Brayton & Brayton
[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 502American 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 660Beecham 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 380City 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 301Eaby 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 35In 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 366M 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) 318Smethurst v Commissioner of Police (2020) 94 ALJR 502.
Stanford & Stanford (2012) 247 CLR 108
Summer v Booth [1974] 2 NSWLR 174
Tableland Peanuts Pty Ltd v Peanut Marketing Board (1984) 58 ALJR 283
Waugh v Waugh (2002) 27 Fam LR 63
Yunghanns v Yunghanns (1999) 24 Fam LR 400Texts J. D. Heydon, Cross on Evidence, (2020) LexisNexis, 12th Australian Edition Division: Division 1 First Instance Number of paragraphs: 72 Date of hearing: 8 and 10 December 2021 Place: Melbourne Counsel for the Applicant: Mr C. Newlinds SC Solicitor for the Applicant: Barkus Doolan Family Lawyers Counsel for the First Respondent: Mr S. Gray Counsel for the First Respondent: Ms L. Johnson Solicitor for the First Respondent: Armstrong Legal And Wrp Legal & Advisory Counsel for the Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth and Tenth Respondents: Mr B. Roberts QC Counsel for the Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth and Tenth Respondents: Mr M. Wong Solicitor for the Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth and Tenth Respondents: Holmes Donnelly & Co Solicitors ORDERS
SYC 5516 of 2017 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS BRAYTON
Applicant
AND: MR BRAYTON
First Respondent
MS AA BRAYTON
Second Respondent
MR TOBLER (and others named in the Schedule)
Third Respondent
order made by:
WILSON J
DATE OF ORDER:
22 DECEMBER 2021
THE COURT ORDERS THAT:
1.Using the draft orders proposed by the wife, the parties must bring 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 proposed.
2.In relation to expert evidence on valuation and handwriting, the minute must provide a timetable for the filing of any further submissions ahead of debate on 10 March 2022.
3.The costs of and incidental to this application are reserved.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Brayton & Brayton is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
WILSON J
introduction
By amended application in a proceeding filed on 2 December 2021, the applicant[1] sought a sophisticated array of orders, mostly in the nature of prohibitory injunctions, together with orders for disclosure. I heard this application over two days, it being urgent. These reasons explain why in my view orders in the nature of injunctions must be made along with orders for disclosure.
[1] In these reasons the applicant is described interchangeably as “the wife” or “the applicant”.
This litigation was commenced in 2017 in what was then the Federal Circuit Court of Australia.[2] In it, the wife seeks orders –
(a)for the alteration of property interests pursuant to s 79 of the Family Law Act;
(b)under s 106B of the Family Law Act, if the court does not treat the assets of certain trusts[3] as the property of the husband then under s 106B of the Family Law Act the wife sought an order setting aside the deed of variation in respect of each such trust;
(c)orders under s 85A of the Family Law Act in respect of those trusts;
(d)under s 106B of the Family Law Act orders setting aside the husband’s transfers on 9 July 2021 of his shares in certain companies;[4]
(e)orders under s 106B of the Family Law Act setting aside the husband’s declaration of acknowledgment of bare trust with respect to his shares in the companies (or some of them) referred to in paragraph 2(d);
(f)an order under s 37A of the Conveyancing Act declaring void the husband’s declaration of acknowledgment of bare trust in respect of the husband’s shares in the companies (or some of them) referred to in paragraph 2(d);
(g)an order under s 37A of the Conveyancing Act declaring void the purported transfer of the husband’s share in the companies referred to in paragraph 2(d); alternatively
(h)an order for payment to the wife of $350 million.
[2] Having regard to the amounts in issue on this application, the issuing of the case in that court was curious.
[3] 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.
[4] Those companies in respect of which shares were transferred were DD Group Pty Ltd, CC Holdings Pty Ltd, EE Pty Ltd, AN Holdings Pty Ltd, FF Pty Ltd, LL Pty Ltd, MM Pty Ltd, KK Pty Ltd, NN Pty Ltd, OO Pty Ltd, Z Pty Ltd, Z Holdings Pty Ltd, Z Corp Pty Ltd, RR Pty Ltd, TT Pty Limited Pty Ltd, VV Pty Ltd and AM Pty Ltd.
By amended application filed 2 December 2021 the wife sought injunctions against the husband, the second respondent (Ms AA Brayton) and the third respondent (Mr Tobler) from performing a collection of activities.[5] The wife also sought orders enjoining DD Group Pty Ltd as trustee of the DD Trust from transferring shares in any of the husband’s companies (as defined) in the manner set out in paragraph 2 of the amended application.
[5] Those included resigning as a director or secretary of the companies referred to in paragraph 2(d) or the trusts referred to in paragraph 2(b), transferring shares, appointing further directors, disposing of assets of more than $100,000 and making loans by the trust to the third parties in amounts of more than $20,000 without the wife’s consent.
The wife also sought orders in relation to disclosure. Those orders were focused with pinpointed specificity in relation to valuations to be undertaken by a single expert in respect of the trust companies and the husband’s companies with a different single expert being appointed in respect of real estate.
Additionally, the wife sought orders for the appointment of a handwriting expert who would be requested to examine a collection of documents.
To the further amended initiating application the wife attached points of claim in which she purported to spell out the factual and legal basis for the complex orders she sought in this proceeding. In précis form, and in no greater detail than is necessary to determine this urgent interlocutory application, those points of claim recorded the following contentions –
(a)the husband and wife commenced cohabitation in August 2002, were engaged in 2005 and separated in 2017;
(b)the second respondent is the husband’s mother and mother of Mr BB Brayton;
(c)the third respondent (“Mr Tobler”) is the husband’s advisor and accountant;
(d)the husband holds 50% of the issued shares in the capital in various companies[6] while Mr BB Brayton holds the other 50% of the issued shares in the capital of those companies and each of the husband, Mr BB Brayton and Mr Tobler is a director of each of those companies;
(e)the companies just mentioned are trustee companies;
(f)each of those companies is now owned by DD Group Pty Ltd consequent upon the husband transferring his issued share in DD Group Pty Ltd to DD Group Pty Ltd on 9 July 2021;
(g)other companies[7] are now owned by DD Group Pty Ltd consequent upon various shares in them being transferred by the husband to DD Group Pty Ltd on July 2021;
(h)on 21 January 2005 deeds of variation were executed appointing the husband’s mother and Mr Tobler as appointers, replacing the husband in relation to 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;
(i)prior to their marriage the husband and the wife entered into a financial agreement on 7 March 2005;
(j)the purported transfers of shares allegedly effected on 9 July 2021 to DD Group Pty Ltd were ineffective; and
(k)the deeds of variation of the trusts referred to in paragraph (h) above were shams with the consequence that the trusts and their assets remain property of the parties to the marriage and the husband continues to retain control of those trusts.
[6] AM Pty Ltd, CC Holdings Pty Ltd, DD Group Pty Ltd, EE Pty Ltd, FF Pty Ltd, GG Holdings Pty Ltd and AN Holdings Pty Ltd.
[7] KK Pty Ltd, LL Pty Ltd, MM Pty Ltd, NN Pty Ltd, OO Pty Ltd, Z Pty Ltd, Z Corp Pty Ltd, UU Pty Ltd, TT Pty Limited, VV Pty Ltd and AM Pty Ltd.
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.
Pausing at that juncture, in giving the evidence she did in her 12 November 2021 affidavit, the wife was endeavouring to understand, interpret and comprehend a collection of transactions undertaken by the husband, Mr BB Brayton, Mr Tobler and the husband’s mother, to which the wife was not privy. The information she was able to give in respect of those transactions was necessarily limited as she was not privy to the transactions. Senior Counsel on her behalf contended the wife was relying on inferences to be drawn from other facts, which I took him to mean she relied on cases such as Richard Evans & Co Ltd v Astley,[10] Bradshaw v McEwans Pty Ltd,[11] Luxton v Vines,[12] Holloway v McFeeters,[13] Girlock (Sales) Pty Ltd v Hurrell,[14] Jones v Dunkel,[15] Trustees of the Property of Cummins (a bankrupt) v Cummins,[16] Tinkerbell Enterprises Pty Ltd v Takeovers Panel and Ors,[17] J & A Vaughan Super Pty Ltd (Trustee) v Becton Property Group Ltd,[18] In the Matter Of Petrolink Pty Ltd, Re; Smith v Bone,[19] Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing & Allied Services Union of Australia v Australian Competition and Consumer Commission,[20] Lithgow City Council v Jackson,[21] Australian Competition and Consumer Commission v Metcash Trading Ltd[22] and Ashby v Slipper.[23]
[10] [1911] AC 674, 687.
[11] (1951) 217 ALR 1.
[12] (1952) 85 CLR 352.
[13] (1956) 94 CLR 470
[14] (1982) 149 CLR 155.
[15] (1959) 101 CLR 298.
[16] (2006) 227 CLR 278
[17] [2012] FCA 1272.
[18] [2014] FCA 581.
[19] [2014] FCA 1024.
[20] (2007) 162 FCR 466.
[21] (2011) 244 CLR 352
[22] (2011) 198 FCR 297.
[23] (2014) 219 FCR 322.
The wife obtained company searches of several of the companies which are respondents in this litigation, although in paragraph 48 of her 12 November 2021 affidavit she did not say when those searches from the Australian Securities Investments Commission (“ASIC”) were obtained. That aside, she deposed to the shareholding and directorships of the husband as follows. That is to say he is –
(a)one of two directors and a 50% shareholder in KK Pty Limited;
(b)one of six directors and a 50% shareholder in LL Pty Limited;
(c)one of six directors and a one third shareholder in MM Pty Limited;
(d)one of six directors and a 50% shareholder in NN Pty Limited;
(e)one of six directors and a 50% shareholder in OO Pty Limited;
(f)one of six directors and a 50% shareholder in the Z Group of Z Pty Limited;
(g)one of six directors and a 50% shareholder in Z Holdings Pty Limited;
(h)one of six directors and a 50% shareholder in Z Corp Pty Limited;
(i)one of six directors and a 50% shareholder in RR Pty Limited;
(j) one of six directors and a 100% shareholder (through Z Corp Pty Limited) in SS Pty Limited;
(k)one of six directors and a 50% shareholder in TT Pty Limited;
(l)one of six directors and a 50% shareholder in UU Pty Limited; and
(m)one of six directors and a 50% shareholder in VV Pty Limited.
The wife deposed to the husband’s net worth being estimated at almost $1.2 billion.
She deposed to undertaking further ASIC searches on 11 November 2021 and the results of those searches. She stated in paragraph 52 of her affidavit that the husband’s one share in several companies[24] had been transferred from him to DD Group Pty Ltd on 9 July 2021. In respect of five other companies,[25] the husband’s shares had also been transferred to DD Group Pty Ltd.
[24] Those companies were AM Pty Ltd, CC Holdings Pty Ltd, DD Group Pty Ltd, EE Pty Ltd, GG Holdings Pty Ltd, AN Holdings Pty Ltd, FF Pty Ltd, KK Pty Ltd, LL Pty Ltd, MM Pty Ltd, NN Pty Ltd, OO Pty Ltd, Z Pty Ltd, Z Holdings Pty Ltd, Z Corp Pty Ltd, RR Pty Ltd, TT Pty Limited Pty Ltd, UU Pty Ltd and VV Pty Ltd.
[25] LL Pty Ltd, NN Pty Ltd, OO Pty Ltd, RR Pty Ltd and VV Pty Ltd.
The wife deposed to the ownership of DD Group Pty Ltd. She said it was held as to 50% by Mr BB Brayton. She said the husband transferred his 50% shareholding in DD Group Pty Ltd to DD Group Pty Ltd stating “I am not sure if a company can hold shares in itself”. She made a valid point.
The wife’s solicitor affirmed an affidavit on 8 December 2021 to which she exhibited a collection of documents. Attached to these reasons and marked Schedule A is a document described by the wife’s solicitor, Marie-Louise Brochut, as a “mind map” which while an inapt description is a very useful document to explain the trusts relevant to this litigation. Ms Brochut also exhibited a non-exhaustive collection of–
(a)trust deeds of various trusts of relevance in this case;
(b)deeds of appointment and removal of appointor variation of deed dated 21 January 2005;
(c)certain financial statements in respect of some but not all of the trusts of relevance in this case;
(d)ASIC searches for many of the respondents in this proceeding;
(e)title searches in respect of certain parcels of real property in New South Wales and South Australia; and
(f)ASIC searches of companies that make up the Z Group.
Ms Brochut also exhibited to her affidavit a document she described as a mind map in respect of the companies that make up the Z Group of Companies. That document is attached as schedule B to these reasons. Those companies include –
(a) WW Pty Ltd;
(b) XX Pty Ltd;
(c) Z Enterprises Pty Ltd;
(d) VV Pty Ltd
(e) OO Pty Ltd;
(f) AC Pty Ltd;
(g) AD Pty Ltd;
(h) AE Pty Ltd;
(i) AF Pty Ltd;
(j) SS Pty Ltd;
(k) AH Pty Ltd;
(l) AJ Pty Ltd;
(m) AK Pty Ltd;
(n) The Z Group of Z Pty Ltd; and
(o) AL Pty Ltd.
Returning to the wife’s affidavit made 12 November 2021, at paragraph 21 she deposed to the reason for receiving a notice to admit facts. It was in the following terms –
The proceedings then continued in relation to the substantive relief sought by me for a property settlement and on 20 December 2019 my lawyers served upon Mr Brayton's lawyers a Notice to Admit Facts. The Notice sought to gain an admission from Mr Brayton to the effect that, amongst other things, his mother, Ms AA Brayton, and his advisor, Mr Tobler, were appointed by Mr Brayton as co-appointors of various trusts and that for practical purposes, those persons were subordinate to Mr Brayton to the effect that she or he would accept and implement Mr Brayton's instructions in undertaking their roles.
the husband’s evidence
The husband’s 8 October 2021 affidavit related to parenting only.
It is significant that the husband has not filed a defence to the wife’s points of claim.
the other respondentS’ EVIDENCE
No other respondent made an affidavit on this application.
the wife’s submissions
In their written submissions dated 8 December 2021, senior and junior counsel for the wife set out their written contentions on the four matters before me, namely –
(a)interlocutory orders restraining dealings by the husband, the second respondent and the sixth respondent;
(b)disclosure;
(c)the appointment of a single expert; and
(d)the appointment of a handwriting expert.
Counsel for the wife also prepared a highly detailed version of proposed orders to be made if the wife’s four applications or any one or more of them were successful.
So far as the complexities of the husband’s commercial activities were concerned, the wife made an accurate submission. It was as follows –
The Husband’s commercial affairs are highly complex. He discloses that he is a director of 50 companies, including the Trustee Companies and the Husband’s Companies (as defined in the Wife’s Amended Application).[26] He further discloses that he is an eligible beneficiary of the seven Trusts (as defined in the Amended Application). The net asset positions of those Trusts include (notably) $9,910,578 (DD Trust), $12,279346 (EE Trust), $485,100 (HH Family Trust), $48,224 (Brayton Family Trust) and $49,922 (FF Trust).[27]
[26] Financial Statement filed 25 August 2021, p. 14-15.
[27] Financial Statement filed 25 August 2021, p. 15-16.
The actual value of the property in respect of which the parties sought adjustment orders under s 79 was not formally proved on this application yet it was asserted as being in the vicinity of $1.2 billion.
At its core, counsel for the wife argued that the matters to which the wife deposed in her affidavit made 12 November 2021 revealed a series of dealings or purported dealings in real estate, personal property and trust powers apparently designed to divest the husband of assets otherwise amenable to orders in this proceeding. Counsel for the wife contended (in précis form) that –
(a)the husband had previously been the appointor of the DD Trust, the EE Trust, the HH Family Trust, the CC Holdings Trust, the Brayton Family Trust, the GG Trust and the FF Trust;[28]
(b)six weeks prior to the execution of the financial agreement (later set aside by consent) the husband executed a series of deeds of variation pursuant to which he purported to vest powers of appointment in relation to various trusts in respect of which he previously had been the appointer in favour of his mother and brother;
(c)the husband purported to transfer powers of appointment to his mother and solicitor;[29]
(d)in aggregate, the DD Trust, the HH Family Trust and the EE Trust hold assets of at least $22 million;
(e)the former matrimonial home in Suburb JJ is owned by the DD Trust and the husband deposed to residing at that premises pursuant to a tenancy agreement made between DD Group Pty Ltd and the husband;[30] and
(f)the husband purported to transfer title in his shares in DD Group Pty Ltd to DD Group Pty Ltd, in contravention of s 259A of the Corporations Act in respect of which a civil penalty may be imposed.
[28] A copy of each deed of trust was exhibited to Ms Brochut’s affidavit.
[29] Those trusts were the DD Trust, the HH Trust and the EE Trust.
[30] It is arguable that the tenancy agreement is not an arm’s length commercial transaction having regard to the directorships of and shareholding in DD Group Pty Ltd, although the point need not be decided.
The wife submitted that when properly examined, the dealings recorded immediately above were invalid. Her counsel put the position in the following terms in paragraph 15 of their written submissions –
The wife alleges that the defeating dealings described above were shams and void and accordingly, or alternatively seeks relief voiding the relevant transactions pursuant to s 106B, or over property settled upon the Trusts pursuant to s 85A. The wife asserts that the Trusts remain under the control of the Husband, and seeks a declaration that assets of the trusts were property of the marriage.
Considerable debate emerged about the terms of the orders sought by the wife. On behalf of the sixth respondent, with whose submissions the husband agreed and supported, counsel argued that no need existed to enjoin the respondents in the manner proposed. That was because –
(a)the boards of the majority of the respondents are composed in such manner that the husband does not have a controlling influence;
(b)having regard to the magnitude of the husband’s overall commercial activities and his overall corporate structure, it is absurd for the wife to insist that she approves disbursements of or greater than the sum she nominated whether or not she may be required to not unreasonably withhold her consent;
(c)the evidence of the risk of dissipation of assets was unpersuasive and it was premised on inferences that were not open to be drawn in all the circumstances;
(d)the making of the injunctions pressed by the wife will orchestrate hardship to the respondents that could not be compensated if it later transpired that the orders were wrongly made; and
(e)the wife was unable to give a meaningful undertaking as to damages, a very significant factor to be considered when assessing whether it was appropriate in all the circumstances to enjoin the respondents in the manner proposed.
In the passages below I have addressed the submissions of the wife as well as those of the sixth respondent and of the husband.
applicable legal principles
Section 114 of the Family Law Act empowers a justice of this Court to make orders in the nature of injunctions. Section 114(1)(e) empowers any such injunction to be made in relation to the property of a party to the marriage.
Citing Waugh v Waugh[31] and M v DB,[32] counsel for the wife submitted that two requirements exist where an order is sought restraining a spouse from dealing with his or her property. They put the position in the following terms –
The two requirements for an injunction to restrain a spouse from dealing with his or her property are first an existing or potential claim to an order altering property interests under s 79 or s 90SM; and second a danger that the claim may be defeated or prejudiced unless such an injunction is granted.
[31] (2002) 27 Fam LR 63.
[32] (2006) 36 Fam LR 454.
One may legitimately wonder whether that encapsulation of principle is necessarily correct or, if correct, whether it is exhaustive in its relative narrowness. In the specific realm of injunctions in family law litigation, the scholarly distillation of principle in Yunghanns v Yunghanns[33] represents a statement of principle that is more in keeping with the test propounded by the High Court of Australia, namely the existence of a serious issue to be tried and that the balance of convenience supports the making of the order. Those authorities include A v Hayden (No 2),[34] Australian Coarse Grain Pool Pty Ltd v Barley Marketing Board of Queensland,[35] and Tableland Peanuts Pty Ltd v Peanut Marketing Board[36] and other cases cited below.[37]
[33] (1999) 24 Fam LR 400.
[34] (1984) 156 CLR 532.
[35] (1982) 57 ALJR 425.
[36] (1984) 58 ALJR 283.
[37] Beecham Group Limited v Bristol Laboratories Pty Ltd (1968) 118 CLR 618, American Cyanamid Co v Ethicon Ltd [1975] AC 396, Epitoma Pty Ltd v Australasian Meat Industry Employees Union (1984) 3 FCR 55, Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 3) (1998) 195 CLR 1, Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (No 3) (1998) 195 CLR 1, City of Enfield v Development Assessment Commission and Another (2000) 199 CLR 135, Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199, Australian Broadcasting Corporation v O’Neill (2002) 227 CLR 57, Bankstown City Council v Alamdo Holdings Pty Ltd (2005) 223 CLR 660 and Smethurst v Commissioner of Police (2020) 94 ALJR 502.
In the specific field of family law litigation, the injunction sought by the wife in this case has been the subject of observation under the rubric of the prevention of abuse and frustration of the process of the court. Illustrations of decisions of that nature include Waugh v Waugh as well as Deputy Commissioner of Taxation v Kliman.[38] High Court authority is supportive of such an approach.[39]
[38] (2002) 29 Fam LR 301.
[39] Jackson v Sterling Industries Ltd (1987) 162 CLR 612, Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 and Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia [No 3] (1998) 195 CLR 1.
In this case the wife alleges that a sizeable amount of the husband’s assets is held by companies or trusts owned or controlled by the husband. Alternatively, she asserts that matrimonial property is held by trusts and companies controlled by the husband and having regard to the changes to the composition of some of those entities along with the power to control the identity of the corporate trustee of the trusts presently controlling over $20 million worth of assets, then her claim over matrimonial property is at risk. Counsel for the wife relied on observations of the High Court in Ascot Investments Pty Ltd v Harper[40] as well as Kennon v Spry[41] for the proposition that this court (me, in this case) possesses the power to grant an interlocutory injunction restraining dealings with property said to constitute property of the marriage held by a third party. To like effect is the observation of this court in In the Marriage of Harris; Re Banaco Pty Ltd [No 2].[42] Of course, that analysis assumes that several of the respondents in this proceeding are third parties, strictly so called, by force of the composition of their boards not being controlled by the husband or by reason of their relationships having no legal or equitable connection to the husband, de facto if not de jure. It seems to me that one of the issues in the trial of this proceeding is the nature and extent of the influence exercised by the husband over the shareholding in the various respondents and in his control over the boards of those respondents.
[40] (1981) 148 CLR 366.
[41] (2008) 238 CLR 366 (at [68]).
[42] (1981) Fam LR 515.
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.
To that several things must be said. In no particular order those include the following –
(a)the wife deposed to the husband being involved in his commercial affairs in a manner that did not involve her;
(b)disclosure has been problematic in this litigation and a contested application exists in relation to disclosure;
(c)by reason of disclosure complications, the full extent of the husband’s involvement in the creation of the 21 January 2005 documents is not presently known, especially whether and if so to what extent his mother, brother and tax advisor were involved;
(d)the wife deposed to having no knowledge of the facts and circumstances surrounding the execution of the 21 January 2005 deeds or the purported share transfers;
(e)a full investigation must be devoted to unravelling the factual matrix behind the execution of the 21 January 2005 deeds and the purported share transfers;
(f)the wife is directly affected by the execution of the 21 January 2005 deeds and by the purported share transfers;
(g)if the wife is correct in her contentions that certain documentation is a sham and was devised to defeat claims, then her entitlements in her application for the alteration of property interests are very much affected by the orders she seeks on this application; and
(h)expressed differently, unless the orders she seeks are made, a significant risk exists that the assets in issue in this case could be compromised in such manner that they may not be amendable to an order under s 79 of the Family Law Act.
To my mind, there is merit in that analysis.
It seems to me that a lower risk of injustice is posed by the making of the orders than by the refusal of them.[46] In my view, the balance of convenience supports the making of the injunctions sought.
[46] This is a theme espoused by the Court of Appeal of the Supreme Court of Victoria Bradto Pty Ltd v State of Victoria (2006) 15 VR 65.
The precise terms of the orders sought were the subject of agitation by the husband. Mr Gray SC did not oppose the making of the restraints urged by the wife but he sought seven days within which the wife has to provide her consent. That is reasonable. The husband stated in written submission as follows –
The Husband asked for 7 days. The Wife rejects that timeframe and does not suggest an alternative timeframe. The time frame is necessary. The restraint is an imposition on the Husband engaging in his ordinary activities for the benefit of himself and those entities the subject of the restraint. The Husband should have certainty as to when the time has passed that he should be approaching the Court without having to incur further costs in engaging in discussions with the Wife about whether her failure to agree is reasonable or otherwise.
In my view the proposed orders should be modified with that qualification.
Proposed order 1.2 was also the subject of a requested modification. Mr Gray SC sought the inclusion of words “other than in the course of the ordinary course of business, when the need arises to appoint a replacement director or secretary”. The phrase “ordinary course of business” was considered in considerable detail by me in Goodridge & Beadle.[47] It seems to me that the husband’s request is reasonable. However, the words “when the need arises to appoint a replacement director or secretary” are largely meaningless for the simple reason that the need to appoint either is subjective or incapable of objective assessment. Disputation may very well emerge about whether the asserted need was real or whether it was a contrivance. In my view, the words “when the need arises to appoint a replacement director or secretary” add nothing and are otiose. They should not be included.
[47] (2017) 57 Fam LR 425.
Paragraph 23 of the wife’s proposed order related to the parties’ self-managed superannuation fund. The wife sought a restraint on the husband’s dealing with that fund. The husband sought a mirror order in relation to the wife’s dealing with the fund. To my mind that is reasonable. The wife’s proposed order should be correspondingly amended.
undertaking
Before addressing the debate about disclosure issues, and with a view to concluding the consideration about injunctions, it is last necessary to say something about the requisite undertaking as to damages.
In the ordinary course of events, the giving of an undertaking as to damages is the price of the injunction. In National Australia Bank Ltd v Bond Brewery Holdings Limited,[48] the Appeal Division of the Supreme Court of Victoria undertook what I regard as a scholarly examination of jurisprudential foundation in equity of the need for an applicant for orders for the appointment of a receiver or for an injunction to proffer an undertaking as to damages. Some brief consideration was given to the issue in Blueseas Investments Pty Ltd v Mitchell.[49]
[48] [1991] 1 VR 386.
[49] (1999) 25 Fam LR 65.
The rule is not immutable that a person seeking orders in the nature of injunctions must proffer a valid, enforceable and meaningful undertaking as to damages. In Blueseas, the court held that the inability to provide such an undertaking was not a bar to the grant of the injunction. That was not a novel observation as Sir Frederick Jordan had made observations to like effect in Re the Will of Gilbert[50] as did the High Court in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc[51] as did the court in Allen v Jambo Holdings Ltd.[52]
[50] (1946) 46 SR (NSW) 318.
[51] (1981) 148 CLR 170.
[52] [1980] 2 All ER 502.
In this case the husband’s commercial enterprises is large, complex and profitable. The effect of the orders proposed by the wife has the potential to substantially interfere with his business. If it later transpires that the orders were made in error for which the husband wishes to attach the wife on her undertaking, it will most likely be meaningless. In any event, the wife is unlikely to have the ability to provide a meaningful and valuable undertaking in respect of business operations said to be in the vicinity of $1.2 billion. On her behalf, Mr Newlinds SC confidently proffered her undertaking as to damages, quite properly so. It remains to be seen whether a need will arise for the wife to be attached on her undertaking. That said, she gives it through her counsel and I accept it.
disclosure
Disclosure was a hotly contested issue in the application before me. The categories of documents sought by the wife and enumerated in the draft orders proposed by her were extensive. Not all were the subject of objection, however. The husband, through his counsel put in issue the merits of making orders for disclosure in relation to specific documents or categories of them. In the passages that follow I have recorded my views in relation to disclosure of those contested documents.
Proposed order 4.6 seems to have been replaced, once abandoned, by proposed order 4.7. The husband has indicated that he does not oppose proposed order 4.7. In those circumstances I make the order proposed in paragraph 4.7 of the draft order.
Next, the husband opposed orders being made in relation to disclosure from a company the relevance of which was not well enunciated, AL Pty Ltd. Unless and until the involvement of AL Pty Ltd is better explained on proper material, and at this juncture I am not to be taken as shutting the wife out from later applying for disclosure concerning AL Pty Ltd on more sophisticated evidence, I am not presently minded to make disclosure orders in relation to AL Pty Ltd.
In paragraphs 6 and 7 of the wife’s proposed orders she sought disclosure from trusts and companies having no apparent relevance to this litigation. That is not to say that the trusts recorded in paragraphs 6 and 7 and the companies recorded in paragraph 7 are irrelevant. It simply means that the manner in which those entities assume some level of importance in this litigation has not yet been explained. As with the previous order, I take an expansive view about disclosure consistent with the FCFCOA (FL) Rules, especially in cases such as this which are essentially commercial and equity cases in a family law context. To my mind, it is appropriate to stand over disclosure contests to a date in mid to late March of next year. That is unlikely to jeopardise the trial of this proceeding presently fixed for September.
The husband opposed the orders for the disclosure in respect of resolutions of directors.[53] The husband submitted that the request for those documents amounted to fishing, inferentially within the contemplation of Commissioner for Railways v Small.[54] Counsel for the husband also submitted that no case had been enlivened giving rise to the need to rely on director’s resolutions. On that point I disagree. The directors’ resolutions are likely to reveal the subject matter and context concerning the decisions to enter into the deeds of variation executed on 21 January 2005 as well as the share transfers to DD Group Pty Ltd. Those resolutions may shed light on whether the decisions to enter into the deeds and to effect the share transfers were for a proper purpose. They may also shed light on issues surrounding the wife’s sham contentions. They are discoverable.
[53] Those proposed orders were reposed in paragraphs 4.2, 5.1, 8.4, 10.4, 12.4, 14.4, 16.4, 18.4 and 20.4 of the wife’s draft orders.
[54] (1938) 38 SR (NSW) 564.
However, in some instances the resolutions sought go back 25 years. The relevant time frame in this litigation is probably reckoned by reference to the date on which the parties commenced cohabitation, as a starting point, and is a continuing obligation in accordance with normal equitable principles concerning discovery and disclosure. The date on which the parties commenced living together was 2002. I am unable to see how disclosure of board resolutions prior to that date are likely to reveal any relevant matters. While the board resolutions are or may be relevant, those prior to 2002 are unlikely to be.
The husband objected to the provision of originals of the trust deed and originals of the deeds of variation as were recorded in certain paragraphs of the proposed orders.[55] The husband submitted that no case had been raised that called for production of the original versions of the original trust deeds or the original versions of the deeds of variation.
[55] Those were recorded in paragraphs 4.1, 6, 8.1, 8.2, 10.1, 10.2, 12.2, 14.1, 14.2, 16.1, 16.2, 18.1, 18.2, 20.1, 20.2 and 37.21-37.35.
The wife’s position on this point is confined. She said she wants to subject each original document to a handwriting expert with a view to obtaining expert evidence in relation to not only authorship of the deeds but the date on which each was created. That evidence, so the wife submitted, dovetailed into the wife’s contentions that various documentation is a sham as the transaction allegedly recorded in the documentation was undertaken with a view to putting assets out of reach, or at least, beyond the scope of this proceeding.
Whether or not a handwriting expert is able to express an opinion about the execution date of a document remains to be seen. However, that is not a reason for not acceding to the wife’s request for the production of the originals of those documents. I do not agree that “there is no case that gives rise to the need of original documents” (counsel’s words) as the husband’s counsel asserted.
In debate I referred counsel to the High Court’s decision in Healey v Healey[56] for certain observations about the nature and scope of evidence from a handwriting expert. As was held in Summer v Booth,[57] genuine samples of a person’s handwriting and dates can be important but the handwriting expert’s function is to point out similarities in samples and then to leave it to the court to draw its own conclusion.[58]
[56] (1912) 14 CLR 271.
[57] [1974] 2 NSWLR 174, 178.
[58] J. D. Heydon, Cross on Evidence, (2020) LexisNexis, 12th Australian Edition pg. 1512.
To my way of thinking, the husband’s production of the original documents will advance the forward progress of this litigation. It should be done.
Next, the husband opposed the production of consulting or management services as sought in proposed orders 4.11 and 5.8 of the wife’s proposed orders. The husband contended that those orders should not be made because the orders require the husband to speculate “as to what are ‘consultancy’ or ‘management services’ and what documents or records may be ‘relating to’ such services”. The husband further argued that the author of any of those documents was unknown and therefore he was unable to determine whether or not the relevant documents meeting that description related to his “consultancy” and “management services”. Counsel for the husband submitted that “it is not clear who the husband must approach to ascertain whether such person or entities hold such documents”.
I find that argument difficult to accept. The husband is a very astute business man, well-advised and much adept in complex commercial transactions. I reject the notion that he is unable to comprehend what is and what is not a written consultancy document or a written document in relation to management services. As a first step, he is required to disclose documents meeting those descriptions. He must make that disclosure from documents in his possession, power or control. To the extent that persons other than him possess documents meeting either description, those documents will be amenable to disclosure if they are in his power or control. He is not required to engage in a fishing expedition. But if, for example, a document is held by one of his agents, strictly so called, then he is required to disclose it.[59] That is an entirely different proposition to the point urged by the husband when he asserted that he was unsure who he must approach to ascertain whether some other entity holds the documents in issue.
[59] Wheeler v Le Marchant (1881) 17 Ch D 675.
Next the husband objected to disclosure in relation to loan account ledgers.[60] The husband asserted that he should not be required to disclose all loan account ledgers of the husband’s companies or trusts from 30 June 2000, more than 20 years ago, especially loans of very small amounts. He qualifies his overall protest about disclosure of those documents by contending that outstanding loans may be relevant.
[60] These were the subject of proposed orders 4.8, 4.9, 5.6, 6.11, 10.11, 12.11, 14.10, 16.11, 18.11 and 20.11.
Naturally, any outstanding loans are relevant because an indebtedness under a loan is a liability and therefore must be factored into the parties’ overall financial position, colloquially described as the parties’ “balance sheet”. However, that does not mean that it is unnecessary to examine the borrowings history of each of the married parties and of the corporate emanations controlled by them. If a loan was taken out to acquire property, for example, then that item of property is relevant for s 79 purposes and relevant to the question of the parties’ legal and equitable interests in that property in accordance with principles espoused in such cases as Stanford & Stanford,[61] Clayton & Bant[62] and Hsiao v Fazarri.[63] Further, as this court must take into account the myriad of contributions made by the parties,[64] payments made in reduction of loan accounts is likely to be relevant in the overall assessment of the manner in which the parties’ funds was applied.
[61] (2012) 247 CLR 108.
[62] [2020] HCA 44.
[63] [2020] HCA 35.
[64] Jabour & Jabour (2019) 59 Fam LR 475.
I see no basis for excluding disclosure of loan accounts and I see no reason to confine any such disclosure to extant “outstanding” loans.
However, the parties cohabited from 2002. That seems to me to be the most logical commencement point in time for the assessment of loan accounts. The date of 30 June 2000 has no apparent logic.
The husband objected to the wife’s request for an order in terms of paragraph 22 of the proposed orders. The husband asserted that the wife’s proposal was “nonsensical, appears to have no utility and will only cause further unnecessary cost to be incurred”.
Paragraph 22 of the wife’s proposed orders related to the second to tenth respondents attesting to information in relation to disclosure. The husband opposed the proposal, arguing that he will produce such documentation as he has. He said that if he does not have anything to produce, then he will not produce anything and no purpose is served by an order directing him to write to the wife stating that he does not have the documents.
To my way of thing, something of a middle ground must be struck. I recognise that in a high volume case such as this, the costs associated with disclosure are commensurately high. Yet equally, where one party takes the view that the other is being derelict in relation to disclosure obligations and there is, or might at least prima facie be some merit in those criticisms, then one option may be the formulation of orders of the sort proposed by the wife. Another option may be requiring the filing and service of an all-embracing affidavit of documents of the sort administered in common law courts in which the maker deposes to the existence of the document, whether privilege is claimed in relation to it, where the document is and if not in the possession of the deponent, where the document went upon leaving the control of the deponent. That method is time consuming to address and expensive to prepare. But it has the salutary consequence of fixing the deponent to a particular state of events which may be the subject of cross-examination if the deponent gives a different version of events about the fate of the document. The list proposed in paragraph 22 is a middle ground. I take the view that it is a reasonable proposal.
Handwriting and valuation experts
The remaining issues concern the evidence to be given by valuers and handwriting experts. The husband proposes a single expert in relation to real estate valuations. A different valuer is proposed in relation to the valuation of companies and trusts. The FCFCOA(FL) Rules address single expert evidence. The wife has proposed a regime that differs, albeit slightly, to the regime prescribed by Part 7.1 of the FCFCOA(FL) Rules.
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.
I certify that the preceding seventy-two (72) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Wilson. Associate:
Dated: 22 December 2021
SCHEDULE OF PARTIES
SYC 5516 of 2017 Respondents
Fourth Respondent:
AM PTY LTD
Fifth Respondent:
CC HOLDINGS PTY LTD
Sixth Respondent:
DD GROUP PTY LTD
Seventh Respondent:
EE INVESTMENTS PTY LTD
Eighth Respondent:
FF PTY LTD
Ninth Respondent:
GG HOLDINGS PTY LTD
Tenth Respondent:
AN HOLDINGS PTY LTD
SCHEDULE A
SCHEDULE B
4
36
0