Nevett and Nevett and Anor (No. 3)

[2007] FamCA 1207

FAMILY COURT OF AUSTRALIA

NEVETT & NEVETT AND ANOR (NO. 3) [2007] FamCA 1207

FAMILY LAW – PRACTICE AND PROCEDURE – party to the proceedings discharged

Family Law Act 1975 (Cth)

APPLICANT: Mrs Nevett

RESPONDENT: Mr Nevett

SECOND RESPONDENT: M Pty Ltd

FILE NUMBER: MLF 2459 of 2006

DATE DELIVERED: 26 September 2007

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 26 September 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT: In Person

SOLICITOR FOR THE APPLICANT:

COUNSEL FOR THE RESPONDENT: Mr Korfiatis

SOLICITOR FOR THE RESPONDENT: Webb Korfiatis

COUNSEL FOR THE SECOND 

RESPONDENT:

Mr Wood

SOLICITOR FOR THE SECOND

RESPONDENT:

Berger Kordos Lawyers

Orders

1. That the final hearing of all outstanding applications be listed before Justice Cronin on 14 January 2008 initially as a reserve matter.

2. That the wife file and serve any affidavit and financial statement upon which she intends to rely by 4.00pm on 3 December 2007.

3. That the husband file and serve any affidavit and financial statement upon which he intends to rely by 4.00pm on 14 December 2007.

4. That the wife pay any setting down fee by 4.00pm on 3 December 2007 subject to any waiver by the Registry Manager or her nominee.

5. That the husband make available for inspection at the offices of his solicitor the documents numbered 2 to 11 in Exhibit W1 this day.

6. That any party desiring to issue any subpoena file and serve on the other party, such subpoena by 4.00pm on 12 October 2007 returnable on 25 October 2007 at 9.30am in the Registrar’s list of cases.

7. That each party file a compliance certificate indicating that the matter is ready for trial by 4.00pm on 14 December 2007.

8. That the matter be listed for mention by telephone before Justice Cronin on a date to be fixed in December 2007.

9. That the single expert witness update the valuation evidence in respect of all real property.

10. That at a time to be agreed, the wife’s appointed valuer have access to all real properties for her own valuation purposes.

11. The single expert witness be appointed by the parties for the purposes of valuing all motor vehicles at their joint expense.

12. In so far as any party seeks a superannuation splitting order, the trustee of such superannuation fund be served with a copy of the proposed orders as soon as practicable.

13. Liberty to apply on short notice to Justice Cronin.

14. That the respondent M Pty Ltd be discharged from the proceedings.

15. That the Form 2 application filed 29 August 2007 and the response of the wife (Form 2A) filed 25 September 2007 be otherwise dismissed.

16. That the wife pay the costs of M Pty Ltd fixed in the sum of $3500 within 60 days of the date of this order.

17. That the husband’s costs of this hearing this day be fixed in the sum of $1000, the payment of that sum be reserved to be determined by the trial judge at the final hearing.

18. That all parties have liberty to put questions in writing to any single expert witness provided the copy of such letter is first provided to the other party.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 2459 of 2006

MRS NEVETT 

Applicant

And

MR NEVETT

Respondent

And

M PTY LTD
Second Respondent

REASONS FOR JUDGMENT

1. This matter was transferred to me from the Duty List on 26 September 2007. 

2. In addition to determining the Form 2 application of the third party and the response of the wife, I also conducted a case management hearing listing the case for trial as a reserve matter before me in January 2008. 

3. I made a variety of orders both for case management and also dealing with the applications in a case before me and these are my reasons for those decisions.

4. I heard this case on an interlocutory basis in July 2007 and other judges of this Registry have dealt with interlocutory issues on a contested basis previously. I reiterate what I had said previously. This case has a modest pool of assets and the duration of the relationship was very short.

5. The wife joined M Pty Ltd and in the reasons for judgment that I delivered in July, I indicated that I could not fully understand why that company needed to be a party to the proceedings. 

6. On 29 August 2007, the company issued an application to be discharged from the proceedings.

7. I had the benefit of reading the affidavit of a director of that company. Ms D referred to the joint purchase arrangement with T Pty Ltd in late 2003. T Pty Ltd is a company in which the husband and wife are the shareholders. The wife is no longer a director as a result of the orders of Justice Kay earlier in the year.  In early 2004, the two companies purchased a property in Newcastle. They obtained separate loans. The property was purchased as tenants in common in equal shares. It would appear that the loans were each guaranteed by the other company and both were with the Commonwealth Bank of Australia.

8. The purposes of the hearing before Justice Kay included enabling the husband to refinance the company’s loan.

9. Ms D set out in her affidavit that she could see no reason why the wife would join her company in the proceedings.

10. The record of the court will show that the wife has persistently chased documents associated with the indebtedness of both companies. She says that was she personally liable for the debt of T Pty Ltd and hence by cross-guarantee, the debt of M Pty Ltd.

11. Mr Wood of counsel for the company said that he had spoken to an officer of the bank indicating that not only had the bank no interest in the wife as a result of the refinancing but that the bank had written to the wife’s post office box with documents for her to sign to formally (presumably) complete any discharge of guarantee. The wife told me that no such letter had been received and she had been in touch with the bank. In further discussion with the wife however, it appears that she issued a subpoena to the bank and no such discharge documents were in the subpoenaed material. The wife said that she contacted the bank and the bank said that there were no formal discharge documents. I am quite satisfied that in respect of the wife’s personal liability, the loan has been refinanced as was contemplated by Kay J and what Mr Wood was told makes sense. The problem does not end there.

12. The wife exhibited documents to her affidavit showing that the companies were jointly and severally liable for each other’s $440,000 indebtedness. After some attempt to try and sort out exactly what she meant, my understanding was that if M Pty Ltd somehow failed to meet its obligations, T Pty Ltd would face the prospect of having to be responsible for and ultimately pay $880,000. The wife conceded that the most recent valuation of the property was around $1.15 million and if the indebtedness of $880,000 was taken away from that, there is a joint equity between the two companies of about $270,000. It is presumably to be argued that $135,000 of that equity should be added to the pool of assets for division between the husband and the wife on the basis that that is property of the parties.

13. The wife maintains that she needed M Pty Ltd as a party to the proceedings because of the risk that if it failed to honour its obligations then other property belonging to the husband and the wife could be put at risk if the equity in the companies’ asset was not sufficient to meet the debt.

14. The other property of the parties is the former matrimonial home in which there is an equity of about $140,000 and two other properties owned by the husband in which there is an equity of about just over $100,000. 

15. Accordingly, for the assets of the husband and the wife to be at risk, M Pty Ltd would have to default and a sale would need to take place in which the real property of the companies was sold for around $600,000.

16. The whole concept seems remarkably unlikely. The wife candidly acknowledges that she is trying to protect her entitlement to the property pool but that will happen anyway. If in fact M Pty Ltd was still a party to the proceedings and the trial was heard immediately, the wife says that she would seek orders against M Pty Ltd forcing them to sell their interest in the Newcastle property and/or give her an indemnity so that in the end, she would have a guarantee of no liability arising out of the Newcastle project.

17. In my view none of that is a basis to have the company joined as a party. As I pointed out, in so far as the wife chose in future to seek specific orders against the company such as under Part VIIIAA, she would then be in a position to either give them notice that she was seeking those orders or to even make an application to join them.  I reiterate what I said in July that I do not see any need for the company to be a participant in the proceedings at this stage and as they have come along on all occasions and participated, the company is clearly aware of the risk of not being involved. Mr Wood indicated to me that under no circumstances did his client see any need for the company to be a participant at this stage and I agree.

18. The company sought costs. Initially the application was for indemnity costs.  I immediately rejected that concept on the basis that I raised the subject in July of the need for the company not to be involved and it was not until September that a suggestion was made in writing to the wife that she give the company an opportunity to leave the proceedings. It occurs to me that at that stage, the company had already issued its application by filing it on 29 August 2007. Mr Wood sought a general figure of $5000 which he said was basically determined on scale but having regard to the fact that I indicated I was only prepared to make an order for costs subsequent to the date of the letter which was after the filing of the application, I felt it appropriate to discount those costs to a figure of $3500.

19. Mr Korfiatis indicated to me that his client also sought costs for having attended because although the matter was listed for a trial notice listing before a registrar, the Court was not in a position to list the matter because of the existence of the unresolved Form 2 application of the company. The wife at that hearing had an opportunity to indicate that she was not proceeding. Not surprisingly, even today the wife has indicated her desire to continue with the company as a participant until such time as they provide her with an indemnity in respect of the indebtedness. In my view that is unnecessary and creates a problem for the company by continually being involved.

20. I decline however to make the payment of the husband’s costs of this day but did fix them at five hours on the scale which is $192.90 per hour rounding that up to a total sum of $1000. Under s 117 of the Family Law Act1975 (Cth) (“the Act”), each party should pay their own costs unless there are circumstances that satisfies a court that it is proper and just to make an order for costs. I am satisfied that the message was very clear to the wife in July and she was given an opportunity to release the company and failed to do so. In those circumstances, the third party has been put to considerable inconvenience in my view unnecessarily.

21. In respect of matters under s 117(2A), I repeat what I had previously determined and indicate that there are circumstances in this case which justify the amounts to which I have just referred.

22. In respect of the wife’s response however she also sought a number of other orders. Those were that the company be dismissed from the proceedings providing a number of things occurred. The things that she wanted done included not only action by the company officer holders but also by the husband. In my view, those demands were unreasonable and unnecessary. 

23. Part of what the wife was seeking from M Pty Ltd as part of the release from the proceedings was a series of documents. Mr Wood correctly pointed out that those documents could have been obtained by third party discovery had the wife so chosen and it is to be noted that on a number of occasions over the last few weeks she has issued subpoenae.

24. The wife also sought the sum of $4325 being half of the costs incurred in the marketing and sale agreement in relation to the Newcastle property. In my view there is some significant doubt as to whether there is jurisdiction to make that order but in any event, it is a matter that should be determined between the husband and the wife at trial.

25. The wife also sought the sum of $10,000 towards her legal costs because she has undertaken a number of steps which she says were “due to unauthorised actions conducted in relation to the Newcastle property by [Ms D] and/or her agent(s) without the consent of the wife”. Again, there is a question about whether the Court has jurisdiction to make those orders and even if there was, on the material that I have read it would be inappropriate for me to make such orders today.

26. Those are not matters in my view that go to the question of whether or not the company should be a party to the proceedings.

27. In respect of legal costs, the wife indicated that she has had advice and that her unnamed solicitors have been discussing the matter with senior counsel in South Australia. In the circumstances, it is not appropriate without those solicitors indicating how the costs were incurred, for me to even contemplate an order for $10,000. I am told that the wife was very reluctant to indicate who those solicitors were and on that basis, it is hard to engage the entitlement to an order for costs even if one could be made.

28. The wife also sought that the costs orders I made on 25 July 2007 be “discharged, or alternatively, varied so that payment of all costs as ordered during these proceedings await a full and final property settlement between the parties”. It is to be noted that no application to appeal against my decision was made. Furthermore, both the company and the husband declined to agree to any variation of those orders. Under those circumstances, it is not appropriate for me to make any variation to the orders I made in July.

29. The wife sought a judicial settlement conference. This is something that she raised in July. She said that she was optimistic about a resolution of the matter once full disclosure had been made by the husband. Having regard to the very modest duration of the relationship and the very modest pool of assets, it is hard to see how there would be any prospect of a resolution in circumstances where there have been at least four if not five contested hearings involving judgments. In my view, allocating judicial resources for that purpose is totally inappropriate. Whilst the wife said she was optimistic, I indicated that I was pessimistic and for that reason, the matter should be listed for final hearing. It is due for that in any event having regard to its position in the list queue.  Importantly, the wife was advised that if she so desired, she could have her lawyers or herself involved in negotiations outside of the Court including mediation and arbitration. When I requested that she speak to her solicitors about the question of arbitration, she responded by saying that they had told her that it was a good idea but not until after all of the discovery process had been completed. I am not at all clear having regard to the duration of the marriage what it is that is causing the parties not to be able to negotiate in this case.

30. The wife also sought an order that she have access to the real properties for the purposes of updating valuations. I have pointed out to her that she can have that access and there was no dispute from the solicitor for the husband however that will not entitle her to file any evidence from the valuer without permission of the Court. There is a single expert witness appointed in this case and that position remains. On that subject however, it appears according to Mr Korfiatis, a single expert firm has changed names or personnel and is now trading under a different entity. If that is in fact so, the single expert witness will be the replacement firm. I have not made an order about that because in my view, that is a question to be determined by the single expert witness itself.

31. The wife sought that the husband update his financial statement. She said that she could not negotiate until that had been done. I reject that. I have made orders that the parties file their evidence in chief and I have done that so that the material is filed sequentially to enable the Court to have an understanding of what each party says. That should also reduce the time of evidence in chief. 

32. When I announced that I was going to make orders for the filing of documents such as the statement of financial circumstances in December, the wife said that that prejudiced her position because she could not negotiate. I reject that also.  It is clearly the obligation of a party not only to make full and frank disclosure of their financial position but also to file an amended Form 13 financial statement if the circumstances have changed significantly. When I asked the wife what she understood had changed, she gave me an example of the matrimonial home. It seems to me that whilst the title may have been transferred, the asset itself remains the same and it is still part of the pool of assets for division. 

33. In the circumstances, I see no reason to do any more than make the orders that I have for the purposes of getting the matter ready for trial. I have made it very clear to the parties that the matter is listed as a reserve and I will make inquiries in the week prior to Christmas as to its readiness.

I certify that the preceding Thirty Three (33) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin

Associate

Date:  26 September 2007