Aitken & Aitken (No 7)
[2023] FedCFamC1F 836
•29 September 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Aitken & Aitken (No 7) [2023] FedCFamC1F 836
File number(s): SYC 5021 of 2019 Judgment of: HARPER J Date of judgment: 29 September 2023 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Where proceedings remitted by the Full Court for rehearing by a judge other than the primary judge – Proceedings listed for final hearing for ten days commencing 8 April 2024 – Where wife seeks a raft of interlocutory orders – Where wife contended that the interim orders made prior to the first final hearing were re-enlivened upon the Full Court allowing the appeal and remitting the matter – Held that pursuant to r 5.01 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) interlocutory orders ceased to have continuing effect upon the pronouncement of final orders at first instance – Interlocutory orders do not automatically resume operation in the event the Full Court allows an appeal – Where wife’s application therefore treated as an application for fresh interlocutory orders – Where a number of orders were agreed by the parties while others required judicial determination. Legislation: Family Law Act1975 (Cth) Pt VIII, ss 74(1), 79(1)
Federal Circuit and Family Court of Australia Act2021 (Cth) ss 8, 9, 67(1), 68(1)
Federal Circuit and Family Court of Australia (Family Law) Rules2021 (Cth) r 5.01
Cases cited: Aitken & Aitken (2023) FLC 94-142; [2023] FedCFamC1A 69
Australian Rail, Tram and Bus Industry Union v Metro Trains Melbourne Pty Ltd (2020) 276 FCR 172; [2020] FCAFC 81
Clayton v Bant (2020) FLC 93-994; [2020] HCA
DMW v CGW (1982) 151 CLR 491; [1982] HCA 73
New South Wales v Kable (2013) 252 CLR 118; [2013] HCA 26
Re Macks; Ex parte Saint (2000) 204 CLR 158; [2000] HCA 62
Division: Division 1 First Instance Number of paragraphs: 62 Date of hearing: 6 September 2023 Place: Sydney Counsel for the Applicant: Mr O’Ryan KC Solicitor for the Applicant: Nolan Lawyers Counsel for the Respondent: Mr Stapleton Solicitor for the Respondent: Avondale Lawyers ORDERS
SYC 5021 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS AITKEN
Applicant
AND: MR AITKEN
Respondent
ORDER MADE BY:
HARPER J
DATE OF ORDER:
29 SEPTEMBER 2023
THE COURT ORDERS THAT:
Injunctive Relief
1.Save in accordance with Orders 2, 5 and 6 herein, each party is restrained from removing or transferring any funds from the following accounts other than in the ordinary course of business and subject to the respondent husband (“husband”) providing three days’ notice to the applicant wife (“wife”):
(a)D Pty Ltd Term Deposit account number …03;
(b)D Pty Ltd Cash Reserve Bonus account number …02;
(c)D Pty Ltd Loan Account (redraw facility account number …52);
(d)D Pty Ltd account number …79;
(e)U Pty Ltd Business account number …72;
(f)U Pty Ltd Cash Reserve account number …86;
(g)U Pty Ltd Term Deposit account number …78;
(h)Aitken Unit Trust account number …29;
(i)Aitken Family Superannuation Fund account number …07;
(j)Aitken Family Superannuation Fund account number …94; and
(k)Aitken Family Superannuation Fund Term Deposit account number ending …75.
2.The husband be restrained from doing any act or thing, either directly or indirectly so as to remove the wife as a signatory or to remove her online viewing access to any and all bank accounts in the name of:
(a)D Pty Ltd;
(b)U Pty Ltd; and
(c)Aitken Pty Ltd;
(together “the companies”)
and for the purposes of giving effect to this order the husband shall ensure that at all times the wife is provided with all necessary passwords and shall sign all necessary authorities directed to the bankers of the companies to provide the wife with online viewing access to:
(a)D Pty Ltd Trading account number …29;
(b)D Pty Ltd Term Deposit account number …03;
(c)D Pty Ltd Cash Reserve Bonus account number …02;
(d)D Pty Ltd Loan account (redraw facility account number …52);
(e)D Pty Ltd account number …79;
(f)U Pty Ltd Business account number …72;
(g)U Pty Ltd Cash Reserve account number …86;
(h)U Pty Ltd Term Deposit account number …78;
(i)Aitken Unit Trust account number …29;
(j)Aitken Family Superannuation Fund account number …07;
(k)Aitken Family Superannuation Fund Term Deposit account number …75; and
(l)Any other accounts in the names of the companies;
provided that the wife is restrained from exercising any right as signatory to any of the accounts to pay from or otherwise operate any of those accounts without the prior written consent of the husband.
3.Unless otherwise agreed in writing or as otherwise ordered by the Court, the husband and wife are to cause the term deposits invested in the name of the companies, upon maturity, to be reinvested as term deposit(s) with the same financial institution for a further period of not more than 12 months.
4.The parties, without agreement in writing signed by each of them or an order of the Court, be restrained from selling or transferring their shares in the companies or adversely dealing with their interest in the Aitken Family Superannuation Fund.
5.The husband is restrained from making any item of capital expenditure from the accounts of D Pty Ltd or the Aitken Unit Trust in an amount greater than $30,000 unless he has first given seven days’ notice of the proposed expenditure to the wife and she has not, within a further seven days responded.
6.Each party be restrained from disposing of any asset with a value exceeding $10,000.
7.Each party be restrained from selling or encumbering any interest in real property.
8.Pending further order, the wife shall have the right to occupy the former matrimonial home, being the property at B Street, Suburb C in State of New South Wales, and the husband is restrained from attending at that property unless the parties otherwise agree in writing.
Accountant & Financials
9.Pending further order, AO Accounting Group be appointed as accountants for the companies and AO Accounting Group are requested to accept service of this order upon them as such authorisation from each party.
10.So as to facilitate Order 9, the husband shall do all things necessary to ensure that the management accounts are kept up to date for the following entities:
(a)D Pty Ltd;
(b)U Pty Ltd;
(c)Aitken Pty Ltd;
(d)Aitken Family Superannuation Fund; and
(e)the Aitken Unit Trust;
and the parties are restrained by injunction from withdrawing his or her instructions to AO Accounting Group so as to frustrate or prevent the progress of these proceedings or the wife having access to, and login details for, the software platforms for the entities referred to in this order and that AO Accounting Group are requested to accept service of this order upon them as binding authorisation from each party.
Disclosure
11.The husband, in his capacity as director of the companies, ensure that within 14 days of the conclusion of each month the wife is provided by email with:
(a)The management accounts for the companies for the preceding month, including but not limited to a copy of all documents relating to:
(i)Tax invoices;
(ii)BAS payments;
(iii)GST payments;
(iv)PAYG payments;
(v)Superannuation payments;
(vi)Wages payments;
(vii)Credit card statements;
(viii)The reconciliation receipts for the transactions incurred on the credit card statements and any other amounts paid; and
(ix)Payments made by Mr X to the Aitken Unit Trust.
(b)The software ledgers, sub-ledgers and software backup-data file and bank files for the preceding month;
(c)the Business Activity Statements as and when they are lodged;
(d)the Income Tax Returns as and when they are lodged; and
(e)the Financial Statements as and when they are prepared.
12.The husband, forthwith, do all acts and things and execute all documents and writings to enable the wife to have 24 hour read only access to the software platforms referred to in Order 10.
Australian Taxation Office Determination
13.Forthwith, and in any event no later than 13 October 2023, the husband and wife do all acts and things and sign all such documents necessary and cause each of the D Pty Ltd and Aitken Pty Ltd to do all acts and things necessary to:
(a)Cause the repayment of outstanding amount owed with respect to the loan from D Pty Ltd to the Aitken Unit Trust having an agreed balance of $17,559,675 as at 30 June 2021 (“the loan”); and
(b)Meet the taxation liability determined by the Australian Taxation Office (“ATO”) on 6 December 2021 in respect of the loan (“determination”), including the payment of all liability for taxation, interest and penalties arising consequent upon the loan and/or determination.
14.For the purpose of compliance with Order 13 herein, and by no later than 13 October 2023, the husband and wife do all acts and things and sign all such documents necessary and cause each of D Pty Ltd and Aitken Pty Ltd to do all acts and things necessary:
(a)To effect the transfer to D Pty Ltd of the following properties in repayment of the loan and interest thereon:
(i)J Street, Suburb H in the State of New South Wales at such value as is agreed and failing agreement as determined by the Single Expert appointed in accordance with these orders;
(ii)2 G Street, Suburb H in the State of New South Wales at such value as is agreed and failing agreement as determined by the Single Expert appointed in accordance with these orders;
(iii)1 G Street, Suburb H in the State of New South Wales at such value as is agreed and failing agreement as determined by the Single Expert appointed in accordance with these orders;
(iv)UU Street, Suburb H in the State of New South Wales at such value as is agreed and failing agreement as determined by the Single Expert appointed in accordance with these orders; and
(v)3 AA Street, Suburb BB in the State of New South Wales at such value as is agreed and failing agreement as determined by the Single Expert appointed in accordance with these orders; and
(b)in the event that the transfers in accordance with Order 14(a) are insufficient to discharge the amount of the loan and the interest thereon, the husband and wife as directors of D Pty Ltd do all things and sign all documents necessary to cause D Pty Ltd to declare a dividend to each of the husband and the wife in an amount equal to any shortfall then remaining, which dividend shall be loaned by the husband and wife in an equal amount to any shortfall then remaining, which dividend shall be loaned by the husband and wife to Aitken Pty Ltd and applied in discharge of the remaining amount owing.
Accountant & Financials
15.The parties must forthwith do all acts and things and sign all documents and writing as are necessary to provide instructions to AO Accounting Group to finalise the 30 June 2022 and 30 June 2023 tax returns and financial accounts for the companies.
16.The husband and the wife do all acts and things and sign all documents and writings as are necessary to execute a compliant Division 7A Loan Agreement with D Pty Ltd in compliance with Orders 17 and 18 made on 17 September 2021 (being the partial property settlement in the amount of $1,000,000 paid to the wife by way of a director’s loan from D Pty Ltd) and AO Accounting Group are requested to accept service of this order upon them as such authorisation from each party to draw such loan agreement and facilitate this order.
17.By no later than 13 October 2023, the parties do all things and sign all documents necessary to execute a compliant Division 7A Loan Agreement with D Pty Ltd in relation to the amount of $8,693,345.66 advanced to the wife pursuant to the orders dated 19 December 2022 and AO Accounting Group are requested to accept service of this order upon them as such authorisation from each party to draw such loan agreement and facilitate this Order.
Further Disclosure
18.Within seven days of the date of these orders, the husband must provide to the wife by way of financial disclosure all documents and writings including but not limited to:
(a)The relevant NSW Government Local Land Services holding reference number and online password for all relevant livestock and real property;
(b)All written communication and correspondence between the husband, in his personal capacity or in his capacity as a trustee of the Aitken Unit Trust, and AQ Pty Ltd during the period 1 December 2018 to date;
(c)All tax invoices, statements of account, records of sale, receipts, purchase orders and any other documents recording transactions between the husband, in his personal capacity or in his capacity as Trustee of the Aitken Unit Trust, and AQ Pty Ltd during the period 1 December 2018 to date;
(d)All tax invoices, statements of account, records of sale, receipts, purchase orders and any other documents recording transactions in relation to Property Identification Code Number in the husband’s personal name or in the name of the Aitken Unit Trust during the period 1 December 2018 to date; and
(e)All tax invoices, statements of account, records of sale, receipts, purchase orders and any other documents recording transactions in relation to National Livestock Identification System user each identification number in the husband’s personal name or in the name of the Aitken Unit Trust during the period 1 December 2018 to date, in relation to:
(i)Livestock and progeny currently on hand; and
(ii)Livestock purchased and livestock and progeny sold during the period 1 December 2018 to date.
Real Property Valuations
19.AG Company be jointly re-appointed as Single Expert pursuant to Ch 7 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) to:
(a)prepare an updated valuation of:
(i)1 YY Street, Suburb BB;
(ii)AA Street, Suburb BB;
(iii)3 AA Street, Suburb BB;
(iv)2 AA Street, Suburb BB;
(v)B Street, Suburb C;
(vi)1 G Street, 2 G Street and J Street, Suburb H;
(vii)3 G Street, Suburb H;
(viii)UU Street, Suburb H;
(ix)E Street, Suburb F;
(x)1 AC Street, Suburb AP;
(xi)3 AC Street, Suburb AP; and
(xii)ZZ Street, Suburb AB;
(b)To provide a valuation report having regard to the current market value of each of the real properties;
(c)In relation to the property known as 1 YY Street, Suburb BB, include in their valuation report the following alternatives;
(i)The value of 74 acres comprising the land purchased in 2018 less the 4 acres the wife contends belongs to the parties’ son Mr X;
(ii)The value of 38 acres comprising;
A.The original 34 acres being 1 YY Street, Suburb BB purchased in 2017; and
B.An additional 4 acres from the subsequent purchase of 2 YY Street, Suburb BB in 2018;
(iii)the value of 34 acres, being the original acquisition of 1 YY Street, Suburb BB in accordance with the Contract for Sale dated 2017; and
(iv)the value of 4 acres, being a portion of the acquisition of 2 YY Street, Suburb BB in accordance with the Contract for Sale dated 2018.
20.Each of the wife and the husband do all acts and things to allow, and cooperate in allowing, access to AG Company to inspect each of the real properties at all reasonable times as requested by AG Company and within seven days of access being requested.
21.Both the husband and the wife are restrained from attending the inspections of each of the real properties, save for the purposes of providing access pursuant to Order 20, or as otherwise permitted by these orders.
Livestock Valuation
22.Within 14 days of the date of these orders, the parties do all things necessary to jointly appoint SS Company as the Single Expert pursuant to Ch 7 of the Rules to value the livestock located on the following properties:
(a)1 YY Street, Suburb BB;
(b)AA Street, Suburb BB;
(c)3 AA Street, Suburb BB; and
(d)2 AA Street, Suburb BB.
23.The husband do all acts and things to allow, and cooperate in allowing, access to the livestock valuer to inspect all livestock at each of the real properties at all reasonable times as requested by the livestock valuer and within seven days of access being requested.
Tax Expert
24.Mr XX of AR Lawyers be appointed as Single Expert (“Taxation Expert”) pursuant to Ch 7 of the Rules to give expert evidence in relation to the matters specified in this order and within seven days of the date of these orders the parties do all things and sign all documents as are necessary to instruct the Taxation Expert to prepare a further/updating report addressing the following issues:
(a)advise any further dealings with the ATO on behalf of the parties;
(b)quantify any further taxation consequences and rectification costs arising as a result of the loans made by D Pty Ltd to the Aitken Unit Trust;
(c)provide an updated opinion as to the range of likely liability of the parties informed by the dealings with the ATO including:
(i)provide an opinion as to all financial consequences, taxation and other imposts arising from the implementation of corrective action by way of transferring ownership of real properties by the Aitken Unit Trust to D Pty Ltd;
(ii)provide an opinion as to all financial consequences, taxation and other imposts, arising from the implementation of corrective action by way of declaring dividends;
(iii)Provide an opinion as to any other corrective action properly available to the parties that will result in a lesser financial impost.
(d)any taxation issues arising in relation to the loan from the Aitken Unit Trust to AH Pty Ltd and the estimated quantum of any taxation liabilities;
(e)any taxation issues arising in relation to the director's loan from D Pty Ltd to Ms Aitken in the amount of $1,000,000 advanced on about 11 October 2021 in accordance with the orders made on 17 September 2021 and the estimated quantum of any taxation liabilities;
(f)any taxation issues arising in relation to the sale of the following real properties and the estimated quantum of any liabilities, including but not limited to Capital Gains Tax (CGT);
(g)any taxation issues arising in relation to sale of the issued shares of D Pty Ltd and the estimated quantum of those taxation liabilities;
(h)any taxation issues arising in relation to the director's loan from D Pty Ltd to Ms Aitken in the amount of $8,693,345.66 advanced on about 23 December 2022 in accordance with the orders made on 19 December 2022 and the estimated quantum of any taxation liabilities;
(i)any other taxation issues arising in relation to the final order sought by the wife and the estimated quantum of any taxation liabilities; and
(j)any other taxation issues arising in relation to the final order sought by the husband and the estimated quantum of any taxation liabilities.
25.The parties:
(a)co-operate and provide all necessary authorities and permissions to AO Accounting Group requested or required by the Taxation Expert; and
(b)upon being requested to do so by the Taxation Expert, do all acts and things and sign all documents and writings, provide any documents requested and pay all moneys as recommended by the Taxation Expert to implement any advice provided by him.
Instruction Letters and Documents
26.For the purposes of issuing joint letters of instructions necessary to implement these orders:
(a)the wife provide the draft joint letter of instructions to the husband;
(b)the husband sign the draft joint letter of instructions within seven days of receiving same;
(c)if the husband fails to sign the joint letter of instructions within seven days of receiving it, the wife shall forthwith provide the joint letter of instruction to the intended recipient.
27.Each party provide all documents, including but not limited to valuation reports, to any Single Expert appointed in these proceedings within seven days of receiving a request from the Single Expert without requiring the consent of the other party.
Access
28.If the husband refuses or neglects to provide access in accordance with these orders, the wife in her capacity as director and unit holder (where applicable) for each of the companies shall do all things necessary to permit and provide access to any person or Single Expert required to attend any of the real properties owned by the companies.
29.The husband is hereby restrained from obstructing the wife from accessing any of the real properties owned by the companies, the wife or the husband for the purposes of Order 20.
30.The husband be restrained from attending any of the real properties owned by the companies, the wife or the husband, at such time as the wife is in attendance in accordance with Order 20.
Leave
31.The wife and husband are granted leave to provide a copy of these orders to the Single Experts appointed in this matter.
Single Expert Fees
32.The husband and wife shall do all things necessary to cause D Pty Ltd to pay the costs of Mr XX as and when the costs fall due.
33.Other than as provided for in these orders, the wife and husband shall each pay one half of the costs and fees of the Single Experts appointed in this matter within seven days of a request for payment from the Single Expert.
Costs
34.Costs stand 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).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Aitken & Aitken has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
HARPER J:
INTRODUCTION:
These are property adjustment proceedings under Pt VIII of the Family Law Act1975 (Cth) (“the Act”) between the applicant wife (“wife”) and the respondent husband (“husband”).
The wife commenced these proceedings on 1 August 2019. A final hearing took place between 8 and 17 March 2022. Final orders were pronounced on 16 November 2022. The husband appealed and on 12 May 2023 the Full Court allowed the appeal and remitted the proceedings for rehearing before a judge of this Court, being Federal Circuit and Family Court of Australia (Division 1), other than the primary judge.
In its reasons the Full Court set out some relevant background, which it is unnecessary to repeat for the purposes of this judgment (Aitken & Aitken (2023) FLC 94-142 at [4]–[27]).
The proceedings came before me on 6 September 2023 for the determination of a raft of interlocutory issues raised by the wife in an Amended Application in a Proceeding filed on 1 September 2023, prior to any rehearing.
The wife’s application, in summary, seeks 63 orders, including injunctions on the operation of business bank accounts, making capital expenditures, disposing of assets, appointment of accountants and experts, disclosure, steps for the repayment of company loans, single experts, real property, livestock and business valuations, and directions for final hearing. As will be explained in the course of these reasons, ultimately there was agreement about a number of orders, while other issues required adjudication.
However, one question requires consideration before the other issues can be addressed.
Discharge of Interlocutory Orders
The proposed orders 3 to 18 sought by the wife replicate a number of orders made in the proceedings between 23 December 2019 and 17 September 2021.
There was no dispute that once the primary judge pronounced final orders on 16 November 2022, r 5.01 of the Federal Circuit and Family Court of Australia (Family Law) Rules2021 (Cth) (“the Rules”) applied:
5.01 On the making of final orders in a proceeding, any interlocutory order made in the proceeding pending further order is automatically discharged and ceases to have continuing effect.
It can be seen that r 5.01 operates automatically to discharge “any interlocutory order” “on the making” of any final order. Senior counsel for the wife argued that r 5.01 did no more than state in a rule the long settled position under the general law, which held that interlocutory orders were discharged by the delivery of a final judgment, unless specifically extended by further order of the Court. That much may be accepted as broadly correct.
Senior counsel further argued that by reason of the orders of the Full Court, allowing the appeal and remitting the proceedings for rehearing, the many interlocutory orders which had been made since 2020 should be treated as never having been discharged. The wife argued that, therefore, the husband should be treated as having been bound by those orders, at all times, and continues to be bound, by reason the Full Court giving its judgment on 12 May 2023. This became common ground between the parties by the conclusion of the interim hearing.
This has some importance for determining the wife’s Amended Application in a Proceeding, because if she is correct, the interlocutory regime which has been put in place progressively since the proceedings began, has never ceased to operate. However, I do not accept this as correct.
This Court, the Federal Circuit and Family Court of Australia (Division 1), continues the Family Court of Australia under a different name; it continues to be a superior Court of record and a court of “law and equity” Federal Circuit and Family Court of Australia Act2021 (Cth) (“FCFCOA Act”) s 8 and s 9. Consequently, its final orders are binding on the parties and must be complied with until set aside or varied on appeal (DMW v CGW (1982) 151 CLR 491 at 505; Re Macks; Ex parte Saint (2000) 204 CLR 158 at [19]–[23], [53], [57], [219], [256]–[257], [344]).
The High Court has also made clear that traditional concepts of finality or “merger” of rights operate in relation to final orders made in the exercise of statutory powers pursuant to s 79(1) or s 74(1) of the Act, those powers are then exhausted, so as to support well known types of “issue” or “claim” estoppel (Clayton v Bant (2020) FLC93-994 at [26]). Consequently, after final orders are pronounced at first instance, the Court for the purposes of exercising original jurisdiction in the proceedings is functus officio, unless and until the proceedings are remitted for rehearing on appeal. The point is that, even if made in excess of jurisdiction, and set aside on appeal, final orders of this Court are not void “ab initio” (New South Wales v Kable (2013) 252 CLR 118 at [41]). Rather they are set aside and become “void” only from date of the orders of the Full Court allowing the appeal, unless the Full Court makes an order setting them aside from an earlier date.
In Australian Rail, Tram and Bus Industry Union v Metro Trains Melbourne Pty Ltd (2020) 276 FCR 172 the Full Court of the Federal Court (per Flick J) pointed out:
8.Orders made by a Judge, when exercising the original jurisdiction of the Court, determine the rights as between the parties then in dispute. Such orders may be made when entertaining an interlocutory application, and such orders may even then be expressly made “until further order” (cf. Resort Hotels Management Pty Ltd v Resort Hotels of Australia Pty Ltd (1991) 22 NSWLR 730 at 731 per McClelland J), or may be varied or set aside when final judgment is given. But all such orders remain subject to such further orders as may be made by a Court on appeal. Orders made by a primary Judge may be set aside on appeal, either from the date upon which orders were first made or as from the date of judgment of the Full Court exercising the appellate jurisdiction of the Court: e.g., Johnston v Vintage Developments Pty Ltd [2006] FCAFC 171 per Tamberlin, Jacobson and Rares JJ…
The wife’s argument means accepting that the consequence of the successful appeal is that this Court should proceed as if the final orders never happened. It is difficult to reconcile this notion with the status of final orders of a superior Court of record, which must be taken as valid and binding unless and until set aside, not void ab initio, but only voided from the date of, or specified in, the appellate orders.
It is also difficult to reconcile the contention that interlocutory orders of this Court enjoy automatic resurrection, as if never discharged, upon an appeal being allowed. If correct, this would mean that in the period between the making of final orders and the successful appeal a party would not be bound by the given interlocutory orders, but would then become exposed to allegations of contravention of the same interlocutory orders during the same period because they are treated as never discharged.
In my view, the wording of r 5.01, construed in its ordinary meaning, and according to its context and purpose, is consistent with the opposite conclusion. The rule operates “on the making” of final orders and automatically effects a discharge by force of the rule itself. The rule stipulates that the interlocutory orders to which it applies “cease to have continuing effect” on the happening of a specific judicial act, the making of final orders. The ceasing of effect is not made contingent on the continuing existence of final orders. The rule says nothing about the effect of appellate orders setting aside the final orders and remitting the proceedings. On the contrary, once any interlocutory orders have ceased to have continuing effect by force of the rule, the ready inference is that they are at an end. They could only be returned automatically to efficacy by a specific provision which is intended to bring about that result. There is no such provision in the rules. Rather if a party wants to extend interlocutory orders beyond final judgment, specific application can be made, seeking to do so.
I do not accept that any interlocutory orders survived the making of final orders by the primary judge.
Accordingly, the question is whether fresh interlocutory orders should be made, and if so whether in the same or similar terms as some earlier interlocutory orders or otherwise. Where the parties have agreed, I will make orders by consent. Otherwise, I will treat the disputed orders as an application by the wife for fresh orders.
Several further initial points should be made. The first is that the parties’ wealth lies primarily in the value of the businesses, including real estate, operated by or through:
(a)D Pty Ltd;
(b)U Pty Ltd;
(c)Aitken Pty Ltd;
(d)Aitken Family Superannuation Fund; and
(e)Aitken Unit Trust.
(“the entities”)
D Pty Ltd is the primary corporate entity. For the purposes of the first final hearing D Pty Ltd was valued at $45,514,742 in a net asset pool of somewhere between $79,925,966 and $82,522,809. The wife in her evidence appeared to contend that D Pty Ltd was originally a partnership between her and the husband which commenced in 1991. D Pty Ltd was incorporated in 1995. The parties are both directors and hold one each of the issued share capital of two shares. The husband claims he is the present Managing Director.
The second is that U Pty Ltd, a company in which the parties are also directors and shareholders, owns three properties at 1 AC Street, Suburb AP. Aitken Pty Ltd, of which again the parties are the only directors and shareholders, as trustee of the Aitken Unit Trust owns a number of properties in NSW at Suburb AN, Suburb H and Suburb BB.
D Pty Ltd conducts its business from some of the properties at Suburb H.
There is also a livestock breeding operation conducted on the properties at Suburb BB, which appears to be separate from the business of D Pty Ltd. The wife gave evidence about this but the husband did not specifically mention it in his affidavit. While it was not made clear, I infer from the wife’s evidence that the Aitken Unit Trust is the entity through which this livestock business is conducted. The owner of the livestock would therefore be Aitken Pty Ltd.
The third is that there was ultimately agreement between the parties before me that the business of D Pty Ltd should be sold. This is not necessarily a simple matter. It could mean the sale of shares in D Pty Ltd, or a sale of its assets and business undertaking, and include the sale of properties, owned by Aitken Pty Ltd, upon which D Pty Ltd conducts its operations. The wife indicated that she proposed to amend her Initiating Application. Orders were made on 6 September 2023 for the parties to file and serve amended pleadings which specified their proposed methods of sale, including the proposed sale of any properties upon which D Pty Ltd conducts its business.
The fourth is that the wife was paid $8,693,345.66 on 19 December 2023 as a fully franked dividend from D Pty Ltd in accordance with the final orders before they were set aside on appeal. She has retained this money, but the characterisation of the payment is now a matter of dispute, since the order requiring payment as a fully franked dividend has been overturned on appeal. I will return to this below.
The fifth is that the Court has listed the proceedings for further final hearing commencing on 2 April 2024.
All these factors have an impact on the range of orders which should be considered and made on the basis of this judgment.
Orders
I will refer to the order numbers as they appear in the wife’s Amended Application in a Proceeding. This is the most convenient way to proceed despite the contending orders proposed by the husband in his Response. Counsel for the husband helpfully provided a written response to the wife’s individual orders which became Exhibit 5.
Proposed orders 1 and 2 have no continuing relevance and can be put aside.
Proposed orders 3 to 18 are put forward as existing operative interlocutory orders. As explained, I will consider these as proposed fresh orders which replicate the terms of earlier orders discharged by the force of r 5.01 of the Rules by the final orders on 16 November 2022. This means the onus lies on the wife to justify the proposed order, unless the husband agrees to it.
The husband consented to the wife’s proposed orders 5, 6, 12 and 13. I will make those orders.
Proposed order 3 seeks to restrain each party from dealing with funds in a range of nominated bank accounts. It was apparent that this order was of significance to the operation of the D Pty Ltd businesses. Among those accounts are two accounts held at Westpac, account …29 being the D Pty Ltd Trading Account, and account …02, being D Pty Ltd Reserve Bonus account. The form of proposed order 3 is almost the same terms as an order made by Rees J on 28 May 2020 (Order 6), that is more than three years ago. In support of this order, the wife claims that the husband has a history in the proceedings of failing to adhere to Court orders. These, so she argues, are sufficient reasons for a reimposition of the order. The husband argues the order defies commercial reality and its past operation has prevented the proper conduct of the business of D Pty Ltd. He claims it is not in the interests of either party for such an order to continue.
The wording of proposed order 3 includes a limitation “save in accordance with Orders 8, 9 and 10 herein”. This exposes one of the problems in the approach of the wife. I will return to proposed order 10, but proposed orders 8 and 9 repeat the wording of two orders (Orders 12 and 13) also made on 28 May 2020, some three years ago. They specifically allow the husband to make payments referred to in financial statements or profit and loss statements for the year ended 30 June 2019, more than four years ago. As pointed out, since May 2020 the parties have had a final hearing and successful appeal. The evidence did not explain why orders in terms of proposed orders 8 and 9 continued to be necessary in September 2023, and it is likely they are spent. I do not propose to make proposed orders 8 and 9. Consequently, the exemptions in the wording of proposed order 3 have partly become otiose.
Proposed order 3 also needs to be considered in light of several other orders. Proposed order 4, to which the husband broadly consents, restrains him from removing the wife as a signatory from, and requires him to ensure the wife has online viewing access to, the same accounts as are referred to in proposed order 3 together with any other accounts of D Pty Ltd, U Pty Ltd and Aitken Pty Ltd. The husband seeks additional wording to proposed order 4 which would restrain the wife operating any of the accounts nominated in proposed order 3 without his consent.
One of the reasons which the wife also pointed to as a reason to renew the injunction in proposed order 3 was the fact that she accepted the husband was largely in control of the conduct of the businesses of D Pty Ltd, and she claimed alienation from the operation of the businesses despite being a joint director and shareholder of relevant companies. The husband claimed he had taken the responsibility of running the businesses over the last several years to the best of his ability. In light of these competing contentions, it seems to me that the additional wording proposed by the husband in order 4 would protect the position of both parties, pending final hearing. I will make order 4 with the additional wording proposed by the husband.
Proposed order 10 seeks a restraint on the husband making any item of capital expenditure greater than $10,000 without notice to the wife. In argument he indicated agreement to this order if the limit was raised, first to $200,000, which he later reduced to $30,000. Proposed order 11 is relevant here, because it restrains both parties from disposing of any asset with a value exceeding $1,000. The husband also agrees to this order if the limit is increased to $10,000. Orders 10 and 11 will be made with the increased limits proposed by the husband.
It is not possible at an interim stage to make factual findings about the husband’s claims that proposed order 3 would adversely affect the business operations of D Pty Ltd, other than to infer an inability to operate so many bank accounts is likely to make operating a business more difficult.
It is also relevant to record here that in support of her proposed orders, the wife gave evidence that on 25 May 2023 the husband unilaterally withdrew $1,000,000 from …49 and $6,004,884 from …02. This took place after the Full Court orders allowing the appeal on 12 May 2023. The wife thus argues that these withdrawals were made in breach of Order 6 made on 28 May 2020 (substantially replicated in proposed order 3). The husband’s evidence is that he withdrew these amounts to place them in interest bearing accounts where they have earned interest. He claimed he did so because he understood all interlocutory orders had been discharged. On the view I have taken of r 5.01, the husband’s understanding was reasonably based. However, the wife also gave evidence that she and the husband executed the necessary documents to give her viewing access to those accounts going forward. Thus, she can monitor transactions on those accounts. I do not consider these withdrawals to be of significance in determining whether to make proposed order 3.
It is also necessary to consider order 3 in light of proposed orders 14, 15, 16, 17 and 18.
Proposed order 14 requires the husband to maintain management accounts for relevant companies and trusts, and he consents to such orders if the accounting firm AO Accounting Group is engaged rather than PP Group, whom the wife supports. Proposed order 16 replicates earlier orders for the provision of management accounts to the wife.
The dispute about the appropriate accountants to be appointed for the purposes of these proceedings was very difficult to understand. Before me the wife promoted PP Group while the husband promoted AO Accounting Group. The wife conceded she had supported AO Accounting Group in the past. There was no doubt PP Group have been engaged as accountants for the entities in the recent past. However, the husband has engaged AO Accounting Group more recently because his relationship with PP Group has broken down. The wife’s resistance to AO Accounting Group seems to be based upon the fact that the husband chose them unilaterally. She claimed he did so in breach of an order made on 23 March 2021 appointing PP Group. Apart from the likelihood that this order was spent some time ago, it has clearly been discharged in my view by reason of r 5.01. Since the husband has been conducting the businesses, it is more practical to appoint the accountant with whom he has a working relationship. That is not presently PP Group. AO Accounting Group will be nominated as accountants in the orders I make. I will make order 14 inserting AO Accounting Group as the accountants.
Proposed order 15 requires the management accounts of the entities are kept up to date. The husband agrees to this order if AO Accounting Group are the accountants. I will make proposed order 15 on that basis.
Proposed order 16 requires disclosure from the husband as a director of the entities. The husband does not agree to this order. Rather he vaguely proposed an order which requires the wife to specify what disclosure she wants to the accountant 28 days after the end of each quarter. I consider the wife’s proposed order 16 is more appropriate, and will make an order in those terms. The husband agrees to the wife’s proposed order 17. He argued that proposed order 18 was unnecessary because it should be subsumed within proposed order 16. This seems broadly correct. The duty of disclosure of both parties is continuing, and the wife can seek disclosure pursuant to the Rules if necessary, or by further Court order. I will make the wife’s proposed order 17 however I decline to make proposed order 18.
Pausing here to return to proposed order 3, in summary, therefore, the evidence shows the husband appears to be conducting the ongoing operations of the business of D Pty Ltd. Both parties agree the business should be sold. It is in the interests of both parties that the business continues to operate as successfully as possible until sale. Accordingly, I will make an order in terms of proposed order 3 but allow the husband to operate the accounts in the ordinary course of business and with three days’ notice, and subject to orders 4, 10 and 11 amended as discussed above. The wife will also retain oversight of the bank accounts and receive information and disclosure about the operations of the relevant entities.
Proposed order 7 seeks to restrain the husband from varying or altering any insurances without the consent of the wife. An order in the same terms was made by Rees J on 28 May 2020. The wife pointed to past breaches of the order, as part of her complaint that the husband made business decisions without consent. The husband opposes this order. He argued that it would impede the effective conduct of the businesses. The wife’s evidence did not convince me that order 7 is necessary. Insurance is an ordinary incident of responsible corporate governance. The wife did not point to any occasion where insurance organised by the husband was somehow detrimental to the business. I decline to make order 7.
Proposed orders 19 to 21 relate to a loan between D Pty Ltd and the Aitken Unit Trust which has been subject to a determination by the Australian Taxation Office (“ATO”) dated 6 December 2021. There was no dispute that the ATO had agreed to accept a transfer of certain properties to D Pty Ltd in discharge of the loan. Despite the continuing accrual of compound interest, the parties cannot agree on which properties should be the subject of transfer. The wife supports using properties about which the parties had expert advice from Mr XX and which were the subject of the final orders, now overturned on appeal. The husband supports different properties because he claims to have received advice that the wife’s proposed properties, if transferred, may well create further taxation issues, while the transfer of the properties he proposes will result in cost savings. He did not provide this advice to the Court. He did point out that the wife claimed none of the properties proposed by either party as part of her final relief, so it makes no difference which properties are transferred. There may be force in the husband’s arguments, but since the only expert evidence about the transfer of properties comes from the wife, I will make orders for transfer using the properties adopted by her by proposed orders 19 and 20. This makes order 21 unnecessary.
Proposed orders 22 to 26 relate to the provision of documents and instructions for the finalisation of the June 2022 and June 2023 tax returns and financial accounts of the relevant companies. In relation to orders 22, 23 and 24 the only difference between the parties is over the identity of the appropriate accountant to undertake the work. Consistently with my earlier conclusions AO Accounting Group will be nominated as proposed by the husband and proposed orders 22 and 24 be made accordingly. Order 23 relates to providing information for the purposes of business valuation which is unnecessary, at least at present, because the businesses will be sold. I will not make order 23.
By orders 25 and 26 the wife proposes a payment to the husband of $8,693,345.66 by transfer from D Pty Ltd. Clearly, this is the same amount already received by the wife. She then proposes the payments to each of the spouse parties be declared as fully franked dividends from D Pty Ltd (proposed order 25) or that the payment to her of $8,693,345.66 alone be documented as a Division 7A loan. The husband opposes a payment to him of $8,693,345.66 because he contends D Pty Ltd could not presently afford to make such a payment without causing adverse impacts to the continuing operation of its business. He also opposes using a fully franked dividend to characterise the payment already made to the wife because he argues if a fully franked dividend is declared in favour of the wife, the same dividend will have to be declared for him, which again D Pty Ltd cannot afford. He would consent to the wife’s alternative proposal of characterising the payment of $8,693,345.66 to her as a Division 7A loan, with the documentation being prepared by AO Accounting Group (proposed order 26). I will make such an order.
Proposed order 27 seeks specific disclosure in relation to livestock. The husband argued this was unnecessary because earlier orders covered such disclosure. I do not accept this is clear. I propose to make an order in terms of order 27.
Proposed orders 28, 29, 33, 34, and 35 deal with the appointment of an expert to value businesses, including D Pty Ltd, stock, plant and equipment of the parties and the entities as at 30 June 2023. This would involve the parties in significant additional expense. In light of the broad agreement to sell the businesses, the orders for the parties to submit proposed orders for the sale and the return of the proceedings for mention on 23 October 2023, I am not persuaded that these orders are presently necessary. This question may need to be revisited, but I decline to make these orders at present.
Proposed orders 30, 31, and 32 deal with the valuation real properties. These properties were valued for the purposes of the first final hearing. Even though the businesses are being sold, it seems to me that the Court may yet require updated valuation of real estate for the purposes of final hearing. Both parties agreed to the properties for valuation, but disagreed on the valuer. The wife’s proposed order 30 proposes new valuers rather than using AG Company who were the original single expert for the original final hearing. The husband contends that AG Company could undertake updated valuations of properties with which they are already familiar. The wife did not explain why she proposed valuers other than AG Company. It seems to me that using AG Company could result in a saving to the parties.
In relation one property, 1 YY Street, Suburb BB, the wife’s order proposed a valuation on different bases. She did not explain why but nor did the husband explain any opposition.
I will make an order for AG Company to undertake updated valuations and value 1 YY Street on the alternative bases proposed by the wife. I will further make orders 30 to 32, using the husband’s version of order 30 (being order 22 in his Response).
Proposed orders 36 and 37 relate to the appointment of valuers for the livestock depastured on the properties at Suburb BB. The difference between the parties, yet again, is over the identity of the valuer. The husband proposes using SS Company. The wife gave some evidence about livestock valuation but did not explain why fresh valuers were necessary. I will make orders for SS Company to undertake an updated valuation and proposed order 37.
The terms of proposed order 38 were substantially agreed, although the husband proposed a different wording for subparagraph (h) (being subparagraph 5(i) in his Response). I will adopt this wording.
Order 39 was agreed if AO Accounting Group was inserted as accountants. I will make an order broadly in those terms.
The terms of proposed orders 40 to 47 were agreed. I will make orders in those terms.
Proposed orders 48 to 63 related to listing the proceedings for final hearing and trial directions. As noted I have listed the proceedings for final hearing in 2024. Other trial directions can await the next mention of the proceedings on 23 October 2023.
All questions of costs will be reserved.
In light of the manner in which the parties approached the determination of the issues considered in this judgment, it is necessary to remind them of their duty to conduct the litigation in accordance with the overarching purpose set forth in s 67(1) of the FCFCOA Act to facilitate the just resolution of their dispute as quickly, inexpensively and efficiently as possible. Section 68(1) obliges parties to “conduct the proceedings (including negotiations for settlement of the dispute to which the proceeding relates) in a way that is consistent with the overarching purpose”. The Court expects the parties, before applying to use judicial resources, to reach agreement in a sensible and pragmatic manner to refine what issues truly require adjudication, and agree all other matters.
CONCLUSION
For these reasons I will make the orders set out the commencement of judgment.
I certify that the preceding sixty-two (62) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Harper. Associate:
Dated: 29 September 2023
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