Rennie and Rennie

FAMILY COURT OF AUSTRALIA

RENNIE & RENNIE

[2017] FamCA 329

FAMILY LAW – PROPERTY – Where final judgment is reserved – Where an application is made to re-open property proceedings – Whether the interests of justice will be better served by granting leave to re-open the case – Where leave to re-open is granted for the purpose of admitting a limited amount of evidence.

Family Law Act 1975 (Cth)

EB v CT (No. 2) [2008] QSC 306
Smith v NSW Bar Association (1992) 176 CLR 256
Summitt & Summit and Ors (Re-opening) [2009] FamCA 365

APPLICANT:

Mr Rennie

RESPONDENT:

Ms Rennie

FILE NUMBER:

BRC

1329

2014

DATE DELIVERED:

19 May 2017

PLACE DELIVERED:

Brisbane

PLACE HEARD:

Brisbane

JUDGMENT OF:

Forrest J

HEARING DATE:

15 May 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Bunning

SOLICITOR FOR THE APPLICANT:

McInnes Wilson

COUNSEL FOR THE RESPONDENT:

Mr Linklater-Steele

SOLICITOR FOR THE RESPONDENT:

Hopgood Ganim

Orders

IT IS ORDERED

That leave is granted for the Husband to re-open his case in property adjustment proceedings BRC1329 of 2014, where the trial was concluded on 3 February 2017.
That, further, leave is granted for the Husband to read in those re-opened proceedings and to rely upon only the following further evidence contained in his affidavit filed 7 April 2017:
(i)Paragraphs 6 – 22 and annexures MSR-02 and MSR-03;
(ii)Paragraphs 23 – 28 and annexure MSR-05;
(iii)Paragraphs 29 – 34 and annexures MSR-06 and MSR-07;
(iv)Paragraphs 75 – 78.
That the Wife’s solicitors inform the Court, through the Judge’s Associate, and also inform the Husband’s solicitors by close of business on Friday, 26 May 2017, if the wife intends to cross-examine the husband and/or the psychiatrist who is the author of the report marked annexure MSR-03 in respect of the further evidence relied upon by the Husband in the re-opened proceedings, whereupon the matter will be listed for further directions to be made so as to facilitate that.
That in the event that the Wife’s solicitors do not give notice of intention to cross-examine pursuant to paragraph (3) hereof, the Wife shall file and serve any further written submissions she wishes to make in the property adjustment proceedings having regard to the further evidence now adduced by close of business on Friday, 9 June 2017 and the Husband shall file and serve any further written submissions he wishes to make in the property adjustment proceedings having regard to the further evidence now adduced by close of business on Friday, 23 June 2017.

AND IT IS ORDERED UNTIL FURTHER ORDER

That Orders 3 and 6 of the interim Orders made by Justice Forrest on 3 February 2017, are discharged.
That the Wife is hereby appointed, to the extent that it is necessary, as the sole trustee for the sale of the following vehicles owned by the C Trust:
(i)Vehicle 1;
(ii)Vehicle 2 reg. …;
(iii)Vehicle 3 reg. …; and
(iv)Vehicle 4 reg. …;
and, in the interests of clarity, those vehicles shall not be used at all, other than as determined by the Wife pending sale and the Husband shall follow all directions issued by the Wife in respect of those vehicles pending their sale, including in respect of the delivery into the Wife’s possession or the possession of her nominee any and all things, including documents and records, necessary for the sale of the said vehicles.
That the Wife shall deposit the net proceeds of sale, after discharge of any lease liability pertaining to the particular machine sold and payment of costs of sale, to the bank account of the C Trust, which account only she shall be entitled to draw upon, and she shall be entitled to use any of the funds deposited to that bank account to meet any lease payments pertaining to any lease on any of the vehicles that might remain unsold as such lease payments fall due and owing.
That Order 11 of the interim Orders made by Justice Forrest on 3 February 2017 be varied by replacing the words “water licences” on line 5 thereof with the words “the water allocation identified as WA … on AP …, title reference …”.

AND IT IS FURTHER ORDERED

Costs

That each party shall bear his and her own costs of and incidental to the determination of this application.

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 1329 of 2014

Mr Rennie

Applicant

And

Ms Rennie

Respondent

REASONS FOR JUDGMENT

At the end of a four day trial in contested property adjustment proceedings between these parties, on 3 February 2017, I made some interim orders pending delivery of my final judgment, which I reserved. I have not been able to deliver the judgment to this date.
Those interim orders included an order that the wife forthwith resign as a director of the company by which the parties had operated their business, and the husband was given total management and control of the business from that point on. My orders, however, restrained the husband from taking any steps to wind up the company or to cause it to be put into liquidation. Those interim orders were made notwithstanding the husband’s application, pressed at trial, for the winding up of the company and cessation of the operation of the business.
I also ordered that the husband ensure that all things were done to ensure that the lease payments for leases on three vehicles operated by the business were continued to be paid. I made orders that in the event of default in this obligation that the wife, as sole trustee for sale, be entitled to sell such vehicle or vehicles, that she discharge the finance obligation attached to that machine and deposit any remaining proceeds of sale to the bank account of the trust entity that owned the vehicles pending further orders. The wife is the trustee of that trust and has personally guaranteed the lease liabilities owing to the bank pursuant to the leases, as has the husband. Based on single expert valuations of the machines obtained in December 2016 and consideration of the lease liabilities to the financier, there was, at the time of trial, significant equity in the three operational vehicles. Indeed, it was calculated to be a total of $721,540.
On 7 April 2017, the husband filed an application seeking further interim orders. On 11 May 2017, he filed an amended application seeking an order that the trial be re-opened so that further evidence could be adduced by him. He also sought a number of other orders in that amended application and at the start of the hearing before me on Monday, 15 May 2017, counsel who appeared for the husband told the Court that he still sought all of those orders in addition to the re-opening of the trial. He also informed the Court that the husband sought those orders whether or not the re-opening was granted.
For her part, the wife opposed the re-opening of the trial, but nevertheless sought further interim orders herself providing for all things to be done for her control of the trusts through which their interests in the company are held and through which the vehicles operated by the business are financed to be transferred to the husband. At the hearing, the Court was told that the wife did not oppose the discharge of the restraint on the husband from winding up the company. She also sought an order for amendment of one of the interim orders relating to the transfer of the property to the wife by the husband. Counsel for the husband informed the Court that was not opposed and was consented to.

The Re-opening Application

The husband’s application to re-open the trial is founded, it is submitted on his behalf, on his desire to lead more evidence that he has included in his affidavit filed 7 April 2017.
In that affidavit, he principally deposes to a substantial change in his health subsequent to the trial that he says has resulted in the licensing authority suspending his medical clearance to operate a vehicle. He also says that the deterioration in his health has caused him difficulty in continuing to operate the vehicle services business, particularly in meeting his responsibilities under the operator’s certificate necessary to run the business, as well as being the cause of the business’s preferred contractor status with one the business’s major clients being terminated. He also deposes to not being able to “fulfil [his] obligation … in relation to the lease” for one of the vehicles and says that the bank is taking steps to repossess it. He also deposes to not being able to meet ongoing expenses of the business, including the ongoing lease repayments on the other vehicles the business operates.
He also deposes to the fact that certain loans (that he describes as Division 7A loans) made between the entities and the parties between 30 June 2016 and the trial were not taken into account in the single expert’s valuation of the business. Finally, he also deposes to maintenance that he asserts the vehicles need or will need in the near future and the estimated cost of same.
In relation to his health, the husband says in his affidavit that within days of the trial concluding in early February this year he was hospitalised because of a serious deterioration in his state of mental health. He remained in hospital for several days before being discharged home into the care of family members and his treating general practitioner and, then, a psychiatrist.
He says that the licensing authority then suspended his medical clearance to operate a vehicle having found out about his state of health and that the business’s major customer terminated its relationship with the business. He says that whilst legally he could continue to operate the business without being able to operate the vehicles, the circumstances are such that he just cannot do that properly having regard to his responsibilities under safety regulations.
Indeed, the husband attached to his affidavit a report from the consultant psychiatrist who he had begun seeing in March, this year. It was not attached to an affidavit of that doctor, but there was no objection to me reading it.
The psychiatrist diagnosed the husband with Major Depressive Episode with Melancholic features secondary to current stressors. Those current stressors the doctor listed as:
1.Divorce from wife 3 years ago.
2.Interim court order as part of divorce settlement, that determines [Mr Rennie] to keep his …business and ex-wife takes the home property.
3.[Mr Rennie] alleges that the …business is failing and it is not viable to maintain/continue with it. He has closed his business, but cannot sell it because of the interim court order. He is currently in serious financial difficulty with no income and ongoing expenses from lease payments on [vehicles] etc.
The husband does not himself say in his affidavit that he has “closed his business”, though he made it clear that it is apparently not currently operating and that he does want to close it down. He has certainly asserted that without income from an operational business it will be difficult for him to meet the ongoing lease payments on the three vehicles.
I note though, at this point, the prognosis advanced by the psychiatrist at the end of his report was that with support and medication, which he said the husband was accessing, the husband has a good long term prognosis.

The Husband’s submissions

For the husband, it was submitted that the interests of justice require the re-opening and the receipt of the further evidence as that evidence, if accepted, would “most probably effect (sic) the result of the case”.
In support of that submission, counsel for the husband pointed to the valuation evidence of the single expert that was adduced for the trial in respect of the value of the business. He pointed to the fact that the future maintainable earnings of the business were assessed at $56,472, calculated after allowing for a commercial rate of remuneration for the husband of $120,000 per annum, amongst other recurring expenses. He also pointed to the fact that such was also calculated on past earnings generated when the major customer was providing quite a lot of work for the business and that the new evidence is that it is not any more. Counsel submitted that the valuation opinion did not take into account “the changed circumstances of the Husband’s ability to operate the business moreover it did not take into account the loss of the major customer … and was based upon [that customer] being one of the main customers of the business.”
In essence, as I understand it, counsel’s submission for the husband in this respect is that the evidence the husband now seeks to adduce on a re-opening of the case demonstrates that the valuation opinion evidence of the single expert at trial should not be relied upon in determining the final orders for property adjustment as between the parties as some of the underlying factual premises upon which it was based have changed significantly.
Counsel’s submission is seemingly premised on the proposition that it would be unjust and inequitable (indeed, he submitted that not to allow a re-opening could result in a miscarriage of justice) for the matter to proceed to final judgment with the prospect of orders being made that the husband retain the business and its assets and liabilities (which counsel for the husband conceded is open to the Court) at the values fixed prior to trial by the single expert in circumstances where post-trial the business has effectively shut down due to the deterioration in the husband’s mental health.
Counsel’s submission is that the trial should be re-opened, the husband’s affidavit be admitted into evidence, the company wound up, the assets sold, lease liabilities paid off, costs of sale and tax liabilities paid (or at least to be taken into account by a fresh single expert accountant’s report being commissioned) and a further hearing take place to receive evidence and further submissions.
After three years in the pending cases list, numerous interim hearings, four days of trial, and hundreds of thousands of dollars spent by the parties in legal costs, that is a daunting prospect to consider, even before considering the interests of the other litigants in the hundreds of cases still waiting in this Court’s list for a hearing in addition to the public interest in the efficient administration of the Court.

What are the Applicable Principles for a re-opening?

In his written submissions, counsel for the husband appropriately referred to relevant authorities and the applicable principles to be applied in determining the husband’s application for a re-opening of the case.
For a judicial analysis of the principles governing applications to re-open property adjustment proceedings in this Court see Summitt & Summit and Ors (Re-opening) [2009] FamCA 365 per Murphy J at [14]-[24].The granting of leave is discretionary and is guided by the interests of justice. As Murphy J said at [15]:
The essential question is, is the court more able to do justice in the facts and circumstances of the particular case if the application is granted.
Murphy J also pointed out that the High Court has said that the primary consideration, where reasons for judgment have not been delivered, should be embarrassment or prejudice to the other side.[1]
[1] Smith v NSW Bar Association (1992) 176 CLR 256
In EB v CT(No. 2) [2008] QSC 306, in determining an application to re-open de facto relationship property adjustment proceedings before judgment was delivered in Supreme Court proceedings, Applegarth J referenced authority for the following propositions that are also to be considered:
(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.
Murphy J in Summitt[2] referred to the discussion of these principles with approval. He also adopted as applicable to litigation in this Court generally Applegarth J’s statement that the interests of justice also require account to be taken of the strain that litigation imposes on personal litigants and that the interests of justice are served by finality in litigation, “particularly where prolonged litigation imposes a strain on personal litigants”.[3]
[2] (supra) at [19]
[3] EB v CT (No. 2) (supra) at [5]
I respectfully accept the correctness of the discussion of these applicable principles.

My Consideration of the Evidence having regard to the Applicable Principles

The parties’ respective positions in the years leading up to the trial in this matter included each of them seeking orders that he or she retain the business to the exclusion of the other. Indeed, on two separate occasions the husband had filed interim applications seeking that the wife, who was his co-director of the company that operated the business, be removed as a director and that he be given the exclusive right to manage the business pending trial. The first of those applications was compromised by the parties and consent orders made by me that provided for both parties to continue as co-directors in clearly defined roles – the wife as a bookkeeper and the husband as the operations manager. The second of the applications was dismissed by me after a hearing and the co-directorship continued as before.
Also in the lead-up to the trial, last year, I was required to determine competing interim applications that raised issues about the husband’s operational management of the business as well as the frankness and completeness of his ongoing disclosure. The wife’s position was that the husband was not operationally managing the business in their joint interests and had made and was making arrangements (including by conspiring with an employee of the business) for business income to be shifted elsewhere in ways that the wife was unlikely to discover without substantial diligence and the coercive powers of the Court used for the production of documents.
Relevantly, there was also an interim dispute about the date at which the single expert was to value the business and the shares in the company that operated it. The husband had unilaterally obtained his own accounting advice, not from the company’s regular accountants but from another firm of accountants, and he was apparently relying on that in submitting that a date later than 30 June 2016 for the valuation of the business and the company was appropriate.
I determined all those disputes as they arose. I ordered further disclosure by the husband, gave leave for numerous subpoenas for the production of documents to be issued by the Court on the application of the wife and ordered that the single expert accountant value the business as at 30 June 2016. That date was selected as it was the end of the last financial year before the trial for which financial statements for the company that operated the business, and for the parties’ other business related entities, had been prepared and tax returns submitted.
In his trial affidavit filed on 16 December 2016, the husband did not say that he no longer wanted to retain the business, but rather, he gave evidence that the company was then at risk of being wound up by creditors for insolvency.

By the time the trial commenced on 31 January, this year, through the issue of subpoenas directed to various third persons, including customers of the business, the wife had uncovered much evidence that supported her case that the husband had not been operationally managing the business in their joint interests and that he had actually been conspiring with an employee of the business to divert work from the business and to make things appear as if the business was failing.
The trial took place in late January, this year. By the start of the trial, each party had changed their position on the retention of the business. The wife made it clear that she no longer sought to retain it. However, she did contend that the husband should retain it. The husband also maintained that he no longer wanted to retain it. He did not attempt to make a case that his health was such that he could no longer work in the business, but rather that the business was struggling financially and was not financially viable to retain.
At the conclusion of the trial, very troubled by the evidence that I had seen and heard during the course of the trial that supported the wife’s assertions about the husband’s management of the business, I considered that it would not be just and equitable at that time and in the circumstances presenting to just let the husband wind up the business and cause the vehicles to be sold, whilst managing them to his own benefit pending sale, during the time that my judgment was reserved. The wife and her legal representatives were also clearly concerned about that and they sought interim orders very much like the ones that I made on the evening of the final day of the trial – 3 February 2017.
By allowing the husband exclusive management of the business pending final judgment and making orders that appointed the wife as sole trustee to sell each of the vehicles used by the business if the husband failed to make the lease payments, I considered the husband would have sufficient incentive to maintain the lease payments and to continue to operate the business pending final judgment.
As he did in his submissions on this re-opening application, counsel for the husband had conceded in his submissions at the end of the trial that the Court is not bound to order the sale of an asset, such as the business in this case, simply because each of the parties says they do not want to keep it.
As for the state of the husband’s mental health, I repeat my earlier observation that the husband had not made a case at trial that the business needed to be sold because of his mental health. However, now in his affidavit of 7 April 2017, the husband says his poor state of mental health is nothing new. He says the following at [6]:
Since about December 2013 I have attended regular appointments with my GP, [Dr D] to treat my depression that I had been suffering from. On recommendation from Dr D I had also been seeing a mental health nurse, Ms E since around October 2015.
(my highlighting)
He goes on in [8] of that affidavit to confirm the following:
It is not and was not my position at Trial that my depression was to such an extent that I was asking the Court to consider it a factor in determining the outcome of these proceedings.
Notwithstanding those depositions, the husband then asserts that his mental health deteriorated immediately after the trial concluded, and he asserts that such deterioration has had consequential detrimental impact on the business such that he wants to wind up the company that runs it and sell off the vehicles that it operates.
In my judgment, the re-opening application must also be considered in the context of all the matters just outlined by me. The question then becomes one of whether the interests of justice demand a re-opening of the case so as to admit evidence that in the immediate post-trial period the husband’s pre-existing state of depression, of which he did not make the Court aware nor make part of his case at the trial, deteriorated such that he could no longer operate a vehicle or responsibly manage the vehicle services business that the interim orders gave him sole control of pending finalisation of the contested property adjustment.
To answer that question, I particularly consider it in the light of the submissions of counsel for the husband set out, albeit in summary form, in paragraphs [15]-[19] herein, and, with respect, those submissions plainly overlook an important fact. The single expert valuer’s report adduced into evidence at the trial ultimately attributed no ‘goodwill’ to the business, as the assessed future maintainable earnings of the business multiplied by the appropriate capitalisation rate resulted in a figure that was less than the value of the net tangible assets of the company. That consequently resulted in the single expert expressing the unchallenged opinion that the shares in the company that operated the business were worth nothing more than the net tangible assets of the company, as the company did not have any of that intangible asset known as ‘goodwill’.
Accordingly, the future maintainable earnings of the business as calculated by the single expert in the end played no part in determining the value of the business and the parties’ interests in the company, save for confirming that the value was appropriately determined by considering the net value of its assets and liabilities.
Consequently, in my respectful judgment, the single expert’s opinion on future maintainable earnings of the business contained in his report that was adduced at trial and the concession made by the parties as to the appropriate commercial rate of remuneration to allow for the husband in the calculation of those future maintainable earnings recorded in the single expert’s report were relevant at trial only to the consideration of the relatively narrow issue of the income the husband is earning and might be expected to earn in the future – a matter clearly relevant to the determination of appropriate property adjustment orders that are just and equitable (see s 79(4)(d) and (e) of the Family Law Act 1975).
Further in that respect, whilst the husband told the Court at trial that he did not want to keep the business, he also made it clear at the trial that a number of things, including his age and his waning interest in continuing to work hard, might result in him not remaining in the industry much longer in any event. This was further evidence for consideration in respect of his likely future income, his earning capacity and his prospective financial circumstances.
The determination to let the husband have exclusive control of the business but to restrain him from disposing of it until the making of final orders was made to minimise conflict between the parties and to give the husband the control he had craved, whilst ensuring that the jointly guaranteed, significant lease liabilities were able to be met pending finalisation, in circumstances where the husband’s management of the business in recent times had most clearly not advanced the interests of the wife in that business.
However, even if final orders were to have been made for the husband to retain the business over his opposition, given the evidence at the trial they would have to have been made in the context of an understanding that the husband might have chosen to dispose of the business in any event, or at least at some not too distant point in time.
Clearly now though, the husband says in his affidavit of 7 April 2017, that he now cannot keep the business going despite my interim orders, that he wants to close it down and sell the vehicles. Whilst, as I have just said, that could always have happened even if the husband had by order retained the business at the finalisation of these proceedings, the assessment of his income, future earning capacity and future financial circumstances that is part of the determination process would still have been undertaken against the single expert’s assessment of the business’s future maintainable earnings of $56,000 per annum plus an agreed commercial remuneration of $120,000 as well as some assessment of the prospects of him actually retaining the business.
Plainly, at least in my judgment, this new evidence of the significant deterioration in the husband’s state of health and the matters consequent upon that relating to the impact on the business, if admitted and accepted, would at least rule out any consideration of the husband’s financial circumstances taking into account that assessment of the maintainable earnings and the agreed commercial remuneration allowance. Whilst I am left pondering the husband’s failure to present evidence of his state of mental health at the time of the trial when that evidence was available to him, I am persuaded that evidence of the substantial nature of the deterioration in his health after the trial is evidence that simply could not have been adduced at trial. As such, I am at least persuaded to the view that the case should be re-opened and that evidence admitted. However, I am not persuaded that the entirety of the matters deposed to in the husband’s affidavit of 7 April 2017 should be admitted as evidence to be considered in finalising the case.
The husband deposed to other matters under various headings in his affidavit. I do not consider the evidence included under the following headings to be evidence that should now be admitted on a re-opening:
·Competitors contacting clients
·My current financial position
·The Business
·Livestock Enterprise
·Real Properties
·Possible Repossession Vehicle 4 by Westpac
·Sale of vehicles
·Sale of Property F
I do not consider that the evidence included under those headings goes to the subject matter of the significant deterioration in his mental health and the impact of that upon his capacity to retain and continue to operate the business.
Relevant to my decision, counsel for the husband observed in his submissions that the single expert opinion evidence adduced at the trial had included opinion as to the taxation and realisation costs if the business was to be wound up, but not if it continued to operate. That same fact was asserted by the husband in his affidavit. Whilst that is a correct observation, I respectfully fail to understand the point that is being made by that observation, save for considering that it might be that the husband and his counsel are pointing out the obvious fact that the single expert evidence did not take into account changes in the tax positions of the parties brought about by circumstances occurring in the period between 30 June 2016 and the trial, but rather was proffered in the context of taking specific liabilities as at the date of the last completed financial accounts, being 30 June 2016. As I have said, that is an obvious fact, but I respectfully reject any submission that such fact is justification for now allowing more evidence to be adduced about that issue on a re-opening.
The husband was at pains during the trial to tell the Court of the changes in the business conditions post-30 June 2016 and also to tell the Court about the fact that there had been changes in the loan accounts of the parties in the books of the company that would impact on their tax positions. His evidence about that was before the Court. It is appropriate to take it into account in determining the final orders. However, I do not consider the interests of justice demand that further evidence about this now be given at a re-opened trial.
The husband was also at pains during the trial to tell the Court that the vehicles had ongoing and future maintenance needs that would have to be paid for. That was a matter acknowledged by the single accounting expert who referred to the issue in [22]-[24] of his report of 25 January 2017. He said that “the actual costs that might be incurred [for maintenance] could differ markedly from the amounts included in our valuation which could impact on the value assessed”. But as I have noted, the single expert did not ultimately value the business to include ‘goodwill’ so the value of the business was not dependent on its maintainable earnings and the value attributed to the vehicles in the evidence that was adduced for the trial was “fair market value” assessed by a single expert as at 12 December 2016. It was based on the expert assessment of each machine’s condition and state of repair at that time.
Property adjustment litigation necessarily involves the determination of value of the parties’ interests in property, at a ‘snapshot in time’, generally at the time of the trial. In respect of these vehicles, the process of obtaining single expert opinion about that had been undertaken by the parties and the evidence of their value adduced for the trial, with the date of that valuation being as close to trial as could practicably be facilitated in the context of fairness being afforded the parties in respect to their trial preparation.
Accordingly, whilst I accept that future maintenance costs would impact one way or another on the earnings of the business and thus, potentially, assessment of maintainable earnings, given that the value ultimately ascribed to the parties’ interests in the business was the value of the sum of its parts, including the net equity in the vehicles, I do not consider that the interests of justice demand a re-opening of the case for more recently available evidence about the value of the vehicles to be adduced, simply because the husband now asserts that his state of health requires the business to be closed down and the vehicles sold.
The evidence about competitors of the business contacting clients, the livestock enterprise, the real properties, the possible repossession of the vehicle and the sale of Property F that the husband also seeks to have admitted into evidence on a re-opening, presumably for it to be considered in the making of the final orders, is not evidence that I consider would affect the outcome of the trial having regard to all of the evidence adduced at the trial. I will not admit it in the re-opening.
I will make an order that the trial is re-opened for the purpose of admitting the limited amount of evidence that I have determined should be admitted. That evidence will include the Hospital Discharge Summary that is exhibit MSR-02 to the husband’s affidavit of 7 April 2017, the psychiatrist’s report that is exhibit MSR-03, the Notice of Suspension by the licensing authority that is exhibit MSR-05, and the letters from Company G that are exhibits MSR-06 and MSR-07. I will not admit any of the other exhibits attached to that affidavit.
As a matter of procedural fairness to the wife, I consider I must provide her with the opportunity to cross-examine the husband on the newly admitted evidence and also the psychiatrist who wrote the report that is admitted, if she so elects. My orders will make provision for her to give notice of her election to do so, after which appropriate procedural directions can be made to facilitate that. Also each party shall have the right to make further written submissions in respect of the final orders that should be made in the light of this re-opening, and the receipt of this further evidence.

The Interim Orders sought by the Husband in any event

The husband seeks the discharge of all previous interim orders. I do not intend to do that. I will discharge Order 3 of the interim Orders made on 3 February, 2017 as the wife indicated through her counsel at the hearing of this application that she did not object to that. That will discharge the restraint on the husband from taking any steps to wind up Rennie Pty Ltd or to cause it to be put into liquidation and he may proceed to do that if that is his continued determination.
I will also discharge Order 6 of those same interim Orders. It is necessary in circumstances where the business is no longer being operated for the vehicles to be sold as quickly as possible and for the lease liabilities pertaining to their financing to be discharged without further loss. Pursuant to that Order 6, one of the vehicles is already in the process of being sold by the wife due to the husband’s default in respect of the lease.
The husband seeks orders that the vehicles now be sold by the parties through an expressly named person and on terms set out in in his amended application. He seeks to be able to ‘cross-hire’ the machines pending their sale. I will not make such orders as he seeks. My interim Orders of 3 February 2017, provided for the husband to exclusively run the business and to continue to make the lease payments on the three leased vehicles pending final judgment. Those Orders gave him complete operational control of those vehicles and full control of the business and, clearly, any income earned from the use of those vehicles after the payment of the lease payments and expenses was to be retained by the husband.
I do not consider it just and equitable in the current circumstances, where the husband says he cannot operate the business any longer for health reasons and cannot meet the lease payments, for him to have operational control of the machines pending their sale. Furthermore, I do not consider it just and equitable in all of the circumstances for him to determine who sells them and on what terms.
So that the lease liabilities do not continue to increase at a rapid rate over time whilst the husband cross-hires the machines and keeps the income, I will make Orders that the wife has sole control of and responsibility for the sale of all of the vehicles, leaving her and her advisers to determine how they are to be sold as quickly as possible for the best price, where they are to be located and where they are to be used. In this way, the wife may be able to reach an accommodation with the financier to prevent any repossession of any of the machines pending their sale. In any event, the wife is in reality the trustee of the discretionary family trust that leases the vehicles and my orders will simply align with the reality this already presents, namely that she has the sole authority to deal with the assets of that trust.
My Orders will, as did Order 6 of my previous interim Orders, provide for the net proceeds of sale of the vehicles, after discharge of the lease liabilities, to be deposited to the bank account of the trust and for any such proceeds to be used to meet any ongoing payment obligations pertaining to the lease or leases on any machines remaining unsold.
The husband seeks other interim orders for the sale of the real properties, plant and equipment, cattle semen and embryos. He seeks very detailed orders as to the process of sale and the use of the sale proceeds. Rather confusingly, he also seeks superannuation splitting orders. All of these appear to me to be orders that could be made as final property adjustment orders rather than interim orders pending the finalisation of my judgment. I do not consider it either appropriate or necessary to make any of these orders at this point in time and I will not.

The Interim Applications of the Wife

In her Response to the husband’s application, the wife also sought discharge of Order 6 of my interim Orders of 3 February this year. In lieu thereof, though, she seeks orders be made that I also consider are orders that could be made as final property adjustment orders rather than interim orders. The orders she seeks would see her relinquish all authority, involvement and interest in the trusts that she is currently trustee of, in favour of the husband. That would give him control of the sale of the vehicles. Additionally, though, she seeks orders that he indemnify her in respect of any liability under her personal guarantee and in respect of all other liabilities arising out of the trusts. I am not prepared to make those orders on an interim basis, although acknowledging that they are, as I have said, orders that could be made on a final basis.

I am satisfied at the moment that the most appropriate way to rid the wife and indeed the husband of liability under the personal guarantees each has given the financier, is for the vehicles to be sold quickly and I am satisfied, in all the circumstances, that the wife is the person most likely to be able to manage that promptly and with the interests of each of the parties at the forefront of her decision making pending the delivery of my final judgment.
I will also make the order that the parties indicated agreement to in relation to a variation to the wording of Order 11 of the interim Orders made 3 February 2017.

Costs

At the end of the hearing of this application, I asked the parties for their submissions in respect of the issue of costs on this application.
Counsel for the Wife submitted that if the Husband was unsuccessful he should be ordered to pay the Wife’s costs.
Counsel for the Husband submitted that whatever the outcome, each party should bear his and her own costs.
Having regard to my determination that the matter be re-opened and a limited amount of evidence be permitted to be admitted and relied upon by the Husband, I am not persuaded that an Order providing for other than each party bearing his and her own costs of and incidental to the application is justified.
I make the orders set out at the commencement of these written reasons.

I certify that the preceding seventy-three (73) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Forrest delivered on 19 May 2017.

Associate:

Date: 19 May 2017

[2017] FamCA 329

19 May 2017

Key Legal Topics

Areas of Law

Family Law

Civil Procedure

Legal Concepts

Appeal

Costs

Discovery

Injunction

Procedural Fairness