Cabot & Cabot and Ors

Case [2020] FamCA 1109

FAMILY COURT OF AUSTRALIA

Cabot & Cabot and Ors [2020] FamCA 1109

File number(s): PAC 1189 of 2018
Judgment of: MCCLELLAND DCJ
Date of judgment: 23 December 2020
Catchwords: FAMILY LAW – PROPERTY – INJUNCTIONS – DISCLOSURE – Where the husband seeks an injunction restraining a third party to the marriage – Where the husband seeks disclosure from third parties to a marriage – Where the third parties contend that they have been improperly joined to the proceedings – Consideration given to whether the husband has established why injunctive relief is necessary to protect his interests and to ensure that the parties’ matrimonial property pool will not be depleted – Consideration given to the relevance of the documents, sought in disclosure, to the proceedings and specifically the relationship to the financial circumstances of the third parties to the marriage – No orders made for an injunction – Some orders made for disclosure – Application otherwise dismissed.
Legislation:

Family Law Act 1975 (Cth) s 45A, 90AF, 114

Evidence Act 1995 (Cth) s 55

Family Law Rules 2004 (Cth) r 1.06(c), 10.12, 13.01, 13.02, 13.22
Cases cited:

Cardile v LED Builders Pty Limited (1999) 198 CLR 380

Farr and Farr (1976) FLC 90-133

Hall v Hall (2016) 332 ALR 1

Kelleher & Anderson [2007] FamCA 137

Labonte & Labonte [2018] FamCA 755

McIlwain v Ramsey Food Packaging Pty Ltd (2005) 221 ALR 785

Moore & Moore (2014) FLC 93-595

Riddick v Thames Board Mills Ltd [1977] QB 881

Sieling and Sieling (1979) FLC 90-627

XYZ Pty Ltd & Charisteas & Ors (2017) FLC 93-782

Family Court of Australia, Joint Practice Direction JPD1 of 2020 – Core Principles of Case Management of Family Law Matters
Number of paragraphs: 80
Date of hearing: 23 November 2020
Place: Sydney by web conference
Counsel for the Applicant: Mr Lloyd SC
Solicitor for the Applicant: Swwab Attorneys
Counsel for the First Respondent:  The First Respondent is excused from appearing
Counsel for the Second, Third and Fourth Respondents: Mr Campton SC
Solicitor for the Second, Third and Fourth Respondents: Karras Partners and Solicitors

ORDERS

PAC 1189 of 2018
BETWEEN:

MR CABOT

Applicant
AND:

MS CABOT

First Respondent

MS S

Second Respondent

MS S PTY LTD AS TRUSTEE OF THE MS S FAMILY TRUST (and another named in the Schedule)

Third Respondent

ORDER MADE BY:

MCCLELLAND DCJ

DATE OF ORDER:

23 DECEMBER 2020

THE COURT ORDERS THAT:

1.To the extent that they are within her possession or control, Ms S (“the Second Respondent”) is to provide, to the solicitors for Mr Cabot (“the husband”), within 28 days of the date of these Orders, copies of:

(a)Copies of bank statements in relation to all joint overseas accounts in Country N and Country O of which Ms Cabot (“the wife”) was a joint account holder with the Second Respondent from August 2015 to date;

(b)A copy of probate of the late Mr S’s estate in Country Z;

(c)A copy of the Trust Deed of the Mr S Revocable Trust and any…

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Cabot & Cabot and Ors [2020] FamCA 1109
Case
[2020] FamCA 1109
Decision Date

CaseChat Overview and Summary

In the matter of *Cabot & Cabot*, Mr Cabot (the husband) sought interlocutory relief against Ms S (the second respondent) and Ms S Pty Ltd as Trustee of the Ms S Family Trust (the third respondent), who were third parties to his marriage proceedings with Ms Cabot (the first respondent). The husband sought an injunction to restrain the third parties from dissipating matrimonial property and disclosure of documents relevant to the wife's financial circumstances and potential interests in assets held by the third parties. The third parties contended they had been improperly joined to the proceedings.

The court was required to determine whether the husband had established the necessity for injunctive relief to protect his interests and prevent the depletion of the matrimonial property pool. Additionally, the court had to consider the relevance of the documents sought in disclosure to the proceedings, specifically in relation to the financial circumstances of the third parties and their connection to the marriage. The court also considered the third parties' application to be dismissed from the proceedings.

The court applied principles concerning the granting of interlocutory injunctions in family law proceedings, drawing on authorities such as *Labonte & Labonte* and *Cardile*. The established legal principles require an applicant to demonstrate a real risk of assets being disposed of and a real ground for believing that this risk will prejudice the applicant's claim for a remedy at final hearing. Mere assertion is insufficient; solid evidence of a danger of dissipation or disposal of assets must be produced. The court also considered the requirements of section 90AF of the *Family Law Act 1975* (Cth) regarding orders and injunctions binding third parties, including the need for the relief to be reasonably necessary or appropriate for the division of property and for procedural fairness to be accorded to the third party.

Ultimately, the court made no orders for an injunction against the third parties. However, it did make orders for specific disclosure from Ms S, requiring her to provide copies of various bank statements, probate documents, trust deeds, and distribution records within 28 days. The court also ordered the husband to particularise his claims against the second, third, and fourth respondents, with subsequent procedural steps for the third parties to respond and potentially seek further particulars. The husband's application for an injunction was dismissed, and the third parties' application to dismiss the husband's claim against them was otherwise dismissed, with liberty to approach the Associate for further listing to hear that application.

Orders

Orders of the court

PAC 1189 of 2018

BETWEEN:

MR CABOT

Applicant

AND:

MS CABOT

First Respondent

MS S

Second Respondent

MS S PTY LTD AS TRUSTEE OF THE MS S FAMILY TRUST (and another named in the Schedule)

Third Respondent

ORDER MADE BY:

MCCLELLAND DCJ

DATE OF ORDER:

23 DECEMBER 2020

THE COURT ORDERS THAT:

1. To the extent that they are within her possession or control, Ms S (“the Second Respondent”) is to provide, to the solicitors for Mr Cabot (“the husband”), within 28 days of the date of these Orders, copies of:

(a) Copies of bank statements in relation to all joint overseas accounts in Country N and Country O of which Ms Cabot (“the wife”) was a joint account holder with the Second Respondent from August 2015 to date;

(b) A copy of probate of the late Mr S’s estate in Country Z;

(c) A copy of the Trust Deed of the Mr S Revocable Trust and any variation or amendment thereto;

(d) A copy of all documents recording the dates of receipt of distributions to the wife from the Mr S Family Trust and the amounts received by the wife from the date of the marriage being … 1993 to the date of its winding up;

(e) Copies of all documents evidencing distributions paid to the Second Respondent at the time the Mr S Family Trust was wound up together with any documents evidencing whether, at the time the trust was wound up, there were any outstanding distribution(s) owed to the wife; and

(f) Any and all documents recording the account number of the accounts at T Bank, Country N contained in the notes to the Financial Statements of the Mr S Superannuation Fund in respect of the 2012 and 2013 financial years.

2. Within 14 days of receipt of the documents referred to in order 1, the husband file and serve Points of Claim, pleading the contentions of fact and law, with specific reference to the particular provisions of the Family Law Act 1975 (Cth), relied upon as grounds for the relief sought by him as against the Second, Third and Fourth Respondents identifying, with reference to the orders he seeks, the contentions of law and fact to support each particular ground of relief.

3. Within 14 days of receipt of the husband’s Points of Claim, the Second, Third and Fourth Respondents are to submit any request for further and better particulars.

4. Within a further 14 days, the husband shall respond to the request for further and better particulars referred to in order 3 by making a genuine attempt to ensure that the Second, Third and Fourth Respondents are in a position to properly understand the case that they are required to meet.

5. Within 14 days of receiving the husband’s response to the request for further and better particulars referred to in order 4, the Second, Third and Fourth Respondents are to file and serve any affidavit in support of their application to dismiss the husband’s claim against them.

6. The Application in a Case filed 28 February 2020 as amended on 3 April 2020 is otherwise dismissed.

7. The parties have liberty to approach the Associate to Deputy Chief Justice McClelland with a view to programming a further listing to hear the Second, Third and Fourth Respondent’s Application in a Case filed 10 November 2020 seeking orders to dismiss the husband’s claim against them.

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

As these interim proceedings are between the Applicant husband and the Second to Fourth Respondents, the First Respondent wife has been excused from any further involvement in these interim proceedings.BACKGROUND On … 1941, the Second Respondent was born in Country G. She is currently aged 79 years. On … 1962, the Second Respondent and the late Mr S were married. There are three (3) children of their marriage including the First Respondent wife, Ms L and Ms M. Ms L is married to Mr L who has sworn an Affidavit in these proceedings. During the course of the Second Respondent’s and the late Mr S’s relationship, they established bank accounts in international financial institutions including T Bank in Country N (“the T Bank accounts”), V Bank in Country N (“the V Bank accounts”) (collectively “the Country N accounts”), W Bank formally X Bank in Country O (“the X Bank accounts”) and Y Bank in Country Z (“Country Z”). The Second Respondent contends that she and Mr S named the First Respondent wife and her sisters, Ms AA and Ms BB, as additional signatories on the Country N accounts. Comparatively, the Applicant husband contends that the First Respondent wife and her sisters were named as joint account holders on the Country N accounts. The Applicant husband, at this stage of the proceedings, questions whether the Second Respondent provides an accurate characterisation of the accounts and whether it reflects the actual ownership of funds held in those accounts. In particular, he contends that, until clarified by the production of documents, a reasonable inference is that the First Respondent wife has an actual or beneficial interest in those accounts. He therefore seeks further information concerning those accounts and, in particular, transactions that have occurred in respect to funds held in those accounts with a view to determining whether the First Respondent wife has been the beneficiary of funds disbursed from those accounts. On … 1965, the Applicant husband was born in Country G. He is currently aged 55 years. On … 1965, the First Respondent wife was born in Country G. She is currently aged 55 years. On 29 June 1983, the Mr S Family Trust (“the Mr S Family Trust”) was established. The First Respondent wife and the Second Respondent were named as beneficiaries of the Mr S Family Trust. The Applicant husband contends that trust is, therefore, a financial resource of the First Respondent wife. However, the Second Respondent contends that the First Respondent wife has no power to compel a distribution be made to her and there is no basis to assert that she has a reasonable expectation of receiving a distribution from the trust, in circumstances where the First Respondent wife has never received any distributions. On … 1993, the Applicant husband and First Respondent wife married and commenced living together. In 1996, the Applicant husband and First Respondent wife moved to Australia. On 23 November 1998, an amendment was made to the Mr S Family Trust to appoint the First Respondent wife and her sisters, Ms L and Ms M, as additional trustees of the trust.

Evidence

Evidence Before The Court

Having received submissions from the parties, for reasons which I explain, I have determined that orders should be made requiring the parties, to the extent to which it has not already occurred, to provide proper disclosure in accordance with their obligations to each other and the Court, for the Applicant husband to properly particularise his case against the Second to Fourth Respondents, and then for the Second to Fourth Respondents to have the opportunity to seek further and better particulars in respect to the Applicant husband’s claim. I have determined that, after having received full and proper notice of the basis of the Applicant husband’s claim, the Second to Fourth Respondents should have the opportunity of making further submissions and, if they deem it necessary, to provide an updating affidavit in support of their application.EVIDENCE The Applicant husband relies upon the following documents: (a)Amended Application in a Case filed 3 April 2020; (b)Affidavit of the Applicant husband filed 28 February 2020; and(c)Tender bundle of documents (labelled Book 1 and Book 2). The Second to Fourth Respondents rely upon the following documents: (a)Affidavit of Ms S filed 15 April 2020 and annexures; (b)Affidavit of Ms M filed 15 April 2020; (c)Affidavit of Mr L filed 15 April 2020; and (d)Tender bundle of documents. INJUNCTION RESTRAINING THE SECOND RESPONDENT The law – concepts and principles Section 90AF of the Family Law Act1975 (Cth) (“the Act”) provides:Court may make an order or injunction under section 114 binding a third party (1) In proceedings under section 114, the court may: (a) make an order restraining a person from repossessing property of a party to a marriage; or (b) grant an injunction restraining a person from commencing legal proceedings against a party to a marriage. (2) In proceedings under section 114, the court may make any other order, or grant any other injunction that: (a) directs a third party to do a thing in relation to the property of a party to the marriage; or (b) alters the rights, liabilities or property interests of a third party in relation to the marriage. (3) The court may only make an order or grant an injunction under subsection (1) or (2) if: (a) the making of the order, or the granting of the injunction, is reasonably necessary, or reasonably appropriate and adapted, to effect a division of property between the parties to the marriage; and(b) if the order or injunction concerns a debt of a party to the marriage--it is not foreseeable at the time that the order is made, or the injunction granted, that to make the order or grant the injunction would result in the debt not being paid in full; and (c) the third party has been accorded procedural fairness in relation to the making of the order or injunction; and (d) for an injunction or order under subsection 114(1)--the court is satisfied that, in all the circumstances, it is proper to make the order or grant the injunction; and (e) for an injunction under subsection 114(3)--the court is satisfied that, in all the circumstances, it is just or convenient to grant the injunction; and (f) the court is satisfied that the order or injunction takes into account the matters mentioned in subsection (4). (4) The matters are as follows: (a) the taxation effect (if any) of the order or injunction on the parties to the marriage; (b) the taxation effect (if any) of the order or injunction on the third party;(c) the social security effect (if any) of the order or injunction on the parties to the marriage; (d) the third party's administrative costs in relation to the order or injunction; (e) if the order or injunction concerns a debt of a party to the marriage--the capacity of a party to the marriage to repay the debt after the order is made or the injunction is granted; Note: See paragraph (3)(b) for requirements for making the order or granting the injunction in these circumstances. Example: The capacity of a party to the marriage to repay the debt would be affected by that party's ability to repay the debt without undue hardship. (f) the economic, legal or other capacity of the third party to comply with the order or injunction; Example: The legal capacity of the third party to comply with the order or injunction could be affected by the terms of a trust deed. However, after taking the third party's legal capacity into account, the court may make the order or grant the injunction despite the terms of the trust deed. If the court does so, the order or injunction will have effect despite those terms (see section 90AC). (g) if, as a result of the third party being accorded procedural fairness in relation to the making of the order or the granting of the injunction, the third party raises any other matters--those matters; Note: See paragraph (3)(c) for the requirement to accord procedural fairness to the third party . (h) any other matter that the court considers relevant.

Decision

Reasons for decision

As previously noted, to assist the parties to narrow the issues genuinely in dispute, I will make orders for the further case management of this matter by requiring the Second to Fourth Respondents to provide the documents to which I have referred in this decision within 28 days. I will require the Applicant husband to particularise the contentions of law and fact upon which he relies to establish the basis of his claims against the Second to Fourth Respondents within a period of 14 days. The orders will provide for the Second to Fourth Respondents to, within 14 days of receipt of the particularise claim, seek further and better particulars of the Applicant husband’s claim against them. The orders will provide a further 14 days for the Applicant husband to respond to that request for further and better particulars. The orders will, finally, provide for the Second to Fourth Respondents to have a period of 14 days to file any evidence upon which they seek to rely in support of their application to strike out the Applicant husband’s claim against them.CONCLUSION Accordingly, for the above reasons, I make the orders set out at the commencement of these reasons for judgment.

Ratio Decidendi

Legal Principle Established

In Labonte & Labonte [2018] FamCA 755, after reviewing several authorities, I set out what I understand to be the relevant principles to be adopted in cases where a party seeks to restrain another party, such as, in this case, a third party from dissipating matrimonial property such that it has the potential to prevent justice being done, between all parties, at final hearing. I summarised my understanding of those principles, at [55]–[56], as follows: 55.It is unnecessary for an applicant for interlocutory orders to establish “all of the propositions that would be necessary” to obtain the final relief they are seeking: Cardile at [127]. However, the applicant for such an order must establish:a)That there is a real risk of assets being disposed of (Cardile at [122]); andb)That, as a result of that risk, there is a real ground for believing that the applicant will be prejudiced in the remedy he or she is seeking (Glover v Walters (1950) 80 CLR 172 at 176).56.In that respect, in Curtis v NID Pty Limited [2010] FCA 1072, Edmonds J said at [8] to [10]:8. The test in Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 is in similar terms to O 25A r 5(4). In that case, Gleeson CJ, with whom Meagher JA broadly agreed, said, at 321 – 322, as follows:[A] plaintiff will need to establish … a danger that, by reason of the defendant absconding, or of assets being removed from 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.9. ‘Danger’, however, is not defined. In some cases, judges have employed the phrase ‘real risk’ to identify the degree to which a plaintiff must demonstrate that a prospective judgment will go unsatisfied: see, for example, Cardile at [122] per Kirby J; Ninemia [1983] 1 WLR 1412 at 1422 per Kerr LJ. In others, it has been said that an applicant must establish ‘a sufficient likelihood of risk which in the circumstances of a particular case justifies an asset preservation order’: Lifetime Investments Ltd v Commercial (Worldwide) Financial Services Pty Ltd [2005] FCA 226 at [14] per Kiefel J, approving Victoria University of Technology v Wilson [2003] VSC 299 at [36] per Redlich J. There is even a third view, namely, that the plaintiff establishes ‘a sufficient apprehension of dissipation of the … assets’: Vaughan v Duncan [2007] NSWSC 811 at [5] per Hamilton J.10. What is settled, however, is that solid evidence of a danger of dissipation or disposal of assets be produced. The relevant test was enunciated by Brereton J in Finn v Carelli [2007] NSWSC 261 at [4], where his Honour referred to the NSW Court of Appeal’s decision in Frigo v Culhaci [1998] NSWCA 88:It is not necessary for an applicant to show that the respondent has a positive intention of evading a judgment, and it is sufficient to show that the course on which the respondent proposes to embark is, objectively speaking, calculated to have that effect. But as the Court of Appeal made clear in Frigo v Culhaci, an applicant must establish, by evidence and not mere assertion, that there is a real danger that by reason of the respondent absconding or otherwise dealing with assets, the applicant will not be able to have its judgment satisfied. While acknowledging that there has been much debate as to the precise degree to which that has to be shown, the Court emphasised that mere assertion that the defendant was likely to put assets beyond the plaintiff’s reach was inadequate, for which the Court cited Ninemia Maritime Corp v Trave GmbH & Co Kg (The Niedersachsen) [1984] 1 All ER 298 as well as Patterson v BTR Engineering.Consideration