Brayton & Brayton

Case [2021] FedCFamC1F 337

Federal Circuit and Family Court of Australia

(DIVISION 1)

Brayton & Brayton [2021] FedCFamC1F 337

File number(s): SYC 5516 of 2017
Judgment of: WILSON J
Date of judgment: 22 December 2021
Catchwords:

FAMILY LAW – INJUNCTION – $1.2 billion corporate structure operated by the husband – complex structure of corporate trusts and companies – husband purporting to replace himself as appointor of trusts by his mother, brother and tax advisor – husband purporting to orchestrate transfer of his shareholding in one company to that same company – prohibition on company trading in its own shares.

FAMILY LAW – INJUNCTION – urgent interim application for quia timet injunction – serious question to be tried – balance of convenience favouring the grant of the injunction – held, injunction granted.  
Legislation:

Corporations Act 2001 (Cth) s 259A

Conveyancing Act (1919) (NSW) s 37A

Family Law Act 1975 (Cth) ss 79, 106B, 85A, 114 and 90AF

Cases cited:

A v Hayden ( No 2) (1984) 156 CLR 532

AC v VC (2013) 49 Fam LR 276
Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170
Allen v Jambo Holdings Ltd [1980] 2 All ER 502

American Cyanamid Co v Ethicon Ltd [1975] AC 396

Ascot Investments Pty Ltd v Harper (1981) 148 CLR 366.

Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199
Australian Broadcasting Corporation v O’Neill (2002) 227 CLR 57
Australian Coarse Grain Pool Pty Ltd v Barley Marketing Board of Queensland (1982) 57 ALJR 425
Bankstown City Council v Alamdo Holdings Pty Ltd (2005) 223 CLR 660

Beecham Group Limited v Bristol Laboratories Pty Ltd (1968) 118 CLR 618
Blueseas Investments Pty Ltd v Mitchell (1999) 25 Fam LR 65
Bradto Pty Ltd v State of Victoria (2006) 15 VR 65
Cardile v LED Builders Pty Ltd (1999) 198 CLR 380

City of Enfield v Development Assessment Commission and Another (2000) 199 CLR 135
Clayton & Bant [2020] HCA 44
Commissioner for Railways v Small (1938) 38 SR (NSW) 564
Deiter v Deiter [2011] FamCAFC 82
Deputy Commissioner of Taxation v Kliman (2002) 29 Fam LR 301

Eaby v Speelman [2015] FamCAFC 104

Epitoma Pty Ltd v Australasian Meat Industry Employees Union (1984) 3 FCR 55
Goodridge & Beadle (2017) 57 Fam LR 425
Healey v Healey (1912) 14 CLR 271
Hsiao v Fazarri [2020] HCA 35

In the Marriage of Harris; Re Banaco Pty Ltd [No 2] (1981) Fam LR 515
Jabour & Jabour (2019) 59 Fam LR 475.
Jackson v Sterling Industries Ltd (1987) 162 CLR 612
Kennon v Spry (2008) 238 CLR 366

M v DB (2006) 36 Fam LR 454.

Marvel v Marvel (2010) 43 Fam LR 348
National Australia Bank Ltd v Bond Brewery Holdings Limited [1991] 1 VR 386
Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 3) (1998) 195 CLR 1
Re the Will of Gilbert (1946) 46 SR (NSW) 318

Smethurst v Commissioner of Police (2020) 94…

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Details
AGLC
Brayton & Brayton [2021] FedCFamC1F 337
Case
[2021] FedCFamC1F 337
Decision Date

CaseChat Overview and Summary

In the matter of Brayton & Brayton, the wife sought relief under the Family Law Act, alleging various claims against her former husband, his mother, and his financial advisor. These claims included that certain deeds of variation were executed to defeat her claims, that the husband's transfer of shares to DD Group Pty Ltd was unlawful, and that the financial agreement between the parties should be set aside. The wife also argued that the husband had a chose in action for due consideration and administration of relevant trusts, which she claimed was property within the meaning of s 79 of the Family Law Act. The court was required to determine whether the wife's claims were substantiated and if the requested injunctions and orders were justified.

The court carefully considered the wife's allegations, noting that findings of fact should be made with great circumspection in an urgent interim application. The judge observed that the wife's case was not based on direct evidence and urged far-reaching orders that could have serious detrimental consequences for the husband's commercial operations. The court concluded that the wife's claims were serious and needed to be tried in a full hearing. Regarding the injunctions, the court found that the wife had not shown a requisite sufficient connection between the making of the orders and the core of the marriage and matrimonial causes power, as required by s 90AF of the Family Law Act.

The court fixed a date for further hearing to address the issues of expert evidence and the adherence to the procedure prescribed by Part 7.1 of the FCFCOA(FL) Rules. The judge directed the parties to bring in a minute on or before noon on 10 January 2022, giving effect to these reasons in relation to the injunctions ordered, the disclosure ordered, and the expert evidence required. The minute was to use the proposed orders as drafted by the wife as a base, and a timetable for the filing of any further submissions was to be formulated so that the debate on 10 March 2022 could be focused. The costs of and incidental to this application were reserved.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

The wife asserted that the deeds of variation were transactions to defeat claims. She also contended that – (a)the husband’s transfer of shares to DD Group Pty Ltd was unlawful; (b)they were shams;(c)the purported transfers were transactions to defeat claims;(d)the purported declarations were shams and were transactions to defeat claims;(e)the purported transfers and purported declarations were alienations of property with the intent to defraud creditors; (f)the financial agreement should be set aside; and (g)the husband, as the object of the relevant trusts, possesses a chose in action for due consideration and for due administration of the relevant trusts which is property within the meaning of s 79 of the Family Law Act.[8][8] Woodcock & Woodcock [2021] FedCFamC1F 88.the wife’s evidence In support of this application the wife relied on her affidavit sworn 12 November 2021. So far as is relevant to this application the matters that are next recorded represent the more important factual issues to which the wife deposed – (a)she is 42 and the husband is 50;(b)the husband founded the Z Company Group, a corporate group involved in major property development projects;(c)they have two children, their daughter born 2005 and their son born 2008;(d)the daughter has been diagnosed with autism spectrum disorder, she lives with her father and is estranged from her mother;(e)parenting issues in this litigation have been resolved; (f)on 24 August 2017 the wife commenced this proceeding seeking orders under s 79 of the Family Law Act;(g)the husband agreed to pay the wife $350,000 on 11 December 2017 and on 19 July 2018 the husband was ordered to pay the wife $200,000 in costs following a contested parenting application;(h)by orders of Harper J made 22 October 2019, the parties’ 7 March 2005 financial agreement was declared void and the husband was ordered to pay the wife $190,000 in costs;(i)the wife is presently studying for a bachelor’s degree , the anticipated completion date being 2024;(j)the wife and husband previously lived in the former matrimonial home in Suburb JJ from 2004 until July 2017 when she moved out;(k)the wife contended that throughout the marriage the husband represented to her that he was the registered proprietor of the former matrimonial home yet she has since discovered that the husband is the registered proprietor of that property but in a representative capacity as a bare trustee for the DD Trust; (l)the parties’ decree nisi for divorce was made absolute on 5 October 2018;(m)during the marriage the husband kept his financial dealings largely to himself;(n)the second respondent (that is to say, the husband’s mother Ms AA Brayton) has no financial or business qualifications and she did not attend any board meetings in respect of commercial activities undertaken by the husband;(o)the third respondent (that is to say, the husband’s financial advisor, Mr Tobler) is an advisor in a law firm in AP City and, following separation, the third respondent was appointed as a director of the trustee companies; and(p)the third respondent was nominated as the appointor of the Brayton Trusts[9] pursuant to the alleged (her word) deed of variation dated 21 January 2005.[9] Those trusts were the Brayton Family Trust, the CC Holdings Trust, the DD Trust, the EE Trust, the FF Trust, the GG Trust and the HH Family Trust.

Decision

Reasons for decision

It seems to me that a different day should be allocated for the hearing and determination of the question of expert evidence and whether the procedure prescribed by Part 7.1 of the FCFCOA(FL) Rules should be adhered to. I fix 9:00am on 10 March 2022 for the hearing of that matter. The regime prescribed by Part 7.1 may not be suitable having regard to the tight timetable that is involved in the lead up to trial. That said, the regime prescribed by Part 7.1 will ordinarily be appropriate. Of course, this case has idiosyncratic aspects to it which may suggest that a deviation of the precise detail of Part 7.1 may be required. Similar observations apply to the proposed handwriting expert. Conclusion I direct the parties to bring in a minute on or before noon on 10 January 2022 giving effect to these reasons in relation to – (a)the injunctions ordered; (b)the disclosure ordered; and (c)the expert evidence required. The minute should use the proposed orders as drafted by the wife as a base. So far as the expert evidence is concerned, the minute should formulate a timetable for the filing of any further submissions so that debate on 10 March 2022 may be pithy and focused. The costs of and incidental to this application are reserved.

Ratio Decidendi

Legal Principle Established

Counsel for the wife brought to my attention various authorities of this court that have construed s 90AF of the Family Law Act, especially the decision of Altobelli J in Shipman v Shipman.[43] I entirely agree with his Honour’s distillation of principle. An important point emerges between that case and this, however. In this case the wife provided a detailed recital of the circumstances that obtained as the precursor to her seeking the joinder of each respondent as a party to this proceeding. The parties against whom injunctions are sought in this application are parties to the proceeding. They are not third parties. It may well be that at trial many of those respondents are regarded as the alter ego of the husband. In any event, I draw from Altobelli J’s formulation of Shipman v Shipman the following – (a)section 90AF requires careful consideration to be given in any particular case about the facts and the connection of those facts with the subject of the matrimonial cause;(b)the legislative safeguards in s 90AF(3) and s 90AF(4) must be observed in order for the exercise of power to be valid;(c)the proper construction of s 90AF(3)(a) requires the phrases "reasonably necessary" and "reasonably appropriate” to be read together with the balance of the subsection as providing "the requisite sufficient connection between the making of the order or the granting of the injunction in relation to a third party and the core of the marriage and the matrimonial causes power". Such construction marks the limits of the power and discretion of the Court;[44] and(d)section 90AF cannot be invoked in aid of increasing the properties of the parties.[43] [2021] FamCA 584.[44] AC v VC (2013) 49 Fam LR 276.CONSIDERATION This being an urgent interim application, authority that binds me provides that findings of fact should only be made with great circumspection.[45] It is neither necessary not desirable for me to make any findings about, for example, the wife’s allegations of sham, about the declarations that purport to confer the power of appointment in respect of certain trusts on persons other than the husband and about the share transfers pursuant to which shares in DD Group Pty Ltd are transferred from the husband to DD Group Pty Ltd, seemingly in defiance of s 259A of the Corporations Act2001. Those are serious issues to be tried. In my view, they must be tried. [45] Eaby v Speelman [2015] FamCAFC 104, Marvel v Marvel (2010) 43 Fam LR 348 and Deiter v Deiter [2011] FamCAFC 82 to name but a few. So far as the balance of convenience is concerned, I recognise that the scales are finely balanced. The restraints urged by the wife have the potential to orchestrate very considerable hardship to the husband and companies that have been deeply immersed in his complex commercial activities. It must also be recognised that the wife’s case is not based on direct evidence in which, for example, the whole matrix of fact surrounding the execution of the deeds on 21 January 2005 in relation to various trusts is the subject of comprehensive examination. Instead, the wife urged me to make far reaching orders, potentially having seriously detrimental consequences to the commercial operation of the husband in circumstances where no direct evidence is before the court especially about the deeds executed on 21 January 2005.