Riemann & Riemann and Ors (No. 3)
[2017] FamCA 911
•17 November 2017
FAMILY COURT OF AUSTRALIA
| RIEMANN & RIEMANN AND ORS (NO. 3) | [2017] FamCA 911 |
| FAMILY LAW – PRACTICE AND PROCEDURE – INTERIM PROCEEDINGS – Where the wife sought to join additional parties to the proceedings and to set aside a transaction pursuant to section 106B of the Family Law Act 1975 (Cth) – Where the husband and the intervenors opposed the application – Where the husband sought orders to be relieved of his obligation to respond to the Notice to Admit Facts and Authenticity of Documents served upon him – Consideration of the requirements of section 106B of the Act – Court finds that the wife has not established an arguable case for the relevant disposition to be set aside pursuant to section 106B(1) of the Act – Court finds that the husband should be relieved of his obligation to respond to Schedule A of the Notice to Admit Facts and Authenticity of Documents – Orders made for the husband, within 14 days of being provided with the relevant documents referred to in Schedule B of the wife’s Notice to Admit Facts and Authenticity of Documents, file and serve a Response to that Notice - Court finds that the third parties should not be joined to the proceedings – application for joinder dismissed – application to set aside the transaction dismissed. | |
| Family Law Act 1975 (Cth) ss 106B, 118 Family Law Rules 2004 (Cth) rr 6.02, 6.03, 6.04 | |
| B Pty Ltd and Ors & K and Anor (2008) FLC 93-380 In the Marriage of D (1984) 10 Fam LR 73 at 82 In the Marriage of Heath (1983) 9 Fam LR 97 In the Marriage of Gelley and Gelley (No 2) 15 Fam LR 483 In theMarriage of Whitaker (1980) 5 Fam LR 769 Ivanfy and Ivanfy (1978) 4 Fam LR 54 Transport Commission (Tas) v Neale Edwards Pty Ltd [1954] HCA 21 Whitaker and Whitaker (1980) FLC 90-813 | ||
| APPLICANT: | Ms Riemann | |
| RESPONDENT: | Mr Riemann |
| SECOND RESPONDENT: THIRD RESPONDENT: | Ms Lindrum Ms Gildas |
| INDEPENDENT CHILDREN’S LAWYER: | Legal Aid New South Wales |
| INTERVENORS: | Mr Aaron and Y Pty Ltd |
| FILE NUMBER: | SYC | 5764 | of | 2014 |
| DATE DELIVERED: | 17 November 2017 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | McClelland J |
| HEARING DATE: | 26 October 2017 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Levet |
| SOLICITOR FOR THE APPLICANT: | Bridges Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr O'Ryan QC |
| SOLICITOR FOR THE RESPONDENT: | Broun Abrahams Burreket |
The Second Respondent, the Third Respondent and the Independent Children’s Lawyer were excused
| COUNSEL FOR THE INTERVENOR: | Mr Henry SC |
| SOLICITOR FOR THE INTERVENOR: | Hoffman & Koops |
Orders
THE COURT ORDERS THAT:
The husband is relieved of his obligation to respond to schedule A of the wife’s Notice to Admit Facts and Authenticity of Documents filed on 17 October 2017.
Within 14 days of the husband being provided with the documents referred to in schedule B of the wife’s Notice to Admit Facts and Authenticity of Documents filed on 17 October 2017, the husband file and serve a Response to that Notice.
Orders 2, 3, 4, 5 and 6 of the wife’s Amended Application in a Case filed on 6 September 2017 are dismissed.
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 Riemann & Riemann and Ors (No.3) 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 SYDNEY |
FILE NUMBER: SYC 5764 of 2014
| Ms Riemann |
Applicant
And
| Mr Riemann |
Respondent
And
| Ms Lindrum |
Second Respondent
And
Ms Gildas
Third Respondent
And
Legal Aid New South Wales
Independent Children’s Lawyer
And
Mr Aaron and Y Pty Ltd
Intervenors
REASONS FOR JUDGMENT
INTRODUCTION
This decision primarily concerns an application by the wife filed on 6 September 2017 in which the wife is seeking to join Mr Aaron and Y Pty Ltd ACN … (“YPL”) as Trustee for the AA Family Trust to the proceedings and to set aside a transaction pursuant to section 106B of the Family Law Act 1975 (Cth) (“the Act”). The challenged transaction was a Sale and Purchase Agreement dated 18 September 2013 between W Pty Ltd ACN … (“WPL”) as Trustee of the X Family Trust and YPL as Trustee of the AA Family Trust (“the Agreement”). The X Family Trust is the husband’s family trust and the AA Family Trust is the family trust of Mr Aaron.
The wife also sought an order that the husband comply with his disclosure obligations pursuant to orders previously made in this matter. On the day of the hearing, I granted the parties an extension of time to comply with order 5 of the orders made on 19 September 2017 which required each party to provide updated disclosure in relation to their financial circumstances. Accordingly, I do not consider the issue of further disclosure in this decision.
The husband and the intervenors are seeking the dismissal of the wife’s application. The husband also sought an order that he not be required to respond to a Notice to Admit Facts and Authenticity of Documents that has been served upon him by the wife.
BACKGROUND
As I noted in my decision dated 4 October 2017 in this matter,[1] each of the parties completed detailed chronologies in preparation for the final hearing which was to commence on 13 June 2017. In these proceedings it is not necessary to set out the parties’ contentions in respect to the entirety of the history of their relationship. It is sufficient to note that the parties met in 1990. There is a dispute as to the nature of the parties’ relationship subsequent to the parties’ meeting and until November 1998 when they became engaged. It is common ground that the parties cohabited in the period after November 1998 and that they married in 1999. The husband contends that the parties separated in May 2013 however, the wife contends that the parties separated on 19 December 2013.
[1] Riemann & Riemann & Ors (No. 2) [2017] FamCA 788.
The following background facts do not appear to be in issue:
§On 2 June 2006 YPL was registered in Victoria. Mr Aaron and the husband were appointed the directors. Mr Aaron was appointed the secretary. There were four issued ordinary shares and Mr Aaron and the husband each held two shares. On 2 June 2006 WPL was registered in Victoria. Mr Aaron and the husband were appointed the directors. The husband was appointed the secretary. There were four issued ordinary shares and Mr Aaron and the husband each held two shares. WPL was the corporate trustee of the X Family Trust, which was the husband’s family trust. Mr Aaron and the husband each held 50 per cent of the shares in each other’s corporate trustee company. On 22 June 2016 WPL was deregistered.
§On 2 June 2006 Z Pty Ltd ACN … (“ZPL”) was registered in Victoria. On 15 June 2006 Mr Aaron and the husband were appointed the directors. Mr Aaron was appointed the secretary. On 28 February 2014 the husband ceased to be a director of ZPL. There are two issued ordinary shares. YPL held one share and WPL held the other. As noted, WPL has now been deregistered.
§On 15 June 2006 the X Family Trust was established. WPL was the corporate trustee of the Trust.
§In mid-2006, YPL, as trustee of the AA Family Trust, and WPL, as trustee of the X Family Trust, and ZPL entered into a joint venture agreement. Over the period from 2006 until 2013 the joint venture made a number of investments.
§In early to mid-2011 the parties commenced extensive renovations to the former matrimonial home at Suburb M. The renovations were funded from various sources including, on 22 August 2013 the husband obtained a further loan from the National Australia Bank (NAB) for $1 million through JJ Pty Ltd. Both the wife and the husband were the guarantors for that loan.
§By way of a Sale and Purchase Agreement dated 18 September 2013, the husband caused the X Family Trust’s interest in the ZPL Partnership, to be sold to YPL as trustee for the AA Family Trust.
§Clause 3.1 of the Agreement provided:
3.1 Calculation of the JV Purchase Price
Each of the Vendor and the Purchaser acknowledges and agrees that:
(a) the JV Purchase Price is comprised of the following amounts which reflect the agreed value of the Vendor’s Interest (through the Nominee) in the Following Investments:
I.$1,092,500 - in relation to the [DD] Asset: and
II.$135,000 – in relation to the Listed Securities
(b) the JV Purchase Price may be adjusted upwards (by the agreed adjustment on the completion date) to reflect the agreed value of the Vendor’s Interests (through the Nominee) in the [CC] Asset
§The Agreement defined the CC Asset as being the interest in the CC Investment Trust.
§The Listed Securities was defined as meaning:
a.KK Limited;
b.LL Limited; and
c.MM Limited.
§The DD Asset was defined as meaning the interest in the DD Capital Unit Trust.
§In addition, clause 2.4 of the Agreement provided:
2.4 Income in respect of the DD Asset
Notwithstanding any other clause of this Agreement and in respect of the Period on and from the Completion Date until 30 June 2014 (Income Period) only, the Purchaser agrees that the Vendor (or its Nominee) shall be entitled to receive and/or retain any and all income, derived or generated in respect of the [DD] Asset during the Income Period, to which the Vendor would have been entitled to receive but for this agreement.
§On 28 February 2014 the Agreement between WPL and YPL was completed. On 28 February 2014 WPL, as trustee of the X Family Trust, transferred its share in ZPL to YPL. On 28 February 2014 the husband resigned as a director of YPL and Mr Aaron resigned as a director of WPL.
§In March 2014 the X Family Trust received the final payment due on the ZPL sale in the amount of $127,500.
§The X Family Trust received an amount of $168,750 following the sale of the ZPL interest in the CC project joint venture.
§The husband contends that the final distribution that the husband received from ZPL relating to the DD investment was $44,101.88 and it was received on 5 August 2014.
ORDERS SOUGHT
Wife
The wife sought the following orders in her Amended Application in a Case filed at 9.38pm on 6 September 2017:
1. That time for compliance by the Wife with Order 12(b) made on 31 July 2017 be further extended for 21 days following compliance by the Husband with his obligations pursuant to order 11(d) made on 31 July 2017.
2. That [YPL] Pty Ltd ACN … as Trustee for the [AA] Family Trust be joined as a party to one of the proceedings.
3. That [Mr Aaron] be joined as a party to the proceedings.
4. That leave be granted to the wife to:
(a) amend her Response filed 27 October 2014 by the insertion of the following orders sought
“That pursuant to Section 106B(1) of the Act that the purported transfer by [W] Pty Ltd (ACN …) as Trustee for the [X] Family Trust of all that its interest in [Z] Pty ltd ACN … to [Y] Pty Ltd ACN … as Trustee for the [AA] Family Trust pursuant to Sale and Purchase Agreement dated 18 September 2013, completed on or about 28 February 2014 (“The ZPL Disposition”) be set aside.”
and
“That pursuant to Section 106B(4) of the Act Mr Aaron pay the Wife’s costs of and incidental to the [ZPL] Disposition and the setting aside of [ZPL] Disposition”
(b)Within 21 days of compliance by the Husband with his obligations pursuant to Order 11(d) made 31 July 2017, to file a Further Amended Response in respect of financial matters.
5. That within 21 days [Y] Pty Ltd file any Response on which it seeks to rely.
6. That within 21 days [Mr Aaron] file any Response on which he seeks to rely.
The wife provided a Case Outline document to the Court on 24 October 2017 which sought orders at variance with the application filed on 6 September 2017. The orders sought in the Case Outline document were as follows:
1. That time for compliance by the Wife with Order 12(b) made on 31 July 2017 be further extended for 21 days following compliance by the Husband with his disclosure obligations.
2. That [Y] Pty Ltd ACN … as Trustee for the [AA] Family Trust be joined as a party to the proceedings.
3. That [Mr Aaron] be joined as a party to the proceedings.
4. That leave be granted to the Wife to:-
(a) Amend her Response filed 27 October 2014 by the insertion of the following orders sought:-
“That pursuant to Section 106B(1) of the Act that the purported transfer by [W] Pty Ltd (ACN … ) as Trustee for the [X] Family Trust of all that its interest in [Z] Pty Ltd … to [Y] Pty Ltd ACN … as Trustee for the [AA] Family Trust pursuant to Sale and Purchase Agreement dated 18 September 2013, completed on or about 28 February 2014 (“The [ZPL] Disposition”) be set aside.”
and
“That pursuant to Section 106B(4) of the Act [Mr Aaron] pay the Wife’s costs of and incidental to The [ZPL] Disposition and the setting aside of The [ZPL] Disposition”.
(b) Within twenty-eight days of compliance by the Husband with his full disclosure obligations, to file a Further Amended Response in respect of financial matters.
5. That within twenty-one days [Y] Pty Ltd file any Response on which it seeks to rely.
6. That within twenty-one days [Mr Aaron] file any Response on which he seeks to rely.
In respect of the Wife’s Application in a Case filed 11 October 2017 seeking partial property settlement orders:
1. Liberty to serve short notice of this Application.
2. That from the monies held in the joint names of the parties at the National Australia Bank in a Term Deposit account number …39 and/or account number …62 the amount of $2,090,682-47 be forthwith released to the Wife as and by way of partial property settlement.
3. That the parties forthwith do all things and sign all documents necessary to give effect to Order (2) hereof.
4. That in the event that any party refuses, neglects or otherwise fails to do anything or sign any document necessary to give effect to Order 2 hereof then the Registrar of the Family Court of Australia Sydney Registry is hereby appointed to do such thing or sign such document on his or her behalf, and for such purpose the signature of the Registrar of the Sydney Registry of the Family Court of Australia shall be deemed to be the signature of such party.
5. That the Wife’s costs and incidental to this Application be reserved.
In addition to the orders set out above, there are a number of additional and consequential orders that follow which the Wife seeks order that:
1. Leave be granted to the Wife to issue within 14 days subpoenas to:
(a) National Australia Bank Ltd;
(b) NN Pty Ltd;
(c) OO Pty Ltd;
(d) [ZZ] Bank Ltd;
(e) Australian Taxation Office;
(f) T Pty Ltd;
(g) Ms PP Books ABN …;
(h) Mr QQ; and
(i) Mr RR.
2. Pursuant to Rule 15.57 of the Family Law Rules 2004 (Cth), within 14 days the Husband produce a copy to the joint expert, [Mr P], and the solicitors for the Wife and lodge with the Court Registry:
(a) Any and all documents for the period 1 January 2016 to 28 February 2017 which evidence, relate to, arise out of or are in connection with [SS Accountants’] change in methodology between their valuations dated 29 January 2016 and their valuation as at 31 December 2016 of TT Street, Suburb UU.
(b) Any and all documents which evidence or record any agreements to which [T] Pty Ltd ([TPL]) or [T] Funds Management Pty Ltd ([TFM]) or any of their “related entities” (as that term is defined in the Corporations Act 2001 (Cth)) are a party in relation to the project known between the parties to the Proceedings as the “Health & Forestry Complex”, including but not limited to:
1. Unitholder agreements;
2. trust deeds;
3. managements agreements; and
4. drafts of any proposed agreements.
(c) Any and all documents which evidence or record any agreements to which [TPL] or [TFM] or any of their “related entities” (as that term is defined in the Corporations Act 2001 (Cth)) are a party in relation to the project known between the parties to the Proceedings as “[VV]”, but not limited to:
1. unitholder agreements;
2. trust deeds;
3. managements agreements; and
4. drafts of any proposed agreements.
(d) Any and all documents for the period 1 July 2014 to date which evidence or record the payment or proposed payment of a bonus as described at paragraphs 96 to 98 of the Expert Report of [Mr P] dated 9 June 2017 (the Bonus Provision), including but not limited to:
1. any minutes of any management committee meetings in relation to, arising out of or in connection with the bonuses the subject of the Bonus Provision;
2. any minutes of directors meetings or memoranda of resolutions of directors in relation to, arising out of or in connection with the bonuses the subject of the Bonus Provision;
3. any discussion papers or forecasts in relation to, arising out of or in connection with the bonuses the subject of the Bonus Provision;
4. any correspondence between the relevant managers of [TPL] in relation to, arising out of or in connection with the bonuses the subject of the Bonus Provision;
5. any employment agreements of [TPL] personnel containing references to the bonuses the subject of the Bonus Provision; and
6. any evidence of payment of any bonuses the subject of the Bonus Provision.
3. Within 7 days the Husband produce to Court, any and all documents which evidence or record:
(a) All communications between:
1. the Husband or his agents, on the one hand; and
2. [NN] Pty Ltd, on the other,
in relation to, arising out of or in connection with the contents of the letter from [NN] to the National Australia Bank dated in or about December 2012 (the 2012 NAB Letter) (copy enclosed) or any draft of the 2012 NAB Letter; and
(b) Any correspondence by which the 2012 NAB Letter was disclosed to the Wife in the Proceedings.
4. The Wife be granted viewing and copying access to documents produced by the Husband in answer to order 2.
5. That the time for the Husband to fully comply with Order 5 of the Orders dated 19 September 2017 (relating to financial disclosure) be extended until 1 November 2017.
6. That the time for the Husband to respond to the Notice to Admit Facts and Authenticity of Documents served by the wife dated 17 October 2017, be extended until 1 November 2017.
7. That the trial of this matter commencing 29 January 2018 be vacated.
Husband
The husband’s Response to the Wife’s Amended Application in a Case, filed 14 September 2017 (“the husband’s Response”), sought both property and parenting orders. The orders sought that are relevant to this decision are:
1. That the wife's Amended Application in a Case filed 6 September 2017 be dismissed.
2. That pursuant to s.118 of the Family Law Act 1975 (Cth) ("the Act") the wife be and is hereby restrained from seeking to prosecute any relief under s.106B of the Act or in any way seeking to further amend the relief she is seeking on a final basis in the proceedings.
…
4. That the wife be and is hereby restrained from seeking to rely in the proceedings on any of the "e documents" as referred to in Orders 11 and 12 of the Orders of 31 July 2017, save for the documents provided at 12:03am on 13 June 2017 by email from the wife's former lawyers Lander and Rogers to Broun Abrahams Burreket.
5. That in the alternative to Order 4 above, within seven days of the date of the making of this Order the Wife pay the sum of $700,000 into the Trust Account of the husband's legal representatives, Broun Abrahams Burreket Family Lawyers to be applied to the husband's costs of his compliance with Order 11(d) of the Orders made 31 July 2017.
6. That the husband be relieved of his obligation to comply with Order 11(d) of the Orders made 31 July 2017 until after the Wife's compliance with Orders 5.
…
8. That the wife pay the husband’s costs of and incidental to this application on an indemnity basis.
In the husband’s Case Outline document provided to the Court on 26 October 2017, the husband also sought a further order that the wife be restrained from seeking to prosecute any further relief pursuant to section 118 of the Act. The husband also sought to be relieved of an obligation to respond to the Notice to Admit Facts and Authenticity of Documents which was served on the husband’s solicitors on 17 October 2017.
Intervenors
The Intervenors sought the following orders set out in the Response to an Application in a Case filed 14 September 2017:
1. That orders 2 to 6 in the Amended Application in a Case filed 6 September 2017 [the Wife’s Amended Application in a Case] be dismissed.
EVIDENCE
The wife relied on the following documents:
·Amended Application in a Case dated 6 September 2017;
·Case Outline Document filed on 24 October 2017;
·Affidavit of Mr BB sworn 6 September 2017;
·Affidavit of Mr BB sworn 13 September 2017;
·Affidavit of wife sworn 25 August 2017;
·Affidavit of Mr BB sworn 18 September 2017;
·Financial Statement of Mr Riemann dated 12 September 2014;
·Pages 64-80 of Report of P dated 11 October 2016;
·Pages 43-46 of Report of P dated 9 June 2017 and Schedule 1 to that report;
·Affidavit of the Husband sworn 15 May 2017;
·Affidavit of Mr Aaron sworn 9 June 2017;
·Affidavit of the Wife sworn 12 May 2017;
·Affidavit of the Wife sworn 26 May 2017;
·Affidavit of Mr BB sworn 24 October 2017; and
·Affidavit of the Wife sworn 25 October 2017.
The husband relied on the following documents:
·Response to Application in a Case filed 14 September 2017;
·Affidavit affirmed by the husband on 14 September 2017;
·Affidavit sworn by Mr GG on 15 September 2017;
·Affidavit affirmed by Ms EE on 15 September 2017; and
·Affidavit affirmed by the husband on 26 October 2017.
As stated, the husband also provided a case outline document to the Court on 26 October 2017.
The intervenors relied on the following documents:
·Response to Application in a Case filed 14 September 2017;
·Affidavit of Mr Aaron affirmed 9 June 2017; and
·Outline of submissions provided to the Court on 23 October 2017.
Procedural issues
On 19 September 2017 the following orders were made:
…
5. Within 28 days of the date of these orders the parties provide updated disclosure of their respective financial circumstances to the other including, insofar as it may be relevant, disclosure in respect to those matters as set out in rule 13.04 of the Family Law Rules 2004 (Cth).
6. Each party is to file and serve an undertaking as to disclosure in accordance with Rule 13.15 of the Family Law Rules 2004 (Cth) by no later than 28 days prior to the first day of the final hearing.
In my decision, dated 4 October 2017, I dealt at length with a party’s obligations of disclosure under the Act and the Family Law Rules 2004 (Cth) (“the Rules”) in the context of an ongoing dispute between the parties regarding what were described, in that decision, as the “E-documents”. The E-documents were documents that came into the wife’s possession after the commencement of these proceedings as a result of the wife discovering those documents on home computers and, further, as a result of the wife being provided with electronic copies of additional documents by an unidentified person or persons.
By way of summary, my decision, dated 4 October 2017, set out the parties’ ongoing obligation to disclose to the other party those non-privileged documents which are relevant to the proceedings. In that decision, I concluded that there was no justification for making additional orders beyond orders 5 and 6 made on 19 September 2017.
In his affidavit affirmed on 26 October 2017, the husband, at paragraph 108, stated:
108. There are over 400,000 e-documents. I refer to the affidavit of [Mr FF] sworn 15 September 2017 at paragraph 22 and the diary note prepared by L&R dated 6 June 2017 (MCR3 - 187) wherein [Mr AB] records "You have tasked us w working through 400,000 docs - have to use computer''. The cost involved in reviewing every document is exorbitant and not cost effective. Following the Orders dated 19 September 2017 I have embarked on the following process to identify further relevant documents to be disclosed to the wife:
108.1. I have instructed [Mr FF] to isolate all documents in the quarantined bundle that contain both of the words "North and [Suburb N]". I have selected these two words as I am aware that the wife has made an allegation that I have an interest in the property in which I reside at North [Suburb N]. Mr [FF] confirmed on Monday 23 October 2017 that there are 1,891 documents containing both words (Tab 29);
108.2. I have instructed [Mr FF] to isolate all documents in the quarantined bundle that contain both of the words "[Aaron] and [ZPL]". I have selected these two words as [Aaron] was a selected keyword due to my having instructed … in these proceedings and the solicitor at that firm who formerly, prior to her retirement, that represented me was Ms [Aaron]. I am aware that the wife has made repeated allegations that I have an interest in [ZPL] and that the [ZPL transaction between [Mr Aaron] and me should be set aside. Mr [FF] confirmed on Monday 23 October 2017 that there are 554 documents containing both words (Tab 29);
108.3. A hard drive of the identified documents set out in the preceding paragraphs 108.1 and 108.2 is being made available to me for collection on 26 October 2017. On receipt of that hard drive I am reviewing the 2,445 documents and will disclose to the wife those documents that are relevant to an issue in these proceedings or that may lead to a line of enquiry relevant to an issue in the proceedings. I anticipate the task of reviewing the documents will take about one week.
109. I have been invoiced $7722 in respect of the task outlined in the preceding paragraph undertaken by [Mr FF] (Tab 30).
The reference to “L & R” is a reference to Lander and Rogers Solicitors who previously acted on behalf of the wife. As I indicated in my decision dated 4 October 2017, those solicitors arranged for Deloittes to review the E-documents with a view to separating out those that they regarded as being potentially the subject of a claim for legal professional privilege on the part of the husband.
In my decision dated 4 October 2017, I discussed the circumstances in which the E-documents came into the wife’s possession. In those circumstances and in circumstances where the wife’s solicitors, through Deloittes, identified those documents which were potentially the subject of a claim for legal professional privilege, the course of action undertaken by the husband as outlined in paragraphs 108 and 109 of his affidavit sworn 26 October 2017 is not inappropriate. In particular, the words identified in those paragraphs as being the subject of electronic search have previously been identified by counsel for the wife as resulting in a situation where a document, or documents, may have been incorrectly identified as privileged. In those circumstances, it is appropriate to review those documents where a document has potentially been incorrectly categorised as privileged. If an examination of the document establishes that it is not in fact privileged and it is relevant to the proceedings, then it should be provided to the wife.
In light of the information set out in paragraph 108.3 of the husband’s affidavit, on 26 October 2017 I made an order to extend the period set out in order 5 of the orders made on 19 September 2017 to 3 November 2017. That extension of time applied to both parties.
I therefore consider that the issue of disclosure has been adequately dealt with and I do not propose to make any further orders in respect to that issue.
The second procedural issue arises from the husband’s application to be relieved of an obligation to respond to the Notice to Admit Facts and Authenticity of Documents served by the wife’s solicitors on the husband’s solicitors on 17 October 2017. That Notice to Admit Facts and Authenticity of Documents became Exhibit H5 in the proceedings and read as follows:
1. That in relation to each of the documents identified in Schedule A hereto:
(a) That insofar as those documents are email or correspondence communications:
i. those communications were sent on or about the date that those documents were purported to be sent;
ii. those communications were received on or about the date that those documents were purported to be sent;
iii. Those communications were sent by (or on the instruction of) the person identified as the sender of those communications; and
iv. Those communications were received (or on behalf of) the person identified as the recipient of those communications.
(b) That insofar as those documents bear a signature, the signature contained on each of those documents is an accurate signature of the person identified as being the signing party in the documents.
2. That in relation to each of the documents in Schedule B hereto, that those documents:
(a) do not bear the signature of the Wife, [Ms Riemann]; and/or
(b) were not signed by the Wife; and/or
(c) the document was signed without her permission either by the Husband or at his direction.
Schedule A is a 52 paged table with text in extremely small font and with ten columns titled; Number, Deloitte Source Reference, Document Number, Parent Document ID, Item Date, Title/subject, To, From, CC, the CC. The documents referred to in the schedule are not attached and, as I understand it, have not been provided to the husband. It appears that no effort has been made to distil, from the documents, those facts that are relevant to these proceedings. In those circumstances, it is simply not possible for the recipient of the Notice to either admit or deny those facts. Accordingly, to the extent that the Notice requires a response to Schedule A, it is oppressive. I will therefore make an order relieving the husband of his obligation to respond to schedule A of the Notice to Admit Facts and Authenticity of documents served by the solicitors for the wife on 17 October 2017. That order is, of course, without prejudice to the wife, utilising the provisions of the Rules, to file and serve a Notice in proper form.
The documents referred to in Schedule B of the Notice are potentially relevant to the proceedings and, subject to the wife providing copies of those documents referred to in schedule B to the husband, it is my view that the husband should appropriately respond to Schedule B of the Notice. Accordingly, I will order that, within 14 days of the husband being provided with the documents referred to in schedule B of the Notice to Admit Facts and Authenticity of Documents filed on 17 October 2017, the husband should file and serve a Response to that Notice.
Issue of joinder
The wife’s application for orders for a further partial property distribution has been listed for hearing on 20 November 2017. At the interim hearing on 26 October 2017, there were also several exchanges between the parties that can be described as being in the nature of skirmishes concerning peripheral issues. Those skirmishes were unnecessarily distracting and the only remaining issue that was the subject of submissions of substance was the issue of joinder as raised in paragraphs 2, 3, 4, 5 and 6 of the orders proposed by the wife in her Amended Application in a Case filed on 6 September 2017.
Relevant Legislation
Section 106B
Section 106B of the Act provides:
Transactions to defeat claims
(1) In proceedings under this Act, the court may set aside or restrain the making of an instrument or disposition by or on behalf of, or by direction or in the interest of, a party, which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.
(1A) If:
(a) a party to a marriage, or a party to a de facto relationship, is a bankrupt; and
(b) the bankruptcy trustee is a party to proceedings under this Act;
the court may set aside or restrain the making of an instrument or disposition:
(c) which is made or proposed to be made by or on behalf of, or by direction or in the interest of, the bankrupt; and
(d) which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.
(1B) If:
(a) a party to a marriage, or a party to a de facto relationship, is a debtor subject to a personal insolvency agreement; and
(b) the trustee of the agreement is a party to proceedings under this Act;
the court may set aside or restrain the making of an instrument or disposition:
(c) which is made or proposed to be made by or on behalf of, or by direction or in the interest of, the debtor; and
(d) which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.
(2) The court may order that any money or real or personal property dealt with by any instrument or disposition referred to in subsection (1), (1A) or (1B) may be taken in execution or charged with the payment of such sums for costs or maintenance as the court directs, or that the proceeds of a sale must be paid into court to abide its order.
(3) The court must have regard to the interests of, and shall make any order proper for the protection of, a bona fide purchaser or other person interested.
(4) A party or a person acting in collusion with a party may be ordered to pay the costs of any other party or of a bona fide purchaser or other person interested of and incidental to any such instrument or disposition and the setting aside or restraining of the instrument or disposition.
(4AA) An application may be made to the court for an order under this section by:
(a) a party to the proceedings; or
(b) a creditor of a party to the proceedings if the creditor may not be able to recover his or her debt if the instrument or disposition were made; or
(c) any other person whose interests would be affected by the making of the instrument or disposition.
(4A) In addition to the powers the court has under this section, the court may also do any or all of the things listed in subsection 80(1) or 90SS(1).
(5) In this section:
"disposition " includes:
(a) a sale or gift; and
(b) the issue, grant, creation, transfer or cancellation of, or a variation of the rights attaching to, an interest in a company or a trust.
"interest " :
(a) in a company includes:
(i) a share in or debenture of the company; and
(ii) an option over a share in or debenture of the company (whether the share or debenture is issued or not); and
(b) in a trust includes:
(i) a beneficial interest in the trust; and
(ii) the interest of a settlor in property subject to the trust; and
(iii) a power of appointment under the trust; and
(iv) a power to rescind or vary a provision of, or to rescind or vary the effect of the exercise of a power under, the trust; and
(v) an interest that is conditional, contingent or deferred.
Necessary Party
Rule 6.02 of the Rules provides:
Necessary parties
(1) A person whose rights may be directly affected by an issue in a case, and whose participation as a party is necessary for the court to determine all issues in dispute in the case, must be included as a party to the case.
Example: If a party seeks an order of a kind mentioned in section 90AE or 90AF of the Act, a third party who will be bound by the order must be joined as a respondent to the case.
(2) If an application is made for a parenting order, the following must be parties to the case:
(a) the parents of the child;
(b) any other person in whose favour a parenting order is currently in force in relation to the child;
(c) any other person with whom the child lives and who is responsible for the care, welfare and development of the child;
(d) if a State child order is currently in place in relation to the child--the prescribed child welfare authority.
(3) If a person mentioned in subrule (2) is not an applicant in a case involving the child, that person must be joined as a respondent to the application.
Note 1: The court may dispense with compliance with a rule (see rule 1.12).
Note 2: Pre-action procedures must be complied with by all prospective parties under rule 1.05.
Adding a Party
Rule 6.03 of the Rules provides:
Adding a party
(2) A party may add another party after a case has started by amending the application or response to add the name of the party.
(3) A party who relies on subrule (2) must:
(a) file an affidavit setting out the facts relied on to support the addition of the new party, including a statement of the new party's relationship (if any) to the other parties; and
(b) serve on the new party:
(i) a copy of the application, amended application, response or amended response; and
(ii) the affidavit mentioned in paragraph (a); and
(iii) any other relevant document filed in the case.
Note 1: For amendment of an application, see Division 11.2.2.
Note 2: If a Form is amended after the first court date, the Registry Manager will set a date for a further procedural hearing (see subrule 11.10(3)).
Note 3: Pre-action procedures must be complied with by all prospective parties under rule 1.05.
Approach
There was some uncertainty as to whether the wife was making an application pursuant to rule 6.02 or rule 6.03 of the Rules.
When clarification was sought from counsel for the wife, he initially indicated that the wife’s application was pursuant to rule 6.03. When asked to identify the affidavit that satisfies the requirements of rule 6.03(3)(a), counsel for the wife referred to the documents set out in paragraph 2 of the wife’s Case Outline document. As noted above, those documents included reference to nine separate affidavits, two expert reports and a Financial Statement filed by the husband. In response, I indicated to counsel for the wife that I was not satisfied that the information in those various documents satisfied the requirements of an affidavit as described in rule 6.03(3)(a) of the Rules. I expressed the view that the absence of a single document setting out comprehensible particulars of the nature of the wife’s claim raised an issue of natural justice.
As a result, it appeared that counsel for the wife shifted the focus of the wife’s application to rule 6.02 of the Rules.
In B Pty Ltd and Ors & K and Anor,[2] Warnick J stated:
In the usual run of applications for alteration of property interests or parenting orders, the fact of marriage or parenthood, accompanied, in respect of the former, by a history of contribution to and acquisition of, property and, in respect of the latter, evidence that relates to any aspect of a child’s interests, is sufficient to make the existence of a “cause of action” apparent. No pleading in the traditional sense is required to identify further facts material to the cause.
However, the narrative or descriptive nature of evidence is often unsuited to formulate or particularise a cause of action against a third party. Something resembling a statement of claim will generally be necessary.
[2] (2008) FLC 93-380 at [43 - 46].
Those sentiments have particular resonance in the circumstances of this case. With respect, the absence of adequate attention to properly particularising the wife’s claim has caused considerable difficulty for the applicant wife, the parties and the Court. Specifically, as I will discuss, it has not assisted the wife in establishing the necessary precondition to joining a party to proceedings, that is, that she has an arguable case against them.
Ultimately, however, there is little difference to the Court’s approach in terms of considering an application under rule 6.02 or, if they had been joined pursuant to rule 6.03, what would inevitably have been an application by the third parties pursuant to rule 6.04. That is because, as I have stated, the essential question is whether the wife has established that she has an arguable case for setting aside the agreement and for the joinder of the parties.
In State of Victoria v Sutton,[3] McHugh J articulated the appropriate principle as follows:
The rules of natural justice require that, before a court makes an order that may affect the rights or interests of a person, that person should be given an opportunity to contest the making of that order. Because that is so, it is the invariable practice of the courts to require such a person to be joined as a party if there is an arguable possibility that he or she may be affected by the making of the order.[4] (emphasis added)
[3] [1998] HCA 56; 195 CLR 291.
[4] Ibid at [77].
In Hancock Family Memorial Foundation Ltd v Fieldhouse [No 3],[5] Le Miere J helpfully referred to relevant authorities and articulated, in precise terms, why it is necessary for a party seeking to join a third party to litigation to establish an unarguable case, in the following terms:
The applicant on a joinder application must show that there is an arguable case sufficient to resist the entry of summary judgment by the parties sought to be joined: Universal Music Australia Pty Ltd v Cooper [2004] FCA 78 [6] (Tamberlin J). The test is that stated by Barwick CJ at 128 - 129 in General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125: Universal Music Australia Pty Ltd v Cooper [7] (Tamberlin J); Review Australia Pty Ltd v Red Berry Enterprises Pty Ltd [2003] FCA 1009 [5] (Heerey J). It would be futile to order that a person be joined as a defendant if the material before the court disclosed that if the person, having been joined as a defendant, applied for summary judgment the application would succeed.
[5] [2010] WASC 223.
For reasons that I will discuss, the wife has failed to satisfy the Court that she has an arguable case to set aside the agreement and to join the third parties referred to in her application.
Consideration
The requirements of section 106B
In Haseloff & Korman and Ors,[6] Dawe J referred to relevant authorities[7] in concluding that:
The wording of s 106B is such that the following questions must be answered affirmatively for the wife’s claim to succeed:
a) are there “proceedings under this Act”?
b) is there an “instrument or disposition”?
c) was the “instrument or disposition” made “by or on behalf of, or by direction or in the interests of, a party”?
d) is the interests or disposition “made or proposed to be made to defeat an existing or anticipated order in those proceedings” or “irrespective of intention, is likely to defeat any such order”?
[6] [2013] FamCA 1019 at [58].
[7] Murphy J in Bourke & Bourke and Anor (Final Hearing Costs) [2010] FamCA 199 (17 March 2010) at [45], with a similar approach being used when s 106B was known as s 85 prior to an amendment to the Act occurring in late 2000 (see, eg, the approach of Gee J in In the Marriage of D (1984) 10 Fam LR 73 at 82 and the approach of Nygh J in In the Marriage of Heath (1983) 9 Fam LR 97 at 104).
In this matter, the first three questions can be answered in the affirmative. The real issue is in respect to the fourth question. That question is in two parts and the wife can succeed if she establishes an affirmative answer to either of the following questions:
1. Is the interest or disposition “made or proposed to be made to defeat an existing or anticipated order in those proceedings”? or
2. Irrespective of intention, is the disposition likely to defeat any such order?
In Chifley and Ha,[8] Rees J stated that, in order to satisfy the requirements of section 106B, it is at least necessary for the applicant to prove the following:
·That an order for property settlement was actual or anticipated at the time of the transaction;
·That the relevant disposition is likely to defeat an order for property settlement;
·That the transaction was not a bona fide transaction on the part of the person who benefited from the disposition.
[8] [2017] FamCA 683 at [57].
In Grech v Deak-Fabrikant (No 3),[9] Daly As J said that the following principles emerge from Family Court authorities considering section 106B:[10]
a)it is necessary to establish a causal connection between the transaction and the defeat of the order;
b)an order must be objectively foreseeable, not just a claim;
c)the transaction must be foreseeably likely to defeat that order; and
d)‘anticipated’ means ‘expected’ or ‘reasonably probable’ according to an objective test.[11]
[9] [2015] VSC 581.
[10] In the Marriage of Whitaker (1980) 5 Fam LR 769; Pflugradt and Pflugradt (1981) 7 Fam LR 188; Hajduk and Hajduk (1993) FLC 92-383; Ivanfy and Ivanfy (1978) 4 Fam LR 542; D and D (1984) 10 Fam LR 73.
[11]Grech v Deak-Fabrikant (No 3) [2015] VSC 581 at [400].
It is important to appreciate the different requirement in the respective limbs of section 106B(1). In that respect, in Halabi v Artillaga (Halabi),[12] when considering a predecessor provision to section 106B, Nicholson CJ stated that the Court’s jurisdiction to set aside a transfer was enlivened when:
an instrument has been made with the intention of defeating an anticipated order in the proceeding, or secondly, regardless of the intention with which it has been made it is likely to have the effect of defeating such an order. (emphasis added)
[12] (1993) 17 Fam LR 675 at 679.
That is, in order to satisfy the first leg of section 106B(1), it is necessary for the applicant to establish the existence of intention on the part of the party disposing of the asset to defeat an anticipated order.
However, in order to satisfy the second leg, it is not necessary for the applicant to establish the existence of intention on the part of the party disposing of the asset. Instead, in this case, the task is to establish the likelihood of the anticipated order being defeated by the disposition.
Drawing upon the analyses by both Rees J and Daly As J, to which I have referred, in order to satisfy the first limb it is necessary for the applicant to establish:
·That an order for property settlement was actual or anticipated at the time of the transaction;
·That an order must be objectively foreseeable, not just a claim;
·That the transaction was not a bona fide transaction on the part of the party disposing of the asset; and
·That the intention of the party disposing of the asset was to defeat an existing or anticipated order.
In terms of the second leg of section 106B(1), that is, that the disposition has the likely effect of defeating an existing or anticipated order, in Whitaker and Whitaker, [13] Nygh J said:
… the disposition must be shown to have the direct effect, or the likely direct effect of defeating an existing … order in the sense that if that disposition had not taken place the order would have been effective. Hence, if the order was, or would in any event have been, defeated by other supervening circumstances, it cannot be said that the order was defeated by the disposition or was at any time likely to have been defeated by it.
[13] (1980) FLC 90-813 at 75,129.
In Gould and Gould and Swire Investments Ltd it was held, relevantly, that:[14]
… an applicant … may establish [the s 106B claim] by demonstrating that the pool of property of the parties has been diminished by the making of the instrument or disposition in question to an extent that is likely to have an impact on the anticipated orders.
[14] (1993) FLC 92-434 at 80,433 – 4 per Nicholson CJ, Fogarty Finn JJ agreeing relevantly.
Accordingly, in order to satisfy the requirements of the second leg of section 106B(1) it is necessary for the applicant to establish:
·the transaction must be foreseeably likely to defeat the order or anticipated order, where ‘anticipated’ means ‘expected’ or ‘reasonably probable’ according to an objective test; and
·That there is a causal connection between the transaction and the defeat of the order or likely defeat of the order as opposed to the order being defeated by a supervening event.
Even if, for the purpose of this consideration, it is assumed that the wife is able to establish lack of bona fides on the part of the husband, in respect to the transaction insofar as the wife contends that the husband caused the sale to occur at an undervalue, for the reasons that I will set out, the wife has failed to satisfy the Court that she has an arguable case that the disposition should be set aside pursuant to section 106B.
The applicant has failed to establish an arguable case that an order for property settlement was actual or anticipated at the time of the transaction
There was no actual order for property settlement at the time of the transaction which was 18 September 2013. These proceedings were commenced on 15 September 2014. All parties acknowledged that section 106B may nonetheless apply to a disposition that is made prior to the commencement of proceedings and I accept that to be the case. Nevertheless, there must be some anticipation of the order in the proceedings as opposed to anticipation of the claim.[15]
[15] In The Marriage of Gelley and Gelley (No 2) 15 Fam LR 483 at 487.
The wife contends that the husband’s anticipation of the order is established by the fact that, prior to September 2013, he had sought family law advice and, further, in April 2012 he discussed the possibility of marital breakup with a therapist.[16] Even if it is accepted that, at final hearing, the applicant establishes those matters, at its highest, that evidence establishes only the anticipation of a claim under the Family Law Act. It does not establish anticipation of an order.
[16] Transcript of proceedings dated 26 October 2017 at page 42.
Accordingly, for this reason alone, the wife has not established that she has an arguable case in respect to the first leg of section 106B(1).
The applicant has failed to establish an arguable case that the intention of the husband in causing the sale of the property was to defeat an anticipated order
The wife contends that the relevant intention is established by the following facts.
Firstly, the wife contends that, despite statements by the husband and Mr Aaron to the contrary, subsequent to the disposition the husband has received a benefit from and has exercised control over ZPL. When asked how the parties’ dealings in the period subsequent to the disposition establish what the husband’s intention was at the time of the disposition, counsel for the wife stated:
What we say happened in relation to the 28 February 2014 transaction was that it was done with a certain intent, and inferences can be made, in my respectful submission, as a result of the post-28 February 2014 conduct of the parties to that transaction; in this case, the husband and [Mr Aaron]. If they engage in conduct which is inconsistent with that, your Honour is able to draw certain inferences, and indeed, we would say that certain inferences are inescapable.[17]
[17] Ibid at page 14.
Counsel for the wife later clarified that the date of the challenged disposition was in fact 18 September 2013. Counsel for the wife also clarified that the inference the Court would be invited to draw was that the “purpose [of the disposition] was to minimise the amount by which the husband would have to pay by way of property settlement”.[18]
[18] Ibid.
It is to be noted that section 106B(1) requires the wife to establish that it was the intention of the party entering into the transaction to “defeat an existing or anticipated order” not, as stated by counsel for the husband, to “minimise the amount by which the husband would have to pay by way of property settlement”.
In any event, I do not, with respect, accept the logic of the submission made by counsel for the wife that the dealings of the husband and Mr Aaron in the period subsequent to the date of the disposition establish what the husband’s intention was at the time of the disposition. Specifically, in my view, it is not reasonably arguable that the conduct of the husband and Mr Aaron in the period subsequent to the disposition, as referred to by the wife, establishes that the husband had the intention of defeating “an anticipated order”.
An additional reason for contending that the wife will be able to establish the requisite intention on the part of the husband was stated by counsel for the wife to be:
This is a deal he has done with his friend. This is a deal he has done with a friend, workmate, godfather of their children. That’s the relationship between them. And the value of [ZPL] and the DD asset from $1.9 million to now $12 million and the husband sells out of it at a point which values it at $2.185 million, you would not believe. You absolutely wouldn’t believe it.[19]
[19] Ibid at page 31.
In that context, counsel for the wife contended that “the husband and [Mr Aaron] are experts in finance and experts in property and that he would have known the true property value of DD throughout the life of the asset. Both of them would have”.[20]
[20] Ibid.
As result of those facts individually and/or collectively, counsel for the wife contended that the Court should make an inference that the purpose of the transaction was to defeat the wife in the property proceedings before this Court. In that respect, it was contended that there are only two possible inferences from the transaction. They were that the transaction was either “to defeat the wife in property proceedings, or an intention to defeat the Tax Office”. In respect to that second alternative, it was contended that as the Court could assume that the husband “would not say that it was his intention to defeat the Tax Office. That only leaves an intention to defeat the wife. That is an inference that you can make”.[21]
[21] Ibid at page 36.
In Transport Commission (Tas) v Neale Edwards Pty Ltd,[22] Kitto J described the circumstances where a Court may draw an inference even though there is no direct evidence on an issue to be determined. The case involved a train accident and there was no direct evidence that the driver had acted inappropriately in regulating the speed of the train. In the context of the facts of that case, Kitto J said:
The guard was unable to throw any light on the cause of the accident. The case was therefore one of circumstantial evidence. The burden of proof lay upon the respondent; H. C. Smith Ltd. v. Great Western Raihway Co.,and the standard of proof which he had to satisfy was that which was explained in Luxtonv Vine It will be sufficient to quote two sentences from the latter case: “In questions of this sort, where direct proof is not available, it is enough if the circumstances appearing in evidence give rise to a reasonable and definite inference: they must do more than give rise to conflicting inferences of equal degrees of probability so that the choice between them is mere matter of conjecture : see per Lord Robson, Richard Evans & Co. Ltd. v. Astley. But if circumstances are proved in which it is reasonable to find a balance of probabilities in favour of the conclusion sought, then, though the conclusion may fall short of certainty, it is not to be regarded as a mere conjecture or surmise: cf. per Lord Loreburn.” (citations omitted)
[22] [1954] HCA 21; 92 CLR 214 at 233.
More recently in Beaumaris Football Club v Hart & Ors and Bayside City Council v Hart & Ors (30 August 2017),[23] the Supreme Court of Victoria Court of Appeal said:
The principles relating to the drawing of inferences in a civil case are well established. They were recently summarised by this Court in Masters Home Improvement Australia Pty Ltd v North East Solutions Pty Ltd in terms which are sufficient for the purposes of this case, namely:
The principles, relating to the drawing of inferences in civil cases, are well established. First, any inference must be based on facts established by admissible evidence. Secondly, the process of reasoning must constitute a valid inference, as distinct from speculation or guesswork. Thirdly, and importantly, where the inference is drawn in favour of the party which bears the burden of proof in the case, the conclusion must be ‘the more probable inference’ from those facts. In other words, the inference drawn by the judge must be reasonably considered to have a greater degree of likelihood than any competing inference. Fourthly, in determining whether an inference is to be drawn as a matter of probability, the tribunal of fact is not required to consider each primary fact, established by the evidence, in isolation. Rather, the Court considers the totality of those facts together, giving effect to their united and combined force. (citations omitted)
[23] [2017] VSCA 226 (Osborn, Beach and Kaye JJA) at [93].
The circumstantial evidence referred to by counsel for the wife in this matter, when considered in totality, raises no more than a mere matter of conjecture. An equally plausible explanation to the possibilities advanced by counsel for the wife is the explanation provided by the husband. That explanation was to the effect that the cost of the extensive renovations being undertaken by the parties at the former matrimonial home had increased to a level where the parties were under financial pressure and it was necessary to obtain funds over and above that which they could borrow from financial institutions.
Accordingly I conclude that, on the basis of the material referred to by counsel for the wife, the wife has no reasonable prospects of proving that the husband had the requisite intention for the purposes of section 106B(1) of the Act.
Moreover, even if the Court accepted that such an inference could reasonably be made, it still does not establish an intention on the part of the husband to defeat an objectively foreseeable order of the Court. In that respect, in Pflugradt and Pflugradt,[24] Elliott J drew upon the concept of foreseeability as applied in the law of torts. In that respect his Honour said:
As in the law of torts, I consider that the elements of expectation or foreseeability in an “anticipated order” must be considered on an objective rather than a subjective basis-- to hold otherwise would be to favour the determinately ignorant or the blissfully unaware; “anticipated” as used in sec. 85 is an adjective, not a verb. It is therefore descriptive of the order referred to. It requires the order to have the quality of being “anticipated”. By whom, the law’s answer must be by reasonable disponer at the time of the disposition, properly considering all of the circumstances of the case.
[24] (1981) FLC 91-052 at 76,429 - 76,430.
In that context, according to the wife’s evidence, the disposition occurred at a time prior to the parties’ separation and where it is agreed that the proceedings had not been commenced for another year. A matter of further relevance is the nature of the transaction and, most relevantly, the amount of money involved in the context of the total available property pool. I will subsequently discuss that issue.
The Disposition’s Effect and Whether It Was Likely to Defeat the Order
The wife contends that the disposition was and is likely to defeat the anticipated order in these proceedings. In that context, the counsel for the wife noted that, at final hearing, the wife seeks a 70 per cent distribution of the parties’ property in her favour.[25] I will, for the purpose of considering the wife’s submissions in this matter, assume that to be a likely order.
[25] Transcript of proceedings dated 26 October 2017 at page 25.
Counsel for the wife submitted that the Court would be satisfied that such an order is likely to be defeated by the disposition because the value to the matrimonial property pool if the sale is set aside would increase by $8,010,739.
The contention of the wife as to why that would be the case is set out in Exhibit W1 and is as follows:
Estimated current capital value of [ZPL]
· [DD] asset $12,493,000
· [Suburb UU’s] Investments (.062% Interest) $883,190
· Investment in [Property WW] $100,000
· XX Trust $100,000
· YY Investments $56,000
· listed shares – unknown
sub-total $13,632,190
Estimated current capital value of the husband is 50% interest in [ZPL] – $6,816,095
Estimated net income received since 28 February 2014 – date of purported sale
· distributions received since 28 February 2014 $5,171,787
· husband is 50% entitlement (assuming sale set aside) $2,585,893.50
· less amount paid to [Mr Riemann] under Sale and Purchase Agreement ($1,391,250)
· estimated net income received and liable to be disgorged $1,194,644
Estimate of Total Value to Matrimonial Pool Is Set Aside – $8,010,739.
That submission by counsel for the wife is, with respect, incorrect. It is clear that the critical time at which the likely effect is to be considered is the time of the disposition. In Gelley and Gelley (No 2)[26] Treyvaud J said, in that respect:
In so far as the order be anticipated, it is one anticipated by the reasonable disponer at the time of the disposition, properly considering all the circumstances of the case. (emphasis added)
[26]In The Marriage of Gelley and Gelley (No 2) 15 Fam LR 483 at 487.
The time of the disposition was acknowledged by counsel for the wife to be 18 September 2013.[27] Counsel for the wife further confirmed that the wife’s application is for the transaction to be set aside ab initio.[28]
[27] Transcript of proceedings dated 26 October 2017 at page 16.
[28] Ibid at page 61.
The evidence of the wife, in respect to the value of WPL’s interest in ZPL, as at 18 September 2013, is that the DD property should have been valued at $4 million and not $1,092,500 as specified in the Agreement. The basis of the wife’s contention, in that respect, is an email sent from the husband to the Business Banking Partner of the National Australia Bank dated 11 December 2012. In that email the husband requested that a letter requesting Finance from the bank be amended to “change DD Value to $4 million”.[29]
[29] Exhibit DSC5 at page 7.
In other words, the best evidence available to the Court, as presented by the wife, is that the property which was the subject of the disposition was undervalued by the amount of $2,907,500. This amount represents the difference between $4 million and the amount identified in the Agreement as being the value of the DD property which was stated to be $1,092,500. On the facts of this case, it could not reasonably be argued that, as at 18 September 2013, such a disposition was likely to defeat anticipated orders in these proceedings.
In that respect, page 7 of DSC-5, which was relied upon by the wife, includes an assertion by the husband that upon the completion of renovations to the parties’ matrimonial home, which were being undertaken during the course of 2012 and 2013, the property would be worth $18 million. That property was subsequently sold and the parties have, from the proceeds of sale, taken interim property distributions to the value of approximately $8,550,000.[30] The remaining proceeds of the sale of the former matrimonial home totalling approximately $ 7,623,454[31] are held in a term deposit on behalf of the parties.
[30] Transcript of proceedings dated 26 October 2017 at page 25.
[31] Ibid.
The husband contends that the current value of the matrimonial property is $12,683,362.[32]
[32] Husband's Affidavit affirmed 26 October 2017 at [121].
On either scenario, it cannot be established that an anticipated order, in favour of the wife, is likely to be defeated. This is shown by considering the scenario of the $2,907,500 being notionally added back into the property pool for the purpose of considering whether a likely order in the wife’s favour would be defeated. When that exercise is undertaken, it is clear that the wife’s claim to 70 percent of the matrimonial property, which I have assumed to be the likely order, would not be defeated. Accordingly, the wife has failed to satisfy the Court that she has an arguable case that the likely effect of the disposition made on 18 September 2013 is to defeat property orders that can reasonably be anticipated in these proceedings.
Moreover, I note that the partial property distributions paid to the parties, with the consent of both parties, in the period subsequent to the 18 September 2013 disposition, have resulted in the matrimonial property being reduced by an amount of $8,550,000. That amount substantially exceeds the amount of the alleged $2,907,500 undervalue. Accordingly, the diminution of the property pool has been impacted by supervening events such that it cannot be said that the disposition has caused an anticipated order of the Court to be defeated.[33]
[33]Whitaker and Whitaker (1980) FLC 90-813, 75,129.
Practical and Discretionary considerations
In the course of opposing the wife’s application, counsel for the intervenors articulated a number of practical and discretionary reasons why the wife’s application should be declined. Most relevantly, in terms of practical considerations, this included the fact that WPL has been deregistered and, in those circumstances, the order to set aside the disposition cannot be effected unless and until steps are taken by the wife to re-register that company.
Counsel for the intervenors also noted that a necessary consequence of setting aside the disposition ab initio would result in instruments and transactions entered into by ZPL subsequent to 18 September 2013 also being set aside. It was submitted that, in those circumstances, the parties that would be potentially impacted by an order to set aside the disposition, have a right to receive notification and, if desired, to be heard in these proceedings.
The submissions of counsel for the intervenors in respect to those matters had considerable merit. However, in light of the findings that I have made that the wife has not established an arguable case for the disposition to be set aside pursuant to section 106B(1) of the Act, it is unnecessary to further consider the submissions of counsel for the intervenor in respect to those practical and discretionary considerations.
Order
Accordingly, I dismiss the wife’s application for orders as set out in paragraphs 2, 3, 4, 5 and 6 of the wife’s Amended Application in a Case sealed on 6 September 2017 at 9.38pm.
I make a further order in respect to the husband’s obligation to respond to the wife’s Notice to Admit Facts and Authenticity of Documents as set out above.
For all these reasons I make the orders as set out at the commencement of these Reasons for Judgment.
I certify that the preceding eighty-four (84) paragraphs are a true copy of the reasons for judgment of the Honourable Justice McClelland delivered on 17 November 2017.
Associate:
Date: 17 November 2017
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