Antoun & Antoun
[2023] FedCFamC1F 129
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Antoun & Antoun [2023] FedCFamC1F 129
File number(s): PAC 796 of 2017 Judgment of: RIETHMULLER J Date of judgment: 9 March 2023 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Legal professional privilege – Where the husband claims legal professional privilege with respect to documents sought to be relied upon by the wife – Consideration of the exception set out in s 125 of the Evidence Act 1995 (NSW) with respect to “fraud” – Claim to privilege dismissed Legislation: Family Law Act 1975 (Cth) ss 79, 106B
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 6.01, 6.09, 6.17
Evidence Act 1995 (NSW) ss 117, 118, 125
Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (NSW) r 31
Cases cited: Australian Securities & Investments Commission v Mercorella (No 3) (2006) 58 ACSR 40; [2006] FCA 772
Crittenden & Collins [2017] FamCA 716
Gartner v Carter [2004] FCA 258
Greco & Greco [2008] FamCA 501
Kallinocos & Anor v Hunt & Ors (2005) 64 NSWLR 561; [2005] NSWSC 1181
Yamada & Bernard [2016] FamCA 977
Division: Division 1 First Instance Number of paragraphs: 99 Date of hearing: 27 January 2023 Place: Parramatta Counsel for the Applicant: Mr Lloyd SC and Mr Ford Solicitor for the Applicant: Lewarne & Goldsmith Counsel for the First Respondent: Mr Sansom SC and Mr Richardson Solicitor for the First Respondent: Barkus Doolan Winning Counsel for the Second and Third Respondents: Mr Dura Solicitor for the Second and Third Respondents: Kennedy’s Law Counsel for the Fourth, Fifth, Sixth and Twelfth Respondents: Mr Todd Solicitor for the Fourth, Fifth, Sixth and Twelfth Respondents: William Roberts Lawyers ORDERS
PAC 796 of 2017 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS ANTOUN
Applicant
AND: MR ANTOUN
First Respondent
B PTY LTD
Second Respondent
MR C (and others named in the Schedule)
Third Respondent
order made by:
RIETHMULLER J
DATE OF ORDER:
9 MARCH 2023
THE COURT ORDERS THAT:
1.The husband’s Application in a Proceeding filed 24 January 2023 be dismissed.
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 Antoun & Antoun has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
RIETHMULLER J:
INTRODUCTION
The applicant wife seeks property settlement orders against the husband, the first respondent, following the breakdown of their marriage in 2015. The wife alleges that the husband has embarked upon a course of conduct designed to put the title and/or control of various trusts and corporate entities beyond his reach for the purpose of defeating the wife’s potential claim pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”).
On 9 May 2022, the wife filed an Application in a Proceeding seeking to join various persons and entities which she says assisted the husband in carrying out such transactions to defeat her claim pursuant to s 79 of the Act. The wife seeks orders pursuant to s 106B of the Act seeking to set aside a large number of transactions, and alternatively, for the imposition of remedial trusts or provision of equitable compensation. The wife seeks to rely upon a number of documents prepared by the husband’s former solicitors which she says support her contention that the husband intended to defeat her claim pursuant to s 79 of the Act. The wife sets out her claim in her Points of Claim filed 7 December 2022.
On 24 January 2023, the husband filed an Application in a Proceeding seeking to restrain the wife from continuing to instruct her current solicitors (or that they be restrained from acting for her), and to restrain the wife from relying on certain documents to support her claim on the basis that the documents are privileged.
These reasons for judgment address the husband’s legal professional privilege claim. However, in order to address the husband’s privilege claim, it is necessary to provide a summary of the wife’s Points of Claim to give context to the documents.
BACKGROUND
The husband and wife are both 47 years of age. They were married in 2000. During the course of their relationship, they had four children (who are now aged 21, 20, 17, and 14). The husband operated a business, H Pty Ltd (“H Pty Ltd”), in which the wife worked. The wife is a finance professional, and the husband works in a trade.
The wife stopped working in H Pty Ltd around early 2015, at which time the husband started to pay her $750 cash each week to meet the household bills, groceries, and expenses. On 1 December 2015, the husband and wife separated. The husband left the marital home on 6 December 2015.
On 12 May 2020, the solicitors for the husband prepared a balance sheet setting out the property of the husband which included a value for the matrimonial home, some funds in the bank, chattels, a small share portfolio and modest superannuation. The balance sheet included references to 11 companies, all of which were said to have values that were either nil or not known, as follows:
H1 Pty Ltd $ NIL
H2 Pty Ltd $ NIL
J Pty Ltd $ NIL
Antoun Group Pty Ltd $NK
K Pty Ltd $ NIL
L1 Pty Ltd $ NIL
AA Pty Ltd $ NIL
Antoun Pty Ltd $ NIL
J1 Pty Ltd $ NIL
N Pty Ltd. $ NK
O Pty Ltd $ NIL
(As per the original)
(Extract of the husband’s balance sheet dated 12 May 2020)
THE WIFE’S CLAIMS
The wife’s claims concern over 30 business entities. The wife’s claim, in substance, is that the husband formed the intention to separate from her in around mid-2015 and set about divesting himself of assets and positions of control, such as being the appointor of discretionary trusts. Whilst there is a large and complex web of companies and trusts, much of the beneficial interests in the business are held on trust, making the position of appointor (of the relevant trustee) of the trusts the position of effective control of the benefit of the property interests (in discretionary trusts where family members are beneficiaries or objects of the trusts).
The wife summarises the key transactions in respect of various trusts in Item D of her Points of Claim, which include the following changes, all of which are alleged to have been effected by the husband on 4 December 2015, some three days after separation:
(a)Varying the H4 Trust to replace himself as appointor by his accountant and his sister;
(b)Varying the H3 Trust to replace himself as appointor by his accountant and his sister;
(c)Varying the L1 Trust to replace himself as appointor by his mother (now deceased) and his sister;
(d)Varying the Antoun Group Trust to replace himself as appointor by his accountant and his sister; and
(e)Varying the J Trust to replace himself as appointor by his accountant and his sister.
Whilst the wife pleads in her Points of Claim that the husband’s accountant has been made an appointor of many of the trusts, the accountant is not a party or proposed party to the proceedings. In argument, the wife’s counsel said that the accountant was no longer an appointor, hence he is not joined to the proceedings, however that does not appear on the face of the wife’s Points of Claim.
The balance of the wife’s claims, as set out in the 251 paragraphs of her Points of Claim, are not so easily summarised due to the complex corporate structures that are in place, and that the claims are pleaded not only on the basis of seeking orders pursuant to s 106B of the Act, but also claims for account and the imposition of remedial trusts with respect to a large number of parties.
I turn now to summarising the wife’s claims.
1. H Pty Ltd and B Pty Ltd claim
H Pty Ltd (“H Pty Ltd”) was established in 1999. The husband and Mr M were the shareholders and directors. In mid-2005, Mr M transferred his shares to the husband and ceased as a director of the company. This left the husband as the sole shareholder and director of H Pty Ltd. The wife had been working in H Pty Ltd until early 2015 and continued to do some work in the business from time to time.
The wife says H Pty Ltd had 40 employees, making it a substantial business: see the wife’s affidavit filed 14 December 2022, paragraph 53. The wife says that H Pty Ltd had a turnover of a little over $10 million in 2017. The wife says that after she ceased working for H Pty Ltd, the husband transferred all of the business bank accounts to a different bank and she lost the ability to login to view the accounts. The wife also says that the H Pty Ltd financial statements for 2015 and 2016 received when disclosure was exchanged between the parties, differ from the financial statements her current solicitor has obtained directly from the Australian Taxation Office (“ATO”) portal: see the wife’s affidavit filed 14 December 2022, paragraph 61.
In late 2015, a share transfer was lodged with the Australian Securities and Investments Commission (“ASIC”) whereby the husband transferred his shares in H Pty Ltd to H1 Pty Ltd (“H1 Pty Ltd”). The transfer, despite being lodged in late 2015, was dated mid-2015. In late 2015, the accountants for H Pty Ltd sought to withdraw the lodgement of the share transfer form dated mid-2015, which was permitted. It appears that the husband therefore remained the shareholder of the company at that time: see the wife’s Points of Claim, paragraphs 5–10. Curiously, the same day in late 2015 another share transfer dated mid-2015 was lodged with ASIC, transferring shares in H1 Pty Ltd to H1 Pty Ltd (effectively a share buy-back) which appears to have been rescinded some months later in 2015: see the wife’s Points of Claim, paragraph 11.
The relevance of H1 Pty Ltd is that it was incorporated in 2014 with the husband as the sole director and shareholder: see the wife’s Points of Claim, paragraph 43. H1 Pty Ltd is the corporate trustee of the H4 Trust (“H4 Trust”), a discretionary trust of which the husband was the appointor until late 2015 when the husband’s accountant and sister were made appointors in place of the husband: see the wife’s Points of Claim, paragraphs 44–47. The wife seeks orders setting aside the change in appointors for the H4 Trust pursuant to s 106B of the Act: see the wife’s Points of Claim, paragraph 50.
In late 2017, the husband’s shares in H Pty Ltd were transferred to B Pty Ltd (“B Pty Ltd”), the second respondent, being a company operated by the husband’s brother-in-law, Mr C (who is the third respondent): see the wife’s Points of Claim, paragraph 12.
Mr C became the director of H Pty Ltd. B Pty Ltd was registered in late 2017 by the husband’s accountant, Mr P, shortly before the share transfer. The wife says Mr C does not hold a trade licence as he is accountant finance professional by training: see the wife’s affidavit filed 14 December 2022, paragraph 76. There is also evidence that the costs of establishing B Pty Ltd (as trustee for B Group Trust) were invoiced to H Pty Ltd. The consideration for the transfer is said to be $115,000 (and the assumption of tax debts of a little less than $1 million), yet the wife alleges that:
(a)The value of H Pty Ltd (at least as shown on balance sheets obtained during disclosure) was in the order of $3.3 million (the retained profits of $3,301,596 in the company shown in the 2017 financial statements): see wife’s affidavit filed 14 December 2022, paragraphs 95 –96;
(b)The husband continues to work for H Pty Ltd;
(c)H Pty Ltd had sufficient cash to meet its taxation liabilities (such that it was in credit with the ATO in November 2017 in the sum of $86,468.37): see wife’s affidavit filed 14 December 2022, paragraph 93; and
(d)In the 2017 financial year, H Pty Ltd lent Q Trust (presumably the trustee Q Pty Ltd, the proposed 17th respondent and an entity controlled by Mr C) around $1.177 million: see wife’s affidavit filed 14 December 2022, paragraph 95; and
(e)Following the transfer of shares from H Pty Ltd to B Pty Ltd, H Pty Ltd continued to pay the husband’s rent of $4,997.02 per month and made payments toward his legal fees: see wife’s affidavit filed 14 December 2022, paragraphs 98 –99.
The wife seeks to have this transaction (the transfer of shares from H Pty Ltd to B Pty Ltd) set aside under s 106B of the Act, or a declaration that B Pty Ltd holds the H Pty Ltd shares on trust for the husband, or that Mr C holds his shares in B Pty Ltd on trust for the husband (and wife), and an order for account or equitable compensation: see the wife’s Points of Claim, paragraphs 21–35.
H Group - The H Pty Ltd sister company claim
In 2017 another company, H Group (“H Group”), the proposed thirteenth respondent, was registered, which was described to Australia and New Zealand Banking Group Limited (“ANZ”) as a “sister company” to H Pty Ltd. H Group is the trustee for the H Group Trust (“H Group Trust”). The husband’s brother-in-law was the initial director, however he resigned in 2022, and the husband’s sister became the director: see the wife’s Points of Claim, paragraphs 137–138, and 154.
The website for the H Pty Ltd business now refers to H Group (H Group), having been shut down and replaced by the same website under the H Group name. The wife says all of the projects referred to on the H Group website are the same as those which appeared on the initial H Pty Ltd website, and that H Group continues to rely upon the husband’s trade licence: see the wife’s affidavit filed 14 December 2022, paragraphs 101 and 103.
Over three months in 2018, N Pty Ltd (“N Pty Ltd”) transferred $1.15 million to H Pty Ltd or H Group: see the wife’s Points of Claim, paragraph 139.
2. Q Pty Ltd transfers
In 2016, Mr C caused the registration of Q1 Pty Ltd. At that time, all of the shares were owned by R Pty Ltd and Mr C was the sole director and shareholder of that company. In 2016, half of the shares in Q1 Pty Ltd were transferred to the husband. However, in 2018, Mr C’s accountant requested the withdrawal of this transfer from ASIC, causing all of the shareholdings to be thereafter vested in R Pty Ltd again. In 2022, the Mr C lodged an application for voluntary deregistration of Q1 Pty Ltd: see the wife’s Points of Claim, paragraphs 174–179. The wife seeks to set aside the withdrawal of the share transfer from the husband pursuant to s 106B of the Act, and orders declaring that all of the shares were held for the benefit of the husband, and orders for accounts: see the wife’s Points of Claim, paragraphs 180–186.
Whilst Q1 Pty Ltd appears to have been abandoned, Mr C incorporated Q Pty Ltd (“Q Pty Ltd”) in 2016. Between 2016 and 2018 H Pty Ltd transferred around $1.177 million to Q Pty Ltd which has not been repaid. The wife seeks declarations that the shares in Q Pty Ltd are held on trust for the husband or an account, or equitable compensation: see the wife’s Points of Claim, paragraphs 187–190. Aside from the declaration as to the shares being held for the benefit of the husband, any other remedy would appear to be for the benefit of H Pty Ltd which is not a party to the proceedings (in seeking repayment of the $1.177 million).
The Suburb T property
The property located at S Street, Suburb T NSW (“the Suburb T property”) was acquired by H Group in 2018 for $1.4 million, relying upon borrowings secured by a mortgage from ANZ in the sum of $915,000. The husband was a signatory on the mortgage and bank accounts at the ANZ for H Group: see the wife’s Points of Claim, paragraphs 142–143.
In 2018, the registered office of H Group was changed to the address of the Suburb T property and the husband became a director, however, the shareholding continued to be held by his brother-in-law, Mr C: see the wife’s Points of Claim, paragraphs 140–141. The Suburb T property appears to be the site of the business being operated by N Pty Ltd (discussed below).
The Suburb V property and W Pty Ltd
In 2019, retention monies of $71,000 owed to H Pty Ltd were paid to the vendor’s solicitors in relation to a property located at U Street, Suburb V NSW (“the Suburb V property”). The property was being purchased by W Pty Ltd (“W Pty Ltd”), the proposed seventh respondent) for $710,000, and the retention monies used as the deposit of 10 per cent. As a result, the wife claims that H Pty Ltd was entitled to a 10 per cent beneficial interest in the Suburb V property, held on trust by W Pty Ltd: see the wife’s Points of Claim, paragraphs 36–42. H Pty Ltd is not a party to the proceedings.
The Suburb V property was sold in 2022 for $640,000. As a result, the wife seeks orders that W Pty Ltd account for the sale proceeds. Whilst the wife’s Points of Claim refer to the “husband” in paragraph 42, it appears clear that “W Pty Ltd” was meant to be named as they are listed as the seventh respondent in the proceedings.
3. L Pty Ltd
In 2015, L Pty Ltd (“L Pty Ltd”) was established. The shares are held by Mr Z (“Mr Z”) (the proposed ninth respondent) and L1 Pty Ltd (whilst the ACN is described as in the wife’s Points of Claim, this must be an error as it cannot have the same ACN as L Pty Ltd) (“L1 Pty Ltd”) as trustee for L1 Trust (“L1 Trust”). The husband was the appointor and a beneficiary of the L1 Trust in 2015: see the wife’s Points of Claim, paragraphs 51–52.
In late 2015, the husband caused a Deed of Variation to be created, which implemented a variation of L1 Trust’s deed to appoint his sister, Ms BB (the proposed eighth respondent), and Ms CC (the now deceased mother of the husband) as appointors, subsequently removing himself as appointor. This Deed of Variation was backdated to mid-2015. As at mid-2016, the L Pty Ltd business had a turnover of $1.85 million, which had increased to $7.25 million by 2020: see the wife’s Points of Claim, paragraphs 53–58.
The wife seeks orders pursuant to s 106B of the Act to set aside the transactions by the husband (in varying the appointors pursuant to the Deed of Variation), and orders for account from the husband, his sister and Mr Z: see the wife’s Points of Claim, paragraphs 59–60. It is not apparent from the pleadings contained within the wife’s Points of Claim that Mr Z did not have a real interest in L Pty Ltd, nor is there any conduct by him that is currently pleaded which appears to give rise to a cause of action for an account of profits (as claimed by the wife at paragraph 60 of her Points of Claim filed 7 December 2022).
4. The Suburb EE and GG Street Properties
K Pty Ltd and the Suburb EE property
K Pty Ltd (“K Pty Ltd”) is the current name of a company initially established many years ago by the wife and her sister (the wife says K Pty Ltd was first established under a different name for the purposes of selling products, although never did so). The wife was the director of K Pty Ltd until she was removed in 2017 when the husband became the sole director and shareholder. K Pty Ltd remains the trustee of the Antoun Family Trust, of which the wife is the appointor: see the wife’s affidavit filed 14 December 2022, paragraphs 115–117.
K Pty Ltd purchased a property located at DD Street, Suburb EE NSW (“the Suburb EE property”) in 2012 for $725,000 and became the registered proprietor in 2013. The Suburb EE property is vacant land. The purchase was funded by a mortgage for $653,000, and at the time of separation the debt was around $567,000: see the wife’s affidavit filed 14 December 2022, paragraphs 119 and 127. In 2017, the $653,000 mortgage was discharged and a new mortgage entered into with ANZ, securing borrowings of $775,000: see the wife’s affidavit filed 14 December 2022, paragraph 130.
In 2017, a five year lease (with two, five-year options) was registered on the title of the Suburb EE property in favour of Q1 Pty Ltd commencing 2015, although Q1 Pty Ltd was not registered until 2016. In 2019, the lease was surrendered and a new lease was registered on the title of the Suburb EE property in favour of Q Pty Ltd commencing in 2017, for ten years with two, five-year options: see the wife’s affidavit filed 14 December 2022, paragraphs 120–121 and the wife’s Points of Claim, paragraph 191.
In 2020, K Pty Ltd borrowed a further $635,970 secured over the Suburb EE property, and then transferred $520,700 to H Pty Ltd over three separate transactions in 2020: see the wife’s Points of Claim, paragraphs 15–16.
K Pty Ltd is neither joined nor proposed as a party to the proceedings at this time.
J Pty Ltd and the GG Street Property
It is alleged that the husband acquired a property located at FF Street, GG Street NSW (“the GG Street property”) in 2010 for $595,000. In 2014, J Pty Ltd (“J Pty Ltd”) was incorporated (with the husband as the sole shareholder and director) and appointed as the trustee of the J Trust (“J Trust”). The husband was the sole appointor and beneficiary for the J Trust prior to late 2015: see the wife’s Points of Claim, paragraphs 92–94.
In 2014, J Pty Ltd acquired the GG Street property from the husband for $690,000. The GG Street property is now used as collateral for loans by various entities totalling $2.48 million: see the wife’s Points of Claim, paragraphs 96–97.
In 2015, the husband was replaced as appointer of the J Trust by his accountant and his sister, a change which the wife seeks to have set aside pursuant to s 106B of the Act: see the wife’s Points of Claim, paragraphs 98–101. The husband remains the sole shareholder and director of J Pty Ltd, the corporate trustee of J Trust: see the wife’s Points of Claim, paragraph 99.
In 2020, the husband arranged for J Pty Ltd to borrow $691,000 from ANZ secured by a mortgage over the GG Street property. J Pty Ltd then transferred $434,833.92 to H Pty Ltd and $199,270.90 was transferred to the husband. The husband then transferred $171,000 to H Pty Ltd in four transactions in 2021: see the wife’s Points of Claim, paragraphs 17–19.
The relief that the wife seeks with respect to these transactions (the wife’s Points of Claim, paragraph 20) is difficult to follow, but is presumably that H Pty Ltd account to K Pty Ltd and J Pty Ltd, or pay equitable compensation to them. However, neither H Pty Ltd, K Pty Ltd, nor J Pty Ltd appear to be proposed respondents.
5. H3 Pty Ltd
In 2013, H3 Pty Ltd (“H3 Pty Ltd”), the proposed tenth respondent, was incorporated, and the wife was the sole director and shareholder. In 2015, the wife was removed as a director of H3 Pty Ltd and her shares transferred to the husband. The husband then transferred the shares in H3 Pty Ltd to H2 Pty Ltd (“H2 Pty Ltd”) (the proposed eleventh respondent), as the trustee for H3 Trust (“H3 Trust”) (of which the husband was the appointor) by a transfer dated mid-2015, however, this transfer was not lodged with ASIC until late 2015: see the wife’s Points of Claim, paragraphs 61–64.
H2 Pty Ltd was incorporated in 2014, and the H3 Trust was established on or around a short time later. The husband remains the shareholder of H2 Pty Ltd, but changed the appointor of the H3 Trust in 2015 to his accountant and his sister (Ms BB): see the wife’s Points of Claim, paragraphs 74–77 and 80–83. The wife seeks to have the change of appointors set aside pursuant to s 106B of the Act, and seeks accounts of profits from the accountant and the husband’s sister: see the wife’s Points of Claim, paragraphs 85–86.
H3 Pty Ltd leased the Suburb T property in 2015 from K Pty Ltd, on terms alleged to be uncommercial: see the wife’s Points of Claim, paragraphs 69–71. In 2017, a new lease was entered into by H3 Pty Ltd, renting the Suburb T property from K Pty Ltd for $3,813.33 per month. The wife alleges that these leases are a sham and seeks consequential relief: see the wife’s Points of Claim, paragraphs 65–72. However, if the transaction is a sham, she has only joined the party receiving the benefit of the alleged sham, H3 Pty Ltd, and not K Pty Ltd.
6. Antoun Group Pty Ltd Trust
Antoun Group Pty Ltd (“Antoun Group Pty Ltd”) is the corporate trustee of the Antoun Group Trust (“Antoun Group Trust”). The husband is the sole director and shareholder of Antoun Group Pty Ltd and was initially the appointor of the Antoun Group Trust, but by Deed of Variation was replaced by his accountant and sister in late 2015 as the appointors: see the wife’s Points of Claim, paragraphs 87–89.
There is no evidence of the value of Antoun Group Trust or Antoun Group Pty Ltd at this stage. The wife seeks orders pursuant to s 106B of the Act to set aside the change of appointors of the Antoun Group Trust: see the wife’s Points of Claim, paragraphs 90–91.
7. AA Pty Ltd
AA Pty Ltd (“AA Pty Ltd”) was incorporated in 2015, and the husband and Mr Z each held one half of the shares. On that same day, the AA Trust (“AA Trust”) was established. The units in the AA Trust were held half by Antoun Pty Ltd (no ACN is set out in the wife’s Points of Claim) as trustee for the Antoun Pty Ltd Trust, and half by Mr Z Pty Ltd (no ACN is set out in the wife’s Points of Claim) as the trustee for Mr Z Trust: see the wife’s Points of Claim, paragraphs 102–104, and 106. The Antoun Pty Ltd Trust was also established in late 2015, with the husband’s mother, Ms CC, as the appointor. Following the death of the husband’s mother, his sister has become the appointor for the Antoun Pty Ltd Trust: see the wife’s Points of Claim, paragraphs 108–109.
Whilst paragraph 105 of the wife’s Points of Claim allege that the husband was a director and shareholder of the AA Trust, I assume it was intended to plead that AA Pty Ltd was the trustee.
The Suburb JJ property
In 2015, AA Pty Ltd purchased a property located at HH Street, Suburb JJ NSW (“the Suburb JJ property”) for $1,020,000, funded in part by a mortgage securing $720,000: see the wife’s Points of Claim, paragraph 107.
The Suburb LL property
In 2017, AA Pty Ltd purchased a property located at KK Street, Suburb LL NSW (“the Suburb LL property”) for $3.7 million, funded in part by borrowings of $2.792 million from ANZ. ANZ also took securities over the Suburb JJ property, L Pty Ltd, H Pty Ltd, AA Pty Ltd, and personal guarantees from both the husband and Mr Z: see the wife’s Points of Claim, paragraphs 110–114.
In 2018, ANZ offered to advance to AA Pty Ltd a loan in the sum of $586,511.15 with respect to the Suburb JJ property, and $2.736 million with respect to the Suburb LL property, although it is difficult to understand the relevance of this offer from ANZ: see the wife’s Points of Claim, paragraph 115.
In 2018, AA Pty Ltd lodged a development application seeking approval to develop a business on the Suburb LL property: see the wife’s Points of Claim, paragraph 116.
The wife claims that the husband has de facto control over the AA Pty Ltd and AA Trust entities, and seeks a declaration that the assets of AA Pty Ltd and AA Trust are held for the beneficial interest of the husband: see the wife’s Points of Claim, paragraphs 117–118. It is difficult to understand the basis upon which the wife alleges that AA Pty Ltd and AA Trust are controlled by the husband and hold assets for his benefit, at least with respect to the half share held by Mr Z and his business structures. In any event, AA Pty Ltd is not a proposed party to the proceedings.
8. N Pty Ltd
The husband established N Pty Ltd (“N Pty Ltd”) in 2015. He was appointed as the sole director and shareholder. In 2015, Ms G (the twelfth respondent) was employed by N Pty Ltd as a business manager. In 2018, 15 per cent of the shares in N Pty Ltd were transferred to Ms G without consideration: see the wife’s Points of Claim, paragraphs 119–121.
Between 2018 and 2022, sums totalling $4,638,750 was transferred from N Pty Ltd to D Pty Ltd (the fourth respondent): see the wife’s Points of Claim, paragraphs 122 and 126. During 2018, N Pty Ltd transferred $1.15 million to H Pty Ltd or H Group: see the wife’s Points of Claim, paragraph 139.
The wife claims that Ms G holds her shares in N Pty Ltd for the benefit of the husband and seeks a declaration from Ms G to that effect: see the wife’s Points of Claim, paragraphs 123–125, and 131. The relief sought with respect to the $4,638,750 is unclear as paragraph 126 of the wife’s Points of Claim is incomplete, however an account of profits is sought from Ms G and D Pty Ltd in paragraph 132 of the wife’s Points of Claim. However, such account would be due to H Pty Ltd or H Group, only the latter of which is joined to the proceedings.
In 2020, the husband the husband lodged a development application with respect to the Suburb T property to develop a business which was approved in early 2021: see the wife’s Points of Claim, paragraphs 144–146. The Suburb T property currently bears the signage of N Pty Ltd: see the wife’s Points of Claim, paragraph 147.
Later in the wife’s Points of Claim at paragraphs 148–153, there are allegations of a joint venture involving the husband, Mr C, Ms G, N Pty Ltd, H Pty Ltd and H Group, with respect to a business at the Suburb T Property.
There are three other companies and two trusts that appear to be associated with the N Pty Ltd business, as identified in the wife’s Points of Claim, but there is nothing pleaded as to their connection, and N Pty Ltd is not proposed a party. Those companies are D Pty Ltd, E Pty Ltd, and F Pty Ltd (all of which are joined as the fourth to sixth respondents respectively, and to which Ms G is the sole director and shareholder of each). The two trusts are E Trust (where Mr C is the appointor, and E Pty Ltd is the corporate trustee), and D Unit Trust (where D Pty Ltd is the corporate trustee): see the wife’s affidavit filed 14 December 2022, paragraph 223, and the wife’s Points of Claim, paragraphs 127–129.
9. NN Pty Ltd
In 2018, Mr Z incorporated NN Pty Ltd , NN1 Pty Ltd, and NN2 Pty Ltd (the proposed fourteenth to sixteenth respondents) (collectively, “the NN companies”). Mr Z was the sole director and shareholder of all of the shares across the NN companies: see the wife’s Points of Claim, paragraphs 157–162.
Between 2018 and 2021, around $3.24 million was transferred from L Pty Ltd to the various NN companies: see the wife’s Points of Claim, paragraph 163.
The OO Street property
In 2020, NN Pty Ltd purchased a property located at OO Street, Suburb T NSW (“the OO Street property”) for $1.28 million: see the wife’s Points of Claim, paragraph 164. In 2020, Mr Z lodged a development approval seeking to build a business at the OO Street property: see the wife’s Points of Claim, paragraph 165.
The wife alleges that the development at the OO Street property is a joint venture between L Pty Ltd and the three NN companies, Mr Z, and the husband: see the wife’s Points of Claim, paragraphs 166–173. If this is correct, then the appropriate claimant appears to be L Pty Ltd who is not yet a party to the proceedings.
10. PP Pty Ltd
From paragraph 196 to 225 of the wife’s Points of Claim, the wife sets out claims with respect to PP Pty Ltd (“PP Pty Ltd”), and a number of apparently related entities. The claim stems from transfers by H Pty Ltd between 2016 and 2017 of sums totalling $126,500 to PP Pty Ltd, and claims of significant involvement of the husband in the operation of PP Pty Ltd, and his alleged assistance in setting up bank accounts for PP Pty Ltd. The money provided by H Pty Ltd to PP Pty Ltd appears in the books of H Pty Ltd as a loan. As PP Pty Ltd and its related entities are not listed parties or proposed parties in the wife’s Points of Claim, these claims cannot proceed on the current state of wife’s Points of Claim.
11. QQ Pty Ltd
From paragraph 226 to 240 of the wife’s Points of Claim, the wife sets out claims with respect to QQ Pty Ltd (“QQ Pty Ltd”), and a number of apparently related entities. The claim stems from transfers by H Pty Ltd and L Pty Ltd during 2016 and 2017 of sums totalling $531,337.80 to QQ Pty Ltd, and claims that the husband is involved in the operation of QQ Pty Ltd. As neither QQ Pty Ltd nor the other persons alleged to be involved in these transactions are proposed to be joined to the proceedings, this claim cannot succeed.
12. The Suburb SS property proceedings
In 2018, the husband’s sister commenced proceedings in the Supreme Court of New South Wales seeking orders declaring that she owned 50 per cent of the property located at RR Street, Suburb SS NSW (“the Suburb SS property proceedings”), and that the husband and wife together owned the remaining half. The wife filed a cross-claim: see the wife’s Points of Claim, paragraphs 241–243.
The Suburb SS property proceedings were settled in early 2020 when the parties entered into a Heads of Agreement, and filed Notices of Discontinuance: see the wife’s Points of Claim, paragraphs 244–245. The wife says that she was subject to undue influence and duress, but sets out no facts or circumstances in this regard: see the wife’s Points of Claim, paragraph 246. Similarly, the wife claims relief pursuant to s 106B of the Act on the basis that she had not given her “informed consent” as she was not aware of the steps taken by the husband to move assets beyond his control or power: see the wife’s Points of Claim, paragraph 247. It is difficult to discern an arguable case with respect to the Suburb SS property proceedings.
SUMMARY
The wife’s Points of Claim are not only hard to follow but appear to have many difficulties, although argument on those issues awaits determination after the current privilege claim. However, what emerges regularly in the wife’s Points of Claim (as it is presently drawn) are numerous transactions where the husband has either transferred shares he held (without consideration at market value) or divested himself of the position of appointor of trusts. Such transactions necessarily lead to a prima facie case that the transactions would be likely to defeat the wife’s property settlement claims pursuant to s 79 of the Act.
It is in light of this core feature of the claims by the wife that I proceed in the current application.
THE HUSBAND’S DEFENCE TO THE POINTS OF CLAIM
On 25 January 2023, the husband filed a Points of Defence (“the husband’s Points of Defence”) in response to the wife’s Points of Claim raising many factual and legal issues concerning the myriad of transactions identified in the wife’s claim. For the purpose of this application, I need not traverse all of those issues, which will no doubt be addressed in the subsequent arguments by all of the respondents as to the adequacy of the wife’s Points of Claim.
For present purposes, it is sufficient to identify that the husband has joined issue with the wife’s claims that many transactions should be set aside under s 106B of the Act on the basis that they were not done with an intention to defeat her potential claims under the Act (the husband’s Points of Defence, paragraphs 12, 21, 28, 36, 40, 42, 48, 51, 56, 100, and 118), but rather done for “estate planning” reasons, whatever that phrase means in the context of this case: see the husband’s Points of Defence, paragraphs 3(c)(ii), 21, 28, 36, 42, 48, 51, 56, and 121. Whilst intention is not an essential element to a claim pursuant to s 106B of the Act (and indeed nor is lack of consideration at market-value), both factors are weighty considerations when exercising the discretion pursuant to s 106B of the Act, and are therefore relevant facts and circumstances in the wife’s case.
THE PRIVILEGE CLAIM
In order to address the question of the husband’s intention when carrying out various transactions, the wife seeks to rely upon a number of documents prepared by former solicitors for the husband. The key documents are exhibits MA1 and MA3 to the wife’s affidavit filed 14 December 2022, which were used for the purpose of the argument. In substance, these documents are letters from the husband’s solicitors seeking information to enable them to effect changes to the various corporate and trust structures of the husband so as to remove the husband as a director and appointor of various entities.
Exhibit MA1 of the wife’s affidavit filed 14 December 2022, which is referred to in the wife’s Points of Claim at paragraph 14.1, is an email dated 19 November 2015 to the husband and his accountant from his then solicitor. The email seeks copies of the trust deeds and financial statements for the relevant entities. The solicitor outlines the husband’s plans, saying:
[Mr Antoun] has suggested he may wish to resign as director of his companies. However, he may still stay in some office holder role(s). Obviously there are concerns around that from a Family Law point of view. He has suggested that his brother or sister could possibly be appointed in his place as director(s). The risk is minimal as we understand that his sister is independently significantly wealthy and that it would be okay for either siblings to become directors if need be.
Further, [Mr Antoun] has also expressed an interest in possibly removing himself as appointor of the Family Trust on the possible ‘grounds of ill health’ or similar reason backed up by a ‘doctor’s certificate’ if necessary. This also needs to be carefully looked into from the estate planning and Family Law point of views, as it could have major ramifications. The timing of such moves is crucial in these matters and I agree with [Mr Antoun] that it would have been better that this had occurred earlier than now.
…
I am concerned that the Court might consider any removal as appointor as a means of trying to defeat a property claim by [Mr Antoun’s] wife. [Mr Antoun] has also indicated to me that he wishes to leave his wife around Christmas time and that he has now purchased a property that he will shortly be moving into presumably after he announces his intention to separate at Christmas.
…
So it appears things are developing rapidly and [Mr Antoun] is keen to have certainty with whatever actions he decides to carry out with the minimum of risk to him from an asset protection point of view.
(Wife’s affidavit filed 14 December 2022, exhibit MA1)
Exhibit MA3 of the wife’s affidavit filed 14 December 2022 is an email dated 26 November 2015 sent from the husband’s then solicitor to the husband and the husband’s accountant, and confirms that the husband instructed his solicitors to proceed to make many changes to his business structures, traversing details of information held and required with respect to the various entities, and saying, inter alia:
In order for us to proceed with the Estate and Succession planning aspects of your matter having regard to your potential Family Law situation, would you kindly complete the attached Fact Finder document.
…
We note we are also to prepare Deeds of Variation for all of your trusts.
…
I will have to open a new file here in my Private Advisory Team for the Estate Planning side of things, and provide a Retainer Agreement estimating the costs involved in preparing these documents. This will be sent to you very shortly for your consideration and approval.
(Wife’s affidavit filed 14 December 2022, exhibit MA3)
The other documents show extensive involvement of the husband in supervising and carrying out the changes in arrangements to the various company and trust entities.
Section 117 and s 118 of the Evidence Act 1995 (NSW) (“the Evidence Act”) provide for communications between solicitors and clients to be privileged in the circumstances set out in the provisions. The relevant documents appear, prima facie, to be confidential communications between the husband’s solicitors and the husband.
Importantly, the privilege provided by the Evidence Act is lost if the document was prepared “in furtherance of the commission of a fraud or an offence or the commission of an act that renders a person liable to a civil penalty”: see s 125(1)(a) of the Evidence Act.
Transactions designed to put assets beyond the reach of a spouse in property settlement proceedings were found by Hogan J to be within the ambit of s 125 of the Evidence Act: see Yamada & Bernard [2016] FamCA 977. Such an approach is consistent with the common law and the approach taken in a number of cases in other superior courts. It was accepted by counsel for the husband that transactions within the ambit of s 106B of the Family Law Act 1975 (Cth) would fall within the ambit of “fraud” as that word is used in s 125 of the Evidence Act.
I am mindful that privilege would attach to legal advice on what could lawfully be done (Australian Securities & Investments Commission v Mercorella (No 3) (2006) 58 ACSR 40 at [96] to [100]), and that it is the documents with respect to the carrying out of the scheme that come within the ambit of s 125 of the Evidence Act.
Prima facie, the documents show that the husband was instructing his solicitors to put in place the various changes in contemplation of “leaving his wife around Christmas time”, and choosing his sister as replacement for the husband in the companies and trust as that way the “risk is minimal as … his sister is independently significantly wealthy”: see the wife’s affidavit filed 14 December 2022, exhibit MA1. It is clear on the face of these documents that they were prepared in order to effect transactions that the husband ultimately carried out, which the wife seeks to impugn in her Points of Claim. As a result, I am persuaded that the documents fall within the exception set out in s 125 of the Evidence Act.
Whilst some parts of the documents also appear to contain general advice about the husband’s family law matter (such as advice about spousal maintenance), there was no application by the husband to sever those parts of the documents. That advice appears to have been quite mundane and it is difficult to see what ongoing relevance it would have in any event. Importantly, no submissions were made by the husband’s counsel that legal professional privilege should attach to part of the documents. As a result, I need not decide if part of the documents should be severed: see, for example, Gartner v Carter [2004] FCA 258 at [137]–[138] per Lander J.
OBJECTION ON THE GROUNDS OF LATE DISCOVERY
The husband also argued that as the documents had not been disclosed earlier in the proceedings, the wife should not be permitted to rely upon them.
The time for making disclosure provided for in the relevant rules is simply “in a timely manner”: see r 6.01 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the FCFCOA rules”). A specific time frame can flow from the operation of r 6.09 of the FCFCOA rules, which provides for a party to request “a list of documents to which the duty of disclosure applies” and for that list to be provided within 21 days of the request (or where the document comes into the possession of the party making disclosure after the list is provided, within seven days of the document coming into their possession). Counsel for the husband did not refer to any request having been made. However, on any version of the facts, the wife’s disclosure of these documents was not “in a timely manner”.
Rule 6.17 of the FCFCOA rules sets out the consequences of failing to disclose documents in a timely manner:
Consequences of non-disclosure
If a party does not disclose a document as required by these Rules:
(a) the party:
(i) must not offer the document, or present evidence of its contents, at a hearing or trial without the other party’s consent or the court’s permission; and
(ii) may be guilty of contempt for not disclosing the document; and
(iii) may be ordered to pay costs; and
(b) the court may stay or dismiss all or part of the party’s case.
Notably, despite the wife’s application having been pending for some years, it is only now that the pleadings phase of the action is being resolved. The complexity of the matter is enormous and it appears that it is only the wife’s current solicitor who has been able to collate the material in such a way as to articulate a case for the wife pursuant to s 106B of the Act. The matter will not possibly be ready for a trial this year. The documents are likely to be significant to the wife’s case.
The documents are all documents that were in the husband’s possession, or at least his power, and are all documents he would be well aware of as they concern his business restructures in the context of his separation from his wife.
Counsel for the husband was unable to articulate any specific prejudice that had been suffered by the husband through the late disclosure of the material, beyond the documents being adverse to the husband’s case.
I am persuaded that the wife should be permitted to rely upon the documents in the circumstances of this case, despite their late disclosure.
APPLICATION TO RESTRAIN THE WIFE’S SOLICITOR FROM ACTING
The husband also argued that the solicitor for the wife breached r 31 of the Australian Solicitors’ Conduct Rules, which has been enacted in the Legal Profession Uniform Law Australian Solicitors’ Conduct Rules 2015 (NSW), which provides:
31 Inadvertent disclosure
31.1 Unless otherwise permitted or compelled by law, a solicitor to whom material known or reasonably suspected to be confidential is disclosed by another solicitor, or by some other person and who is aware that the disclosure was inadvertent must not use the material and must:
31.1.1 return, destroy or delete the material (as appropriate) immediately upon becoming aware that disclosure was inadvertent, and
31.1.2 notify the other solicitor or the other person of the disclosure and the steps taken to prevent inappropriate misuse of the material.
31.2 A solicitor who reads part or all of the confidential material before becoming aware of its confidential status must:
31.2.1 notify the opposing solicitor or the other person immediately, and
31.2.2 not read any more of the material.
31.3 If a solicitor is instructed by a client to read confidential material received in error, the solicitor must refuse to do so.
In this case there was nothing inadvertent about the documents coming into the hands of the wife’s solicitor. The wife provided them to her solicitor, having obtained them from the computers of the parties. This is not a case where there was no issue that the documents were privileged: on the contrary there was a genuine issue as to whether the documents were privileged as a result of the operation of s 125 of the Evidence Act.
The husband relies upon three cases in support of the argument that the solicitor for the wife should be restrained from continuing to act:
(1)In Kallinocos & Anor v Hunt & Ors (2005) 64 NSWLR 561, a solicitor’s former client sought to restrain him from acting. To the extent that the decision is relevant to these proceedings, it is the propositions that the Court has power to restrain a solicitor from acting in order to “ensure that the administration of justice is not brought into disrepute”, and that the test to be applied is “whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a legal practitioner should be prevented from acting, in the interests of the protection of the integrity of the judicial process and the due administration of justice, including the appearance of justice”;
(2)In Greco & Greco [2008] FamCA 501, Collier J considered a situation where the one firm was acting for the husband and a partnership and two companies in which the husband and wife had interests, however there was an ongoing dispute between the husband and the companies (of which the wife was a shareholder and officer) and partnership. Collier J found that this situation was sufficient to justify restraining the solicitor from acting for the husband; and
(3)In Crittenden & Collins [2017] FamCA 716, the husband came into possession of documents that he knew were privileged and provided them to his solicitors. There was no dispute that the husband knew that documents were privileged when providing them to his solicitors. Carew J found that r 31 of the Australian Solicitors’ Conduct Rules “may not strictly apply” (at [54]) as the disclosure was not “inadvertent” within the meaning of r 31 (see the argument at [39]). In Crittenden & Collins, however, her Honour noted that “the intended mischief to be addressed is absolutely clear” (at [54]) in the context of that case.
It appears that r 31 of the Australian Solicitors’ Conduct Rules was intended to cover simply situations of inadvertence or error, not more complex situations as arose in this case and as arose in Crittenden & Collins. The wife’s solicitor did not receive the documents in this case inadvertently or in error, and therefore this case is outside the ambit of r 31 of the Australian Solicitors’ Conduct Rules. However, if the wife’s solicitor has acted inappropriately, the fact that the conduct does not come within the ambit of r 31 of the Australian Solicitors’ Conduct Rules does not prevent the Court from making appropriate orders.
In the present proceedings, the supply of the documents to the wife’s solicitor was not to simply obtain an unfair advantage, as occurred in Crittenden & Collins, but rather to attempt to rely upon the documents as evidence of a fraud on the part of the husband (in the sense of authorising transactions likely to defeat the wife’s claim). This is a genuine issue that arises from the documents. I see no impropriety in the wife’s solicitor reading and advising upon the documents. Having formed the view that the documents were not privileged, the wife’s solicitor has relied upon them in the preparation of the wife’s case. In my view, the documents are not privileged as a result of the exception in s 125 of the Evidence Act, but even if I am wrong in that regard, it is a case where the position of the wife is clearly arguable and it should not be suggested that a solicitor should not make such an argument on behalf of a client. Neither professional obligations of solicitors nor r 31 of the Australian Solicitors’ Conduct Rules are to prevent a client obtaining legal advice about documents when genuine issues arise. Of course, if the documents were privileged, then it may be that the solicitor would be restrained from continuing to act (as they were in Crittenden & Collins), however that is a separate question.
Thus, I am not persuaded that the wife’s solicitor breached r 31 of the Australian Solicitors’ Conduct Rules in the context of this case. Nor, in the circumstances of this case, is any criticism of the wife’s solicitor warranted for considering and relying upon the documents in carrying out her duty to represent her client in the context of this case.
As I have found that the documents are not privileged, and rejected the argument that the solicitor has breached r 31 of the Australian Solicitors’ Conduct Rules or otherwise acted inappropriately with respect to privileged documents, I see no basis for the husband’s application to restrain the solicitor from continuing to act for the wife.
I therefore dismiss the husband’s Application in a Proceeding filed 24 January 2023 seeking to prevent the wife from relying upon the documents, and dismiss the husband’s application seeking to restrain the wife’s solicitor from continuing to act upon her behalf in this matter.
Having regard to the complexity of the case, it appears that the matter is well within the ambit of the Major Complex Financial Proceedings List. Whilst the value of the assets is unclear, I am comfortably satisfied that the case likely concerns assets which are likely, in total, to meet the financial threshold for the list. Therefore, it is appropriate that I refer the matter to the convenor of that list for further case management, particularly having regard to the age of the proceedings.
I therefore make orders accordingly.
I certify that the preceding ninety-nine (99) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Riethmuller. Associate:
Dated: 9 March 2023
SCHEDULE OF PARTIES
PAC 796 of 2017 Respondents
Fourth Respondent:
D PTY LTD
Fifth Respondent:
E PTY LTD
Sixth Respondent:
F PTY LTD
Seventh Respondent:
MS G
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