Moore and Moore
[2009] FamCA 319
•29 April 2009
FAMILY COURT OF AUSTRALIA
| MOORE & MOORE | [2009] FamCA 319 |
| FAMILY LAW – PRACTICE AND PROCEDURE – Summary dismissal – wife seeking to set aside deed of settlement previously entered into by parties – wife alleges fraud or false statement or misrepresentation by or on behalf of the husband in entering deed – consideration of authorities on fraud and misrepresentation – husband seeks summary dismissal of wife’s application – husband has not established that the wife “lacks a reasonable cause of action or is advancing a claim that is clearly frivolous or vexatious” – husband’s application dismissed |
| Family Law Act1975 (Cth), s 118 Family Law Rules 2004 (Cth), rr 1.12, 10.12, 10.13, 10.14 |
| Bigg v Suzi (1998) FLC 92-799 |
| APPLICANT: | Ms Moore |
| RESPONDENT: | Mr Moore |
| FILE NUMBER: | ADF | 4732 | of | 1998 |
| DATE DELIVERED: | 29 April 2009 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Strickland J |
| HEARING DATE: | 5 August 2008 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Whitington QC with Mr Jordan |
| SOLICITOR FOR THE APPLICANT: | David M Davidson |
| COUNSEL FOR THE RESPONDENT: | Mr Dickey QC with Mr Berman |
| SOLICITOR FOR THE RESPONDENT: | Barnes Brinsley & Shaw Lawyers |
Orders
That the Application in a Case filed by the husband on 19 May 2008 be dismissed and removed from the active pending cases list.
IT IS NOTED that publication of this judgment under the pseudonym Moore & Moore is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT ADELAIDE |
FILE NUMBER: ADF 4732 of 1998
| MS MOORE |
Applicant
And
| MR MOORE |
Respondent
REASONS FOR JUDGMENT
Introduction
Before me is the husband’s Application in a Case filed on 19 May 2008 seeking an order that the application of the wife filed on 18 December 2006 be dismissed. That application is opposed by the wife.
In the application filed by the wife on 18 December 2006 she sought the following orders:
“1. That the approval of the deed (executed by the parties on 23/11/00) ordered on 24/11/00 by the Honourable Justice Murray be revoked pursuant to S.87(8) of the Family Law Act 1975 as amended.
2. That pursuant to S.79 of the said Act and by way of settlement of property or alteration of interests in property the husband do pay to the wife such sum as this honourable court deems just and equitable.
3. That the husband pay the wife’s costs.”
Brief Factual and Procedural Background
The husband was born in October 1948.
The wife was born in May 1949.
The parties were married in March 1973.
The parties separated on 18 January 1998.
On 12 November 1998, the wife filed an application in the Family Court of Australia seeking orders for settlement of property and spousal maintenance.
On 18 January 1999 the husband filed a response joining issue with the wife’s application.
On 27 July 1999 a decree nisi for dissolution of the marriage was made which became absolute on 30 August 1999.
The husband obtained a valuation of the “business interests” of the husband from Mr K, Chartered Accountant dated 31 March 2000. Taking into account the debit loan accounts of the husband and the wife, Mr K concluded that the “net position” of the husband and the wife was a net liability of $997,901.
The wife obtained a valuation report from Mr W, Chartered Accountant dated 24 October 2000 which addressed the “actual net profit earned by the entities in which the [Moore] group is involved”, and which although it did not say so in the report, apparently resulted in a valuation of approximately $7 million.
Apart from the business interests the parties had other assets including the former matrimonial home, a property at N, furniture and contents, motor vehicles, life insurance and jewellery. There were some liabilities and the husband also had a small entitlement in a superannuation fund.
A settlement was negotiated between the parties and on 23 November 2000 they entered into a deed which recorded the terms of settlement. The company holding the mortgage over the title to the former matrimonial home was a party to the deed as well.
This deed was a maintenance agreement to which s 87 of the Family Law Act 1975 applied.
On 23 November 2000, a hearing was convened before Murray J for the purpose of obtaining approval of the deed. However, the documents were not ready in time and the hearing was adjourned to 24 November 2000.
On 24 November 2000, the husband through his counsel tendered an amended application seeking an order that the deed be approved pursuant to s 87 of the Family Law Act 1975, and an order that the order for spousal maintenance made on 24 September 1999 be discharged as from 1 December 2000.
On 24 November 2000 before Murray J, both parties were represented, but the company holding the mortgage was not. The valuations of Mr K and Mr W were tendered to her Honour, the latter being annexed to an affidavit sworn on 3 November 2000. There was also a schedule of assets, liabilities and resources as at 23 November 2000 tendered to Her Honour. The wife consented to the orders sought by the husband. Her Honour found that the agreement was proper and made the orders.
In summary, the deed provided as follows:
1. For the sale of the former matrimonial home by the wife and from the proceeds of sale the husband to receive the sum of $650,000 to discharge the mortgage and the wife to receive the balance.
2. The husband to pay to the wife the total sum of $2.25 million by 31 December 2005.
3. The husband to pay out the wife’s debit loan accounts.
4. The wife to retain her motor vehicle, her jewellery, her personal effects, her household furniture and her personal savings and investments.
5. The husband to retain his property at [N], his motor vehicle, his superannuation fund entitlement, his life assurance policy, his shares in members of the [Moore] group of companies and the other [Moore] companies, his interest and entitlement in any trust forming part of the [Moore] group of companies and the other [Moore] companies and any asset therein, his jewellery, personal effects, household furniture and personal savings and investments.
On 18 December 2006 the wife filed the application referred to in paragraph 1 above.
On 19 May 2008 the husband filed his application in a case referred to in paragraph 1 above.
On 30 July 2008, the wife filed an application in a case seeking an order that the Registrar of the Supreme Court of South Australia do deliver up to the Family Court at Adelaide all affidavits filed in suit number … of 2007 between Mr M (and others) and the husband (and others).
On 1 August 2008 I made an order in terms of the order sought in the application filed by the wife on 30 July 2008 and I gave leave to the legal representatives of the parties to inspect certain of the affidavits filed in the Supreme Court proceedings. I then made a further order as to the inspection and copying of the affidavits and the use to which those affidavits could be put.
The Relevant Rules and Legal Principles
The husband seeks an order that the application filed by the wife be summarily dismissed.
The Family Law Rules 2004 do not provide for an application for summary dismissal as such, but rules 10.12, 10.13. 10.14 and 1.12 provide as follows:
Rule 10.12 Application for summary orders
A party may apply for summary orders after a response has been filed if the party claims, in relation to the application or response, that:
(a)the court has no jurisdiction;
(b)the other party has no legal capacity to apply for the orders sought;
(c)it is frivolous, vexatious or an abuse of process; or
(d)there is no reasonable likelihood of success.
Rule 10.13 Application for separate decision
A party may apply for a decision on any issue, if the decision may:
(a)dispose of all or part of the case;
(b)make a trial unnecessary;
(c)make a trial substantially shorter; or
(d)save substantial costs.
Rule 10.14 What the court may order under this Part
On an application under this Part, the court may:
(a)dismiss any part of the case;
(b)decide an issue;
(c)make a final order on any issue;
(d)order a hearing about an issue or fact; or
(e)with the consent of the parties, order arbitration about the case or part of the case.
Note This list does not limit the powers of the court. The court may make orders on an application, or on its own initiative (see rule 1.10).
Rule 1.12 Court may dispense with Rules
(1)These Rules apply unless the court, on application or its own initiative, orders otherwise.
(2) The court may dispense with compliance with any of these Rules at any time, before or after the occasion for compliance arises.
(3)In considering whether to make an order under this rule, the court may consider:
(a)the main purpose of these Rules (see rule 1.04);
(b)the administration of justice;
(c)whether the application has been promptly made;
(d)whether non‑compliance was intentional; and
(e)the effect that granting relief would have on each party and parties to other cases in the court.
The Family Law Rules 2004 are properly read as supplementing the power of the court to dismiss frivolous or vexatious proceedings pursuant to s 118(1) of the Family Law Act 1975. The rules are also to be read in the context of the many cases confirming the Court’s inherent power to dismiss or permanently stay an application which cannot succeed, as to which see the authorities discussed in Bigg & Suzi (1998) FLC 92-799 at 84,974.
The principles that apply to an application for summary dismissal are well settled and are to be found in cases such as General Steel Industries Inc v Commissioner for Railways (NSW) And Ors (1964) 112 CLR 125, per Dixon J in DeyvVictorian Railways Commissioners (1949) 78 CLR 62 at 91, and per Kirby J in Lindon v the Commonwealth (No 2) (1996) 70 ALJR 541, at 544-545. The principles have been adopted by this Court (eg, see Bigg & Suzi (supra); and Ferrall & McTaggart v Lyton (2000) FLC 93-054; Pelerman & Pelerman (2000) FLC 93-037 and Beck & Beck (2004) FLC 93-181). They are usefully distilled by Kirby J in Lindon v the Commonwealth (No 2) (supra), at 544-545, as follows (citations omitted):
“1. It is a serious matter to deprive a person of access to the courts of law for it is there that the rule of law is upheld, including against Government and other powerful interests. This is why relief, whether under O 26 r18 or the inherent jurisdiction of the Court, is rarely and sparingly provided;
2. To secure such relief, the party seeking it must show that it is clear, on the face of the opponent’s documents, that the opponent lacks a reasonable cause of action or is advancing a claim that is clearly frivolous or vexatious;
3. An opinion of the Court that a case appears weak and such that it is unlikely to succeed is not, alone, sufficient to warrant summary termination. Even a weak case is entitled to the time of a court. Experience teaches that the concentration of attention, elaborated evidence and argument and extended time for reflection will sometimes turn an apparently unpromising cause into a successful judgment;
4. Summary relief of the kind provided for by O 26 r 18, for absence of a reasonable cause of action, is not a substitute for proceeding by way of demurrer. If there is a serious legal question to be determined, it should ordinarily be determined at a trial for the proof of facts may sometimes assist the judicial mind to understand and apply the law that is invoked and to do so in circumstances more conducive to deciding a real case involving actual litigants rather than one determined on imagined or assumed facts;
5. If, notwithstanding the defects of pleadings, it appears that a party may have a reasonable cause of action which it has failed to put in proper form, a court will ordinarily allow that party to reframe its pleading…
6. The guiding principle is, as stated in O 26 r 18(2), doing what is just. If it is clear that proceedings within the concept of the pleading under scrutiny are doomed to fail, the Court should dismiss the action to protect the defendant from being further troubled, to save the plaintiff from further costs and disappointment and to relieve the Court of the burden of further wasted time which could be devoted to the determination of claims which have legal merit.
To similar effect, Dixon J said in DeyvVictorian Railways Commissioners (supra), at 91:
“The application (for summary dismissal) is really made to the inherent jurisdiction of the Court to stop the abuse of its process when it is employed for groundless claims. The principles upon which that jurisdiction is exercisable are well settled. A case must be very clear indeed to justify the summary intervention of the Court to prevent a plaintiff submitting his case for determination in the appointed manner by the Court with or without a jury. The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amount to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether of fact or law and the rights of the parties depend upon it, then it is not competent for the Court to dismiss the action as frivolous or vexatious and an abuse of process.”
Barwick CJ cited the remarks of Dixon J in General Steel Industries Inc v Commissioner for Railways (NSW) And Ors (supra), at 129-130 and said:
“The plaintiff rightly points out that jurisdiction summarily to terminate an action is to be sparingly employed and is not to be used except in a clear case where the court is satisfied that it has the requisite material and the necessary assistance from the parties to reach a definite and certain conclusion…(I)n my opinion great care must be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal. On the other hand, I do not think that the exercise of the jurisdiction should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff’s claim. Argument, perhaps of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed.”
The Evidence
The husband’s senior counsel relied on and referred to the following documents:
1.The s 87 maintenance agreement dated 23 November 2000.
2.The schedule of assets, liabilities and resources tendered by the parties at the hearing before Murray J on 24 November 2000.
3.The transcript of proceedings on 24 November 2000 before Murray J.
4.The financial report of Mr W annexed to his affidavit filed on 24 November 2000.
5.The financial report of Mr K dated 31 March 2000.
6.The wife’s particulars of claim filed on 19 July 2007.
7.The affidavits of the wife filed on 12 February 2008 and 16 April 2008.
There are of course limitations on the material upon which an applicant for summary dismissal can rely in establishing a case for that relief. The party must show that it is clear on the face of the opponent’s documents that the opponent lacks a reasonable cause of action or is advancing a claim that is clearly frivolous or vexatious (per Finn J in Custodio v Pinto & Ors (2006) FLC 93-279, at 80,760 quoting Kirby J in Lindon v the Commonwealth (supra)). That limitation is satisfied here.
Discussion
The wife in her particulars of claim sets out two bases for the relief she seeks, namely:
“1. That the Court could not have been satisfied that the terms of settlement were proper;
2. That the approval was obtained by fraud, namely by the husband falsely asserting that certain assets of his group of companies were beneficially owned not by him but by his mother.”
However, at the commencement of the hearing, the wife’s senior counsel indicated that the second basis was the one being pursued. It is said that revocation of the deed is being sought under either s 87(8)(a) or (c), namely that either there has been fraud or the agreement is voidable for misrepresentation.
In Green v Kwiatek (1982) FLC 91-259, the Full Court of the Family Court of Australia adopted the definition of fraud contained in Derry v Peek (1989) 14 A.C 337, as follows:
“Fraud in this context consists of a false statement of fact which is made by one party to a transaction to the other knowingly, or without belief in its truth, or recklessly, without caring whether it be true or false, with the intent that it should be acted upon by the other party and which was so in fact acted upon.”
With respect to non-disclosure or suppression of evidence or material facts, at common law mere silence or non-disclosure does not usually amount to fraud. However in Suters v Suters (1983) FLC 91-365, Strauss J relied on equitable principles, stating at 78,548 that:
“Suppression or non-disclosure of material facts has long been treated as such fraud in equity as would entitle a Court of Equity to set aside a transaction.”
If fraud or misrepresentation is established, it must also be established that the other party in fact relied upon it.
As to whether knowledge defeats an allegation of misrepresentation, it was said in Gipps v Gipps (1978) FLC 90-523 at 77,769:
“It by no means necessarily follows that complete knowledge of the falsity of representations defeats a case based on them; it is only if the knowledge is such as to destroy the effect of the misrepresentations as inducements. Only if knowledge is of the falsity of representations, and that knowledge is accepted as true so that the false belief is wholly dissipated, does knowledge defeat misrepresentation.”
In Green v Kwiatek (supra), it was found that the husband had not been induced to enter into the maintenance agreement by the wife’s false representation that she had no interest in a business, as the husband had knowledge of that interest.
The issue of fraud or non-disclosure in this case relates to the assets of the E Group. E Pty Ltd was the trustee of the E Trust, and the directors were the husband, his mother and Mr M. Mr M was the long-time partner in property development with the husband. The husband and Mr M had one share each and the husband’s mother held 8 shares. The appointor of the trust was the husband’s mother and the husband was a beneficiary of the trust.
E Pty Ltd had a 50% interest in the R Trust, and a one third interest in the P Trust. According to Mr K, those interests were valued at $4.762 million. However, because they were within the husband’s mother’s control and not the husband’s control, the husband’s case was that those interests should be excluded from the pool of assets available to be distributed between the parties.
The wife alleges that the husband did in fact have control of the E Group and its assets at the time of the execution and approval of the deed, and by asserting otherwise, he acted fraudulently or at least he misrepresented the position.
The wife then says that she relied on that representation in agreeing to the settlement, in executing the deed, in submitting the deed for approval, and in consenting to the orders.
The husband’s senior counsel points to the following in support of the application for summary dismissal:
41.1At all times the wife was represented by Ms Vicki Chapman, solicitor.
41.2That according to paragraph 6 of the affidavit of the wife filed on 16 April 2008, Ms Chapman instructed Mr W to provide advice as to the valuation of the business interests undertaken by Mr K.
41.3That according to paragraph 7 of the said affidavit, the advice the wife received from her solicitor was that “the assets of the [E] Trust were beyond the reach of the Family Court because they were controlled by (the husband’s) mother”.
41.4That despite that advice, at the time of the preparation of the deed there was a major divergence of views concerning the value of the business interests, the wife suggesting it was approximately $7 million and the husband asserting it was minus $997,901.
41.5A settlement was reached which provided, inter alia, for the wife to receive $2.25 million over 5 years.
41.6At the hearing on 24 November 2000, the wife was present and was represented by Ms Chapman. The husband’s counsel with the agreement of Ms Chapman provided the Judge with the document entitled “Schedule of assets, liabilities and resources” dated 23 November 2000 which identified the major divergence in opinion referred to above. In tendering this document it was stated that it was a schedule that had passed between solicitors and had been agreed upon.
41.7The wife’s counsel ensured that the report of Mr W was placed on the Court file by tendering his affidavit sworn on 3 November 2000.
On the basis of these facts, the submission of the husband’s senior counsel is that the wife cannot say that she relied on any assertion by the husband as to the control or ownership of the assets of the E Trust. In negotiating the settlement, in executing the deed, in seeking the approval of the Court and in consenting to the orders, her position was that the value of the business interests were $7 million, which included the assets of the E Trust, and this belief was based on the report of Mr W.
Prima facie the husband could take some comfort from the Full Court decision in Green v Kwiatek (supra) in making this submission. In other words it was held in that case that the husband was not induced to enter into the agreement by the non-disclosure or implied representation of the wife because the husband in fact was aware of what the wife had failed to disclose.
The absence of any evidence that the wife relied upon any assertion by the husband is clearly the crux of the husband’s argument but there is also an issue as to whether there was a false statement or at least a misrepresentation.
The wife’s case that the husband in fact controlled the E Trust is based for example on the claim that the husband’s mother was too elderly to run that part of the business, but more significantly on admissions by the husband in the pleadings in the Supreme Court proceedings between Mr M and the husband such as that, “at all material times, [E] was controlled by (him).” The husband’s senior counsel conceded on the husband’s behalf that he was in effect managing or running the affairs of the E Trust on a day to day basis, but he says that was in the sense of how a Chief Executive Officer would manage a business and did not indicate that the assets of the trust were in his control such that they could be treated as his assets. Thus he posed the question of what does “controlled by [Moore]” as it appears in the pleadings in the Supreme Court proceedings in fact mean, and given those proceedings were commenced some time after the date of approval of the deed, he posed the question of what is meant by “at all material times”?
In these circumstances, Mr Dickey submits that there is no evidence to support the wife’s claim that there was a false assertion made by or on behalf of the husband, and there is no evidence to support her claim that she relied upon any assertion made by or on behalf of the husband. Thus, he says the wife has no reasonable prospect of success.
Finally, Mr Dickey points to the fact that to revoke approval involves an exercise of discretion and here, given that the deed was approved 8 years ago and the wife received all the payments due to her 3 years ago, it is not “proper” for the approval to be revoked.
For the wife’s part, in opposing the husband’s application for summary dismissal and in responding to the submissions made on behalf of the husband, the wife’s senior counsel relied on the following:
48.1 As to whether there was a false statement or misrepresentation, it is not necessary for the wife to establish her case at this point, but only to raise an arguable claim. As Dixon J said in Dey v Victorian Railways Commissioners, supra:
“…once it appears that there is a real question to be determined whether fact or law and that the rights of the parties depend upon it, then it is not competent for the Court to dismiss the action as frivolous and vexatious and an abuse of process.”
Here, the husband’s senior counsel himself makes the point that the meaning of “controlled” and “at all material times” in the pleadings in the Supreme Court action is unclear. Thus, it can be said that a real question has been raised that needs to be determined, and the time to do that is in the course of hearing the application to revoke the approval. That is what paragraph 4 of the principles set out in paragraph 26 above is all about. In any event, the wife’s senior counsel has taken me to other paragraphs in the Statement of Claim in those proceedings, and to the husband’s defence which prima facie indicate for example that “at all material times” refers to the whole period of the ownership by C Group of those assets, namely extending back to well before November 2000 when the deed was executed and approved. Similarly it is arguable that “controlled” as referred to in those proceedings was not used in the sense of a Chief Executive Officer managing a portfolio of properties. In the Statement of Claim, Mr M is asserting that he and the husband in partnership ran a property development and holding business, that they held these properties together (including the properties in which E Trust had an interest), and they reached a settlement at a mediation to divide them up between themselves, but then the husband reneged on that settlement. In his Defence, the husband does not suggest that he is not able to deal with any of the subject properties. Thus as Mr Whittington says, at the very least this raises questions that the husband needs to answer and which should be determined at trial.
48.2 In relation to the crucial question of whether the wife relied on the assertion by the husband that he had no control over the assets of the E Trust and they should be excluded from the asset pool, the wife’s senior counsel said a number of things, not all of which I accept but some of which I do, but to my mind the most relevant submission, and putting it into my own words, is that even if the wife did not believe that the husband’s mother rather than the husband controlled the assets, and even if she was promoting a value of the business interests including the interests of the E Trust, of approximately $7 million, she can still be said to have relied on the assertion by the husband to set the parameters for the negotiated settlement. In other words, the husband was asserting that without the assets of the E Trust there was a deficit of approximately $1 million, but the wife was asserting that including those assets, the relevant value was approximately $7 million, and that provided the parameters within which a compromise was reached, and the wife’s case is that that is how the ultimate figure was arrived at, although of course there were other items of real estate and personalty that were taken into account as well. Again though, the issue is whether an arguable claim has been raised and not whether that claim can be established.
I also make the comment that these submissions provide possible points of distinction between the facts of this case and the facts in Green v Kwiatek, supra. In other words in Green v Kwiatek, firstly the proceedings have reached the point where it was established that there had been non-disclosure of a business interest, and secondly there was no question of reliance on the non-disclosure as setting the parameters of the settlement.
Conclusion
Applying the relevant principles I set out in paragraph 26 above I do not consider that the applicant husband has established that the wife “lacks a reasonable cause of action or is advancing a claim that is clearly frivolous or vexatious”.
There seems to be real questions to be determined, namely was a false statement made or at least was there a misrepresentation, and did the wife rely on the statement in reaching a settlement in executing the deed, in seeking approval of the deed, and in consenting to the orders. Those questions “should ordinarily be determined at a trial”.
Thus, the application of the husband for summary dismissal of the wife’s application seeking revocation of approval of the deed should be dismissed.
I note that the husband’s senior counsel raised the question of the exercise of my discretion in revoking the approval, but in the circumstances I do not consider that I need to address that issue.
When delivering these reasons for judgment I will address with counsel the question of when the wife’s application can be heard and what preparation is necessary for that hearing.
I certify that the preceding 54 paragraphs are a true copy of the reasons for judgment of the Honourable Justice Strickland delivered on 29 April 2009
Associate
Key Legal Topics
Areas of Law
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Civil Procedure
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Family Law
Legal Concepts
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Jurisdiction
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Procedural Fairness
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