Nagle & Nagle

[2009] FamCA 397

FAMILY COURT OF AUSTRALIA

NAGLE & NAGLE [2009] FamCA 397

FAMILY LAW – EVIDENCE – Interlocutory application for husband and intervenors to answer questions and provide a sample of original loan agreement document to the wife to enable her to have it tested for authenticity

Family Law Act 1975 (Cth)
Evidence Act 1989 (Cth)

Palmer and Dolman [2005] NSWCA 361

APPLICANT: Ms Nagle

RESPONDENT: Mr Nagle

INTERVENOR: P Pty Limited

FILE NUMBER: SYF 3932 of 2005

DATE DELIVERED: 19 May 2009

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Moore J

HEARING DATE: 18 May 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Mater

SOLICITOR FOR THE APPLICANT: Broun Abrahams Burreket

COUNSEL FOR THE RESPONDENT: Mr Schonell

SOLICITOR FOR THE RESPONDENT: Paltos & Co.

SOLICITOR FOR THE INTERVENOR: Diamond Conway

Orders

1. The application of the wife filed 5 May 2009 is dismissed.

IT IS NOTED that publication of this judgment under the pseudonym Nagle & Nagle is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYF 3932  of 2005

MS NAGLE

Applicant

And

MR NAGLE

Respondent

And

P PTY LTD
Intervenor

REASONS FOR JUDGMENT

1. With the final hearing of property proceedings pending and scheduled to commence 23 June, the wife filed an interlocutory application on 5 May seeking various orders set out more particularly in that document.  In essence, by proposed order 1 she asks that the husband and the intervenor, P Pty Limited, file and serve within 7 days a sworn affidavit providing answers to questions set out therein; proposed orders 2 – 7 inclusive relate to the intervenors providing to her solicitors one of the original loan agreements dated 16 January 2004 [purportedly entered into between the husband and others - the total amount involved is well in excess of $2 million] so as to permit the wife:

   ·    to engage a further expert employed by or contracted to R Research Company ‘to test the loan agreement provided’;

   ·    to send it to R Research Company in Melbourne;

   ·    to receive from the intervenor written authorisation for R Research Company to remove for testing purposes a sample of the paper and conduct destructive testing of the sample only; and

   ·    to return the loan agreement by registered post to the intervenors’ solicitors. 

2. She agrees to bear the costs of the further testing. 

3. The application has its more immediate genesis in an application the wife brought earlier in the year which resulted in orders made on 19 February 2009 obliging the husband and intervenors to provide to her solicitors the original loan agreements to enable her to engage a forensic expert to examine the documents in pursuit of her claim they are not authentic.  In her affidavit sworn 9 February 2009 she set out the basis on which she questions their authenticity: they do not appear to have been prepared by legal representatives or stamped at the Office of State Revenue as was the usual practice of P Pty Ltd; they were not witnessed by any third parties and are executed by the husband, J Nagle and A Nagle, other than the agreement with H Company which is also executed by the husband’s sister, Ms M.  She suspects they were drafted and executed shortly prior to or in the period following separation, an assertion she says is fortified by the husband’s actions very shortly after separation in transferring his shareholding in P Pty Limited to T Pty Limited as trustee for the Nagle Family Trust. 

4. Therefore the wife wants to be in a position to advance the contention that the documents are a fraud or concoction brought into existence before or after her separation from the husband and relied on now to suit his case in the pending property proceedings.  It is said, however, that she does not dispute the money reflected in the agreements was advanced by the husband’s family, directly or indirectly, but she maintains it is not repayable.  It has not yet been stated what her case will be if it is found to be not repayable, although the husband taking the credit for it in the assessment of their respective contributions readily suggests itself.  On the other hand, if it is repayable the debt will be deducted from the value of their gross assets for the purpose of calculating their entitlements - or at least no one has yet suggested otherwise.  The investment the wife is making in the issue may be driven by a perception that that the mathematical precision of the latter is less advantageous to her case than giving the husband credit for contributing it, but whatever the case it appears at this point inevitable that the funds will be brought to account one way or the other. 

5. After the February orders the wife engaged a person said to be a document expert, Mr D, and it is apparent that at some stage prior to 1 April she received a report from him.  That was followed by an exchange of correspondence between her solicitors and the solicitors for the husband and the intervenor and led to her filing the present application on 5 May.  The dispute will be apparent from the summary of correspondence to follow:

   (i)On 1 April 2009 the wife’s solicitors wrote to the husband’s solicitors.  There is reference to Mr D’s report [obviously it was by then available] but before it would be served the wife required sworn evidence of the date the loan agreements were prepared, who prepared them, the date they were executed, the location they were printed [eg P Pty Ltd’s premises or the husband’s home office or some other place], the type of printer used, and the brand of paper used to print them.  This was required before the report was served ‘as a number of expert’s findings may or may not be of relevance depending’ on this evidence.  On the same date a letter in the same terms was sent to the intervenor’s solicitors. 

   (ii)On 2 April the husband’s solicitors replied with the reminder that when collecting the original three loan agreements the wife’s solicitor Ms Felton had given her assurance [confirmed in correspondence and given outside Court on 19 February] that the expert’s report would be served when received.  They made a demand for a copy of the report. 

   (iii)On 6 April the solicitors for the intervenors replied and, ignoring the motor vehicle issue, it was said that at no time had the wife sought that the intervenors provide the evidence requested in the letter of 1 April, nor were there any preconditions attached to the solicitors undertaking outside court to serve the report when it was to hand, and it was observed that the request indicates the expert has been unable to provide a report favourable to the wife and so a fishing expedition had become necessary to shore up her argument. 

   (iv)The following day the intervenors’ solicitors sent a further letter saying they had now considered the request for their client to provide sworn evidence of the matters in the letter of 1 April and after noting they had previously submitted to any order about the production of the documents, the observation was made that the time allowed for examination had expired and the intervenors were now in the position of being asked to provide further evidence about the agreements and they could not see why they should go to further expense of dealing with the matters the wife had raised.  There being no scope for doubt the monies were advanced to the husband - taken up as loans in financial accounts over the years in question and subsequently – it was observed that the loan agreements took the matter no further save that they created an interest sufficient to support a caveat on behalf of P Pty Ltd.  The letter concluded with the observation that whether or not the wife’s solicitors served the expert’s report is a matter for them, but the intervenor will not incur further expense to facilitate an exercise which appears to have no point. 

   (v)It was not then until 30 April the wife’s solicitors wrote to the intervenors solicitors.  It was said that at the time of the earlier application to the Court the wife was not in a position to know that ‘further testing’ would be required.  On the expert’s recommendation she was now proposing the further testing be a physical examination of the paper to test for grammage, thickness and density [non destructive], cutting a sample size from one page and testing this sample for fibre furnishing analysis, testing of filler contents and type [destructive].  On the expert’s advice she was now proposing to engage R Research Company in Melbourne to undertake the testing and one original piece of the paper is required for that purpose.  If not forthcoming, an application to the Court was foreshadowed. 

   (vi)On 1 May the solicitors for the intervenors replied requesting service of the report to consider the request and the wife’s solicitor was reminded this was a condition precedent of releasing the loan documents to the forensic analyst. 

   (vii)On 4 May the expert wrote to the wife’s solicitors setting out questions he would like answered to ‘proceed further in the testing of the veracity of the subject loan agreements’.  Nothing was said about a recommendation to have paper tested elsewhere and nor was anything said about R Research Company doing testing or how the results of any such tests might affect his task. 

6. The dispute unresolved, on 5 May the wife filed the present application.  In support of it her affidavit mostly relates the history of correspondence.  In his submissions her counsel, Mr Mater, refers to the orders proposed in 2 – 7 inclusive as being related to the arrangements for testing by R Research Company and for the proper care and return of the document.  When asked about the application for questions to be answered as per order 1, which seemed designed to give the expert the answers to questions he posed so that he might arrive at an opinion, Mr Mater characterised them as specific questions falling within Rule 13.26 of the Family Law Rules which the wife was entitled to administer.  Rule 13.26 is this:

   “FAMILY LAW RULES 2004 - RULE 13.26

   Service of specific questions

   (1)After a case has been allocated to a first day before a Judge, a party (the "requesting party") may serve on another party (the "answering party") a request to answer specific questions.

   (2)      A party may only serve one set of specific questions on another party.

   (3)      The specific questions must:

   (a)      be in writing;

   (b)be limited to 20 questions (with each question taken to be one specific question); and

   (c)       not be vexatious or oppressive.

   (4)If an answering party is required, by a written notice served under rule 13.20 or an order, to give the requesting party a list of documents, the answering party is not required to answer the questions until the time for disclosure under Part 13.2 or an order has expired.

   (5)The requesting party must serve a copy of any request to answer specific questions on all other parties.”

7. But there are other Rules which have some bearing on this.  Part 13 applies to all applications seeking final orders, not interim or interlocutory applications.  Rule 13.27 obliges the party on whom the questions are served to answer on affidavit within 21 days.  The Rule provides for objection to be made to answering by specifying the grounds of the objection and briefly stating the facts in support of the objection.  Rule 13.28 is about applications for orders in relation to specific questions and outlines what may be sought and what the Court may take into account in making any such order; namely whether -

   ‘(a)     the requesting party is unlikely, at the trial, to have another reasonably simple and inexpensive way of proving the matter sought to be obtained by the specific questions;

   (b)answering the questions will cause unacceptable delay or undue expense; and

   (c)       the specific questions are relevant to an issue in the case.’

8. Mr Mater advises from the bar table that R Research Company could provide their report in 14 days of receiving the original paper. 

9. The husband resists these orders and his counsel, Mr Schonell, makes some brief submissions in support.  One is about timing – the wife has had the report since before the letter of 1 April – and he maintains there is prejudice to the husband in dealing with any further evidence.  Another is about the assurance given when the order was made that the report would be made available which has not been honoured.  The wife has waived privilege – see the letter marked G to her affidavit – and the husband is entitled to inspect the report the expert has provided.  By seeking to have the husband swear to evidence in response to questions, in the face of an allegation of fraud he is entitled to rely on protection against self-incrimination and decline to answer them, particularly where the wife seeks to cloak the report in secrecy and will not comply with the assurance given previously.  [Mr Mater replies to say that when the assurance was given it was contemplated a final report would be received]  In any event, the submission is that if what is proposed is about the age of the paper, as Mr Mater intimates, that is not the husband’s task and nor is the expert the tribunal of fact.  There is a question of fairness to the husband who should not have to meet this issue 2/3 weeks out from the hearing and he is being ‘led up the path’ in his ability to meet the case.  The application should be dismissed.  The solicitor for the intervenors adopts those submissions. 

Conclusion

1. The dispute is not one which resolves itself without waver or hesitation on one side of the argument or the other. 

2. The wife’s point of view is readily understandable.  She suspects documents said to support the husband’s contention that a substantial amount of money is to be repaid to others have been concocted for purposes related to his case.  She has identified the elements that underpin her suspicions about authenticity [noted earlier] and the weight of that will await evaluation along with other evidence at the close of the upcoming hearing.  In the meantime, why should she not be permitted, at her expense, to gather evidence from such source as she may be advised in an effort to have her suspicions confirmed and so pursue the issue from the standpoint of her case, which on present indications is that the advances are not debt and therefore should not be deducted from the gross value of their assets?  Having been successful in getting an order for the husband and the intervenor to make available the originals of the documents so she could provide them to the expert she wanted to engage for the purpose, why should she not have access to the paper requested and have the answers to the questions her expert asks?  Is it not fair that she should be put in the position of being given the material and information?  Prima facie, the answer to all three is yes and therefore there is a deal of weight in favour of making the orders she seeks. 

3. But that is only part of the picture and, as I find, ultimately the balance of considerations related to fairness and prejudice is against it. 

4. In my assessment the husband and the intervenor are right to be concerned at the march of time and the prospect of prejudice to the preparation of their case.  That is because, at this stage of proceedings, they may well have to meet evidence in the wife’s case which is not yet available but foreshadowed to be coming after the results of the process envisaged in Melbourne are known.  The time frame is said to be 14 days after the paper is provided and, while that has not come from the laboratory being asked to undertake the task, it remains unquestioned and can be accepted for present purposes.  Nonetheless, assuming the estimate is right, the results would only become available three weeks before the start of the hearing which has been set down for 8 days and may take more.  That is in circumstances where the wife was aware her expert was seeking further information by at least 1 April and she was aware both the husband and the intervenors were refusing to supply it by 7 April.  It must have been obvious to those advising her that the resolution of that particular impasse would take time and therefore time was of the essence from 7 April if refusal was to be outstripped by Court order.  Yet no application for orders to achieve that was filed until 5 May and the delay is without explanation and nor is any reason apparent otherwise from the evidence.  Then it was not until 30 April that anything was raised about ‘further testing’ by anyone else on the recommendation of the expert engaged which, if it was to happen, would obviously take time to process.  Yet she was put in the position of being able to engage an expert to support her case on 19 February when there was ample time either to get the evidence well in time for the hearing or abandon the issue as unsupportable.  Instead, with the paper provided to the laboratory and the questions answered on affidavit, the results of both exercises will not be available to the husband for him to consider and meet until virtually the cusp of the long awaited hearing.  If the testing foreshadowed produces a result adverse to his case there would be little if any opportunity for him to test the reliability of that by calling another expert properly instructed to refute it should he be so advised. 

5. Moreover, the approach to the expert evidence being gathered for the wife has unsatisfactory question marks.  For example, there is no suggestion that anyone from the laboratory which would undertake the testing of the paper would be on affidavit.  That may be wrong but if it is in contemplation it was not stated and the impression conveyed is that the laboratory is to conduct ‘further testing’ to enable Mr D to complete his report.  What is this about?  No one, including Mr D, has explained.  It does not rate a mention in the letters from the wife’s solicitors of 1 April and it goes unmentioned until the letter of 30 April where Mr D’s recommendation is said to be the impetus.  His later letter of 4 May, however, says nothing about laboratory testing but is confined to recording questions he would want answered so he might ‘proceed further in the testing of the veracity’ of the documents. 

6. If the plan is to have the laboratory technician in Melbourne provide the results of testing to Mr D for him to complete his report, obvious problems are immediately apparent since those conclusions could not be tested through cross-examination of Mr D.  It is difficult to see how his report could withstand objection to its admissibility in that event.  If it is not the plan at least further questions arise.  There must be in contemplation the engagement of another expert, not yet instructed and whose evidence is not yet available, about whom nothing is known including their availability for the forthcoming hearing.  Does the need to call in other expertise mean Mr D’s expertise has fallen short of the task?  If so, what is the scope of the task he sees himself left with to complete his report?  More particularly, how could the questions in his letter of 4 May assist with the task he was given?  There is nothing to clarify what appears to have arisen about his expertise since that has never been spelled out, his interim report provides no help since it has not been presented, and there is nothing self evident on the letterhead of his letter of 4 May.  No doubt it will become clearer when his evidence is filed but that is no help at the interlocutory stage when a decision is sought.  As for the questions he framed in his letter of 4 May, as I raised at the outset with Mr Mater, by their very nature some of them convey the distinct impression they are directed to the fact finding responsibilities of the Court rather than to information an expert examining a document might be considering.  If they are not outside the scope of his responsibilities as an expert giving an opinion on an issue there was no explanation forthcoming, from him or elsewhere, about their place in the role he was allotted.  In other words the utility of the expert having the answers was not apparent, much less compelling at this stage of the proceedings. 

1. Despite the context of the application for sworn answers being interlocutory proceedings related to the engagement of an expert or experts, Mr Mater maintains the questions can be administered under Rule 13.26 - which applies to applications for final orders.  Putting that shift aside for the sake of the argument, it is not an unqualified right as the remainder of the Rule makes apparent.  The Rule provides for 21 days for answers to questions served which obviously would have to be significantly abridged here if the hearing is not to be put in jeopardy.  As the Rules also make apparent, and Mr Schonell’s submissions foreshadow, objection can be taken to answering them and indeed objection is made although the sequence of the process envisaged by Rules has not been followed here.  That aside, as I noted earlier Rule 13.28 provides that in considering whether to make an order, the Court may take into account whether (a) the requesting party is unlikely at the trial to have another reasonably simple and inexpensive way of proving the matter sought to be obtained by specific questions, (b) answering the questions will cause unacceptable delay, and (c) the specific questions are relevant to an issue in the case. 

2. For my part I have not been put in the position of being able to say that the questions asked are relevant to the issue in the case – they are not self evidently so - and nothing put in evidence establishes their relevance, either from the expert who wants the answers or from any other source.  Without knowing what Mr D says of the significance of the information he requires, it is impossible to come to any conclusion about the utility of the answers to his role. 

3. Further, in my view the limited time frame before the hearing means that making the order is likely to cause unacceptable delay in a case that was instituted as long ago as September 2005.  The time for answering the questions could be abridged and no doubt an order could be made for the answers to be filed on a date that would allow some time for the deponents to make whatever enquiries may be necessary to respond in a meaningful way to what is asked of them - or to lodge their formal objections and give their reasons, as Mr Schonell foreshadowed, in which case certificates under s 128 of the Evidence Act 1989 (Cth) might come into play and it would be necessary to allow for that process.  But still to follow would be the expert’s report, leaving little time for the husband to consider and arrange if required expert evidence to counter whatever might be forthcoming.  All of this is in circumstances where the issue was being agitated by the wife long ago and the order in February allowed ample time for her to do what she had in mind without prejudice to the husband. 

4. Further, it has to be said that the claim of lack of authenticity does not rest wholly on expert evidence; that is, whether Mr D produces a report or not about its supposed authenticity is not fatal to the issue if that is the argument the wife pursues at the hearing.  Fact finding tribunals have to address disputed contentions every day, including this sort of issue, by the application of s 140 of the Evidence Act 1989 (Cth).  Not every case about a disputed document has the benefit of expert opinion, assuming Mr D is such a person since no credentials have yet been seen, and the wheels of litigation would turn more slowly and be more costly were it otherwise.  Circumstantial evidence and the inferences to be drawn from it are more generally all that is available and so be it – an example of fraud being inferred from circumstantial evidence alone is the decision of the New South Wales Court of Appeal in Palmer and Dolman [2005] NSWCA 361 more particularly the leading judgement of Ipp JA.

5. Concluding as I do that any merit in making the orders is outweighed by the likely prejudice to the husband from doing so, the application filed 5 May will be dismissed. 

I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Moore

Associate: 

Date: