Reece and Dawkins

[2013] FamCA 665

FAMILY COURT OF AUSTRALIA

REECE & DAWKINS [2013] FamCA 665

FAMILY LAW – PRACTICE AND PROCEDURE – where the judgment in the final property proceedings is still reserved – where the de facto husband seeks leave to re-open his case – whether it is in the interests of justice to re-open the case – whether the new evidence would most probably affect the outcome – whether the evidence could have been discovered earlier by reasonable diligence – whether prejudice would ensue to the de facto wife by reason of the late admission

Reid v Brett [2005] VSC 18 (8 February 2005)

Smith v NSW Bar Association (1992) 176 CLR 256

Suell & Suell (Re-opening) [2009] FamCA 55

APPLICANT: Mr Reece

RESPONDENT: Ms Dawkins

FILE NUMBER: CAC 559 of 42

DATE DELIVERED: 5 September 2013

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Watts J

HEARING DATE: 22 August 2013

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Hodgson

SOLICITOR FOR THE APPLICANT: Nicholl & Co

COUNSEL FOR THE RESPONDENT: Mr Miller

SOLICITOR FOR THE RESPONDENT: Farrar Gesini Dunn

Orders

Orders made 22.8.2013

1. Leave granted to the de facto husband to reopen the case to adduce any further evidence relating to the amount of $114,172.84 which was withdrawn from account … on 19 January 2011, deposited into account … on the same day, withdrawn from account … on 3 February 2011 and deposited into the St George term deposit … on the same day.

2. Within 14 days the de facto husband file and serve the fresh evidence upon which he wishes to rely.

3. The wife is to have an opportunity to ask the de facto husband further questions about the evidence he files as a result of this leave.

4. Leave granted to the de facto wife to issue a subpoena to Ms B for her bank records relating to the withdrawal by her from account 2 on 20 January 2011 in the sum of $114,172.94 and any transaction on those bank records.

5. Leave granted to the de facto husband to issue subpoenas in relation to any transaction on account 2.

6. Twenty one days before the continuation of the hearing, each party file and serve any affidavit annexing subpoenaed documents upon which they wish to rely. 

7. This matter be adjourned for any further evidence and submissions to 4.15pm on 28 October 2013.

8. The order made that the de facto husband pay the cost of the reopening of the hearing made 6 June 2013 (part of order 5) is discharged. The costs of each party in respect of the de facto husband’s application to reopening the case is reserved.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Reece & Dawkins 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: CAC 559 of 42

Mr Reece

Applicant

And

Ms Dawkins

Respondent

REASONS FOR JUDGMENT

INTRODUCTION 

1. The final property proceedings were heard by me on 20 – 22 May 2013 and 6 June 2013. Judgment is reserved. On 6 June 2013, during the conclusion of oral submissions, the de facto husband applied to re-open his case. The parties were unable to agree on whether fresh evidence might be admitted. By way of an Application in a Case filed 5 July 2013, the de facto husband sought an order in the following terms:

   That this Honourable Court grant the Respondent leave to re-open this case to adduce evidence as to monies held on trust by the Respondent for his mother in St George Bank Account number ...

2. The de facto wife seeks that the de facto husband’s application be dismissed.

3. Up until 6 June 2013, the case proceeded on the basis that an amount of $126,712.17, which is the balance in a St George Bank term deposit 1, was the money of the de facto husband. It was an agreed item (item 14) on the balance sheet (exhibit 20). There was another agreed item on the balance sheet of a minor amount in the sum of $2.82 (item 13) which was the balance in a St George Bank account number ending ...

4. The de facto husband wishes to adduce evidence relating to accounts ending 2 and 1 for two purposes:

   4.1.As an answer to a suggestion by counsel for the de facto wife that an amount of $114,172.84 should be added back as a new item on the balance sheet against the de facto husband; and

   4.2.To establish that the figures in items 13 and 14 on the balance sheet should be removed as they relate to monies held by the de facto husband in trust for his mother.

WHAT THE DOCUMENTS SAY ON THEIR FACE

1. The following is clear from the evidence in the hearing and the evidence which the de facto husband now seeks to adduce:

Account 2

1. This is an account held in the joint names of the de facto husband and his sister.

2. The first page of the statement for the period 27 December 40 to 26 March 2011 of that account was tendered during the hearing (exhibit 19 on 22 May 2013). It discloses that as at 27 December 40 it had an opening balance of $227,524.42.

3. On 19 January 2011, an amount of $114,172.84 was withdrawn by the de facto husband and deposited into an account in his own name (account 4). On the next day (20 January 2011) an identical amount was withdrawn, the de facto husband says by his sister, Ms B, and at this time the place where that money was deposited is not known.

4. The amount of $114,172.84 withdrawn by the de facto husband on 19 January 2011 remained in account 4 for just over two weeks until he withdrew it on 3 February 2011 and deposited it into St George Bank term deposit 1.

St George Bank term deposit 1

1. This is item 14 on the balance sheet. The original deposit of 3 February 2011 has not been disturbed by the de facto husband and that amount has accumulated interest so that as at 2 February 2013 there was $126,712.17 in that term deposit.

2. The difficulty for the de facto husband is that he has made a number of inconsistent statements previously, some of which have been verified by him on oath. They are as follows:

   11.1.In his financial statement of 22 May 42 (exhibit 22) the de facto husband records his ownership of the monies in account 1 (then at a balance of $120,829.62) without recording in any way that those funds were held by him on behalf of his mother or that the source of those funds were his mother’s funds;

   11.2.In his financial statement upon which he relied at the trial filed 14 May 2013, the de facto husband again records as his own funds the term deposit 1, now with a balance of $126,712.17. However, in the same financial statement, the de facto husband also records as his own funds, monies in St George Bank account 3 which he recorded had a balance of $118,626.69. A concession was made by the de facto wife at the commencement of the trial that that was an error in the de facto husband’s sworn statement and that those funds were in fact funds of the de facto husband’s mother. Although counsel for the deo facto wife indicated that that concession may have to be revisited in light of what the de facto husband is now alleging, it was made clear at this hearing that those inquiries had been made and that the de facto wife was satisfied that the amount of $118,626.69 in account 3 was appropriately not placed on the balance sheet.

   11.3.In his trial affidavit sworn 8 April 2013, the de facto husband at paragraph 32 says the following:

   I [sic] my sister and I both hold an account in trust for my mother. The account number is [3] at St George Bank. There is about $115,000.00 in the account.

   11.4.In the letter of explanation dated 12 June 2013 written by the lawyers for the de facto husband and attached to the de facto husband’s affidavit sworn 3 July 2013 (on which he relies in these proceedings), the situation is confused by a statement to this effect:

   In relation to the St George Bank account number [2], in the names of [Ms B] and [Mr Reece], this is a joint account held by our client and his sister on trust for their mother. This is consistent with his evidence at paragraph 32 of our client’s Affidavit sworn 8 April 2013...

   That statement is inaccurate given that paragraph 32 of the de facto husband’s affidavit sworn 8 April 2013 clearly only deals with account [3] and not account [2].

3. So it can be seen that in two of his financial statements the de facto husband on his oath has indicated that these monies are his and in his affidavit, although he refers to account 3, he does not refer to account 2 as being an account that he holds in trust for his mother.

4. The question raised is whether or not the de facto husband should be allowed to put before the court evidence that would contradict the position that he had previously put.

5. In considering that question, I am mindful of the way this whole issue came to light.

6. Counsel for the de facto wife cross examined the de facto husband about what had happened to the withdrawal from account 4 of $114,172.84 on 3 February 2011. Counsel for the de facto wife during final submissions said that the de facto husband’s explanation for what happened to these funds was unsatisfactory and that the amount of $114,172.84 should be added back against the de facto husband on the balance sheet. I set out below part of the cross examination:

   COUNSEL FOR THE DE FACTO WIFE: Right.  And on 3 February that year there was a withdrawal from your 4 St George account of $114,172.84.  You got that?  $114,000 - - - ?

   DE FACTO HUSBAND: Yes, yes.

   COUNSEL FOR THE DE FACTO WIFE: - - - in round figures.  Sir, do you know what the purpose of that withdrawal was?

   DE FACTO HUSBAND: Not sure whether that was mum’s money which we put into her account or I put that in an investment account.  I wouldn’t put cents into an investment account, so it would have been half of what mum – the residue of mum – Debbie – I’m assuming Debbie would have had the same amount – if it’s gone into an account for mum I’m assuming Debbie would have had the same amount if that’s – if that’s where it’s gone.

   …

   [Counsel for the de facto wife showed the de facto husband a St George Bank statement for the account 4]

   COUNSEL FOR THE DE FACTO WIFE: Right.  And we’ve got the page that has a transaction dated 3 February 2011?

   DE FACTO HUSBAND: Yes.

   COUNSEL FOR THE DE FACTO WIFE:  And it shows a withdrawal called transfer to account - - - ?

   DE FACTO HUSBAND: Yes.

   COUNSEL FOR THE DE FACTO WIFE: - - - $114,172.84?

   DE FACTO HUSBAND: Yes.

   COUNSEL FOR THE DE FACTO WIFE: Do you say that you think that’s the money that’s divided between you and your sister that belongs to your mother?

   DE FACTO HUSBAND: I think it must be, yes, because I wouldn’t have invested – have something with 84 cents.  I would say that Debbie possibly would have had the same amount and we’ve said, “Right, we put this into an account for mum where we don’t touch it.”

   …

   [Counsel for the de facto showed the de facto husband a statement of the account of the de facto husband’s mother (account 3)]

   COUNSEL FOR THE DE FACTO WIFE: And I asked you earlier about a withdrawal from your account 4 of $114,172.84 - - - ?

   DE FACTO HUSBAND: Right.

   COUNSEL FOR THE DE FACTO WIFE: - - - on 3 February?

   DE FACTO HUSBAND: Yes.

   COUNSEL FOR THE DE FACTO WIFE: It doesn’t seem to have been deposited to that account, does it?

   DE FACTO HUSBAND: Can’t see it there.

   COUNSEL FOR THE DE FACTO WIFE: No.  So where did it go to?

   DE FACTO HUSBAND: Well, it was in mum’s account.  It hasn’t gone anywhere.

   COUNSEL FOR THE DE FACTO WIFE: Sorry, that is mum’s account, isn’t it?

   DE FACTO HUSBAND: Yes, yes.  I’m just saying I can’t – I can’t see it here.

   COUNSEL FOR THE DE FACTO WIFE: So it didn’t go there apparently.  It did apparently come out of your account 4?

   DE FACTO HUSBAND: Yes.

   COUNSEL FOR THE DE FACTO WIFE: And are you simply not able to help us about where it went?

   DE FACTO HUSBAND: No.  Wouldn’t have gone into any of my accounts because it ended in 84 cents so to me it was split.  Now, whether – I can’t – I can’t answer that, but it hasn’t gone anywhere else into any of my accounts or my - - -

   COUNSEL FOR THE DE FACTO WIFE: But if it was split – you mean split with your sister, don’t you?

   DE FACTO HUSBAND: I would say so.  Yes, yes, yes, because - - -

   COUNSEL FOR THE DE FACTO WIFE: Well, let’s assume?

   DE FACTO HUSBAND: - - -it ends in cents.

   COUNSEL FOR THE DE FACTO WIFE: But that’s just a guess, isn’t it, that it was split with your sister because you’re not even sure it was your mother’s money in the first place to split, are you?

   DE FACTO HUSBAND: I’m assuming it was my mother’s money, yes.

   COUNSEL FOR THE DE FACTO WIFE: But that’s just an assumption, isn’t it?

   DE FACTO HUSBAND: Yes.

7. The undisputed fact is that the answer to the question by counsel for the de facto wife about where the withdrawal of $114,172.84 from account 4 on 3 February 2011 went, was that it went into the St George Bank term deposit 1 on the same day and has remained there ever since untouched.

8. Pausing there, it is clear that at some point before 22 May 2013 the de facto wife’s lawyers had available to them or at least sighted the document the de facto husband seeks to adduce relating to the St George Bank term deposit 1. I can infer that because (by the 22 May 2013) the de facto wife had agreed to a balance sheet figure in relation to that account at the balance of $126,712.17.

9. I do not however make any adverse comment about the questions that the de facto husband was asked in the witness box (to which the de facto wife should have known the answer) nor to the submissions made by counsel for the de facto wife in relation to the amount of $114,172.84 being added back.

10. Counsel for the de facto wife did properly make the point that in the letter from the de facto husband’s solicitor dated 31 May 2013, in first paragraph on page 2 the solicitor confirms that although it is not clear on the face of the document that account 1 is in the de facto husband’s name.

11. It was as a result of the de facto husband being accused of not properly accounting for the figure of $114,172.84 that the de facto husband realised that that money was deposited into his St George Bank term deposit 1 and that it was his mother’s money. It was in those circumstances that the de facto husband having discovered his mistake, made the current application.

12. The de facto wife still wishes to test the proposition that the monies originally in account 2 were monies that the de facto husband and his sister jointly held on behalf of their mother.

LEGAL PRINCIPLES

1. In Reid v Brett [2005] VSC 18 (8 February 2005) Habersberger J said:

   2011.  The criteria governing the exercise of the discretionary power to re-open a case to admit further evidence where the hearing has concluded but judgment has not been delivered have been said to be as follows:

   (a)the further evidence is so material that the interests of justice require its admission;

   (b)the further evidence, if accepted, would most probably affect the result of the case;

   (c)the further evidence could not by reasonable diligence have been discovered earlier; and

   (d)no prejudice would ensue to the other party by reason of the late admission of the further evidence.[1]

   …

   i)[1] Re: Australasian Meat Industry Employees’ Union (WA Branch); Ex parte Ferguson (1986) 67 ALR 491 at 493-494 per Toohey J, citing Watson v Metropolitan (Perth) Passenger Transport Trust [1965] WAR 88 and Murray v Figge (1974) ALR 612

2. In Smith v NSW Bar Association (1992) 176 CLR 256, the plurality of the High Court stated at 267 that in circumstances where there was an application to re-open before judgment had been delivered:

   It is difficult to see why… the primary consideration should not be that of embarrassment or prejudice to the other side. (footnote omitted)

IS THE EVIDENCE SO MATERIAL THAT THE INTERESTS OF JUSTICE REQUIRE ITS ADMISSION?

1. In the context of the applications that are made, the monetary amount involved is of sufficient significance for it to be in the interests of justice to allow the admission of the fresh evidence.

2. The evidence which the husband wishes to lead that was not before me at the hearing relates to:

   25.1.A print out of the St George Bank Term Deposit account ending 1 showing transactions for the period 3 February 2011 to 2 February 2013 (Annexure C to the de facto husband’s affidavit);

   25.2.The de facto husband’s assertion in his affidavit in support of this application that account 2 contained monies (and continues to contain monies) held on trust for the de facto husband’s mother.

IF THE FURTHER EVIDENCE WAS ACCEPTED, WOULD IT MOST PROBABLY AFFECT THE RESULT OF THE CASE?

1. I am satisfied that this evidence, if allowed, most probably would affect the result of the case in that:

   26.1.It would add to the shield the de facto husband raises against the submission that the $114,172.84 should be added back as a separate new item on the balance sheet or alternatively considered under s 79(4)(e) Family Law Act 1975 (Cth) (if in fact that submission is still maintained by the de facto wife);

   26.2.It provides the de facto husband with the basis upon which he can make a submission that either:

   26.2.1.items 13 and 14 should be removed from the balance sheet; or

   26.2.2.if they remain on the balance sheet, that they should be treated as contributions made on his behalf by his mother.

COULD THE FURTHER EVIDENCE HAVE BEEN DISCOVERED EARLIER BY REASONABLE DILIGENCE?

1. This is a more difficult argument for the de facto husband to make and quite clearly there has been a degree of slackness in terms of the preparation of the de facto husband’s case either by the de facto husband or the de facto husband’s lawyers so that these documents were not fully put before the court in the proper manner. I have however discussed above the circumstances in which the error was discovered by the de facto husband and in those circumstances I do not put a large amount of weight on the fact that the de facto husband could have, by reasonable diligence, put this material before the court in the proper way during the trial. It is clear that records of account 1 had been discovered to the de facto wife.

WOULD PREJUDICE ENSUE TO THE OTHER PARTY BY REASON OF THE LATE ADMISSION OF FURTHER EVIDENCE?

1. Counsel for the de facto husband submitted that any prejudice to the de facto wife would be covered by an order for costs. Counsel for the de facto wife submitted that in accordance with what Murphy J said in Suell & Suell (Re-opening) [2009] FamCA 55, when commenting on the High Court’s comments in Smith v NSW Bar Association:

   11. Prejudice or embarrassment, though, is a broad concept and is not limited merely to cost or expense. The significant stress imposed upon litigants, particularly where the prior litigation history has been lengthy, has been widely recognised as an element of prejudice. Moreover, litigants have a right to expect finality in litigation.

2. I am of the view that that is not one of these cases. The de facto wife in this case is in by far the superior financial position and I am not satisfied that delay will impose significant stress upon her. Any prejudice to the wife can be covered by an order for costs and I further discuss that matter below.

CONCLUSION ON THE RE-OPENING OF THE CASE

1. I am consequently of the view that in order for the court to do justice in the facts and circumstances of this particular case, the de facto husband should be granted leave to be able to reopen his case to lead the evidence about the matters that he has foreshadowed.

2. In those circumstances, counsel for the de facto wife has indicated that he would wish to ask the de facto husband questions for about half an hour. He would also wish to issue subpoenas to the de facto husband’s sister in order to test the de facto husband’s assertions about an agreement he and his sister had reached in relation to the custodianship of their mother’s money. I also raised during submissions with counsel for the de facto husband that perhaps this matter might be able to be resolved between the parties if the actual source of the funds in account 2 could be properly demonstrated and I will grant leave to issue subpoenas if the de facto husband wishes to attempt to provide some further evidence as to the source of the opening balance in account 2 (first page of exhibit 19).

COSTS

1. On the 6 June 2013, I made the following order in relation to costs:

   5.If the parties are unable to agree on a statement of agreed facts which is to be forwarded by email to my associate within 7 days, the applicant’s lawyer is to contact my associate with a view to relisting the matter and argument in relation to the issue of reopening the case. The [de facto] husband will bear any costs in relation to the reopening of the case.

2. After submitting that any prejudice the de facto wife faced could be remedied by an order for costs, counsel for the de facto husband went on to submit that any costs order against the de facto husband should be limited to the time between 23 May 2013 (the day after the end of the first part of the hearing) and 31 May 2013. The latter date is the date the de facto husband’s solicitors sent a letter to the de facto wife’s solicitors enclosing the print out of the St George Bank Term Deposit account ending 1. Counsel for the de facto husband says that the de facto wife should have conceded that the money in account 1 should be removed from the balance sheet as it was the de facto husband’s mother’s money.

3. Counsel for the de facto husband alternatively submitted there should be no order for costs.

4. On 22 August 2013 when the application to re-open was before me, I foreshadowed that the de facto husband may be liable for the de facto wife’s costs from 23 May 2013 until 31 May 2013.

5. In light of the inference I have made that the de facto wife’s solicitors did in fact have or at least sight the St George Bank Term Deposit print out for account ending 1 prior to the commencement of the hearing, I find the more appropriate course is to reserve costs in relation to this application and discharge part of Order 5 made on 6 June 2013. The costs of each party in relation to this application to reopen the case is reserved.

I certify that the preceding thirty-six (36) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts delivered on 5 September 2013.

Associate:  H. Pickering

Date:  5.9.2013