FAMILY COURT OF AUSTRALIA
| LAMBERT & JACKSON | [2010] FamCA 357 |
| FAMILY LAW – PROPERTY SETTLEMENT – whether or not a global approach to contributions is appropriate in this short marriage – property acquired before marriage – contributions by the parties – whether the husband made special contributions – direction financial contributions by relatives – indirect non financial contributions by grandmother – whether the wife’s mother was a financial resource – duty of full and frank disclosure – appropriate adjustment where there has been a lack of disclosure FAMILY LAW – SPOUSAL MAINTENANCE FAMILY LAW – CHILD SUPPORT – application for departure FAMILY LAW – conduct of proceedings by lawyer – prima facie evidence against the husband’s solicitor and whether a referral to the Legal Services Commission is appropriate |
| Family Law Act 1975 (Cth) ss 75(2); 75(2)(o); 79; 79(4)(d) – (g) Family Law Rules 13.01; 13.04; 13.07; 13.14; 13.15 |
| Oriolo & Oriolo (1985) FLC 91-653 Black & Kellner (1992) FLC 92-287 Weir & Weir (1993) FLC 92-338 Omacini v Omacini (2005) FLC 93-218 DJM and JLM (1998) FLC 92-816 HDM & MM and SJM [2006] FamCA 47 (14 February 2006) Chorn & Hopkins (2004) FLC 93-204 Essex and Essex [2009] FamCAFC 236 Biltoft (1995) FLC 92-614 Lenehan and Lenehan (1987) FLC 91-814 Norbis v Norbis (1986) FLC 91-712 Aleksovski (1996) FLC 92-705 Robb and Robb (1995) FLC 92-555 Jones & Dunkel [1959] HCA 8; (1959) 101 CLR 298 Scott & Scott (1994) FLC 92-457 St John v St John (1974) 6 Fam LN N14 |
| APPLICANT: | Ms Lambert |
| RESPONDENT: | Mr Jackson |
| FILE NUMBER: | SYF | 2949 | of | 2006 |
| DATE DELIVERED: | 6 May 2010 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Watts J |
| HEARING DATE: | 26 – 29 October 2009 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Grahame Richardson SC |
| LAWYER FOR THE APPLICANT: | Barkus Doolan Kelly |
| COUNSEL FOR THE RESPONDENT: | Mr Fleetwood |
| LAWYER FOR THE RESPONDENT: | Y Firm |
Orders
This matter be relisted on 24 May 2010 at 2.15pm for oral argument on the form of the orders as outlined in paragraph 382 of the Reasons for Judgment.
The parties are to confer within a period of seven days to explore whether or not they can reach an agreed form of orders.
In the event that they are unable to agree on a form of orders by 3pm on 21 May 2010 each party shall email to my associate a minute of order together with a short outline of argument in relation to why those orders should be made.
There be a further listing before me on 24 May 2010 at 2.45pm for the purposes of giving Ms Y an opportunity to make submissions as to why I should not send my prima facie findings to the Legal Services Commission (Queensland) for the purpose of him considering whether to initiate and prosecute disciplinary proceedings against Ms Y.
Any affidavit evidence upon which Ms Y wishes to rely for the purposes of her submissions on 24 May 2010 is to be filed in the Sydney Registry by 3pm on 21 May 2010.
Unless the court otherwise orders the name of Ms Y be made anonymous in any copy of these Reasons for Judgment available to anyone other than the court, the parties and the Legal Services Commissioner (Queensland) or anyone he may nominate (in the event the findings are sent to him).
IT IS NOTED that publication of this judgment under the pseudonym Lambert v Jackson is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT ADELAIDE |
FILE NUMBER: SYF 2949 of 2006
| MS LAMBERT |
Applicant
And
| MR JACKSON |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
These proceedings are about what alteration should be made between the husband and wife in respect of property. In the event the wife does not obtain the outcome that she seeks by way of property alteration, she in addition seeks an order for spousal maintenance. The wife also seeks an order for departure from the current level of assessed child support and an order that the husband pay for the two children of the marriage to attend private schools. The wife sought an injunctive order against the husband which has been withdrawn upon the husband giving an undertaking in similar terms to the order that was sought.
At the end of the hearing an issue arose relating to the professional conduct of the husband’s solicitor, Ms Y.
THE PARTIES’ APPLICATIONS
The wife at commencement of the hearing sought orders as follows:
1.That the Husband pay or cause to be paid to the Wife the sum of $3,117,752 within 28 days of the date of the making of these Orders.
2.That within 28 days of the date of these Orders and subject to the payment referred to in paragraph 4, [sic] the Wife do all acts and things and sign all documents necessary to transfer to the Husband the whole of her right, title and interest in the property situated at and known as [T property] being the whole of the property comprised in Lot […] Registered Plan […] Title Reference […] subject to the Husband having submitted to the Wife’s legal representatives at least 14 days prior to the date of settlement a Memorandum of Transfer in registrable form.
3.That simultaneous with the transfer referred to in the preceding paragraph, the Husband do all acts and things and sign all documents necessary to discharge the mortgage to the National Australia Bank Limited and registered as security against the title to the [T] property.
4.That except as any paragraph of these Orders provide to the contrary, as against the Husband, the Wife is solely entitled to and the Husband has no interest in:
4.1.the Wife’s bank accounts;
4.2.the Wife’s superannuation interests with AMP, Media Super and REST Super;
4.3.the Wife’s interest in the property situated at and known as [A property] being the whole of the property comprised in Certificate of Title Folio Identifier […];
4.4.all other assets of whatsoever nature and kind presently in the name, ownership or possession of the Wife.
Spouse maintenance
5.That the Husband pay to the Wife or as the Wife may from time to time direct in writing the sum of $700 per week, the first payment to be made within 7 days of the making of these Orders.
6.The spouse maintenance payable by the Husband to the Wife pursuant to paragraph 5 is to be varied on the review date each year commencing on 1 January 2011 to such sum as shall be determined by multiplying the spouse maintenance payable on the review date by the fraction N/B where “B” is the Consumer Price Index for Sydney (All Groups) published by the Australian Bureau of Statistics (“CPI”) in respect of the quarter year ended 12 months prior to the review date, namely 30 June, and “N” is the CPI in respect of the quarter year ending on the day immediately proceeding the review date
Child support
7.That pursuant to section 117 of the Child Support (Assessment) Act, 1989, there be a departure from the administrative assessment of child support payable by the Husband for the children as follows:
7.1.for the period from the date of these Orders until the occurrence of a child support terminating event the annual rate of child support be set at $875 per week per child week (being a total amount of $1,750 per week for the children), the first payment to be made within 7 days of the making of these Orders;
7.2.the child support payable by the Husband to the Wife pursuant to paragraph 7.1 is to be varied on the review date each year commencing on 1 January 2011 to such sum as shall be determined by multiplying the child support payable on the review date by the fraction N/B where “B” is the CPI in respect of the quarter year ended 12 months prior to the review date, namely 30 June, and “N” is the CPI in respect of the quarter year ending on the day immediately proceeding the review date.
8.That in addition to the child support payable pursuant to paragraph 7, pursuant to section 124 of the Child Support (Assessment) Act, 1989, the Husband shall provide additional child support for the children by way of payment of all education expenses incurred by the Wife in respect of each of the children and education expenses shall mean and include all tuition fees, excursion fees, coaching and tutoring fees, extra curricular activities, incidental sporting costs, the cost of school books, and the cost of school and sports uniforms and the husband forthwith pay [C] College the sum of $4,500.00.
General
9.That the Husband forthwith do all acts and things and sign all documents necessary to cease using the reference “Gold Digger” to identify any payments made by the Husband to the Wife and thereafter the Husband be restrained by injunction from using this or any other derogatory or offensive term to identify payments made by him to the Wife.
10.In the event that either party refuses or neglects to execute any deed or instrument necessary to give effect to these Orders, then the Registrar of the Court be appointed pursuant to section 106A of the Family Law Act, 1975 to execute such deed or instrument in the name of the defaulting party and to do all acts and things necessary to give validity and operation to the deed or instrument.
11.That the Husband pay the Wife’s costs of and incidental to these proceedings.
The husband at commencement of the hearing sought orders as follows:
1.That within thirty (30) days from the date hereof the Wife transfer to the Husband all her right title and interest in the former matrimonial home situated at [T] more particularly described as Lot […] on RP […], County of […], Parish of […], fully contained in Certificate of Title Reference No […] and the Husband shall indemnify the Wife in respect of any previous, current or future outgoings in respect of this property and in particular cause the Wife to be released from the mortgage granted to the National Australia Bank and secured over the former matrimonial home.
2.Contemporaneous with the transfer of property pursuant to Order 13 that the Husband shall pay to the Wife the sum of $800,000.00 and indemnify the Wife in respect of the amount due to [R] Pty Ltd for works attended to by or on behalf of the company for renovations and improvements at the former matrimonial home.
3.That the Wife have all right title and interest in the property at [A] in the State of New South Wales more particularly described as Lot […] in Strata Plan […], fully contained on Certificate of Title Reference Folio […] and the Wife shall indemnify the Husband in respect of any previous, current or future liabilities in respect of this property.
4.That the Husband have all right title and interest in his interest in [the property in] England.
5.That the Wife be responsible for and indemnify the Husband in respect of any monies due and owing to the Wife’s mother [Mrs Lambert Snr] or any other family member of the Wife’s family or associated entity.
6.That in the event that the Husband is unable or unwilling to meet the payment required in Order 14 [sic] within 30 days of the date of this order then the former matrimonial home situated at [T] be sold upon such terms and conditions as this Honourable Court deem met.
7.That upon completion of the sale of the property as provided herein that the sale proceeds received be paid out in the following manner and priority:
7.1.payment of all debts secured over the property as at the commencement of proceedings;
7.2.payment of outstanding rates;
7.3.[R] Pty Ltd or an agreed contractor for works attended to by or on behalf of the company or agreed contractor for renovations and improvements at the former matrimonial home to make the home presentable for sale and the parties shall be advised by the agent in relation to what works are required to be carried out for that purpose;
7.4.payment of agent’s commission, if any, due in relation to sale;
7.5.payment of the legal costs of the sale;
7.6.payment of any advertising or other expenses necessarily incurred to give effect to this Agreement;
7.7.Any costs incurred as a result of Council requirements;
7.8.The residue to be divided as follows:
To the Wife an amount equal to 50% of the contract price of the former matrimonial home less 50% of items (b), (c), (d), (e) and (f) [sic] and the balance to the Husband.
8.That until such time as the former matrimonial home has been sold and/or whilst the Husband remains in occupation of the former matrimonial home, the Husband shall be responsible for making the monthly repayments of the mortgage secured over the former matrimonial home, and all other outgoings in respect of property excluding rates.
9.That the Husband have all right, title and interest in his interest in the company [R] Pty Ltd A.C.N[…]. The Husband shall indemnify the Wife in respect of all past, present or future outgoings and liabilities in respect of this business/company save as provided for in these Orders.
10.That the Wife have all right, title and interest in the Toyota Kluger 4 x 4 registration number […] currently in her possession. The Wife shall be responsible for the personal loan obtained by the Wife to purchase this vehicle and shall indemnify the Husband in respect of all past, present or future liabilities in respect of this vehicle.
11.That the Wife have all right, title and interest in any superannuation investments held by her.
12.That the Husband have all right, title and interest in any superannuation investments held by him.
13.That the Husband and the Wife shall each be responsible for their respective debts and liabilities save as provided for in these Orders.
14.That the Wife have all right, title and interest in any bank accounts operated in the Wife’s name alone.
15.The Husband have all right, title and interest in any bank accounts operated in the Husband’s name alone.
16.That the Husband has no right title or interest in any other item of matrimonial property or financial resource not enumerated herein in the possession of or under the control of the Wife and that any such item of matrimonial property or financial resource in the possession of or under the control of the Wife shall forthwith be the sole property of the Wife and the Wife has no right, title or interest in any other item of matrimonial property or financial resource not enumerated herein in the possession of or under the control of the Husband and that any such item of matrimonial property or financial resource in the possession of or under the control of the Husband shall forthwith be the sole property of the Husband.
17.Save as for provided for otherwise within these Orders that the transfer of all real property and financial instruments referred to herein shall be completed within thirty (30) days of the date of these Orders and such date shall, for the purpose of these Orders be the date of completion.
18.The Wife pay the Husband’s costs of an incidental to these proceedings to be agreed or taxed.
19.That the husband and wife be injuncted from contacting in any way the local authorities regarding the [T] property at all.
20.That the wife’s application for spousal maintenance and the departure order sought from the Child Support Agency assessment be dismissed with costs.
DOCUMENTS RELIED UPON
Wife’s documents
The wife relied upon the following documents:
5.1.Financial Statement of the wife filed 14 April 2009;
5.2.Affidavit of the wife filed 14 May 2009;
5.3.Further affidavit of the wife filed 31 March 2009;
5.4.Further affidavit of the wife filed 19 October 2009;
5.5.Affidavit of Mrs Lambert Snr (wife’s mother) filed 13 February 2009;
5.6.Further affidavit of the wife’s mother filed 20 October 2009;
5.7.Affidavit of Mr Lambert Snr (wife’s father) filed 13 February 2009;
5.8.Further affidavit of the wife’s father filed 22 October 2009.
The wife also relied upon a tender bundle of documents which was Exhibit “H” and further documents tendered during the hearing.
Husband’s documents
The husband relied upon the following documents:
7.1.Response to an Application for Final Orders filed 6 July 2006;
7.2.Financial Statement of the husband filed 6 July 2006;
7.3.Affidavit of the husband filed 15 May 2009;
7.4.Affidavit of the husband filed 23 October 2009;
7.5.Financial Statement of the husband filed 23 October 2009;
7.6.Affidavit of Mr c filed 22 October 2009;
7.7.Affidavit of Mr C filed 23 October 2009.
Expert evidence
Expert evidence was provided as follows:
8.1.Affidavits of Mr P filed 26 February 2008 and 2 June 2008 as to value of A property (in NSW);
8.2.Affidavits of Mr S filed 13 March 2008, 25 June 2008 and 25 August 2009 as the value of T property (in QLD);
8.3.Affidavits of N (accountant) filed 26 February 2008, 27 March 2009 and 14 April 2009.
Mr N provided an updated report based upon the 2009 financial statements of the husband’s corporate entities and gave oral evidence.
SHORT HISTORY
The husband was born in 1962 and is currently 47 years old. The wife was born in 1970 and is currently 39 years old.
The parties commenced cohabitation in March 2003 and were married in January 2004.
The children of the marriage, W and J (“the children”) were born in November 2004 and are currently 5 years old.
The parties separated on 24 March 2006 and were divorced on 6 July 2007.
Final parenting Orders were made by consent before Registrar Campbell on 22 October 2009 and provide that the children reside with the wife and that the husband spend time with the children from 9:00am Saturday to 5:00pm Sunday (or Monday if a long weekend) on one weekend per calendar month as nominated by the husband to the wife and for more extended time during school holidays.
CREDIT
The evidence of the wife
The wife gave evidence in a forthright manner. Nothing emerging from her cross examination damaged her credit and counsel for the husband did not suggest that her credit had been impugned.
Mrs Lambert Snr (wife’s mother)
The only issue arising from the evidence of the wife’s mother relates to the evidence she gave about her potential as a financial resource for her daughter in the future. I discuss my reservations in relation to her evidence in that regard later in the judgment. I find that what she says about this issue does not reflect the real situation. Otherwise, no issue of credit arises from the evidence of the wife’s mother.
Mr Lambert Snr (wife’s father)
Mr Lambert Snr’s evidence was not challenged during cross examination and no issue arises in respect of his credit.
The evidence of the husband
Shortly prior to the lunchtime adjournment on the second day of the hearing the husband gave the following evidence:
Would you accept that there are a number of features of your evidence today that might leave his Honour with the impression that you are a thoroughly dishonest person?---Yes.
Prepared to tell lies when it suits you?---Yes.
I accept the husband’s evidence in that regard. By the end of the hearing the husband’s creditability was in tatters.
During final submissions, counsel for the husband conceded that any assessment of his client’s evidence in the witness box would lead to the conclusion that “my client has given that [sic] from time to time he has made inconsistent statements”.
The examples as to when the husband had failed to be truthful are numerous and I do not propose to chronicle them.
The husband has not made a full and frank disclosure of his financial position to the court.
The wife has demonstrated that the husband has been less than cooperative in a fulsome disclosure of the husband’s business activities. The husband’s affidavit which was filed at the commencement of the hearing in relation to issues of non disclosure does not adequately explain why 40 boxes of documents remained unavailable to the wife. The husband’s assertion that these documents were on CD, proved to be a false assertion. He admitted in cross examination all that was on CD were MYOB records.
The husband does not dispute that in December 2008 his former lawyers received a letter from the wife’s lawyers proposing an agreed value of L Street based on an historical valuation. The lower figure agreed to was in circumstances in which the property had already been sold at a higher price and the husband’s former solicitors had acted on the sale.
At the time the husband gave evidence before me there was an outstanding amount of arrears in respect of child support that the husband owes the wife in excess of $3,000. Whilst that is not a major amount in the context of this matter, the husband indicated that he had been in discussions with the Child Support Agency in relation to arrangements for the periodic payment of that debt. The husband conceded in cross examination that he could write a cheque immediately to pay the arrears and in fact in the witness box promised to do so. He had always been in a position to make that payment. The fact that he had chosen not to is not to his credit. The husband conceded that on a number of occasions he had misrepresented his financial position to the bank.
During cross examination the husband was shown a photocopy of an affidavit filed by him in the Federal Court of Australia on 20 November 1995. The affidavit verified a statement of affairs annexed to the affidavit as being true and correct. It was a statement that the husband was obliged to file under the Bankruptcy Act. The husband failed in that document to disclose any interest in the United Kingdom property or the existence of a bank account in the United Kingdom. When questioned about that, the husband objected to the question on the ground that the evidence he would give may tend to prove that he had committed an offence. Whilst no adverse inference should be drawn arising from the husband’s claim for privilege, I do have evidence, on the one hand Exhibit T, which is the affidavit verifying the husband’s statement of affairs, and on the other hand evidence that at that time the husband had an interest in real estate in the United Kingdom and a bank account in the United Kingdom. I conclude that the husband was not truthful when swearing his affidavit in 1995.
The husband also refused to answer questions about the truthfulness of statements he made in his undertaking as to disclosure which was filed in court on 7 October 2009. Again it is not appropriate for me to draw any adverse inference from the fact that he failed to answer questions about the truthfulness of that document on the basis that those answers may incriminate him. I do however find, on the balance of probabilities, that the undertaking that he gave to the court was untrue based on other evidence which is fully discussed below.
Counsel for the husband did not make a submission that I should make a positive finding about the husband’s credit. Where the evidence of the wife varies with the evidence of the husband, then I should accept the wife’s evidence unless that evidence was intrinsically unlikely or there was evidence from objective sources that would point in the opposite direction.
The documents that were tendered upon the reopening of the case after final submissions from Sparke Helmore cast a dark cloud over all of the husband’s evidence in relation to the arrangements that are currently in place between himself and his former partner, Mr EN. I deal with those documents in more detail later but note I am able to find that the husband has consistently and repetitively failed to tell the truth about his agreement with Mr EN, independently of what is in those files. The Sparke Helmore files reinforced my views about the husband’s credit.
In October 2006 the husband, through his lawyer, gave an undertaking not to divest his shareholding in R Pty Ltd. The wife made the point during the hearing that he had in fact done so by way of restructuring. I accept however that that restructuring was simply for tax purposes. The husband at no time asserted that he had lost effective control of the asset and I do not draw any adverse inference in relation to the husband’s credit arising from the structural reorganisation that had occurred.
CHRONOLOGY
The wife graduated with a Bachelor of Economics Social Sciences in 1990.
The wife purchased a property at A for the sum of $272,000 in 1993. The wife borrowed $165,000 from her mother, Mrs Lambert Snr, which is secured by way of mortgage against the property. Originally this borrowing required repayment on demand but did not require the payment of any interest. That was the position for ten years until the mortgage was renegotiated by way of a further borrowing around about the time of the commencement of the cohabitation between the husband and wife. From that time, by way of variation of the mortgage, the original borrowing and the additional borrowings attracted an accrual of interest at an agreed interest rate which was 2 percent above the bank bill rate. Senior counsel for the wife initially asked me to draw the inference that that was an advantageous interest rate. I indicated that without evidence I was not prepared to take judicial notice that it was and he abandoned that submission.
In August 2001 the wife commenced employment with CW Organisation.
On 1 March 2002 the wife’s mother purchased 5,000 shares in Austar at a cost of $1,700 for the wife.
In November 2002 the wife was negotiating a new contract with CW Organisation with a salary package of $84,000. It seems from the wife’s oral evidence that these negotiations were never concluded.
In December 2002 the husband and wife discussed moving to southern Queensland. In February 2003 the wife resigned from her employment and received a net termination payment of $5,605.81 which the wife used to pay for living and household expenses.
In March 2003 the parties commenced cohabitation. The A property was valued at between $690,00 and $720,000 as at the commencement of cohabitation in March 2003 and the equity in the property was consequently approximately $540,000 ($705,000 - $165,000).
In mid March 2003 the parties leased a 4 bedroom property for $395 per week and the wife paid half of the bond and $150 towards the rent. The husband’s three children from his prior marriage resided with the parties at this time. At that time they were aged 16, 14 and 12.
In April 2003 the wife received a tax refund for the 2001- 2002 financial year of over $2,000.00 and used this money to pay for living and household expenses.
At the commencement of the cohabitation, the husband had an interest in two partnerships, one which traded under the name R Company and the other a partnership consisting of EN Pty Ltd, AEN, JEN and the husband. At the commencement of cohabitation, the husband had a 50 percent interest in each of those partnerships. The husband’s estimates for the value of those partnerships in paragraph 24 of his affidavit based on 2003 tax returns were the subject of a successful objection. The 2003 tax return was not tendered. There was no evidence given as to the value of the interest in the entities as at the date of commencement of cohabitation. On 23 June 2003 the husband was appointed as director of R Pty Limited and he acquired 50 percent of the ordinary shares in the company.
On 30 September 2003 the parties purchased a property at T for $995,000 plus the costs of the purchase. The husband borrowed $494,000 from National Australia Bank, secured by way of mortgage against the T property and the wife provided a personal guarantee to the bank. The wife borrowed $492,849.30 from her mother, on the basis that the interest on that borrowing be capitalised. The loan from the wife’s mother was secured by way of mortgage against the A property. The mortgage also secured the original $165,000.00 that had been borrowed when the wife had acquired A property. As already mentioned, the interest rate was 2 percent above bank bill rates.
On 8 January 2004 the terms of the mortgage granted to the wife by the wife’s mother were varied and the principal sum was increased to $700,000.
In January 2004 the wife borrowed $8,000 from the Commonwealth Bank of Australia and this was used to pay for living and household expenses. At separation the balance of the loan was approximately $5,300, which has been fully repaid since separation.
In January 2004 the parties were married.
At the end of January 2004 the partied purchased a shed kit, which was installed during the parties’ honeymoon, for approximately $12,000 to $14,000 and the wife contributed to this cost.
In February 2004 the partied moved into the T property and renovated the stable, added 3 bedrooms, 2 bathrooms, a toilet laundry, remodelled the main bedroom, built deck chairs and stair and installed electricity and plumbing. The wife contributed between $300 and $1,000 on a monthly if not weekly basis to the costs of the renovation. The wife’s source of income was rent from her A property.
In mid 2004 the wife noticed a property for sale at O and she informed the husband of this and this property was subsequently purchased by R Pty Ltd. In July 2004 the Jackson Superannuation Fund was established by deed and the wife and husband were appointed as trustees with the husband being the sole member of the fund.
On 21 July 2004 the wife sold her Austar shares for $3,950 and received $3,884 which the wife used to pay for household and living expenses. In July/August the wife’s mother purchased a lounge suite for the parties.
In November 2004 W and J were born.
In November 2004 E Holdings Pty Ltd, a company in which the wife held 50 shares, ceased trading and the wife received approximately $50.
In early 2005 the wife received a tax refund of $4,935.28 for her 2003 tax return, which the wife used to pay for living and household expenses.
In January 2005 the wife traded in her BMW for $8,000, which was owned by the wife at the commencement of cohabitation, and purchased a Toyota Kluger Grande for $63,563. The balance of the purchase price was borrowed from the wife’s mother.
In March 2005 the husband’s travel for work related purposes increased and he began staying away from home for between 1 to 4 nights a week. By June 2005, the husband was travelling for work every month and usually twice a month.
On 8 November 2005 the terms of the mortgage granted to the wife by the wife’s mother were varied and the principal sum increased to $775,000, with $179,000 relating to the A property (including the initial loan of $165,000 with interest from 2003); $513,100 relating to the acquisition and improvement of the T property, $48,100 relating to the acquisition of the Wife’s car, $6,980 for the Wife’s tax liabilities and $27,300 for living and household expenses.
In March 2006 the wife accompanied the husband to Cairns and Dunk Island and stayed there for 1 week.
On 16 March 2006 the husband was appointed sole director shareholder and director of DO Pty Limited.
On 24 March 2006 the parties separated. On 31 March 2006 the wife vacated the former matrimonial home and on 9 April 2006 moved with the children to Sydney.
On 12 May 2006 the wife commenced proceedings in the Family Court of Australia in which she sought final property and parenting orders.
On 15 May 2006 the she received her first child support payment from the husband and in June 2006 the father spent time with the children for the first time since separation.
In July 2006 the father travelled to Malaysia for one week.
On 1 August 2006 the wife filed an interim application seeking financial orders including spouse maintenance. On 14 August 2006 the parties attended counselling at the Family Court of Australia and the parties reached agreement that the husband would spend time with the children twice each alternate weekend for 2.5 hours to be supervised by one of the wife’s parents.
On 29 August 2006 interim orders were made in the Family Court and the husband was ordered to pay the wife spousal maintenance of $450 per week.
In September 2006 the husband travelled to Vanuatu for 4 days.
On 12 September 2006 the parties appointed Mr N as a single expert to value the husband’s interest in R Pty Ltd. On 13 September 2006 the husband said to the wife in reference to his interest in R Pty Ltd, “I’m just telling you it’ll be worth nothing”. I find that statement of opinion by the husband was not truthful.
On 4 October 2006 the wife received a letter from the husband’s lawyer confirming that the husband has “no intention of divesting or diluting his current shareholding in [R] Pty Limited.”
On 20 October 2006 the husband asserts that he attended a meeting of the trustees of the Jackson Superannuation Fund during which the husband and the wife retired as trustees. The husband signed the minutes of the meeting and a statutory declaration. The wife did not attend this meeting and the minute is inaccurate in that regard. On 13 December 2006 the husband notified the Australian Taxation Office of the change in trustees of the Jackson Superannuation Fund.
In December 2006/January 2007 the husband travelled to Africa for 3 weeks, with a stopover in Dubai. The husband then travelled to the United Kingdom in February2007/March 2007 for 2 ½ weeks again with a stopover in Dubai.
In June 2007 the wife moved into a 2 bedroom unit in D in Sydney with the children and in July 2007 the wife was admitted to Prince of Wales Hospital in Randwick, being discharged 2 weeks later.
On 6 July 2007 the marriage between the parties was dissolved by the Federal Magistrates Court. Later on in July 2007 the children start attending U Pre School 2 days a week (extended to 3 days at the beginning of 2008). Through August 20007 the husband telephoned the children at a frequency of about once a week or every 10 days.
In October 2007 the husband transferred his interest in R Pty Limited to DO Pty Limited without notice to the wife.
In December 2007 the wife became aware that she and the children have been removed from the father’s private health insurance.
On 24 December 2007 the wife had a conversation with the husband in which he said “[R Pty Ltd] no longer exists”, a statement which was misleading and untruthful.
On 1 January 2008 W had a seizure and an ambulance was called. The wife contacted the father and asked him about the child’s private health insurance and that the father did not respond. On 14 January 2008 the wife obtained an ASIC search of R Pty Limited and became aware that the husband had transferred his interest to DO Pty Limited in October 2008. On 21 January 2008 the wife’s lawyer wrote to the husband and requested particulars of the transaction. No response was received.
In February 2008 the husband travelled to Malaysia with his new partner, Ms SH. Around this time the number of times the husband telephoned the children are reduced to once every 2 to 3 weeks.
During the first half of 2008 the wife lodged her 2004, 2005, 2006 and 2007 tax returns and was assessed to pay $9,593.20 plus provisional tax, an amount to be repaid at a rate of $470 per month.
On 12 May 2008 Mr N was further instructed to value the seven entities in which the husband had an interest.
In June 2008 Jackson Investment Pty Limited was incorporated, with the husband being the sole director and holding 2 ordinary shares and 1 “D” class share held by DO Pty Limited. On 30 June 2008 Jackson Investment Pty Limited received a distribution from the Jackson Family Trust. This was not disclosed to the wife within a reasonable time of it happening.
In July 2008 the wife commenced part-time study of a Masters Degree.
On 25 July 2008 My N requested additional information to assist his valuation of entities.
On 23 August 2008 the husband was assessed to pay child support of $471.88 per week calculated using the husband’s provisional income of $153,809 per annum.
On 27 August 2008 the husband cancelled his plans to spend time with the children as he stated that there were no available flights. The wife conducted website searches which showed flights were available on Qantas and Jetstar. This evidence is relevant to the wife’s submissions about the findings that should be made about the husband’s likely future involvement with the children.
On 27 August 2008 R Development No. 2 Ltd, of which the husband is a director, sold a property in Western Australia for $1,350,000, details of which are not disclosed to the wife by the husband.
In late September 2008 the husband stopped paying child support until 8 October 2008.
On 17 October 2008 a letter from the husband’s accountant was received in response to a letter from the wife’s lawyer confirming that Jackson Investments Pty Ltd was a corporate beneficiary of the Jackson Family Trust and stating that Jackson Investments Pty Ltd would receive a distribution in the 2008 financial year.
On 20 October 2008 the wife requested that instructions be sent to Mr N to value Jackson Investments Pty Ltd. No response was received prior to 20 October 2009. On that day, at the request of the wife, I ordered that Mr N value this interest. The husband’s interest in the company was valued at $170,459.
On 22 October the husband sold a property in the United Kingdom for £150,000, details of which are not disclosed to the wife.
On 28 October 2008 the husband provided to the wife documents relating to her purported retirement as a trustee of the Jackson Superannuation Fund. The documents have not been signed by the wife.
On 5 November 2008 the husband paid £1,750 to his relative ‘DY’, the purchaser of the United Kingdom property. The wife was not initially aware that the purchaser was a relative of the husband (and hence the sale of the property not at arms length).
On 21 November 2008 the husband responded to the wife’s letter of 14 October 2008, providing the wife with the contract for sale notifying of the property in Western Australia
On 4 December 2008 R No 1 Pty Ltd, of which the husband is a director, sold a property at Lot 6, L Street (QLD) for $520,000 (plus GST), details of which were not disclosed to the wife until 24 February 2009.
On 4 December 2008 the wife’s lawyer wrote to the husband’s former lawyer providing proposed values of real estate. The proposed values were based on valuations provided by the husband and obtained in 2007. The wife was unaware at this time that the property at L Street had in fact already been sold. The husband’s former lawyer had acted on the sale. The husband’s lawyer agreed to the value proposed by the wife, failing to disclose the sale of the property at L Street for a higher value.
On 15 January 2009 the husband offered to pay to the wife $100 per week in child support until the ‘backlog’ of payments had been paid. Payments to this effect were made until 9 March 2009, in circumstances where the husband had ample capacity to pay any arrears of child support in one payment.
On 23 January 2009 the husband cancelled his plans to spend time with the children on the Australia Day long weekend. The husband provided no explanation for the cancellation.
On 24 February 2009 the wife submitted an application to change the child support assessment. The application was listed for telephone conference on 17 April 2009. The husband did not file a response to the application. On the same day Mr N received the information needed to complete his report that had been requested on 25 July 2008 and it was at this time that the wife asserts that she was notified of the sale of the property at L Street.
On 2 March 2009 the wife’s lawyer wrote to the husband’s lawyer and requested a copy of the contract for sale of the property at L Street and no response was received. On 9 March 2009 the wife issued a subpoena to R Development No 1 Pty Ltd to obtain copy of the contract for sale of land, returnable 17 March 2009.
On 9 March 2009 the husband sought a credit of $100 as ‘non-agency payment’.
On 20 March 2009 the children telephoned the husband and spoke with AH, the son of the husband’s de facto partner who informed them that the husband and Ms SH were living together, a fact not previously known by the wife. On 22 March 2009 the first unsupervised 3 hour visit between the husband and the children took place.
In late March 2009 to April 2009 the father travelled overseas for 4 to 5 weeks with his de facto partner, Ms SH.
In March 2009 the children attended U Pre School for 2 days per week and J Pre School 2 days a week. During the same month the wife submitted her tax return and was assessed to pay $1,480.60.
On 8 April 2009 the wife ascertained, through her own endeavours, that the United Kingdom property had been sold for £150,000 and the wife’s lawyer wrote to the husband’s lawyer seeking particulars of the sale. A response was received on 29 April 2009 confirming the sale of property on 22 October 2008. The wife asserts that she was not satisfied that the husband only had a 50 percent interest in the property as the husband had stated in a loan application submitted to the bank that he was the sole owner of the property. The husband’s share of the sale proceeds was deposited into 2 HSBC accounts, only one of which was known to the wife prior to disclosure.
On 2 May 2009 the husband failed to attend a scheduled visit with the children. In oral evidence the husband stated that he told the children on the telephone that he was not coming to Sydney. He stated that he believed the wife was listening in on that conversation, as he asserted that is what she normally did. The husband acknowledged that if the wife had not been listening in, she would not have known that he was not coming to Sydney unless the children (who were then 4) had told her. I accept the wife was unaware that the husband had changed his plan to visit the children.
The husband withdrew £10,000 from HSBC account number …143 on each of 12 May 2009, 15 May 2009 and 18 May 2009, totalling £30,000, without disclosure to the wife until 7 August 2009.
On 16 May 2009 the husband spent 4 hours with the children (the wife had offered the husband a full day).
On 28 May 2009 the Child Support Agency granted the wife’s departure application and increased the husband’s child support liability to $2,014.17 per month backdated to 6 March 2009. The correct amount was not paid until August 2009.
In June 2009 the wife applied for a leave of absence from her Masters degree.
On 3 June 2009 the parties attended mediation, agreed on parenting arrangements and signed consent orders reflecting the agreement which were then lodged with the Family Court of Australia. On 4 June 2009 the husband withdrew his consent for the orders and also withdrew consent to the wife taking the children to Spain to attend the wife’s brother’s wedding. On the 8 June 2009 the husband sent the mother an email stating “I will no longer be seeing our children… please explain to them why.”
On 23 June 2009 this matter was set for final hearing on 26 to 29 October 2009.
Ms Y filed a Notice of Address for Service and became the lawyer on the record for the husband on 30 June 2009. Ms Y is an accredited family law specialist.
On 6 July 2009 the wife’s lawyer sent a letter to the husband’s lawyer providing flight details for the wife and the children between Sydney and Amsterdam. On 13 July 2009 the wife’s lawyer sent a letter to the husband’s lawyer providing flight details for the wife and the children between Amsterdam and Barcelona. On 17 July 2009 the wife’s lawyer sent a letter to the husband’s lawyer requesting that the husband identify any information he required in relation to the proposed trip. No response to these letters was received. On 18 and 19 July 2009 the husband spent time with the children. On 21 July 2009 the wife filed an application seeking an order to travel with the children to Spain and on 29 July 2009 the husband agreed to the orders sought by the wife, with orders being made to that effect in the Family Court of Australia on 30 July 2009. The wife’s costs of the application were reserved. In cross examination, the husband conceded that his behaviour in relation to the wife’s request to take their twins overseas was unacceptable and explained that it was motivated out of anger.
On 7 August 2009 the husband provided statements of the 2 HSBC accounts to the wife and the wife became aware that the husband withdrew £30,000 between 12 May 2009 to 18 May 2009 from HSBC account number …143. No explanation was offered for the withdrawal until 25 August 2009 when the wife’s lawyer received a letter from the husband’s lawyer in response to an enquiry by the wife, which stated that the £30,000 had been placed into premium bonds with National Savings & Investments in the name of the husband’s brother.
On 15 September 2009 R Development No 2 Pty Ltd, of which the husband is the sole director, sold a property in Western Australia for $1,300,000 (plus GST). Details of the sale were disclosed to the wife on 14 October 2009 after an enquiry from the wife’s lawyer.
In relation to child support, as at 7 October 2009 the father was in arrears of $3,853.70.
On 10 October 2009 and 11 October 2009 the father spent time with the children, but no request was made by him to have the children overnight, notwithstanding the parties had agreed to orders being made in those terms.
On 22 October 2009 final parenting Orders were made.
The husband’s current family law solicitor, Ms Y, from Y Firm, accredited family law specialist, commenced to act on the record for the husband in these proceedings by filing a Notice of Address for Service on 30 July 2009.
On the morning of 6 August 2009, Ms Y and Jason Sprague at Sparke Helmore, had a conversation which I discuss in more detail later. Subsequently, on 6 August 2009 the husband, Ms Y and Jason Sprague had conversations relating to the agreement that had been reached between the husband and Mr EN.
On 7 August 2009 Ms Y received an email from the husband, where he set out his understanding of how his arrangements with Mr EN would be implemented.
On 7 October 2009 the husband filed an Undertaking as to Disclosure which had been prepared by Ms Y, signed by the husband. Ms Y had signed the certificate attached to the disclosure. On that day, Ms Y also made representations to the wife’s solicitors which I discuss below.
DUTY OF FULL AND FRANK DISCLOSURE
Well known case law (Oriolo & Oriolo (1985) FLC 91-653; Black & Kellner (1992) FLC 92-287; Weir & Weir (1993) FLC 92 - 338 require a party to property proceedings to make a full and frank disclosure of a party’s financial position. Senior counsel for the wife colourfully summarised the these authorities in the following way:
“Come to this court and chance your hand at having the court determine the case without putting all the facts on the table, that hand will be burnt if you are left on the unfortunate side of it.”
That case law is reinforced by the Family Law Rules (“FLR”). Parts 13.1 and 13.2 FLR set out a party’s disclosure obligations.
Rule 13.01(1) FLR provides:
“Each party to a case has a duty to the court and to each other party to give full and frank disclosure of all information relevant to the case, in a timely manner.”
Rule 13.04(1)(c) FLR provides:
“A party to a financial case must make full and frank disclosure of the party’s financial circumstances, including:
….
(b) any vested or contingent interest in property;
(c) any vested or contingent interest in property owned by a legal entity that is fully or partially owned or controlled by a party.”
Rule 13.07 FLR provides the duty of disclosure applies to each document that:
“(a) is or has been in the possession, or under the control, of the party disclosure the documents; and
(b) is relevant to an issue in the case.”
Rule 13.15 FLR is in the following terms:
Undertaking by party
(1) A party (except an independent children’s lawyer) must file a written notice:
(a)stating that the party:
(i)has read Parts 13.1 and 13.2 of these Rules; and
(ii)is aware of the party’s duty to the court and each other party (including any independent children’s lawyer) to give full and frank disclosure of all information relevant to the issues in the case, in a timely manner;
(b) undertaking to the court that, to the best of the party’s knowledge and ability, the party has complied with, and will continue to comply with, the duty of disclosure; and
(c) acknowledging that a breach of the undertaking may be contempt of court.
(2) A party commits an offence if the party makes a statement or signs an undertaking the party knows, or should reasonably have known, is false or misleading in a material particular.
Penalty: 50 penalty units.
Note Subrule (2) is in addition to the court’s powers under section 112AP of the Act relating to contempt and the court’s power to make an order for costs.
(3) If the court makes an order against a party under section 112AP of the Act in respect of a false or misleading statement mentioned in subrule (2), the party must not be charged with an offence against subrule (2) in respect of that statement.
(4) A notice under subrule (1) must comply with subrule 24.01 (1) and be as follows:
This Notice is filed in accordance with rule 13.15 of the Family Law Rules 2004 .
I [ insert name ]:
(a) have read Parts 13.1 and 13.2 of the Family Law Rules2004 ;
(b) am aware of my duty to the court and to each other party (including any independent children’s lawyer) to give full and frank disclosure of all information relevant to the issues in the case, in a timely manner; and
(c) undertake to the court that, to the best of my knowledge and ability, I have complied with, and will continue to comply with, my duty of disclosure.
I understand the nature and terms of this undertaking and that if I breach the undertaking, I may be guilty of contempt of court.
.....................
....................................
( signature of person making statement )
( full name of person making statement )
..............................
( date of signature )
....................................
....................................
( signature of witness )
( full name of witness )
....................................
( date of signature )
Note 1 For the consequences of failing to comply with this rule, see rule 11.02.
Note 2 A party who breaches an undertaking may be found guilty of contempt of court and may be punished by imprisonment (see section 112AP of the Act).
The Explanatory Statement, issued in 2004 by the authority of the Judges of the Family Court of Australia, states, inter alia:
Rule 13.01: General duty of disclosure
This rule sets out the general duty of disclosure and provides that it applies from pre-action procedures to the finalisation of the case.
This rule reinforces these principles:
(a)the duty applies in all cases;
(b)the duty applies to the disclosure of information and documents;
(c)it is a duty which the Court regards as very important and will scrutinise and enforce;
(d)it is a continuing duty starting with the pre-action procedure.
The importance of the duty of disclosure is emphasised in the Rules by the introduction of the following:
1.the parties are required to read the duty of disclosure before swearing the affidavit in the Form 1 and Form 1A;
2.the parties are required to acknowledge the duty of disclosure and give an undertaking as to their compliance with it at a certain stage of a case. Breach of this undertaking may be punishable as a contravention of a parenting order under the Act (section s 112AA (c) and 70 NB (c)) and may amount to contempt of court; and
3.Rule 13.14 which is intended to send a clear message that the Court will take a serious view of non-compliance with the duty of disclosure and the Rules.
Rule 13.04: Full and frank disclosure
This rule was formerly O17 r3 (FLR 1984) which has been extended to ensure it is contemporary, relevant and useful in relation to complicated financial structures as well as not so complicated arrangements.
Rule 13.07: Duty of disclosure - documents
This rule imposes a duty on a party to disclose documents in the party’s possession or control that are “directly relevant” to an issue. Gone are the days where the Court will allow “general discovery” ie “an order that a party produce all documents in the party’s possession or control relating to the issues in dispute.”
This follows the lead taken in the United Kingdom and Queensland in eliminating the extremely wide test established by The Compagnie Financiere du Pacifique v. The Peruvian Guano Company (1882) 11 QBD 55 which required discovery of documents which may (not must) either directly or indirectly enable the party requiring the affidavit either to advance his own case or to damage the case of his adversary. “ The results of this test was to make virtually unlimited the range of potentially relevant (discoverable) documents which parties were obliged to review and list forcing the other party to read, against the knowledge that only a handful of such documents would affect the outcome of the case. It is a monumentally inefficient and costly process.” (Lord Woolf :Access to Justice Final Report 1996)
The requirement to disclose “directly relevant” documents will introduce a higher standard of assessment in the sifting and examination of a client’s documents. This will oblige parties and lawyers to focus attention at an early stage upon the real issues in dispute and the documentary evidence that goes directly to those issues.
Rule 13.15: Undertaking by party
A significant change to existing practice is the requirement for all parties to acknowledge an awareness of the duty of disclosure in the Form 1 and Form 1A. Also under these Rules a party must sign a notice acknowledging an awareness of the duty of disclosure and undertaking that they have complied with and will continue to comply with the duty. Breach of an undertaking may be punishable as a contravention of a parenting order under the Act (section s 112AA (c) and 70 NB (c)), and may be contempt of Court.
A false statement in an undertaking may be an offence (subrule 2).
Whilst this undertaking is not a prescribed form the court will have forms which comply with subrule (4) available on the web-site and at Registries for use.
WHETHER OR NOT THERE IS AN AGREEMENT BETWEEN THE HUSBAND AND MR EN AND WHAT IT SEEMS MS Y KNEW ABOUT IT
A central issue in the hearing was what was the true position between the husband and his business partner Mr EN. It was an agreed fact that Mr EN wishes to exit from the business arrangements that he has had with the husband for some considerable time. The question that was raised was whether or not an agreement had been reached (as opposed to completed) between Mr EN and the husband which the husband had not disclosed. A second question was the extent of the knowledge or involvement of the husband’s family law solicitor, Ms Y, in arrangements between the husband and Mr EN. That question is whether or not Ms Y had taken any steps or failed to take any steps which assisted the husband in not disclosing to the court arrangements that the husband had entered into with Mr EN. Ms Y is an accredited family law specialist and I infer is very familiar with the husband’s duty of full and frank disclosure.
In order to consider these questions, it is important to look at the following things:
127.1.The husband’s written evidence.
127.2.The husband’s oral evidence.
127.3.The Sparke Helmore files.
127.4.A letter written by Ms Y to the wife’s lawyers dated 7 October 2009 (Exhibit R).
127.5.Undertaking as to Disclosure and Certificate of Lawyer filed on 7 October 2009 (Exhibit Y).
The files from Sparke Helmore in Brisbane arrived at the court after senior counsel for the wife had concluded his submissions and prior to the submissions of the husband’s counsel. Counsel for the husband made the files available for inspection, without any claim for legal professional privilege. Senior counsel for the wife sought to reopen to tender the files. Counsel for the husband said his instructions were not to oppose the tender of the Sparke Helmore files. As will be seen, those files contain material of some significant concern.
The written evidence
The written evidence of the husband is contained in his affidavit sworn 4 May 2009 and filed 15 May 2009 and his affidavit sworn 22 October 2009 filed 20 October 2009.
There is no mention of negotiations between the husband and Mr EN in relation to the potential exit of Mr EN from the partnership.
Ms Y filed a Notice of Address for Service on behalf of the husband on 30 July 2009. She was the solicitor who prepared/settled the husband’s affidavit sworn on 22 October 2009. This affidavit, inter alia, dealt with “discovery” but did not mention anything about the husband’s dealings with Mr EN.
Oral evidence
I have extracted the following pertinent extracts from transcripts of the husband’s oral evidence and added emphasis to particular parts of it:
Day two – Tuesday 27 October 2009
Page 38:
Discussion of relationship between with [Mr EN] and [the husband]:
HIS HONOUR: …. Firstly, has there been a severance of your relationship with Mr [EN]?‑‑‑Can I just tell the story, your Honour, if you would not mind.
You cannot answer that yes or no?‑‑‑We are equal, 50 per cent shares in the company.
Well, have you had any other relationship with Mr [EN] apart from that one for years?‑‑‑No.
Right. So nothing has changed in relation to that financial relationship with him, is that right?‑‑‑Yes. As far as the shareholding goes, yes.
What has changed in your relationship with Mr [EN]?‑‑‑The fact that he has now resigned as a director. He is 55, 56 years old and he’s looking to step back and we have put a – what do you call it – a continuation – not a continuation, like a going forward strategy in the company about, you know, when [Mr EN] retires and we’ve been doing lots of negotiations about how we can ‑ ‑ ‑
So without getting the full story, he is no longer a director?‑‑‑He’s no longer, which they’ve been notified of.
He is still a shareholder; 50 per cent shareholder?‑‑‑He’s still 50 per cent shareholder, yes…
…MR RICHARDSON: Mr [EN], can I suggest that, firstly – have you engaged some solicitors, Sparke Helmore, to advise you in relation to the separation from Mr [EN]?‑‑‑Yes.
I take it that the work that they are undertaking must be significant work. Would that be fair to say?‑‑‑We are trying to structure a deal with [Mr EN] where he can exit the company.
Well, can I suggest to you, for example, that on 7 April 2009, Sparke Helmore were paid $20,000?‑‑‑Yes.
That was paid from a ledger created within the company called Separation Costs?‑‑‑Yes.
Since that time there has been a further payment to them on a loan account ledger in your sole name on 8 September 2009 of a further $4305.40?‑‑‑I am not aware of that.
You have not told any of this story in your affidavits in the case?‑‑‑It’s an ongoing ‑ ‑ ‑
Do you agree with that proposition? You have not told any of this story, whatever it may be that has unfolded between April and September 2009, has not been told in your affidavits?‑‑‑I have informed my wife’s solicitor ‑ ‑ ‑
You are not listening, Mr [Jackson], with the greatest of respect. I am asking for you - for an acknowledgement that between April and September of this year and continuing, indeed, to the present time in the affidavits that you filed, you have not told any of this story about whatever the arrangement is with Mr [EN]. Do you agree with that?‑‑‑Yes…
…Would it come as a surprise to you that one of the factors taken into account in his (Mr N’s) valuation (of R Pty Ltd) is a contention that there needs to be an allowance of $220,000 per annum for the remuneration of Mr [EN] in determining an ongoing value of the company?‑‑‑I don’t know.
If that is there, that would clearly make Mr [EN’s] departure a relevant matter for the valuer to know of, would it not?‑‑‑Yes.
So Mr [EN’s] loan account within [R Pty Ltd] was conducted principally through [AEN] Pty Ltd, is that right?‑‑‑Yes.
The balance of that loan account was ruled off as at 31 March 2009, can I suggest, and any new expenditure met on Mr [EN’s] behalf thereafter was recorded in a new loan account titled [AEN] – pausing there, that is his initials, is it not?‑‑‑Yes.
[AEN] Number 2 Account (After Agreement)?‑‑‑Yes.
What I want to suggest to you is that this signifies in my contention to you that Mr [EN’s] financial interest in the company had changed substantially as at March 2009?‑‑‑No.
…Yes. His Honour has no evidence, nor does the valuer, from which they could determine the nature and extent of the respective interests of yourself and Mr [EN] presently?‑‑‑There’s been no document signed – [Mr EN] is still a 50 per cent shareholder of [R] Entities…
…No, no, that is not what I am asking you about Mr [Jackson]. You answered my question by saying, “No documents have been signed,” and I am suggesting to you that that does not preclude the fact that yourself and Mr [EN] have nonetheless come to an agreement some months ago that simply remains to be documented. Do you agree with that?‑‑‑We’ve drafted an agreement, yes…
…HIS HONOUR: I am sorry, before we leave it. Have you reached an agreement with this man? You say there is a draft agreement?‑‑‑Your Honour, we’ve drafted a few scenarios of how to – for him to exit the company, but until these court proceedings are finished and we know the final answer we won’t know whether (1) it’s possible, or (2) how it can be done. The way we’re looking at it is it would have to be a majority of property, so he would basically take property instead of cash.
MR RICHARDSON: Could I suggest to you, sir, that you have already been to the ANZ Bank and obtained approvals for releasing, in respect of the facilities provided by that bank to the company, releases of various securities that Mr [EN] had provided, including his personal guarantee?‑‑‑Yes, but nothing – that’s just the – we’re just getting it ready, that’s all. Nothing is signed.
The husband then stated that he had been given advice during mediation in June 2009 by Mr Eric Baker, the mediator, and the husband’s barrister, Mr Tom Kirk, that matters regarding negotiations did not need to be disclosed in the family court proceedings. It was later put to the husband by senior counsel for the wife that such advice had been based on the incorrect premise put by the husband to Mr Baker and Mr Kirk that the only negotiations underway were that Mr EN had threatened the husband that if he did not buy out Mr EN’s interests in the partnership, Mr EN would wind up the business. It was put to the husband that not only was it was the husband who had put forward this incorrect premise and then sought to rely upon the advice flowing from it, but that as at the date of mediation in June 2009 a deal had already been made between the husband and Mr EN. The husband denied that this was the case (at page 53):
MR RICHARDSON: I am asking you whether you accept that that advice related to something different to the present, namely, that you told the people that were there, you say, and provided this advice that Mr [EN] had made a demand that you buy him out and had said if you do not buy him out, he will do things to cause the entity to be wound up?‑‑‑No, that’s not true.
Page 59:
The husband again insisted that there was uncertainty surrounding any concluded agreement:
MR RICHARDSON: According to what Mr Kirk wrote, all that they were told was that Mr [EN] had made some demands, and there may be some negotiations thereafter, whereas earlier today you saw, and agreed with the fact, that in March of 2009 the ledger has already recorded the separation. I want to suggest to you that what you told Mr Kirk and Mr Baker, and others on that day, upon which you seem to have taken advice, was misleading. You had already reached the substance of an agreement with Mr [EN]. That is right, is it not?‑‑‑No, no, no, because there’s no agreement, because we don’t know the outcome of this court case. There might be no agreement.
Page 68:
Later in cross examination the husband was again asked about the negotiations which had taken place:
MR RICHARDSON: Sir, you have been in negotiations of one form or another with your former partner for most of this year on buying him out, right?‑‑‑Yes.
Raising finance from a bank to assist you in doing that?‑‑‑Yes.
Day three – Wednesday 28 October 2009
Page 98:
The husband again maintained that whether or not the deal would proceed was dependant on the outcome of the Family Court proceedings:
MR RICHARDSON: Mr [Jackson], can I add into the fray on that, it is your understanding is it not that the ANZ Bank have been asked to release unit 10 from its securities and they have approved that?‑‑‑They’ve approved in principle, yes, but it hasn’t been released.
Well, when you say in principle, in fact they have told you it is approved. As far as they are concerned the deal is done, it is just a matter of the documentation – someone picking up the documents and lodging them?‑‑‑All I can say, Mr Richardson, is that if after this I can’t afford it, then [Mr EN] will remain a director. He will come back as a director, that’s in the notes of the brief we’ve done. There will be no sale. In fact [R Company] will – well, either [Mr EN] will have to buy me out or I guess ‑ ‑ ‑
You understand I am not asking about that?‑‑‑Yes, I’m just trying to explain that there’s nothing in concrete.
Page 178:
In final submissions, counsel for the husband (and before the reopening of the evidence to which I shall shortly refer) suggested that the husband had simply relied upon advice that he was not required to disclose any matters relating to negotiations with Mr EN:
There has been much criticism levelled at my client for his failure to disclose the discussions, proposals, negotiations between himself and Mr [EN] until a very late stage in these proceedings and indeed not – sorry, I withdraw that submission, there has been criticism made that he did not properly disclose his discussions, negotiations with Mr [EN]. Your Honour, my client is not a lawyer, he is a builder. It seems at the mediation there was some form of discussion between my client and Mr Baker. The outcome of those discussions is now reflected in that memorandum which was tendered before you yesterday. My client is not, as I have indicated – is a builder, he is not a lawyer. He clearly was under the impression that he did not have to make disclosure of those negotiations. Whether your Honour ultimately finds that he was right or wrong in that conclusion, he sought advice and he relied upon advice.
HIS HONOUR: Well, he sought advice based on a particular premise ‑ ‑ ‑
MR FLEETWOOD: That is correct, your Honour.
HIS HONOUR: ‑ ‑ ‑ that he gave to the persons giving him the advice.
MR FLEETWOOD: Yes, that is correct, your Honour.
HIS HONOUR: What is being asserted is the premise was wrong.
MR FLEETWOOD: As I have indicated, your Honour, my client is not a lawyer, he is a builder and he thought or he understood the advice that was given to him, based on the premise that he put to the people ‑ ‑ ‑
HIS HONOUR: Well, if he knew the premise was wrong then it does not matter if he is a builder or a lawyer, he knows he cannot rely on advice when it is based on an incorrect premise.
MR FLEETWOOD: Yes, your Honour.
HIS HONOUR: Now, that is the submission that is being made against you.
MR FLEETWOOD: Yes, your Honour.
HIS HONOUR: That it was an incorrect premise and he knew it was an incorrect premise when he sought the advice.
MR FLEETWOOD: Well, the premise was that, as set out in that document but it seems that Mr [EN] was seeking $3,000,000 or he was going to wind the company up.
HIS HONOUR: What is the exhibit number? Yes, the premise was that [the husband] wanted to buy out his interests for $3 million or he will wind up the business. Sorry, Mr [EN] wanted [the husband] to buy out his interests for $3 million or he would wind up the business. Now that is the base [sic] upon which the advice has been given.
MR FLEETWOOD: Yes, your Honour.
HIS HONOUR: The assertion against you is that was an incorrect proposition that was put to Mr Baker and to Mr Kirk because as at 3 June 09, a deal had already been done.
MR FLEETWOOD: Yes, your Honour.
HIS HONOUR: So what do you want to say about that?
MR FLEETWOOD: Well, consistent with my client’s oral evidence, a deal had not been done; a final deal had not been done and it is consistent with my client’s oral evidence that ‑ ‑ ‑
HIS HONOUR: What do you say about the accounts that have been prepared which indicate that as at the end of March 09, there had been a splitting of the accounts between the two men?
MR FLEETWOOD: Well, as – your Honour, that is consistent with my client’s evidence that there was an exit strategy being contemplated, being talked about, and some of those steps – some of the steps may have been started but my client’s evidence also is that it is dependent upon what happens in this court. So no final agreement or no final arrangement had been put in place.
HIS HONOUR: Yes.
MR FLEETWOOD: Coming back to the non-disclosure point, your Honour, my client is, as your Honour is aware, running a business with – is running a business and clearly, as you [sic] depose in his affidavit filed earlier in this week, he had not given the question of disclosure proper consideration. It is a matter for your Honour to assess the evidence given by my client in the witness box and I cannot make the submission any higher but, at times it is – it seems apparent on the documentary evidence that your client – sorry, that my client has given that from time to time he has made inconsistent statements. I cannot take the submission any further than that.
The memorandum produced by Mr Kirk upon which the husband placed so much reliance was Exhibit S as follows:
“[the husband] told Eric Baker about the position his partner [Mr EN] had put him in (wants [the husband] to buy out his interests for $3m or he will wind up the business). [The husband] asked Eric when he had to tell the wife about the demands of [Mr EN] - Eric said that before he reaches a concluded agreement with [Mr EN] he should tell the wife or rather, if he reaches a concluded agreement before he signs off on that agreement he should tell the wife so that she can seek to stop it if that be her wish.
Eric told [the husband] that he had no present obligation to disclose the approach of his partner or any negotiations he was having with [Mr En] providing the wife was told before he made any commitment.”
I comment later that the husband cannot rely upon this document in the way he asserts.
Sparke Helmore files
Following final submissions, senior counsel for the wife sought leave to reopen the wife’s case in order to tender some additional material. That material consisted of documentation produced by the firm Sparke Helmore on subpoena. Material in this file had not been seen by the wife or by the court prior to it arriving at court on the last day of the trial after senior counsel for the wife had completed his submissions. The tender of the entire files was not opposed. Certain documents in the files were flagged by senior counsel for the wife and I deal with those below. The passages set out in bold below, are my emphasis.
The whole of the Sparke Helmore files were tendered but senior counsel for the wife specifically labelled documents 1 to 10 using dark yellow tabs. I have placed additional blue tabs on the exhibit numbered 11 to 16.
When the files are read as a whole, it is clear that, apart from the parties executing documents, all the preparatory work has been done for the deal to proceed.
One folder entitled “Bible of Transaction Documents” includes a Share Sale Agreement, draft company resolutions and ASIC documents, land title transfers, Deed of Sale of Land, Deed of Covenant and Assignment of Lease, Deed of Surrender of Lease, a Commercial land and Building Contract, Deed of Surrender of Lease and Deed of Divestment and Dissolution of R Group Interests. As will be seen, the deal was restructured after 6 August 2009.
I extract relevant parts of documents from the file as they occur in chronological order (although the tab numbers are not in sequence).
Tab 11
On 14 April 2009 an internal memorandum was sent from Sarah Booth to Mark Simpson of Sparke Helmore. This email illustrates that there was never any question that the purpose of the overall agreement was to facilitate Mr EN’s exit from the partnership:
…It has 2 partners ([the husband] and [Mr EN]). [Mr EN] had decided he wants to exit from the business so we are preparing all the documents to effect his exit.
There have been some slightly tense discussions between [the husband] and [Mr EN] to finalise the exact terms of his exit and I wouldn’t be surprised if bits of the deal change even now.
They want to settle this matter by 1 May 2009…
As set out above, the husband asserted during the hearing that no agreement had been reached and that during mediation in June 2009 he had advised the mediator that the only negotiation towards dissolution of the partnership was that Mr EN had made demands that if he did not buy out Mr EN’s interests in the partnership, Mr EN would wind up the business.
Tab 10
A letter of instruction from H and C Chartered Accountants & Business Advisors to Sparke Helmore dated 23 April 2009 suggests that a deal had been made at least in principle by late April 2009:
The “[R] Group” is currently spread over various entities and is owned essentially by [the husband] (50%) and Mr [EN] (50%). [The husband] and Mr [EN] have reached an agreement for the disposal of Mr [EN’s] interest to [the husband]. In providing the outline of this agreement, I have considered the various entities within the group and then documented my understanding of the agreement as it applies to each entity.
The letter then goes on to describe each of the entities subject to the agreement, and the requirements for the change in ownership of each of those entities to affect the agreement.
Tab 9
Accounts for the R Group consolidated for a six month period to December 2008. It was put by senior counsel for the wife that these accounts bear little resemblance to the accounts produced in the course of the proceedings. As there are no figures for the second six months of the financial year a direct comparison is not possible, however, it was put by senior counsel for the wife that for the documents to be factually consistent the second six months must have been marked by severe losses and that essentially the documents that were relied upon by experts in the present proceedings were not reliable. That is a submission of some weight.
Tab 7
On 19 June 2009 an email was sent from Mr C to Mr EN, ‘J’ (I assume Mr Jackson) and JT titled ‘[R] Settlement’. This email outlines the variations to the proposal for dissolution of the partnership as raised by the husband and indicates that as early as June 2009 an agreement as to the general terms of the dissolution had been reached. In particular it illustrates that changes to the agreement were largely based on timing:
The agreement terms for the sale of [7 RM Street] – price of $900,000 with debt transferred of $450,000 remain unchanged. However, the timing of the settlement is to be extended to October 2009.
Tab 8
On 25 June 2009 an internal email was sent from Sarah Booth to Jason Sprague and Mark Winn of Sparke Helmore titled ‘RE: [R Group] – discrepancy in owner of [7 RM Street]’. This email highlights that all elements of the deal had been agreed to and that it was only the date for transfer of shares and transfer of the RM Street property that were delayed:
[Mr C] said deal is the same but a couple of parts need to be delayed. [Husband] is going through a matrimonial dispute and has asked that [7 RM Street] and share transfers not happen till Oct 2009. Rest of the deal will still occur now (they want it all to take effect as at 30 June for [Mr EN’s] tax reasons). [Mr C] said [Mr EN] will still get his rent and loan payments from 30 June. (I can’t see how he can get rent of [7 RM Street] though if it’s not transferring to till October – perhaps he just means rent on [O property] – will have to clarify in meeting).
[Mr EN’s] main concern is whether he is at risk by resigning as director of [R] now and then waiting a few months for the rest of the deal to happen – he is after some advice/reassurance on that.
I note that the hearing dates for this matter were set down on 23 June 2009. I find as at 25 June 2009, the husband had reached the view that the agreement he had reached with Mr EN was not to be settled or disclosed until after the family law proceedings had been concluded.
Tab 6
On 6 August 2009 at 3:00pm an email was sent from Jason Sprague to Sarah Booth both of Sparke Helmore to provide information on a discussion he had with Ms Y and the husband. (Ms Y filed a notice of address for service as lawyer on the record in the proceedings on 30 July 2009). The email suggests that the deal had been agreed in principle and that both the husband and Ms Y wanted to delay signing of the documents and the transfer of the RM Street property until after the Family Court proceedings to avoid valuation problems in the Family Court proceedings. It also indicated that as at 6 August Mr EN was not aware of the husband’s desire to delay settlement:
1.I had a chat with [the husband’s] divorce lawyer [Ms Y], this morning. We discussed the impact of [the husband’s] divorce on the [R] deal and she clarified a few things in relation to the property settlement issues. Her initial concern was that any alteration of the partnership or corporate group would see the other side calling for a new valuation. She was also concerned that the figure of the value which [Mr EN] was receiving might be different to the existing valuation they had which would be grounds for revaluation. There is also concern about the other side creating difficulties if they get wind of any changes and be claiming there were deals done and arrangements made with the intent to prevent the wife from claiming on [the husband’s] share of the [R] assets. When I explained the transaction, that it was arms length, commercial and the relevant values which were in line with the valuation this seemed to satisfy her.
2.She then subsequently met with [the husband] and they both rang me to discuss their preferred options. Ideally they only wanted the transfer of the [O property] and the resignation of [Mr EN] as a director at this stage. The rent for [7 RM Street] would be dealt with through [Mr EN’s] loan account. There was to be no other documents signed until after the property hearing in November. The reason given is that once a contract was signed the wife and the court would need to be informed. While negotiations were on foot then there is no obligation to disclose any arrangements. [The husband] indicated that [Mr EN] was agreeable to deferring most of the transactions until November.
3.I subsequently rang [Mr EN] to see if he had agreed to the deferred arrangements as [the husband] put them to me. He indicated that he had not agreed to this arrangement and was going to call [the husband] to tell him this was not on and get back to me. I mentioned it would be easier to finalise all the deals now and the divorce issue was [the husband’s] problem not his and so it shouldn’t be something which we let dictate the way the transaction was supposed to run. I am still waiting to hear back from [Mr EN].
Tab 6 also contains a note from the corporate accountants referring to the “plan” that had been devised on 6 August 2009.
Tab 16
An email from Mr C dated 6 August 2009 (at 3:34pm) sets out the revised plan in some detail.
Tab 5
On 6 August 2009 at 4:00pm an email was sent from Ms Y to Jason Sprague of Sparke Helmore titled ‘Our client: [the husband]”. In this correspondence Ms Y requested confirmation from Sparke Helmore that there will only be a ‘minor transaction’ in relation to R Pty Ltd. This appears to be in direct conflict with what the email from Jason Sprague directly above (tab 6) suggests Ms Y was actually aware of in terms of the agreement. In the email Ms Y stated:
We refer to our telephone conversation with you in the presence of [the husband] on Thursday 6 August 2009 when we confirmed there will be a minor transaction in relation to [R] Pty Ltd in the following terms:
1. That Unit 10 [W Street] will be transferred to [Mr EN] for superannuation benefits (on taxation advice);
2. That [Mr EN] shall resign as a Director (reason being for practical terms as [Mr EN] has not been involved in decision making in the business for a substantial period of time and [Mr EN] agrees that he will step down);
3. [Mr EN] shall retain his 50% shareholding;
4. That [Mr EN] shall remain as a consultant to [R] Pty Ltd.
Would you please confirm with [Mr EN] his understanding of the abovementioned arrangements and we await your confirmation.
If the email from Jason Sprague to Sara Booth of 6 August 2009 (see tab 4) accurately outlines the contents of discussions on 6 August 2009 initially between Jason Sprague and Ms Y and then between Ms Y, the husband and Jason Sprague, it would be difficult not to draw the prima facie conclusion that this present email by Ms Y sets out part of a strategy which Ms Y knew had been deliberately developed that day to delay the settlement of a concluded agreement so that there was minimal documentation to disclose to the wife or to the court.
As will be seen later, the husband’s commercial lawyers did not provide the confirmation she sought and I infer, prima facie, Ms Y was aware she had no such confirmation when she sat at the bar table while the husband gave his oral evidence during the four days of the hearing before me.
Tab 14
On 7 August 2009 at 10:57 an email was sent from Jason Sprague to Mr C, Mr EN, the husband and copied to Richard Day and Sarah Booth titled ‘RE:[R] Agreement’ which refers to the above email from Ms Y (tab 5). The email covers detailed terms of the actions proposed later in the year:
The proposed actions for later this year will be:
o The transfer of shares in [AEN] P/L to [DO] P/L atf [Jackson] Family Trust with share mortgage and financial assistance arrangements done at that time;
o The transfer of [7 RM Street] with a new lease to an entity of [Mr EN’s] still to be advised which will replace (as opposed to assigning) the current lease which has the partnership entities [DO] P/L and [AEN] # 2 P/L as lessor and [R] P/L as lessee.
o The dissolution of the [O] Partnership
o The transfer of [AEN] Company Pty Ltd atf [AEN] Trust’s shares in [R] Projects P/L to [Jackson] Development Company atf [Jackson] Development Trust. I assume [F] wil have been sold by this time.
o Transfer of shares held by [Mr EN] in [R] Hire P/L to [the husband].
My understanding is the arrangements relating to the transfer of the vehicle, the loan amount and the ‘transfer’ of the $455,000 cash to [Mr EN] are not being documented at this stage. They will be encompassed by reference in final documents assuming the above transactions proceed.
Final documented terms have yet to be agreed and no other documents are being signed by the parties until later in the year as ‘discussions continue’.
I have received an email from [the husband’s] divorce lawyer which is attached.
[Mr EN], please review it and advise if you are agreeable to its content. There is a reference there to a consultant arrangement. I don’t recall a consultant arrangement as part of the initial arrangements. Can you or [Mr C] clarify this…
Apart from what was in the Sparke Helmore files, there was ample evidence to demonstrate the husband’s lack of full and frank disclosure during the case. I formed the view that nothing the husband could further say would repair that position.
Prior to the commencement of the final hearing, the parties had agreed to appoint Mr N, chartered accountants specialising in forensic accounting, as a single expert to provide a report valuing the husband’s interests in three trusts, seven corporate entities and a partnership. His most recent report is dated 28 October 2009 and values the husband’s interests as at 30 June 2009 in a total sum of $2,326,930. The entities which had been valued carry on the business activities of the husband. For the purposes of the valuation it was assumed that the husband and Mr EN had a 50 percent interest in the value of the underlying corporate structure.
The revaluation carried out by Mr N on 28 October 2009 was carried out without him being informed by the husband of the nature and extent of the arrangements that I find he has reached with Mr EN, including the consideration the husband had agreed that he would pay Mr EN for his exit from the corporate and business entities and the terms upon which that payment is made.
The values on the balance sheet for items 4 through to 18 are based on the assumption that the current business activities are owned only as to 50 percent by the husband. The husband and Mr EN have agreed otherwise.
On 3 June 2009 the corporate accountant records that the “effective” consideration Mr EN and entities related to him was to receive was $2,820,450 (see email from Ms JT at tab 9 of Sparke Helmore Files). The difference between Mr N’s valuation of the husband’s half share and the entry on the Sparke Helmore files by the corporate accountant on 3 June 2009 of what was to be paid to Mr EN for his half share, is $493,520 ($2,820,450 - $2,326,930). This is a somewhat simplistic calculation because the amount is the amount a half partner is prepared to take to get out, the majority of it is to be paid on terms over time and the husband will now be able to run the enterprise fully controlling it.
This can be compared with Exhibit S which is also dated 3 June 2009 (the text of which is to be found at paragraph 138) and which has the husband indicating that the figure Mr EN wanted was $3,000,000. The husband in oral evidence said that figure was incorrect and the figure was $2,500,000. But he later described a payment of $500,000 to Mr EN’s superannuation fund and it was unclear to me as to whether that was in addition to the $2,500,000 figure or not. Due to the husband’s lack of disclosure, I am unable to make any finding as to precisely what the husband has agreed to pay Mr EN for his half share.
The final valuation of Mr N was based upon accounts prepared to 30 June 2009 (see exhibit II). Senior counsel for the wife drew my attention to six months accounts to 30 December 2008 in the Sparke Helmore file for R Pty Limited. The turnover in the first six months was $12,641,714. The operating profit on that turnover was $1,351,664. Comparing that document with Exhibit II (the published full year accounts), the turnover in the full year according to the published figures was $19,517,629. The operating profit for the full year was $785,149 (a trading loss for the second six months of $566,000). The two sets of accounts give rise to questions about whether or not the husband has given Mr N figures that are different from figures that he and Mr EN had available to them. I however am not able to draw any conclusions adverse to the husband in relation to these accounts apart from the obvious one, namely, that failure to disclose the six monthly figures in a timely manner left the wife in no position to interrogate them or compare them with the full year figures that were made available to the wife at some time around the start of the hearing.
Counsel for the husband was given an opportunity to speak to his client prior to reopening his submissions following the tendering by consent of the Sparke Helmore files. After a 15 minute adjournment, counsel for the husband simply said this:
“Your Honour, the only submission I can make on behalf of my client is that he believed, consistent with the evidence and in accordance with the evidence, that he gave that until a final agreement was reached and documented with Mr [EN] then there was no such final agreement. I cannot make any further submission at this stage Your Honour….that concludes my submissions Your Honour”.
I find that the husband, prima facie with the assistance of his current solicitor, contrived to prevent the court and his wife from being aware of something that he knew was relevant, namely, the arrangements he had entered into with Mr EN.
As to the quantum of adjustment the lack of financial disclosure should bring by way of example, senior counsel for the wife referred to a judgment of Holdan CJ in Kannis (8.5.2001; unreported). His Honour had made a 10 percent adjustment (in a pool of about $33,000,000) for the non disclosure by the husband relying upon ss 75(2)(o) FLA.
In Kannis, although the wife did not find the $15,000,000 to $20,000,000 she was asserting was hidden, Holden CJ found she was fully justified in her pursuit of hidden assets, having regard to the husband’s non disclosure. The 10 percent adjustment made by Holden CJ did not represent a finding as to the amount of the undisclosed assets, but was an adjustment made to do the best his Honour could, given that he did not know how much was undisclosed.
In final submissions, senior counsel for the wife, having reopened his case to lead the evidence from the Sparke Helmore file, indicated that he would seek a further 10 percent adjustment based upon the husband’s non disclosure of the deal with Mr EN and the uncertainty it created in relation to Mr N’s valuation. I am mindful that senior counsel for the wife made that submission from the position of suggesting the wife was already entitled to 80 percent of the net assets.
Senior counsel for the wife did not attempt to revisit the balance sheet. The agreed values for the husband’s business entities on the balance sheet are based on the husband having a 50 percent ownership in the business enterprise. That is realistically no longer the case and that a concluded arrangement has in fact been reached with Mr EN for the husband to pay monies to him and for the husband to take over the whole ownership of the enterprise. Senior counsel for the wife made it clear that the wife was anxious to have the proceedings concluded and, given the history of this litigation, I can understand her motivation in not applying for an adjournment so that figures might be recalculated based on the agreement with Mr EN.
I take into account that $80,000 (item 41) has already been added back onto the balance sheet against the husband as a result of his non disclosure.
The further 10 percent requested by senior counsel for the husband is the equivalent of about $415,000.
Conclusion in relation to s 79(4)(d) - (g) FLA matters
Senior counsel for the wife submits that a further 30 percent adjustment (including 10 percent for non disclosure) should be made in respect of s 75(2) matters starting from a basis of 60/40 division in the wife’s favour based on contributions. He submits that the s 75(2) adjustment should be higher if a lower adjustment is made on contributions.
The husband submits that if the husband is able to retain his present interest in the building company, it is anticipated that the wife will receive an adjustment because of her ongoing responsibility to care for the children of the marriage and her more limited opportunities for employment, but counsel for the husband did not make clear what that adjustment might be.
The effect of non disclosure (under s 75(2)(o) FLA) has to be balanced along with the other s 75(2) to which I have referred. I find that taking all matters under s 79(4)(d) - (g) FLA into account, an adjustment of 20 percent in the wife’s favour is warranted.
JUST AND EQUITABLE
The wife makes the following submissions in relation to overall adjustment:
The Wife contends that an overall finding of 90 percent to the Wife and 10 percent to the Husband is both just and equitable.
Based upon my findings on contributions and s 75(2) matters, the result would be a 75/25 division of the net assets in favour of the wife. That could be achieved by the division of assets set out in the following distribution table (“the distribution table”) with the husband paying the wife the sum of $3,171,845.
| H gets 25.0% | |||
| Assets | |||
| Item No. | Description | Percentage | Value |
| 1 | T property | 100% | $1,650,000 |
| 2 | UK Property | 100% | $360,000 |
| 4 | R Pty Ltd | 100% | $0 |
| 5 | Loan account with R Pty Limited | 100% | $0 |
| 6 | DO Pty Limited | 100% | $1 |
| 7 | H Developments Pty Limited | 100% | $1 |
| 8 | Jackson Development Company Pty Limited | 100% | $1 |
| 9 | R Hire Pty Limited | 100% | $519,571 |
| 10 | R Projects Pty Limited | 100% | $0 |
| 11 | R Developments Pty Limited | 100% | $0 |
| 12 | R Developments No. 2 Pty Limited | 100% | $0 |
| 13 | R Developments No. 3 Pty Ltd | 100% | $0 |
| 14 | Jackson Investment Pty Limited | 100% | $261,641 |
| 15 | Loan account with Jackson Investment | 100% | $1,315 |
| 16 | Jackson Family Trust | 100% | $264,500 |
| 17 | Loan account with Jackson Family Trust | 100% | $1,236,421 |
| 18 | Jackson Development Discretionary Trust | 100% | $41,589 |
| 19 | Loan account with Jackson Development Discretionary Trust | 100% | $1,893 |
| 20 | Shares in Gabriel Resources Limited | 100% | $2,721 |
| 22 | Great Southern Plantations 2005 | 100% | $0 |
| 23 | Qantas frequent flyer points | 100% | $3,996 |
| 24 | Virgin Velocity points | 100% | $403 |
| 26 | Household contents | 100% | $5,000 |
| 27 | Cattle on property | 100% | $2,400 |
| 32 | NAB account number …76 | 100% | -$722 |
| 33 | NAB account number …101 | 100% | $137 |
| 34 | HSBC account number …151 | 100% | $0 |
| 35 | HSBC account number …143 | 100% | $0 |
| 36 | NS & I premium bonds | 100% | $0 |
| 39 | Add back: paid legal fees | 100% | $125,573 |
| 41 | Add back: deposit paid on property | 100% | $80,000 |
| 42 | Add back: drawings by husband | 100% | $111,047 |
| 43 | Jackson Superannuation Fund | 100% | $47,600 |
| Liabilities | |||
| Item No. | Description | Percentage | Value |
| 48 | Mortgage to NAB account number …95 | 100% | $462,699 |
| 49 | Loan to ANZ Bank | 100% | $0 |
| 54 | National Visa card …643 | 100% | $5,020 |
| 57 | Monies owed by husband to joint valuers | 100% | $38,052 |
| Husband pays Wife | $3,171,845 | ||
| Net Assets to H | $1,037,472 | ||
| W gets 75.0% | |||
| Assets | |||
| Item No. | Description | Percentage | Value |
| 3 | A property | 100% | $950,000 |
| 21 | M Holdings Limited | 100% | $400 |
| 25 | Qantas frequent flyer points | 100% | $341 |
| 28 | Household contents | 100% | $5,000 |
| 29 | Engagement ring | 100% | $5,000 |
| 30 | Horse | 100% | $1,000 |
| 31 | Toyota Kluger Grande 4 x 4 | 100% | $30,000 |
| 37 | CBA account number …142 | 100% | $5 |
| 38 | CBA account number …619 | 100% | $15 |
| 40 | Add back: paid legal fees | 100% | $332,885 |
| 44 | Media Super (formerly Just Super | 100% | $1,942 |
| 45 | AMP Flexible Lifetime - superannuation | 100% | $6,601 |
| 46 | AMP Retirement savings account | 100% | $2,417 |
| 47 | REST Super | 100% | $2,965 |
| Liabilities | |||
| Item No. | Description | Percentage | Value |
| 50 | Mortgage to wife’s mother (principal) | 100% | $774,484 |
| 51 | Mortgage to wife’s mother (interest) | 100% | $209,160 |
| 52 | Loan from wife’s mother (for legals) | 100% | $311,907 |
| 53 | Loan from wife’s father (for rent and legals) | 100% | $80,132 |
| 55 | CBA Mastercard | 100% | $18,013 |
| 56 | David Jones credit card | 100% | $4,305 |
| Wife receives | $3,171,845 | ||
| Net Assets to W | $3,112,415 | ||
Standing back and particularly considering the difficulties with the lack of financial disclosure by the husband, I find that this distribution of assets and liabilities and the amount of the payment by the husband to the wife is just and equitable.
SPOUSAL MAINTENANCE
The wife’s expenses as set out in her financial statement were not the subject of any challenge in cross examination. The husband’s submission however was that he did not have the capacity to make any payments.
Counsel for the husband submitted that there was an onus on the wife to prove that she could not work. The twins start school in 2010. I accept senior counsel for the wife’s submission that I have to look at these matters realistically. In oral evidence the wife spoke of the opportunity of some casual work in 2010. It is however simply an aspiration of the wife that she work in 2010. There was no specific proposal for any specific employer for employment.
Senior counsel for the wife originally sought an order for an 80/20 division of the assets and in those circumstances indicated that if the wife received an adjustment in those terms she conceded that no spousal maintenance would be payable. After the production of the Sparke Helmore files, senior counsel for the wife amended the wife’s position to 90/10 percent in the wife’s favour. No indication was given at that time that there was any alteration in respect of the wife’s position relating to her application for spousal maintenance.
The adjustment that the wife has received has fallen short of the order that would see her no longer press her spousal maintenance application.
Independently from any concession the wife may make, I find that no spousal maintenance order is proper after the wife has received the adjustment of property to which she is otherwise entitled. The settlement of property will allow her to adequately attend to her needs.
There is a present continuing order for interim spousal maintenance of $450 a week and based upon the wife’s needs and the husband’s capacity to pay, I find it is proper for that order to continue until the property orders are complied with to the extent that the husband has paid at least $1,000,000 to the wife.
CHILD SUPPORT
The Wife seeks a departure from the administrative assessment of child support on a periodic basis. The Wife is seeking periodic child support of $1,750 per week (for both children) to meet the children’s needs as disclosed in her most recent financial statement. On the basis that the Wife receives an adjustment of property interests as sought by her, she concedes a capacity to contribute to the children’s needs and seeks $800 per week (for both children).
The husband seeks that the application for departure order be dismissed.
I find that the wife has established an appropriate ground under s 117 Child Support (Assessment) Act based on the financial position of the father.
When considering a just and equitable order for periodic payments, the needs of the children need to be considered. The wife has set out in Part N of her financial statement filed 14 May 2008 what she asserts to be the children’s needs. They total $1,114. Part of those expenses are day care at $340 a week. In her affidavit filed 19 October 2009 the wife notes that the cost of preschool has increased to $680 per week. The children will be going to a local public school in 2010 and that expense will cease. Eventually it will be replaced by private school fees (which is the subject of a separate application). The wife is also currently paying rent of $780 per week and part of that accommodation expense relates to the children. The wife is paying private health insurance of $59 per week and motor vehicle registration and car insurance of $34 per week. Again, part of those expenses would relate to the children. None of this evidence was tested. The expenses not included in Part N of the wife’s financial statement that relate to the children total $873 and I will apportion notionally one half of that amount to the two children (being a sum of $436.50).
Consequently on the evidence that I have, I assess that the total costs of maintaining the children in the wife’s household is in the sum of $1,210 per week ($1,114 - $340 + $436).
I take into account the respective position of the parties after the order for adjustment of property is made. Mindful of that division, the husband has skills which will allow him to continue to generate substantial income and acquire new assets in the future at least at the same rate as the wife. The wife will receive income from the capital she receives as a result of the property adjustment. She will be able to return to some employment as the twins grow older and eventually to full time employment.
I find it is just and equitable that the husband pay 50 percent of the costs of the children whilst they are with their mother based on the current income earning capacities and financial resources of the parties after alteration of property. I find that result is otherwise proper.
The husband therefore would pay an amount of $605 per week (for both children); that is, $302.50 per week per child.
The wife additionally seeks an order pursuant to s 124 Child Support (Assessment) Act 1989 that the husband pay an immediate sum of $4,500 to C College and all education expenses incurred in respect of the children attending that college.
The husband did not object to the twins going to a private school. He however objected to him paying for that to happen. The basis upon which he objected was one of fairness to his other children, namely, that he did not pay to send his other children (who are now adults) to a private school and on that basis he thought that it was appropriate that he not pay for the twins to go to a private school. The costs of the children’s attendance at C College is $27,300 per annum. The husband, through his counsel, made a submission that his future finances are uncertain and he was not in a position to make the concession that he had the capacity to pay private school fees.
Given the matters that I have already discussed in relation to the current relative financial positions of the parties and the state of the husband's disclosure in this case, it is appropriate that the husband pay the one off amount of $4,500 to the wife for the purposes of her attending to the reservation payment required to be paid to C College or to reimburse the wife for payment that she might have otherwise already have made. In relation to the long term commitment in respect of the payment of education expenses, having regard to the comments I have already made about the respective long term income earning capacities of both parents and their financial positions following the alteration of property that will be ordered, I find it is just and equitable that the husband pay 50 percent of those expenses and the wife 50 percent of those schooling expenses.
INJUNCTION
The wife submits that she finds it offensive to continually be confronted by bank transfer records describing her, as the payee, as “Gold digger”. The husband gave an undertaking to the court in the following terms:
“I will make all necessary steps within 14 days to cause any reference to my former wife as “the gold digger” be removed from all and any public records.”
On that basis, the wife’s application for an injunctive order was withdrawn.
PROPOSED FORM OF THE ORDERS
Senior counsel for the wife referred to the 1974 Court of Appeal decision of St John v St John (1974) 6 Fam LN N14 and in particular to a passage in that judgment which reads, inter alia:
“Faced with a party whose affairs were tangled or did not give the assistance within his power to disentangle them, the trial judge, in my opinion, was well entitled to simply take the view that it lies upon the party to devise the means to comply with the order. If the burden is impossible, he cannot complain as he is the author of his own misfortune.”
Both counsel have invited me to not make final property orders until such time, as discussions take place or submissions are made, relating to the implementation of those orders. Given that both parties have requested it, I will allow that opportunity. The property, spousal maintenance and child support orders that I have in mind are set out in the following draft form. I will take further submissions about the form of the orders and will make directions to facilitate receiving those submissions. The submissions should go to how machinery orders might be made to facilitate the adjustment, which I have found to be just and equitable, and what other default enforcement orders might be appropriate in relation to any payment on terms. I will also entertain any amendment to the draft orders to which both parties consent. If this process becomes too difficult, I will simply make orders as I have foreshadowed and allow the parties to rely upon the enforcement provisions contained in the Family Law Act and Rules.
1.An order be made pursuant to s 79 Family Law Act in the terms of paragraphs 2 - 5 hereof.
2.The Husband pay or cause to be paid to the Wife the sum of $3,171,845 within 28 days of the date of the making of these Orders.
3.Within 28 days of the date of these Orders and subject to the payment referred to in paragraph 2, the Wife do all acts and things and sign all documents necessary to transfer to the Husband the whole of her right, title and interest in the property situated at and known as T property being the whole of the property comprised in Lot … Registered Plan … Title Reference … subject to the Husband having submitted to the Wife’s legal representatives at least 14 days prior to the date of settlement a Memorandum of Transfer in registrable form.
4.Simultaneous with the transfer referred to in the preceding paragraph, the Husband do all acts and things and sign all documents necessary to discharge the mortgage to the National Australia Bank Limited and registered as security against the title to the T property.
5.Except as any paragraph of these Orders provide to the contrary as against the other, each party is to have sole right, title and interest in any asset and be responsible for any liability which has been distributed to each of them in the distribution table in the Reasons for Judgment dated the date of these orders.
Spouse maintenance
6.The husband pay the wife the sum of $450 by way of spouse maintenance until the husband has complied with his obligations under Order 2 to the extent of at least a partial payment in the sum of $1,000,000.
Child support
7.That pursuant to section 117 of the Child Support (Assessment) Act, 1989, there be a departure from the administrative assessment of child support payable by the Husband for the children as follows:
7.1.for the period from the date of these Orders until the occurrence of a child support terminating event the annual rate of child support be set at $302.50 per week per child week (being a total amount of $605.00 per week for the children), the first payment to be made within 7 days of the making of these Orders;
7.2.the child support payable by the Husband to the Wife pursuant to paragraph 7.1 is to be varied on the review date each year commencing on 1 January 2011 to such sum as shall be determined by multiplying the child support payable on the review date by the fraction N/B where “B” is the CPI in respect of the quarter year ended 12 months prior to the review date, namely 30 June, and “N” is the CPI in respect of the quarter year ending on the day immediately proceeding the review date.
8.That in addition to the child support payable pursuant to paragraph 7, pursuant to section 124 of the Child Support (Assessment) Act, 1989, the Husband shall provide to the wife additional child support for the children by way of payment of an immediate payment in the sum of $4,500.00 together with 50% of all education expenses incurred by the wife in respect of each of the children at C College (when the children are of an age to be able to attend that college) and education expenses shall mean and include all tuition fees, excursion fees, coaching and tutoring fees, extra curricular activities, incidental sporting costs, the cost of school books, and the cost of school and sports uniforms
General
9.In the event that either party refuses or neglects to execute any deed or instrument necessary to give effect to these Orders, then the Registrar of the Court be appointed pursuant to section 106A of the Family Law Act, 1975 to execute such deed or instrument in the name of the defaulting party and to do all acts and things necessary to give validity and operation to the deed or instrument.
I certify that the preceding three hundred and eighty-one (381) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts.
Associate:
Date: 6 May 2010
- AGLC
- Lambert and Jackson [2010] FamCA 357
- Case
- [2010] FamCA 357
- Decision Date
CaseChat Overview and Summary
The court was required to determine the appropriate form of orders to be made in the proceeding, and whether prima facie findings should be referred to the Legal Services Commission (Queensland) for consideration of disciplinary action against Ms Y. The court also needed to consider submissions from Ms Y regarding why such a referral should not occur.
Watts J ordered that the matter be relisted for oral argument on the form of the orders. The parties were directed to confer within seven days to attempt to reach an agreed form of orders. If agreement was not reached by 3pm on 21 May 2010, each party was to email a minute of order and a short outline of argument to the associate. A further listing was scheduled for 24 May 2010 to allow Ms Y to make submissions against the referral of findings to the Legal Services Commission. Any affidavit evidence Ms Y intended to rely upon for these submissions was to be filed by 3pm on 21 May 2010. The court also ordered that Ms Y's name be anonymised in any public copies of the Reasons for Judgment, unless otherwise ordered.
Orders
Orders of the court
1.
This matter be relisted on 24 May 2010 at 2.15pm for oral argument on the form of the orders as outlined in paragraph 382 of the Reasons for Judgment.
2.
The parties are to confer within a period of seven days to explore whether or not they can reach an agreed form of orders.
3.
In the event that they are unable to agree on a form of orders by 3pm on 21 May 2010 each party shall email to my associate a minute of order together with a short outline of argument in relation to why those orders should be made.
4.
There be a further listing before me on 24 May 2010 at 2.45pm for the purposes of giving Ms Y an opportunity to make submissions as to why I should not send my prima facie findings to the Legal Services Commission (Queensland) for the purpose of him considering whether to initiate and prosecute disciplinary proceedings against Ms Y.
5.
Any affidavit evidence upon which Ms Y wishes to rely for the purposes of her submissions on 24 May 2010 is to be filed in the Sydney Registry by 3pm on 21 May 2010.
6.
Unless the court otherwise orders the name of Ms Y be made anonymous in any copy of these Reasons for Judgment available to anyone other than the court, the parties and the Legal Services Commissioner (Queensland) or anyone he may nominate (in the event the findings are sent to him).
Background
Background to the litigation
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Evidence
Evidence Before The Court
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Decision
Reasons for decision
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Ratio Decidendi
Legal Principle Established
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