Spender and Spender
[2011] FamCA 499
•28 June 2011
FAMILY COURT OF AUSTRALIA
| SPENDER & SPENDER | [2011] FamCA 499 |
| FAMILY LAW – PROCEDURES – Respondent to proceedings removed – leave to file an amended application seeking final orders – application for interim orders – applications for costs. |
| Evidence Act 1995 (Cth) Family Law Act 1975 (Cth) |
| B Pty Ltd v K Anor [2008] FamCAFC 113 |
| APPLICANT: | Ms Spender |
| RESPONDENT: | Mr Spender |
| FILE NUMBER: | MLC | 11722 | of | 2010 |
| DATE DELIVERED: | 28 June 2011 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Cronin J |
| HEARING DATE: | 1 June 2011 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Brown SC With Ms Ben-Simon |
| SOLICITOR FOR THE APPLICANT: | William Murray |
| COUNSEL FOR THE RESPONDENT: | Mr Sweeney |
| SOLICITOR FOR THE RESPONDENT: | Nathan Kuperholz |
Orders
That Ms B be removed as a respondent from proceedings MLC11722/2010.
That the wife have leave to file an amended application seeking final orders.
That the application for interim orders filed 17 December 2010 is dismissed.
That by way of security for costs, the wife pay into the trust account of her solicitors the sum of $20,000.
That if by 4 pm on 27 July 2011 the wife has not provided proof to the solicitors for the husband that she has complied with paragraph 4 of these orders, the application seeking final orders of the wife shall stand dismissed.
That the husband be excused from filing a financial statement until further order.
That there be liberty to apply.
That should any party desire to make any application for costs arising out of these orders, they may do so in writing by submission together with reference to any affidavit material they so desire to be considered and such submission shall be filed and served by 4 pm on 8 July 2011 and any submission in response thereto shall be filed and served by 4 pm on 15 July 2011. Any such submission shall be endorsed by the legal practitioner that a copy of it has been served upon the other party.
IT IS CERTIFIED:
That pursuant to Order 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend.
IT IS NOTED that publication of this judgment under the pseudonym Spender & Spender has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 11722 of 2010
| Ms Spender |
Applicant
And
| Mr Spender |
Respondent
REASONS FOR JUDGMENT
On 1 June 2011, I heard submissions from Mr Brown SC and with him Ms Ben-Simon for Ms Spender to whom I shall refer in these reasons as “the wife” and from Mr Sweeney for Mr Spender to whom I shall refer as “the husband”. I refer to them in that way even though they have long been divorced.
The dispute that brings the husband and wife back to this Court is the wife’s application to revisit a financial settlement made in 1994. I use the term “revisit” because at this stage, the precise application and its future conduct, is unclear. What is clear is that the husband disputes the wife’s application.
By way of background, the husband and wife who had been represented by lawyers in 1993, sought and obtained from Hannon J on 28 February 1994, an order under s 87 of the Family Law Act 1975 (Cth) (“the Act”) approving a financial deed executed by them.
The wife’s present application filed 17 December 2010 was returnable on 22 March 2011 in a case assessment conference. She named the husband’s present wife Ms B along with the husband, as respondents to that application. That joinder of Ms B gives rise to the first issue before me.
The applicant sought interim and final orders. By something of a tenuous agreement, counsel agreed between themselves that the wife would not proceed with the interim orders that she had sought in the application. At the same time, Mr Brown said that the wife needed to replead her case. I agree.
The application for final orders (in so far as they were relevant to this application) sought:
1.That pursuant to s 79A(1)(a) of the Family Law Act 1975 or in the Exercise (sic) of the inherent Jurisdiction of the Court, the Orders made 2 July 1993 and the agreement made on 28 February 1994 be set aside or varied or both.
2.That upon the Court Orders and agreement being set aside or varied or both the Court make such Orders pursuant to s 79 of the Family Law Act 1975 as this Honourable Court deems fit.
3.That the Firstnamed Respondent pay to the Applicant lump sum Spousal Maintenance in such amount as this Honourable Court deems fit.
4.That the First and Secondnamed Respondents pay the Applicants (sic) costs of these proceedings.
None of those orders has any basis if the legal position I have described above is correct. However, that exposed another difficulty in respect of the joinder of Ms B. There is no order sought against her.
Mr Sweeney sought that Ms B be removed from the proceedings.
Whilst the joinder rule (r 6.03 of the Family Law Rules 2004) has been amended by the Family Court Amendment Rules 2011 (No 1), no change has been made to r 6.04. It reads:
A party may apply to be removed as a party to a case.
In B Pty Ltd v K Anor [2008] FamCAFC 113 the Full Court, said:
[i]t is not proper to allow a joinder of third parties merely… on the basis that at trial facts to support the application may be asserted and proved. Sufficient facts must be asserted to demonstrate that, if proved, the law arguably provides the relief sought.
In Gould v Gould; Swire Investments Ltd, (1993) FLC 92-434 at [80,449] to [80,451], cited in B Pty Ltd v K, the Full Court discussed the procedure for the joining a party to proceedings and noted that the history of the Act and Rules in relation to joining third parties had not “followed a clear course”. Fogarty J, with Nicholson CJ and Finn J agreeing, observed (at [80,449]) that:
Ordinarily, where in litigation orders are sought against a person, that person is made a party in the proceedings as the respondent or defendant (as the case may be). The process also identifies the nature and basis of the claim. It is then served upon that person in accordance with the practice of the Court in question. This is an aspect of the overall principles of natural justice, namely, that a person against whom a claim is made must be given notice of that claim and a reasonable opportunity to be heard: see the discussion by the High Court in Taylor v Taylor (1979) FLC 90-674, esp. per Gibbs J at p. 78,589.
…
I conclude, consistently with Buckeridge and Barro, that the correct procedure, where an applicant in proceedings under the Family Law Act seeks relief against a person who is a stranger to the marriage or relationship, is to name that person as an additional respondent in the proceeding and set out the nature of the claim and the basis of it in the ordinary way in the application.
The Full Court considered that the appropriate procedure to follow was to name the third party as a respondent in the amended application and set out the nature and basis of the claim and the relief sought against it in the amended application.
Particularisation of claims arose in Wayne & Dillion & Dillion [2008] FamCAFC 204 where the Full Court, constituted by Warnick J, cited B Pty Ltd v K and Gould v Gould. The question arose on an appeal from the Federal Magistrates Court. His Honour noted that the Federal Magistrates Court Rules 2001 (Cth) provided in rule 11.01 that “a person whose participation is necessary for the Court to completely and finally determine all matters in dispute in a proceeding must be included as a party in the proceeding”. The construction of that rule is similar to that of rule 6.02. His Honour observed (at paragraphs 17 to 19) that:
As seen, while neither that rule nor the relevant Family Law Rule refers to an applicant for leave to join having to establish a cause of action and supporting “case” which, taken at its highest, is arguable, that test was adopted by the parties before Morgan J and by her Honour. That approach was not attacked in the appeal in B Pty Ltd & K (supra). It is a test consistent with the references, in the passages quoted above from B Pty Ltd & K (supra), to the need for an applicant for joinder to set out the nature of the claim and the basis of it. As also seen, in Gould v Gould; Swire Investments Ltd (1993) FLC 92-434, Fogarty J particularly referred to the need for fairness to the third party. Any person joined to a proceeding ought, at that point, be able to take advice on whether the facts pleaded (if established) would lead to a successful claim. Joinder to litigation is a serious step with often significant financial consequences.
The word “necessary” in rule 11.01(1) must mean something more than “useful” or “expeditious”. In my view, if there are available alternative means to joinder to the substantive proceedings, of obtaining from a third person or someone already a party what is needed to allow an applicant for joinder to establish an identified “case”, joinder is unlikely to be “necessary”.
However, if a cause of action, recognisable at law, against a “third person” is particularised, then it is at least highly likely that joinder will be “necessary for the court to completely and finally determine all matters in dispute”…
I applied B Pty Ltd & Ors v K in Penciousv Pencious [2010] FamCA 605. In Pencious I observed that (at paragraphs 2 to 4):
The recipient of the application for joinder as well as all other parties to the litigation must be able to identify what material facts give rise to a cause of action against the party sought to be joined. Perhaps the practical test is whether the application would enable the party so joined or to be joined, to respond, in the sense of filing a defence to the claim. This Court is not a court of pleadings so formal statements of claim and defence are not relevant…
…
After pointing to the jurisdictional basis upon which orders are sought (if they are), the application for joinder (or the person seeking to defend having joined a person) must be able to show that the rights of those persons may be affected by an issue in the case but also that participation is necessary to enable the court to determine all issues in the case.
None of those principles can be seen to have been followed by the wife. Mr Brown made a strong and valiant submission that all will be revealed and the involvement of Ms B would be relevant. At this stage however, the principles set out in r 6.04 are those that determine this application. Having regard to what I have said, Ms B must be removed from the proceedings.
With the wife’s application largely without any pursuit of interim orders, the husband effectively became the applicant. He filed a substantive response on 11 March 2011. He sought interim and final orders.
The husband’s final orders were:
1.The Initiating Application be struck-out as against the Second Respondent.
2.The Initiating Application be permanently stayed, or alternatively dismissed, as against the First Respondent.
3.That the Respondent’s costs be paid by the Applicant on an indemnity basis.
The interim orders that the husband sought in so far as they are relevant to these proceedings, were:
2.That the Respondents not be required to file Financial Statements or make any discovery pending the hearing and determination of the Respondents’ applications for final orders.
3.That the Applicant provides security in a form and for an amount to be determined by the Court for the Respondents’ costs and that the Initiating Application be stayed pending the provision of that security.
The matter came before Registrar Marrone on 22 March 2011. The Registrar ordered that all extant applications be adjourned to be listed in the Judicial Duty List on 1 June 2011.
The husband by his counsel, only sought the orders to which I have referred other than that he also pursued by notice, the bifurcation of the substantive proceedings.
Turning first then to the husband’s application for exemption from the requirement to file a financial statement, I consider that it is not necessary at the moment for the following reasons.
Chapter 13 of the Family Law Rules 2004, governs the general duty of disclosure. Those rules relevantly provide:
13.01 (1)Subject to subrule (3), each party to a case has a duty to the court and to each other party to give full and frank disclosure of all information relevant to the case, in a timely manner.
(a)disclosure of financial circumstances (see Division 13.1.2);
(b)disclosure and production of documents (see Division 13.2.1); and
(c)disclosure by answering specific questions in certain circumstances (see Part 13.3).
(2)The duty of disclosure starts with the pre‑action procedure for a case and continues until the case is finalised.
…
13.02 (1)This Division sets out the duty of disclosure required by parties to a financial case.
Rule 13.04(1) requires what could only be described as a comprehensive disclosure of virtually all of the husband’s financial circumstances. He submitted that that was unnecessary in this case.
Rule 13.05(1) reads:
(1)A party starting, or filing a response or reply to, a financial case (other than by an Application for Consent Orders) must file a Financial Statement at the same time.
In addition, r 13.06 provides for constant and ongoing disclosure.
All of those rules have to be read in the context of r 1.04 which reads:
The main purpose of these Rules is to ensure that each case is resolved in a just and timely manner at a cost to the parties and the court that is reasonable in the circumstances of the case.
The intention behind r 1.04 can clearly be seen in r 1.06 which reads as follows:
The court must apply these Rules to promote the main purpose, and actively manage each case by:
(a)encouraging and helping parties to consider and use a dispute resolution method rather than having the case resolved by trial;
(b)having regard to unresolved risks or other concerns about the welfare of a child involved;
(c)identifying the issues in dispute early in the case and separating and disposing of any issues that do not need full investigation and trial;
(d)at an early stage, identifying and matching types of cases to the most appropriate case management procedure;
(e)setting realistic timetables, and monitoring and controlling the progress of each case;
(f)ensuring that parties and their lawyers comply with these Rules, any practice directions and procedural orders;
(g)considering whether the likely benefits of taking a step justify the cost of that step;
(h)dealing with as many aspects of the case as possible on the same occasion;
(i)minimising the need for parties and their lawyers to attend court by, if appropriate, relying on documents; and
(j)having regard to any barriers to a party's understanding of anything relevant to the case.
All of these provisions focus on what is relevant to the issues in dispute. I am hampered by the lack of precise orders sought by the wife notwithstanding the able argument of Mr Brown that the amended document will be filed in the future. Rule 13.02(1) refers to a financial case. At the moment, I am not sure whether this could be called a financial case because it seeks to set aside orders and an agreement that was made in 1994. The orders clearly sanctioned the agreement. The wife must show the relevance of the husband’s current position to whatever her application might be. As such, there being no relevance shown, the husband’s application must succeed.
I turn then to the argument about security for costs.
Rule 19.05(1) provides:
(1)A respondent may apply for an order that the applicant in the case give security for the respondent's costs.
(2)In deciding whether to make an order, the court may consider any of the following matters:
(a)the applicant's financial means;
(b)the prospects of success or merits of the application;
(c)the genuineness of the application;
(d)whether the applicant's lack of financial means was caused by the respondent's conduct;
(e)whether an order for security for costs would be oppressive or would stifle the case;
(f)whether the case involves a matter of public importance;
(g)whether a party has an order, in the same or another case (including a case in another court), against the other party for costs that remains unpaid;
(h)whether the applicant ordinarily resides outside Australia;
(i)the likely costs of the case;
(j)whether the applicant is a corporation;
(k)whether a party is receiving legal aid.
Rule 19.06 provides:
If the court orders a party to give security for costs, the court may also order that, if the security is not given in accordance with the order, the case of the party be stayed.
The husband’s position may be summarised by his counsel’s outline. It was that the husband had filed various affidavits including that of a cost consultant and his solicitor relating to his position if the litigation continues. In respect of the applicant, Mr Sweeney argued:
· The applicant resides permanently in the Country C;
· The husband’s present wife resides permanently in the Country C;
· The applicant engaged solicitors in City D eight years ago to set aside the orders but chose to take no further action;
· The applicant owns no real property in Australia;
· The success of the applicant’s case depends on her proving allegations for 17½ years ago which are denied by the husband; and
· The likely cost to the husband exceeds $27,000 to date and is likely to be around $60,000 at the end of the current proceedings.
In Stapleton and Bryant (Security for Costs) [2009] FamCAFC 63, the Full Court said:
45.The relevant principles applicable to an application for security for costs are well known. In Luadaka & Luadaka (1998) FLC 92-830 the Full Court set out the relevant principles as follows:
38.Section 117(1) provides that, subject to sub-section (2), each party to proceedings under the Act shall bear his or her own costs. Section 117(2) provides that if in proceedings under the Act the court is of the opinion that there are circumstances that justify it in doing so the court may, subject to sub-section (2A), make such order for security for costs as the court considers just. Section 117(2A) provides that in considering what order should be made the court shall have regard to the matters set out in paragraphs (a) to (g) inclusive. Section 117(2A)(g) provides that the court shall have regard to such other matters as the court considers relevant.
…
61.In our opinion, when dealing with an application for security for costs the general rule provided for in s 117(1) applies, namely that subject to s 117(2) each party to proceedings shall bear his or her own costs. However, if the court is satisfied that there are circumstances that would justify an order then the court may, subject to s 117(2A), make such order for security for costs as the court considers just. It is not necessary to establish that there are special circumstances. However, it is necessary to establish that there are justifying circumstances. The decision to order security for costs is discretionary, both as to whether to order security, and as to the amount to be secured.
62.The purpose of an order for security is to secure justice between the parties by ensuring that an unsuccessful party does not occasion injustice to the other. In considering whether or not to make an order, apart from those referred to in s.117(2A), matters which may be relevant include the following:
62.1It may be relevant to take into account the means of an applicant to satisfy an order for costs if he or she is unsuccessful. Ordinarily the means of the applicant is not alone sufficient to justify an order for costs because of the rule that poverty should be no bar to justice. This is reinforced by s.117 (1). However, the financial circumstances of the applicant do not prevent an order being made if there are other grounds which justify an order. Financial weakness may be relevant, for example, if the applicant is a company. In relation to the means of the respondent, who is the applicant for security, it was held by Goldstein J in Alexander and Alexander (supra) and Gee J in B and B (supra) that the question is whether or not the respondent is able to pay his or her costs. Section 117(2A)(a) requires consideration of the financial circumstances of both parties. However, we do not accept that it will only be in cases where the applicant for security does not have the means to meet his or her costs that an order would be made. In appropriate circumstances an order may be made even if the applicant for security has the means to pay his or her costs.
62.2The prospects of success is a relevant matter to take into consideration: Parkinson & Co Ltd v Triplan Pty Ltd (supra). However, ordinarily the court will not undertake a detailed assessment of the likelihood of the applicant's success unless it can be demonstrated that there is a high probability of success or failure: Porzelack KG v Porzelack (UK) Ltd [1987] 1 WLR 420; Appleglen Pty Ltd v Mainzeal Corporation Pty Ltd (1988) 79 ALR 634; Equity Access Ltd v Westpac Banking Corporation (1989) ATPR ¶40-972. This is because of the lack of material at the time the application is dealt with. However, such an assessment may be possible in circumstances where, as in this case, affidavits have been filed in which the case sought to be made out is set out.
62.3It is a relevant consideration whether the applicant's claim is made bona fide, whether it is genuine and not trivial, vexatious or a sham: Parkinson & Co Ltd v Triplan Pty Ltd (supra); Lynnebry Pty Ltd v Farquhar Enterprises Pty Ltd (1977) 3 ACLR 133; J & M O'Brien Enterprises Pty Ltd v Shell Company of Australia Ltd (1983) 7 ACLR 790.
62.4It may be relevant to consider whether or not an order for costs would be oppressive or stifle the litigation. In Mantaray Pty Ltd v Brookfield Breeding Co Pty Ltd (1990) 8 ACLC 304 Byrne J said at 306:
“A factor in deciding whether security should be required is that the order may well mean that the action cannot proceed. That prospect does not require refusal of the application but it is often a significant matter.”
See also Rosenfield Nominees Pty Ltd v Bain & Co (1988) 14 ACLR 467 and Sydmar Pty Ltd v Statewise Developments Pty Ltd (1987) 5 ACLC 480.
62.5It may be relevant to consider whether or not the litigation may involve a matter of public importance: Equity Access Ltd v Westpac Banking Corporation (supra); Jodast Pty Ltd v A & J Blattner Pty Ltd (1991) 104 ALR 248. In Quick on Costs at [ 4.9440] it is said that this will militate against the making of an order.
62.6It may be relevant to consider whether or not there has been delay in bringing the application. An application may be refused if there is delay in making the application and prejudice is caused to the respondent to the application: Buckley v Bennell Design & Constructions Pty Ltd (1974) 1 ACLR 301 and Loreva Pty Ltd v Cefa Associated Agencies Pty Ltd (1982) 7 ACLR 164.
62.7Other relevant matters may include any difficulties of enforcing an order for costs and the amount of costs to be incurred.
The law set out by the Full Court reflects the principles set out in r 19.05(2). In respect of that rule, there does not appear to be any argument about the financial means of the applicant. Mr Sweeney pointed to the fact that there was over $60,000 in savings. In respect of the security for costs quantum, he asked for an order that that sum be placed in the wife’s own solicitor’s trust account to be held as security for the proceedings.
The husband provided affidavit evidence of his solicitor and a cost consultant which indicated the expense that the husband would be likely to incur if these proceedings continued particularly in relation to a contested hearing.
It is not suggested that $60,000 has been incurred but rather, it could be if the wife pursued what is anticipated to be her application. In my view, it is premature to order $60,000 but looking at the evidence relied on by the husband I would anticipate that $20,000 would be expended by the husband to at least the preliminary stages of the litigation.
The contentious issue in respect of the argument arises out of the questions of the genuineness of the application and the prospects of success or merits of it. I shall turn to that below. There is no argument about the financial means of the applicant being caused by the respondent’s conduct nor could I find in the circumstances having regard to the evidence to which I shall turn that the order for security for costs would be oppressive or would stifle the case. There is no suggestion in this case that it involves a matter of public importance. There are also apparently no outstanding costs that remain unpaid. I have already dealt with the issue that the applicant ordinarily resides outside of Australia as does the husband and as such, it would appear that witnesses do as well.
I shall treat them as evidence which is unchallenged.
No other matters in the rules are otherwise relevant.
The wife’s position was set out succinctly by Mr Brown. On 13 December 2010, the wife swore that in the year 2000 her suspicions were aroused that the husband had misled her about his financial assets and resources when she learnt that he “appeared to own the freehold to a flat” in City D “since 25 August 1993” and that in 1995, he had purchased a property in Suburb E. She went on to refer to the husband’s present wife owning an extensive country house in F Town, Country C. The affidavit went on to say that she discovered the City D flat had been transferred to G Pty Ltd on 25 August 1993 and that that had not been revealed in the family law proceedings in 1994. She did not say that it was transferred by the husband to G Pty Ltd and nothing in the document attached to her affidavit indicated a connection between the husband and G Pty Ltd.
The wife relied upon an affidavit by Mr H who described himself as an investigator in Country J. He said that he had operated an investigation business in the region for over 20 years and specialised in intelligence gathering, analysis and other investigative work particularly in Country J. He then went on to the say that he was familiar with the means by which persons sought to conceal their involvement in various entities through the use of trusts but particularly in Country J, the use of nominees to conceal the real identity of the owners of various assets. He said in 2003 he was engaged by the wife to investigate G Pty Ltd and a company called K Pty Ltd. He ascertained that G Pty Ltd was a registered company in the Country L apparently registered in March 1992 and that “under the instructions of [Mr Spender] PCS have provided nominees, shareholders and directors for [G Pty Ltd]”. I do not understand what that means.
Importantly, it is questionable whether the evidence of Mr H is information from records or whether it is opinion or gossip. I am unable to say. Mr H went on to say that he made inquiries in 2003 of “a woman by the name of Ms M” of a company that signed all documents on behalf of G Pty Ltd and N Pty Ltd and that Ms M informed him that the instructions for G Pty Ltd were provided to her by the husband.
The Evidence Act 1995 (Cth) permits evidence of hearsay to be relied upon by an applicant in an interlocutory proceeding provided the source of the information is given. Accordingly, the evidence of Mr H is admissible but its eight is questionable in relation to the issue before me. It may certainly be more relevant in the substantive proceedings.
In an affidavit sworn 10 March 2011 and filed 11 March 2011, the husband denied that he had not disclosed his financial position and denied that he had misled the Court or the wife. He pointed to a letter that he received in June 2003 from solicitors in Country C acting for the wife making allegations on her behalf that there was a serious failure on his part to disclose all of his assets. Reference was made to companies “inaugurated” and active bank accounts “already functioning in Country J prior to the court proceedings”. The husband said that the current application “again” raised false and incorrect allegations. He said that there was not any factual or legal basis for the allegations made against him. Importantly in respect of the evidence of the investigator, he said he never controlled G Pty Ltd nor had any interest in or entitlement to the City D flat “such that it should have been disclosed in any manner at any relevant time in the original proceeding”. He said to the best of his knowledge, G Pty Ltd was owned and controlled by persons associated with accountants in Country J who controlled the discretionary trust of his late father and the representatives of the accountant whose identity he did not know, were the trustees of the trust. He said he last had dealings with the accountants in Country J in about 1995 or 1996. He had no records or documents in his possession or under his control in relation to the City D flat.
None of this evidence was tested as it would be in a trial. I have the emphatic denial of the husband in an affidavit sworn 10 March 2011 presumably at a time when he did not know of the affidavit material of Mr H. Accordingly, not only has the husband put his own credit in issue but he has denied the factual basis upon which the wife could bring her case. Doing the best I could with the evidence, having regard to the vagueness of the hearsay of Mr H, I ought not accept Mr H’s evidence at this stage.
Mr Brown also pointed to evidence in an affidavit sworn by people by the name of Mr and Ms O who described themselves as retired accounts clerk and police sergeant respectively. Their evidence was confined to a statement that they were employed by a company in City D as porter/house manager and housekeeper respectively of the relevant building in which the flat existed. Their positions were residential. Their evidence was confined to an issue about the fact that the husband introduced himself as the owner of the flat. Again, I have that evidence against the emphatic statement of the husband which was sworn around the same time. The evidence of Mr and Ms O being in direct conflict with that of the husband means that I cannot and should not determine any issue here upon it.
Mr Brown also drew my attention to an affidavit of Mr P. Mr P was the building manager of the relevant building and he said that the premises were owned by a company called G Pty Ltd. He said that in early 2004, “control of the company, passed from a [Mr Spender] to a company called “[Q]”. He said that gentleman called Mr Spender “owned the property behind a shell company called [G Pty Ltd]”. He said he knew that because the husband told him so in person and he met him on one occasion in roughly October 2003. He said he introduced himself as Mr Spender and that he was the owner. He said he also used to receive mail at the flat in the name of “[Spender]” and he would return it to the sender because he did not have any forwarding details. Mr P has only been employed in the position for the last ten years so just exactly what evidence he can give about the year 1993-1994, I am unsure. However, I again have to deal with the husband’s emphatic denial of any ownership or control of G Pty Ltd and accordingly, the evidence must be tested.
Mr Brown drew my attention to an affidavit by a solicitor Mr R who acted for the husband in 1994 prior to the orders being made. That affidavit read (so far as it is relevant) that he had spoken to the solicitor for the wife and advised her in relation to a trust that had been established in Country J upon the instructions of a man named Mr S Spender. I have presumed that was the husband’s father. Mr R relayed the information to the wife’s solicitor that he had been given that it was a discretionary trust and that the husband was not a named beneficiary. He said that the in-house company of the accountants to whom I have earlier referred were the trustees of the trust. The affidavit went on to say that although the husband was not a beneficiary of the trust initially, he was subsequently admitted for a period of one day for the purposes of making a distribution to him and thereafter removed. He said the trust had distributed approximately $1 million to the husband in about early 1992. It has not been suggested to me that the wife was not aware of that distribution. The affidavit went on to say that there would be no further “benefit” accruing to the husband from the trust.
In the husband’s own affidavit in February 1994, he said that to the best of his knowledge and belief he had no present or future interest in any deceased estate or trust nor was there any trust to which he had made any contribution or disposition or to which he was a beneficiary and there was no trust in respect of which he had any direct or indirect control.
Mr Brown drew my attention to the husband’s affidavit in this proceeding in which he said that he had the “entitlement” at the discretion of the trustees of the trust to use the flat. The husband had said that he put that arrangement in place following his marriage to his present wife in 1993. Mr Brown described that statement as curiously inconsistent with what was said by the husband in 1993. Mr Brown submitted that it was important to disclose everything and tell the truth and the husband had not. The husband’s position was that the entitlement was to use the flat. I am not at all clear as to whether that could be said to be either by the husband or the wife, some sort of legal or equitable right. None of that was canvassed.
Rather than find it inconsistent, the husband’s statement appears to me to be what it says, simply a right to use the premises. No doubt all of that will become much clearer when the investigation is undertaken about G Pty Ltd.
Mr Brown pointed to the fact that the husband had not indicated what happened when the City D flat was sold or where the proceeds went and that the husband was acting at his peril by not so responding.
Mr Brown’s submission was that the wife’s material was “strong, convincing and compelling” in its current form. Unfortunately, I cannot adopt that view as a finding having regard to the nature of the evidence. I have the unambiguous denial of the husband and the evidence from a variety of witnesses whose position may be referring to legal rights or simply usage.
Mr Sweeney on behalf of the husband put to me that much of the evidence that the wife was relying upon was not admissible at trial. That remains to be seen. However, the question that I have to determine is whether there are prospects of success or merits in the wife’s application and the genuineness of her application. That leads me to the question of delay.
In this case, the evidence is that the wife made an assertion in 2003 presumably on the basis of the evidence of people to whom I have earlier referred. As I understand the position, the husband denied the position then and continues to do so. Another seven years has gone by. In all, 17½ has elapsed since the orders were made.
The genuineness of the wife’s application remains very much to be seen and depends entirely upon whether or not the evidence that she proposes to call is admissible as against the husband. I am very conscious that she needs to establish not what happened afterward but what was occurring at the time that the agreement was executed and the orders were ultimately made. It is possible that events subsequent to 1994 might shed some light on what was really going on prior to the agreement being executed but the evidence thus far does not satisfy me that there is a high prospect of success. Looking at the evidence that has been presented to me which is untested, I could not make a finding that the husband misled the Court or the wife in 1993 but I stress again, that the evidence is untested by cross-examination. That view must mean that the prospects of success at this stage are questionable.
As the Full Court pointed out above, s 117 of the Act still guides the Court in making any orders relating to costs including security for costs. There must be a justifiable circumstance for the Court to consider departing from the rule that each party pays their own costs. In this case, having regard to all of the matters that the husband argued, I think there is a justification for saying that if the wife was ultimately unsuccessful, the husband may have difficulties in another jurisdiction recovering those costs because there are no items of property in Australia and the wife is a resident of the Country C. In the circumstances having regard to all of the other factors in s 117(2A), I think there is a basis for making an order for security of costs bearing in mind that the wife has access to funds and they can be under the control of her solicitor and subject to further application should the need arise.
Accordingly, I propose to make an order but not in the terms sought by the husband. Rather, I will fix the sum at $20,000 and if that is not so paid, the application will stand dismissed.
Finally, the husband sought an order for the bifurcation of the proceedings. That would mean effectively the Court would initially only be able to concentrate on the question of whether or not to revoke the Court’s approval of the maintenance agreement. The Court would only then proceed to consider making an order in relation to the property of the parties under Part VIII of the Act if the approval of the maintenance agreement had been revoked.
The bifurcation order sought by the husband was opposed by the wife. Mr Brown argued that an adjustment of the parties’ property entitlements would be part of the substantive application and would add little in terms of time or expense.
The nature of the wife’s application yet to be filed will directly bear on the complexity, time and cost of determining this issue.
The consequence of a revocation of the Court’s approval of the maintenance application is that the agreement ceases and the court may make such order as it considers just and equitable. Depending upon how that might impart on third parties, time and expense may be spent on issues affecting them as well.
In K & W [2006] FamCA 1221, Watt J similarly had to determine whether it was appropriate to bifurcate proceedings under ss 87(8) and (9), as urged by the husband and resisted by the wife.
Watt J considered Oastler & Oastler (1993) FLC 92-390, in which the Full Court considered an appeal against the trial judge’s orders under s 79A, which set aside the parties’ previous financial orders under s 79. In Oastler, the question of whether the previous s 79 order should be set aside was dealt with in a preliminary and discrete hearing, which was to be followed by a second, subsequent hearing in relation to the Court’s discretion to make fresh orders in relation to the parties’ property interests under s 79.
As Watt J stated in K v W, the Full Court in Oastler made it clear that a bifurcation of s 79A proceedings is “not the preferred approach”. His Honour then quoted the following passage of the Full Court’s judgment, at para [101]:
About the commencement of the hearing a discussion took place as to what the nature and conduct of the proceedings with which his Honour was to deal should be. The understanding reached was that his Honour should only deal with the question whether the order should be set aside, and that the question what orders if any should be substituted should be considered in separate proceedings. Whilst it is not necessary to lay down as an inflexible rule that such a course cannot be followed, prima facie at least the course adopted does not appear to be consistent with what the section envisages. The section provides that ``the court may, in its discretion, vary the order or set it aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside''. The power granted to the court hearing the application under section 79A to vary the existing order strongly suggests that there should be one proceeding only in which the proceedings to vary or set aside the order and if appropriate, to make another order, should be disposed of . (Watt J’s emphasis): at page 80,006.
The relevance of s 79A, which like the current proceedings turned not on that section but ss 87(8) and (9), was disputed by Senior Counsel for the parties in that matter. The husband’s case was that s 87(9)(b) should not be subjected to the same construction as s 79A, while the wife’s case was that the differences in the wording of the two sections do not warrant departing from the Court’s approach to s 79A proceedings. Watt J noted at para [104] and [105], that:
Whilst there are differences between the wording of the two sections, the similarities are quite striking, in that 87(9)(b) clearly envisages the adjustive orders being made:
… in proceedings for the revocation of … approval.
In the present matter, Mr Sweeney for the husband similarly submitted that the authorities on s 79A are also applicable to the relevant subsections of s 87.
While there are clear differences between s 79A and ss 87(8) and (9), in that they each require different elements to be established to make out the application, I accept the proposition that they are similar in the sense that they allow for orders relating to the parties’ previous orders or maintenance agreement to be set aside (or varied in the case of s 79A) and new orders to be put in place at the Court’s discretion. To this extent, I respectfully agree with Watt J’s statement that it is appropriate to have regard to the authorities in relation s 79A in the current proceedings.
The Court should be open to ordering the bifurcation of s 79A proceedings in circumstances where the proceedings justify it. In Patching & Patching (1995) FLC 92-585, the Full Court (Nicholson CJ, Fogarty and Jordan JJ) considered what factors would be relevant to a finding that it is appropriate to split s 79A proceedings, at 81,797:
In Oastler and Oastler (1993) FLC 92-390 the Full Court emphasized that it is generally preferable to deal with all of the steps in the one hearing. The reasons for that are obvious, namely that even if the Court concludes that there have been circumstances which amount to a miscarriage of justice it must then consider whether in all the circumstances it should exercise its discretion to vary or set aside the orders and/or make a new s. 79 order. In exercising that discretion it will have regard to, inter alia, the degree and nature of the miscarriage in question, any delay, alterations in the parties’ positions in the meantime, and the extent to which, if at all, it is now appropriate to vary the original orders: McIntyre, supra, provides an example of this. The last of those circumstances was important in this case for reasons which will subsequently become apparent. Of course there will be cases where it is convenient to divide the procedure into several hearings; for example, where there is a discrete issue under the first and/or second step and the property circumstances of the parties are complex. (emphasis added)
In Lancer & Lancer [2008] FamCA 112, the Full Court (Bryant CJ, Warnick and Thackray JJ), considered an appeal to set aside the trial Judge’s order that the question of whether there had been a suppression of evidence during the original property proceedings be treated as a threshold issue to be determined in a discrete hearing. The Full Court found that the trial judge had made no appealable error. The leading judgment of Warnick J (Bryant CJ and Thackray J agreeing) refers to the above passage in Patching and described bifurcation as “an exception to the general rule”. The Court then considered when it might be appropriate to split a hearing and discussed the practical benefits of doing so where appropriate, at [18] – [21]:
In addressing the question of whether or not to bifurcate the hearing of a section 79A application, a judge is likely to examine the degree of connection between the ground and the other questions which might need to be addressed, namely whether there has been a miscarriage of justice in the circumstances and whether the order should be varied or set aside, if so, to what extent it ought be varied or what order ought be made, if any, in lieu. That connection or degree of connection will vary from case to case.
Where, for example, an applicant relies upon a diminished capacity to appreciate rights and entitlements and the effect of the property order consented to, it may well be difficult to determine whether, even if established, that constitutes a miscarriage of justice and even more difficult to determine whether another order ought be made, without a full examination of the financial affairs of the parties and all other matters relevant to alteration of property interests.
On the other hand, the establishment of a ground involving suppression of evidence in relation to matters that arguably would have had a significant impact on valuation is highly likely to constitute a miscarriage of justice, whatever the current financial circumstances of the parties and whatever the history of contributions. The case before [the trial Judge] was much more of that latter character and was, on the spectrum of these matters one where real benefits might be seen to flow from bifurcation of hearing in relation to discrete issues.
The whole point of bifurcation, of course, is to allow the prospect of avoidance of the subsequent hearing after the preliminary matter has been determined and that might represent significant savings of time and costs.
Similarly, in the earlier decision of G & G [2005] FamCA 1171, the Full Court (Kay, Warnick and Guest JJ) made it clear that trial Judge’s decision to bifurcate the proceedings was within his Honour’s discretion. The Court said, at [20]:
Whilst there appear to be strong arguments as to why it might be inappropriate to hold split hearings in s 79A applications to determine firstly whether there is any basis for interfering with the existing orders, and then if there is such a basis what order it is then appropriate to make, there can be no doubt that there is a discretion to make an order for a split hearing. In a case where the financial circumstances of the parties are very complicated, the cost of obtaining up to date valuations and of litigating over the size of the asset pool can be very substantial indeed. Much of the cost involved in preparing for such litigation would be entirely wasted in a s 79A application if the applicant is unable to satisfy the Court of the existence of one of the necessary pre-conditions of the Court varying or setting aside the original order.
The Family Law Rules 2004 are also relevant in relation to proceedings of this type. Specifically, r 10.13 which did not exist at the time that Oastler was decided reads:
10.13. A party may apply for a decision on any issue, if the decision may:
(a) dispose of all or part of the case;
(b) make a trial unnecessary;
(c) make a trial substantially shorter; or
(d) save substantial costs.
In Jeeves & Jeeves [2008] FamCA 277, I observed at [25], the explanatory memorandum clause relating to r 10.13 provided that splitting an application under s 79A was an example of when r 10.13 may apply. It is clear that r 10.13 is motivated by the same factors as those discussed by the authorities referred to, namely the efficient administration of justice and the potential for both the parties and the Court to save considerable time and cost.
It is a discretionary matter to bifurcate the application in instances where:
(a)It is possible and appropriate to break down the proceedings into discrete issues;
(b)The financial circumstances of the parties are complicated;
(c)Significant savings of time and cost would be made by bifurcating.
The absence of a particularised and precise claim by the wife does not enable me to answer any of those three questions and as such, it is premature for me to order bifurcation. That is not to say it could not be reconsidered when the nature and extent of the wife’s claim is clear. At the moment, it is far from that.
I certify that the preceding Seventy Four (74) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 28 June 2011.
Associate:
Date: 28 June 2011
Key Legal Topics
Areas of Law
-
Family Law
-
Civil Procedure
Legal Concepts
-
Costs
-
Procedural Fairness
14
2