Phillips and Phillips

[2008] FamCA 158

FAMILY COURT OF AUSTRALIA

PHILLIPS & PHILLIPS [2008] FamCA 158

FAMILY LAW – PROPERTY—Value of property—where Wife initially purported to challenge value of real property—where Wife subsequent to prior hearing reformulates challenge to real property as "stock in trade"—where Wife's representatives deny conversation with Husband's representatives to that effect—where Husband requests further particulars of Wife's claim—where Wife claims particulars cannot be made without further disclosure by Husband—Orders made.

APPLICANT: MRS PHILLIPS

RESPONDENT: MR PHILLIPS

FILE NUMBER: BRC 10818 of 2007

DATE DELIVERED: 5 March 2008

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Barry J

HEARING DATE: 29 February 2008 and 5 March 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Baston of Counsel appeared for the Applicant Wife

SOLICITORS FOR THE APPLICANT: Andrew Wiltshire Family Lawyers

COUNSEL FOR THE RESPONDENT: Mr Kirk of Senior Counsel appeared for the Respondent Husband

SOLICITOR FOR THE RESPONDENT: Philippa Power Solicitor

Orders

IT IS ORDERED BY CONSENT UNTIL FURTHER ORDER THAT:

1. The Husband’s legal representatives to provide the Wife’s legal representatives within seven (7) days with the following:

a.documents specified in the letter from the Wife’s Solicitors to the Husband’s Solicitors of the 27 February 2008 save that such financial statements shall be for the five (5) years preceding 31 January 2002;

b.documents specified in paragraph 8.1 of the letter of Mr C, Chartered Accountant, to the Wife’s Solicitors of 27 February 2008.

1. Leave given to the Wife’s legal representatives to issue subpoenas by 4.00 pm on 7 March 2008 with such subpoenas to be returnable by 4.00 pm on 28 March 2008.

IT IS ORDERED UNTIL FURTHER ORDER THAT:

1. Leave given to both parties’ legal representatives to inspect any material returned pursuant to the subpoenas referred to in paragraph 2 of this Order.

1. Within twenty-one (21) days of inspection of the abovenamed subpoenaed material the Wife is to file and serve full particulars of her claim in respect of the section 79A application to set aside the consent orders dated 31 January 2002 and the binding financial agreement dated 31 January 2002.

1. The Husband is to be relieved from compliance with the Family Court Rules in respect of filing any further material including a financial statement until the wife complies with paragraph 4 of this Order.

1. Leave given to either party to apply to a Registrar for the re-listing of this matter before the Honourable Justice Barry once the Wife’s particulars have been supplied in accordance with paragraph 4 hereof.

1. The Wife to pay the Husband’s costs of and incidental to today’s date and 29 February 2008, with payment of such costs to be stayed until the resolution of the section 79A application.

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

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER:  BRC 10818 of 2007

MRS PHILLIPS

Applicant

And

MR PHILLIPS

Respondent

REASONS FOR JUDGMENT

1. By way of an amended application in a case filed on 11 December last year the husband sought orders in the following terms:

   1.        That the wife's application filed on 11 September 2007 be struck out;

   2.        That in the alternative to O.1:

   (a)the wife file and serve within 14 days full particulars of her claim in respect of:

   (i)the consent orders dated 31 January 2001 be set aside (I believe that is an error and should be amended to 2002 but I will leave that aside);

   (ii)the binding financial agreement dated 31 January 2007 being set aside (again that is clearly an error and should read 2002);

   (b)the husband be relieved from compliance with the Family Law Rules in respect to filing any further material, including a financial statement until the wife complies with O.2A of this application;

   2A      That in the alternative to O.1:

   (a)the wife file and serve on or before 16 March 2008 all expert valuation evidence upon which she shall seek to rely in respect of the alleged under value by the husband as at December 2001/January 2002 of his interests in the following properties/assets, namely (they are described then as the Y property, the G property, the V shares, the former matrimonial home, the N property and his interest in O Pty Ltd) and then there are various other orders largely of a procedural nature as to the wife having permission to adduce expert evidence.

2. At the hearing before me on 29 February, I was informed that for her part the wife sought orders as set out in a letter from her solicitor to the husband's solicitors of 27 February 2008.  I will just quote from the passage to which I was referred, it is halfway down the page:

   It is our suggestion that the following orders be made by consent so as to avoid the necessity of counsel appearing at the mention of our client's application on Friday:

   (1 )that your client provide us with financial statements for the last five years within 14 days of the date of the orders;

   (2) that we deliver up a report and particulars within 21 days of receiving the financials from your client and;

   (3) that the parties have liberty to relist the matter.

3. Belatedly, counsel for the wife also sought immediate disclosure of documents as set out in paragraph 8.1 of a letter written by Mr C, a chartered accountant, also dated 27 February 2008.

4. The substantive proceedings in this matter consist of the wife's application under s.79A seeking to reopen the issue of property settlement which was resolved by consent orders made in late January 2002.  In summary form, the husband submits the wife should particularise her claim by identifying, with a degree of specificity, the way in which a miscarriage of justice is said to have occurred. 

5. The matter was last before me on 14 December 2007.  Prior to the institution of proceedings and up to and including 14 December, the wife's complaint appeared to be that the values ascribed to certain properties were significantly undervalued.  As soon as the proceedings were instituted, or may have even been prior to the institution of the proceedings, the husband engaged reputable valuers who express the opinion that the values relied on as at January 2002 were either less than or equal to the value ascribed in the consent orders.

6. It is common ground at the time of making of the consent orders valuations were not obtained.  The wife appears to have accepted the husband was a experienced in property management and had a detailed knowledge of the value of land in the south-east Queensland area that was referable to the holdings they had and there was, seemingly, a high level of trust between the parties.

7. I was informed at the hearing on 14 December 2007 that the wife disputed certain of the valuation reports the husband had obtained.  I was informed the wife had not obtained written valuations from her own valuers, but oral advice had been received to this effect from a valuer or valuers.  It now transpires the information was not obtained by the wife's current legal representative but by another legal practitioner whose name the wife does not wish to have disclosed.

8. The husband's solicitor, Ms Power, says she had a phone conversation with Mr Wiltshire, the wife's solicitor, on 26 February as detailed in paragraph 3 of Ms Power's affidavit sworn 28 February which was filed by leave on 29 February.  The relevant passage in paragraph 3 of Ms Power's affidavit is to this effect:

   On 26 February 2008 I telephoned Andrew Wiltshire, the wife's solicitor, requesting as to when we were likely to receive material from him.  He said, in summary, I would receive it tomorrow, and when I asked what would be received he told me Peter Baston would pass on to Tom Kirk particulars and he would also have a copy and send them through to me.  The particulars would be in a pleading format of what was raised in his client's affidavit but more concise.  He said that [Mr C] will be giving an overview of the matters he needs to value the business and Mr Wiltshire assumed it would be put in an affidavit.  Mr Wiltshire then said that they were not disputing the value of the assets as we had been given to them, that they would be viewing those as though they were "stock in trade” and what they wanted would be to value the business and that this goodwill was not disclosed by our client.

9. That is not the entire paragraph.  The solicitor for the wife denied the substance of the call as set out in paragraph 3 from which I have just quoted.  I was informed that he was of the view, the only subject matter of the call was that facsimile numbers were exchanged.  I must say that if Mr Wiltshire's denials be correct, Ms Power is extraordinarily prescient in being able to describe the properties as being perceived as "stock in trade" which were the very words the wife's counsel used before me in making submissions on 29 February.  Refer page 5 of the transcript.

10.Exhibit 2 consists of the attendance note by Ms Power setting out the phone conversation.  I invited counsel for the wife to tender his instructor's attendance note of the same phone call but this offer was not taken up.  I have had a transcript made of the proceedings of 14 December 2007 and, in particular, various passages dealing with the expected challenge to the valuations ascribed by the husband's valuers. 

11.I assumed, when adjourning this matter on 14 December, the particulars sought by the husband would be forthcoming by now.  On 14 December counsel for the wife had this to say:

It's appropriate to make an order asking the allocation of a manager, a Judge manager or a registry manager in adjourning both parties’ applications today to a date in mid February by which time my client will have her response to his application and it will probably be, for example, the application seeks that we, my client file her affidavit material such that the matter can be argued at the end of March.  Even if we were able to say to the Court today that we accept the gravamen, the complaint and would agree to do all of that, your Honour, I know from my own contemporary experience that you would be hard pressed to find a valuer to value the extent of these properties and be able to do so by 30 March.

12.At the bottom of the page I made the comment:

I find it staggering that she would have instituted these proceedings without obtaining the valuation evidence to back it up first.  She would have had to produce that evidence at some stage.  Counsel replied, “Yes, your Honour, and she's received advice - right, she's received valuation advice”.

13.So nothing was done after 14 December 2007 until 27 February 2008, two days prior to the adjourned hearing date.  When something was done it was done in a dramatically altered format as set out in Mr C’s letter.  Mr C says he cannot progress his valuation methodology until he is supplied with relevant documentation.  For his part, the husband says that at all times he has been willing to supply relevant documentation.

14.In response to Mr C’s letter, the husband obtained, at extremely short notice, a report from Mr O dated 28 February.  Mr O is also a chartered accountant.  Mr O notes that as he is not a registered land valuer he is precluded by legislation from offering any opinion of values of real estate, but on the information available to him Mr O expresses a view there would be no value for goodwill for the company, V Pty Ltd, as at January 2002.  That is the extent of the evidence before me at the moment. 

15.Having regard to the submissions made on 29 February I somewhat reluctantly propose to accede to the request for more time.  I accede to the husband's application for the wife to supply further particulars of her application.  Indeed, counsel for the wife did not challenge that that was appropriate for such particulars to be provided with the caveat that occur once the documents they requested had been provided.  It appeared common ground 21 days was an appropriate period to respond after the supply of the relevant documents.

16.I have to observe that the conduct of the wife's case to date appears to be in the nature of what is referred to in law as a fishing exercise.  It would seem the husband is confident there are no fish in this particular pond.  He says he is not opposed to providing informal disclosure.  Documents sought by Mr C at paragraph 8.1 of his letter to which I have made reference are described in the following terms under the heading "Additional Information":

Whether the value of the properties is the same as suggested by C B Richard Ellis and [L Valuers] is essentially a question of the opinion of those valuers.  To assess whether they are correct would require the following:

(a) initial feasibility study as well as any other feasibilities completed and;

(b) any development application;

(c) any construction proposals and;

(d) any marketing proposals or;

(e) any valuations that show the development applications have been included in the value of the site.

8.2  The question as to whether there is a property development business and whether that property development business has goodwill can only be determined after reviewing prior financial statements of the business for at least five years and gaining an understanding of the business following discussions with the proprietors and people associated with the business.

17.I note that the orders sought by counsel as set out in Mr Wiltshire's letter, to which I have made reference, really seek financial documents five years back from today.  Clearly counsel ought to amend that so that it was five years prior to January 2002 when the consent orders were made.

18.Effectively, I do not think I am reading too much into this, the orders today are largely by consent.  There is not a great deal challenged so I will read into the record what I believe to be appropriate orders for today and I will hear counsel as to whether they seek any amendments.

ORDERS DELIVERED

I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Barry

Associate: 

Date:  5 March 2008