Wernham and Campagnola

[2012] FamCA 66

FAMILY COURT OF AUSTRALIA

WERNHAM & CAMPAGNOLA [2012] FamCA 66

FAMILY LAW - PRACTICE AND PROCEDURE - Hearing - where husband seeks orders to set aside orders for property settlement pursuant to section 79A of the Family Law Act1975 (Cth) and orders for property settlement - where wife seeks that the threshold section 79A issue be heard in a discrete hearing - where the wife’s application is to be determined by the trial judge in the exercise of discretion having regard to the circumstances of each case - where costs of expensive valuations would be avoided if the husband failed to meet the threshold test - where efficient use of court’s time relevant - found that threshold section 79A issue is to be heard in a discrete hearing

Family Law Act 1975 (Cth) s 79A

Lancer and Lancer [2008] FamCACF 112

APPLICANT: Mr Wernham

RESPONDENT: Ms Campagnola

FILE NUMBER: SYC 4027 of 2011

DATE DELIVERED: 24 February 2012

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Rees J

HEARING DATE: 17 January 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Batey

SOLICITOR FOR THE APPLICANT: Gayle Meredith & Associates

COUNSEL FOR THE RESPONDENT: Mr Lethbridge SC

SOLICITOR FOR THE RESPONDENT: APA Lawyers

Orders

1. That the matter be listed for hearing before the Honourable Justice Rees for determination, in the first instance, of the threshold issue.

2. That the matter be listed before the Honourable Justice Rees for directions on 30 March 2012 at 10 am.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Wernham & Campagnola 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 SYDNEY

FILE NUMBER: SYC 4027 of 2011

Mr Wernham

Applicant

And

Ms Campagnola

Respondent

REASONS FOR JUDGMENT

1. The substantive application before the court is an application by the husband (Mr Wernham) to set aside, pursuant to section 79A of the Family Law Act 1975 (Cth), orders for property settlement, made by consent on 4 April 1995.

2. The wife (Ms Campagnola) opposes the application and seeks that the threshold issue, whether the applicant can establish that there has been a miscarriage of justice by reason of one of the matters in section 79A(1)(a) be determined separately.

3. The matter before me for determination is the wife’s application that the hearing be divided into two with the issue of whether there has been a miscarriage of justice being considered in a discrete first hearing.

4. I have had the benefit of written submissions and supplementary submissions from both parties.

5. The substance of the husband’s assertions are found at Paragraph 9 of his affidavit sworn 1 July 2011. To understand his assertions, it is necessary to have regard to the affidavit sworn 20 March 1995 by the wife in support of the making of the consent orders which is annexure D to the affidavit of the husband in these proceedings.

6. He asserts that, although she disclosed owning three shares in A Pty Ltd, her estimate of their value was incorrect. He further asserts that the wife “would have known” that her estimate of value was “not true”. Her estimate of the value of the shares was $3. The Financial Statement for the year ended 30 June 1994, discloses that A Pty Ltd was a bare trustee.

7. He asserts that, although she disclosed that she was a beneficiary of the O Family Trust, the G Family Trust and the C Trusts, and annexed to her affidavit the financial statements of those trusts as at 30 June 2004, she did not disclose the value of the trusts. In support of that assertion he annexes a copy of a letter from S Accountants dated 10 November 1993 valuing a 20 per cent interest in the trusts. The evidence does not establish whether the wife knew of the valuation. However, she was a director and shareholder of A Pty Ltd.

8. At Paragraph 10 of her affidavit sworn 20 March 1995, the wife gives no evidence of the value of the trusts.

9. The husband asserts that the wife did not disclose that she was a shareholder in C Pty Ltd or D Pty Ltd although she disclosed that she was a director of both companies and annexed the financial statements for both companies for the year ended 30 June 1994 to her affidavit. The financial statements for C Pty Ltd disclose that the principal activity of the company during the financial year was acting as a trustee company. The net profit was “Nil”. In relation to D Pty Ltd, its financial statements indicate that its principal activity was “investment”, its current assets were $5,000 in cash and it had a liability of $5,000 being a loan to the C Trust.

10. Lastly the husband asserts that the wife understated her income from the various entities in the financial year ended 30 June 2004. At Paragraph 10 of her affidavit sworn 20 March 1995, she deposed to having received a payment of $50,000 in the “last financial year”. Since the affidavit was sworn in March 1995, I infer that she was referring to income received in the financial year ended 30 June 1993.

11. In Lancer and Lancer [2008] FamCACF 112, the Chief Justice noted:

    34.…section 79A itself contains two aspects. One is essentially a fact finding exercise, that is whether the applicant can establish on the relevant evidentiary standard, namely the balance of probabilities, that there has been a miscarriage of justice by reason of one of the matters set out; in this case suppression of evidence. That is often referred to as the threshold test.

    35.The second part which follows from a positive finding about the first is a discretionary one, namely that the court may in its discretion vary, or set aside, the original order and, if appropriate, make another order. The decision in each case about whether to hold a single hearing will…be a matter to be determined by the trial judge in the exercise of discretion having regard to the circumstances of each case.

12. I accept the submission of the husband that the issue can only be determined by the trial judge and there the substantive issue will be listed for hearing before me.

13. The wife submits that the question of whether there has been a miscarriage of justice, if answered in the negative, will result in a dismissal of the husband’s substantive application. That exercise should be able to be contained within one day.

14. If the husband is successful in establishing the threshold, then it will be necessary for there to be evidence of the financial position of each of the parties, at least at the date of separation, and at the date of the trial. The wife’s assets are in corporations and in trusts. At the very least there will have to be valuations of her interests in those entities by forensic accountants. I do not know, from the material before me, whether those entities also own real estate which will also have to be valued. The wife’s submissions indicate that she personally holds real estate that will have to be valued. The costs of those valuations will be high. I accept the submission of the wife that those costs would be thrown away if the husband fails to meet the threshold test.  

15. The final consideration is the use of the court’s time. On the basis of what I presently know about the matter, the substantive hearing is likely to take at least 5 days whereas the threshold issue could likely be dealt with in one. The efficient use of the court’s time is a relevant matter.

16. I therefore propose to make the Orders set out above.

I certify that the preceding sixteen (16) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 24 February 2012.

Associate: 

Date:  24 February 2012