Kendling and Kendling (No. 2)

FAMILY COURT OF AUSTRALIA

KENDLING & KENDLING (NO. 2)

[2007] FamCA 991

FAMILY LAW – DISQUALIFICATION

Family Law Act 1975 (Cth)

R v Watson; Ex parte Armstrong (1976) 136 CLR 248
Re Lusink; Ex parte Shaw (1981) 55 ALJR 12; 32 ALR 47
Ex parte CJL (1986) 161 CLR 342
Vakauta v Kelly (1989) 167 CLR 568
Webb v The Queen (1994) 181 CLR 41
Johnson v Johnson (2000) 201 CLR 488 at 492-493
Ebner v Official Trustee in Bankruptcy (2001) 205 CLR 337 at 344
Concrete Pty Ltd v Parramatta Design and Developments Pty Ltd [2006] HCA 55 (6 December 2006)
S & M Motors Repairs Pty Lltd & Others v Caltex Oil (Australia) Pty Ltd and Another (1988) 12 NSWLR 358 at 370

APPLICANT:

Mr Kendling

RESPONDENT:

Mrs Kendling

FILE NUMBER:

SYF

2903

2003

DATE DELIVERED:

30 August 2007

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

O'Ryan J

HEARING DATE:

16 August 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Greenwood SC

SOLICITOR FOR THE APPLICANT:

Barkus Edwards Doolan

COUNSEL FOR THE RESPONDENT:

Mr Richardson SC

SOLICITOR FOR THE RESPONDENT:

Michael Conley Lawyers

Orders

The application for disqualification filed on 30 July 2007 on behalf of the Husband be dismissed.

IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Honourable Justice O’Ryan J delivered this day will for all publication and reporting purposes be referred to as Kendling.

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYF 2903 of 2003

Mr Kendling

Applicant

And

Mrs Kendling

Respondent

REASONS FOR JUDGMENT

Introduction

Before me for hearing is an application filed on 30 July 2007 by Mr Kendling who I shall refer to as the Husband in which he seeks the following:
That His Honour Justice O’Ryan, disqualify himself from hearing further proceedings in the matter of [Kendling & Kendling and others], being matter number SYF2903/2003.
The Respondent is Mrs Kendling who I shall refer to as the Wife. The application is opposed by the Wife.
There was no appearance by or on behalf of the Second to Eighth Respondents.

Background

There are pending proceedings pursuant to Pt VII of the Family Law Act 1975 (Cth) for final parenting orders and pending proceedings pursuant to s 79 of the Act for property settlement. The proceedings were commenced by an application filed by the Husband on 28 November 2005. The hearing of the applications for final parenting orders commenced before Cronin J on 16 July 2007 and is part heard. To date I have had responsibility for case management of the property settlement applications. As yet no orders have been made for the filing of evidence in relation to the property settlement proceedings and of course no final hearing dates allocated. This current application therefore in substances relates to the pending s 79 property settlement proceedings.
On 29 March, 20 April, 9 May and 21 May 2007 I heard an application by the Wife, for payment of an amount of $1,230,000 to defray her costs of and incidental to the pending proceedings for final orders relating to parenting and property settlement. The costs proceedings were commenced by application filed on 2 March 2007. On 25 May 2007 I delivered judgment and made the following orders:
1.      The Husband pay into the trust account of the Wife’s Solicitors, Messrs Michael Conley Solicitors, of […], the sum of $1,100,000 such sum to be paid as follows:
1.1     by 4.00 pm on 20 June 2007 the amount of $550,000.
1.2     by 4.00 pm on 28 July 2007 the amount of $550,000.
2       The determination as to whether the sum referred to in Order 1 hereof be treated as part of the Wife’s entitlement to property settlement, the provision of maintenance for the Wife, or in payment by the Husband of the costs of and incidental to these proceedings, be reserved to the trial judge at the final hearing of these proceedings.
3       Any monies received by or on behalf of the Wife pursuant to Order 1 hereof be utilised on account of the Wife’s costs in prosecuting her claims in these proceedings, including costs (outstanding and future) in relation to solicitors, counsel, accountants, valuers, and other legal costs and disbursements including process servers fees and conduct money.
4       The Wife shall account at the final hearing for monies so received and disbursed.
The Husband has not appealed against the orders. The Husband does not complain that he did not have fair hearing. Orders 2 and 4 are of importance to the current application.
In my judgment I said:
4       The Husband … seeks that the Wife’s application be dismissed. The current proceedings were summarised in the following way by senior counsel for the Husband:
1.The present application seeks provision of $1,185,000 to the Wife from either of the Husband, [B] Ltd or such other entity as the Husband may nominate, to be applied to:
“the Wife’s costs in prosecuting her claims in these proceedings, including costs (outstanding and future) in relation to solicitors, counsel, accountants, valuers, and other legal costs and disbursements including process servers fees and conduct money”.
2.The Wife seeks that such provision be “treated as part of the Wife’s entitlement to property settlement, the provision of maintenance for the Wife, or in payment by the Husband of the costs of and incidental to these proceedings”, the ultimate characterisation of the payment being reserved to the trial Judge. The Wife has failed to respond to the Husband’s request to specify the basis upon which such provision is to be sought.
3.The Husband opposes the orders sought by the Wife and, in summary, contends that there is no warrant for the granting of the relief having regard to:
3.1the claim as advanced by the Wife;
3.2the substantive dispute between the Husband and Wife;
3.3the financial circumstances of each of the Husband and Wife; and,
3.4discretionary considerations.
5       There are pending proceedings for parenting orders and settlement of property. The proceedings were commenced by application filed by the Husband on 28 November 2005. I will hereafter set out the final orders sought by each party. In the written outline of argument of the Husband it was submitted that:
11.In the present proceedings there is a substantial dispute between the parties as to the nature and value of the assets to be considered in the property proceedings. The Husband contending that there are net assets available of approximately $1.8M and the Wife variously contending for assets in excess of $100M. This position is reflected in Reasons for Judgment delivered on 11 October 2006, where O’Ryan J found (paragraph 114) that “as a preliminary view I am of the opinion that in the property proceedings the significant issue will probably be as to the extent and value of the wealth of the parties”.
12.The competing applications of the parties are consequently vastly differing as to outcome:
12.1the Wife seeking an adjustment in ‘global’ terms of not less than $50M in her favour (apparently equating to approximately 50%); and,
12.2the Husband seeking orders that would effect no adjustment to the present financial position of the parties.
What I said on 11 October 2006 as to the significant issue remains my view, but it is no longer simply a “preliminary view”. I note that the Husband now contends that there are property interests of a value in excess of $40,000,000.
6       The Husband was born on … December 1932 and the Wife was born on … February 1968. The parties were married on 6 September 1995 and first separated in about February 2003. They reconciled in May 2003. The Wife contends that the parties finally separated in September 2004 and the Husband contends that it was in April 2005. The parties were divorced in September 2006.
7       There are two children of the marriage; David born on … September 1996 and Marc born on … January 1999.
8       The Wife has a child from a previous marriage JH who was born on … May 1988. The Husband has four children from previous marriages; Francis Kendling born on … April 1958, Michael Kendling born on … June 1962, Jeremy Kendling born on … October 1976 and Penelope Kendling born on … September 1978.
9       There are a number of respondents. The Second Respondent is T Pty Ltd. The Third Respondent is Jeremy Kendling who is the Husband’s son from a previous marriage. The Fourth Respondent is Penelope Kendling who is the Husband’s daughter from a previous marriage. The Fifth Respondent is L Pty Ltd. The Sixth Respondent is A Pty Ltd. The Seventh Respondent is Mr Z. The Eighth Respondent is B Ltd.
10     In the property proceedings the Wife contends that the matrimonial asset pool is very significant and includes interests in businesses, companies, real estate, artwork, furniture and personalty. The Wife contends that the parties own assets of considerable value, however their financial affairs are complex. The Wife contends that she is unable to determine the asset pool although the value is probably in excess of $100 million. In a recent financial statement the Husband contended that, subject to the value of shares in B Ltd, he has assets of a net value of $257,063. However as I have noted above, he now contends that there are property interests of a value in excess of $40,000,000.
11     On 4 October 2006 a response objecting to jurisdiction was filed on behalf of the Third, Fourth and Fifth Respondents. It is contended that the Wife’s claims against the Third, Fourth and Fifth Respondents set out in paragraphs 1, 2, 3, 4, 6, 8, 10, 11, 13, 14, 15, 16, 17 and 31 and the Wife’s amended response filed on 19 May 2006 be dismissed because the Family Court lacks jurisdiction to make the orders, the Wife’s claims have no or no reasonable prospect of success and that the orders sought against the Third, Fourth and Fifth Respondents are “grounded upon laws of the Commonwealth that are invalid and unconstitutional”.
12     The Wife contended, and I accept, that since the proceedings were commenced on 28 November 2005 the matter has been in court on not less than 14 days with respect to residence, contact, financial and/or maintenance issues as well challenges to subpoena issued on behalf of the Wife. The proceedings have been before the court on numerous occasions and this is evidenced from the history provided by the Wife. As well, I have no doubt that an enormous volume of correspondence has passed between the Wife’s lawyers and the lawyers for a number of parties and others.
13     The Wife has incurred very significant legal costs and disbursements. She paid $122,055.29 to her previous solicitors, Etheringtons, Solicitors. The Wife paid $336,888.69 to her current solicitors with respect to costs and expenses in relation to the proceedings in this Court. The Wife contends that she has incurred fees and expenses that remain outstanding of $378,415.68 with respect to the proceedings in the Family Court. As well, she owes an amount of $78,389.49 to her solicitor with respect to the proceedings in the Supreme Court. According to the Wife’s costs memorandum (Exhibit A), she has fees incurred to the first day of trial of $862,076. The memorandum reveals work in progress not yet billed for the period to 26 March 2007 of $36,000 which does not include the fees of senior counsel or an accountant. The Wife has paid $546,943 and there is currently an amount of $13,550 held in trust by the Wife’s solicitor. The estimated costs of the trial are $9,790 per day including fees of senior counsel of $7,700 per day.
…
15     Looking at the costs memorandum on the basis that the Husband has paid a total of $666,439.60, the estimate of future costs of both the parenting and property proceedings including the trial of both proceedings is a total of $205,000. However, in his affidavit of 19 April 2007 the Husband contended that his solicitors estimated that he would require an amount of about $320,000 to pay his legal costs to the conclusion of the proceedings. This is a difference of $115,000. On the basis that the applications for final orders proceed to a final hearing, the costs of the Husband will probably be well in excess of $1,000,000 and this estimate does not include the costs of B Ltd and T Pty Ltd.
16     I recently received a costs memorandum from T Pty Ltd dated 2 May 2007 and it discloses costs rendered of $74,248.70, costs paid of $44,164.40 and estimated future costs of $130,000. The estimated combined costs of the Husband and B Ltd are in excess of $1,200,000. Subject to submissions, given what has now been revealed I will probably require costs memorandums from all parties.
17     The hearing proceeded before me in a truncated way in that there was no oral examination of the parties or any witnesses. There are a number of significant issues that at this stage I am unable to resolve and they will be dealt with at the hearing of the applications for final orders. The volume of material I had before me was very significant and I will refer to some of it; for example the Husband swore an affidavit on 20 March 2007 comprising 25 pages, however the exhibits to the affidavit comprise 469 pages. There are 38 exhibits. On behalf of the Wife evidence was given by her solicitor Mr Michael Conley and her forensic accountant Mr V. I also had the benefit of comprehensive written outlines of arguments on behalf of each party and they included chronologies. I will refer to what was said in the chronologies although I accept that some of what was said may have to be the subject of further evidence.
18     Because of the quantum of the Wife’s claim and the issues I have to address I propose to set out a great deal of the relevant background. I am also going to include what I said in a judgment delivered on 11 October 2006. However, I emphasise that what I will identify is probably far from comprehensive about what has happened and the material that will be relevant at the hearing of the applications for final orders. I repeat that there are a number of significant issues about which at this stage I cannot make any concluded findings. For example, I am of the view that the credit of the parties and various witnesses will be an important issue, but at this stage there has been no cross examination of any witness.
My judgment was very lengthy and comprises about 352 paragraphs. As senior counsel for the Wife said it was a lengthy judgment because of the volume of material. I concluded by saying:
350    I have no doubt that what I have said above is not exhaustive or perhaps even accurate of all relevant facts and as I have identified there are a significant number of matters that have to be investigated. However, I am satisfied that the Wife has established justifying circumstances and that an order should be made.
351    In the circumstances of this case it would be unjust and oppressive if an order was not made. In my view, from the Wife’s perspective it would stifle her ability to conduct the litigation. The Wife has anticipated costs including what she has already paid of $1,230,000. If I exclude the amount of $78,389.49, which the Wife contends she owes in relation to the Supreme Court proceedings, the balance is $1,151,610.51. It may be that of the amounts paid some of what was paid related to the proceedings in the Supreme Court. What I do know is that the Husband and B Pty Ltd have anticipated total costs of the proceedings in this Court in excess of $1,200,000. Consistent with the submissions as to a “dollar for dollar” order, I can also infer that the Wife will have the equivalent, if not greater costs. In all the circumstances an order that I consider just is that the Husband pay $1,100,000.
352    I will give the Husband the opportunity to organise his affairs such that the funds can be paid and thus will order that the amount be paid in two instalments. I am satisfied that the amount I am persuaded to order to the Wife is reversible given the property settlement the Husband proposes the Wife will receive.
The present application is made on the basis of the appearance of bias which is sometimes referred to as an apprehension of bias principle.

Relevant Principles

A number of authorities were referred to by senior counsel for the Husband. Senior counsel for the Wife simply adopted what I said in Boulos and Boulos and Others (unreported, 29 May 2007 No SYF 9777 of 1992). For the purposes of this application without repeating what I said in Boulos I adopt and apply what I said at paragraphs 187 to 206 under the heading “Relevant Principles”.
The test to be applied is well settled namely that I am disqualified if a fair-minded lay observer might reasonably apprehend that I might not bring an impartial mind to the resolution of the question that I am required to decide. The reasons for this important principle are well established namely to give effect to the requirement that justice should both be done and be seen to be done and this requirement reflects the fundamental importance of the principle that a tribunal be independent and impartial: R v Watson; Ex parte Armstrong (1976) 136 CLR 248 at 262-263; Re Lusink; Ex parte Shaw (1981) 55 ALJR 12; 32 ALR 47; Livesey v The New South Wales Bar Association (1983) 151 CLR 288 at 293-294; Re JRL; Ex parte CJL (1986) 161 CLR 342; Vakauta v Kelly (1989) 167 CLR 568; Webb v The Queen (1994) 181 CLR 41; Johnson v Johnson (2000) 201 CLR 488 at 492–493; Ebner v Official Trustee in Bankruptcy; Clenae Pty Ltd v ANZ Banking GroupLtd (2001) 205 CLR 337 at 344 and Concrete Pty Ltd v Parramatta Design and Developments Pty Ltd [2006] HCA 55 (6 December 2006).

Submissions

I received a written submission on behalf of the Husband in which the following categories of complaint were identified.
Category 1.Where it appears that a determination has been made regarding the Husband’s association with T Pty Ltd.
Category 2.Where it appears that I was providing advice to the Wife as to the evidence she could/should gather which is likely to be adverse to the Husband.
Category 3.Where there is a comment or language used that is unnecessary and implicitly derogatory or suggestive of improper behaviour by the Husband.
Category 4.Where the onus of proof appears to have been reserved.
Category 5.Where there has been the examination by me of without prejudice correspondence and/or material that may well be inadmissible on a final hearing.
Category 6.Where there appears to have been an expression of a final view on a disputed matter.
Category 7.Where there appears to be a strong preference for a witness for the Wife over another possible witness.
In the written outline of argument the paragraphs of my judgment that are relevant to each category of complaint were identified. I will set out what I said in these identified paragraphs. However where a paragraph in relied upon under more than one category of complaint I will only set out the paragraph against the first identified category: for example paragraph 262 is relied upon in relation to both the seventh and third categories and thus I have only set it out under the seventh category. There were also paragraphs referred to in submissions that are not identified in the written outline.
I will also attempt to emphasise those parts of the identified paragraphs that senior counsel for the Husband made particular reference to. However I do not suggest that I have identified all of what was referred to.
As to the relevance of the Husband not appealing against the orders of 25 May 2007 senior counsel for the Husband simply stated that one appeals from a final order, not from a judgment and reasons given from the judgment.
On behalf of the Wife it was submitted that to a degree the arguments that are advanced on behalf of the Husband all reasonably fall into the category of a pernickety examination of all that was said and done and the reasons provided.

In my view it is also necessary to put this current application into context. The High Court reminded in Livesey v The New South Wales Bar Association (supra) at 299-300 that it is impossible to lay down an inflexible rule to govern apprehension of bias cases and that each case must be determined by reference to its particular circumstances. So also in Re JRL; Ex parte CJL (supra) Dawson J who dissented said at 371-372 that the whole of the circumstances must be considered.
What I dealt with was an interlocutory application by one party for the payment by the other party of an amount of money to defray the costs of pending litigation to be incurred by the applicant party. The application was ultimately dealt with pursuant to s 117 of the Act. This required consideration of the matters set out in s 117(2A) of the Act being:
(a) the financial circumstances of each of the parties to the proceedings;
(b) whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c) the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d) whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e) whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f) whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g) such other matters as I considered relevant.
As well I said that having regard to the nature of the order sought being an order that one party pay a sum to the other party to enable them to defray his/her costs of pending proceedings and the circumstances in which such an order may be made it was relevant to take into account:
·the complexity in the financial affairs of the respondent (the Husband);
·the need for an expert investigation into the financial affairs of the respondent (the Husband);
·the position of considerable financial strength held by the respondent (the Husband); and
·the capacity on the part of the respondent (the Husband) to meet his/her own ongoing litigation costs and an inability on the part of the applicant (the Wife) to meet his/her ongoing litigation costs from his/her own income, assets or financial resources.
I concluded that what is important is that the decision to order costs is discretionary both as to whether to make an order and as to the amount. However I had to be satisfied that there were justifying circumstances.
The Family Court does not have a system of pleadings. Proceedings are commenced by filing an application and all that is required is that full particulars be included of the orders sought. If an order is sought pursuant to s 79 of the Act for property settlement then a party must also file a Financial Statement at the same time as filing the application.
In the Family Court cases must participate in what is called the resolution phase and it is only after the conclusion of the final resolution event that an order is made that parties attend a pre-trial conference. The Family Law Rules provide that the evidence in chief at a trial must be given by affidavit (r 15.05). The rules provide that at least 14 days before the pre-trial conference each party must file one affidavit setting out his/her evidence in chief and one affidavit for each witness (r 15.07(2)). The practice is, and has been for some time, that at the conclusion of the final resolution event orders will be made for the contemporaneous filing by all parties of affidavits and this reflects the nature of the proceedings namely that ordinarily both parties are seeking orders and the respondent is not simply seeking a dismissal of the application. At the pre-trial conference which is conducted by a Registrar if the Registrar is satisfied that the case is ready for trial a date for a trial may be fixed (r 12.10).
Notwithstanding the absence of a system of pleadings r 1.04 of the Family Law Rules provides that the main purpose of the rules is to ensure that each case is resolved in a just and timely manner at a cost to the parties and the court that is reasonable in the circumstances of the case. Rule 1.06 provides that the court must apply the rules to promote the main purpose, and actively manage each case and there are 10 matters and para (d) provides that at an early stage, identify the issues in dispute. Rule 1.07 sets out how the court should apply the rules to achieve the main purpose. Rule 1.08 deals with the responsibility of parties and lawyers in achieving the main purpose and there are 12 relevant matters one of which in para (h) is the responsibility of identifying the issues genuinely in dispute.
Chapter 13 of the Family Law Rules sets out rules in relation to a party’s duty to make early, full and continuing disclosure of all information relevant to the case to each other party and the court; and the timing, extent and method of discharging the duty of disclosure and how the duty can be enforced. Division 13.1.1 provides for a general duty of disclosure. Division 13.1.2 deals with a duty of disclosure in financial cases. Part 13.2 deals with a duty of disclosure of documents. The introductory summary to Chapter 13 provides that the aim of disclosure is to help parties to focus on genuine issues, reduce costs and encourage settlement.
Senior counsel for the Wife submitted that in the Family Court the process of case management is a necessity particularly in what he described as detailed and complex matters. It was submitted that the proceedings often involve the dynamic that one of the parties will typically have the day to day control and extensive knowledge of family financial affairs and the other party's role may have been very different and he or she is less informed, and there are often disputes along the way where there is an imbalance of knowledge. This is such a case. It was submitted that adjudicating on those disputes, at various levels, necessarily requires the Court to acquire knowledge of often very detailed and complex matters. I observe that senior counsel for the Husband during his submissions, although perhaps in a different context, made reference to proceedings in the Family Court being emotional contentious proceedings involving individuals rather than insurance companies. It may be he was referring to the “need for sensitivity” that Kirby P (as he then was) identified in S & M Motors Repairs Pty Ltd & Others v Caltex Oil (Australia) Pty Ltd and Another (1988) 12 NSWLR 358 at 370.
The Family Court also has Case Management Directions (Practice Direction No 3 of 2004) and of importance is Chapter 9 which deals with case management of long cases. Chapter 9.2 provides that in referring a case to the long cases list consideration will be given in a financial case to indicia such as complex corporate structures, valuation issues, interveners and complicated issues of fact or law. The long cases list judge being the judge who has the responsibility for case management of a long case has a range of responsibilities (Chapter 9.3) and they include making procedural orders and also hearing and determining defended interim or procedural applications. The long cases list judge also has responsibility to make orders for preparation for a trial and allocates trial dates.
What was unusual about this case was the quantum of the order sought by the Wife. The Wife sought payment of $1,230,000 and I made an order for the payment of $1,100,000. The Husband does not complain about the order. The facts of the case were considerable, detailed and complex.
The substantive proceedings were commenced in November 2005 and I set out in my judgment some of what has happened since then. As I said in my judgment the proceedings have been before the court on numerous occasions. I have already set out in this judgment some of what I previously said in relation to the history of the litigation.
Consideration of the context of this current application amongst other things requires consideration of the nature of the proceedings, the nature of the pending proceedings for final orders, what I was being asked to consider, what I was required to do by the statute and of course what I said in my judgment. Senior counsel for the Wife described the costs proceedings as involving a number of questions including identifying what the issues are going to be and why the case was going to be so expensive with so many parties.
There are pending proceedings for settlement of property pursuant to s 79 of the Act. There is authority for a preferred, but not rigid, approach to the determination of such proceedings and this approach requires the adjudicator to make findings in relation to the net assets of the parties. This requires identifying and valuing the property, as defined in s 4 of the Act, of the parties, identifying and valuing the liabilities of the parties and identifying and valuing the financial resources of the parties. It has been suggested that superannuation interests should also be separately identified and valued. The power under s 79 is to alter the interests of parties to the marriage in their property being property as defined in s 4 of the Act. In making an order the court may also take into account financial resources. There often arise issues in relation to the jurisdiction and power of the court to make orders in relation to the property interests of third parties and this can raise for consideration Pt VIIIAA of the Act, concepts of sham and alter ego and the accrued jurisdiction of the Family Court.
In this case there is a significant issue or what senior counsel for the Husband called a substantial dispute as to the extent and value of the net assets of the parties and this in turn will require consideration of a number of matters that are controversial. This inquiry will involve issues about what property interests the parties have and the value, what financial resources the parties have and the value and relevance of a number of third party interests. I identified a number of these matters in my judgment. In particular the Wife had to demonstrate that there are such matters to be considered. The Wife had to justify an order for $1.2 million and that the Husband could pay such a sum. Senior counsel for the Husband on the second day of the hearing conceded that there are serious issues to be tried, referring to the significant issue, namely, the extent and value of the financial circumstances of the parties.
I refer to what I said in paragraph 333 of my judgment. The Husband swore his first Financial Statement on 6 April 2006 and he contended that subject to the value of his shares in B Ltd he had assets of a net value of $831,204. On 7 April 2006 counsel for the Husband told the court that the shares in B Ltd were valued in the vicinity of $20 million. On 11 April 2006 the Husband filed a response and set out the property settlement order he sought. The effect of what the Husband sought was that the Wife would receive a home in MX worth $4,500,000 unencumbered and retain W Pty Ltd. To achieve this outcome the Husband would pay $2,000,000 to discharge a Westpac Bank debt. The Husband therefore proposed a significant property settlement in favour of the Wife. Then on 20 March 2007 the Husband swore an affidavit and contended that he had assets of a net value of $68,544 excluding a value of the shares in B Ltd. The Husband said that he had no idea of the value of the shares. Then on 21 March 2007 the Husband swore a further Financial Statement and contended that he had assets of $257,063. The Husband said that the value of the shares in B Ltd was not known. Then on 28 March 2007 the Husband filed an amended reply and he proposed that the home at MX be sold and he receive the net proceeds of sale and there be no adjustment in favour of the Wife. The hearing of the Wife’s costs application commenced on 29 March 2007. On behalf of the Husband a written outline of argument was filed and it was submitted that the parties have assets of a net value of $1,786,038. What thereafter happened appears in paragraphs 281 to 310 of my judgment.
The hearing therefore commenced where the Wife was seeking $1.2 million to defray her costs in circumstances where the Husband was contending that the Wife receive nothing from him by way of property settlement and the net assets were valued at about $1.78 million. At the commencement of the hearing the Husband’s contention was that there was no warrant for granting the relief sought by the Wife because of, amongst other things, the financial circumstances of the parties. In any event what transpired was that the point was reached where I calculated that as a result of evidence given on 16 May 2007 the net assets may be valued at $44,287,062 or $77,985,756. Then on 18 May 2007 the Husband filed a further amended reply and the effect of what he sought was that the Wife would receive a property settlement of a value of $8,857,412.40.
The Wife had to establish an entitlement to an amount of $1.2 million to pay costs. At the commencement of the hearing the Wife confronted the difficulty of trying to identify property as defined in s 4 of the Act if the Husband's contentions as to what the parties' net assets were was correct. The Wife in those circumstances also sought to rely on s 117 of the Act and in so doing identify a financial resource to justify an order. In his opening senior counsel for the Wife contended that even a borrowing capacity would constitute a financial resource that could form a basis for the order that the Wife was asking for.
If the matter had proceeded on the basis that the Husband maintained that in the property proceedings the Wife would receive an entitlement of $4.5 million then the hearing would have been dealt with much more expeditiously and there would have been a number of matters that I would not have had to deal with. As senior counsel for the Wife submitted at that point of time, when the Wife was seeking an order for approximately $1.2 million in legal costs, she was then faced with the challenge of demonstrating to me that this was an extraordinary case in which there were significant issues that needed to be given a fair opportunity of exploration and that she had a compelling case to put that it would be appropriate to make such an order, including demonstrating why the case would be so expensive to run. What happened then, over a period of days, was largely focused upon that exercise.
Then at the end of the case the Husband conceded through his lawyers, having disclosed the sale of the business of B Ltd and the potential consequences of the sale to the value of the net assets, that he would contend his wealth was not less than $40 million, that he would accept that the Wife had an entitlement to 20 per cent of the net assets of the Husband and the Wife and that therefore she would be entitled to assets of a value in the order of $8 million. It was submitted and I accept that if that had been the fact at the beginning of the case, then much of the evidence that the Wife put before me and that I was therefore obliged to consider, would have become irrelevant and the hearing would have been much shorter. It was submitted that when it was disclosed by the Husband that he had been in negotiations for the sale of B Ltd for a period of six months that made the things that the Husband recorded in his financial statements about estimates, and made the valuations that he put forward all the more significant. I have identified the duty of disclosure provided for in the Family Law Rules. I accept the submission that it was a rather extraordinary set of facts and what I did was record those facts.
Even after the evidence given on 16 May 2007 and the further amended reply the Husband filed on 18 May 2007 the Husband still sought that the Wife’s application be dismissed. No attempt was made to amend or change in any way the position put at the beginning of the hearing being that the Husband opposed the orders sought by the Wife and contended that there was no warrant for the granting of the relief having regard to the claim as advanced by the Wife, the substantive dispute between the Husband and Wife, the financial circumstances of each of the Husband and Wife and discretionary considerations.
I accept the submission made on behalf of the Wife that a number of the arguments advanced on behalf of the Husband fall into what senior counsel for the Wife described as a pernickety examination of all that was said and done and the reasons provided. I am of the view that I do not have to deal with each of the paragraphs relied upon by the Husband. In dealing with the submissions I am however mindful of what the majority observed in Ebner v Official Trustee in Bankruptcy; Clenae Pty Ltd v ANZ Banking GroupLtd (supra) at 345. I will however refer to some of the paragraphs if only as part of an attempt to put this current application into context.

First category

The first category is that it appears that a determination has been made by me regarding the Husband’s association with T Pty Ltd. In relation to this category I was referred to eight paragraphs of my judgment being paragraphs 19, 26, 27, 31, 54, 68, 91 and 191 which are as follows:
19     There are a number of entities relevant to these proceedings however in the current proceedings the important entities identified are B Ltd, T Pty Ltd and W Pty Ltd. I am satisfied that these companies form part of what is called the B Group.
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26.     The Wife has always contended, and still maintains, that the Husband is the owner of the B Group and during the hearing on 29 March 2007 the Wife put before me a deal of evidence which she relies upon to support this contention. As seen, the Husband denies that there is a “group”. Then before the hearing resumed on 20 April 2007 the Husband swore an affidavit on 19 April 2007 and what he endeavoured to do, as he stated, was respond to and answer specific documents which were tendered on behalf of the Wife on 29 March 2007. In any event, in the affidavit the Husband said that B Ltd and T Pty Ltd have a long commercial association primarily as a result of his relationship to the directors of T Pty Ltd. He said that he is the sole director of B Ltd and makes decisions in respect of the company’s activities. He said that he has been involved with the company since its inception and that he conducts a residential accommodation facility on real estate owned by the company comprising … villas and apartments. He said that these are leased on 50 year terms which terminate on the death of the lessee or vacancy of the premises. He was responsible for the establishment of the residential accommodation facility and he has had “the primary operation for the establishment” of the business over the past 24 years and he has developed considerable expertise in the business. He went on to say that T Pty Ltd is engaged in the same industry; that is, the development and operation of residential accommodation facilities and the like. He contended that his children Jeremy Kendling and Penelope Kendling have sought his advice regarding various matters relating to T Pty Ltd and its various businesses such as the P Business, the D Business and the ML Facility. He said that he has at all times been willing to provide that advice and assist and support them in the operation of the company’s various businesses and he has encouraged and supported them in their operation of their company and their various businesses. It is necessary to compare the above with what the Husband said in his affidavit of 20 March 2007.
27.     It is apparent to me from the history of the litigation and in particular on occasions when the matter has been before me that, prima facie there may have been attempts by the Husband and others to demonstrate that there is no relevant relationship between B Ltd and T Pty Ltd. There has been almost indignation on behalf of those interested in T Pty Ltd and others that they are involved in the proceedings. In his 19 April 2007 affidavit the Husband continued that there was a long history of a commercial relationship between B Ltd and T Pty Ltd. He gave, as an example, that in 1992 B Ltd constructed the P Business …. Further, that in 2001 B Ltd constructed the D Business … and in 2002 the ML Facility …. The Husband contended that these businesses were owned and operated by T Pty Ltd. He said that in 2006 B Ltd also constructed and managed for T Pty Ltd the building of a project at H Drive. He also said that B Ltd is currently the project manager for developments to be undertaken by T Pty Ltd at R and Q and that both of these developments are awaiting council approval.
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31.     In his affidavit sworn on 19 April 2007 the Husband said that on 15 July 1989 he transferred the majority of his shares in T Pty Ltd to each of Jeremy Kendling and Penelope Kendling. At this time Jeremy Kendling was aged 12 years and Penelope Kendling was aged 10 years. However, in this affidavit the Husband said that at the commencement of the parties’ relationship he held one share in the company which he subsequently transferred to Penelope Kendling. In an affidavit sworn on 19 May 2006 the Wife contended that T Pty Ltd is the alter ego of the Husband and she provided particulars which she contended support this allegation. The evidence prima facie supports an argument that the Husband has controlled and still controls T Pty Ltd. The issue is how this company should be treated for the purposes of the property settlement proceedings. On one view, it is a financial resource of the Husband and the issue is whether it is more than that.
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54     The Wife was appointed a director of W Pty Ltd on 30 June 2000. The Husband contends that in 2000 he transferred all his shares in W Pty Ltd to the Wife. There was put in evidence (Exhibit G) a copy of a letter dated 20 November 2000 signed by the Husband in which he stated “[W] is an integrated part of B Ltd and T Pty Ltd, is locally owned and managed by the same people”. As I have already said I accept that these companies form part of the B Group.
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68     The Husband contends that on 27 June 2002 he ceased to be a director of T Pty Ltd. According to the chronology of the Wife, the Husband ceased to a director of T Pty Ltd on this day. Various documents put into evidence on behalf of the Wife, including on the first day of the current hearing, prima facie establish the Husband’s ongoing control and authority in relation to the affairs of T Pty Ltd even after June 2002. In the Husband’s April 2007 affidavit in reply, he said that subsequent to his resignation as a director he was “appointed as a consultant”. This was the first time, namely in April 2007 that he identified this role and occupation in relation to this company and it was probably because of the evidence that was put before me on 29 March 2007. For a period of time after proceedings were commenced it was contended by the Husband and others that the affairs of T Pty Ltd were irrelevant to the proceedings in this Court. This contention has been the subject of extensive litigation. So far as the future is concerned, I am satisfied that prima facie it has been established that the affairs of T Pty Ltd are relevant to the financial circumstances of the Husband and in my view this is now conceded by the Husband in his April 2007 affidavit.
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92     An overdraft request dated 15 March 2004 was produced by Westpac Bank in relation to an account in the name of B Ltd. The request was stated to incorporate reduction “for [T] Pty Ltd”. This document also referred to “Group” debts and stated that “[The husband] will transfer between entities as required”. There was also a notice of authority produced by the G branch of Westpac Bank in which the customer was identified as T Pty Ltd and was signed by the Husband as managing director. In another document produced by Westpac Bank the customer was identified as T Pty Ltd and the “decision maker” identified as the Husband. There is a significant amount of evidence that prima facie corroborates that the Husband has been the decision maker for T Pty Ltd and in control.
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191    Written submissions dated 9 June 2006 were filed on behalf of T Pty Ltd concerning the right to issue subpoena, submissions in reply to the submissions on behalf of the Wife dated 31 May 2006 in relation to the subpoena to Westpac Bank and submissions in relation to the subpoena to Industry Funds Management (Nominees 2) Pty Ltd. It was stated that the submissions in relation to the subpoena to Westpac Bank were dated 26 May 2006. In relation to the subpoena to Westpac Bank, it was repeated that the objection to inspection was because the information regarding T Pty Ltd was of no relevance to interim proceedings. As to the subpoena to Industry Funds Management (Nominees 2) Pty Ltd it was submitted that the financial affairs of T Pty Ltd were irrelevant. As well, the issue of confidentiality was raised. There is a very significant issue as to relevance of T Pty Ltd.

The Husband’s association with T Pty Ltd is a topic that requires some understanding of the context, because it has been the Husband's case in the proceedings that there was absolutely no relevance of T Pty Ltd to any understanding of the Husband's affairs.
On behalf of the Wife it was submitted that the topic was relevant in understanding the costs that she had incurred to date because, for example, she had incurred some tens of thousands of dollars of costs going through a very laborious process to even gain access to documents on subpoena that had anything to do with that company. It was submitted that to describe it as a group did no more than in a very generic way describe that there is a relevance between the Husband and T Pty Ltd, there is what senior counsel for the Wife described as an interconnection.
Senior counsel for the Wife submitted that there is evidence, including some offered late in the day by the Husband of his role as a consultant to T Pty Ltd, providing an explanation for why the Husband on day to day basis signed cheques, signed all sorts of documents, does things for this company and also transactions that were disclosed between B Ltd and T Pty Ltd that very clearly made the case for the fact that there was at least a connection between them of a significant nature. What the ultimate consequence of that connection may be has not been the subject of comment, nor could it have been at this point in time.
In his affidavit of 19 April 2007, that was filed during the course of the hearing, the Husband gave evidence of a long history of a commercial relationship of B Ltd and T Pty Ltd. Senior counsel for the Wife submitted that this evidence made it fair to describe these entities as having some group association. It was submitted that in paragraph 54 I identified a letter signed by the Husband that should remove at least a discussion about that generic term of the association from any dispute.
In paragraph 92 I dealt with some of the evidence tendered by the Wife to show that she had a credible case deserving of the opportunity of a proper trial, as to the Husband's control of T Pty Ltd. What I said was that there was material that makes the argument one that is seemingly credible.
The observation at the conclusion of paragraph 31 about a financial resource does no more than record the arguments or issues between the parties. I observed in discussion during the hearing of the current application the significance to the proceedings of the distinction between a financial resource and property, and that in the circumstances T Pty Ltd must quite clearly be regarded as a resource of the Husband.
The opinion expressed that various companies including T Pty Ltd. form part of the B Group is irrelevant. What was relevant was my finding that the evidence prima facie supports an argument that the Husband has controlled and still controls T Pty Ltd. What is important is that I said, as I had to, that the issue is how this company should be treated for the purposes of the property settlement proceedings and that on one view, it is a financial resource of the Husband and the issue is whether it is more than that. That is the issue that remains to be determined.

Second category

The second category is that it appears that I was providing advice to the Wife as to the evidence she could/should gather which is likely to be adverse to the Husband. There are nine paragraphs of my judgment referred to being paragraphs 30, 42, 47, 58, 61, 65, 77, 82 and 89 which provide as follows:
30     Senior counsel for the Wife raised a number of concerns about the administration and governance of B Ltd. Senior counsel for B Ltd in both his written and oral submissions went to some lengths to point out that the redeemable preference shareholders of B Ltd are not in some esoteric category and that they are “real people with a real interest in the capital of [B] Ltd”. He submitted that “the central thrust of what we argue in relation to the redeemable and preference shareholders is that they have very real and significant rights, both by reason of the constitution of B and under the Corporations Act, which they at any time might want to or be in a position to explore which might result in some kind of claim being made against the husband as a director”. As I indicated in discussion, consideration may have to be given to whether or not notice of these proceedings is given to the Australian Securities and Investments Commission and others.
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42     There may be an issue as to the extent and value of the Husband’s assets at the commencement of the relationship. He may have had a share in T Pty Ltd. He may have had shares in other companies that are not identified. Amongst other things, it will be necessary to obtain a copy of the Husband’s income tax return and the financial statements of all relevant entities for the year ended 30 June 1994. On behalf of the Husband it was submitted that at the commencement of the relationship he owned essentially the same assets as he did at separation and presently.
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47     The Husband contends that on 21 August 1997 B Ltd purchased two properties being T1 and T2 for $2,150,000. The properties were then consolidated and nine units were constructed. Construction was completed in October 2000 and the strata plan was registered in May 2001. To pay for the costs of purchase B Ltd borrowed funds from Members Equity Bank. The Husband contends that the security for the borrowing included a property owned by Jeremy Kendling at T3 as B Ltd did not have sufficient security. The Husband also contends that B Ltd agreed to sell the airspace of one of the units to each of Jeremy Kendling and Penelope Kendling and construct one unit for each of them. The Husband contends that the airspace was sold to Penelope Kendling for $240,000 and to Jeremy Kendling for $249,000 and the cost of constructing each unit was an estimated $250,000. Further, that Jeremy Kendling received Unit 1 and Penelope Kendling received Unit 2. These transactions will have to be investigated. Evidence will probably have to be given by Jeremy Kendling and Penelope Kendling.
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58     By a transfer stamped on 19 April 2001 B Ltd acquired land described in Folio Identifier … for a consideration of $1,200,000 (Exhibit C). By an undated transfer stamped on 19 April 2001 B Ltd transferred this property to T Pty Ltd for a consideration of $155,250 (Exhibit C). Senior counsel for the Wife submitted that these transactions are relevant and I agree. In summary, B Pty Ltd purchased a property for $1,200,000 and then by an undated transfer, but upon which stamp duty was paid three months later, transferred it to T Pty Ltd for $155,000. At the relevant time B Pty Ltd was controlled by the Husband. It will be necessary to ascertain how it could be a prudent decision for the directors of B Ltd to acquire this asset for $1,200,000 and then dispose of it three months later for less than 10 per cent of that price. It is a property on which there is a substantial property development.
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61     61.   By transfer dated 15 March 2002 B Ltd transferred land described in Folio Identifier … to Jeremy Kendling for a consideration of $249,000 (Exhibit E). Jeremy Kendling later sold the property for $1,750,000. Given what the Husband said in his April 2007 affidavit, this may be the airspace of one of the units at T being Unit 1. This will have to be investigated.
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65     The Husband contends that on 14 April 2002 B Ltd resolved to enter into a mortgage over real estate owned by T Pty Ltd securing advances which were then $13,000,000. This will have to be investigated, amongst other things, because of the Husband’s contentions about the transactions between what he at first contended were unrelated corporations and the submissions put to me by senior counsel for B Ltd about the rights and interests of the redeemable preference shareholders of this company. At some point Mr Harper may have to be more explicit about his role and in particular the source of his instructions.
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77     The Wife contended that in April 2003 a transfer was lodged with the Land Register Service and Public Registers in the Netherlands evidencing the transfer of the property in the Netherlands to A Pty Ltd for a purchase price of €1,050,000. In his affidavit of 20 March 2007 the Husband contended that as a result of difficulties in the marriage from 2002 to April 2003 he sold the home in the Netherlands to A Pty Ltd which was a company owned by a business acquaintance, Mr PS, who had originally come from the M area in Holland. I assume that Mr P and Mr PS are the same person. The Husband contended that it was agreed that as part of the consideration A Pty Ltd would pay off three mortgages totalling €313,000 to O Company and that Mr PS would take over a liability to K in the sum of €760,000 and the transaction was completed in April 2003. In summary, the Husband contended that the property was sold for a total of €1,050,000. However, the Husband also said that Mr PS informed him that he had acquired the property to retire at M “but in the meantime has permitted me to use the property when I visit Holland when it is available”. In a letter dated 13 September 2006 Slade Manwaring, Solicitors on behalf of A Pty Ltd set out how the alleged sale was concluded and I have no doubt that the transaction will have to be investigated and primary records provided corroborating the contentions. It is instructive to read the correspondence that passed between the Wife’s lawyers and Slade Manwaring Solicitors. Evidence may have to be given by Mr P or Mr PS.
In paragraph 42 I said that it may be necessary to examine tax returns going back to the time of commencement of cohabitation. Senior counsel for the Wife submitted and I accept that I was doing nothing more than recording part of the matters that I was taken through during the course of argument about what running the case would involve and what were the factors that would go to the cost of doing so.
Senior counsel for the Wife referred to paragraphs 47, 58 and 61. Again I was recording the submissions that were put. I was told that this was going to be an issue for the hearing. I was told and it was explained to me that part of the Wife's case would rely upon a contention under Barnes v Addy [1874] LR 9 Ch App 244 which then became the basis for what I said in paragraph 58. In summary a submission was put endeavouring to articulate to me that part of the Wife’s case, in the alternative, is to contend that the Husband, with a fiduciary obligation to B Ltd caused that company to participate in transactions below value to remove value from that company and place it in the hands of others who were on notice of the nature of the transaction and the undervalue proposition of it and that it was not for the benefit of the company. Senior counsel for the Wife was endeavouring to explain what the issues were for the trial of this matter.
As to paragraph 65 senior counsel for the Wife submitted that all that is said springs from the context of how the debate was unfolding before me and that during the course of the hearing it was said, without dispute, that the Husband was the person responsible for providing the instructions for B Ltd.
As to paragraph 77 and the material that falls in the last four lines about the property in the Netherlands and Mr P or PS it was an acceptance as to how the Wife is pursuing her case because that is what it stated in the correspondence that passed between the lawyers. When I said that it was instructive to read the correspondence I was acknowledging that in the correspondence the transaction was clearly being put in issue and the other parties were being requested to produce primary records that would demonstrate their explanation.
Senior counsel for the Wife submitted, and I agree, that when I indicated areas that required investigation it was not a circumstance of providing a “hint" to the Wife.Each of the various matters were relevant for discussion because they went to developing an understanding of the complexity of matters in issue in the proceedings. Further each of the matters were presented to me in argument and submissions made on behalf of the Wife. When I referred to areas of investigation I was drawing upon the submissions that were made on behalf of the Wife about matters of significant issue in the proceedings, the breadth of factual dispute, the type of investigation required, the ultimate impact upon the cost of the trial and the cost that the Wife would be put to.
This complaint appears to ignore a number of important matters including the nature of the proceedings, the nature of the pending proceedings for final orders, what I was being asked to consider and what I was required to do by the provisions of s 117 of the Act.
Senior counsel for the Wife submitted, and I accept, that there were events that unfolded in the course of the hearing, including changes to the Husband's position in very material and relevant ways, that fell to be recorded and were recorded in an objective way. This applies to most if not all of the categories.

Third category

The third category is that there is a comment or language used that is unnecessary and implicitly derogatory or suggestive of improper behaviour by the Husband. In relation to this category there were about 42 references being paragraphs 14, 30, 42, 47, 58, 61, 65, 77, 82, 89, 90, 95, 107, 119, 125, 150, 156, 158, 166, 221, 228, 259, 262, 271, 273, 275, 277, 278, 287-299, 323 and 343 which provide as follows:
14     There were difficulties in ascertaining the costs of the Husband. According to the first costs memorandum of the Husband (Exhibit B), he incurred costs and disbursements rendered up to 27 March 2007 of $370,837.77 and had paid $346,425.97. He had outstanding costs as at 27 March 2007 of $24,411.80 as well as unbilled work in progress and disbursements estimated at $50,000. The estimated future costs and disbursements of the hearing of the applications for parenting orders was $75,000. According to the memorandum, it was not possible to estimate the quantum of the future costs and disbursements of the property proceedings. According to the memorandum in order to pay the amount of $346,425.97 the Husband borrowed against his loan account with B Ltd. On 27 March 2007 I received two costs memorandums from the Husband. The first memorandum did not identify the source from which the Husband obtained the funds to pay costs. The second memorandum did identify the source. Then when the hearing resumed on 20 April 2007, I was handed a further “Notice as to Costs” dated 19 April 2007 in which it was stated that the costs and disbursements rendered up to the date of the Notice were $666,439.60 as opposed to the amount of $370,837.77 referred to in the first costs memorandum of 27 March 2007. The costs memorandum of 19 April 2007 also revealed that the Husband had paid $585,403.52, not $346,425.97. It also revealed costs and disbursements outstanding as at the date of the Notice of a total of $81,036.08. It revealed work in progress and disbursements to be billed up to and including the interim hearing estimated at $45,000. It maintained the estimate of $75,000 with respect to the costs and disbursements of the five day parenting hearing. However, it identified an estimated amount of $130,000 for future costs and disbursements of the property proceedings. Thus according to the Notice, the Husband’s estimate of the further costs was $205,000. The Notice advised that the costs paid were sourced by the Husband borrowing funds from his loan account with B Ltd. On 19 April 2007 the Husband swore an affidavit in which, amongst other things, he sought to give evidence in relation to various documents that had been tendered on behalf of the Wife on 29 March 2007. The Husband said that his solicitors estimated he would require an amount of about $320,000 to pay for his legal costs to the conclusion of the parenting and property proceedings. This is different from the estimate in the Notice. The Husband said “I am unable to draw upon my loan account with [B Ltd] any further, the amount now advanced almost equal to the valuation of the property which is held by the company as security for that loan”. The Husband went on to say that he is employed as the managing director of B Ltd to manage its affairs and that he “will” receive an annual income of $240,000 in addition to the provision of a motor vehicle and that he intends to meet the payment of his legal costs from his income. Then during the course of the hearing I was informed by senior counsel for the Husband that in fact in relation to the outstanding costs and disbursements contended for as at 19 April 2007 of $81,036.08, an amount of $18,000 was received and receipted by the Husband’s solicitors on 20 April 2007 and a cheque for the balance being $63,036 “is in the post but has not as yet been receipted”. Senior counsel for the Husband conceded that the errors made in the costs memorandums were unfortunate, particularly in the context of this case.
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82     Senior counsel for the Wife made a number of submissions about loan accounts in the names of the two children of the marriage. In the financial accounts of B Ltd for the year ended 30 June 2003 under "Unsecured interest bearing liabilities of the company" there was listed; first, a loan account indebtedness to the child David Kendling of $128,000 and second, a loan account indebtedness to the child Marc Kendling of $1,750,000. By 30 June 2004 both of those loan accounts disappeared. There are two home units which have been the subject of an order pursuant to the Conveyancing Act 1919 (NSW) which referred trusteeship to the Husband and the Wife, one being a commercial unit, the other being a residential unit, that are owned by the two boys. The Wife does not know where the amount of $1,750,000 or the $128,000 came from and on a number of occasions her advisers have invited/requested explanation. Senior counsel for the Wife identified some correspondence that was received the day before the hearing commenced and I am satisfied that not only was there a delay in providing a response, but that no explanation has yet been given. These matters will have to be inquired into.
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89     There is a significant issue about the extent and value of what the Husband contends are the financial circumstances of the children. On behalf of the Wife it was submitted that the strata unit transferred to the child David is a commercial premises shop. One of the matters that has been the subject of requests on behalf of the Wife relates to the rent being received from the shop by the child David. No mention of the rent was made in the Husband’s financial statement. In his first financial statement of 6 April 2006 he said that the child David had an average weekly income of $10,000. In his financial statement of 20 March 2007 the Husband said that he does not know what income his children have. I have some difficulty with this evidence and it will have to be inquired into. The Husband contends that he has a nil tax assessment although the children are with him for a small part of the time and as a result he sought and obtained an assessment of child support against the Wife based upon her taxable income of $70,000. The Husband also gave evidence about arrears of child support that are presently outstanding to him. Prima facie this a very unusual situation and I find difficult to understand. Senior counsel for the Wife submitted, and I agree, that orders will have to be made that require the Husband and others to provide all of the relevant information about the income received for these children and other matters. The Husband may also have to make a more comprehensive disclosure to the Child Support Agency. The reasons for this are many but include that he now contends that he has an income of $240,000 per annum.
90     In a development application form dated 30 December 2003 lodged with W Shire Council on behalf of T Pty Ltd as applicant, that part of the document titled “signature of owner(s)” was signed by the Husband. The Husband may now contend that he did so as the “consultant”. The application related to a resort facility in TE and the total project value was stated to be $93,380,000 excluding the value of the land. An application for approval was lodged with G Shire Council in respect of property at GM on behalf of T Pty Ltd and was also signed by the Husband as the “owner”.
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95     The Wife contends the parties finally separated in September 2004. There will be an issue about when the parties finally separated because the Husband contends that it was in April 2005. There is evidence that prima facie suggests that the Wife’s version may be preferred.
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107    On behalf of the Wife it was submitted that there are a number of discrepancies in the case put forward by the Husband. It was submitted that there is a “huge case to be explored in relation” to T Pty Ltd and prima facie I agree. All of the current activities of T Pty Ltd, being undertakings of a development nature, appear to be funded in a rather unusual way by B Ltd. It was submitted that when I consider a valuation by Mr G which I will shortly deal with (bearing in mind this is the valuer coming from the Husband's side, the valuer who has access to everybody to get the information), he talks of the things that Mr V contends are very strange. It was submitted that it is not conventional accounting practice that B Ltd is paying for work in progress of T Pty Ltd’s expenses and does not raise the existence of a debt, but rather brings those expenses into account in recording for its own purposes significant trading losses. Mr G in his valuation remarked upon the same transactions and in effect said he had made further inquiries and he might have to revisit this topic. Senior counsel for the Wife submitted that by the 6 June 2005 invoice in one fell swoop, in an invoice of three or four lines, it purported to bring to account financial transactions between the two entities in the 10 preceding years. The effect was to move a huge amount of money from one company to the other. Senior counsel submitted that these things will be matters for explanation, but they are clearly matters that will be complicated and expensive to explore, particularly in the face of the resistance that T Pty Ltd has shown in the course of these proceedings. Prima facie there is merit in what was submitted.
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119    On 17 November 2005 the solicitors for the Husband wrote to the solicitors for the Wife and said that the Husband had sought financial statements and been informed that having regard to advice received from the valuers, auditors and accountants, and the intervening Christmas holidays, he would not be able to receive that information to enable him to make a complete disclosure until approximately the end of January 2006. It was contended that the Husband estimated it would take him approximately 14 days from receipt of the information to finalise the disclosure. There was no attempt to identify the valuers, auditors and accountants. There also does not appear to have been difficulties in providing comprehensive and reliable information to lending institutions.
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125    By letter dated 19 December 2005 Westpac Bank advised the Wife that B Ltd was no longer in a position to make repayments in relation to a mortgage secured on the title of the property at MX jointly owned by the parties. There was put into evidence a letter dated 19 December 2005 signed by the Husband addressed to Westpac Bank. The letter is said to be “Re payment [R Property] approximately $40,000 month”. In the letter the Husband said “Please do not take further funds from [B] each month from now. Should that not be undertaken I need to close the [B Ltd] account to enforce it. Please advise the legal division of this decision and will await their answer of foreclosure”. In his affidavit sworn on 20 March 2007 the Husband said:
As from November 2005 I was excluded from “[RI]” and since then [the wife] has had sole occupation and possession of that property for use by herself. … Up until January 2006 [B] Limited continued to pay mortgage payments to Westpac Banking Corporation in the sum of approximately $30,000 per month as guarantor under that mortgage. Those payments were debited against the loan of myself and [the wife] secured by way of second mortgage over that property. In January 2006 [B] Limited ceased making payments and Westpac Banking Corporation has now threatened to call up the mortgage loan on “[RI]”. I have made representations to Westpac Banking Corporation which has agreed to forbear default action at the present time until December 2007. The mortgage debt continues to escalate at the rate of about $2,000 per week.
On behalf of the Wife it was submitted that the Husband contended that he had been persisting in making representations to Westpac Bank to try and ensure that the bank did not sell up the MX property from which he had been excluded and the Wife was living in. However when the letter the Husband wrote to the bank is considered and what the Husband said about not making payments and looking forward to the advice of the bank legal team as to foreclosure, a reasonable inference to draw is that the Husband was inviting the bank to “sell it up and kick her out”. This will have to be investigated. Prima facie an inference that could be drawn is that the letter written by Westpac Bank to the Wife was written because of what the Husband had said to the bank. There are contradictions between what the Husband said in his affidavit of 20 March 2007, what he said in the letter to the bank of 19 December 2006 and what he said in his affidavit of 19 April 2007. The resolution of this issue could be significant to the findings made in relation to other issues. It may be an important credit issue. It may also be relevant in the parenting proceedings.
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150    On 16 March 2006 W Pty Ltd filed an application in the Supreme Court seeking that the proceedings in that court be transferred to the Family Court. The application was opposed by T Pty Ltd and on 28 April 2006 the application was dismissed. The Wife annexed to her affidavit a copy of a judgment of 28 July 2006 of Nicholas J. Given the evidence which is now before this court, prima facie I can understand why the application was made for a transfer of the proceedings in the Supreme Court to this court.
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156    The Husband then swore a financial statement on 6 April 2006 which was filed on 11 April 2006. Notwithstanding what had been said in the letter of 15 November 2005 and the repeated requests by the solicitors for the Wife, it was not until April 2006 that the Husband made a disclosure of his financial circumstances. In the statement he gave his occupation as “Company Director” and said he lived at S. He said that he had nil income. As to personal expenditure he disclosed the following:
$
·Income tax  TBA
·Rates  200
·Loan repayments – Westpac Banking Corporation Limited          200
·Other expenditure  4,455
The Husband completed Part N of the financial statement and gave evidence of how the amount of $4,455 was made up being:
$
·Food  600
·Household supplies   50
·House repairs  100
·Electricity  110
·Clothing and shoes  70
·Children’s activities  400
·Child minding   500
·Medical, dental and optical  100
·Entertainment/hobbies  100
·Holidays  550
·Education expenses  1,000
·Chemist  15
·Gardening  50
·Cleaning  50
·Repairs, furniture and appliances  50
·Dry cleaning  10
·Books and magazines  30
·Gifts  50
·Hairdressing, toiletries  20
·Rental house  600
Thus he was contending that he had weekly expenditure of $4,855 or $252,460 per annum with no income. The expenditure he contended he incurs for the children may be relevant in the parenting proceedings. I note that he contended he spent $52,000 per annum on education expenses. This will have to be investigated given a document put into evidence from the school the children attend in relation to 2007 school fees. He disclosed that the child David had an average weekly income of $10,000.
The Husband contended that he had property interests of a total value of $4,680,000 being:
$
·Property at G  2,250,000
·Apartment in Germany   130,000
·Household contents  50,000
·“[RI]”, R (half share)  2,250,000
·40,500,005 ordinary shares in B Ltd  Not known
Subject to the value of the shares in B Ltd the Husband was contending that he had assets of a value of $4,680,000.
As to liabilities the Husband disclosed:
$
·Mortgages (husband and wife)  2,001,458
·Loan from Westpac Bank  15,000
·Debit loan account with B Limited
(husband only)  1,832,338
Total$3,848,796
Subject to the value of the shares in B Ltd, the Husband was contending that he had assets of a net value of $831,204.
The Husband did not disclose any interest in T Pty Ltd even as a financial resource. He did not say that he was a consultant to this company.
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158    As to his shares in B Ltd the Husband said that it was presently not possible to quantify the company’s potential liability in respect of redemption payments and a formal valuation would need to be obtained as to the value of the business conducted by the company as a going concern. I have some difficulty understanding this given that he has consistently said that the amount is approximately $65,000,000 and also what was disclosed in the financial accounts. He also contended that the value of his shares as a part shareholder had to be further discounted given the risk on realisation. In an earlier judgment I noted that in the letter dated 2 March 2006 the Husband’s solicitors said that as soon as the financial statements were available some estimate could be given of the value of the Husband’s shares and he would be in a position to provide financial disclosure. He contended that his shareholding was being valued by P Chartered Accountants and was therefore yet to be fully quantified.
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166    The effect of what the Husband sought by way of property settlement was that the Wife would receive the home in MX worth $4,500,000 unencumbered and retain W Pty Ltd. To achieve this outcome the Husband would pay over $2,000,000 to discharge the Westpac Bank debt. The Husband therefore proposed a significant property settlement in favour of the Wife. This approach was consistent with what was disclosed on 7 April 2006 as to the Husband’s possible net worth, namely in excess of $20,000,000. However, it may be inferred that it was inconsistent with what the Husband disclosed in his financial statement. In any event, it will be seen shortly that he changed his position.
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221    On 14 August 2006 the solicitors for the Husband wrote to the solicitors for the Wife and provided a draft statement of assets and liabilities. In this document the Husband contended that there are assets of a gross value of $7,264,466 and liabilities of $6,484,000. Thus the Husband contended that the parties have assets of a net value of $780,466. The Husband disclosed a shareholding in B Ltd which he contended had a nil value. Pausing there, at this time the Husband’s position was that in circumstances where the parties had assets of a net value of $780,466 the Wife would receive a settlement of a value in excess of $4,000,000. The value contended for by the Husband at this time was different to what was represented to the court on 7 April 2006.
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228    There was then put into evidence a valuation report of B Ltd finalised in August 2006 by Mr G of P Chartered Accountants (Exhibit K). P Chartered Accountants were instructed by Mr Z to prepare a valuation report of the fair market value of the ordinary shares in B Ltd as at 30 June 2006. Amongst other sources, P Chartered Accountants relied upon information provided by Mr M. P Chartered Accountants reviewed financial statements for the years ended 30 June 2004, 30 June 2005 and 30 June 2006. In the report it was stated that the valuation of the ordinary shares was based on the net realisable value method as the business operated at large losses over the previous two financial years and that the ordinary shares as at 30 June 2006 were valued at nil. Further, that the redeemable preference shares on issue were in excess of the net realisable value of the company. Mr V said that the valuation concluded that B Ltd had an excess of liabilities over assets to the extent of some $12,000,000. The inference that could be drawn is that P Chartered Accountants and the Husband were contending that B Ltd was insolvent and trading in circumstances where it is was unable to meet its commitments. It had significant trading losses and a significant deficiency of assets. This was known to P Chartered Accountants and Mr M, who I understand is the auditor. This may have to be investigated and I bear in mind the recent submissions made by senior counsel for B Ltd and in particular the reliance upon s 245K of the Corporations Act. In the outline of argument filed on behalf of the Husband it was contended that valuations were undertaken in relation to the real property owned by B Ltd and its liabilities to the redeemable preference shareholders as at 30 June 2006. The valuations revealed a value of $61,650,000 for real property and liabilities including the amount owing to redeemable preference shareholders of a total of $85,346,105.
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259    There was put into evidence a report dated 5 February 2007 prepared by Members Equity Bank titled “Credit Risk Committee Meeting”. This is an important document and I have no doubt that at the final hearing in the absence of admissions it will be examined and considered. In the document it was recorded that the committee resolved to approve a reduced credit exposure to the B Group to the amount of $42,000,000. The exposure was $49,000,000.   It was stated that the approval was sought to reduce credit facilities from $49,000,000 to $42,000,000, being a reduction of $7,000,000. The reduction in credit facilities resulted from the receipt of part of the proceeds of sale of P Business owned by T Pty Ltd which had been sold to PL Group for $11,000,000. It was stated that the Husband as the principal director was seeking Members Equity Bank’s approval to accept $7,000,000 from the proceeds of sale which would be applied to permanent debt reduction and that the balance of the sale price, namely $4,000,000, would be used in “group related activities”. In the document reference was made to the “[B] Group” and T Pty Ltd was described as a “Group borrowing entity”. It was stated that the Husband, as a director of T Pty Ltd, was seeking the Bank’s agreement to accept the sum of $7,000,000 from the proceeds of sale to be applied to permanent debt reduction and if approved the total business loans would be reduced from $49,000,000 to $42,000,000. The document is instructive for a number of reasons including because it goes on to provide a summary of the Group’s business and property assets. The B Group has been a client of Members Equity Bank since 1996 when an original facility of $9,000,000 was approved. The B Group has two core operating activities being residential accommodation and property development. The B Group’s “business and property assets” were recorded as follows
EntityAsset  Value
·B Ltd  B Facility  49,000,000
·B Ltd  G 2  10,000,000
·B Ltd  P Business  10,000,000
·T Pty Ltd   D Business  14,000,000
·T Pty Ltd   MN Parade Development Site       12,000,000
·T Pty Ltd  Q, Westside   20,000,000
·T Pty Ltd  Q, Eastside  20,000,000
·T Pty Ltd  R Development Site  15,000,000
A description was also given of each of the above assets. It was said that the B Facility, P Business and more recently the D Business and ML Facilities, are the core operating activities of the Group providing stable and consistent operating cash flow. It was said that the primary borrowing entity, namely B Ltd, and “associated company”, namely T Pty Ltd, “are the two group entities managed by [the husband], a successful residential accommodation operator and real estate developer”. I note that it was also said that there are a number of matters under consideration by the Husband including the sale of B Facility and other residential facilities. For reasons I will hereafter give, an inference that could be drawn is that without any notice to the Wife and/or those advising her or for that matter the Court, the Husband was withdrawing the B Group from one of the two core operating activities being residential accommodation and that hereafter it will concentrate on property development. This will have to be investigated.
…
271    The Husband swore an affidavit on 20 March 2007 in which he contended he owns the following property:
$
·G Property  2,200,000
·Apartment in Germany  130,000
·Half interest in “[RI]”, MX  2,250,000
·Shares in B Ltd yet to be quantified  -
·Debt owing by Wife for outstanding child support  10,000
·Debt owing by Wife  500,000
As to liabilities the Husband contended that he had the following:
·Mortgage secured over “[RI]” (one half)  648,930
·Loan account with B Ltd  2,849,286
·One half of debt to B Ltd secured by mortgage over “[RI]”            1,523,240
In the affidavit the Husband said that other than as he set out he has “no other assets or liabilities other than ongoing monthly accounts”. He persisted with the contention that he had no idea of the value of the shares in B Ltd.
…
273    The Husband swore a further financial statement on 21 March 2007. He gave his occupation as company director and identified B Ltd as his employer. He did not say that he is also a consultant. He contends that he resides in BD in rural New South Wales. He disclosed nil income. As to his personal expenditure he disclosed the following:
$
·Rates and unit levies  200
·Westpac Bank overdraft loan repayment  24
·Food  600
·Household supplies  50
·House repairs  100
·Electricity  110
·Motor vehicle, petrol and tyres  370
·Clothing and shoes  70
·Children’s activities  400
·Child minding  500
·Medical, dental and optical  100
·Entertainment and hobbies  100
·Holidays  550
·Education expenses  1,000
·Chemist and pharmaceutical   15
·Gardening/lawn mowing/pool  500
·House cleaning  50
·Repairs of furnishings and appliances  50
·Dry cleaning  10
·Books and magazines  30
·Gifts  50
·Hairdressing and toiletries  20
·Rent     600
Total$5,275
He contends that he is not presently in receipt of any income from his employer B Ltd, however as a director he receives benefits in the form of a maintained motor vehicle and private telephone use. He said that otherwise his weekly expenditure is drawn against his capital loan account with B Ltd. Thus according to the Husband, he is able to draw $274,300 per annum against his loan account with B Ltd to pay his living expenses. As seen above, according to the costs memorandum he has drawn in excess of $600,000 against the loan account to pay his legal costs. The Husband did not say that there was any limit or ceiling to his making drawings from his loan account.
As to his property he disclosed the following:
$
·“RI”, R  2,250,000
·G Property  2,200,000
·Apartment in Germany  130,000
·Shares, B Ltd  Not known
·Household contents       50,000
Total$4,630,000
Prima facie, and subject to evidence, I have some difficulty accepting what he said as to the value of his shares in B Ltd given the August 2006 report of Mr G that the shares had a nil value. No explanation was given by the Husband as to why in March 2007, given the valuation he obtained in August 2006, he was contending that he did not know the value of the shares. On one view he did know the value of his shares, namely a nil value. In November 2005 the Husband said that he would make a full disclosure and yet in March 2007 he contended that he could not provide a valuation of his significant asset. It may be that the March 2007 position was because he knew that the August 2006 valuation of P Chartered Accountants was wrong and that the shares did have a significant value as represented on 7 April 2006. It may be because he realised that the outcome of the valuation was that he was contending that the company was insolvent and that, as senior counsel for B Ltd recently pointed out, there may be very significant consequences if this were so, including with the Australian Securities and Investments Commission given the interests of the redeemable preference shareholders.
Then as to liabilities the Husband disclosed the following:
$
·Home mortgage  nil
·Other mortgages  2,172,170
·Loan from Westpac Bank  15,000
·Debit loan account with B Ltd  2,185,767
Total$4,372,937
In his financial statement of 6 April 2006 the Husband contended that his debt to B Ltd was $1,832,338 and that as at 21 March 2007 it was $2,185,767, being a difference of $353,429. In his affidavit of 20 March 2007 he contends that his loan account with B Ltd was $2,849,286. There is no doubt that there will have to be examination of the relevant primary records of all drawings by the Husband because when I reflect on what the Husband said as to his costs paid and other expenses paid, prima facie, I have some concerns about the reliability of the amount of $353,429 drawn between 6 April 2006 and 21 March 2007 unless perhaps he had paid costs of approximately $300,000 between November 2005 and April 2006.
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275    In notes to the financial statement the Husband said that B Ltd is a public company in which he owns 40,500,005 fully paid ordinary shares. He contends that the nature of the share structure is that residential units on the real estate property owned by B Ltd are occupied by retirees and upon termination of occupancy redemptions payments are required to be made to the occupants. He said this before. He contends that it is presently not possible to quantify the company’s potential liability in respect of redemption payments and a formal valuation will need to be obtained as to the value of the business conducted by the company as a going concern. He said this before. Further, he has previously quantified the amount to be paid in respect of redemption payments. He also contends that the value of his shares as a part shareholder have to be further discounted given the risk on realisation. He said this before. He contended that his shareholding was presently being valued by P Chartered Accountants and was therefore yet to be fully quantified and that the valuations were to be exchanged on 19 April 2007. In August 2006 he obtained a valuation from P Chartered Accountants and I have already remarked on this evidence.
277    In summary, when an analysis is done of the financial statements and other evidence, in my view prima facie there is support for the Wife’s contention that there is an issue as to whether or not the Husband has made a full and frank disclosure of his financial circumstances and whether in the conduct of the proceedings there has been obfuscation by the Husband and others.
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287    When the hearing resumed on 20 April 2007 I was informed by senior counsel for the Wife that by letter of 18 April 2007 the Wife’s solicitors were told that a sale had been negotiated of B Facility and that no contract had been committed to. In the letter it was said that B Ltd would remain responsible to the redeemable preference shareholders for about $65,000,000 for the next 15 years. A copy of the letter is attached to an affidavit of the Wife of 2 May 2007. Then at about 6:00 pm on 19 April 2007 the Wife’s solicitors were served by facsimile with a copy of an affidavit of the Husband in which statements similar to that in the letter of 18 April 2007 were made, excepting that the reverse proposition was put about the preference shareholders; that is, it was said the purchaser will be responsible for and will indemnify B Ltd as to redeemable preference shareholders for the next 15 years until the last redeemable preference shareholder is paid out. On the morning of 20 April 2007 senior counsel for the Husband advised senior counsel for the Wife that the letter, which is inconsistent with the affidavit, was wrong. Senior counsel for the Husband also told senior counsel for the Wife that there have been further developments and that firm instructions were being obtained from the Husband about developments. Senior counsel for the Husband then told me that subsequent to the affidavit being sworn at around about 8.00 pm on 19 April 2007 there were further negotiations with respect to the proposed sale deposed to and that there had been some further matters of agreement and matters of discussion relevant to that proposed sale. Senior counsel told me that he had his solicitor obtain specific written instructions about those matters. Senior counsel then said that his solicitor had obtained the instructions and he wanted an opportunity to read them. He said “I want to make sure that my client is completely precise about the instructions that he gives me and signs those instructions and gives them to me in my presence before I tell your Honour what those instructions are.” I then adjourned and when the hearing resumed senior counsel for the Wife said that he had been provided with a document headed "Instructions". Senior counsel for the Wife said that he did not propose doing anything with it and that it was ambiguous, inconsistent and defied providing an ability to simply and clearly understand what the transaction was about. Nothing further happened. A copy of the written instructions of the Husband is now attached to the affidavit of the Wife sworn on 2 May 2007.
288    In his 19 April 2007 affidavit the Husband said that he had agreed with the prospective purchaser not to disclose its name. The Husband attached a copy of the first page of the contract with the same purchaser dated 13 March 2007 in respect of the sale of the P Business, but did not identify the purchaser and I will infer that this was deliberate. At the time I was of the view that the purchaser would have to be identified and speculated that the purchaser was probably PL Group being the entity identified in the documents of Members Equity Bank.
289    I was also of the view that when consideration was given to what is in the documents produced by Members Equity Bank and the evidence of the Husband about the P Business being sold and that now the B Facility was being sold, an inference that could be drawn was that one of the two core operating activities of the B Group being residential accommodation was in the process of being sold and that hereafter the B Group may concentrate on property development. As I previously said, this will have to be investigated.
290    The issue that then arose was the consequence of this recent evidence of the Husband. It is clear on the authorities that evidence of a prospective sale is admissible and relevant. The Husband contended that he had “had discussions for 6 months” which takes it back to at least November 2006. At no time prior to 19 April 2007 did the Husband disclose these negotiations. They are not referred to in the reports of Mr G and thus I assume that he had no knowledge of the negotiations when he did his report. I also assume that the lawyers and others had no prior knowledge of what was happening. I make this assumption because given the evidence that has put before the Court, the lawyers and others may be in a difficult position if they did know about the negotiations. As I said, the evidence of negotiations is extremely relevant and thus I assume that no professional involved in the proceedings before me being lawyers and or accountants were privy to, or had any knowledge of, the negotiations given what was being said and represented in the proceedings. However that said, I infer that some warning about what was happening may have been given from some sources such as the material from Members Equity Bank and this may have to be investigated.
291    In his 19 April 2007 affidavit the Husband made no attempt to amend the valuation of Mr G and nor was any effort made by the Husband’s lawyers including senior counsel to demonstrate to me what the effect may be of the prospective sale on the financial circumstances of the Husband.
292    Senior counsel for the Wife submitted that on the basis of the Husband's affidavit, I would take out the $53,000,000 and substitute it for $39,000,00 on the basis that the purchaser would be responsible for paying out the $65,000,000. In a very unsophisticated way, the net of those adjustments would see Mr G's valuation adjusted to about $50,000,000 equity in B Ltd.
293    Senior counsel for the Wife also made submissions about what he described as the ”miracles” that could have occurred to enable negotiations for that sale to be underway at the time that the valuations of Mr G and Mr X were being served upon the Wife's representatives and that this demonstrates how difficult the Wife’s task in this case is. It was submitted that in the period the sale was being negotiated the Husband was putting forward valuations of nil or half a million dollars for B Ltd. It also coincided with the time when, two days before the hearing commenced, the Husband amended his response for reasons that in the face of the disclosure of the sale negotiations can only be regarded as tactical for the present proceedings to change from a position where he was conceding an entitlement to the Wife of $4,500,000 to a position that she receive nothing. It was submitted that with those negotiations going on in the background it could quite fairly be assumed that that step was taken simply to avoid a Poletti argument; that is, the Husband already conceded an entitlement far in excess of what was been sought on an interim basis. Senior counsel for the Wife submitted that it is hoped that when the Husband’s lawyers filed the amended response they had no knowledge of the negotiations that were happening for the sale.
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323    The Husband appears to have absolute and unfettered ability to access all relevant documentation and information. It is apparent from the history of the litigation which I have outlined above that the Wife and those advising her do not have the same capacity. The Wife and those advising her do not have the same knowledge and documents and prima facie they have experienced difficulties in obtaining information and documentation. It follows that the Wife’s costs may be greater because of her need and the need of those advising her to get the relevant information and documentation. Further, it is apparent from what I have said that there are a considerable number of matters that will require further investigation. In summary, in my view there is at least a possibility that the Wife’s costs may be greater than Mr Conley has estimated.
…
343    I am of the opinion that subject to the ultimate findings as to the assets of the parties the Wife has a prima facie claim to a reasonable property settlement amongst other things given her contributions. I also have no doubt that her claim is made bona fide. These matters are also acknowledged by the further amended reply of the Husband filed on 18 May 2007.

It is not clear to me what the complaint about paragraph 14 is. It sets out what happened and as I pointed out in discussion the Husband had an obligation to provide a notification of costs in accordance with r 19.04 (3)(a) of the Family Law Rules.
As to paragraph 30 which is also relied upon in the second category the comments there arise from matters that were raised in the course of the submissions on behalf of the Wife at a point of time when the Husband contended that there was a shortfall of assets over liabilities in B Limited of about $12 million. It was also raised as a matter of case management. This raised for consideration the requirement to give notice to persons or entities who might be affected. As senior counsel for the Wife submitted the relief that the Wife was seeking would, if the Husband proved that case, have the potential to affect the rights of various creditors and parties interested, including preference shareholders and that such notice may be required to be given.
As to paragraph 82 it was submitted on behalf of the Wife and I accept that the material about the loan accounts in the children's name, if anything, was an observation, as to something that is in issue in the proceedings and part of understanding why the Wife's task is difficult and expensive because her solicitors wrote letters to the Husband, who has knowledge of these things, asking for explanations about matters and they did not get a response or, as was the instance here, were given a response that was of itself non-responsive. So also as to paragraph 89: they are matters that go to observation of things which would be in issue in the case which the Wife contends are to be explored.
Submissions were made on behalf of the Husband in relation to what I said in paragraph 95 about the controversy as to when the parties separated. On behalf of the Wife it was submitted that there is an issue and there is nothing very controversial about what I said because it is simply an observation. It chronologically points to something that was happening in December 2004 being correspondence from the Husband’s lawyer dealing with a settlement which was four months before the Husband contended the parties were separated.
Pausing there senior counsel for the Wife submitted that what was relevant was to consider if the Wife had a case worthy of going to trial and to explore issues about the bona fides of transactions that occurred shortly after the Husband and the Wife separated. It was part of an unfolding chronology and there was no pre-determination about any part of it other than the suggestion that there was material that on the face of it suggested the Wife has at least a credible argument, an argument that would properly go to part of the exercise of a discretion to provide her with funds to defray the costs of the ongoing litigation.
As to paragraph 107 I am not going to repeat all of what was submitted to me in relation to this paragraph. I accept the submissions put on behalf of the Wife. However I observe that Mr V who is the Wife’s accountant had been writing to the accountant pointing out that it was a “double dip” and if it was not then seeking an explanation and the requests were unanswered. I did not come to a view, all I did was identify the issue.
As to the observation at the conclusion of paragraph 119 on behalf of the Wife it was submitted that it is nothing more than fair comment on the material that was put as part of a case that the Wife encountered difficulties in obtaining information and incurred expense as a consequence.
As to paragraph 125, all the discussion ends with what I said about investigation and thus falls into what I said about category two. I observed that it may be an important credit issue because of what the Husband had said and as senior counsel for the Wife submitted by saying that, I precluded the suggestion that I was forming a credit view as a consequence of it.
As paragraph 150 it was a very neutral proposition. There is an issue about the interrelationship between these entities. I also observe that in paragraph 348 I referred to a submission that a proportion of the past costs related to the proceedings before the Supreme Court and the Wife was seeking payment for the purpose of securing continuing representation in both the proceedings in this Court and the proceedings in the Supreme Court. I said that there may be some merit in this submission although I was of the view that there is probably a relationship of the Supreme Court proceedings and the breakdown of the marriage and to the proceedings in this Court.
As to paragraph 156 picks up on the material about the Husband’s estimates or lack of estimates. As to what I said about the parenting proceedings there were two occasions where I said something about material being relevant in the parenting matter. On behalf of the Wife it was submitted and I accept that it was a statement of observation in the context that the application also sought funding to place the Wife in funds necessary to conduct the parenting proceedings and I identified a link.
As to paragraph 259 in the context of all the discussions that had taken place about what I had heard what I said was nothing more than an observation. This evidence may be potentially important given it was material from the major lending institution of the companies. I was observing things that might emerge from it.
Paragraph 262 is relied upon in relation to both the third and seventh categories. It was evidence that gave an understanding of matters that are going to be in issue in the case; not evidence that I accepted or determined a dispute from or demonstrated a disposition to determine the dispute in a particular way.
As to paragraph 277 in relation to the issue about disclosure what I said was in consequence of what I had earlier said. I concluded that the Wife had put forward some material that at least suggested she has a credible argument. Senior counsel for the Wife submitted and I agree that would be a matter properly to take into account in exercising a discretion as to whether the Wife should be provided with funds that would permit her to go to trial and properly explore the issues in relation to the financial circumstances of the parties and other matters.
As to paragraph 288 on behalf of the Wife it was submitted and I agree that there is nothing sinister or critical in the reference to intentional non-disclosure. It is a follow on of what I said in the first sentence of the paragraph, that is, that the Husband said that he was under an obligation, as he had agreed, not to disclose the buyer.
As to paragraph 343 what I said acknowledged what was conceded by the Husband in his amended reply filed on 18 May 2007 The Wife has a claim to a reasonable property settlement. On behalf of the Wife it was submitted that it is a fair description that the Husband accepts that the Wife has a claim of at least $8 million. It must be remembered that the Husband had at first propounded a case that the Wife had no entitlement and obviously if the evidence had prima facie established this fact then the Wife could hardly justify a claim for $1.2 million to defray her costs.
As to the submission that I made comment or used language that was unnecessary on behalf of the Wife it was submitted that it could not be a basis for relevant complaint amongst other reasons because there was no appeal. If there were irrelevant matters that I had taken into account in the exercise of discretion that would be a proper matter for appellant intervention and there has been no such complaint.
In conclusion I do not accept that there was comment or language used that was unnecessary and implicitly derogatory or suggestive of improper behaviour by the Husband.

Fourth category

The fourth category is that the onus of proof appears to have been reversed. In the written outline there was only one reference being paragraph 68 which is also relied upon in relation to category. It provides:
68 The Husband contends that on 27 June 2002 he ceased to be a director of T Pty Ltd. According to the chronology of the Wife, the Husband ceased to a director of T Pty Ltd on this day. Various documents put into evidence on behalf of the Wife, including on the first day of the current hearing, prima facie establish the Husband’s ongoing control and authority in relation to the affairs of T Pty Ltd even after June 2002. In the Husband’s April 2007 affidavit in reply, he said that subsequent to his resignation as a director he was “appointed as a consultant”. This was the first time, namely in April 2007 that he identified this role and occupation in relation to this company and it was probably because of the evidence that was put before me on 29 March 2007. For a period of time after proceedings were commenced it was contended by the Husband and others that the affairs of T Pty Ltd were irrelevant to the proceedings in this Court. This contention has been the subject of extensive litigation. So far as the future is concerned, I am satisfied that prima facie it has been established that the affairs of T Pty Ltd are relevant to the financial circumstances of the Husband and in my view this is now conceded by the Husband in his April 2007 affidavit.
On behalf of the Wife it was submitted that the discussion about prima facie matters within the context of the debate did nothing more than acknowledge that the Wife told me there was an issue and she put forward some material that on the face of it would suggest there is a credible issue to be explored. It was submitted that in fact it probably became a more of a credible debate of greater weight given that the Husband took the opportunity halfway through the hearing to file an affidavit that purported to answer evidence the Wife had put before me.

Fifth category

The fifth category is that there has been the examination by me of without prejudice correspondence and/or material that may well be inadmissible on a final hearing. There were two paragraphs referred to being paragraphs 78 and 243 namely:
78 Further to the issue about the property in the Netherlands there was put into evidence correspondence in relation to an agreement that the parties previously made of financial matters in dispute. I allowed this material to be put before me for a number of reasons. In a letter dated 25 February 2005 written and signed by the Husband he said that he agreed for the Wife to have access to the home in the Netherlands for a three week period in any one year until the children have left college with a months notice in advance. He went on to say that if the Wife wanted to request further periods to access the home at times when it was not otherwise occupied, then “I will favourably consider a request.” This is the property the Husband alleges he sold in April 2003.
…
243 Over objection I allowed to be put into evidence (Exhibit AE) a file note dated 16 November 2006 produced by the National Australia Bank in relation to an application for $3,000,000 in the name of B Ltd. I note that the author of this document is stated to be Mr PO who was one of the bank employees referred to in the email dated 20 June 2006 which I have earlier referred to. In the file note it was stated “perhaps a bigger driver of the sales effort has been that the group’s principal [the husband] has not yet finalised his divorce. Given the nature of [B Ltd] it is difficult to assess a net equity in the business (due to deferred liabilities to residence, etc), and this has delayed finalisation of arrangements. Perhaps due to this it may be considered that [the husband] has not had incentive to maximise sales opportunities, and sales levels that affect overall income levels have been allowed to decrease for a period of time”.
There was a tender of material and there was argument about its admissibility, as to whether it was privileged, or whether it was evidence of an agreement rather than an offer. I accepted it into evidence. My judgment consistent with the interlocutory nature of the application, did not provide any dissection of the reasoning process for that matter.
On behalf of the Wife it was submitted that as a matter of principle the contention in category five does not arise because once the evidence was admitted in the interlocutory hearing it is admissible at the hearing of the application for final orders. In support of this submission reliance was placed on the decision of the majority (Gleeson CJ, Gaudron, McHugh, Gummow, Hayne and Callinan JJ) in Bass v The Permanent Trustee Co Ltd (1999) 198 CLR 334 at 360. I am not going to consider at this stage the correctness of this proposition. It is sufficient to adopt what was also submitted on behalf of the Wife namely that the fair-minded observer, knowing that I am a professional adjudicator and not a jury, would understand that I can and do in the course of a complex trial, see and hear matters that ultimately I am obliged to put out of mind in the course of resolution. Further it was not put on behalf of the Husband that the matters flowing from this material were something so outrageously inflammatory that a fair minded observer could not be thought to comprehend and accept that a judge could put them out of his or her mind.

Sixth category

The sixth category is that there appears to have been an expression of a final view on a disputed matter. In relation to this category there was only one paragraph relied upon being paragraph 195 which provides:
195 A valuation dated 14 June 2006 of B Ltd was prepared by Mr N of N Partners (Exhibit K). The report was prepared in response to instructions from the Husband. In the report Mr N said that he was instructed by the Husband to determine the current market value of the “Owners Interest” in the residential accommodation facility at S for realisation purposes. He said that the report covered the facility owned by B Ltd being a residential accommodation facility. I am not going to go into any great detail in relation to what Mr N said in his report. It is very comprehensive and instructive. However, I will refer to some matters. He said that a detailed analysis carried out included the owner’s equity, having regard to preferential redemptions calculated from information provided as at May 2006 and that this analysis was being principally carried out on a net present value calculation to a maximum 15 year period. He said that the estimated resale price was $146,410,000. Further, that the residence equity for valuation purposes was $63,788,568 with the result that the estimated market value of the owners’ equity was $71,475,253. Mr N then provided a summary of his value being $40,000,000 for the B Ltd Facility at S; $28,000,000 for “Owner’s Interest”; $7,900,000 for existing stock and $4,200,000 for villas for redevelopment. Mr N took into account the interests of the redeemable preference shareholders.
This is an important category of complaint. The submission on behalf of the Husband appears to fall within the general proposition of pre-determination. Senior counsel for the Wife submitted that again it is necessary to consider the context of the discussion that took place during the hearing as to what I was doing. The debate was about whether in a valuation of Mr N the redemption of preference shareholders had been taken into account. Mr N had prepared the valuations on behalf of the Husband.
On behalf of the Wife it was submitted that it is clear that there was no predetermination. More importantly it is no longer an issue. The business enterprise of B Ltd that was the subject of the valuations has been sold and the value could only now fall for determination in the event that for some reason that sale was not to complete. By the end of the hearing I had been informed that the valuation was abandoned and there was a different valuation put forward by a different valuer of the assets in that company. On 16 May 2007 evidence of value was given on behalf of the Husband by Mr G and it is this evidence that leads to the conclusion that the Husband may now contend that the value may be $44,287,062.

Seventh category

The seventh category is that there appears to be a strong preference for a witness for the Wife over another possible witness. In relation to this category there were six paragraphs relied upon being paragraphs 219, 244, 247, 262, 278 and 323 which provide as follows:
219    On 11 August 2006 the single expert wrote to the solicitors for the parties referring to a letter of 28 July 2006 in which a request had been made for an estimate of the costs of preparing a report. It was stated that the Husband had clearly made an extensive and significant effort to provide relevant material. However, a number of important issues were identified that included losses incurred by B Ltd, the dealings between B Ltd and T Pty Ltd, the valuation of the residential accommodation facility and the treatment of claims by redeemable preference shareholders. All of these matters remain important issues. Mr V gave evidence about subsequent correspondence and he contends that a response from Mr M did not explain certain matters. Mr V said that he has raised the same issues that were raised by the single expert and he has also been unable to obtain a satisfactory response from Mr M and P Chartered Accountants.
…
244    On 16 November 2006 Mr M called Mr V and advised that he had prepared a response to the request from Mr V, but that Mr M had been instructed to have the Husband’s expert accountant “review it”. Mr V heard nothing further from Mr M until 8 December 2006. Mr V gave evidence about communications he then had with Mr KV the Husband’s expert accountant, and documents he received on 6 December 2006. Mr V contends that he did not receive responses to most of the questions he had raised on 30 October 2006. Mr V gave evidence about conversations he had with Mr M on 8 and 11 December 2006 and correspondence he received. What was discussed is important and no doubt will have be investigated. However, what is of particular importance is that Mr V was of the opinion that the information provided up until 8 December 2006 was inadequate for his purposes and did not represent a full and reasonable response to the questions he had asked. My current impression, and subject to the evidence given at the final hearing, is that the single expert encountered the same difficulties that prior to that so did the Wife and her lawyers. Mr M advised Mr V that journals were unavailable due to “a technology upgrade on the system, journals could not be retrieved” and “the journals are irretrievable”. The Wife contends that no response was provided to a request for explanation of items in financial statements amounting to many millions of dollars. On 11 December 2006 Mr M advised Mr V that “he had no luck finding working papers” and that “… what you have is all there is”. Mr V had earlier raised an issue about double counting and Mr M advised Mr V that he had raised this issue with Mr KV.
…
247    On 14 December 2006 Mr V wrote a letter setting out the extensive deficiencies in the responses he had received. He gave evidence about communications with Mr M and Mr KV on 15, 21, 22 and 28 December 2006 and 4, 9 and 10 January 2007. Mr V raises a number of matters which at this time I am unable to resolve but they will have to be investigated and inquired into at the final hearing. One matter Mr V did raise is that having reviewed documents produced to the court in answer to subpoena, in his view Members Equity Bank were evaluating the credit worthiness of the “[B] Group” by reference to a set of 2005 financial statements which were significantly different from those provided to the Australian Securities and Investments Commission. Mr V said that there are some transactions that “cry out for some explanation but no reasonable explanation has been provided”.
…
262    Mr V swore an affidavit on 1 March 2007 in which, amongst other things, he gave evidence about difficulties in obtaining information and what information is outstanding. He also gave evidence about what he has to do and his estimate of the costs which he said may be around $40,000 plus GST and that it does not include other tasks he identified. He also set out orders he suggested be made to enable him to undertake his task. I am of the view that, for appropriate reasons, the costs of Mr V may exceed $40,000. Mr V swore a second affidavit on 1 March 2007 and what he said is very instructive as to the issues involved.
…
278    Mr V swore a further affidavit on 27 March 2007 and he gave evidence about, amongst other things, what transpired as regards the provision of information by Mr Mortimer following the orders of 2 March 2007. What Mr V said will have to be inquired into and adjudicated upon, however if what he says is ultimately established then it is of concern. Mr V concluded that Mr M has demonstrated no intention of providing full and detailed explanations, if any explanations, of most of the matters Mr V raised with Mr M. This is a serious allegation against Mr M which if substantiated may have significant and serious consequences for both Mr M and the Husband.

On behalf of the Wife it was submitted that senior counsel for the Husband did not articulate where the matters of preference arise. It was submitted that I observed three matters for investigation concerning Mr M. One was the transfers Mr M had signed as an officer of a company when he only held the office of auditor. The next was evidence of a multiple series of balance sheets and profit and loss accounts that existed for the same entities prepared by Mr M’s office but with significant differences to them. The next was evidence from Mr V as to conversations he had with Mr M and he suggested that Mr M was uncooperative or had suggested that there were limitations on his instructions as to what he was willing to tell Mr V. It was submitted that those issues were there on the papers that were filed well before the hearing and Mr M was not called as part of the case for the Husband. Thus all that I did was record the existence of the issues consistent with the matters submitted on behalf of the Wife.
At this stage of the proceedings I do not know what the evidence in the Husband’s case will be. However senior counsel for the Wife submitted that it was relevant to record the issues as they are issues that are clearly and patently going to be issues from the same material before any Judge. Thus I will proceed on the basis that Mr M will give evidence. It was submitted and I accept that I did not at any point say something that would cause the reasonable observer to believe that I had formed a view that when I came to hear from Mr M about these matters where there was a contest I would then be predisposed to prefer the evidence that Mr V gave on the topic.
On behalf of the Wife it was submitted that in any event if there is to be a contest it could only be on the third of the three topics that I identified, because the first two have nothing to do with Mr V’s evidence, other than he may have discussed them. They are things that are demonstrated from the documents themselves.

Conclusion

On behalf of the Husband it was submitted that senior counsel for the Wife not surprisingly sought to try and colour or explain what appears in my judgment by providing an explanation which is one where it can be seen from another point of view; and in order to do that at times drew on the intricacies of what occurred at the hearing and the evidence. It was submitted that the more appropriate way is to say: having regard to the number of, in particular, comments that appear in the last sentence or two of paragraphs and the content of them, is the test satisfied to that person? It was submitted that as difficult as that may be for a person who has been intimately involved in the case to do, that is what is required. In my view what senior counsel for the Wife did was endeavour to put the categories into context which on one view was ignored by senior counsel for the Husband. However in his opening senior counsel for the Husband did submit that the context is critically important. It may be that what senior counsel for the Husband was referring to was a different context being simply that what I said was in a judgment on an interim costs application.
In my judgment I dealt with the statutory considerations being the matters in s 117 of the Act and in the course of doing so said a number of things including the following:
324    On 20 April 2007 senior counsel for the Husband conceded that there is a serious case to be tried. He said that senior counsel for the Wife was correct when he submitted that as a result of the evidence before me and the documents that were tendered, not only is there a serious case to be tried, but that I cannot make findings with respect to the issues potentially raised by that evidence and those documents because of the nature of these proceedings. I agree.
…
328    I am required to consider the financial circumstances of each of the parties to the proceedings. This is the significant issue in the property proceedings.
…
331    On behalf of the Husband it was submitted that it is not possible on an interim basis to resolve the significant and substantial dispute between the parties as to the available net assets. I accept that I cannot make any findings as to the full extent and value of the financial circumstances of the parties. Further, that such difficulty is exacerbated in circumstances where it appears that the relief sought by the Wife is predicated upon the Wife successfully obtaining the relief sought by her against the Second to Eighth Respondents, which relief remains the subject at this time of preliminary issues as to jurisdiction (at least insofar as the Third to Fifth Respondents are concerned). Again, this submission was made before the most recent valuation of Mr G and the further amended reply of the Husband filed on 18 May 2007.
332    In my view, it follows from what is now the Husband’s case that a number of the above submissions are no longer relevant. However, I accept that at this stage it is not possible to determine the Wife’s contentions in respect of the extent and value of the financial circumstances of the Husband even excluding her relief sought against the Second to Eighth Respondents. Further, that no finding can be made at this stage in relation to the Wife’s relief sought against the Second to Eighth Respondents. However, in my view, prima facie a problem is, and has been since November 2005, attempting to define/ascertain what the Husband contends to be the extent and value of his financial circumstances.
…
334    Although I am unable to reach any concluded view as to the extent and value of the financial circumstances of the parties and whether either of them has deliberately failed to make such a disclosure, I have no doubt, accepting the Husband’s evidence, that he has considerable assets available to him.
…
338    At this stage I cannot make any concluded findings in relation to the Wife’s contentions that the Husband has failed to make a full and frank disclosure of his financial circumstances and that the Husband, and perhaps some of those advising him, have obfuscated and taken steps to make the task of the Wife and those advising her more arduous and expensive. However, prima facie it is apparent that the Wife and those advising her have, for reasons yet to be explored, had difficulties in obtaining information and documentation.
…
344    I am of the view that the issues in this case as to the financial affairs of the Husband are extremely complex and that in relation to his financial affairs there are also serious issues to be tried in relation to the relevance of the financial circumstances of the Second to Eighth respondents.
…
347    …There is prima facie evidence that supports the Wife’s contentions and I also note the concession made by senior counsel for the Husband on the second day of the hearing that there are serious issues to be tried, referring to the significant issue, namely, the extent and value of the financial circumstances of the parties.
The current position in relation to the pending property proceedings is that no trial dates have been allocated for the hearing of the applications for final orders and there are no pending procedural, interim or interlocutory applications. However I accept that there is probably a great deal yet to be done to prepare for the final hearing and if the history of what happened between 28 November 2005 and 25 May 2007 is any guide I will assume for present purposes that there may be further procedural, interim or interlocutory applications. Thus proper case management of the proceedings is important. Further as I indicated in discussion the practice is that the case management judge is ordinarily the trial judge although for any number of reasons that is not always what happens.
In Boulos and Boulos (supra) I said:
Numerous cases across various jurisdictions, including some High Court decisions, have recognised the exigencies of modern litigation and in particular noted the increased judicial intervention and involvement in matters as a result of legislative trends promoting more active judicial case management. In light of this, a number of cases have urged the importance of bearing in mind these realities when deciding whether there is reasonable apprehension of bias.
I referred to Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (supra) where Kirby and Crennan JJ (forming part of the majority) reiterated at [111] that “ it is important to bear in mind the characteristics of modern litigation”, as recognised by Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ in Johnson v Johnson (supra) at 493:
Whilst the fictional observer, by reference to whom the test is formulated, is not to be assumed to have a detailed knowledge of the law, or of the character or ability of a particular judge, the reasonableness of any suggested apprehension of bias is to be considered in the context of ordinary judicial practice. The rules and conventions governing such practice are not frozen in time. They develop to take account of the exigencies of modern litigation. At the trial level, modern judges, responding to a need for more active case management, intervene in the conduct of cases to an extent that may surprise a person who came to court expecting a judge to remain, until the moment of pronouncement of judgment, as inscrutable as the Sphinx. In Vakauta v Kelly, Brennan, Deane and Gaudron JJ, referring both to trial and appellate proceedings, spoke of 'the dialogue between Bench and Bar which is so helpful in the identification of real issues and real problems in a particular case'. Judges, at trial or appellate level, who, in exchanges with counsel, express tentative views which reflect a certain tendency of mind, are not on that account alone to be taken to indicate prejudgment. Judges are not expected to wait until the end of a case before they start thinking about the issues, or to sit mute while evidence is advanced and arguments are presented. On the contrary, they will often form tentative opinions on matters in issue, and counsel are usually assisted by hearing those opinions, and being given an opportunity to deal with them."
I also referred to the comments of Callinan J at [175]-[176] in relation to the Federal Court docket system.
In my view it is also important to bear in mind what the majority said in Johnson v Johnson (supra) at 493 where they discussed the characteristics of the relevant hypothetical reasonable observer and said (footnotes omitted):
The hypothetical reasonable observer of the judge's conduct is postulated in order to emphasise that the test is objective, is founded in the need for public confidence in the judiciary, and is not based purely upon the assessment by some judges of the capacity or performance of their colleagues. At the same time, two things need to be remembered: the observer is taken to be reasonable; and the person being observed is "a professional judge whose training, tradition and oath or affirmation require [the judge] to discard the irrelevant, the immaterial and the prejudicial".
Whilst the fictional observer, by reference to whom the test is formulated, is not to be assumed to have a detailed knowledge of the law, or of the character or ability of a particular judge, the reasonableness of any suggested apprehension of bias is to be considered in the context of ordinary judicial practice. The rules and conventions governing such practice are not frozen in time. They develop to take account of the exigencies of modern litigation.
See also S & M Motor Repairs Pty Ltd & Others v Caltex Oil (Australia) Pty Ltd & Another (supra).
Finally I refer to what Mason J said in Re JRL; Ex parte CJL (supra) at 352 (footnotes omitted):
It seems that the acceptance by this court of the test of reasonable apprehension of bias in such cases as Watson and Livesey has led to an increase in the frequency of applications by litigants that judicial officers should disqualify themselves from sitting in particular cases on account of their participation in other proceedings involving one of the litigants or on account of conduct during the litigation. It needs to be said loudly and clearly that the ground of disqualification is a reasonable apprehension that the judicial officer will not decide the case impartially or without prejudice, rather than that he will decide the case adversely to one party. There may be many situations in which previous decisions of a judicial officer on issues of fact and law may generate an expectation that he is likely to decide issues in a particular case adversely to one of the parties. But this does not mean either that he will approach the issues in that case otherwise than with an impartial and unprejudiced mind in the sense in which that expression is used in the authorities or that his previous decisions provide an acceptable basis for inferring that there is a reasonable apprehension that he will approach the issues in this way. In cases of this kind, disqualification is only made out by showing that there is a reasonable apprehension of bias by reason of prejudgment and this must be “firmly established” (R v Commonwealth Conciliation and Arbitration Commission; Ex parte Angliss Group (1969) 122 CLR 546 at 553–4; Watson at p 262; Re Lusink; Ex parte Shaw (1980) 55 ALJR 12 at 14). Although it is important that justice must be seen to be done, it is equally important that judicial officers discharge their duty to sit and do not, by acceding too readily to suggestions of appearance of bias, encourage parties to believe that by seeking the disqualification of a judge, they will have their case tried by someone thought to be more likely to decide the case in their favour.
In his opening senior counsel for the Husband said that in my judgment I clearly used expressions from time to time, of not having made concluded findings and that my judgment “is peppered with references to prima facie view”. As I indicated in discussion a judge does not necessarily have to say such things because unless the judge is being asked to make determinations he or she should not do so, referring to final determinations. I said that there has been no opportunity for the parties to put on their evidence in relation to the trial and there has been no cross-examination. Senior counsel for the Husband responded that the “words” are not “determinative”.
In this case I was dealing with an application in respect of which I had to make findings that were necessary to determine the application and, amongst other things, this was consistent with the obligation to provide adequate reasons. However in my view when either considering each of the paragraphs relied upon by the Husband or reading the judgment as whole it is clear that there is an issue as to the financial circumstances of the parties and that I have made no predetermination of that issue or said anything that firmly establishes that a fair-minded lay observer might reasonably apprehend that I might not bring an impartial and unprejudiced mind to the resolution of that issue. What the fair minded observer might apprehend is that the determination of this issue requires consideration of a number of matters which I have identified in the context of the costs proceedings. There may be a great deal of evidence to be filed and examination of witnesses that enables the trial judge to resolve the issue. I did use expressions from time to time, of not having made concluded findings and my judgment does include references to “prima facie view”. This was done in a measured way to ensure that in determining the costs application I was not making any predetermination or saying anything that might firmly establish that a fair-minded lay observer might reasonably apprehend that I might not bring an impartial and unprejudiced mind to the resolution of the issue.
I have come to the conclusion that this application should be dismissed. In all the circumstances of this case I am not satisfied that it has been firmly established that a fair-minded lay observer might reasonably apprehend that I might not bring an impartial and unprejudiced mind to the resolution of questions that may have to be decided in the further case management of the case and final hearing of the pending property settlement proceedings.

I certify that the preceding 93 paragraphs are
a true copy of the reasons for judgment
of the Honourable Justice O’Ryan

………………………………………………………..
Associate:
Date: 30 August 2007

[2007] FamCA 991

30 August 2007

Key Legal Topics

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Family Law

Civil Procedure

Commercial Law

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Jurisdiction

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