Pitt & Pitt

[2008] FamCA 402

FAMILY COURT OF AUSTRALIA

PITT & PITT [2008] FamCA 402

FAMILY LAW – EVIDENCE – Costs of experts – Access to company records

Family Law Act 1975 (Cth)

APPLICANT: Mrs Pitt

RESPONDENT: Mr Pitt

FILE NUMBER: SYC 2905 of 2007

DATE DELIVERED: 10 June 2008

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: O'Ryan J

HEARING DATE: 5 March, 15 April 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Dura of Counsel

SOLICITOR FOR THE APPLICANT: Slade Manwaring

COUNSEL FOR THE RESPONDENT: Mr Magee

SOLICITOR FOR THE RESPONDENT: Armstrong Legal

Orders

1. Until further order the Wife may attend the premises of R Pty Ltd during business hours when she is inspecting and copying information with any persons that she chooses to accompany her provided that when she attends the premises she is not accompanied by any person who is a member of the group known as L or any person(s) who is associated with the group known as L.

2. The Husband shall pay the costs of the experts as identified at Orders 2 and 3 made on 5 March 2008 with the final determination on allocation of costs to be made by the trial judge.

3. Both the Husband and the Wife do all acts and things necessary to cause to be forwarded to Ms D the following material:

   3.1Financial statements for R Pty Ltd for the financial years ending June 2003 and 2004;

   3.2Bundle of emails and documents referred to in annexure A to the Wife’s affidavit filed 15 February 2008 [these being allegedly relevant to undisclosed dealings and agreements of the relevant companies].

4. Both the Husband and the wife do all acts and things and execute all documents and writings necessary to instruct Mr B to revalue the plant and equipment located in the Pallet Store Room.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 2905  of 2007

MRS PITT

Applicant

And

MR PITT

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. There are pending proceedings for settlement of property.  On 24 April 2007 an application for final and interim property orders was filed on behalf of Mrs Pitt who I shall refer to as the Wife.  On 15 June 2007 a response to the application for final orders was lodged on behalf of Mr Pitt who I shall refer to as the Husband.

2. There have been a number of interim and procedural applications in this case, some of which have been finalised and others remain current.  There has been significant satellite litigation.

3. Currently before me for hearing are proceedings commenced by interim application filed on 16 January 2008 on behalf of the Wife, and the response of the Husband filed on 1 February 2008.  The orders now sought by the Wife are set out in a further amended application filed on 3 March 2008.  The orders sought by the Husband are set out in a response to a further amended application, filed on 13 March 2008.

4. In her further amended application, the Wife seeks the following orders:

   1.That the Wife may attend the premises of [R Pty Ltd] during business hours with any persons that she chooses to accompany her when she is inspecting and copying financial information.

   2.That [Mr S] of [T Company] be appointed as a single expert (I.T. consultant) for the purposes of extracting the non-privileged information from the computer backup tapes of [R Pty Ltd] produced by the Husband under subpoena.

   3.That the parties agree to appoint a single expert legal practitioner for the purposes of determining which emails for the Husband stored on the computer back up tapes shall be deemed as privileged and failing agreements such legal practitioner to be appointed by the President of the Law Society.

   4.That the Wife shall have total unfettered access to the information stored on the copies of the computer back up tapes once the privileged information has been removed.

   5.That the Husband shall pay the costs of the experts as identified at Orders 2 and 3 at first instance with the final determination on allocation of costs to be made by the trial judge.

   6.That the Husband and wife do all things necessary to hold a director’s meeting on a monthly basis with the first meeting to be held on the next business day 7 days following the 14^th of each month unless otherwise agreed, with the following information to be provided to the Wife at least 7 days before the Director’s meeting:

   a)      Financial accounts and budget

   b)      Business strategy

   c)      How business performed against key performance indicators the previous month

   d)      Future strategies; and

   With such meeting to be alternated between the premises of [R Pty Ltd] and the Wife’s solicitors and to be recorded by audio tape.

   7.That both parties do all things necessary to cause to be forwarded to Ms [D] the following material:

   a)      Financial statements for [R] Pty Ltd for the financial years ending June 2003 and 2004

   b)      Bundle of emails and documents referred to in annexure A to the Wife’s affidavit filed 15 February 2008 [these being allegedly relevant to undisclosed dealings and agreements of the relevant companies]

   8.      That [Mr B] be instructed to revalue the plant and equipment (located in the Pallet [Store] Room)

5. In his response the Husband seeks the following:

   1.That the Wife may attend the premises at [R] Pty Ltd during business hours when she is inspecting and copying information.

   2.That when the Wife attends the at [R] Pty Ltd pursuant to Order 1 [sic] , she may be accompanied by:

   a)      Any member of staff from Slade Manwaring;

   b)      Mr Glen Gould Barrister

   c)      Mr David Dura Barrister

   d)      Mr Robert Lethbridge

   e)      Any member of “[C] Security”, provided that any such member of “[C] Security” only accompanies her in public areas, being areas that are not enclosed rooms, and if the Wife does enter such an enclosed room the member of “[C] Security” shall stand as a static guard outside that room.

   3.That the Wife shall pay the costs of single experts [Mr S] and [Mr W].

   4.That the Wife’s Further Amended Application be otherwise dismissed.

   5.That the Wife pays the Husband’s costs of this application.

6. I note firstly that orders 2, 3 and 4 of the relevant application were made by consent of the parties on 5 March 2008.  Those orders were are follows:

   2.That [Mr S] of [T Company] be appointed as a single expert (I.T. consultant) for the purposes of extracting the non-privileged information from the computer backup tapes of [R Pty Ltd] produced by the Husband under subpoena.

   3.That the parties agree to appoint a single expert legal practitioner for the purposes of determining which emails for the Husband stored on the computer back up tapes shall be deemed as privileged and failing agreements such legal practitioner to be appointed by the President  of the Law Society.

   4.That the Wife shall have total unfettered access to the information stored on the copies of the computer back up tapes once the privileged information has been removed.

7. In relation to order 8, that Mr B be instructed to revalue the plant and equipment (located in the Pallet Store Room), although the parties consented to this occurring, there remains an issue as to who will bear costs in relation to Mr B.  The Wife states that she does not seek to rely on any order in relation to this and submits that the order should be governed the Family Law Rules 2004.  Rule 15.47(1) provides:

   The parties are equally liable to pay a single expert witness’s reasonable fees and expenses incurred in preparing a report.

8. I also note that rule 15.46 states that if there is a dispute about fees, a party or the expert witness may request the court to determine the dispute.

9. The Wife relies upon the affidavit of Mr E filed on 18 February 2008 and her affidavit filed on 18 February 2008.  The Husband relies upon his affidavit sworn on 12 March 2008 and the affidavit of Mr A sworn on 29 January 2008.

10. It was agreed by the parties on 5 March 2008 that the issues outstanding may be dealt with on the papers. I had extensive written submissions which are a reflection of the litigation experienced to date and the conflict between the parties. The hearing proceeded in a truncated way in that there was no cross-examination.  The consequence is that there are a number of contentions raised by each party that I am presently unable to resolve.

BACKGROUND

1. I will first set out details of the other applications that have come before the Court before addressing the current interim applications before me.

2. On 23 May 2007 orders were made by Judicial Registrar Loughnan dealing with an interim application filed by the Wife on 24 April 2007.  This application sought, amongst other things, exclusive occupancy of a property at H, as well as a series of orders restraining the Husband from doing a series of acts in relation to the assets of the parties and interim costs.  It was ordered as follows: 

   1.Orders are made in terms of paragraphs 1, 3(a), (b), (c), (d), (e), (f), (j), (l), (p), (q), 8, 9 and 16 of the document titled “Minutes of Orders Sought by Applicant Wife on an Interim Basis” as amended, marked Exhibit 1 as set out hereunder:

   “Exclusive Occupancy

   1.     That, pending further Order, the Wife do have the exclusive use and occupancy of the Real Property jointly owned by the Husband and the Wife and known as [H property] in the State of New South Wales, comprising the whole of the land contained in Torrens Title Folio Identifier […] (“the [H] residence”).

   3.     That until further Order, each of the parties be restrained from doing causing or permitting any act or thing to be done or giving any direction in relation to any of the companies listed in Schedule 1 hereto which might have the effect of:-

   (a)Altering any of the rights of any of the existing shareholders;

   (b)Issuing any further shares in the companies or reducing the capital of the companies;

   (c)Registering any shares already issued but not as yet registered in the companies;

   (d)Altering the rights attaching to any shares already issued in the companies;

   (e)Appointing any further Directors of the company or to appoint any additional Secretary or alternate Secretary of the companies;

   (f)Dismissing any or all of the Directors presently appointed to the companies;

   (j)Assigning, transferring or disposing of or in any way dealing with any asset of the companies;

   (l)Guaranteeing any loan or contractual liability of any other person or other corporations or entities;

   (p)Affixing the common seal of the companies to any contract, agreement, instrument or other document other than in the ordinary course of business;

   (q)Incurring any legal fees in the name of any of the companies other than in the ordinary course of business.

   8.     That, pending further Order, each of the parties be restrained from doing any act or thing as a director or shareholder of any company which acts as a trustee of any trust which might have the effect or:-

   (a)Removing the trustee

   (b)Appointing a new trustee

   (c)Altering in any way the provision of the trust deed or settlement

   (d)Mortgaging or charging or encumbering any asset of the trust other than in the ordinary course of business

   (e)Assigning, transferring or disposing of any asset of the trust, other than in the ordinary business of the trust

   (f)Transferring or assigning the power of appointment of the trustee or the role of guardian to any person or corporation

   (g)Causing the Trust to advance or loan any moneys to any person or corporation

   9.     That, pending further Order, the Husband do pay all rates, taxes, mortgage instalments and household insurance costs in respect of the [H] residence.

   16.    As and from the date of making these Orders and until completion of the sale pursuant to Order 15 herein, the Husband shall make and be responsible for the payment of as and when they fall due:

   (a)All other outgoings including telephone, gas, electricity accounts, council and water rates, insurance and maintenance in relation to the [S] property.

   2.By consent within 28 days from the date of these orders, the Husband pay to the solicitor for the Wife the sum of $100,000 to be applied only to the costs and disbursements of the Wife incurred during the course of these family law proceedings.

   3.By consent the Wife is restrained from causing those funds or any part of those funds to be applied to the purposes of [L Group] AND in relation to that payment orders are made in terms of paragraphs 13 and 14 of Exhibit 1 as set out hereunder:

   “13.  That the characterisation of the payment of the Preliminary Sum, for the purposes of these proceedings, be reserved to the Trial Judge. 

   14. That for the purposes of compliance with Order 12, and subject to the Husband making a declaration to this Court in accordance with a Form 13 Financial Statement as provided under the Family Law Rules, the Husband and the Wife as directors be at liberty to declare and cause a dividend to be paid to the Wife in the aforesaid amount from [R] Pty Limited (ACN […]).”

   4.The proceedings are adjourned to the Call-over of the Judicial Registrar's Duty List at 9:30 am on 25 June 2007 AND the Court requested that case outline documents be provided to Judicial Registrar Loughnan’s chambers at last two working days prior to that date.

   IT IS NOTED

   5.The agreement of the parties that the Wife will continue to receive her normal director fee of $125,000 per annum.

   6.The caveat in relation to the Husband’s consent to the injunctions made in terms of Exhibit 1 contained in paragraph 9 of his Response to the Initiating Application.

3. On 25 June 2007 Judicial Registrar Loughnan made further orders, finalising the interim property orders sought by the Wife on 24 April 2007.  The following orders were made:

   1.In addition to the payments identified as being made by the Husband in the orders made on 25 May 2007, the Husband is to pay direct to the Wife or as she may direct $262.00 per week by way of interim spouse maintenance.

   2.By consent the orders made on that date are varied to provide that the order made in terms of paragraph 3(j) of Exhibit 1 on 25 May 2007 be varied to add at the conclusion of those words “other than in the ordinary course of business”.

   3.Orders are made, to the extent necessary, whereby the Husband is restrained until further order in terms of Order 3 (g), (h) and (i) where it is not already provided in each case “other than in the ordinary course of business”:

   3(g)  Selling, Mortgaging, charging or encumbering any asset of the Companies (other than in the usual course of business).

   (h)    Making any loan or advance to any other person or other corporations or entities.

   (i)     Terminating any leasehold by any of the companies.”

   4.An order is made in terms of 3(m), as set out hereunder:

   3(m) Altering or varying the signatories to the bank account of the companies;

   5.Until further order and in that regard the Wife is restrained until further order from signing any cheque on any company account without the consent of the Husband unless she gives the Husband twenty-one (21) days prior written notice of her intention to sign such a cheque.  That notice to include details of the payee and purpose of the payment:

   6.The Husband is restrained until further order from doing or causing or permitting any act or thing to be done or giving any direction in relation to any of the companies listed in Schedule 1 to Exhibit 1 of 23 May 2007, which might have the effect of increasing the superannuation benefits or payments of or to either of the parties without giving the Wife at least twenty-one (21) days prior written notice.  That notice to include the detail of the proposed arrangement.

   7.An order is made in terms of the interim order sought at paragraphs 5 and 6 of the Response to Initiating Application filed on behalf of the Husband on 15 June 2006 as set out hereunder:

   5.     That within fourteen (14) days of the making of these Orders, the Husband shall make available for inspection by the Wife all bank statements in relation to facilities of the companies for the period from 1 July 2006 to date, including all bank statements recording the transfer of funds from all accounts operated by the companies, or either of them, from 1 April 2007 to date, and thereafter the Husband shall make available for inspection by the Wife all other documents relating to the affairs of the companies as may reasonably be requested by her from time to time.

   6.     That the Husband shall cause the Wife to be provided with a copy of all management and financial reports prepared in relation to the operation of the companies, which reports are prepared in the usual course on a monthly basis.

   8.It is noted that unless the parties otherwise agree the venue for inspecting documents referred to in paragraph 5 is to be the business premises of the relevant company.

   9.By consent the Wife is restrained until further order in terms of paragraphs 4 and 4.2 of the Response of the Husband filed 15 June 2007 as set out hereunder:

   4.That the Wife shall:

   4.2       shall do all things reasonably requested of her and sign all reasonable documents submitted to her necessary to cause and permit the companies to continue to operate in the ordinary course of business.

   10.Otherwise the application for interim orders reflected in the Minutes of Orders Sought by the Wife which was Exhibit 1 on 23 May 2007 and the interim orders sought by the Husband in his Response filed 15 June 2007 are dismissed.

   11.That the parties attend a conciliation conference at 9:15 am on 26 July 2007 and the Court noted there is an apprehended violence order between the parties and requested that the parties have separate interviews.

4. A conciliation conference was held on 24 August 2007.  On this day directions were made by a Registrar for the parties to reach agreement about single experts to value the corporate entities.  The matter was then adjourned to 6 November 2007 for the possible issue of a trial notice.

5. A further application was brought by the Wife on 28 August 2007 for a review of the Registrar’s decision made on 24 August 2007.  This application was finalised on 13 September 2007 by way of the following orders of Moore J:

   1.The order made by the Registrar on 24 August 2007 is set aside.

   2.The mention on 6 November 2007 at 11am is vacated.

   3.The matter is listed for mention before Justice Le Poer Trench at 10am on Friday 12 October 2007.

   IT IS ORDERED by consent:

   4.That orders be made in terms of paragraphs 1 to 4 inclusive of the document headed “Minutes of Orders Sought by Applicant Wife on an Appointment of Single Experts” and filed herein as set out hereunder:

   [Ms D]

   1. Pursuant to Division 15.45 of the Family Law Rules [Ms D], Forensic Accountant, of […], be appointed as the Single Expert to conduct valuations in respect of the following companies:

   a.[R] Pty Limited (ACN […]);

   b.[F] Pty Limited (ACN […]).

   2.     That the parties do all things necessary to facilitate the preparation of a report including the provision of any information or access to any property.

   3.     That within 7 days from the date of these Orders, the parties confer for the purpose of preparing a joint letter of instruction to the Single Expert.

   4.     That failing agreement in respect to the joint letter of instruction, the parties be at liberty to restore the matter on short notice for the Court to determine those issues.

1. On 12 October 2007 Le Poer Trench J made orders by consent for Mr R to value the properties at H and S and plant, stock, and equipment of R Pty Ltd and F Pty Ltd.

2. It was also agreed that the Husband will be initially responsible for costs related to single expert reports of Mr B and Ms D, with final determination to be left to the trial judge.

3. Orders were also made for the sending of a final letter of instruction to Ms D, disclosure and the filing of material in preparation for the hearing, including the filing of financial questionnaires.  The matter was allocated to Moore J and listed before her Honour on 30 January 2008.

4. A further application was brought by the Husband on the 6 December 2007.  In essence, the Husband sought that the Wife comply with the orders made to send the letter of instruction to Ms D, in accordance with orders made by Le Poer Trench J on 12 October 2007.

5. This matter was finalised on the 11 December 2007 with the following orders made by Le Poer Trench J:

   IT IS DIRECTED BY THE COURT

   A.That the time for compliance with Order 3 made on 12 October 2007 (financial questionnaires) be extended to the close of business on 14 December 2007.

   THE COURT ORDERS

   1.That the orders sought in the response filed in Court today by the Wife are dismissed.

   IT IS DIRECTED BY THE COURT

   2.That the solicitor for the Wife forthwith forward to Ms [D] the letter of instruction settled by me Justice Le Poer Trench on 12 October 2007 subject to any amendments which the parties may agree upon this afternoon and accordingly mark on the letter of instruction to be sent to [Ms D].

   THE COURT FURTHER ORDERS

   3.That the Wife pay the Husband’s costs of and incidental to his application filed 6 December 2007, such costs to be as agreed or assessed in the absence of agreement.

6. Another application was brought on 16 January 2008.  The further amended application was filed on 3 March 2008.

7. The original interim application filed on 16 January 2008 sought that the business “[F Pty Ltd]” be placed on the market for sale; that the net proceeds of the sale of properties at W and E be paid to the Wife such that the total amount received by the Wife after the sale of the properties totals $250,000 and that the Husband immediately do all things necessary to reinstate the Wife’s remote and onsite computer privileges and costs.

8. The following orders were made by me on 30 January 2008:

   1.In respect of any asset and or liability in relation to which the parties are at issue as to the value and there is no evidence of valuation already filed then a single expert is to be appointed for the purpose of undertaking a valuation of the relevant asset(s) and or liabilities and such expert to be as agreed between the parties and subject to further order the costs of the single expert be paid as to one half by each party.

   2.By 4.00 pm on 13 February 2008 each party provide to the other party all documents/records in his/her possession or control which establish his/her contentions as to the identity and/or value  of the assets and liabilities about which there is a dispute.

   3.If relevant, by 4.00 pm on 21 March 2008 each party provide to the other party all documents/records in his possession or control which establish his/her contentions as to the assets and liabilities he/she had at the commencement of the relationship together with any documents/records in his/her possession or control which establish how such assets were subsequently dealt with, whether by way of sale or otherwise.

   4.By 4.00 pm on 20 February 2008 each party provide to the other party a copy of his/her income tax returns relating to earnings that were received by each party during the relationship and if necessary obtain from the Australian Taxation Office a copy of any missing tax returns.

   5.The Husband file and serve within 28 days an affidavit setting out his evidence in chief in relation to the following.

   5.1    His financial circumstances at the commencement of the relationship.

   5.2    His work in relation to the establishment, operation and development of the business of [R] Pty Ltd and [F] Pty Ltd and any other business owned and or operated by the parties or any entity of which they were the beneficial shareholders.

   5.3    His role as homemaker and parent.

   5.4    His contention that he should receive a further 2 per cent of the net assets of the parties because of his care and support of adult children.

   6.The Wife file and serve within 28 days after service upon her of the affidavit of the Husband referred to in the preceding order an affidavit setting out her evidence in chief in relation to the issues identified in the said affidavit of the Husband.

   7.Each of the Husband and Wife file and serve within 28 days an affidavit setting out his/her evidence in chief in relation to his/her proposals as to how he/she will support himself/herself in the future.

   8.It be noted that after receipt of the report by the single expert accountant the Wife will seek further directions in relation to the filing of evidence with respect to the issue of financial waste by the Husband.

   9.Each of the parties will promptly do all acts and things necessary to provide to the single expert accountant all documents and information she may request.

   10.The Husband within 28 days make available for inspection by the Wife and/or her legal and accounting advisors all hard copy corporate and taxation and financial and accounting records of [R] Pty Ltd and [F] Pty Ltd.

   11.It be noted that the parties are yet to resolve access by the Wife and/or her legal and accounting advisors to the electronic records of the said companies.

   12.Each of the Husband and Wife file and serve within 28 days an affidavit setting out his/her evidence in chief in relation to the assets and liabilities which remain in dispute either as to identity and or value.

   13.By consent, the Husband do all things necessary to cause payment to the Wife of the net proceeds of sale of the property situated at [W] held in the trust account with Conveyancing solutions.

   14.By consent, the Husband shall do all things necessary to cause payment to the Wife of the net proceeds of sale of the property situated at [E], such that the total amount received by the Wife under orders 13 and 14 totals $250,000.00 and there be liberty to apply in relation to this order.

   15.By consent, the classification of the payments made under orders 13 and 14 be reserved to the Trial Judge.

   16.Order 3 of the application in a case filed on behalf of the Wife be listed for a hearing before a Judicial Registrar, it being noted that the order is sort by way of an injunction for the preservation of property.

   17.In respect of Order 7of the said application in a case, the hearing of that application be adjourned to 15 April 2008 before me and it be noted that by that time it is anticipated that there will be available a report of the single expert accountant.

   18.The Husband filed and serve within 14 days an amended financial questionnaire.

   19.Liberty granted to all parties to restore the matter before me by arrangement with my associate.

9. Order 3 was to place “[F Pty ltd]” on the market.  Order 7 sought that the Husband immediately do all things necessary to reinstate the Wife’s remote and on site computer privileges to the computer systems for “[F Pty Ltd]” and “[R Pty Ltd]”.

10. The following orders were made by Judicial Registrar Loughnan on the 21 February 2008 and the matter adjourned until 4 March 2008:

    1.By consent orders are made in terms of the document titled “Consent Orders” marked Exhibit 1 and attached hereto.

    2.The proceedings are adjourned to the Judicial Registrar’s Call-over at 9:30 am on 4 March 2008.

    3.Any further documents on which either party seeks to rely are to be filed and served not later than 28 February 2008.

    4.The costs of the parties of and incidental to these proceedings are reserved.

    EXHIBIT 1: BY CONSENT IT IS ORDERED:

    1.      That the Wife’s solicitors have permission to uplift the back-up tapes (that have no specific end of month reference) produced under Subpoena by the Husband for the purposes of determining the date of each of those back-up tapes.

    2.      The Wife solicitors shall forthwith return the back-up tapes to the Family Court once the date of those back-up tapes has been confirmed.

    3.      For the purposes of Order 1 the back-up tapes shall be taken by the Wife’s solicitors to the business premises of [R] Pty Ltd at [S] for the company’s IT consultant, [Mr A] to confirm the back-up tape date in the presence of the Wife and her solicitors and then be returned to the Court.

    4.      It is noted that the backup tapes that seem to be missing from production are the April and November 2007 tapes.

    5.      That the Wife’s solicitors or any other persons do not have permission to copy or view any of the backup tapes with the exception of ascertaining the date of the material on the tape in accordance with Order 3.

    6.      That the parties shall ensure that the backup tapes are write-protected before the backup tapes are viewed.

    7.      That the Husband shall upon the Wife’s request forthwith provide to the Wife the current set of backup tapes for [R] Pty Ltd and [F Pty Ltd] on a weekly basis or as she shall request (the tapes made each day) within one day from the date of these Orders provided such backup tapes be returned by the Wife within fourteen (14) days or upon demand by the Husband and are collected by the Wife.

    8.      That the Husband shall within twenty one (21) days from the date of these Orders provide to the Wife the break down of all travel expenses (overseas) on a trip by trip basis since 1 January 2006.

11. On 29 February 2008, the Wife filed an amended application.  These orders sought to facilitate the sale of “[F Pty Ltd]”.  This application was listed before Judicial Registrar Loughnan on 4 March 2008.  On 4 March 2008 the following orders were made by the Judicial Registrar:

    1.By consent orders are made in terms of the orders sought by the Wife in her Further Amended Application in a Case filed 29 February 2008 as amended today and by substituting paragraph 1(e) as amended and 1(k) set out in the Response to Further Amended Application in a Case which is dated today’s date for those same paragraphs in the Wife’s application and set out hereunder:

    1.     That the Husband and Wife immediately do all things necessary to place on the market for sale and to sell the business of [F] Pty Ltd (“[F Pty Ltd]”) including plant, stock and equipment upon the following terms and conditions:

    (a)Mr Robinson shall forthwith prepare an information memorandum in relation to the sale of [F Pty Ltd] containing:

    (i)Details of the leases entered into by [F Pty Ltd];

    (ii)Details of the plant and equipment of the premises which will include the inventory prepared by [Mr B] (but not the valuation figures);

    (iii)Details of any consents obtained;

    (iv)Feasibility studies – noise, traffic and demographic studies;  and

    (v)Any further relevant information concerning the sale.

    and upon receipt of that Memorandum (“the tender document”) the Wife must prepare a letter to accompany those documents for submission to prospective purchasers (“covering letter”) with such covering letter to be agreed to by the Husband and failing agreement such covering letter to be settled by Julie Briscoe.

    (b)The parties shall:

    (i)each provide to the other the list of interested purchasers that they intend to send the tender document to within 7 days from the date of these Orders; and

    (ii)Inform the other party in writing within 3 days of sending any subsequent tender document to any interested purchaser. 

    (c)Julie Briscoe of Robinson Legal (business lawyers) be appointed to conduct the sale of “[F Pty Ltd]” on behalf of the parties and [F] Pty Ltd upon such terms and conditions and in such manner, subject to these Orders, she shall consider in her absolute discretion appropriate.

    (d)That each of the Husband and the Wife shall do all acts and things to cause all information and documentation that Ms Briscoe may require in relation to any aspect of the sale to be expeditiously provided to her.

    (e)In the first instance, the method of sale must be by way of private sale for a period of thirty days.  In the event that no offer is accepted, then the parties jointly instruct [B] Business Brokers with a view to selling the business for the best attainable price.

    (f)That each of the parties must refer any interested prospective purchasing party or parties too Ms Briscoe.

    (g)That Ms Briscoe shall receive all competitive tenders pursuant to Order1(e).

    (h)That Ms Briscoe prepare a draft contract for sale being both a contract for the sale of the business and or contract for the sale of the shares of [F Pty Ltd] as soon as is reasonably practicable and provide it to each of the Husband and the Wife for their consideration such contract to include those terms considered by Ms Briscoe to be the “usual terms, excluding price” normally included in such contracts.

    (i)That in the event that either party takes any issue with any term included in the draft contract or wishes to include any additional term in that contract or in relation to the amendment of any contract submitted to any purchaser then they must within three (3) days from that receipt of the contract notify Ms Briscoe and the other party in instructing with precision the terms of all amendments proposed by them.

    (j)That in the event that either party gives notice to Ms Briscoe pursuant to (i) above then each party shall inform Ms Briscoe of whether or not they agree to the amendments proposed by the other party and in the event that there still remains any issue, that dispute must be determined by Ms Briscoe in relation to any minor commercial matters and otherwise must be determined by a business lawyer (not being Ms Briscoe) appointed by the president for the time being of the Law Society of New South Wales whose appointment and whose appointees determination shall be final and binding on the parties.

    (k)That in the event there is any dispute between the parties as to whether or not any offer of purchase should be accepted by reason that the offer is not equivalent to a fair market price, any price equal to or above that determined for the business by Ms [D] shall be considered a fair market price.

    (l)That neither party is required by the Orders to accept any offer for sale that fails properly to release and indemnify the parties, [R Pty Ltd] and [F Pty Ltd] in respect of all liability over and in relation to [F Pty Ltd] and its ongoing trading on and from settlement of its sale.

    2.     That in the event that the Husband wishes to submit any offer to purchase then he must disclose in his offer documentation to the Wife the precise details of the sources of the funding for the purchase of [F Pty Ltd] and his ability to release the Wife and [R Pty Ltd] from all and any liability of [F Pty Ltd] pursuant to Order 1(l).

    3.     That in the event that there is any issue between the parties as to the disposition of the proceeds of sale of the business then in the event that the dispute is notified in writing to Ms Briscoe prior to settlement then she shall retain the amount in dispute upon trust for [F] Pty Ltd pending further order of the Court.

    4.     In the first instance the costs of Ms Briscoe including any costs on account must be paid by [R] Pty Ltd and the parties must do all acts and things to cause that to occur provided that such costs met by that company shall be repaid to it out of the proceeds of the sale and for that purpose shall be deemed to be costs of the sale.

    5.     That nothing in these Orders shall prevent the sale of the business of [F Pty Ltd] in parts where the sale of any part or parts will maximise the value of the whole business.”

    2.Leave is granted to restore the matter to the list on giving 7 days’ notice to the Court and to the other party.

    3.No order is made as to costs.

12. The Wife filed a further amended application on 3 March 2008, which is the application now before the Court.  In relation to that application, by consent, the following orders were made by me on 5 March 2008:

    1.The Wife have liberty to uplift the March 2002 back up tapes for [R Pty Ltd] and [F Pty Ltd] produced under subpoena by the Husband and retain such tapes in the possession pending further order.

    2.[Mr S] and [Mr W], the single experts appointed in the proceedings, have liberty to uplift all backup tapes produced under subpoena for [R Pty Ltd] and [F Pty Ltd] for the purpose of their respective instructions in these proceedings and return such tapes to the Court upon completion of their engagement.

    3.The liberty granted in order 2 above be operative from the date of receipt of the joint letter of instructions.

    IT IS FURTHER ORDERED:

    4.The Husband file and serve within seven days a response to the further amended application in a case filed on behalf of the Wife on 3 March 2008 together with any affidavit material in support on which he would seek to rely.

    5.Thereafter the hearing of that application will proceed on the papers.

    6.The matter be listed before me at 9.30 am on 15 April 2008.

13. Two other applications have since been filed.  I will outline these before addressing the remainder of the application filed on 3 March 2008.

14. An application was filed on 10 April 2008 on behalf of the Wife seeking that the Husband, amongst other things, sign joint letters of instruction to Mr S and Mr W.  The Husband had refused to do this due to his disagreement with the terms of reference of the letters and disputes between the parties in relation to what would be classified as privileged information.

15. The Wife also sought that the Husband be restrained from doing anything in relation to “[R Pty Ltd]” or “[F Pty Ltd]” which might have the effect of increasing his income/salary payments or his loan account without the consent of the Wife.  She also sought that the Husband answer requisitions sent by Ms D in letters dated 22 January and 4 April 2008.  This application is yet to be finalised.

16. An urgent application was filed on 11 April 2008 by the Husband seeking that the hearing on 15 April 2008 be vacated due to his inability to attend court.  This application was finalised by the following orders made by me on 15 April 2008: (Relevantly, the orders transferred paragraphs 1, 2, 4 and 6 of the 10 April 2007 application to be listed before a Judicial Registrar):

    2.The Husband is restrained from doing or causing or permitting any act or thing to be done or giving any direction in relation to [R] Pty Ltd or [F] Pty Ltd which might have the effect of increasing the income/salary payments to himself or his loan account without the written consent of the Wife.

    3.The Husband shall within 14 days from the date of this order provide to the Wife for on forwarding to Ms [D] answers to her requisitions as set out at paragraphs 9, 10, 21 ([R Pty Ltd]) and 1, 2, 3 ([F Pty Ltd]) in her letter of 22 January 2008 and her letter of instruction dated 4 April 2008.

    4.In relations to paragraphs 1, 2, 4 and 6 of the application in a case filed on 10 April 2008 on behalf of the Wife, the hearing of those matters be listed before a Judicial Registrar, by arrangement, as soon as practicable.

    5.The Husband file and serve by 4 pm on 22 April 2008 a response to the application in a case referred to in the preceding orders, together with any affidavit material on which he would seek to rely.

    6.The application referred to in order 17 made on 30 January 2008 also be listed for hearing before a Judicial Registrar, contemporaneously with the hearing referred to in the preceding orders.

CONCLUSION

Order 1

1. As to order 1, that the Wife may attend the premises of R Pty Ltd during business hours with any person(s) that she chooses to accompany her when she is inspecting and copying company financial information a number of submissions were made on behalf of the Wife.

2. The Wife is one of two company directors and a 50 per cent shareholder of both R Pty Ltd and F Pty Ltd, with the Husband being the other director and 50 per cent shareholder in each company.

3. On behalf of the Wife it was submitted that the Husband has no restriction on who he may bring to the business premises and the same principle should apply to the Wife.  The Wife should not be restricted in any way as to where she should be able to go at the business premises located at S or who may accompany her.

4. The Husband maintains as the basis for his concern about this order that “such persons are likely to include members of [L Group] that may be motivated to cause mischief upon him or [R Pty Ltd] or both”.  On behalf of the Wife it was submitted that the Wife has not in the past, and there is no reason to suggest that she will in the future “cause mischief” to R Pty Ltd, more particularly as she is a half owner of the Company from which she derives her income from its trading activities.  Moreover there is no evidence from the Husband to indicate that any member of L Group has caused any “mischief” in any way to R Pty Ltd or has accompanied the Wife to the business premises.  It is submitted that these are groundless allegations by the Husband with no basis in fact.  Similarly, there is no evidence to suggest that the presence of a member of L Group at the Company premises would in any way adversely affect the day to day operations of the Company.

5. Since separation the Wife has at all times attempted to execute her duties in the best interest of the company.

6. The Husband alleges that he has “generally provided unfettered access to the records and staff of [R Pty Ltd]” (paragraph 29 Affidavit filed 13 March 2008).  The Wife denies this has occurred.  On several occasions the Wife has been denied access to records and staff have been informed that they cannot give her anything without the Husband’s approval.

7. On behalf of the Wife it is submitted that she should have the same unfettered access to the company’s computer system as the Husband, and the right to request information from staff who are employed by R Pty Ltd and/or F Pty Ltd.

8. The Husband in his submissions makes reference to the “integrity of [R Pty Ltd’s] computer system”.  The Wife has previously emphatically denied that she was responsible in any way for any alleged “attack on the integrity of the computer system” or that she copied the Husband’s email directory and/or sent any files off site (see Wife’s Affidavit filed 16 January 2008; paras 68 to 72).

9. On behalf of the Wife it is submitted that again there is no objective basis for this concern being used as reason to restrict the Wife’s access to the business premises.

10. On behalf of the Wife it is submitted that the suggestion by the Husband that the computer network “could” have been damaged is speculation designed to frustrate the Wife’s ability to obtain access to the company’s computer records.

11. The Wife is concerned about the Husband’s attempt to frustrate her ability to discharge her duties as a director of R Pty Ltd and F Pty Ltd by locking out her involvement in the affairs of the companies and insisting she incur the cost of barristers and solicitors to accompany her to premises which, as a shareholder and director, she in any event has a right to attend.

12. On behalf of the Husband it is submitted that by earlier Orders made by Judicial Registrar Loughnan on 1 May 2007 and 25 June 2007, the Husband is the party responsible for managing the day to day affairs of R Pty Ltd.

13. On behalf of the Husband it is submitted that there is substantial acrimony between the Husband and the Wife which the Husband says has its nexus arising from allegations of sexual molestation of the parties’ daughter by a member of a group known as L Group, to which both parties belonged prior to separation.  The Husband accepted the child’s allegations as against the person.  The Wife did not. The alleged perpetrator subsequently committed suicide before being questioned by the Police in relation to the allegations.  Upon the Husband raising the allegations of the child with members of L Group at a meeting, he was immediately removed from the organisation. He was confronted at the matrimonial home by the Wife and two other members of L Group.  An incident took place giving rise to an allegation of assault against the Husband.  The alleged victim was not the Wife.  The Wife has obtained, by consent and without admissions, an Interim Apprehended Violence Order.  The hearing in relation to the alleged assault is part heard before the Downing Centre Local Court.  Subsequently applications for Apprehended Violence Order have been made by members of L Group against the parties’ son and separate Apprehended Violence Order proceedings had been brought by the child against other members of L Group.

14. On behalf of the Husband it is submitted that the Wife says that she would like to be able to attend R Pty Ltd to inspect and copy company information for these proceedings, but does not feel safe in doing so.  It is submitted that to date, the Wife has been accompanied on such an occasions by her legal and/or financial advisors.  She has also indicated that she does not feel safe in the presence of the Husband’s legal advisor, Peter Magee, although she makes no specific allegations against him.

15. On behalf of the Husband it is submitted that the Husband has allowed the Wife access to R Pty Ltd subject to protecting documents over which he makes a claim for privilege, requiring reasonable notice so as to avoid any confrontation with the Wife and to appropriately notify staff.

16. The Wife has earlier indicated a desire to be accompanied by a member of “[C] Security”.  On behalf of the Husband it is submitted that notwithstanding the Husband’s position that it is entirely unnecessary for the Wife to have concern for her safety, the unreasonableness of her concern being borne out by her alleged fear of being present with Mr Magee, notwithstanding no allegation having been made.

17. On behalf of the Husband it is submitted that he has no objection to the Wife being accompanied by her legal or financial advisors to date in these proceedings.  The Husband also has no objection to her being accompanied by “[C] Security” subject to those security officers remaining in public areas and acting as a static guard outside any enclosed private rooms the Wife might choose to enter.

18. The basis of the Husband’s concern about the Wife’s requests for “any persons that she chooses to accompany her” is that such persons are likely to include members of L Group that may be motivated to cause mischief upon him or R Pty Ltd or both.  At the least, it raises a fear for him within his workplace which is unnecessarily provocative.

19. The reason for the restriction to be placed upon members of “[C] Security” is to provide a compromise between the Wife’s need for her personal security and the Husband’s need to maintain the security of R Pty Ltd.  In the circumstances where the Wife enters an enclosed room, there is no need for her to have concerns for her safety in circumstances where static guards or guards are present at the entrance.  At the same time, this proposal prevents the possibility of any person purporting to act as a security guard being involved in activity on the computer system which may place the Husband and/or R Pty Ltd at risk.  The reason for the concern of the Husband in relation to the integrity of the computer system is set out in the Affidavit of Mr A.  In summary, access was obtained to the computer system from outside the company using the Wife’s login details.  Once inside the computer system, the person who obtained access to the system copied the Husband’s email directory and sent those files off site.  At the same time, the entire computer network could have been damaged, corrupted, destroyed or contaminated, including the possibility of the introduction of transactions to the data to support the Wife’s assertion of financial non-disclosure by the Husband.

20. On behalf of the Husband it is submitted that the while it is true that the Wife, in her capacity as a director, would be entitled, as a general principal to the relief sought in Order 1 of her Further Amended Application in a Case, her rights to do so have been limited by the operation of the Orders for the Husband to manage the financial affairs of the company.  If that were not the case, the appropriate Orders to be made in relation to the provision of financial information from the company would be that the Wife have access to obtain whatever information she thinks fit.  Clearly, that is not the case and that position is acknowledged by the Wife through her seeing it necessary to seek the relief in Order 1.

21. On behalf of the Husband it is submitted that a balance must be attained between the need to keep the Wife informed of the financial affairs of R Pty Ltd for the purpose of these proceedings and her ability to make enquiries from the records of R Pty Ltd for those purposes, weighing against the need for the Husband to continue the operation of the Company, feeling comfortable in doing so, protecting the integrity of the computer system and the assets of the parties through the Husband productively working and protecting the computer system.

22. On behalf of the Husband it is submitted that his position seeks to provide a compromise between satisfying the Wife’s needs to obtain information, while feeling safe, and the Husband’s needs of feeling safe in the work place and protecting the interests of the Company.

23. On behalf of the Wife it is submitted that the material contained in the Husband’s Affidavit filed on 13 March 2008 (paragraphs 12 to 26) is inflammatory and not relevant to these proceedings which relate exclusively to a property settlement between the parties.  It is submitted that issues and disputes between the Husband and L Group are being litigated in other Courts.  It is submitted that the Husband has attempted to disparage the Wife on account of her involvement in the L Group organisation and by making allegations concerning the parties’ daughter, allegations that are emphatically denied by the Wife.  It is submitted that the Husband has previously attributed the success of the parties’ joint business, R Pty Ltd, to the assistance he received from the now deceased alleged perpetrator and the L Group organisation in which he enthusiastically participated for 26 years.

24. The Wife further states that it would be her intention to attend the business premises twice a week to inspect company information on a computer that has been set up for her purposes.  She also claims that as a result of her previous inspection of material, she has observed that a large number of emails written by the Husband and the parties’ daughter have been deleted.  She states that there are business ventures in relation to the plant of “[F Pty Ltd]” and a contract in existence in South-East Asia which were not known to her, despite being a company director.  Annexed as Annexure A to her affidavit is a bundle of emails which she states demonstrates dealings the Husband has had to date, which have not been the subject of disclosure by the Husband.  She further states that there are a number of incriminating emails on backup tapes to which she desires access, in particular to the April 2007 back-up tape, which she states has been declared “missing” by the Husband.

25. I am going to make the order sought by the Wife.  However I will also order that the Wife is not to be accompanied by a member of L Group or any person associated with that organisation.

Order 5

1. As to order 5, that the Husband pay the costs of the experts as identified at Orders 2 and 3 at first instance with the final determination on allocation of costs to be made by the trial judge a number of submissions were made.

2. As seen on 5 March 2008 orders were made that Mr S of T Company be appointed as a single expert for the purposes of extracting the non-privileged information from the computer backup tapes of R Pty Ltd produced by the Husband under subpoena and that the parties agree to appoint a single expert legal practitioner for the purposes of determining which emails for the Husband stored on the computer back up tapes shall be deemed as privileged and failing agreements such legal practitioner to be appointed by the President  of the Law Society.

3. On behalf of the Wife it is submitted that the Husband has allegedly saved allegedly privileged information on the business computer system.  The Husband contends that it was emails/documents relating to the provision of advice/instructions between his family and criminal law advisors.  Importantly, the Husband took this action unilaterally without the consent of the Wife as a Director of R Pty Ltd and F Pty Ltd.  The Wife seeks to view the Company information saved on the backup tapes, as she is entitled to do both as a Director and as part of the discovery process.

4. For several months the Husband should have been aware of the Wife’s requirement to view the Company information saved on Company backup tapes (noting that proceedings were commenced on the 24 April 2007) as a consequence of both the pre-action procedures and the orders of the Judicial Registrar on 25 June 2007 (orders 5 and 6) which provide “the Husband shall make available for inspection any other documents relating to the affairs of the company”.  Nevertheless the Husband continued to allegedly save allegedly privileged information on such backup tapes.

5. The Wife should not have to incur any expense as a consequence of the Husband’s fault in storing allegedly privileged information on the company computer system.  For these reasons the Husband should bear all costs at first instance in relation to the extraction of the privileged information from the backup tapes.

6. On behalf of the Husband it was submitted that since the separation of the parties, the Wife has had access to accommodation in the former matrimonial home at no expense while receiving weekly amounts of $1,915.50.  At the same time, and in addition, she has received capital sums in excess of $400,000.

7. In his affidavit the Husband gave evidence that the Wife has had access to the following funds, in addition to currently receiving $1,915.50 from R Pty Ltd on a weekly basis:

   ·the use of the former matrimonial home free of mortgage repayments, rates or utilities costs;

   ·withdrawals of $21,000 from the R Pty Ltd account between 2 April 2007 and 13 April 2007.

   ·$50,000 return of bail surety of the alleged perpetrator after he committed suicide;

   ·$100,000 paid to the Wife’s solicitors in interim costs; and

   ·the net proceeds from real estate sold during the course of proceedings, valued at $250,000.

8. The appointment of Mr S and Mr W as single experts was at the initiative of the Wife in order to seek to prove a contention that she has about financial non-disclosure on the part of the Husband.  The Husband had consented to the appointment of those experts in order to limit the issues in dispute notwithstanding his denials of the alleged non-disclosure.  The Wife has been provided sums of money since separation which would enable her to meet the upfront costs of the appointed experts. There has been no suggestion from the Wife that she has exhausted the funds made available to her.

9. It is the Husband’s position that he has enabled the Wife to make any enquiries she seeks fit in relation to his financial position.  He has consented to pay the upfront costs of all experts that are required for the purposes of both parties to the proceedings in order to resolve the dispute.  Where experts have been appointed for the Wife’s purposes alone, sufficient funds have been released to her to enable her to meet those expenses.  In the event that the Wife is vindicated by the finding of probative evidence of non-disclosure by the Husband as alleged, then it is a matter for the trial judge to make a determination as to whether or not the costs of the joint-experts referred to in the Order sought by the Wife, should be apportioned.

10. Where the Wife has appropriate resources to meet the costs of experts making in unreasonable and far fetched enquiries, she should meet those upfront costs.

11. I am going to make the orders sought by the Wife.  The issue of the ultimate burden of the costs as between the Husband and the Wife will be dealt with at the hearing of the applications for final orders.

Order 6

1. As to order 6, that directors’ meetings should occur on a monthly basis the Wife made a number of submissions.

2. On behalf of the Wife it is submitted that the reasons for this Order are set out at paragraph 14 of her Affidavit filed on 18 February 2008 which in summary relate to the Husband making decisions without consulting the Wife – evidence by way of example from the documents/emails (of Affidavit of Wife filed 18 February 2008 - annexure A) of discussions with third parties to produce goods from the production facilities – M Company.  It is submitted that these issues continue to the present day and correspondence is frequently sent to the Husband reminding him about his obligations to consult and seek the Wife’s consent.

3. On behalf of the Wife it is submitted that the despite the presence of orders the Husband has failed to meet the Wife’s requests for information and documents within a timely manner.  By way of example the travel reports were requested initially in September 2007 (Affidavit Wife filed 16 January 2008 para 75) but the Wife had to seek specific orders for this to occur (order 8 of 21 February 2008) which then still were provided late by the Husband.  The trip reports were not received until 26 March 2008.

4. On behalf of the Wife it is submitted that the three Director’s meetings that have been conducted to date (November 2007, January 2008 and February 2008) have been conducted reasonably and without any complaint from the Husband.  Indeed following the Directors meeting in January 2008 the Husband sought that a further meeting be arranged and noted in his email dated 1 February 2008 (annexure “A” Husband’s Affidavit filed 4 March 2008) about the “cooperative and amicable nature of the meeting we had on the proposed [F Pty Ltd] sale of Tuesday 29 January 2008”.  Thus the Husband’s concerns about feeling “intimidated” as a basis to reject regular meetings (paragraph 38 of Husband’s Affidavit filed 13 March 2008) is not supported by his very own evidence.

5. In summary the meeting forms an important part of the Wife remaining informed about the business and the decision making which she has in the past always taken an active role in and has now been excluded from.

6. On behalf of the Husband it was submitted that the Wife has access to information pursuant to Orders made on 1 May 2007 and 25 June 2007, by attending the Company premises to inspect records and accessing the computer system, by access to the R Pty Ltd and F Pty Ltd backup tapes and otherwise as may be requested.

7. The parties held a series of director’s meetings in relation to the intended sale of F Pty Ltd.  Those directors meetings were not able to resolve the issues concerning the sale of that entity and ultimately resulted in that issue being before a Judicial Registrar over two days.

8. On behalf of the Husband it is submitted that the director’s meetings have been conducted with the Wife not being present in the room and questions and answers being relayed to her through her legal and financial advisors.  Such a process, as perceived by the Husband, would be an interrogation or cross-examination of him by the Wife’s legal and financial advisors on a monthly basis between the date of any such Order and the hearing. This is not to mention a transcript being taken from the interrogation for later use in these proceedings.  Such a situation denies natural justice and the protections of Order by the Court under cross-examination.

1. On behalf of the Husband it is submitted that there is no additional information that is required by the Wife beyond the arrangements that have already been put in place.  However, in the event that such a need arises for further information, such a request can be made by the Wife in the ordinary cause of the litigation by making such a request in writing.  No Order of the type sought by the Wife is necessary.

2. I am not prepared to make the order sought by the Wife.  However this is on the basis that she is able to access all relevant information and documents as contended for by the Husband.

Order 7

1. As to order 7, that both parties do all things necessary to cause to be forwarded to Ms D financial statements for R Pty Ltd for the years ending 30 June 2003 and 2004 and the bundle of emails and documents referred to as annexure “A” to the Wife’s Affidavit filed on 15 February 2008) a number of submissions were made.

2. On behalf of the Wife it is submitted that the basis for this Order is the evidence of Mr E in the affidavit filed on 18 February 2008.  Mr E, under Annexure B, in his letter dated 15 February 2008 supports the information sought by the Wife under Order 7 being given to the single expert.

3. On behalf of the Wife it is submitted that importantly, the turnover cycle of the business relating to machinery sales is significant and varies from year to year.  For example, during the financial years ending 30 June 2003 and 2004 machinery sales were $3,902,525 and $34,298 respectively.  Machinery sales for the financial years 2005 and 2006 and 2007 were $28,404 and $43,243 and then $2,269,501 respectively (Annexure 1).  It is therefore important if a proper value for the business is to be determined that the single expert is provided all material information, including a larger financial picture of the material relating to machinery sales.  At the moment all that the single expert has been given is one year (namely 2007) where significant growth in the turn over occurred as a consequence of the machinery sales.

4. As to the Korean Broker Agency Agreement it is noted that Ms D has called for this in her letter dated 22 January 2008 under item 10 (annexure 2) and Mr E remarks “I would be interested in seeing all international agency arrangements” (Affidavit filed 18 February 2008 annexure “B”).

5. On behalf of the Wife it is submitted that it is important to underscore that the issue in terms of emails and documents relating to the Husband’s use of the production facilities at the factory with outside parties only arose since the Wife has had her access reinstated to the business computer system (noting that it was unilaterally terminated on 15 December 2007) in February 2008.  This information was not known to the Wife at the time the letter of instruction was being settled by Le Poer Trench J in October and December 2007.  

6. Moreover it is common ground that the Husband has specifically sought that the production facilities at S be excluded from the sale of F Pty Ltd presumably for the reasons that he sees that the production facilities a profitable business and a “going concern” in the future.  Thus the submission by the Husband at paragraph 39 of his Submissions that “the production [facilities] could not be valued as a going concern” fails to acknowledge that that is indeed the Husband’s future intent and therefore should be included as part of the valuation process of Ms D.

7. On behalf of the Wife it is submitted that generally speaking the Husband’s position relates to three points; first, that the initial letter of instruction was settled by Le Poer Trench J and his Honour declined to include any additional material so that is the end of the matter; second, that Ms D has not requested the material and third that the Husband does not consider the material relevant.

8. On behalf of the Wife it is submitted that she is seeking to provide material to the single expert that is completely different to what was sought to be provided in December 2007.  Moreover, the material that is being sought to be provided was only discovered by the Wife in February 2008 which was the first time that the Husband consented to the Wife having access.  Prior to this the Husband had terminated the Wife’s computer access from 13 December 2007.  The Wife has consistently protested against this.On 11 December 2007 the Wife sought to inform the expert that F Pty Ltd and R Pty Ltd needed to be valued separately and that the Wife had sought to sell F Pty Ltd, which at that time was not agreed to by the Husband.  As to the second matter is it important to note that the process with the single expert is also dependent on the parties informing the single expert of any matter that may bear on the valuation assessment.  The process of document provision cannot just rely on requisitions from the expert (which is the Husband’s case).  The letter of engagement makes this plainly clear:

   Our report will be issued on the understanding that you and your client draw our attention to all matters of which you, or your client, are aware concerning information materials supplied to us or other matters which may have an impact on our report up to the date of signature.  We will not be responsible for any error in our report caused by misrepresentation in or omission of information materials supplied.

9. The material is clearly relevant and in the Wife’s submission ‘may have an impact on’ the report.

10. As to the third matter, on behalf of the Wife it is submitted that Mr E is infinitely more qualified than the Husband to assess what is relevant and he supports the material being sent.  Mr E’s evidence should be preferred to that of the Husband.

11. On behalf of the Wife it is submitted as a final and more practical matter that the material sought to be provided could in any event be provided to Ms D by way of formal questions under the Rules or under cross-examination.  It is better for Ms D to consider all information at one time when she is doing her report rather than having to produce amended reports or deal with this material under oral cross-examination.

12. On behalf of the Husband it is submitted that on or about 13 September 2007, this matter came before Le Poer Trench J in relation to a dispute concerning the terms of the letter of instruction and what documents should be forwarded to Ms D with that letter of instruction.  In accordance with the Orders of his Honour, documents were provided to the Wife’s solicitors with the documents to be enclosed with the letter of instruction to Ms D.  Those documents were not sent in accordance with the Orders of Le Poer Trench J.

13. On 11 December 2007 at an Interim Hearing on similar issues, Le Poer Trench J refused the Wife’s application for further material to be provided to Ms D and ordered costs.

14. In relation to the evidence of Mr E and the Q Company agreement, Mr E comments that “[Q Company] have asked [R Pty Ltd] to continue with an exclusive arrangement”.  The continuing of an existing arrangement where there is an established earnings pattern from the material provided would be sufficient for Ms D to assess the future earnings of R Pty Ltd pursuant to that continued agreement and allow her to make an assessment of the value of the Company at the current time. To suggest that R Pty Ltd has other alternatives available to it, would only muddy the waters.  Mr E does not indicate whether or not the additional information is likely to increase or decrease the valuation of R Pty Ltd.  Further, the exclusive arrangements that were entered into with Q Company were at a time before the parties separated and presumably were entered into with a view to maximising the returns to the company and its value.  For the Wife to now suggest otherwise is inconsistent with the decisions made while she was a director and prior to separation.

15. On behalf of the Husband it is submitted that Ms D is asked to provide a current value for R Pty Ltd.  That value should be an expression of her opinion of the Company as it now stands in the current market conditions.  For her to do otherwise would be to misunderstand her role.  For her to be taking account of expressions of interests from emails from other parties, outside of an exclusive arrangement which has been in place for an extended period, would be mere speculation and not in accordance with her role.

16. On behalf of the Husband it is submitted that in relation to the Korean Broker agency arrangements with R Pty Ltd and the incorporation of a company as R Korea, the evidence of Mr E is that he considers “this agreement of itself represents little value”.  Accordingly, there is no evidence to support the provision of any additional documents in relation to this point.

17. On behalf of the Husband it is submitted that in relation to the production facilities, Mr E asserts that the “bundle of papers provided” would be relevant “as it goes to the question of whether the assets should be valued on a realisable basis or on a going concern basis”.  He also says that “[R Pty Ltd] is actively pursuing the option of providing specialist […] products out of the production [facilities], not only to [F Pty Ltd] but to other potential customers, in particular [M Company]”.

18. On behalf of the Husband it is submitted that it is common ground between the parties that F Pty Ltd has not commenced trading, nor has there been any sale from the production facilities to M Company or any other potential customers.  On this basis, the production facilities could not be valued as a going concern.  The prospect of the facilites becoming a going concern, let alone being valued as such is more speculation.

19. On behalf of the Husband it is submitted that of the three points raised in the report of Mr E being annexure “B” to his Affidavit filed on 18 February 2008, one he conceives as of no real assistance and the other two are matters of speculation which would not be of any great assistance to Ms D.  Ms D has after two Applications in a Case, been instructed upon terms ordered by the Court.  She has made requisitions which have been answered.  The provisions of further voluminous information which is of a purely speculative nature, would only serve to delay her report and increase the costs of the parties.  The issues raised by the Wife are issues which, at best, could be raised with Ms D as to their relevance in the event the Wife ultimately seeks to challenge the conclusions reached in Ms D’s report.

20. On behalf of the Husband it is submitted that the intended use of the production facilities is certainly something that was within the parties’ contemplation prior to separation, given their investment of approximately $2 million.  R Pty Ltd seeking to utilise the production facilities is certainly something that the Wife view or ought to have known at the time of Ms D originally being instructed.  The only real change since separation has been that the parties have agreed to sell F Pty Ltd which in the Husband’s view has the effect of making profitable utilisation of the production facilities on even more remote prospect than at separation or at the time of instructing Ms D.

21. On behalf of the Husband it is submitted that Ms D has been instructed and made requisitions for further information in order to complete her report.  The information required by Ms D has been prepared and provided to her.  She has not requested the information that the Wife now seeks to provide.  It is the Husband’s position that the additional information is relevant to the current value of R Pty Ltd and by providing it to Ms D will only delay the finalisation of her report and increase the costs to the parties.

22. I am going to make the order sought by the Wife.  However, I make clear that it is subject to costs and in the event that the contentions of the Husband are established and that unnecessary costs were incurred then they will be the responsibility of the Wife.

Order 8

1. As to Order 8, specifically in relation to costs related to Mr B’s updated report on behalf of the Wife it is submitted that the Husband has conceded a need for an updated Report.  Mr B’s report on the plant and equipment at page 5 says: “Unsighted items contained in pallet [store] room – the valuer reserves the right to re-appraise those items if offered for inspection”.  He then provides a list.  On behalf of the Husband it is submitted that the report is defective for the reason that the Husband failed to provide proper access to the single expert to value the items in the store room.  The expert has indicated that the store room was locked and he was not provided with a key.  There is no reason why the normal rule under 15.47 (1) should be departed from and therefore costs should be shared between the parties in relation to the reappraisal of the items not sighted by Mr B.

2. On behalf of the Husband it is submitted that Mr B is a single expert that has been appointed to value real estate, plant and equipment on behalf of the parties in these proceedings.  Mr B expresses an opinion as to the value of the plant and equipment located in the pallet store room at the store of F Pty Ltd without having inspected the items.  The Husband is unaware as to how Mr B arrived at that figure.  He was advised how he could obtain access to the store room and elected not to do so.  It is the Husband’s position that the valuation provided by Mr B is fair and reasonable, but does not object to the Wife having Mr B reinspect those items and reconsider his view, subject to her paying the upfront cost of such an inspection and ultimately meeting the entire costs in the event that Mr B’s view does not change or does not substantially change in favour of the Wife.

3. I am going to make the order sought by the Wife.

I certify that the preceding one hundred and two (102) paragraphs are a true copy of the reasons for judgment of the Honourable Justice O’Ryan

Associate: 

Date:  10 June 2008