent: Mr Dickson KC with Ms Matson Solicitor for the First Respondent: Kenna Teasdale Lawyers Solicitor for the Second Respondent: Mr J (Did not participate) Solicitor for the Intervener: Lander & Rogers (Did not participate) ORDERS
NAA 42 of 2024
NAA 360 of 2023
MLF 3444 of 2006FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MR JESS JNR
First Applicant
MR BAN
Second ApplicantAAA PTY LTD AS TRUSTEEE OF THE BBB TRUST (and others named in the Schedule)
Third ApplicantAND: MS JESS
First Respondent
MR J IN HIS CAPACITY AS THE LEGAL PERSONAL REPRESENTATIVE FOR MR JESS SNR (DECEASED)
Second Respondent
MR K AND MR L AS TRUSTEES OF THE BANKRUPT ESTATE OF MR JESS SNR
Intervener
ORDER MADE BY:
ALSTERGREN CJ, AUSTIN & WILLIAMS JJ
DATE OF ORDER:
16 MAY 2024
THE COURT ORDERS THAT:
1.In Appeal NAA 360/2023:
(a)leave to appeal is refused;
(b)the Notice of Appeal filed on 22 December 2023 is dismissed; but
(c)pursuant to r 10.13(1)(e) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth), Order 8(e)(ii) made on 8 December 2023 is varied by deleting the suffix words “together with the current estimated value of the Units”.
2.In Appeal NAA 42/2024:
(a)leave to appeal is refused; and
(b)the Notice of Appeal filed on 22 February 2024 is dismissed.
3.The appellants shall pay the first respondent’s costs of and incidental to the applications for leave to appeal, fixed in the composite sum of $71,258 pursuant to r 12.17(1)(a) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
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).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Jess & Jess (No 5) has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
ALSTERGREN CJ, AUSTIN & WILLIAMS JJ
These reasons explain the consolidated disposition of two appellate proceedings.
The first appeal, subject to the grant of leave to bring it, lies from financial disclosure orders made on 8 December 2023 in a pending financial cause by a judge of the Federal Circuit and Family Court of Australia (Division 1).
The second appeal, again subject to the grant of leave to bring it, lies from the primary judge’s refusal on 19 February 2024 to stay the operation of the financial disclosure orders pending the determination of the first appeal.
For the following reasons, leave to appeal is refused in both instances, though one order is varied pursuant to r 10.13(1)(e) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) because it inadvertently does not reflect the intention expressed in the reasons for judgment published by the primary judge.
BACKGROUND
Immediate identification of the many parties to, and the nature of, the underlying dispute will aid comprehension of these reasons.
The wife pursues financial relief against the deceased estate of the late husband (“the deceased”) under Pt VIII of the Family Law Act 1975 (Cth) (“the Act”). The trustees of the deceased’s bankrupt estate have intervened in the proceedings (“the trustees”).
As an adjunct to the federal financial cause, claims are brought by the wife against other parties to recover property and income, intending that such property and income should form part of the property interests of the deceased and then be amenable to division between the wife, the deceased, and the trustees pursuant to property settlement orders made under Pt VIII of the Act. The wife’s allied claims comprise applications pursuant to s 106B of the Act to set aside a trust deed, the transfer of unit holdings the subject of the trust deed, and a deed of settlement, and in addition, claims in equity in reliance upon doctrines of constructive trust, tracing, and the taking of accounts.
Aside from the deceased, who is the first respondent to the proceedings, the deceased’s son (“Mr Jess Jnr”) is the second respondent, Mr Jess Jnr’s wife (“Ms C Jess”) is the twenty-ninth respondent, an associate of Mr Jess Jnr (“[Mr Ban]”) is the fourth respondent, and the remaining respondents comprise a multitude of corporations said to be under Mr Jess Jnr’s actual or ostensible control. Ten of the twenty-nine respondents were consensually discharged as parties to the proceedings on 8 December 2023 (Order 1), which order is not challenged in the appeal, though it seems the order mistakenly omitted to achieve the intended additional removal of the sixth respondent (at [5]).
Broadly stated, the wife contends the deceased and the respondents complicitly perpetrated an extravagant fraud to relieve the deceased of property and income to which he was properly entitled, which should now be available for division between the wife, the deceased and the trustees by adjustment orders made under Pt VIII of the Act. The primary judge described the wife’s case in this way:
51.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 [wife’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.
…
68.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.
(Footnote omitted)
Although the wife does not seek remedial relief against all respondents directly, they may be at least indirectly affected by her claims to claw back property and income.
For the purpose of elaborating the factual background to this appeal, we adapt the Full Court’s chronological summary set out in the reasons for judgment delivered when disposing of the last appeal proceeding between the parties (Jess & Jess (No 4) (2023) 67 Fam LR 615).
In December 2006, the wife commenced property settlement proceedings against the deceased under the Act. The major asset in dispute is a retail business. The deceased’s business interests were structured such that they were ultimately held by a company as trustee of a unit trust established in 1983, units in which were held by the deceased (the “Units”).
In 2007, Mr Jess Jnr commenced proceedings in the Supreme Court of Victoria seeking orders confirming that the deceased’s Units had vested in him, relying upon a trust deed (“the trust deed”) purportedly signed by the deceased on 28 February 2002.
On 24 September 2009, property settlement orders were made pursuant to s 79 of the Act with the spouses’ consent. Four days earlier, the wife had entered into a deed of settlement (“the deed of settlement”) with the deceased and Mr Jess Jnr foregoing any claim on the Units, which the deceased purported to hold for the benefit of Mr Jess Jnr pursuant to the trust deed. The wife alleges she entered into the deed of settlement because she could not then prove the trust deed was fraudulent. The Units were transferred by the deceased to Mr Jess Jnr that same day.
Sometime afterwards, the deceased confessed to the wife that the trust deed was fraudulent, ultimately leading both her and the deceased to separately apply in 2013 to set aside the trust deed and consequential transactions, including the deed of settlement, relying upon s 106B of the Act and to set aside the consent property settlement orders under s 79A of the Act.
In 2016, the deceased was declared bankrupt on a debtor’s petition. The trustees were appointed as trustees of the deceased’s estate in bankruptcy. They were consensually joined to the proceedings in August 2016 and remain party to the proceedings, despite the discharge of the bankruptcy in 2019.
The deceased died in 2018 and was replaced in the litigation by the legal personal representative of his deceased estate.
On 15 November 2019, a judge of the Family Court of Australia (as the Court was then known) found the trust deed was fraudulent and declared it “was not executed on the date that it bears”. An appeal to the Full Court by Mr Jess Jnr was dismissed (Jess & Jess (2021) FLC 94-055) and an application for special leave to appeal from the judgment of the Full Court was then dismissed by the High Court of Australia (“the High Court”) (Jess & Jess [2022] HCASL 24).
On 29 July 2022, the property settlement orders formerly made between the wife and the deceased on 24 September 2009 were set aside pursuant to s 79A(1) of the Act with the consent of the deceased and the trustees. An application for leave to appeal by Mr Jess Jnr and related respondents from the orders setting aside the original property settlement orders was dismissed (Jess & Jess (No 3) [2023] FedCFamC1A 2).
The wife, the deceased and the trustees all seek orders pursuant to s 106B of the Act setting aside the trust deed, the deed of settlement, and the transfer of the Units to Mr Jess Jnr. They also seek orders for the recovery of the Units and, on the wife’s case, any traceable proceeds of the Units. The effect of the orders sought by the wife, the deceased and the trustees is to restore the Units to the deceased so they form part of the property that is then amenable to fresh property settlement orders between the wife, the deceased and the trustees pursuant to s 79 of the Act.
The trustees seek orders to set aside the impugned transactions at the time they were made, so as to ensure the deceased held the Units at the time of his bankruptcy (or at least prior to the discharge from bankruptcy), so the Units would then vest in the bankruptcy trustee under s 58 of the Bankruptcy Act 1966 (Cth).
Pursuant to procedural orders made by the primary judge in the proceedings, the wife pleaded her causes of action against the respondents in her Amended Statement of Claim filed on 31 October 2022, in response to which their Defence was filed on 11 November 2022, and in respect of which the wife filed a Reply on 28 November 2022. Those documents currently comprise the pleadings, though amendments are apparently still intended.
The last appeal was determined by orders made by the Full Court on 3 November 2023. In part, the Full Court dismissed the respondents’ application for leave to appeal from findings made by the primary judge that they should give extensive financial disclosure to the wife, as no operable orders to that effect were actually then made (Jess & Jess (No.4) at [24]–[34]). Appeals only lie from judgments expressed in orders (s 26(1) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (“the FCFCA Act”), not from findings expressed within reasons. An application for special leave to appeal from that decision was also recently dismissed by the High Court (Jess & Jess [2024] HCASL 47).
While the former appeal proceeding was still pending before the Full Court, presumably due to the parties’ inability to agree upon the terms of the financial disclosure orders which should be made to reflect the primary judge’s stated intention, the wife applied in the original proceedings for specific orders prescribing the ambit of the disclosure she required from the respondents. That application was filed by the wife on 26 May 2023, listed on 24 August 2023, and then adjourned for hearing on 18 September 2023.
On 15 September 2023, just before the scheduled interim hearing, the wife filed an Amended Application in a Proceeding refining the orders for disclosure she wanted made against the respondents. The respondents contested the application, the hearing of which extended over four days between September 2023 and December 2023.
Orders resolving the dispute were made by the primary judge on 8 December 2023. In the interests of brevity, we refrain from the verbatim recitation of the lengthy orders and instead summarise their effect as follows:
(a)All respondents must give discovery to the wife in accordance with the following orders (Order 2);
(b)The corporate respondents (being the fifth to twenty-eighth respondents, less those discharged as parties by Order 1 made on 8 December 2023) must discover to the wife certain documents created from 1 July 2009 (Order 3);
(c)Mr Jess Jnr must discover to the wife:
(i)certain documents created by many corporate entities, said to be controlled by Mr Jess Jnr, none of which are current parties (either because they never were or because they have since been discharged), from 1 July 2009 (Orders 4 and 5);
(ii)any documents created to enable the deceased to make a payment to the wife as required by orders made on 24 September 2009 (Order 6); and
(iii)certain documents created in September 2009 and the financial records of corporations controlled by him from 1 July 2009 (Order 7); and
(iv)any declarations of trust between himself and other named persons from 1 July 2009 (Orders 8(a) and 8(b));
(d)Ms C Jess must discover to the wife any signed copies of documents executed on 20 September 2009 and 24 September 2009 and certain prescribed documents from 1 July 2009 (Order 8(c));
(e)Mr Ban must discover to the wife any signed copies of documents executed on 20 September 2009 and 24 September 2009 and certain prescribed documents from 1 July 2009 (Order 8(d)); and
(f)Mr Jess Jnr must file and serve an affidavit disclosing certain information from 20 September 2009 (Order 8(e)).
The respondents sought leave to appeal from those orders by way of a Notice of Appeal filed on 22 December 2023. Despite now being the applicants for leave to appeal in these appellate proceedings, they will continue to be called the respondents for consistency.
An application to stay the appealed orders was then made by the respondents on 29 January 2024, which was dismissed by the primary judge on 19 February 2024.
The respondents sought leave to appeal from the order dismissing their stay application by way of a Notice of Appeal filed on 22 February 2024.
The respondents notified the appeal registrar they were content for the stay appeal to be heard in conjunction with the substantive appeal.
The appeals were contested between only the respondents and the wife. The trustees filed Submitting Notices and neither they nor the deceased appeared at the appeal hearing.
LEAVE TO APPEAL
The respondents only apply for leave to appeal from the financial disclosure orders as their fall-back position, as they primarily contend their substantive right to keep documents confidential is conclusively infringed by the orders and so leave to appeal is not required. The wife conversely submitted the orders are plainly interlocutory and leave to appeal is necessary.
Leave to appeal is only relevantly necessary in respect of “prescribed judgments” (s 28(3)(e)(i) of the FCFCA Act), which definition includes “interlocutory decrees” (reg 4.02(1)(a) of the Federal Court and Federal Circuit and Family Court Regulations 2022 (Cth)).
The wife did not contend the subject orders were deprived of characterisation as “judgments” and thereby incapable of supporting an appeal (Commonwealth v Mullane (1961) 106 CLR 166 at 169). Rather, her dispute with the respondents was confined to the subsequent question of whether or not leave to appeal from the “judgment” embodied within the orders was required, the resolution of which dispute hinges on whether the orders were final or interlocutory.
Sometimes it can be difficult to distinguish between final and interlocutory orders (Bienstein v Bienstein (2003) 195 ALR 225 at [25]), though orders are generally categorised as interlocutory in nature if they do not finally determine substantive legal rights (Carr v Finance Corp of Australia Ltd (No 1) (1981) 147 CLR 246 at 248 and 256–257; Licul v Corney (1976) 180 CLR 213 at 225 and 230–231; Hall v Nominal Defendant (1966) 117 CLR 423 at 439–440 and 444).
We regard the financial disclosure orders as being interlocutory in nature, such that no appeal lies from them without an antecedent grant of leave to appeal. The classification of orders for discovery as being interlocutory in nature is not novel (Apache Northwest Pty Ltd v Newcrest Mining Ltd (2009) 182 FCR 124 at [1] and [22]–[23]).
True it is, the respondents are compelled by the orders to disclose information they would prefer to keep confidential, but the compulsive disclosure of such information pursuant to an order is not an infringement of any substantive legal right enjoyed, or obligation borne, by the respondents. Their desire for the retention of confidentiality in the documents is not the same thing as the enjoyment of a right to the retention of confidentiality, as the latter flows from the operation of some type of legally recognised privilege or contractual condition (O’Brien v Komesaroff (1982) 150 CLR 310 at 326–328; The Commonwealth v John Fairfax and Sons Ltd (1980) 147 CLR 39 at 50–51; Mobil Oil Australia Ltd v Guina Developments Pty Ltd (1996) 33 IPR 82 at 87; Corrs Pavey Whiting & Byrne v Collector of Customs (Vic) (1987) 14 FCR 434 at 443), whereas the former does not.
The Full Court has previously determined leave to appeal is needed even when orders which are the subject of the intended appeal compel the disclosure of documents which the appellant contends are confidential pursuant to the operation of a legally recognised privilege such as public interest immunity or legal professional privilege, though the test for the grant of leave in such circumstances may not be applied so rigorously (Dupont v Chief Commissioner of Police & Anor (2015) FLC 93-648 at [87]). It would therefore be curiously inconsistent if leave to appeal was not needed here when the confidentiality asserted in the documents does not spring from any legally recognised privilege or other legal duty.
The respondents acknowledged that leave to appeal from the order dismissing the stay application is certainly required.
In both cases, the grant of leave to appeal ordinarily requires the applicant to show the decision at first instance is attended by sufficient doubt to warrant appellate scrutiny and, additionally, substantial injustice would result if leave were refused, supposing the decision at first instance to be wrong (Medlow & Medlow (2016) FLC 93-692 at [44]–[57]).
The wife urged dismissal of the two applications for leave to appeal due to the respondents’ failure to demonstrate “substantial prejudice” would flow from their compliance with simply procedural orders, in line with analogous authority (Hancock Prospecting Pty Ltd v DFD Rhodes Pty Ltd (No 2) [2023] WASCA 108 at [108]–[114]), but we instead dismiss the applications primarily because the proposed appeals lack merit.
THE SUBSTANTIVE APPEAL
At the outset, something critical must be said about the conduct of this appeal by the respondents and their legal representatives. Eight grounds of appeal are pleaded, but they are articulated over more than 10 type-written pages, broken into paragraphs and sub-paragraphs, and really amount to the assertion of legal, factual and discretionary errors via the necessity of some 103 propositions – a quite remarkable position to adopt when the reasons for judgment only run to 91 paragraphs. The grounds of appeal are an opaque dissertation, not a succinct summary.
The standardised Notice of Appeal form used by this Court enjoins all appellants to state their grounds of appeal “briefly”, an exhortation the respondents seem to have deliberately disregarded. The breach could not have been inadvertent because the respondents’ solicitors and barristers enjoy professional repute. It is just another insight into the disproportionate proliferation of this litigation conducted between litigants with deep pockets.
It is timely to recite the tenet that multiple grounds of appeal can conceal an essential ground (Thorne v Kennedy (2017) 263 CLR 85 at [49]). Indeed, we are entitled to be circumspect about the merit of all grounds when they are pleaded in such a loquacious and confounding way (Tame v NSW (2002) 211 CLR 317 at 345; Penrith Whitewater Stadium Ltd v Lesvos Pty Ltd [2007] NSWCA 103 at [8]).
Ground 1
Ground 1 contends for the respondents’ denial of procedural fairness and, if demonstrated, vitiates all orders.
It is asserted the denial of procedural fairness is manifest from the primary judge refusing to hear and determine the respondents’ application for leave to amend the pleadings contained within their Defence before proceeding to hear and determine the wife’s application for their financial disclosure.
The subject interlocutory dispute over the wife’s application for financial disclosure filed in May 2023 was heard across four days between September and December 2023, during which period the state of the parties’ pleadings were described by the primary judge this way in the reasons for judgment:
7.In their current form, that is to say, there being no order yet made on the [respondents’] amendment application dated 29 November 2023, the extant pleadings of the wife and the [respondents] are constituted by –
(a) the wife’s amended statement of claim dated 13 October 2022; and
(b)the [respondents’] defence dated 10 November 2022 to the wife’s 13 October 2022 amended statement of claim.
8.By 18 September 2023, the [respondents] 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 [respondents’] defence to that document being their 10 November 2022 defence. In debate before me on 1 December 2023 [senior counsel for the wife] submitted that the pleadings delineating the arena of debate between the wife and the [respondents] 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 [respondents] on 1 and 6 December 2023 attempted to persuade me that the arena of debate between the wife and the [respondents] included the amendments in respect of which the [respondents] 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 [respondents] wished to introduce by the inclusion of paragraphs 31(aa) and 32(b) of their proposed latest iteration of their defence.
9.When this case was before me on 15 November 2023 junior counsel for the [respondents] 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.
…
17.By way of defence (that is to say, according to their defence dated 10 November 2022) the [respondents] 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 [respondents] 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 trust deed];
(b) the [deceased’s] assertions;
(c) [Mr Jess Jnr’s] assertions;
(d) the fraudulent creation of [the trust deed];
(e) the fraudulent transfer of the [Units]; and
(f)that a basis exists to set aside [the deed of settlement].
…
19.Pausing at that juncture, the [respondents] 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.
(Footnote omitted)
On the second day of the hearing (15 November 2023), the respondents’ counsel informed the primary judge that an application would subsequently be made by them for leave to amend their pleadings, but the respondents did not apply to amend their pleadings until 29 November 2023, by which time two days of the hearing had already been completed.
Two days later, on the third day of hearing (1 December 2023), during further submissions in relation to the financial disclosure dispute, the primary judge mooted the prospect of hearing the respondents’ amendment application on the fourth day of hearing before resolving the financial disclosure dispute. This exchange occurred between the primary judge and the wife’s senior counsel:
HIS HONOUR: … So would it not be most sensible to treat the 6th, which is early next week, to have a fight on the amendment application and the exhaustion of the debate about the discovery point, unpalpable that you say that is - - -
[Senior counsel for the wife]: Yes, it’s most unfortunate and it’s a very costly way of concluding the discovery debate. …
…
HIS HONOUR: Well, just so that I can prepare for next Wednesday, can someone help me with the proposed amendments that are sought and which paragraph?
…
HIS HONOUR: … I’m asking for the pleading. I was handed up a proposed defence that has a XXX November 2023. …
…
HIS HONOUR: Okay, so what paragraphs of that document should I be concerned about?
…
[Senior counsel for the wife]: It’s in particular – I think that the main one is at paragraph - - -
HIS HONOUR: 31(aa)?
[Senior counsel for the wife]: 30? Yes, it’s about 31, yes. 31.
HIS HONOUR: Okay. Hard to see how it’s going to take all day to debate that.
[Senior counsel for the wife]: Yes.
…
HIS HONOUR: Presumably on the 6th next week, we will be having an Aon fight about the timing of this; is that right?
[Senior counsel for the wife]: Yes, I think so. Yes, thank you.
(Transcript 1 December 2023, p.17 lines 6–12; lines 21–22; lines 39–40; lines 45–46; p.18 lines 1–9; p.22 lines 20–23)
However, the following week, at the commencement of the fourth day of hearing (6 December 2023), the primary judge adopted a contrary position, announcing his Honour would instead resolve the financial disclosure dispute before turning to consider the respondents’ application to amend their pleadings. The hearing that day commenced this way:
HIS HONOUR: … Have I got this right: we’re here to return [counsel for the respondents] submissions on the disclosure argument and, also, to formally hear his application to be amended. Is there anything else we need to concern ourselves with today?
[Counsel for the respondents]: No your Honour. In the reverse order, the amendment application - - -
HIS HONOUR: No. I want to deal with the discovery point, first.
[Counsel for the respondents]: I will be going back to the amended - - -
HIS HONOUR: I want you to deal with what I’ve asked you to deal with in the order I’ve asked you to deal with it, please.
(Transcript 6 December 2023, p.2 lines 13–26)
Thereafter, the respondents’ counsel was unable to persuade the primary judge to hear and determine their application to amend the Defence before determining the financial disclosure dispute.
Judgment in respect of the financial disclosure dispute was then pronounced two days later (8 December 2023), before the respondents’ application to amend their Defence had been heard. We were informed the primary judge will imminently entertain applications by both the wife and the respondents to amend their pleadings.
There could be little doubt the primary judge formulated a provisional view on the third day of hearing that it would be best to determine the respondents’ application to amend their Defence before concluding the financial disclosure dispute, but then changed his Honour’s mind before embarking upon the fourth day of hearing, in consequence of which his Honour proceeded to determine the financial disclosure dispute first.
Whether that decision was wise is not to the point. The question is whether the sequence of events across the last two days of the hearing deprived the respondents of procedural fairness, remembering that the doctrine of procedural fairness is concerned only with the fairness of the hearing, not with the fairness of the result (SZBEL v Minister for Immigration and Multicultural Affairs (2006) 228 CLR 152 at [25]).
The comments of the primary judge on the third day of hearing created an expectation that, on the fourth day of hearing, the respondents’ application to amend their Defence would be determined before the financial disclosure dispute was finalised, which expectation was dashed by the primary judge’s subsequent change of mind. While parties’ expectations created by judicial representations may affect the practical content of the requirements of procedural fairness, the test necessarily remains one of unfairness, not merely one of departure from a representation. Not every departure from a stated intention necessarily involves unfairness, even if it defeats an expectation (Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1 at 12–13).
The concept of procedural fairness is applied in a practical rather than abstract way (Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex parte Lam at 14), the corollary being that this ground fails on two counts: first, the primary judge was well entitled to determine the financial disclosure dispute on the current state of the parties’ pleadings, which had been unchanged for nearly a year by the time the hearing started; and secondly, the amendment of the pleadings would likely have made no difference to the resolution of the financial disclosure dispute, despite the respondents’ submissions to the contrary, and so there would be no warrant to grant leave to appeal and allow it even if there had been some technical deprivation of procedural fairness (Stead v State Government Insurance Commission (1986) 161 CLR 141 at 145).
As to the first point, the respondents made submissions at length about the desirability of the primary judge’s anterior determination of their application to amend their Defence. But their submissions were heard and rejected. There was nothing unfair about the manner in which the primary judge conducted the hearing, as the respondents were not denied the opportunity to make all the submissions they wanted in support of their position. In reality, the respondents are aggrieved by the primary judge’s rejection of their submissions, which grievance concerns the result, not the process.
The respondents’ counsel submitted they may be prejudiced unless their amendment application was determined first, but that was an asserted prejudice which would arise from the financial disclosure dispute being determined before their amendment application, not any prejudice arising from them being denied the opportunity to argue volubly for their amendment application being decided first in time. Having said as much as he wanted about the desirable priority of business, the respondents’ counsel said this to the primary judge:
[Counsel for the respondents]: Well, if your Honour is not prepared to hear me in terms of the consequential amendment, I can’t really take it much further in terms of the discovery case.
…
[Counsel for the respondents]: … If your Honour is not willing to deal with it in the order which we wish to proceed then I can’t take categories 1 through to 10 much further, because those amendments bear on that issue. …
(Transcript 6 December 2023, p.9 lines 1–3; lines 39–41)
As to the second point, the respondents contended in the appeal that the anterior amendment of their Defence would affect the outcome of the financial disclosure dispute. Before addressing that submission, it is necessary to understand the import of the intended amendment to the Defence, which the respondents’ counsel told the primary judge was “a narrow amendment”, thereby begging the obvious question of why it would make so much difference to the outcome of the financial disclosure dispute.
The wife pleaded that she had no knowledge of the disposition of the Units between the respondents after the Units were transferred by the deceased to Mr Jess Jnr. The respondents want to amend their Defence to relevantly assert that, first, the deceased validly transferred the Units to Mr Jess Jnr pursuant to the contentious deed of settlement, and secondly, income of $600,000 was generated by those Units in the period between 2009 and 2023.
Even if that was the state of the respondents’ pleaded Defence at the time of the hearing before the primary judge, they were facts the respondents would still have to prove at trial, given the wife is not inclined to admit such facts. However, those factual assertions would not then confine the dispute and preclude the wife’s discovery of documents in pursuit of her much wider allegations of fraud and illegality. We reject the respondents’ proposition that the amendment of their Defence would necessarily confine the ambit of their financial disclosure to the discovery of only the documents which would vindicate their amended pleadings. The deed of settlement is but one of the few “instruments or dispositions” she seeks be set aside under s 106B of the Act and she suspects much more income has been generated by the Units transferred in pursuit of those instruments and dispositions than the respondents concede.
This ground is devoid of merit.
Grounds 2, 3, 6 and 8 – pertaining to Mr Jess Jnr
Orders 2, 4, 5, 6, 7, 8(a) and 8(b) all require Mr Jess Jnr to disclose to the wife certain described documents created since 1 July 2009.
Order 4 requires Mr Jess Jnr to disclose documents held by certain third party corporations, but only if they have received funds directly or indirectly from any current or former respondents.
Order 5 requires Mr Jess Jnr to disclose documents held by the corporations which are now de-registered and have since been discharged as respondents to the proceedings.
Order 6 requires Mr Jess Jnr to disclose the documents he signed in order to enable the deceased to make the payment to the wife in accordance with the property settlement orders made between the spouses in September 2009.
Order 7 requires Mr Jess Jnr to disclose signed copies of all documents executed on 20 September 2009 (the date the deed of settlement was executed and the Units were transferred by the deceased to Mr Jess Jnr) and 24 September 2009 (the date the property settlement orders were made), together with the financial records of all corporations controlled by him within the meaning of s 50AA of the Corporations Act 2001 (Cth) as from 1 July 2009.
Order 8(a) requires Mr Jess Jnr to disclose any declarations of trust between him and any corporation he controls.
Order 8(b) requires Mr Jess Jnr to disclose any declarations of trust between him and any other person or entity since 1 July 2009.
Those orders are all challenged compendiously by Grounds 2, 3, 6 and 8.
At their highest level of abstraction, these grounds assert the primary judge erred by making orders enabling the wife to “undertake a process of tracing” (Ground 2), erred by making orders enabling the wife to “[take] accounts” (Ground 3), erred by making certain factual findings (Grounds 6 and 8), erred by failing to take into account certain pleadings (Grounds 6 and 8), erred by taking into account certain submissions made by the wife (Ground 6), and erred by failing to take into account, or alternatively, give proper weight to certain submissions made by the respondents (Ground 6).
As can be seen, Grounds 2 and 3 imply (but do not express) errors of law, whereas Grounds 6 and 8 are an awkward admixture of alleged factual and discretionary errors which are virtually impossible to address other than holistically.
Ground 2 contends the primary judge erred by making the orders which enable the wife to undertake a tracing exercise in respect of the Units and the income they generated. In support of the asserted error, the respondents cited authority for the principle establishing how tracing claims generally require the party seeking the trace to show an original proprietary right or claim in respect of the property sought to be traced (RnD Funding Pty Ltd v Roncane Pty Ltd (2023) 297 FCR 91 at [48]–[52]). It was contended the wife had no proprietary interest in the Units and so had “no proprietary base” from which to mount her tracing claim.
The deceased formerly owned the Units. The wife had and has no proprietary interest in the Units unless and until she secures such an interest in them pursuant to a property settlement order made in the exercise of discretion under Pt VIII of the Act (Sarto & Sarto (2022) 65 Fam LR 605 at [19]; Lin & Ruan (2021) FLC 94-024 at [41], [48] and [49]; Bevan v Bevan (2013) 279 FLR 1 at [80]).
So much was observed by the former Full Court, who said this in Jess & Jess (No.4):
31.To the extent that the claim by the wife is expressed as a “tracing claim”, the applicants argue that the wife is unable to trace the property in the Units as she never held a proprietary interest in the Units, only the [deceased] held such an interest. The discovery would be necessary for the wife to identify the consequences of the transfer of the [deceased’s] Units to [Mr Jess Jnr] in order to seek such further orders (pursuant to s 106B of the FLA) as may be required to effect the return of the full value of the Units. The wife also argues that her claim for the settlement of the Units (or part of them) upon her, pursuant to s 79 of the FLA, gives her a proprietary claim sufficient to found the tracing claim. This argument was not well developed and may be difficult to sustain in light of the decision in Re Chemaisse; Federal Commissioner of Taxation (Intervener) (1990) FLC 92-133 at 77,915.
32.To the extent that the wife’s reliance upon equitable tracing principles is based upon the [deceased] having an equitable proprietary interest in the property “derivative of the original” Units (that is, tracing follows the [deceased’s] property in the Units into the substitute property), the wife is entitled to attempt to prove that the [deceased’s] equitable proprietary interests in this respect are part of the “property” of the [deceased] for the purpose of the s 79 proceedings. If the [deceased’s] tracing rights are only a mere equity outside the ambit of “property” as the term is used in the FLA, s 90AE(2) provides a broad power for the Court to make orders against a third party “in relation to the property of a party” and s 90AE(3)(a) provides that such orders may be made if “reasonably necessary … to effect a division of property”. The effect of s 90AE(2) of the FLA, in this respect, appears to allow the wife to pursue a claim of the [deceased] against a third party in order to obtain the relief the [deceased] would obtain had he sought the remedy, as an incident of obtaining her relief pursuant to s 79 of the FLA. That is, s 90AE appears to admit of a spouse pursuing the other spouse’s rights in a way that is analogous to subrogation for the purpose of recovery upon those rights in order to access property for the purpose of a property settlement pursuant to s 79. Without this power, a wife’s claim for a property settlement could easily be stymied by a [deceased] failing to effectively pursue his rights against another to recover what may be the most substantial asset for property settlement.
We agree with those observations. Although the wife formerly enjoyed no ownership in the Units, she has a pending claim for a proprietary interest in them, which claim depends upon her antecedent claims for recovery of the Units pursuant to either s 106B of the Act or equitable principles. The potentiality for the wife’s lawful reliance upon s 90AE of the Act cannot be discounted. Nor can her potential reliance upon s 78 of the Act, enabling a declaration that the deceased’s existing property interests include the Units.
There are two answers to the respondents’ contentions.
First, according to authority, the wife’s pending claim for a proprietary interest in the Units pursuant to Pt VIII of the Act is, or may be, a sufficient foundation for her to trace the Units and the income (RnD Funding Pty Ltd v Roncane Pty Ltd at [48]).
Secondly, even if that were not so, the deceased and the trustees both support the wife’s claims to claw back the Units and the income generated by the Units after 2009. The deceased filed a Response to Initiating Application on 16 December 2013 (not since amended) in which he seeks declarations setting aside the trust deed and the deed of settlement in order to recoup the Units and there could be no doubt at all about the deceased’s “proprietary base” to trace the Units and the income derived from them. Consequently, it is an artifice for the respondents to try and distinguish between the parties who do and do not have the right to trace when they seek the same relief and mutually support the claim of the other.
Ground 3 contends the primary judge erred by making the orders enabling the wife to “take accounts” without first finding that the respondents or third parties affected by the orders are potentially liable to pay the wife any money consequent upon the taking of accounts, for which proposition the respondents cited authority (Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (2000) 202 CLR 588 at [56]). They further contended that any right to seek accounts only follows consequentially upon an antecedent determination of liability at trial (Milltec Australia Pty Ltd v Burnes [2006] NSWCA 13 at [13]).
In reliance upon those authorities, the respondents submitted this:
51.The primary judge has not determined that any third party or non-party to the proceeding is liable to account to either [the wife] (or [the deceased]). Moreover, the primary judge has not ordered a taking of accounts. It necessarily follows that the primary judge erred in ordering discovery for the purpose of the taking of accounts.
(Respondents Summary of Argument filed 19 February 2024)
Conversely, the wife submitted that the issues in the underlying proceedings before the Court have not been bifurcated and so the separate questions of the respondents’ liability and, if liable, the quantification of the liability and the nature of the remedial orders will be determined contemporaneously, meaning the wife is entitled to seek evidence to address the second issue in advance of the trial. That was the view taken by the primary judge and we are unable to discern any appealable error in it. We do not understand legal principles to demand disjunctive hearings as to liability and remedy, even if that might be common practice.
Before turning to consider Grounds 6 and 8, which allege factual and discretionary errors vitiate the conclusions reached by the primary judge, it is useful to advert to the reasons given by his Honour for the orders made against Mr Jess Jnr requiring him to give financial disclosure.
Relevantly, his Honour summarised the wife’s pleadings and the brevity of the particulars of fraud by reason of her current ignorance of circumstances surrounding transactions between the respondents (at [10], [16], [37], [43], [48] and [50]), noted the respondents’ argument that they should not be subjected to the invasive process of discovery without adequate particulars (at [10] and [43]), and noted the respondents’ submission the case pleaded against them is bereft of sufficient details to enable the assessment of the relevance of the documents sought by the wife (at [48] and [69]).
Correctly, the primary judge identified the parties’ acceptance that the financial disclosure dispute was determinable by the deemed relevance of the documents sought by the wife to the necessary resolution of the contentious issues joined in the pleadings (at [35] and [47]). While acknowledging “disclosure is an invasive process” (at [53]), the primary judge found the documents were relevant, concluding this:
53.At the risk of pointing out the self-evident, the [wife] 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. …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.
…
59.…. The categories of documents in respect of which disclosure was sought was broad as to both date and content. The [respondents] 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. …
…
69.I do not accept the contention by the [respondents] 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. …it would stultify this litigation and stymie its whole purpose to do as the [respondents] say by refusing disclosure on the basis that an expansive pleading has not been proffered.
…
77.To my way of thinking it is no answer for the [respondents] 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].
…
84.If I were to accede to the submissions of the [respondents], 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 [the deceased] 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 an 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.
(Footnotes omitted) (Emphasis added)
The reasons show the respondents’ submissions about the shortcomings of the wife’s pleadings and the asserted onerous invasion of their privacy were expressly considered, but such submissions did not carry the result. The primary judge determined the dispute in the wife’s favour on account of being persuaded as to the relevance of the identified documents to the issues joined between the parties, which it will be remembered encompasses claims made by the wife against the respondents under s 106B of the Act and in equity.
At its heart, the wife’s case is that the deceased and Mr Jess Jnr entered a sham trust deed in 2002 to keep the corporate empire away from the wife’s clutches, which trust deed was the foundation for the deed of settlement executed between the wife, the deceased and Mr Jess Jnr in September 2009 to resolve the Victorian Supreme Court proceedings which, in aggregation with the trust deed, was the foundation for the deceased’s transfer of the Units to Mr Jess Jnr, thereby excluding such property from the property settlement dispute between the wife and the deceased, resolved by the orders made in September 2009, since set aside.
Orders compelling the discovery of documents entail an evaluative judgment about the relevance of the sought documents to the issues joined in the litigation. In undertaking that evaluative exercise, the primary judge concluded the historical documents held by Mr Jess Jnr and the corporations he controls are relevant to: the deceased’s transfer of the Units to Mr Jess Jnr; any subsequent transfer of the Units by him to any corporation he controls; the income generated by the Units since 2009; and how such income has been distributed. None of the submissions advanced by Mr Jess Jnr or the respondents demonstrate such conclusions reached by the primary judge as to the relevance of the documents were necessarily foreclosed.
The sundry complaints within Grounds 6 and 8 of the primary judge erring by failing to take into account certain pleadings, by taking into account the wife’s submissions, by failing to take into account the respondents’ submissions, and by not giving proper weight to the respondents’ submissions are not genuine complaints of appealable error (House v The King (1936) 55 CLR 499 at 504–505). They are certainly not allegations of legal or factual error. They are no more than complaints that the primary judge did not do as the respondents asked, albeit masquerading in the language of discretionary error. But discretionary error is manifest only by taking into account immaterial considerations, by failing to take into account material considerations, or by reaching a result which is plainly unreasonable or unjust.
The parties’ pleadings were indeed a material consideration in determining what financial disclosure was required from the respondents, but the pleadings were discussed at length by the primary judge. If his Honour erred in the analysis of the pleadings, the error was not by reason of the failure to take them into account.
The parties’ submissions were not “considerations” relevant to the outcome of a discretionary decision in the sense conveyed by the High Court in House v The King. The contentious issues addressed by the parties in their submissions were liable to be material considerations, but the submissions themselves were not. In every case, competing submissions must be either accepted or rejected. The rejection or non-acceptance of a submission is not the same thing as a failure to take the submission into account. Reasons for judgment are not required to mention every argument relied on by the losing party (DL v The Queen (2018) 266 CLR 1 at [131]; Whisprun Pty Ltd v Dixon (2003) 200 ALR 447 at 463–464; Wiki v Atlantis Relocations (NSW) Pty Ltd (2004) 60 NSWLR 127 at 136). Here, his Honour expressly referred to the content of the parties’ submissions so, again, if there was an error in analysing them, the error was not the failure to take them into account.
Upon the conditional false premise of such asserted errors, Grounds 6 and 8 otherwise attack certain findings made by the primary judge throughout the reasons for judgment. But since the various contentions of mistaken facts are said to hinge entirely upon the false discretionary errors, they are not competent grounds of appeal either.
The respondents contended the orders improperly grant the wife “wife-ranging discovery” in satisfaction of her desire to “see whether she has…a case to plead; not merely to particularise the fraud that she has pleaded”, which contention is not accepted. It is not uncommon for discovery to be granted before pleadings of fraud are particularised (Amann Aviation Pty Ltd (in liq) v Continental Venture Capital Ltd [2005] NSWCA 154 at [24]; Trade Practices Commission v CC(NSW) Pty Ltd (No 4) (1995) 58 FCR 426 at 439; Lyons v Kern Konstructions (Townsville) Pty Ltd (1983) 47 ALR 114 at 127–128).
The wife’s specific pleadings of fraud are presently confined to events up to September 2009, as the respondents assert, but the discovery of documents thereafter is relevant to her claim for remedial relief by way of restoration of the Units’ ownership to the deceased, recovering them from whichever respondent or respondents now own them, and the recovery of income generated by the Units since 2009, as distributed to or between the respondents. Unless the ownership of the Units after September 2009 is established and the recipients of income generated by the Units are identified, the wife’s claims for relief are liable to be thwarted.
Even if the respondents do amend their Defence to plead, as foreshadowed, that Mr Jess Jnr remains the sole owner of the Units and he has been the sole recipient of income generated by the Units since September 2009, the wife is not bound to accept that as being true. She is entitled to investigate it.
We agree with the reasons of the former Full Court, who said this in Jess & Jess (No.4):
30.… it is difficult to see how the applicants could resist making discovery with respect to the consequences of the disposition of the Units as this would almost certainly be relevant to the exercise of the Court’s discretion pursuant to s 106B of the FLA.
These grounds are without merit.
Ground 7 – pertaining to Mr Jess Jnr
This ground challenges Order 8(e).
Unlike the preceding orders, Order 8(e) does not require Mr Jess Jnr to disclose documents to the wife. Rather, it requires him to file and serve an affidavit deposing to certain facts known to him from 20 September 2009, when the Units were transferred to him by the deceased.
In essence, this ground contends the primary judge fell into legal error by making Order 8(e) at all, but alternatively, fell into error by including as part of the order a requirement for Mr Jess Jnr to give sworn evidence about the current estimated value of the Units transferred to him by the deceased, on account of his lack of expertise to give such expert opinion evidence.
The latter proposition is made good and was conceded by the wife in these terms:
99.It is conceded that the affidavit should not include [Mr Jess Jnr’s] opinion as to the value of the [deceased’s] unitholding. This was a concession made before the Primary Judge, and does not give rise to an error in the ordering of the affidavit otherwise.
(Wife’s Summary of Argument filed 8 March 2024)
The primary judge expressly noted the wife’s concession that the order should not extend so far as to require expert valuation opinion evidence (at [44]). However, notwithstanding the concession and the notation, the offending words still inadvertently found their way into Order 8(e) and so the order does not reflect the stated intention of the reasons for judgment and may be varied by resort to the slip rule, embodied in r 10.13(1)(e) of the Rules. The respondents conceded that was so.
Consequently, the contest was limited to the validity of Order 8(e) in the confined form the wife conceded it should have been made, but even that dispute dissolved upon another concession being made by the respondents.
As the factual premise for the discussion of this issue, it is common ground the wife proclaims ignorance about what became of the Units (and the income they generated) once they were transferred by the deceased to Mr Jess Jnr in September 2009 and he has so far not given any account about the fate of the Units and associated income. The respondents’ proposed amended pleadings will give such an account of what became of the Units and the income they have generated, positively asserting Mr Jess Jnr remains the legal and beneficial owner of the Units transferred to him by the deceased in September 2009, which Units have yielded him income of $600,000 over ensuring years.
Being propositions of fact, the respondents responsibly conceded they should verify the truth and accuracy of the amended pleadings by an affidavit sworn or affirmed by Mr Jess Jnr. That concession triggered another. The respondents conceded the terms of Order 8(e) (in its varied form) do not impose any obligation upon Mr Jess Jnr above and beyond that which he was not already willing to embrace by deposing as to the truth and accuracy of his proposed amended pleadings. Accordingly, there was no utility in maintaining the challenge to Order 8(e) (in its varied form) and the respondents abandoned Ground 7.
Grounds 2, 3 and 6 – pertaining to multiple corporate respondents
Orders 2 and 3 require the remaining corporate respondents (being the fifth to twenty-eighth respondents, less those discharged as parties by Order 1 made on 8 December 2023) to disclose to the wife certain described documents created since 1 July 2009 evidencing their financial affairs and corporate governance.
Those orders are challenged by Grounds 2, 3 and 6, which have already been addressed above in so far as they challenge the similar orders binding Mr Jess Jnr. Nothing can usefully be added. As the grounds fail in respect of Mr Jess Jnr, so they must in respect of the corporate respondents. No distinction between them was made by the respondents in their submissions.
Ground 4 – pertaining to Ms C Jess
Orders 2 and 8(c) require Ms C Jess to disclose to the wife certain described documents created since 1 July 2009.
Those orders are challenged by Ground 4, which complains of the primary judge failing to take into account as material considerations, first, the wife’s pleadings do not make any specific allegations against Ms C Jess, secondly, but yet the wife still entertains suspicions that Ms C Jess is involved in Mr Jess Jnr’s fraud, and thirdly, Ms C Jess’s commercial transactions with Mr Jess Jnr have been conducted at arm’s length.
As elaborated in answer to Grounds 6 and 8, such allegations dressed in the language of discretionary error taking the form of failing to take material considerations into account are not really discretionary errors at all. If the primary judge made mistaken findings of fact which underpin the orders affecting Ms C Jess, which is not to say his Honour did, then the orders affecting her are plainly not challenged on that basis.
On the asserted false premise of such discretionary errors, this ground further alleges the primary judge made an error by “failing to find” that Ms C Jess’s commercial dealings with Mr Jess Jnr were irrelevant to the proceedings, and in addition, the primary judge erred by finding that a foundation existed for “wide ranging and invasive discovery” in respect of Ms C Jess.
There could be no error of law by failing to make a finding. The failure to do so could only be an error of law if some legal principle compelled the making of such a finding as an antecedent step to making the subject order. It was unnecessary for the primary judge to positively find Ms C Jess’s commercial dealings with Mr Jess Jnr in respect of two parcels of real property had no bearing upon the litigious dispute. It was enough for the primary judge to find the potentiality of such relevance.
Evidence adduced then, and emphasised now, by the respondents as to how Ms C Jess’s dealings with the two parcels of real property took place before the Units were transferred by the deceased to Mr Jess Jnr in September 2009 does not detract from the potentiality of Ms C Jess’s involvement in Mr Jess Jnr’s alleged fraud. Ms C Jess gave evidence in the past, upon which the wife relied, to the effect that she had not had paid employment for some years and she had little knowledge or understanding of the assets she owned. Yet she was or had been the registered proprietor of real properties and she was a director of three corporations. Those facts and circumstances understandably piqued the wife’s curiosity about Ms C Jess having benefited from Mr Jess Jnr’s largesse after 2009.
The primary judge said this in the reasons:
72.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 [address]. The wife recorded in the table exhibited to her affidavit in respect of real property that the property at [address] 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 [address] 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.
73.The [respondents] 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]”, for which no foundation existed. Junior counsel for the [respondents] added surplusage to that submission stating “in fact, it’s highly questionable”.
74.I do not agree.
75.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 ([four named persons]) 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 [the wife’s senior counsel] called “chicanery”. …
(Footnotes omitted)
Evidently, the primary judge was well aware of the reasons advanced by the respondents for their opposition to the discovery order sought against Ms C Jess, but their submissions were not found to be persuasive.
Although no claim is yet brought directly against Ms C Jess within the wife’s pleadings, the wife contended, and the primary judge accepted, that Ms C Jess might have been complicit with Mr Jess Jnr in the transfer of the Units between the respondents and the distribution of income generated by the Units in the years since 2009. That was the foundation for the discovery order against Ms C Jess and it is not shown to be erroneous, so this ground is without merit.
Ground 5 – pertaining to Mr Ban
Orders 2 and 8(d) require Mr Ban to disclose to the wife certain described documents created since 1 July 2009. The order is in almost identical form to Order 8(c) which binds Ms C Jess.
Orders 2 and 8(d) are challenged by Ground 5 which, like Ground 4 in respect of Ms C Jess, alleges false discretionary errors as the foundation for finding the “logic of requiring [Mr Ban] to make disclosure mirrors the logic of requiring [Ms C Jess] to make disclosure”.
Relevantly, the primary judge said this in the reasons:
79.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 [WJ]2 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]; 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.
80.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).
81.The [respondents] opposed any orders being made that required [Mr Ban] to provide disclosure. They argued that no pleadings implicated him.
82.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.
(Footnotes omitted)
The submissions made by the respondents in the appeal in respect of this ground were as follows:
64.Put simply, [the wife’s] Amended Application for discovery in respect of [Mr Ban] was totally founded on unpleaded speculation and amounted to no more than a fishing expedition for a cause of action against [Mr Ban]. It is trite that discovery is not permitted to assist a party upon a fishing expedition and must relate to a question or fact in issue on pleadings between the parties.
(Respondents Summary of Argument filed 19 February 2024) (Footnote omitted)
As in respect of Ms C Jess, no claim is pleaded by the wife directly against Mr Ban. However, on the evidence adduced by the wife before the primary judge, Mr Ban was a current director of three corporations associated with Mr Jess Jnr and had previously been an officeholder in two others. The wife submitted, and the primary judge accepted, there was an adequate evidentiary foundation to establish Mr Ban’s potential connection with Mr Jess Jnr’s alleged fraud. That was the foundation for the discovery order against Mr Ban and it is not shown to be erroneous, so this ground is without merit.
THE STAY APPEAL
The stay appeal becomes entirely academic upon dismissal of the application for leave to appeal from the foundation orders, yet it is addressed for the parties’ edification.
The respondents’ failure to comply with the financial discovery orders, despite the refusal of their application to stay the orders, cannot pass unremarked.
We accept as true the wife’s submission that:
18.…the [respondents] have not complied with the Discovery Orders, thereby, in effect, granting to themselves the stay which they assert they should have been entitled to, but were denied, by order of the Primary Judge. …
(Wife’s Summary of Argument filed 12 April 2024)
It does not reflect well on the respondents that they do as they please, deliberately defying operative orders of the Court, until they are satisfied they have pursued all available remedies in the hope or expectation of eventually having their way.
As already noted, the respondents acknowledge they require leave to appeal from the dismissal of their stay application. The ostensible merit of the intended grounds of appeal is a material consideration in determining whether leave ought be granted.
The three intended grounds of appeal advanced by the respondents are that, when dismissing the stay application, the primary judge erred by finding their substantive appeal lacked merit and that their argument the documents will fall into “unfavourable hands” was relatively weak (Ground 1), erred by failing to take into account the respondents’ submissions about why the stay application should succeed (Ground 2), and erred because his Honour “ought to have granted a stay” (Ground 3).
The second and third grounds are not valid grounds of appeal at all. They are merely assertions the primary judge erred by dismissing the respondents’ stay application, but the proposed appeal is not made good simply by repeating the arguments made unsuccessfully at first instance.
The primary judge accepted the respondents’ contention that discovery is an invasive procedure (at [10]). His Honour also acknowledged the respondents’ arguments about the potential loss of privacy in the documents and the method by which the discovery orders could instead be partially implemented by collating them in digital form in readiness for release, but without actually releasing them, pending determination of the substantive appeal (at [6]). Nevertheless, his Honour dismissed the stay application because the grounds of the substantive appeal appeared to lack merit and the legal principles guiding the disposition of stay applications were not engaged (at [2], [4], [9] and [10]). The respondents do not contend the primary judge incorrectly applied such legal principles – only that his Honour reached the wrong decision.
Such analysis of the reasons given for the dismissal of the stay application shows how the first ground of the stay appeal also lacks merit. The primary judge’s conclusion that the respondents’ challenge to the orders was without ostensible merit proved to be correct. Leave to appeal from the financial disclosure orders has been refused. The lack of apparent merit in the stay appeal warrants the dismissal of the application for leave to bring it, as the respondents cannot fulfil the first limb of the test set out in Medlow & Medlow.
Nor can the respondents fulfil the second limb of substantial prejudice. Before the primary judge, the respondents said the documents to be discovered could easily be prepared in digital format without delay, so there was no undue inconvenience incurred by them collating the documents in readiness for production, supposing that their intended appeal from the orders proved successful. Nor would there be any material prejudice in actually producing the documents to the wife before the substantive appeal was determined because she is neither a business competitor nor trade rival of Mr Jess Jnr or any other respondent, which situation may sometimes be grounds for the preservation of confidentiality (Mobil Oil Australia Ltd v Guina Developments Pty Ltd at 37–38; MG Corrosion Consultants Pty Ltd v Gilmour [2011] FCA 1514 at [13]–[14] and [28]–[34]). Upon inspecting the documents, the wife would be bound by the attendant duty of confidentiality enunciated by the High Court in Hearne v Street (2008) 235 CLR 125.
DISPOSITION
In Appeal NAA 360/2023, leave to appeal is refused, but Order 8(e)(ii) made on 8 December 2023 is varied by resort to the slip rule to ensure the order accurately reflects the intention set out within the reasons for judgment.
In Appeal NAA 42/2024, leave to appeal is refused.
The wife sought her party/party costs of the applications for leave to appeal from the respondents, assessed in the sum of $71,258, which order is made because the applications were wholly unsuccessful. Unsurprisingly, the respondents did not cavil with the quantum of the wife’s assessment, as they spent $478,207 on their own costs. It is best we say nothing more about the prudence of such expenditure.
I certify that the preceding one hundred and thirty-four (134) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Chief Justice Alstergren and Justices Austin & Williams. Associate:
Dated: 16 May 2024
SCHEDULE OF PARTIES
MLF 3444 of 2006 Applicants
Fourth Applicant:
GGG PTY LTD
Fifth Applicant:
EEE HOLDINGS PTY LTD
Sixth Applicant:
HHH PTY LTD
Seventh Applicant:
X CORPORATION PTY LTD
Eighth Applicant:
X PROPERTIES PTD LTD
Ninth Applicant:
X PTY LTD AS TRUSTEE FOR THE JESS RETAIL UNIT TRUST
Tenth Applicant:
X-1 PROPERTIES PTY LTD
Eleventh Applicant:
NNN PTY LTD
Twelfth Applicant:
QQQ PTY LTD AS TRUSTEE OF THE RRR FAMILY TRUST
Thirteenth Applicant:
SSS PTY LTD AS TRUSTEE OF THE TTT INVESTMENT TRUST
Fourteenth Applicant:
VVV PTY LTD
Fifteenth Applicant:
MS C JESS
41
6