Logan & Anor and Logan & Anor
[2016] FamCA 649
•11 August 2016
FAMILY COURT OF AUSTRALIA
| LOGAN AND ANOR & LOGAN AND ANOR | [2016] FamCA 649 |
| FAMILY LAW – CASE GUARDIAN – where the wife seeks an order removing the husband’s case guardian – where the application is opposed – where the wife alleges a conflict of interest – where the order for appointment of the case guardian is discharged. |
| Family Law Rules 2004 (Cth) r 6.10(1) |
| Kannis & Kannis (2003) FLC 93-135 |
| APPLICANT: | Mr Logan |
| CASE GUARDIAN FOR APPLICANT: | Mr Patterson |
| RESPONDENT: | Ms Logan |
| INTERVENOR: | Mr Kirk |
| FILE NUMBER: | ADC | 1196 | of | 2013 |
| DATE DELIVERED: | 11 August 2016 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Berman J |
| HEARING DATE: | 5 August 2016 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Byrne |
| SOLICITOR FOR THE APPLICANT: | A D Byrne Lawyer |
| COUNSEL FOR THE CASE GUARDIAN: | Mr Byrne |
| SOLICTOR FOR THE CASE GUARDIAN: | A D Byrne Lawyers |
| COUNSEL FOR THE RESPONDENT: | Ms Dickson |
| SOLICITOR FOR THE RESPONDENT: | Tindall Gask Bentley |
| COUNSEL FOR THE INTERVENOR: | Ms O'Toole |
| SOLICITOR FOR THE INTERVENOR: | O’Toole Lawyers |
Orders
That the order made on 17 March 2015 appointing Mr Patterson as the case guardian is discharged.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Logan and Anor & Logan and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT ADELAIDE |
FILE NUMBER: ADC 1196 of 2013
| Mr Logan |
Applicant
And
Mr Patterson
Case Guardian for Applicant
And
| Ms Logan |
Respondent
And
Mr Kirk
Intervenor
REASONS FOR JUDGMENT
INTRODUCTION
By Initiating Application filed 20 June 2014, Mr Logan (“the husband”) seeks general orders in respect of property settlement.
By Response filed 27 November 2014, Ms Logan (“the wife”) joins with the orders sought by the husband for settlement of property with the provision that would transfer for consideration the farming properties together with plant, equipment, debtors and the stock of Logan Pty Ltd to the parties’ children.
It is not contentious that the husband suffers from advanced dementia. Following application on behalf of the husband, an order was made by consent that Mr Patterson be appointed as a litigation guardian for the husband pursuant to r 11.11 of the Federal Circuit Court Rules 2001 (Cth) (as amended).
Mr Patterson was well known to the parties and is represented as having been a friend of the husband for many years.
It was generally agreed by the parties that their financial circumstances were parlous and that the sensible way forward would be to cause the sale of the assets of Logan Pty Ltd, B Pty Ltd, the Logan Property Trust and of the parties personally thereby crystalizing their value, discharging liability and allowing the parties to focus on a resolution of the proceedings.
A consent order made on 24 September 2015 reflects the agreement of the parties as to the sale of property of the parties and related entities with a particular focus upon the transport plant and equipment, farming lands known as Property C, Property D, Property E, Property F, Property G and Property H and the I Town properties.
By order made 12 July 2016 following the transfer of the proceedings to the Family Court of Australia, an order was made granting leave for the liquidator of Logan Pty Ltd to intervene in the proceedings.
The husband by his case guardian filed an Application in a Case on 10 June 2016 seeking orders to cause the sale and final disposal of the properties know as Property F and Property H. In addition, the husband sought that the wife disclose the whereabouts of certain plant and equipment, motor vehicles and the proceeds of crops planted on farmlands owned by the parties and/or B Pty Ltd in the years 2014 and 2015.
That application was listed for hearing on 5 August 2016.
By her Response filed 15 July 2016, the wife sought orders by consent in terms of paragraph 2(d) of the husband’s application namely that the parties would authorise an accountant to complete the financial statements and taxation returns for the Logan Superannuation Trust acknowledged by the parties to be substantially non-compliant.
Whilst the wife also seeks the sale of the Property F and Property H property, each of the parties seek that the sale be in favour of a different purchaser. The parties remain in conflict.
The wife also seeks that the husband disclose details of income received by way of rental income, the sale of land, plant and equipment and exceptional circumstance payments.
The wife filed an Amended Response on 4 August 2016 which seeks an order to remove Mr Patterson as the case guardian.
There was no application to adjourn the interim proceedings to enable the case guardian to better answer the wife’s complaint. I consider that the resolution of the status of Mr Patterson is a paramount consideration. It is only in respect of the application to discharge his appointment that these reasons relate.
There was attendance by a solicitor for the liquidator, however the status of the case guardian was of no concern to the intervenor and leave was given for the solicitor to withdraw from the hearing.
ISSUES RAISED BY THE WIFE
The case guardian, by affidavit filed 10 June 2016, sets out the history of the sales and attempted sales of the rural holdings of the parties. Paragraph 6 confirms that the land known as Property C, Property D and Property E was sold at auction to Mr J Logan being the son of the parties. Property G was sold shortly after auction and thereby leaving the focus on the sale of Property F and Property H. They were not sold at auction, but each has been the subject of negotiations for sale and offers have been received.
The wife sets out her initial concerns in respect of the potential for the litigation guardian to have a conflict of interest in her affidavit filed 15 July 2016:-
8.In relation to paragraph 7 of [Patterson’s] affidavit I say the property known as [Property G] was sold at auction to [Patterson]. I say it was not sold shortly after the auction and I say [Patterson] in fact set the reserve price for [Property G] as the litigation guardian. [Patterson] was therefore well aware the reserve at the auction for [Property G] was $250,000.00. I say [Patterson] bid at the auction and paid the price of $252,000.00, being only $2,000.00 above reserve. I say this is a clear conflict of interest as [Patterson] was well aware of the reserve price prior to the auction and should not have been involved with bidding at all. I also say that after the sale it was agreed [Patterson] would pay for one half of the cost of freeholding [Property G]. I say [Patterson] has now reneged on that agreement and this will involve further litigation. The proceedings in relation to the freeholding costs are clearly adverse to the husband and myself and is one further reason why [Patterson] should be removed as the litigation guardian given the conflict of interest that has now arisen.
The case guardian is keen to effect the disposal of the remaining properties namely, Property F and Property H. He considers that the wife is recalcitrant in her refusal to execute genuine contracts for sale, whereas she contends that she has no faith in the process if it involves the case guardian and is mistrustful of his motives. She considers that he has deliberately ignored better offers because he may be seeking to acquire an interest or involvement in the remaining properties notwithstanding that he promotes a sale to a third party.
The case guardian responds to the wife’s allegations by affidavit filed 3 August 2016. Relevant to the wife’s allegations, he sets out a more detailed history of the wife’s acquisition of the property known as Property G. It appears that the case guardian’s son Mr K Patterson was the successful bidder at the auction held on 11 December 2015. The case guardian and his son farm together in partnership. He anticipates that at some point he will retire and leave the farming enterprise to his son.
The respondent was apparently aware that Mr K Patterson was interested in purchasing the property. In submissions, counsel for the wife conceded that the wife understood that Mr K Patterson and probably his wife would be a bidder at the auction. This did not give any rise for concern and there is no suggestion that Mr K Patterson or indeed anyone else was not entitled to bid.
The following is set out by the case guardian:-
(vi)For that reason I did not consider it appropriate that I be involved in setting a reserve at the auction. I played no part in setting the reserve. To the best of my knowledge that figure was the subject of discussion between the respondent and the agent and [Mr Logan].
(vii)Whilst I am the Litigation Guardian in the Federal Circuit Court proceedings for [Mr Logan] he retains great knowledge and interest in farming and in these proceedings. He had previously commissioned a valuation which had been provided to the agents and the respondent.
(viii)I was present at the auction. Several bids were made which were not accepted. The auctioneer then announced that the reserve price was $250,000.00. [Mr K] bid $252,000.00. There were no other bidders at or above that value. His bid was accepted.
(ix)There was no complaint by the respondent at that time. She signed the Contract and settlement occurred on the 16th May 2016.
What is not said is that following the signing of the contract by Mr K Patterson, there was either an assignment of part of his interest to the case guardian in the contract, or that he was an undisclosed nominee. It is conceded that at no time did the case guardian advise the agent or the wife that he was either the undisclosed nominee or that he would be interested in acquiring an interest in the property. It was certainly not disclosed to the wife until the Memorandum of Transfer was exchanged which reflected the identity of the purchaser that the wife became aware of the litigation guardian’s involvement.
The issue again arose in respect of the sale of the Property H property. Mr K Patterson was the successful bidder at auction and initially signed a contract to buy Property H for $80,000. After discussion between the case guardian and his son, it is conceded that he exercised his right to cool off.
The wife complains that the case guardian has acquired an interest in various plant and equipment. Irrespective of the wife’s allegation, the involvement of the case guardian has created an atmosphere of mistrust.
The further affidavit of the wife filed 4 August 2016 only highlights the entrenched position of the parties in respect of the status of the case guardian.
The wife contends that at all material times the case guardian received emails from the agent regarding reserve prices and it could not be said that the case guardian was divorced from the instructions given to the agent or the advice by the agent as to the method and manner of sale of the properties.
GENERAL PRINCIPLES
Part 6.3 of the Family Law Rules 2004 (Cth) provide for the appointment of a case guardian and r 6.10(1) allows the appointment, replacement or removal of a case guardian upon application by a party to the proceedings or the case guardian personally.
There is no assistance in the rules as to the circumstances which might provide for the removal of a case guardian and it is reasonable to consider that the Court has a discretion as to whether the case guardian should be removed. If an order is made to that effect then it is important that a new appointment is made expeditiously given that the proceedings are effectively stayed.
Brougham LC in Nalder v Hawkins (1833) 2 My & K 243 at [249]; 39 ER 937 at [939]: sets out the classic statement defining the position of a case guardian:-
No discouragement ought to be thrown in the way of persons bona fide suing as next friends; but no undue facility should be given to mere volunteers, who interfere rather for their own purposes than for the infant’s advantage. Whilst they appear to act bona fide they will be protected; the presumption will rather be in their favour; the proof will rather be thrown upon those who impeach their motives; the leaning will be more for than against them. But no strained presumption will be made to protect them; no forced constructious (sic) will be put on their conduct; no benefit from bare possibilities will be conjured up in their behalf. They must be content to have their motives appreciated and their acts judged like other parties. If they have involved themselves in suspicion, their proceedings must be subjected to enquiry; if they have incurred just blame, be it by improper interference, or be it by unnecessary interference, they must abide the consequences; the suit at their instance must be stayed; or if the suit be useful to the infant, but the parties instituting it be unfit to conduct it, they must give place to others in whom the Court can better repose confidence.
The position of a case guardian does not need to be neutral or impartial. He can be highly protective of the protected person and even strongly opposed to the opposing party. Providing he acts honestly and is seen to do so thereby protecting the interests of the protected person, there can be no challenge to his retention.
It is not necessarily that a case guardian will have his position terminated and the appointment discharged simply because he may stand to gain by the outcome of the litigation. As was considered by the Full Court in Kannis & Kannis (2003) FLC 93-135:-
The fact that the next friend for the husband stood to gain if his father obtained a more favourable result [than] that sought by the wife could not be seen as a reason to remove him. Indeed to the contrary. There was some communality of interest between the next friend and his father. The fact that the next friend proved to be an unreliable witness would not be enough to make it appropriate to remove him.
CONCLUSION
It is not suggested on the evidence that the case guardian has gained an improper benefit or advantage. What has occurred is that his conduct has created an apprehension of impropriety. The purchase of Property G by the Patterson Partnership could have been conducted with a level of transparency that could not have been the subject of adverse comment. If the case guardian had simply advised the wife and the agent that he was either an undisclosed nominee or that he intended to receive an assignment of part of his son’s interest in the contract, acceptance by the wife would have been an effective waiver.
A further option is that the case guardian could have refrained from involving himself in the transaction, with the result that his son would hold the property in his own right. That did not occur.
There is also now an apprehension that the application of the case guardian in respect of Property F and Property H seeking a sale in favour of a particular purchaser, is suspect because the wife does not consider that the purchaser is a farmer and that the land would adjoin existing land owned by the case guardian.
The interests of the parties are served by the disposal of the last remaining properties and a crystallization of their property pool. When that occurs and subject to the added complexity of the liquidator’s claim, there can at least be a reasonable attempt at a resolution of the parties differences given the pool is modest and the marriage is long.
The focus has therefore been distracted by the application in respect of the status of the case guardian and in the circumstances I find that the continuation of his appointment has been rendered untenable, not just because of the wife’s position, but because the actions of the case guardian in relation to the Property G property and other dealings were ill-considered. It is a conflict of interest even if it is only apprehended to be so which presents a difficult hurdle for a case guardian to overcome.
In the circumstances of this case, I consider it appropriate to exercise my discretion and order that the case guardian be removed and that the order for his appointment be discharged.
There has been much discussion as to whether the Public Trustee should be invited to apply for appointment.
This proposal is principally at the behest of the wife and based upon a view that the case guardian must be unbiased and impartial. If that is the case, it is an incorrect understanding. As indicated, a case guardian is entitled to be entirely partisan in favour of the protected person. He should however avoid circumstances where a conflict of interest may arise.
I make orders as appear at the commencement of these reasons.
I certify that the preceding forty (40) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 11 August 2016.
Associate:
Date: 11 August 2016
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