TODD & TODD AND ORS
[2018] FamCA 520
•9 May 2018
FAMILY COURT OF AUSTRALIA
| TODD & TODD AND ORS | [2018] FamCA 520 |
| FAMILY LAW – PROPERTY – Wife’s claim against second to sixth named respondents for property – Application for summary dismissal – Orders for discovery by second to sixth named respondents to be followed by contentions of fact and law by wife – Application for summary dismissal adjourned. |
| APPLICANT: | Ms Todd |
| RESPONDENT: | Mr A Todd |
| SECOND RESPONDENT: | Ms B Todd |
| THIRD RESPONDENT: | Mr C Todd |
| FOURTH RESPONDENT: | Mr D Todd |
| FIFTH RESPONDENT: | Mr E Todd |
| SIXTH RESPONDENT: | F Pty Ltd (ACN …) |
| INDEPENDENT CHILDREN’S LAWYER: |
| FILE NUMBER: | MLC | 9329 | of | 2016 |
| DATE DELIVERED: | 9 May 2018 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Bennett J |
| HEARING DATE: | 9 May 2018 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Glick QC with Ms H Renwick |
| SOLICITOR FOR THE APPLICANT: | Susan Snyder |
| COUNSEL FOR THE RESPONDENT: | No Appearance |
| SOLICITOR FOR THE RESPONDENT: | ||
| COUNSEL FOR THE 2ND TO 5TH RESPONDENTS: | Mr Weil | |
| SOLICITOR FOR THE 2ND TO 5TH RESPONDENT: | Rockman & Rockman |
| COUNSEL FOR THE 6TH RESPONDENT | No Appearance |
Orders
IT IS ORDERED THAT:
(1)The application of the 2nd to 6th respondents filed on 23 April 2018 (for summary dismissal) be adjourned to the Judicial Duty List on 4 September 2018 at 10.00 am for further consideration after compliance by the applicant wife with paragraph 3 of this Order.
(2)Within two weeks the wife specify to the 2nd to 6th respondents, via their respective solicitors, what documents she seeks be discovered or disclosed and all such documents so identified and in the possession custody or control of the 2nd to 6th respondents, or any of them, and not the subject of objection to produce be made available by not later than 20 June 2018.
(3)By not later than 4 weeks after compliance by the 2nd to 6th respondents with the preceding order, the wife file and serve contentions of fact and law relevant to the final orders sought at paragraph 6 of her Further Amended Initiating Application filed on 29 March 2018.
(4)I reserve to the parties liberty to seek an adjournment of this matter by consent and administratively to any date in October or November 2018 in the event disclosure is not completed or the time for compliance by the wife with paragraph 3 of this Order has not expired.
(5)The costs of this day be reserved.
(6)My reasons for decision this day be transcribed and when settled placed on the Court file and a copy provided to the parties.
(7)Until further order, the parties can cause subpoena to issue on an unlimited basis providing the subpoenas are to be served within Australia.
(8)Until further order I relieve the parties from compliance with r.13.26(3)(b) of the Family Law Rules in relation to Specific Questions and any party receiving questions answer same on oath within 21 days of receipt.
(9)This Order does not affect the obligations of disclosure as between the applicant and the first respondent husband.
AND IT IS NOTED that if a person fails to comply with an order for the filing of documents or attending a Court event which he/she/it is required to attend, the non-offending party(s) may apply for this matter to proceed without any further input by the non-complying party.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Todd & Todd and Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 9329 of 2016
| Ms Todd |
Applicant
And
| Mr A Todd |
Respondent
And
| Ms B Todd |
2ND Respondent
And
| Mr C Todd |
3RD Respondent
And
| Mr D Todd |
4TH Respondent
And
| Mr E Todd |
5TH Respondent
And
| F Pty Ltd (ACN …) |
6TH Respondent
EX TEMPORE REASONS FOR JUDGMENT
This matter comes to me in the judicial duty list. It is the application of the family members of the husband for a summary dismissal of a claim against them. Neither of the husband and wife are in Court today. Neither of them are in the country and both of them now live somewhere overseas. The summary dismissal is sought by Ms B Todd, Mr C Todd, Mr D Todd and Mr E Todd. The sixth named respondent does not appear today.
The wife is 47 years old and not employed outside the home. She has the care of two of the four children of the marriage, being X, who is 14, and Y, who is 12. She is living with her parents in the United States of America.
The husband is 49 years old. He was previously a company director, but since the end of 2016 has resided in Country G engaged in what his family members think might be some retail enterprise. They say that he is likely to be impecunious and likely not to return to Australia, and there is a question mark about what role he will take in the proceedings.
The husband and wife were married in the United States of America on in 1995 and separated in 2016 after some 20-plus years of marriage. There are four children of the marriage, of whom I have mentioned only two. The other older children are Z and W - who are aged respectively 22 years and 19 years. They and are in Country G.
I have asked the practitioners who appear, being Mr Glick and Ms Renwick for the wife, and Mr Weil for the second to fifth respondents, for a brief outline of the underlying facts of the case.
There is a family business called F Pty Ltd, which has operated for some years. Ms B Todd and Mr C Todd are the parents of the husband. They are aged 68 years and 79 years respectively. The husband's parents and his brothers Mr A, who is 46 years of age (and in Court today) and Mr E, who is 44 years of age, were involved in the business to some degree and that each of them is a director of the sixth named respondent, which is F Pty Ltd. Until approximately October 2016, the husband was also a director of the sixth respondent.
Henceforth I will refer to the sixth respondent as “the company” and to F Pty Ltd as “the business”.
By way of background, Mr A is married and has six children. Mr E is married and has four children. It appears that the business operated, apparently successfully to all concerned, until approximately October 2015. Then Mr D Todd received a telephone call from one or more of the schools attended by the children of his marriage and the schools attended by his and his brother's children. Those schools are religious private schools. Mr D Todd was advised in that telephone conversation that the children then at those schools be excluded from the school if outstanding school fees were not paid. I refer in particular to paragraph 5 of Mr D Todd's affidavit sworn or affirmed on 20 April 2018 [30]. He deposes:
In or about October 2015 the schools attended by the children of the First, Fifth and myself spoke by telephone to the Applicant and separately to my wife threatening to remove our children from their school if outstanding fees were not paid. By agreement, the fees were paid by distribution from the business.
The amount of fees is not mentioned. I asked for details of the fees and I could not be given the details precisely, but it was a couple of hundred thousand dollars, by way of an estimate.
The demand for payment by the schools initiated a review or investigation into the business, which all the Todds who remain in the country now say was under the management of the husband. Over the ensuing 12 months, there were investigations into the financial affairs of the company. Those investigations were conducted by Mr H of J Accountants. He was relying apparently on documentation which had been prepared by the company accountant, Mr L. The last financial records for the company prepared by Mr L are those for the financial year ended 30 June 2015 and are annexed to the affidavit of the wife. Mr D Todd deposes that Mr H recommended that the business be closed or wound up. There were more debts than the business had assets to meet. He deposes that his parents, himself and his younger brother all contributed moneys to clear the company debts. His parents did so by selling their family home. He and his brother did so by obtaining loans from their respective parents-in-law, subject to security over real property. Mr A and Mr E are not now engaged in the company business. The business was not, however, closed. It operates as a small concern, selling cars privately, and presumably without any extensive floorplan.
The former matrimonial home was a property situated at K Street, Suburb M. That was sold, and either prior to or upon settlement of the sale, it was realised that there were more encumbrances against the property than the wife had anticipated. The property was sold for something in excess of $2 million. In order to settle the property, there were encumbrances in excess of $1.5 million paid out. Of this, an amount of $1.263 million was said to have been paid by the husband on behalf of himself and the wife to the sixth respondent.
Well prior to the house being settled in August 2017, queries were made by the solicitors of the wife to the solicitors of the husband, and in response to those queries came a letter from Rockman & Rockman, who are the husband's solicitors, dated 5 August 2016. It is annexed to the affidavit of the wife sworn or affirmed on 13 March 2017, and seeks to alleviate the wife's concerns about the amount of moneys and the use to which the moneys were put. I doubt that it did. The letter details moneys in the approximate sum of $2.24 million, of which it is said $1,263,000 was paid to the sixth respondent. Precisely, the letter states:
The remaining borrowings which total $1.263 million were paid to the [Todd] … business. The exact amount due to our respective clients is currently unsustainable, as our client had significant drawings on the business for personal expenses of the family which have not yet been reconciled. To date, all of the borrowings have been serviced by drawings from the business, and we have enclosed a letter from Westpac Banking Corporation confirming that all accounts are up to date and in order.
It's the wife's case that she knew nothing of the moneys said to be paid to the company ($1,263,000) and, I gather, that she knew nothing about the loan accounts which were said to be a liability of the husband to the company.
The fact that there were moneys owing by the company to the husband and the wife was further confirmed when the husband filed a statement of financial circumstances in these proceedings. It is sworn or affirmed on 29 November 2016 at Suburb N, so he must at that stage have still been in Australia and not yet have gone to Country G. It is folio 4 on the Court file. At paragraph 43, under the heading Property Owned by You, he specifies that moneys owing by F to her are: "E. $500,000," and that represents a 50 per cent share. Lest one think that the husband's entitlement was 50 per cent of $500,000, he appears to clarify the matter when he contemporaneously swore or affirmed an affidavit in which at paragraph 18 he seeks to describe assets, liabilities, superannuation and financial resources. He deposes:
At this time, I am unable to specify with exact certainty the pool of assets, liabilities, superannuation and financial resources. It includes:-(…) moneys owed by [F Pty Ltd], approximately $1 million.
The wife initiated proceedings in this Court by filing an application on 27 September 2016. On 29 March 2018, she filed a further amended initiating application. As indicated, she named her parents-in-law, Ms B and Mr C Todd, and her brothers-in-law, Mr A and Mr E Todd, respectively as second, third, fourth and fifth respondents, and the company as the sixth respondent. She seeks an alteration of property interests between herself and the husband in terms which are not specified, and lump sum spousal maintenance. She seeks to be excused from particularising her claim. She seeks some parenting orders. And then in paragraph 6 of the final orders sought, she seeks:
That pursuant to section 90AE of the Family Law Act:
(a), the second, third, fourth and fifth respondents personally and/or in their capacity of directors of:-
(i), the sixth respondent [F Pty Ltd] and/or
(ii), companies associated with the sixth respondent; and/or
(b), the sixth respondent –
jointly and severally forthwith repay or cause to be repaid to the wife the sum of $1,000,000 (on account of the moneys lent by the husband and the wife to them), together with such interest as is ordered by this Honourable Court, to be applied in satisfaction or part-satisfaction of the amounts ordered to be paid and/or the property ordered to be transferred to the wife pursuant to paragraphs 1 and 2 hereof.
It is in respect of that relief that the second to fifth respondents seek a summary dismissal.
Counsel for the wife concedes that there has been a failure on their part to comply with 6.03(3) of the Family Rules 2004. That provides that when a party amends an application to add the name of another party, the filing party must file an affidavit setting out the facts relied on to support the addition of the new party, including a statement of the new party's relationship, if any, to the other parties, and serve on the new party a copy of the application, amended application, response or amended response, the affidavit to which I have already referred, and any other document filed in the case. So as matters stand, there has not been an affidavit filed by the wife which sets out the relationship between her and the second to sixth respondents. However, as best I understand it, the relationship is fairly well known. In practical terms, they are her current parents-in-law, her brother-in-law and a company of which the husband was a director until late 2016.
It is a serious matter to deprive a litigant of access to courts.
The summary dismissal claim is to be determined on the basis that I assess in practical terms and with a practical perspective whether there are real issues of fact and law to be decided. It is not enough that the case may be weak or is unlikely to succeed. The applicant for summary dismissal must show that it is clear, on the face of the wife’s documents, that the wife lacks a reasonable cause of action or is advancing a claim which is clearly frivolous or vexatious.[1] I must be cautious about accepting facts which are inherently fanciful or trivial or trifling when contradicted by all of the other evidence in the case.
[1] Lindon v Commonwealth of Australia (No 2) (1996) 136 ALR 251
Mr Weil for the second to fifth respondents says that the fact of moneys being owed by F Pty Ltd to the husband and wife in these proceedings is contradicted by documents which are annexed to the wife's affidavit. He refers to the financial statement of the company as at 30 June 2015. There does not appear to be any liability owing to the husband and wife or any entity associated with them. Mr Weil says that there is no reference to the loan accounts, which one would imagine would be within the description of the financial position of the company. That, however, is not a comprehensive contradiction.
Mr Weil has painted a picture of a company which was operated by the husband in a less than transparent manner which was in financial difficulty for some time unbeknownst to any of the family members or the wife. He paints a picture of the husband being in charge of the company, and presumably in charge of providing the information that went into the compilation of the accounts. Accordingly, this is a document about which I would have some reservation. There are no later accounts or financial position statements than that for 30 June 2015. All such accounts were being prepared by Mr L of L Accountants. Apparently none were prepared for 2016 and none were prepared in 2017. This is whilst Mr H was undertaking work on the company, so I do not quite know what happened to the documents or what the documents were that Mr H took into account. Mr L went on a holiday at the end of 2017 and was injured in an accident, from which he has only just recovered and now he has returned to Australia. Mr Weil is instructed that the preparation of the outstanding accounts and financial returns for the sixth respondent will be forthcoming within three weeks. He is understandably pessimistic about that. I accept his pessimism is probably well-founded.
Now, the other relevant fact that I take into account is that today, for the first time, the second to fifth respondents say that the moneys referred to in the husband's letter to the wife dated 5 August 2016 were not paid to the company or received by the company. The second to fifth respondents say, through Mr Weil, that they have no knowledge of those moneys. They have "never seen those moneys". It may be that Mr Weil is referring to a situation in which the second to fifth respondents confine their investigations to a perusal of the financial statement of the company for the period ended 30 June 2015, but that would be fairly naïve if that was the case. It does seem that if matters were as clean cut as Mr Weil submits, the second to sixth respondents would have been able, before today, to advise the wife that the company did not receive the $1,263,000. There is no statement on oath to the effect that the money was not paid or received.
I should refer to another aspect of the proceedings, which adds somewhat to the representations made on behalf of the husband even though he is not participating today. The husband in these proceedings is represented by Rockman & Rockman Barristers and Solicitors of Latrobe Street, Melbourne. Today, Mr Weil is instructed by Mr Rockman of Rockman & Rockman of Latrobe Street, Melbourne. The same firm that acts for the husband acts for the second to fifth respondents. Mr Rockman draws a distinction on the basis that one solicitor, who is not him, acts for the husband whilst he acts for the second to fifth respondents. That explains why the very firm whose correspondence dated 5 August 2016 says that moneys ($1,263,000) were paid from assets in the ownership of the husband and the wife to the sixth respondent is now the firm who instructs Mr Weil to say that the second to fifth respondent and the sixth respondent has never seen those moneys.
At the commencement of this case, Mr Glick asked me to note or assure him that I would not take his lack of objection to Rockman & Rockman acting for the second to fifth respondents this day as a waiver of the wife's rights to apply subsequently for an order restraining them from acting for the second to fifth respondents. I gave no such assurance. That is something that would be considered as and when any application for a restraining order in those terms is made and would be made by the judge before whom that application came. It is unlikely to be news to Mr Glick that the timeliness of a conflict application is a particularly relevant factor, and a delay in making one may make what seems to be a strong case weaker.
So turning to the application before me, I am assisted by the applicant wife's summary of argument, which I mark exhibit W1 and direct remain on the Court file. It is a helpful submission.
The wife’s summary correctly recites that the wife seeks orders pursuant to section 90AE of the Family Law Act against the second to fifth respondents personally and in their capacity as directors of the sixth respondent, and in their capacity as directors of any companies associated with the sixth respondent. That is the claim in respect of which the summary dismissal is sought. Mr Weil's point is that section 90AE does not create substantive rights per se. It is an enabling provision, a machinery provision to give the Court unambiguous power to make orders against third parties, subject to certain legislative requirements, but those rights are rights which would be established pursuant to law and equity independently of section 90AE. They would merely be implemented by virtue of section 90AE, subject, as I have said, to certain legislative requirements. It seems to me that that argument is correct.
When I turn to a practical assessment of whether the application itself should now be dismissed summarily, I am not satisfied that it should. The Family Law Rules (2004) do not have forms for third parties to set out a statement of claim, as might be expected in a civil state court or in another jurisdiction. An applicant is requested to specify the orders sought not the jurisdictional power on which such orders can be made. The wife has specified the orders she seeks.
Commonly in this Court, a person seeking orders in reliance on laws of equity or common law or otherwise would specify the legal basis of their claim in contentions of fact and law. However, such contentions are filed at the direction of the Court rather than in a vacuum.
I have already pointed to the fact that the relationship between the wife and the other parties was not identified in an affidavit, as it should have been. Mr Glick has sensibly indicated that the affidavit that complies with that rule can contain the contentions of fact or law. However, he is short on the facts at the moment. It is common ground that the wife was not aware of these advances and does not have personal knowledge of the moneys being advanced or received by the company.
A further complicating factor which renders any summary dismissal premature is that it was not until today that the second to fifth respondents deny the accuracy of the letter of 5 August 2016.
In my view, the most practical and expedient way of dealing with the matter is to require the wife to particularise the claim that she has against the second to fifth respondents. That is in addition to what she has already specified is the final orders she seeks against them. However, she will first need some further documentation and disclosure of material in order to do that. Mr Weil says that discovery or disclosure will not be a difficulty. As we speak, Mr L is apparently compiling the financial statements for the sixth respondent for the financial years ending 2016 and 2017. Those documents should be made available to the wife as soon as practicable. Furthermore, there is Mr H's report, which is not dated but which was received by those who instruct Mr Weil in December 2015. It is called a Financial Summary F Pty Ltd. That document is available and should be made available forthwith.
I accept Mr Weil's submission that the debt that is sought to be recovered by the wife in these proceedings against the second to fifth respondents and the sixth respondent is unspecified as to the date of the particular advances, the life of the loans and the terms of the loans, such as interest and conditions for repayment. However, the most fundamental question is whether or not the moneys were at all received. I have indicated that Mr Weil said initially that the moneys were not received, but subsequently some ambiguity was introduced to that categorical statement. I might have misunderstood what Mr Weil said. There is obviously some work to be done by the wife based on the few facts that she does have to see where the moneys which were raised against the former matrimonial home were paid or advanced to.
It is premature to dismiss the wife’s application against the second to fifth respondents. There are certainly some technical defects with it, but I think that they are explicable in terms of our Rules and the paucity of procedures we have for third-party claims or claims against third parties.
The asset pool is not large. There appears to be some $500,000 invested by Rockman & Rockman in their capacity as solicitors for the husband (as opposed to in their capacity as solicitors for everyone else in the case except the wife) and $1 million equity in a property in O Street, Suburb P. Mr Weil says that the documents filed by the wife indicate that the wife has something in the vicinity of $150,000 in US currency with her in the United States. Obviously, it is a case which costs must be conserved if at all possible. That is another reason why I will not at this point dismiss the claim summarily.
It appears to me that, through evidence independent of the wife that a debt may be owing by the sixth respondent to the husband and the wife which, if recovered, could form part of the property which can be altered between them, subject of an order altering property interests between them under Part VII of the Act. The liability of the directors subsidiary to that of the company is another matter. However, it is not the case that the wife’s case lacks a reasonable cause of action on its face.
In the next two to three months, my expectation is that matters will develop and at that point I would be prepared to entertain again the application by the second to fifth respondents for a summary dismissal without them needing to file a further application, and provided they have completed all discovery.
Today, I will merely adjourn the application for a period of time pending disclosure of documents and pending the service of the contentions of fact and law.
I certify that the preceding thirty-four (34) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Bennett delivered on 9 May 2018.
Associate:
Date: 17 July 2018
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