SALTZER & PACEK (No.4)
[2020] FCCA 3484
•21 December 2020
In FEDERAL CIRCUIT COURT OF AUSTRALIA
| SALTZER & PACEK (No.4) | [2020] FCCA 3484 |
| Catchwords: FAMILY LAW – Property – discovery – where application in a case brought late – where Court facilitated expedition in determination of many applications – where applicant retains a series of lawyers and accountants in proceeding – where proceeding set down for hearing – where parties maintain that they strive to retain trial date – where application in case brought on eve of trial seeking extensive discovery – where applicant unilaterally cancels agreed mediations – where discovery predates separation by many years – whether the discovery necessary – where no cogent evidence as to necessity is provided – whether applicant seeking to discover if he has a case rather than evidence to support case – whether applicant embarking on fishing expedition – whether large-scale of discovery sought on eve of trial indicates an abuse of discovery process – whether case management considerations militate against such broad relief – orders made. |
| Applicant: | MR SALTZER |
| Respondent: | MS PACEK |
| File Number: | MLC 2954 of 2020 |
| Judgment of: | Judge A. Kelly |
| Hearing dates: | 17-18 December 2020 |
| Date of Last Submission: | 18 December 2020 |
| Delivered at: | Melbourne |
| Delivered on: | 21 December 2020 |
REPRESENTATION
| Counsel for the Applicant: 17 December 2020 18 December 2020 | Ms R. Matson Mr D Brown, Q.C. with him, |
| Solicitors for the Applicant: | Melbourne Legal Chambers |
| Counsel for the Respondent: 17 December 2020 18 December 2020 | Ms S. Fisken Ms R. Stoikovska, Q.C. with her, |
| Solicitors for the Respondent: | Cornelius Family Law |
ORDERS
Pursuant to ss 67 and 68 of the Federal Circuit Court of Australia Act 1999 (Cth), the parties may appear and make submissions via audio and video link.
By 4:00pm on Wednesday, 23 December 2020, the parties sign all documents and do all things as necessary to instruct Domantay Legal to release the sum of $500,000 to each of the parties from the sale proceeds of the property situate at A Street, Suburb B, currently held on their behalf in a controlled monies account by Domantay Legal.
By 4:00pm on Wednesday, 23 December 2020, the respondent sign all documents and do all things as may be necessary to authorise the applicant to obtain copies of bank or account statements for the financial years ended 30 June 2019, 30 June 2020 and 1 July 2020 to date, being accounts identified in Annexure A to this order of:
(a)H Group Pty Ltd;
(b)Q Pty Ltd;
(c)V Pty Ltd;
(d)V Family Trust;
(e)E Pty Ltd;
(f)W Pty Ltd;
(g)X Pty Ltd; and
(h)the respondent.
By 4:00pm on Wednesday, 30 December 2020, the applicant make file and serve an affidavit making discovery:
(a)
by consent, in appropriately redacted form, of the tax invoices issued, and any office and trust account ledgers held, by the lawyers Vlahos Legal and Melbourne Legal in the period
20 April 2020 to the date of that affidavit;
(b)of all bank statements relating to any account held by him, or on his behalf, as detailed in paragraph (6) of the Order made, by consent, on 7 August 2020;
(c)of any documents evidencing his interest in any property (real or personal) which he has acquired, or in which he claims any interest, for the period 1 August 2019 to date;
(d)of any documents evidencing all payments which have been made by him or on his behalf to his personal assistant.
By 4:00pm on Wednesday, 30 December 2020, the applicant produce in electronic read only format to the respondent each of the documents of which discovery is made in accordance with paragraph (4) of this Order together with any password required to open such documents.
By 4:00pm on Wednesday, 30 December 2020, the respondent make file and serve an affidavit making discovery of all MYOB data files:
(a)for the financial years ended 30 June 2019, 30 June 2020 and 1 July 2020 to date which are in her custody, possession or control relating to H Pty Ltd; W Pty Ltd; E Pty Ltd; Q Pty Ltd; and, V Pty Ltd;
(b)which are no longer in her custody, possession or control and deposing as to when she last had any such MYOB documents.
By 4:00pm on Wednesday, 30 December 2020, the respondent produce in electronic read only format to the applicant each of the documents of which discovery is made in accordance with paragraph (6) of this Order together with any password required to open such documents.
The parties’ solicitor client costs of and incidental to making discovery and producing all documents in accordance with paragraphs (4) to (7) of this Order be reserved.
The applicant pay the parties’ costs of Mr Melilli of counsel upon his retainer to act as their mediator on 9 December 2020 fixed at $5,000.
In lieu of the directions given on 25 May 2020, the following directions are made respecting the final hearing on 4 February 2021:
(a)the evidence in chief of each party and any witness shall be by way of affidavit;
(b)by 4:00 pm on Wednesday, 13 January 2021, the applicant file and serve his, and any other witnesses, trial affidavit together with a statement of the precise final orders that he will seek for a final adjustment of the parties’ property interests and a balance sheet disclosing all items which he contends comprise the asset pool (both non-superannuation and superannuation assets and any liabilities), with copies of such draft final orders and balance sheet to be provided in Microsoft Word format;
(c)by 4:00 pm on Thursday 28 January 2021, the respondent file and serve her, and any other witnesses, trial affidavit together with a statement of the precise final orders that she will seek for a final adjustment of the parties’ property interests and a balance sheet disclosing all items which she contends comprise the asset pool (both non-superannuation and superannuation assets and any liabilities), with copies of such draft final orders and balance sheet to be provided in Microsoft Word format marking as tracked changes to the draft documents served on her by the applicant;
(d)by 4:00 pm on Monday, 1 February 2021, the parties file a joint Court book as follows:
(i)one copy in electronic format that has searchable functionality, is indexed, paginated and bookmarked;
(ii)two copies in hard format that is indexed and paginated;
(e)by midday on Wednesday, 3 February 2021, the parties file and exchange an outline of case (Times New Roman, font 12, 1.5 spacing not exceeding 15 pages), such outlines to be filed in Microsoft Word format and to identify with precision each of the issues that is required for determination.
Save with leave of the Court, no party may rely upon any evidence that is not contained in their trial affidavits or Court book;
by 4:00pm on Thursday, 31 December 2020, the solicitors for the applicant and respondent respectively make, file and serve an affidavit:
(a)deposing as to all legal costs and disbursements which have been incurred by their client to date (irrespective of whether they have been incurred with that or any prior legal firm);
(b)deposing as to the legal practitioners considered estimate of all legal costs and disbursements which are anticipated may reasonably be incurred from 1 January 2021 until judgment;
(c)deposing to having provided advice (orally and in writing) to their client of their considered estimate of legal costs and disbursements pursuant to paragraph (12(b)) of this Order and of the substantive effect of s 117 of the Family Law Act1975 (Cth).
All other extant interim applications be dismissed.
The parties’ costs of and incidental to this application be reserved.
Annexure A
| Entity | Bank account |
| H Pty Ltd | CBA ...33 |
| H Pty Ltd | CBA ...11 |
| H Pty Ltd | Z Bank ...00 |
| H Pty Ltd | Z Bank ...46 |
| Q Pty Ltd | Z Bank ...68 |
| Q Pty Ltd | Z Bank ...54 |
| Q Pty Ltd | AA Bank ...04 |
| V Pty Ltd | Z Bank ...70 |
| V Pty Ltd | AA Bank ...55 |
| BB Family Trust | Z Bank ...93 |
| E Pty Ltd | Westpac ...36 |
| W Pty Ltd | Z Bank ...21 |
| X Pty Ltd | CC Bank ...34 |
| Ms Pacek | Amex ...03 |
| Ms Pacek | CBA ...72 |
| Ms Pacek | CBA ...07 |
| Ms Pacek | Amex ...01 |
| Ms Pacek | CBA ...94 |
| Ms Pacek ATF DD | CBA ...71 |
IT IS NOTED that publication of this judgment under the pseudonym Saltzer & Pacek (No.4) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 2954 of 2020
| MR SALTZER |
Applicant
And
| MS PACEK |
Respondent
REASONS FOR JUDGMENT
Introduction
These reasons for judgment explain orders that are made upon the applicant’s most recent urgent application which is made by application in a case filed on 8 December 2020. It is made in the context that: (1) by his affidavit sworn on 18 March 2020 (being an affidavit prepared by his then solicitor), the applicant husband deposed that he was “seeking an equal division of the net assets to ensure the respondent maintained a reasonable lifestyle after these proceedings are finalised”; (2) by her affidavit sworn on 23 March 2020, the respondent wife has deposed that “The husband has openly threatened to ‘bury the asset settlement negotiations’ even if it means that I will get nothing out of it”; (3) by her affidavit sworn on 9 April 2020, the respondent deposed to a further statement by the applicant in which he reiterated that he would “burn everything down”, a statement made in the presence of the parties’ long-standing accountant, Mr G; (4) the matters deposed to by the respondent wife above are not distinctly contradicted by the applicant husband’s later affidavits, particularly in circumstances where he deposed that “there were several false statements made to the court by the Respondent in her Affidavit filed on the 23rd of March 2020”; (5) the matter is set down for hearing on 4 February 2021, pursuant to an order made on 25 May 2020; (6) the applicant has progressively engaged, dismissed or retained a series of five legal and two accounting firms to assist in the conduct of his application; (7) while the applicant seeks interlocutory relief, he does so in circumstances where complaint is made of his own continuing failure to make financial disclosure; (8) much of the relief now sought by the applicant is opposed; (9) the applicant has unilaterally cancelled, at late notice, no less than three mediations; (10) this is the tenth occasion on which the matter has been before this Court since March 2020.
These reasons for judgment should also be read in the context of the Court’s earlier reasons for judgment: see Saltzer v Pacek [2020] FCCA 854; Saltzer v Pacek [No2] [2020] FCCA 1303; Saltzer v Pacek [No3] [2020] FCCA 1381. Much of the background to the proceeding is contained in the earlier reasons and is incorporated in these reasons. Having regard to the extensive relief which is now sought, I consider that it is appropriate to provide a broad outline of the troubled procedural history of this matter throughout 2020.
Initial proceedings – Property – Injunction respecting matrimonial home
On the respondent’s case, the parties separated in August 2019. For some months thereafter, the parties with their solicitors and accountant, Mr G, endeavoured to resolve all issues between the parties. It has been the respondent’s consistent position that each party should retain 50% of their net non-superannuation assets.
On 19 March 2020, the applicant husband filed an initiating application in which he sought urgent ex parte relief to restrain the respondent wife from completing a sale of the former matrimonial home. Contextually, following the parties’ separation in 2019, the applicant transferred that property to the respondent; however, he then objected to her decision to sell the property notwithstanding his active involvement in the sale, including his agreement as to the ultimate sale price.
On 23 March 2020, the matter came before a Registrar of the Court and an order was made setting down the matter for an Interim Hearing on 14 April 2020. Amongst the parties’ consent orders made on 23 March 2020, orders were made restraining each of them from disposing or altering any of their current office-holdings, shareholdings or interests in a series of corporations and trusts. Further, each party was restrained, by consent, from terminating Mr G’s engagement. The minute also recorded that the parties had agreed upon a joint expert, J Group, for the purposes of valuing their interests in their complex of corporate and related entities collectively known as the H Group.
It appears that on about 4 April 2020, the applicant took up residence in a vacant room at the business premises of H Group in K Street, Suburb L. It is common ground that he pays no rent.
On 14 April 2020, the applicant sought orders to restrain the completion of the sale of the former matrimonial home while the respondent sought orders, in effect, permitting the completion of the sale on terms that the net proceeds of sale be retained in a controlled monies account. Upon the hearing and determination of that application, the applicant was restrained from interfering with the sale: Saltzer & Pacek 2020 [FCCA] 854. The respondent’s costs of that application were reserved.
Application in a case – A Street, Suburb B Property
On 8 May 2020, the applicant filed an Application in a Case, seeking that the respondent be restrained from executing a proposed contract of sale for the property situate at A Street, Suburb B (‘A Street, Suburb B Property’). The application was refused and orders were made permitting the respondent to enter into and execute a contract for the sale of that property, conditioned on the net proceeds of sale being placed in a controlled monies account: Saltzer & Pacek (No 2) 2020 [FCCA] 1303. Ancillary relief was granted which required the husband to remove a caveat over the subject property. A further order was made restraining him from interfering or taking any step to interfere in any sale of that property. Notably, in the course of this hearing it emerged that (apparently contrary to the parties’ consent orders), the applicant had transferred certain interests in a company, C Pty Ltd, and accordingly orders were made requiring that he make disclosure in relation to this issue. Relatedly, an order was made which required the husband to make discovery of documents respecting any appointment or purported appointment of Mr D as a director of C Pty Ltd. An order was made setting down the proceeding for final hearing on 4 February 2021 and directions given to secure that the matter would be properly prepared for trial. On this occasion, an order was made that the applicant pay the respondent’s costs.
The applicant instituted an appeal from the orders made on 25 May 2020 and following a further Application in a Case, a stay was granted. Again, the parties’ costs of and incidental to this application were reserved: Saltzer & Pacek (No 3) 2020 [FCCA] 1381. In the result, the respondent was restrained pending appeal from completing a contract for the sale of the A Street, Suburb B property.
On 11 June 2020, the applicant filed an Amended Application in which he identified the final orders then being sought in the proceeding.
In mid-18 June 2020, the applicant retained EE Forensic Accountants (EE) to “engage a full forensic accounting into the H Group, including an urgent investigation of the funds used to purchase the A Street, Suburb B property”, which had been purchased in June 2018. Thereafter, the applicant issued a subpoena to Mr G seeking production of an extensive array of corporate and trust records.
On 9 July 2020, the applicant filed another Application in a Case by which he sought that E Pty Ltd ATF Q Family Trust and F Pty Ltd ATF the FF Group Unit Trust be joined as the second and third respondent respectively. It appeared that the decisions to do so were in part due to the recognition of the applicant’s new counsel that such steps would be necessary in order that the appeal might have any prospect of success.
On 22 July 2020, orders were made by consent discharging the stay granted pending appeal in circumstances where the applicant had decided to discontinue his appeal. Orders were made, by consent, that the applicant pay the respondent’s costs associated with the stay, and discontinued his appeal. Orders for costs were made by consent with respect to the costs incurred by the purchaser of the A Street, Suburb B property. Further, an order was made by consent for a partial property settlement whereby each of the parties were paid $150,000.
In addition, the orders which were made on 22 July 2020 included notations recording the parties’ agreement to proceed with mediation and that they had “agreed on a business valuation”.
On 7 August 2020, expedited arrangements were made for a Senior Registrar of the Court to assist the parties in resolving the many extant issues respecting the subpoena issued upon Mr G. An objection to the subpoena was withdrawn by the respondent in circumstances where Mr G had complied with the subpoena on the basis that his costs would be paid. Pursuant to the orders which were made by consent, it was agreed that the respondent would provide a written authority authorising an IT consultant to the H Group to communicate with the applicant’s solicitor upon “issues arising with the provision of read-only access” to the MYOB data retained in relation to certain companies; namely, H Pty Ltd; W Pty Ltd; E Pty Ltd; Q Pty Ltd; and, V Pty Ltd. Commendably, the registrar adjourned the matter for further directions on 26 October 2020 in order that the parties could identify any other issues which were in dispute, agreed or arising in relation to the valuation of assets or liabilities and the witnesses to be relied upon at trial. Included in the consent orders was that the applicant would pay the respondent’s costs of and incidental to the subpoena objection in a fixed amount. So too, an order was made that the applicant pay the costs of the subpoena recipient of compliance with that subpoena. To date those and other costs orders remain unpaid.
In the period June 2020 to date, no report from EE has been produced by the applicant and further, there is presently no independent objective opinion evidence which identifies any systemic irregularities in the financial affairs of the H Group.
It also appears that despite the consent orders made respecting disclosure by the applicant of documents relating to C Pty Ltd, it became necessary for the respondent to issue a subpoena to Mr D, whom it appeared had been appointed by the applicant as a director of that company. It further appeared that Mr D had not complied with that subpoena in accordance with its terms, or at all.
More significantly, it appeared that the applicant had:
a)unilaterally cancelled agreed arrangements made for a mediation to be undertaken by, Mr J Melilli of counsel;
b)taken a variety of steps, the effect of which may have impeded completion of the sale of the A Street, Suburb B property;
c)conducted himself in a manner which interfered with the performance by Mr G of his obligations as accountant for the parties’ various companies and trusts.
In the result, on 9 October 2020, an urgent application was brought by the respondent seeking to address the resolution of the several matters then in dispute. When, on 14 October 2020, the matter was listed for hearing, the applicant had the considerable benefit of senior and junior counsel who represented his interests on that day. Ultimately, orders were made by consent including as follows:
a)the parties would attend private mediation with Mr Melilli;
b)the parties would do all things required of them to facilitate completion of the sale of the A Street, Suburb B property;
c)the applicant would otherwise be restrained from attending that property;
d)the applicant would withdraw a proceeding seeking an intervention order against the accountant, Mr G;
e)the parties would forthwith instruct three experts as follows:
i)J Group, to update its valuation of two properties (K Street, Suburb L and GG Street, Suburb L);
ii)an agreed single expert to value certain property in Country HH;
iii)an agreed single expert to value certain trucks, trailers, tippers, plant and equipment (which had previously been valued by Mr JJ) (and for the costs of such valuations to be paid from monies held on trust);
f)the identification by the respondent of the documents of which she would provide discovery and those in respect of which she objected to make discovery;
g)the provision of further information (if any) as may be required to facilitate access to the MYOB data;
h)the dismissal of all extant interim applications;
i)the reservation of the respondent’s costs to trial;
j)the listing of the matter for mention on 17 December 2020.
Present application
On 8 December 2020, the applicant filed an Application in a Case, again seeking an urgent listing and abridgement. By the application, the applicant sought that the consent order made on 14 October 2020 by which “the parties attend private mediation with Mr Joseph Melilli of counsel on 9 December 2020, unless otherwise agreed in writing or ordered” be vacated (emphasis in original). Further orders sought were:
a)for mediation to be conducted on a date to be agreed;
b)for the parties to instruct, at their mutual cost, Mr JJ, to prepare an updated valuation in respect of the following companies: (i) V Pty Ltd; (ii) E Pty Ltd; (iii) H Pty Ltd; (iv) Q Pty Ltd; (v) Q Pty Ltd (as to the latter company, it was not clear whether this was an intended reference to W Pty Ltd or Q Pty Ltd).
c)for the respondent to provide to the applicant, within seven days, “copies of the bank statements exhibited hereto”;
d)for the respondent to provide to the applicant, within seven days, no less than 13 categories of documents (see below);
e)the release to each party of $600,000 from a controlled monies account and the transfer of $72,000 from an account held by the applicant’s former solicitors, Dwyer Vlahos to his current solicitors, together with ancillary relief.
By her response to the application, the respondent sought orders:
a)for dismissal of the Application in a Case;
b)dispensing with mediation and orders respecting costs incurred in relation to the abortive attempts at mediation to date;
c)for the applicant to file an up-to-date financial statement and, in particular identifying: (i) all bank or like accounts held by him in any financial institution; (ii) his current assets; (iii) all motor vehicles in his name; and, making discovery of related source documentation;
d)for the parties to jointly authorise Mr JJ upon “the methodology chosen by Mr JJ to value the parties business entities”.
Each of the parties sought costs.
The parties filed extensive affidavits which I have examined. It is a matter of regret that such extensive evidence and exhibits were filed.
Indeed, when the matter was called on for hearing on 17 December 2020, junior counsel for the applicant sought an adjournment of her client’s Application in a Case doing so on the stated basis that in filing affidavits in answer to the applicant’s affidavits on the eve of the hearing, the respondent had acted in flagrant breach of the order that no affidavits should be filed less than seven days before the mention on that date. This submission paid scant regard to the order which had in fact been made or the context in which it had been made. In particular, that consent order was in reference to the matter being listed for mention on 17 December 2020 so as to address Case management issues in advance of the final hearing scheduled to commence on 4 February 2021. More specifically, the order said nothing respecting any Application in a Case to the respondent’s entitlement to file any evidence in answer to any affidavits which may be brought by the applicant. The order did not foreclose the respondent from answering any affidavits relied upon by the applicant support of his most recent ‘urgent’ Application in a Case.
By an affidavit made by the applicant’s current solicitor, the following contentions or assertions were made rather by way of submission than as by adducing evidence in support of those contentions or assertions:
a)the consent mediation scheduled for 9 December 2020 ought to be adjourned in the circumstances deposed to by that affidavit;
b)while there had been agreement as to an updated valuation by Mr JJ, the respondent did not agree to that valuation;
c)the respondent had failed to produce all of the MYOB databases including those “files for the 2019 and 2020 financial year for H or any current data files for any of the entities” and that request for these data files had been “either ignored or refused”;
d)the respondent had failed to produce documents including relevant bank statements and bank accounts in Country HH;
e)the respondent had been unwilling to release further funds;
f)a valuer appointed to value certain vehicles would not be able to complete his valuation in advance of the mediation, and further a valuation of a Country HH property had just been received.
The matters deposed to by the applicant and his solicitor were answered in detail by affidavits sworn by the respondent and her solicitor. Following complaint as to the lateness of service of those affidavits I concluded that, irrespective of the merit of the complaint, it would be appropriate to adjourn the application in order that the applicant’s counsel and instructing solicitor should be afforded an opportunity to consider that material and to confer with counsel for the respondent.
Nothing was indicated before the adjournment to suggest that the applicant would seek to file any further evidence in support of the Application in a Case. Undeterred, the solicitor for the applicant nonetheless filed and served a further affidavit very late on the eve of 17 December 2020. As advised to the parties, I considered their oral submissions on 18 December 2020 on the stated basis that I would examine that further affidavit in due course.
Resolution
The Court had the considerable and measured assistance of the parties’ senior counsel on the second day of that hearing.
Having regard to the scope of the parties’ extensive affidavits and the procedural history to date, it is convenient to address the topics as raised by the parties and my conclusions in relation to each of them. Contextually, senior counsel for the applicant husband furnished a proposed minute of orders by reference to which the parties made their oral submissions.
Further partial property settlement
The applicant seeks a further partial property settlement of $600,000.
By his affidavit sworn 4 December 2020, the applicant deposed to his present financial circumstances including that he has a net weekly salary of $1,756 but is left with $196 per week to pay for his personal living expenses. The applicant deposed that:
a)on 4 May 2020, a sum of $250,000 was released to him and to the respondent and that such sum has been expended on personal expenses and legal costs;
b)on 24 July 2020, a sum of $150,000 was released to himself and respondent respectively which has also been expended on personal expenses and legal costs (including $72,000 which he stated was frozen in the account of Dwyer Vlahos pursuant to orders made on 22 July 2020 “which cannot be released until further order of the Court or consent of me or on the wife”);
c)he has a present credit card debt of $15,000;
d)contrastingly, it was said that the respondent had been paying her credit card debts from company funds;
e)he is presently indebted to his current solicitors for $170,000 and that further costs will be incurred in proceeding toward mediation and trial and that his present lack of funds was prejudicing his ability to fund his litigation;
f)since April 2020, the applicant has been living in a spare room at the offices of H Group;
g)the applicant has purchased a block of land upon which he has paid a deposit of $10,392. The purchase is due to complete in late January 2021 at which point he is liable to pay a further sum of $216,965 which he was presently unable to pay and in respect of which he had informed the respondent’s solicitors (including by supplying a copy of the contract of sale);
h)of the monies presently held in controlled monies accounts there was: (i) $130,000 representing the net proceeds of sale of the former matrimonial home; (ii) $2.002m representing the net proceeds of the A Street, Suburb B property; (iii) $200,000 representing the net proceeds of sale of certain trucks, trailers and like equipment;
i)Q Pty Ltd Pty Ltd was indebted to him in the sum of $1.58m;
j)E Pty Ltd, the owner of the A Street, Suburb B property was indebted to Q Pty Ltd in the sum of $1.6m.
The applicant deposed that in all the circumstances, there were ample monies which could be released by way of a partial property settlement. Those matters were also supported by the applicant solicitor who deposed as to the extent of the applicant’s current indebtedness on account of legal fees said to have been incurred to date.
Senior counsel for the respondent drew to the Court’s attention some obvious shortcomings in the application for a partial property settlement.
The applicable principles were not in contest. Indeed, it was implicit in the applicant’s submissions that they should be accepted.
Having regard to the parties’ net asset pool, I am satisfied that it is in the interests of the administration of justice that a further partial property settlement should be made. The substantive objection by the respondent to the quantum of the sum sought by the applicant was that, if granted, it may be necessary to make an order pursuant to which the respondent wife was able to ‘clawback’ some part of those monies from the net asset pool. This submission is to be understood in the context that the respondent deposed to a net asset pool of non-superannuation assets of $8.5m of which, as she accepted, the applicant would receive one half. Further, the respondent deposed that she presumed the applicant would wish to retain certain assets held by H Group and V Pty Ltd which, on present valuations would account for at least $3.8m. Account also needed to be taken of the partial property settlements made to date, by consent ($400,000) together with a property held by the applicant in PP Street, Suburb QQ ($440,000). All told, those items amounted to $4.64m, being a sum greater than $4.25m
Then, as the argument ran, the making of an order for a further partial property settlement of $600,000 would result in the applicant husband receiving far in excess of 50% of the net asset pool. In addition, the respondent submitted that a further payment of $90,000 would suffice.
In the course of the parties’ oral submissions, it was quite clear that the Court will retain power to make final orders which will, as far as is possible, finally determine their property interests and to do so in a way which preserves, and does not prejudice, the interest of either party. That is to say, it was accepted in the course of argument that a possible consequence flowing from the making of an order that each party now receive a further sum of $600,000 may be that it is then not possible for the applicant husband to retain the assets of some or all of those held by H Group and V Pty Ltd.
In my view, it is a corollary of the application for a further partial property settlement that it may then be beyond the capacity of the applicant to acquire the assets of H Group and V Pty Ltd. Contextually, it will be recalled that in the course of earlier applications, the applicant was unable to adduce any cogent evidence demonstrating his capacity to secure the finance necessary to purchase the A Street, Suburb B property at the price then being offered to the vendor.
Those matters notwithstanding, I am prepared to grant the relief for a further partial property settlement for a sum of $500,000.
Discovery by the applicant
The applicant’s draft minute of proposed orders did not address the relief sought by the respondent respecting the discovery sought from him. That it did not do so was perhaps notable in light of the response by which such discovery was sought from the applicant coupled with the respondent’s affidavit evidence deposing to the continued failure of the applicant to make discovery in accordance with consent orders (which affidavit had been responded to late on 17 December 2020), and the direction that the parties’ counsel should confer with a view to narrowing the issues requiring determination. In the event, it was not in real contest that despite the consent order made on 7 August 2020, the applicant has not made discovery in accordance with paragraph (6) of that Order.
Senior counsel accepted that such discovery was appropriate. This submission was commendable, particularly in circumstances where the most recent affidavit filed by the applicant’s solicitor (at 10:46pm on Thursday, 17 December 2020), adhered to the position that such discovery by his client was ‘unnecessary’.
It cannot be ignored that the applicant, who pursues yet another ‘urgent’ application, does so in circumstances where his own compliance with orders is wanting.
MYOB data
As to the provision of this data, orders have been made by consent in August 2020 to resolve this issue. The applicant’s solicitor deposed that shortly before the hearing on 14 October 2020, the respondent’s IT consultant had provided his office with a USB stick “containing read only copies of hundreds of MYOB data files”. The deponent complained that the data files were not properly described, were in no particular order, duplicated, labelled incorrectly and saved as Zip files that required ‘unzipping’. The applicant’s solicitor recounted a conversation with the respondent’s IT consultant who, it was said, was unable to assist on the basis that “the wife had created all of the data files and that he had simply copied same from the server to the USB”. The deponent further recounted that attempts to obtain further assistance from the respondent had not been successful and further that he, and his staff members, had spent almost 5 weeks unzipping and identifying data provided which had been expensive, time-consuming and labour-intensive. In addition, it was deposed that a number of the MYOB data files could not be opened or accessed and that it was not until 4 November 2020 that replacement ledgers had been supplied by the respondent.
The applicant’s solicitor identified a series of MYOB files which, it was said, had not been produced and spanning (to a greater or lesser extent) the years 2013 to 2020. The deponent stated that these records were directly relevant to the movement of monies across entities and intercompany loan accounts. The solicitor acknowledged that the response received from the respondent’s solicitors had been to advise that such records had previously been provided. The circularity of the ensuing debate was somewhat remarkable and may, if necessary, best be resolved by cross-examination of the deponents.
The applicant’s solicitor further deposed that on 19 November 2020 he had telephoned his client’s new accountant, Mr MM, who had advised that in August 2020 he had received an invitation from Mr G to access read only copies of the 2019 and 2020 MYOB data files and, when asked if he could provide a copy of those data files, was advised that they could not be copied and that he was not able to allow the applicant’s solicitor or staff to access those files. While the applicant’s solicitor deposed that he could not properly advise upon mediation without proper access to the MYOB data files, the gravamen of his concern was expressed in terms of the need to identify any items of personal expenditure which had been paid for by any company for the benefit of the respondent wife. Considered from another perspective, the applicant’s solicitor did not depose to any wider concern.
Contrastingly, the affidavits filed on behalf of the respondent identified in particular detail the many steps taken to assist the applicant solicitor in gaining access to the electronic read only MYOB data. The respondent’s evidence is that the data is provided in read-only format so as to avoid the risk of the introduction of unnecessary further disputation from the possibility that the data might be altered. It is unnecessary to reflect any further upon the merit of that concern or otherwise.
Of greater concern is the scope of the discovery being sought which traverses several years prior to the parties’ final separation. The relevance of such historical MYOB data is far from obvious. First, the joint appointed expert was able to prepare a valuation, doing so without reference to any complaint as to the need for access to such data. Secondly, while the applicant retained a firm of forensic accountants, EE, to examine the books and accounts, there is no evidence from those accountants supporting a conclusion that such records are necessary in all of the circumstances. Thirdly, it is the respondent’s evidence that the current MYOB data is accessible in hard copy in the boardroom at the head office of H Group (where the applicant is now living pending his purchase of another property). Historical MYOB data is also retained in a container at those premises. Fourthly, the evidence of the applicant solicitor is that the need to review this MYOB data arises from the concern of certain borrowings for the purpose of paying “personal and non-company items”. He speculates that such personal borrowings are likely to be very significant but does so without reference to the fact that the parties remained in their relationship until 2019. It is difficult to ignore that the affairs of parties may inevitably be intermingled with those of the affairs of their private companies and trusts and there was considerable force in the submission that any further discovery on the eve of trial should be focused upon relevant issues and in particular the MYOB data for the period post separation. Fifthly, the years are long past when parties were permitted to pursue a process of discovery by compelling an opposing party to provide discovery of any documents which may (not must), directly or indirectly enable a party to advance his own case or damage that of the opponent. Sixthly, it cannot be ignored that applications for further or better discovery should be made at the proper time. In the present case, the application was made in the last sitting days before Christmas when the matter had been listed for final hearing at the beginning of the legal year in February 2021, such listing been given in May 2020. Seventhly, a proper boundary that is placed upon the making of an order for further discovery is that the applicant should demonstrate the necessity for such discovery. Having regard to the historical nature of the discovery sought for documents which predated the parties separation in mid-2019 and included records going back to 2013, in my view it was incumbent upon the applicant to demonstrate such necessity by cogent evidence and this was not done. Eighthly, it is long settled that in the absence of special circumstances a party is not permitted to exploit interlocutory procedures (including subpoenas, interrogatories or discovery) to pursue a fishing expedition, not for the purpose of obtaining evidence, but to discover whether he or she has any case at all. Ninthly, such applications may be refused where a disproportionate number of documents are called for, particularly at a late stage, and it is not demonstrated that they are sufficiently relevant. Tenthly, considerations of case management loom large where such applications are made on the eve of trial.
Cognisant that parties to proceedings for an adjustment of property interests are subject to a duty of full and frank disclosure, the modern practice in this jurisdiction is to require discovery of documents that are directly relevant such that general discovery is no longer permitted. With those considerations in mind, I do not accept the applicant’s submissions that there should be wholesale discovery of MYOB data. To the extent that the most recent affidavit from the applicant’s solicitor framed his evidence in terms that, in effect, the full extent of the true position could never be known until complete discovery had been given, I regarded this as representing a self-fulfilling prophecy which paid insufficient regard to the need to assist parties in identifying the real issues in dispute and to dedicating resources in the investigation and pursuit of issues in a manner which was properly proportionate to their just claims. In my view, the necessity of the discovery sought across such a broad period was not demonstrated and to the contrary bore all of the hallmarks of an unrestrained fishing expedition. It follows that I was not persuaded that adherence to the parties’ trial date was conditioned upon general discovery of MYOB data from 2013 – 2020.
I am satisfied that the respondent has complied with the order made by consent on 7 August 2020 whereby she was required to provide written authority to an IT assistant, Mr NN of OO Consultants, authorising him to communicate with the applicant’s former solicitor, Ms Vlahos, so as to facilitate ready access to the read-only MYOB files. I am likewise satisfied that on the date Ms Vlahos’ retainer was terminated and the applicant’s current solicitor was engaged, a like authority was furnished without delay to the new solicitor. I am further satisfied that the parties’ accountant Mr G has also endeavoured to assist the applicant in relation to the MYOB data issues and also wider issues respecting the discovery of financial documents relating to the parties’ affairs. While the Court must keep an open mind in relation to these matters, the need for pursuit of this ‘fantastic’ discovery dispute (as it was aptly described by the applicant’s senior counsel), may be questioned.
On the available evidence, I am satisfied that the respondent’s solicitors have endeavoured to assist the applicant’s solicitors in gaining access to the MYOB data in a manner that goes above and beyond that which might ordinarily have been expected between litigants. The fact that this has occurred may be explained by the desire of the respondent to achieve finality in this litigation. In addition, the respondent’s counsel made oral submissions by which it was proposed that, within limits, her client would make a further affidavit providing discovery of certain MYOB data, including in relation to that which she was not in a position to make, by reason that it was no longer within her custody, possession or control.
I note that by the order made on 7 August 2020, by consent, it was agreed that “any costs associated” with the assistance rendered by Mr NN in facilitating access to the MYOB data would “be met by the husband.” In all of the circumstances, I see no reason to modify that order. At the same time, senior counsel for the respondent sought an order that the applicant immediately bear the costs of preparation of a further affidavit of documents relating to MYOB data. As it remains to be seen whether any such data is of particular relevance (and indeed whether such data has already been provided), it will be necessary to reserve those costs. However, an increasing number of costs orders are now extant.
Bank statements
The applicant’s solicitor deposed as to a series of bank statements of which discovery was sought and reiterated the complaint that his advice upon mediation could not be provided without such discovery. While the series of bank statements and related documents were neatly defined as ‘Miscellaneous Documents’, such a definition concealed the true scale of the discovery being sought and which is of significant dimension.
The respondent resists such discovery. Moreover, it is plain from the affidavits filed by the applicant solicitor that the objection to such discovery has been ongoing since at least August 2020. In the face of that ongoing dispute, the filing of an ‘urgent’ Application in a Case on 8 December 2020 was notable.
I reiterate the applicable principles and observations at [46]-[50] above.
In my view, the affidavits of the applicant’s solicitor did not descend to provide any cogent evidence supporting a conclusion that discovery of these many ‘Miscellaneous Documents’ was necessary for a just determination of the issues in the case and was more reflective of an application for general discovery of a kind which is not appropriate. Again, I considered the application to be a fishing expedition. In contrast with the evidence adduced by the applicant solicitor in relation to the MYOB data, the most sparse of attempts was made to depose as to the reasons why such records were directly relevant to the issues for trial.
The respondent’s evidence is that the vast majority of documents to which the applicant now seeks production have already been produced to, or by, him. An available inference is that the applicant’s current solicitor may prefer to seek further copies of documents which have already been provided to the applicant’s former solicitor from the respondent’s solicitor as an expedient way of securing access to those documents. There was force in the respondent’s evidence that it is not to her account that such discovery has been produced to the applicant’s former solicitor. Further, the respondent’s evidence is that a raft of such bank and other records were produced to the applicant by Mr G and, pursuant to paragraph 2 of the Order made on 7 August 2020, such documents have already been released to the applicant for inspection.
Of other concern, is that the applicant is a joint director with the respondent of many of the entities for which discovery was sought and is, in those circumstances, entitled as of right to obtain, at his own cost, any such documents. An affidavit filed by the respondent solicitor, Mr Cornelius, deposed at [6] to [98] of his dealings with the applicant solicitor in relation to each of the categories of documents for which discovery is now sought. The deponent observed that the applicant’s forensic accountant, EE Forensic Accountants, who had been engaged in June 2020, had not sought production of a great many of the documents now sought and that large numbers of them significantly predated the parties’ separation. From this affidavit I am satisfied that the respondent’s solicitor made no attempt to ignore or ‘fob off’ requests for information or documents and, to the contrary, dealt directly with each of the requests including, for example, advising that certain statements were not available by reason that a particular account had been closed. The respondent’s solicitor identified the generality of many of the applicant’s requests and the absence of any real explanation as to the supposed relevance of such documents, including those of an historical nature. Further, the respondent’s solicitor had already drawn to the attention of the applicant’s solicitor that hard copies of such documents were stored at the business premises of the H Group (where the applicant has lived since April 2020).
I do not ignore the respondent’s evidence that she says the applicant is well aware of the existence of such hardcopy documents. I cannot ignore that the applicant contends to the contrary. However, a constant theme in the course of the ongoing discovery dispute appears to be that the applicant and those whom he instructs appeared to rely on the respondent and her solicitors, IT consultant and Mr G to provide a level of assistance which goes well beyond what might be reasonably expected, particularly, where both parties are legally represented.
A further troubling aspect of the discovery applications is that the applicant solicitor appears to press for disclosure of lease and related documents in circumstances where, on the affidavit filed by the respondent solicitor, no such documents exist, and the parties’ private arrangements had historically been that there was no necessity for any formal lease between companies within the H Group such that the rental paid by any such company is recorded within the relevant bank statements. Viewed from this perspective, it is not unimportant to recognise that issues of this kind should be the subject of instructions.
Subject to what follows, I am not satisfied that it is necessary in all the circumstances of this case to require the respondent to make any further affidavit of documents in relation to the bank statements and other extensive lists of Miscellaneous Documents of which production is sought by the applicant. I regard the affidavits of the respondent and her solicitor, each sworn on 16 December 2020, as providing a sufficient and complete explanation of the stance taken by the respondent in relation to each of those categories of documents.
Otherwise, insofar as it may now be suggested that the respondent’s written consent is an impediment to the supply by any bank of any statement (but without accepting the veracity of that contention in all instances), I accept that it is expedient for the applicant to furnish a written authority from such banks as the applicant may require, limited however, to the accounts of H Pty Ltd, Q Pty Ltd Pty Ltd, V Pty Ltd, BB Family Trust, E Pty Ltd, W Pty Ltd, X Pty Ltd and the respondent as identified in the draft minute of order but for the financial years 30 June 2019, 30 June 2020 and to date, being for the accounts as identified in the annexure to that draft order.
Updated company valuations
The parties, who have already appointed Mr JJ as their joint expert, obtained a valuation dated 29 June 2020. Until 14 October 2020, it appeared that for a period of at least three months no issue had been taken by the applicant with the Mr JJ valuation.
The Mr JJ valuation was apparently undertaken on the basis of an assessment of net asset values.
The applicant’s solicitor deposes that his concern is that the current valuation does not accurately reflect the value of H Pty Ltd by reason of the sale, on 23 October 2020, of 17 trucks and trailers which were “sold by agreement between the parties” and for which $200,000 was obtained as the net proceeds of those sales.
At first sight, the Mr JJ valuation would be immediately adjusted to reflect that fact including the receipt of those net proceeds of sale together with the consequential impact on overall valuation.
In a similar vein, the parties, who consented on 14 October 2020 to obtaining updated valuations of certain properties (as earlier valued by J Group in January 2020), now have those updated valuations from KK Real Estate. It is now said by the applicant was a solicitor that those circumstances require a consequential updated valuation to be provided by Mr JJ. It is not immediately apparent why that is so. Nor is it apparent why such issues could not be resolved at trial. Indeed, there would seem no reason why the issues of this kind could not be resolved by agreement.
In my view, enough has been seen to support a conclusion that an attempt to resolve valuation issues by means of joint appointment will only be productive of further disputation. I am fortified in that conclusion by the content of the most recent affidavit filed by the applicant’s solicitor that “although there is no dispute with respect to Mr JJ being instructed to provide revised valuations of the companies, the parties need to agree the instructions to be provided to that firm.” Such evidence is to be viewed in the context that the respondent’s solicitor had earlier taken the initiative to suggest a further letter of joint instructions but no agreement as to those instructions could be achieved.
Instead, to the extent parties may wish to obtain a further report from Mr JJ (or any other expert), they should be free to do so at their own expense and on terms that any such report as may be obtained is immediately provided to the other party. By extension, any letter or record of any other communication by, or on behalf of, a party with any such expert should also be disclosed without delay.
Valuation of trucks and trailers
It appears that certain items of plant and equipment including trucks, trailers and tippers were valued by Mr JJ on the basis of their written down book value as contained in relevant balance sheets.
The applicant’s solicitor deposed as to certain suggested difficulties attending the valuation of trucks, trailers, tippers, plant and equipment as valued by Mr JJ, including that the parties had agreed to another valuer, LL Valuers, as a single expert, but that despite certain difficulties a valuation should be provided by 9 December 2020. The solicitor deposed that he could not advise the husband as to any reasonable settlement offer when there was no certainty as to the valuation of the companies and assets.
While it is less than clear in the evidence precisely how many items of equipment actually need to be valued (in circumstances where a number of items have been sold to the parties’ subcontractors), it appears such valuations as are, or have been, required, will be completed shortly.
Loans and repayments of loans
An issue arises respecting the treatment of the net proceeds of sale of the A Street, Suburb B property, including that from the accounting which has now been given by the wife’s solicitors certain other non-mortgage liabilities that have been discharged. On the available evidence, despite request, the applicant declined to extend a certain loan for V Pty Ltd and as a result upon settlement of the sale of this property, Westpac Banking Corporation, a secured lender, discharged all extant loans at settlement.
These issues were not pressed in the course of submissions and I am not satisfied that further discovery of such records is required.
Country HH accounts
In the ongoing process of discovery, the respondent has produced to the applicant certain bank statements relating to accounts held by her in Country HH and, which she deposes, she has discovered for the period 2014 to date. Further she deposes that she purchased a Country HH property in 2015 to the knowledge of the applicant and which property she has always disclosed in this proceeding.
Again, these issues were not pressed in the course of submissions.
Institution of further proceedings
The applicant solicitor made an affidavit by which he deposed to instructions of his client’s desire to commence proceedings against the respondent for alleged breaches of ss 180, 181, 182, 198E, 198F, 286 and 290 of the Corporations Act 2001 (2001) and for breaches of fiduciary duty and for relief under s 247A so as to obtain access to the books and accounts of certain of their companies and finally for the institution of a derivative proceeding under Pt 2F.IA of the Corporations Act 2001.
Suffice to say, there is no evidence that any such proceedings have been prepared or instituted. No draft proceedings or statements of claim were exhibited. No draft affidavit in support of any application for the institution of a derivative receiving was provided. In the circumstances it is more troubling is that the instructions apparently furnished by the applicant to his solicitor have apparently been provided on the eve of trial and have not yet been amplified or supported by any, let alone any detailed, allegations of impropriety. I reiterate that neither EE, nor any other independent expert has furnished an opinion identifying any systemic irregularities in the affairs of the H Group and in particular any such irregularities in the period post separation in 2019 despite hardcopies of such records being stored at the business where the applicant has lived since April 2020 and notwithstanding the extensive discovery which has already been provided and the assistance given to access read only versions of the documents. Upon one view, those instructions may perhaps be seen as consistent with some of the matters detailed in these reasons for judgment at [1]. Without pre-empting any steps which may be taken hereafter, it may be observed that the issue of any such proceedings would require the lawyer who instituted such proceedings to certify their belief as to a proper basis for any such claims.
On the evidence, such as it was, the applicant’s desire to institute proceedings across such a broad landscape stood in marked contrast to the measured submissions of his senior counsel that he wished to retain the trial date on 4 February 2020.
Transfer of proceeding
As the written submissions of Ms Fisken of junior counsel for the respondent properly recognised, it was no part of the relief sought in the Application in a Case that any such order should be made.
No submission was made as to this by senior counsel for the applicant.
Mediation
The applicant’s solicitor deposed that it was appropriate for the mediation to be adjourned until the panoply of interlocutory skirmishes had been resolved. I am satisfied that the applicant has unilaterally conducted himself in a manner which has resulted in mediations being aborted at the last minute and at cost to himself and the respondent.
I accept the submissions on behalf of the respondent that there is, in this case, no utility in any further mediation. Particularly is that so in circumstances where it now appears the applicant may seek to withdraw from his position stated, on oath, in March 2020, that he considered an equal division of property to be appropriate. At present, the parties are represented by highly experienced counsel and would be well advised to seek and consider their advice upon the proper resolution of their dispute. They remain free to conduct any negotiations they might choose to pursue out-of-Court in the usual manner.
I am satisfied that an order should be made that the applicant pay the parties’ costs of the retainer of Mr Melilli of counsel who had agreed to act as their mediator on 9 December 2020 and which I fix at $5,000.
Conclusion
For the avoidance of doubt, I accept that Mr Brown of her Majesty’s counsel was ultimately qualified in his submissions as to whether his client now accepted that an equal division of the net asset pool represented a just and equitable adjustment of those interests. I do so, conscious that senior counsel (for each party) had been retained only shortly before the second day of this hearing. Nothing which I have said as to this issue should be misunderstood as diluting the parties’ sworn evidence on this issue.
However, if the qualified submission by senior counsel may be taken as providing some indication that the applicant now takes a different view of the matter then it is appropriate that he should distinctly state, in advance of the final hearing, precisely what orders are sought by way of final relief and what items he contends represent the net asset pool (both in terms of non-superannuation and superannuation assets and any liabilities). By extension, the respondent should likewise identify the final relief for which she contends and whether she agrees or disagrees as to the parties’ net asset pool. It will be of assistance to the orderly resolution of the matter that the parties furnish their proposed orders and asset pool in a Microsoft Word format in order that ‘tracked changes’ can be effected to a single document and that the trial can be conducted upon that basis. Furthermore, it is to be expected that the parties’ outlines of case will detail the precise issues which are said to require determination, a result which can be achieved in part by indicating where there is agreement including as to items comprising the parties’ net asset pool.
Having regard to the procedural history outlined above, I consider it appropriate that each of the parties’ solicitors should make, file and swear an affidavit which deposes as to the costs which have been incurred by their client to date, those which are estimated to be incurred up to judgment and that advice has been furnished to their client as to the substantive effect of s 117 of the Family Law Act 1975 (Cth).
Each of the parties were emphatic in their submissions that they would strive to retain the trial date of 4 February 2021. The parties were given their trial date by an order made on 25 May 2020. The making of that order carried a number of consequences. First is that other litigants in this Court who are no less deserving of a trial date at the earliest opportunity have been denied that hearing date. The volume of business in this Court is a matter of notoriety and the orderly case management of a proceeding dictates that parties be given a reasonable opportunity to prepare and bring forward the real issues which require determination at a final hearing. Secondly, and for the avoidance of doubt, the parties have been afforded every opportunity to prepare the matter for trial since May 2020 and are expected to have done so. In particular, the preparation of their trial affidavits, identification of relevant documents for inclusion in the court book and submissions upon the issues which properly require determination should already be well advanced. Thirdly, neither party should proceed upon any assumption that the trial date will be vacated merely at their convenience. While parties are entitled to a reasonable opportunity to prepare their case, it is a matter for them whether that opportunity is taken. Fourthly, each of the parties should reasonably assume that the Court will hear and determine the application upon the available evidence and submissions which have been prepared and made at that trial. There must be an end to litigation.
I certify that the preceding eighty-six (86) paragraphs are a true copy of the reasons for judgment of Judge A. Kelly
Associate:
Date: 21 December 2020
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