Messana & Messana
[2023] FedCFamC1F 365
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Messana & Messana [2023] FedCFamC1F 365
File number: PAC 6602 of 2020 Judgment of: CAMPTON J Date of judgment: 15 May 2023 Catchwords: FAMILY LAW – PROPERTY – PRACTICE AND PROCEDURE – Application for joinder of 16 proposed respondents – Where the joinder is resisted by each of the proposed respondents – Proposed respondents to be joined are the husband’s brothers, and a number of corporate entities in which the husband and his brothers have either direct or indirect interests – Where the husband seeks final relief against some of the proposed respondents pursuant to s 90AE of the Family Law Act 1975 (Cth) or in the alternative, pursuant to s 257A of the Corporations Act 2001 (Cth) s 257A – Where those respondents against whom the husband seeks final relief are necessary parties for the purpose of r 3.01 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) – Where some of the entities against whom relief is sought have no realisable assets and will be excluded from joinder. Legislation: Corporations Act 2001 (Cth) s 257A
Family Law Act 1975 (Cth) ss 79, 90AE, 117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) Pt 3.1, r 3.01, ch 6
Cases cited: Wayne & Dillon & Anor [2008] FamCAFC 204
Weir & Weir (1993) FLC 92-338; [1992] FamCA 69
Division: Division 1 First Instance Number of paragraphs: 59 Date of hearing: 21 April 2023 Place: Sydney Counsel for the Applicant: Mr Dura Solicitor for the Applicant: Paul & Paul Lawyers Counsel for the First Respondent: Ms Tabbernor Solicitor for the First Respondent: Karen L Haga & Associates The Second Respondent: No appearance Counsel for the Proposed Third Respondent: Mr Hyde Solicitor for the Proposed Third Respondent: King & Wood Mallesons ORDERS
PAC 6602 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR MESSANA
Applicant
AND: MS MESSANA
First Respondent
B PTY LTD
Second Respondent
order made by:
CAMPTON J
DATE OF ORDER:
15 MAY 2023
THE COURT NOTES THAT:
A.The proposed additional respondents for the purpose of these orders means the persons and entities referred to in paragraph 1 of the orders sought by the husband in his Application in a Proceeding filed 8 February 2023.
THE COURT ORDERS THAT:
Joinder of additional respondents
1.Mr C Messana be joined as the third respondent to the proceedings;
2.Mr D Messana be joined as the fourth respondent to the proceedings;
3.E Pty Ltd (…) be joined as the fifth respondent to the proceedings.
4.F Pty Ltd (…) be joined as the sixth respondent to the proceedings.
5.G Pty Ltd (…) be joined as the seventh respondent to the proceedings.
6.H Pty Ltd (…) be joined as the eighth respondent to the proceedings.
7.Messana Pty Ltd (…) be joined as the ninth respondent to the proceedings.
8.J Pty Ltd (…) be joined as the tenth respondent to the proceedings.
Amended relief
9.On or before 22 May 2023, the husband is to file his Amended Response to an Initiating Application incorporating the relief contained in the annexure to his affidavit filed 8 February 2023, directed to the respondents joined pursuant to these orders.
10.On or before 29 May 2023, the wife is to file and serve an Amended Initiating Application.
11.On or before 5 June 2023, the respondents joined pursuant to these orders are to file and serve a Response to an Initiating Application.
Disclosure
12.In the event that the parties, as at the date of these orders or during the future conduct of these proceedings are at issue as to the provision of documents or information by way of disclosure and are unable to resolve that dispute for a period of greater than 14 days, then the party asserting a failure to disclose relevant documents or information:
(a)Shall serve on each other party from whom disclosure is sought a schedule of the date of the request, identity and description of the documents or information sought and contended not to have been provided; and
(b)In the event the documents or information remain outstanding within seven days of the service of such schedule, shall be at liberty to file and serve an Application in a Proceeding specifying with particularity the orders for disclosure sought, and an affidavit in support thereof annexing the schedule served on each other party; and
(c)Shall forward to chambers by email a copy of the Application in a Proceeding as filed (to…@...).
13.In the event a party files an Application in a Proceeding pursuant to Order 12(b) above, within seven days thereafter, each party named as a respondent to that Application in a Proceeding shall file and serve a Response to that Application in a Proceeding and affidavit in support thereof.
AND THE COURT NOTES that each of the parties joined to the proceedings have duties to the Court and to each other party to give full and frank disclosure of all information relevant to the proceedings in a timely manner, and are otherwise subject to the requirements of ch 6 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Further case management
14.The proceedings be listed for further case management on 18 August 2023 at 10.00 am by Microsoft Teams.
15.Save for in respect to orders as to disclosure pursuant to Order 12, each of the parties has liberty to relist the matter on seven days’ notice to my chambers, by email (copying in each other party) and annexing a Minute of Order sought on the relisting for mention.
Outstanding applications
16.Save and except as provided by these orders, all extant Applications in a Proceeding and responses thereto are otherwise dismissed.
17.The costs of all parties pursuant to the matters determined by way of these order be reserved.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Messana & Messana has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CAMPTON J:
These reasons determine the Application in a Proceeding filed by Mr Messana (“the husband”) on 9 February 2023, as part of property adjustment proceedings in the Major Complex Financial Proceedings (“MCFP”) list, seeking the joinder of 16 proposed additional respondents and for disclosure from those proposed respondents. Each of the proposed additional respondents have historical relationships and linkages with the husband. They include each of his brothers, Mr C Messana and Mr D Messana (“the husband’s brothers”), and a raft of entities to which he and his brothers have direct or indirect relationships.
Ms Messana (“the wife”) supports the relief sought by the husband and seeks additional orders for disclosure from some of the proposed additional respondents.
During the course of the hearing on 21 April 2023, B Pty Ltd absent objection was joined as a party to the proceeding. It is now the second respondent in the proceeding. For the purpose of the property adjustment proceedings, it is agreed that the husband is the sole shareholder and director of B Pty Ltd, and that B Pty Ltd is the ‘alter ego’ of the husband. A further order was made by consent permitting the husband and wife to provide any of the documents annexed to the affidavit filed by the solicitor for the proposed additional respondents on 18 April 2023 to any joint expert valuer appointed in the proceedings.
Each of the 16 proposed additional respondents oppose the joinder.
For the reasons that follow, orders will be made joining the following as parties to the proceedings:
(a)Mr C Messana as the third respondent;
(b)Mr D Messana as the fourth respondent;
(c)E Pty Ltd as the fifth respondent;
(d)F Pty Ltd as the sixth respondent;
(e)G Pty Ltd as the seventh respondent;
(f)H Pty Ltd as the eighth respondent;
(g)Messana Pty Ltd as the ninth respondent; and
(h)J Pty Ltd as the tenth respondent.
The husband’s application to join the following entities will be refused:
(a)The Messana Partnership;
(b)K Pty Ltd;
(c)M Pty Ltd;
(d)L Pty Ltd;
(e)Messana Consulting;
(f)Messana (NSW) Pty Ltd;
(g)N Pty Ltd;
(h)Messana Holdings.
The husband will be directed to file and serve an Amended Response to an Initiating Application incorporating the substantive relief identified in his affidavit filed on 8 February 2023. The wife will be directed to file an Amended Initiating Application and the joined respondents will thereafter be directed to file a Response to each of the husband and wife’s amended relief as sought.
Orders will be made to facilitate disclosure of relevant documents between the parties, and creating a process whereby the parties may relist the matter (at each of their own risks as to costs) in the event they contend further disclosure failures.
The husband’s Application in a Proceeding filed on 8 February 2023 and the Responses thereto filed by the wife and the proposed additional respondents will otherwise be dismissed.
The proceedings will be listed for further case management in the MCFP list on 18 August 2023 at 10.00 am by way of Microsoft Teams.
MATERIAL RELIED UPON
In support of his Application in a Proceeding filed on 8 February 2023, the husband relied upon:
(a)A Case Outline filed on 19 April 2023 (Exhibit 2);
(b)His affidavit filed on 8 February 2023;
(c)His affidavit filed on 23 February 2023, annexing his proposed Amended Response to an Initiating Application;
(d)The balance sheet prepared by the husband and wife and filed on 13 February 2023 (Exhibit 5).
In support of her Response to an Application in a Proceeding filed on 9 March 2023, the wife relied upon:
(a)A proposed Minute of Order dated 21 April 2023 (Exhibit 1);
(b)A Case Outline filed on 9 March 2023 (Exhibit 3); and
(c)Her affidavit filed on 9 March 2023.
In support of their Response to an Application in a Proceeding filed on 12 April 2023, the proposed additional respondents relied upon:
(a)A Case Outline filed on 21 April 2023 (Exhibit 4);
(b)An affidavit of Ms O, the solicitor on record for each of the proposed additional respondents, filed on 12 April 2023; and
(c)An affidavit of Ms O filed on 19 April 2023.
BACKGROUND
The husband and wife married in 1986. They effected a separation in early 2020. They have five adult children.
The wife commenced these proceedings by filing an Initiating Application on 8 December 2020, seeking orders pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”). She broadly seeks an adjustment to the value of 60 per cent the available property in her favour.
The husband filed a Response to the Initiating Application on 22 December 2020. He seeks an adjustment to the value of 60 per cent of the available property in his favour.
As part of the litigation, the husband and wife filed have developed a joint balance sheet, a draft of which was filed on 13 February 2023 and marked Exhibit 5 in this application. It records the husband and wife’s assertions that the value of the property available for adjustment between them being in the range of $37 million. Of that total value, between $25 million and $27.5 million is held by way of corporate entities in which the husband has a direct or indirect minority interest, either personally or by way of B Pty Ltd, with entities owned and controlled (by not dissimilar mechanisms) by his brothers.
In addition to the various interests in entities, the parties jointly own two parcels of real property, one being at Suburb P in New South Wales and the other being at Suburb Q in Queensland. It was uncontroversial that as part of the s 79 adjustment, the wife will receive the husband’s interests in those two real properties, which would result in an adjustment in her favour of about $3.53 million.
The parties have nominal superannuation. The husband’s other non-corporate assets, or interests held by minority interests with his brothers or their corporations, have a value of less than $1 million.
Accepting for the purpose of these reasons that the wife will receive an adjustment of the husband and wife’s property to the value of 40 per cent in her favour (being the husband’s best case), it will be necessary for the husband or B Pty Ltd to access by way of their minority interests the wealth held by corporations that are controlled by the husband’s brothers or their corporations. Putting it another way, the minimum value of the wife’s adjusted entitlement pursuant to s 79 of the Act, as conceded by the husband, cannot be satisfied from the other property of the husband and wife alone, without accessing the assets of the corporate entities held either directly or indirectly by the husband in minority with those of his brothers.
The relationship between the husband and his brothers was constructive and cooperative for many years over the course of the marriage. The husband’s affidavit evidence suggests that the relationship between himself and his brother’s is “strained” (at paragraph 25). Prior to the separation the husband was removed as a director from the five companies in which he and his brothers have interests, being G Pty Ltd, H Pty Ltd, Messana Holdings and Messana Pty Ltd and J Pty Ltd. As will be recorded in these reasons, four of those five entities are the entities that hold significant wealth between the husband and his brothers.
The interrelationship of legal interests as between the husband and his brothers
E Pty Ltd is an entity wholly owned by Mr C Messana, who is also its sole director. F Pty Ltd is an entity wholly owned by Mr D Messana, who is also its sole director.
E Pty Ltd, F Pty Ltd, and B Pty Ltd together hold all of the issued shares (in equal, one-third proportions) in five corporate entities, being:
(a)K Pty Ltd;
(b)G Pty Ltd. This is a corporation registered by the husband and his brothers in 2012. The husband was removed from this capacity in 2018. His two brothers are the current directors. G Pty Ltd is, on the husband’s evidence, a trading company that owns a real property at Suburb R (valued in the range of $48 million), livestock, plant and equipment, and silage, as well as other “significant assets and liabilities” (paragraph 7.7 of his affidavit filed 8 February 2023);
(c)M Pty Ltd;
(d)H Pty Ltd. This was a company registered by the husband and his brothers in 2007. Again, the husband ceased to be a director of this company in 2018. His two brothers are the current directors. H Pty Ltd (on the husband’s evidence) owns several acres of land at Suburb S on which a large development proposal has been approved (valued in the range of $10.6 million), and the “construction arm of the approved development” (paragraph 7.7 of his affidavit filed 8 February 2023); and
(e)L Pty Ltd.
The husband and each of his brothers together hold all of the issued shares (in equal, one-third proportions) in five corporate entities, being:
(a)Messana Consulting;
(b)Messana (NSW);
(c)Messana Pty Ltd. This is a corporation established by the husband and his brother’s in 1991, as the entity through which they operated their business. The husband contends he was formally a director of this company by was removed from that capacity in 2018. His brothers are its current directors. Messana Pty Ltd owns 50 per cent of the issued shares in T Pty Ltd. The husband does not seek to join T Pty Ltd. N Pty Ltd, being a company in which neither the husband nor his brothers have shares nor any apparent direct interest, owns the other 50 per cent of the issued shares in T Pty Ltd. T Pty Ltd in turn holds parcels of real property across U Town, V Town and Suburb W (valued in the range of $2 million), and otherwise wholly owns the corporation, X Pty Ltd.
(d)Messana Holdings. This is the corporate trustee of the Messana Family Trust, for which each of the husband and his brothers are beneficiaries. As recorded later in these reasons, it was contended by counsel for the proposed additional respondents that Messana Holdings holds no assets of its own, and that the assets of the trust were distributed in 2018;
(e)J Pty Ltd. This is a corporation established by the husband and his brothers in 2004. The husband contends he was formally a director of the company but was removed from this capacity in 2018. His two brothers are the current directors. The husband contends that he no longer has knowledge of its business operations (if any) (paragraph 7.3 of his affidavit filed 8 February 2023).
Additionally, the husband and his brothers each have a one third share in the Messana Partnership. The Messana Partnership owns two pieces of real property.
Short further history of the litigation
Since these proceedings were commenced by the wife in December 2020, various interlocutory and procedural orders have been made to facilitate the husband and wife obtaining expert valuation evidence so as to define the scope of the property available to them for adjustment as part of the s 79 process, and the value of that property.
On 6 August 2021, orders were made by consent appointing Mr Y of Z Accountants as the single expert witness to prepare a report as to the value of the husband’s interests in various entities, and requiring the husband and wife to prepare a letter of instruction to Mr Y setting out a schedule of the agreed entities to be valued. Additional orders were made for the provision of relevant documents to Mr Y, to facilitate the preparation of his valuation report.
Orders were made by consent on 9 June 2022 appointing Mr AA of BB Valuers as the single expert witness to value 12 parcels of real property held by the husband personally or by entities in which he has an interest. Those orders further appointed Mr CC, being an Agent and Consultant, as the single expert witness to value the husband’s share in two assets, and facilitated the husband and wife appointing a single expert witness to value the livestock held either by the husband personally, or by the entities in which he has an interest.
Each of the husband and wife give affidavit evidence of the difficulties they have experienced in obtaining documents and information from the proposed additional respondents that they contend are relevant and necessary for the purposes of the various single expert witness valuation reports. They each depose that Mr Y has made numerous requests of the husband to provide financial documents relating to the various entities in which he has an interest (jointly with his brothers), to which the husband has not been able to respond. It is the husband’s firm evidence that he has been excluded from various entities and has otherwise been physically locked out of real properties in which he has an interest. The husband said he has caused to be issued a number of subpoena to the proposed additional respondents and their accountants for documents that would ordinarily be created in the course of business, but that those documents have not been forthcoming, or have been incomplete. The wife has similarly issued subpoena to relevant third parties seeking documents and information.
Each of the husband and wife contend that despite their efforts, there remains outstanding material required to complete the single expert valuation reports, such that the valuation process has effectively been brought to a stand-still. That said, long standing authority confirms that parties should not be joined to a proceeding only for the purpose of obtaining information. That process can be achieved by way of a subpoena to give evidence.
It was agreed during the course of the hearing that the proposed additional respondents had retained their current solicitors approximately two weeks ago and since that time a large volume of documents and information as sought by the husband, the wife and the single forensic accounting expert sourced from a number of the proposed additional respondents have been made available. This included by way of exhibits to the two affidavits of Ms O filed for the purpose of this determination (one of which was filed and served effectively one business day prior to the hearing on 21 April 2023). The husband and wife said they had not been able to comprehensively review those documents by the time of the hearing.
THE APPLICATION FOR JOINDER
The law
Part 3.1 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) sets out the procedure for the joinder of a party to the proceeding. Rule 3.01 prescribes:
3.01 Necessary parties
A person whose rights may be directly affected by an issue in a proceeding, and whose participation as a party is necessary for the court to determine all issues in dispute in the proceeding, must be included as a party to the proceeding.
Example:If a party seeks an order of a kind referred to in section 90AE or 90AF of the Family Law Act, a third party who will be bound by the order must be joined as a respondent to the proceeding.
The rule does not identify the discretionary matters to be considered to join a party to a proceeding. It mandates that a necessary party to a proceeding must be joined. The rule prescribes satisfaction of two conjunctive thresholds, being:
(a)Firstly, that the party who is proposed to be joined has rights that will be directly affected by the proceeding; and
(b)Second, that their participation in the proceedings are necessary to determine all issues in dispute in the proceeding.
If the evidence grounds such satisfaction, the rule obliges a joinder. Rule 3.01 reflects longstanding jurisprudence that a party may only be joined to proceedings if they are directly relevant to the outcome of the matter.
The word “necessary” for the purposes of a predecessor of the r 3.01 was described by
Warnick J in Wayne & Dillon & Anor [2008] FamCAFC 204, as meaning:
...something more than “useful” or “expeditious”. In my view, if there are available alternative means to joinder to the substantive proceedings, of obtaining from a third person or someone already a party what is needed to allow an applicant for joinder to establish an identified “case”, joinder is unlikely to be “necessary”.
However, if a cause of action, recognisable at law, against a “third person” is particularised, then it is at least highly likely that joinder will be “necessary for the court to completely and finally determine all matters in dispute.”
Consideration and Determination
A critical consideration as to whether a proposed additional party should be joined to proceedings, as mandated by r 3.01, is whether an order is sought against them.
The first category of proposed respondents sought to be joined
The amended relief to be sought by the husband or B Pty Ltd as identified in the proposed Amended Response to an Initiating Application seeks orders pursuant to s 90AE of the Act (as identified in the example in r 3.01 recorded at [32] above) or in the alternative, pursuant to s 257A of the Corporations Act 2001 (Cth) (“the Corporations Act”), against each of the following proposed additional respondents:
(a)Mr C Messana (personally);
(b)Mr D Messana (personally); and
(c)Each of the corporate entities identified at [23] and [24] above.
At this stage of the proceedings, the husband’s identification of the Court’s jurisdiction relied upon to ground joinder of these entities was not put into issue. That may not remain the case as the proceedings progress and when the strength of the arguable case for relief sought by the husband against these entities is considered. This may be exposed upon the husband filing a Points of Claim document setting out a statement of contentions of fact and/or law that would give rise to the relief that he or B Pty Ltd seek.
Hence on first glance, an application of r 3.01 would mandate the joinder of each of the above identified parties in that should the husband’s final relief be achieved, they will be bound by the final orders made. That however is not the end of the matter.
The husband’s brothers unequivocally contend that each of the following proposed additional respondents no longer trade or have never traded and have no realisable assets:
(a)Messana Holdings;
(b)Messana (NSW);
(c)Messana Consulting;
(d)L Pty Ltd;
(e)M Pty Ltd; and
(f)K Pty Ltd.
The husband’s brothers assert their contentions in relation to these proposed respondents are verified in documents disclosed by them to the husband and wife in the shadow of the hearing. The husband and wife, having regard to the volume of documents recently disclosed, are unable to verify these contentions. However, there is no plausible reason why these contentions should not be accepted having regard to the calibre of the current legal representation of the husband’s brothers.
It would be a nonsense to allow the joinder of the entities in this second category if there was no utility to doing so. The husband’s application for joinder of these proposed respondents will be refused.
In the event the assertions of the husband’s brothers as to the underlying value of these entities prove inaccurate, the husband is at liberty to bring such further application for joinder, with the husband’s brothers and the proposed additional respondents in this category being on notice of their risk as to costs.
Save for the entities identified at [41], the proposed additional respondents did not wish to be heard in relation to the application for joinder of the proposed additional respondents identified at [23(a)–(e)] and [24(a)–(e)] above. Orders joining those entities will be made.
Counsel for the proposed additional respondents submitted that the joinder of E Pty Ltd and F Pty Ltd was not necessary in circumstances where those entities were said to be the “personal investment vehicles of [the husband’s brothers]”, and that there “is nothing joining… those entities with any of the other entities” in the so called Messana Structure. That submission did not reflect the corporate structure identified at [23] above, nor did it engage with the force of the husband’s proposed relief seeking that either the husband or B Pty Ltd’s interests be compulsorily acquired by E Pty Ltd or F Pty Ltd in G Pty Ltd or H Pty Ltd. As identified in [40], the terms of that relief mandate the joinder of both E Pty Ltd and F Pty Ltd.
It was further submitted by counsel for the proposed additional respondents that it would “neither be reasonably necessary or reasonably appropriate to order third parties to acquire shares in a company of the shares held by the husband”, in that “there is nothing preventing the husband from transferring those shares to the wife” (Transcript 21 April 2023, p. 24 lines 36–37, and p. 25 lines 32–33). That said, it was conceded that there was no evidence before the Court as to the constitution of the various corporations or any shareholders agreement regulating the transfer of issued shares in the said corporations. In addition to the submission being absent evidentiary foundation, it failed to engage with the terms of the relief sought by the husband pursuant to s 90AE of the Act, or s 257A of the Corporations Act.
The second category of proposed respondents sought to be joined
The remaining proposed additional respondents sought to be joined by the husband are the Messana Partnership and N Pty Ltd. The proposed Amended Response to an Initiating Application articulating the relief of the husband and B Pty Ltd does not disclose any particular order being sought against the Messana Partnership or N Pty Ltd. Their joinder as parties to the proceedings will be refused for the following reasons.
The Messana Partnership, being the partnership between the husband and his brothers, owns a real property at Suburb S, having a gross value in the range of $11.7 million, and a real property at DD Town having a gross value in the range of $825,000. The husband and wife contend that the husband’s interest in the real properties owned by the Messana Partnership is valued in the range of $2,225,000.
No relief is sought as to the real property interests of the Messana Partnership. The thresholds in r 3.01 are not achieved in relation to the Messana Partnership. In circumstances where the husband’s brothers, being the remaining partners, are personally joined as recorded earlier in these reasons, the obligations of disclosure codified in ch 6 of the Rules apply to the husband’s brothers in their personal capacities for the purpose of the litigation.
N Pty Ltd is a corporation in which the husband has no direct nor indirect interest. It holds the 50 per cent balance of the issued shares in T Pty Ltd (with Messana Pty Ltd, as recorded at [23(c)] above). The highest case the husband could submit as to the proposed joinder of N Pty Ltd was that “it might” or “it may” become necessary in the future to seek orders directly affecting the interests of N Pty Ltd in T Pty Ltd.
Counsel for the husband gallantly attempted to provide this prayer of relief context by way of notions of efficiency and an absence of prejudice having regard to the complex web of corporate interrelationships constructed by the husband and his brothers. However, speculation does not achieve thresholds mandated by r 3.01. Should the conjunctive thresholds identified in the r 3.01 of the Rules be established on the evidence in future, an application for joinder of N Pty Ltd can be made at the time.
DISCLOSURE
The evidence of the parties and the proposed additional respondents as to when documents and information were requested, and when they were provided or not provided was extensive. In the circumstances, having regard to the large volume of the … provided in the shadow of the hearing, the following orders were made on 21 April 2023:
7.By consent, each of the husband and wife are at liberty to provide to any joint expert valuer appointed in the proceedings any document annexed to the affidavit of [Ms O] filed on 18 April 2023, which has been subject of a request by that valuer.
8.On or before 28 April 2023, the legal representatives for each of the husband, the wife, and the proposed additional respondents are to confer and to provide to the Court an agreed schedule as to the identity and description of any outstanding document or information requested by way of disclosure, with such schedule to be forwarded to my associate by email, in anticipation of it being marked Exhibit 6 in the proceedings.
The husband, wife and proposed additional respondents did not adequately comply with those orders. The Court remains in the dark as to the terms of disclosure requested and provided. As was made clear during the hearing on 21 April 2023, the Court will not trawl through large volumes of documents to determine what was requested, when it was requested, whether the requested information was relevant, and when or if the request had been complied with. In the circumstances, if the parties are unable to assume responsibility for compliance with disclosure obligations, there is no reason why the Court should relieve them of that responsibility at this stage of the proceedings.
The Rules are clear in their conferral of duties on parties to proceedings in this Court to make full and frank disclosure. Those obligations are absolute, continuing and remain until the conclusion of the s 79 process. The husband’s brothers and the entities identified at [5] of these reasons, once they are parties to the proceedings, face the same obligations of disclosure insofar as is relevant to the proceedings.
The obligations of disclosure and the options available to the Court faced with deficiencies in disclosure are well-known (see Weir & Weir (1993) FLC 92-338 (“Weir”) at 79,593), including that the Court should not be unduly cautious about making findings in favour of the “innocent party”. That said, the particular facts of the non-disclosure and the inference drawn from them may vary. There are those cases where a finding of non-disclosure is no more than one which complicates the fact finding process and from which costs orders often inevitably flow, and those cases where the nature and extent of the non-disclosure makes the approach identified by the Full Court in Weir thoroughly permissible.
If the parties remain in dispute as to the adequacy of disclosure, orders will be made requiring the party seeking disclosure to file and serve upon each other party a schedule setting out with precision the identity and description of the documents they contend are relevant and have not been disclosed. At each of their own risk as to costs, should such schedule not be adequately met, the party seeking disclosure will thereafter be required to file an Application in a Proceeding specifying the orders it seeks as to disclosure and the parties resisting disclosure shall be required to file a Response thereto.
COSTS
At the conclusion of the hearing on 21 April 2023, counsel for the proposed additional respondents made an oral application for his clients’ costs be indemnified by the husband. No foundation pursuant to s 117(2A) of the Act was identified in support of that application.
In the circumstances, I am not satisfied that any order for costs ought to be made at this stage of the proceedings, given that the costs application was made without notice to the husband and without particularity. The proposed additional respondents are not prevented from making such further application as to costs or security for costs as they are advised in the future.
I certify that the preceding fifty-nine (59) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Campton. Associate:
Dated: 15 May 2023
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