This is a sample (posted 19 July 2024) of “Latest Notable Cases”, which is posted monthly with live links for members at the Members’ Home Page under Members’ Practice News. Also available at our Members’ Home Page (along with our E-Book, our up-to-the-minute family law and child support practice news, our online forms and precedents and our free legal help line) is our online members’ Archive of all our back issue indexed case notes (assembled by topic and with live links to AustLII), useful papers and client brochures.

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Property – No error in order compelling disclosure of company documents where companies were not party to proceedings – Wife was entitled to disclosure to investigate application of income after allegedly fraudulent transfer of units in unit trust

In Jess (No 5) [2024] FedCFamC1A 85 (16 May 2024) the Full Court (Alstergren CJ, Austin & Williams JJ) heard an appeal by third party respondents against orders for disclosure.

The background to the proceedings included: the husband and wife entering into consent orders premised on a deed of trust in favour of the parties’ son (“Mr Jess Jnr”), the husband later confessing to the wife that the deed was fraudulent, the wife filing proceedings to set aside the consent orders and the husband becoming bankrupt and then dying. The consent orders were set aside pursuant to s 79A(1A). The wife then sought s 106B relief to set aside the fraudulent deed (see our case summaries of Jess (No 4) [2023] FedCFamC1A 189 and Jess (No 3) [2023] FedCFamC1A 2 in our archived property case notes under “transaction to defeat claim” and “ section 79A” respectively).

As part of the s 106B proceedings, the Court directed all respondents to provide disclosure, including that Mr Jess Jnr provide documents of companies in which he held an interest, irrespective of whether those companies were a party to the proceedings ([26]).

The third party respondents appealed, arguing that their right to keep documents confidential had been “conclusively infringed by the orders” ([32]).

The Full Court said (from [36]):

“We regard the financial disclosure orders as being interlocutory in nature, such that no appeal lies from them without an antecedent grant of leave to appeal. The classification of orders for discovery as being interlocutory in nature is not novel (Apache Northwest Pty Ltd v Newcrest Mining Ltd [2009] FCAFC 39 … )

[37] … [T]he respondents are compelled by the orders to disclose information they would prefer to keep confidential, but the compulsive disclosure of such information pursuant to an order is not an infringement of any substantive legal right enjoyed, or obligation borne, by the respondents. Their desire for the retention of confidentiality in the documents is not the same thing as the enjoyment of a right to the retention of confidentiality …

( … )

[73] [The appellants contend] … the primary judge erred by making the orders which enable the wife to undertake a tracing exercise in respect of the Units and the income they generated. … [T]he respondents cited authority for the principle establishing how tracing claims generally require the party seeking the trace to show an original proprietary right or claim in respect of the property sought to be traced (RnD Funding Pty Ltd v Roncane Pty Ltd [2023] FCAFC 28 … It was contended the wife had no proprietary interest in the Units and so had ‘no proprietary base’ from which to mount her tracing claim.

[74] The deceased formerly owned the Units. The wife had and has no proprietary interest in the Units unless and until she secures such an interest in them pursuant to a property settlement order made in the exercise of discretion under Pt VIII of the Act …

( … )

[76] … Although the wife formerly enjoyed no ownership in the Units, she has a pending claim for a proprietary interest in them, which claim depends upon her antecedent claims for recovery of the Units pursuant to either s 106B of the Act or equitable principles. The potentiality for the wife’s lawful reliance upon s 90AE of the Act cannot be discounted. Nor can her potential reliance upon s 78 of the Act, enabling a declaration that the deceased’s existing property interests include the Units.

( … )

[78] … [T]he wife’s pending claim for a proprietary interest in the Units pursuant to Pt VIII of the Act is, or may be, a sufficient foundation for her to trace the Units and the income (RnD Funding Pty Ltd v Roncane Pty Ltd at [48]).

[79] … [E]ven if that were not so, the deceased and the trustees both support the wife’s claims to claw back the Units and the income generated by the Units after 2009 … [I]t is an artifice for the respondents to try and distinguish between the parties who do and do not have the right to trace when they seek the same relief and mutually support the claim of the other.

( … )

[93] The respondents contended the orders improperly grant the wife ‘wife-ranging discovery’ in satisfaction of her desire to ‘see whether she has … a case to plead; not merely to particularise the fraud that she has pleaded’, which contention is not accepted. It is not uncommon for discovery to be granted before pleadings of fraud are particularised …

[94] The wife’s specific pleadings of fraud are presently confined to events up to September 2009, as the respondents assert, but the discovery of documents thereafter is relevant to her claim for remedial relief by way of restoration of the Units’ ownership to the deceased, recovering them from whichever respondent or respondents now own them, and the recovery of income generated by the Units since 2009, as distributed to or between the respondents. Unless the ownership of the Units after September 2009 is established and the recipients of income generated by the Units are identified, the wife’s claims for relief are liable to be thwarted.

[95] Even if the respondents do amend their Defence to plead … that Mr Jess Jnr remains the sole owner of the Units and he has been the sole recipient of income generated by the Units since September 2009, the wife is not bound to accept that as being true. She is entitled to investigate it.

[96] We agree with the reasons of the former Full Court, who said this in Jess & Jess (No.4):

‘ … it is difficult to see how the applicants could resist making discovery with respect to the consequences of the disposition of the Units as this would almost certainly be relevant to the exercise of the Court’s discretion pursuant to s 106B of the FLA.’”

Leave to appeal was refused. The appellants were ordered to pay the first respondent’s fixed costs of $71,258.

 

Our latest notable cases this month also include summaries of cases that involve the following:

 

Property – Order for leave to proceed out of time set aside – De facto wife established hardship but failed to provide sufficient reason for delay in commencing proceedings – Ignorance of time limit or poor advice not a valid reason to extend time

 

Child support – Father’s previous unsuccessful challenges to child support assessments did not overcome s 111 requirement for leave to seek departure orders from a child support assessment more than 18 months old

 

Children – Father successfully subpoenaed counselling records and notes from Domestic Violence Crisis Service, Victim Support Service and Rape Crisis Centre – Restrictions upon such evidence in Evidence (Miscellaneous Provisions) Act 1991 (ACT) not applicable

 

Property – Wife’s application for leave to join husband’s father refused – No failure of joint endeavour or pooling of resources between father, husband and wife to support a constructive trust, where wife alleged that her and husband’s contributions to a farm were reliant upon representations of ownership upon the father’s death

 

Property – Mother did not promise her son her 90 per cent interest in jointly owned property, nor was there a common intention constructive trust – Promissory estoppel and equitable trust claims dismissed

 

Property – NSW Civil and Administrative Tribunal bound by High Court decision of Gazzo v Comptroller of Stamps (Vic) [1981] HCA 73 – Earlier version of s 90 of Family Law Act invalid – Duty assessments for over $1.8 million confirmed where land was transferred pursuant to FLA orders from “various entities” to a company