NYLES & NYLES

Case [2011] FamCA 565

FAMILY COURT OF AUSTRALIA

NYLES & NYLES [2011] FamCA 565

FAMILY LAW - PROPERTY – Section 79A application to set aside consent orders – miscarriage of justice by reason of fraud, suppression of evidence, the giving of false evidence of any other circumstance – whether wife failed to disclose information material to the valuation of a shareholding – where parties made orders and a binding financial agreement by consent – whether wife had an obligation to disclose confidential information – whether wife had an obligation to disclose information that was in the public domain – where husband was advised not to consent to orders because solicitors had inadequate information – husband did not rely on advice of solicitors – husband did not rely on knowledge or representations of the wife.

FAMILY LAW - PROPERTY – Section 90K application to set aside a binding financial agreement – where it was alleged agreement obtained by fraud – husband’s non reliance on wife’s fraudulent misrepresentation and non-disclosure.

Family Law Act 1975 (Cth)
Corporations Act 2001 (Cth)
Evidence Act 1995 (Cth)

Australian Steel and Mining Corporation Pty. Ltd. v. Corben (1974) 2 N.S.W.L.R. 202
Barker & Barker (2007) 36 FamLR 650
Bigg v Suzi (1998) FLC 92-799
Briese and Briese (1986) FLC 91-713
Derry v. Peek (1889) 14 A.C. 337
Fryda and Johnson (No.2) (1981) FLC 91-058
Gebert v Gebert (1990) FLC 92-137
Gipps v Gipps (1978) FLC 90-523
Gray v Associated Book Publishers (Australia) Pty Ltd (in liq) [2002] FCA 1045
Green v Kwiatek (1982) FLC 91-259
Harman v Secretary of State Home Department [1983] 1 AC 280
Harris v Caladine (1991) FLC 92-217
Jacks & Parker (2011) FLC 93-426
Jeeves and Jeeves [2011] FamCAFC 94
Kostres & Kostres [2009] FamCAFC 222
L & L (FCOA Full Court; 27 February 1996)
Livesey v. Jenkins (1985) 1 All E.R. 106
 Mackay Sugar Co-operative Associated Ltd v CSR Ltd (1996) 63 FCR 408
McIntyre v McIntyre (1994) FLC 92-468 at 80,856
Molier and Van Wyk (1980) FLC 90-911
Morrison & Morrison (1995) FLC 92-573
NAK Pty Ltd v Starkey Consulting Pty Ltd [2008] NSWSC 1136
Oriolo & Oriolo (1985) FLC 91-653
Public Trustee (as executor of the estate of Gilbert) v Gilbert (1991) FLC 92-211
Rohde v Rohde (1984) FLC 91-592
Science Research Council v Nasse [1980] AC 1028
Sinclair v. Preston (1970) W.A.R. 186
Suiker (1993) FLC 92-436
Suters & Suters (1983) FLC 91-365
APPLICANT: Mr Nyles
RESPONDENT: Ms Nyles
FILE NUMBER: MLF 4247 of 2003
DATE DELIVERED: 19 July 2011
PLACE DELIVERED: Melbourne
PLACE HEARD: Melbourne
JUDGMENT OF: Mushin J
HEARING DATE: 30 - 31 May 2011, 1 June 2011 & 10 June 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: Dr Pannam QC with Mr Strum of Counsel
SOLICITOR FOR THE APPLICANT: Taussig Cherrie Fildes & Associates
COUNSEL FOR THE RESPONDENT: Mr Minahan of Counsel with Ms Teicher of Counsel
SOLICITOR FOR THE RESPONDENT:

James D Mapleston

it is ordered that:

  1. The husband’s Amended Application filed on 11 October 2005 together with any other…

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NYLES & NYLES [2011] FamCA 565
Case
[2011] FamCA 565
Decision Date

CaseChat Overview and Summary

In the matter of NYLES & NYLES, the husband sought to set aside consent orders made on 10 February 2004 and a binding financial agreement entered into on the same date. The husband alleged that the consent orders and agreement were obtained by fraud, suppression of evidence, or other circumstances that constituted a miscarriage of justice. The core of the husband's claim was that the wife had failed to disclose material information regarding the valuation of a shareholding in J Company Pty Ltd, which he argued was pivotal to his decision to consent to the orders.

The legal issues before the court were whether the wife had breached an obligation to disclose confidential information concerning J Company Pty Ltd, and whether any such non-disclosure or alleged misrepresentation amounted to fraud sufficient to set aside the consent orders and the financial agreement under sections 79A and 90K of the Family Law Act 1975 (Cth) respectively. A key aspect of the husband's case was his assertion that he relied on the wife's representation that J Company would not be floated on the ASX, or that if it were, it would take considerable time and yield no benefit.

Mushin J found that the husband had not relied on any alleged misrepresentation or non-disclosure by the wife. The evidence indicated that the husband had received advice from his solicitors that they had inadequate information to assess the settlement offer. Despite this, the husband proceeded to consent to the orders. Furthermore, the wife had sought legal advice regarding the disclosure of company information, and was advised by the Company Secretary that disclosing non-public information would constitute a breach of her fiduciary duty to the company. The court noted that the husband's own communications, including an email dated 6 February 2004, suggested he was aware of the potential for the company to float and sought clarification on this matter, indicating he was not entirely unaware of the potential value.

The application to set aside the consent orders and the financial agreement was dismissed. The court concluded that the husband had not established the necessary grounds for setting aside the orders, particularly the element of reliance on the wife's alleged conduct.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

On 6 February 2004 the husband wrote to the wife by e-mail and sent a copy of it to his solicitor. He thanked her for – … not attending a police station and having me charged for phoning you and technically breaching the Intervention Order. As you know, I could be imprisoned.I will formally retract any accusation of you blackmailing/threatening me with forcing the signing of our settlement offer. I will inform [my solicitors] to do the same. This will not be recorded or used as evidence. (emphasis included)All I require for us to settle is for relevant documentation (sic) forwarded to [my solicitors]. For peace of mind and for the sake of our health and well-being, could you forward any details you have on your package, bonuses and float details.The husband sought certain financial calculations "and the amended settlement offer we agreed on Wednesday." He continued:If documentation cannot be forwarded, could you explain the reasons why so [my solicitors] have an understanding!I just wanted to feel absolutely comfortable that your offer is fair and reasonable. I don't doubt you or your intentions. The e-mail referred to in the previous paragraph also annexed another e-mail from the husband to the wife which was not copied to his solicitor. It was written on 5 February 2004. It contained the following statement:[The wife], if [J Company] is now NOT going to float as you mentioned yesterday, and it will take 5 years to receive any monies if it does, please make this information known to [my solicitors]. This will confirm any doubt of a financial windfall in months to come. The husband's statement quoted from his e-mail in the previous paragraph occupied significant time during this trial. The husband asserted that he had relied on the wife's statement allegedly made by her on 4 February 2004 that the company would not be floated on the ASX. The husband regarded that statement as being pivotal in his decision to enter into the consent orders. During cross-examination on that statement, the husband swore as follows:HIS HONOUR: Could you just clarify, are you saying that what your former wife told you on 4 February, that there wouldn’t be a float, was really important in your thinking? Is that­ ­ ­?HUSBAND: ‑‑‑Absolutely, and more so than that, she mentioned that if it was going to, which I don’t think it will, it could take four or five years and there is nothing in it for us anyhow because there is no value to the shares.HIS HONOUR: Yes?HUSBAND: ‑‑‑ And that’s what she told me on the 4th and the 5th, and so I assumed, and I just wanted to believe her, and didn’t want to drag this on any further, didn’t want to go for spousal maintenance, so I just wanted to end it all and move on with our lives, and that’s why I just took what she said, I just believed her. Silly me, but I did, and ­ ­ ­ … . The wife was concerned as to what information she could disclose to the husband and his solicitors. She contacted the Company Secretary of J Company Pty Ltd who replied by e-mail on 10 February 2004 as follows:The advice from our corporate lawyers … in (sic) that to disclose any information with respect to forecasts that is not normally publicly available would constitute a breach of your fiduciary duty as a director of the company.As a director you have a fundamental obligation of duty of confidence to the company at general law. This means that any information you receive in your capacity as a director that is not in the public domain is to remain confidential and cannot be disclosed.Therefore you are unable to disclose such information as it is not available in the public domain and hence subject to confidentiality at law.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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