Woodcock & Woodcock (No 6)
[2024] FedCFamC1F 333
•27 May 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Woodcock & Woodcock (No 6) [2024] FedCFamC1F 333
File number MLC 13421 of 2020 Judgment of WILSON J Date of judgment 27 May 2024 Catchwords FAMILY LAW – MAJOR COMPLEX FINANCIAL PROCEEDINGS LIST – valuation of the dual choses in action of the right to due administration and the right to due consideration of an object under a discretionary trust – adversarial expert appointed by the court to conduct valuation – parties ordered by consent to provide such documents and information as the adversarial expert may reasonably require.
FAMILY LAW – PRACTICE AND PROCEDURE – whether competent for husband and the trustees to assert that the expert is not entitled to the documents he seeks – novel point involved – adversarial expert should not be impaired in his task by the husband or trustees telling him what he is to receive in order for him to do his valuation.
FAMILY LAW – PRIVILEGE – legal advice privilege – wife prematurely asserting that privilege does not apply by reason of fraud or improper purpose – general discovery inapplicable as pleadings have not closed – general discovery principles inapplicable to information sought by the adversarial expert.
Legislation Corporations Act 2001 ss 180, 198F, 290
Evidence Act 2008 s 125
Family Law Act 1975 ss 79, 106B
Property Law Act 1958 (Vic) s 173
Cases cited Alister v R (1984) 154 CLR 404
Annesley v Earl of Anglesea (1743) LR QB 317
Attorney-General for the Northern Territory of Australia v Kearney (1985) 158 CLR 500
B v B [1979] 1 All ER 801
Baker v Campbell (1983) 153 CLR 52
Bullivant v Attorney-General [1901] AC 196
Butler v Board of Trade [1971] Ch 680
Buttes Gas & Oil Co v Hammer [1981] QB 223
Commissioner of Australian Federal Police v Propend Finance Pty Ltd (1997) 188 CLR 501
Crescent Farm (Sidcup) Sports Ltd v Sterling Offices Ltd [1972] Ch 553
Crowe v Stevedoring Employees Retirement Fund Pty Ltd [2003] VSC 316
Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588
Dick v Alan Powell Holdings Pty Ltd [2009] QSC 184
Ding v Ding (2018) 59 Fam LR 262
Esso Resources Australia Ltd v The Commissioner of Taxation (1999) 201 CLR 49
Gartside v Outram (1856) 26 LJ Ch 113
Goodridge v Beadle (2017) 57 Fam LR 425
Grant v Downs (1976) 135 CLR 674
Hardcastle v Advanced Mining Technologies Pty Ltd [2001] FCA 1846
Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405
Holloway v McFeeters (1956) 94 CLR 470
Honeysett v R (2014) 253 CLR 122
In Re Londonderry’s Settlement; Peat v Walsh [1965] Ch 918
Kang v Kwan [2001] NSWSC 698
Kennon v Spry (2008) 238 CLR 366
Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705
Mandie v Memart Nominees Pty Ltd (2014) 42 VR 325
O’Rourke v Darbishire [1920] AC 581
R v Bell; ex parte Lees (1980) 146 CLR 141
R v Cox & Railton (1884) 14 QBD 153
Russell v Jackson (1851) 68 ER 560
Schmidt v Rosewood Trust Ltd [2003] AC 709
Schweitzer & Schweitzer [2010] FamCA 445
Stern v Sekers [2010] NSWSC 59
Tavano & Tavano [2022] FedCFamC2F 326
Varawa v Howard Smith & Co Ltd (1910) 10 CLR 382
Woodcock v Woodcock (2021) 64 Fam LR 489
Woodcock v Woodcock (No 2) (2022) 65 Fam LR 333
Woodcock & Woodcock (No 5) [2023] FedCFamC1F 894
Division Division 1 First Instance Number of paragraphs 117 Date of hearing 10 May 2024 Solicitors for the applicant Lander & Rogers Counsel for the first respondent Mr T North SC with Mr M Wilson Solicitors for the first respondent Nedovic Lawyers Counsel for the second, third and fourth respondents Mr C Shaw KC with Mr R Minson Solicitors for the second, third and fourth respondents McNab Lawyers ORDERS
MLC 13421 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN MR WOODCOCK
Applicant
AND MS WOODCOCK
First Respondent
B PTY LTD
Second Respondent
F PTY LTD
Third Respondent
E PTY LTD
Fourth Respondent
ORDER MADE BY
WILSON J
DATE OF ORDER
27 MAY 2024
THE ORDERS I MAKE ARE AS FOLLOWS –
1.On or before 4pm on 17 June 2024, the trustees must produce to Mr T, the wife’s adversarial expert, all documents corresponding to the requests for the production of documents made in paragraphs 1(a), 1(c), 1(e) and 2 of the wife’s application in a proceeding dated 17 April 2024 and filed herein.
2.By noon on 18 June 2024 the solicitors for all parties must email my associates informing my associates that documents have in fact been produced in accordance with paragraph one of these orders by 17 June 2024.
3.The further hearing of this proceeding is adjourned to 1 July 2024 for directions.
4.Costs of all parties of and incidental to this application are reserved.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
WILSON J
INTRODUCTION
The task of ascribing a value to the husband’s choses in action[1] described by the High Court in Kennon v Spry[2] is well advanced yet it remains incomplete. The wife’s adversarial expert says he needs documents and information which the husband and the trustees are unwilling to provide, hence this application.
[1] That is to say the right to due consideration and the right to due administration the subject of my decisions in Woodcock v Woodcock (2021) 64 Fam LR 489 and Woodcock v Woodcock (No 2) (2022) 65 Fam LR 333.
[2] (2008) 238 CLR 366.
By application in a proceeding dated 17 April 2024, the wife sought orders requiring the production of documentation to enable Mr T, the adversarial actuarial expert retained by the wife, to complete his valuation of the dual choses in action.
As these reasons reveal, an order for production of documents in the categories mentioned in the early pages of these reasons should be made.
RELEVANT FACTUAL SCENARIO – MR O’S EVIDENCE
The events leading to the wife’s application in a proceeding dated 17 April 2024 were recorded in an affidavit made by her solicitor sworn 17 April 2024. Along with exhibits, that affidavit spanned a substantial 339 pages.[3] The wife’s solicitor’s affidavit stated as follows –
[3] Affidavits of that size and complexity are a commonplace feature of cases in the Major Complex Financial Proceedings List having regard to the legal and factual intricacies in each of those cases, including this.
(a)at all relevant times the husband has been and remains a director of the relevant trustees, being the second, third and fourth respondents;
(b)the husband is the managing director of the G Group and the chair of the investment committee and family council of the G Group;
(c)the husband and wife separated in early 2019;
(d)on 4 July 2019 the wife’s solicitor was informed by the husband’s solicitor that –
(i)the husband is a primary beneficiary of the trusts;
(ii)the husband possesses no enshrined right to capital or income from the G Group and instead any decisions of significance regarding distributions are subject to unanimous agreement between family members of the trustees pursuant to prescribed rules;
(iii)those rules governing distributions provide that by simple majority the relevant trustee can declare whether a distribution is to be made at all in which case, absent any further resolution passed unanimously by all five directors, any such distribution would go to beneficiaries in specified percentages of which the husband’s notional share was 16%;
(iv)by special majority represented by 75% of the five directors who vote unanimously, the trustees can resolve to distribute to anyone in a particular class of beneficiaries;[4]
[4] The husband’s solicitors added in their 4 July 2019 letter to the wife’s solicitor that in practical terms that occurred in respect of most distributions.
(v)where no decision to distribute was made, funds accumulated in the relevant trust;
(vi)where the relevant trust reaches its vesting date and no decisions have been made to distribute to beneficiaries prior to the vesting date, all trust assets are distributed in accordance with the same specified percentages governing distributions during the life of the trust;
(e)on or about 1 September 2020 the deeds governing the trusts were amended, a matter about which the wife’s solicitor was not told;
(f)the husband and wife divorced in mid-2020;
(g)on 7 December 2020 the husband commenced this proceeding at which time a case assessment conference was fixed for 22 February 2021;
(h)ahead of the case assessment conference, on 17 February 2021 the wife’s solicitor provided the husband’s solicitor with a minute of proposed consent orders pursuant to which the husband proposed providing by mid-March copies of all deeds or other instruments establishing each trust including any amending documents to which proposed consent minute the husband refused to agree;
(i)on 29 April 2021 the wife’s solicitor issued one or more subpoenae for the production of the deeds of trust;
(j)the trustees of the trusts were then separately represented, they objected to the production of the documents sought and sought orders setting aside the subpoenae;
(k)on 30 September 2021 I made orders dismissing the objections to the subpoenae and I ordered the production of the documents sought by the wife;[5]
(l)in October 2021 after the parties executed confidentiality agreements, copies of the deeds were produced at which time, for the first time, the wife’s solicitor ascertained that the deeds of trust had been amended in or about September 2020;
(m)one effect of the operation of the amending deeds is recorded in a document entitled “statement of assumptions and questions for the expert” dated 31 January 2022 provided to Mr U (the husband’s expert) and to Mr T (the wife’s expert);
(n)another effect of the operation of the amending deeds is recorded in a document entitled “statement of agreed facts” provided to the court on 18 October 2023;
(o)on 27 October 2023 consent orders were made by me authorising the appointment of Mr T as the wife’s expert to value the husband’s rights as defined in the draft letter of 11 October 2023; and
(p)correspondence then commenced to pass between Mr T and the parties’ solicitors, originating on 16 November 2023.
[5] Woodcock v Woodcock (2021) 64 Fam LR 489.
One of Mr T’s earliest items of correspondence to the wife’s solicitor was his letter dated 20 November 2023 in which he set out the information he said he needed in order to undertake the valuation he was ordered to do. That included information that provided a reasonable basis for assessing the future benefits that will arise from the husband’s right to due consideration and his right to due administration under the relevant trusts and in particular, Mr T said he needed information that addressed the three uncertainties set out in paragraph 119 of his 31 January 2022 report, those being uncertainties about –
(a)the earnings and distributions of the entities and assets owned or controlled by the various trusts;
(b)the disposition of the amounts available for distribution by the various trusts; and
(c)the survival of the husband in order to receive distributions.
Mr T stated in his 20 November 2023 letter that he appreciated that in the normal course of events he would be entitled to ask once only for information. However, he said the information he needed was not normal. He said in his letter that multiple layers of entities, trusts and companies existed and as at the date of his letter he did not know the totality of assets, liabilities, income or expenses by description, nature, value, relationship, ability to control or influence distributions, the timing and duration thereof, contractual and other relationships. He said quite frankly, he did not know what he did not know and therefore could not comprehensively identify and specify his information requirements on an ex-ante basis. Mr T proposed two alternative ways forward, namely, asking for information on a progressive basis as knowledge gained from earlier requests enabled questions to be asked, or, for him to request information over broad categories of information in respect of all relevant entities, recognising that the identity of all relevant entities was not then known. Mr T expressed his preference for the second alternative and between paragraphs 16 to 33 of his letter he recorded the general categories of information he said he needed.
The wife’s solicitor sent Mr T’s 20 November 2023 letter to the husband’s solicitors as well as to the solicitor representing the second, third and fourth respondents. By letter dated 4 December 2023, on behalf of the second, third and fourth respondents, Mr J responded to the wife’s solicitor. The author of the 4 December 2023 letter adopted a somewhat confrontational approach by stating –
(a)the trustees’ solicitors did not know why various categories of documents were being sought;
(b)Mr T was seeking information directed to valuing the husband’s reasonable expectation of future benefits when the court had ordered Mr T to value the husband’s right to be considered and the husband’s right to due administration; and
(c)the deeds for the relevant trusts had been provided and any broader inquiry was not relevant.
I infer[6] that the author of the 4 December 2023 letter wrote that letter on the instructions of the second, third and fourth respondent. Read fairly, in my view it could not be said that the second, third and fourth respondents’ approach to providing documents to enable Mr T to conduct his tasks was either enabling or especially helpful.
[6] Holloway v McFeeters (1956) 94 CLR 470.
Mr T personally responded to the 4 December 2023 letter from the second, third and fourth respondents by letter dated 5 December 2023. Mr T said he agreed he was required to value the husband’s right to be considered and the husband’s right to due administration. Mr T stated in his 5 December 2023 letter that the husband’s rights possess value because they may give rise to future benefits such as distributions from the trusts and that the task of valuing those rights require attribution of a value to the possibility of future benefits. Mr T stated that in order to undertake that valuation, he was required to consider various uncertainties, which he recorded for a second time (consistently with the manner those have been set out above). Mr T said in his 5 December 2023 letter that all the information he had requested was directed towards obtaining all necessary information to quantify elements of those uncertainties, hence, to value the husband’s rights. Mr T specifically addressed the trust deeds that amended the earlier trust deeds. He said the information he requested related to –
(a)assessing the expected impact (if any) of the changes on subsequent distribution decisions; and
(b)assessing the impact of uncertainty relating to the possibility of further changes to the trust deeds in the future.
Mr T’s 5 December 2023 letter was detailed and lengthy as well as it was courteous. It was followed by a telephone conversation between Mr O and Mr J shortly prior to Christmas 2023. On 8 January 2024 Mr J wrote to Mr O in respect of Mr T’s 5 December letter in relation to the conversation between Mr J and Mr O pre-Christmas. A fair reading of Mr J’s letter revealed a degree of cooperation by the provision of certain documents yet the 8 January 2024 letter revealed a degree of intransigence by the trustees beyond the provision of documents. For example, after informing Mr O that it was settled law that the husband as a beneficiary does not have a right to compel the trustee to exercise its powers to make a distribution in the husband’s favour as a beneficiary, Mr J went on to gratuitously observe that Mr T’s assumption that the husband’s right may give rise to future benefits such as distributions from the trust was inaccurate and that a valuation of the rights based on such an assumption will not be probative. Precisely why Mr J considered that he was at liberty to instruct the solicitor for another party whose expert was endeavouring to discharge court ordered functions was not stated. In respect of other passages of Mr T’s letter, Mr J responded by quoting passages of an affidavit made by Mr K, thereby engaging in argument on various matters and preferring the information given by Mr K as if it were a proven fact. That was pointed out by Mr O on 9 January 2024 in his email to Mr J when Mr O said, in substance, that most of the claims Mr J made about Mr T’s approach were matters for cross-examination at trial or were submissions. That accorded with the way I viewed Mr J’s approach. It was not up to Mr J to attempt to control the manner in which Mr T formulated his own report. I agree that the trustees’ concerns about the way Mr T approached his task were trial matters, they were matters for cross-examination or they were matters for submission. Whether Mr T’s report in its entirety or in specific respects was probative was a matter for me as the trial judge, not for Mr J or his clients. Yet by email dated 12 January 2024 Mr J told Mr O that Mr J’s client (he meant “clients” in the plural) did not want to impede the efficient completion of Mr T’s report. That statement was not entirely accurate. By 30 January 2024 Mr T sent an email to Mr J telling Mr J that he (Mr T) was working on a further information request although that task had not been completed. Mr T told Mr J he (Mr T) needed more time to complete his assessment. On 5 February 2024 Mr T provided to both Mr O and to Mr J a signed version of Mr T’s letter requesting further information. That request was very detailed setting out not only what Mr T said he wanted but why he wanted it in the context of providing his report.
On 5 February 2024 Mr O requested Mr J’s clients to comply with Mr T’s request for information by 4pm 8 February 2023. That date came and went. On 20 February 2024 Mr J sent an email to Mr O stating that the information sought may be available by the following day.
On 22 February 2024 Mr J provided Mr O with the trustees’ response to Mr T’s 5 February 2024 request for information. The response from Mr J was appropriately detailed in certain respects yet in other respects Mr J persisted in making what appeared to amount to submissions about Mr T’s request. In several places in the 22 February 2024 letter in respect of several issues Mr J debated the sufficiency of the information provided with comments such as –
(a)“my clients also believe that the material provided is sufficient to assess the flow of money in relation to the trusts”;[7]
(b)“the trustees have no obligation to provide reasons for their decisions or material upon which their decisions have been based or which goes to their reasoning process”;[8]
(c)“there is no basis for this assumption – quite the contrary …”;
(d)“[Mr T] can be assured that all distributions have been made to eligible objects of the trust”;
(e)“my client has done its best (sic) to present the information in a useful fashion”;
(f)“my clients cannot see how it is necessary to the task [Mr T] is required to perform to provide the information about specific family members or groups of family members requested by [Mr T]”; and
(g)“why [the 2020 changes] were made is not relevant to this enquiry”.
[7] A party’s belief about the sufficiency of the documentation that has been provided is irrelevant. The court assesses the adequacy of a party’s discharge of its duties in relation to disclosure.
[8] Whether that becomes an issue at trial remains to be seen.
On 29 February 2024 Mr O provided to Mr J a draft minute of a consent order that Mr O prepared which was in a form loosely approximating the terms of the application in a proceeding dated 17 April 2024 on which the wife moves on this application. In that email of 29 February 2024, Mr O sought Mr J’s clients’ consent to an order being made in the terms of the proposed minute. Mr J refused to sign the consent minutes provided by Mr O. Mr J complained that Mr T was now seeking six classes of documents not previously requested. He otherwise debated the probative nature of the information sought.
On 18 March 2024 Mr J sent an email to Mr O stating that the reconciliation asked for by Mr T was not easily prepared and Mr J asked whether Mr T stated that manual consolidations were necessary. In response Mr O conveyed Mr T’s comments to the effect that before answering, Mr T would need to consider whether alternatives were available to the provision of the reconciliation.
On 22 March 2024, Mr O sent a letter to Mr J as well as sending it to the husband’s solicitors asking whether the trustees and husband would not challenge Mr T’s proposal to value the husband’s rights before and after the 2020 amendments on the basis that no further trust deed changes will occur. Mr O wrote that the wife may not require the proposed minutes of consent orders to be made if the husband and trustees agreed to the basis on which Mr T proposed to proceed with the valuation. Mr O limited the time to respond to 5pm on 25 March 2024.
Mr J duly responded by the time and date limited. His response included statements to the effect that –
(a)the trustees were not currently considering further changes;
(b)the trusts were intergenerational trusts;
(c)the legal and taxation framework and economic context in which the trusts operate can be expected to change and develop as well as the circumstances of the families; and
(d)the individuals who represent the families on the board of the trustees will also change and future changes to the trust deeds could not be ruled out.
On 28 March 2024 Mr O sent an email to my associate asking for a half day hearing to agitate the subject of the draft minutes that accompanied his letter.
On 3 April 2024 Mr J wrote to Mr O stating that Mr T had identified three categories of documents he said were essential to his work yet Mr T had not provided the categories and in those circumstances issuing any application was premature.
Mr J and Mr O exchanged emails on 5 and 8 April 2024.
On 15 April 2024 Mr T wrote a 15 paragraph letter of response to Mr O in which Mr T set out the outstanding information he said he needed to value the husband’s right to be considered and his right to due administration under the four trusts set out in the 16 November 2023 letter. Mr T duly responded. In his response, Mr T pointed out that –
(a)information that remained outstanding went to resolving uncertainty about the distributable pool amounts available from the G Group;
(b)family council minutes of meetings were required in an unredacted form so as to properly disclose the environment in which distribution decisions were set;
(c)information provided to the directors of each trustee was required for each year from 30 June 2014 to date including recommendations and the reasons plus documents in support of those reasons, that material being relevant to the context in which the decisions were made with a view to developing a reasonable basis for assessing future directions;
(d)information provided to the guardians or relevant decision makers of each trust prior to each variation of the trust deed was required including but not limited to advice in relation to the reasons for the change, the intent and purpose of the change and the anticipated effects of the change, such information being relevant to the context of the changes thereby enabling the development of a reasonable basis for assessing potential future changes, recognising that the information sought would not be relevant if both parties agreed that Mr T’s valuation was to be performed on the basis of no change in the value of the husband’s rights due to future changes in the trust deeds; and
(e)information was required on all amounts provided to the family beneficiaries as well as entities associated with family beneficiaries in respect of loans (such information to relate to quantum, dates and amounts), such information being relevant to the actual benefit acquired by the beneficiaries, including the husband, as well as to resolving the uncertainties concerning future benefits.
Mr O made a further affidavit on 9 May 2024. Relevantly synthesised, in his 9 May 2024 affidavit, Mr O deposed to the following –
(a)paragraph 60 of the parties’ statement of agreed facts[9] that recorded that the husband was the sole director of C Pty Ltd, the trustee of the G Family Trust was wrong because in October 2023 Messrs AW and K had been appointed as additional directors, a matter about which the wife had not been previously informed; and
(b)Mr O wants to examine the documents provided to Mr T by the trustees since 17 April 2024 to assess the sufficiency of the information provided, recognising that Mr T will be bound by the terms of the confidentiality undertaking given in October 2023.
[9] Mr O swore that the statement of agreed facts had been agreed between the solicitors for all parties on 16 October 2023.
THE APPLICATION – IN DETAIL
Paragraphs one to four of the wife’s application in a proceeding were lengthy. They were as follows –
1.That within 14 days the Husband in his capacity as sole director of [C Pty Ltd] the trustee of the [G Family Trust] and each of the Second, Third and Fourth Respondents as the trustees of the [B Trust], the [F Trust] and the [E Trust] (all four being collectively referred to as "the Trustees" and the "Trusts" respectively) provide to the Wife and [Mr T], the Wife's expert, unredacted copies of all documents (as the expression 'document' is defined in Parts 1 and 2 of the Dictionary to the Evidence Act 1995 (Cth.)) in their possession power or control falling within the following categories:
(a)all documents which refer directly or indirectly to distributions made by the Trustees to beneficiaries of the Trusts in each of the financial years from 2014 until the present, including any documents which contain or refer to the reasons or explanation given by the Trustees for making such distributions;
(b)all documents which refer directly or indirectly to distributions or contemplated or proposed distributions supplied to or considered by the Trustees prior to making decisions about the distributions made, or deferred or declined to be made, to beneficiaries of the Trusts in each of the financial years from 2014 until the present;
(c)all documents which refer directly or indirectly to loans made or contemplated or proposed to be made to beneficiaries of the Trusts in each of the financial years from 2014 until the present, including any documents which contain or refer to the reasons or explanation given by the Trustees for making or declining such loans;
(d)all documents which refer directly or indirectly to loans or contemplated or proposed loans to beneficiaries of the Trusts supplied to or considered by the Trustees prior to making decisions about any loans made, or deferred or declined to be made, to beneficiaries of the Trusts in each of the financial years from 2014 until the present;
(e)all documents which refer directly or indirectly to amendments to the trust deeds of the Trusts supplied to or considered by:
(i) the Trustees;
(ii) the Investment Committee of the [G Group];
(iii) the Family Council of the [G Group];
before or after decisions were made to amend the trusts including any documents which contain or refer to the reasons or explanation given by the Trustees for making such amendments; and
(f)all documents which refer directly or indirectly to amendments or contemplated or proposed amendments to the trust deeds of the Trusts supplied to or considered by:
(i) the Trustees;
(ii) the Investment Committee of the [G Group];
(iii) the Family Council of the [G Group];
prior to the making of any decisions about amending the trust deeds of the Trusts in each of the financial years from 2014 until the present and with respect to the amendments made in the 2020 amending and supplementary deeds such disclosure is to include all communications to or from legal advisors; and
(g)A glossary of terms and abbreviations used in any of the documents falling within the above categories.
2.That within 14 days the Husband and each of the Second, Third and Fourth Respondents provide to [Mr T], the Wife's expert, the following information:
(a)a reconciliation between the accounts of the [G Group] and the Investment Committee Reports for each of the financial years from 2014 up to and including 2022 in the same format as was provided for the financial year 2023 by [Mr J], the solicitor for the Second, Third and Fourth Respondents, in his letter of 22 February 2024; or
(b)in the event that such reconciliations cannot provided, such other available information or documents as [Mr T] requests.
3.That the Wife have liberty to apply for further orders to enable [Mr T] to complete his valuation when the material required to be produced pursuant to these orders has been provided and considered.
4.That the Wife have leave to rely on more than 10 annexures to the affidavits of [Mr T] and [Mr O] filed contemporaneously with this application.
In paragraph 1(a) of the wife’s application in a proceeding filed 17 April 2024 Mr T sought from the husband in his capacity as sole director of C Pty Ltd and each of the second, third and fourth respondents all documents relating directly or indirectly “to distributions made by the Trustees” (namely C Pty Ltd, B Pty Ltd, F Pty Ltd and E Pty Ltd) to beneficiaries of the trusts in each financial year from 2014 to present including any documents which contain or refer to the reasons or explanation given by the trustees for making such distributions.
Expressed most basically, that request calls for consideration of a collection of issues. Those are –
(a)all documents;
(b)in which there is a direct or indirect reference to distributions;
(c)by any of the four trustees to any beneficiary;
(d)from 2014 to date.
It is likely that the trustees’ records are computerised rendering the task of identifying documents that match search fields tolerably simple. In other words, when all documents from each trustee are searched from 2014 to date for references to distributions to beneficiaries, the task is neither burdensome, time consuming nor unfair. I am unable to see how legitimate complaints can be made about complying with Mr T’s request. In my view, the trustees should be required to obtain the documents sought and to provide them to Mr T, subject of course to Mr T receiving them on terms binding him to the usual obligations of confidentiality.
Having regard to the way the trustees have produced documents in response to Mr T’s requests to this point in time (described by their counsel Mr Shaw KC as “cooperatively”) then much of the complaint about the husband being required to provide documents in his capacity as a director of the trustees evaporates. In other words, the debate about whether the husband is entitled to properly use his fiduciary role as a director of the trustees to procure the trustees to provide documents in answer to Mr T’s call for document production became otiose as the trustees themselves (being the second, third and fourth respondents) through their other directors have hitherto complied with Mr T’s requests for document production.
Paragraph 1(b) of the wife’s application in a proceeding asks for production of all documents referring directly or indirectly to distributions or contemplated or proposed distributions supplied to or considered by the trustees prior to making decisions about the distributions made, or deferred or declined to be made to beneficiaries of the trusts in each financial year from 2014 to present.
Expressed most basically, that request calls for consideration of a collection of issues. Those are –
(a)all documents;
(b)in which there is a direct or indirect reference to distributions or contemplated or proposed distributions;
(c)supplied to or considered by the trustees;
(d)prior to making decisions about the distributions made, deferred or declined to be made;
(e)to beneficiaries of the trusts; and
(f)in each financial year from 2014 to date.
To my way of thinking, that classification of the documents sought –
(a)goes significantly beyond the fields of enquiry set out in paragraph 1(a) of the wife’s application in a proceeding; and
(b)is broad, possibly rendering it burdensome and borderline impossible to answer;
Paragraph 1(c) of the wife’s application in a proceeding asks for production of all documents referring directly or indirectly to loans made, contemplated or proposed to be made to beneficiaries of the trusts in each financial year from 2014 to present including documents evidencing reasons given by the trustees for making or declining loans.
Expressed most basically, the request for production in paragraph 1(c) was confined. It sought –
(a)all documents;
(b)in which there is a direct or indirect reference to loans made or proposed to Trust beneficiaries;
(c)in each financial year from 2014 to date;
(d)including reasons.
The documents sought in paragraph 1(d) of the wife’s application in a proceeding bore a close relationship to the documents sought in paragraph 1(c). However, it mirrored paragraph 1(b) in its parallel of wording to paragraph 1(b), potentially rendering it too broad. Expressed most basically, in paragraph 1(d), the wife sought production of –
(a)all documents;
(b)in which there is a direct or indirect reference to loans or contemplated or proposed loans to trust beneficiaries;
(c)supplied to or considered by the trustees;
(d)prior to making decisions about any loans made, deferred or declined to be made;
(e)to beneficiaries of the trusts; and
(f)in each financial year from 2014 to date.
As with the documentation sought in paragraph 1(b) of the wife’s application in a proceeding, the documents sought in paragraph 1(d) –
(a)go significantly beyond the fields of enquiry set out in paragraph 1(c) of the wife’s application in a proceeding; and
(b)are broad rendering it burdensome and borderline impossible to answer.
Paragraph 1(e) of the wife’s application in a proceeding was the subject of trenchant opposition. In it the wife seeks all documents that refer directly or indirectly to amendments to the trust deeds of the trusts supplied to or considered by –
(a)the trustees;
(b)the investment committee of the G Group;
(c)the family council of the G Group;
before or after decisions were made to amend the trusts including reasons.
In other evidence before me, the role of the trustees of the four trusts was explained as was the role of the investment committee and family council of the G Group. Distribution to beneficiaries is a matter of relevance to the trustees, the investment committee and the family council. It is likely that documents exist that refer directly (and probably also indirectly) to amendments to the trust deeds of 2020. It is also probable (yet I say no more than that) that those documents were supplied to or considered by the trustees, by the investment committee and by the family council, prior to and possibly subsequent to the decision to amend the trusts. Among those documents it is probable that there will be reasons why the trustees either sought or approved the recommendation to amend the trust deeds.
As with the documents sought in paragraph 1(b) and 1(d), in paragraph 1(f) of her application in a proceeding the wife introduced into her application for the production of documents a complexity without which the documents sought may well have been amenable to production. Expressed most basically, in paragraph 1(f) the wife sought production of –
(a)all documents;
(b)in which there is a direct or indirect reference to amendments or contemplated or proposed amendments to the trust deeds;
(c)supplied to or considered by the trustees, the investment committee or the family council of the G Group;
(d)prior to the making of any decisions about amending the trust deeds of the trusts;
(e)in each financial year from 2014 until present; and
(f)and with respect to the amendments made in 2020 amending and supplementary deeds, such disclosure is to include all communications to and from legal advisors.
Paragraph two of the wife’s application in a proceeding sought a reconciliation between accounts of the G Group and the investment committee reports of each financial year from 2014 up to 2022 in the same format as was provided for the financial year 2023 by Mr J in his letter of 22 February 2024.
The reconciliation provided by Mr J on 22 February 2024 was a comprehensive document. For the most part, it focused on the financial year 2023. However, immediately prior to the table on page two of that letter Mr J recorded that while accounts were publicly available, he nevertheless provided those accounts (or an extract thereof) for the financial years 2020 – 2023. Mr T seeks a reconciliation over different years, namely, from 2014 to date.
It is not readily apparent why the period from 2020 to 2023 was selected by Mr J in his 22 February 2024 letter. Be that as it may, Mr J provided a significant amount of information to Mr O in his 22 February 2024 letter. No protest or complaint was made about the provision of that information. Having regard to the detail in it, self-evidently a very large amount of effort had been devoted to unearthing the information in that letter. Mr T asks for the same information but in respect of a different, earlier time frame. The chronological starting point for Mr T’s request is grounded in events in 2014. The trustees have provided information between six and nine years thereafter, but not from the date Mr T requires, namely 2014. Mr T says he needs information from the starting date 2014.
MR T’S EVIDENCE
Mr T made an affidavit on 17 April in support of the wife’s application in a proceeding also dated 17 April 2024. Mr T deposed to –
(a)receipt on 16 November 2023 of my orders made on 27 October 2023 and his engagement on 16 November 2023;
(b)receipt of a statement of agreed facts;
(c)a copy of my decision in Woodcock v Woodcock (No 2)[10] and in Woodcock & Woodcock (No 5)[11] plus an extract of applicable court rules governing the exchange of correspondence with Mr J in January 2024; and
(d)the exchange of correspondence with the husband’s solicitors in January 2024 and following.
[10] (2022) 65 Fam LR 333.
[11] [2023] FedCFamC1F 894.
THE HUSBAND’S RESPONSE AND HIS EVIDENCE
The husband sought orders –
(a)for the dismissal of the wife’s application in a proceeding dated 17 April 2024;
(b)that prior to 1 June 2024, the wife do all things to procure the release of Mr T’s report; and
(c)for the wife to pay the husband’s indemnity costs.
The husband made an affidavit on 1 May 2024. Relevantly distilled, the husband deposed to the following –
(a)he is one of seven directors of B Pty Ltd, F Pty Ltd and E Pty Ltd;
(b)he is one of three directors of C Pty Ltd, the other two directors being Mr K and Mr AW, each of whom having been appointed in or about October 2023;
(c)C Pty Ltd is a wholly owned subsidiary of F Pty Ltd;
(d)he is subject to the direction of F Pty Ltd in respect of any dealings with C Pty Ltd;[12]
(e)he said he does not control the trusts nor does he have any fixed interest or right to any capital or capital distributions from any of the trusts;
(f)he does not know why the wife seeks orders against him personally;[13] and
(g)the wife has had ample time to produce the report required of Mr T.[14]
[12] Precisely how that accorded with his duties as a director of C Pty Ltd under s 180 of the Corporations Act 2001 was not stated by the deponent.
[13] This was in truth a submission rather than a statement of fact required by the rules in respect of affidavits.
[14] Ibid.
The husband made a collection of submissions under the guise of statements of fact, as has been revealed by the observations in the last two alphabetical paragraphs as well as in paragraphs 18, 19 and 20 of his affidavit. It was not for a witness in the shoes of the husband to depose to matters to which he is not qualified to depose, such as what an expert valuer says he needs in order to perform the task ordered by the court for him to perform. The majority of his affidavit served no evidentiary purpose.
THE TRUSTEES’ RESPONSE AND EVIDENCE
The trustees sought the dismissal of the wife’s application as well as orders for the payment of indemnity costs. I do not deal with costs on this application.
Evidence in respect of the trustees’ position on this application was given by Mr K, a director of B Pty Ltd, F Pty Ltd, C Pty Ltd and E Pty Ltd. Relevantly distilled, Mr K deposed to the following –
(a)in early 2023 the husband stepped down from the role of chief executive officer of the G Group and thereafter commenced in the role of executive chairman of the group;
(b)each trust deed relevant to the four trusts in issue in this case has been varied several times, the most recent of which was in 2020;
(c)as a result of correspondence between Mr O and Mr J, Mr T has been provided with a large volume of documentation “going to the underlying assets and value of the trusts”, notwithstanding that the trustees contend that those materials were neither necessary nor relevant to the task Mr T is to perform;[15]
(d)the trustees object to the production of documents that are comprised of unredacted minutes of family council meetings as well as information or advice in relation to the reasons for the amendments made to the trust deeds beyond that which has already been given;
(e)the content of paragraph 20 was squarely an inadmissible submission; and
(f)so was the content of paragraph 21.
[15] The Federal Circuit and Family Court of Australia (Family Law) Rules require a lay witness to confine depositions in affidavits to matters of fact. The words in parenthesis were not depositions of matters of fact and instead were submissions. This witness’s assessment of whether documents were necessary or relevant was inadmissible. This witness did not give his expertise to enable him to assert what was and what was not necessary in order for Mr T to perform Mr T’s task in accordance with well established authority including Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705, Dasreef Pty Ltd v Hawchar (2011) 243 CLR 588 and Honeysett v R (2014) 253 CLR 122.
SUBMISSIONS
Written submissions on this application were provided –
(a)by the wife on 9 May 2024;
(b)by the husband on 8 May 2024; and
(c)by the trustees also on 8 May 2024.
All parties provided extensive viva voce submissions by counsel on 10 May 2024. It is necessary to narrate, at least in précis form, the written and verbal submissions advanced by each party.
THE WIFE’S SUBMISSIONS
It is utile to address first the wife’s written submissions. Relevantly synthesised, counsel for the wife advanced the following written submissions –
(a)the orders made 27 October 2023 provided (by consent) that the parties agreed to provide to Mr T “any documents or information as is reasonably requested by that expert for the purpose of valuing the husband’s rights as soon as practicable upon request in writing…”;
(b)Mr T’s initial request for information was made on 20 November 2023;
(c)on 4 December 2023 Mr J stated that certain documents would be provided but expressed the trustees’ reservations about relevance to which Mr O replied on 4 December 2023 explaining Mr T’s response to Mr J’s reservations grounded in relevance;
(d)on 8 January 2024 Mr J wrote to Mr O stating that the documents sought by Mr T would be provided shortly by Mr J;
(e)the second, third and fourth respondents have provided documents directly to Mr T, concurrently informing the wife’s solicitors that documents of a particular description had been provided to Mr T and at the insistence of the second, third and fourth respondents Mr T provided confidentiality undertakings the effect of which has prohibited the wife and her solicitors from seeing those documents;
(f)no document provided to Mr T under the 27 October 2023 order has been provided to Mr O and it is only by reference to the correspondence from Mr J that Mr O is able to make a limited assessment of the extent to which the second, third and fourth respondents have complied with their obligations under the 27 October 2023 orders;
(g)the husband has not supplied Mr T with documents so he probably has none to assist Mr T and the husband has not asserted he has any;
(h)Mr J has previously objected to providing documents to Mr T by asserting that the trustees’ decision is absolute and the trustees have no obligation to provide reasons for their decisions or material on which their decision is based; and
(i)the trustees have adopted an inconsistent approach in relation to their assertion that the trustees are under no obligation to provide reasons or material on which their decision is based, such inconsistency leading the wife and her legal advisors to speculate on whether the trustees have disclosed all information sought or whether they are choosing to withhold information erroneously believing they are not required to provide the information requested.
The wife acknowledged that generally beneficiaries cannot pursue disclosure of the reasons why a trustee exercises an absolute discretion in a particular manner. In reliance upon the decision of the Supreme Court of Victoria in Mandie v Memart Nominees Pty Ltd[16] the wife acknowledged that the inability of a beneficiary to pursue disclosure of reasons extends to material that was so integrated with the trustees’ reasoning process that the disclosure of the integrated material may reveal the reasoning process. However, counsel for the wife submitted that the principle there stated operates in the context of a request for information by a beneficiary where no proceeding is on foot. Counsel for the wife relied on a long line of authority[17] to the effect that the principles on which the trustees relied has no application to a disclosure process by a party to litigation in which a party is under an obligation to produce or disclose information or documents to an opposite party. Counsel for the wife submitted that my 27 October 2023 orders imposed an obligation on the trustees and the husband to provide information and documents. They submitted[18] that all documents provided thus far to Mr T are to be taken as being relevant to a matter in issue.
[16] (2014) 42 VR 325 (Macauley J).
[17] O’Rourke v Darbishire [1920] AC 581, 626, 627 (Lord Wrenbury), In Re Londonderry’s Settlement; Peat v Walsh [1965] Ch 918, 937 (Salmon LJ), Schmidt v Rosewood Trust Ltd [2003] AC 709, Crowe v Stevedoring Employees Retirement Fund Pty Ltd [2003] VSC 316 (Balmford J) and Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405, 441 (Sheller JA).
[18] Counsel for the wife was Mr T. D.O.J. North SC and Mr Mark Wilson.
Counsel for the wife raised their client’s concerns that the trustees had withheld documents or had not disclosed documents in a timely manner. The specifics of that contention were grounded in the following –
(a)delivering a statement of agreed facts prepared on 16 October 2023 which recited that the husband was the sole director of C Pty Ltd when 15 days earlier, on 1 October 2023 two other directors had been appointed to the board of that company;
(b)Mr T was being invited to proceed on an erroneous premise, namely that the husband was the sole director of that company when he was not;
(c)Mr T has taken the view that redacted information is highly relevant yet the trustees are unwilling to remove redactions to minutes of meetings of directors of various trusts;
(d)Mr T is of the view that he requires all minutes of every meeting of the trustee directors of the G Group Trusts;
(e)the disclosure to Mr T has been direct and conducted in a manner that has precluded the wife’s legal advisors from inspecting documents yet it is apparent that significant documents have not been disclosed; and
(f)the husband should be required to swear to his having no documents in his possession.
The wife’s counsel addressed issues arising from her s 106B claim. In essence, she contended that –
(a)the wife has a colourable claim for relief under s 106B of the Family Law Act;
(b)communication made in the furtherance of the creation of an instrument or disposition to defeat an anticipated order is contrary to public interest as canvased in Commissioner of Australian Federal Police v Propend Finance Pty Ltd[19] and R v Bell; ex parte Lees[20] and therefore legal professional privilege does not attach to any such communication;
(c)citing Varawa v Howard Smith & Co Ltd,[21] counsel for the wife argued that the rules relating to legal professional privilege adopted to protect the administration of justice cannot be applied to things which would prevent the disclosure of a crime or fraud; and
(d)legal professional privilege is inapplicable to a communication in furtherance of an unlawful purpose, citing R v Bell; ex parte Lees.[22]
[19] (1997) 188 CLR 501.
[20] (1980) 146 CLR 141.
[21] (1910) 10 CLR 382.
[22] (1980) 146 CLR 141.
In that last case it was held by Gibbs J that it is a well settled principle, based on public policy, that communications made confidentially between a client and his legal advisor for the purpose of obtaining or giving legal advice or assistance are privileged from disclosure. However, the privilege will not apply where the communication was part of a criminal or unlawful proceeding or was made in furtherance of an illegal object, for example, where the client sought legal assistance as a step in, or preparatory to, the commission of a crime or fraud, even though the solicitor was unaware of the purpose of the communication at the time it was made. Stephen J held that the law will not permit legal professional privilege to be used to undertake or continue criminal or fraudulent conduct. An illegal purpose would prevent privilege attaching (Russell v Jackson).[23] Stephen J also held that the information to which privilege is denied must be as to some act which is in furtherance of an illegal object. Wilson J relied on the formulation of the principle in respect of legal professional privilege as espoused by Lord Halsbury LC in Bullivant v Attorney-General[24] to the effect that no court can be called upon to protect communications which are in themselves part of a criminal or unlawful proceeding, described as the second limb in Bullivant’s case which Wilson J in R v Bell; ex parte Lees held was grounded in public policy. Wilson J held that it is in the public interest that confidential professional communications between solicitor and client should be uninhibited by any fear of disclosure and that it would be odd if the privilege extended to protect communications which were directed against the public interest.
[23] (1851) 68 ER 560.
[24] [1901] AC 196, 200.
Counsel for the wife also relied on the High Court’s decision in Attorney-General for the Northern Territory of Australia v Kearney[25] in support of their contentions that legal professional privilege cannot be claimed in certain circumstances. The facts of that case have no parallel to those with which I am concerned on this application. However, statements of principle emerged from the separate reasons of Gibbs CJ, Mason, Wilson and Brennan JJ. The following is an extract of those reasons –
[25] (1985) 158 CLR 500.
(a)the statement of the plurality in Grant v Downs[26]concerning legal professional privilege is grounded in traditional doctrine and promotes the public interest because it assists and enhances the administration of justice by facilitating the representation of clients by legal advisors, the law being a complex and complicated discipline, which it does by keeping secret their communications, thereby inducing the client to retain the solicitor and seek his advice and by encouraging the client to make full and frank disclosure of the relevant circumstances to the solicitor;
[26] (1976) 135 CLR 674, 685.
(a)Grant v Downs also stands for the proposition that the existence of the privilege reflects, to the extent to which it is accorded, the paramountcy of this public interest over a more general public interest which requires that in the interests of a fair trial, litigation should be conducted on the footing that all relevant evidence is available;
(b)one exception to the general rule is that communications by a client for the purpose of being guided or helped in the commission of a crime of fraud are not privileged from discovery;
(c)in Varawa v Howard Smith & Co Ltd[27] Griffith CJ held that the exception to the rule about privilege has not been extended beyond cases of fraud, intended fraud or of intended crime;
(d)the privilege has been held to continue to apply even in the case of breach of contract or furthering a conspiracy to commit a breach of contract;[28]
(e)not all authorities are tied to the concept that the exceptions to the existence of privilege are based solely on crime or fraud because in Russell v Jackson,[29] Turner VC held that the existence of an illegal purpose would prevent any privilege attaching to the communication, because it is no part of the duty of a solicitor to advise his client as to the means of evading the law;[30]
(f)the privilege is not displaced merely by making a mere charge of crime or fraud or even a charge that powers have been exercised for an ulterior purpose because Bullivant v Attorney-General and O’Rourke v Darbishire[31] stand for the proposition that “there must be something to give colour to the charge”;
(g)the precise meaning of “crime” or “fraud” in the decided cases includes –
(i)“any unlawful or wicked act”;[32]
(ii)“a criminal or unlawful proceeding, fraudulent contrivance or any illegal proceeding”, “an improper or illegal act”, illegality or fraud or trickery”, “wrong-doing” or “illegal object”;[33]
(iii)“any illegal or improper purpose”, “to frustrate the processes of law”, “taint of illegality”;[34] or
(iv)“crime or fraud or civil offence”.[35]
[27] (1910) 10 CLR 382, 385.
[28] Crescent Farm (Sidcup) Sports Ltd v Sterling Offices Ltd [1972] Ch 553.
[29] (1851) 68 ER 558.
[30] Other authorities supportive of this doctrine include Varawa v Howard Smith & Co Ltd (op cit), R v Bell; ex parte Lees (op cit), Gartside v Outram (1856) 26 LJ Ch 113, R v Cox & Railton (1884) 14 QBD 153, 169 and Bullivant v Attorney-General (op cit).
[31] [1920] AC 581, 604, 613, 622, 632.
[32] Annesley v Earl of Anglesea (1743) LR QB 317.
[33] Varawa v Howard Smith & Co Ltd (1910) 10 CLR 386.
[34] R v Bell; ex parte Lees (1980) 146 CLR 145.
[35] Baker v Campbell (1983) 153 CLR 52, 86.
Counsel for the wife relied on the decision of the High Court in Commissioner of Australian Federal Police v Propend Finance Pty Ltd.[36] Among the more important observations that emerge from the reasons for judgment of Brennan CJ were the following –
(a)in determining whether a claim of legal professional privilege can be upheld, it is open to the party resisting the claim to show reasonable grounds for believing that the communication effected by the document for which legal professional privilege is claimed was made for some illegal or improper purpose that is, some purpose that is contrary to the public interest;[37]
(b)a reasonable basis for believing is required because the test is objective and it is not necessary to prove the ulterior purpose but there has to be something “to give colour to the charge”[38] and a prima facie case is needed that the communication is made for an ulterior purpose;[39]
(c)the purposes that deny protection of privilege for a communication, whether documentary or verbal between a client and the client’s solicitor or counsel include the furthering of the commission of an offence;[40] and
(d)when a party in a curial proceeding is seeking to rebut a claim of privilege by asserting that the communication with the legal advisor was made for an ulterior purpose, the evidence of ulterior purpose must be admissible in the proceeding and it is not sufficient to rely on the information laid before the justice who issued the warrant.
[36] (1997) 188 CLR 501.
[37] Attorney-General (NT) v Kearney (op cit) and R v Bell; ex parte Lees (op cit).
[38] O’Rourke v Darbishire (op cit).
[39] Butler v Board of Trade [1971] Ch 680, 689.
[40] R v Cox & Railton (1884) 14 QBD 153.
Dawson J relied on separate reasons. His Honour held as follows –
(a)only communications passing between a legal advisor and his or her client in professional confidence which are privileged and a communication made by the client for assistance in the commission of a crime of fraud lies outside any legitimate professional relationship;
(b)the authorities make it plain that those seeking to exclude legal professional privilege do not have to prove that the communication in question was in furtherance of a crime or fraud yet in Bullivant v Attorney-General the Earl of Halsbury LC held that “you must have some definite charge either by way of allegation or affidavit or what not” and in O’Rourke v Darbishire Viscount Finlay held that there must be, in order to get rid of privilege, not merely an allegation of a fraud but there must be something to give colour to the charge;
(c)where the proceeding is at an interlocutory phase, the material must be weighed without the apparatus of a formal trial on an issue; and
(d)on an interlocutory application hearsay is ordinarily admissible in the form of affidavit evidence but in determining whether the privilege is displaced, not even affidavit evidence is necessarily required.
Toohey J suggested it was proper for the primary judge to have inspected the impugned document.
Gaudron J held that inevitably, what will be sufficient to cast a further evidentiary burden on a person claiming legal professional privilege will vary according to the facts of each case but the presumption of innocence is not lightly displaced. Her Honour held that –
(a)in a case such as O’Rourke v Darbishire that involved a fraud allegation, there must be material which shows grounds for saying that prima facie a state of things exists, which if not displaced at trial will support a charge of fraud;
(b)Lord Denning MR held in Buttes Gas & Oil Co v Hammer[41] that strong evidence was necessary; and
(c)if a person wishes to resist a claim of privilege and to lead evidence of an illegal purpose or other purpose inconsistent with its existence, that evidence must be in admissible form, ordinarily excluding hearsay.
[41] [1981] QB 223, 246.
McHugh J delivered separate reasons. The more important matters arising from his Honour’s reasons were as follows –
(a)a mere allegation of an illegal purpose or fraud is not, of itself, sufficient to displace a claim of legal professional privilege;
(b)a person who alleges that legal professional privilege does not apply to a communication tenders an issue for consideration and has the onus of proving it; and
(c)subject to any provision to the contrary, any evidence tendered in a court of justice to prove an issue must comply with the ordinary rules of evidence.
Kirby J made several important observations. Those included the following –
(a)the person alleging that legal professional privilege is lost for illegality must state clearly the charge of illegality made for the purpose of showing with some precision what it is;
(b)vague or generalised contentions of crimes or improper purposes will not suffice;
(c)the mere making of an allegation of a crime or of fraud is not sufficient to get rid of the privilege and something more must be added to give colour to the charge;
(d)some cases state that evidence, even strong evidence, is required to do away with the privilege; and
(e)although surmise and conjecture will never suffice, something less than full proof of illegality by admissible evidence must suffice.
THE WAY THE WIFE CAST THE PRIVILEGE ARGUMENT
The way the wife put her contentions in respect of the loss of the trustees’ legal professional privilege was less than lineal. In verbal addresses on 10 May 2024 Mr North SC advanced the following propositions –
(a)within weeks of the amendments to the trust deeds in September 2020, in December 2020 the husband commenced this litigation;
(b)after resisting disclosure and compliance with a subpoena addressed to the trusts,[42] the trust deeds were ultimately disclosed almost 12 months later;
(c)the entitlements to receive both distributions of income and capital were altered;
(d)prior to the amendments each of the family representatives (of whom the husband was one) had the capacity to block income or capital distributions in specified portions or, with respect to income, not to make a distribution in a particular year thereby suffering a taxation penalty;
(e)the 2020 amendments removed that capacity in that at least four but not all five family members were required for a majority to pass a resolution with respect to distributions;
(f)the wife contends that those amendments materially impact upon the likely value of the husband’s entitlement; and
(g)the nature and extent of that impact is likely to be the subject of evidence yet to be received from Mr T.
[42] Woodcock v Woodcock (2021) 64 Fam LR 489.
Mr North linked his contentions to s 106B of the Family Law Act. He submitted as follows –
(a)the wife will invite the court to infer from the secrecy of the circumstances surrounding the amendments to the trust deeds in 2020 and from her allegations in respect of s 106B of the Family Law Act that the trustees got cold feet (Mr North’s words)[43] and thought better of relying on the disqualifying event in light of s 106B;
(b)the fact that the trustees did so at all is relied on by the wife as evidence tending to show a purpose or one of the purposes of the 2020 amendments, namely, to defeat an anticipated claim;
(c)the wife has a colourable claim under s 106B;
(d)having regard to that colourable claim, legal professional privilege does not attach to any advice or communications relating to those amendments; and
(e)the decision in Ding v Ding[44] is directly on point.
[43] Transcript 10 May 2024 T 13 L 9.
[44] (2018) 59 Fam LR 262.
Pausing there, from that recital of the way the wife cast her s 106B case and the inapplicability of the ordinary protection conferred by legal professional privilege, several evidentiary matters ought to have arisen. Among them should have been –
(a)direct evidence should have been given that the trustees had in fact asserted the existence of legal professional privilege attaching to identified and specific documents or communications between identified and specific persons and clients; and
(b)the colourable claim asserted by the wife should have been given the effect of which was to support her contention that legal professional privilege did not attach to the specific and identified documents or communications claimed.
This being an interlocutory application and not a trial, persuasion was required by affidavit or other process to the requisite proof of the wife’s colourable claim.
Before examining the evidence on those matters, this being a claim in the specific context of family law litigation and not in the context in which the lead authorities were set, the wife placed heavy reliance upon the observations in Ding v Ding. This being an interlocutory application, the provisions of the Evidence Act do not apply and instead common law rules in respect of legal professional privilege are applicable, as was held by the High Court in Esso Resources Australia Ltd v The Commissioner of Taxation.[45] All parties agreed that the decision in Esso v The Commissioner was applicable.
[45] (1999) 201 CLR 49.
The facts of Ding v Ding were very different to those with which I am concerned on this application. In Ding v Ding the trial judge dismissed a s 79 application holding that the wife’s s 106B application for the setting aside of specific dispositions from the husband to members of his family prior to the breakdown of the marriage failed. In the course of the trial, the husband claimed legal professional privilege in respect of a letter from his solicitors prepared two weeks prior to the date on which the impugned transactions took place. The wife argued that legal advice privilege did not apply by operation of s 125 of the Evidence Act the effect of which was that legal advice privilege could not be claimed where the relevant document had been prepared in furtherance of the commission of a fraud.
In Ding v Ding legal advice privilege was asserted in respect of an identified letter dated 29 March. In this application the wife has not identified with precision the document, documents or information in respect of which legal advice privilege is claimed and whether that privilege is lost by reasons of fraud. To my way of thinking, that is critical to the disposition of the debate about legal advice privilege.
In Ding v Ding, the application of s 106B was addressed by the observation that the wife did not need to prove any intention on the part of the husband to sustain her s 106B claim, much less fraudulent intention.
The court in Ding held that the trial judge erred in failing to consider whether colour to the charge of fraud existed yet the court erroneously relied on the decision of a single judge of the Supreme Court of New South Wales in Kang v Kwan[46] rather than the cases surveyed above, from England and from the High Court of Australia, in which the source and subsequent application, consideration and explanation of the phrase “colour to the charge” has been addressed in erudite terms.
[46] [2001] NSWSC 698 (at [37]).
I confess to deriving very little assistance from the decision in Ding v Ding in the determination of this application.
In their written submissions, counsel for the wife addressed the so-called “colourable claim” on which the wife relied. Her counsel contended that it was apparent that the wife had a colourable claim for relief under s 106B of the Family Law Act as was evident from annexure A to the wife’s counsels’ written submissions. To the wife’s counsels’ written submissions was an annotated version of the latest iteration of the wife’s statement of claim. The annotations appear to have been made by the wife’s legal team indicating the source of evidence of various pleaded allegations. For example –
(a)under the particulars subjoined to paragraph six of the statement of claim, the annotation has been added “affidavit of [Mr K] filed 19 October 2022 at [8] on page 5”;
(b)under particular (a) of the particulars subjoined to paragraph eight of the statement of claim the annotation has been added “statement of agreed facts 18 October 2023 at [15] annexure MO04 to affidavit of Mr O filed 17 April 2024 at page 53”;
(c)a similar annotation but in reference to paragraph 18 of the statement of agreed facts was included in particular (b) to the particulars subjoined to paragraph eight of the statement of claim;
(d)under particular (c) of the particulars subjoined to paragraph eight of the statement of claim an annotation has been included stating “statement of agreed facts 18 October 2022 at [20] annexure MO04 to affidavit of Mr O filed 17 April 2024 page 54”;
(e)under particular (d) of the particulars subjoined to paragraph eight of the statement of claim an annotation has been included stating “statement of agreed facts 18 October 2023 at [22] annexure MO04 to affidavit of Mr O filed 17 April 2024 at page 55;
(f)under the particulars subjoined to paragraph 11 of the statement of claim the annotation appears “affidavit of [Mr K] filed 19 October 2022 at [8] on page 5”;
(g)under particular 3(a) of the particulars subjoined to paragraph 13 of the statement of claim an annotation appears “statement of agreed facts 18 October 2023 at [35] annexure MO04 to affidavit of Mr O filed 17 April 2024 at page 59”;
(h)similar annotations (but referring to different paragraphs of the statement of agreed facts) were made in respect of particulars subjoined to paragraphs 13(b), 13(c) and 13(d) of the statement of claim; and
(i)other annotations were made referring to Mr K’s affidavit or to other paragraphs of the statement of agreed facts in respect of paragraphs 14, 16 and 18 of the statement of claim. No particular purpose is served reciting those paragraphs. Each is intended to be a pinpoint reference to the source of agreed issues as between the wife and the trustees where Mr K makes mention of certain matters addressed in the wife’s statement of claim and as between the wife and the husband where agreed facts are set out.
The wife’s contentions in respect of her s 106B claim appear in paragraph 23 to 27 of the statement of claim. The particulars subjoined to paragraph 23 of the wife’s statement of claim give details to her contentions. Essentially, those particulars provide as follows –
(a)between 27 April 2019 and 24 February 2020[47] the husband and wife negotiated in respect of a financial settlement in satisfaction of their rights against each other under the Family Law Act;
(b)the wife requested the husband to provide information about the husband’s interests and rights as a beneficiary of each of the B Trust, the F Trust and the E Trust;
(c)the wife advised her intention to seek a financial settlement which took account of the value of the husband’s interests in those three trusts; and
(d)in the annotation to paragraph 23 of the statement of claim, the wife stated that she relied in particular on the letters from the husband’s solicitors dated 4 July 2019 and 1 November 2019 to demonstrate that a s 106B order was anticipated.
[47] Counsel did not say as much in their submissions but the dates April 2019 and February 2020 were prior to the amending trust deeds of September 2020.
The annotation to paragraphs 24, 25 and 27 seemed to me to be meaningless. It asserted that “the above conclusions will be borne out by the evidence and submissions at trial”.
If legal advice privilege was somehow claimed by the husband or by the trustees as a means of preventing disclosure of documents or communications concerning the creation of the amending trust deeds in September 2020, the question became whether the wife had proved to the requisite extent that the privilege ought not apply by reason of the exception based on fraud. Specifically, the issue was whether the wife had shown a colourable claim. The authorities did not speak with one voice about the degree and length to which she was required to go to demonstrate a colourable claim. Vague or generalised contentions of crimes or improper purpose will not suffice as Kirby J held in Commissioner of Australian Federal Police v Propend Finance Pty Ltd.[48] Whether the requirement that strong evidence exists as propounded by Lord Denning MR in Buttes Gas & Co v Hammer,[49] especially in Australian circumstances, was not a matter to which submissions were directed before me. This being an interlocutory application, evidence in an affidavit would normally suffice and Mr O’s affidavits in that regard would be sufficient, in my view. The more important issue was whether a colourable claim of improper conduct was revealed. The two letters on which the wife relied called for setting out.
[48] (1997) 188 CLR 501.
[49] [1981] QB 223 246.
The 4 July 2019 letter was in the following terms –
Dear Mr O
[Woodcock] - Family Law Matters
We refer to our previous correspondence dated 29 May 2019 and confirm that we have now obtained our client's detailed instructions.
We are instructed as follows:
1.Our client is firm in his instructions that it is his desire to resolve all matters as quickly and amicably as possible, and we are confident that this can be achieved at a private mediation.
2.We enclose a schedule setting out the parties' marital assets and liabilities available for division. We note that the list of assets does not include the assets held by the [G Group], and we set out the following background information in respect of same.
3.Further, the asset pool does not include the artwork which our client received as gifts from his family, which we understand your client is also agreeable to excluding from division.
Background to [G Group]
4.Our client is the CEO/Managing Director of [G Group]. [G Group] is the term used to describe the combined operations of the various entities that comprise the [G Group].
5.[The G Group] was established by our client's grandparents, continues to be family operated and will endure for the benefit of the [G Family]. It is largely made up of three trusts:
(a)[B Trust]. Its trustee is [B Pty Ltd]. [B Trust] holds long term investments. Its wealth reflects the personal wealth which had been accumulated by [Mr and Ms G] over their lifetime.
(b)[F Trust]. Its trustee is [F Pty Ltd]. This is the parent trust of the active business and speculative investment group of the companies of [G Group].
(c)[E Trust]. Its trustee is [E Pty Ltd]. It has invested in lower risk, passive investments,
(collectively referred to as “the trusts”).
6. The activities of the Trusts (and more particularly the numerous entities connected thereto - together referred to as the [G Group]) are managed by the various employees and advisors of the [G Group] Family Office. An Investment Board and family board (referred to as the Family Council) are responsible for setting strategy, reviewing operations and investments, and the governance of [G Group]. Each year, strategies are set for the group by the Investment Board, which is comprised of senior management, independent members, a family member elected by the Family Council and our client as CEO/Managing director. The strategy is then submitted to the Family Council for review and approval. Our client is the Chair of the Family Council.
7.While the Investment Board and ultimately the Family Council is treated as having the final say on all matters in [G Group], the formalities of [G Group] are attended to by the trustees of the Trusts.
8.Each of the Trusts have corporate trustees, the directors of which are our client and the […] daughters of [Mr and Ms G] (our client's mother and her […] sisters). In each case, the corporate trustee is required (either explicitly or by agreement amongst the five family sub-groups that comprise the [G Group] families), to have a member from each of the five arms of the family as a director. Up to two non-family directors are also permitted.
9.There are numerous corporate entities and trusts which have been established to hold the various individual investments in which the major trusts have invested.
10.The Trusts are discretionary trusts and the class of beneficiaries is wide but predominantly focused on the extended family of [Mr and Ms G] and the entities connected thereto.
11.Our client is one of the primary beneficiaries of the Trusts. As is the case in trusts of this nature, our client has no enshrined right to capital or income from [G Group]. Indeed, any decisions of significance regarding the making of distributions, must generally be the subject of unanimous agreement between the family members of the trustee entities, the rules of which are as follows:
(a)First, by ordinary majority (i.e. 51%), the trustee can declare whether there will be a distribution at all. If there is a decision by ordinary majority to make a distribution, then absent any further resolution passed unanimously by all five directors, such distribution will go to beneficiaries in specified percentages (of which our client's notional share is approximately 16%).
(b)Second, and relevantly to the way in which the trusts actually operate, by special majority (i.e. 75%, provided that the five family directors vote unanimously), the trustee can resolve to distribute to anyone in the class of beneficiaries. Practically speaking, this is what occurs for all distribution matters.
(c)Third, there is no decision of the trustee to distribute during the lifetime of the trust, then the default position is an accumulation within the relevant trust.
(d)Fourth, if the trust reaches its vesting date and no decisions have been made to distribute to beneficiaries prior thereto, all trust assets are then distributed in accordance with the same specified percentages which govern distributions during the life of the trust,
12.We have provided the above-mentioned overview to emphasise that our client has no immediate right to capital or income. He is treated no differently to any other beneficiary, save that he is separately remunerated for his role as CEO/Managing Director of [G Group].
13.Our client does not resile from any suggestion that [G Group] does not have substantial wealth. However, this is wealth which is specifically and deliberately to enure for the benefit of ongoing generations. Our client's interest is at best a financial resource which subject to the above restrictions, can benefit our client primarily as to participation of distributions of income and capital.
14.During the marriage, our client made significant financial contributions via his receipt of income and capital payments from [G Group] which were applied towards various property acquisitions and the benefit of the family.
Financial disclosure
15.Obviously, there are a great many documents which could be made available in this matter such as trust deeds, constitutions, financial accounts and the like. However, we submit that practically they are of little practical relevance given our client's lack of control and the manner in which [G Group] has been structured for many years. As we have indicated above, our client does not resile from the suggestion that the group is worth substantial value and nor would we resile from the proposition that it has value as a financial resource to our client.
16.Our client is keen to advance a resolution between he and his wife for the benefit of the family. We suggest that a conference between solicitors and counsel would be advantageous to target those documents which might be sought to clarify any structural issues and to focus on those matters which might best advance your Mr O's understanding of these issues in anticipation of a mediation taking place to resolve property division.
Your client's new motor vehicle
17.Finally, on a separate issue, we are instructed that approximately one year ago a deposit was placed on the acquisition of a new vehicle that was intended to be used by your client. Our client is informed that the vehicle may become available for delivery as early as the end of this month. The cost of the vehicle is in excess of $250,000.
18.Please advise as to whether she wishes for the acquisition to proceed, in which case, the purchase price of the vehicle will be treated as a part property settlement to your client. If your client no longer wishes to proceed with the purchase, our client will advise the vendor accordingly.
We look forward to hearing from you in relation to the above.
Yours faithfully
Mark Parker
The 1 November 2019 letter was in the following terms –
Dear Mr O
[Woodcock] – Family Law Matters
We refer to your letter of October 2019.
We wish to reiterate that our client has been forthcoming in his proposals as to how to provide both your client and Mr O with a proper understanding of the factual background in relation to our client’s involvement in those corporate entities and trusts which comprise the greater [G Group].
Further, your client has had the benefit of attending the [G Family] briefings over an extended period and has adequate knowledge of the affairs and modus operandi of [G Group] to allow her to adequately instruct your Mr O in relation to same.
Despite this, we repeat that there is a standing invitation for your Mr O and your client’s Accountancy advisor to meet with [Mr K] to explain fully the very clear limitations in relation to our client’s involvement with [G Group] and the more apparent difficulties associated with the provision of documents to [G Group].
We note that your client has, and has always had open access to the banking facilities relevant to the [Woodcock] Family Accounts. As such, our client points our generally that in relation to documents which have been requested, the following is apparent:
1.A number of documents requested have already been provided;
2.A number of the documents are already in the possession of your client or otherwise capable of being obtained by her directly; and
3.A number of documents cannot for reasons which we will again repeat below, be provided by our client.
In respect of those other documents requested, further disclosure is provided as set out in this letter. This now enables your client and Mr O to participate in an initial conference to agree a pathway to lead to a resolution of this matter. Our client emphasises again that this is the most expeditious and family focussed manner to achieve an amicable resolution in this matter. Hopefully your client will acknowledge the bona fides of our client in not only providing the documents and information which he provided thus far, but the further documents now attached to this letter and his repeated offer to meet with [Mr K] to move this matter forward.
Dealing now with the documents sought in your letter, we again repeat that although your letter seeks to include [G Group] entities in respect of the entities for which documents are sought, these are not entities controlled by our client nor entities in which our client has any defined interest and more importantly, entities in which there are a myriad of third parties who are involved and fall within the general class of beneficiaries (of which our client is but one member). To the extent that there is any confusion or misunderstanding in relation to same (which given your client's involvement with the [G Family] over many years, should not be the case), a full history and description (which we note has already been provided to your firm), can be further amplified in the meeting with [Mr K] and to the extent considered necessary, the relevant trust deeds can be made available for inspection by your Mr O at that conference.
Given the above, the following responses to the documents sought are restricted to [P Pty Ltd], the [Woodcock] Family Trust and of course the parties personally.
Our client's responses are as follows:
1.As to item 3, we set out below a table setting out the distributions which have been received by our client in the 2016, 2017 and 2018 financial years from [G Group] entities.
YEAR 2019 2018 2017 2016 Total distribution – [Mr Woodcock] related - 8,540,586 1,960,000 3,355,001 [E Trust] - - - 1,380,881 [F Trust] - 8,287,586 - 1,174,120 [B Trust] - - - - [G Family Trust] (a distribution trust in [G Group]) - 253,000 1,960,000 800,000 A copy of the notifications sent to [Mr Woodcock] from the [G Group] entities is attached (refer Appendix 1).
Further, we are instructed that [Mr Woodcock] has received distributions from the [F Trust] of approximately $420,000 and $125,000 to manage donations from the [G Family] to various charities. These distributions and the use to which they have me put are evident from our client's income tax returns, which are attached.
2.Item 5. There are no formal arrangements between our client and [G Group] in relation to remuneration received by our client. Our client's income position is otherwise as set out in his income tax returns.
3. The documents sought in item 15 are attached in Appendix 2.
4. In relation to the bank account details sought, we can advise as follows:
(a)Account ending […13] is the main account utilised by the [Woodcock] family. Your client has full access to this account and can access whatever statements she requires, for whatever periods of time she requires;
(b)Account ending […01] is the account used solely by our client. Again, your client can access these statements;
(c)Account ending […47] is a general operating account which your client has full access to;
(d)Account ending […25] is an account used solely by your client and your client has full access to same;
(e)Visa card in our client’s name is utilised by each of our respective clients. Your client has full access to same;
(f)Visa card in the name of [P Pty Ltd]. The relevant statements are attached to this letter (Appendix 3);
(g)[AX Bank] statements are attached to this letter (Appendix 4);
(h)[AY Finance] account in our client’s name is utilised by each of our respective clients. Your client has full access to same.
5.We refer to item 17. This is attached in Appendix 5. In the interests of all issues being available for consideration, we also enclose loan account details relating to monies which have been lent to your client’s parents and your client’s sister (refer Appendix 6).
6.We refer to item 18. These details have been previously provided, noting however that in respect of items (c) and (f), your client is best able to deal with this as any such items remain in the former matrimonial home. The only issue in relation to same is that all items left to our client by his grandmother are to be excluded from any division as they were bequeathed to our client (your client is aware of this) on the understanding that they are to remain in the family or otherwise passed over to a public gallery.
7. We refer to item 19. There are no such valuations.
8.We also comment and/or enclose the following:
(a)a copy of the [Woodcock] Family Trust Deed has previously been provided;
(b)the Constitution of [P Pty Ltd] is attached (Appendix 7);
(c)copies of the relevant 2016 Financial Accounts for the years 2017-2017 have previously been provided;
(d)copies of the Financial accounts for the years 2017-2019 have previously been provided;
(e) distribution details relevant to the [Woodcock] Family Trust are set out (Appendix 9).
Finally, our client has caused an updated statement of financial position for the [Woodcock] Family to be prepared. It is Appendix 10. Highlighted in the statement are changes from the previous statement provided to your office with those changes reflecting movements in bank balances, provision of a value for the [AZ Property] and the balances on the recoverable loans for your client’s parents and sister.
We await your response in relation to the above.
Yours faithfully,
Mark Parker
Returning to the viva voce submissions on 10 May 2024, Mr North SC argued[50] that conduct that amounts to the creation of an instrument or likely disposition by or on behalf of or by the direction of or in the interest of the party which is made to defeat an anticipated order, irrespective of intention, is conduct that is contrary to public policy.
[50] Transcript 10 May 2024 T 14 L 25.
Mr North SC submitted that a communication made in furtherance of the making or the creation of an instrument to defeat an anticipated order is contrary to the public interest as canvassed in Propend.
Mr North SC submitted that Mr K deposed in his affidavit made 1 May 2024 to various purposes behind the creation of the 2020 amendments.
Despite my invitation, Mr North SC expressly declined to make any submissions on any parallels in fact or in law between s 106B of the Family Law Act and s 173 of the Property Law Act 1958, transactions to defeat creditors.
Mr North SC addressed what he described as “the unfortunate position” of being unable to see documents that have gone to Mr T, who has received them impressed with an obligation not to release them, especially to the wife’s legal team, despite their self-evident relevance. Rather flamboyantly, Mr North submitted –
“This is like conducting litigation with one hand tied behind your back, in my respectful submission”.
THE TRUSTEES’ CONTENTIONS
On behalf of the trustees, written and viva voce submissions were advanced. So far as the trustees’ written submissions were concerned, relevantly synthesised they were as follows –
(a)on 16 November 2023 the wife engaged Mr T;
(b)on 20 November 2023 Mr T set out a list of information he said he needed in order to conduct the valuation;
(c)between 20 November 2023 and 16 April 2024, Mr T, Mr O and Mr J exchanged a series of communications resulting in the variation, postponement or withdrawal of some of Mr T’s requests for information;
(d)notwithstanding their assertion of irrelevance, the trustees have provided Mr T with a large volume of documents and information about the trusts;
(e)as at today’s date, the trustees have provided Mr T with all outstanding information sought by him except –
(i)unredacted minutes of certain meetings of G Group’s Family Council; and
(ii)information or advice in relation to the reasons for amendments to the trust deeds.
The trustees have objected to the provision to Mr T of the unredacted minutes of meetings set out immediately above and the information or advice in relation to the reasons for amending the trust deeds beyond the information already given as is recorded in Mr K’s 19 October 2022 affidavit.
The basis of the objection to both categories of documents is that they are irrelevant to Mr T’s task and they are not reasonably necessary for him to perform his task.
So far as the redacted minutes were concerned, Mr Shaw KC for the trustees in his written submissions contended that those documents do not relate to distributions and the available distribution pool, nor to loans to beneficiaries of the trust. Mr Shaw KC argued that no warrant existed for the production of those documents.
Mr K asserted that the redacted minutes do not relate to distributions and the available distribution pool. He says the redacted documents do not relate to loans to trust beneficiaries.
I accept what Mr K says as being true when he states that the redacted documents say what they say. However, Mr K does not depose that he is a businessman with a law degree nor that he is a legally qualified legal practitioner. He has examined the documents in this case and has been instrumental in decision-making about documents that have gone to Mr T. To my way of thinking, it is erroneous for the trustees to assert that “warrant exists” or does not exist to order the production of certain documents. The making of such an assertion is to do more than to state the trustees’ position. Whether warrant exists is a matter for me, not the trustees.
Mr T has been assigned the task of preparing the relevant report. He has been given power to call for documents he requires. It does not lie in the mouths of the trustees or for the husband for that matter to say with what documents Mr T is to be supplied. Mr T is an expert witness of considerable veneration and standing. The task assigned to him in the preparation of his report may turn out to be unprecedented. No case law was provided to me to demonstrate that the expert whose task it is to value the dual choses of action in issue in this case must take into account certain matters. It would be peculiar if any such prescriptions existed as the task set of Mr T to value the husband’s dual choses in action is factually intensive and factually specific.
Mr Shaw KC submitted, correctly in my view, that the production of documents by the trustees to Mr T at this stage of the litigation is not part of general discovery. That was because, so Mr Shaw KC argued, the wife had delivered a statement of claim yet no respondents had filed a defence to the wife’s statement of claim. Mr Shaw submitted that the correct sequence of events in respect of discovery should be –
(a)Mr T should complete his report;
(b)if any amendment to the statement of claim is thereby enlivened once Mr T provides his report then the statement of claim should be amended prior to any defences being filed;
(c)the respondents should then file their defences to the amended statement of claim; and
(d)general discovery should then follow.
The trustees’ counsel have submitted that Mr T has not given direct evidence about why he says he needs documents with respect to information or advice relating to the reasons for the amendments to the trust deeds.
The trustees’ counsel argued that Mr K has already given evidence of the reasons for the changes to the trust deeds and no warrant exists to go beyond that. That seemed to me to be another way of the trustees contending that Mr K has said what he has and no debate should be entered into on point. I reject that position. Mr T is entitled to call for such documents as he considers necessary to enable him to perform the complex task ahead of him. The trustees should not be permitted to control what Mr T sees or considers so as to better enable him to perform the valuation task he has been set.
In my view the minutes sought by Mr T should be provided to him within a short period of time.
The trustees have opposed Mr T being provided with information and advice relating to the reasons for the 2020 amendments to the trust deeds. The trustees have stated that the trust deeds were amended in September 2020 as part of a restructure of the G Group intended to implement –
(a)a revised decision-making framework;
(b)a framework to cater for intergenerational succession of interests and control;
(c)a mechanism for the election of the directors of the trustees from time to time; and
(d)a strengthening generally of the governance regime.
The trustees in written submissions say Mr T has not provided any direct evidence as to why he needs information beyond stating in his 15 April 2023 letter that information and advice given to the guardians or other relevant decision makers of each trust prior to each variation in the trust deed after 20 August 2013 is relevant to understanding the context for the changes and hence developing a reasonable basis for assessing potential future changes.
In their written submissions the trustees advanced three responses to the stance adopted by Mr T. Those responses were –
(a)Mr K has already said what the reasons were for the changes to the trust deeds in 2020 and “there is no warrant for [Mr T] seeking any material beyond that”;[51]
(b)there is no warrant for Mr T to analyse past changes to the trust deeds in the hope that that will provide a reasonable basis for assessing future changes having regard to –
(i)the trust deeds may be changed in the future in light of changing circumstances and no basis exists to think that the reason for past changes will assist in predicting the likelihood of future changes;
(ii)the identity of the directors will change with the passage of time and therefore future decisions of the trustees will not necessarily be made by the same individuals who made the 2020 changes; and
(c)the further information sought is not required to enable Mr T to perform his task because speculative attempts by Mr T to try to predict the likelihood of the trust deeds being amended, and if so how, can provide no assistance to the task of valuing the two choses in action possessed by the husband.
[51] Paragraph 10 of the trustees’ written submissions dated 8 May 2024.
In viva voce submissions addressed on 10 May 2024 Mr Shaw KC made a collection of points on this issue. They included the following –
(a)in his affidavit in support of this application Mr T does not say that he cannot possibly value the husband’s interests without having the documents or information concerning the reasons for the 2020 amendments to the trust deeds;
(b)Mr T has everything he needs to complete his report;
(c)the report by Mr T will illuminate the s 106B claim because there will be no s 106B claim if the husband’s interests were valued at a particular sum prior to the 2020 amendments and the husband’s interests were valued at the same amount subsequent to the amendments; and
(d)in circumstances where a s 106B claim may never see the light of day, it would be extraordinary for disclosure to be required.[52]
[52] Transcript 10 May 2024 T 30 L 43.
CONSIDERATION
Any consideration of those submissions requires the setting of the 2020 amendments in a chronological context. During the currency of the marriage, that is to say, up to 2020 or thereabouts, the husband regularly received trust distributions in substantial amounts made pursuant to trust instruments that operated prior to the 2020 trust deeds. The distributions altered subsequent to 2020. Put most basically, the wife is advancing a contention in this litigation that the 2020 amendments to the trust deeds were effected in order to alter the assets available for allocation under s 79 of the Family Law Act. She wants to know why the 2020 amending trust deeds were executed in the first place. Mr K says the 2020 amending deeds were made as part of general succession planning. The wife takes a different view of the reasons why the 2020 amending deeds were executed. Mr T says that his knowing the reasons for the making of the 2020 amendments will enable him to form a reasonable basis for assessing future change. The trustees say that speculative attempts by Mr T to predict the likelihood of the deeds being amended provide no assistance to the task of valuing the husband’s rights and the reasons for previous amendments similarly give no assistance in that regard.
There is authority to the effect that trustees are not bound to disclose to their beneficiaries their reasons for exercising a discretionary power.[53] Statements of principle from those cases were premised on considerations very different from those with which I am concerned here. Here, the trustees’ reasons are sought to enable an expert valuer to advance his valuation. General concepts about whether trustees are bound to disclose their reasons are of little, if any, utility in my view.
[53] In Re Londonderry’s Settlement; Peat v Walsh [1965] Ch 918, applied in Crowe v Stevedoring Employees Retirement Fund Pty Ltd [2003] VSC 316 and Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405.
I take the view that Mr T is entitled to be provided with information and documents that provide reasons for the making of the 2020 amendments to the trust deeds. With that information and documentation the veracity of Mr K’s stated reasons for the amendments can be measured. It may be that at least one reason for the amendments was a desire of the trustees to limit a divorcing couple among the beneficiaries from having recourse to interests of beneficiaries under the trusts. If so, that may be relevant to the s 106B claim. Mr Shaw KC may well be correct when submitting that the valuation of the husband’s interest prior to and after the 2020 deeds is relevant. But it is equally important to know why the 2020 trust deed amendments were made at all and whether Mr K’s account for the amendments is correct. The documentation relevant to the reasons for making the 2020 amendments is likely to provide some of the answers. I do not agree that there is no warrant for Mr T’s request for that information. His requests for information and documentation should not be sanitized by the trustees. I accept that the process underway in requiring the trustees to provide documentation is invasive. Understandably, the trustees are likely unwilling to provide documentation unless its need is made demonstrably apparent. That said, the task that has been set of Mr T in this case is novel. No case law exists to offer guidance about what a valuer of the dual choses in action in issue in this case should be given to enable the valuer to complete the valuer’s task. That task is sufficiently complicated without the intervention of the 2020 amending trust deeds. Knowing why the relevant trusts were amended is a matter of importance to Mr T. In my view he should be told in order to enable him to perform the task of valuing the dual choses in action. It must be remembered that French CJ in Kennon v Spry[54] held that valuing the dual choses in action in issue in this case is not beyond the actuarial arts. Precisely how to undertake that valuation went unexplained in Kennon v Spry. I take the view that it is unwise to fetter the legitimate requests made by Mr T for documentation. I also take the view that it is no reason to impede his access to such information for the trustees to say, in effect, that Mr T has already been provided with all he needs. It is not up to the trustees (or, more importantly, one director of one trustee) to tell a highly qualified valuer what the valuer needs to perform his tasks.
[54] (2008) 238 CLR 366.
The husband’s written submissions proceeded on the basis that the matters to be resolved in respect of Mr T’s requests for documentation are to be determined by general principles of discovery. In the husband’s written submissions, propositions were advanced bearing upon principles about discovery generally. While certain propositions are undoubtedly correct, for example, the statement from Alister v R[55] that discovery that materially assists in the determination of an issue in the proceeding is relevant. However, the application for the documents specifically sought by Mr T is not general discovery. That is for the self-evident reason that none of the respondents have filed defences to the wife’s statement of claim and therefore no delineation of the issues for determination has been given. That will take place upon the close of pleadings.
[55] (1984) 154 CLR 404.
The husband advanced the contention that the discovery order sought must be proportional. The contention was expressed thus –
14.The discovery exercise ought to be proportional to the exercise at hand and balance any reasonable requests of the adversarial expert with the rights of the parties to an expedient trial and to not incur ongoing costs of this litigation in circumstances where the underlying premise of the adversarial valuation is in dispute.
Several things must be said of that contention. First, Mr T’s request for specific documents to enable him to complete his report is not general discovery. Second, precisely what was meant by the phrase “the discovery exercise ought to be proportional to the exercise at hand” went unexplained, especially why proportionality was relevant, what exercise was at hand and why Mr T’s task in formulating his report was “general discovery”, which it is not. Third, it ill behoves the husband to press for expedition in Mr T’s formulation of his report when the task set of Mr T is novel and complex. The husband seems to consider that Mr T’s task is routine. It is very far from that. Fourth, the husband argues the trustees’ case by protesting about records of the trustees that Mr T requests. The trustees are well-advised and well represented in this litigation. The trustees’ contentions are best made by them and not by the husband. One of the mainstays of the husband’s stance on this application was his contention that as a director of the second, third and fourth respondents he was not under an obligation to give discovery of company documents.[56] The husband relied on an authority that does not bind me so I have disregarded it.[57] The husband submitted that he does not enjoy a right of access to documents of the company he directs in relation to private litigation between the director personally and another.
[56] The husband relied on an array of authorities on point including B v B [1979] 1 All ER 801, 807, Hardcastle v Advanced Mining Technologies Pty Ltd [2001] FCA 1846, Dick v Alan Powell Holdings Pty Ltd [2009] QSC 184, Stern v Sekers [2010] NSWSC 59 and Schweitzer & Schweitzer [2010] FamCA 445.
[57] Tavano & Tavano [2022] FedCFamC2F 326.
The case law in relation to a director’s access to documentation owned or controlled by the company the director directs provides that access is confined to the director having such access to enable the director to fulfil the fiduciary duties he or she owes to his or her company. The provisions of s 198F and s 290 of the Corporations Act confer upon the director a right of access to the company’s books and financial records so long as that access is to better enable the director to discharge his or her duties as a director.
There is considerable merit in those contentions. It seems to me to be erroneous for the wife to seek from the husband documents in the possession, power or control of the company he directs for use in private litigation in this court. The wife’s counsel did not propound a submission that answered the husband’s contentions in that regard. Accordingly, the wife is not entitled to obtain from the husband documents of the second, third and fourth respondent. The mere fact that the husband is a director of those trustees does not render the documents amenable to his private use in this litigation.
Returning to the allegations and arguments about the loss of legal professional privilege, it is necessary to close off the submissions advanced by the trustees because, it seemed to me, that the trustees’ contentions were to be preferred. Mr Shaw KC submitted –
(a)it is not at all clear that an allegation of fraud is made at all by the wife and no document was put forward by the wife to support the suggestion that colour has been given to an allegation of fraud or other impropriety;
(b)all considerations about privilege should await general discovery once pleadings close;
(c)in the usual course of events, on discovery a party asserting the existence of privilege claims the privilege and a debate is then commenced about the basis of the claim;
(d)in the context of the privilege claim in respect of one or more identified documents, the party seeking discovery (here, the wife) can advance whatever facts and submissions she wishes to propound that privilege does not apply including by reason of fraud or impropriety; and
(e)a degree of precision is called for when asserting fraud especially in particularising pleadings in which fraud is alleged.[58]
[58] In Goodridge v Beadle (2017) 57 Fam LR 425 I surveyed the requirements of asserting, pleading and proving fraud.
Mr Shaw KC submitted that the debate about privilege was premature.
Mr T has been ordered to prepare his valuation by order made by me on 27 October 2023. Those were consent orders, one paragraph of which required all parties to cooperate in the provision to Mr T of documents he requested. Over a period of time, Mr T has requested documents most of which having been produced in accordance with Mr T’s requests. The trustees have resisted producing certain documentation, namely –
(a)minutes of meetings of a particular class; and
(b)documents and information relating to the decision to make the 2020 amendments to the trust deeds.
For reasons already expressed, I take the view that the trustees must supply to Mr T documents in both categories. Mr T says he needs them to undertake his task. Whether or not Mr K takes a different view is beside the point as Mr T is to be the author of the report and what he introduces into his formulation of his reasoning is a matter for him. When it comes time to cross-examine Mr T, questions can be asked about why one or more documents were considered important. It is not proper for the trustees to attempt to control the information that will be supplied to Mr T to enable him to perform the task he was ordered to perform when valuing the husband’s interests in various trusts.
Documents sought from the husband in his capacity as a director of one or more of the second, third and fourth respondents (the three trustees) need not be produced. The husband is not entitled to demand documents from the company he directs for use, not to promote the best interests of the company, but in the context of personal litigation involving the director husband and his former wife.
The argument about privilege must await the close of pleadings because only then will the issues in dispute be fully formed. Once pleadings close, where in respect of a specific document or class of documents, legal advice privilege is asserted and the wife opposes such a claim on the basis of fraud or some other form of impropriety, then a fully formed debate can be conducted in respect of those documents. At present, any such claim is abstract.
ORDERS
I take the view that in respect of the specific paragraphs to the wife’s application in a proceeding filed 17 April 2024, several responses must be made.
Paragraph 1(a) of the wife’s application in a proceeding is not formally defective. It must be answered by the trustee.
Paragraph 1(b) of the wife’s application in a proceeding is unacceptably broad and need not be answered by the trustees.
Paragraph 1(c) of the wife’s application in a proceeding is not defective and must be answered by the trustees.
Paragraph 1(d) of the wife’s application in a proceeding is unacceptably broad and need not be answered by the trustees.
Paragraph 1(e) of the wife’s application in a proceeding is not formally defective and must be answered by the trustees.
Paragraph two of the wife’s application in a proceeding must be answered. I am of the view that a reconciliation is necessary. The trustees have already provided one.
The trustees must provide the documentation ordered by 17 June 2024.
I certify that the preceding one hundred and seventeen (117) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Wilson. Associate:
Dated: 27 May 2024
0
23
4