Pappas and Ebner

[2013] FamCA 458

FAMILY COURT OF AUSTRALIA

PAPPAS & EBNER [2013] FamCA 458

FAMILY LAW – PRACTICE AND PROCEDURE – where husband sought orders pursuant to s79A – where wife sought summary dismissal of husband’s application – whether husband’s application is doomed to fail – where husband’s application is summarily dismissed.

Family Law Act 1975 (Cth) s 79A

Friar & Friar [2011] FamCAFC 71
Lindon v Commonwealth (No 2) (1996) 136 ALR 251

APPLICANT: Ms Pappas

RESPONDENT: Mr Ebner

FILE NUMBER: SYC 4655 of 2008

DATE DELIVERED: 24 May 2013

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Stevenson J

HEARING DATE: 20 May 2013

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Ms Pappas appeared on her own behalf

SOLICITOR FOR THE RESPONDENT: Mr Ebner appeared on his own behalf

Orders

1. That the husband’s Initiating Application filed on 29 January 2013 is dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Pappas & Ebner has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 4655 of 2008

Ms Pappas

Applicant

And

Mr Ebner

Respondent

REASONS FOR JUDGMENT

the proceedings

1. On 25 October 2012 Ms Pappas and Mr Ebner consented to final orders and declarations for settlement of their matrimonial property.  Inter alia, they consented to a declaration that the wife

   be solely entitled to all other property, both real and personal in his [sic] ownership, possession or control including but not limited to:

   (e) her interest in any shares.

2. By an Application filed on 29 January 2013 the husband sought the following orders:

   1.        That the Court order and insert as Order 8A to the Orders of 25 October 2012 (Proceedings SYC4655 of 2008) THAT THE Wife not dispose of her interest in Property for a period of three years from 25 October 2012 without leave of the Court with the Court at liberty to hear submissions from the parties as to whether such sale is in the best interests of the children.

   2.        That the Court order that existing Order 9 of the Orders of 25 October 2012 (Proceedings SYC4655 of 2008) be deleted and be replaced by the following words as Order 9 to the Orders: 

   “That in the event of any sale or disposition of the Property after the date of these Orders, then the Wife shall pay to the Husband an amount of $105,000 and the parties are to provide all necessary instructions and authorities to cause that $105,000 is to be paid to the Husband from the net proceeds of sale upon settlement of the Property.  The amount of $105,000 shall not bear interest for a period of three years after 25 October 2012, thereafter at a rate of 4 percent per annum until such time as the amount is paid to the Husband.”

   3.        That the Wife pay to the Husband his costs arising during 2012 under proceedings SYC4655 of 2008.

   It would appear that the husband seeks to vary the consent orders of 25 October 2012 pursuant to s 79A of the Family Law Act.

3. In support of this application the husband swore affidavits on 24 January 2013 and 15 May 2013.  The contents of these affidavits, and his oral submissions, seemed to indicate that the husband relies on subsection 79A(1)(a), which provides as follows:

   79A  Setting aside of orders altering property interests

   (1)  Where, on application by a person affected by an order made by a court under section 79 in property settlement proceedings, the court is satisfied that:

   (a)  there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance.

4. The husband appeared to assert that the wife failed to disclose relevant information.  In particular, he contended that she made no reference in her Financial Statement of 16 May 2012 to a share portfolio and wrongly attributed a nil value to her interest in a business known as Business D.  The husband maintained that the wife’s business was valued at $726,238 in a report of 11 March 2011 by Mr A.

5. On 22 April 2013 the wife filed an Application in a Case by which, inter alia, she sought an order for summary dismissal of the husband’s s 79A proceedings. She swore an affidavit on 22 April 2013 in support of her claim for summary dismissal of the husband’s Application. She conceded that she made no reference to her share portfolio in the Financial Statement of 16 May 2012. She maintained that she assigned a nil value to her business interests because of changes in profitability, due to the global financial crisis and the impact upon her of these lengthy proceedings.

Consideration

1. In her affidavit of 22 April 2013 the wife deposed that her share portfolio was referred to in Mr A’s report and disclosed in her Financial Statements of 21 January 2010 and 26 November 2010.  She annexed copies of these Financial Statements to her affidavit and they contained reference to shares in E Pty Limited, Pappas Pty Limited and F Trust.

2. The husband annexed to his affidavit of 24 January 2013 extracts from Mr A’s 2011 report.  Mr A made clear reference to the wife’s shares at pages 5, 89 and 90 of his report.  At pages 90, 91 and 92 Mr A directly addressed the value of the wife’s “investment portfolio”.  He referred an indemnity provided by H Firm, a firm of financial advisors.  I refer to this indemnity below in these reasons.

3. At page 5 of his report Mr A summarised his opinions as to the value of the wife’s corporate and trust interests, as at 30 June 2010, in these terms:

Entity	Shares Net assets	Loan	Bonus	Annexure	Para
[D] Unit Trust	See [F] Trust	15,000	J	273,286
[F] Trust	85,063	327,924	K	299
[Pappas] Pty Ltd	88259	7,330	L	306
[E] Pty Ltd	164,734	Nil	M	313
[F] Superannuation Fund	38,928	Nil	N	325

As noted, this table was contained in the husband’s own evidence.

1. In his affidavit of 15 May 2013 the husband deposed: 

   The admission by the Wife as to non-disclosure is noted.  I consistently throughout the four years of litigation put in values for the business valuation of [Business D] and the share portfolio with [H Firm] however the values were always contested by the Wife who consistently rejected all settlement offers on the basis that the numbers were incorrect.  The Wife never disclosed “Share Portfolio documentation from [H] Investments” in any Financial Statement of the Wife.  I only obtained the information under subpoena issued on [H Firm].  Any inclusion of assets and values in settlement negotiations in 2012 was made on my part and I had to rely on values from the [Mr A] Report which the Wife admits in her Second Affidavit was “out of date” and generally rejected by the Wife.

2. The husband annexed to his affidavit of 24 January 2013 a copy of an email dated 27 September 2012 to the wife and her then solicitor which read in part as follows: 

   The calculations of division are based on the attached calculation sheet which I have based on the balance sheet filed in May 2012 thereby providing the court with consistent numbers…

   For some reason, the husband did not annex to his affidavit the attachment to this email, being the “calculation sheet”. 

3. In her affidavit of 22 April 2013 the wife deposed that her share portfolio was included in “our final summary of assets to work out our settlement which the orders were made from” and also “a draft balance sheet”.  She annexed copies of these documents to her affidavit.  It is patently obvious that the wife’s shareholding was included in both of these documents.

4. In his affidavit of 15 May 2013 the husband stated: 

   3.        The calculation sheet was produced by me and not used in the settlement as it was rejected on a number of points (addbacks, value of her business assets, pre marital contributions) by the Wife.  The calculations used the [Mr A] numbers from 30 June 2010 which the Justice Rees considered outdated and instead was relying on the Financial Statement of 16 May 2012.  Furthermore the calculation sheet shows that the Wife would be receiving 82% of the Matrimonial Pool which I would not have agreed to.  The words and dating at the top of the sheet are those of the Wife;

   4.  The draft balance sheet at Appendix J reflected the joint balance sheet put to the Wife per Court Orders 8 March 2012 and filed on 1 June 2012 – the draft balance sheet was used by the Wife to solely allege addbacks favourable to the Wife as highlighted by the Wife at Item 36, Item 37 and Item 40.  There is no evidence that the Wife was providing disclosure.  The production of this balance sheet by the Wife was at the same time as her Financial Statement of 16 May 2012 which should have alerted her to the discrepancies in values and balances.  In any case the draft balance sheet again fails to disclose the share portfolio providing only a value of $85,063 for [F] Trust.

1. In fact, the draft balance sheet filed on 1 June 2012 read in part as follows:

Investments	7	W	Units in [F] Trust	83,063	NK	Value from Draft Expert Report by [Mr A]
8	W	Shares [E] PL	164,734	NK	Value from Draft Expert Report by [Mr A]
9	W	Shares in [Pappas] PL	88,259	NK	Value from Draft Expert Report by [Mr A]
10	W	W Loan to [F] Trust & [Pappas] PL	335,254	NK	Value from Draft Expert Report by [Mr A]

1. The husband annexed to his affidavit of 24 January 2013 a copy of a letter dated 16 March 2009 from H Firm, Financial Advisers, to the wife which was headed:  “Investment Portfolio”.  This letter read in part: 

   Following on from our recent meeting please accept this letter as confirmation that H Firm agrees to indemnify you against the fall in the value of your portfolio from commencement to the value at 12^th March 2009.  That amount that will be covered by this indemnity is detailed in the following table:

Value at Commencement	Value 12/3/2009	Difference
$350,000	$211,864	$138,136
Plus Interest	$96,698	$234,834
TOTAL	$234,834

Based on this information we calculate that the fall in your portfolio value during this period amounts to $234,834.  Interest has been calculated at an average of 5% p.a. for the 5 year period.

The indemnity that our firm is providing on this amount means that on 1^st July 2014 your portfolio will be in the same position you would have been, had it not fallen in value to the amount described above during this period.

On the basis of his own evidence, therefore, the husband was fully aware of this arrangement between the wife and H Firm. 

1. The husband annexed to his affidavit of 15 May 2013 a copy of a letter dated 2 May 2010, which set out an offer of settlement.  Inter alia this letter stated: 

   G.  Summary  This offer constitutes your client receiving around $3million cash (depending upon the sale price achieved for the matrimonial home) which is, together with her retained interests in [Business D], indemnified share investments, term deposits and superannuation, well in excess of 50% of the matrimonial assets relevant to the marriage.

   Again, the husband’s own evidence demonstrated that he was aware of the wife’s shareholding.

2. In these circumstances, I am satisfied that the husband was fully on notice at all relevant times that the wife held a share portfolio.  In my view, the husband’s evidence alone was sufficient to establish that he was aware of the existence of her share portfolio and the H Firm indemnity.  He had this knowledge at all relevant times, including the point when he elected to resolve the proceedings on a final basis.  Additionally, the wife’s evidence and the draft balance sheet prepared by his lawyers establish that he knew of the wife’s shareholding. 

3. The reality of the husband’s complaint in relation to the wife’s share portfolio would thus seem to be that she omitted to include these assets and an estimate of their value in her Financial Statement of 16 May 2012. It is nonetheless abundantly clear that the husband was fully aware of the existence of the wife’s share portfolio and elected to investigate this issue by way of a subpoena to H Firm. In these circumstances, I am of the view that the husband cannot now assert a miscarriage of justice by way of suppression of evidence, including failure to disclose relevant information, for the purposes of s 79A(1)(a) of the Family Law Act, simply on the basis that the wife failed to include her share portfolio in her Financial Statement of 16 May 2012.

4. The husband was in possession of Mr A’s report of March 2011 which dealt, inter alia, with the value of the wife’s business interests.  On 6 June 2012 the wife informed the court that she would rely on Mr A’s report as evidence of the value of her business (“exhibit D” to the husband’s affidavit of 24 January 2013). 

5. The wife deposed that she believed that Mr A’s valuation was no longer an accurate assessment of the value of her business in 2012 but, nevertheless, she was prepared to proceed on that basis in the interests of finalisation of the proceedings.  That assertion carries a ring of truth, as the litigation had been ongoing since 2008 and the wife underwent treatment for cancer during the intervening period.

6. It was clear from the husband’s own evidence that he was very much alive to the issue of the valuation of the wife’s business.  In his affidavit of 15 May 2013 he deposed: 

   The statement of the Wife is incorrect.  In contrast to $NIL values declared by the Wife in her Financial Statement of 16 May 2012, the single expert Mr [A] valued the Wife’s business interests in [Pappas] Pty Limited, [Business D] and [F] Trust at $726,238 in his report of 11 March 2011.  An extract of the [Mr A] Report is attached as an exhibit to First Affidavit of Husband.  Even with the attendance of her lawyers and accountants at the conference, the Wife has provided no evidence to support her statement.

7. In these circumstances, it is my view that the husband cannot now assert a miscarriage of justice by way of suppression of evidence, including failure to disclose relevant information, for the purposes of s 79A(1)(a) in relation to the value of the wife’s business interests. He was in possession of a report by a court appointed single expert in relation to that very issue.

8. In his affidavit of 15 May 2013 the husband made extensive reference (paragraphs 50 and following) to the contents of documents produced on subpoena, which he claimed to be inconsistent with the wife’s Financial Statement of 15 May 2012.  It appears that the husband took issue with some items in the wife’s May 2012 Financial Statement and obtained documents by way of subpoenas to the Commonwealth Bank, H Firm and Business D.  If the husband did not in fact have these documents before he consented to the orders of 25 October 2012, it was always open to him to issue these subpoenas before he elected to finalise the proceedings.

9. The wife deposed that the parties agreed to the consent orders at a settlement conference which they attended with their lawyers and a representative of H Firm.  The husband deposed:

   22.  I disagree as to the wife’s statement that was a “final settlement”.  The meeting occurred on 11 September 2012 and was called by the wife’s lawyers to mediate an offer.  Extensive discussions, correspondence and negotiations continued for the next four weeks.

   I thus infer that the husband and his lawyers had every opportunity to pursue all matters of concern to them prior to the making of final orders on 25 October 2012.

10. The wife deposed that she was unrepresented when she prepared her Financial Statement of 16 May 2012.  She also deposed that the proceedings had been ongoing since 2008 and that she had spent some $650,000 on legal fees.  The wife deposed further that she was diagnosed with cancer in 2007 and underwent a double mastectomy in October 2007.  She then underwent chemotherapy for several months and, in June 2008, she suffered a “violent reaction” to oral medication.  She then underwent two further surgical procedures.  The wife deposed that she “has been under enormous pressure being involved in these proceedings for over five years and at the same time fighting breast cancer”.  In my view, the wife offered this evidence in an attempt to explain the inaccuracies in her May 2012 Financial Statement.

11. The husband objected to the wife making any reference to the state of her health for the purpose of these proceedings.  He deposed: 

    Respectfully seek to strike and delete as irrelevant to the issues as these are property proceedings.  In December 2010, the Wife confirmed there were no health issues of the Wife relevant for the Hearing set down for 2010 – I refer to Exhibit 4.  I note that the Wife has not provided any supporting evidence from any consulting specialist as to any continuing health issues which would affect her ability to partake in these proceedings.  As I pay all the private health insurance for the Wife and family I have had access to all claims made by the Wife and I have not seen any claims which suggest that the Wife has not fully recovered from the cancer in 2007.  Furthermore photos of the Wife’s recent skiing trip in January 2013 to Aspen show no signs of health issues or any lack on energy levels.  I refer to Exhibit 5.  Furthermore the Wife has sufficient funds available to her to engage legal representation to assist her.  The Wife is trying to garner sympathy for financial gain.  If the Wife continues to allege serious health issues without providing supporting evidence then I will file an Application for Contempt.

12. The husband seemed to assert that the wife is now effectively estopped from making any reference to her state of health by the contents of a letter “exhibit 4” to his affidavit of 15 May 2013.  In that letter the wife’s then solicitor wrote:  “the wife’s medical issues will no longer be an issue in the proceedings”. 

13. In my view this letter does not prevent the wife now from advancing the impact of her cancer treatment as a partial explanation for her omission to include her share portfolio in her May 2012 Financial Statement and her attribution of a nil value to her business in that document.  This issue is entirely separate from any claim such as an adjustment in her favour pursuant to s 75(2) in a final property settlement.

Conclusion

1. In Lindon v Commonwealth of Australia (2) (1996) 136 ALR 251 the High Court of Australia held (at page 256):

   The approach to be taken by the court to the Commonwealth’s application for summary relief is not in doubt.

   1.         It is a serious matter to deprive a person of access to the courts of law for it is there that the rule of law is upheld, including against government and other powerful interests.  This is why relief, whether under O 26, r 18 or in the inherent jurisdiction of the court, is rarely and sparingly provided.

   2.         To secure such relief, the party seeking it must show that it is clear, on the face of the opponent’s documents, that the opponent lacks a reasonable cause of action or is advancing a claim that is clearly frivolous or vexatious.

   3.         An opinion of the court that a case appears weak and such that it is unlikely to succeed is not, alone, sufficient to warrant summary termination.  Even a weak case is entitled to the time of a court.  Experience teaches that the concentration of attention, elaborated evidence and argument and extended time for reflection will sometimes turn an apparently unpromising cause into a successful judgment.

   4.         Summary relief of the kind provided for by O 26, r 18, for absence of a reasonable cause of action, is not a substitute for proceeding by way of demurrer.  If there is a serious legal question to be determined, it should ordinarily be determined at a trial for the proof of facts may sometimes assist the judicial mind to understand an apply the law that is invoked and to do so in circumstances more conducive to deciding a real case involving actual litigants rather than one determined on imagined or assumed facts.

   5.         If notwithstanding the defects of pleadings, it appears that a party may have a reasonable cause of action which it has failed to put in proper form, a court will ordinarily allow that party to reframe its pleading.  A question has arisen as to whether O 26, r 18 applies to part only of a pleading.  However, it is unnecessary in this case to consider that question because the Commonwealth’s attack was upon the entirety of Mr Lindon’s statement of claim.

   6.         The guiding principle is, as stated in O26, r 18(2), doing what is just.  If it is clear that proceedings within the concept of the pleading under scrutiny are doomed to fail, the court should dismiss the action to protect the defendant from being further troubled, to save the plaintiff from further costs and disappointment and relieve the court of the burden of further wasted time which could be devoted to the determination of claims which have legal merit.

1. In Friar and Friar [2011] FamCAFC 71 the Full Court said:

   49. Rules 10.12(c) and (d) of the Family Law Rules 2004 (“the Rules”) relevantly provide that a respondent may apply for “summary orders” in relation to an application on the basis that it is “frivolous, vexatious or an abuse of process” or has “no reasonable likelihood of success”.

   50. The Rules are properly read as supplementing the power of the Court to dismiss frivolous or vexatious proceedings pursuant to s 118(1) of the Act. The Rules are also to be read in the context of the many cases confirming the Court’s inherent power to dismiss or permanently stay an application which cannot succeed, as to which see the authorities discussed in Bigg v Suzi (1998) FLC 92-799 at 84,974.

2. In my view, the husband made no submission or gave any evidence which could be construed as an indication that he relied on subparagraphs (b), (c), (d), or (e) of section 79A(1). It is clear to me, for reasons set out above, that he had knowledge of the matters about which he now complains when he elected to enter into the consent orders of 25 October 2012. At that time he had the benefit of legal representation.

3. In these circumstances, I can see no basis upon which any amendment to the husband’s application could advance his prospects of success. I thus will take the unusual step of making an order for summary dismissal of the husband’s application pursuant to section 79A. I am satisfied that the husband lacks a reasonable cause of action. It may be that he advances a claim which is clearly frivolous or vexatious, in the manner to which the High Court referred in Lindon v Commonwealth of Australia.That being so, I will also dismiss his application for an order that the wife pay his costs “arising during 2012”.

I certify that the preceding thirty one (31) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on 24 May 2013.

Associate:     

Date:              24 May 2013