Cabelo & Cabelo

Case [2021] FamCA 361

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 93-911
Number 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 Werner
Solicitors for the Applicant: Johnston Family Lawyers
Counsel for the Respondent: Mr Dickson QC
Mr McCormick
Solicitors for the Respondent: Goldsmiths Lawyers
Counsel for…

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Details
AGLC
Cabelo & Cabelo [2021] FamCA 361
Case
[2021] FamCA 361
Decision Date

CaseChat Overview and Summary

In the matter of *Cabelo & Cabelo*, McEvoy J of the Federal Court of Australia considered an application by the wife for interlocutory injunctive relief pending the final hearing of property proceedings. The parties, who operate a complex farming business, were in the midst of a contentious separation. The wife alleged that the husband had failed to provide full and frank disclosure, had entered into loan agreements with his brother without her consent, and had sold parcels of land and transferred shares in a profitable company at undervalue to entities controlled by his brother. She further contended that these transactions were uncommercial and that the husband and his brother were engaging in such dealings.

The primary legal issues before the court were whether to grant interlocutory injunctive relief, specifically in the nature of freezing orders, to preserve the parties' assets pending final determination. This involved assessing whether there was a serious issue to be tried and whether the balance of convenience favoured the wife. The court also considered the significance of the husband's alleged failure to provide full and frank disclosure and the principles applicable to provisional and protective relief within the context of the *Family Law Act 1975* (Cth), including the implications of refusing to provide an undertaking as to damages. Additionally, the court addressed the wife's application for costs in a fixed sum, considering the principles outlined in *Kohan and Kohan*.

McEvoy J reasoned that the disputed evidence regarding the wife's concerns could not be resolved on an interlocutory basis, establishing a serious issue to be tried. The court found that the balance of convenience favoured the wife, particularly given the husband's alleged conduct and the potential dissipation of assets. Applying the principles for granting protective relief, the court determined that injunctions were warranted to preserve the status quo. The court also ordered that the wife be paid her costs of and incidental to her application on a party/party basis, noting that the fixed sum sought was not significantly less than costs on an indemnity basis.

Consequently, the court made orders substantially in the terms sought by the wife, restraining the husband, both personally and in his capacity as an officeholder of any company, from selling, encumbering, or otherwise altering his interests in real estate, plant, equipment, and other assets without the wife's prior written consent. The husband was also restrained from entering into or extending loan facilities or borrowing funds, except in the ordinary course of business, and from entering into transactions that would create or increase indebtedness in favour of his brother or associated entities, without the wife's consent.

Orders

Orders of the court

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:

1.

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.

2.

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.

3.

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.

4.

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).

Background

Background to the litigation

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.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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