Agapetos & Armani (No 2)

Case [2024] FedCFamC1F 740

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Agapetos & Armani (No 2) [2024] FedCFamC1F 740

File number: SYC 2768 of 2023
Judgment of: CAMPTON J
Date of judgment: 6 November 2024
Catchwords:

FAMILY LAW – ENFORCEMENT – Injunction – Application for injunctive order in aid of enforcement – Where consent orders were made providing for the application of the sale proceeds of a property held by the husband and the fourth respondent that did not provide for the application of funds to pay out a loan of the fourth respondent secured by way of mortgage over the property – Where the wife seeks an order requiring the fourth respondent to pay the value of funds applied from the sale of the property to discharge the loan and mortgage to an account established pursuant to the orders holding the funds produced from the sale – Where issue exists as to the interpretation of the consent orders sought to be enforced – Where issue exists as to the exercise of discretion to enforce – Orders made requiring the fourth respondent to pay the value of funds applied to discharge its loan into the interest-bearing account established by the consent orders in the joint names of the husband and the wife.

FAMILY LAW – COSTS – Litigation funding – Where the wife has received the benefit of prior litigation funding by way of lump sum and dollar-for-dollars order payable by the husband – Where the wife seeks further litigation funding for legal costs already incurred and future costs payable by the fourth respondent – Where the fourth respondent opposes the relief – Where the financial circumstances of the wife are not dissimilar to those that which existed at the time of the prior litigation funding orders – Where the financial circumstances of the fourth respondent are superior to those of the wife – Where issues generating increased costs as to have continued – Where the fourth respondent submits that costs payable by a non-marriage party for litigation funding ought be exercised sparingly and that the risk of irreversibility is a consideration that “weighs heavily” in the circumstances of this case – Where the husband’s costs are being paid by the second respondent, his mother and the other respondents costs are being paid – Where the part of the wife’s current costs are unpaid – Where the wife’s case is not absent merit – Where absent further litigation funding the wife is unable to participate in this complex litigation – Where the circumstances justify a further litigation funding order payable by fourth respondent to enable the wife to continue to prosecute her claim – Litigation funding ordered payable by the fourth respondent in a fixed sum.

FAMILY LAW – PARTIAL PROPERTY SETTLEMENT – Where the wife seeks the husband pay to her $100,000 by way of partial property settlement – Where the wife seeks funds to purchase furniture and curtains for a new residence – Where the husband has not filed a…

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Agapetos & Armani (No 2) [2024] FedCFamC1F 740
Case
[2024] FedCFamC1F 740
Decision Date

CaseChat Overview and Summary

In the Federal Circuit and Family Court of Australia, Ms Agapetos brought an enforcement application against Mr Armani and others, seeking to enforce various consent orders and obtain further relief in their family law dispute. The application involved complex financial and disclosure issues, as well as requests for additional funding and property settlement. The court addressed multiple legal issues, including the interpretation of the consent orders, the exercise of discretion to enforce those orders, and the appropriateness of further litigation funding for the wife. The court also considered the wife's request for additional financial disclosure from non-party entities.

The court ruled that B Pty Ltd must deposit $1.4 million into a joint account of the husband and wife, as required by the consent orders. The court found this order to be just and convenient, as it preserved the parties' positions without irrevocably adjusting property. The court also ordered the second to fourth respondents to disclose specific financial documents relevant to the consolidated financial statements of the entities in the J Group. In the event of non-compliance, the wife was granted leave to issue subpoenas to the relevant entities. Further, the court granted the wife $160,000 in litigation funding from B Pty Ltd to cover her legal costs, as the circumstances justified further funding to enable her to continue prosecuting her claim. The husband was ordered to pay $30,000 to the wife by way of partial property settlement. The application for further funding from the husband's mother was dismissed, as the court found that she already met the costs of the wife and child's accommodation.

The court's decision hinged on the balance of the interests of justice and the need for reversibility in litigation funding orders. The court referenced Zschokke and Strahan to clarify that while reversibility is a consideration, it is not a requirement for making an interim litigation funding order under the Family Law Act 1975. The court concluded that the interests of justice in this case justified the orders made.

Orders

Orders of the court

SYC 2768 of 2023

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MS AGAPETOS

Applicant

AND:

MR ARMANI

First Respondent

MS ARMANI

Second Respondent

ARMANI PTY LTD (and another named in the Schedule)

Third Respondent

ORDER MADE BY:

CAMPTON J

DATE OF ORDER:

6 NOVEMBER 2024

THE COURT ORDERS THAT:

1. By way of enforcement and implementation of Order 2 of the consent orders made on 13 September 2023, within 28 days of the date of this orders, the fourth respondent do all things as are necessary to deposit $1,403,010 into the interest-bearing trust account held in the joint names of the husband and the wife, being NAB account #...39 established pursuant to the said 13 September 2023 orders holding the funds produced on the sale of the property at D Street, Suburb E.

2. Within 14 days of them being completed, and in any event no later than 6 December 2024, the respondent husband and the second, third, and fourth respondents provide consolidated financials for the entities comprised in the J Group for the year ending 30 June 2023.

3. The second, third, and fourth respondents provide to the solicitors for the husband and the wife by way of disclosure within 28 days of the date of this order the following documents, as are in the possession or control of any of them:

(a) Any valuations obtained in the last five years for the following:

Various commercial premises listed (i) – (xvi)

(b) Detailed financial statements and management accounts and ledgers to support the information contained in the financial statements including assets, liabilities, income and expenditure for the last three financial years for the entities comprised in the J Group including but not limited to:

Various corporate entities listed (i) – (xiv)

4. In the event of a failure to comply with Order 3, the wife have leave to issue subpoena for the documents not produced directed to the relevant named entities, such subpoena to be issued no earlier than 6 December 2024.

5. Pending further order, by way of litigation funding:

(a) Within 28 days from the date of these orders the fourth respondent pay to the solicitors for the wife by way of litigation funding the sum of $160,000; and

(b) The amounts that the wife’s solicitors receive from the fourth respondent pursuant to these orders are to be applied only to meet the wife’s solicitors costs and disbursements, the wife’s counsel fees, and experts fees for the purposes of the this proceeding; and

(c) The wife’s solicitors are to keep detailed records of all payments made of all legal costs and disbursements paid with funds provided by the fourth respondent.

6. Within 14 days of completion of the acquisition of the real property at F Street, Suburb G (“the Suburb G property”), or on or before 30 June 2025, whichever is earlier, the husband pay to the wife $30,000 by way of partial property settlement.

7. The Application in a Proceeding of the wife filed on 9 July 2024 as amended by the Amended Minute of Orders of the wife (Exhibit 1), the Response to an Application in a Proceeding filed by the husband on 29 August 2024, and the Response to an Application in a Proceeding filed on 30 August 2024 by the second to fourth respondent, are dismissed, save as to costs.

8. The costs of each party of and incidental to the Application in a Proceeding filed on 9 July 2024 and the Responses thereto 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.

Background

Background to the litigation

For the reasons that follow orders will be made providing for:(a)B Pty Ltd to pay $1,403,010 into the account established pursuant to the orders made on 13 September 2023 in the joint names of the husband and the wife;(b)The second to fourth respondents to have the opportunity to comply with paragraph 2.2 and 2.3 as sought by the wife in Exhibit 1, and in the event of they are unable to do so, the wife have leave to issue a subpoena to the relevant entities;(c)B Pty Ltd to pay to the wife’s solicitors by way of litigation funding $160,000; and(d)The husband to pay to the wife $30,000 by way of partial property settlement.BACKGROUND The factual history of this matter is dense. The issues in the proceeding have presented with some complexity. The litigation has consumed five days of interlocutory hearing prior to the hearing of the current interlocutory dispute on 24 and 25 October 2024. The context of this current interlocutory dispute is informed by:(a)The consent orders made on 13 September 2023 (“the September 2023 orders”); and(b)The history, the findings made, and the findings that were not made, as recorded in the reasons for judgment delivered on 13 December 2023 (Agapetos & Armani [2023] FedCFamC1F 1072) (“the December 2023 reasons”). No appeal was filed from that determination. During submissions various paragraphs of that judgment were identified as relevant to the current disputes. In the circumstances and in conformity with the obligations codified in s 67 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) the contents of those earlier reasons will not be reproduced in these reasons save as where necessary. That said, it is helpful for the purposes of these reasons to unpack some of that history.The Armani Trust In 2013 the husband’s father, Mr H, who passed away in 2022, (“the husband’s late father”), established four “Bloodline Trusts”. The third respondent, the Armani Trust, by way of its trustee Armani Pty Ltd, is one of the four trusts. The husband is identified as the principal beneficiary of the Armani Trust. The husband’s mother is the sole shareholder of Armani Pty Ltd. The husband’s brother, Mr K, and his mother, are its directors. The wife contends that the nature and character of the husband’s interest in the Armani Trust such that it is the property of the husband in the matrimonial cause (at [116]–[135] of the December 2023 reasons). The husband and the second to fourth respondents oppose the findings as sought by the wife, adopting a differing evaluation of the factual matters said to underscore her contention. The wife seeks alternate relief by way of ss 85A and 90AE, and pursuant to s 79(5) of the Family Law Act 1975 (Cth) (“the Act”) (at [134]), opposed by the husband and the other respondents. The December 2023 reasons concluded (at [139]) that absent the entirety of all relevant evidence and the testing of that evidence, the findings sought by the wife as to the nature and character of the husband’s interests in Armani Trust would not be made or rejected by way of an interim determination.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

An order requiring B Pty Ltd to pay $1.4 million into an interest-bearing account of the husband and the wife does not irrevocably adjust property. The position of each of the parties is preserved by the preconditions of the orders made on 13 September 2023. As such is not a divesting of property.Conclusion Having regard to the matters recorded earlier in these reasons, I find on balance that it is just and convenient to order for B Pty Ltd to pay $1,403,010 into the account in the joint names of the husband and the wife by way of enforcement. Orders ought to be the subject of compliance. No application has been made to vary them. The prejudice identified by the wife as to the potential reduction of the “equity” of she and the husband in the Suburb G property if it is to be sold as recorded in the September 2023 orders attracts weight, as does the absence of evidence as to specific hardship and prejudice to the fourth respondent if the payment is made. An undertaking as to damages was not sought as a condition of the interlocutory injunctive order. The wife sought for the payment to be made within 14 days. No submissions were made as to a reasonable period for B Pty Ltd to pay $1,403,010 into the account established pursuant to the September 2023 orders. The period for payment should be reasonable. It shall be extended to 28 days.EXHIBIT 1 – PARAGRAPH 2 – FINANCIAL DISCLOSURE The wife concedes that there has been substantive disclosure provided by the husband’s mother, B Pty Ltd, and Armani Pty Ltd, including the consolidated financial statements of the entities making up in the J Group. It is uncontroversial that many of the documents disclosed to date are not the documents of the parties to the proceedings. The Armani Trust will, on completion of the administration of the husband late father’s estate, receive a minority shareholding in the entities comprising the J Group. It is the wife’s case that the evaluation of the consolidated financial accounts of the entities making up the J Group requires the provision of the management accounts and ledgers that make up the integers of those summaries, and valuations for specified commercial premises, for the purposes of in turn obtaining advice underscoring the value of the interest the Armani Trust will receive in the group. The second to fourth respondents submitted that there was no apparent relevance to the additional documents sought and that they were voluminous. They submitted that the purpose of such disclosure of the documents in sought pursuant to paragraph 2.3 was unclear, as the financial statements had already been provided, and that the disclosure requested was “akin to a disclosure under a subpoena”, which may be set aside where it is oppressive and has no forensic purpose. The second to fourth respondents identified three paragraphs in the affidavit of Mr K in his capacity as director of Armani Pty Ltd in support of these submissions, being:28.I am reluctant to disclose the commercially sensitive material because of conversations I have had with [the husband]. On a number of occasions throughout the course of these proceedings, [the husband] has told me that [the wife] has said to him words to the following effect:I know how your family makes its money. If I were to use that information, you should all be shaking in your boots.29.These conversations which have been relayed to me by [the husband] have made me concerned that, if the documents were to be provided to [the wife], that they could be made public which could have a material detrimental impact on the Groups’ business…30.This is also in circumstances where a significant amount of time and resources have already been dedicated to compiling and transmitting the requested documents to the [wife], the bulk of which relate to entities that are not parties to this proceeding and for whom any connection to the [wife] or [the husband] is remote…(Emphasis added)

Ratio Decidendi

Legal Principle Established

The second to fourth respondents submitted that reversibility of a litigation funding order is a consideration that “weighs heavily” in the circumstances of this case. In Lao & Zeng Ryan J citing Zschokke and Zschokke (1996) FLC 92-693 (“Zschokke”), with whom Ainslie-Wallace J agreed, said:48The next point is that it is the requirement of justice that is the basic principle to which Zschokke speaks and not as the appellant suggests, reversibility. Reversibility and the ability to take the payment into account in the final hearing are considerations of fluctuating relevance having regard to the source of power under which the payment is sought. So much is clear from Zscokke itself as it is only in relation to the application of s 79 and s 80(1)(h) of the Act that this issue “must … be an integral part” (at 83,220) of such an order. Thus, although in Zschokke the Full Court was not satisfied that the wife would receive a property settlement greater than the sums already advanced by the husband, that was not the end of the matter and their Honours continued (at 83,221):However, while the conclusion in relation to the uncertainty of the amount of the wife's eventual property settlement award may be fatal to an application under s.80(1)(h), it is not necessarily so to an application under s.117(2). It is just one of the matters to be balanced in the exercise of the discretion under the latter sub-section.49It is also significant that in Zschokke the Full Court said that there must be a question about whether it is possible to make a litigation funding order under s 117(2) even though the order could not be taken into account in a final hearing. For example in parenting proceedings or where no right of action exists under s 79. If their Honours considered that reversibility and the ability to take the amount into account in a final property hearing was an essential element to the exercise of power under s 117(2) it follows that in the examples given such an order could not be made. Their Honours’ conclusion that in relation to those examples the “position is less clear” demonstrates that they were not satisfied that an order of the type under discussion here must be able to be reversed or taken into account at the final hearing. 50As to the highlighted words, the words “seem desirable” and “most cases” contemplate that there will be cases where even though the amount paid may not be able to be made subject to an order as discussed or be taken into account in the final hearing, the interests of justice may nevertheless justify an order under s 117(2) for interim funding or security for costs. The passage extracted by the primary judge from Zschokke cited at [190] reinforces this point. See also Strahan at [95] where, having referred to this passage from Zschokke, the Full Court agreed that whether it will be possible to take the amount payable under the order into account in a final hearing is but one consideration. 51As to the second of the passages in Zschokke upon which the appellant relies, the additional point made by their Honours is that by its nature an interlocutory litigation funding order can be taken into account, or at least had regard to, in the final hearing. Nevertheless and as they went on to explain, it is generally desirable that an order be made for the funds provided to be taken into account in this manner. Nothing in the language indicates that reversibility is a requirement and failure to be satisfied of it is fatal to an order being made under s 117(2). (Emphasis added)