Jinson and Fletcher (No 2)

[2015] FamCA 1153

FAMILY COURT OF AUSTRALIA

JINSON & FLETCHER (NO 2) [2015] FamCA 1153

FAMILY LAW – Adjournment of trial where discovery still being pursued. Importance of explaining delay and exposing relevance of documents pursued in discovery.

Costs.

Family Law Act 1975 (Cth)

Aon Risk Services Australia Limited v Australian National University [2009] HCA 27

Briese and Briese (1986) FLC 91-713
K & K [2008] FamCA 957
Strachan & Strachan (Interim Financial Disclosure Orders) [2010] FamCA 423
Woley and Humboldt (no 3) [2009] FamCA 546

APPLICANT: Ms Jinson

RESPONDENT: Mr Fletcher

FILE NUMBER: MLC 3123 of 2014

DATE DELIVERED: 18 December 2015

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 17 December 2015

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Strum SC

SOLICITOR FOR THE APPLICANT: O'Hanlon Foster Lawyers

COUNSEL FOR THE RESPONDENT: Mr Percy with Ms Mariole

SOLICITOR FOR THE RESPONDENT: Goldhirsch & Shnider Lawyers

Orders

1. That the final hearing listed for 18 January 2016 is vacated.

2. That all outstanding applications are listed for any interim hearing at 10.00am on 17 February 2016.

3. That each party have leave to file such applications in a case as they are so advised to be made returnable at 10.00am on 17 February 2016.

4. That within 21 days of this date, the solicitors for the wife serve upon the solicitors for the husband a list of all documents that they require for inspection and subject to objection, the husband provide those documents for inspection within 10 days thereafter.

5. To the extent that there is any objection to the disclosure referred to in these orders, that matter be determined on the next return date.

6. That the application in a case filed 16 December 2015 is dismissed.

7. That the wife pay the husband’s costs fixed in the sum of $5000.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Jinson & Fletcher (No 2) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 3123  of 2014

Ms Jinson

Applicant

And

Mr Fletcher

Respondent

REASONS FOR JUDGMENT

1. The issue for determination in this interlocutory application is essentially whether or not a final hearing which is listed to begin in about 4 weeks should be vacated. There are other issues of discovery, joinder of parties and costs to be resolved. For the reasons that follow and with some hesitation, I consider justice requires the wife be given a further (and perhaps final) chance to get her house in order. It follows that the trial should be vacated.

2. In Aon Risk Services Australia Limited v Australian National University [2009] HCA 27, French CJ considered the Australian Capital Territory civil procedure rules requiring ACT courts to facilitate the just resolution of the real issues in civil proceedings with minimum delay and expense and for that purpose, to apply the rules so that inter alia ,there was a timely disposal of the proceedings at a cost affordable by the respective parties. His Honour observed that the rules required the parties to help the court to achieve the objectives and that failing compliance, appropriate sanctions could be imposed. The ACT rules are unsurprisingly, very similar to the rules of this Court.

3. French CJ contemplated the apparent clash between access to justice and the requirement to conduct litigation according to case management principles. His Honour said that whilst case management principles should not supplant the objective of doing justice between parties according to law, courts cannot be seen to be wasting public resources and causing undue delays all of which have consequent strain and uncertainty for litigants.

4. The principle therefore is that whilst justice must be provided, a lack of attention to dealing with cases expeditiously can lead to a loss of public confidence in the legal system. Those principles are raised in this case where the wife again seeks to delay her own application.

The background and litigation history

1. In this case, the respondent husband who is aged 79, opposes the final trial of the property proceedings being delayed. The wife who is 63, seeks to delay the hearing because she is still investigating the financial position of the husband. That investigation has been going on for over a year.

2. The wife’s initiating application was filed on 11 April 2014 and has passed through a litigation process which has involved a case assessment conference in June 2014, a conciliation conference in December 2014, 2 interim hearings before a registrar over discovery, a partial property settlement hearing in June 2015 and a directions hearing before me in July 2015. In the July hearing, the case was set for final hearing in October 2015.

3. In July, it was common ground that the dispute was around whether or not the husband had control of a foundation which is situated in Country B. The husband has always denied any control.

4. As at July 2015, the wife’s position was that the court should make an order that the husband transfer to her his interest in a Suburb C home and discharge the encumbrance. In addition, she sought a payment of $5 million.

5. The husband’s (then) generic response sought a dismissal of the wife’s application but included a statement that the court make such order otherwise as it saw fit. It seems from discussion during this hearing with senior counsel for the husband that it is conceded that the wife should get something from the former home but certainly not all of it and certainly not an additional $5 million.

6. In September, the trial date was vacated because of the illness of the wife and questions were raised by the husband about whether she should have a case guardian. His application for such an appointment was refused. The wife asserted that she wanted to be involved and was in control of her affairs. The wife’s case was obviously not ready to proceed in July and things had not advanced by September.

7. A concern about delay constantly expressed by the husband was that an intervention order had excluded him from the home. Albeit that was an interim order, the recent final hearing confirmed that order although this time with the husband’s consent. He consented with a denial of the basis for the order and indeed asserts that it should not have been made.

8. Of concern is that on the husband’s case, the divisible property is simply the equity in the home and some superannuation. Roughly put, there is about $1.5 million for division. On the wife’s case, there is a lot more if it is established that the husband has control of a foundation in Country B along with some interlinked entities. But regardless of that determination, there are said by the husband to be contribution issues that complicate the matters. The uncertainty of the state of the pleadings of both parties makes determination of the preliminary issues about discovery and joinder of further parties difficult.

9. In October 2015, the husband’s application for the appointment of a case guardian for the wife failed but in the course of that hearing, at which the wife was represented by senior counsel, it was made clear that she was pursuing further discovery in relation to the Foundation.

10. It seems from the material to which I shall now turn that whilst there was a conference in early December 2015 of senior and junior counsel, the wife’s position remains unclear. The husband says therefore that he wants the trial to proceed.

The current application

1. The application in a case was brought on quickly and at short notice to the husband because of the imminent trial and the impending Christmas break. It was filed on 16 December 2015.

2. The application seeks orders that:

   (1)      the trial be vacated;

   (2)the Husband make disclosure in accordance with a schedule on or before 22 January 2016;

   (3)on or before 26 February 2016, the wife file and serve any application to join D Pty Ltd, E Limited and the Council of the Fletcher Foundation;

   (4)      costs reserved.

3. The husband opposes all of those orders.

4. It is a requirement in proceedings before this court that litigants attend unless there is a good reason otherwise. The noticeable absence of the wife at this and the previous hearing was disconcerting. No explanation was given.

5. The wife relied upon the affidavit of her solicitor. His evidence can be summarised in the following points:

   ·E Ltd owns all of the shares in D Pty Ltd;

   ·The farm at Edenhope (from which it appears D earns its revenue) consists of a number of parcels of land all of which are owned by E Ltd;

   ·The wife has made “numerous” requests for documents some of which had been provided but the husband “has not produced many relevant documents and discovery of other have been refused”;

   ·The husband has not made any “further disclosure” since the October hearing “despite his ongoing obligation to do so”.

6. A reference was made [paragraph 15 of the affidavit] about what I had said in the October hearing. It is not necessary that I deal with that issue because the transcript speaks for itself.

7. Some of the dot points set out above are factual but much of the affidavit was simply assertion and argument and did not deal with the underlying reason why the wife’s case had not advanced. It was evident at the hearings in July and October that the wife intended to pursue the Foundation question. As such, I expected precise details of what had been sought and what its relevance was to the claim the wife wanted to make. In hearing the submissions on this application, I referred to being in a “fog” about just what the wife was pursuing.

8. Understandably, discovery is an ongoing obligation but to what relevant end? What is the wife’s claim and to what extent will any documents be relevant?

9. The wife had access to some documents provided in discovery by the husband. They were tendered in evidence by the wife. They show the Foundation has money but I am at a loss to understand how the wife justifies a claim of the unencumbered house and $5 million. It may be that this is a justifiable claim if the balance sheets are not a true reflection of the wealth of the entities. Of concern here is the fact that the wife asserts the husband has control, as distinct from, ownership. Just what documents will show that all of that can be converted into money remains unclear.  

10. The assertion in the solicitor’s affidavit is that the husband has been recalcitrant in his disclosure obligations. Nothing that I read indicated that was the case. I do not know what he has been asked to provide of late. It is also concerning that counsel have only been involved in early December to sort out an approach to resolving the discovery issue as distinct from the claim itself.

11. The solicitor set out his interpretation of the Foundation’s Regulations. That description is disputed by the husband and in any event, the document speaks for itself. Having read it, it is not easy to see where the control of the husband lies but I consider the wife should have the opportunity to put her argument and submission in detail so that she can test the husband’s proposition that he does not have control or a divisible interest.

12. In the solicitor’s affidavit, reference was made to the farm being owned by E Ltd. The inference is that the land is valuable. The more relevant question seems to me to be who owns the company shares because the value of the land is not the issue but rather the company’s equity for division between the shareholders.

13. In addition to the question about the husband’s control of the Foundation and whether that makes any difference to “the pool” for division either directly by virtue of some legal or equitable ownership or because of some argument about it being a financial resource, there is also the connection between the husband and the other entities proposed to be joined.   E Ltd holds shares in D Pty Ltd and the husband has shares in both.

14. E is a company registered in the United Kingdom. The E Limited balance sheet notes to 30 June 2014 were tendered (as distinct from the balance sheet). From what can be interpreted from those, there were book value tangible assets of $1.6 million, fixed asset investments of $1.7 million but there was $3.7 million owed to creditors.  The document described its “ultimate parent company” as the Fletcher Foundation. The disclosure statement referred to $3.7 million being due to the Fletcher Foundation.

15. Thus, little clarity as to the financial position let alone control can be drawn from that document.

16. The D financial statements for 2014 showed an operating loss of $153,113. Its balance sheet showed excess of liabilities over assets of nearly $350,000.  Little assistance can be drawn from that document.

17. The Fletcher Foundation financial statement named the council members. I understood Senior counsel for the wife to say that the wife did not know who were the Foundation councillors yet they were named in the document in the possession of the wife. The financial statement showed a balance sheet with net assets of just over $5 million. That sum was said to be represented by the money owed to it largely by E Ltd.

18. I am concerned about the lack of action by the wife in pursuing these questions. Senior counsel for the husband asserted that discovery was an issue very early in the registrar hearings. It may be that that perception of lack of activity is unfair to the wife but the solicitor’s affidavit was not strong on facts. There is no real detail explaining the delay and more importantly, why these issues were not addressed earlier.  There can be no doubt the wife was aware of the problem very early in the proceedings.

19. Much has been said in the solicitor’s affidavit about the husband’s lack of disclosure. Nothing I have read would justify a finding of any recalcitrance on his part.

20. I have drawn significant comfort from the statement by senior counsel for the wife that both senior and junior counsel have been working on the issue and investigating what needs to be done but that only seems to have been in December.

21. It is perhaps unfortunate that I remain confused as to where the wife’s proposed investigations will lead but I consider she must be given another opportunity. That is largely because I remain unclear whether it is her doing or that of the professionals assisting her that has given rise to this unfortunate delay.

22. I am also conscious that s 79 of the Act provides that a court must not alter the interests of parties in property by orders unless satisfied that it is just and equitable to do so. That requirement means that the court has to give a litigant every chance to get the relevant evidence to enable a court to determine what is just and equitable. If the documents tendered in this hearing are a guide, the net equity in the assets to which the shareholders would be entitled, would be quantifiable. The vexed question is whether the husband has any control over the Foundation such that he could orchestrate distributions of assets so that he would benefit. It is unfortunate that the case has come this far down the litigation pathway to a point where those questions remain unanswered from the perspective of the wife.

23. Despite the paucity of the evidence and indeed any explanation for delay, I consider justice requires that the wife be given a further chance to complete her investigations. Accordingly, I propose to vacate the trial date.

Discovery generally

1. To the extent that disclosure of documents is a very real obligation in proceedings in this court, the authorities and the rules make the position particularly about relevance, clear (see rule 13.01(1), K & K [2008] FamCA 957, Strachan & Strachan (Interim Financial Disclosure Orders) [2010] FamCA 423, Woley and Humboldt (no 3) [2009] FamCA 546, Briese and Briese (1986) FLC 91-713).

2. The issue of discovery is as I have described it. I intend to make an order that notwithstanding all that has gone before, if the wife wishes to seek documents, she should provide that list within a limited time frame. If the husband objects to production for whatever reason, that can be his response and I will set a hearing date for a determination of relevance and objection.

Joinder

1. The third area of dispute in this application concerned the joinder of the entities mentioned in these reasons. Notwithstanding the usual approach which places the onus on the joined party to seek to be removed, I think this is a case where the wife should serve the proposed parties who should be given an opportunity to be heard before being joined.

2. Senior counsel for the husband urged the court to do all of these steps in one but in my view, the wife’s position is more workable. That is, she should be given an opportunity to seek and if necessary contest disputed discovery and then determine whether the joinder application should proceed.

Costs

1. That only leaves the question of costs. Each party put their position. The husband said that either way, he should have his costs which he calculated at well above the current scale. The wife’s senior counsel did not wish to be heard on the subject which I can understand because it may have required responses about the way in which the wife’s case had been prepared.

2. Section 117 of the Act provides that in proceedings under the Act, each party shall pay their own costs unless there are circumstances to justify a departure from that principle. If an order is being contemplated, the Court must take into account the matters in s 117(2A) of the Act.

3. This is a case where the wife should pay the husband’s costs. In the October hearing, senior counsel for the wife acknowledged how important it was to be ready for the trial even if there was some doubt about the steps that needed to be undertaken. Orders were made for the wife to file her trial material. None of that occurred. The husband has every right to have his case determined so that he can, as his counsel described it, “move on”. He had complied with orders and has been ready to proceed.

4. There are therefore justifiable reasons to make an order for costs.

5. Assessing the matters in s 117(2A) of the Act is difficult where there are no findings. That said, the wife asserts that she will be seeking the unencumbered home. She is represented by senior and junior counsel and it was not suggested this was not an inexpensive exercise. I can at least conclude that she has financial support to fund her case.  The non-compliance with orders and the absence of readiness not just for trial so much as for undertaking the steps to get ready for trial justifies an order for costs.

6. The husband seeks his costs which are calculated above scale. In my view, using the scale, I assess the husband’s costs as $5,000 which includes senior counsel’s fees.

I certify that the preceding Forty Seven (47) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 18 December 2015.

Associate: 

Date:  18 December 2015