MOORE & MOORE

[2012] FamCA 387

FAMILY COURT OF AUSTRALIA

MOORE & MOORE [2012] FamCA 387

FAMILY LAW – PROPERTY – REVOCATION OF APPROVAL OF DEED – where the wife seeks that the approval of a Deed executed by the parties in November 2000 be revoked pursuant to s 87(8) of the Family Law Act 1975 (Cth) – where the husband opposes the order sought and seeks dismissal of the wife’s application and costs – where the wife alleges that her approval to the agreement was obtained by fraud and/or misrepresentation and/or material non-disclosure, and/or undue pressure and/or undue influence – where the wife’s evidence was not credible – where the husband was an impressive witness whose evidence was preferred to that of the wife wherever there was a conflict – where the primary allegations or fraud, misrepresentation or material non-disclosure centres around the control of a discretionary Trust – where the evidence fails to demonstrate that the husband and not his mother controlled the Trust such that it could be treated as an asset of the husband at the date of the approval of the Deed and at all relevant times prior thereto – where the evidence fails to demonstrate that the husband failed to disclose to the wife what became of the proceeds of sale of two properties or that he made false representations about that – where the wife was not subjected to undue influence or undue pressure by the husband which necessitated her entering into settlement negotiations or resulted in an unfavourable settlement – where the wife was at all times in receipt of legal advice from experienced, well respected legal practitioners – where there is no basis for the approval of the Deed to be revoked – application dismissed.

Family Law Act 1975 (Cth) ss 87(6), (8)(a) & (c), (11)
Family Law Rules (2004) (Cth)

Australian Steel and Mining Corporation v Corben [1974] 2 NSWLR 202
Borrelli & Ors v Ting & Ors [2010] UKPC 21
Carmel-Fevia & Fevia (2010) 43 FamLR 405
Gipps & Gipps(1978) FLC 90-423
Gould v Vaggelas (1985) 157 CLR 215
Green & Kwiatek (1982) FLC 91-259
Jones v Dunkel (1959) 101 CLR 298
Scribe & Scribe (2006) FLC 93-302
Smith v Chadwick (1884) 9 AC 187
Suter & Suter (1983) FLC 91-365

APPLICANT: Ms Moore

RESPONDENT: Mr Moore

FILE NUMBER: ADF 4732 of 1998

DATE DELIVERED: 18 April 2012

PLACE DELIVERED: Brisbane

PLACE HEARD: Adelaide

JUDGMENT OF: Strickland J

HEARING DATES:

23, 26, 29 & 30 November 2010

1, 2, 10, 13, 14, 15, 16 & 17 December 2010
4, 5 & 6 April 2011

10 May 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Whitington QC
with Mr Jordan

COUNSEL FOR THE RESPONDENT:

Mrs Shaw QC

with Mr Bleby

SOLICITOR FOR THE APPLICANT: City East Legal

SOLICITOR FOR THE RESPONDENT: Barnes Brinsley Shaw Lawyers

Orders

1. The Application filed by the wife on 18 December 2006 be dismissed.

2. All Applications and Responses be otherwise 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

1. The application before the Court is the wife’s application filed on18 December 2006 seeking 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 interest 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.

2. The hearing that has now taken place only addresses the first order sought given that it is only if that order is made that the second order needs to be addressed.

3. The husband opposes the orders sought by the wife, and in his Response filed on 30 October 2007 he sought a dismissal of the application and an order for costs.

4. Because of the nature of the application made by the wife and the issues involved an order was made by a Registrar on 24 April 2007 that the wife file particulars of claim.  That order was initially complied with by the filing of particulars of claim on 19 July 2007.  Subsequent to that there were amended particulars of claim filed on 26 October 2009 and then substituted particulars of claim filed on 28 October 2009.  Then, on 18 November 2010, just prior to the commencement of the hearing, the wife made an application for leave to amend her substituted particulars of claim.  This application was ultimately heard by me on 29 November 2010 and I granted the wife leave to amend her substituted particulars of claim by adding paragraphs 14A through 14F inclusive.

5. The point of referring to this at this stage is that in the wife’s summary of argument provided for the purposes of the hearing, it was said that the matters pleaded in the further substituted particulars of claim entitled the wife to a number of declarations including pursuant to s 87(11) of the Act leading to the making of the order sought.

6. The husband opposed the making of these declarations, and I must say that I do not see the need for them.  They are perhaps better described as the findings that need to be made by the Court before the order sought by the wife can be made.

Relevant background

1. The husband was born in Europe in 1948 and at the commencement of the hearing he was aged 62 years.  His family migrated to Australia in 1950 and settled in Adelaide.

2. The wife was born in the United Kingdom in 1949, and at the commencement of the hearing she was aged 61 years.  Her family migrated to Australia in 1958 and settled in Melbourne.

3. The husband and the wife married in 1973 in Adelaide.  At that time the husband had his own professional practice and the wife was working as a teacher.

4. The parties purchased their first home at W Street N in June 1976.

5. In about September 1977 the husband formed the Moore Family Trust with A Nominees as the Trustee.  The husband and the wife were the directors and shareholders of the trustee company until 1990 when the wife was removed as a director.

6. In May 1979 O Nominees Pty Ltd was incorporated with the husband’s father, Mr Moore Snr, and his mother Mrs Moore Snr as the directors and shareholders.

7. In 1979 the parties’ first child, a daughter, was born.

8. In 1980 the husband and his business partner Mr S established C Investments Pty Ltd as Trustee of the C Investments Unit Trust to develop and invest in commercial properties.  Thereafter the husband and Mr S established various companies and trusts to progress the business.  Collectively these entities became known as the C Group or just C.

9. In 1980 the husband’s father, Mr Moore Snr, died.

10. In 1983 the parties’ second child, a son, was born.

11. On 27 March 1986 the property at E Street Suburb H was purchased jointly by A Nominees Pty Ltd and O Nominees Pty Ltd.

12. In September 1987 the husband and A Nominees Pty Ltd purchased the property at S Terrace Suburb N.

13. In 1988 Mr R joined the husband and Mr S in the C business.

14. On 20 November 1987 the parties moved to live in the property at
    Suburb H.

15. In October 1989 the company Y Pty Ltd was incorporated with the husband’s mother and the husband as the directors and shareholders.

16. On 20 October 1990 the property at S Terrace Suburb N was transferred into the sole name of the husband.

17. On 28 March 1992 the parties contracted to purchase the property at TE Street Adelaide for $890,000.

18. On 1 April 1992 the sale of the property at Suburb H was settled.

19. On 14 April 1992 the husband and the wife executed a mortgage to
    O Nominees Pty Ltd over the property at TE Street securing the sum of $930,000.

20. On 16 April 1992 the purchase of the property at TE Street was settled.

21. On 30 June 1992 the D Trust was settled with Y Pty Ltd as the Trustee.

22. On 30 June 1992 the husband executed an acknowledgement that he held his shares in Y Pty Ltd on trust for his mother.

23. On 17 August 1992 the sale of the property at S Terrace Suburb N was settled and the husband deposited the net proceeds of sale of $530,337.18 in his mother’s bank account.

24. In June 1993 the ER Company Pty Ltd was incorporated.

25. In June 1993 the company E Pty Ltd was incorporated with the directors being the husband’s mother, the husband and Mr S, the husband’s business partner.  The shareholders were the husband’s mother with eight shares and the husband and Mr S with one share each.

26. On 22 September 1993 the E Trust was settled with E Pty Ltd as the Trustee.  The appointor of this trust was the husband’s mother.

27. On 28 October 1993 the ER Trust took a lease of the properties at RE Street from the State Government.

28. In June 1995 the company P Pty Ltd was incorporated with the directors being the husband, Mr S and Mr R.  The shareholders were E Pty Ltd, Z Pty Ltd and B Pty Ltd (as Trustee for the Ms R Family Trust). 

29. In June 1995 the P Trust was settled with P Pty Ltd as the Trustee.  The three equal unit holders of the P Trust were E Pty Ltd, Z Pty Ltd and B Pty Ltd.

30. On 30 August 1995 P Pty Ltd purchased the property at P Street L for $4,000,000 borrowing $6,000,000 from the Adelaide Bank.

31. On 22 December 1995 the Adelaide Bank provided a loan facility of
    $6,000,000 to ER Company Pty Ltd on the security of the lease from the State Government.

32. On 18 January 1998 the parties separated with the husband leaving the property at TE Steet.

33. On 12 November 1998 the wife filed an Application in the Family Court of Australia seeking orders for settlement of property and spousal maintenance.  Her solicitor was Ms Vickie Chapman of Chapman & Associates.

34. The husband instructed Mr J, a partner at X Accountants, the husband’s and C Group’s accountants to prepare a valuation of his business interests for the purposes of the Family Court proceedings.  Mr J presented his valuation report on 15 January 1999 and a copy was provided to the wife on that same date.

35. On 18 January 1999 the husband filed his Response to the wife’s application seeking orders for property settlement and spousal maintenance.

36. On 18 January 1999 settlement of the purchase of the property at M Street Suburb N by the husband for $310,000 occurred with the husband borrowing $248,000 from the Adelaide Bank.

37. On 3 March 1999 the husband filed a Form 8A Response seeking the sale of the property at TE Street and the repayment of the mortgage to O Nominees Pty Ltd.

38. On 14 May 1999 the wife through her solicitors instructed Mr W, accountant.

39. On 8 February 2000 the wife instructed Mr Raymond Mansueto to act as her commercial solicitor.

40. On 31 March 2000 Mr K, on instructions from the husband’s solicitors, provided a valuation report in relation to the business interests of the parties.

41. On 24 October 2000 Mr W presented his report on the income stream of the entities in which it is claimed the husband had an interest.

42. On 23 November 2000 the husband, the wife and O Nominees Pty Ltd executed a Section 87 Deed.

43. On 24 November 2000 Murray J approved the Section 87 Deed.

The deed

1. In summary, the Deed dated 23 November 2000 and approved by Murray J on 24 November 2000 provided as follows:

   (a)The former matrimonial home at TE Street Adelaide be sold by the wife by 31 July 2001 (without reference to the husband) at a price to be determined in the absolute discretion of the wife save that it not be less than is required to pay the sale expenses and the sum of $650,000 to the husband.

   (b)At settlement of the sale the wife pay $650,000 to the husband and the husband procure the discharge of the registered mortgage held by O Nominees Pty Ltd over the property, and the release of the wife from any liability to O Nominees Pty Ltd.

   (c)Upon payment to the husband of $650,000, O Nominees Pty Ltd (being a party to the Deed) release and completely discharge the wife from any liability to O Nominees Pty Ltd, and the entitlement to security pursuant to the terms of the mortgage be limited to $650,000.

   (d)The husband shall assume full liability and responsibility to O Nominees Pty Ltd in respect of the mortgage.

   (e)Pending settlement the wife is entitled to the use and occupation of the property and she is to meet all ongoing expenses in relation to that property save and except that there is no payment required by her pursuant to the mortgage to O Nominees Pty Ltd.

   (f)If the $650,000 has not been paid to the husband by 31 August 2001 the TE Street property is to be marketed and sold upon such terms as may be agreed by the husband and the wife and in default as ordered by the Court, and from the proceeds of sale after payment of the selling costs the husband is to receive $650,000 and the wife is to receive the balance.

   (g)The husband is to make the following payments to the wife:

   (i)       $150,000 on 1 December 2000.

   (ii)$600,000 by 20 quarterly instalments of $30,000, payable in advance, with the first instalment payable on 1 January 2001 and the last instalment on 1 October 2005.

   (iii)     $1,500,000 on 31 December 2005.

   (h)All payments to be made to the wife shall be in the nature of capital and not income, and shall be net of tax.

   (i)The husband shall repay any liability of the wife to any member of the Moore Group of Companies and the other Moore Companies and indemnify the wife in relation thereto.

   (j)The wife shall assign to the husband any interest that she has in any of the Moore Group of Companies or the other Moore Companies including any loan account.

   (k)The wife shall retain as her sole property:

   (i)Her jewellery, personal effects, household furniture and personal savings and investments currently in her possession and control.

   (ii)Her Mercedes SLK motor vehicle.

   (l)The husband shall retain as his sole property:

   (i)His jewellery, personal effects, household furniture and personal savings and investments currently in his possession and control.

   (ii)His shares in members of the Moore Group of Companies and the other Moore Companies.

   (iii)His interest and entitlement in any Trust forming part of the Moore Group of Companies and the other Moore Companies and any assets therein.

   (iv)The property at M Street Suburb N.

   (v)The Porsche motor vehicle.

   (vi)The husband’s Asgard Super Fund entitlement.

   (vii)The husband’s Tower Life Assurance Policy.

The relevant legislation and the principles to be applied

1. Section 87(8) of the Family Law Act 1975 (Cth) (“the Act”) provides as follows so far as is relevant:

   A court may, by order, revoke the approval of a maintenance agreement under this section if, and only if, the agreement is registered or deemed to be registered in that court and the court is satisfied that:

   (a)      The approval was obtained by fraud;

   …

   (c)The agreement is void, voidable or unenforceable;

   …

2. I observe that pursuant to s 87(6) where a Court has approved an agreement as is the case here, the agreement is deemed to be registered.

3. Next, s 87(11) provides as follows, and again in so far as is relevant:

   Apart from the provision made by subsections (2), (4A), (4C), (5), (9) and (10), the validity, enforceability and effect of an approved maintenance agreement shall be determined by the court according to the principles of law and equity that are applicable in determining the validity, enforceability, and effect of contracts and purported contracts …

4. The wife relies on both paragraphs (a) and (c) of s 87(8) set out above. She claims that the approval was obtained by fraud and/or the agreement is voidable or unenforceable.

5. The wife correctly points out that the Act does not define what is meant by these expressions. However, as to paragraph (a) the Full Court in Green & Kwiatek (1982) FLC 91-259, albeit when considering s 87(6) which was the forerunner to s 87(8), held that the word “fraud” connotes equitable fraud saying as follows (at 77,456):

   The learned trial judge proceeded on the assumption that the word “fraud” in sec 87(6) connotes equitable fraud. We agree with that conclusion which also appears to have been the conclusion reached by Ferrier J in Fryda and Johnson (No 2)(1981) 7 Fam LR 238; (1981) FLC 91-058 where his remarks [at Fam LR 243; FLC 76,470] indicate that he was considering such misrepresentation as would entitle a plaintiff to rescission of the agreement.

   …

   The definition of “fraud”, both equitable and at common law, has been well settled since the celebrated definition of Lord Herschell LC in Derry v Peek (1889) 14 App Cas 337 at 374. The learned trial judge restated that definition in the following terms:

   “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 in fact so acted upon.”

6. I agree with the submission of the senior counsel for the wife that:

   Strictly, the Full Court may have gone too far in propounding the test by reference to Derry v Peek, since that was a case of fraud at common law, and fraud in equity did not (at least in the exclusive jurisdiction) require a dishonest intention to deal, but simply the unconscientious breach of some duty which equity applied in the circumstances: Nocton v Lord Ashburton [1914] AC 932, 943-958 (per Viscount Haldane).

7. Significantly though for the facts of this case, the Full Court in Green & Kwiatek went on to apply the proposition that “fraud” requires dishonesty in the Derry v Peek sense to the non-disclosure of a material matter for the purpose of proceedings for a property settlement.  Thus the Full Court held that a deliberate and knowing omission by a party with the intention that it be acted upon by the other party qualified as they had defined it.

8. I pause here to observe that this Court has long held that material non-disclosure can come within the bounds of fraudulent conduct.  For example, Strauss J (with whom Wood SJ and Lambert J agreed) said this in Suter & Suter (1983) FLC 91-365 at 78,458:

   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.

9. The Full Court in Green & Kwiatek also invoked the rule in Smith v Chadwick (1884) 9 AC 187 (at 196), namely, that “it may be inferred from a representation made by a person which is calculated to induce particular conduct in the representee, and the fact that the representee does engage in that conduct, that they were induced to do so by the representation.” Further, as pointed out by the wife’s senior counsel here, in reliance upon Australian Steel and Mining Corporation v Corben [1974] 2 NSWLR 202, per Hutley JA at 207 and 210, the Full Court in Green and Kwiatek in effect held (at 77,457), “that once the representee has established those matters, a heavy evidential burden falls upon the representor to establish want of reliance”, and
   (at 77,459) that, “the representation need only be one of the factors inducing reliance and conduct, not the sole and exclusive factor.”

10. I would also highlight the helpful comments of Brennan J in Gould v Vaggelas (1985) CLR 215, at 250-251:

    An inference of inducement may be drawn when a party enters into a contract after a material representation has been made to him, but it is no more than an inference of fact and it is settled law that such an inference may be rebutted by the facts of the case … The tribunal of fact may infer that such a material misrepresentation induced the representee to enter into the contract and the fact that there were other inducements to him to do so does not necessarily preclude the drawing of that inference.  The relevant question for the tribunal of fact to answer on all the evidence is whether the misrepresentation alone, or with or notwithstanding other things that have accompanied it, was a real inducement, or one of the real inducements to the plaintiff to do whatever caused his loss.

    (Footnotes omitted)

1. A relevant issue in this case is the wife’s state of mind, and whether knowledge in effect defeats an allegation of misrepresentation.  This was considered by the Court of Appeal of New South Wales in Gipps & Gipps (1978) FLC 90-423 where Hutley JA (Glass and Samuels JJA agreeing) said this (at 77,768-77,769):

   The analysis of the effect of misrepresentation in Cheshire and Fifoot begins with the proposition – “knowledge of the untruth of a representation is a complete bar to relief since the plaintiff cannot assert that he has been misled by the statement, even if the misstatement was made fraudulently”.

   …

   In fact, 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 inducement.  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.  The true legal position is, in my opinion, stated by Burt J (as he then was) in Sinclair v Preston [1970] WAR 186 at 191:

   “I might say in passing that I do not agree, that if a person to whom a misrepresentation of fact inducing in character has been made subsequently but before agreement finds out that the statement is not wholly true, that it must follow that he was not induced by such statement to enter into the agreement.  The question whether a person has been induced by a statement made to him to enter into an agreement is, in my opinion, a single issue of fact.  No doubt precontractual knowledge that the statement made is not wholly true has a very direct bearing upon the resolution of this question of fact but it does not of itself necessarily provide the answer.  To say that it does is to formulate a different question.”

   To state that a person is induced by a statement is to affirm a causal relation which is a question of fact, not of law.  That being so, it is impossible to apply to any situation a rule which produces a final result, the trial judge or jury have to answer the question – did the misrepresentation cause the representee to enter into the contract, it being understood that the representation “was one among the factors which induced the contract”.  (Australian Steel and Mining Corporation Pty Ltd v Corben (1974) 2 NSWLR 202 at 207).

   Any other rule would be an affront to commonsense, it would mean that if a person dealing with a rogue has made to him a representation which he knows to be false, but believes to be false to a particular extent, he has no right of action if after making the contract in reliance upon the representation as adjusted by the representee, even though he later learns that the misrepresentation was greater than he suspected.

   In determining whether a person is induced by a misrepresentation, the court is entitled to assume that the representor knows his victim and the misrepresentation designed to produce a result does so …

2. As the wife’s senior counsel put it, “the ultimate question is one of causation; did the husband’s false disclosure or non-disclosure procure or cause the relevant agreement and the Court approval?”  That is of course a question of fact; but it must not be forgotten that the first step is still to establish that there was a false disclosure or non-disclosure.

3. As to s 87(8)(c), it is undeniable that an agreement is voidable in equity for misrepresentation (fraudulent or innocent), undue pressure and undue influence. Further, at law, an agreement is voidable for fraudulent misrepresentation or duress.

4. Relevantly, it must also not be forgotten that the Court has a broad discretion to revoke the approval of a Deed, and it is not bound to do so.

5. Given that the wife was alleging fraud and/or misrepresentation, and/or material non-disclosure and/or undue pressure and/or influence, it can be appreciated why it was necessary for the allegations to be specifically pleaded as to the material facts that supported those allegations.  As referred to above, this of course was done, but the husband complained that the particulars were inadequate and failed to give fair notice of the wife’s case.  Along the way there were requests for further and better particulars by the husband and a number of interlocutory skirmishes between the parties as to this complaint both in the lead-up to the hearing and during the hearing itself.  This issue was further highlighted by the application, also referred to above, made by the wife to amend the particulars to allege a new ground of fraud or misrepresentation, namely, the alleged false representation by the husband as to the application of the proceeds of sale of the properties at Suburb H and at S Terrace Suburb N.  To repeat, I permitted this amendment.

6. As will become apparent in these reasons for judgment there were a number of deficiencies in the particulars provided and the late amendment was unfortunate, but I am satisfied that the husband was not prejudiced by this and that he had sufficient notice to enable him to adequately address and respond to the claims and the bases for those claims made by the wife.

The evidence

1. The wife was represented at trial by Mr R J Whitington QC with Mr A Jordan.  The wife relied on her affidavits of evidence-in-chief filed respectively on

   
   

   18 August 2010 and 10 November 2010.  She gave evidence and was cross-examined.

2. The wife did not call any witnesses but she tendered and relied on a number of documents which it is unnecessary for me to list here.  They all were marked as exhibits.

3. The husband was represented by Mrs M Shaw QC with Mr C Bleby.  The husband relied on his affidavit of evidence-in-chief filed on 8 October 2010 and as with the wife there were also a number of documents tendered and relied on by him.  Again, I do not see the need to list these documents here but I observe that some of the documents were received as evidence only in relation to specific issues, and on limited bases.  That was duly recorded in the transcript at or about the time of tender.  Equally I do not need to identify these documents or the limitations at this point.

4. The husband gave evidence and was cross-examined.

5. The husband called two witnesses, namely his solicitor Mr Andrew Barnes, and Mr K, accountant.  Mr Barnes filed relevant affidavits on 29 October 2010, 15 November 2010 and 4 April 2011, and Mr K filed affidavits on 29 October 2010 and 16 March 2011.  Both Mr Barnes and
   Mr K gave evidence and were cross-examined.

6. I was not impressed with the evidence of the wife.  She gave the distinct impression “that it was all too hard”.  She was quite vague in many of her answers and she professed to be unable to recall many significant and relevant matters despite being the one to institute these proceedings.  For example, she said that she did not recall all of the meetings that she had with the husband from September/October 2000 to November 2000 to discuss settlement, and nor was she able to recall all that was discussed, despite the notes of the meetings containing her handwriting being shown to her.  In any event, I simply do not believe that she was unable to recall these things.

7. The wife’s oral evidence was also inconsistent in many respects with her affidavit material.  One example of this was that in an affidavit filed in these proceedings in April 2008 the wife expressly denied ever being told about the figure of $7,000,000 that was contained in the schedule of assets, liabilities and resources provided to Murray J as her estimated valuation of the business interests for the purposes of the approval of the Deed.  However, in her oral evidence before me she said quite specifically that she knew about this figure.

8. The wife frequently avoided answering questions put in cross-examination and instead challenged the questioner as to the relevance of what she was being asked.  Her answers also often had little to do with the question asked and it was readily apparent that in many important areas she was reconstructing events and circumstances to suit her case.

9. On occasions her evidence was not credible.  For example, the wife said in oral evidence that after the receipt of the K Report Ms Chapman told her that “legally, it was binding”.  Apart from the fact that this was not deposed to in any of her affidavits, and given the circumstance that the wife did not call Ms Chapman as a witness, it stretches credulity to suggest that an experienced family law practitioner such as Ms Chapman would say such a thing.  Indeed, the objective evidence is that the advice the wife received from not only Ms Chapman but also from Mr Mansueto was to a very different effect, and the falsity of this statement by the wife is amply demonstrated by the efforts that Ms Chapman and Mr Mansueto went to in order to establish an alternative approach to the valuation of the husband’s business interests through Mr W.  For example, Ms Chapman wrote to the wife on 3 May 2000 (Exhibit H41) saying:

   Having conferred with Mr [W] and Mr Mansueto it is clear that we must proceed with a reassessment of the business interests of your former husband on a capitalisation of earnings basis.

   Further, on 5 May 2000 (Exhibit H43) Mr Mansueto wrote to the wife saying that he had met with Ms Chapman and Mr W to discuss the K Report, and that they “identified a number of areas in which the Report may be challenged …”.

10. This evidence of course is also highly relevant in the context of the claim by the wife that the husband, by relying on the K Report, has made a false representation to her.

11. In contrast to the wife, the husband was an impressive witness.  His evidence was generally clear and concise and he endeavoured to assist the Court with his answers.  He made appropriate concessions and he was consistent in what he said.  In particular, I do not accept the submission of the wife’s senior counsel that the husband was evasive in cross-examination as to the involvement of Mr K following the earlier report of Mr J.  I do not have any difficulty in accepting the reasons given by the husband as to why he sought a report from Mr K and how that came about.

12. I am satisfied that wherever there is a conflict in the evidence between the husband and the wife the husband’s evidence is to be preferred.  Further, I accept the husband’s recollection of events and conversations where the wife professed to be unable to recall the same.  In particular, his evidence, supported by the notes as to what was said during the meetings between he and the wife, has the ring of truth.

13. There is very little that I need to say about Mr Barnes.  He is an experienced family law practitioner.  His evidence was not seriously challenged, and I accept the truth and accuracy of the same.

14. With Mr K, he also gave his evidence well.  He is an expert forensic accountant who is well known and respected in this jurisdiction.  He has prepared many valuation reports for use in this Court, and he has given expert evidence on numerous occasions.  Again, I accept the truth and accuracy of his evidence.  In particular, I reject any suggestion that he “provided the husband with what he wanted in relation to the [E] Trust”.

15. Finally on this topic I observe that there were a number of other witnesses who either could be called, or who were subpoenaed, and not called, and indeed in one case an affidavit was filed but not relied upon and nor was the deponent called as a witness.

16. During the course of the proceedings various submissions were made based on the failure to call these witnesses, and reliance was sought to be placed on the principles emanating from the High Court decision in Jones v Dunkel (1959) 101 CLR 298.

17. The persons in this category are the husband’s mother, Mr S, the husband’s internal accountant Ms MH, the wife’s solicitors Ms Chapman and Mr Mansueto (noting no privilege was claimed by the wife in relation to their files), and Mr W.  On 8 October 2010 the husband filed an affidavit of his mother, but he did not rely on this affidavit or call her as a witness.  The wife also issued a subpoena to the husband’s mother to give evidence on
    20 September 2010, but that subpoena was not pursued.  Further, on
    20 September 2010 the wife also issued a subpoena to Mr S to give evidence, but that was not pursued either.

18. The principle from Jones v Dunkel, simply put, is that the unexplained failure by a party to call a witness, may, in appropriate circumstances lead to an inference that the uncalled evidence would not have assisted that party’s case.  It also allows the Court to more readily draw any inference fairly to be drawn from any other evidence in respect of matters about which the missing witness could have given evidence.  The principle does not permit an inference that the untendered evidence would in fact have been damaging to the party not tendering it.  Further, it only applies where a party is required to explain or contradict something, and the evidence of the missing witness is such as would have elucidated a matter.

19. It is apparent that each of the persons named above may have been able to give relevant evidence on a range of topics, and it may be that certain inferences can be drawn.  I will address this further later in these reasons, but for now I make the following points:

    85.1It is not necessarily open to the Court to conclude that each of these persons would be able to remember past events accurately.

    85.2It was open to both parties to call each of these persons as witnesses.  Indeed, to repeat, the wife subpoenaed Mr S to give evidence, but did not proceed with that subpoena, and in the opening by the wife’s senior counsel he left open the prospect of Mr S being called as a witness in the wife’s case, but equally that did not eventuate.  Similarly, and to also repeat, the wife subpoenaed the husband’s mother to give evidence and produce documents, but did not proceed with the former, and the husband filed an affidavit of his mother which was then not relied upon because she was not called as a witness.

    85.3Despite this, the principle of Jones v Dunkel confirms what common sense suggests as to which party should call which witness, and it would have been reasonable to expect that the husband would call his mother as a witness, as well as Mr S and Ms MH, and that the wife would have called Ms Chapman, Mr Mansueto and Mr W, but again this still may not lead to any adverse inference being drawn because they were not called as witnesses.

20. I observe that I have confirmed my initial impressions and the assessment of the evidence of the parties and the witnesses by reflecting on my contemporaneous notes taken during the hearing and by re-reading the transcript of the entire hearing.

The issues in dispute

1. There were four factual issues identified by the wife’s senior counsel in his opening.  As Mr Whitington QC put it, first there is “the [E] issue”, secondly there is “the [O] mortgage issue”, thirdly there is “the issue of the costs pressures to which the wife was subjected during the course of the property settlement proceedings”, and finally “the dealing in the proceeds of sale of (the [Suburb H] property) and the [S] Terrace property.”

2. I will address each of these issues in turn, but not necessarily in that order.

The E Trust

1. The primary allegations of fraud and/or misrepresentation and material non-disclosure centres around the entity known as the E Trust.

2. That Trust is part of the group formed on 22 September 1993.  The other entities in the group are the ER Trust and the P Trust.  They all have corporate trustees as referred to above.  The E Trust owns 50 per cent of the ER Trust and 331/3 per cent of the P Trust, each of which owns property.

3. As at the date of the approval of the Deed the husband had one share in E Pty Ltd, the Trustee of the E Trust, the husband’s mother had eight shares and Mr S, the husband’s business partner, had one share.  These shareholders were also the three directors of E Pty Ltd.  The appointor of the Trust was the husband’s mother, and the specified beneficiaries were the husband and his mother.

4. In his report dated 31 March 2000 Mr K said this about the E Trust:

   2.193I have assumed that Mr [S] is unable to control [E] PL as Mrs [Moore Snr] is the beneficial owner of more than 75 per cent of the shares which gives the holder the ability to appoint and remove directors in accordance with the Corporations Law.

   2.194I have assumed that Mr [S] is unable to control [E] as
   Mrs [Moore Snr] has the power of appointment.  Consequently,
   Mr [S] has no interest in the [E] Group apart from being one of the class of persons who may be a beneficiary.

   And further,

   8.10As Mr [S] is merely one of the class of persons who may be a beneficiary, I assume he has no beneficial interest in the assets of the [E] Group.

5. On this basis, in his report, Mr K excluded the value of the E Trust from the assets of the parties.  That value though, as found by
   Mr K, was $2,501,403.

6. The wife says that she “relied on the husband’s adoption and promotion of the [K] Report in relation to the [E] interests in agreeing to the property settlement embodied in the Deed.”

7. The wife further says that “the evidence which has become available to [her] since entering into the agreement embodied with[in] the Deed overwhelmingly supports the inference that the position as presented by the husband in connection with the [K] Report and the [E] interests was false”.  That further evidence principally comprises the contents of a letter of 24 May 1999 forwarded to the Australian Taxation Office, a suggestion that the husband’s mother resigned as the appointor of the E Trust on
   20 August 2001, the circumstances of the dispute between the husband and his business partner Mr S between 2005 and 2007 which involved two mediations and Supreme Court proceedings, and finally the circumstance that the E Trust made a capital profit of about $9,000,000 on the sale of the ER interests to Mr S as part of the settlement of their dispute and that the husband through the Moore Family Trust received $7,825,790 and the husband’s mother received $1,000,000.

8. As to the husband’s “adoption and promotion of the [K] Report in relation to the [E] interests” the wife says that the husband commissioned the Report, that once received his solicitors sent it to the wife’s solicitors, that he referred to the Report in his Financial Statement of 15 June 2000, that he used the valuation in the schedule of assets, liabilities and resources tendered to the Court on 24 November 2000, and that in the Deed he covenanted that he had made full disclosure of his financial position.

9. These facts are incontrovertible, but do they indicate fraud, misrepresentation or material non-disclosure?

10. It is necessary to look at all of the surrounding circumstances at all relevant times to appreciate how the K Report was used by the husband and how it was viewed by the wife and her legal and accounting advisers.

11. The proceedings were commenced by the wife filing an Initiating Application on 12 November 1998 seeking orders for property settlement and spousal maintenance.  The husband filed his Response on 18 January 1999, and in there the husband sought that, inter alia, he retain for his sole use and benefit absolutely his share and interest in the E Trust.

12. After the wife had filed her application, but before the husband filed his response, he instructed Mr J of X Accountants, who were the C Group and the husband’s accountants, to prepare “a valuation of [his] business interests for the purpose of the Family Court proceedings.”

13. The valuation report was received by the husband on 15 January 1999, and was provided to the wife on the same date.  The report included a valuation of the E Trust at $1,797,000, with the rider that “[c]onsideration will need to be given to attributing a percentage of the value of this (and other) Trusts to Mrs [Moore Snr]”.

14. It was conceded by the husband that “the provision of this report to the wife was an express representation of the fact of an interest of the husband in the [E] Trust” and indeed the husband had deposed to as much in an affidavit filed on 3 March 1999.

1. The wife engaged her own expert accountant and valuer, Mr W in May 1999.  However, he did not provide a report until much later, namely in October 2000, and he did not take up the offer repeatedly made by the husband’s solicitors for him to contact Mr J “for assistance with respect to relevant documentation and explanation of any relevant matter that he may wish to have more fully explained”.

2. The evidence is that Mr K was first engaged by Mr S in or about May 1999 when Mr S was seeking to find out how the proceedings between the husband and the wife would affect his interests.  Then, in late 1999, on the advice of his solicitor, the husband determined to instruct
   Mr K as well to prepare a report.  This was done because he was advised by his solicitor that Mr J may not be considered independent.  It was suggested by the wife’s senior counsel that that was not in fact the reason for instructing Mr K, but rather, the husband was looking for someone to provide a report that excluded the E Trust as an asset of the husband.  However, I reject that submission.  The husband’s evidence, supported as it is by the evidence of his solicitor Mr Barnes, has the ring of truth.  I also reject the submission that Mr K was in fact instructed by the husband and was working on his valuation well before December 1999.

3. After the provision of the K Report in March 2000 the husband’s solicitors were pressing the wife’s solicitors for a report from Mr W.  However, none was forthcoming, and indeed on 3 May 2000 the wife’s solicitors wrote to the husband’s solicitors indicating that they had met with Mr W in relation to the K Report and they would not be recommending the valuation method applied by Mr K, and that in the circumstances Mr W would be contacting Mr J to arrange inspection of the financial statements, with detailed profit and loss statements for each of the entities, together with tax returns for those entities (Exhibit H40).  It is plain, and it is referred to in that letter, that a valuation on the basis of future maintainable earnings was their preference, and that is what they would be pursuing.

4. It is significant that on 8 February 2000 the wife instructed Mr Raymond Mansueto to advise her on the commercial aspects of the proceedings between her and her husband, and it is apparent that thereafter he worked closely with not only Ms Chapman, the wife’s solicitor, but also Mr W, her forensic accountant.

5. It is also significant that at no time did the wife accept that the husband did not control the E Trust.  She considered that although the mother appeared to have “legal” control, it was the husband who was in fact controlling the Trust, and not just in the sense that the husband concedes, namely the day to day management and operation of the Trust.  The wife believed that it was the husband who made all of the business and investment decisions, and relevantly without reference or deference to his mother, such that the assets of the Trust could be treated as his property.

6. For the husband’s part the issue of control and whether he had sufficient control to warrant a finding that the assets of the E Trust should be included in the asset pool was a matter to be litigated in the proceedings.  There is no doubt though that if the matter went to trial his position would be that he did not have sufficient control and the assets should not be included in the asset pool.  He well understood though that that was not the wife’s position.

7. After receiving the letter from the wife’s solicitor of 3 May 2000, the husband provided discovery, not only generally, but in response to specific requests for documents from the wife’s solicitors.  Importantly though, no inspection of the documents listed in his affidavit of discovery was undertaken by or on behalf of the wife.  This became extremely relevant to one of the bases for the wife’s claim at trial that the husband did in fact control the E Trust.

8. The wife relies heavily on a letter from a solicitor, Mr ST, to the Australian Taxation Office dated 24 May 1999 (Exhibit W143) in which private tax rulings were sought on behalf of the entities comprising the C Group, and including E Pty Ltd in its own right, for the financial years ending 30 June 1996, 1997 and 1998.  In the course of setting out the structure of the Group it is stated that the E Trust is “controlled by the husband”.

9. In opening the wife’s case, the wife’s senior counsel claimed that this letter was not discovered by the husband in the original proceedings.  However, that was simply not correct.  It was discovered in the husband’s affidavit of documents filed in July 2000, but not seen by the wife or any of her solicitors because, to repeat, no inspection was made of those documents.  After this became known the wife’s senior counsel changed tack and instead criticised the husband for not bringing this correspondence to the attention of the wife’s solicitors and suggesting to include it in a lengthy list of documents was insufficient.  Full disclosure required more than that, it is submitted.

10. This is an extraordinary submission, and I reject it.  The husband did all that was required of him given that in my view there was no reason at the time for this letter to be highlighted or the subject of specific discovery.  It was only the failure by the wife’s legal advisers to inspect the documents that kept the wife in the dark about this letter.  In any event, I will say more later in these reasons about the importance or otherwise of the contents of that letter.

11. To continue with the sequence of events.  On 21 September 2000 the wife’s solicitor in correspondence acknowledged receipt of the financial accounts requested and advised that they had been “distributed to [their] commercial solicitor and valuer for (sic) the report.”

12. Then on 25 October 2000 Mr W provided a report dated 24 October 2000.  Intriguingly though this report did not provide a valuation of the husband’s business interests.  Instead, it attached three schedules.  The first schedule compared the “various incomes and net costs of the operating entities in the [C] Group for the years ended 30 June 1999 and 30 June 2000” and provided figures for the “actual net profits earned by entities in which the [Moore] Group is involved”, including the E Trust, the P Trust and the ER Trust.  The net profit for the 1999 year was stated to be $854,354 and for the 2000 year $894,412.

13. The second schedule was said to be produced by “the [C] Group” and supported the result that Mr W came to in the first schedule.  The third schedule set out an updated “family tree” of the Moore/C Group as at 30 June 2000.

14. Why this was the report presented, and not a valuation as such is not able to be explained on the evidence before me because none of Mr W, Ms Chapman or Mr Mansueto was called as a witness in the wife’s case.  However, it must be remembered that as early as February 2000 the prospect of a valuation on the basis of future maintainable earnings was foreshadowed, and this report, given its focus on the net profit of the relevant entities confirms that that was what the wife and her advisers were at the very least working towards.

15. No further report was provided by the wife’s solicitors to the husband’s solicitors, but Ms Chapman verbally informed Mr Barnes at the court hearing on 26 October 2000 that Mr Mansueto was conferring with Mr W concerning the calculation of the income stream of the businesses of the C Group into a capital value, and then, at the court hearing on 20 November 2000 Ms Chapman verbally informed Mr Barnes that the figure of $7,000,000 was the estimate to be placed on the husband’s assets by the wife, and that that had come from Mr Mansueto and Mr W.  Further, Mr Barnes was informed by Ms Chapman that that was the figure to be inserted in the schedule of assets, liabilities and resources that was to be prepared by Mr Barnes for the assistance of Murray J when she heard the application for approval of the Deed.

16. Mr Barnes duly attended to that, and in the schedule provided to her Honour jointly by the parties the following appears under the heading “The [C] Group of Companies”:

    The wife has obtained a valuation from [Mr W], chartered accountant which provides an estimate of the value of the interests of the husband and the wife of approximately $7,000,000.

17. I also observe that Ms Chapman was at pains to tender to her Honour an affidavit of Mr W annexing his report referred to earlier.

18. To put this into context, for the husband’s part he included the valuation from the K Report as the figure that he was relying on, namely a net liability of $997,901, and the husband’s counsel said this to her Honour without demur from Ms Chapman:

    I can tell Your Honour, that schedule is a document that has passed between the solicitors for both parties and whilst obviously each party does not necessarily agree with the position adopted by the other, it at least provides your Honour with some indication of the respective positions.

    (Transcript, 24 November 2000, page 5, lines 14-18)

19. I will elaborate on this later in these reasons, but the effect of how this issue was presented to her Honour was that the wife did not accept the K valuation and she was proceeding on the basis that the business interests were valued at approximately $7,000,000.

20. Disingenuously in her evidence before me, the wife sought to “diminish the significance of the indication of the valuation of the business interests at
    $7,000,000”.  She said she knew about it but she did not rely on it.  As to the former, I have commented above that in her affidavit sworn and filed on
    16 April 2008 she claimed that she was not only not shown the schedule of assets, liabilities and resources handed to Murray J, but also she was not made aware of the figure of $7,000,000.  She also claimed in this affidavit that there was no discussion about the schedule, and she had no recollection of any discussion of the valuation of Mr W.  However, this turned out not to be true according to her evidence given at the trial before me, and when the content of her affidavit was put to her in cross-examination she became typically evasive and avoidant.

21. I find that the wife at no time accepted the correctness of the K valuation in excluding the value of the E Trust, that in her view the husband’s interests included the E Trust, that in consultation with her solicitor Ms Chapman, her commercial solicitor Mr Mansueto, and her forensic accountant Mr W, a valuation of $7,000,000 was struck for the value of the husband’s (and the wife’s) business interests including the E Trust, and that was presented to Murray J as the wife’s position in joining in seeking the approval of the Deed.

22. I find that at no time did the wife rely on any representation by or on behalf of the husband that the E Trust should be excluded from the asset pool for whatever reason, including in particular that the husband did not control that Trust.  Or, put another way, I do not accept that the wife was induced to enter into the agreement that was eventually reached by any such representation.

23. I observe that the wife’s senior counsel was at pains in his final submissions to have the Court accept not only that there was no evidence that any valuation was obtained by the wife, but also that a valuation on the basis of future maintainable earnings says nothing about what assets are being valued.  However, I reject both of these submissions.  There was ample evidence that the wife’s legal and accounting advisers were working on a valuation of the husband’s business interests as a going concern by capitalising the future maintainable earnings.  Indeed, it is apparent from correspondence passing between Ms Chapman, Mr Mansueto and the wife that this was the approach recommended to the wife even before Mr K’s report was received (for example see Exhibits H32 and H35).  I digress to indicate that this also refutes the submission made by Mr Whitington QC that why the wife and her legal and accounting advisers proposed that such a valuation be prepared was because of a recognition that they could not avoid the consequence of Mr K assuming in his valuation that because of lack of control by the husband the E Trust should not be included in the asset pool.  This is refuted because the valuation that everyone had in February 2000 was the valuation of Mr J which included the E Trust.

24. In any event, again, as to whether a valuation on the basis of future maintainable earnings was being prepared by Mr W assisted by
    Mr Mansueto I need do no more than refer to Exhibits H41, H42, H43, H45, H49, H117, H122, H123, H126, H127, H99, H130, H136, H5, H133, H134, H135 which comprise correspondence and notes of telephone and personal attendances where the issue of the preparation and presentation of a valuation report on that basis is referred to.  I also repeat what I have said in paragraphs 105 and 116 to 119 above.  Thus I have no difficulty in finding that the wife had available to her a valuation of the husband’s business interests at $7,000,000 and that was the valuation that she was promoting in seeking approval of the Deed.

25. As to the second aspect of Mr Whitington’s submission, a valuation of a business on the basis of the future maintainable earnings is still a valuation of the business even though there is no valuation of the individual assets of the business.  There can be no question that the valuation provided by the wife of the business interests at $7,000,000 was of all of the businesses which produced income for the husband’s benefit, and for confirmation of this I point to the wording utilised in paragraph 1 of the schedule of assets, liabilities and resources provided to Murray J for the purposes of the approval of the Deed (Exhibit W6).  This valuation plainly included the value of the E Trust, that Trust being a substantial source of the income used to calculate the future maintainable earnings of the businesses.

26. However, I have jumped ahead, and I now want to take one step back and address the question of what the position was in relation to the control of E Trust.

27. First it is necessary to record the background to the formation of this Trust and the circumstances surrounding its operation.

28. As referred to above, in 1980 the husband and his business partner Mr S established C Investments Pty Ltd (originally C Pty Ltd) as Trustee of the C Investments Unit Trust.  The purpose of establishing this entity was to invest in and develop commercial properties.

29. The business and number of properties owned grew over time and various other companies and trusts were established for “flexibility”, as well as for taxation and stamp duty reasons.  These entities then comprised and became known as the C Group or just C.

30. In 1988 Mr R joined the husband and Mr S in the business.

31. Although the business was initially successful, C Group experienced financial difficulties when the economy suffered a recession in the early 1990s.  Indeed, the affairs of C Group were transferred from the State Bank to the SA Asset Management Corporation, and it was not until 1996 that C Group was able to refinance out of asset management with funding from Prudential.

32. In 1992 the State Government called for expressions of interest to develop the property in the central business district of Adelaide.  C Group registered its interest to develop the commercial portion of the site and negotiations then took place.  However, because of the financial difficulties that C Group had, the Government insisted that a new entity financially independent from C Group undertake the project, that there be an initial capitalisation of $250,000, and that a funding source for the development costs of $8,000,000 be demonstrated.

33. The husband explained the project to his mother and asked her to provide the initial capital of $250,000, which she did through her company Y Pty Ltd as Trustee for the D Trust.  He also explained that construction funding to get the project off the ground was required and that although he would attempt to obtain those funds from a financier, it may be that that money would also need to be provided through Y Pty Ltd.

34. The husband’s evidence was that his mother was quite prepared to invest in the project and she had confidence in him and Mr S in organising and running the project.  However, she did not want to expose herself to financial risk unnecessarily and thus she required a power of “veto”.  As to the return on her investment the evidence of the husband was that his mother did not require regular income but she sought a share in any capital profit received from the project.

35. I pause here to indicate that there is no evidence supporting the submission made on behalf of the wife that the initial capital of $250,000 necessarily came from the proceeds of sale of the S Terrace property sold by the husband on 17 August 1999.  However, even if it did I consider that that is of no moment because as I explain later in these reasons those proceeds were paid to the husband’s mother to meet legitimate obligations that he had to her.

36. The husband (and Mr S) then set up the following structure for the development of the site (taken from the husband’s affidavit filed on 8 October 2010):

    160.In September 1993, [ER] Pty Ltd was incorporated and became the trustee of the [ER] Trust.  This was the operating entity that entered into the Ground Lease with (the State Government) and assumed the development obligations under the Ground Lease.

    161.        The directors of [ER] Pty Ltd were:

    (a)      [the husband];

    (b)      [Mr S]; and

    (c)[Mr R] ([Mr R] was not financially involved in the Project).

    162.The equal fixed interest beneficiaries of The [ER] Trust were:

    (a)[E] Pty Ltd as trustee for The [E] Trust (“[E]”), representing the [Moore] family interests; and

    …

    (b)[Z] Pty Ltd as trustee for The [Z] Trust (“[Z]”) representing the Maras family interests.

    163.        The equal shareholders of the trustee [ER] Pty Ltd were:

    (a)      [E]; and

    (b)      [Z].

    164.[E] Pty Ltd and the [E] Trust (as well as [Z] Pty Ltd and the [Z] Trust) were established at the same time as the [ER] structure in September 1993.

37. Further, there needed to be a complementary structure for the family interests of Mr S.  Therefore a similar structure was established in relation to those interests through the formation of Z Pty Ltd and the Z Trust.  The husband was also appointed a director of Z Pty Ltd, and Mr S a director of E Pty Ltd (together with each having a nominal shareholding in the other entity).

38. The initial funding of $250,000, which to repeat came from the husband’s mother’s company Y Pty Ltd as Trustee of the D Trust, was recorded as a loan of $125,000 to the E Trust and $125,000 to the Z Trust.

39. However, there was difficulty in finding a financier, and thus Y Pty Ltd also provided a loan facility to ER Company Pty Ltd.  By 31 December 1995 a total of $1,085,585 had been drawn down through this facility. 

40. The husband ultimately arranged finance through the Adelaide Bank of
    $6,000,000, and in January 2006 $1,085,585 was paid to Y Pty Ltd to extinguish that loan.

41. As referred to above, in June 1995 P Pty Ltd was incorporated to act as Trustee of the P Trust.  The three equal shareholders of P Pty Ltd and unit holders of the P Trust were E Pty Ltd, Z Pty Ltd and B Pty Ltd representing the Mr R family interests.

42. The P Trust undertook the purchase and development of a warehouse at L, converting it to a mortgage processing centre leased to the … Bank.

43. As to the issue of control, it is beyond doubt that the strict legal position was that at the date of the approval of the Deed and at all relevant times prior thereto the husband’s mother, as a director of, and the majority shareholder in E Pty Ltd, and as the Appointor of the E Trust, controlled the E Trust, and not the husband.  Thus Mr K was absolutely correct with what he said in his report.

44. There is also no doubt that the husband attended to the day to day management and operation of the E Trust, but that alone does not create a situation where the value of the E Trust can be treated as an asset of the husband.  The husband of course was a director of E Pty Ltd and thus its day to day operation was of vital concern to him, and he had the necessary expertise to attend to this.  Nor can the mere fact that E Pty Ltd as Trustee made distributions of 100 per cent of the net income of the Trust in each financial year effectively to the husband result in that finding.

1. The wife, of course, claims that despite the strict legal position it was the husband who in fact controlled the E Trust such that it can be considered as an asset of his, and the husband’s representation otherwise by relying on the report of Mr K constitutes fraud, or at the very least a misrepresentation, and/or a material non-disclosure such that the approval of the Deed by Murray J should be set aside.

2. The husband denies that he controlled the E Trust in the sense alleged and denies that he is guilty of any fraud or misrepresentation or non-disclosure.

3. The evidence that the wife relies on as demonstrating that the husband controlled the E Trust in the relevant sense is as follows:

   149.1In December 1998 the husband purchased a property at M Street Suburb N for $310,000, and he borrowed $248,000 from the Adelaide Bank to complete the purchase.  In his loan application (Exhibit W67) this appears under the heading “Investment and Beneficiary Interests”:

   C Investments Unit Trust – 50 per cent

   current market value

   ER Trust - 50 per cent (via E Trust)

   current market value

   P Trust – 331/3 per cent (via E Trust)

   current market value

   D Trust – discretionary trust (trustee Y Pty Ltd).

   However, I agree with the submission of the husband that on any view this is uncontroversial.  It does not say anything about control, and it is consistent with the report of Mr K, in that the husband as a beneficiary receives income from the E Trust,

   149.2In the letter referred to above from Mr ST to the Australian Taxation Office dated 24 May 1999 it is suggested that the husband controlled the E Trust.

   To repeat, that letter was seeking a private tax ruling in relation to the entities comprising the C Group including E Pty Ltd.  In setting out the structure of the ER Trust it is said that the E Trust is a discretionary Trust “which is ‘controlled’ by Mr [Moore]”.

   However, the difficulty for the wife in relying on this letter is that it was not a letter written by the husband, and the language used was that of Mr ST, the author.  There is no context in the letter to the use of the word “controlled”, and it could have a meaning other than the one the wife seeks to promote.  Indeed, Mr ST was not called as a witness to provide that necessary context, and it was as much open to the wife to call him as a witness in her case, as it was to the husband to call him.

   Thus, this letter does not provide the necessary inconsistency with the report of Mr K that the wife requires to succeed in her claim.

   I also observe again, that in his opening the wife’s senior counsel alleged that this letter had not been discovered in the original proceedings, whereas in fact it had been.  In any event, once the true position came to light Mr Whitington’s position changed to an attack on the husband to the effect that the letter was buried in a long list of discovered items which would have taken some significant amount of time to look at.  However, I do not consider that this assists the wife’s case.  The letter was discovered by the husband and the wife’s solicitors would have seen it and assessed the relevance or otherwise of it if they had bothered to inspect the discovered documents.  The husband cannot be criticised in any way in relation to this issue.  Given the state of the proceedings at the time there was no necessary basis for the husband to draw the wife’s attention to this particular letter.

   Finally, it was suggested to the husband in cross-examination that he should have shown this letter to Mr K for the purposes of his report, and that if he had, Mr K would not have written his report as he did.  However, I do not find that persuasive.  Although it is plain that the letter was not provided to Mr K by the husband or his solicitors, Mr K had access to any information that he thought was necessary, and he was in fact in contact with Mr ST in the course of writing his report.  Indeed, Mr K had a two hour meeting with Mr ST and provided drafts of parts of his report to him.

   Thus, to repeat, I do not consider that any forensic use can be made of the contents of this letter, and it certainly does not support the wife’s contention as to the control of the E Trust.

   149.3The wife submits that events subsequent to the approval of the Deed indicate that the husband controlled the E Trust at the time that approval was granted.  In particular, she points to the following series of events:

   149.3.1.By 2005 the husband and Mr S were in dispute over the C business.

   149.3.2.As a result, in May 2005 Mr S retired as a director of E Pty Ltd and transferred his share to the husband, and the husband did likewise in relation to Z Pty Ltd.

   149.3.3.By early 2006 the dispute escalated with the husband refusing to agree to a roll-over of the loan facilities with the Adelaide Bank.

   149.3.4.In March 2006 there was a mediation conducted by
   Mr Abbott QC which resulted in a prima facie settlement of all issues and a severance of the C property interests.  There is no suggestion that the husband’s mother was present at this mediation.

   149.3.5.The husband then entered into various “implementation agreements” and engaged in negotiations to minimise capital gains tax liabilities.

   149.3.6.In April 2007 Mr S instituted proceedings in the Supreme Court of South Australia against the husband and various entities including E Pty Ltd essentially seeking to enforce the mediation agreement.

   149.3.7.The husband instructed solicitors to defend those proceedings including on behalf of E Pty Ltd.

   149.3.8.In August 2007, as a result of a mediation with
   Mr Walsh QC the dispute was resolved and a separation of business interests agreed upon.  Part of the agreement was for the E Trust’s share in ER to be sold to Z which was to then take over the ownership and management of ER.

   149.3.9.A capital profit of approximately $9,000,000 was received on the sale of the ER interest to Mr S, and the husband through the Moore Family Trust received $7,825,790 and the husband’s mother received $1,000,000.

   The argument of the wife is that this series of events indicates that the husband made all of the relevant decisions in relation to the E Trust without any reference to his mother, and thus he controlled that Trust in the sense promoted by the wife.  Although these events took place some time after the Deed was approved, the wife says that if the husband controlled the Trust at this time then he must have also controlled it at all relevant times previously because there was no evidence of any change.

   However, again I am not persuaded by this argument.  First, it has never been in dispute that the husband maintained the day to day control of the E Trust, and that is all that this evidence demonstrates.  Secondly, it is the husband’s evidence that he exercised the day to day control, and conducted and concluded the dispute, the proceedings and the mediation with the consent of his mother.  His evidence is that he consulted regularly with her and discussed all of the issues with her at the times when he needed to.  Thirdly, on 30 June 2006 the husband’s mother retired as a director of E Pty Ltd and transferred her eight shares to the husband.  This was done because of her age and the need to avoid her being embroiled in the dispute.  Thus, the proceedings in the Supreme Court were in fact conducted by the husband as the sole director and shareholder of E Pty Ltd, as was the mediation with Mr Walsh QC, and the finalisation of the dispute.  The husband did not need to defer to his mother or involve her at all after 30 June 2006 in relation to the operation of the trustee company.

   Of course, this was an area where the wife’s senior counsel submitted that the failure of the husband to call his mother as a witness in his case should lead to the adverse inference that her evidence would not have assisted him and leaving it open to the Court to then more readily infer from other evidence that it was the husband who controlled the E Trust and not his mother.  However, in respect of the latter proposition I do not consider that there is any “other evidence” which leads to this inference.  As to the former proposition, it may be that that inference can be drawn, but such an inference cannot overcome the positive evidence that was given by the husband that satisfies me that he did not control the E Trust in the sense alleged by the wife.  Thus, to apply the principle in Jones v Dunkel here does not lead to a different result.

   149.4The wife tendered a General and Enduring Power of Attorney (Exhibit W189) whereby the husband’s mother purports to appoint the husband as her Attorney.  However, the document tendered is not dated, and Mrs Moore’s signature is not witnessed, and there is no acceptance by the husband.  Thus, as the husband says, this is not a document “that could be relied on by the husband to conduct
   Mrs [Moore’s] affairs” (Power of Attorney and Agency Act 1984 (SA) s 6(2)).

   In any event, even if it was properly executed, again, as the husband submits, it would not be open to the husband under this Power to manage the affairs of his mother to benefit himself.  Thus he still could not be said to control the E Trust such that its assets can be treated as his.

   149.5The wife sought to rely on a document dated 20 August 2001 whereby the husband’s mother purported to resign as appointor of the E Trust and to nominate Mr S and the husband as appointors (Exhibit W167).

   The husband in his affidavit of evidence-in-chief deposed that his mother was, and at all times remained the appointor of the E Trust.  Thus, immediately there was an inconsistency, and the wife suggests that not only does this impact on the husband’s credit, but this indicates that within a year of the approval of the Deed these changes were made with the implication that they were done to implement what had been the defacto position at the time of that approval, namely, the husband in fact controlling the E Trust in the relevant sense.

   The husband’s explanation of this document given in evidence-in-chief was that it, along with a number of share transfer forms were prepared but were not implemented.

   I will address the issue of the transfer forms in a moment, but the husband’s evidence is that the preparation of all of these documents was precipitated by the retirement of the father of Mr S,
   Mr KS.  In 2001 Mr KS sought to retire from his involvement in Z Pty Ltd and the Z Trust which were the mirror company and trust to E Pty Ltd and the E Trust.  This entailed him retiring as appointor of the Z Trust, appointing the husband and Mr S in his place, transferring four of his eight shares in Z Pty Ltd to the husband and the other four to Mr S, and retiring as a director of that company.  This was all implemented by the husband and his
   in-house accountant Ms MH.

   At the same time the husband and his mother contemplated whether it was appropriate for her to retire as well.  Indeed, documents were prepared and signed in anticipation of that decision being made.  However, it was not proceeded with and the husband’s mother remained the appointor of the E Trust and a director and the majority shareholder of E Pty Ltd.

   Referring to the Relinquishment of Appointor document prepared for his mother, the husband’s evidence is supported by the terms of the document being the same as the Deed by which Mr KS relinquished his position as appointor of Z Pty Ltd and nominated the husband and Mr S as the appointors.  Accordingly, I accept the husband’s evidence as to this.

   It is also not clear to me how it is that a document prepared in 2001, and not put into effect, and in any event purporting to substitute not just the husband but also Mr S as the appointor of the E Trust can raise an implication that the husband controlled the E Trust at the time of the approval of the Deed and at all relevant times beforehand.

   Turning to the transfer forms (Exhibits W184–187), apart from one (Exhibit W187), they were standard printed forms.  The odd one out was a typed form which replicated the relevant parts of the standard printed form.  They were all signed by Mrs Moore Snr as Transferor and two of them were signed by the husband as Transferee.  They were all undated.  They each had a “Date of Purchase” panel for completion, and the printed part of the panel was as follows
   “… / … 19…”.

   The wife’s senior counsel submitted that these forms had been prepared in the 1990s, and importantly before the date of
   Mr K’s report.  This, it was said, indicates that the husband was in control of the E Trust, that he was just waiting for the finalisation of the property settlement dispute to implement these transfer forms, and most significantly they were not disclosed not only to the wife, but also to Mr K.

   I reject these submissions as completely untenable on the evidence before me.  The uncompleted panel does not indicate that the forms were prepared in the 1990s, and the husband’s evidence that these forms were prepared and signed in 2001 in the context of the possible retirement of Mrs Moore Snr from the E Trust following the retirement of Mr KS from Z is entirely plausible.

   I observe that with the forms used to transfer Mr KS’s shares, the date of purchase panel was exactly the same as in Exhibits W184-187, but the date “2001” had been handwritten over the printed date of “19…”.

   149.6The wife told the Court of her beliefs and opinions as to the abilities of the husband’s mother, and to what extent the husband managed her affairs.  For example, in paragraph 27 of her affidavit of evidence-in-chief filed on 18 August 2010 she deposed that following his father’s death in April 1980 “the husband took over complete control of all of his mother’s financial affairs (which he undertook for the remainder of (the) marriage)”.  Further, the wife claimed that Mrs Moore Snr could not read or write English and she had to be taught to sign her name.

   In paragraph 13 of her affidavit in reply filed on 10 November 2010 the wife said that she did not believe that Mrs Moore Snr “was capable of playing or did play any part in the management of (her) companies”, in paragraph 19 of that affidavit she claimed that “(s)he was not capable of managing her affairs”, and that it was “absurd … to suggest that she had any input to financial or business matters,” and in paragraph 29 she said that she did not “believe that the husband’s mother had any knowledge of transactions and bank accounts.”

   All of this of course was meant to convey to the Court that the husband’s mother could not be the controller of the E Trust in the relevant sense, and that the husband must have been.  The wife’s belief was that the husband did not give his mother any “advice”, that he did not “follow her directions”, and that he “treated the assets of entities said to belong to or be controlled by his mother as he pleased”.

   However, I agree with the husband’s submissions that these beliefs and opinions have no value as to the truth of those beliefs or opinions, and as such they do not provide any basis for finding that the husband controlled the E Trust.

   This of course was another area where it might have been appropriate for the husband to call his mother as a witness, but for the same reasons as identified above, I do not consider there can be any adverse inference drawn from that omission.

4. Thus, I consider that this evidence fails to demonstrate that the husband controlled the E Trust such that the assets of the Trust can be treated as his at the date of the approval of the Deed and at all relevant times prior thereto.

5. In understanding the role that the husband has played in the E Trust it is also important to appreciate the history of Mrs Moore’s financial affairs.

6. In 1980 when the husband’s father died, Mrs Moore Snr was left with the sole ownership of the business structure that had been established by the husband’s father to that time.  This included O Investments Pty Ltd and O Nominees Pty Ltd as Trustee of the O Investments Unit Trust.

7. The husband was appointed a director of these two companies because of the requirement for there to be two directors, and to assist his mother with the management of the companies.  The husband also held shares in these companies because of the requirement for there to be two shareholders, but these shares were held on trust for Mrs Moore Snr.

8. Thereafter the husband, through the C business provided advice and assistance to his mother with respect to the investments held by those companies.  For this O Nominees Pty Ltd paid a regular management fee to C Group.

9. In 1991/1992 the husband’s mother altered her business structures on the recommendation of her accountants at the time.  This entailed the formation of the D Trust with Y Pty Ltd as Trustee.  Mrs Moore Snr and the husband were appointed the directors, Mrs Moore Snr held one share, and the husband held the other share on trust for his mother. Mrs Moore Snr was the appointor of the Trust and the beneficiaries were Mrs Moore Snr and her family, including the husband.

10. On 30 June 1992 the D Trust purchased 49 per cent of the units in
    O Investments Unit Trust.

11. Thereafter, O Nominees Pty Ltd and Y Pty Ltd have been the two principal business structures owned and controlled by the husband’s mother.  Subsequently of course, as outlined above, Mrs Moore Snr became involved in the Adelaide CBD project as an investor, and in September 1993 the E Trust was established with E Pty Ltd as Trustee representing the Moore family interests.  The husband’s mother provided funding for the project through Y Pty Ltd in the total amount of $1,335,585.

12. These funds were plainly provided on beneficial terms, including being interest free, but that cannot indicate that the husband was, to use the vernacular, “pulling the strings”.  I accept the submission of the husband that this can be viewed unremarkably as the husband’s mother providing assistance to her son (and his wife) in the pursuit of their business interests.

13. Ultimately, in 2007, the husband advised his mother that it was commercially sensible for the E Trust to sell its interest in the ER Trust to Z Pty Ltd, and that occurred as a result of the mediated outcome of the Supreme Court proceedings.  The husband’s evidence is that his mother insisted on her share of the profits, and stipulated $1,000,000.  Following the sale, that amount was distributed to Mrs Moore Snr through the E Trust.

14. In conclusion, I find that the husband as a director of E Pty Ltd the trustee of the E Trust exercised control over the daily operations of the Trust as well as attending to its business activities, bearing in mind though that it was an investment trust.  Understandably the husband’s mother was comfortable to leave these tasks to the husband and I accept the husband’s evidence that his actions were undertaken with her consent and approbation.  I also accept the husband’s evidence that he regularly consulted his mother about the operations of the Trust given her position as a director and major shareholder of the trustee company, as appointor of the Trust, and as having a substantial investment in the assets.  I agree with the submission of the husband’s senior counsel that the wife has not come close to establishing that the position was otherwise, and the evidence presented by the wife fails to contradict the husband’s evidence in this regard.

15. Thus, given this finding, there was no fraud, misrepresentation or material non-disclosure committed by the husband in taking the position that he did not control the E Trust such that the assets of the Trust could be treated as his.  Accordingly there is no basis here for revoking the approval of the Deed.

The suburb h and s terrace properties

1. As referred to above, just prior to the hearing the wife sought to amend her substituted particulars of claim.  Over the objections of the husband I allowed that amendment which introduced further allegations of fraud and/or misrepresentation and/or non-disclosure by the husband.  The amended particulars read as follows:

   14AFurther, the husband caused the sale of [Suburb H] and [S Terrace Suburb N].

   14BAt the time of the sales the husband had the control of the proceeds.

   14CAt the time the husband failed to disclose to the wife what had become of the proceeds of both sales.

   14DIn the negotiations leading to the settlement the husband falsely represented that the entire proceeds of both sales had been applied in reduction or discharge of loans.

   14EFollowing the execution of the Deed of Settlement the wife discovered that the husband had paid away the proceeds of both sales or a substantial part thereof for no consideration.

   14FThe wife relied on the representation referred to in paragraph 14D in agreeing to the terms of settlement and executing the Deed.

1. The husband was cross-examined about the sequence of events, and it was strenuously put to him and to the Court in submissions that this was all part of a planned strategy on his part to use the mortgage against the wife.  However, I reject this submission.  To repeat, it was the wife’s own actions in first raising the question of the mortgage and then alleging fraud and forgery that precipitated the Notice of Demand, and the husband was doing nothing more than reacting to the allegations made by the wife and her solicitor.  As far as I can see, the husband acted appropriately, and in particular in arranging for his mother (and O Nominees Pty Ltd) to be independently represented.  It was also appropriate for him as a director of O Nominees Pty Ltd to inform his mother, the other director, of what was being alleged, and it was even more appropriate for him to recognise that there was a conflict of interest and resign his directorships on the advice of Ms Powell QC.

2. There is also nothing in the events subsequent to the making of the demand as set out in paragraph 189 above to suggest that they too were part of a scheme to use the mortgage against the wife and ultimately to pressure her to settle.  I consider that the husband’s actions were entirely appropriate and necessary on behalf of his mother in light of the challenge to the mortgage maintained by the wife through her solicitors.

3. Crucially, there is also no evidence whatsoever to support the submission made by the wife’s senior counsel that the demand or the threat were “held over the head of the wife in the property settlement negotiations” or that “the wife was forced to negotiate property settlement under the pressure of the threat applied by the mortgagee.”

4. I set out later in these reasons the sequence of events and the circumstances surrounding the negotiations which led to the resolution of the issues of property settlement and maintenance, and nowhere does this issue feature.

5. It also must not be forgotten that in the settlement that was ultimately reached, the husband agreed to take responsibility for the mortgage, something that the wife had insisted on throughout the negotiations.

6. It is noteworthy too that at no time after 2 February 2000 did O Nominees Pty Ltd make any further demand or threat, and the negotiations that resulted in the settlement were yet to occur.  This of course does not sit well with paragraph 22 of the substituted particulars of claim which related “the demand and the accompanying threat” to the time of the negotiations.

7. I also observe that to continue to refer to a “threat” in relation to the mortgage is not entirely accurate.  The wife in her evidence repeatedly characterised it as a threat to peremptorily sell the property and evict her therefrom, but as from 10 May 1999 Mr U had reserved to his client its right to bring whatever action it may be advised to bring.  That is not a threat, but a reservation of rights.

8. The final nail in the coffin containing these submissions can be found in the advice that was given by Mr Mansueto to the wife.  He was asked about the enforceability of the mortgage and in his initial letter of advice dated
   18 February 2000 (Exhibit H32) he said this:

   I will need to meet with you at some stage in any event to go over that material and take a detailed statement from you about the mortgage as it may be a good tactical manoeuvre to bring a claim against [the husband’s] mother to have the Mortgage set aside or in some other way to challenge it.

9. I accept the submission of the husband’s senior counsel that what this indicates is that far “from being placed under some sort of undue pressure about the [O] mortgage, the wife was receiving advice in the matter by February 2000 not only from Ms Chapman, but also from Mr Mansueto.”  Further, “this was not limited to advice on whether or not the Coman mortgage was unenforceable, but how best to exploit the mortgage to the wife’s advantage, through the possible use of a tactical manoeuvre in the form of proceedings against [the husband’s mother].”

10. I observe that the fact of there being a mortgage to O Nominees Pty Ltd over the former matrimonial home in the principal sum of approximately $930,000, was always going to be a significant issue in the proceedings for property settlement, as well as what was to happen to that property.  Accordingly, it is apparent that at every opportunity the wife attempted to avoid the consequences of there being this mortgage.  She challenged its validity and its enforceability, although on an ever-shifting basis, she alleged that her signature was a forgery, but then drew back from that once the witness to her signature filed an affidavit confirming that the wife did sign the document.  Consistent though with this disingenuous approach she was still evasive when cross-examined before me about her recollection of signing the mortgage.  Frankly, I am less than impressed with how the wife addressed this issue.

11. More importantly, to put all this into context, the wife has failed to persuade me that the agreement reached was “procured by the exercise of pressure” by the husband on her “which is unconscionable, that is, beyond what the law is prepared to countenance as legitimate”.  It is also said that “(t)he (illegitimate)” pressure need only be one reason why a party acted as they did and not the sole, predominant or clinching reason”.  In other words, “it is no answer that the aggrieved party would have entered into the contract even without the exertion of the unlawful pressure: Barton v Armstrong [1976] AC 104.” However, I find that not only was there no unlawful pressure brought to bear, but the demand and the threat insofar as it can be described as such, had no bearing on the wife’s decision to settle as she did.

12. As to the issue of undue influence I need say no more than that none of the requirements to make a finding of undue influence have been satisfied here.

13. Before I leave this topic, I need to address one further issue raised by the wife, namely the fact that once the case had settled but before the Deed was approved, the husband’s mother indicated to the husband that she would accept the sum of $650,000 to be paid to the husband by the wife in full satisfaction of the liability under the mortgage rather than the amount of $930,000 together with interest accumulated thereon.  It was suggested that this was indicative of the husband “always calling the shots”.  However, I reject this submission and find that the husband’s evidence on this issue was unremarkable.  After the matter had been finalised between the husband and the wife the husband’s mother, who expressed relief that it was over, indicated that she would accept the amount that the wife had to pay to the husband, namely $650,000 from the proceeds of sale of the property.  I pause to observe that this in itself confirms that the mortgage was not a sham.

14. However, there is another issue that this circumstance raises, namely the fact that the husband did not inform the wife of what his mother proposed.  Plainly, at this stage there was still an obligation on the husband to provide to the wife and to the Court full disclosure, yet the husband did not do that here.  The question then becomes what is the effect of that.  Although full and frank disclosure of information is required under the Family Law Rules (2004)(Cth) it is limited by the requirement that it be relevant to the case (Sub-Rule 13.01(1), and see e.g. Carmel-Fevia & Fevia (2010) 43 FamLR 405), and it is the husband’s position that the circumstance of his mother proposing to accept $650,000 was not relevant to the case once he had agreed to take over the mortgage entirely. The reason for that is that the wife’s clear position at all relevant times was that the mortgage was unenforceable and should not be taken into account. She sought one half of the agreed value of the TE Street property and that the husband take care of the mortgage. In other words, whether the husband was going to pay $930,000, or $650,000 or indeed nothing to his mother to discharge the mortgage was of no concern to the wife because, to repeat, she claimed that it was unenforceable and should not be taken into account, and that is what happened, namely it was not taken into account in the settlement.

15. The husband was unable to recall whether he informed his solicitor of the proposal of his mother, but in the schedule provided to Murray J and in the Deed itself the figure of $930,000 still appears as the principal amount owing under the mortgage.  It might be said that this then was a fraud on the Court, but in no sense did this error or oversight result in the Court giving its approval to the Deed.  I also observe that the Deed was drawn on the basis that the entitlement of O Nominees Pty Ltd to security pursuant to the terms of the mortgage was to be limited to $650,000 (see clause 4.4.2) and this was because it was upon payment by the wife to the husband of the sum of $650,000 that the mortgage was to be discharged entirely.  It seems to me that this is consistent with the proposal of the husband’s mother and goes some way to negate the impact of any non-disclosure, even if it was considered to be relevant.  I also refer to the Full Court decision in Scribe & Scribe (2006) FLC 93-302 where a party having access to legal advice in circumstances such as these was treated as a significant factor weighing against the effect of the non-disclosure. In that case, as here, the wife was always clear about the outcome that she wanted and the subject of the non-disclosure to her and the Court was not relevant to that.

16. Finally, the wife’s senior counsel suggested that this gesture by the husband’s mother confirmed that the husband could have at any time previously called a halt to the demand and threat that had been made on behalf of O Nominees Pty Ltd.  However, I reject this submission.  There is no evidence to support it and it is quite apparent that the mother’s gesture was one borne of relief that the parties had reached a settlement and on no other basis.

17. It emerged during the wife’s oral evidence that the wife was also pursuing a more general claim under the topic of unlawful pressure/undue influence, namely that the husband pursued a strategy of denying the wife funds to prosecute her claim forcing her into a disadvantageous settlement.

18. The assertion of the wife is that she could not afford to go to trial, and thus she was obliged to engage in settlement negotiations with the husband.  She claimed that the husband’s assertion that he could not fund the costs of the trial was in fact false and he had ample resources at his disposal should he choose to avail himself of them.

19. The first point to make is that at all times the wife was represented by well respected and experienced legal practitioners, and the wife was well aware that she could make application to the Court for an order that the husband provide funds for the purposes of the trial.  Indeed, on 11 May 1999 the wife filed an application seeking an order that the husband pay to the wife’s solicitors the sum of $20,000 on account of legal costs and disbursements.  In response the husband agreed to pay the sum of $10,000, and that was made the subject of a consent order on 8 June 1999.  That amount was to be used to pay the wife’s accountant’s fees and her professional witness fees.

20. Then on 2 July 2000, at around the time that the Court listed the trial to commence on 3 October 2000, the wife through her solicitors sought that the husband provide her with the sum of $85,000 to meet the costs of the preparation for trial and of the trial itself (Exhibit W193).

21. The husband’s position at this time was that he was not able to obtain further money from the C Group business to fund the wife’s costs let alone his own.  This was apparent from affidavits of the husband, of his business partner
    Mr S and the internal accountant Ms MH filed on 14 June 2000 for the purposes of the husband’s then application to sell the TE Street property and to discharge the interim order for spousal maintenance.

22. According to those affidavits there was an imminent shortfall of funds, the then current level of drawings could not be sustained, and there was no credit loan account within the group that the husband or his trust could draw upon.  The affidavit of Mr S was to the effect that as a result of the financial position of C Group he could not and would not consent to any increased drawings.  This was also the subject of his further affidavit filed on
    5 September 2000.

23. There was a dispute between counsel as to whether all of these affidavits were before the Court or not, and if they were on what basis.  For my part, the husband’s affidavit of 14 June 2000 was clearly before the Court for all purposes having been cross-examined upon and tendered during his
    re-examination, but with the other affidavits they were not tendered as evidence of the truth of their contents but as indicating the state of the material that was before the Court on this topic and available to the wife at this time.

24. Significantly there has been no evidence to which I have been referred that was before the Court at the relevant time or that has been presented as part of these proceedings that indicates that the affidavit evidence of the husband as to these matters was not accurate.  In addition, although they were not evidence of the truth of their contents, the state of the material before the Court at the time, in the form of the other affidavits, is telling.

25. It was suggested by the wife that the prospects of the C Group were improving and that the ER investment would prove to be quite successful.  The husband’s evidence in this regard was that there had been an improvement in the prospects of the C Group since the early 1990’s but there was no guarantee that that improvement would continue.  That of course did not say anything about the funds that were available to the husband, and with the ER investment there was still another three years before negotiations needed to take place for the purchase of the fee simple interest in the Adelaide project.

26. It was submitted by the wife that the husband was able to meet the cost of the Report of Mr K and that he had funds available to him that could have been used to meet the cost of a report commissioned by the wife.

27. There is no question that the husband was able to meet the cost of
    Mr K’s report, and indeed that he was able to meet the ongoing costs of his solicitors for that matter, but that does not say anything about whether he had other funds or access to other funds to provide to the wife.  In any event, apparently the wife was able to come to an arrangement about the ongoing costs of Ms Chapman, Mr Mansueto and Mr W.  The problem though for both parties was the significant costs of the trial, and of the preparation required for that trial.

28. It was suggested that the husband could have approached his mother and obtained funds from her.  However, there was no evidence of her financial position and as it was the parties already were indebted to her in the sum of $930,000 for the purchase of the TE Street property.

29. The husband was cross-examined about his ability to obtain funds from his mother given that there was no doubt that he had done so previously, and indeed even subsequent to the approval of the Deed, but his candid response was that he was not prepared to approach her to fund the costs of the trial given the level of indebtedness to her at the time and given that he did not want to further involve her in the proceedings.  She was of course already involved to a certain extent as a result of the allegations that the wife was making about the mortgage and its enforceability.

30. In any event, in response to the wife’s requests for funds, the husband proposed that a total sum of $200,000 be borrowed by way of second mortgage secured against the TE Street property, and that each party have $100,000 from that total amount (Exhibit W193).

31. The wife ultimately accepted this proposition on the basis that if the money was unable to be borrowed then she would proceed with an application “to remove the case from the trial list pending satisfactory funds or property being received by way of costs.”

32. On 18 August 2000 the following order, inter alia, was made by consent:

    1.That within twenty-one [21] days the husband do cause the sum of ONE HUNDRED THOUSAND DOLLARS [$100,000] to be paid to Chapman and Associates Pty Ltd Trust Account on account of the wife’s legal costs for the preparation and trial of the within proceedings PROVIDED the parties do sign all such documents as may be necessary to:

    (a)cause the jointly owned house property at [TE Street] Adelaide in the said State to be security by way of mortgage for a bank loan of TWO HUNDRED THOUSAND DOLLARS [$200,000];

    (b)authorise ONE HUNDRED THOUSAND DOLLARS [$100,000] of the aforesaid loan to be paid to Wallmans Trust Account on account of the husband’s legal costs for the preparation and trial of the within proceedings;

    (c)each party to pay one half of the loan repayments, pending repayment of the said loan.

33. In addition to this order directions were made at this time to further prepare the matter for trial commencing on 3 October 2000.

34. The husband attempted to find a lender willing to advance the funds required on the security of a second mortgage but he was unsuccessful, and on
    11 September 2000 he filed an application seeking a discharge of the order made on 18 August 2000.

35. The wife’s senior counsel suggested that the husband well knew that he would not be able to secure such a loan because of the accumulating debt under the O Nominees Pty Ltd mortgage, and he further suggested that that was all part of the husband’s strategy in constricting the wife’s access to funds.  However, I reject this as fanciful.  I consider that the husband was genuine in his proposal and it was just unfortunate that a loan could not be obtained.

36. By this time, namely 11 September 2000, it had also become apparent that the hearing would not be able to proceed on 3 October 2000 because of the need for further documentation to be prepared and then made available by the husband.  Thus it was agreed that the listing of the trial should be adjourned to late January or early February 2001.

37. In these circumstances, on 11 September 2000 orders were made by Murray J extending the time for the husband to provide the required documentation, suspending the order for the payment of $100,000 to the wife, allowing for the sale of items of personalty and the proceeds to be paid to the wife’s solicitors to meet legal and accounting costs, vacating the trial listing for 3 October and fixing it for late January or early February 2001.  Indeed, as already indicated, subsequently the trial was fixed for 5 February 2001.

38. As a result of this the parties agreed to have a settlement conference with counsel briefed for the trial on 3 and 4 October 2000, and the wife required the husband to provide funds for that purpose.  The husband indicated that he could borrow $15,000, but not the $20,000 - $25,000 sought by the wife.  The wife then accepted this proposal but reserved the right to seek further funds for the trial.  In the meantime the husband provided to the wife the required documentation which was presented to Mr W for him to complete his report (Exhibit W193).

39. I observe that this does not sit well with the claim by the wife that because the husband had been able to spend up to $50,000 in obtaining a report from
    Mr K, and he was unable to provide a similar amount to her, that meant that she was unable to obtain a report from her accountant.  Indeed, I note that that was not something that was raised at any time during 2000.

40. In the end result the conference with counsel did not proceed.  There is a dispute on the evidence as to why this was, but it related to the non-payment by the husband of the $15,000.  The wife claims that the husband subsequently reneged on this offer.  The husband though says that on
    25 September 2000 the wife’s counsel insisted on payment into the solicitor’s trust account that day.  The husband was unable to comply with what his solicitor in evidence rightly described as an unreasonable demand.

1. In any event, as I record later in these reasons the parties themselves then entered into negotiations to resolve this matter, and those negotiations ultimately proved successful.

2. Importantly though for the current issue, those negotiations were clearly conducted on the understanding that if they were not successful the wife would be proceeding with an application for the husband to provide at least $100,000 to the wife to prepare for the trial in February 2001, and to meet the costs of that trial.  Indeed, the wife’s solicitor made this quite clear to the wife both in correspondence and in discussion (Exhibit W193).

3. On 26 October 2000 the matter was again before Murray J.  Her Honour was told that the parties were negotiating but that given the listing of the trial on
   5 February 2001 the wife needed to make an application for funding for that trial.  Her Honour then adjourned the hearing to 20 November 2000 to hear that foreshadowed application, and ordered that it be filed by 3 November 2000.  However, as a result of the state of the negotiations between the parties that application was not filed and on 20 November 2000 her Honour was advised that agreement had been reached and a Deed was being prepared to finalise the entire dispute.  As a result the matter was adjourned to
   23 November 2000 and on that day the hearing was further adjourned to
   24 November 2000 when the Deed was approved by her Honour.

4. Given this background, I do not accept that the wife was subjected to a strategy by the husband of denying her funds, and that that either necessitated her entering into settlement negotiations or resulted in an unfavourable settlement.  Whatever the husband said about his financial position it was always open to the wife to bring an application seeking funds for the purposes of the trial, and as can be seen she not only did just that but she was always prepared to take that step again.  Moreover, and to repeat, at all relevant times the wife had the benefit of expert advice about what she could do in this regard from her family law solicitor, her commercial solicitor, and her forensic accountant.

The settlement negotiations

1. That there is no fraud, misrepresentation, innocent representation, or undue pressure or influence here is demonstrated by the settlement negotiations that took place between the husband and the wife, and how the final settlement came about.

2. Settlement discussions took place off and on between the husband and the wife commencing in 1998.  Even in the initial stages of these discussions they generally took the form of the wife indicating what she wanted and the husband responding.  For example, one of the earliest discussions was that the wife wanted $5,000,000 by way of property settlement.  Nothing came of this though because the husband considered that the wife was well aware that he was not “worth” that much.  Subsequently, and in 1999, the husband attempted to float the idea of using superannuation to achieve what the wife was seeking, and he put a proposal to her in late November/early December 1999, but this was rejected.  According to the husband’s evidence, which I accept, the wife at that time wanted the following:

   (a)Half the equity in the [TE Street] house, ignoring the [O] mortgage.  Her estimate of this was say, $750,000;

   (b)‘Maintenance’ payments of $75,000 after tax for four or five years; and

   (c)      $3,000,000 at the end of four or five years.

   (Paragraph 308 the husband’s affidavit of evidence-in-chief filed on 8 October 2010)

3. The wife made it clear to the husband that the figure of $3,000,000 did not come from any valuation advice, and was simply what she wanted.  She was even prepared to allow time to pay.

4. This offer was then formally put by the wife’s solicitors in a letter dated
   6 December 1999 (Annexure “ALB 1” to the affidavit of Mr Andrew Barnes filed 15 November 2010).

5. The matter did not resolve and there was a further meeting between the parties on 12 February 2000 when the wife again told the husband what she wanted, namely:

   (a)      $1,000,000 now from the sale of the house;

   (b)      $75,000 per annum for four (4) years; and

   (c)      $1,850,000 payable in four (4) years time.

   This was a total of $3,150,000.

   (Paragraph 313, the husband’s affidavit of evidence-in-chief filed on 8 October 2010)

6. Again though the matter did not resolve, and there was then a period when settlement was not spoken of between the parties until late September/early October 2000 when through a mutual friend, Mr PP, the parties commenced a series of meetings at the TE Street property in what I would describe as a concerted effort to resolve the dispute.

7. At the first meeting it was agreed that they would start from “scratch” and put down what the wife felt about property settlement before talking about figures.  Importantly, one of the major comments then made by the wife was that she believed that she deserved half of the Moore family assets as a matter of principle.

8. The parties then traversed a number of issues such as the house property at TE Street.  The wife said that she did not wish to live in it beyond her present circumstances and she preferred an apartment.  It was agreed that
   $1,450,000 was a fair value of this house property for their purposes.  It was also understood that “the [Moore] family assets” included all the business assets.

9. The parties then discussed specific figures and two columns were prepared as to what the wife wanted and what the husband was prepared to agree to.  The wife wanted the TE Street property to be sold, $700,000 being 50 per cent of the estimated sale proceeds ignoring the mortgage, $100,000 payments each year for five years, and $1,550,000 in five years time.  This was $2,750,000 in total.  (Paragraph 322, the husband’s affidavit of evidence-in-chief filed on 8 October 2010).

10. The husband’s position in relation to this was that the house be sold, the wife receive $350,000 being 100 per cent of the estimated sale proceeds after paying the mortgage, $100,000 payments each year for five years and $1,400,000 in five years time.  This was $2,250,000 in total.  (Paragraph 322, the husband’s affidavit of evidence-in-chief filed on 8 October 2010).

11. Thus, the parties were $500,000 apart.  Thereafter the wife made it clear that what would make her “happy” was $3,000,000 over five years.

12. Significantly, it needs to be emphasised that during these negotiations there was no reference to whether the E Trust was in or out, or whether the husband controlled it or not, although given the “[Moore] family assets” were on the table it was clear that this Trust was in the mix.  Nor was there any reference to the proceeds of sale of the Suburb H and the S Terrace properties, and there was no discussion about the mortgage over the TE Street property being a sham, although as can be seen the wife’s position was that it not be taken into account.  Further, apart from agreement as to the value of the house property, there was no discussion about valuations.  The discussions were all premised on what the wife wanted.

13. By the end of October the husband felt that they were close to an agreement, and they discussed engaging an independent lawyer to act as a mediator to try and finalise the matter.  The husband suggested that the wife’s commercial solicitor Mr Mansueto be utilised because of his background knowledge of the matter, and the wife could be assured that he would act in “her best interests”.  The wife agreed and the husband contacted Mr Mansueto.  Mr Mansueto said that he would first have to consult with the wife, which he did, and then he agreed to act for both parties to further the negotiations.

14. The parties entered into a retainer agreement with Mr Mansueto and two or three meetings took place in his offices.  I accept the evidence of the husband that “(t)here was an open and co-operative atmosphere to the negotiations conducted by Mr Mansueto” and further that “(d)uring the negotiations the wife appeared confident, articulate and firm about what she wanted”.  Of course, I note again that Mr Mansueto was not called as a witness by the wife to speak to these issues.

15. As a result of these discussions, agreement was reached.

16. Based on a net value of the TE Street property at $1,400,000 the final agreement provided for a total of $3,000,000 to be paid to the wife, and for the wife to retain furniture and other items.

17. Mr Mansueto then set about drafting a consent order, but it was agreed that the matter would be finalised by way of a Deed.  The order was then converted into a Deed by Mr Mansueto with the assistance of Ms Maureen Pyke QC, and that draft Deed was circulated for comment.

18. The key terms of the settlement were that the house property at TE Street be sold by the wife, that at settlement the husband receive $650,000 from the proceeds of sale and he would assume sole responsibility for the mortgage.  Thereafter the husband would pay to the wife $150,000 on
    1 December 2000, $600,000 over five years by quarterly instalments of $30,000, and $1,500,000 on 31 December 2005.

19. It is apparent that throughout these negotiations the wife was legally represented by Ms Chapman, and she had Mr W available to advise her on the forensic accounting issues.  She also had her commercial solicitor
    Mr Mansueto to advise her, of course though outside of the time when he was acting for both parties.

20. In addition the husband had provided complete discovery and made available not only all documents requested by or on behalf of the wife, but also access to Mr J who was the husband’s personal and business accountant.

21. The value of the husband’s business interests plainly remained a live issue given the non-acceptance by the wife and her advisers of either the approach or the valuation of Mr K.  Although the husband was clear about using that valuation for the purposes of his case, the wife and her advisers were busily preparing their own valuation based on the future maintainable earnings of the husband’s business interests.  There is also no doubt on the evidence that the wife’s position was that the E Trust was controlled by the husband and should be included in the asset pool, no matter what the husband or Mr K said about that, and that was the basis on which her case was being prepared.  To repeat, at no stage did she act on any representation by the husband to the contrary.

22. In any event, as referred to above, the settlement reached by the parties ignored these niceties and was both negotiated and finalised on the basis of what the wife wanted to achieve.

23. How there can be any fraud, or misrepresentation, or any basis for finding the agreement to be voidable or unenforceable on these facts is beyond me.

24. I need though to address in some detail how the particular terms of the Deed that was the subject of approval were settled.

25. To repeat, once agreement had been reached between the parties with the assistance of Mr Mansueto, he was instructed by them to prepare draft orders.  He did so and circulated them to the parties on 14 November 2000 (Exhibit H19).  Importantly, in these orders (Exhibit H20) the Moore Group of Companies was described as including, inter alia, E Pty Ltd, the E Trust, ER Pty Ltd, the ER Trust, P Pty Ltd and the P Trust, and the husband was to retain his shares in the members of that Group, and his “interest and entitlement” in any Trust forming part of the Group and “any asset therein”.  Again, this confirms in my view that at this time the wife was proceeding on the basis that the E Trust and its assets were in the asset pool, and there was no suggestion that the wife was acting on or settling on the basis of any representation by the husband that the Report of Mr K was correct in its treatment of the E Trust.

26. However, as referred to above, it was then agreed that a Deed would be prepared rather than proceed with the draft orders, and that was also attended to by Mr Mansueto.  He circulated a draft for comment on 17 November 2000.

27. The draft Deed contained the same description of the Moore Group of Companies and the same provisions for what the husband was to retain, as in the draft orders.

28. Then, on 20 November 2000 Mr Mansueto sent to the parties a second draft Deed as settled by Ms Maureen Pyke QC.  That draft altered the recitals and added two new clauses.

29. By facsimile dated 21 November 2000 (Exhibit W8) the husband’s solicitor requested changes to the Deed such that the entities comprised in “the [Moore] Group of Companies” did not include entities that were “associated with (the husband’s) mother and which were not established by (the husband) nor were they conducted or operated by him”.  In particular, Mr Barnes wanted to ensure that there was “no suggestion that (the husband) owned or controlled some of those entities.”

30. As a result, the final Deed was amended to incorporate the following recitals:

    OThe husband during the course of the marriage established and/or conducted the entities which comprised the Moore Group of Companies as defined in clause 2.1.3 of this Deed.

    PThe husband and/or his mother during the course of the marriage or before established and/or conducted the entities referred to in clause 2.1.4.

31. Then, in the body of the Deed clause 2.1.4 provided as follows:

    2.1.4The ‘Other [Moore] Companies’ shall mean:

    (a)[O] Nominees Pty Ltd

    (b)The [O] Investment Unit Trust

    (c)[E] Pty Ltd

    (d)The [E]Trust

    (e)[Y] Pty Ltd

    (f)[D] Trust

    (g)[O] Investments Pty Ltd

    (h)[ER] Pty Ltd

    (i)The [ER] Trust

    (j)[P] Pty Ltd

    (k)The [P] Trust

    (l)[NT] Pty Ltd

    (m)The [TN] Unit Trust

32. Then in the clauses identifying the “property” that the husband was to retain the following appeared:

    7.2The husband shall retain as his sole property absolutely free of any claim, demand, right, interest or entitlement of the wife:

    …

    7.2.2the husband’s shares in Members of the [Moore] Group of Companies and the Other [Moore] Companies;

    7.2.3the husband’s interest and entitlement in any Trust forming part of the [Moore] Group of Companies and the Other [Moore] Companies and any asset therein;

    …

33. The wife suggests that this change constituted a significant misrepresentation by the husband on which she relied in executing the Deed, and in then obtaining the approval of the Court to that Deed.  The alleged misrepresentation was that the husband did not own or control the E Trust whereas in fact he did.  However, I reject this claim.  It is answered completely by my finding that the husband did not control the Trust such that its assets should be treated as his.  Nevertheless, as the husband submits, well before this change was made, the agreement had already been reached on the wife’s part on the basis that the E Trust did constitute an asset of the husband to be included in the asset pool, and the changes sought by Mr Barnes altered nothing as to the wife’s position; the Deed still provided for the husband to retain his “interest and entitlement” in the entities named, and it did not alter the differences between the parties in respect of whether the E Trust was to be considered an asset of the husband or not.

34. In any event, upon seeing this change the wife had the clear option to refuse to execute the Deed.  She went through the Deed (and the schedule of assets, liabilities and resources) with Ms Chapman on 23 November 2000 and she then executed the Deed and provided instructions to Ms Chapman to join with the husband in seeking approval of the Deed.

35. It is also instructive to consider what was put to Murray J on 24 November 2000 in relation to the application for approval of the Deed, and I highlight the following:

    (a)Mr Berman who appeared as counsel for the husband said of the schedule of assets, liabilities and resources:

    … It will be of some assistance to Your Honour.  It does the best that the husband can to set out the asset parameters in respect of both of the parties and, indeed, raises some of the matters that Your Honour has been discussing with Ms Chapman.

    (Transcript, 24 November 2000, page 5, lines 6-9)

    (b)Then Mr Berman said this:

    I can tell Your Honour that schedule is a document that has passed between the solicitors for both parties and whilst obviously each party does not necessarily agree with the position adopted by the other, it at least provides Your Honour with some indication of the respective positions.

    (Transcript, 24 November 2000, page 5, lines 14-18)

    (c)Ms Chapman did not demur from this position, and the wife was also present in Court.  Thus, by impliedly agreeing with those statements, and on the basis of what was contained in paragraph 1 of the schedule, the wife was indicating that she did not accept the valuation from the K Report, and was presenting a valuation from Mr W.

    Pausing there, I also agree with the submission of the husband that it could never be said that there was a “fraud” on the Court; the Court was being told, correctly, that a compromise had been reached notwithstanding the different positions taken by the parties.  It is also noteworthy in this regard that at this hearing Ms Chapman insisted that the affidavit of Mr W annexing his Report be filed.

36. These events support my finding that the wife did not rely or act on the K Report and/or any adoption by the husband of that Report, and/or any representation by the husband as to the E Trust in executing the Deed as alleged in paragraph 12 of the further substituted particulars of claim dated 23 November 2000.

Conclusion

1. After a careful and lengthy analysis of the wealth of evidence presented in this case I have found that there was no fraud, misrepresentation, material non-disclosure, undue pressure or undue influence by the husband.  That is enough to dispose of this application but if it be thought that anything said or done by or on behalf of the husband was otherwise, I have also found that the wife was not induced by any conduct or omission on the part of the husband as alleged by the wife to resolve the property settlement or spousal maintenance application, to execute the Deed, or to seek and obtain the approval of the Court to that Deed.  Or, to put it in the terminology of the wife’s senior counsel, there was nothing said or done or omitted by or on behalf of the husband as alleged by the wife which caused the wife to act as she did to resolve the dispute and finalise the same by executing a Deed and obtaining the Court’s approval to that Deed.

2. At all relevant times the wife was represented by experienced legal practitioners in family law and commercial law respectively, and she had the advice of a well respected forensic accountant.  At every step of the way she made fully informed choices as to the approach she would take.

3. Save and except in one respect there was full and frank disclosure by the husband, and in relation to the one failing in that regard I have found that it was not relevant to the outcome.

4. The wife was also able to, and she did pursue her own enquiries and her own valuation of the husband’s business interests.

5. In short, there is no basis for the wife to complain about any conduct or omission on the part of the husband in resolving the property settlement and spousal maintenance proceedings in the way that they were.  It is plain on the evidence that the wife settled the proceedings on the basis that the value of the E Trust and the value of the former matrimonial home without regard to the mortgage to O Nominees Pty Ltd were included in the asset pool.

6. In these circumstances I propose to dismiss the application.

I certify that the preceding two hundred and seventy eight (278) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Strickland delivered on 18 April 2012.

Associate:     

Date:              18 April 2012