Joubert and Anor & Verhoeven and Anor
[2020] FamCA 53
•14 February 2020
FAMILY COURT OF AUSTRALIA
| JOUBERT AND ANOR & VERHOEVEN AND ANOR | [2020] FamCA 53 |
| FAMILY LAW – PRACTICE AND PROCEDURE – Where the wife joined a company and the husband’s brother to the substantive proceedings as the Second and Third Respondents – Where the Second and Third Respondents seek that the proceedings be bifurcated to determine the issue of whether the husband is a beneficial owner of any ordinary shares in the Second Respondent – Where this issue had already been adjudicated by a Judge in the Family Court of Australia – Where the Second and Third Respondents allege that there was a material difference in the case put before the Court in the previous interim hearing –Where the wife argues that the application is an abuse of process – Principle of finality discussed – Whether the application should alternatively be dismissed in the exercise of discretion – Application dismissed. |
| Family Law Act 1975 (Cth) ss 79, 90AE Uniform Civil Procedure Rules 2005 (NSW) |
| Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; 226 CLR 256 Brimaud v Honeysett Instant Print (1988) 217 ALR 44 Farina & Lofts and Ors [2018] FamCA 763 Ghosh v NineMSN Pty Ltd [2015] NSWCA 334 Harrison Partners Construction Pty Ltd v Jevena Pty Ltd [2005] NSWSC 1225 Jess & Garvey (2018) FLC 93-827 Joubert and Anor & Verhoeven and Anor [2018] FamCA 879 Liu v The Age Company Limited [2016] NSWCA 115 Malcher & Malcher (No. 2) [2012] FamCA 1115 Paris King Investments Pty Ltd & 1 ors v Michael Norman Rayhill & 2 ors [2006] NSWSC 578 P Dawson Nominees Pty Ltd v Australian Securities and Investments Commission (No 2) [2009] FCA 413; (2009) 255 ALR 466 Southwell v Bennett [2010] NSWSC 1372 Tomlinson v Ramsey Food Processing Pty Limited (2015-16) 256 CLR 507 |
| APPLICANTS: | Mr C Joubert & B Pty Ltd |
| FIRST RESPONDENT: | Ms Verhoeven |
| SECOND RESPONDENT: | Mr A Joubert |
| FILE NUMBER: | SYC | 4981 | of | 2016 |
| DATE DELIVERED: | 14 February 2020 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Harper J |
| HEARING DATE: | 29 November 2019 |
REPRESENTATION
| COUNSEL FOR THE APPLICANTS: | Mr Schonell SC |
| SOLICITOR FOR THE APPLICANTS: | Blanchfield Nicholls |
| COUNSELS FOR THE FIRST RESPONDENT: | Mr Condon SC Ms Gerace |
| SOLICITOR FOR THE FIRST RESPONDENT: | Somerset Ryckmans |
COUNSEL FOR THE SECOND RESPONDENT: | Mr Kearney SC |
| SOLICITOR FOR THE SECOND RESPONDENT: | Holmes Donnelly & Co Solicitors |
Orders
The Application in a Case filed by Mr C and B Pty Ltd on 28 August 2019 be dismissed.
All extant applications be adjourned to 10 March 2020 at 10:45am for mention before the Docket Registrar.
If any party seeks an order for costs, an appropriate application to the Court may be made within 28 days of today’s date (supported by any documentary material) to be filed and served within that time period and a copy forwarded to my Chambers. If no such application is made within the time period specified, no order will be made as to costs.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Joubert & Verhoeven has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 4981 of 2016
| Mr C Joubert & B Pty Ltd |
Applicants
And
| Ms Verhoeven |
First Respondent
And
| Mr A Joubert |
Second Respondent
REASONS FOR JUDGMENT
Introduction
These proceedings are property proceedings between the wife, Ms Verhoeven (“the wife”), and the husband, Mr A Joubert (“the husband”).
The parties were married for approximately fourteen years. There are two children of the relationship, X born in 2004, and Y, born in 2007. They are presently fifteen and thirteen years of age respectively. They primarily live with the mother.
On 15 October 2019, two interim applications were listed before me on 29 November 2019 for hearing.
The first application was filed by the husband on 16 August 2019. This application was resolved between the husband and the wife by agreement after the hearing and is not the subject of this judgment. However, it is helpful to describe it briefly to give some context to the second application.
The husband sought an order for interim sale of a property at S Street, Suburb T, which was the former matrimonial home. The Suburb T property is jointly owned by the parties, valued at $3,400,000, and is subject to a mortgage of approximately $284,000. The husband sought an equal division of the net proceeds between himself and the wife to provide the husband with litigation funding. The husband’s argument for litigation funding was predicated upon the unavailability otherwise of funds to ensure his continued representation in the proceedings. The wife opposed the husband’s application. She contended that she wished to retain the Suburb T property on a final basis, for her and the children to live in.
Importantly, a substantial part of the wife’s case is that the husband has a beneficial proprietary interest in, or entitlement to, up to 50% of the issued capital in the Second Respondent, B Pty Ltd, and its profits. As a result, the wife argued the Court could not be satisfied that the husband’s financial position is as parlous as he asserts.
On 10 December 2019, orders were made by consent allowing the wife and the husband to raise a facility on the Suburb T property. This disposed of the husband’s application.
The second application filed on 28 August 2019, is brought by B Pty Ltd and Mr C Joubert. Mr C Joubert, is the brother of the husband, the director and major shareholder of B Pty Ltd. Intending no disrespect, and to avoid confusion, I will refer to Mr C Joubert as “Mr C ” in these reasons.
Mr C and B Pty Ltd seek the determination of separate issues pursuant to rules 10.13 and 10.14 of the Family Law Rules2004 (Cth) (“the Rules”). I describe the separate issues in more detail below, but essentially they seek a separate determination of the factual contentions supporting the wife’s claims concerning the alleged interest of the husband in B Pty Ltd. I will refer to these claims as “the third party claims” in this judgment.
The wife opposes this application. She contends Mr C and B Pty Ltd have previously made an application for separate determination which was dismissed by Stevenson J in Joubert and Anor & Verhoeven and Anor [2018] FamCA 879, delivered on 29 October 2018. The wife argues the application the subject of this judgment is the same in all material respects as that considered by Stevenson J and constitutes an abuse of process. Alternatively, the wife argues that in any event as a matter of discretion the Court would not order any separate determination of issues as sought by Mr C and B Pty Ltd.
There was no dispute that the third party claims against B Pty Ltd and Mr C introduced the main complexities in the proceedings. Apart from those claims, the property adjustment claims of the wife and the husband against each other under s 79 of the Family LawAct1975 (Cth) (“the Act”) related to a balance sheet comprised only of the Suburb T property and superannuation as the most significant assets. There was no real dispute before me that adjudication of the s 79 case would comprise a small proportion of overall hearing time, if all issues were determined together.
The Wife’s Claims against B Pty Ltd and Mr C
The wife has articulated her third party claims in a series of points of claim. She relies upon some presently available objective evidence, although preparation for a final hearing has not been completed. In her Further Amended Points of Claim filed 20 August 2019 she seeks a range of declaratory relief. In summary the wife seeks declarations that the husband, B Pty Ltd and Mr C agreed, or entered in a joint venture on terms, or are estopped from denying, that the husband would receive equity in, and share profits in, B Pty Ltd as follows: 35% from 1 September 2006, 40% from 1 July 2007 and 50% from 1 July 2010. She also seeks a declaration that Mr C holds 50% of the shares in B Pty Ltd on trust for the husband, that he is entitled to an account of profits, and that a loan agreement dated 15 December 2015 between the husband and B Pty Ltd is a sham, entered into to defeat the wife’s claims, or otherwise never took effect. The declaration of the existence of a trust appears to be contingent upon the Court upholding the wife’s arguments concerning the existence of an agreement, joint venture or estoppel.
Mr C swore an Affidavit on 27 August 2019 which he relied upon in the hearing before me. There was undisputed evidence that Mr C is a director and major shareholder of B Pty Ltd. Mr C says he is the only director. As I understand the wife’s case, there may be a factual contest as to whether the husband should be held to be, or has been, a “shadow” director. No conclusion can be reached about this factual contention at this stage of the proceedings. Be that as it may, in 2006 the husband was employed by B Pty Ltd as a Manager. He remains employed in this position.
The issued capital of B Pty Ltd includes ordinary shares, classes of shares from “A” to “I” which can receive dividends but carry no voting rights, and “J” class redeemable preference shares.
In February 2010, Mr C caused B Pty Ltd to issue 999 ordinary shares to himself. The ordinary shares carry voting rights. Two “C” class shares were also issued, one to Mr C and the other to the Husband. The “C” class shareholders have no voting rights but are entitled to receive dividends, which may be declared in the sole discretion of the directors. According to Mr C, the purpose of issuing the “C” class share was to enable payments to be made to the husband “above and beyond” his salary. In 2012, B Pty Ltd issued two “D” class shares, one to the wife and one to Mr C , and two “E” class shares, one to Mr C and one to his former partner.
The husband’s “C” class share has been valued at $1.
In support of her third party claims, the wife relied upon the following matters:
a)Paragraph 37 of her Affidavit sworn 25 January 2018, in which she records a conversation she had with the Husband wherein he explained to her that initially his profit sharing and ownership of B Pty Ltd would not be equal:
“At first, Mr C and I will share the profits and own the business 35% to me and 65% to Mr C.”
I said to Mr A Joubert:
“That’s unfair, we have a family, you have more people to support.”
Mr A Joubert replied firmly:
“I need to prove myself to Mr C. I agree that it has to be 35/65 in the beginning. Then once I prove myself and Mr C sees my value we will share the profits and own the business 50/50.
b)Paragraph 62, and Annexure “I”, of her Affidavit sworn 25 January 2018 in which she records a conversation wherein the Husband collectively referred to his and Mr C’s income, saying to her in 2014: “We each earned $2,000,000 last year and in 2013 from the company and $1,500,000 the year prior to that in 2012. We earn in the top 1% of Australians. The average Aussie wouldn’t make $2,000,000 over their entire career, yet [Mr C] and I have done it in one year… and we’re only in our early 40’s… and we’ll better it next year”;
c)Paragraph 66 and Annexure “J” of her Affidavit sworn 25 January 2018, in which she records documents prepared by Mr O of P Accountants, B Pty Ltd’s accountant, titled “Reconciliation of [Mr A Joubert] Entitlement 2014” showing the Husband’s entitlement in B Pty Ltd as at 30 June 2014 was $5,597,790, of which $2,582,839 was the cash still owing to him;
d)Documents prepared by Mr O wherein the Husband’s profit share entitlements are shown to be 35% in 2007, then 40% in for 3 years (2008-2010), then 50% from July 2010;
e)Paragraph 67 and Annexure “K” of her Affidavit sworn 25 January 2018, in which Mr O’s file notes record: “Confirm deal between [CJ] & [AJ] To be 50/50 1/7/10”; and “cash to be taken out from Co out of 2011 entitlements to [AJ] to pay off loan…Dividend to cover $780K + $500K to go out 1/7/11”;
f)Paragraph 71 and Annexure “M” of her Affidavit sworn 25 January 2018, in which she records Mr O’s email to Mr C dated 1 September 2009: “Hi [Mr C], Just wanted to let you know I haven’t forgotten that I have to come back to you about the arrangement between you and [Mr A Joubert] – (how to get amounts to [Mr A Joubert] and how to get ownership over time to him)”.
The wife has also filed evidence from other witnesses who state Mr C and the husband represented a number of times that they were proprietors of B Pty Ltd and it was a family business.
The only evidence given, so far, by the husband himself concerning the third party claims, which appears to counter the wife’s evidence, is paragraph [31] in his Affidavit filed 30 August 2019, where he says “In September 2006 I commenced working for my brother in [B Pty Ltd] as a Manager and I continue to be employed in that capacity”. He submitted “At its highest, the evidence adduced by the wife amounts to a series of notes from material produced by an accountant”.
The accountant in question is Mr O. Some of his evidence, and documents prepared by him, are relied upon by the wife, as noted above. Mr O swore an Affidavit dated 20 November 2019 in support of B Pty Ltd and Mr C’s application. He gives considerable detail about his dealings with Mr C and the husband in his role as accountant for B Pty Ltd and Mr C since 2007. He states, in summary, that although there were a number of discussions between 2007 and 2015 about the husband taking equity in B Pty Ltd and sharing profits, Mr C was the decision-maker and nothing was ever actually implemented in this regard. He gives evidence that he was never asked by either Mr C or the husband to take any step pursuant to an agreement between them about the husband “taking equity”, although he had the impression Mr C “wanted to involve [Mr A Joubert] in the business and was trying to find out how he could.” According to Mr O, although the husband attended many meetings with Mr C, he was never made a director, he remained an employee of B Pty Ltd, and the only shareholding he ever received was his one “C” class share.
However, the evidence of Mr O discloses that the husband received between 2007 and 2015 considerable financial support, in the form of dividends from B Pty Ltd and gifts of money from Mr C. For example, from June 2011 to June 2015 the husband received a dividend of $150,000 each year. From June 2007 to June 2015, he received cash gifts from Mr C totalling $2,514,843, in addition to the dividends received from B Pty Ltd.
Mr O says he is unable to explain how these amounts paid to the husband were arrived at by Mr C. However, he gave evidence that between 2007 and 2014 at least, Mr C asked him to calculate “a split of profits by various percentages as per [Mr C’s] instructions at various dates, adjusted for notional salary levels to each [of] [Mr C] and [Mr A Joubert].” Mr O understood he was asked to do this “so Mr C knew “what I would owe [Mr A Joubert] should I decide to split profits the way I mentioned to you.”” From this there is a strong inference that Mr C gave express consideration to splitting profits with the husband. Mr O prepared a spreadsheet with the requested calculations each year. The amounts actually received by the husband each year, as salary, dividend and gift, as described in [21] above, were offset against Mr O’s calculation in the spreadsheet.
The Application for Separate Determination
B Pty Ltd and Mr C argued that there should be a separate determination of the issues set out in Order 1 of their Application in a Case filed 28 August 2019. They do not press other aspects of their application including summary dismissal.
There was no dispute that if an order for separate determination was made, at least two hearings would be required. This was referred to as a “bifurcated hearing”.
The husband also supports the application of B Pty Ltd and Mr C. In other words, despite his asserted lack of resources the husband supports the possibility of more than one hearing.
In considering the separate issue application it is necessary to refer to the judgment of Stevenson J in Joubert, above. A number of points should be highlighted:
a)At the time Joubert was heard by Stevenson J, the third party claims and the final orders sought by the wife were articulated in her Amended Initiating Application filed 25 January 2018. In summary, so far as it related to B Pty Ltd and Mr C, that pleading sought declarations that the husband had a 35%, then 40% and finally a 50% interest in the ordinary shares issued in B Pty Ltd, on largely the same dates as asserted in her Further Amended Points of Claim, the only difference being the alleged date for the husband’s 35% interest articulated in her Amended Initiating Application was March 2006 rather than 1 September 2006. The wife also sought a taking of accounts “in respect of dividends declared referrable to the Ordinary shares” held by Mr C in B Pty Ltd, with consequential relief such as an order for the husband to be recorded in the Register of Members.
b)The substantive separate question considered by Stevenson J was in the following terms:
Order that the question "whether the third respondent holds his ordinary shares in the second respondent for himself, or on trust for himself and the first respondent in the proportions proposed by the applicant" in her Amended Initiating Application filed 25 January 2018, be decided as a separate question.
c)Her Honour set out in full the statement of principles given by Hallen AsJ (as he then was) in Southwell v Bennett [2010] NSWSC 1372, a decision made under the Uniform Civil Procedure Rules 2005 (NSW), but applicable generally to applications for separate determination of questions or issues.
d)Her Honour at [20] recorded the submissions of Senior Counsel for B Pty Ltd (“BPL”) and Mr C as follows:
1. the wife seeks a declaration in relation to shareholding in BPL and then the taking of accounts and transfer of shares;
2. the consequential orders sought by the wife would require:
§mathematical calculations of dividends to which the husband was entitled for the years 2006 to date;
§amended tax returns for BPL and the husband for the years 2006 to date, with the potential for penalties and fines;
§amended balance sheets and profit and loss statements for BPL from 2006 to date;
§calculation of capital gains tax affecting BPL for the years 2006 to date, with the potential for fines and penalties; and
§valuation of the husband's interest in BPL as at March 2006, 1 July 2007, 1 July 2010 and the date of trial.
§the tasks identified above would be "enormous" and involve significant cost;
§determination of the preliminary issue could be contained to a three day hearing;
§bifurcation would enable the second and third respondents to depart the proceedings if they are successful;
I note that B Pty Ltd and Mr C also argued before Stevenson J that there was a significant danger of an extremely large loss being occasioned as a consequence of Mr C having to disclose to any potential purchaser the existence of these matters, and B Pty Ltd may not survive financially the declarations sought by the wife. Those arguments were not repeated before me.
Stevenson J found at [23] that:
It seems likely that the wife, the husband, [Mr C] and [Mr O] would be included as witnesses at a bifurcated hearing. The Affidavit of the wife … suggests that findings as to the credit of witnesses will be a significant consideration in the outcome of the bifurcated hearing. For example, the wife asserts that various conversations took place as to the intended beneficial ownership of [B Pty Ltd] between herself, the husband and [Mr C]. Additionally, there may well be significant issues of credit involved in the correct interpretation of material contained in the files of [Mr O].
The wife argues that the present application is simply a further attempt by B Pty Ltd and Mr C to seek the same relief on the same basis, and constitutes an abuse of process.
There is considerable authority to establish that a principle of finality applies to interlocutory decisions. In Tomlinson v Ramsey Food Processing Pty Limited (2015-16) 256 CLR 507 at [24] to [25 the High Court confirmed the doctrine of abuse of process is informed in part by considerations of finality and fairness similar to the doctrines of res judicata and issue estoppel, although it is inherently broader and more flexible than estoppel, and is capable of application in any circumstances in which the use of a Court's procedures would be unjustifiably oppressive to a party or would bring the administration of justice into disrepute. In relation to interlocutory applications, this statement of principle has been echoed in numerous judgments of this, and other, Courts: in Malcher & Malcher (No. 2) [2012] FamCA 1115 at [15], Ryan J stated that the Family Court is “not a court of unrelenting interlocutory applications”; in Farina & Lofts and Ors [2018] FamCA 763 at [31] Carew J held attempts to re‐litigate matters already determined, even on an interlocutory basis, will be discouraged; in Jess & Garvey (2018) FLC 93-827 at [130]-[131] the Full Court followed the decision of McLelland J (as he then was) in Brimaud v Honeysett Instant Print (1988) 217 ALR 44 at 46 where he said:
It would be conducive to great injustice and enormous waste of judicial time and resources if there were no limit on the power of a party to have any interlocutory application or order re-litigated at will.
In Brimaud it was held that a subsequent application to set aside, vary or discharge an interlocutory order must be founded on a material change of circumstances, or the discovery of new material which could not reasonably have been put before the Court on the hearing of the original application. More recently, the limits on successive interlocutory applications were explained in Paris King Investments Pty Ltd & 1 ors v Michael Norman Rayhill & 2 ors [2006] NSWSC 578 at [14] by Brereton J as follows:
In my opinion, as outlined in Harrison Partners Construction Pty Ltd v Jevena Pty Ltd [2005] NSWSC 1225, [16]-[17], acknowledging that it is impossible to state a principle capable of universal application, nonetheless the general rule is that interlocutory relief is not to be reconsidered if all that is involved is a review on the same facts as prevailed when it was originally granted or declined or on facts which ought then reasonably have been in contemplation, but that if new facts have emerged which may affect the arguability of the case for final relief or the balance of convenience, then the grant of interlocutory relief may be reconsidered. If it were not so, it would be open to a defendant to make repeated applications for variation of an interlocutory injunction, requiring consideration of the matter de novo, for no stronger reason than dissatisfaction with the previous decision [Harrison Partners Construction Pty Ltd v Jevena Pty Ltd, [13]].
See also the statements of principle to the same effect in Liu v The Age Company Limited [2016] NSWCA 115 at [199].
B Pty Ltd and Mr C argued that the wife’s third party claims, as articulated in her Further Amended Points of Claim, are markedly different to those considered by Stevenson J. They argued that since the decision in Joubert the wife has filed her Further Amended Points of Claim, which have significantly changed the landscape.
I disagree. Although there are some differences in particulars, I am not satisfied there is any material difference between the case made by the wife in her Further Amended Points of Claim and the case considered by Stevenson J. The Further Amended Points of Claim give greater particularity to the wife’s allegations, and refine the consequential relief she seeks, but her critical allegations remain unchanged. The central contention is that the husband received at some point in the past, and presently enjoys, an interest in the issued capital and profits of B Pty Ltd starting at 35% increasing to 50% between March or September 2006 and July 2010. In all material respects exactly the same contentions were put forward by the wife before Stevenson J.
In my view, none of these factors are “new” in the sense relevant to successive interlocutory applications. They all arose either directly or by necessary implication from the wife’s claims at the time Stevenson J considered the first application for separate determination.
It is true that the wife’s contention that the agreement dated 11 December 2015 is a sham, introduced a new claim and raised a fresh area of factual dispute. Such a claim was not part of the claims made by the wife in her Amended Initiating Application and was not considered by Stevenson J. However, as I understood the submissions, it also formed no part of the basis for Mr C and B Pty Ltd seeking a separate determination. It has little relevance to their application and was not material to it for that reason.
As I understood their submissions, B Pty Ltd and Mr C also contend the arguability of the wife’s third party claims against them has been impugned by the emergence of new facts, which justifies a further application.
The question is whether the evidence relied upon by Mr C and B Pty Ltd is both new and materially changes the position as it stood in Joubert.
I accept that Mr C swore an Affidavit in support of his application on 27 August 2019 which was not before Stevenson J. He denies all of the wife’s the third party claims. He states he “will give evidence to support” his denials when he swears a Trial Affidavit. He states he wants those claims determined “as quickly and efficiently as possible”. However, I am not persuaded this is fresh or new evidence. It seems to me this evidence is repetitive of the evidence and arguments before Stevenson J.
The Affidavit evidence of Mr O is new, in the sense that it was not before Stevenson J. He gives some interpretation of the material contained in his files, and relied upon by the wife, an area specifically referred to by her Honour as possibly involving significant issues of credit at trial. However, I am not persuaded such evidence has relevantly “emerged” since the decision of Stevenson J. Rather it must “then reasonably have been in contemplation” as explained by Brereton J in Paris King, above, for the very reason that Stevenson J identified interpretation of the material contained in Mr O’s files as an area involving credit issues.
Senior counsel for B Pty Ltd and Mr C emphasised that difficult questions of valuation which would be required for a single hearing, and which could be avoided by a separate determination. Reference was also made to the great tax complexities involved if factual findings were made as sought by the wife, and to the requirements of s 90AE of the Act to take account of the interests of third parties and in particular the matters listed in s 90AE(4) of the Act. B Pty Ltd and Mr C contend that all such difficult and expensive aspects of the litigation may be avoided by a separate determination of issues. The learned authors of Spencer, Bower and Handley, Res Judicata (Lexis Nexis, 4th, 2009) suggest at [5.32] the dismissal of an interlocutory application on the merits does not bar a further application although that is not likely to succeed unless supported, inter alia, by a different argument. Whether or not that statement of principle is too wide, in my view, none of the points made by B Pty Ltd and Mr C before me are materially different to the arguments made in Joubert. As noted at [26.d)] above these, or materially the same, arguments were rehearsed before Stevenson J.
I take account of correspondence forming part of Exhibit “CJ1” which was tendered by Mr C to support his arguments about the complexity of valuation issues. For example, a letter dated 23 February 2019 from Ms W of Z Firm to Blanchfield Nicholls Partners, solicitors for Mr C and B Pty Ltd, sets out a broad range of questions which, she argues, would need to be addressed, to carry out a valuation assessment of the husband’s alleged interest in B Pty Ltd. She concludes the costs of such valuation evidence would be $20,000 to $30,000 “if properly instructed” or $100,000 to $200,000 “if I did not receive the necessary instructions”. It is hard to know what weight to give this letter. As Ms W herself acknowledges, she had already been engaged to act as an expert by Mr C and B Pty Ltd so she could not be engaged as an independent expert. It is hard to see how any valuation assessment could be made without “the necessary instructions”. The letter indicates that a properly instructed the valuation exercise may cost up to $30,000. This is expensive no doubt, but is not a level of expense unusual in this Court. This evidence was not available at the time Joubert was heard. Even though the evidence is “new” in this sense, again it must reasonably have been in contemplation at the time Joubert was heard. I do not consider the evidence of the complexity and cost of valuation put before the Court after Joubert alters the nature of the present application to make it materially different to the application considered in Joubert.
I am not satisfied that any of the matters raised by Mr C and B Pty Ltd are “exceptional” so as to warrant re-consideration of their application for separate determination, nor does the justice of the matter require them to be allowed to revisit separate determination as defined by their application: P Dawson Nominees Pty Ltd v Austral Mr C Securities and Investments Commission (No 2) [2009] FCA 413; (2009) 255 ALR 466 at [49].
In my view, the expense and delay occasioned by the second application for separate determination, where there is no material difference from the first application, make the second application unjustifiably oppressive to the wife and run a real risk of bringing the administration of justice into disrepute by undermining the public perception of the Court’s processes: see Tomlinson, above.
A determination that an abuse of process has occurred is not strictly a discretionary decision. Rather, it is an evaluative decision of a subjective nature, regarding an issue upon which minds may differ: Ghosh v NineMSN Pty Ltd [2015] NSWCA 334 at [37] following Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27; 226 CLR 256 at [7]). For the reasons given, I am satisfied the application for separate determination by Mr C and B Pty Ltd should be dismissed as an abuse of process.
In any event, if I am wrong in my conclusions about abuse of process, as a matter of discretion, I am not satisfied that B Pty Ltd and Mr C have made a case for a separate determination. I have taken account of the statement of principles set out in Southwell (supra), and repeated by Stevenson J. It is not necessary to set them out again in this judgment.
All of the considerations, set out above at [26], which lead Stevenson J to refuse a bifurcated hearing, remain live.
As I understood the submissions of B Pty Ltd and Mr C , a primary consideration in favour of a separate determination will be the potential to avoid lengthy, complex and very expensive expert evidence which would be required only if the wife succeeds. This has already been mentioned above. For example, as noted above, she contends the husband received an interest in B Pty Ltd starting at 35% increasing to 50% between September 2006 and July 2010. Therefore, in order to settle a balance sheet between the wife and the husband, it is not simply a matter of valuing for hearing the alleged 50% interest in B Pty Ltd the husband presently enjoys. In order to assess contributions for the purposes of s 79, it appears each of the husband’s alleged percentage interests between 2007 and now will have to be valued as at the date they are alleged to have been received by the husband.
As already pointed out above these arguments, or materially similar ones, were made in Joubert. Be that as it may, in considering the exercise of discretion, they have some force. They point to factors which weigh in favour of a separate hearing.
But these arguments possess persuasive force primarily by reference to the possibility that the wife may fail in the factual contest between B Pty Ltd and Mr C. At present, I could not conclude this is likely. At this stage of the proceedings, in my view the evidence discussed can be taken to establish that a reasonably complex factual contest exists between the wife on the one hand and B Pty Ltd and Mr C on the other. However, I am not able at an interlocutory stage, when evidence is not complete and none of the evidence has been tested by cross examination, to reach any concluded view about which evidence should be accepted and which rejected. It may be that after a final hearing, when the parties have had the opportunity to place before the Court all evidence they seek to rely upon and the evidence has been tested, the wife’s assertions about the husband’s alleged interest in B Pty Ltd will result in the findings she seeks, or she may fail. The Court may conclude that although Mr C gave consideration to creating an interest in favour of the husband in B Pty Ltd’s issued shares and profits, he never actually did so. The wife will have to accept the consequences of that result, if it transpires, just as the husband, B Pty Ltd and Mr C will have to accept the consequences if the wife succeeds.
Clearly, there are no issues which can be determined separately on agreed facts or on a determination of a short factual contest, nor could I conclude the wife is likely to fail.
So the arguments of B Pty Ltd and Mr C do not address the impact upon the parties and the allocation of judicial time of the realistic possibility of appeal by the losing party and the likelihood of credit findings against witnesses, leading to hearings before different judicial officers. These are the same matters militating against bifurcation which Stevenson J pointed to in Joubert at [23]-[24]. If the wife succeeds, and wins any appeal, the difficult and expensive expert evidence, and consideration of s 90AE of the Act, will be necessary in any event. Furthermore, even if B Pty Ltd and Mr C succeed on the proposed separate issues, a further hearing between the wife and the husband for property adjustment under Part VIII of the Act will be required.
It seems highly likely that finalisation of the litigation will be delayed, perhaps significantly, by a separate determination of the proposed issues, and costs for all parties will also likely have been increased by the necessity of several hearings.
Finally, I rely upon the observations above at [42] concerning the asserted complexity and cost of expert valuation evidence. I am not persuaded that the valuation exercise required by the wife’s third party claims is necessarily as onerous or expensive as Mr C and B Pty Ltd contend. As I understand the letter from Ms W, the problem of expense and complexity would arise in circumstances where an expert did not receive “the necessary instructions”. Fundamentally it appears to require a valuation of the ordinary shares in B Pty Ltd, held by Mr C, on specified dates, so as to derive a value for the alleged percentage interest of the husband in those shares, said to be held on trust for him. A properly drawn letter of instruction should allow this to happen in these proceedings, as it does in many other proceedings.
I am not satisfied that the potential to avoid valuations, even if they are truly difficult and expensive, constitutes a sufficient reason for ordering a separate determination of issues, especially where there can be no certainty, nor any conclusion of likelihood, that the potential will be realised.
Before leaving this matter, the point should be made that it is regrettable that time and money have been expended on two unsuccessful attempts to hold a separate determination of issues. Over a year has passed since Joubert without the matter being progressed beyond additional particulars, refined points of claim and inconclusive correspondence about expert evidence. It is hard to see how the main purpose of the Rules, expressed in rule 1.06 has been served or that the Court has been assisted in promoting the main purpose. The parties would have been far better served by the avoidance of arid interlocutory debates and by concentrating upon making the matter ready for trial.
I will dismiss the application of B Pty Ltd and Mr C.
I certify that the preceding fifty-seven (57) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Harper delivered on 14 February 2020.
Associate:
Date: 14 February 2020
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