Bergman and Bergman and Anor

[2008] FamCA 445

FAMILY COURT OF AUSTRALIA

BERGMAN & BERGMAN AND ANOR [2008 ] FamCA 445

FAMILY LAW – PRACTICE AND PROCEDURE – Interim Injunctive Orders – Existing Undertaking Not Extended

APPLICANT: MR BERGMAN

RESPONDENT: MRS BERGMAN

POTENTIAL THIRD PARTY: MR SARINSSON

FOURTH PARTY: MR PORTER

FILE NUMBER: MLF 5245 of 2003

DATE DELIVERED: 19 JUNE 2008

PLACE DELIVERED: MELBOURNE

PLACE HEARD: MELBOURNE

JUDGMENT OF: YOUNG J

HEARING DATE: 19 JUNE 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT: MR ST JOHN SC

SOLICITOR FOR THE APPLICANT: CAROLINE COUNSEL FAMILY LAWYERS

COUNSEL FOR THE RESPONDENT: MS JOHNS

SOLICITOR FOR THE RESPONDENT: MARSHALLS & DENT

THE POTENTIAL THIRD PARTY: IN PERSON

SOLICITOR FOR THE POTENTIAL THIRD PARTY : N / A

COUNSEL FOR THE FOURTH PARTY: MS NIKOU SC

SOLICITOR FOR THE FOURTH PARTY: CAREW COUNSEL PTY LTD

Orders

WITH the period for which the current undertaking of Mr Porter given to the Court originally on 30 May 2008 now expired and with his refusal to now extend that undertaking

AND UPON THE UNDERTAKING of the Case Guardian given upon her instructions received from the husband that she will abide any order of the Court as to any proven loss, damage or expense as may be ordered by the Court and incurred by or occasioned as a result of the granting of these orders

IT IS ORDERED:

1. THAT the Fourth Party be and is hereby restrained until 4.00 p.m. on Thursday 3 July 2008 from undertaking any action or causing any act or thing to be done by himself or his servants or agents (including W Corporation and/or W Limited) to:

   (a)enforce any cash call made upon the husband, including pursuant to the default notice served upon the husband dated 12 May 2008;

   (b)sell, mortgage, charge, encumber or otherwise deal with any real asset of W Corporation;

   (c)seek to confiscate, sell, acquire, cancel or otherwise deal with the husband’s shares in W Corporation;

   (d)seek to change the present shareholding and/or directorships in W Corporation or W Ltd.;

   (e)cause W Corporation or W Ltd to pay any sum to N Pty Ltd, to himself or to any other company in his control;

   (f)pledging the credit of W Corporation and/or W Ltd without the consent in writing of the Case Guardian first obtained;

   (g)instructing or continuing any Court proceeding in Australia or elsewhere in which W Corporation or W Limited and/or the husband are parties but not including proceedings in the Family Court of Australia or in the currently issued Magistrates Court proceedings at Melbourne;

   (h)from holding any formal meeting of directors of one or other of the companies.

2. THAT on or before 4.00 p.m. Wednesday 25 June 2008 the Fourth Party make, file and serve any further application and any affidavit, and annexures thereto upon which he intends to rely as to the discharge of the interim orders pronounced above.

3. THAT on or before Monday 30 June 2008 at 4.00 p.m. the Case Guardian on behalf of the husband, the wife and Mr Sarinsson, (if he may so intend) make, file and serve any response, or other application and any affidavit, with annexures, upon which they may intend to rely.

4. THAT the further hearing of the interim application as to the continuation or otherwise of the above undertaking and orders be listed, subject to all part-heard matters, at 10.00 a.m. on Thursday 3 July 2008.

5. THAT the undertaking given by the Case Guardian by herself on behalf of her father, and as contained in paragraph 2 of the orders dated 30 May 2008 be extended to 3 July 2008 save that it has no operation of and in respect of the current Melbourne Magistrates Court proceedings wherein the husband is a co-plaintiff.

6. THAT the extempore reasons for judgment be transcribed, be placed upon the Court file and be made available to the parties.

7. THAT the costs of and incidental to the hearing of this day, that is from 2.15 p.m. be reserved to the adjourned hearing date before Young J.

IT IS CERTIFIED

1. THAT pursuant to Rule 19.50 of the Family Law Rules this matter reasonably required the attendance of Counsel including Senior Counsel for all parties.

2. THAT as to the outstanding written submissions on the substantive preliminary matter upon which judgment remains outstanding it is directed that:

   (a)Senior Counsel for the Case Guardian on behalf of the husband complete, file and serve any further written submissions and reply on or before 4.00 p.m. Wednesday 25 June 2008;

   (b)that any further written submissions, as requested by Ms Nikou and which either the legal practitioners for the wife or Mr Sarinsson may elect to submit to the Court be filed and served on or before 4.00 p.m. Monday 30 June 2008.

IT IS NOTED

A.THAT for the purposes of this interim order, and in the specific circumstances identified in the extempore reasons for judgment and for purposes of these interim injunctive orders only Mr Porter has been described and identified by the Court as a Fourth Respondent but that does not extend to any other applications or proceedings before the Court pending the reserve judgment on these matters to be hereafter delivered at another date and time.

IT IS NOTED that publication of this judgment under the pseudonym Bergman & Bergman is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 5245 of 2003

MR BERGMAN

Applicant

And

MRS BERGMAN

Respondent

And

MR SARINSSON
Potential Third Party

And

MR PORTER
Fourth Party

EX TEMPORE REASONS FOR JUDGMENT

1. The matter of Bergman and others has been before me on an ongoing and part-heard basis in determining an interim but substantial issue of who properly are or should be the named parties in the ongoing defended hearing that is currently before the court.

2. This judgment does not in any way deal with those various matters.  That judgment is reserved from yesterday, 18 June, and it would be hoped that it can be prepared and delivered over the next month or thereabouts. 

3. The subject of this brief extempore judgment delivered after 4.30 p.m. this day is as to what, if any, proper and necessary interim injunctive orders are required to replace the now expired undertaking previously given by Mr Porter.

4. In this interim hearing, Mr St John of Senior Counsel continued to appear for the Case Guardian on behalf of the husband.  Ms Nikou of Senior Counsel appeared for Mr Porter, the potential fourth party (as he is formerly described in the substantive proceedings) and Ms Johns of counsel appeared for the wife.  Mr Sarinsson was yesterday excused by consent from this continuing interim proceeding. 

5. On 30 May 2008 an undertaking was given by Mr Porter to the court by his Senior Counsel in the terms of paragraph 3(a) - (h) (inclusive) thereof.  That undertaking was to continue until 18 June 2008 and yesterday by a further order I pronounced, by consent, was extended until this day. 

6. Over the course of this afternoon I have received preliminary but incomplete submissions from Ms Nikou.  The current position is that her client has declined to give his consent to any extension of his undertaking.  The issue therefore arises as to whether it is just and proper and on the balance of convenience in the interests of all parties for an order, in lieu of the undertaking, to be made on an interim basis.  That order is opposed by Ms Nikou. 

7. The current undertaking is extensive and does in summary substantially, if not wholly, as and from 30 May 2008 limit or exclude Mr Porter from any commercial activities, development or management of the W property and the development thereon, including the raising of finance, the payment of bills for work undertaken or other related commercial transactions. 

8. To assist the Court in a better understanding of the overview of the W project Ms Nikou tendered, by consent, a colour photograph of the property highlighting the completed access routes to the property.  With that background Ms Nikou then advised the Court that Mr Porter has previously obtained oral, and perhaps provisional, finance to borrow $1,500,000 to pay accounts and meet expenses of and related to the project.  A statement of those accounts is annexure “KMJ8” to the affidavit of the Case Guardian filed 20 May 2008 (Court Index document No. 245).

9. Mr St John for the case guardian seeks the granting of an interim restraining order, but does so on the basis that the case guardian has instructed him that she will provide an indemnity undertaking to the court in the usual terms.  I have taken the opportunity to raise in open court and in the form of limited discussion with Mr St John that I would require the case guardian to abide by any order of the court, and if ordered by the court - that is upon a hearing - to pay or otherwise secure any proper and proven loss damage or expense occasioned by the granting of these orders this day. 

10. The Case Guardian was, in a strict sense, the applicant for the injunctive orders.  On the basis of the past undertaking, the evidence before the Court and with limited available time I directed Ms Nikou to first address the Court.  I was not intending to reverse any onus of proof.  The Case Guardian’s case rested upon her evidence already before the Court and there was wholly insufficient time for Ms Nikou to contest, on instructions from her client, many of the disputed matters and facts. Likewise Mr Porter had filed extensive affidavits and annexures thereto and there was simply no time to investigate these matters or for Mr St John to challenge the facts and urgency with which they purportedly established. Within the framework of very limited time and with the court sitting beyond the normal hours I concluded that it was necessary for the Court to adopt a pragmatic but cautious approach to interim injunctive orders and the protection and preservation of assets in this significant ongoing dispute. Being mindful that a full interim hearing was not possible within the constraints of time and with another urgent defended children’s matter listed for hearing the following day the scope and approach to this hearing was necessarily limited.

11. In her submissions and in presenting the evidence upon which she relied to convince the Court that there should be no injunctive orders on an interim basis made against her client, Ms Nikou sought to rely on various documents.

12. The first of the documents was a minute of a purported directors meeting of W Corporation held 31 March 2006.  Those minutes were sought to be tendered as they had not previously been placed in evidence and are not an annexure to any of the affidavits now before the Court.  Senior Counsel on behalf of the Case Guardian objected.  I did not permit those minutes to be handed to the Court and thereby tendered in evidence as they were not previously identified and indeed Mr St John complained that his client, and most certainly on instructions the Case Guardian, had not received and did not know of any ratified directors’ minute now sought to be presented to the Court.

13. Ms Nikou then identified annexure “KMJ8” to the affidavit of the Case Guardian filed 30 May 2008 (Court Index document No. 245).  This document is a letter dated 12 May 2008 written and signed by Mr Porter and sent to the husband in his capacity as a director of W Corporation.

14. The first three paragraphs of that letter read as follows:

    a)“On 31 March 2006 there was a members meeting of [W Corporation] attended by [Mr Sarinsson], Simon Gerber of B2B Lawyers as proxy for [the husband] and myself.

    b)Resolutions were passed at the members meeting particularly item 62 headed ‘Finance’ and it was RESOLVED that the company make an application for finance for Fj 2,000,000.  [Mr Porter] is to manage the process and receive a 0.025% fee on success and on the amount funded to be paid from the 1^st draw down.

    c)The company is now pleased to advise that it has received verbal approval for approximately Fj 1,500,000 on an interest only basis for a three year period”.

15. That letter then purportedly set out the basis of obtaining finance, the benefit the funding would be to shareholders in W Corporation and the manner in which the proceeds of sale would be utilised and in this regard, and in summary, such proceeds would:

    d)pay out existing creditors, as were attached to that letter;

    e)pay Mr Porter’s expense claims;

    f)pay project management fees approved as at 28 February 2008;

    g)pay further expense claims by Mr Porter;  and

    h)re-commence the project.

16. That letter is not a substitute for the minutes of the directors meeting.  It represents a summary of the meeting and in any event there is no evidence before the Court that this letter was received by or responded to on behalf of the husband.  It appears that, perhaps, that letter was sent by facsimile to the husband on telephone number (03) … and additionally was sent by e-mail to the address thereon.  Those matters remain to be proved but, if and when so proved, may then be persuasive of the knowledge of the husband of the material contained in that letter.

17. Ms Nikou next referred to the further affidavit of Mr Porter filed 29 May 2008 and in particular to annexure “TP-8” therein.  Item 16 in the second part of that annexure, that is identifying the documents allegedly provided to the husband in the period 18 April 2008 – 12 May 2008, is described as follows:

    [W Corporation] letter 12/5/2008 to [the husband]  headed ‘Finance Approval’. 

18. Ms Nikou argued that that entry supported the conclusion that the husband, personally, and not by his Case Guardian, had received that particular letter earlier identified.  With the husband not present in Court and with the Case Guardian not able to confirm or deny the receipt of that letter Mr St John was unable to properly obtain any instructions on this issue.  The purported minutes of the directors meeting held 31 March 2006 are therefore not properly before the Court and there is no evidence of their acceptance or ratification by directors, and at that time there were three directors as the date of that meeting predates the resignation of Mr Sarinsson as a director of W Corporation.  The evidence on that matter is therefore unsatisfactory and it is a matter that Mr Porter and his legal advisors should have carefully considered and prepared and had before the Court given that they were aware of their necessity to resist the injunction application and to discontinue his current undertaking and the significant restrictions placed upon him (currently with his consent) in that regard.

19. Ms Nikou then identified the further affidavit of Mr Porter filed 18 June 2008, with the leave of the Court and in particular paragraph 11 and annexure “TP5” thereto.

20. That annexure is a letter dated 30 June 2004 from the husband to Mr Sarinsson, and with a copy to Mr Porter.  I have read that letter and it is clear that it contains critical and direct comments by the husband to Mr Sarinsson about the W construction project and otherwise there is a strong endorsement by the husband of Mr Porter and specifically the husband’s approval for Mr Porter to continue ordering materials and contracting works to develop the project.

21. Ms Nikou relied upon that letter, and generally the relevant contents of that affidavit, to support the husband’s knowledge and endorsement of the W project and the management and financial role of Mr Porter therein.

22. Finally, and in an overview of her submissions Ms Nikou identified and relied upon paragraph 16.1 of the shareholders agreement dated 1 October 2002 and as to its authorisation for the borrowing of funds and general financing of the project.

23. Mr St John sought the granting of urgent interim orders and was supported by Ms Johns who otherwise made no submissions and did not adduce any other evidence.

24. Having considered all of the matters and evaluated the actual evidence before me, as time permits in this urgent and extended hearing, I conclude that the necessary and proper interim orders should injunct Mr Porter until the adjourned hearing date which will be 3 July 2008.  For the purpose of these interim orders and to legitimise the basis upon which they are pronounced, and as time does not permit any argument on this issue I propose, for this specific purpose and for the limited duration of this order, to name Mr Porter as party to these proceedings.  That does not have any ongoing and extended operation outside of these interim orders.

25. I clearly emphasise that I intend this order to be effective and enforceable if and when required.  Additionally, Mr Porter would understand that if he wished to enforce the undertaking given by the Case Guardian he would need to do so with proper standing in this court and to that extent there might be the reverse benefit to him to be able to so enforce the undertaking of the case guardian if and when appropriate and proven.

26. The current evidence before me of all urgent and required financial and commercial dealings has been shown to be somewhat insufficient or has not been able to be properly explained to the Court in the available time.  I have raised concerns and objection has been taken by counsel and issues have been discussed over the past two hours that highlight the need for full and proper disclosure of financial and commercial matters to the court, as a basis for either the continuation or the discharge of any interim order. 

27. What I require is for the solicitors for Mr Porter to file an affidavit with all appropriate annexures, evidencing what they say to be the commercial and financial circumstances of the development, the necessity to facilitate payments of accounts and otherwise deal with moneys.  As part of that requirement the letters and other documents conveyed to the husband and his, or alternatively his proxies', understanding of issues may be of significance and should be carefully dealt with in those documents.  I will require that document and the application's supporting orders there required to be filed by 4 pm next Wednesday.  That is 25 June.  Thereafter I will reserve to the case guardian and the wife, and if required, Mr Sarinsson, to file any affidavit in response thereto by 4 pm on Monday 30 June. 

28. I propose to list this matter before me on Thursday 3 July 2008 at 10.00 a.m., but I do so with the very complete disclosure that I am over listing this matter on that day.  There may be a part-heard defended matter from earlier in that week.  I simply do not know the outcome of that case but I have no other alternative, and at this stage I conclude the matter should likely remain before me as it is effectively, if not wholly, part-heard on these current interim issues. 

29. As to the content of the interim order, I propose to largely follow the current undertaking save for a typographical correction as to paragraphs (a) to (f) (inclusive) thereof.  I will make modest and agreed variations to subparagraphs (g) and (h) thereof. 

30. I well understand that these parties and others require near to a full‑time court to hear and determine their issues but that is simply not available.  I have endeavoured in earlier proceedings and again today indicated to the parties that there does need to be some level of reasonable discussion out of court.  Again I extend that common sense invitation because the asset(s) that is being dealt with is of potentially significant value.  It may or may not be the major asset of one or other of the parties or others.  It certainly is of value and the costs of the litigation and the other commercial costs may be having a major effect upon any available equity in the W project.  However, I leave that matter to another day, but I record in these extempore reasons as previously I have recorded in this court, that there is clearly an obligation on parties, and I would have thought also on the legal advisers to the parties, to endeavour to mitigate issues, to discuss and to show financial commonsense.  I do not direct that observation at any individual. 

1. For those brief reasons, I conclude on the evidence and submissions before me it is both necessary and proper to pronounce interim injunctive orders.  I do so on the basis of preservation and protection of assets and until there is more evidence and a better understanding of all of the alleged urgent debts, but only for a limited tenure.  These orders will have no operation beyond 4.00 p.m. on 3 July 2008, but the hearing on that day, or as soon as can be thereafter arranged will largely depend upon the proper content of information and facts before the court.  I have said this afternoon on numerous occasions, so many that I have lost count, that this court will and can only act on evidence.  The obligation of legal practitioners is to have the full and proper evidence before the court.

2. Ms Johns on behalf of the wife has foreshadowed an oral interim application.  Ostensibly this was aimed at discovering information, documents, or updated financial disclosure.  I have declined to permit that application to be made orally, but of course it can and perhaps should be made in the appropriate manner, supported by affidavit and returnable on 3 July 2008. 

3. I am not encouraging further litigation.  I am trying to manage the countless issues that are raised at the bar table but not properly documented and evidenced, and hereafter I think it proper that I again record that matters will only be entertained in an orderly documented and proper procedural manner. 

4. For those very brief reasons, delivered without leaving the bench and extempore and for the short duration, I will make orders as I conclude are necessary and proper to preserve and protect assets and the subject matter of the substantive hearing before me.  These orders will be transcribed and made available to all parties.  I will require the wife's solicitor to provide Mr Sarinsson with a copy of these orders and reasons delivered extempore as soon as practicable.  I record that I have marked the photograph of W property and the access routes, by consent, and that will be retained on the file.

I certify that the preceding paragraphs are
a true copy of the reasons for judgment herein
of The Honourable Justice Young

………………………………………………………..
Associate:          
Date: 23 June 2008