Short v Delaney
Case
•
[1999] NSWSC 1293
•23 December 1999
No judgment structure available for this case.
CITATION: SHORT v DELANY & ORS [1999] NSWSC 1293 CURRENT JURISDICTION: Civil FILE NUMBER(S): 20465/94 HEARING DATE(S): 15/02/99, 16/02/99, 17/02/99, 18/02/99, 22/02/99, 23/02/99, 24/02/99, 28/04/99, 23/12/99 JUDGMENT DATE:
23 December 1999PARTIES :
Lesley Lorraine Short (Plaintiff)
P G Delany, P N Coumbs, J P Rowen, P T Hayson, J S Currie, J C Hartigan, R A Todd, G Miles, J W Kenny, J S Goldstein all trading as Laurence & Laurence (Defendants)JUDGMENT OF: Adams J at 1
COUNSEL : Mr D H Murr SC (Plaintiff)
Mr D Grieve QC (Defendants)SOLICITORS: Rockliffs (Plaintiff)
Phillips (Defendants)CATCHWORDS: Professional negligence; matrimonial dispute; settlement; failure to investigate husband's assets; effect on settlement ACTS CITED: Family Law Act 1975 CASES CITED: In the Marriage of Soblusky (1976) 2FamLR 11, 528; FLC 90-124;
In the Marriage of Willett (1976) 1 FamLR 11, 248; FLC 90-022;
In the Marriage of Ferguson (1978) 4 FamLR 312; FLC 90-500;
In the Marriage of Meuller and Hegedues (1979) 5 FamLN 14; FLC 90-708;
Kowaliw v Kowaliw (1981) FLC 91- 0 -19;
In the Marriage of Townsend (1995) FLC 92-569;
In the Mariage of Oriolo (1985) FLC 91-653;
Penfold v Penfold (1980) FLC 90-800;
In the Marriage of Weir (1993) FLC 92-338;
Burridge & Burridge (1980) FLC 90-902;
Harris v & Harris (1993) FLC 92-378;
Jones v Dunkel (1959) 101 CLR 298DECISION: See paragraph 80
61THE SUPREME COURT
OF NEW SOUTH WALES
COMMON LAW DIVISION
ADAMS J23 DECEMBER 199920465/94SHORT v DELANY & ORSJUDGMENT
1 HIS HONOUR: This is an action arising out of alleged professional negligence by a solicitor, Mr J S Goldstein who, at relevant times, was the partner of the other defendants. 2 The plaintiff married Robert Pollack (the husband) on 10 February 1973 when she was 21 years old and the husband was 26 years old. They have three children, born in July 1977, March 1979 and July 1981. For most of their marriage both worked as dentists in partnership, sometimes the plaintiff working part time but mainly full time. On 10 September 1985 the husband left the matrimonial home at 35 Minimbah Road Northbridge. There were difficulties in the marriage that year and, as a result, the plaintiff consulted Mr Goldstein, a most experienced family law practitioner, about her situation. At the end of 1985, the husband returned to the matrimonial home, although there was no reconciliation, and the plaintiff again consulted Mr Goldstein. The following year, some moves towards reconciliation were made but they were unsuccessful and, in March 1986, the plaintiff left the matrimonial home, together with the three children of the marriage, then 4, 7 and 8 years of age. The plaintiff again consulted Mr Goldstein concerning her matrimonial affairs. A number of consultations then ensued with communications and negotiations between Mr Goldstein and the husband’s solicitors. On 9 July 1987, agreement not having proved possible, an application initiating proceedings for property settlement and maintenance was made in the Family Court of Australia on the plaintiff’s behalf. On 14 September 1987, the husband filed a reply and cross-application together with an affidavit and, in due course, a statement of financial circumstances sworn 22 September 1987. On 2 November 1987, the plaintiff filed an affidavit in reply and a statement of financial circumstances which had been sworn on 14 July 1987. Negotiations for settlement were undertaken but, by early 1988, had clearly failed. In about April 1988, the husband instigated further negotiations directly with the plaintiff who, in due course, consulted Mr Goldstein and further negotiations ensued between solicitors on both sides. Consent orders embodying agreement were eventually made on 3 August 1988 (the consent orders), the settlement date. 3 The plaintiff claims that the advice given to her and the work undertaken by Mr Goldstein in connection with his retainer to assist her in her matrimonial affairs was negligent. The essence of the plaintiff’s claim is that she agreed to a financial settlement with the husband at a figure significantly less than that which was appropriate and to which she would have agreed had Mr Goldstein made appropriate enquiries and given her correct advice. Mr Murr of Senior Counsel for the plaintiff submitted that the simple reality of this case was that the plaintiff settled her family law claim in ignorance of the true state of the assets of the parties that were available for distribution, not knowing that the true state of affairs was that there were further assets of something over double the figure she believed was the case. 4 It is useful to set out at this point the legal principles applicable not only to the duty of care owed by a solicitor to a client, which I apprehend are not controversial, but also the key relevant provisions of the Family Law Act 1975. 5 Subject to the nature of any particular retainer and the ambit of any additional assumed responsibility, a solicitor has a duty of care to exercise a reasonable level of professional care and skill and take all reasonable steps to advise the client appropriately concerning all material aspects of the matter entrusted to the solicitor. Depending on the circumstances, this might involve advice as to the client’s rights and obligations as to matters in dispute between that client and another person, identifying material issues which ought to be apparent from the due exercise of the solicitor’s professional skill and experience, whether specifically sought by the client or not, and advising as to or undertaking necessary or desirable enquiries. The nature of the matter entrusted to the solicitor may require him or her not only to carry out the client’s specific instructions but the solicitor may need to initiate action or undertake enquiries in order properly to discharge the duty to the client and protect him or her from a real and foreseeable risk of economic loss. The standard of care usually applying is that of the ordinary skilled solicitor practising in the field relevant to the matter in respect of which the particular solicitor is retained and where the solicitor professes special expertise in a particular field of law to do work within that field, the relevant standard of care is that of the ordinary skilled solicitor who exercises and professes such special expertise. In this case, it is conceded, and rightly so, that Mr Goldstein both had and professed special expertise in family law matters of the kind entrusted to him by the plaintiff. Mere adherence to well-established practice may not excuse a solicitor from responsibility for avoidable damage which was reasonably foreseeable if the particular circumstances of the case as were known or ought to have been known to him or her required particular steps to be taken in order to avoid the risk of loss to the client. 6 The jurisdiction of the Family Court to make orders relating to property is contained in a number of provisions of the Family Law Act 1975 (the Act), principally ss74, 75 and 79. It is unnecessary for present purposes to set out these provisions. Their salient features are as follows: section 74 permits the Court in respect of the provision of maintenance, to “make such order as it considers proper”; section 75 provides that in exercising this jurisdiction the Court must take into account a number of matters including the circumstances of the parties and of the children, the extent to which each has contributed to the economic resources of the other, the care and control of any children and “any fact or circumstance which, in the opinion of the Court, the justice of the case requires to be taken into account” (s75(2)(o)); and section 79 permits the Court to “make such orders as it considers appropriate” with respect to the property of the parties, taking into account amongst other things the financial or other contribution made by a party to the property of the parties, to the welfare of the family and any children and the matters referred to in s75(2) so far as they are relevant. The language of these provisions, whilst pointing to a number of specific relevant considerations, is apt to give the Court a wide discretion to do justice between the parties and it is obvious that it is not to be exercised by the application of any rigid formula. Even if it were not otherwise clear, this must be so having regard to the specific provisions of ss 75(2)(o), 79(1) and 79(4)(e), although the effect of the second and third of these is not unlimited but they should be construed as referable to facts or circumstances of a broadly financial nature: In the Marriage ofSoblusky (1976) 2 FamLR 11, 528; FLC 90 - 124 at 75 586; In the Marriage ofWillett (1976) 1 FamLR 11, 248; FLC 90 - 022; In the Marriage ofFerguson (1978) 4 FamLR 312; FLC 90 - 500; In the Marriage of Mueller and Hegedues (1979) 5 FamLN 14; FLC 90-708. When dealing with appropriate orders under s79 of the Act, despite the mere fact that property has passed out of the hands of a party, for example has been sold and the proceeds of sale disposed of, it may nevertheless be treated as included in the property of the parties for the purposes of the application if the circumstances make it just to do so and in such a case the party dealing with the property will be treated as having received it or its value: Kowaliw v Kowaliw (1981) FLC 91 - 0-19; In the Marriage ofTownsend (1995) FLC 92 - 569. These principles are uncontroversial in the context of this case although in some respects the parties contend for different consequences when they are applied. 7 It is self-evident that it is fundamental to the operation of the Act that, in financial cases, there is an obligation on each party to make a full and frank disclosure of all material facts. It is a positive obligation to inform the other party (and the Court) accurately and truthfully of the financial position of the disclosing party. This has been described as “at the very heart of cases concerning property and maintenance”: In the Marriage ofOriolo (1985) FLC 91 - 653 (Full Court of the Family Court of Australia, Emery, Fogarty and Murray JJ). When a statement of financial circumstances is not only incomplete but such as to amount in substance to a false statement, this must be regarded as a matter of “great concern”: Penfold v Penfold (1980) FLC 90-800 (High Court of Australia). Misbehaviour of this kind may not only impact upon measuring the appropriate division of property in that “the Court should not be unduly cautious about making findings in favour of the innocent party ... [since to] do otherwise might be thought to provide a charter for fraud” but also justify an order for costs against that party: In the Marriage ofWeir (1993) FLC 92 - 338 at 79, 593. Again, these principles were not in issue in this case. 8 Whether the Court in an appropriate case could make interim orders relating to property was, surprisingly, somewhat uncertain, at least at the relevant time frame involving this case, having regard to the decision of Nygh J in Burridge & Burridge (1980) FLC 90 - 902, although his Honour considered that what he termed a “partial property order” could be made under s80(k). With every respect for the learned Judge whose experience in this jurisdiction was very great and mine is, as it were, that of an interloper, I respectfully consider that the judgment of the Full Court of the Family Court of Australia in Harris & Harris (1993) FLC 92 - 378 at 79, 929 is plainly correct -9 To resume the narrative of events, after the husband left the matrimonial home in September 1985, the plaintiff went to see Mr Goldstein again and told him that this had occurred, that the marriage was over, and asked what she should now do. It is agreed that Mr Goldstein told the plaintiff that as she was in the matrimonial home with the children she should not move out. However, late in December of that year, the husband returned to the matrimonial home and insisted on moving into the master bedroom then occupied by the plaintiff. The plaintiff made somewhat inconsistent (but, I think, inconsequentially so) statements about the husband’s attitude to her remaining in the bedroom. At all events, she felt she had to move to a spare room in the basement. The plaintiff told Mr Goldstein about this occurrence and pointed out that, as she was sleeping at the bottom level of the house, she was two floors away from the children, who were very young (then 8, 6 and 4 years of age) and she was concerned because she could not hear them if they woke up during the night. She asked Mr Goldstein what she could do to remove her husband from the bedroom or “better still, out of the house”. The plaintiff does not now remember Mr Goldstein’s response but said that he did not propose any course of action in respect of either of these matters. She was left with the impression, she said, that she would have to put up with the situation and that there was nothing she could do about it. Mr Goldstein, whose statement was tendered but who did not give evidence (because, as was accepted by both sides, he was too ill to do so) said that he did not recall the conversation but that, if he was asked by the plaintiff to give advice, “I would have told her that in the absence of any misconduct on the part of her husband, it would not have been possible to have him removed from the matrimonial home”. I accept that the plaintiff queried Mr Goldstein as she said and that he gave her advice along the lines of his stated response. However, this response did not,it appears, include advice as to whether the husband could be removed from the master bedroom and to that extent seems to be also inadequate. 10 If the circumstances were as alleged by the plaintiff, it would be most surprising if an appropriate order could not be obtained from the Family Court, for example, requiring the husband to leave the premises unless he were prepared to move to another bedroom, an order which might well be justified having regard to the welfare of the children. Again, on the plaintiff’s account, the husband acted in a high-handed and quite inexcusable way which, at all events, could well amount to misconduct. Mr Broun QC, called to give expert evidence for the defendants on family law and practice, said that the plaintiff might well have succeeded in any application to have the husband move (although, probably, not to be removed from the house) but that the cost of such an application may well have been such as not to justify its being made. That assumes, however, that the application was contested. Even if it were, the dispute fell within a narrow compass and I think that the suggested cost of $4000 by Mr Broun QC is much too high. From the plaintiff’s point of view, moreover, the cost of obtaining other accommodation was obviously substantial. 11 It is somewhat surprising that Mr Goldstein, it seems, did not give any advice to the plaintiff about these modes of relief. It is fair to observe, however, that it does not appear that the plaintiff pressed him about it and Mr Goldstein might have inferred that the real thrust of the plaintiff’s complaint was that the husband had returned to the house. In light of the exiguity of the evidence in connection with this issue, I have not arrived at any concluded view about the sufficiency of Mr Goldstein’s advice about removing the husband. It appears that after a month the parties were attempting a reconciliation, although by 1986 this had failed. The plaintiff found the situation at home intolerable and moved out in early April 1986. 12 This matter is not the subject of any claim in these proceedings except in the sense that it provides some of the context for later events. That the plaintiff was subjected to the expense of providing accommodation for herself and her children, was a relevant factor in determining the appropriate measure of division of the matrimonial estate. It was submitted for the plaintiff and not really controverted that she was deprived of occupation of the matrimonial home for herself and her children until its sale whilst it was occupied at no cost by the husband and that this materially affected the entitlement of the plaintiff in a family law settlement. 13 It is worth noting at this stage that it is undisputed that Mr Goldstein, during the whole of his conduct of the plaintiff’s matrimonial dispute, made no file notes. It is difficult indeed to reconcile this failure with a proper degree of professional responsibility. Quite apart from the interests of the solicitor, notes of communications not only with the client but also with other persons in relation to the matter for which the solicitor is retained are essential in the interests of the client. This is especially so where negotiations and litigation are likely to extend over a considerable period of time and circumstances are likely to be dynamic. In my view, the failure to make and retain records of important communications made by Mr Goldstein with the plaintiff and others in the circumstances of this case is negligent to the point of recklessness. For all that its impact is difficult to measure, I consider it should lead me the more readily to reject inferences, otherwise doubtful, that favour the defendants where a communication with Mr Goldstein is material. 14 The plaintiff said that she left the matrimonial home since she had not been advised by Mr Goldstein that there was any way by which she could force the husband to leave. Amongst other things, this required the payment of rent and, I think, additional child minding fees. The plaintiff claims that she told Mr Goldstein on many occasions from March (this may be an error for April) 1986 that the husband had not been paying any child support and she was in a desperate financial position. Even so, Mr Goldstein did not take any action to request child support from the husband until December 1987. However, this is to get ahead somewhat of the narrative of material events. 15 In about January 1986, as I mentioned, the plaintiff said that her husband wished to be reconciled with her. He proposed the purchase of another dental practice at Penshurst Street Willoughby which was to be hers whilst he would continue to work from the North Sydney practice at which both had previously worked in partnership. The Willoughby practice was purchased in joint names and for accounting purposes was operated by the same partnership which undertook the North Sydney practice. The husband’s attitude to its later disposal (discussed below) indicated that the partnership was no mere formality. The purchase price was financed out of joint property and by a secured loan from the Commonwealth Bank. The plaintiff and the husband were both qualified dentists and had practised in partnership from premises at North Sydney between 1977 and 1985, the plaintiff having started this practice and the husband joining her from about 1981 onwards. The couple also owned practices in Collaroy and Pitt Street in the city. The proper analysis of this arrangement is that the dental practices, although each was associated with one of the partners, constituted partnership assets and their income was partnership revenue. 16 After the purchase of the Willoughby practice, the plaintiff with her husband travelled to Melbourne about the end of January 1986 to submit an application to gain entry to the orthodontic program for which she had been preparing by undertaking a master’s degree at Sydney University. When the reconciliation failed and the plaintiff left home with the children, she was working three days a week in the Willoughby practice and studying for her master’s degree on another two days of the week. 17 On 3 April 1986, shortly before the plaintiff left the matrimonial home, she conferred with Mr Goldstein. He advised her that, in the event of a property settlement, it might well be that the matrimonial home would be sold and the proceeds evenly divided, that the money on deposit would be equally divided but it was difficult to predict what would happen to the jointly owned premises in which her practice was conducted. Mr Goldstein recommended that the plaintiff’s settlement offer should seek a sale of the house with a disproportionate division of the proceeds in the plaintiff’s favour, an equal division of the funds on deposit and settlement on her of the premises from which she practised. Maintenance and custody of the children was not then an issue. It does not appear that there was any response as such made by the plaintiff to Mr Goldstein’s letter of 3 April 1986. 18 The plaintiff’s financial position was parlous and she consulted Mr Goldstein once more with respect to her position, informing him of the circumstances surrounding the attempted reconciliation and the reasons for its failure. Mr Goldstein’s response was, according to the plaintiff (and this is not controverted), simply the observation that she should not have moved out. The plaintiff informed Mr Goldstein of the assets and liabilities of herself and her husband to the following effect -
“The distinction which Nygh J drew in Burridge between an “interim” and a “partial” order appears to be that an interim order is one which operates until the final hearing but may then be submerged into the final order whereas a partial property order is a property order complete in itself but dealing with part only of the property and not intended to be a final determination of the proceedings.
“We do not doubt that the Court has power in a proper case in s79 proceedings to make what may be conveniently described as an interim order, that is an order dealing with some of the property of the parties prior to the final hearing. We do not consider that it is necessary to draw a distinction in terminology between an “interim” order and a “partial” order.
“...Urgent situations may arise where it is necessary to exercise this power if injustice is to be avoided. Examples include cases where it is necessary to do so to avoid an asset being eroded or lost in the intervening period, and cases (beyond the maintenance power) where an order in favour of one party is necessary to reserve or obtain a home for or is otherwise necessary for the welfare of the children.”
I am satisfied that, however considered, a competent family law practitioner at times material to this case, would have known that urgent orders of this kind could be obtained and would have sufficed to remedy the situation that arose, described below.
The plaintiff told Mr Goldstein that she was not exactly sure about the total assets, that her husband had not kept her informed about their financial position and she strongly felt that there were assets of which she was ignorant. She asked if some searches could be done to find out what the assets were. The plaintiff says that Mr Goldstein replied, “Yes, that will be all taken care of”. He further suggested that the plaintiff should go to see a Mr Trevor Vella (an investigative accountant) to shed some light on her financial situation. Mr Goldstein told the plaintiff that he was an accountant with whom he had worked in the past and was well-qualified in matters of this kind. Mr Goldstein’s statement deals with this conversation very briefly. He said that he did not recall the conversation but that if it took place it was likely that he would have recommended the appointment of investigative accountants, as in fact occurred. Having regard to the nature of the essential issue in this litigation, I consider that Mr Goldstein’s inability to deny the assertion by the plaintiff that she informed him of her suspicions of the husband as permitting me more readily to accept, as I do, the plaintiff’s evidence about this warning. 20 In cross-examination, the plaintiff agreed that she and her husband had acquired a number of properties and sold them over time during the course of their relationship. These properties were mostly residential but there were a couple of commercial properties as well. She said that her husband had discussed these dealings only minimally although she was aware of the basic outline of what was going on. She conceded that she did not know whether her husband had in fact attempted to deceive her as to any of the dealings that occurred before 1987 and that she had no basis upon which she could suggest that he did so. The plaintiff described her husband as “wheeling and dealing” and, indeed, throughout the marriage had exhibited all the traits of a speculator. These transactions, as she understood it, had by and large been successful. 21 Merely to have no actual evidence that would establish the likelihood of the husband’s dishonesty or concealment does not, to my mind, reduce the significance of the plaintiff’s expression of her belief about this matter to her solicitor. Whilst it may be notorious that disaffected spouses may, for quite inadequate and insubstantial reasons, express suspicions about the behaviour of their estranged partner, it is also notorious that spouses do undertake financial transactions of considerable significance without candid disclosure to, indeed, with conscious deceit of, their partners and that this is more likely to be the case where the party in question has led a relatively independent professional life and the separation was preceded by a lengthy period of increasing unhappiness. This circumstance does not require any expert evidence from one experienced in family law: it is but a common sense reflection on human nature. Thus, though Mr Goldstein would have had good reason to think that it was reasonably possible, perhaps even probable, that the plaintiff was expressing no more than a suspicion born of dislike for her husband, yet there was obviously a distinct likelihood that the suspicion was well-founded. Indeed, as I understand his statement, he proposed that the appropriate course of action was to obtain the services of an investigative accountant. The engaging of the services of Mr Vella could not, however, be a sufficient performance of Mr Goldstein’s duty in respect of the plaintiff’s interests. It is self-evident, as it seems to me, that he needed to bring his mind to bear on the nature of the enquiries most likely to reveal the true position and to satisfy himself that Mr Vella had taken all reasonable steps for this purpose. I will return in due course to the explanation given by Mr Goldstein in this regard and the expert evidence. However, it appears that the first meeting the plaintiff had with Mr Vella was in December the following year. 22 The plaintiff then went to see Mr Goldstein in about June 1986. She says that at that time she and her husband had $157,000 in a joint account in their names, into which the earnings of them both were deposited and out of which all living expenses were paid. It is, perhaps, not surprising in this event that Mr Goldstein did not immediately make any application for maintenance since, presumably, the living expenses of the plaintiff and the children could be drawn from this account. Even so, at this time or shortly afterwards, Mr Goldstein advised the plaintiff to open a separate account into which she should deposit all her earnings from the Willoughby practice. She discovered, when she enquired as to the balance in the joint account, that the whole of the credit balance had been withdrawn. Mr Goldstein then telephoned the bank manager and shortly thereafter the $157,000 was returned to the account. The plaintiff understood, though the basis for this opinion is unclear, that the account had been frozen and this might explain why its funds were not available to her. The plaintiff believed, or at least suspected, that the husband had dishonestly misappropriated these funds although she had no evidence that he had done so except for her belief about his character and, of course, the fact that they had been removed. It is fair, however, to observe that there is no evidence before me even that the husband had been responsible for the nil balance in the account. The plaintiff about this time, opened an account for herself into which she paid the income from her part of the practice and which she used for living expenses for herself and the children. 23 At about this time, the plaintiff informed Mr Goldstein that she was in a desperate financial position with only her own income to support herself and the children, as she did not have access to the joint account and was not earning enough to get by. She told him that she had to pay $300 a week rent and $250 a week babysitting fees because, as I have mentioned, she worked for three days a week at the surgery and studied for two days a week on her master’s degree. She sought advice about seeking maintenance from her husband and said that Mr Goldstein told her that she was entitled to it. However, the plaintiff complains that nevertheless Mr Goldstein did nothing about it and, in particular, made no application for child maintenance. Mr Goldstein, in his statement, did not deny this conversation. His response was merely to annex a letter of 22 December 1987 to the husband’s solicitors serving copies of an application for maintenance which had been filed in the Family Court on 21 December 1987 and an affidavit of the plaintiff in support sworn 18 December 1987 noting that the return date of the application was 29 January 1988. No explanation was proffered as to the delay in this application. 24 On several occasions between March and November 1986, the plaintiff had conferences with Mr Goldstein about her financial affairs and informed him that she wanted a property settlement with the husband. On 26 November 1986, Mr Goldstein wrote a letter of demand to the husband. So far as property was concerned, it stated that the matrimonial home was understood to be worth about $900,000 and mortgaged for about $600,000 or $650,000 together with property owned jointly in which the Willoughby practice was carried on, the two dental practices, of which the wife’s was worth less than his (this was mistaken, as I have mentioned, the practices were both owned by the partnership) and a large sum of money on deposit. Mr Goldstein proposed that the proceeds of sale of the house be divided two-thirds to the plaintiff and one-third to the husband, that the money on deposit should be equally divided, that the property in which the plaintiff carried out her practice should be settled on her and there should be provision made for the children. Mr Goldstein asked for a statement of the husband’s financial circumstances and advised him to see a solicitor. On the same day, Mr Goldstein wrote to the plaintiff forwarding a copy of the letter to the husband and referring to a conference they had conducted on the previous day. On 16 December 1986, the husband’s solicitor, Mr Fowler of McDonald Morgan Milne & Salier, wrote to Mr Goldstein setting out “in broad terms” what his client saw as the current financial position. Mr Fowler appreciated that the plaintiff might not accept the values proposed but said that his client was content to have them submitted to an independent valuer for verification. The letter expressed the hope of a settlement. The assets and liabilities indicated are -
Assets
35 Minimbah Road, NorthbridgeMercedes Ferrari 186 Penshurst St Willoughby Willoughby practice North Sydney practice Motor cruiser Money in bank Furniture & personal effects Shares Total assets Liabilities Perpetual Trustee $ 500,000 Alliance Acceptance ($40,000 used for deposit for Willoughby) 160,000 Beneficial Finance 242,000 ATO (amount disputed) Commonwealth Bank 160,000 Associated Midlands Ltd (Equipment lease for North Sydney) 11,500 Mastercard 14,000 Bankcard 10,000 Total Liabilities $1,097,500 Net Assets $ 577,500
19
1. House - Northbridge 2. Practice - North Sydney (calculated on one half of the gross annual fees plus the value of the equipment 3. Practice at Willoughby (calculated upon the same basis) 4. Freehold property at Willoughby (purchased for $200,000 but substantially renovated) 5. Lesley’s car 6. Robert’s car 7. Furniture (query whether this is a replacement value) 8. Inflatable dingy with outboard 9. Cash on hand in joint names TOTAL ASSETS I add that there is in Lesley’s possession jewellery and a substantial quantity of clothing which Robert estimates to have a value (at cost) of between $110,000 and $120,000 and your client’s comments on that might be appropriate 1. First mortgage on the home to the Perpetual Trustee Co Ltd 2. Second mortgage on the home to Alliance Acceptance Co Ltd 3. Arrears of interest due to Alliance Acceptance Co Ltd (now Mercantile Credits Limited) 4. Balance of unpaid lease (referred to in our phone conversation) Beneficial Finance Co Limited 5. Unpaid lease (also referred to in our telephone conversation) to Citycorp Australia Limited 6. Personal Loan to Custom Credit Corporation Ltd 7. Personal loan to Avco Financial Services Limited 8. Lease residual (not referred to in our telephone conversation) but relating to equipment at North Sydney and to Associated Midlands Ltd 9. Overdraft account in respect of the practices (Note: that the figure of $83,000 was procured some time ago and Robert now believes it may be as much as $90,000 10. Mastercard liability 11. Bankcards for both TOTAL LIABILITIES NET EQUITY on the above calculations 25 Mr Goldstein wrote to the plaintiff on 19 December 1986 seeking comments on the letter, which he was sending also to Mr Vella, but pointing out that she had already expressed the view that the matrimonial home was worth far more than the husband had indicated. He added that the jewellery was irrelevant and there should be no question of any payment of cash by the plaintiff to her husband. Mr Goldstein did not refer to the significance of the failure by the husband to pay maintenance nor the extra expense to which the wife was put to obtain accommodation for herself and the children. These factors alone made the last observation in the solicitor’s letter questionable. However, when writing to Mr Vella on 19 December 1986, Mr Goldstein did not expressly refer to Mr Fowler’s letter and set out valuations significantly different to the husband’s assessment. In particular, I note that he suggested that the husband’s practice was worth either the same as the plaintiff’s or even possibly something less although the husband’s assessment was that it was worth $35,000 more than the Willoughby practice on his figures and $45,000 more than Mr Goldstein’s understanding of the plaintiff’s estimate of its worth. Furthermore, he referred to an amount of about $80,000 “tucked away in some account of which she knows very little” which may be a reference to the joint funds which he had earlier mentioned but, of course, only about one half of them, the account, according to the husband’s solicitor, being $157,000. If it were the joint account, the plaintiff had some information about it, although, perhaps, not a detailed one. Mr Goldstein adverted in this letter to “having it in mind” that the wife had been told very little about the financial affairs of the two of them and adding that the case seems to be one “where perhaps the husband’s affairs would merit a great deal of investigation particularly as I am told by our lady that the husband’s practises in financial terms are not quite what they ought to be with the practice” [sic]. This appears to me to be a garbled but unambiguous acknowledgment of the plaintiff’s suspicions about her husband’s financial position. Mr Goldstein also noted that the plaintiff was at that time operating a joint bank account from which she drew some money for herself and the children but whether this is the joint account to which I have already referred is uncertain, though I rather think it is. All in all, this letter is a somewhat confused and broad-brush affair which does not indicate any attempt to focus on the important issues or the possible lines of appropriate inquiry. However, Mr Goldstein may have been awaiting the plaintiff’s instructions as to Mr Fowler’s information before taking the matter further. 26 Some support for the plaintiff’s suspicions about her husband is evident in a letter of 23 February 1987 from Mr Goldstein to Mr Fowler in which he points out the plaintiff’s instructions that whilst she drew money from her practice of perhaps $200 or $300 per week, this was from the trading account whilst the husband took cash from the daily takings as to which there was very little record, if any, kept. If the plaintiff’s surmise had some basis, this indicates a degree of concealment, if not deceit, on the husband’s part which should have excited in Mr Goldstein a suspicion about his honesty and a heightened degree of scepticism about the husband’s candour. As the income from this practice was partnership income, Mr Goldstein should have insisted on immediate compliance with proper accounting and information on past cash drawings. 27 In the meantime, on 22 December 1986, Mr Vella reported to Mr Goldstein on the inquiries so far undertaken. The plaintiff had conferred with him and disclosed that the husband had sold a boat in about August 1986 for about $250,000 without, however, apparently (as the plaintiff thought) any discharge of the lease finance having been obtained and the same situation was thought to have applied to the husband’s Ferrari, which was sold about the same time for about $54,000. Mr Vella referred to other assets which were not controversial but did not suggest that any further investigations might be appropriate. Mr Vella pointed out that he was not aware of what had become of the proceeds of sale of either the boat or the Ferrari. The plaintiff says that Mr Goldstein never gave her any advice or suggestions about confirming the reliability of the husband’s claims about his assets and liabilities although the plaintiff claims that she raised the matter with him shortly after she received a copy of Mr Vella’s letter to Mr Goldstein in early January 1987. Some time shortly after the plaintiff received from Mr Goldstein Mr Vella’s letter of 22 December 1986, the plaintiff conferred with Mr Goldstein. She claimed that the husband’s statement of affairs as set out in the letter of his solicitor was “all rubbish”. In particular, she pointed out that her husband had not accounted for the proceeds either of the Ferrari or of the boat although he brought into account the debts to Citycorp of $40,000 and Beneficial Finance of $242,000 in relation to these items. The plaintiff claims to have told Mr Goldstein that her husband was “a crook” and “totally corrupt when it comes to money”. She added that nothing he said was trustworthy. Mr Goldstein said that he did not recall this conversation and did not accept that it took place. This falls short of a denial. In a later statement, the plaintiff supplemented her account of this conversation by stating that either at this meeting or a subsequent meeting she told Mr Goldstein that her daughter Belinda had said to her that the husband had told her that if the plaintiff left him he would get all their money, because he had control of the finances, had money hidden away and was not going to disclose where the assets were. This additional material was set out in a supplementary statement by the plaintiff of 12 June 1997. Mr Goldstein had made a statement on 8 June 1995 and did not later supplement it. There is no evidence suggesting that Mr Goldstein was, by virtue of his illness, unable to respond to the plaintiff’s supplementary statement. 28 I am mindful of the doubt which must necessarily attend statements made long after the event and when, leaving dishonesty aside, there is a strong motive which might well significantly affect the reliability of any attempted recollection. However, the plaintiff gave evidence before me and although in some respects her recollections were unreliable, in some instances admittedly so, I am satisfied that she did express to Mr Goldstein, at least by late 1986, serious allegations about the trustworthiness of the husband which referred either implicitly or explicitly to the likelihood that he had not been candid during their marriage (and contemporaneously) about his financial affairs and might well be concealing his assets. 29 It is unnecessary for present purposes to set out in detail the correspondence between Mr Goldstein and the husband’s solicitors or that involving the plaintiff. They are of a conventional character, involving negotiations about and contentions concerning the assets and liabilities of the parties. However, nothing in these communications suggests that Mr Goldstein either took seriously or raised the issues concerning the plaintiff in a way that directly or indirectly could have enabled him to be satisfied that her fears were unfounded. 30 The matrimonial home was sold in March 1987, the plaintiff agreeing to it on the basis that the net proceeds following payment of any mortgage, legal costs and agent’s commission should be held by both firms for the respective parties in trust for them pending the outcome of the property proceedings. The sale was completed in April 1987 by a third firm of solicitors who, following discussions with Mr Goldstein, agreed to forward one half of the net proceeds to each of the solicitors for the parties. It seems, however, that Mr Goldstein did not raise with the solicitor the payment of the deposit moneys which, in accordance with ordinary practice, were with the estate agents. The solicitors forwarded at the end of the month one half of the net proceeds of sale to the plaintiff together with an account of costs and disbursements. The account was addressed to both vendors at the husband’s premises and stated, amongst other things, that the deposit of $85,000 (10% of the sale price) was forwarded “to you on 27 March 1987”, which was somewhat surprising since the sale was not completed until 29 April and one would not usually expect the deposit to be paid to the vendors until that time. 31 The plaintiff complains, and there is good reason for so doing as it seems to me, that Mr Goldstein did not follow up the establishment of the trust account or due accounting for the proceeds of sale. The plaintiff was unable to say whether she passed on to Mr Goldstein the solicitor’s letter about the payment of the cheque to her husband although it is obvious that she should have done so, in her own interests. However, Mr Goldstein was undoubtedly in communication with the solicitor and it seems reasonable for the plaintiff to assume that he would have asked the solicitor to forward an account, since it is obvious that it was relevant to the negotiations which were then proceeding. It appears that he may not have done so. On either account, this marks a degree of carelessness. If he was unaware of the details of the sale, and, in particular of the disposition of the proceeds, this must be because he failed to inquire adequately about the matter; on the other hand, if he was aware of these matters then he should have advised the plaintiff about them and ensured that appropriate accounts were set up to safeguard the proceeds. In early May, however, Mr Goldstein wrote to the husband’s solicitors stating that he understood that the deposit of $85,000 “is being held in some joint account” and asking for the details so that “we may obtain our client’s half” however, nothing further was done about these funds and they do not appear to have been brought into account in any of the later negotiations. This was not consistent with appropriate professional competence. 32 Shortly after settlement of the sale of the matrimonial home, the plaintiff was approached, according to her, by the husband who asked for the $44,000 that she had got from the sale, in order to pay out some debts which she understood related to jointly owned assets, possibly the boat and the Ferrari. The plaintiff said that she was aware that they had debts which she wanted to pay out so that “we could start our separate lives without debts from the past”. The plaintiff said that her husband gave her details of the debts at the time but she cannot now recall what they were. It is apparent that she obtained no written details, or written acknowledgment and did not tell Mr Goldstein. This was certainly careless, if not foolish. It seems unlikely that the plaintiff did not know at this time that the deposit had already gone to her husband. However, I accept that she relied on Mr Goldstein to supervise the adjustment of the matrimonial property for the purpose of obtaining a settlement and no doubt thought that all these items would be brought into account at the end. 33 It is difficult to accept without reservation the plaintiff’s evidence of her extreme suspicion of her husband’s trustworthiness which she said she had at this time when, on the face of it, she did not bother to chase up either the deposit received or the balance of purchase price arising from the sale of the matrimonial home. However, she was leading at this time an extremely demanding professional life, was studying hard and had the care of her three children. I think also that she had a relatively unsophisticated trust of her solicitor and simply believed that he had his finger on the pulse of her affairs even when she herself did not keep him adequately informed. On the other hand, Mr Goldstein should have explicitly brought to her attention his reliance on her providing him with information about matrimonial assets and that she should not make assumptions about his obtaining this information from other sources. 34 The objective picture certainly appears inconsistent with the plaintiff’s expressions of distrust. However, having regard to the whole of the evidence, including Mr Goldstein’s letter to Mr Vella of 19 December 1986, the way the plaintiff impressed me whilst she was giving evidence, and bearing in mind the lack of denial by Mr Goldstein, I have concluded that the plaintiff more probably than not did have a real suspicion of her husband’s candour and did express those suspicions with emphasis enough in her communications with Mr Goldstein. It was certainly naive for the plaintiff to pay over to the husband her share of the deposit such a substantial sum of money, without first consulting her solicitor or later informing him of it, and without proper verification of the debts or even, it seems, proof of their discharge. Indeed, the plaintiff said that she did not bother to speak with Mr Goldstein about the $44,000 which her husband asked for because “Mr Goldstein had given me very little hope in his advice to me that there was anything I could to thwart the husband’s wishes . . . I just assumed that there was nothing I could do when the husband demanded my share of the proceeds of sale to pay outstanding debts”. As the plaintiff had not sought advice about matters of this kind, I am sceptical that there was any reasonable basis for this feeling. It was, however, reasonable for her to assume, as I accept she did, that this payment would be brought into account when the final property settlement was reached. 35 In early May 1987 Mr Goldstein raised with the husband’s solicitors the point that the boat and the Ferrari were sold for about $300,000 and these funds were not accounted for but, rather than enquire (except, possibly, by implication) as to the use to which the proceeds had been put, simply asserted a disinclination on the part of the plaintiff to contribute towards the outstanding lease payments “for the toys which your client used and disposed of”. The husband’s solicitors responded a week later stating that they would seek instructions about the deposit, taking umbrage with Mr Goldstein’s reference to toys. On 12 June 1987, however, Mr Goldstein wrote to the plaintiff stating that he had received copies of cheques and bank statements together with a written statement, which he thought was probably from the husband relating to the boat and the Ferrari. The husband asserted (and this was supported by the bank statement) that on 29 August 1986 $24,000, representing a 10% deposit on the sale of the boat, plus $54,000 from the sale of the Ferrari was paid into account number 2217 29 55 66 which was the joint account of the plaintiff and her husband. It is a little difficult to understand why Mr Goldstein’s letter commented “I don’t know what account this is”. On 5 September 1986, the balance of the proceeds of sale of the boat, $216,000, were credited to the account. Transfers to Robles Holdings Pty Limited (Robles) were made totalling $215,000 (although this cannot be reconciled with the bank statements) and a further $40,165.81 were to an account in the name of the plaintiff and the husband trading as “Charter 43”. Robles was trustee of a family trust. A 35 day bank bill with face value of $153,000 in the husband’s name was purchased for $150,474.91 on 12 September 1986 (called by the husband an interest bearing fixed deposit). On 20 February 1987 a deposit into the joint account of $40,000 was identified by the husband as a “transfer from fixed deposit” together with $80,000 to Robles and a balance of $40,165.81 to Charter 43, from the rolled over bank bill. Mr Goldstein commented that it did not appear that the plaintiff had benefited from these transactions but asked her to contact him if she could “make any sense of the notes and the accounts”. Having regard, amongst other things, to the terms of the husband’s solicitor’s letter of 16 December 1986, stating that the debt to Beneficial Finance was outstanding, this letter from the husband required a great deal more analysis than Mr Goldstein exhibited. It does not appear that Mr Goldstein made any inquiry of the husband’s solicitors or that any of these transactions were clarified before settlement. The assumption of the husband’s note appears to be that these transactions were all joint. This was certainly reflected in the proposals advanced by his solicitors in the negotiations. Though Mr Goldstein’s letters appeared to reject this approach, the figures mentioned by him to not seem, in the end, to have involved a significant adjustment in the plaintiff’s favour. Certainly, he never articulated any advice to the plaintiff which proposed the manner in which these matters should have been taken into account. I consider that was a failure to fulfil his professional responsibilities. 36 In the plaintiff’s statement tendered in these proceedings Exhibit “D”, she said that she did not see the letter before February 1999, in connection with preparation for this trial. Certainly, the defendants have not adduced any evidence of any communication between the plaintiff and Mr Goldstein about it, but, as it appears that Mr Goldstein took no notes of verbal communications, this is not surprising. The bank statements referred to relate to three accounts “Charter 43” for varying periods from August 1986 to May 1987. The plaintiff did not operate on the Robles account. I mention here that in later litigation taken under s 79A of the Act the husband gave an account of the transactions relating to these accounts which is, however, incomplete in a number of significant respects. I return to this matter later. 37 On 1 July 1987, the husband’s solicitors wrote to Mr Goldstein stating their instructions as to the financial position of the parties and making an offer for settlement. I set out below their list of assets and liabilities -
A settlement offer was proposed as follows -
“In broad terms (subject to child maintenance which will have to be discussed) it is proposed by Robert that Lesley receive the Practice at Willoughby, the freehold at Willoughby and her car and the furniture and her personalty and that a cash adjustment be made back by her to Robert who will assume liability for the debts. The quantum of the cash adjustment obviously has to abide agreement to valuation of the particular assets but we have advised Robert at this stage that having regard to the income earning capacity of both the parties and what is related in relation to the history of the marriage we think it an appropriate case for an equal division.”
39 The plaintiff says that she told Mr Goldstein that a number of valuations in the letter were wrong and distorted in favour of the husband. She pointed out that the deposit of $157,000 in the joint account was not mentioned and she did not accept the accuracy or relevance of the overdraft liability of $117,000. She pointed out, she said, that the mortgage over the Willoughby real estate of $160,000 was not mentioned (but in this she was mistaken, since it was a loan secured against the Northbridge property) and that a debt for the Ferrari of $33,900 was brought into account although she understood the vehicle had been sold. There was no reference to the account which Mr Goldstein had requested to be created for the balance of the sale proceeds of the matrimonial home. The plaintiff says that she again asked Mr Goldstein whether there was some way of discovering the true position and that Mr Goldstein responded that she should not worry, it would be “all sorted out”. Mr Goldstein in his statement tendered in these proceedings, says that he did not recall and does not accept that the conversation which I have referred to above took place as stated by the plaintiff. I am minded to accept that there was a conversation along the lines deposed to by the plaintiff, although I am sceptical as to the reliability of her recollection of its detail. Even so, the points made are fairly obvious from the letter itself and should have been evident to Mr Goldstein, whether or not they were mentioned to him by the plaintiff. I mention here that the plaintiff had met with Mr Vella, the accountant, on 25 June 1987 to discuss the statement of assets and liabilities which had already been supplied by the husband, which differed somewhat from the list set out in the husband’s solicitor’s letter of the 1 July 1987, but which exhibited the same shortcomings. It appears that the plaintiff disputed only the value ascribed to furniture and the debt to their previous accountants, but did not query the matters which she alleges she raised with Mr Goldstein. I think that, having regard to the purpose of the plaintiff’s meeting with Mr Vella and its near contemporaneity with the letter of 1 July 1987 from the husband’s solicitors, that the details of the conversation as alleged by the plaintiff were unlikely to have been raised and that her recollection in this regard is mistaken. This does not excuse Mr Goldstein, however. 40 The plaintiff informed Mr Vella that she would be prepared to accept a settlement of about $300,000, which comprised about 75% of the net assets apparently then existing although, so far as I can see, this did not take into account the money in the joint account, or the balance of the proceeds of the sale of the matrimonial home. On 8 July 1987, Mr Goldstein conveyed to the husband’s solicitor the offer set out in Mr Vella’s letter of the previous week which, from Mr Goldstein’s point of view, assumed that the proceeds of sale of the matrimonial home had already been appropriately divided which, if he did not know was false, certainly he did not know was true, and which appeared to accept that the sale of the boat and the Ferrari had simply accounted for the liabilities with the possibility of leaving an excess which the plaintiff would not pay. It is obvious from what I have thus far said that I do not see any proper basis for any of these matters to be dealt with in this way by Mr Goldstein. Furthermore, his acceptance of the husband’s proposals for maintenance, whilst apparently reasonable when considered in isolation, did not advert to the failure of the husband to pay any maintenance from the date of separation in September 1985. The supposition that this was, as it were, at all events coming out of joint income was baseless (if it was made, but I cannot see any other way by which this factor was accounted for), especially having regard to the queries raised about the husband’s failure properly to account for his income from his practice. There has not been produced on Mr Goldstein’s behalf any records or notes giving any indication of a consideration by him of the various elements of the parties’ positions, nor does his statement seek to explain, let alone justify, the mode by which the offer of 8 July was arrived at. In the end, and despite some uncertainties about the reliability of the plaintiff’s recollection, I am satisfied that she is correct when she states that this letter did not reflect Mr Goldstein’s instructions, was based on seriously incomplete information and, at all events, in the absence of appropriate investigations and analysis. 41 On or about 8 July 1987, the plaintiff initiated proceedings for property settlement and maintenance in the Family Court of Australia. She sought orders that the husband transfer to her his interest in the Willoughby property, that the dental practice conducted by her there be declared her property, a settlement of $400,000, maintenance for her of $200 a week until she completed her further studies at Melbourne University and certain other maintenance for the children. It will be seen that the letter of the husband’s solicitors of 1 July valued the Willoughby property at $230,000 although, Mr Vella seems to have received information that it was worth $250,000, which is the figure referred to by Mr Goldstein in his letter to the husband’s solicitors of 8 July 1987. However, Mr Goldstein had arranged for a valuation of that property and was informed in early March that its value was $185,000. There is no evidence that the plaintiff was informed of this valuation and I infer that she was not. Certainly, no reference to it appears in any of the correspondence including that by Mr Goldstein with the husband’s solicitors. This matter is not adverted to in Mr Goldstein’s statement. For obvious reasons, a lower valuation would assist the plaintiff to make the case claimed in her application. 42 In mid-August, the plaintiff became aware that her husband had increased the limit on his credit card with ANZ Bank to $50,000 and that he was seeking further accommodation from the Commonwealth Bank concerning the Charter 43 overdraft account. On 25 August 1987, in a letter addressed to the husband but at the wife’s address and which she opened, the National Australia Bank informed him that it had approved a bill facility for $220,000. These were brought to Mr Goldstein’s attention and he wrote to both banks to warn that the Willoughby property was the subject of matrimonial proceedings between the plaintiff and her husband and that she did not consent to any involvement of the property in the transactions. Having regard to the partnership character of the revenue available to the husband which was presumably the source of interest payments, one way or another, and to the size of these obligations, the inadequacy of Mr Goldstein’s response is manifest. 43 On 23 September 1987, following a conference with Mr Goldstein, he suggested that the plaintiff should put her practice on the market and sell it as best she could “although there will be enormous fuss about this”. He did not advise the plaintiff as to the possible significance of the husband’s banking arrangements, the most obvious of which was that he either intended or had undertaken substantial investment in assets of which the plaintiff was unaware. Mr Goldstein mentioned only that his letters to the banks would prevent the use of the Willoughby property as security. It seems likely that Mr Goldstein’s comment concerning the sale of the practice arose from his being informed by the plaintiff that she desperately needed to sell it since she intended to go to Melbourne in the following year to qualify as a specialist and her absence would cause the practice to run down. The dentist employed in the practice, a Ms Fisher, had offered $170,000 but the husband had refused to sell because, the plaintiff said, he did not want her to go to Melbourne. 44 The plaintiff’s evidence was that in late 1985 she applied to Melbourne University to study orthodontics, a course in which only four applicants were accepted out of about two hundred applications. The candidates were selected twelve months in advance and, at the date of her application, those for the 1987 year had already been selected. The plaintiff did not discover until late in 1987 that she had been accepted. The plaintiff’s husband supported her application and accompanied her to Melbourne for the initial interview in early 1986. It was shortly after this, of course, that their relationship became unsatisfactory. The plaintiff says that in April or May 1987 she told her husband that, if she was accepted into the orthodontics course, she would have to sell the Willoughby practice to finance her undertaking of it. She claims that her husband said that he would not agree to the sale of the practice so that she could not go to Melbourne unless she agreed to the terms of the settlement that he proposed. The plaintiff claims that when she was informed in September 1987 of her acceptance into the course, she met with Mr Goldstein and told him of what her husband had said. The plaintiff’s account of her conversation with Mr Goldstein in her statement of 10 March 1995 differs significantly with the effect of her statement of 12 June 1997 in this respect. In the former statement the reason that she gave to Mr Goldstein for her husband’s refusal to sell was, essentially, out of bloody-mindedness. On the other hand, the latter statement contains the first reference to the earlier conversation between the plaintiff and her husband and asserts that that the plaintiff told Mr Goldstein that her husband was blackmailing her into agreement to a settlement on his terms. There is no difference between the two concerning Mr Goldstein’s advice which was, according to her, that she could not force the husband to join in the sale of the practice even though he had implied in his letter of 23 September that she could do it despite the “enormous fuss”. Ms Fisher was in a position to complete the purchase by the end of October 1987 but the refusal of the husband to give his consent derailed the transaction and by mid-December 1987 the offer was, in effect, withdrawn. This contract was completed on 10 November 1987. 45 On 3 November 1987, Mr Goldstein, in the course of a lengthy letter setting out the plaintiff’s position on particular items forming part of the negotiations, had sought the husband’s approval for this sale. I mention here that Mr Broun QC dismissed the significance of the valuation of the Willoughby property at $185,000, arguing that it was advantageous for Mr Goldstein to accept the higher figure proposed by the husband, since the settlement negotiations were then proceeding on the basis that the husband would take the Willoughby property and give the wife cash. However, whilst that was one interpretation of the letter from the husband’s solicitors of 1 July 1987, this was certainly not the case by 8 July 1987, still less by 21 October 1987, the date of the letter from the husband’s solicitors to which Mr Goldstein’s letter of 3 November was a response. From the plaintiff’s point of view, the value of this property that she should have regard to as at the settlement date, was the crucial question and, on the whole of the evidence I conclude that Mr Goldstein did not give the matter further consideration or, if he did, did not advise the plaintiff about it, when he should have done so. In February 1988, the husband’s solicitors claimed it was worth $300,000. So far as the sale of the practice is concerned, Mr Broun QC relies to some extent upon an inference that the plaintiff did not tell the husband of Ms Fisher’s offer, which was communicated for the first time in Mr Goldstein’s letter of 3 November 1987. I do not think that there is any evidence upon which such a conclusion could be based. On 9 October 1987 the husband’s solicitors wrote to Mr Goldstein stating that they had been instructed that the plaintiff had placed the Willoughby practice on the market for sale and objecting to this course. This indicates to my mind that the husband was likely to have been aware of the proposed sale to Ms Fisher. The letter of 21 October 1987 from the husband’s solicitors proposed that the wife should receive the proceeds of the Willoughby practice, valued at $170,000 which reflects Ms Fisher’s offer, whilst the husband would receive the Willoughby realty said to be worth $230,000. In the letter of 3 November 1987 Mr Goldstein proposed that the plaintiff would obtain the Willoughby freehold whilst the husband should receive both the practices. 46 On 9 November 1987, the husband offered to keep both practices and the real estate, together with debts, whilst the plaintiff should have her car, furniture, jewellery and furs plus an amount of cash. To this offer, Mr Goldstein agreed, subject to an increased cash payment. Negotiations along these lines continued for several months. On 15 January 1988, the husband indicated his agreement to the sale of the Willoughby practice at $170,000, as I have mentioned above, but it was too late; Ms Fisher had withdrawn her offer and had made other arrangements. 47 I have mentioned that the plaintiff says that when she asked Mr Goldstein whether there was anything she could do to require the husband to consent to the sale of the practice when the opportunity to go to Melbourne for post-graduate study arose, Mr Goldstein simply told her that there was nothing that could be done. It was self-evident that, if the plaintiff were not undertaking the practice, it was likely to run down and lose value. I do not think that the husband ever intended to take over the practice himself but, rather, that the negotiations reflected an intention by him to sell the practice, this being, I think, revealed by the abrupt change of stance in mid-January 1988. Whilst, of course, one cannot be confident of certainty having regard to the exiguity of evidence, I am inclined to the view that the husband’s refusal to agree to the sale of the practice was a bargaining ploy designed to put pressure on the plaintiff to settle the property dispute. 48 So far as the jurisdiction of the Family Court in the circumstances was concerned, Mr Goldstein should have been aware that, even accepting Burridge (supra) as good law, a partial property order could well have been obtained. His advice to the plaintiff as set out above was therefore wrong. Behaviour of parties, as such, will only rarely affect property orders for obvious reasons, but proof of an improper motive might well affect the Court’s view of the bona fides of an opposing case. Moreover, there was no reason why Mr Goldstein should not have attempted to negotiate some reasonable settlement of this aspect of the dispute especially when, as it later appeared, the putative purchaser had, on 30 November 1987, indicated that unless the plaintiff’s solicitors were able to advise hers within the next few days that exchange was possible before 11 December 1987, she would probably not be proceeding with the purchase. Mr Goldstein denies that he told the plaintiff that it was not possible to force the husband to join in the sale of the practice. 49 Mr Goldstein drafted and the plaintiff swore on 14 December 1987 in the Family Court proceedings seeking an order that the husband be restrained from attempting to enter the Willoughby practice or take any monies from it, a propos an alleged statement by him to the effect that it was up to him to come in and take control of the practice when the plaintiff moved to Melbourne, if he so wished. In this affidavit, the plaintiff made no reference to the proposed sale of the practice or to any improper threat by the husband. She said she had arranged for her sister to run the practice on her behalf. 50 The plaintiff whilst producing Ms Fisher’s letter of 30 November 1987 by way of annexure to her statement, adverting to its receipt, does not say that she sent it to Mr Goldstein or brought it to his attention. Having regard to other occasions in the plaintiff’s statement where she refers to the receipt of documents which she sent on to Mr Goldstein, there is no proper basis for me to infer that this omission was inadvertent. Accordingly, bearing in mind the plaintiff’s onus of proof, I am not prepared to infer that she informed Mr Goldstein of this ultimatum. I am fortified in this conclusion by the terms of the affidavit of 14 December 1987, to which I have referred. In the context, therefore, where active negotiations were on foot, of which the plaintiff must have been aware, an element of which was an assertion by the husband that he would take over the practice as part of an overall settlement which valued it at $170,000 there was no reason for Mr Goldstein to suppose that it was either necessary or desirable to invoke the processes of the Family Court to force a sale. It was suggested by Mr Crowley, of Clayton Utz, Canberra, a senior family law practitioner called to give expert evidence for the plaintiff, that Mr Goldstein should have written to the husband’s solicitors putting them on notice that his conduct in refusing to consent to the sale to Ms Fisher was unreasonable and that such conduct could be considered under s 75(2)(o) of the Act as bearing on any ultimate determination. However, it is difficult to see how, at the time, the husband’s attitude could be regarded as unreasonable where he is negotiating to take over the practice and account for it at the price Ms Fisher was prepared to pay. As Mr Goldstein had no reason to suppose that the proposed purchase might fall through, it was not, I think, in all the circumstances unreasonable to undertake the negotiations, as he appears to have done, upon the basis that if, in the end, they failed to produce an acceptable compromise, the issue of the husband’s refusal (if it continued) to consent to the sale could then be taken up. In the absence of any evidence that Mr Goldstein was aware of Ms Fisher’s attitude as expressed in her letter of 30 November 1987, I do not think that the plaintiff’s criticism of Mr Goldstein’s conduct of her affairs in this regard is made good. 51 Towards the end of August 1987, the Commonwealth Bank had complained about the failure of the parties to meet overdraft obligations of about $125,000 and threatened to charge penalty interest as for a troublesome account. Of course, one possibility for the expanded credit facilities being sought by the husband was in respect of these debts. Even so, the facilities exceeded by well over $100,000 the outstanding obligations. There were any number of explanations for the husband’s transactions; in my view, they should not have been left in a speculative state. As it happens, the sum of $220,000 was in fact part of the price of a property in Bungan Head Road, Newport, which the husband had purchased for $285,000 pursuant to a contract entered into on 7 August 1987. 52 During the negotiations which I have outlined above, and, indeed, when they were ultimately concluded at the end of 1988 by consent orders, Mr Goldstein did not raise with the husband’s solicitors any queries concerning the utilisation by the husband of the very substantial line of credit that he had obtained. I mention this at this stage because he had (presumably on instructions) made a specific offer to settle the plaintiff’s claim against the husband in circumstances where he was aware of at least one substantial line of credit which he knew must have been secured somehow without the plaintiff’s consent and hence probably by the husband on assets of his own which were, ex hypothesi, not disclosed. He should also have borne in mind, not only the husband’s acquisition of the plaintiff’s share of the net proceeds of the matrimonial home but also his failure to account for the sale proceeds of the boat and the Ferrari. I consider that Mr Goldstein’s failure to make enquiries about these matters, to require the accountants to assess their effect on the extent of the matrimonial property and to require full disclosure before making an offer of compromise fell well short of his professional responsibilities. 53 I have mentioned that towards the end of 1986, the plaintiff raised what she called her “desperate financial situation” with Mr Goldstein and asked whether she could obtain maintenance from her husband. Mr Goldstein told her that she was entitled to maintenance but it appears that he did nothing further about it until proceedings in the Family Court were commenced on 9 July 1987. Maintenance both for the plaintiff and the children was sought. A further application for maintenance was filed in the Children’s Court on 21 December 1987 but this document is not tendered before me. The ultimate consent orders made provision for maintenance for the children and expressed the agreement of the parties that provision of maintenance was made for the plaintiff in an amount of about $100,000. This, however, is a somewhat arbitrary calculation, reflecting the sum by which, according to the husband’s calculations, the total paid to the plaintiff by way of settlement exceeded a one half share of the net matrimonial assets. The plaintiff says that, prior to her departure for Melbourne in early 1988, the husband gave her $2,000 for the support of the children but that, apart from this sum, she received no other maintenance from him from March 1986 until the consent orders were made on 5 August 1988. It was conceded by Mr Murr SC for the plaintiff that no claim could be made in respect of any alleged negligence on Mr Goldstein’s behalf to apply for maintenance in a timely way since it was time-barred. However, Mr Murr SC submits that the fact that maintenance had not been paid required to be taken into account in the final property settlement since the husband had not made his proper contribution in this respect. The husband had offered on 1 July 1987, maintenance for each of the children in the sum of $40 a week and in addition, to pay for private schooling for them whilst the plaintiff was undertaking her orthodontic course, and all medical and related expenses. The maintenance was reduced whilst the children were in Melbourne with the plaintiff because of the expenses that the husband would need to incur to have access. This, of course, did not apply to the earlier period of separation. In the ultimate settlement, the husband agreed to pay $100 a week for each of the children together with schooling and medical etc expenses. Mr Goldstein responded to the offer of 1 July, in respect to maintenance, by describing it as “generous” and saying that it would be accepted “provided that it is part of the global settlement”. Precisely what this was meant to convey is uncertain since, on 21 August 1987, Mr Goldstein complained to the husband’s solicitors that he was not paying any maintenance for the children and had accepted responsibility only for one half of their school fees. He threatened, absent immediate agreement, to bring on the application for child maintenance quickly. As I have mentioned, however, no maintenance was actually paid until after the consent orders were made. The negotiations as to that settlement did not advert to past maintenance and there is no evidence that any adjustment in this respect was factored in to the agreement. The plaintiff, I infer, was not given any advice about it. She should have been. I conclude that no adjustment was actually made, from the plaintiff’s point of view, in respect of either past maintenance for the children or past accommodation and that this was due to Mr Goldstein’s negligence, although some maintenance of $2000 was paid. It is difficult to estimate the amount which should have been allowed under this head, especially in the absence of any evidence concerning the payment of school fees. As there is no evidence concerning this latter element, I do not see how I can take it into account at all. However, the course of the negotiations and the final sum agreed to be paid, do give a basis for me to make an estimate of the kind of sum that should have been factored in to any appropriate settlement agreement. As Mr Murr SC concedes, if a property settlement had been ordered by the court following litigation, there would not have been a dollar for dollar reflection of the unpaid maintenance in the ultimate order. However, doing the best I can, I think that, conservatively, an adjustment in settlement negotiations should have been sought in favour of the wife of something of the order of $40,000. Of course, no precise adjustment would or could have been made, had the matter gone to litigation, but I consider that an allowance for this item would have resulted in significant extra provision to the plaintiff of the order indicated. 54 On 7 August 1987 the husband exchanged contracts for the purchase of a property at 73 Bungan Head Road Newport for $285,000. The deposit of $28,500 was paid for by cash advances on credit cards and an overdraft facility with the husband’s bank. This information and other material to which I shall refer, comes from an affidavit sworn by the husband at the end of October 1991 and filed in the Family Court in relation to proceedings brought by the wife to have the settlement abrogated under s79A of the Act. Whether the affidavit is entirely frank may be doubted but for present purposes I think I should regard it as probably correct, as far as it goes. The assertions of the husband are supported to some extent by documentary annexures. Further funds were raised by the husband and utilised, at least in part, for the purchase of the Newport property from the sale and lease back of dental equipment and a motor vehicle together with accumulated earnings from his practice as a dentist. The finance application to the National Australia Bank which was submitted by the husband’s accountants on 13 August 1987 set out, as one would expect, assets, liabilities, income and expenses which, subject to some relatively small exceptions, represented matrimonial property. His net share of the practice income for the 1986-1987 was reckoned at $165,000 and for the following year at $185,000. It included a cash balance at the Commonwealth Bank of $125,000 which was very probably joint property. 55 The balance of the purchase price of the property was paid on settlement with the proceeds of a bank bill facility with the National Australia Bank in the sum of $220,000 including interest and charges. The Bank’s letter of offer of 9 September 1987 and its notification of the issue of the bills of 11 November 1987 made it clear that security for the debt was taken over and used for the purchase of the Newport property. 56 The husband asserted in his affidavit that the correspondence concerning the bank bill was forwarded to him at the plaintiff’s address in Penshurst Street Willoughby and was subsequently forwarded to him by her. He alleged that the mail had been opened. I have already referred to a letter of 25 August 1987 addressed to the husband at Penshurst Street Willoughby from the National Australia Bank advising approval of the bill facility for $220,000 and enclosing the letter of offer containing the information that the loan was secured by a first registered mortgage “over property situated at Newport”. It is uncontested that the plaintiff sent the covering letter referring only to the approval of the bill facility and containing no reference to the property to Mr Goldstein, who wrote to the Bank on 8 September 1987 in term implying, most probably, that he had not seen the letter of offer which referred to the Northbridge property. If he had seen that document, the significance of the disclosure of hitherto unknown real estate having an obviously substantial value could not have been lost on him if he was acting with appropriate or, indeed, any professional acuity. The plaintiff has not stated categorically that she did not see the letter of offer but this is the clear implication of her evidence and no different suggestion was put to her by counsel for the defendant. It is not at all impossible that, as it happened, the letter of offer did not accompany the covering letter, although this seems unlikely. In the result, however, my uncertainty about this matter is of little practical significance (except, possibly, as to the s79A application). If the letter of offer was forwarded by the plaintiff to Mr Goldstein then she was entitled to think that he would take appropriate steps in respect of the information it contained and his failure to do so would be negligent. On the other hand, if the letter of offer was not forwarded to the plaintiff (if it were received I am satisfied that she would have sent it with the covering letter to Mr Goldstein) then the provision of the bill facility should, by itself, have placed Mr Goldstein on notice of the husband’s substantial increase in liabilities and hence to the likelihood that the borrowed funds were being used to acquire some asset which was not reflected in any of the financial statements which he had received nor in the husband’s statement of financial circumstances which was filed about a month later. In his letters discussing these matters Mr Goldstein stated -
ASSETS $ Willoughby freehold Practice Willoughby Practice North Sydney Leslie’s car Robert’s car Furniture Dinghy LIABILITIES Personal loan Lease of equipment (North Sydney) Personal Loan Mercedes Lease Ferrari Bank overdraft Davey & Associates 57 None of these transactions are reflected in the statement of financial circumstances filed by the husband on 23 September 1987. I am unable to see how it could be seriously suggested that this statement was appropriately candid. It was clearly misleading. The husband swore, in effect, that the facts and figures in his statement and the annexures were true to the best of his knowledge, information and belief. The statement provides in substance for a balance sheet of income and expenses and assets and liabilities. They were significantly deficient. I do not think it is credible that the husband thought that the transactions to which I have referred did not need to be disclosed. Nor do I accept it is likely that, had he sought advice in relation to them from his solicitor, he would not have been told that full and candid disclosure was essential to compliance with his obligation to tell the truth which he undertook by the oath to which the document was witness. The statement of financial affairs was filed at the outset of proceedings. It is obvious that it would be likely to be relied on by the plaintiff, not only immediately but as the matter proceeded which, in her case, was in ignorance of very relevant information. The mere fact that it might have been thought that the net position was not affected by the omitted transactions cannot reasonably, and I think possibly, have been thought to make truthful that which was a lie or accurate that which plainly was not. The husband suggested this was so in his answer to the wife’s later s79A application. Such a suggestion could not have been bona fide. The argument was also proposed by Mr Broun QC. I reject it. I have no doubt that the husband’s omission of these transactions was part of a course of deliberate concealment. Mr Grieve QC for the defendants submitted that, the husband not being called to give evidence, I should not draw this conclusion. Having regard to the evidence before me, I do not see how any other conclusion is reasonably open. He also submitted that the plaintiff should have called the husband, amongst other things, to put the allegation of dishonesty to him and that I should apply the rule in Jones v Dunkel (1959) 101 CLR 298 adversely to the plaintiff because of her failure to do so. I reject this submission. In no relevant sense could the husband be said to be in the plaintiff’s camp. 58 In his affidavit of 29 October 1991, the husband disclosed that on 19 October 1987 he exchanged contracts for the purchase of a service station in Ryde for $830,000. The property was to be owned by a partnership in which the husband had a one-half interest and the other half interest was divided equally between two brothers (the Guiroyans). The husband’s share of the deposit was, he claimed, paid for out of the sale and lease back of the dental equipment and the Nissan motor vehicle, which were partnership assets. The purchase price was increased by an additional $50,000 to purchase a business associated with the service station. The purchase of the Newport property was settled on 9 November 1987 utilising the bank bill facility. The purchase of the service station was completed on 22 March 1988. The husband utilised credit cards and the overdraft facility provided by the Commonwealth Bank on his cheque account (principally replenished by partnership income) to pay the stamp duty associated with this transaction and borrowed the balance of the outstanding purchase price from the Challenge Bank Limited secured by way of a first mortgage on the service station and a second mortgage over the Guiroyans’ home. A company, Basai Holdings Pty Limited was incorporated by the partners for the purpose of running the business and owning the property. The husband claimed that the correspondence from the Challenge Bank to him was addressed to him at the Penshurst Street Willoughby address and was forwarded from that address and had been opened before his receipt of it. This allegation is in substance contrary to the plaintiff’s evidence and I am not prepared to accept it as true. At all events, I think that it is most unlikely that the wife would not have taken some steps to acquaint Mr Goldstein of these matters if she was so concerned about her husband’s affairs as to open his correspondence. A conciliation conference under Order 24 of the Rules of the Family Court was appointed between the husband and the plaintiff on 12 November 1987. Each of the parties is required to give a detailed account of his or her respective financial positions to the other. The husband did not disclose any of the transactions concerning the obtaining of credit, the expenditure of those funds or the acquisition of any property. I consider that this was more probably than not a dishonest concealment of those matters. I refrain from drawing the conclusion with a higher degree of certainty only because the husband has not given evidence in these proceedings and has had no opportunity to respond to such an allegation, but so far as the evidence before me is concerned I consider that the conclusion to be drawn from this material as a whole must be adverse to the husband or, to be more appropriate, in relation to the issues between the parties here, favourable to the plaintiff against the defendants. The affidavit of 29 October 1991 does not seek to explain the failure to disclose these transactions except insofar as the husband asserts that some part of them was known to the plaintiff from her opening of his correspondence with the Bank. If that were the only explanation it would not, in my view, provide any justification for the failure to disclose his affairs at the conference. It follows also that the information about the husband’s assets and liabilities, which was disclosed in the letters of his solicitor in connection with the negotiations for settlement, was deceitful. No suggestion has been made, and no evidence implies, that the solicitor was a party to the husband’s behaviour in this regard. However, the mere fact that the husband concealed it from his solicitor (if this be the fact, as I think it is) indicates that he well knew that the plaintiff was ignorant of the details of these estimates and that their disclosure would, or at least probably would, require him to make a more generous adjustment in her favour of the division of the matrimonial property. Having regard to the extent of the obligations into which the husband entered, it is difficult to accept the truthfulness of his assertion in the statement of financial circumstances dated 22 September 1987 that indeed his net income (before tax) from his dental business was $32,500 for the year ended 30 June 1987, the artificiality of which figure is demonstrated by his assertion that his total expenses for that period were in excess of $135,000. Some taxation advantages and income which might have been thought not to be personal, arose from the interposition of several companies together with a family trust plainly related to tax minimisation. However, I note that the income tax returns attached to the application, prepared by a firm of accountants, are not audited so that their reliability depends upon honest disclosure, on the evidence in this case I would infer by the husband rather than the plaintiff. 59 At all events, there were significant discrepancies between the statement of financial circumstances and those which had been disclosed in the husband’s solicitor’s correspondence. Mr Goldstein did not, so far as I can see, make any enquiries as to these matters. On the whole, I consider that he had not made any serious attempt to place himself in a position where he could have been reasonably confident that candid disclosure of the husband’s financial position had been made and hence that he was in a position to competently conduct the negotiations as to property settlement which he undertook on the plaintiff’s behalf. It was submitted that because the purchase of the undisclosed assets was financed totally out of borrowings, the non-disclosure made no difference. This is to significantly misstate the issue. Amongst other things, not only is there an obvious difference between price and value, as I have pointed out, part of the deposit on the purchase of the Newport property was raised by the husband’s disposal of partnership property. There was a significant unexplained difference between the income disclosed in the taxation returns in the year ended June 1986 and the following year, there was no reference to the joint deposit of $157,000 nor to the deposit (possibly the same funds in a lesser sum at a later time) of $125,000, nor to the proceeds from the motor cruiser or the Ferrari (which were, however, the subject of a partial but inadequate disclosure in June 1987, as I have mentioned). The husband’s later affidavit asserted that these items had been sold respectively in September and mid 1986 producing balances after payment of liabilities of around $60,000. Failure to deal with these transactions in the statement of financial circumstances should have provoked Mr Goldstein into making further enquiries. There are reasons, at all events, for doubting the reliability of the husband’s later assertions about these transactions, but for present purposes it is unnecessary to dilate further on this matter except to point out that even they are less than sufficiently detailed. 60 To resume the narrative, the purchase of the Newport property was completed on 9 November 1987 when bills amounting to $220,000 were discounted at the Bank’s rate of 13.65% yield, maturing on 6 April 1988. The purchase of the service station was, as I have mentioned, financed in part by a mortgage for $880,000 (amounting to 100% of the purchase price, of which the husband’s share was one-half) for five years at an interest rate of 14.38%. In the meantime, the husband had purchased a Ferrari for $62,000, obtaining one month later, in mid April 1988, an invoice showing the full price of the vehicle as $105,000, which he sold to a finance company at that price on a lease back arrangement requiring him to pay almost $2,000 a month for three years. The proceeds of this transaction were largely used to pay off credit card obligations mostly undertaken, as I understand the matter, in connection with the purchase of the service station. I do not see, having regard to the husband’s financial position and the use to which he put this vehicle, that there is any substance in Mr Broun QC’s opinion that this was an improvident or foolish purchase. At all events, I am doubtful that this opinion has any evidentiary value. Insofar as the husband relied on the income from the North Sydney practice, this was partnership revenue and a significant share of it was, in substance, the plaintiff’s or, at least, accountable to her. 61 Correspondence between the solicitors concerning the possibility of a negotiated settlement continued through late 1987 and into January of the following year. During this time, the transfer of the Newport property to the husband was registered on 19 November 1987. On 30 January 1988, the plaintiff went to Melbourne to undertake her master’s degree, taking the children with her. On 7 April 1988, the National Australia Bank bills to a total face value of $220,000 were rolled over at an interest rate of 11.85% per annum, maturing on 5 July 1988. On the same day the Commonwealth Bank (CTB) advanced $15,000 to the husband at 15%, secured by a second mortgage on the Newport property. The NAB bills were rolled over at 13.35% per annum for a further thirty days on 7 July 1988 and for a further thirty days on 9 August 1988 at the same interest rate. On 5 September 1988, the bills were again rolled over for thirty days at 13.7% and on 6 October 1988 at 13.8%, rising to 14.15% on 7 November 1988. Whilst not low, Mr Broun QC’s characterisation of these rates as showing “extraordinary growth” is exaggerated. One way or another, it was very likely that these payments would have been tax deductible, probably at the top rate of tax and hence more than halved. 62 On 22 June 1988, the husband’s accountants applied on his behalf to Prudential Finance Limited to borrow $50,000 specifying as assets, inter alia, the Nissan Patrol ($17,000), practice equipment ($60,000), practice goodwill ($140,000), furniture, jewellery and personal effects ($60,000), all of the former being partnership assets and, very likely, most of the latter three being matrimonial property. The land at Newport was then valued at $550,000 and his one-half share in the service station business at $800,000. The liabilities were stated to be (excluding tax), an overdraft with the Commonwealth Bank of $20,000, the bill facility with the National Australia Bank of $220,000 and the loan from Challenge Bank of $440,000. The husband’s net worth was assessed at $1,292,000, though this seems to have been arithmetically incorrect, the correct figure being $475,000 less. 63 It is, I think, constructive to contrast this statement of assets and liabilities with the information contained in a letter of 20 June 1988 from the husband’s solicitors to Mr Goldstein seeking agreement to the property settlement which was, by that stage, close to finalisation -
“We sent letters to both the ANZ Bank [who had written to the husband approving an increase of his overdraft by $50,000] ... and the National Bank.
It may well be they are letters requesting him to borrow more money at an enormous amount of interest but equally it may be that something has happened between him and them although if I was asked to guess I would say it was the former.
The letters certainly have the effect of putting the Bank on notice that they really should not do business with Robert on the security of any jointly owned property.”
This letter displays a considerable degree of confusion, even naivety. The bank’s letters by no means request the husband to borrow any money and clearly respond to serious applications by him for further funds. I think that Mr Goldstein’s failure to appreciate the possibility that the husband was involving other than “jointly owned property” was a significant failure in his duty towards the plaintiff. The bank’s letter of 11 November 1987, confirming settlement of the transaction, was addressed to the husband at his North Sydney premises. I do not think that there is an adequate evidentiary basis to infer that in fact it was sent to the husband at the plaintiff’s address in Willoughby. I conclude that she did not get this letter. The sale and lease transaction was effected on 4 August 1987 and the period during which the husband could draw bills to be accepted by the bank commenced on 20 August 1987. I have already mentioned that on 7 August 1987, contracts were exchanged to purchase the Newport property for $285,000.
“You will note that we have included a clause in the minutes referring to section 77A of the Family Law Act and have specified that the amount of provision of maintenance for the wife is approximately $100,000. That calculation is made on the basis that the parties have the following matrimonial assets and liabilities which are the subject of the settlement:
64 Accepting, as I do, the propriety of the husband’s solicitors in sending this letter, I do not see how it could be seriously suggested that the husband had not been deceitful or that this settlement reflected a fair division of the matrimonial estate. The crucial factor, however, is that Mr Goldstein advised his client as to this settlement in ignorance of matters of which he should have satisfied himself either by voluntary disclosure after pertinent enquiry of the husband’s solicitors or, if such satisfaction was not arrived at, by appropriate proceedings in the Family Court requiring, by compulsory process, the eliciting of information. An obvious course of action would have been to subpoena the banks. 65 As I have mentioned, the plaintiff went to Melbourne early in 1988. During this period, she claims (but I think this is not altogether accurate) that she did not receive any correspondence at all from Mr Goldstein and, in particular, was unaware of that which had passed between the husband’s solicitors and him. She says that in about April 1988, her husband rang her in Melbourne and told her that he would like to finalise the financial settlement and made a number of proposals. I understand that there were a number of conversations. In June 1988, the plaintiff claims that she telephone Mr Goldstein to inform him of her husband’s proposed terms of settlement which were -
The husband’s dental practice Less debts to be paid by husband Amount retained by the husband, less than Wife’s dental practice, say Freehold at Willoughby, approximately Less Mortgage balance Total retained by the wife
“On the basis that our client has agreed to what can only be described as very generous maintenance for the children, and proceeding on the basis that in the circumstances, an equal division of the assets between the parties would be appropriate, your client is receiving approximately $100,000 more than a one-half share under these terms. It is therefore that figure that we have included as the appropriate amount in the Short Minutes.”
66 The valuer called by the plaintiff considered that the value of the service station property as at 1 August 1988 was $900,000 whilst that of the Newport property was $800,000. The valuer called for the defendants considered that the latter property was, as at 3 August 1988, worth $750,000. However, both valuers considered comparable sales of properties not only before August 1988 but also subsequently for the purpose of arriving at these valuations. It was submitted to me that, in principle, the only relevant comparable sales were those that occurred before August 1988 since it was that valuation which would have provided a basis for negotiations on the assumption that the existence of the property had been disclosed at that time. The plaintiff’s valuer had been an agent in the Newport area for about twenty years and I accept his evidence that he knew “almost ... every block of land in the area”. Some criticism was directed to him in cross-examination as to his mode of valuation but I consider that, in the circumstances, it was appropriate. 67 It is clear that properties in the Newport area had increased markedly during 1988 and into 1989. As it happened, the Newport property was sold in August 1989 for $860,000. The defendants’ valuer had valued the property, as I have mentioned, initially at $750,000 but revised that downwards by $100,000 because he thought it inappropriate to take into account the value of comparable properties sold after the date of settlement, in particular a sale in October 1988. The fundamental difficulty with this approach is that it assumes that the date of the consent orders is the date at which a valuation would have been obtained for the purpose of the settlement and the only relevant date for present purposes. That is to give this date a significance which, in all the circumstances, it did not have. As I have mentioned, I consider that, had Mr Goldstein acted appropriately, the investigations would have ultimately led to the exposure of the husband’s real estate transactions. Obtaining the necessary information and then negotiating in the new context would, of course, take some time and I doubt very much that there would have been any property settlement effected by 3 August 1988. It is reasonable to infer, having regard to the relatively unhurried course of the proceedings up to that time and the controversy that would have been injected by the disclosures of other assets, that, if a settlement were to be negotiated, it could well have taken several more months to finalise. The defendants’ valuer agreed that, if the post-August sales could be taken into account, the plaintiff’s valuation of $800,000 as at the settlement date was a reasonable one. 68 In a negotiated context where some compromise might be expected, I consider that in all probability a figure for the Newport property something in excess of $800,000, having regard to the rapidly rising market, would have been agreed on. However, it is important to note that such a compromise would occur in the context of a global settlement and, as I have pointed out, a number of assets in the hands of the husband do not appear to have been brought into account by Mr Goldstein and which, assuming he applied his undoubted professional expertise in the way that he should have to this matter, would have required further adjustment in favour of the wife. In due course, I will need to deal with the likelihood that negotiations would fail altogether and the proceedings would fall to be determined by the Family Court. However, having regard to the course of the negotiations and the husband’s real estate and business dealings, I think that he would have been under substantial pressure to negotiate an early settlement if he could, since Mr Goldstein had available to him process which could seriously hamper the husband’s freedom of action concerning the assets which he already possessed and any other interests which he might wish to acquire. The husband’s acquisitions were obviously available for division in accordance with the Act, as (at the least) they were substantially financed with reliance on joint assets, one way or another. So far as Newport was concerned, although he had borrowed the entire purchase price, its increase in value meant that by the time real negotiations were likely to have taken place the husband’s equity was approaching, if it did not exceed, $500,000. I have set out above the interest rate at which the bills providing the bulk of the financing were discounted. The accumulation of interest, if that occurred in a real sense, was relatively trivial by the relevant time. It is fair to point out that capital gains tax would have been payable on the Newport property had the husband needed to sell it for the purpose of the settlement with the plaintiff. It is difficult now to assess the likelihood that the husband would indeed sell the property to do so rather than raise finance and, as it were, pay the plaintiff out, in which event capital gains tax would have come into play but, obviously, not fully. Other costs of realising the assets, such as agents’ commission, legal fees and the like would have to be allowed also, but, if the property were not sold and the matter proceed to a negotiated settlement, I do not think this factor would have been a significant one. 69 The so-called order 24 conference which was a compulsory conciliation proceeding in which the husband should have disclosed the transactions I have been discussing but did not, would usually take place about 18-20 months before hearing, according to Mr Broun QC. Accordingly, if negotiations had broken down, the effect of his evidence is that a hearing would have been likely in mid-1989. Indeed, Mr Broun QC agreed that this was so. The time frame that reasonably would have applied to a negotiated settlement would not have varied much from this. I do not think that very much depends on whether I conclude that a negotiated settlement would have been in place towards the end of 1988 or the beginning of 1989 on the one hand or, failing settlement, a hearing of the litigation would have been completed by around mid 1989. No suggestion was made in evidence or in submissions that any significant delay in judgment would have been suffered by the plaintiff and I consider it to be accepted therefore that timely judgment would have been given, perhaps within a few weeks or a month or so of hearing, very probably before September 1989. Having regard to the price obtained by the husband in August 1989 for the Newport property I think it fair to assess its value as at the likely date of a hearing as being of the same order, namely about $850,000. Having regard to the transformed forensic circumstances which would have been very likely to have developed if Mr Goldstein had acted without negligence, I have no doubt that a purchaser’s index search would have been appropriate and would, very likely, (but dependent somewhat on the course of negotiations and their time frame) have brought to light, or at least confirmed, the husband’s purchase of the Ryde property as well as the Newport property. According to the husband’s affidavit, he sold his interest in the service station to his other partners in December 1989, receiving about $185,000 net of debt. This was a substantial profit. Having regard to the valuation of $900,000 as at August 1988 it seems to me reasonable to infer that, as at the time of any likely hearing, his net interest in the service station was of the order of $150,000. The husband disclosed that in March 1989 he purchased a shopping centre at Newport with a three-year, interest-only loan with the Advance Bank for $1.3 million with interest at 16.3% per annum, asserting that the income from it was significantly less than the interest payable. A Loss Submission prepared by the CTB following the husband’s bankruptcy stated, however, that the husband’s accountants had disclosed that the shopping centre generated for the year (I infer) ended either June 1990 or June 1991, a net profit of $35,000. The evidence does not disclose the purchase price of the shopping centre (Mr Broun QC’s report states it as $1.6m) but it was asserted by the husband in his Statement of Financial Circumstances of October 1991 to have been worth $1,946,000 and in his debtor’s petition under the Bankruptcy Act 1966 of June 1992 to have been sold about a month later, in November 1991 for $2.1 million. It may well be that the proceeds of sale of the Newport property were applied to discharge finance incurred for this purchase. It may be that other loans were also entered into in substantial sums. However, I consider that the probability is that assets of equal or greater value were acquired with those funds. I think that it is clear that the acquisition by the husband of these assets necessarily involved his reliance, to a substantial degree one way or another, on jointly owned property or assets derived from reliance on such property, giving security over jointly owned assets and the placing at risk of practice earnings which should realistically be regarded as at least partly partnership income and hence formed part of the matrimonial property. It does not appear that Mr Goldstein ever regarded this money as otherwise than the husband’s; although he protested about cash withdrawals, no numbers he proposed, or accepted, seem to have taken into account its partnership character. I have little doubt that the Family Court would, on the assumption that there was no property settlement in August 1987, have brought into account all of the assets acquired by him following separation, and owned by him at the date of hearing subject, naturally, to the cost of finance. The husband would not have been in a position to argue about niceties. 70 Failing settlement in August 1988 (which disclosure would have made virtually certain), I consider that, acting properly, Mr Goldstein would have prevented by appropriate process further erosion by the husband of the matrimonial property by ventures such as, possibly, the supermarket purchase, although from the material available to me, it appears that as at mid 1989 into November 1991 this property may well have been an advantageous acquisition. It was submitted to me, and Mr Broun QC makes much of this (though it is argument rather than admissible opinion) that the husband was a reckless speculator and profligate. There is no evidence of this. Indeed, it seems to me that the opposite was the case, with the possible exception of a purchase of a second Ferrari. His acquisitions appear to me to have been shrewdly judged and his sales timely. It is clear from the evidence as to applicable interest rates that Mr Broun’s assumptions concerning this aspect of the financing (namely 20% or greater) was considerably overstated. It appears that, by various serial transactions, $800,000 had been borrowed from Resi-Statewide Corporation Limited in December 1988 on security of the Newport property at a rate of 14.75%. It is obvious that other property was probably brought into account to provide a realistic buffer from the financier’s point of view. The shopping centre was purchased, it appears, in March 1989 financed at least in part by the Advance Bank and, I think it reasonable to infer, the advance from Resi-Statewide Corporation Limited. 71 Mr Grieve submitted that the plaintiff would have had difficulty in establishing in the proceedings if they had occurred, what assets the husband actually held. I do not think that is so. Indeed, the matter was relatively simple. The husband at that time had at least two very substantial assets, three if the shopping centre be included, and had utilised other funds which I have referred to. Subpoenas issued to the financing organisations would have, I believe, produced virtually everything that was necessary for the husband’s financial position to be exposed subject to such qualifications as, from his private information, he might be able to produce but which does not seem to have been very significant when one considers the relatively brief and to my mind uncomplicated account set out in his affidavit in the 79A proceedings. The mere fact that, as it appears, investigations had not disclosed, it seems, much information by the time that those proceedings were discontinued does not, I think amount to much. The husband’s own affidavit, together with purchaser’s index searches gave a great deal of grist to what would have been the plaintiff’s mill. I do not see how the husband’s financial position, as it deteriorated well after the litigation would have been completed, is informative or even relevant to the likely position as at the likely time of any trial. 72 It was submitted that I should take into account not only the extent of the liabilities incurred by the husband for the purpose of purchasing the properties but that accruing interest might not be paid out of any income produced by those properties and hence, in effect, would be capitalised and should therefore be deducted. The garage was producing income and I do not think that any interest component should be taken into account, having regard to the ultimate sale of that property and the return to the husband. The Newport property was not income producing but the interest cost was not great, at least in respect of the sum originally borrowed and was easily payable out of the husband’s takings from the partnership practice. The shopping centre was income producing although the husband claimed that this did not consistently offset the mortgage interest. I am sceptical about the husband’s claims in this respect but, at all events, having regard to the whole of the circumstances I do not think that any substantial allowance would have been or should be made for this interest. 73 There was a difference of opinion between Mr Crowley for the plaintiff on the one hand and Mr Broun QC for the defendants on the other as to the likely costs of litigation, had this matter gone to trial. Both are practitioners of considerable experience. Both seem to me to have approached the matter in a similar way; they differ essentially on their assessments of how long the trial was likely to take. Mr Crowley’s assessment of the costs was $25,000 whilst Mr Broun’s was $40,000. Having regard to the issues in the case which, as I have said, I think were relatively straight forward, I am inclined to favour Mr Crowley’s assessment of about four days, hence a sum of about $25,000. The husband’s parlous forensic position may well have rendered the trial even shorter. As this hearing in all probability would have been required because of the husband’s lack of candour I am of the view that the usual order as to costs in Family Court proceedings would not have been made and that the court would have ordered the husband to pay a substantial part of the costs resulting from such behaviour. Perhaps more than in any other jurisdiction, the Family Court relies on the candour of the parties to reduce issues and foster amicable settlement if that is possible and, at the relevant time, procedures were in place to encourage compliance with this policy, which was justified not only by the public interest in reducing litigation but to prevent one party from forcing an unfair settlement on the other by threatening, as it were, to waste the matrimonial property. Yet a further consideration is that matrimonial disputes are often fraught with emotion which makes dispassionate assessment of self interest difficult and may complicate other related matters such as the care and custody of children. In this situation, I consider that the Family Court would have looked with a seriously jaundiced eye at the behaviour of the husband and would be likely to conclude that the only appropriate response was to require the husband to pay the costs of the litigation which, realistically, he brought down upon his own head. It is possible, however, that some costs may not have been ordered on an indemnity basis. Accordingly, an allowance should be made adverse to the wife in respect of this matter in the order of $5,000. 74 The plaintiff also claims her costs of undertaking the proceedings under s79A of the Act. That provision permits a person affected by an order such as made here following the settlement in August 1988 to make an appropriate adjustment of the parties’ interests and property despite the terms of that agreement where, so far as is presently relevant “there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence, the giving of false evidence or any other circumstance”: s79A(1)(a). I have no doubt that in this case the plaintiff did suffer a miscarriage of justice by reason of, at least, the suppression of evidence or, if they might not be so characterised, by the other circumstances to which I have referred and which lay at the husband’s hand. I consider it reasonable and appropriate that she should have made an application under s79A even though there was a delay in so doing following her awareness of the husband’s undisclosed property transactions. I do not think it necessary for present purposes to detail the circumstances of this delay. It is enough to say that its effect was to prejudice only herself and I do not see that it should have caused her to refrain from undertaking those proceedings. 75 After certain further documents had been filed in the 79A application, the husband filed a debtor’s petition in the Federal Court on 5 June 1992. He was declared bankrupt and the s79A proceedings were halted, there being no point in taking the matter any further. The plaintiff had retained Ms Carol Foreman then with Messrs Clayton Utz during the course of 1990 and had filed the application seeking orders under s79A in July 1991. Legal fees totalled $30,275 and accountancy expenses totalled $3,364, a total of just over $33,600. The accounts have been tendered in evidence. Ms Forman continued to hold the retainer for the plaintiff throughout the relevant period, though she changed firms. On the face of it, the fees, though at the higher end of the scale, appear reasonable and in respect of a level of work that also appears reasonable. Indeed, the plaintiff had been advised by experienced counsel late in 1990 that an application under s79A would have good prospects of success providing that she established that at the time of the settlement she had no independent knowledge of the undisclosed matters and relied on the representations of the husband and that the matrimonial assets were materially greater than those disclosed at the time of settlement. For the reasons which I have set out I consider that both those conditions could have been satisfied by the plaintiff with relative ease. Mr Grieve QC for the defendants submitted that, by the time the proceedings ended, the plaintiff had very little hard evidence as to the second of these conditions. I do not accept this submission. I think that it is tolerably clear that the matrimonial assets were significantly greater as at the material time and that the use of appropriate compulsory process would have sufficiently shown this to be so as, indeed, has occurred before me though to a lesser degree than then would have been possible. (For example, the husband would, as a practical matter, have been required to give evidence). 76 If the matter had been settled by early to mid 1989 (as I think likely), I have no doubt it would have been on terms more favourable to the plaintiff than the consent orders were. It is difficult to determine the relative likelihood of a more favourable settlement on the one hand and, failing this, moving to a hearing and judgment on the other. Both parties would be motivated to settle, partly by the desire to save costs and, of course, the inconvenience and unpleasantness of a hearing. I think that, on balance, the husband’s business interests and the risk of forensic prejudice to his case (especially concerning costs) engendered by his own lack of candour, and the wife’s apparent attitude to litigation would make settlement more probable than not. As to the amount, I consider that the “discount” of costs saving and convenience make it very likely that it would be at full value. Treating the loss as that of “a chance”, I measure this probability at 90%. In all likelihood, settlement would have been effected in the first quarter of 1989. In respect of liabilities, some considerable uncertainty remains. The mortgages to CBA and Resi-Statewide, which together total over $1m are the obvious examples. However, I consider that these funds would almost certainly or, at least, more probably than not, have been used to acquire equivalent assets, most likely the Newport shopping centre, if not, they represented a very large sum in the husband’s hands and at his disposal. In calculating a likely pool of assets, these borrowings should I think as a practical matter, be balanced against the value of the shopping centre thus, in effect, ignored. The possibility of capital gains tax being payable on the sale of the Newport property must also be accounted for. That obligation, if any, is not referred to in the husband’s affidavit of October 1991 though it had been sold in August 1989; the sale of his interest in the service station also occurred in December 1989 with no reference to the tax in the affidavit. An important consideration is the likelihood of sale in the near future, since the liability to both capital gains tax and realisation costs is “notional” (to use the language of Nicholson CJ in Carruthers v Carruthers (1996) FLC 92-707 at 484) or, at least, contingent. Quite apart from the possibilities available by tax planning, both are subject to a degree, perhaps marked, of potential fluctuations. As the Chief Justice said (ibid) -
(i) the partnership which conducted the dental practice at Willoughby be dissolved and the husband’s interest be assigned to the plaintiff;
(ii) the husband transfer to the plaintiff his interest in the Willoughby property;
(iii) the plaintiff to keep the Ford Laser motor vehicle;
(iv) the plaintiff to pay $140,000 of the mortgage on the Willoughby property to the Commonwealth Bank and the husband to pay the balance;
(v) the husband to keep the North Sydney practice;
(vi) the husband to pay the debt owing to Davey & Associates, accountants, and to Custom Credit, and arrears of school fees;
(vii) the husband to pay maintenance of $100 per week for each of the children and all private school fees and education expenses for them;
(viii) the plaintiff to have the furniture and keep her jewellery; and
(ix) each party to pay his or her own tax liability.
The plaintiff says that Mr Goldstein asked her whether this was what she wanted to do and that she said “I think that’s the best that I will be able to get from Robert. What do you think? I really want to get this settlement finalised.” Mr Goldstein, the plaintiff asserts, said, “OK let’s go along with that”. Mr Goldstein’s statement is to the effect that whilst he did not recall the content of his various conversations with the plaintiff, they had many more conversations than those to which she referred and he does not accept that they occurred as the plaintiff alleges. I accept, however, that the plaintiff’s account of her conversation with Mr Goldstein concerning the settlement proposal is substantially true. Certainly, her account is supported by letters written by Mr Goldstein to the husband’s solicitors on 6, 28 and 29 April 1988. I have already referred to the letter of 20 June 1988 from the husband’s solicitors to Mr Goldstein enclosing Short Minutes of Orders for approval and execution. Having regard to the evidence as a whole, I have no doubt that no further significant discussions occurred between Mr Goldstein and the plaintiff as to the elements of the settlement proposal and, in particular, as to the extent of the matrimonial property. Consent orders were ultimately made on 3 August 1988 to the following effect -
1 the husband to assign to the wife all his interest in the Willoughby practice;
2 the husband to transfer to the wife his interest in the Willoughby property;
3 the husband to transfer to the wife his interest in the Ford Laser motor vehicle;
4 the husband to pay the Commonwealth Bank of Australia all moneys due to the Bank secured by first mortgage on the Willoughby property over the sum of $140,000, which would become the wife’s responsibility;
5 the husband to pay the accountants, Davey & Associates, $25,000, to Custom Credit Corporation, $58,500 and for school fees, $4,000;
6 the dental practice at North Sydney to be transferred to the husband;
7 as maintenance for the children the husband to pay $100 per week for each of them and all private school fees and education expenses;
8 the husband agreed he has no interest in the furniture, effects, jewellery or furs in the wife’s possession;
9 the husband and wife were each responsible for their separate income tax liabilities; and
10 the effect of the orders is that provision of maintenance was made for the wife in the amount of about $100,000.
It is obvious that this settlement was based upon the offer of the husband’s solicitors of 20 June 1988 and on the assumption by the wife implicitly supported by Mr Goldstein that the matrimonial assets were more or less as stated in that letter. This assumption was unwarranted. A number of matters, including the real value of the Willoughby property and the husband’s actual asset position, were in a state of uncertainty, to say the least. I consider that this was mainly due to Mr Goldstein failing in his professional duty to make adequate enquiries both independent and of the husband’s solicitors or of the banks or otherwise by compulsory process in the Family Court proceedings which had by then, of course, commenced and that this left the plaintiff in a most disadvantageous position. Had appropriate enquiries been made in early 1988, when the question of settlement appeared to be coming to a head and certainly as the year proceeded, it is most probable the existence of the two properties hitherto concealed by the husband would have become known because the threat of compulsory process and the raising of the suspicions would have enabled the husband’s solicitors, by giving appropriate advice, to elicit the information from him.
77 As I have mentioned, the interest payments made would very likely have been deductible in the husband’s hands, one way or another. It was submitted by Mr Murr SC for the plaintiff that it should be borne in mind that accounting for these payments is not a merely arithmetical exercise. In a quite fundamental way, the Family Court must have regard not only to the husband’s, as it were, cash contribution but also the wife’s non-cash contribution arising out of, for example, her care for the children. I accept this submission. Mr Murr conceded that the husband’s interest payments, to the extent to which they represent his personal exertion over and above what might be thought to represent the wife’s home-making contribution, should be placed into the scale to his advantage. To state the problem in this way, however, is to demonstrate the mixed character of the balance which must be struck; only a global approach is really possible. 78 Dealing with the matter globally, the items that should have been brought into account but, it seems to me, were negligently ignored, were the Newport property, the interest in the service station, the balance deposit from the sale of the Northbridge house, the net proceeds of sale of the Ferrari and the net proceeds of sale of the cruiser, the joint account and the over-value of the Willoughby property. Dealing with their approximate values, the Newport property should be brought in at about $850,000 less initial borrowings of $285,000, yielding $565,000, the interest in the service station at about $150,000, the deposit balance at $85,000 and the remaining items, respectively, at $21,000, $41,000, $125,000 and $20,000. As to the last figure, the basis which I infer to be the case, of the calculation is that the difference between the valuation and the asserted value would have shrunk over the intervening period as values increased. Having regard to the personal delivery by the plaintiff to the husband of $44,000 following the sale of the house, her belief it was used to pay joint debts, the existence of such debts and that I do not take them into account for this calculation, I do not include this sum. I am satisfied, despite the lack of clarity concerning this aspect of the case, that to do so would probably amount in substance to double counting. I note that in her application in the s79A proceedings, the plaintiff positively asserts that the net proceeds of the sale of the home were divided between the parties. I also believe that the substance of the matter is that she took this delivery into account when she agreed to the consent orders. It will be seen that the last five items are dealt with on a net basis. Some allowance should be made for capital gains tax on the Newport property. This involves about $230,000 to $255,000 but, having regard to the husband’s resources, I do not think the whole of this should be allowed. Having regard to the global character of the appropriate approach, it is not meaningful to say more than that something of the order of $240,000 should be taken into account. Sales costs of $15,000 are not unreasonable. It was conceded by the plaintiff that capital gains tax on the Willoughby real estate should be allowed at $35,000. Interest payments of about $3,000 should be allowed, reducing the overall amount of the order of $12,000 or so for the period between purchase and sale or settlement by reference to the plaintiff’s contribution. As to the service station, the simplest approach is to bring into account something of the order of $150,000, having regard to the husband’s net return after sale of his interest at the end of the year. Only a small sum should be allowed to represent a contingency for capital gains tax, say $20,000, I think, on the service station, since its sale was by no means either necessary or pending. The additional sum, over the amount received on settlement, that should have been considered by Mr Goldstein to be brought into account is therefore about $695,000. I emphasise that this sum is purely indicative, representative of the accumulation of and diminution by sums which are themselves estimates. From the point of view of my task, I have undertaken this exercise in order to enable examination of an order or degree of inappropriately omitted value by reference to which a global sum which in my view should be considered as having been lost by the plaintiff as a result from Mr Goldstein’s negligence. I accept the evidence of Mr Crowley that the application of s75(2) of the Act would result in a weighting in favour of the plaintiff of the order of 60%. In addition, the omitted payments of maintenance for the children should be added plus the costs of the 79A proceedings. 79 Overall, I consider that the plaintiff would have been likely to have received substantially more than she did obtain from the settlement which, doing the best I can and taking into account 10% for contingencies less the allowance for costs, represents a sum of about $420,000. This is somewhat less than the indicative number (of about $440,000) but represents the real figure which I consider to be the plaintiff’s loss in respect of Mr Goldstein’s negligence. I do not consider that a judgment in the Family Court proceedings would have resulted in an award to the wife of an amount substantially different than that which I here specify plus, of course, that which she received under the settlement. 80 Accordingly, I assess the plaintiff’s damages at $420,000 plus interest. The defendants must pay the plaintiff’s costs. In default of agreement on interest, either party may seek further directions for determination of the appropriate sum, upon seven days’ notice. In the absence of the need for further directions, I order the plaintiff to file judgment in accordance with these reasons. In absence of agreement of the terms of such judgment, the parties may have liberty to apply on seven days’ notice for directions.
“I think it must be remembered that this Court is faced with the task of exercising a discretionary judgment in order to bring about a just and equitable result between the parties to a marriage.”
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Last Modified: 06/26/2000
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Short v Delany [1999] NSWSC 1293
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