L and L

[2008] FCWA 29

[2008] FCWA 29

JURISDICTION	:	FAMILY COURT OF WESTERN AUSTRALIA
ACT	:	FAMILY LAW ACT 1975
LOCATION	:	PERTH
CITATION	:	L and L [2008] FCWA 29
CORAM	:	PENNY J
HEARD	:	30 JANUARY 2008
DELIVERED	:	7 MARCH 2008
FILE NO/S	:	PT 6197 of 2003
BETWEEN	:	L
Applicant/Husband
AND
L Respondent/Wife
Catchwords:

Practice and procedure - s 79A application filed by wife - husband seeks hearing on s 79A application only - wife opposes application - says s 79A application should be dealt with in context of trial on all issues, including s 79(4) - separate trial of s 79A issues only

Legislation:

Family Law Act 1975 - s 79A

Category: Not Reportable

Representation:

Counsel:

Applicant	:	Mr M McCusker QC
Respondent	:	Mr P Dowding SC

[2008] FCWA 29

Solicitors:

Applicant	:	Butlers
Respondent	:	Carr & Co

Case(s) referred to in judgment(s):

Oastler and Oastler (1993) FLC 92-390
Patching and Patching (1995) FLC 92-585

[2008] FCWA 29

1 These parties purported to settle their competing claims for property settlement

pursuant to s 79 of the Family Law Act 1975, by a consent minute filed in this Court on 5 December 2005. Final orders were made in terms of the Minute on 6 December 2005. One of the assets of the parties, owned by an entity known as the [L] Trust, was a parcel of 86,562 ordinary shares in [PBS] then valued by KPMG in April 2005 in the sum of $8m. As part of the settlement of property it was agreed that the wife would retain 10,592 fully paid ordinary [PBS] valued at $980,993 net.

2 On 7 September 2007 the wife filed a Form 1 application seeking the following

orders:

“Pursuant to s79A(1)(a) the order made by consent on 6 December 2005 be varied by deleting the reference in order 4 to “469,716” and inserting the words “$4,469,716 of which the wife acknowledges receipt of the sum of $469,716.” ”

3 The facts upon which the wife relies to vary the orders made are contained in a

letter from her solicitors to the husband filed 21 June 2007. In that letter the wife alleges, on the part of the husband, a deliberate suppression of evidence because he did not disclose to the wife or KPMG:

• that there was an anticipation that [PBS] would become a publicly listed company; and

• the audited financial statements for 30 June 2005, which showed an improved profit figure by [PBS]for the financial year to 30 June 2005.

4 In the valuation prepared by KPMG the valuer discounted the [L] Trust’s

interest in [PBS] by 15% because it was a minority shareholder and further discounted
the valuation by a further 30% on account of “lack of marketability”.

5 It is the wife’s case that the husband and his fellow directors were aware at the

time of the consent orders that there was a real possibility that [PBS] would float or be sold to a third party. Prior to the matter settling the wife had brought an application pursuant to s 79(5) seeking an adjournment of the proceedings anticipating that one or other of these events would occur. That application was dismissed.

6 It is the wife’s submission that if KPMG had been aware of the intended float

and the actual profit performance of [PBS], its valuation of the Trust’s interest in
[PBS] would have been more in the order of $20.6m.

7 The husband says that there has been no suppression of evidence and he opposes

the wife’s application. He seeks to have the issue of whether there has, pursuant to s 79A(1), been a suppression of evidence so as to enliven the discretion of the Court to vary the consent orders, dealt with as a preliminary issue. The wife opposes that application and says that the s 79A matter should be dealt with in the context of a property trial. It is her argument that unless all the facts are before a trial judge there will not be sufficient information for the Court to determine, in its discretion, whether to vary the previous agreed property settlement orders.

[2008] FCWA 29

8 In support of this contention, counsel for the wife relies on the authorities of

Patching and Patching (1995) FLC 92-585 and Oastler and Oastler (1993) FLC 92- 390. Before considering these decisions I should set out the relevant terms of s 79A relied on by the wife.

“79A(1) Where, on application by a person affected by an order made by a court under section 79 in property settlement proceedings, the court is satisfied that –

(a)	there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance; or
[…]

the court may, in its discretion, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside.”

9 In relation to this section, Nicholson CJ, Fogarty and Jordan JJ in Patching and Patching (supra) stated at 81,797:

“Here this involves four steps, namely whether there had been a suppression of evidence or “other circumstance” as alleged by the husband, whether that amounted to a “miscarriage of justice”, whether the Court, in its discretion, should “vary the order or set the order aside” and whether it should make another order under s. 79…”

10 The judges went on to consider the decision in Oastler and Oastler (supra) and stated in relation to that matter:

“the Full Court emphasized that it is generally preferable to deal with all of the steps in one hearing. The reasons for that are obvious, namely that even if the Court concludes that there have been circumstances which amount to a miscarriage of justice it must then consider whether in all the circumstances it should exercise its discretion to vary or set aside the orders and/or make a new s. 79 order. In exercising that discretion it will have regard to, inter alia, the degree and nature of the miscarriage in question, any delay, alterations in the parties’ positions in the meantime, and the extent to which, if at all, it is now appropriate to vary the original orders.”

11 The Full Court, however, went on to say:

“Of course there will be cases where it is convenient to divide the procedure into several hearings; for example, where there is a discrete issue under the first and/or second step and the property circumstances of the parties are complex.”

[2008] FCWA 29

12 Counsel for the husband also referred to Patching and Patching as well as a number of decisions of a master and judges of the Supreme Court of Western Australia.

13 The husband’s counsel says that the facts upon which the allegation of

suppression of evidence is based are narrow. The husband has filed a lengthy affidavit annexing many pages of documents setting out his version of events leading up to the floating of [PBS]. [The Executive Chairman] of [PBS Holdings Ltd], has sworn an affidavit setting out his version of the facts. The wife has also filed an affidavit setting out her position in relation to the evidence, both of the husband and [the chairman]. A trial on this issue would not be lengthy and would only require an assessment by a judge of the evidence raised in the affidavits already filed. There is an obvious attraction in determining that issue as a preliminary one in that the costs of the parties would be significantly less than if there was a trial on all of the issues associated with the parties’ financial relationship and the manner in which their property should be divided.

14 The parties were married for eleven years. During that time they purchased two

homes and the husband was involved in a number of business dealings resulting in the parties’ present entitlements to [PBS]. After separation a number of other transactions occurred relating to [PBS]. If it is determined that the s 79A application was to be heard at the same time as a property trial, not only the husband, but the wife, would have to file evidence in relation to contributions made to their assets, both during the marriage and after. I have no doubt that this would involve the filing of affidavits by a number of people. None of this would be necessary if the wife does not succeed on her s 79A application. In addition, the parties’ obligation to provide disclosure would be very significant; far greater than their obligation in relation to the s 79A application.

15 Apart from this obvious advantage, the husband’s counsel says there is another

factor which would indicate that a hearing on this discrete issue alone would be appropriate. The parties separated in January 2002. They divorced in 2004 and the reached a settlement in relation to property issues in December of the following year. The husband has now remarried. He does not wish to disclose his current financial situation to the wife in circumstances where, he says, it is likely that the wife’s allegations will not substantiated and no change will be made to the orders agreed to by the parties in 2005.

16 In my view, this matter falls within the exception to the general rule as stated in

Oastler and Oastler. It is convenient to divide the procedure into several hearings and, in my opinion, there are good reasons for doing so. If there is not found to be a suppression of evidence by the husband there will be no necessity for a full hearing on the financial circumstances of the parties, both during and after their marriage. If it is determined that the husband has suppressed the evidence as alleged by the wife and it is the view of KPMG, or another valuer, that the [L] Trust’s interest in [PBS] when the consent orders were made was in the vicinity of around $20m, then it is hard to imagine that the discretion of the trial judge would not be exercised and the orders made by consent would be set aside.

[2008] FCWA 29

17 This is not a situation where the effect of the suppression of evidence would

result in a slight adjustment to the asset pool. The wife alleges the shares were worth
$12m more than the valuation provided by KPMG.

18 In addition to the matters mentioned above, a determination of the issues raised

pursuant to s 79A may, if an order is made that the consent orders be set aside, mean that the parties will be able to negotiate a settlement in relation to their claims for property settlement. Without a determination of the s 79A issue, this is highly unlikely to occur. This is another factor which convinces me that a trial on the issues raised in the s 79A application is appropriate.

I certify that the preceding [18] paragraphs are a true copy of the reasons for

judgment delivered by this Honourable Court

Associate