It is obvious that this settlement was based upon the offer of the husband's solicitors of 20 June 1988 and on the assumption by the wife implicitly supported by Mr Goldstein that the matrimonial assets were more or less as stated in that letter. This assumption was unwarranted. A number of matters, including the real value of the Willoughby property and the husband's actual asset position, were in a state of uncertainty, to say the least. I consider that this was mainly due to Mr Goldstein failing in his professional duty to make adequate enquiries both independent and of the husband's solicitors or of the banks or otherwise by compulsory process in the Family Court proceedings which had by then, of course, commenced and that this left the plaintiff in a most disadvantageous position. Had appropriate enquiries been made in early 1988, when the question of settlement appeared to be coming to a head and certainly as the year proceeded, it is most probable the existence of the two properties hitherto concealed by the husband would have become known because the threat of compulsory process and the raising of the suspicions would have enabled the husband's solicitors, by giving appropriate advice, to elicit the information from him.
66 The valuer called by the plaintiff considered that the value of the service station property as at 1 August 1988 was $900,000 whilst that of the Newport property was $800,000. The valuer called for the defendants considered that the latter property was, as at 3 August 1988, worth $750,000. However, both valuers considered comparable sales of properties not only before August 1988 but also subsequently for the purpose of arriving at these valuations. It was submitted to me that, in principle, the only relevant comparable sales were those that occurred before August 1988 since it was that valuation which would have provided a basis for negotiations on the assumption that the existence of the property had been disclosed at that time. The plaintiff's valuer had been an agent in the Newport area for about twenty years and I accept his evidence that he knew "almost ... every block of land in the area". Some criticism was directed to him in cross-examination as to his mode of valuation but I consider that, in the circumstances, it was appropriate.
67 It is clear that properties in the Newport area had increased markedly during 1988 and into 1989. As it happened, the Newport property was sold in August 1989 for $860,000. The defendants' valuer had valued the property, as I have mentioned, initially at $750,000 but revised that downwards by $100,000 because he thought it inappropriate to take into account the value of comparable properties sold after the date of settlement, in particular a sale in October 1988. The fundamental difficulty with this approach is that it assumes that the date of the consent orders is the date at which a valuation would have been obtained for the purpose of the settlement and the only relevant date for present purposes. That is to give this date a significance which, in all the circumstances, it did not have. As I have mentioned, I consider that, had Mr Goldstein acted appropriately, the investigations would have ultimately led to the exposure of the husband's real estate transactions. Obtaining the necessary information and then negotiating in the new context would, of course, take some time and I doubt very much that there would have been any property settlement effected by 3 August 1988. It is reasonable to infer, having regard to the relatively unhurried course of the proceedings up to that time and the controversy that would have been injected by the disclosures of other assets, that, if a settlement were to be negotiated, it could well have taken several more months to finalise. The defendants' valuer agreed that, if the post-August sales could be taken into account, the plaintiff's valuation of $800,000 as at the settlement date was a reasonable one.
68 In a negotiated context where some compromise might be expected, I consider that in all probability a figure for the Newport property something in excess of $800,000, having regard to the rapidly rising market, would have been agreed on. However, it is important to note that such a compromise would occur in the context of a global settlement and, as I have pointed out, a number of assets in the hands of the husband do not appear to have been brought into account by Mr Goldstein and which, assuming he applied his undoubted professional expertise in the way that he should have to this matter, would have required further adjustment in favour of the wife. In due course, I will need to deal with the likelihood that negotiations would fail altogether and the proceedings would fall to be determined by the Family Court. However, having regard to the course of the negotiations and the husband's real estate and business dealings, I think that he would have been under substantial pressure to negotiate an early settlement if he could, since Mr Goldstein had available to him process which could seriously hamper the husband's freedom of action concerning the assets which he already possessed and any other interests which he might wish to acquire. The husband's acquisitions were obviously available for division in accordance with the Act, as (at the least) they were substantially financed with reliance on joint assets, one way or another. So far as Newport was concerned, although he had borrowed the entire purchase price, its increase in value meant that by the time real negotiations were likely to have taken place the husband's equity was approaching, if it did not exceed, $500,000. I have set out above the interest rate at which the bills providing the bulk of the financing were discounted. The accumulation of interest, if that occurred in a real sense, was relatively trivial by the relevant time. It is fair to point out that capital gains tax would have been payable on the Newport property had the husband needed to sell it for the purpose of the settlement with the plaintiff. It is difficult now to assess the likelihood that the husband would indeed sell the property to do so rather than raise finance and, as it were, pay the plaintiff out, in which event capital gains tax would have come into play but, obviously, not fully. Other costs of realising the assets, such as agents' commission, legal fees and the like would have to be allowed also, but, if the property were not sold and the matter proceed to a negotiated settlement, I do not think this factor would have been a significant one.
69 The so-called order 24 conference which was a compulsory conciliation proceeding in which the husband should have disclosed the transactions I have been discussing but did not, would usually take place about 18-20 months before hearing, according to Mr Broun QC. Accordingly, if negotiations had broken down, the effect of his evidence is that a hearing would have been likely in mid-1989. Indeed, Mr Broun QC agreed that this was so. The time frame that reasonably would have applied to a negotiated settlement would not have varied much from this. I do not think that very much depends on whether I conclude that a negotiated settlement would have been in place towards the end of 1988 or the beginning of 1989 on the one hand or, failing settlement, a hearing of the litigation would have been completed by around mid 1989. No suggestion was made in evidence or in submissions that any significant delay in judgment would have been suffered by the plaintiff and I consider it to be accepted therefore that timely judgment would have been given, perhaps within a few weeks or a month or so of hearing, very probably before September 1989. Having regard to the price obtained by the husband in August 1989 for the Newport property I think it fair to assess its value as at the likely date of a hearing as being of the same order, namely about $850,000. Having regard to the transformed forensic circumstances which would have been very likely to have developed if Mr Goldstein had acted without negligence, I have no doubt that a purchaser's index search would have been appropriate and would, very likely, (but dependent somewhat on the course of negotiations and their time frame) have brought to light, or at least confirmed, the husband's purchase of the Ryde property as well as the Newport property. According to the husband's affidavit, he sold his interest in the service station to his other partners in December 1989, receiving about $185,000 net of debt. This was a substantial profit. Having regard to the valuation of $900,000 as at August 1988 it seems to me reasonable to infer that, as at the time of any likely hearing, his net interest in the service station was of the order of $150,000. The husband disclosed that in March 1989 he purchased a shopping centre at Newport with a three-year, interest-only loan with the Advance Bank for $1.3 million with interest at 16.3% per annum, asserting that the income from it was significantly less than the interest payable. A Loss Submission prepared by the CTB following the husband's bankruptcy stated, however, that the husband's accountants had disclosed that the shopping centre generated for the year (I infer) ended either June 1990 or June 1991, a net profit of $35,000. The evidence does not disclose the purchase price of the shopping centre (Mr Broun QC's report states it as $1.6m) but it was asserted by the husband in his Statement of Financial Circumstances of October 1991 to have been worth $1,946,000 and in his debtor's petition under the Bankruptcy Act 1966 of June 1992 to have been sold about a month later, in November 1991 for $2.1 million. It may well be that the proceeds of sale of the Newport property were applied to discharge finance incurred for this purchase. It may be that other loans were also entered into in substantial sums. However, I consider that the probability is that assets of equal or greater value were acquired with those funds. I think that it is clear that the acquisition by the husband of these assets necessarily involved his reliance, to a substantial degree one way or another, on jointly owned property or assets derived from reliance on such property, giving security over jointly owned assets and the placing at risk of practice earnings which should realistically be regarded as at least partly partnership income and hence formed part of the matrimonial property. It does not appear that Mr Goldstein ever regarded this money as otherwise than the husband's; although he protested about cash withdrawals, no numbers he proposed, or accepted, seem to have taken into account its partnership character. I have little doubt that the Family Court would, on the assumption that there was no property settlement in August 1987, have brought into account all of the assets acquired by him following separation, and owned by him at the date of hearing subject, naturally, to the cost of finance. The husband would not have been in a position to argue about niceties.
70 Failing settlement in August 1988 (which disclosure would have made virtually certain), I consider that, acting properly, Mr Goldstein would have prevented by appropriate process further erosion by the husband of the matrimonial property by ventures such as, possibly, the supermarket purchase, although from the material available to me, it appears that as at mid 1989 into November 1991 this property may well have been an advantageous acquisition. It was submitted to me, and Mr Broun QC makes much of this (though it is argument rather than admissible opinion) that the husband was a reckless speculator and profligate. There is no evidence of this. Indeed, it seems to me that the opposite was the case, with the possible exception of a purchase of a second Ferrari. His acquisitions appear to me to have been shrewdly judged and his sales timely. It is clear from the evidence as to applicable interest rates that Mr Broun's assumptions concerning this aspect of the financing (namely 20% or greater) was considerably overstated. It appears that, by various serial transactions, $800,000 had been borrowed from Resi-Statewide Corporation Limited in December 1988 on security of the Newport property at a rate of 14.75%. It is obvious that other property was probably brought into account to provide a realistic buffer from the financier's point of view. The shopping centre was purchased, it appears, in March 1989 financed at least in part by the Advance Bank and, I think it reasonable to infer, the advance from Resi-Statewide Corporation Limited.
71 Mr Grieve submitted that the plaintiff would have had difficulty in establishing in the proceedings if they had occurred, what assets the husband actually held. I do not think that is so. Indeed, the matter was relatively simple. The husband at that time had at least two very substantial assets, three if the shopping centre be included, and had utilised other funds which I have referred to. Subpoenas issued to the financing organisations would have, I believe, produced virtually everything that was necessary for the husband's financial position to be exposed subject to such qualifications as, from his private information, he might be able to produce but which does not seem to have been very significant when one considers the relatively brief and to my mind uncomplicated account set out in his affidavit in the 79A proceedings. The mere fact that, as it appears, investigations had not disclosed, it seems, much information by the time that those proceedings were discontinued does not, I think amount to much. The husband's own affidavit, together with purchaser's index searches gave a great deal of grist to what would have been the plaintiff's mill. I do not see how the husband's financial position, as it deteriorated well after the litigation would have been completed, is informative or even relevant to the likely position as at the likely time of any trial.
72 It was submitted that I should take into account not only the extent of the liabilities incurred by the husband for the purpose of purchasing the properties but that accruing interest might not be paid out of any income produced by those properties and hence, in effect, would be capitalised and should therefore be deducted. The garage was producing income and I do not think that any interest component should be taken into account, having regard to the ultimate sale of that property and the return to the husband. The Newport property was not income producing but the interest cost was not great, at least in respect of the sum originally borrowed and was easily payable out of the husband's takings from the partnership practice. The shopping centre was income producing although the husband claimed that this did not consistently offset the mortgage interest. I am sceptical about the husband's claims in this respect but, at all events, having regard to the whole of the circumstances I do not think that any substantial allowance would have been or should be made for this interest.
73 There was a difference of opinion between Mr Crowley for the plaintiff on the one hand and Mr Broun QC for the defendants on the other as to the likely costs of litigation, had this matter gone to trial. Both are practitioners of considerable experience. Both seem to me to have approached the matter in a similar way; they differ essentially on their assessments of how long the trial was likely to take. Mr Crowley's assessment of the costs was $25,000 whilst Mr Broun's was $40,000. Having regard to the issues in the case which, as I have said, I think were relatively straight forward, I am inclined to favour Mr Crowley's assessment of about four days, hence a sum of about $25,000. The husband's parlous forensic position may well have rendered the trial even shorter. As this hearing in all probability would have been required because of the husband's lack of candour I am of the view that the usual order as to costs in Family Court proceedings would not have been made and that the court would have ordered the husband to pay a substantial part of the costs resulting from such behaviour. Perhaps more than in any other jurisdiction, the Family Court relies on the candour of the parties to reduce issues and foster amicable settlement if that is possible and, at the relevant time, procedures were in place to encourage compliance with this policy, which was justified not only by the public interest in reducing litigation but to prevent one party from forcing an unfair settlement on the other by threatening, as it were, to waste the matrimonial property. Yet a further consideration is that matrimonial disputes are often fraught with emotion which makes dispassionate assessment of self interest difficult and may complicate other related matters such as the care and custody of children. In this situation, I consider that the Family Court would have looked with a seriously jaundiced eye at the behaviour of the husband and would be likely to conclude that the only appropriate response was to require the husband to pay the costs of the litigation which, realistically, he brought down upon his own head. It is possible, however, that some costs may not have been ordered on an indemnity basis. Accordingly, an allowance should be made adverse to the wife in respect of this matter in the order of $5,000.
74 The plaintiff also claims her costs of undertaking the proceedings under s79A of the Act. That provision permits a person affected by an order such as made here following the settlement in August 1988 to make an appropriate adjustment of the parties' interests and property despite the terms of that agreement where, so far as is presently relevant "there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence, the giving of false evidence or any other circumstance": s79A(1)(a). I have no doubt that in this case the plaintiff did suffer a miscarriage of justice by reason of, at least, the suppression of evidence or, if they might not be so characterised, by the other circumstances to which I have referred and which lay at the husband's hand. I consider it reasonable and appropriate that she should have made an application under s79A even though there was a delay in so doing following her awareness of the husband's undisclosed property transactions. I do not think it necessary for present purposes to detail the circumstances of this delay. It is enough to say that its effect was to prejudice only herself and I do not see that it should have caused her to refrain from undertaking those proceedings.
75 After certain further documents had been filed in the 79A application, the husband filed a debtor's petition in the Federal Court on 5 June 1992. He was declared bankrupt and the s79A proceedings were halted, there being no point in taking the matter any further. The plaintiff had retained Ms Carol Foreman then with Messrs Clayton Utz during the course of 1990 and had filed the application seeking orders under s79A in July 1991. Legal fees totalled $30,275 and accountancy expenses totalled $3,364, a total of just over $33,600. The accounts have been tendered in evidence. Ms Forman continued to hold the retainer for the plaintiff throughout the relevant period, though she changed firms. On the face of it, the fees, though at the higher end of the scale, appear reasonable and in respect of a level of work that also appears reasonable. Indeed, the plaintiff had been advised by experienced counsel late in 1990 that an application under s79A would have good prospects of success providing that she established that at the time of the settlement she had no independent knowledge of the undisclosed matters and relied on the representations of the husband and that the matrimonial assets were materially greater than those disclosed at the time of settlement. For the reasons which I have set out I consider that both those conditions could have been satisfied by the plaintiff with relative ease. Mr Grieve QC for the defendants submitted that, by the time the proceedings ended, the plaintiff had very little hard evidence as to the second of these conditions. I do not accept this submission. I think that it is tolerably clear that the matrimonial assets were significantly greater as at the material time and that the use of appropriate compulsory process would have sufficiently shown this to be so as, indeed, has occurred before me though to a lesser degree than then would have been possible. (For example, the husband would, as a practical matter, have been required to give evidence).
76 If the matter had been settled by early to mid 1989 (as I think likely), I have no doubt it would have been on terms more favourable to the plaintiff than the consent orders were. It is difficult to determine the relative likelihood of a more favourable settlement on the one hand and, failing this, moving to a hearing and judgment on the other. Both parties would be motivated to settle, partly by the desire to save costs and, of course, the inconvenience and unpleasantness of a hearing. I think that, on balance, the husband's business interests and the risk of forensic prejudice to his case (especially concerning costs) engendered by his own lack of candour, and the wife's apparent attitude to litigation would make settlement more probable than not. As to the amount, I consider that the "discount" of costs saving and convenience make it very likely that it would be at full value. Treating the loss as that of "a chance", I measure this probability at 90%. In all likelihood, settlement would have been effected in the first quarter of 1989. In respect of liabilities, some considerable uncertainty remains. The mortgages to CBA and Resi-Statewide, which together total over $1m are the obvious examples. However, I consider that these funds would almost certainly or, at least, more probably than not, have been used to acquire equivalent assets, most likely the Newport shopping centre, if not, they represented a very large sum in the husband's hands and at his disposal. In calculating a likely pool of assets, these borrowings should I think as a practical matter, be balanced against the value of the shopping centre thus, in effect, ignored. The possibility of capital gains tax being payable on the sale of the Newport property must also be accounted for. That obligation, if any, is not referred to in the husband's affidavit of October 1991 though it had been sold in August 1989; the sale of his interest in the service station also occurred in December 1989 with no reference to the tax in the affidavit. An important consideration is the likelihood of sale in the near future, since the liability to both capital gains tax and realisation costs is "notional" (to use the language of Nicholson CJ in Carruthers v Carruthers (1996) FLC 92-707 at 484) or, at least, contingent. Quite apart from the possibilities available by tax planning, both are subject to a degree, perhaps marked, of potential fluctuations. As the Chief Justice said (ibid) -
"I think it must be remembered that this Court is faced with the task of exercising a discretionary judgment in order to bring about a just and equitable result between the parties to a marriage."
77 As I have mentioned, the interest payments made would very likely have been deductible in the husband's hands, one way or another. It was submitted by Mr Murr SC for the plaintiff that it should be borne in mind that accounting for these payments is not a merely arithmetical exercise. In a quite fundamental way, the Family Court must have regard not only to the husband's, as it were, cash contribution but also the wife's non-cash contribution arising out of, for example, her care for the children. I accept this submission. Mr Murr conceded that the husband's interest payments, to the extent to which they represent his personal exertion over and above what might be thought to represent the wife's home-making contribution, should be placed into the scale to his advantage. To state the problem in this way, however, is to demonstrate the mixed character of the balance which must be struck; only a global approach is really possible.
78 Dealing with the matter globally, the items that should have been brought into account but, it seems to me, were negligently ignored, were the Newport property, the interest in the service station, the balance deposit from the sale of the Northbridge house, the net proceeds of sale of the Ferrari and the net proceeds of sale of the cruiser, the joint account and the over-value of the Willoughby property. Dealing with their approximate values, the Newport property should be brought in at about $850,000 less initial borrowings of $285,000, yielding $565,000, the interest in the service station at about $150,000, the deposit balance at $85,000 and the remaining items, respectively, at $21,000, $41,000, $125,000 and $20,000. As to the last figure, the basis which I infer to be the case, of the calculation is that the difference between the valuation and the asserted value would have shrunk over the intervening period as values increased. Having regard to the personal delivery by the plaintiff to the husband of $44,000 following the sale of the house, her belief it was used to pay joint debts, the existence of such debts and that I do not take them into account for this calculation, I do not include this sum. I am satisfied, despite the lack of clarity concerning this aspect of the case, that to do so would probably amount in substance to double counting. I note that in her application in the s79A proceedings, the plaintiff positively asserts that the net proceeds of the sale of the home were divided between the parties. I also believe that the substance of the matter is that she took this delivery into account when she agreed to the consent orders. It will be seen that the last five items are dealt with on a net basis. Some allowance should be made for capital gains tax on the Newport property. This involves about $230,000 to $255,000 but, having regard to the husband's resources, I do not think the whole of this should be allowed. Having regard to the global character of the appropriate approach, it is not meaningful to say more than that something of the order of $240,000 should be taken into account. Sales costs of $15,000 are not unreasonable. It was conceded by the plaintiff that capital gains tax on the Willoughby real estate should be allowed at $35,000. Interest payments of about $3,000 should be allowed, reducing the overall amount of the order of $12,000 or so for the period between purchase and sale or settlement by reference to the plaintiff's contribution. As to the service station, the simplest approach is to bring into account something of the order of $150,000, having regard to the husband's net return after sale of his interest at the end of the year. Only a small sum should be allowed to represent a contingency for capital gains tax, say $20,000, I think, on the service station, since its sale was by no means either necessary or pending. The additional sum, over the amount received on settlement, that should have been considered by Mr Goldstein to be brought into account is therefore about $695,000. I emphasise that this sum is purely indicative, representative of the accumulation of and diminution by sums which are themselves estimates. From the point of view of my task, I have undertaken this exercise in order to enable examination of an order or degree of inappropriately omitted value by reference to which a global sum which in my view should be considered as having been lost by the plaintiff as a result from Mr Goldstein's negligence. I accept the evidence of Mr Crowley that the application of s75(2) of the Act would result in a weighting in favour of the plaintiff of the order of 60%. In addition, the omitted payments of maintenance for the children should be added plus the costs of the 79A proceedings.
79 Overall, I consider that the plaintiff would have been likely to have received substantially more than she did obtain from the settlement which, doing the best I can and taking into account 10% for contingencies less the allowance for costs, represents a sum of about $420,000. This is somewhat less than the indicative number (of about $440,000) but represents the real figure which I consider to be the plaintiff's loss in respect of Mr Goldstein's negligence. I do not consider that a judgment in the Family Court proceedings would have resulted in an award to the wife of an amount substantially different than that which I here specify plus, of course, that which she received under the settlement.
80 Accordingly, I assess the plaintiff's damages at $420,000 plus interest. The defendants must pay the plaintiff's costs. In default of agreement on interest, either party may seek further directions for determination of the appropriate sum, upon seven days' notice. In the absence of the need for further directions, I order the plaintiff to file judgment in accordance with these reasons. In absence of agreement of the terms of such judgment, the parties may have liberty to apply on seven days' notice for directions.
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