Cabelo & Cabelo
[2021] FamCA 361
•3 June 2021
FAMILY COURT OF AUSTRALIA
Cabelo & Cabelo [2021] FamCA 361
File number(s): MLC 3263 of 2018 Judgment of: MCEVOY J Date of judgment: 3 June 2021 Catchwords: FAMILY LAW – INJUNCTIONS – Preservation of property – where the wife sought interlocutory injunctive relief pending the final hearing of this matter – where the parties have a complex farming business – where the wife alleges that the husband has failed to provide full and frank disclosure – where the wife alleges the husband has entered into a number of loan agreements with a third party without her knowledge or consent – where the husband had sought to sell parcels of land at an undervalue – where the wife alleged that the husband and the third party were engaging in uncommercial transactions – where the wife alleged that the husband had transferred shares in a profitable company to an entity controlled by the third party at an undervalue – where the disputed evidence in relation to the wife’s concerns cannot be resolved on an interlocutory basis – where there is a serious issue to be tried – where the balance of convenience favours the wife – principles to be applied in granting provisional and protective relief in the nature of freezing orders – significance in proceedings under the Family Law Act 1975 (Cth) of a refusal to provide an undertaking as to damages – where injunctions are made substantially in the terms sought by the wife.
FAMILY LAW – COSTS – Enforcement application – where the wife seeks costs in a fixed sum – where fixed sum may not be much less than costs on an indemnity basis – principles in Kohan and Kohan (1993) FLC 92-340 – order that the wife have her costs on a party/party basis.
Legislation: Family Law Act 1975 (Cth) Cases cited: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170
Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199
Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57
Basi v Namitha Nakul Pty Ltd [2019] FCA 743
Blueseas Investments Pty Ltd v Mitchell and McGillivray (1999) FLC 92-856
Bodilly & Hand [2013] FamCAFC 98
Cardile v LED Builders Pty Ltd (1999) 198 CLR 380
Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148
Cabelo & Cabelo [2020] FamCA 552
Janko & Janko (No 2) [2018] FamCA 353
Kohan and Kohan (1993) FLC 92-340
Mullen and De Bry (2006) FLC 93-293
Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319
Prantage & Prantage (2013) 49 Fam LR 197
Stasiuk & Guild [2021] FamCAFC 62
Tsiang & Wu and Ors (2019) FLC 93-911Number of paragraphs: 64 Date of last submission/s: 1 April 2021 Date of hearing: 28 January 2021 Place: Melbourne Counsel for the Applicant: Mr Geddes QC
Mr WernerSolicitors for the Applicant: Johnston Family Lawyers Counsel for the Respondent: Mr Dickson QC
Mr McCormickSolicitors for the Respondent: Goldsmiths Lawyers Counsel for the Proposed Second Respondent: Mr Strum QC
Mr MarchettiSolicitors for the Proposed Second Respondent: Grice Legal Counsel for the Proposed Third Respondent: Mr Strum QC
Mr MarchettiSolicitors for the Proposed Third Respondent: Grice Legal ORDERS
MLC 3263 of 2018 BETWEEN: MS CABELO
Applicant
AND: MR CABELO
Respondent
ORDER MADE BY:
MCEVOY J
DATE OF ORDER:
3 JUNE 2021
THE COURT ORDERS THAT:
Until further order, the husband personally and in his capacity as officeholder of any company be restrained from selling, encumbering or otherwise altering his interests in any real estate, plants, improvements, fixtures, plant and equipment, infrastructure, chattels, partnership or water licence save for with the prior written consent of the wife.
Until further order, and except with the wife’s consent, the husband be restrained from entering into or extending any loan facility or borrowing funds either personally or in his capacity as officebearer of any corporate entity save for in the ordinary course of business, with capital works, capital improvements, land development and purchase of plant and equipment exceeding $5,000.00 in value being deemed not to be in the ordinary course of business.
Until further order, and except with the wife’s consent, the husband personally and in his capacity as officeholder of any company be restrained from paying any invoice to or entering into any transaction which has the effect of creating a debt, or increasing the level of indebtedness, in favour of Mr B Cabelo or any company or trust in which Mr B Cabelo holds an interest.
The husband pay the wife’s costs of and incidental to her application of 26 October 2020 on a party/party basis.
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 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).IT IS NOTED that publication of this judgment by this Court under the pseudonym Cabelo & Cabelo has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
MCEVOY J:
INTRODUCTION
Before the Court is the wife’s application to extend certain interim injunctions in the nature of freezing orders issued by Macmillan J on 10 July 2020 and to modify, in significant respects, aspects of those injunctions. Also before the Court is the wife’s application for the costs of her enforcement application of 26 October 2020.
For the reasons which follow the freezing order injunctions will be extended, with certain of the modifications sought by the wife, until further order, and there will also be an order that the wife have the costs of her enforcement application on a party/party basis.
BACKGROUND
The husband is 49 years of age and is a farmer with substantial holdings in Victoria. The wife is 47 years of age and does not appear to be in regular employment. The husband’s brother, Mr B Cabelo, who is also a farmer with substantial holdings in Victoria, features prominently in aspects of the husband’s business and the wife has made an application to join him to the proceedings. That application is yet to be heard.
The husband and wife were married and commenced cohabitation in 2000. They separated in August 2017 and were divorced in February 2020. There are two children of their marriage, one who is 15 years of age and the other who is an adult. Both children live with the husband and apparently neither of the children sees or communicates with the wife. Regrettably it would seem that there is deep animosity between the parties, with senior counsel for the husband frankly conceding at the most recent hearing that the parties hate one another.
The wife commenced parenting and property proceedings in the Federal Circuit Court of Australia on 27 March 2018, and the matter was transferred to this Court on 28 January 2020.
The wife filed an application in a case on 19 December 2019 which was subsequently amended on 10 June 2020. Interim orders in relation to both parenting and property matters were sought. The wife’s application came before Macmillan J in the Judicial Duty List on 11 June 2020.
Her Honour made various orders by consent on that day, including orders restraining the husband from altering his interest in certain land in New South Wales, requiring the production of files by the husband’s solicitors concerning loan documentation, and for the production of other documents. It may be observed that the husband’s failure to make appropriate and timely disclosure has been a concerning feature of the proceedings, and a consistent cause of complaint by the wife.
Her Honour reserved on the question of whether interim interlocutory injunctions should be ordered restraining the husband from dealing with certain property, borrowing funds, or increasing his debt to his brother or entities associated with his brother, pending further hearing after the husband and his brother had had the opportunity to file answering material.
On 10 July 2020 in [2020] FamCA 552 Macmillan J made orders substantially in the terms sought by the wife as follows:
…until further order that:
(1)Pursuant to paragraph 4 of the Orders made on 11 June 2020 the husband personally and in his capacity as officeholder of any company is further restrained from selling, encumbering or otherwise altering his interests in any other real estate or water licenses save for and with the prior written consent of the wife
(2)The husband be restrained from entering into or extending any loan facility or borrowing funds either personally or in his capacity as an officeholder of any corporate entity save for in the ordinary course of business, with capital works, capital improvements, land development and purchase of plant and equipment exceeding $5,000 in value being deemed not to be in the ordinary course of business.
(3)The husband personally and in his capacity as officeholder of any company be restrained from entering into any transaction which has the effect of creating a debt, or increasing the level of indebtedness, in favour of Mr B Cabelo or any company or trust in which Mr B Cabelo holds an interest.
The husband duly filed his material and the matter returned before me in the Judicial Duty List on 11 August 2020. On that occasion certain further orders were made by consent providing for the sale of a property in H Town, for the further disclosure of documents, and varying the injunctions put in place by Macmillan J in a limited way as follows:
11. Order 3 of the orders made by the Honourable Justice MacMillan on 10 July 2020 is varied to the extent that the husband, in his personal capacity and not by any entity controlled by him, may borrow from his brother Mr B Cabelo or any entity controlled by Mr B Cabelo, money to pay the Husband’s solicitor and counsel costs and disbursements (including costs and disbursements already billed but unpaid) that he has incurred or incurs, of and incidental to these proceedings on condition that:
(a) the money borrowed is paid direct to his solicitor’s trust account and used to pay those costs and disbursements; and
(b) the wife’s solicitors are notified by the husband’s solicitors of the amount of that borrowing and its date of receipt within 48 hours of its receipt in their trust account.
By reason of insufficient time being available in the Duty List it was necessary to adjourn the balance of the wife’s amended application in a case to 26 October 2020. Orders were also made for the filing of further affidavit material and short submissions. The wife’s amended application was later administratively adjourned to 18 November 2020.
On 26 October 2020 the wife filed an enforcement application which was also made returnable on 18 November 2020. The husband filed a second amended response to an application in a case on 2 November 2020 seeking, amongst other things, that orders 2 and 3 of her Honour’s 10 July 2020 orders be set aside, as well as certain other relief.
The bulk of the hearing on 18 November 2020 was devoted to the wife’s enforcement application. At the conclusion of the hearing the parties consented to the making of certain orders disposing of that application and providing for the sale of water rights. There were also consent orders providing for the filing of yet further material in relation to the interim freezing orders. All extant applications, including the husband’s application for the setting aside of orders 2 and 3 of Macmillan J’s 10 July 2020 orders, were fixed for a one day hearing on 28 January 2021. Orders were also made on 18 November 2020 for the filing of submissions on the costs of the wife’s enforcement application.
Whether or not the freezing orders should be continued was the subject of detailed oral submissions on 28 January 2021. At the conclusion of that hearing orders were again made by consent providing for valuations and assessments, and the taking of various further procedural steps. I also took the matter into my docket and fixed it for final hearing on 11 October 2021. The husband and the wife were, however, unable to agree on an appropriate regime of restraint for the husband, with the wife having sought orders extending the interim relief granted by Macmillan J as set out in an amended initiating application dated 27 January 2021, revision-marked as follows:
Injunctions against the Husband
3. Until further order, the Husband personally and in his capacity as officeholder of any company be restrained from selling, encumbering or otherwise altering his interests in any real estate, plants, improvements, fixtures, plant and equipment, infrastructure, chattels, partnership or water licence save for with the prior written consent of the Wife
4. Until further order, and except with the Wife’s consent, the Husband be restrained from entering into or extending any loan facility or borrowing funds either personally or in his capacity as officebearer of any corporate entity
save for in the ordinary course of business, with capital works, capital improvements, land development and purchase of plant and equipment exceeding $5,000.00 in value being deemed not to be in the ordinary course of business.5. Until further order, and except with the Wife’s consent the Husband personally and in his capacity as officeholder of any company be restrained from paying any invoice to or entering into any transaction which has the effect of creating a debt, or increasing the level of indebtedness, in favour of Mr B Cabelo or any company or trust in which Mr B Cabelo holds an interest.
It will be observed that the wife’s proposed amendment to order 3 seeks to enlarge the scope of the restraint on the husband’s ability to dispose of assets without her consent; her proposed amendment to order 4 seeks to remove the “ordinary course of business” carve out to the order restraining the husband from borrowing; and her proposed amendment to order 5 seeks to extend the restraint on the husband from increasing his indebtedness to his brother or entities associated with him by prohibiting the payment of invoices to his brother or entities associated with his brother without the wife’s consent.
After the hearing on 28 January 2021 I reserved judgment on the question of the maintenance of the injunctions. However shortly afterwards, on 26 February 2021, the wife filed another application in a case, this time seeking to adduce further evidence in support of her application for the extension of the restraining orders. In support of this application the wife filed another affidavit, as well as an affidavit of an expert agronomist, Mr J. She subsequently sought leave to file a supplementary affidavit of Mr J. The substance of the wife’s concern was the development of a new plantation on land jointly owned by the husband and his brother which had not previously been disclosed to her.
Consent orders were made on 9 March 2021 granting leave for the wife to rely upon her affidavit and Mr J’s first affidavit, and for the husband to file further material in relation to the development of the new plantation. On 12 March 2021 the husband filed his further material, and both the wife and the husband filed written submissions in relation to this development, on 30 March 2021 and 1 April 2021 respectively.
Accordingly the following affidavit material has now been filed on the question of whether the interim injunctions should be extended:
·Affidavit of the wife filed 10 June 2020;
·Affidavit of the husband filed 7 July 2020;
·Affidavit of Mr B Cabelo filed 20 July 2020;
·Affidavit of the husband filed 27 July 2020;
·Affidavit of the wife filed 5 August 2020;
·Affidavit of the husband filed 7 August 2020;
·Affidavit of Mr K filed 3 September 2020;
·Affidavit of the husband filed 4 November 2020;
·Affidavit of Mr B Cabelo filed 17 November 2020;
·Affidavit of Mr B Cabelo filed 9 December 2020;
·Affidavit of the wife filed 24 February 2021;
·Affidavit of Mr J filed 1 March 2021;
·Affidavit of the husband filed 12 March 2021; and
·Affidavit of Mr J filed 26 March 2021.
In addition, the following written submissions have now been filed on the question of whether the interim injunctions should be extended:
·Written submissions of the wife filed 7 August 2020;
·Written Submissions of the husband filed 9 August 2020;
·Written submissions of the wife filed 16 November 2020;
·Written Submissions of the husband filed 16 November 2020;
·Written submissions of the wife filed 21 January 2021;
·Written Submissions of the husband filed 25 January 2021;
·Written submissions of the wife filed 31 March 2021; and
·Written Submissions of the husband filed 1 April 2021.
In his written submissions filed 25 January 2021 the husband says that he relies, in addition, on certain paragraphs of affidavits he swore on 10 April 2019 and 4 February 2019, as well as affidavits he swore on 24 January 2020, 7 June 2020, 3 September 2020, and 1 December 2020, together with his second financial statement filed 2 December 2020.
For the purposes of explaining the need to continue the restraining orders at this interlocutory stage it is unnecessary to refer in terms to all aspects of the considerable volume of evidence advanced by the parties on the subject. Similarly, it is unnecessary to refer in terms to all aspects of the parties’ written and oral submissions. Needless to say however, I have considered all relevant material filed in determining that the restraining orders should continue, with certain modifications.
RELEVANT LEGAL PRINCIPLES
Pursuant to s 114(1) of the Family Law Act 1975 (Cth) (“the Act”) this Court has the power to “make such order or grant such injunction as it considers proper with respect to the matter to which the proceedings relate, including … (e) an injunction in relation to the property of a party to the marriage.”
If the Court is asked to issue an injunction restraining a party from dealing with his or her property it must be satisfied that the party seeking that injunction has a reasonable claim for orders altering property interests and that the success of that claim may be prejudiced if an injunction is not granted. It has not been suggested by counsel for the husband that the wife did not have a claim for property settlement.
The principles governing the exercise of provisional and protective relief in the nature of freezing orders are well known, and have developed in Anglo-Australian law over the last 50 years. Insofar as the general law on the subject is concerned, these principles were recently identified and summarised succinctly by Wigney J in Basi v Namitha Nakul Pty Ltd [2019] FCA 743, at [7]-[9] (“Basi”). In Tsiang & Wu and Ors (2019) FLC 93-911 (“Tsiang”) the Full Court of this Court, referring variously to Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170; Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 at [9]–[12], [15] (per Gleeson CJ) and [245] (per Callinan J); Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148 at 153-154; Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 at 328–329; Blueseas Investments Pty Ltd v Mitchell and McGillivray (1999) FLC 92-856 at [56]; Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at [19]; Mullen and De Bry (2006) FLC 93-293 at [49]; and Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 at 321-322, stated the applicable principles as follows:
20. The grant of an injunction is discretionary and the basis on which such an order is made is well established. A purpose, as in this case, is to preserve the status quo pending resolution of the controversy. An applicant must demonstrate first that there is a serious issue to be tried. While that statement has been the subject of various iterations, in essence it requires the demonstration of an arguable case or as was said in Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at [65], the applicant must “show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo”.
21.Next the applicant must demonstrate that the balance of convenience favours making the order sought. As part of this, the applicant must show that there is a “danger” or risk of dissipation of or dealings with assets which will frustrate any judgment in favour of the applicant.
22. In Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319, Gleeson CJ said after discussing the discretionary nature of the remedy at 321–325:
… as a general rule a plaintiff will need to establish, first, a prima facie cause of action against the defendant, and secondly, a danger that, by reason of the defendant’s absconding, or of assets being removed out of the jurisdiction or disposed of within the jurisdiction or otherwise dealt with in some fashion, the plaintiff, if he succeeds, will not be able to have his judgment satisfied.
...
It is not difficult to imagine situations in which justice and equity would require the granting of an injunction to prevent dissipation of assets pending the hearing of an action even though the risk of such dissipation may be assessed as being somewhat less probable than not.
23. As McDougall J in Skyworks v 32 Drummoyne Road [2017] NSWSC 343 said:
24.The Court is required to undertake a qualitative evaluation of all the evidence that is available, to see if there is a sufficiently serious risk of frustration to justify the making of a freezing order. Further, the two considerations [namely, (1) whether there is a good arguable case and (2) whether there is a real risk of judgment frustration] should be analysed together (as each may impact on the other), and with an appreciation of both the underlying purpose of the rule and the relative risks of granting or withholding relief – the customary discretionary calculus.
...
25. It is unnecessary to demonstrate a positive intention but merely the possibility of the event occurring. The determination about the balance of convenience may thus be an inference drawn from the facts and circumstances established by the applicant’s evidence.
26. Nor is it the role of the judge determining the question of the injunction to, in effect conduct a trial of the disputed evidence to resolve those disputes (see Shercliff v Engadine Acceptance Corporation Pty Ltd [1978] 1 NSWLR 729).
27. As to the determination of the existence of the risk and its magnitude, in Palmer v Parbery [2019] QCA 27 McMurdo JA (with whom Fraser and Gotterson JJA agreed) said:
119.The determination of whether there exists a sufficiently serious risk of the dissipation of assets involves the evaluation of future possibilities, rather than the ascertainment of historical facts. The risk of dissipation might justify an order although the probability of the risk eventuating is less than 50 per cent. But, as the risk of dissipation must be a real and not merely a theoretical one, it must have an evidentiary basis. Where a fact is alleged by the plaintiff in support of its case about the risk, but there is contrary evidence from the defendant, must the fact be proved to the court’s satisfaction as if the application for the freezing order was the trial of the case? In my view, a plaintiff need not do so. A freezing order is interlocutory in nature; it does not involve a final determination of the parties’ positions. Usually it is made in circumstances of urgency in which the court is unable to conduct an extensive and conclusive factual inquiry in a way which is fair to both parties. Where the factual basis for the plaintiff’s case about the risk of dissipation is disputed, the risk will commonly have to be evaluated with the recognition that the factual basis for it is in doubt. Nevertheless, the possibility of the plaintiff’s evidence being correct, considered with other facts and circumstances, might mean that there is a sufficiently serious risk of the frustration of the satisfaction of a judgment as to justify the making of a freezing order. …
(Footnotes omitted)
(Footnotes omitted)
Self-evidently, and as has often been observed, because the applicant for provisional relief will not have proved his or her case, when weighing up the balance of convenience the Court must also consider the extent to which the injunctive relief will restrict the party affected by the injunction in the operations of his or her business. In this jurisdiction the Court should impose only those restrictions that may be necessary to protect the applicant’s claim for orders altering the parties’ property interests and, if relevant, the rights of any third parties.
Generally speaking, of course, an applicant for an injunction will be expected to provide an undertaking as to damages. In Blue Seas Investments Pty Ltd v Mitchell & Ors (1999) 25 Fam LR 65 (Nicholson CJ, Lindenmayer and O’Ryan JJ) (“Blue Seas Investments”) the Full Court considered the principles associated with the obtaining of undertakings as to damages in family law proceedings. As to the suggestion that the purpose of an undertaking as to damages is to enable any damage resulting from an injunction to be recovered if it is subsequently found that the injunction was unjustified, their Honours said as follows:
[47] … We consider that this states the purpose of such an undertaking too widely. In Spry’s Equitable Remedies (4th ed) at p 473, the learned author says:
The purpose of requiring an undertaking is simply to enable the Court, should it think that the justice of the case requires it, to recompense a person who has been temporarily enjoined, and, as it subsequently proves, enjoined contrary to his rights as finally ascertained for the damage that he has meanwhile suffered.
See Attorney-General v Albany Hotel Co [1892] 2 Ch 696; Cooper v Smyth [1883] 4 LR (NSW) Eq 39 and Attorney-General v TS Gill & Son Pty Ltd [1926] VLR 414.
[48] The learned author continues at the end of the passage quoted to state the well known principle that in ordinary civil proceedings, every plaintiff who is granted an interlocutory injunction ought, in the absence of most exceptional circumstances, to be required to give an appropriate undertaking.
[49] [As was correctly submitted for the wife], … even though an undertaking has been given, the court may conclude that in all the circumstances of a particular case, no compensation should be paid even if a loss can be demonstrated, or it can order limited or partial compensation.
[50] The common law position appears to be that the court has the discretion not to enforce an undertaking as to damages and this is because the undertaking is given to the court and not to the other party: see Barratt Manchester Ltd v Bolton MBC [1998] 1 WLR 1003 at 1009; [1998] 1 All ER 1; Cheltenham & Gloucester Building Society v Ricketts [1993] 1 WLR 1545 at 1551; [1993] 4 All ER 276; Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 146 CLR 249 at 311–2; 33 ALR 578 at 581–2.
[51] [It was] conceded that there is no requirement for an undertaking as to damages if the party seeking an injunction is impecunious or has limited means: see Allen v Jambo Holdings Ltd [1981] 1 WLR 1252; [1980] 2 All ER 502; see also Dein v Bealey [1960] NSWR 385; Szentessy v Woo Ran (Australia) Pty Ltd (1985) 64 ACTR 98. [It was] submitted, however, that the inability of the applicant to give such an undertaking is a relevant factor in considering whether to grant the injunction at all.
[52] We note that the learned authors of Meagher, Gummow and Lehane’s Equity, Doctrines and Remedies (4th ed) at p 603, in a note which refers to the above cited Australian cases, say:
It would be a pity if these cases were followed with any enthusiasm, as it would mean that the res publica could be held to ransom by paupers, whereas poverty is a practical misfortune not a legal privilege.
[53] Against this however, there is a well known principle that poverty or straitened circumstances should not bar a litigant’s access to justice — see Re Will of F B Gilbert (dec’d) (1946) 46 SR (NSW) 318 at 323, cited in Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc (1981) 148 CLR 170 at 177; 35 ALR 625.
[54] It should be noted that these principles in relation to undertakings as to damages are principles of equity derived from civil litigation. There is, we think, an additional highly relevant matter that distinguishes litigation under the Family Law Act from ordinary civil litigation: that is the fact that very often the wealth of the parties is controlled by one rather than both of them. This in turn means that it is not uncommon for one of the parties to have no means of meeting any liability that may be incurred pursuant to an undertaking as to damages.
Not unlike the wife’s position in the present case, in Blue Seas Investments the wife had contended that the husband and his son had combined together to place the assets of the marriage outside her reach. Thus the Full Court observed:
[55] … Accordingly, it may well be that she does not have the capacity to meet any damages awarded against her pursuant to her undertaking. While this was not the subject of any specific finding by her Honour, if her case has substance, it would be extraordinary if this fact should stand in the path of the grant of an injunction.
[56]There is no doubt that in proceedings for interlocutory injunctions the court, before making an order, is required to find that there is a serious issue to be tried and that the balance of convenience supports the making of an order: see American Cyanamid v Ethicon Ltd [1975] AC 396; [1975] 1 All ER 504 and the other cases cited by the Full Court of this court in Yunghanns v Yunghanns (1999) 24 Fam LR 400 at 433; FLC 92–386 at 85,723.
[57] No doubt in ordinary civil litigation the impecuniosity of a party is a matter that may be relevant to the issue of balance of convenience. For the reasons already stated however, we consider that family law cases must be looked at in a different light. In our view it would be unconscionable to accept a broad principle that the impecuniosity of a party in family law proceedings would be given such weight as to prevent an injunction being granted where all the other requirements for the grant of such an injunction are present. Indeed, it may even be doubtful whether the impecuniosity of one of the parties to family law proceedings would usually be a factor militating against a grant of interim or interlocutory injunctions if the other tests for the grant of the same were otherwise satisfied. This is not to say that such a factor would never be relevant but in the present circumstances at least, where the injunction may have the effect of preserving the only piece of property to which the wife might have recourse, it would be unreasonable in the extreme for her impecuniosity to operate to prevent an injunction being granted.
It may therefore be accepted that in family law cases where the wealth of the parties is controlled by only one of the parties, unlike civil litigation more generally, the usual requirement that there be an undertaking as to damages as a condition precedent for the grant of an injunction does not have the same significance. This point is of central relevance in the present case.
Although it may be that the Court could take into account any loss incurred by the husband as a consequence of an injunction that should not have been granted as part of the property proceedings in the absence of an undertaking as to damages, it is unnecessary to resolve that question for present purposes: see, for example, Janko & Janko (No 2) [2018] FamCA 353, [4] (Macmillan J).
SERIOUS ISSUE TO BE TRIED
As Macmillan J recorded in her 10 July 2020 reasons for judgment on the imposition of the interim injunctions:
12.The basis of the wife’s case is that the husband has not been meeting his obligations with respect to full and frank disclosure and that it has recently come to her attention that in September 2017, without the prior knowledge or consent, the husband and Mr B Cabelo established five separate loan facilities for a total of $13,543,000. The funds advanced were in each case based upon the same security which included unlimited guarantees and indemnities provided by both the husband and Mr B Cabelo, D Pty Ltd and G Company, general security agreements (which charged all present and after acquired property) owned by each of the named borrowers and D Pty Ltd, first registered mortgages secured over the properties registered in the husband’s name, the properties owned by D Pty Ltd and the properties owned by Cabelo Group Pty Ltd. It was her evidence that the practical effect of these agreements being that all of the husband’s assets have been used to secure his debt as well as Mr B Cabelo’s debt. It is her case that if correct, this would be likely to have a significant impact upon the size of the asset pool for the purpose of the property proceedings.
13.The wife further deposed that it was not until 3 June 2020 that she received a tranche of documents which included seven loan agreements executed by the husband as borrower and Cabelo Investments Pty Ltd an entity controlled by Mr B Cabelo, as lender, advancing funds repayable within 30 days of a written demand by the lender. These documents had not previously been disclosed by the husband, notwithstanding that each agreement had been prepared by Goldsmith Lawyers the husband’s solicitors in these proceedings.
14.The wife further deposed that although the husband gave notice of his intention to sell three parcels of land to Mr B Cabelo as the orders made 16 April 2018 required, these properties were being transferred at less than their value and that these sales would likely impact on the operations of the parties farming enterprise which is yet to be valued.
15.The wife also referred to what she has described as uncommercial transactions including the invoice raised by Mr B Cabelo for $300,000 which is purported to represent 10 years of accounting fees and the agreement for water pumping charges between Cabelo Investments Pty Ltd, Cabelo Group Pty Ltd and the husband and Mr B Cabelo.
16.Finally the wife’s case is that although the husband had deposed to having transferred his 50% shareholding in F Pty Ltd to an entity controlled by Mr B Cabelo for $50,000 she had been unaware until recently when the husband disclosed the financial accounts for F Pty Ltd that in addition to agreed goodwill of $100,000, F Pty Ltd had net assets of $929,593 as at 30 June 2016 and gross income from sales that year of approximately $26 million. On that basis it was the wife’s case that $50,000 did not reflect the market value of the husband’s interest and he had transferred his interest to his brother for less than market value.
The husband filed an affidavit on 7 July 2020 purporting to respond to the concerns identified in the wife’s affidavit of 10 June 2020. Significantly, and as the wife submitted in her 7 August 2020 submissions, the husband abandoned his proposal to transfer the three parcels of land to his brother, and no substantive justification was advanced for the state of the husband’s discovery up to that point.[1] Accordingly the wife maintained that Macmillan J’s interim orders should remain undisturbed by reason of:
(a)the husband’s incomplete discovery which, it was submitted, strengthened the case for the restraining orders;
(b)the fact that the available evidence heightened the objective cause of concern that assets were being dissipated; and
(c)the gravity of the risk of further mischief by the husband tilting the balance of convenience in favour of the husband.[2]
[1] Wife’s submissions dated 7 August 2020, paragraph 33.
[2] Wife’s submissions dated 7 August 2020, paragraph 34.
The wife also maintained her position that it can be inferred from the conduct of the husband and his brother that they are engaged in a course of conduct designed to shift the husband’s wealth to his brother via the entities his brother controls in order to defeat the wife’s claim in the proceedings.[3] In this regard the wife relies on a series of transactions which, she submits, invite this inference and which are not unequivocally rebutted by the affidavits of the husband, his brother, or the accountant, Mr K.[4] In this respect the wife refers to evidence of the following:
(a)that the husband’s valuable 50 per cent shareholding in F Pty Ltd was transferred to an entity controlled by his brother at a significant undervalue;[5]
(b)that some $300,000 of retrospective accounting fees were charged to a partnership between the husband and his brother in favour of a creditor company which is controlled by the husband’s brother;[6]
(c)the belated discovery of open loan agreements executed in the period July 2019 to February 2020 whereby an entity controlled by the husband purports to borrow unspecified funds from an entity controlled by the husband’s brother;[7]
(d)significantly inflated water pumping charges made by entities controlled by the husband’s brother to entities controlled by the husband;[8]
(e)the sale of a significant volume of produce sold for profit which it may be inferred has been secretly recorded or not recorded at all;[9] and
(f)the disposal of substantial capital assets by a partnership between the husband and his brother without the consent of the wife.[10]
[3] Wife’s submissions dated 7 August 2020, paragraph 35.
[4] Wife’s submissions dated 7 August 2020, paragraph 36.
[5] Wife’s submissions dated 7 August 2020, paragraph 37.
[6] Wife’s submissions dated 7 August 2020, paragraph 42.
[7] Wife’s submissions dated 7 August 2020, paragraph 46.
[8] Wife’s submissions dated 7 August 2020, paragraph 49-58.
[9] Wife’s submissions dated 7 August 2020, paragraph 59-66.
[10] Wife’s submissions dated 7 August 2020, paragraph 72-80.
In addition, the wife relies on the continuing unsatisfactory state of the husband’s discovery which, at the time of her 7 August 2020 submissions, included a failure by the husband to discover all documents concerning the level of his bank debt, and documents concerning an adverse possession claim brought by he and his brother to a parcel of land in New South Wales.[11] In her 7 August 2020 submissions the wife contended, with obvious force, that had she not sought the interim injunctions the husband would have transferred four real properties to his brother at a substantial undervalue. She submits that the fact that the husband promptly abandoned his sale proposal once he was obliged to substantiate it invites the inference that, with the benefit of advice, he knew that a transfer on the terms proposed was both unjustified and unjustifiable.[12]
[11] Wife’s submissions dated 7 August 2020, paragraph 81-89.
[12] Wife’s submissions dated 7 August 2020, paragraph 91.
The husband’s 9 August 2020 submissions and his later affidavit of 4 November 2020 attempt to answer the wife’s various concerns. However although they provide some explanation for certain transactions, I do not accept that they fully allay the apprehensions which fairly arise from the facts and circumstances established by the wife’s evidence. For example, the sale of the husband’s shares in F Pty Ltd is sought to be justified on the basis that the balance sheet of that entity was inflated by reason of a trust distribution which, it is asserted, was not in the ordinary course of business. It is said that a proper valuation of the husband’s share of that business needed to “back out” that distribution, as well as a stock adjustment, from the balance sheet.[13] Nothing more is said by way of serious explanation of all this other than a rather gratuitous observation that the wife had been the bookkeeper and should have known about the transaction, and that the point should have been raised before now.
[13] Husband’s submissions dated 9 August 2020, paragraph 31.
I am not, at this point in the proceedings, able to resolve the disputed evidence in relation to this aspect of the wife’s concerns. However for present purposes I do not regard the husband’s explanation of his sale of his shares in F Pty Ltd as providing a complete answer to the inference which the wife seeks to draw about this transaction. The transaction, on the information available, does not engender confidence that assets controlled by the husband are being managed appropriately in the context of the wife’s claims in the proceeding.
Similarly, the husband’s attempts to justify the alleged belated accounting fees of $300,000 raise as many questions as they answer.[14] The husband makes reference to his brother’s evidence that “there had been no charge levied for the previous 10 years when there should have been”, and says little more of substance about this. Once again, while this matter is incapable of resolution at the present time, the husband’s explanation does not engender any real confidence that the relevant transaction is susceptible of proper explanation in the context of the proceedings.
[14] Husband’s submissions dated 9 August 2020, paragraph 32.
I have some uncertainty also about the husband’s attempts to justify some of the other transactions about which the wife complains. In relation to the water pumping charges to which the wife takes exception, for example, the husband appears to accept that there have been significant irregularities, and although the water pumping charges are addressed in his 4 November 2020 affidavit, I do not consider that the position is fully explained.[15] As to the sale of a significant volume of produce sold for profit which the wife says it may be inferred has been secretly recorded or not recorded at all, the husband was not able to provide any substantive explanation in his 9 August 2020 submissions,[16] although his 4 November 2020 affidavit addresses the issue to some extent.[17] Questions, however, remain. On the subject of the disposal of substantial capital assets by a partnership between the husband and his brother without the consent of the wife, the husband somewhat unsatisfactorily dismisses the wife’s concerns as “no more than queries”.[18]
[15] Husband’s submissions dated 9 August 2020, paragraph 34; Husband’s Affidavit filed 4 November 2020, paragraph 13-20.
[16] Husband’s submissions dated 9 August 2020, paragraph 35.
[17] Husband’s Affidavit filed 4 November 2020, paragraph 4-11.
[18] Husband’s submissions dated 9 August 2020, paragraph 37.
As will be apparent, notwithstanding the husband’s attempts in his 9 August 2020 submissions and his 4 November 2020 affidavit to justify the various transactions the wife focuses upon, I do not accept that he has established that the risk to which the wife has pointed is insufficiently serious to justify the maintenance of the injunctions. It should also be observed that the husband’s submission that there is some obligation on the Court to assess, at this interlocutory stage, the wife’s complaints “to a Briginshaw standard” because they are “tantamount to alleging fraud”,[19] must be rejected as plainly wrong: see Tsiang, [25]-[27]; Basi, [8]-[9].
[19] Husband’s submissions dated 9 August 2020, paragraph 30.
As has been mentioned, further affidavit material was filed by the parties prior to the adjourned hearing of the matter on 18 November 2020. Although the question of the maintenance of the injunctions was not reached substantively on that day, in her submissions of 16 November 2020 on the enforcement application which consumed the bulk of the Court’s time on 18 November 2020 the wife renewed her complaint that the state of the husband’s discovery did not enable her (and the Court) to understand the extent of the husband’s indebtedness and, more specifically, the secured debt which encumbers the real properties and water licences which the husband controls.[20]
[20] Wife’s submissions dated 16 November 2020, paragraph 23-26.
Significantly, as the wife pointed out, in the face of the injunctions ordered by Macmillan J on 10 July 2020 the husband had entered into an unsecured loan facility of up to $450,000 for a maximum period of 9 months at an interest rate of 15 per cent. In other words, the wife submitted, “he has elected to obtain finance at uncommercial rates in preference to making full disclosure”. According to the wife, “[t]he difference between ordinary arms-length bank interest and the uncommercial rates he has obtained is – in the Husband’s eyes – an acceptable price to pay for the privilege of being able to conceal his true financial position going forward”.[21] The wife submits that in the circumstances it is impossible to escape the conclusion that the husband’s continuing non-disclosure is deliberate.[22]
[21] Wife’s submissions dated 16 November 2020, paragraph 25.
[22] Wife’s submissions dated 16 November 2020, paragraph 26.
The husband filed short written submissions on 16 November 2020. Contending that the injunctions were wholly unworkable and opposing their extension, he contended that the operation of the injunctions had compelled him to borrow the $450,000 from L Pty Ltd when, absent the injunctions, he could have borrowed from his brother interest free.[23] He submitted also, presumably on the basis of the material in his 4 November 2020 affidavit although without referring to it, that his farming operations had been adversely affected by “weather and market conditions” and that his “major cash flow issue” may force him to put his business into administration.[24]
[23] Husband’s submissions dated 16 November 2020, paragraph 4.
[24] Husband’s submissions dated 16 November 2020, paragraph 5.
The interim hearing on 18 November 2020 dealt principally with the wife’s enforcement application and continuing issues in relation to the husband’s disclosure. Orders were made by consent to provide for the sale of high security water entitlements and payment of the proceeds to the wife’s solicitors, further disclosure, and the filing and service of any further material on the continuance of the injunctions.
As has been mentioned, the question of the maintenance of the injunctions was the subject of substantial argument on 28 January 2021. By that time the husband had filed his affidavit of 1 December 2020 in relation to his asset and liability position. In her submissions filed 21 January 2021 the wife contended that the evidentiary basis for the injunctions, firm when they issued, had gained strength subsequently. It was the wife’s position that there was little if anything in the husband’s evidence which provided any comfort that the adverse inferences she urged the Court to draw might be open to more benign explanations, and she contended that the husband’s 2021 financial forecasts in fact supported her position.[25]
[25] Wife’s submissions dated 21 January 2021, paragraph 3.
On the subject of the husband’s 2021 financial forecasts, the wife submits that the forecast cashflow deficit from operations is over $2.8 million, and she notes that the biggest expenditure is inflated water leasing and pumping charges, followed by staff costs.[26] She maintains that the forecasts, properly assessed, are “commercial nonsense”, and that there is nothing in the husband’s evidence that could reasonably be permitted to justify him being permitted to undertake further borrowings and further deplete the asset pool in the manner contemplated by the forecasts.[27] The wife also notes that not once since the imposition of the injunctions has the husband sought to have her consent to depart from the terms of the injunctions to enable him to pay a creditor or meet some other expense, however he has felt able to enter an unsecured loan facility at a high rate of interest to obtain funds.[28]
[26] Wife’s submissions dated 21 January 2021, paragraph 12-19.
[27] Wife’s submissions dated 21 January 2021, paragraph 20-21.
[28] Wife’s submissions dated 21 January 2021, paragraph 22.
The husband’s further written submissions of 25 January 2021 are dismissive of the matters raised by the wife. The husband submits that the wife’s concerns amount to no more than “questions as to the accounts” and “complaints about discovery” which are matters for trial and do not support an allegation that the asset pool may be being dissipated. He continues to maintain that “the asset pool is so large that the alleged dissipation (which the husband denies) can be accounted for within that pool”.[29] In this latter respect it may fairly be observed that the husband’s evidence does not demonstrate with sufficient clarity the real extent of the asset pool. This has been a consistent complaint made by the wife.
[29] Husband’s submissions dated 25 January 2021, paragraph 4-6.
In oral submissions made on 28 January 2021 senior counsel for the wife took the Court to significant deficiencies in the husband’s second financial statement and the further difficulties which he contended the wife continued to have with the husband’s discovery. Questioning the commerciality and credibility of certain asset sales by the partnership between the husband and his brother to the husband’s brother so that the husband no longer had a claim to those assets, senior counsel for the wife described the relevant sales as “total nonsense” because they plainly served to bring down the value of the land involved.[30] Senior counsel for the wife pointed to the movement of assets out of entities owned or controlled by the husband to entities owned or controlled by his brother, the consequent diminution in value of the assets owned by the husband, the incurring of liabilities by the husband to his brother or entities controlled by his brother in an amount close to $10 million, an apparently uncommercial transaction relating to the pre-payment by a buyer of produce, as well as to a continuing failure on the part of the husband to provide a definitive statement of his net asset position, as sufficient to keep the injunctions in place.[31]
[30] Transcript 28 January 2021, p.7-9.
[31] Transcript 28 January 2021, p.10 -18, 32-36. See also Annexure C to the wife’s 21 January 2021 submissions which comprises a schedule of debts said to be owed by entities controlled by the husband to numerous entities controlled by the husband’s brother. On the basis of the husband’s 2020 accounts the wife contends that there is some $9,950,370 owed by entities controlled by the husband to entities controlled by his brother.
On the basis of the husband’s movement of assets out of entities controlled by him and the sale of assets at a written down value, and the husband’s further borrowing of $450,000, senior counsel for the wife indicated that she sought to enlarge the scope of the restraint operating on the husband’s ability to dispose of assets in order 3, to remove the ordinary course of business carve out in order 4, and also to prevent the payment of invoices to the husband’s brother or his entities in order 5 on the basis of her concern that an account payable to an entity controlled by the husband’s brother in the amount of $2,131,000, allegedly on the basis of water charges, should not be paid at present. The wife submits that the borrowing of the $450,000 by the husband was not in the ordinary course of business and that he should not have been permitted to do it. It is her position that if the husband needs to borrow money in the ordinary course of business he should put a proposal to her for consideration, on proper material.
In oral submissions in response to those advanced by senior counsel for the wife on 28 January 2021, senior counsel for the husband maintained that the wife sought to colour and misconstrue the extent of the husband’s liabilities to his brother. He took issue with the wife’s presentation of the extent of the husband’s liabilities to his brother and his entities as being close to $10 million, contending that it was less than that by some millions of dollars and that the husband and his brother have always entered transactions with one another. The husband’s position is that the wife’s various complaints about the transactions he has entered with his brother are all matters for trial and that they do not justify the continuation of the injunctions.
BALANCE OF CONVENIENCE
The wife’s position on the balance of convenience is essentially that the husband’s financial affairs and their entwinement with his brother’s financial affairs continue to give rise to so many unresolved questions that the only prudent course in all the circumstances is to maintain, and indeed extend, the injunctions.
The husband’s position is that regardless of the concerns the wife has about the organisation of his financial affairs, he will not be able to keep farming in the face of the consistent losses he is recording if the injunctions are continued, let alone if they are extended in the manner sought by the wife. Thus the husband says that the balance of convenience favours him, and that accordingly the injunctions should be discharged. He maintains that the wife’s position that he cannot incur a loss and that he cannot go into debt without her consent is simply unworkable, and that it is impracticable to have to seek her consent for every borrowing. Insofar as his recent borrowing of the $450,000 is concerned, the husband asserts that it was essential in circumstances where he was restrained by the injunctions from borrowing money from his brother (which he says he could have done interest free) and that the fact that he was compelled to do this illustrates the unreality of the wife’s position – that to continue trading he should be forced to borrow at uncommercial rates, thereby further depleting the pool.
The husband is also highly critical of the wife’s refusal (confirmed by her senior counsel at the hearing on 28 January 2021) to proffer an undertaking as to damages as the price of the continuation of the injunctions. He says that this is quintessentially a case where significant damage is foreseeable if injunctions of the nature and breadth of those presently in place are continued, let alone if they are enlarged as the wife seeks.
The wife’s response to the husband’s case on the balance of convenience is, in substance, that she will act reasonably to enable the continuance of operations by permitting further borrowing, if necessary, if the husband puts before her cogent material supporting his cashflow estimates and the need to do this. However she also points to the husband’s own forecasts which predicted, in the months to June 2021, a more positive cashflow position with produce expected to produce some $3.473 million. The wife says that the husband will be able to continue farming and that he can do this without incurring further liabilities. It is her position that because the husband has advanced “financial nonsense” by way of explanation of his affairs, including that his brother is providing him with a motor vehicle 1, and it is also apparent that he is spending significant sums at a gaming venue and on luxury purchases, it is not open to him now to cry poor and say that the balance of convenience favours him. In these circumstances the wife says that the balance of convenience, properly considered, favours her.
As has been mentioned, shortly after I reserved judgment on the question of the maintenance of the injunctions the wife sought and was permitted to adduce further evidence and make further submissions concerning the apparent and previously undisclosed development of a new plantation on land owned jointly by the husband and his brother. Further evidence and submissions were also filed by the husband in relation to this issue. It is the wife’s position that the development of the new plantation on the relevant land (Lot …), by the husband’s brother so the husband contends, and with the grant of a right by the husband to his brother to take and sell the produce from this plantation, is another example of the husband not disclosing relevant information and organising his affairs in such a way as to benefit his brother and thereby diminish the pool of assets available to the wife. She submits that whatever proprietary interest has been created by the husband in favour of his brother is a breach of the interim injunctions ordered by Macmillan J on 10 July 2020.[32]
[32] Wife’s submissions dated 31 March 2021, paragraph 19.
The husband’s position as expressed in short written submissions is that as he has not paid for the construction of the new plantation and has incurred none of the costs and expenses of its development, it is unremarkable that he will not derive any income from it. He says that but for the existence of the injunctions he would have had the opportunity to participate in the new plantation and the fact that he has not been able to do so demonstrates the unduly restrictive effect of the current injunction and the significance of the wife’s ongoing failure to proffer any undertaking as to damages.[33]
[33] Husband’s submissions dated 1 April 2021, paragraph 7, 11.
CONTINUATION OF THE INJUNCTIONS
I am satisfied that in all the circumstances the wife has established that there is a serious question to be tried. Further, I regard the financial material filed by the husband as so beset with significant matters requiring clarification that when this is seen in the context of his continuing failure to make proper and timely disclosure to the wife, the balance of convenience must be regarded as favouring the continuation of the injunctions ordered on an interim basis by Macmillan J on 10 July 2020. Although of course I accept that the continuance of the injunctions will be inconvenient for the husband, I am not persuaded that they will cause the husband’s farming business to grind to a halt, and in this respect I note the assurance made by senior counsel for the wife that she will act reasonably to permit further borrowing, if it is shown to be necessary based on cogent material.
Although it may be accepted that in ordinary commercial circumstances the price of the continuance of injunctions of this kind would be an undertaking as to damages, I do not regard the wife’s refusal to proffer one here as particularly remarkable. Self-evidently the husband is in complete control of the assets of the marriage. The wife is in no position to proffer an undertaking and, consistently with the authorities in this jurisdiction mentioned above, I do not regard it as fatal that she has not done so.
In light of the evidence that the husband may have altered his interests in plant and equipment, infrastructure and other capital items, I consider it appropriate to extend the first injunction (order 3 of her Honour’s orders) in the terms sought by the wife. I do not, however, consider that it would be appropriate to remove the carve out in the second injunction (order 4 of her Honour’s orders) permitting borrowing in the ordinary course of business. That injunction will therefore remain in place in the terms ordered by her Honour. In light of the evidence concerning the husband being charged inflated amounts, particularly for access to water, I consider it appropriate that the third injunction (order 5 of her Honour’s orders) be extended to prohibit the payment of any invoice to the brother or any of his entities. There will accordingly be orders in these terms as set out at the commencement of these reasons.
I will hear the parties on 8 June 2021 on the question of costs arising out of or incidental to the wife’s amended application in a case filed 10 June 2020.
COSTS OF THE WIFE’S ENFORCEMENT APPLICATION OF 26 OCTOBER 2020
I turn finally to the wife’s application for the costs of and incidental to her application in a case filed 26 October 2020. The wife filed submissions in support of this application on 24 November 2020. Pursuant to rule 19.18(1)(a) she seeks those costs, fixed in the sum of $40,000, discounting the figure partly on the basis that some of the time spent will have been properly referrable to the joinder applications.
Relying on s 117(2A)(a), (c), (d), (e), and (g) of the Act, the Colgate Palmolive test, Prantage & Prantage (2013) 49 Fam LR 197 and Bodilly & Hand [2013] FamCAFC 98, the wife contends that the amount sought is reasonable having regard to the complexity of the enforcement application in the context of the issues at play in the case, and the volume of material that it was necessary to present to the Court. She submits that the husband’s non-compliance with the order of 7 February 2020 was unjustifiable and that ultimately the husband capitulated on her application. The wife maintains that the enforcement application was plainly necessary, and that had the husband made proper disclosure early in the proceeding a practical solution to the satisfaction of the interim order could have been found. She says that it is self-evident that the husband had no intention of complying with the order, and that it was only by reason of his non-disclosure that that the order remained outstanding as long as it did. The wife submits that she was left with no other alternative if the order was ever to be satisfied and if there was ever to be the disclosure necessary to progress the case. It is the wife’s position that the husband’s conduct as a litigant has been unsatisfactory and that her costs should be allowed at a rate beyond what the scale provides, albeit not on an indemnity basis.
The husband’s position, in written submissions filed 2 December 2020, is that each party should bear their own costs. He advances a series of matters which, he submits, justify his failure to pay the outstanding $150,000. In relation to s 117(2A)(a), (c), (d), (e), (f) and (g) of the Act the husband says that he has cash flow difficulties, that he had made offers as to how the $150,000 would be paid, that the wife was not wholly successful, and that the 18 November 2020 hearing had to occur in any event. He maintains that there was more than just the enforcement application before the Court on 18 December 2020.
In all the circumstances I do not consider that it would be appropriate for the usual position as provided in s 117(1) of the Act to prevail, and for the parties to be left to bear their own costs of the wife’s enforcement application. In my assessment there are circumstances that justify an order for costs in favour of the wife. Having regard to s 117(2A) of the Act, these include the conduct of the husband in not paying the outstanding $150,000, that the wife was effectively compelled to make her application to obtain compliance with an interim order of the Court, the husband’s effective capitulation on the application, and his failure to make discovery at an earlier stage which might have enabled a more practical solution to the satisfaction of the interim order to be found.
I am not persuaded that the husband’s present cash flow difficulties, such as they are, should stand in the way of an order for costs, or that his various “offers” as to the payment of the $150,000 should have the effect of shielding him from a costs order. Nor do I accept his submission that the wife was not wholly successful, and that there was more than the enforcement application before the Court on 18 November 2020. Although it is true that there were, theoretically, several applications before the Court on that day, in substance it was only the enforcement application that was dealt with. The issue of the continuation of the injunctions needed to be deferred, as did the wife’s joinder applications.
However I also do not consider, in all the circumstances, that an order of a specific amount as sought by the wife should be made. Although the wife is at pains to say that her application for costs in a specific amount is not an application for costs on an indemnity basis, it would seem to be an application for costs on a basis that is not much less than this. Having regard to the exceptional circumstances required for an order for indemnity costs in proceedings to which s 117 of the Act applies, as essayed in Kohan and Kohan (1993) FLC 92-340 and emphasised most recently by the Full Court in Stasiuk & Guild [2021] FamCAFC 62, in my assessment the appropriate order would be that the husband pay the wife’s costs of and incidental to her application of 26 October 2020 on a party/party basis.
I certify that the preceding sixty-four (64) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice McEvoy. Associate:
Dated: 3 June 2021
0
14
1