Asciak v Australian Secured and Managed Mortgages Pty Ltd

BACKGROUND 7 The plaintiff and Ms Asciak were married on 28 December 1985. In June 2003 they decided to commence a mortgage origination and management business to be called A.S. Mortgage Managers. Both the plaintiff and Ms Asciak were involved in the business. 8 In July 2004 the business was restructured and, according to the plaintiff, was thereafter primarily operated by the first defendant. This is contested by Ms Asciak. The plaintiff contends that the fourth defendant remained as the asset holding company whilst the first defendant was the trading entity. This is contested by Ms Asciak who contends that prior to 1 July 2006 the fourth defendant acted as both the trading entity and as the holder of assets in its own right and as trustee of the Asciak Family Trust. It is not necessary to resolve this contested issue for the purposes of this application. 9 On 2 November 2005 the marriage between the plaintiff and Ms Asciak broke down irretrievably. The plaintiff moved out of the matrimonial home on 27 January 2006 and thereafter the plaintiff and Ms Asciak attempted to conduct the business jointly. Ultimately on 1 March 2006, the plaintiff agreed to cease his active involvement in the business of the first defendant. 10 On 9 March 2006 Ms Asciak issued an application in the Family Court of Australia seeking orders for dissolution of the marriage. On 27 March 2006 the Family Court of Australia made orders by consent which provided for the ongoing participation of the plaintiff and Ms Asciak in the business. In particular Ms Asciak was to provide the plaintiff with specified ongoing financial information in relation to the business. 11 The plaintiff contends that from 27 March 2006 until at least 8 June 2006 Ms Asciak did not comply with the orders made on 27 March 2006 which required her to provide him with financial and other information concerning the business finances and performance of the companies in the group. 12 The plaintiff contends that from 27 March 2006 onwards he no longer had any access to the business premises of the business and no longer had access to the financial and other records of the business save for online access to the business, bank accounts.. 13 On 22 May 2006 the plaintiff and Ms Asciak jointly appointed PPB Forensics as an expert to provide a valuation of their respective interests in the group business. In the course of preparing its report PPB Forensics, on 2 June 2006, requested the solicitors for the plaintiff and Ms Asciak to provide further specified information in relation to the business. 14 On 28 June 2006 the plaintiff met with a partner of PPB Forensics who informed him, inter alia, that he had not been given all the information that was required to make a proper assessment of the business. The plaintiff instructed his solicitors to ensure that PPB Forensics was given full access to the documentation that had been requested. PPB Forensics provided its valuation on or about 12 July 2006. 15 On 22 May 2006 the plaintiff and Ms Asciak appointed JLC Valuers to value the residential, commercial and investment properties which they owned or controlled which were to be divided in the financial settlement. JLC Valuers supplied valuations on 3 June 2006. 16 The plaintiff believes that the PPB Forensics report is materially inaccurate in its valuation of the group of companies and that it fails to consider many matters that ought to have been discernible from a draft report prepared by an accountant employed by the group for the financial year ended 30 June 2005. For present purposes it is not necessary to investigate those matters in any detail other than to note that the plaintiff particularises the matters in respect of which he is concerned. 17 As a result of steps taken by Ms Asciak to remove the plaintiff as a director of the first defendant, the Family Court of Australia, on 8 June 2006, on the application of the plaintiff, made orders preventing Ms Asciak from taking any steps to remove him as a director or as an officer of any of the companies in the group and made orders that Ms Asciak provide the plaintiff within seven days the documentation that had been the subject of the orders made by the Family Court of Australia on 27 March 2006. 18 Thereafter between June and August 2006 there was correspondence and dialogue between the plaintiff's legal adviser and Ms Asciak's legal advisers seeking to resolve financial and property issues between them. In particular, the plaintiff was concerned that Ms Asciak provide the financial documents pursuant to the orders of the Family Court of Australia made on 8 June 2006. According to Ms Asciak, she asked the defendant companies' bookkeeper and external accountants to provide PPB Forensics with any information it requested. Again, it is not necessary to resolve this contested issue for the purpose of this application. 19 On 30 August 2006 a conciliation conference was held at the Family Court of Australia at which the plaintiff and Ms Asciak were represented by their legal advisers. The plaintiff has given evidence as to the sequence of events at this conference and as to statements made by each of the parties and their representatives. The conference was apparently conducted by a Registrar of the Family Court of Australia. All financial matters between the parties were resolved at the conference and on the same day, final property orders were made in accordance with the orders referred to in par [4] above. 20 The defendants object to any evidence being given by the plaintiff as to what occurred at the conciliation conference on the grounds that evidence of what was said at the conference is inadmissible. The defendants relied upon s 19N(2) of the Family Law Act which is now repealed. They relied upon that repealed provision because it was operative at the time of the conciliation conference which was held on 30 August 2006. Section 19N(2) provided: "evidence of anything said, or any admission made, at any meeting or conference conducted by a person to whom this section applies whilst the person is acting as such a person is not admissible; a. in any Court (whether exercising Federal Jurisdiction or not); b. in any proceedings before a person authorised by law of the Commonwealth or of a State of Territory, or by the consent of the parties, to hear evidence." That provision was substantially replaced by s 10J of the Family Law Act which applied on the date this proceeding was filed and on the date of the hearing. Section 10J(1) provides: "(1) Evidence of anything said, or any admission made, by or in the company of: (a) a family dispute resolution practitioner conducting family dispute resolution; or (b) a person (the professional) to whom a family dispute resolution practitioner refers a person for medical or other professional consultation, while the professional is carrying out professional services for the person; is not admissible: (c) in any court (whether or not exercising federal jurisdiction); or (d) in any proceedings before a person authorised to hear evidence (whether the person is authorised by a law of the Commonwealth, a State or a Territory, or by the consent of the parties)." 21 It is of no consequence whether the repealed s 19N(2) or the current s 10J of the Family Law Act applies to the evidence upon which the plaintiff now wishes to rely as the evidence falls within both provisions. 22 I was informed by counsel for the defendants that the conciliation conference was conducted by Registrar Rose of the Family Court of Australia. There was no evidence to that effect or as to the circumstances under which the conciliation conference was conducted. When I enquired as to how it was contended that what occurred at the conciliation conference came within s 10J of the Family Law Act, counsel for the defendants informed me that he relied on s 10J(1)(a) and that he assumed that Registrar Rose was an accredited family dispute resolution practitioner and he assumed that s 10G(1)(a) applied to Registrars within the Family Court of Australia. He was not able to say that as of 30 August 2006 Registrar Rose was such a person. 23 There was therefore an issue between the parties as to whether what occurred at the conciliation conference fell within either s 19N or s 10J. The plaintiff submitted that there was no evidence before the Court to establish that the Registrar who presided over the conciliation conference was a person referred to in either s 19N or s 10J. 24 The evidence before me and the submissions made in relation to s 19J and s 10J were such as to leave me in a state of uncertainty as to whether what occurred at the conciliation conference was not admissible by virtue of those sections. It was not necessary to determine that issue because the defendants also relied on s 131(1) of the Evidence Act 1995 (Cth) which provides: "(1) Evidence is not to be adduced of: (a) a communication that is made between persons in dispute, or between one or more persons in dispute and a third party in connection with an attempt to negotiate a settlement of the dispute; or (b) a document (whether delivered or not) that has been prepared in connection with an attempt to negotiate a settlement of a dispute." 25 The plaintiff submitted that the evidence upon which he seeks to rely as to the sequence of events at the conciliation conference, and as to the statements made by each of the parties and their representatives, were nevertheless admissible pursuant to the provisions of s 131(2) of the Evidence Act which provides: "(2) Subsection (1) does not apply if: (a) … (b) … (c) … (d) … (e) … (f) the proceeding in which it is sought to adduce the evidence is a proceeding to enforce an agreement between the persons in dispute to settle the dispute, or a proceeding in which the making of such an agreement is in issue; or (g) … (h) … (i) making the communication, or preparing the document, affects a right of a person; or (j) the communication was made, or the document was prepared, in furtherance of the commission of a fraud or an offence or the commission of an act that renders a person liable to a civil penalty; or (k) one of the persons in dispute, or an employee or agent of such a person, knew or ought reasonably to have known that the communication was made, or the document was prepared, in furtherance of a deliberate abuse of a power. (3) For the purposes of paragraph (2)(j), if commission of the fraud, offence or act is a fact in issue and there are reasonable grounds for finding that: (a) the fraud, offence or act was committed; and (b) a communication was made or document prepared in furtherance of the commission of the fraud, offence or act; the court may find that the communication was so made or the document so prepared. (4) For the purposes of paragraph (2)(k), if: (a) the abuse of power is a fact in issue; and (b) there are reasonable grounds for finding that a communication was made or document prepared in furtherance of the abuse of power; the court may find that the communication was so made or the document so prepared. …" 26 An interesting question arises as to whether s 10J (and the former s 19N(2)) applies to communications covered by its terms to the exclusion of s 131 of the Evidence Act. This issue was not the subject of argument or submissions before me and having regard to the conclusion which I have reached, it is not necessary for me to address or resolve it. 27 I am satisfied that the challenged evidence upon which the plaintiff relies (pars 42 and 43 of his affidavit sworn on 30 November 2007 and pars 8, 9, 10 and 11 of his affidavit sworn on 15 February 2008) falls within subs (1) of s 131 of the Evidence Act. The communications which occurred at the conciliation conference on 30 August 2006 were clearly made between persons in dispute in connection with an attempt to negotiate a settlement of the property dispute between the plaintiff and Ms Asciak. 28 In substance, the plaintiff says that his legal representatives were provided with an email from the defendants' external accountant which disclosed that the defendants had tax liabilities which comprised $98,988 for the 2004 financial year and $48,500 for the 2005 financial year. This email was shown to the plaintiff. The plaintiff says further that his representatives were told orally by Ms Asciak's representatives that an estimate of the defendants' tax liability for the 2006 financial year was around $200,000 and that this estimate was passed on to him. The plaintiff says that in determining to settle the property dispute with Ms Asciak he relied upon the email and the representations from Ms Asciak's representatives concerning the defendants' tax liabilities and financial position. 29 In order to avoid the application of s 131(1) to the evidence upon which he wishes to rely in relation to the conciliation conference, the plaintiff relied on subpars (f), (i), (j) and (k) of s 131(2). 30 I do not consider that these subparagraphs enable the plaintiff to adduce the challenged evidence of what occurred at the conciliation conference. 31 In order for subpar (f) to apply, the proceeding which the plaintiff proposes to bring in the Family Court must be a proceeding to enforce the settlement agreement between Ms Asciak and himself or a proceeding in which the making of the settlement agreement is in issue. The plaintiff proposes to bring a proceeding to have the consent orders made by the Family Court on 30 August 2006 set aside. To the extent to which those consent orders are based on an agreement reached between the parties, the plaintiff is seeking to set aside that agreement; he is not seeking to enforce it or put in issue the making of it. Accordingly subpar (f) is of no assistance to the plaintiff. 32 I do not consider that subpar (i) of s 131(2) applies. The plaintiff submitted that the communication in question was designed to affect the plaintiff's rights as a director because the agreement that was entered into, and the orders made in consequence of that agreement, provided for him to transfer his shares in the defendants and resign as a director of the defendants. However, the communications in respect of which the plaintiff wishes to adduce evidence related to financial matters pertaining to the defendants. The making of the communications did not affect any right of the plaintiff; rather, they provided him with information which he could take into account in making a decision as to how to resolve his outstanding disputes with his wife. 33 In Glass v Demarco [1999] FCA 482, a bankruptcy petition was before the court. The debtor filed an affidavit in which he gave evidence about an offer of compromise in another court proceeding. Objection was taken by the petitioning creditor to the admissibility of that evidence who relied on s 131(1) of the Evidence Act. The debtor relied on s 131(2)(i) of the Evidence Act. At par [10] Emmett J said: "… The contention, as I understand it, is that a right of the debtor is affected by the offer because the debtor, by reason of the offer, has a right to accept it and thereby create a contract of compromise. I consider that the reference to a right in s131(2)(i) is to an existing right and it is not satisfied by reason of a right coming into existence upon the making of an offer." Although it might be said that the plaintiff had at the date of the conciliation conference rights by virtue of his position as a director of the defendants, that right was not affected by the making of the communications in respect of which the plaintiff wishes to adduce evidence. 34 In Talbot v NRMA Limited [2000] NSWSC 602, Hodgson CJ in Eq said at par [3]: "Mr Shand has referred me to s 121(3) of the Evidence Act, which states that privilege would not prevent the producing of evidence of a communication or document which affects the rights of a person. In my opinion, that cannot mean a communication or document that is relevant to a right of a person because that would virtually eliminate the legal professional privilege as a ground for non‑admission of evidence. In my opinion, that must mean a communication or document that affects in some fairly direct way what are the actual rights and perhaps also duties of a person." I consider that these observations apply equally to the communications in respect of which the plaintiff wishes to adduce evidence. They do not affect in any direct way the actual rights of the plaintiff. 35 I do not consider that subpar (j) of s 131(2) is of any assistance to the plaintiff. Notwithstanding the provisions of subs (3) of s 131, I am not satisfied that the circumstances identified by the plaintiff form any basis for suggesting that the communications in respect of which the plaintiff wishes to adduce evidence and the document which was handed to his legal advisers were made or prepared in furtherance of the commission of a fraud or of an offence or the commission of an act that rendered any person liable to a civil penalty. There is not sufficient evidence before me upon which I could form even a tentative or preliminary view that Ms Asciak was seeking to commit a fraud or an offence or an act that rendered her liable to a civil penalty. 36 The plaintiff relied in his written submissions on subpar (k) of s 131(2) of the Evidence Act. This was not addressed in oral submissions and there is no material before me upon which it could apply. 37 It follows that the plaintiff cannot rely upon, and I rule as inadmissible, pars 42, 43 and 44 of his 30 November 2007 affidavit and pars 8, 9, 10 and 11 of his 15 February 2008 affidavit. 38 The plaintiff submitted that even if I ruled these paragraphs inadmissible there was nevertheless still sufficient evidence which warranted the Court making an order under s 198F(2)(b) of the Corporations Act. 39 The defendants submitted that the plaintiff was searching for documentation which he believed might assist him in relation to a possible application in the Family Court pursuant to s 79A of the Family Law Act so that the Family Court was the proper court in which the application presently before this Court should be made if and when proceedings pursuant to s 79A were instituted. It was submitted that the Family Court had jurisdiction to order Ms Asciak to make available for inspection all documents in the possession or power of any company of which she was a director. The defendants also submitted that the plaintiff was proposing to embark on a fishing expedition in circumstances where final property orders were made in August 2006. 40 The defendants did not accept that the plaintiff was proposing in good faith to bring a legal proceeding in the Family Court. They submitted that what he was saying, in effect, was that he had a suspicion that there had been a misrepresentation as to the true value of his interest in the defendant companies and he wanted to have a look at the books of the defendants to see whether he might issue proceedings in the Family Court, but there was no certainty that he would. 41 The defendants submitted, in the alternative, that even if the plaintiff was proposing to bring proceedings in the Family Court to set aside the consent orders made on 30 August 2006, he should seek access to the books of the defendants in the Family Court proceeding as the Family Court had the sole jurisdiction to deal with matrimonial disputes. 42 The defendants did not submit that I did not have jurisdiction under s 198F(2) of the Corporations Act to make the orders sought but rather submitted that, as a matter of discretion, I should refuse the order on the basis that the Family Court was the court in which the plaintiff and Ms Asciak had resolved their matrimonial differences and obtained final orders. 43 It is true that I have a discretion whether or not to make an order under s 198F(2) of the Corporations Act but it seems to me that if all other requirements contained in the section for the exercise of the jurisdiction are satisfied I should be slow to refuse to exercise that jurisdiction on the basis that there is, or may be, an opportunity to obtain access to the same books in proceedings in another court. 44 The defendants submitted that the plaintiff had provided no satisfactory evidence that he proposed to bring legal proceedings against Ms Asciak which had to be commenced in the Family Court and not in the Federal Court and he had not issued any such proceedings to date. 45 The defendants submitted that the plaintiff had failed to identify specific categories or classes of financial documents which he wished to inspect and had failed to indicate that production of such documents would have any bearing on the outcome of any relevant legal proceeding. The defendants complained that there was no attempt made by the plaintiff to limit the sort of documents which were sought for inspection. 46 In his Originating Process, the plaintiff specified the books in respect of which the order for inspection was sought as: "including but not limited to: 2.1 all taxation returns 2.2 all audited accounts for the financial years ending 30 June 2004, 30 June 2005 and 30 June 2006 …" He also sought an order in relation to documents relating to an application for, and the provision of, financial accommodation to the first defendant by Challenger Mortgage Management Pty Ltd ("Challenger") in early 2007. 47 I accepted this submission by the defendants and indicated to the plaintiff that he would need to specify the books sought with a greater degree of particularity. 48 The books of the defendant companies in respect of which the order is sought were then particularised by the plaintiff in the following terms: (a) The tax returns sent by the defendants to the Australian Taxation Office including any attachments for the financial years ending 30 June 2004, 30 June 2005 and 30 June 2006; (b) the certificates returned by the Australian Taxation Office to the defendants in respect of each of the tax returns referred to in par (a) above; (c) Balance sheets for each of the defendants as at 30 June 2004, 30 June 2005 and 30 June 2006; (d) Trial balances for each of the defendants as at 30 June 2004, 30 June 2005 and 30 June 2006; (e) Profit and loss statements for each of the defendants for the years ending 30 June 2004, 30 June 2005 and 30 June 2006; (f) In relation to the Challenger loan application made by the first defendant in about early 2007: (i) any loan applications made by the first defendant to Challenger and any supporting documentation provided; (ii) any loan approval letters (or like documents) from Challenger, including any attachments; (iii) any valuations procured by the defendants, and/or Challenger which are in the possession or power of the defendants for the purposes of the loan application; (g) all documents relating to an application for, and the provision of, financial accommodation to the first defendant, Australian Secured and Managed Mortgages Pty Ltd by Challenger in or about early 2007. 49 In Hardcastle v Advanced Mining Technologies Pty Ltd [2001] FCA 1846. Emmett J, in the course of analysing the right of inspection conferred by the subsection, considered that specific books should be identified. His Honour said at par [24]: "That does not mean to say that specific documents need to be identified by the former director. A former director would not necessarily remember every piece of paper that a Company had. However, in my view, the section requires that a person seeking to inspect books must identify at least specific categories or classes of books, which have some bearing on the relevant legal proceeding. There may be a question as to whether or not the former director is required to identify precisely how the relevant books are relevant or material to that proceeding. There must, however, be some indication of the nature of the books sought and the bearing that the books have on the proceeding in question." I agree with these observations and am satisfied that the ultimate formulation of the order sought by the plaintiff identified the books sought to be inspected with sufficient particularity. 50 The defendants submitted that the proceeding in the Federal Court did not relate to anything the plaintiff had done in his capacity as a former director of the defendant companies. 51 In Hardcastle v Advanced Mining Technologies (supra), Emmett J considered that there was a second possible limitation on the operation of s 198F(2) of the Corporations Act. His Honour said at par [25]: "…the proceeding must be a proceeding to which the former director is a party or believes might be brought against him or her or which he or she proposes to bring in his or her capacity as a director of the company. It would be curious if a person who, fortuitously, happened to have been a director of a company in the past would be entitled to access to books of the company that might be material to proceedings brought by that former director or which might be brought against the former director in a capacity totally unconnected with the capacity of the former director as a director. I do not express any firm or final view on that question at this stage because it does not arise in the application before me. Section 1303 authorises intervention by the Court where a person in contravention of the law refuses to permit inspection." Emmett J did not form a concluded view on this issue and I would, with respect, not read such a limitation into the provision. 52 The defendants submitted that on the proper construction of s 198F(2) of the Corporations Act the only right given to a director was to inspect such books of the company which came into existence during the period of seven years immediately preceding the date upon which the former director ceased to be a director of the company. I do not accept this construction of s 198F(2). The reference to seven years in the subsection is a reference to the period during which the right to inspect exists; that is to say, the right to inspect is a right which continues for seven years after the date upon which the person ceases to be a director of the company. If that right is exercised during that seven year period, it is a right to inspect books which may well have come into existence a considerable period before the date upon which the person ceased to be a director of the company, and it also is a right to inspect books which have come into existence after the date upon which the person ceased to be a director of the company. The period of seven years referred to relates to the period during which the right to inspect arises; it is not a period which relates to the period during which the books of the company came into existence. 53 The defendants submitted that the plaintiff was not proposing in good faith to bring a proceeding in the Family Court. They submitted that the lack of good faith was evidenced by the facts that in August 2006 both parties had been involved in a Family Court property dispute, they had been represented by highly qualified advisers, they had made a decision which was recorded in consent orders and that 18 months later it could not be said that the plaintiff was acting in good faith in raising the issues he had. The defendants pointed to the fact that the plaintiff was seeking to criticise the expert's report which had been given to the parties prior to the conciliation conference and that it had always been open to him to do so prior to the making of the final orders. In short, it was submitted that the plaintiff was not acting in good faith in bringing an application in November 2007 to rectify matters which were within his control prior to the making of the final orders. 54 However, that is not the case which the plaintiff seeks to make. It is on the basis of what he alleges is a misrepresentation by or on behalf of Ms Asciak that he is proposing to take proceedings in the Family Court to set aside the consent orders pursuant to s 79F of the Family Law Act. This is made clear in paragraph 6 of his affidavit sworn on 30 November 2007 in which he says: "As a result of the occurrence of events which I describe below I now believe that my consent to the August Orders was procured by Ms Asciak, the sole remaining director of those companies, on the basis of a misrepresentation as to the true value of my interest in those companies. I set out the basis of this belief below." 55 There are a number of controversial issues between the parties which it is not appropriate for me to resolve in this proceeding. These issues relate to whether Ms Asciak made full disclosure of all the information sought from her prior to the conciliation conference on 30 August 2006, whether there are any deficiencies in the expert's report, and whether there is a basis for the plaintiff's claim that there was a misrepresentation made to him as to the true value of his interest in the defendant companies. Neither the plaintiff nor Ms Asciak were cross‑examined in the proceeding and I should only proceed on the basis that these controversial issues exist that may have to be resolved in other proceedings. 56 A difficulty facing the plaintiff, which is relevant to the determination of the question whether he is proposing in good faith to bring the proceeding in the Family Court, is whether he is able at the present time to establish the factual background or foundation for his application otherwise than by unsubstantiated assertions: see Stewart v Normandy NFM Ltd (2000) 211 LSJS 41 at par [10]; Boulos v Carter (2005) 220 ALR 572 at par [31]. 57 The plaintiff accepted quite properly that if, for the purposes of s 198F(2) of the Corporations Act, a person proposed to bring a proceeding which was absolutely hopeless then the position would be that the person could not satisfy the good faith requirement in subpar (b) of s 198F(2). He also accepted that in order to succeed in the proposed application under s 79A of the Family Law Act, it would be necessary for him to provide evidence that the tax liability representations were made by Ms Asciak, or one of her representatives, to his solicitors or counsel. 58 It is therefore necessary to examine the factual background to the plaintiff's application to this Court. The critical information upon which the plaintiff relies is the taxation liability of the defendant companies in 2006. The plaintiff contends that the taxation liability of the defendant companies was in fact different from that what it was represented to be in the expert PPB Forensics report dated 12 July 2006. In the expert PPB Forensics report it was stated that the level of profits for 2006 was $323,583. On the basis of that statement the plaintiff made certain assumptions about the taxation liability of the defendants. When the plaintiff discovered that the defendants had obtained refinancing from Challenger which had the effect of paying out all existing liabilities to the National Australia Bank, and also providing an additional amount of $110,965.96, he inferred that the taxation liability of the defendants must have been other than what was represented to him in the course of the conciliation conference. 59 The plaintiff in paragraph 43 of his affidavit sworn 30 November 2007 says that in determining to settle the property dispute on 30 August 2006 he relied upon representations by Ms Asciak's representatives concerning the taxation liabilities of the defendant companies and representations made by MDB, the defendants' external accountants, concerning their taxation liabilities. He defines these representations as "the tax liability representations". However, those representations, set out in paragraph 42 of his affidavit are not admissible, as I have determined above, by virtue of the provisions of s 131(1) of the Evidence Act. 60 The plaintiff says that since agreeing to the orders made on 30 August 2006 he has become aware of a number of matters that caused him to believe that Ms Asciak has misrepresented the financial position of the defendants. In particular, he believes that the tax liability representations were misleading. He sets out the basis of his belief which it is not necessary to analyse in any detail for present purposes. The plaintiff says further that if the financial position of the defendant companies was in fact as bad as what had been represented to him prior to the making of the consent orders on 30 August 2006 there was no prospect of Challenger agreeing to refinance the loans for the amount it did. As it was, Challenger refinanced the loans on the basis that after paying out the existing mortgages the sum of $110,965.96 was paid into the companies' bank account. The plaintiff says further that if the tax liability representations had been true the companies would have been insolvent and Challenger would not have refinanced the defendants to the extent which it did. In short, the plaintiff's agreement to settle the proceedings on 30 August 2006 was procured by the tax liability representations. 61 The plaintiff contends that the only way that Challenger would have been in a position to pay to the defendants a sum sufficient to cover what they owed on the existing loans to the National Australia Bank and an additional sum of $110,965.96 which was available to be put into the defendants' business was that if the tax liability of the defendants was something less than $200,000 for the 2006 tax year. Insofar as the plaintiff needs to rely on the tax liability representations to make good his case he is not able to do so because of the provisions of s 131(1) of the Evidence Act. 62 However, there is a lacuna in the plaintiff's argument which is that the material before the Court does not disclose that the tax liability in respect of the 2006 year was less than $200,000. His explanation based upon his analysis of the Challenger refinancing is surmise and speculation. Ms Asciak has explained why she was able to procure such a loan from Challenger and that reason is not developed from an analysis of the defendants' profits or tax liability in respect of the year ended 30 June 2006. 63 The plaintiff submitted that the good faith with respect to which he was proposing to bring the proceeding in the Family Court was demonstrated by the fact that if the tax liability representations were true Challenger would not have refinanced the loans over the Queens Road properties to the extent that it did which resulted in cash of $110,965.96 being injected into the business of the defendants. However, this conclusion is a non sequitur. 64 When challenged on this basis, counsel for the plaintiff relied upon the proposition that the plaintiff had a belief that the tax liability for 2006 was $200,000 and that it did not matter how he formed that belief. The plaintiff says that by reason of facts that have come to his notice since 30 August 2006, that belief is wrong and that the only explanation for the error is that Ms Asciak, who was in control of the defendants' accountants, must have withheld relevant information from him. But, as noted above, it is necessary for the plaintiff to succeed in his proposed application under s 79A of the Family Law Act, as he accepted, that he provide evidence that the tax liability representations were made by Ms Asciak or one of her representatives to the plaintiff's solicitors or counsel. 65 I am not satisfied that the plaintiff has established the factual foundation for the proceeding which he proposes to bring in the Family Court. His chain of reasoning relies on speculation and surmise and on being able to provide evidence that the tax liability representations were made. But he is not able to lead evidence of those representations because of s 131(1) of the Evidence Act. In those circumstances I am not satisfied that he proposes in good faith to bring the proceeding in the Family Court. It is true that he wants to bring the proceeding but the case as presently advanced by him is bound to fail because of his inability to rely on evidence without which his case cannot succeed. 66 The plaintiff's originating process will be dismissed with costs. I certify that the preceding sixty‑six (66) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Goldberg .

Associate: Dated: 23 May 2008 Counsel for the Plaintiff: T McLean

Solicitor for the Plaintiff Slater & Gordon Limited