Kushing and Kushing

[2008] FamCA 555

FAMILY COURT OF AUSTRALIA

KUSHING & KUSHING [2008] FamCA 555

FAMILY LAW – PROPERTY - interim orders - injunctions - operation of a business - disclosure

Family Law Act 1975 (Cth)

APPLICANT: Ms Kushing

RESPONDENT: MR KUSHING

FILE NUMBER: MLC 222 OF 2007

DATE DELIVERED: 11 JULY 2008

PLACE DELIVERED: MELBOURNE

PLACE HEARD: MELBOURNE

JUDGMENT OF: CARTER J

HEARING DATE: 6 MAY 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT: MR DAVIS

SOLICITOR FOR THE APPLICANT: MARIA BARBAYANNIS & CO

COUNSEL FOR THE RESPONDENT: MR NORTH SC

SOLICITOR FOR THE RESPONDENT: BERGER KORDOS LAWYERS

Orders

1. That a single expert witness be appointed to conduct an audit of the affairs of the company known as B Pty Ltd (“the Company”);  the business known as T (“the Business”);  and the … Family Trust (“the Trust”) commencing the 2004 financial year and the husband and the wife do all such things and provide all such documents as may be necessary to enable such expert to conduct the said Audit.

2. That the husband and the wife shall within 14 days from this day confer for the purpose of agreeing on the person to be appointed as Auditor pursuant to par (1) hereof.

3. That if the husband and the wife cannot agree on who should be appointed as the Auditor the proceedings be referred to the Judicial Duty List as soon as practicable, and in that event:

   (a)the parties shall give the Court a list stating the names of four people who are experts and have consented to being appointed as Auditor and the fee each of the experts would accept for performing the Audit, preparing a report and attending Court to give evidence;  and

   (b)the Auditor shall be appointed from the list prepared by the husband and the wife or in some other way which may be determined by the presiding judicial officer.

4. That all instructions to the Auditor shall be in writing and approved by both the legal representatives for the husband and the legal representatives for the wife and without limiting the generality of any such instructions shall instruct the Auditor to have particular reference to:

   (a)the husband’s allegation that the wife removed $67,500 from the business account on 28 December 2006 without authority;

   (b)the husband’s allegation that the wife removed $121,849.89 from the business account, without authority, between 1 July 2006 and 18 January 2007;

   (c)the expenditure by the husband specified in par (1) of the wife’s Application in a Case filed 19 February 2008;

   (d)the transfers by the husband from the business account referred to in Annexure “B’ to the wife’s Application in a Case filed 19 February 2008;

   (e)the wife’s allegation that the sum of $68,600 paid into the business account on 15 June 2007 was transferred by the husband into his Flexi Direct Account number …. 

5. That the costs of the Auditor be paid in the first instance equally by the husband and the wife, provided that at trial, and subject to any order of the trial judge, they shall be at liberty to bring sums paid to the Auditor into account.

6. That within 28 days of this day, the wife file and serve an affidavit deposing as to:

   (a)her knowledge as to the whereabouts of the items referred to in par 9 of the husband’s Response filed 1 May 2008;

   (b)whether or not, and if so when, she sold the Mercedes motor vehicle registration ... (“the motor vehicle”);  and

   (c)if relevant, the particulars of the sale of the motor vehicle, including the amount of the proceeds of sale, the name of the purchaser and the manner in which she used the proceeds of sale.

7. Within 28 days of this day the husband and the wife each serve on the other a List of Documents verified by affidavit identifying:

   (a)all documents and records relating to the Company, the Business and the Trust to which the duty of disclosure applies;

   (b)whether and if so, which such documents and records are in each party’s respective possession and/or in the possession of each party’s solicitor and/or in each party’s control;

   (c)if any such documents or records are no longer in the possession of the respective parties and/or in the possession of their respective solicitors and/or in their respective control, when and how the said documents and/or records left such party’s possession and/or the possession of his or her solicitor and/or the control of such party.

8. Without limiting the generality of par (7) hereof documents and records relating to the Company, the Business and/or the Trust shall include the documents referred to in par (26) of the wife’s affidavit filed 19 February 2008; and the documents referred to in pars 9.3, 9.4, 9.5 and 9.6 of the orders made by Guest J on 18 January 2007.

9. Within 42 days of this day the husband and the wife each provide to the other for the purpose of inspection but only if requested to do so by the other:

   (a)the documents referred to in par (7)(b) hereof;  and

   (b)the documents referred to in pars 9.1 and 9.9 of the orders made by Guest J on 18 January 2007.

10. Until further order, at the end of each calendar month the husband and the wife each provide to the other by his or her respective solicitor a statement in writing setting out:

    (a)all expenditure made or authorised during the preceding calendar month by whatever means (including but not limited to internet transfers) on behalf of the Company, the Business, and/or the Trust or drawn on the bank account or accounts of any of the said entities;

    (b)the date of such expenditure;

    (c)whether the expenditure was for credit card expenditure, for personal or business expenses;  and

    (d)whether the expenditure was made by cheque or in some other manner, and if so, what manner.

11. Until further order, where any expenditure was for business expenses, each party shall provide:

    (a)details of any relevant cheque numbers;

    (b)details of the payee of any cheque or the recipient of any internet transfer of funds;

    (c)details of invoices and/or receipts relevant to any such expenditure;  and

    (d)if requested, copies of such invoices and/or receipts.

12. Until further order, neither party sign any cheque drawn on any account of the Business, the Company and/or the Trust drawn to “Cash”.

13. To the extent it may be necessary, and in order to avoid doubt, the husband, until further order, authorise the wife to receive copies of all bank statements, monthly ledgers, trial balances and interim accounts of the Company, the Trust and the Business as well as the documents referred to in par (13) of the wife’s application filed 19 February 2008.

14. In order to give effect to par (13) hereof the husband shall advise the wife’s solicitor forthwith in writing, the names and addresses of the person, persons and/or institutions from whom or from which those documents may be obtained.

15. That each of the husband and the wife forthwith sign all documents and do all things necessary to cause the Company to pay from the Business account by direct debit facility for the benefit of each party until further order:

    (a)the sum of $850 per week by way of salary, payable by no later than 5:00pm on Friday, 18 July 2008 and weekly thereafter;

    (b)the sum of $3,000 per month by way of credit card expenditure payable by no later than 5:00pm on Friday, 18 July 2008 and monthly thereafter;

    and that neither party be entitled to deduct any sums from the amounts payable pursuant to this order, without an order of the Court.

16. That on or before 18 July 2008 the husband shall do all acts and things necessary to cause the Company to pay the wife from the Business account:

    (a)the sum of $28,900 (comprising payments of $850 per week calculated from and commencing 29 November 2007, a period of 34 weeks);  and

    (b)the sum of $25,000 (comprising payments of $3,000 per month calculated from 14 December 2007, a period of eight months;  together with the further sum of $1,000 being the “shortfall” of reimbursement for credit card expenditure)

    provided that, and subject to verification, the husband shall be entitled to offset against the aforesaid moneys the payments referred to in par 56(d), (e), (f), (g), (h) and (i) of his affidavit filed 1 May 2008 and any payments of salary received by the wife and any credit card payments received by the wife from the business since 6 May 2008.

17. That the husband and the wife forthwith authorise McCluskys Lawyers, to pay from the moneys held by them on trust for the husband and the wife and until further order to make on-going payments to the Wizard home loan secured over the property … in Queensland together with the rates and body corporate levies in respect of the said property and in order to give effect to this order each party forthwith do all acts and things as may be necessary to stop the direct debit from the National Australian Bank account number …in the name of T towards the Wizard Home Loan accounts numbered … and … .

18. Subject to verification of payments made from the Business since 3 July 2007 towards the Wizard Home Loan (together with any additional amount paid by the business towards the Wizard Home Loan since 6 May 2008) in respect of the Queensland property, the husband and the wife forthwith authorise McCluskys Lawyers to pay from the moneys held by them on trust for the husband and the wife:

    (a)the sum of $16,449.11 to the Business;  and

    (b)subject to verification of payments, to reimburse the wife for payments since in or about July 2007 for the rates and body corporate fees for the Queensland property and the property … in Melbourne.

19. That all questions of costs be reserved.

20. Save as aforesaid all interlocutory applications be dismissed and removed from the list of cases awaiting determination.

21. That there be liberty to apply.

IT IS CERTIFIED

1. That pursuant to r 19.50 of the Family Law Rules 2004 this matter reasonably required the attendance of Counsel, including Senior Counsel.

IT IS NOTED that publication of this judgment under the pseudonym Kushing & Kushing is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER:  MLC  222 of 2007

Ms Kushing

Applicant

and

Mr Kushing

Respondent

REASONS FOR JUDGMENT
Reserved

Introduction

To date this matter has generated more heat than substance.  The ultimate issues for the Court should be straightforward and uncomplicated.

…

Regrettably the parties have been before this Court on interlocutory applications on four previous occasions and still their affairs pending trial erupt like boils and give rise to tedious and unnecessary disputation.

1. There is a great deal of truth in those observations which have been extracted from the written Outline of Argument prepared by Mr T D North, SC, who appeared before me on 6 May 2008 on behalf of the husband.

2. Mr P J Davis of counsel appeared on behalf of the wife.

3. The parties’ marriage has now been dissolved, however, it will be convenient to continue to refer to them as “the husband” and “the wife”.

4. The husband is the applicant in pending proceedings for alterations of interests in property filed 8 January 2007 and amended 1 May 2008.  He is the respondent in respect of interim proceedings which the wife commenced by filing an Application on 19 February 2008.  The husband opposes the wife’s Application which he says should be dismissed and also seeks other orders all of which are set out in his Response filed 1 May 2008.

5. This is the determination of those competing interim applications.

Short History

1. The husband was born in November 1947.  The wife was born in September 1947.  They married in May 1967 and have three adult children.  They are both company directors.

2. A separation took place on 2 January 2004 and proceedings were commenced in this Court by the wife on 6 April 2004.  She sought interim and final orders in relation to financial matters.  The husband responded to those Applications.  The proceedings were eventually discontinued, both parties filing the relevant Notices of Discontinuance on 22 July 2004.  Thereafter the parties reconciled or attempted to reconcile.  They both have different views about this.  It is clear, however, that the reconciliation ultimately failed, given that the husband instituted proceedings in this Court on 8 January 2007.  He sought interim and final orders of a financial nature.  His Application did not set out with precision the orders he sought by way of final orders.

3. The wife filed Responses on 23 January 2007.  She also did not set out with precision the orders she sought by way of final orders.

4. According to the husband’s affidavit filed 1 May 2008 for the purposes of the current proceedings the husband and the wife are directors and shareholders of a company known as B Pty Ltd (“the company”).  The company trades as T (“the business”).  It is principally engaged in packaging.

5. The company is the trustee of the Family Trust (“the Trust”).  The Trust owns two items of real estate, namely:

   ·C property (“the business premises”);  and

   ·the Melbourne property, being a residential property where the wife presently lives.

6. The husband and the wife also own real estate in Queensland (“the Queensland property”).

7. The parties had previously owned another item of real estate elsewhere in Melbourne.  That property was sold and the proceeds of sale are held on trust for the parties by McCluskys Lawyers (“McCluskys”).  According to the husband’s most recent Financial Statement which was filed on 1 May 2008 the total amount held by McCluskys is $640,000.

8. In all, the husband estimated in that Financial Statement that:

   ·He owned property with a total value of just over $2.8 million

   ·He had superannuation with a gross value of $99,000;  and

   ·He had liabilities totalling $424,000

9. The wife has not filed a Financial Statement since 23 January 2007 and I am unaware whether she agrees or disagrees with the values ascribed by the husband to the property in  his most recent Financial Statement.

10. On 18 January 2007 Guest J made certain orders with the consent of the parties.  I will refer to some of these orders in more detail later.  For present purposes it is sufficient to note that both parties were ordered to repay certain moneys into the business bank account.  Interim orders were made restraining both parties from removing funds from the business account other than in the normal course of business.  They were also restrained from selling, disposing of, alienating or encumbering any property which was the subject of dispute in the proceedings.  The parties were entitled however, to continue to draw the salary and benefits that they each then received provided there were sufficient funds in the business account to meet those payments.  Orders were made for the appointment of a single expert to value certain specified property.  A Conciliation Conference was appointed for 27 March 2007 and orders were made for the exchange of certain specified documents, if relevant and not already exchanged.

11. On 14 February 2007 the husband sought and obtained an Intervention Order against the wife.  On 26 March 2007 the Magistrates Court at Victoria at Broadmeadows granted “mutual” intervention orders for the husband and the wife, without either party admitting the necessity for such orders.  I will later refer to some of the detail of those orders.  The Intervention Orders continue to operate, having been renewed on 26 September 2007.

12. On 19 April 2007 the wife filed an Application in a Case seeking the discharge of some of the orders made 18 January 2007, together with various restraining orders.  Amongst other things, she sought an accounting of funds originally taken by the husband from the business as well as compliance with some of the orders made on 18 January 2007.

13. The proceedings came before Bennett J on 17 May 2007 and the wife’s Application was adjourned to the Judicial Duty List on 18 June 2007.  The husband was ordered to file any answering material upon which he sought to rely by no later than 25 May 2007.  There is a notation to the orders that a Conciliation Conference had been appointed for 28 May 2007 which was the second Conciliation Conference appointed.

14. The second Conciliation Conference came on before Registrar Moser.  She extended time to the parties to comply with r 10.06 to 18 July 2007.  There were notations to the effect that the husband and the wife were awaiting a valuation of the business and intended thereafter to have a private mediation.  It was also noted that interim issues were listed in the Judicial Duty List on 18 June 2007 and that on this day, whether those interim issues were heard or resolved by consent, the parties would then seek that the substantive matter be referred to the pool of cases awaiting a Trial Notice listing.

15. Notwithstanding the orders made by Bennett J on 17 May 2007 the husband did not file his responding material until 28 June 2007.

16. The next significant Court event was 3 July 2007.  Cronin J made orders with the consent of the parties.  The orders included an order which effectively provided for a payment to each party of the sum of $850 per week by way of salary as and from 9 July 2007, together with $3,000 per month for credit card expenses as and from 28 July 2007.  The payments were to be made by way of a direct debit facility from the business account and, so far as the wife was concerned, all payments for her were to be made to a named account with the Bendigo Bank.

17. The orders further provided that if payment was not received by the wife within 48 hours of the due date for any such payment, then it was to be drawn and paid to her from the sums invested with McCluskys.

18. Another order provided that, until further order, McCluskys were to be authorised by the husband and the wife to pay from the moneys held on behalf of the parties the rates, body corporate levies and home loan instalments for the Queensland property.

19. The orders which I have just detailed were to continue until 14 August 2007 when the proceedings were due to return to Court.  In the meantime, the parties were to have mediation.

20. There were additional orders made which I need not detail at this stage, although reference will be made to some of them in due course.

21. The proceedings were further adjourned without hearing until 5 September 2007 when Young J made orders with the consent of the parties.  The orders which had been due to expire on 14 August 2007 were extended to 31 October 2007 and the last order was further extended to the extent that McCluskys were also to be authorised to pay all rates and outgoings on the Melbourne property.  Again, other and additional orders were made, and again some of them will be referred to in more detail later.

22. There was a notation that the husband and the wife had arranged and would attend mediation on 9 October 2007.

23. The proceedings came before Bennett J on 31 October 2007.  She was informed that the parties had arranged a private mediation for 29 November 2007 and adjourned the proceedings to a date to be fixed in consultation with her Associate on or after 29 November 2007.  Additional procedural orders were also made.

24. The parties attended mediation on 29 November 2007 and negotiated an overall settlement.  Heads of Agreement were signed.  Subsequently a dispute arose and the settlement did not proceed.

25. On 18 February 2008 the matter came before Bennett J again.  It can be seen from her orders that the wife had provided a copy of a proposed Application in a Case to her Honour’s Associate on 14 February 2008.  Her Honour granted leave for that Application to be filed and directed that it be made returnable in the Judicial Duty List on 6 May 2008 at 10:00am.  It was estimated to take half a day.  The husband was ordered to file any material in response upon which he sought to rely by 4:00pm on 4 March 2008.  The parties and their practitioners were ordered to attend a Compliance/Issues Conference with Registrar Riddiford on 22 April 2008 and if the matter was not completely resolved at the conclusion of that conference the Registrar was to assess the readiness of the matter for the interim hearing on 6 May 2008 and make any directions he considered appropriate.

1. The wife’s material was duly filed on 19 February  2008.

2. When the matter came before Registrar Riddiford on 22 April 2008 the husband had not filed any answering material and the Registrar ordered that all such material should be filed and served by 4:00pm on 1 May 2008.

3. The Registrar also requested (amongst other things) that prior to the interim hearing the husband and the wife consider the possibility of appointing a single expert auditor to prepare a report on the matters raised by the parties pertaining to the company’s accounts and relating to moneys received from the business.

4. On 30 April 2008 my Associate corresponded with the solicitors for both parties requesting the provision of certain documents to be forwarded by email to my Associate by 12 noon on Monday, 5 May 2008, the day before the proceedings were due to be heard by me.  The documents which I requested were:

   ·A Chronology which should include a summary of relevant applications and orders which have been made in the past

   ·List of applications before the Court on 6 May 2008

   ·List of affidavits relied upon including all paragraph numbers, if all of the affidavit does not relate to the current application(s)

   ·Minute of Orders sought

   ·Outline of Argument.

5. The wife’s solicitor partially complied with this request.  I was provided with a List of Documents upon which the wife sought to rely;  and a list of relevant orders and Chronology.  I was not provided with a Minute of the Orders sought by the wife – I was referred to the wife’s Application in a Case filed 19 February 2008 in respect of this.  I did not receive an Outline of Argument – it was said that this would be provided by counsel on the morning of the hearing.  It was not.

6. The husband did comply with the letter of 30 April 2008 but not until the morning of the hearing itself.

Documents Relied On

1. The wife relied on the following:

   ·Her Application in a Case filed 19 February 2008

   ·Her own affidavit filed 19 February 2008

   ·The affidavit of Mr F filed 29 October 2007.

2. Mr F was the wife’s former solicitor and this affidavit had particular reference to an order sought by the wife for litigation funding, although reference was also made in it to some other relevant matters.

3. The husband’s Response to the wife’s Application in a Case was filed 1 May 2008, as was his affidavit which was filed in support.

4. Additionally, the husband purported to rely on certain paragraphs of an earlier affidavit sworn 5 January 2007 and filed 8 January 2007.  Those paragraphs were said to be:

   ·“Paragraph 9, 10, 13, 16, 19 – 25m, 27, 30 – 35”

5. I pause here to note that there was no paragraph “25m”.

6. I have read the relevant paragraphs.  Self-evidently the matters contained in those paragraphs relate to events prior to the husband’s Application in a Case which was filed on 8 January 2007.  Indeed, par 20 refers back to par 5 of an even earlier affidavit, sworn 7 June 2006, which relates to the proceedings which were discontinued.  Some of the events were to a certain extent dealt with in the husband’s affidavit filed 1 May 2008.

7. In par 18 of the husband’s most recent affidavit he noted that the wife had filed material in response to his Application in a Case filed 8 January 2007.  Whilst her material was not filed until 23 January 2007, the husband notes that the material filed by the wife was relevant to the hearing on 18 January 2007.

8. The husband’s earlier affidavit, in part at least, gave rise to the orders which were made on 18 January 2007.  The matters raised in his affidavit will, no doubt, provide fruitful ground for cross-examination of both parties when the substantive applications are finally dealt with at trial.  It provides some further information in support of part of the husband’s Application which I am asked to determine, namely the husband’s desire to be placed in physical control of the business.

9. Rule 5.09 of the Family Law Rules 2004 (“the Rules”) sets out which affidavits may be relied on at an interim or procedural hearing. Relevantly it provides:

   5.09The following affidavits may be relied on as evidence-in-chief at the hearing of an interim or procedural application:

   (a)  subject to rule 9.07, one affidavit by each party;

   …

10. Rule 9.07 provides:

    9.07    If:

    (a)a respondent files a Response to an Application in a Case seeking orders in a cause of action other than a cause of action mentioned in the Application in a Case;  and

    (b)the applicant opposes the orders in the Response to an Application in a Case;

    the applicant may file an affidavit setting out the facts relied on.

11. I do not propose to permit the husband to rely on his affidavit filed 8 January 2007 in the earlier proceedings. I am aware that the Court may dispense with compliance with the Rules but this does not appear to me to be appropriate in all the circumstances.

12. I note in any event that Mr North did not refer to the husband’s earlier affidavit in his submissions.

13. In similar vein, the wife’s most recent affidavit refers to an earlier affidavit which was filed 29 October 2007.  Mr Davis did not make any reference to it in his submissions.  That affidavit was filed in support of the wife’s Form 2 Application in a Case which was the subject of consent orders made 3 July 2007 and 5 September 2007.  That application was effectively “replaced” by the wife’s Application in a Case filed 19 February 2008.

14. I do not propose to grant the wife leave to rely on her earlier affidavit for the same reasons as I have refused leave to the husband.

Orders Relevant to the Current Proceedings

Consent Orders made by Guest J on 18 January 2007

1. Paragraph 2 of these orders provided:

   Until further order the husband and the wife be and are hereby restrained by themselves, their servants and agents from:

   2.1Withdrawing moneys from the business account other than in the normal course of business or as agreed in writing by the parties.

   2.2Selling, disposing of, alienating or encumbering any property the subject of dispute in these proceedings.

2. Paragraph 3 of the orders provided:

   3.The husband and the wife continue to draw equally the salary and benefits that each has currently received provided there are sufficient funds in the business account to meet such payments.

3. On behalf of the wife reliance was also placed on par 9.9(a) and (g).

4. Paragraph 9 provided for the exchange of certain listed documents, if relevant, and not already exchanged.  Paragraph 9.9 relevantly required the exchange of all documents containing evidence about the financial matters mentioned in the parties’ Financial Statements (Form 13) and affidavits (9.9(a)) as well as all documents containing evidence about bank statements and credit card statements from the past 12 months of all accounts in each party’s name or to which he or she has access (9.9(g)).

Consent Orders made by Cronin J on 3 July 2007

1. Paragraph 1 provided that:

   ·[Until 14 August 2007] the husband forthwith sign all documents and do all things necessary to cause [B] Pty Ltd (“the Company”) to pay from the NAB account number […] (“the Business account”) by direct debit facility for the benefit of each party;

   (a)      $850 per week salary payable on 9 July 2007 and weekly thereafter;

   (b)$3,000 credit card expenditure payable 26 July 2007 and monthly thereafter

   such payments to be made on behalf of the wife to her Bendigo bank account number […].

2. Paragraph 2 provided that:

   ·“[Until 14 August 2007], in the event of default of payment to the Wife pursuant to paragraph 1 of the orders within 48 hours of the due date for each payment any such payment was to be drawn and paid to the Wife from the funds invested with McCluskys Solicitors on behalf of the parties.”

3. Paragraph 4 provided that until further order the husband was to pay into the business account all amounts received by or on behalf of the company or with respect to the business T.

4. Paragraph 5 provided that until further order the husband and the wife were restrained from removing funds from the business account and/or “increasing” the account save for the purposes of paying business expenses of the company or the business or to comply with orders of the Court.

5. The word “increasing” is a clear typographical error as can be seen from the hand-written minutes which remain on the Court file.

6. Paragraph 8 restrained the husband and the wife, both personally and by their respective servants or agents from doing the following:

   (a)selling, disposing of, encumbering, transferring or otherwise parting with possession or control of any shares owned by the parties or either of them, registered in the name of the parties or either of them, or held by any other person upon trust for the parties or either of them;

   (b)resigning from any directorship or position of office or causing, suffering or permitting the appointment of any further or other directors or other office bearers;

   (c)causing, suffering or permitting the appointment of any new or additional trustee or trustees or appointor or appointors or guardian or guardians;

   (d)relinquishing, abandoning or assigning any interest held by the parties or either of them as appointor or guardian;

   (e)selling, disposing of or further encumbering any asset of any one or more of:

   (i)[B] Pty Ltd, Z Pty Ltd, The […] Family Trust and [K] (‘the Entities’);

   (ii)any other company or trust in which the Husband has an interest;

   (iii)any other money upon trust for the parties or either of them and/or the Entities

   (other than in the usual and ordinary course of business) and in that event upon the giving of 14 clear working days prior written notice to the other of their intention to do so;

   (f)causing, suffering, permitting or voting in favour of any resolution for the issuing or allocation of any further shares in any class in any of the Entities;  and

   (g)pledging or extending the credit of the Entity or any of them (other than in the usual and ordinary course of business) and in that event upon the giving of 14 clear working days prior written notice to the other of their intention to do so.

7. Paragraph 9 provided that at the end of each calendar month the husband was to provide or cause to be provided to the wife copies of:

   (a)      debtor and creditor ledgers for the company and/or business;

   (b)      bank and credit card statements.

8. Paragraph 11 provided that, until 14 August 2007 the parties authorise McCluskys Solicitors to pay from the Fund the rates, body corporate levies and Wizard Home Loan instalments for the Queensland property.

Consent Orders made by Young J on 5 September 2007

1. Paragraph 1 of these orders provided that par 1, 2 and 11 of the orders made by Cronin J be extended to 31 October 2007 and par 11 was also extended to include the payment of all rates and outgoings for the Melbourne property.

2. Paragraph 6 required the husband to provide all documents which he was obliged to provide to the wife pursuant to par 9 of the orders of Cronin J within seven (7) days and to continue to provide such documents each month promptly.

Intervention Order made against the Wife by consent and without Admission on 26 March 2007, extended 26 September 2007

1. Paragraph 3 of the Intervention Order prohibited the wife from knowingly being at or within 200 metres of  the business premises at any time save for and except between the hours of 9:00am and 5:30am each Thursday and Friday unless otherwise earlier agreed between the parties in writing.

2. Paragraph 4 prohibited the wife from damaging or removing property owned or jointly owned with the husband, including the property at T business and the property of the business and at the Queensland property.

3. Paragraph 6 of the Intervention Order provided that, if either party wished to stay at the Queensland property they were to provide seven days written notice to the other party prior to their stay.  Further, any one stay by either party at the Queensland property was to be limited to seven days and that each party have the sole use and occupancy of the property during their stay.

Intervention Order made against the Husband by consent and without Admission on 26 March 2007, extended 26 September 2007

1. Paragraph 3 of this Intervention Order prohibited the husband from knowingly being at or within 200 metres of the business premises between the hours of 9:00am and 5:30pm each Thursday and Friday unless otherwise and earlier agreed between the parties in writing.

2. Paragraph 4 prohibited the husband from damaging or removing property owned or jointly owned with the wife including property at T business, the property of the business, and at the Queensland property.

3. Paragraph 6 provided that if either party wished to stay at the Queensland property, he or she was to provide seven days written notice to the other party prior to that stay.  Further, any one stay by a party at the Queensland property was to be limited to seven days, and that each party have the sole use and occupation of the property during his or her stay.

Dealing with Applications “On the Papers”

1. Rule 5.10(2) of the Rules provides that cross-examination at an interim hearing will only be allowed in exceptional circumstances. It was not suggested that either party should be cross-examined at the hearing before me. The applications were dealt with “on the papers”.

2. The parties’ respective affidavits contain allegations and counter allegations made by each of them against the other.  They include removal of money, documents and motor vehicles, amongst other things.  The parties are in dispute for example, as to what documents were in the actual physical control of either party.  There are disputes about non-disclosure and disputes about expenditure of money post separation.

3. Where affidavits contain irreconcilable and disputed matters of fact, a final determination of those disputed facts usually cannot, and should not be made, until after viva voce evidence and, in particular, until after cross-examination.

4. Interim parenting proceedings provide an example of this procedure.  In Cowling (1998) FLC ¶ 92-801, the Full Court provided assistance to trial judges in dealing with interim applications, although this case must now be looked at in light of the amendments to the Family Law Act 1975 (“the Act”) following the commencement of the Family Law Amendment (Shared Parental Responsibility) Act 2006 (Cth) and the decision of the Full Court in Goode (2006) FLC ¶ 93-286.

5. Proceedings under the Hague Convention are also, generally speaking, summary in nature and as a general rule cross-examination of deponents is not allowed.

6. In Panayotides (1997) FLC ¶ 92-733 the Full Court referred, without criticism, to the approach taken by the trial judge (Jordan J).

7. Jordan J had said:

   The first thing to observe is that there is much conflict in the evidence. These are summary proceedings and issues must be determined on the papers. This often presents the Court with difficulties. It would generally be inappropriate to absolutely reject the sworn testimony of a deponent (see, Re F (1992) 1 FLR 548). As was submitted by counsel for the Central Authority I simply must do the best I can. I look to the versions of each of the parties. I find the common ground, and I note the areas of conflict. I can look to the inherent probability. Of course, when one is talking about the intent of parties, where this is a matter of some conjecture, one looks to the conduct of the parties, and any documentary of corroborative evidence which may help to determine that issue. …

8. Jordan J’s reference to Re F is a reference to the judgment of Butler-Sloss LJ who had said:

   If a judge is faced with irreconcilable affidavit evidence and no oral evidence is available or, as in this case, there was no application to call it, how does the judge resolve the disputed evidence?  It may turn out not to be crucial to the decision, thus not requiring a determination.  If the issue has to be faced on disputed non-oral evidence, the judge has to look to see if there is independent extraneous evidence in support of one side.  That evidence has, in my judgment, to be compelling before the judge is entitled to reject the sworn testimony of a deponent.  Alternatively, the evidence contained within the affidavit may in itself be inherently improbable and therefore so unreliable that the judge is entitled to reject it.  If, however, there are no grounds for rejecting the written evidence on either side, the applicant will have failed to establish his case.

9. Even though Panayotides and Re F dealt with disputed affidavit evidence in Convention cases, the approach taken by Jordan J and Butler-Sloss LJ provide guidance upon which I can draw in the present case.

10. During the course of discussion with Mr North I asked whether there was any extrinsic or documentary evidence which could be utilised to enable me to determine which version of events was correct, given some of the various allegations and counter allegations, particularly noting that the proceedings are being conducted on the papers.  His response was:

    In my submission, not with any degree of confidence.

11. Later, and with reference to the husband’s application to have the sole physical control of the business Mr North pointed out that the business was in the parties’ “joint possession”.  The following exchange then took place.

    (Mr North) … and the purported joint responsibility where they don’t act jointly, where they are both in the position to make allegations about the conduct of the other which are incapable of being resolved. 

    (Carter J)       And your client says that the wife does what you’ve done.

    (Mr North)Yes.  So they are in no way working towards a common goal.  Each is acting in a way, if you believe the other, that undermines what the other is doing, fails to make available to the other appropriate information and/or financial accommodation.  Whilst that persists …

    (Carter J)       Why can I trust one and not the other?

    (Mr North)Your Honour, on the evidence of the allegations made against each, you can’t have much reason to have faith in either of them.

12. That passage is illustrative of the difficulties in dealing with the parties’ applications.

13. At an early stage I advised counsel that the solution might lie in the appointment of an administrator for the company. Both parties are directors (and shareholders) of the company. As such, and as Mr North agreed, they each owe statutory and other obligations under the Corporations Law. The husband alleges, amongst other things, that the wife is not performing her fiduciary obligations and one of the allegations made by the wife is that the husband is neglecting the business and, in her mind, actively and deliberately depreciating the value of the business. She wishes to be involved in the business, pending the final hearing, in order to ensure its continued profitable operation and to monitor the financial aspects of the business in circumstances where she says the husband’s conduct in the financial management of the business is questionable.

14. For his part, the husband seeks that the business be placed in his physical control.  It was submitted that the wife has little, if any, knowledge of the business operation or capacity for management of it.  It was submitted that the nature of the allegations and counter allegations demonstrate the likelihood that joint oversight, but with separate attendances at the premises, is a recipe for a suboptimal business performance, disquiet for employees, loss of opportunities and potential loss of customers.  It was speculated that the wife’s concern and “more recent” intervention in the business was generated by a desire to ensure that the business was valued for the purposes of trial at a valuation that was favourable to the wife’s interests, on the basis that she did not, or would not seek to retain it.  Safeguards were suggested by the husband, for example, that he would be required to report and account for his actions in a timely and regular manner.

1. The issue as to the control, conduct and management of the business is only one of the issues which I am asked to determine and I will return to this later.

Applications for Accounting/Reconciliations

1. The wife has applied for such orders.  The husband raises allegations that the wife has removed funds from the business.  It will be convenient to deal with both those matters at this stage.

2. Paragraph 1 of the orders sought by the wife is for the husband, within seven days, to provide to her a reconciliation of all amounts withdrawn by him or on his behalf from the National Australia Bank business account on account of salary as well as personal and business credit card expenses for the period:

   ·18 January 2007 to 2 July 2007 (inclusive);  and

   ·1 November 2007 “to date”.

3. The evidence in support of this is contained in pars 5-15 of the wife’s affidavit filed 19 February 2008.

4. The genesis of the application is par 3 of the orders made by Guest J on 18 January 2007.  It will be recalled that pursuant to this order the husband and the wife were each permitted to draw equally the salary and benefits from the business account which each was then receiving, provided there was sufficient funds to meet such payments.  The wife has deposed, and the husband agrees, that at the time this order was made and for some time thereafter, she and the husband each received a salary of $850 per week as well as funds to meet their respective credit card expenses.

5. However, the wife goes on to allege that between 18 January 2007 and 2 July 2007 the husband “manipulated” the business account to ensure that she was not able to withdraw sufficient salary and credit card payments for herself.  She has detailed the moneys she received in that period of time.  They total almost $29,000.

6. The husband agrees with this but adds that the wife also received a payment of $850 by way of a cheque on 29 January 2007, and a further payment by way of withdrawal from the account on 15 May 2007 of $540.  He also alleges that the wife removed from the business account the sum of $121,849.89 between 1 July 2006 and 18 January 2007.  That is not responsive to the wife’s affidavit but does raise considerable concern in my mind.

7. The wife has sworn, and the husband does not dispute, that she provided him with a “reconciliation” of the benefits she received up until 1 June 2007, however, the husband failed or refused to provide her with a “reconciliation” of the salary and credit card payments which he received during the period 18 January 2007 to 2 July 2007, despite numerous requests for this to be done.

8. The wife also deposed and the husband has not denied that she did not receive a “reconciliation” of the salary and credit card payments received by the husband for the period 1 November 2007 to the date of her swearing her affidavit, in circumstances where she says that par (3) of Guest J’s orders is “technically still operative and enforceable”.

9. Accordingly, it is the wife’s case that until she receives this information it is not possible to determine whether the parties each received comparable benefits from the business in accordance with par (3) of Guest J’s orders.

10. The wife deposed that she believed that the husband received far greater financial benefits from the business account than she did, given that she was without a salary for many weeks between 18 January 2007 and 2 July 2007.  She further deposed, and the husband has not denied, that during this period the husband took a number of trips, in respect of which details have not been provided notwithstanding requests for the same.

11. The wife went on to give evidence about other matters which underlined her concern and suspicions.  She deposed, and the husband has not denied, that on 15 June 2007 the Bureau of Meteorology paid the sum of $68,600 into the business account and on 18 June 2007 she received information from the Bank that the husband had transferred the full amount into his Flexi Direct account.  To the best of the wife’s knowledge the husband did not transfer those funds back into the business account but, apparently, according to the wife, retained them for his own personal use.  The husband has refused to provide “a proper accounting” of this despite various requests.  The husband has not denied any of that.

12. The wife also deposed that in early May 2007 she requested that the Bank provide her with copies of 40 cheques that the husband had written because she was suspicious that the husband had misrepresented notations on a number of the cheque stubs of the business account stating that he had paid legitimate debtors of the business, whereas on the actual cheques, he had written them out to cash.

13. In due course, the wife received copies of these cheques from the Bank and of the 33 cheques that the Bank was able to provide to her, the husband had written 16 of them to “cash”.  The wife is therefore concerned that the husband was asserting that he was paying business expenses when he was actually drawing cash to pay for personal expenses.

14. All these things lead the wife to seek the order for the reconciliation of amounts withdrawn or caused to be withdrawn by him from the business account on account of salary and personal credit card expenses.

15. Paragraph 2.1 of the orders of Guest J is also relevant to this matter, given that both parties were restrained until further order from withdrawing moneys from the business account other than in the normal course of business or as agreed in writing.

16. In response to this request for a reconciliation of such amounts, the husband simply says that he sees this “as an unnecessary task”.  He deposed that the wife was able to get all reconciliations from the business accountant (Mr S), given that she is a director of the company.

17. It is convenient to note here that at the time the wife swore her affidavit (12 February 2008) the taxation returns of the business for the financial years ending 30 June 2006 and 20 June 2007 had not been completed.

18. In his affidavit (sworn 1 May 2008) the husband deposed that those taxation returns had “now been completed and provided to both parties”.  Mr Davis confirmed this during the course of his submissions, but as I understand it they were not forwarded until about April 2008.

19. It is not altogether clear why those taxation returns had been outstanding for what was a considerable period of time, particularly in relation to the 2006 taxation return.

20. It appears the taxation returns have not been filed.  Mr Davis told me that the wife had received them at some time in the month preceding the hearing and that, on his instructions, there were certain discrepancies that the wife’s new accountant was attempting to resolve with the company accountant.

21. The husband says in his affidavit that the wife had failed to “sign off” on draft financial reports, and accordingly the returns cannot be lodged.

22. Paragraph (5) of the wife’s application is in some aspects similar to par (1) and to a degree overlaps.  The wife seeks an order that within seven days the husband provide a detailed accounting of how moneys referred to in Annexure “B” to her application, which were transferred from the business account, were utilised or otherwise applied.

23. There are well over 100 transactions set out in Annexure “B”.  They cover a period from 25 January 2007 through to 8 February 2008.  The majority of the transactions involve internet transfers, but reference is also made to a number of cheques.

24. In his submissions Mr North reminded me that the context was that both parties were directors, although each was precluded for part of each week from being present at the premises.  He submitted, and I agree, that the wife had in law and in fact, as much access to the records of the business as does the husband.  She also has as much access to the accountant and to the accounts that are prepared by the accountant as does the husband.

25. As Mr North also pointed out, and as was the case, the first two pages, and most of the third page of the schedule related to transactions which occurred in the 2007 financial year, for which the financial accounts have been prepared - but I note only recently.

26. He also submitted, and again correctly, that there was no evidence that the wife had even made enquiry of the company accountant as to how those transactions had been reconciled, noting this would of necessity have had to be done so that the accounts for the financial year could be prepared.  She has given no evidence as to any enquiry or demand made by her upon any agent or employee, and has not said at all what steps she has taken in her role as director to do this.  Again, I note that the accounts were only recently provided, after the wife had sworn her affidavit.  On the evidence she had certainly through her solicitors, sought that the husband account.

27. Mr North further submitted, and again I agree, that it was oppressive to require that the husband provide such a detailed accounting within the period of seven days as was suggested in the wife’s application.  He did not suggest that the information that any such accounting could provide was irrelevant, submitting that it might have use at the trial, or perhaps in providing information for the purposes of some Pre-Trial resolution.

28. Mr Davis agreed that the time frame was “an over-enthusiastic time estimate”.  However, setting that to one side, he strongly urged that the material needed to be produced, and sooner rather than later, so that the parties could commence to have settlement negotiations.  He told me that the sums were not traceable.  Discovery had revealed the existence of cheque stubs, however, bank statements were not of assistance there because of the characterisation of the payments as being “to cash”.  He pointed out that the sum of money was large – it was just over one million dollars – and that there was a clear obligation to disclose.  I agree with both of those matters.

29. Further matters which have no doubt excited the wife’s concerns and suspicions emerge from some of the annexures to Mr F’s affidavit which was filed on 29 October 2007.  As earlier recorded, Mr F was the wife’s former solicitor and his affidavit concerned matters referable to the wife’s application for litigation funding, but it also provided evidence in support of the wife’s claim that the husband had not provided proper financial disclosure nor satisfactory answers to particular financial requests which had been put to the husband’s solicitors.

30. Some of the annexures to Mr F’s affidavit comprise letters he sent to the husband’s solicitors dated 18 September 2007;  16 October 2007 and 25 October 2007.  Reference to these annexures is made in par (8) of Mr F’s affidavit.  I note that the annexures are incorrectly numbered in that paragraph.

31. Annexure “PF4” is a letter dated 16 October 2007 addressed to the husband’s then solicitors.  It was sent not long before the mediation which was then scheduled to take place on 23 October 2007.

32. Reference was made to a report by a Mr M dated 10 October 2007.  As I understand it Mr M was appointed as the single expert to value the business.  The report was not in evidence before me at the hearing.

33. Relevantly the letter provides:

    We refer to the report by [Mr M] dated 10 October 2007.

    According to the report your client has now provided to [Mr M] invoices verifying the sum of $196,380 in cash cheques drawn by [B] Pty Ltd to various suppliers.  We note with some concern, however, that you have not provided us with copies of those invoices …  Your client’s failure to provide our office with the said invoices raises suspicion as to their authenticity.

    …

    We further note from the report that there remains the sum of $215,030 of unverified expenditure … (My emphasis.)

34. I raised these matters with Mr Davis in the course of his oral submissions.  My concern was whether the “cash cheques” were part of Annexure “B” to the wife’s application.  Mr Davis however, told me that they were earlier cheques and they were noted in one of the appendices to Mr M’s report.

35. It was the husband’s case that, prior to September 2006, the wife would generally spend not more than two hours per month at the business premises and that she had not had involvement in the running and operations of the business.  He has deposed that as and from September 2006 the wife insisted in coming to the business premises, adding that the wife told him that her solicitors had advised her to take some part in the business.

36. It was the wife’s case that early in 2006 she attended the business for five days a week, often working from 9:30am until 7:00pm except on one Tuesday each fortnight when she cared for the parties’ grandchild.

37. The husband denies the wife’s description of her involvement with the business.  It is his case, as set out in par (39) of his affidavit that, throughout the marriage and since separation, he was “wholly responsible for the operations and finances of the business.”  Further, according to the husband, cash flow control was vital to the operation of the business.  Additionally, he works on the factory floor and is required to operate the machinery.  He added that the wife did not and had never undertaken any of those tasks, and he expressed doubt that she had the skills and business knowledge to do so.

38. If the husband is correct in his evidence, which cannot at this stage be determined, then it must be the case that he is the person with the most knowledge of the operation and finances of the business, together with its cash flow.

39. The husband has alleged that the wife removed the sum of $67,500 from the business account on 28 December 2006.  He said this was done without his knowledge or consent.  He also alleges that the wife removed the sum of $121,849.89 from the business account between 1 July 2006 and 18 January 2007.

40. The husband annexed to his affidavit certain correspondence passing between the parties’ solicitors.  Annexure “KK7” is a letter dated 21 November 2007 from the husband’s solicitors to the wife’s then solicitors.  At p 2 of that letter it was asserted that the wife, since September 2006, had purchased a second Mercedes motor vehicle for her use in Melbourne; had had cosmetic surgery; had travelled to the USA on a holiday in April 2007 and had removed a considerable amount of money from a company in the form of cheques made out to herself prior to removing the cheque books from the business premises in July 2007.  The husband’s solicitors then requested that the wife’s solicitors provide them information, prior to the forthcoming mediation, as to:

    ·How much the wife had spent for the foregoing matters.

    ·Where the funds came from.

    ·All documents evidencing those expenses and payments.

41. The husband deposed in his affidavit that the “unexplained moneys” drawn by the wife had been written to the joint loan account.

42. Annexure “KK13” to the husband’s affidavit is a letter from his solicitors to the wife’s solicitors dated 17 March 2008.  At p 2 of that letter reference is made to the preparation of the taxation returns which were then still outstanding.  Reference was then made to the husband’s allegation that the wife had taken a substantial amount of money from the business and as to the question of how that should be dealt with in the taxation returns.  The letter went on to say:

    We understand that the accountant will be allocating all moneys to a joint loan account, and then a jointly appointed accountant will conduct what will in effect be an audit to determine how those funds are to be allocated between our respective clients.

Conclusion

1. It appears probable that the parties’ allegations against the other in respect of the matters about which I am currently asked to determine will continue, particularly noting the reference by the husband to the “unexplained moneys” drawn by the wife.  The case shows all the hallmarks of one where at trial, and at significant cost to the parties and to the Court’s resources, a detailed analysis of “where the money went” will be required.

2. In those circumstances I have determined that it would be more sensible for an auditor to be appointed to examine the financial records of the business.  I note that this is likely to involve both parties in significant expenditure.  However, if I granted either party’s application (but particularly the wife’s) both parties would be put to considerable expense in order to prepare the relevant detailed accounting, and then presumably to have their respective accountants examine that accounting and probably the source documents to support it.

3. Further, an auditor would be independent of both parties.

4. This matter has, according to Mr F’s affidavit, not had a Conciliation Conference because of the various interlocutory proceedings.  Whilst settlement without a trial appears somewhat remote given the antipathy and suspicions which each party harbours towards the other, nonetheless and at the very least, each of them has an entitlement to information which will enable them to explore the possibility of settlement in a reasoned manner and also to prepare the matter for trial.

5. The question of the appointment of an auditor was not raised during the hearing before me, although as I have already recorded, I myself raised the possibility of the appointment of an administrator for the company.  However, it was raised in the proceedings before Registrar Riddiford, who requested that the husband and the wife consider the possibility of appointing a single expert auditor to prepare a report on the matters raised by the parties pertaining to the company’s accounts and relating to moneys received from the business.  As I have also recorded, it was raised as well in the letter of 17 March 2008 sent by the husband’s solicitors to those acting for the wife.  Further, par (1) of the wife’s application, in itself, requires something in the nature of an audit.

6. The period of time to be covered by the Audit will need to be addressed.  My tentative view is that the Audit should commence with the 2004 financial year, given that the parties separated in that year.

7. Without limiting the Auditor in any way I would also propose that particular reference be made to the matters earlier discussed and the allegations and counter allegations that each party has made.

8. I will provide the parties with an opportunity to make submissions as to the form of the orders.

Applications for Control of the Business;  Work and Attendances at the Business;  and Intervention Orders

1. In par (2) of his response the husband seeks an order restraining the wife from attending at the business premises at any time.  In par (8) of his response the husband seeks a further order that the husband and the wife do all acts and things to vary the Intervention Order dated 26 September 2007 in which the wife is the complainant and the husband is the defendant by discharging par (3) of that order.

2. In par (16) of her application the wife seeks an order that she resume her attendance at and work in the business on Thursday and Friday of each week between the hours of 9:00am and 5:30pm in accordance with the Intervention Order made on 26 September 2007 unless otherwise agreed between the parties in writing.  In par 17 of her application the wife seeks a further order that the husband open and be in substantial attendance at the business on Monday, Tuesday and Wednesday of each week between the hours of 9:00am and 5:30pm unless otherwise agreed between the parties in writing.

3. It will be recalled that par (3) of the relevant Intervention Order made against the wife prohibited her from knowingly being at or within 200 metres of the business premises at any time except between the hours of 9:00am and 5:30pm each Thursday and Friday unless the parties otherwise agreed in writing.  Paragraph (3) of the Intervention Order made against the husband prohibited him from knowingly being at or within 200 metres of the business premises between the hours of 9:00am and 5:30pm each Thursday and Friday unless the parties otherwise agreed in writing.

1. Copies of the relevant Intervention Orders, as extended, are Annexures “KK8” and “KK9” to the husband’s affidavit.  The husband was said to be the complainant in the Intervention Order made against the wife and the wife was said to be the complainant in the Intervention Order made against the husband.

2. At any early stage in the proceedings when Mr Davis was addressing me I raised the fact that the husband effectively sought an order for the parties to go back to the Magistrates Court to revoke part of the Intervention Order. Mr Davis told me that he awaited with great interest hearing the jurisdictional basis that Mr North relied upon to make that application, drawing attention to the provisions of s 114AB(2) of the Act.

3. Section 114AB provides as follows:

   SECTION 114AB OPERATION OF STATE AND TERRITORY LAWS

   114AB(1)  [Concurrent operation of State law]

   Sections 68B, 68C, 114 and 114AA are not intended to exclude or limit the operation of a prescribed law of a State or Territory that is capable of operating concurrently with those sections.

   114AB(2)  [Proceedings instituted under State law]

   Where a person has instituted a proceeding or taken any other action under a prescribed law of a State or Territory in respect of a matter in respect of which the person would, but for this subsection, have been entitled to institute a proceeding under section 68B or 114, the person is not entitled to institute a proceeding under section 68B or 114 in respect of that matter, unless:

   (a) where the person instituted a proceeding:

   (i) the proceeding has lapsed, been discontinued, or been dismissed; or 

   (ii) the orders (if any) made as a result of the institution of the proceeding have been set aside or are no longer in force; and 

   (b) where the person took other action - neither that person nor any other person is required, at the time that the person institutes a proceeding under section 68B or 114, to do an act, or to refrain from doing an act.

4. Regulation 19 of the Family Law Regulations provides that the Crimes (Family Violence) Act 1987 (Vic) is a “prescribed law” for the purposes of s 114AB of the Act.

5. It can be seen that s 114AB(1) operates to preserve State or Territory law and s 114AB(2) operates to avoid double jeopardy or duplicity of proceedings, given that proceedings to restrain domestic violence could be brought under both s 114 of the Act and also under a relevant prescribed State or territorial law.

6. Mr North told me that he was asking me to preclude the wife from going on to the business premises on the two days mentioned in the Intervention Order against her.  He pointed out that the Intervention Orders were silent about whether the complainant in each order might be permitted to be on the premises, saying that there was no “licence” granted under the Intervention Orders.  In my view, no licence has to be given noting that both parties are directors and shareholders of the company and would have a perfect right to be there, save for the prohibition placed upon each of them by the relevant Intervention Orders.

7. Accordingly the wife is entitled to attend at those premises between the specified hours.  She is, of course, not obliged to do so.  Otherwise she is not permitted to attend at the business premises.  Likewise, the husband is not permitted to attend the business premises between the specified hours on Thursdays and Fridays.  Otherwise he is permitted to attend at the premises, but of course he too is not obliged to do so.

8. Mr North also submitted, and correctly so, that I had power with respect to “the individual” and accordingly could make an order directed to the parties and requiring them to take certain steps.  He made it clear that he was by no means suggesting that I could in any way direct the Magistrates Court as to what it might do if the parties, subject to my direction, made a joint application.  That is also clearly correct.  However, it was also the case that the wife strenuously resisted the husband’s application to remove the wife from the business premises and also raised the question of the Court’s jurisdiction in any event.

9. In my view, I do not have jurisdiction in respect of that part of the husband’s application in which he seeks to restrain the wife from attending at the business premises.  If I am incorrect in that finding, I would in any event in the exercise of my discretion refuse the application.  I also decline to make the orders sought by the husband which would have the effect that the parties be directed to go back to the Magistrates Court and seek that an order made there be revoked, or discharged.

10. Both parties were entitled to seek the protection of the Magistrates Court and they have done so.  I do not accept that this would be an appropriate situation where the Court should interfere with the election which the parties made, particularly in the case of the wife who resists the husband’s application which is effectively to gain control of the business and to exclude her from it.

11. When Mr Davis addressed me in respect of the orders sought by the wife in pars 16 and 17 of her application, he acknowledged that s 114AB(2) also operated against that application and did not pursue it.

12. Otherwise, I repeat my earlier observations that, in my view, both parties have a right to attend at the business premises other than at times prohibited in the respective Intervention Orders and whilst present they would both be entitled, subject to other orders of this Court, to exercise all the rights given to them by virtue of their being directors and shareholders of the company. On the other hand, they each have statutory and other obligations under the Corporations Law.

13. Paragraph (3) of the orders sought by the husband was predicated on his giving certain undertakings which effectively required regular reporting by him to the wife of the business activities together with the provision of relevant documents, as well as a restraint which restricted or confined the husband’s ability to deal with the assets of the business in an adverse manner.  So far as the latter matter is concerned, both parties were restrained from such activities to a certain extent by par (2) of the orders made by Guest J as well as, and to a much larger extent by par (8) of the orders made by Cronin J.

14. On the basis of those undertakings, it was sought that the wife take all necessary steps to alter the requirement for both parties’ signature or authorisation on any of the business accounts with the effect that the husband alone could provide such signature or authorisation.  The husband also sought that the wife resign as a director or other office holder of the company and transfer to the husband all her shareholding in that company.

15. Mr North made no submissions in respect of the application for the wife to transfer her shareholding.  When I asked whether or not he wished to make submissions in respect of the proposed order that the wife resign as a director, Mr North told me that the wife would be effectively restrained from participating in the exercise of the power of a director but would still be exposed to the liabilities of being a director without the opportunity to exercise the responsibilities.

16. He further explained that what was envisaged by the proposed orders and undertaking was that the wife would not be prejudiced in the sense that she lost any access to information that she would have as a director with respect to the affairs of the company, however, she would not have an on-going role with respect to decision making as a director, nor would she be exposed to the liabilities that might befall her during a directorship when she was not being an active participant.

17. Both parties make allegations against the other in respect of the manner in which the business is being conducted.  The husband had the opportunity and did respond to the wife’s allegations, however, his affidavit was filed quite late in the proceedings, albeit with the permission of Registrar Riddiford and the wife accordingly had little, if any, opportunity to respond.

18. The wife strongly resists the husband’s attempt to exclude her from the business and the truth or otherwise of the party’s respective allegations cannot be determined until each of them has been cross-examined.

19. Accordingly, I do not propose to grant par (3) of the orders sought by the husband.

20. That said, it is quite clear that the parties must co-operate if the business is to continue to operate.  They must also comply with their statutory and fiduciary obligations and if they do not, I strongly suspect that the next step in the sorry saga that this case has become will be an application for the appointment of an administrator.

21. The parties are already restrained in the manner in which the business is operated by virtue of, for example, par (2) of the orders made by Guest J on 18 January 2007 as well as par (8) of the orders made by Cronin J on 3 July 2007.  I will impose some additional controls over the parties’ activities in connection with the business and its operations.  I will also provide a mechanism to enable both parties to obtain information as to the activities of the business as well as to facilitate the provision of documents in that regard.  I will build upon but extend the matters raised by Mr North in the course of the hearing.  The orders I propose to make will also deal with the matters raised by the wife in pars 8, 11 and 13 of her application.  I will invite submissions as to the form of the orders.

Provision to be made for Salary and Credit Card Expenses

1. In par (2)(a) and (b) of her application the wife effectively sought an order that both parties receive a salary from the company of $850 per week together with a further payment of $5,500 per month by way of credit card expenditure.

2. It can be seen from par (6) of the orders sought by the husband that he did not oppose the weekly payment of $850, however, it was his position that the monthly amount for credit card expenditure should be $3,000, not the sum of $5,500 as sought by the wife.  In the event, the wife reduced her claim to $3,000 per month.

3. It is not entirely clear but I did not understand that the husband agreed that the payments should be by way of direct debit facility.  I propose to make an order that the payment be made in this manner noting that this accords with par (1) of the consent orders made by Cronin J on 3 July 2007, the operation of which was extended by par (1) of the orders made by Young J on 5 September 2007, again by consent.  Both parties will be required to nominate a bank account into which those payments can be made.

4. The other question was when the payments should be deemed to commence.  The actual orders sought by the wife expressed the commencement date of the payments to be 22 February 2008, however, in the course of his submissions, Mr Davis told me that it was sought to “backdate” the starting time to November 2007.  It will be recalled that the earlier orders relating to this payment ceased to have effect on 31 October 2007.

5. The wife deposed in par 17 of her affidavit that the husband last paid her a salary from the business on 20 November 2007 and last paid credit card expenditure on 26 November 2007 in the sum of $2,000 - $1,000 less than the usual credit card payment.  The husband responded to this in par 56 of his own affidavit.  He appears to agree with the payments in November although he said that the $850 referred to by the wife was paid on 22 November 2007.  The husband also points to other payments received by the wife, which include four payments or withdrawals made by her after the date she swore her affidavit.  He further deposed that the wife had received $19,000 from the sale of a motor vehicle belonging to the business on 30 January 2008.  I will come back to that matter in due course.  A further payment of $300 in cash on 5 January 2008 was also noted by the husband in his affidavit.

6. In the course of Mr Davis’s submissions I pointed out that if the husband had continued to receive the salary after the order had expired, then Mr North would have to exceed his usual eloquence to persuade me that there should not be some parity in the payments to the parties.  Mr Davis told me that he understood this was not the subject of any dispute.  Mr North did not gainsay this.

7. Accordingly, I will make provision for “arrears”.  The salary will be calculated from 29 November 2007 (about a week after the last acknowledged payment) and the credit card reimbursements will be calculated from 14 December 2007 (a month after the last acknowledged payment).  On my calculations the salary “arrears” amount to $28,900 (34 weeks x $850) and the credit card reimbursements amount to $24,000 (8 months x $3,000).

8. The husband will be required to pay an additional $1,000 in respect of the shortfall of the credit card reimbursement.  The husband will, however, be entitled to set off against the payments otherwise due to be made to the wife, the payments referred to in par 56(d), (e), (f), (g), (h) and (i) of his affidavit, subject to verification of those payments.

Payments in Respect of the Queensland Property and the Melbourne Property

1. It will be recalled that par (11) of the orders made by Cronin J on 3 July 2007 required the parties to authorise McCluskys to pay from the moneys held on trust for the parties, the rates, body corporate levies and Wizard home loan instalments for the Queensland property.  That order was to continue until 14 August 2007.  On 5 September 2007 Young J extended the operation of that order to 31 October 2007 and further extended it in the sense that payment was also to be made for all rates and outgoings on the Melbourne property.  There was a notation to the orders made by Cronin J to the effect that the husband asserted that the instalments on the Wizard Home Loan for the Queensland property were debited to the parties’ loan account.

2. In par 2(c) of her application the wife effectively seeks an order that the company pay from the business account the rates, body corporate levies Wizard home loan instalments and all other outgoings of maintenance and repairs in respect of the Queensland property and Melbourne property.

3. In par 4 of his Response the husband seeks an order (amongst other things) to the effect that on-going payments for the Wizard home loan secured over the Queensland property be paid from the moneys held by McCluskys on trust for the parties.  In par 5 of his application the husband seeks that the wife do whatever is necessary to stop the direct debit payment from the business account towards the Wizard home loan accounts.  In par 7 of his application the husband seeks an order that, until further order, the wife meet all rates, body corporate levies and other outgoings for the Queensland property.

4. In support of her application the wife deposed in par 19 of her affidavit that, since about July 2007 she had paid the rates, body corporate fees and other outgoings in respect of both properties.  The circumstances were, according to the wife, that the husband had persistently refused to authorise McCluskys to release funds for those outgoings.

5. In par 59 of his affidavit the husband denied what the wife said in that paragraph.  The sequence of events as set out by the husband and confirmed by some of the attachments to his affidavit is that the parties jointly (through their solicitors) sent a letter of instructions to McCluskys on 5 July 2007 (Annexure “KK3” to the husband’s affidavit).  McCluskys were instructed to cause sums totalling $15,000 to be held in a joint interest-bearing trust account on behalf of the husband and the wife “in order to meet obligations arising out of par 10 (sic)” of the orders made by Cronin J on 3 July 2007.  A copy of the orders was enclosed with the letter as were various rate notices and the like pertaining to the Queensland property.  It was noted that the husband’s solicitors were to advise details in respect of the payment of the Wizard loan.

6. On 1 August 2007 the husband’s solicitors wrote to McCluskys advising that three instalments in respect of the home loan had not been met from the moneys held in trust but instead had been paid from the company or business account (Annexure “KK4”).  The husband deposed that the payments were made by direct debit from the bank and he could not stop this direct debit without authorisation from the wife.  Accordingly, the husband’s solicitors requested that payment totalling $9,666.72 be made to the business, representing those three instalments.

7. On 2 August 2007 the wife’s solicitors wrote to the husband’s solicitors (Annexure “KK5”).  Amongst other things, that letter advised that the wife did not agree to the first of the payments being reimbursed to the business, given that it occurred prior to the making of the orders on 3 July 2007.  Advice was also given that the wife would consent to a reimbursement of the other two payments which had been made on 3 July 2007 and 30 July 2007 upon the husband’s compliance with par (9) of the orders which it was said would assist the wife in verifying the payments.  Paragraph (9) of the orders made by Cronin J required the husband to provide or cause to be provided to the wife copies of debtor and creditor ledgers for the company and/or business, together with bank and credit card statements at the end of each calendar month.  The wife’s solicitors enclosed with that letter to the husband’s solicitors (amongst other things) a copy of the letter which they had sent to McCluskys on the same day.  That letter is also part of Annexure “KK5” to the husband’s affidavit and confirms that the wife did not agree to the payments referred to in the husband’s solicitor’s letter being reimbursed.  The letter went on to say that the issue was being addressed as between solicitors and advice would be given in relation to amounts which were agreed upon “shortly”.

8. Reference to this annexure is made in par 60 of the husband’s affidavit.  He swore that the wife withdrew her authorisation to McCluskys on or about 2 August 2007.  That does not appear to be the case.  The husband went on to say that the wife refused to provide her authorisation to stop the direct debit from the business account to the mortgage.  That may be the case but it does not emerge from Annexure “KK5”.

9. The husband has noted that there was substantial correspondence between the respective solicitors in relation to the matter which could be produced at Court.

10. There are a number of annexures to the husband’s affidavit with reference to the payments of the Wizard loan which the husband alleges he continued to make, or cause to be made.  The husband seeks an order that McCluskys be authorised to pay from the moneys held on trust the sum of $16,449.11 to the business in this regard.

11. Annexure “KK10” to the husband’s affidavit is a letter dated 29 January 2008.  In the last paragraph on p 2 of that letter the husband’s solicitors asserted that the wife remained “in contravention of par (11) of the orders made 3 July 2007 as she (had) failed to authorise McCluskys Solicitors to pay from the fund held by them on trust for the parties jointly, the rates, body corporate levies and Wizard home loan instalments for the Queensland property.”  An authority was enclosed for the wife to sign and contravention proceedings were foreshadowed in the event she did not sign the authority.

12. The letter had earlier set out payments which the husband claimed had been made to the Wizard home loan.  Those payments commenced on the date that the order was made (3 July 2007) and continued through to, and including, 4 December 2007.  The total amount was $16,449.11.  The letter recited that bank statements were enclosed which evidenced those payments.  Those bank statements did not form part of Annexure “KK10”.

13. The authority which the wife was requested to sign would have authorised the release of the sum of $16,449.11 to the business as well as on-going payments to the Wizard home loan account.

1. It is clear on the face of the letter that there had been earlier correspondence between the parties’ solicitors.

2. Annexure “KK11” to the husband’s affidavit is a letter from the wife’s solicitors dated 30 January 2008.  It makes reference to earlier correspondence as well as the letter dated 29 January 2008 from the husband’s solicitors.  It was in this letter that the wife’s solicitors advised that she no longer wished to proceed with the agreement which had been earlier negotiated at mediation.  Various proposals were made for the period leading up to trial, dealing with the provision of financial support for the wife.

3. In the penultimate paragraph on p 2 of that letter, reference was made to the allegation that the wife remained in contravention of par (11) of the orders made 3 July 2007.  It was pointed out (amongst other things) that the order ceased to be operative on 31 October 2007.  The letter went on:

   In view of the above, at best, your client would be entitled to seek that the business be reimbursed for payment made by it for the period 3 July 2007 to 31 October 2007 (inclusive) but not thereafter.  In any event, it is asserted by our client that any such amount would be more than offset by salary owing to her for the period 18 January 2007 to 2 July 2007 pursuant to par 3 of the Orders made on 18 January 2007.  To date, your client has failed to provide details of salary and credit card payments received by him for that period.  As such, it has not been possible for us to determine whether salary and credit card payments during that period were ‘comparable’ as specifically required by the Orders. …

4. Reference to Annexures “KK10” and “KK11” to the husband’s affidavit are made in pars 88, 89 and 90 of the husband’s affidavit.

5. The husband deposed in par 89 that the wife ignored his requests for her Authority, but admitted that the business was entitled to be reimbursed for the payments made by it for the period of 3 July 2007 to 31 October 2007.  This was said to emerge from Annexure “KK11”.  That is not, strictly speaking, correct.  As can be seen from the extract from the letter above, the wife’s solicitors wrote that, at best, the husband would be entitled to seek that the business be reimbursed for payments made in that period.

6. There is further reference to this matter in Annexures “KK13” and “KK15” to the husband’s affidavit.

7. None of the foregoing matters establishes that the wife had not paid the rates, body corporate fees and outgoings for the Queensland property and the Melbourne property.

8. Whilst the relevant order expired on 31 October 2007, it was as the husband said in par 62 of his affidavit “in the spirit of the Orders” that the payments be made out of the fund held by McCluskys.

9. I accept Mr North’s submission that the evidence does not demonstrate one way or the other what the on-going capacity of the business is to meet the mortgage payments.  Mr North accepted that payment from the moneys held by McCluskys was a payment out of capital rather than out of income, however, as Mr North also correctly submitted, whilst that payment would diminish one capital pool, it would enhance the value of another capital item, namely, the Queensland property and without placing a regular strain on the business as a source of income.

10. I have had regard to the matters raised by Mr Davis, but, as seen, prefer Mr North’s submissions.

11. For those reasons orders will be made for the on-going payments to the Wizard home loan secured over the Queensland property to be made from the moneys held on behalf of the parties by McCluskys.  A consequential order will also be made to stop the direct debit from the business bank account in respect of those payments.

12. Subject to verification of the payments, the business should also be reimbursed from that fund with the sum of $16,449.11.  The mortgage payments had to be made from some source.  The Queensland property is a personal asset.  If the wife can verify payment for the rates, body corporate fees and levies, then she too should be reimbursed from the same fund.

13. I will not make an order for the wife to meet the rates, body corporate levies and other outgoings in respect of the Queensland property.  In my view, future payments in that regard should also be made from the moneys held by McCluskys.  I note the husband’s evidence and Mr North’s submission as to the difficulties which the husband says he has met when he attempts to utilise this property.  I also note, however, that the wife had very little opportunity to respond to these matters.  In any event, the matter is the subject of the Intervention Orders which bind both parties.

14. The wife sought an order that rates, outgoings and the like in respect of the Melbourne property should also be made by the business.  It was the husband’s case and this was not disputed by the wife, that the Melbourne property is owned by the Trust.  On that basis, and on the basis of what the husband said in par 63 of his affidavit, namely, that mortgage payments and other outgoings have always been paid for this property by the company, and on the basis that this continues to be the case, I will not make the order as sought by the wife.  There is no need for it, provided of course that the payments continue.

15. It is convenient to deal at this stage with the remaining orders sought by the wife in par 2 of her application.  She sought that the business pay the costs of mobile phone plan and all calls;  land line rental and all calls;  facsimile and internet facilities;  together with all motor vehicle expenses including, but not limited to petrol, registration, insurance, servicing and repairs.  That order was for the benefit of both parties, not just the wife.

16. I accept Mr North’s submission that some of the expenses would be business expenses and some of them would be personal expenses.  However, in as much as the expenses are personal, I agree there is nothing in the evidence to suggest that either party is not capable of meeting those expenses, given the provision to them each of $850 per week, as well as the $3,000 per month for credit card expenditure.  I accept that there is no evidence to indicate that it is necessary or appropriate that the company meet personal expenditure in respect of these matters.  For those reasons, I will not make the orders as sought by the wife in this regard.

Personal Versus Business Expenditure

1. In par 3 of her application, the wife sought an order to the effect that the husband use one credit card only for the purposes of business-related expenses.

2. Mr Davis informed me that, on his instructions, the husband had a number of credit cards and the credit card statements which had been produced did not differentiate between business and private expenses.  He said it was the intent of the order that the husband would isolate one credit card for business purposes and business expenses which could then be readily verified by the wife.

3. In response Mr North submitted that there was no evidence whatsoever to suggest that it was necessary for the Court to direct how either party should organise their affairs, to the extent of requiring the nomination of only one credit card for business expenditure.  He went on to say that if an order was to be made, in circumstances where both parties were actively involved in the management of the business, it should be made against both the husband and the wife.

4. Mr Davis’s final submissions on this point were to the effect that nothing could be more orderly, in circumstances where a person had a number of credit cards and where credit card expenditure was “under a spotlight”, to put business expenses on one credit card and personal expenses on another.  He told me that the wife would agree to a mutual order in those terms.  He repeated that it simply created much more difficulty when statements for a number of credit cards had to be examined.

5. It is fair to say that I was not attracted to this proposed order.  I acknowledged that the course of action proposed would make the task of the wife or her solicitor easier but also expressed the view that this was not the basis for making a Court order.

6. I maintain that view and I decline to make the order as sought by the wife.  However, the orders which I will make should facilitate the identification of and differentiation between business and personal expenses.

Compliance with Paragraph 9 of the Orders made 18 January 2007

1. In par 12 the wife sought that the husband comply with the provisions of the above order within seven days, to the extent that he has not done so.  It will be convenient to deal with this matter later when I deal with other matters relating to disclosure.

Restraining Orders

1. In par 14 of her application the wife sought the continuation and extension to par 8 of the orders made 3 July 2007.  Mr Davis very properly told me that the background to this had not been dealt with in the wife’s affidavit.  I have earlier set out the provisions of this order and as can be seen it is very extensive.  In all the circumstances I decline to make the orders sought by the wife.

Litigation Funding

1. In par 18 of her application the wife sought payment of the sum of $110,000 from the funds held on trust by McCluskys for the purposes of litigation funding.

2. The husband sought an order for the release of the sum of $100,000 to each party from that fund by way of a partial property settlement.

3. In the event the parties compromised and orders were made, by consent, pursuant to which each party was to receive the sum of $100,000 from the funds held on their behalf by McCluskys, with the characterisation of such funds to be determined by the trial judge.

Other Orders Sought by the Wife

1. The wife did not pursue the orders sought in pars 4, 6, 7, 10, 16 and 17 of her application.

2. Paragraph 9 of the wife’s application sought that the husband provide documents which would enable the completion of taxation returns.  As I have recorded elsewhere, that had been done subsequent to the wife filing her application and accordingly there is no need for such an order.  In the application mention was also made of the interim financial accounts for the financial year ending 30 June 2008.  Evidence relating to this can be found in  Annexure “FMK1” to the wife’s affidavit.  This is a copy of a facsimile sent from the wife’s solicitors to the accountant, Mr S, on 7 February 2008 (I note the wife erroneously referred to another date in  her affidavit).

3. Amongst other things, in that letter the wife’s then solicitors sought that “interim financials for the financial year ending 30 June 2008” be completed.  Mr S was requested to advise the wife’s solicitors whether he had sufficient information and documentation, and if not, to advise what further information and documentation was sought.  There is no evidence of any reply by Mr S indicating that he did not have sufficient information to do so.  In those circumstances, I will not make the order as sought by the wife.

4. However, both parties need to be well aware that they must give attention to the preparation of all such documents so that this can be done in a timely fashion.

5. In par 15 of her application the wife sought that both parties take all steps and perform all actions necessary for the fulfilment of their obligations, responsibilities or duties owed to, or in respect of, the company and business, whether such obligations, responsibilities or duties arose in equity, by operation of law, fiduciary status, or otherwise.

6. As I indicated to Mr Davis in the course of his submissions I was disinclined to make an order which did nothing more than to state the legal obligations of the parties.  I did say that I sometimes reminded people what their obligations were, but indicated that this was not in the form of an order of the Court.  I maintain that view and note that in any event, Mr Davis did not pursue the matter thereafter.

Husband’s Application for the Wife to Return Items Removed from the Business Premises

1. In par 9 of his Response the husband seeks an order that:

   The wife forthwith return all items, including any copies removed by her from the business premises including, but not limited to:

   a.        Renault Motor Vehicle

   b.        [Stock]

   c.        Catalogues

   d.Complete Trading Records and Sales, including Bank Statements for the financial years ending 30 June 2004 through to 30 June 2007.

   e.Facsimile Machine

   f.Remote Controls to television and DVD recorder

   g.Documents in relation to new system of recording and promotion of [stock]

   h.Personal items of the Husband as described in his affidavit filed  contemporaneously herewith.

2. The husband’s principal evidence as to this aspect of his claim is contained in pars 76, 77 and, 78, 94, 95 and 96 of his affidavit.

3. The husband alleges that the removal of the items specified is in breach of par 4 of the Intervention Order.

4. It will be recalled that this paragraph prohibited the wife from damaging or removing property owned by or jointly owned with the husband, including the property at T business and the property of the business, as well as property at the Queensland property.

5. The husband deposed that he had reported the wife’s alleged breach of the Intervention Order to the local police but they had not followed up on his complaint and had failed to act on the breach of the Intervention Order.

6. The motor car referred to was allegedly removed by the wife in or about October 2007.

7. Some of the annexures to the husband’s affidavit are also relevant to this part of the husband’s application (see for example Annexures “KK6”, “KK13”, “KK14” and “KK15”).

8. I will deal with the husband’s claim in respect of company or business documents when I deal with the issue of disclosure.

9. I will not make an order in the terms sought on behalf of the husband (for the wife to return all items … including, but not limited to …).  It is simply too wide and lacks particularity.  Nor will I require the wife to return copies of the documents referred to, given that she is a director and shareholder of the company.

10. So far as the other items are concerned the wife has not filed any evidence in answer to the husband’s allegation.  It must be recalled however, that the husband’s affidavit and Response were not filed until 1 May 2008, and the wife therefore had very little time to do so.

11. In his submissions Mr Davis dealt in part with these allegations.  Whilst I do not fully understand the circumstances it appeared to be the thrust of his submissions that the wife had some explanation for the removal of the car which Mr Davis acknowledged was owned by the company.  Mr Davis further told me that on his instructions the wife had not removed and/or kept any of the other specified items, adding that she did not understand what were the documents said to be “in relation to the new system of recording and promotion of [product].

12. It was Mr Davis’s submission that the wife needed the motor vehicle in question and, in the absence of a compelling reason, it should remain with the wife until the final hearing.  I note that the husband said in par 78 of his affidavit that when the wife removed the car she had two other cars in her possession and use.  His evidence was that the Renault was the car which he used while he was in Melbourne.

13. Clearly, these allegations cannot be determined given the manner in which these proceedings have been conducted.  The wife also, of course, has an entitlement to respond to the allegations.  I will deal with this matter by requiring the wife to file an affidavit in response to those allegations.  I should add that I am by no means determining the truth or otherwise of the husband’s allegations, merely looking for a sensible and proper way to deal with them.

Husband’s Application in Respect to Matters Arising from the Alleged Sale of the Mercedes Motor Vehicle

1. In par 10 of his application the husband seeks that the wife provide all documents in relation to the alleged sale of the motor vehicle, together with an accounting of how the proceeds of sale were applied, “and where the proceeds are”.

2. In par 56 of his affidavit the husband alleges that the wife received $19,000 from the sale of a motor vehicle belonging to the business on 30 January 2008.  Mention has been made in some of the correspondence between the parties’ solicitors to the sale of a motor car (see for example, Annexure “KK13” to the husband’s affidavit).  I also note that in Annexure “KK15” to that affidavit (amongst other things) the husband’s solicitors alleged the wife received $19,000 from the sale of the Mercedes, said to be owned by the business, and to have been sold without the husband’s consent and in breach of par 2 of the orders made 18 January 2007.

3. The wife has not responded to this allegation.  Again, I note that the husband’s affidavit and Response were not filed until 1 May 2008, which gave her very little time.

4. I will deal with this in the same manner as in the immediately preceding section.

5. It is convenient to note here that the husband also sought that the wife “forthwith provide” all bank statements and credit card statements for all accounts held in the name of the wife “dated 1 July 2002 to current”.  While I will deal with this application shortly when I turn to the overall question of disclosure, I must say I will not be making an order at this stage of the proceedings to provide documents going back as far as was sought.  On the chronology provided to me the parties did not separate until 2 January 2004 and whilst there may be some reason which would justify the production of documents predating that separation by some 18 months, I am at this stage unaware of it. 

Disclosure

1. As would be apparent from the earlier discussion disclosure is a problem in this case.

2. The wife seeks orders in par 13 of her application for the provision of certain documents.

3. By way of background, I note that the wife has sought independent advice in relation to valuation reports prepared by Mr M and has received advice that certain documents which she has listed in par 26 of her affidavit, should have been, but were not provided to Mr M by the husband when Mr M prepared his report.

4. The husband replied in his affidavit that he provided all the information in his possession or control which was relevant or requested by Mr M.

5. The wife deposed in par 27 of her affidavit that, not only have the documents set out in par 26 not been provided, but in addition the taxation returns for financial years ending 30 June 2006 and 30 June 2007 have not been lodged by Mr S.  I have referred to this elsewhere.

6. In his response to this particular paragraph the husband repeated that he had provided all documentation in his possession or control that was required by the Court orders.  He further deposed, however, that much of the documentation required by the Court orders was removed from the business premises by the wife and that he did not have copies thereof.  Annexure “KK6” to his affidavit is a letter from the husband’s solicitors dated 5 June 2007 which requested the wife return these documents.

7. The letter advises that the husband had instructed his solicitor that he had been collating, following his return from overseas, information and answers to address Mr M’s queries and to enable the valuation to be completed.  The letter goes on:

   Our client has now discovered however that all the information which he has been collating has now been stolen.  Your client has confirmed that it was she who stole the documents advising him that she has given them to her solicitor.

   This is, of course, consistent with the instructions which our client has been regularly giving as to the theft of information and documents by your client, most of which has been vehemently denied by her …

8. Annexure “KK7” to the husband’s affidavit is another letter from his solicitors to the wife’s solicitors, dated 21 November 2007.  The second paragraph of that letter states:

   In relation to the documents that were removed by your client from the business premises, we acknowledge that we have now received from you some of those documents.  Our client’s accountant has advised that there are still a number of documents outstanding that are in your client’s possession, and are required in order for the 2007 financial accounts for business to be completed …

1. Annexure “KK14” to the husband’s affidavit is a letter dated 26 March 2008 from the husband’s solicitors to the wife’s solicitors in which it is alleged that the husband had given instructions that the wife had “again” removed items from the business premises, including a file containing invoices and statements of moneys to be paid to suppliers of the business.  A request for the immediate return of those items was made, together with a request that the wife return copies of the paid invoices “previously removed”, given that they were needed on a day-to-day basis to run the business successfully.

2. Annexure “KK15” to the husband’s affidavit is a further letter from the husband’s solicitor to the wife’s solicitor.  It is dated 26 March 2008 and, amongst other things, it was asserted that the wife had “repeatedly removed” company records of trading for previous financial years, records for company operations and purchases, and other financial documents relating to the business.

3. Clearly, not all of the correspondence has been annexed to either party’s affidavit.  It may be that the wife has denied such allegations through her solicitor.  However, it has given rise to a difficulty which is set out in par 16 of the husband’s written Outline of Argument, albeit that it was raised in connection with the husband’s desire to be placed in the physical control of the business.  Mr North wrote:

   16.      An example of the difficulty that will confront the ultimate tribunal of fact is the allegation and counter allegation with respect to the past records of the business.

   On the one hand the wife accuses the husband of non-disclosure with respect to these records.  The records of the business are the records of a company of which both the husband and the wife are shareholders and directors, where each of the parties had physical access to the books and records and where the husband accuses the wife of having physically removed those records at a time prior to her accusation that he failed to make disclosure …

4. Mr North built on this during his oral submission suggesting that it would be appropriate for each party effectively to make disclosure by a list of documents to be verified by affidavit.  The list would set out who had exclusive possession of the documents as well as information on the basis of the parties’ knowledge and belief as to the whereabouts of any of the records of the business, again to be verified by affidavit. 

5. For his part Mr Davis submitted that it would be appropriate for both parties to file “an affidavit of documents”. Mr Davis recognised that the Rules no longer provided for discovery in this form, however, suggested that it would provide a simple solution to this situation where each party appeared either to deny that he or she had the documents and/or that the other party was in possession of them.

6. The Family Law Rules 2004 introduced a major reform in the concept of discovery, following the lead of the United Kingdom and Queensland. It was intended to bring about a fundamental shift in the attitude to this important area of litigation (see the Explanatory Statement).

7. The Explanatory Statement (“ES”) states that Ch 13 of the Family Law Rules codified the concept of a duty of disclosure, required parties to certify that they were aware of the duty and had complied with it, and confirmed that there were significant consequences for failure to comply. It required parties to concentrate on the disclosure relevant only to the issues in dispute in order to keep in mind the aim of proportionality and the need to focus on those issues in dispute. It was further noted that the “litigation tool” of complete disclosure, was an expensive process, and was therefore still timed to commence only after the final resolution event. At that stage, the parties should be in a position to know what issues need to be proven and should therefore be able to concentrate on obtaining disclosure relevant to those issues.

8. The ES noted an important difference between the Revised Rules and the earlier Rules. The Court’s expectation would be that the parties would not go on a “fishing expedition” or apply for a general order, but would direct their minds to the higher standard and consider what is directly relevant to the disputed issues.

9. The Rules require that parties in financial cases exchange significant documentation in the resolution phase and, in addition, the Registrar has the discretion to order that certain specified documents be provided, if satisfied that this is necessary to enable the parties to resolve the case at the Conciliation Conference.

10. Disclosure is a continuing obligation, however, there are several stages of a financial case at which specific disclosure obligations arise.

11. Rule 12.02 requires parties to exchange a copy of certain listed documents, at least two days before the first Court date in a property case, as far as practicable.  Rule 12.05 applies to a property case in which the parties are required to attend a Conciliation Conference and again sets out a List of Documents which must be exchanged prior to the Conciliation Conference.

12. Those Rules were reflected in the hand-written Minutes and the proforma procedural orders made by consent by Guest J on 18 January 2007.  I will return to this in due course.

13. Disclosure by service of a List of Documents is dealt with in r 13.20 of the Rules and it is timed to take place after the final resolution event for a case. The present proceedings have not as yet reached that event. In the circumstances of this case, I have determined to make certain procedural orders recognising the parties’ obligations for disclosure which, strictly speaking, go further than is contemplated by the Rules for the stage that this case has reached. In doing so, I have particular regard to the main purpose of the Rules, namely, 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 1.04.) The disclosure which I will order will, at this stage, be limited to documentation relating to the affairs of the business and/or company.

14. I now turn to the wife’s allegation, set out in par 30 of her affidavit that the husband was in default of par 9 of the orders made 18 January 2007;  par 9 of the orders made 3 July 2007;  and par 6 of the orders made 5 September 2007.

15. In par 31 of her affidavit the wife deposed to her belief that various letters had been sent to the husband’s solicitors requesting provision of information and documents and in this regard she refers to par 8 of Mr F’s affidavit filed 29 October 2007.  I have earlier referred to Mr F’s affidavit and in particular, certain of the annexures to it which include copies of various letters sent to the husband’s solicitors.

16. In par 32 of her affidavit the wife confirmed that she sought an order that the husband “forthwith” comply with his obligations pursuant to the orders which I have already mentioned, and generally pursuant to his obligation to make full and frank disclosure pursuant to the Rules.

17. In his affidavit at par 70 the husband swore:

    I refer to paragraphs 30, 31 and 32 (of the wife’s affidavit) and confirm that I have made full and frank disclosure.

18. The wording of the husband’s response was the subject of some discussion at the hearing.  At first blush it would appear that the husband may not have denied the wife’s assertion that he is in default of certain orders of this Court.  However, Mr North submitted that it would be wrong to infer that the husband had been evasive in his answer, pointing out that he had responded to all three paragraphs of the wife’s affidavit by using the same language that the wife had used in the first sentence of par 30.  Accordingly, it was submitted that this should be taken as a contradiction of the allegation made against him.

19. The matters which appeared to be of particular concern to the wife related to the provision of bank statements and credit card statements and debtor and creditors ledgers for the company and/or business.

20. Both parties were required to exchange relevant bank statements and credit card statements for the 12 months preceding the orders made by Guest J for all accounts in each party’s name or to which he or she had access.  (Paragraph 9.9(g).)

21. Pursuant to par 9 of the orders of Cronin J made 3 July 2007 the husband was to provide or cause to be provided to the wife, at the end of each calendar month, debtor and creditor ledgers for the company and/or business;  and bank and credit card statements.  I note the hand-written Minutes on the Court file dated 2 July 2007 was signed by the husband and the wife.  Paragraph 8 of those Minutes is the relevant order.  The bench sheet for 2 July 2007 notes that the matter was rolled over to 3 July 2007 for Minutes to be produced and that was the date upon which the orders were actually made.

22. Paragraph 6 of the orders made by Young J on 5 September 2007 required the husband to provide all documents which he was obliged to provide to the wife pursuant to par 9 of Cronin J’s order within seven days, and further that he continue to provide such documents each month promptly.  There are hand-written Minutes of Proposed Orders to be made by consent on the Court file, which each party signed, and the order which I have just summarised forms part of that hand-written document as well as the orders which ultimately issued.

23. Part of Annexure “KK5” to the husband’s affidavit is a letter dated 2 August 2007 from the wife’s solicitors to the husband’s solicitors.  Reference was made to par 9 of the orders made 3 July 2007 and the documents which that order required to be provided.  It was asserted that the wife had contacted the husband in order to obtain those documents and further, that the husband had (amongst other things) informed the wife by telephone and SMS that she was “not getting the documents”.

24. There is further reference to the husband’s obligation to produce debtor and credit balance sheets and bank statements and credit card statements in correspondence contained in Annexures “PF3” and “PF4” to Mr F’s affidavit.  Annexure “PF3” is a letter dated 18 September 2007, a few weeks after Young J’s orders of 5 September 2007.  Annexure “PF4 is a letter dated 16 October 2007. 

25. Notwithstanding that the husband consented to an order that he would provide debtor and creditor ledgers for the company and/or business as was reflected in the orders made by Cronin J and also notwithstanding that he consented to an order made by Young J which effectively was to order compliance with that earlier order, the husband has deposed in his affidavit that he cannot provide the wife with monthly creditor and debtor ledgers “as the same do not exist”.  (See par 101 of the husband’s affidavit.)

26. This was raised in discussion in the hearing before me but the issue was not able to be satisfactorily resolved.  In the circumstances I cannot determine how it was that the husband consented to orders to provide documents which he knew he could not provide and this matter may well be pursued at a later stage.

27. In the meantime, I will make orders which effectively require both parties to provide documents which were earlier specified in Court orders.  The period of time relevant to the various documents will be the same as was provided in the orders of Guest J on 18 January 2007.

28. At the time these Reasons are published draft orders will be provided to the parties to enable them to make submissions as to form.

I certify that the preceding two hundred and sixty-seven (267) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Carter.

Associate:                 …

Date:    11 July 2008