Lake and Lake

[2017] FamCA 354

FAMILY COURT OF AUSTRALIA

LAKE & LAKE [2017] FamCA 354

FAMILY LAW – INTERIM – Disclosure – Whether documents in Supreme Court of NSW should be produced in the proceedings – Where the Family Report writer has had access to the documents

Family Law Act 1975 (Cth)

APPLICANT: Ms Lake

RESPONDENT: Mr Lake

INDEPENDENT CHILDREN’S LAWYER: Legal Aid NSW

FILE NUMBER: SYC 4778 of 2012

DATE DELIVERED: 23 May 2017

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Le Poer Trench J

HEARING DATE: 14 March 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Campton SC

SOLICITOR FOR THE APPLICANT: Broun Abrahams Burreket

COUNSEL FOR THE RESPONDENT: Ms Cohen

SOLICITOR FOR THE RESPONDENT: Ede Family Lawyers

COUNSEL FOR THE INDEPENDENT CHILDREN'S LAWYER: Ms Connor

SOLICITOR FOR THE INDEPENDENT CHILDREN'S LAWYER : Ede Family Lawyers Legal Aid NSW

Orders

1. The Registrar is to request the Registrar of the Supreme Court of NSW to make available the affidavits of Ms J Lake filed in proceeding … in that court on  …2016 or any other affidavit filed in that proceeding by the said Ms J Lake.

2. The Registrar of this court is to place in a sealed envelope any document received from the Registrar of the Supreme Court of NSW pursuant to the above request and not release any document for inspection to any person unless ordered to do so by Justice Le Poer Trench or another Judge of the Family Court of Australia.

3. When the parenting proceeding is concluded in this court between the parents (by the making of a final parenting order) or at any earlier time ordered by Justice Le Poer Trench, the Registrar is to return to the Registrar of the Supreme Court of NSW any documents received from the Supreme Court of NSW pursuant to the request made under these orders.

4. Each party and the Independent Children's Lawyer’s legal costs incurred by the hearing of the mother’s application identified in the reasons attending these orders are reserved.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Lake & Lake has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT

FILE NUMBER: SYC 4778 of 2012

Ms Lake

Applicant

And

Mr Lake

Respondent

REASONS FOR JUDGMENT

Introduction

1. Before the Court is an application by Ms Lake (“the wife”) to review a decision made by Registrar Mordaunt on 20 January 2017 in relation to the husband’s disclosure of material. The respondent, Mr Lake (“the husband”), opposes the orders sought by the wife.

Background

1. The substantive proceedings between the parties, which were commenced by the husband in August 2012, relate to both property and parenting.

2. There are two children of the marriage, B aged 11 and C aged 9 (“the children”). B has dyslexia and requires extra support in completing school work, as well as chronic severe allergic rhinitis and an allergy to dust mites. C suffers from Obsessive Compulsive Disorder, bowel disorder, and sensory issues.

3. Dr K was engaged as a single expert in respect of the parenting dispute. She interviewed the children, the wife and the maternal grandparents in April 2016 and produced a report dated 24 May 2016. Dr K conducted further interviews in November 2016 with the wife, the husband, the children and the paternal grandmother, and produced a second report dated 6 January 2017.

4. On 14 March 2017 I made an order, inter alia, setting all issues for trial to commence 14 August 2017 for five days.

The Supreme Court proceedings

1. In December 2015, proceedings were commenced in the Supreme Court by the husband’s sister against the husband and his uncle (“the Supreme Court proceedings”). The husband’s sister sought to remove them as directors of D Pty Ltd (“D”), which acts as a trustee for the Lake Trust (“the L Trust”).

2. The evidence filed in the Supreme Court proceedings by the husband and the paternal grandmother was the subject of these interim proceedings before this Court.

3. The Supreme Court proceedings were discontinued on 28 September 2016 after mediation took place on 1 September 2016. An agreement resulted from the mediation which contained, inter alia, a confidentiality provision with respect to the Supreme Court proceedings (“the Agreement”).

4. On 14 October 2016, the wife filed an undertaking to the Court that she would treat all information and documentation in relation to the Supreme Court proceedings as confidential, that it would be used only for the purposes of the proceedings under the Family Law Act 1975 (Cth), and disclosed only to solicitors or other professional persons advising her in relation to the Family Court proceedings.

The Orders made on 20 January 2017

1. On 20 January 2017, this matter came before Registrar Mordaunt for a telephone procedural hearing. The wife relied on her Application in a Case filed 26 October 2015 and provided a further Minute of Orders in which the wife sought, inter alia, financial disclosure and the production of affidavit material filed in the Supreme Court proceedings.

2. The solicitor for the wife, Helen Ede, swore an affidavit on 10 February 2017. Ms Ede deposed that when the matter came before Registrar Mordaunt on 20 January 2017, the husband’s solicitor objected to the production of affidavits of the husband and the paternal grandmother on the grounds of relevance and on the basis of the Agreement entered into in respect of the Supreme Court proceedings.

3. Ms Ede deposed that Registrar Mordaunt upheld the husband’s objection.

4. Registrar Mordaunt made Directions for the husband to provide the wife with the documents referred to in orders 1(a), (b) and (e) of her Minute of Orders. Those orders provided as follows:

   MINUTE OF ORDERS SOUGHT BY THE RESPONDENT WIFE
   20 JANUARY 2017

   1.   Within 7 days the solicitors for the Applicant Husband provide to the solicitors for the Respondent Wife the following: -

   a.   In relation to the payment of $208,333.33 received by the Husband on or about 18 July 2016 from [D Pty Ltd] (“[D]”), all documents under the Husband’s possession, authority or control pertaining to: -

   i.The source of that payment to [D];

   ii.The full sum received by [D];

   iii.How that payment has been distributed between the beneficiaries of the [Lake] Trust;

   b.   Affidavit by Mr Lake filed in the Supreme Court proceedings on 11 July 2016 and any other affidavit filed by [Mr Lake] in the Supreme Court proceedings.

   c.   …

   d.   …

   e.   Copies of all documents under the Husband’s possession, authority or control pertaining to PAYG noted in [the Husband’s] tax return as already paid of:-

   i.$19,920 in the 2012 financial year;

   ii.$19,920 in the 2013 financial year;

   iii.$19,156 in the 2014 financial year;

   iv.$19,836 in the 2015 financial year,

   including documents noting the source of payment, date of payment and the payer.

5. The wife filed an Amended Application in a Case on 28 February 2017 in which she sought, inter alia, the following orders:

   1.   That the decision of Registrar Mordaunt of 20 January 2017 be reviewed;

   2.   That, to the extent that it is required, leave be granted to the Wife to extend the time within which a review of the Registrar’s decision can be sought;

   3.   Within 7 days the solicitors for the Applicant Husband provide to the solicitors of the Respondent Wife copies of:

   3.1.Affidavit by [Mr Lake] filed in the Supreme Court proceedings case number … on … 2016 and any other affidavit filed by [Mr Lake] in the Supreme Court proceedings.

   3.2.Affidavits by [Ms J Lake] filed in the Supreme Court proceedings case number … on … 2016 and any other affidavit filed by [Ms J Lake] in the Supreme Court proceedings; …

6. Ms J Lake is the husband’s mother and is here referred to as “the paternal grandmother”.

7. This matter came before me for mention on 14 March 2017. The parties provided consent minutes in relation to the husband’s drug testing and other matters. I directed that the parties provide written submissions in relation to a request by the wife for the documents contained within the file pertaining to the Supreme Court proceedings.

8. On 14 March 2017 I made the following Orders and Directions:

   IT IS ORDERED THAT

   1.   I mark as Exhibit “A” a document being a handwritten minute of consent order.

   2.   By consent I make orders pursuant to Exhibit A.

   3.   I mark as Exhibit “B” a typed document relevant to drug testing.

   4.   By consent I make orders pursuant to Exhibit B.

   5.   I direct that the solicitor for the wife send a copy of the typescript of Exhibits A & B by email to my associate in Word document form within 7 days.

   6.   I direct that the solicitor for the wife provide any written submission tog with a minute of order  sought in relation to specific document contained within a supreme court file and being a request for a specific file or parts thereof to be provided to the court within 7 days.

   7.   I direct that the husband cause a response to those submissions with a minute of order within a further 7 days.

   8.   I grant leave to each of the parties to ask specific  questions of the single expert [Dr K] provided same are delivered within 21 days of the date hereof.

   9.   I list for hearing for 5 days commencing 14 August 2017. The parties are put on notice that if the matter does not conclude within 5 days, then it will continue day after day until it is concluded.

   10. On or before 30 June 2017, each of the husband and wife  is to file and serve an affidavit evidence in chief by themselves and any other lay witnesses they will rely on.

   11. The affidavit so filed deal with the topics identified in Exhibit C, a copy of which has been provided to each of the parties.

   12.  I vacate listing on 11 April 2017 before the Registrar.

   13. I list the matter for mention at 9.30 a.m. on 28 July 2017 for a compliance check and to make trial directions relating to case outlines, trial plans, objections to evidence, and any further directions necessary.

   Exhibit A

   BY CONSENT  PENDING FURTHER ORDER:

   1.   That the Husband in his personal capacity and in his capacity as a director of [D Pty Ltd] as trustee of the Lake Trust, be restrained from:-

   1.1.  Appointing or removing the trustee, [D] Pty Ltd;

   1.2.  Appointing or removing any class of beneficiary;

   1.3.  Altering the terms of the Trust set out in the Schedule to and created by the Will of the late [Mr L Lake] dated 30 April 1993.

   2.   That the husband in his personal capacity and in his capacity as a director of [D Pty Ltd] as trustee of the [Lake Trust] provide to the solicitors for the Wife 21 days’ notice in writing of any intention by the said trustee to distribute less than 1/6 of the capital and income of the said Trust to the husband in any distribution.

   3.   That the Court note that any such distribution of capital or income from the [Lake Trust] made to the husband is subject to the injunction made by this Court on 3^rd December 2015, and that the husband advises the Court today that the said Trust is likely to vest in June/July 2017 such that all of the property and assets of the trust will be subject to final distribution.

   4.   That the Wife have liberty to restore her Amended Application in a Case filed 28 February 2017 by arrangements with the associate of Justice le Poer Trench on 24 hours’ notice to the Court and the husband in the event the husband provides written notice pursuant to order 2 hereof.

   5.   That Order 1 made 3^rd December 2015 be varied so as to permit the parties to meet the cost of the single real estate expert from the controlled monies account.

   6.   That in the event the husband does not file and serve evidence from his accountant as to the value of the distributions he is to receive from the [Lake Trust] by way of the events identified in Order 3 above, and the taxation liabilities created by such distributions on or before 25 July 2017, then the parties shall appoint [Ms M] as the single forensic accountant to provide expert opinion evidence as to those matters, such expert’s costs to be met from the controlled monies account with his solicitors created pursuant to the Orders made 3^rd December 2015.

   7.   That the relief sought by the Wife in paragraphs 5, 6, 8.3, 10 and 11 of the Amended Application in a Case filed 28 February 2017 be stood over generally, with general liberty to restore.

   8.   That the Court note the husband contends that the loan account payable to him by the [Lake] Trust in the 2016 financial statements of $290,498 cannot be paid or satisfied by the Trust in circumstances where the cash assets of the Trust presently stand at approximately $17,000.

   9.   That the husband do all things to forthwith and within 48 hours shall cause his solicitors to notify the solicitors for the wife upon any distributions being made in his favour and/or payable into the controlled monies account pursuant to the Orders made 3 December 2015 from the [Lake] Trust.

   Exhibit B

   BY CONSENT AND PENDING FURTHER ORDER:

   1.That the father shall do all acts and necessary things and sign all documents necessary to facilitate chain of custody hair follicle testing by N Pty Ltd, now known as N [N] for the purpose of testing for:

   1.1.1.Amphetamine/methamphetamines/Ecstasy;

   1.1.2.Marijuana Metabolite;

   1.1.3.Cocaine and Metabolites, and;

   1.1.4.Opiates,

   on a day falling within the following periods:-

   1.1.5.25 March to 31 March 2017;

   1.1.6.23 May to 31 May 2017;

   1.1.7.25 July to 31 July 2017; and

   1.1.8.23 September to 30 September 2017.

   2.That for the purpose of Order 1, the father shall complete all documents provided to him by N, including documents identifying and verifying his identity.

   That the father be restrained by injunction from taking any step to interfere with the provision of hair samples or to interfere with the provision of urine samples or to interfere with the test results and including taking any step to shave, cut, shorten, colour or bleach any scalp or other bodily hair and the Father shall be restrained by injunction from cutting his hair shorter than four (4) centimetres in length.

   3.The father shall direct and authorise N to provide to Legal Aid NSW (Attn: …), copies of all test results forthwith upon those results becoming available, and the ICL shall forward a copy of same to the other party.

   4.That the father shall meet the costs of the hair follicle testing undertaken pursuant to these Orders.

   5.That the Applicant Father submit to urinalysis testing under the following conditions:

   5.1The urinalysis undertaken shall test for opiates, benzodiazepines, cannabis, cocaine, amphetamines, and methamphetamines.

   5.2The drug testing shall be by way of chain of custody urine drug screens with samples supplied in a supervised environment and checked for adulteration.

   5.3The drug testing shall meet the Australian/New Zealand Standard 4308/2008 procedure for collection, detection and quantification of drug abuse in urine.

   5.4The results shall be provided to the Independent Children’s Lawyer (ICL) and the other parties’ solicitors no later than 48 hours of receipt by the Applicant Father.

   5.5That the Applicant Father shall submit to the random drug testing within 24 hours of receiving a request from the ICL and such request is to be made by the ICL by emailing the Applicant Father’s solicitor.

   5.6That the ICL shall make such a request on no more than once each calendar month.

   6.That the father shall meet the costs of urinalysis testing undertaken pursuant to these Orders.

   7.That in the event the father returns a hair follicle test or urinalysis results that indicate the presence of the illicit substances identified in these Orders other than cannabis, or he fails or neglects to submit to a hair follicle testing process within the specified dates or for urinalysis as requested by way of these Orders, then his time spent with the children shall be suspended.

9. The parties’ written submissions were received on 17 and 27 March 2014.

Evidence

1. The wife relied on her affidavit sworn 25 February 2017 in which she provided evidence in relation to the husband’s interest in the L Trust. She deposed that the husband is a Director and equal shareholder in D which is the corporate trustee of the L Trust.

2. The L Trust has an interest in other entities. It owns 25 per cent of the shares in M Pty Ltd, 25 per cent of the shares in the Lake Family Trust #2 and 25 per cent of the shares in N Pty Ltd.

3. The Lake Family Trust #2 owns all the units in the Lake Family Trust. The husband, until 23 May 2015, was a director in O Pty Ltd which is the corporate trustee of the Lake Family Trust. The Lake Family Trust owns all shares in N Pty Ltd and its controlled corporations.

4. The wife deposed that the assets of N Pty Ltd (including its controlled entities) and M Pty Ltd have been liquidated and distributed to the income beneficiaries of the Lake Family Trust and the Lake Family Trust #2.  The final distribution to shareholders is expected to occur in July 2017.

5. The wife deposed that the value of the real property alone sold by those entities between 1 July 2015 and 20 December 2016 exceeds $88 million. It is the wife’s understanding that the current chairman of the N Pty Ltd corporate structure and M Pty Ltd has advised that a final distribution to shareholders will total $101 to $102 million. The L Trust will receive 25 per cent of that sum.

6. The wife deposed that there has been no disclosure by the husband in relation to this anticipated distribution.

7. The wife deposed that, based on the 2016 financial reports for the L Trust, the husband had a beneficiary loan account in the L Trust of $290,498.24 and the L Trust had cash assets of $437,531.67 as at 30 June 2016. The L Trust is also owed $4,060,417 from the Lake Family Trust.

8. The wife received an email from the husband on 13 December 2016 in which he indicated that D is unlikely to make any further payments to him until after the Family Court proceedings are finalised. The husband indicated this is because D is required to consider the beneficiaries’ circumstances before making a distribution. The email further indicated that the wife and two children are also beneficiaries of D.

Submissions

The wife’s submissions

1. The wife sought orders in accordance with Orders 1, 2, 3.1 and 3.2 of her Amended Application in a Case filed 28 February 2017, extracted above. She sought a further order, in the alternative to Orders 3.1 and 3.2, that:

   … the Registrar of the Family Court at Sydney pursuant to Rule 15.34 forthwith request that the Registrar of the Supreme Court of NSW to make available the documents identified in [Orders 3.1 and 3.2 of her Amended Application], and the Court thereafter permit the legal representatives of the parties and the Independent Children's Lawyer to inspect the said documents produced in the Exhibit section of the registry.

2. The Supreme Court proceedings from which the wife sought that the affidavits be disclosed relate to the husband’s capacity and conduct as a director of the Trustee of a Discretionary Trust and whether he should be removed from that position.

3. The wife submitted that the substantive parenting proceedings between she and the husband are complicated given that both children suffer from disabilities which require close management. She submitted that the husband’s history of substance abuse and allegations of him suffering from bi-polar disorder are relevant in determining the outcome of the parenting case.

1. It was the wife’s submission that the observations and experiences of the husband and his family members, particularly as to the husband’s presentation and conduct, given on oath by affidavit in the Supreme Court proceedings, are directly relevant to the s 60CC factors that require consideration by this Court.

2. The wife submitted that the father and paternal grandmother disclosed information to Dr K which is contained in the evidence they filed in the Supreme Court proceedings. The references to these disclosures are contained at pages 7, 14, and 17 of the expert’s report dated 6 January 2017. It is submitted that this information underscored Dr K’s position in relation to the husband’s parenting capacity and her opinion that the paternal grandmother should not supervise or be present during the father’s time with the children.

3. For the purposes of fairness, the wife submitted, she and the Independent Children's Lawyer should have access to the same material that was available to the expert.

4. The wife submitted that, absent compulsion by way of disclosure of the Supreme Court documents, the husband will not volunteer or disclose those relevant matters to the Court.

5. It was the wife’s submission that the Court cannot give proper consideration to the children’s best interests in the substantive proceedings without the evidence filed in the Supreme Court proceedings.

6. The wife expressed concern that the husband may not call the paternal grandmother to give evidence in these proceedings, which she submits poses an issue because Dr K attended upon and relied upon the statements of the paternal grandmother. The wife submitted that it may be necessary to serve the paternal grandmother with a subpoena to attend to give evidence.

7. The wife submitted that without disclosure of the evidence filed in the Supreme Court proceedings, the Court cannot have confidence as to the possibility of violence or other conduct on the part of the husband in the event that he is unable to self‑regulate his behaviour in times of heightened anxiety and stress.

8. In relation to the husband’s concerns of confidentiality as a result of the Agreement, the wife submitted those concerns can be quelled by the undertaking she gave to the Court on 14 October 2016 to treat all material relating to the Supreme Court proceedings as confidential.

The husband’s submissions

1. The husband opposed the orders sought by the wife for the following reasons.

2. The husband submitted that he is a party to an agreement dated 1 September 2016 (“the Agreement”) which requires him to keep the terms of the Agreement and the material filed in the Supreme Court proceedings confidential. He submitted that, if it were not for the Agreement, he would have no objection disclosing his affidavit material to the wife. A copy of the Agreement has been produced to the wife. It was submitted that the parties to the Agreement would be entitled to seek an injunction to restrain the husband from making the documents filed in the Supreme Court proceedings available to the parties in these proceedings.

3. The nature of the Supreme Court proceedings are that they were commenced on 1 December 2015 by the husband’s sister, Ms P lake, against him and his uncle and the companies D and N Pty Limited. Mediation occurred on 1 September 2016. The result of mediation was that the proceedings were discontinued on 28 September 2017 and the Agreement was signed.

4. The husband submitted that the Agreement is relevant to the financial proceedings between him and the wife as it contains a provision for payment to be made by the husband, his uncle and/or D on behalf of the L Trust.

5. The Statement of Claim initiating the Supreme Court proceedings alleges that the husband and his uncle are not fit and proper persons to be directors of the trustee company D. The allegations contained in the Statement of Claim include assertions that the husband suffers from bi-polar disorder and is addicted to cocaine. The husband submitted that he did at one time become addicted to cocaine, but that drug testing in accordance with the Orders made on 14 March 2017 will determine whether he is still a user of cocaine or other drugs.

6. The husband further submitted that the affidavit material filed in the Supreme Court proceedings by his sister and his uncle are not relevant to the parenting proceedings before this Court because neither party would take any part in the care of the children. However, I note that these affidavits were not sought by the wife. The husband submitted that the evidence of his sister and uncle pertained to issues of entitlement to money and the construction of a family trust, which he submitted are substantially different from the issues in these proceedings.

7. In relation to the evidence of the paternal grandmother, the husband submitted that it is not relevant because it was not recommended by Dr K that the paternal grandmother supervise the children’s time with the husband or that she spend time with the children.

8. The husband further submitted that the evidence filed in the Supreme Court proceedings has no relevance to the financial issues between the parties as it is envisaged that his inheritance will have vested by the time of the hearing of the substantive proceedings.

9. Nevertheless, the Supreme Court proceedings were discontinued and the evidence was therefore not tested.

10. The husband submitted that, should either of the parties feel it is relevant to obtain evidence from persons who gave evidence in the Supreme Court proceedings, they will be free to do so.

Determination

1. The affidavit material filed in the Supreme Court of NSW proceeding is specifically referred to in the Family Report prepared by the single expert. As such, it might have some relevance although I consider that is speculative only.

2. The relationship between the father and his mother is important in relation to the parenting case. Although she may not ultimately be a supervisor of the father’s time with the children, that may change. The Court has the ultimate responsibility to make an order which is in the best interests of the children and that can include making an order which is not sought by either parent.

3. I consider it is unlikely that it will be necessary for any of the parties, including the Independent Children's Lawyer, to have access to the material contained in an affidavit filed by the paternal grandmother in the Supreme Court of NSW proceeding specified above, however, experience proves that facts or circumstances which before trial appear to have little relevance can sometimes assume an importance which surprises all in a trial. Lest that happen and the content of the affidavit sworn by the paternal grandmother in the Supreme Court of NSW proceeding become important, I propose to have the Registrar request the Supreme Court of NSW provide the subject affidavit to the Registrar to be placed in a sealed envelope, not to be opened unless I make a further order requiring that to occur. During the trial, should the content of the affidavit become relevant and important either parent or the Independent Children's Lawyer can make an application for inspection and I will consider same at that time. Should the envelope not be required to be opened I propose the Registrar return same to the Supreme Court of NSW.

4. I will reserve each party’s costs.

I certify that the preceding fifty-one (51) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Le Poer Trench delivered on 23 May 2017

Associate:

Date:  23 May 2017