Bing and Bing

[2009] FamCA 538

FAMILY COURT OF AUSTRALIA

BING & BING [2009] FamCA 538

FAMILY LAW – ORDERS – Variation to allow husband to encumber property

Family Law Act 1975 (Cth)

APPLICANT: Mr Bing

RESPONDENT: Ms Bing

FILE NUMBER: MLF 1745 of 2006

DATE DELIVERED: 25 June 2009

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: THE HONOURABLE JUSTICE CRONIN

HEARING DATE: 18 June 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: MR BROWN SC WITH MR DICKSON

SOLICITOR FOR THE APPLICANT: NEVILE & CO

COUNSEL FOR THE RESPONDENT: MR SCRIVA

SOLICITOR FOR THE RESPONDENT: ISSAC BROTT & CO

Orders

1. That paragraphs 4 and 5 of the application in a case filed by the husband on 10 June 2009 and paragraphs 3 to 17 of the wife’s response to an application in a case filed 16 June 2009 are adjourned to 9.00am on 5 August 2009 before me.

2. That paragraph 3 of the orders made by the Honourable Justice Kay on 13 July 2006 as varied by the orders of the Honourable Justice Bennett made on 10 August 2006 be further varied with immediate effect to enable J Pty Ltd as trustee of the J Trust and the husband, to further encumber the property at F to give effect to paragraph 3 of these orders.

3. That the wife forthwith do all such acts and things and execute any necessary document to enable the National Australia Bank to advance to J Pty Ltd the sum of $1,869,000.

4. That paragraphs 1 to 3 of the application in a case filed by the husband on 10 June 2009 and paragraphs 1 to 2 of the wife’s response to an application in a case filed 16 June 2009 be otherwise dismissed.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 1745  of 2006

MR BING

Applicant

And

MS BING

Respondent

REASONS FOR JUDGMENT

1. On 13 July 2006 Kay J made orders that were intended to last for approximately four weeks restraining the husband from selling, disposing of or further encumbering any “capital asset” of the husband and/or the wife or any similar assets controlled by an entity in which the husband was a director, shareholder or in which he had an interest.  Kay J went on to make other orders relating to financial activities.

2. In his affidavit filed 10 June 2009, the husband referred to those orders and quoted a similar portion to that which I have just set out.  However, he added that the words “save in the ordinary course of business” were included in the order.  My examination of his Honour’s orders do not indicate that at all.

3. Kay J adjourned the proceedings to 10 August 2006 on which day, they came before Bennett J.  Her Honour made orders by consent of the parties including orders in terms of minutes signed by them.  My examination of the file does not show a copy of the typed minutes.  However, item 4 of the minutes which are handwritten indicate that paragraph 3 of the orders of Kay J continue “in full force and effect until further order”.

4. Thus, although the orders of Kay J appear to have been imposed upon the parties by his Honour and for only a limited period, it was the parties themselves who had consented to the extension of those orders indefinitely when they came before Bennett J in August 2006. 

5. On 10 June 2009, the husband sought to vary the orders of Kay J although in effect, it should be the orders of Bennett J.

6. The husband sought orders that J Pty Ltd along with the husband be able to “further encumber” the property at F. 

7. The husband also sought orders that the wife execute all documents that would enable the National Australia Bank to advance $1,869,000 to J Pty Ltd failing which, the registrar of the Court execute any document under s 106A of the Family Law Act 1975 (Cth) (“the Act”) in her name. 

8. On 16 June 2009, the wife filed a response to the husband’s application in a case.  That document sought six pages of orders many of which had no connection to the orders sought by the husband.  In many respects, they relate to issues associated with both the trial of these proceedings and also enforcement of the wife’s existing rights.

9. The wife’s response did however seek a dismissal of the husband’s application filed 10 June 2009 and arising out of that issue, a sale of the “site” at F.  Just how that would occur and who was to undertake it was not clear.

10. Before turning to the evidence of each party in respect of the husband’s application, it should be noted that the substantive trial of this case was to have been heard by me but at the request of both parties, was adjourned on the basis that discovery  had not been completed.  My understanding of what each party said was that the parties were not ready for trial.  At my suggestion, the case was taken out of the list only to be reinstated upon the parties indicating that they are ready for a judicial determination.  I raise that as there is a suggestion in the wife’s material that there was not sufficient time for the Court to hear the case.  It was the parties who were not ready.

11. The husband has filed his affidavit for of the final hearing and the wife in her affidavit, is critical of that material saying that it is lacking in particularity. 

12. In his affidavit for the trial, the husband sets out a long history in which the parties were engaged in a business of buying, developing and redeveloping service businesses.  The husband relied upon an affidavit as to valuation showing that the gross value of a variety of entities was about $42 million.  That is not the amount to be added to the pool of assets nor is it the equity.

13. In February 2007, Mushin J made orders for the payment to the wife by the husband of spousal maintenance and a litigation funding order.  The husband concedes that he has not made those payments although he endeavours to explain that he tried to do so.  I am aware of at least one enforcement application by the wife which I struck out as incompetent.

14. In his trial affidavit, the husband says that in late 2008, he proposed that one business be sold and that the proceeds be used to meet his outstanding obligations to the wife.  He pointed out that the wife refused to agree and although the position may now be different from the wife’s perspective, the buyer has gone and as the husband says, the economic climate has worsened.

15. In his trial affidavit, the husband said that he did not wish to sell assets on a fire-sale basis and would prefer to attempt to obtain loan funds from family members and/or business associates to pay out the wife’s entitlement.  He conceded that he would require a substantial period of time to do that in any event.

16. In his affidavit in support of the application for interlocutory orders, the husband said that in 2003, J Pty Ltd acquired the property at F.  That property is subject to a first mortgage to the ANZ Bank.  It is to be noted in this case that the purchase occurred on 16 December 2003, the parties separated under the one roof in June 2005 and the husband left the home in May 2006.  Notwithstanding the fact that the acquisition by contract occurred prior to separation, the wife complains that she knew no details about it.  In his affidavit for the trial, the husband said in respect of the wife’s complaint:

    The reality is that they were not matters that we discussed between ourselves in any detail during the marriage.  While the wife was generally aware of what I did, a number of the acquisitions and sales were made without discussion with her at all or in many cases without her knowledge until after the event.

17. The husband has an obligation to provide whatever information by way of documents as part of his obligation of disclosure.  An apparent lack of interest by the wife during the marriage would not be a basis upon which to obviate that obligation.  However, the parties have been separated now for four years and I am puzzled about the fact that there is still a dispute over discovery.

18. In the affidavit in respect of the interlocutory application, the husband said that the 2003 contract provided that if the F site was not rebuilt by the company within one year of completion of the remediation of the site, the company would be responsible for liquidated damages of $450,000 plus GST payable to P Company.

19. The husband did not set out in his affidavit when the site was “remediated” but he did say that building commenced on the site in March 2008 and that that was within the 12 months of “remediation by [P Company]”.  The rebuilding amounted to the erection of a service business and store which commenced trading in March 2009.  The husband said that that avoided the liquidated damages provision.

20. The wife replied to the husband’s affidavit.  Her affidavit runs to 43 pages but her counsel told me that the relevant paragraphs were 89 to 96.  In paragraph 89, the wife asserted that the husband was now seeking to set aside the injunctions to allow the refinancing and that that was an admission by him of breaching the orders of Bennett J.  It is hard to follow that logic having regard to the fact that there is no evidence that I can find indicating that the husband encumbered the asset.  Quite the contrary, he borrowed significant funds from associates who have now filed affidavits in these proceedings but they remain unsecured creditors.  Accordingly, I could not find that the husband had breached the injunctions of Bennett J.

21. The wife then referred to the fact that the husband maintained that P Company had required him to rebuild the site for P Company to carry out a “remediation of the site”.  My understanding of paragraph 4 of the husband’s affidavit is that it was P Company who remediated the site rather than the husband.  It was the husband’s obligation to then build a service business within 12 months of the remediation being completed. 

22. The wife asserted that when she looked at documents subpoenaed from P Company, no document was produced that dealt with the redevelopment or anything to suggest that P Company had undertaken remediation of the site.  She said the husband’s discovered documents also disclosed no such correspondence with P Company.  If I am right that P Company was to remediate the site, it would very much depend upon what documents were sought from P Company in the subpoenae as to what file might be produced.

23. Accordingly, the parties seemed to be talking about two different things and the terminology becomes very confusing.

24. The wife attached an annexure to her affidavit JB-31 which is a letter dated 7 April 2009 from the solicitor for the husband to the solicitor for the wife.  Rather than clarifying the position, the letter adds to the confusion as it is a response to the letter of the wife’s solicitor dated 6 April 2009.  However, it refers to the fact that in the “ordinary course of business” of the J Group in which the husband has an interest, various business associates “in the group” decided to develop the F site as it was “laying idle”.  It goes on then to explain the financing.

25. In the letter of 7 April 2009, and again without the benefit of the letter of 6 April 2009, the husband’s lawyer wrote:

    Your assumption that the money spent on the redevelopment was drawn from matrimonial funds is false, as set out above.  My client had no need to make a financial disclosure.”

26. The wife complains in her affidavit that the husband adopted the view that disclosure was not required in relation to the redevelopment.  I do not read the letter that way.  Quite the contrary, senior counsel for the husband indicated that the husband had an obligation to make comprehensive disclosure and was doing it on an ongoing basis.

27. The wife’s evidence then was that ordinarily, she would not have opposed the refinancing of the F property provided she could be confident that it would not risk the further dissipation of family assets.  She complained however that the limited information disclosed by the husband did not enable her to draw the conclusion that the family assets would be preserved in the event of the proposed refinancing.

28. It is to be noted that the wife did not seek an adjournment of the husband’s application to enable her to undertake further inquiries or to pursue the discovery about which she complains she had not received concerning that development.  The statement by the wife to which I have just referred is therefore puzzling.

29. The wife’s final paragraph in her affidavit indicated that in view of the husband’s conduct in relation to the F site which in her view had been in breach of injunctions and a total disregard of the duty of financial disclosure, caused her to not consent to the refinancing of the site. 

30. I could not find on this material that there has been any breach of the injunction.  I could not find on this material that the husband has disregarded his duty of disclosure.  I do not have enough information to make any such finding in either case.

31. In his affidavit, the husband pointed to the affidavit of the valuer showing that subsequent to the rebuild of the site, there had been an increase in its value.  Senior counsel for the husband said that the increase had given rise to a further $100,000 being available to the parties in the pool of assets.

32. The husband has now been given notice by his business associates that they want their money back having contributed it for the purposes of the construction of the business.  Their affidavits say that.  The husband may have been ambitious or foolish in committing himself to a program to construct the site using money from his associates on the basis that upon its completion, they would be repaid but I do not see that as a problem if this was the usual business of the husband and there has now been an increase in the pool of assets.

33. Counsel for the wife pointed to the irony of a situation in which the husband was endeavouring to borrow funds for refinancing in circumstances where he had not met his obligations under existing court orders.  That is particularly important in a case where the husband makes the concession that he has not done so and points to his economic problems.  However, as I earlier pointed out, the wife’s initial application for enforcement was struck out as incompetent and more recently, both parties agreed to take the case out of the trial list for the purposes of discovery and discussion.  I can only conclude on that basis that the wife was not particularly perturbed about the husband’s recalcitrance. 

34. I am left with a situation therefore where the only evidence I have points to the fact that this is an exercise of protecting assets rather than placing them at risk.

35. There would still seem to be some debate as to whether asset preservation orders in proceedings under the Act arise under s 34(1) or s 114(3)[1].  In this case, the power to make the orders sought by the husband arises from the provisions of s 114 generally. 

    [1]          Deputy Commissioner of Taxation and Kliman (2002) FLC 93-113

36. Section 114 provides that in proceedings of the kind referred to in paragraph (e) of the definition of matrimonial cause in s 4(1), the Court may make such order or grant such injunction as it considers proper with respect to the matter to which the proceedings relate.

37. Notwithstanding the parties consented to the orders in August 2006, it must follow that the Court acted within power and had it been requested to make the order, it would have done so on the basis that it was proper.  It follows therefore that a court has a power to vary that injunction where in the same proceedings, it still considers it proper to do so.

38. Having regard to the fact that I am asked to permit the husband to undertake a course of action which is for the purposes of preserving assets and the wife would otherwise concede that that is so but for the fact that the husband has not provided information that she seeks, I find that it is proper to vary the injunction.  I propose to make the orders sought by the husband.

39. The wife by her response opposes the orders being made and seeks that the property actually be sold.  There is not sufficient evidence before me to be satisfied about the ramifications of that other than my understanding that she complains justifiably that there are outstanding debts due to her.  As I am asked to adjourn the wife’s interim enforcement application, it is conceivable that the application for sale of assets might later appear under another guise.  I am not asked to enforce the orders for that purpose today and in those circumstances, it is inappropriate for me to make an order for the sale of the property.

40. The husband’s application also seeks an order under s 106A of the Act to enable the implementation of any order by having a registrar sign documents to obviate the necessity to take enforcement proceedings. There is no evidence in this case that the wife will not comply notwithstanding her opposition to the husband’s application. In those circumstances, on this evidence, it would not be appropriate for me to make an order under s 106A having regard to the specific terms of paragraph 1 and 2 of the husband’s application.

I certify that the preceding Forty (40) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin

Associate: 

Date:  25 June 2009