Cabot & Cabot and Ors
[2020] FamCA 1109
•23 December 2020
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 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).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Cabot & Cabot has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
McClelland DCJ:
INTRODUCTION
This decision concerns an interim Application filed by Mr Cabot (“the Applicant husband”) for injunctive relief and disclosure against Ms S Pty Ltd as trustee of the Ms S Family Trust (“the Third Respondent trustee company”), P Lty Ltd as trustee of the P Unit Trust (“the Fourth Respondent company”) and Ms S (“the Second Respondent), who is the mother of Ms Cabot (“the First Respondent wife”).
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.
On 14 June 2000, the Mr S Revocable Trust (“the Revocable Trust”) was established. The Second Respondent contends that she and the late Mr S “did not advance the arrangements in relation to the [Revocable] Trust and it has remained dormant since” other than the initial settlement sum of $10 as they did not relocate to Country Z.
In 2006, the Second Respondent contends that the Mr S Family Trust was wound up. Comparatively, the Applicant husband contends that the Mr S Family Trust continues to exist for such time as the Second respondent is alive, noting the ‘Agreement of Trust’ provides that:
4.1The Trust shall subsist during the lifetime of Mr S and [the Second Respondent] and, subject to the provisions set out hereunder, shall terminate on the death of the last dying of Mr S and [the Second Respondent]...
In 2007, the Second Respondent and the late Mr S moved to Australia.
On 4 April 2007, by deed, the Mr S Superannuation Fund was established as a self-managed superannuation fund. The Second Respondent and the late Mr S were the original members until, on 10 November 2016, the First Respondent wife and Ms L were nominated as members.
On … 2009, the late Mr S passed away. Mr S held estates in Australia, Country N, Country Z and Country G and executed Wills in each of those countries, Country N (dated 3 June 1985), Country G (dated 25 April 1986), Country Z (dated 14 June 2000) and Australia (dated 4 April 2007). The Applicant husband contends that there has been impropriety in the distribution of the estates of the late Mr S and the Wills applied in each jurisdiction. Comparatively, the Second Respondent contends that she was the sole beneficiary of Mr S’s estates in Country N, Country Z and Australia and “inherited the bulk of the Country G Estate”. The First Respondent wife and her sisters were the beneficiaries of the residue of the Country G estate which the Second Respondent contends was in the sum of AUD$3,800.
Subsequent to the passing of Mr S, there have been various transactions regarding his estate, including depositing proceeds of the estate into the X Bank accounts.
On 17 August 2015, the First Respondent wife and her sister, Ms L, were named as joint account holders on the X Bank accounts. The Second Respondent contends that this was so they could assist her to manage the account as a matter of mere convenience, specifically to engage in transactions concerning the accounts for the benefit of the Second Respondent. The Second Respondent contends that neither the First Respondent wife nor Ms L made contributions to the funds held in that account and they have no legal title or equitable interest in the funds held in that account.
In 2015, the First Respondent wife and her sisters signed a Deed of Indemnity purporting to acknowledge that they did not have any entitlement to the funds held in the T Bank account. The Applicant husband contends, however, that the Deed limits the period of non-entitlement to subsequent to the funds being transferred to the Second Respondent’s sole Australian accounts.
The Second Respondent contends that, in 2015, Ms M was removed as a signatory on the Country N accounts due to possible tax implications that she may incur as she is a Country Z citizen. The Applicant husband says this is confirmation that the signatories to the account have an interest in monies held in the accounts such that they may be required to pay taxation on that interest.
In 2015, the Second Respondent closed the V Bank account and transferred the funds to the X Bank accounts.
On 18 August 2016, the Third Respondent trustee company was incorporated. At the time of establishment, the First Respondent wife was one (1) of three (3) directors of the Third Respondent trustee company.
On 26 August 2016, by deed, the Ms S Family Trust (“the Ms S Trust”) was established. The Third Respondent trustee company is the trustee of the Ms S Trust and the Second Respondent is the sole appointer. The Second to Fourth Respondents contend that the Second Respondent has at all times been the sole shareholder of the Third Respondent trustee company. The Second to Fourth Respondents contend that the First Respondent wife is a mere discretionary object of the Ms S Trust and has not received any distributions to date and has no entitlement to insist on any distribution in her favour from the trust.
On 2 February 2017, the Fourth Respondent trustee company was incorporated. At the time of establishment, the First Respondent wife was one (1) of two (2) directors of the Fourth Respondent trustee company.
In 2017, by deed, the P Unit Trust (“the P Trust”) was established. The Fourth Respondent trustee company is the trustee of the P Trust. The Second to Fourth Respondents contend that the unitholders of the P Trust are the Ms S Trust and the L Trust and that the First Respondent wife has not at any time been a unitholder of the trust. They therefore contend that issues concerning this trust can have no possible relevance to the proceedings.
In 2017, the funds that were originally held in the X Bank account were transferred to the accounts of the Ms S Trust.
On 21 November 2017, the Second Respondent applied and was granted a ‘Grant of Probate’ in Country N on the basis of the late Mr S’s Will executed in Australia on 4 April 2007. This enabled her to secure the release of funds held in the T Bank account. The account has since been closed and the funds in that account have been transferred to the Second Respondent’s sole Australian ANZ Bank accounts. The Applicant husband seeks confirmation that funds held in the T Bank account have not been provided to the First Respondent wife or otherwise applied for her benefit. This is in circumstances where the Applicant husband contends that the parties’ relationship was failing and separation was foreseeable.
On 13 March 2018, the Applicant husband and First Respondent wife separated.
On 19 March 2018, the First Respondent wife filed the Initiating Application in these proceedings.
On 4 June 2019, the wife resigned as a director of the Third and Fourth Respondent trustee companies. The Second Respondent is the current director of the Third Respondent trustee company and Mr L is the sole director of the Fourth Respondent trustee company.
On 19 August 2019, the Second to Fourth Respondents were joined to the proceedings by way of being named as such in the Applicant husband’s Amended Response to Final Orders.
APPLICATIONS
The Applicant husband is pressing for the Court to make orders in accordance with his Amended Application in a Case filed 3 April 2020, set out as follows:
1. That pending further Order of the Court or with the husband's prior written consent the Second Respondent be restrained from:
(a) Appointing any other directors of Ms S Pty Ltd and P Pty Ltd ("the trustee companies");
(b) Transferring her shareholding in either of the trustee companies;
(c) Replacing either of the trustee companies with any other trustees in relation to the Third and Fourth Respondents; and
(d) Making any amendments to the trust deeds of either the Third or Fourth Respondents.
2. That within 14 days the Second Respondent:
(a) Provide to the husband's lawyers a schedule setting out the following details in relation to all joint overseas accounts in Country N and Country O of which the wife was a joint account holder with the Second Respondent from August 2015 to date:
(i) Source of any credits including the identity of the payer;
(ii) Date of withdrawal of funds;
(iii) The amount withdrawn;
(iv) The name of the recipient of the funds;
(v) Details of the financial institution, including the country, name of account,
branch and account number to which the funds were transferred; and
(vi) The date of closure of the bank account.
(b) Provide to the husband's lawyers copies of the following:
(i) List of assets and liabilities owned by Mr S at the time of his death in Country G, Country Z, Country N and any other overseas jurisdictions including but not limited to real property, personal property, any interest in any companies in which he was a director or shareholder and any interest in any trusts of which he was in control, either solely or jointly with any other person;
(ii) Masters reference number and Final Liquidation and Distribution Account approved by the Master of the Supreme Court in Country G in relation to the late Mr S's estate in Country G after his death;
(iii) Probate of the late Mr S's estate in Country Z;
(iv)
All tax advice provided by GG Accountants in relation to the late Mr S's estate in Country Z; All taxation and other advice provided by CC Lawyers, LLP Attorneys at Law in relation to the Late Mr S's estate and/or the tax payer Mr S (Deceased) in Country Z.(v) Trust Deed of the Mr S Revocable Trust and any variation or amendment thereto;
(vi) All applications for probate in Country N in relation to the late Mr S;
(vii) All probate documents in relation to the late Mr S's estate in Country N including a schedule of assets and liabilities;
(viii) All documents recording the names of recipients of trust distributions from the Mr S Family Trust, the dates of receipt of same and the amounts received by the recipients from the date of the marriage being … 1993 to the date of its winding up;
(ix) All documents recording the deregistration or winding up of the Mr S Family Trust in Country G; and
(x) 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;
(xi) That the Second Respondent shall sign an Authority addressed to DD Accountants as provided by the respondent husband, such Authority shall permit the accountant to provide all information and documentation requested by Swaab on behalf of the husband with respect to the Mr S Family Trust and the Estate of the Late Mr S.
3. That the Second Respondent pay the husband's costs of and incidental to this Application.
The Second to Fourth Respondents oppose the Applicant’s Application and are seeking that the Application be dismissed with an order for costs. The Second to Fourth Respondents do not press for the orders contained in their Response to Application in a Case filed 15 April 2020, however, I will include those proposed orders below:
1. That within 14 days the respondent provide to the Second respondent all documents referable to the investment undertaken by him (either directly or through an entity associated with him) in relation to EE Pty Limited as trustee for the EE Property Trust, including documents in relation to all monies received by the respondent from the Second respondent and/or her late husband, Mr S, and that within 42 days the respondent provide an accounting to the Second respondent in relation to all funds so received and held in trust by him in relation to that investment.
2. That within 14 days the Second respondent provide to the respondent husband's lawyers a schedule setting out the following details in relation to all joint overseas accounts in Country N and Country O of which the wife was a joint accountholder with the Second respondent as from August 2015 to date, such schedule to include to the extent practicable:-
2.1 Source of any credits including the identity of the payer.
2.2 Date of withdrawal of funds.
2.3 The amount withdrawn.
2.4 The name of the recipient of the funds.
2.5 Details of the financial institution, including the country, name of account, branch and account number to which the funds were transferred.
2.6 The date of closure of the bank account.
3. That within 14 days the Second respondent provide to the respondent husband's lawyers the Masters reference number and final liquidation and distribution account approved by the Master of the Supreme Court in Country G in relation to the Estate of the late Mr S in Country G after his death.
4. The respondent husband's Application in a Case filed on 28 February 2020 be otherwise dismissed.
5. That the respondent husband pay the costs of the second, third and fourth respondents in respect of these interim proceedings.
CASE MANAGEMENT
During the course of the hearing of this matter, I indicated to the parties that I would consider the Applicant husband’s Application in the context of ongoing case management in circumstances where the parties and the Court had been put on notice by the Second to Fourth Respondents that they intend to proceed with her Application in a Case filed 10 November 2020 seeking orders for the dismissal of proceedings against the Second to Fourth Respondents.
Specifically, having regard to Principle 8 of the Family Court of Australia, Joint Practice Direction: JPD1 of 2020 – Core Principles of Case Management of Family Law Matters, I invited submissions from the parties as to what steps, if any, should be taken by the Court to assist the parties to identify and narrow issues in dispute between them.
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.
Section 114 of the Act relevantly provides:
…
(3) A court exercising jurisdiction under this Act in proceedings other than proceedings to which subsection (1) applies may grant an injunction, by interlocutory order or otherwise (including an injunction in aid of the enforcement of a decree), in any case in which it appears to the court to be just or convenient to do so and either unconditionally or upon such terms and conditions as the court considers appropriate.
(4) If a party to a marriage is a bankrupt, a court may, on the application of the other party to the marriage, by interlocutory order, grant an injunction under subsection (3) restraining the bankruptcy trustee from declaring and distributing dividends amongst the bankrupt's creditors.
(5) Subsection (4) does not limit subsection (3).
(6) If a party to a marriage is a debtor subject to a personal insolvency agreement, a court may, on the application of the other party to the marriage, by interlocutory order, grant an injunction under subsection (3) restraining the trustee of the agreement from disposing of (whether by sale, gift or otherwise) property subject to the agreement.
(7) Subsection (6) does not limit subsection (3).
In XYZ Pty Ltd & Charisteas & Ors (2017) FLC 93-782, the Full Court stated at 77,395:
There is no doubt that a court exercising jurisdiction under ss 114 or 90SS of the Act can issue an injunction directly against a third party (Sanders v Sanders (1967) 116 CLR 366). Relevant to the issues raised in these appeals, it is apparent that pursuant to s 90AF, in proceedings under s 114, the court may make injunctions against third parties, subject to conditions which are designed to ensure the discretion is carefully linked and sufficiently connected to the subject matter of the marriage and matrimonial causes (Hunt v Hunt (2006) 36 Fam LR 64 at [119]. The third party must be afforded procedural fairness (s 90AF(3)(c)), and the order must be reasonably necessary, or reasonably appropriate and adapted, to effect a division of property between the parties to the marriage” (s 90AF(3)(a)). And the court must be satisfied that, in all the circumstances, it is proper (s 90AF(3)(d)) and just and convenient (s 90AF(3)(e)) to make the injunction. Section 90AF(3)(f) requires that the order or injunction takes into account the matters listed in s 90AF(4).
(Emphasis added)
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]); and
b)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
The Applicant husband in this case has, with respect, failed to provide evidence to the Court to satisfy me that unless restrained, in her capacity as appointer of the Ms S Trust and/or the P Trust or in her capacity as shareholder of Third Respondent trustee company and/or the Fourth Respondent trustee company, the Second Respondent will act in a manner that can reasonably be anticipated to deplete the matrimonial property pool which is the subject of these proceedings such that it will not be possible for the Court to do justice between the parties at the final hearing. This is in the context where the parties do not appear to disagree that the potential property pool is somewhere between AUD$10 million to 12 million.
Further, even if such potential had been established, the Applicant husband has not set out in evidence or submissions why it is necessary to make orders imposing the broad restraints as sought in order 1 of his proposed orders. In that respect, the party seeking orders in the nature of a restraint against a third party carries the onus of establishing why such an order is necessary and explaining, for the benefit of the Court and the other parties, why the terms of the proposed order are necessary “to limit the disturbance of the property and other assets of the [respondent to the Application] to the potential recovery of [the applicant] and nothing more”: see Cardile v LED Builders Pty Limited (1999) 198 CLR 380 (“Cardile”) at [129].
The reason for this was explained in Cardile at [50] as being the fact that an order imposing such a restraint operates as an imposed obligation “to which the contempt sanction potentially applies” That restrains a person or entity in the usual conduct of the business of this nature.
In the context of family law proceedings, in Sieling and Sieling (1979) FLC 90-627 at 78,264, the Full Court said:
The power to grant injunctions is, of course, a discretionary power, not to be exercised lightly. The Court must balance the hardship to each party of granting or refusing an order and frame its order in such a way to impose no further restriction than is necessary to achieve the protection of the applicant’s interest. It will not lightly interfere with the rights of an owner of property on the basis of a vague or uncertain claim.
With respect, the evidence presented by the Applicant husband in this matter goes no further than a vague or uncertain claim that the Second Respondent may potentially act in an inappropriate manner in respect to the office she holds in the relevant companies and/or in respect to the shareholdings which she holds in the relevant companies such that her conduct can reasonably be anticipated to deplete the parties’ potential property pool such that the Court will be unable to do justice between the parties at final hearing.
Additionally, the Applicant husband has not adequately addressed all the considerations that the Court must consider pursuant to s 90AF of the Act. Most relevantly, the Applicant husband has not addressed the potential taxation consequences of the order he seeks nor has he referred to the Second Respondent’s potential obligations under any other instrument such as a relevant trust deed or the articles of association of the relevant companies.
It is clear that the party moving for injunctive relief carries the onus of establishing that there is a proper basis for granting the relief as sought in their application: see Kelleher & Anderson [2007] FamCA 137 at [195]. The term “proper” means “reasonable and just in [the] circumstances”: see Farr and Farr (1976) FLC 90-133 at 75,636.
In this case, the Applicant husband has failed to discharge the onus that rests upon him to establish that there is a proper basis for granting the relief sought in his Application and, further, he has failed to discharge the onus that rests upon him to establish why the orders he seeks are necessary to protect his interests in the sense that, unless the orders are made, there is a real chance that the parties’ matrimonial property pool will be depleted such that the Court is unable to do justice between the parties at final hearing.
Accordingly, order 1 of the orders sought in the Applicant husband’s Application in a Case filed 3 April 2020 must be dismissed.
DISCLOSURE OBLIGATIONS OF THIRD PARTIES TO A MARRIAGE
The law – concepts and principles
As a party to the proceedings, the Second Respondent has a general duty of disclosure pursuant to r 13.01 of the Family Law Rules 2004 (Cth) (“the Rules”) which applies from pre-action procedures to the finalisation of the case.
Rule 13.02 of the Rules provides that:
(2) This Division does not apply to a party to a property case who is not a party to the marriage or de facto relationship to which the application relates, except to the extent that the party's financial circumstances are relevant to the issues in dispute.
(Emphasis added)
As noted, the duty of disclosure applies to the extent that the documents or information are “relevant to the issues in dispute”. Relevance, in respect to evidence in proceedings before the Court, is defined in s 55 of the Evidence Act 1995 (Cth) (“the Evidence Act”), as follows:
(1)The evidence that is relevant in a proceeding is evidence that, if it were accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceeding.
In McIlwain v Ramsey Food Packaging Pty Ltd (2005) 221 ALR 785 (“McIlwain v Ramsey Food”) at 803, [35], Greenwood J stated that:
When a party contends material that either is or may be or may have been in the possession, custody or power of a respondent relates to any question or issue raised on the pleadings, they will be taken to mean that the material is relevant in the sense contemplated by s 55(1) of the Evidence Act 1995 (Cth) namely, evidence that if accepted, could rationally affect (directly or indirectly) the assessment of the probability of the existence of a fact in issue in the proceedings.
Consideration
Senior counsel for the Second to Fourth Respondents contended that, on the basis of the evidence presented by the Applicant husband, the Court could not be satisfied that the Applicant husband’s contentions in respect to the Second, Third or Fourth Respondents being in possession and/or control of property to which the First Respondent wife is entitled to and/or of financial resources that are reasonably available to the First Respondent wife. Senior Counsel for the wife contends that Applicant husband’s claim in that respect is no more than speculative. On that basis, it was contended that the Second to Fourth Respondents have been improperly joined to these proceedings. Specifically, it was contended that they have been joined with a view to placing additional pressure upon the First Respondent wife to settle and/or to obtain information from the Second to Fourth Respondents that otherwise should have been obtained from third parties to the marriage by way of subpoenas.
By way of background to that submission, it is noted that, on 10 November 2020, the Second to Fourth Respondents attempted to file, through the electronic Commonwealth Court Portal, an Application in a Case seeking orders, pursuant to r 10.12 of the Rules, that “the [Applicant husband’s] Second Amended Response to Initiating Application filed in the proceedings on 16 July 2020 as against the Second, Third and Fourth Respondents be dismissed”.
Through no fault of the Second to Fourth Respondents or their legal advisers, that document was not sealed by the Court until 20 November 2020, the Friday prior to the interim hearing on Monday, 23 November 2020. Consequently, the Application and supporting Affidavit was not served upon the Applicant husband until the day prior to the hearing of this matter. In those circumstances, senior counsel for the Applicant husband, understandably in my view, indicated that he was not in a position, at the hearing of this matter on 23 November 2020, to properly consider and advise his client in respect to the summary dismissal Application by the Second to Fourth Respondents. Senior counsel for the Applicant husband, however, advised the Court that his client would be prepared for the hearing listed on 23 November 2020 to be adjourned until such time as both the Applicant husband’s Application in a Case and the Second to Fourth Respondent’s Application in a Case could be heard in the one sitting.
Equally, understandably, senior counsel for the Second to Fourth Respondents advised the Court that, having regard to potential costs and stresses on the Second Respondent, his client preferred that the matter proceed on 23 November 2020 even though the Court would, on that day, only be considering the Application in a Case filed by the Applicant husband.
In those circumstances, unless and until orders are made pursuant to r 10.12 of the Rules or s 45A of the Act, I intend to proceed on the basis that, until otherwise determined, the Second to Fourth Respondents have been properly joined to the proceedings.
Accordingly, the substantive issue to determine in respect to disclosure is to what extent the documents and category of documents, as sought by the Applicant husband, are relevant to the issues in dispute in the proceedings and relate to the financial circumstances of the Second to Fourth Respondents in the sense described in McIlwain v Ramsey Food; see also Moore & Moore (2014) FLC 93-595 at 79,358 [221], 79 359 [223].
While it is understandable that the Applicant husband would seek orders in the terms of his proposed order 2(a), in circumstances where it is an order that had previously been proposed by the Second to Fourth Respondents, the reality is that it is not an Application for an order for disclosure but, rather, it is a proposed order requiring the Second Respondent, who is now in her senior years and in poor health, at risk of being found in contempt, to prepare a complex schedule setting out the information sought in paragraph 2(a) as opposed to producing the documentation upon which such a schedule would be based. Accordingly, I decline to make order 2(a). In so exercising my discretion, I note and agree with the submission of senior counsel for the Second to Fourth Respondents that the more appropriate course of action would be for the Applicant husband to issue subpoenas to the relevant financial institutions seeking the production of the relevant accounts. The burden and expense of collating the information sought by the Applicant husband would, in those circumstances, fall upon the husband. This is in circumstances where, at the present stage of the proceedings, the Applicant husband’s assertions that the First Respondent wife has a legal and/or equitable interest in funds held in those accounts is little more than speculative.
Further, the information sought in proposed order 2(a) seeks extensive information that may have little if any relevance to the issues in dispute between the parties. Instead of proposed order 2(a), in the exercise of my general case management powers, including pursuant to r 1.06(c), I will make an order requiring the Second Respondent, to the extent that they are within her possession or control, to provide copies of bank statements in relation to all joint overseas accounts in Country N and Country O of which the First Respondent wife was a joint account holder with the Second Respondent from August 2015 to date. That information will establish whether the First Respondent wife has been the recipient of funds from those accounts and/or whether funds of those accounts have been applied for her benefit.
In respect to proposed order 2(b)(i), no evidence has been produced to establish that the First Respondent wife is the beneficiary of any will or testamentary disposition of the late Mr S or that she has any entitlement to, or interest in, property that was owned by him at the time of his death, over and above the amount referred to in a letter from the solicitor acting for the First Respondent wife at the time, FF Lawyers, dated 17 January 2019 being “a 1/3 share of the estate, being a single cash payment equating to approximately AUD$4,823 as at 30 April 2012”.
Further, insofar as the Applicant husband contends that the estate of the late Mr S is, either in whole or in part, a financial resource of the First Respondent wife, the Applicant father is required to prove, by admissible evidence, that the remainder of the estate of the late Mr S is “a source of financial support which [the wife] can reasonably expect will be available to [her] to supply a financial need or deficiency”: see Hall v Hall (2016) 332 ALR 1 at 11,[54] – [55]. The Applicant husband is, with respect, attempting to put the cart before the horse in seeking information regarding the details of the assets and liabilities of the late Mr S prior to him establishing that the First Respondent wife has an interest in the property of the late Mr S or that the remainder of the estate of the late Mr S is a financial resource of the First Respondent wife. This is not a permissible basis for seeking further disclosure.
In respect to proposed order 2(b)(ii), the Court was advised that the Applicant husband has now been provided with the relevant information and, accordingly, I will not make that order.
The Second to Fourth Respondents contend that the documents sought by the Applicant husband in proposed order 2(b)(iii) do not exist. To confirm that is the case, I will nonetheless make an order requiring the Second to Fourth Respondents, to the extent that such documents do exist and are within her custody and/or control, to provide a copy of probate of the late Mr S’s estate in Country Z.
Proposed order 2(b)(iv) is too broad such that it is oppressive. In that respect, in Riddick v Thames Board Mills Ltd [1977] QB 881 (“Riddick v Thames Board Mills”) at 896, Lord Denning MR stated that:
The reason for compelling discovery of documents in this way lies in the public interest in discovering the truth so that justice may be done between the parties. That public interest is to be put into the scales against the public interest in preserving privacy and protecting confidential information.
No possible basis has been established for requiring the Second to Fourth Respondents to provide “all taxation and other advice” in respect to “the taxpayer Mr S (deceased) in Country Z”. To make an order in the terms sought would unsettle the public interest scale to which I have referred. This is in circumstances where, for reasons which I have set out, the suggestion that the First Respondent wife may be entitled to or have an interest in the property of her late father, over and above the amount to which I have earlier referred, and/or that the remainder of his estate is a financial resource of the First Respondent wife, is no more than merely speculative.
Order (2)(b)(v) seeks the “Trust Deed of the Mr S Revocable Trust and any variation or amendment thereto”. That document is potentially relevant to establishing whether the First Respondent wife has a reasonable expectation to be the beneficiary of funds held in that trust and I will make that order as sought by the Applicant husband.
Order (2)(b)(vi) seeks “all applications for probate in Country N in relation to the late Mr S”, and order (2)(b)(vii) seeks “All probate documents in relation to the late Mr S’s estate in Country N including a schedule of assets and liabilities”. The submission made by senior counsel for the Applicant husband in respect of these orders are as follows:
In 2(b)(v) to (xi), we’re entitled, in my respectful submission, to see the Mr S Revocable Trust, all applications for probate in Country N.
(Transcript 23 November 2020, p.24 lines 21–24)
The evidence and submissions of the Applicant husband do not address the matters set out in in relation to the late Mr S. Rule 13.22 of the Rules provides a guide to the court to assist in considering an application for an order for disclosure. Rule 13.22(3) relevantly provides that:
(3) In making an order under subrule (1), the court may consider:
(a) whether the disclosure sought is relevant to an issue in dispute;
(b) the relative importance of the issue to which the document or class of documents relates;
(c) the likely time, cost and inconvenience involved in disclosing a document or class of documents taking into account the amount of the property, or complexity of the corporate, trust or partnership interests (if any), involved in the case; and
(d) the likely effect on the outcome of the case of disclosing, or not disclosing, the document or class of documents.
With the greatest of respect, the Applicant husband has not provided the Court with sufficient information that enables the Court to give consideration to those matters set out in r 13.22(3) of the Rules. In those circumstances, the Applicant husband has failed to satisfy me that orders 2(b)(vi) and (vii) are necessary and I will not make those orders.
Proposed order (2)(b)(viii) offends the principle adumbrated in Riddick v Thames Board Mills, in that it unreasonably distorts the public interest balance to which I have referred. The Applicant husband has not addressed why it is necessary for those details of the distributions from the Mr S Family Trust to be disclosed to him from persons other than the First Respondent wife. Once again, the Applicant husband has failed to address those matters set out in r 13.22(3) to which I have referred. Pursuant to my case management powers, I will, however, require the Second Respondent to provide all documents recording the dates of receipt of distributions to the First Respondent wife from the Mr S Family Trust and the amounts received by the First Respondent wife from the date of the marriage being … 1993 to the date of its winding up.
Proposed order (2)(b)(ix) seeks “All documents recording the deregistration or winding up of the Mr S Family Trust in Country G”. The Applicant husband has not established a basis for seeking “all documents” as defined in the proposed order. I will, however, again, in the exercise of my general case management powers, require the Second Respondent to provide 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 distributions owed to the First Respondent wife.
Proposed order 2(b)(x) seeks documents in respect to the Mr S Superannuation Fund for the 2012 and 2013 period. In a letter from the solicitors for the First Respondent wife, Karras Partners Lawyers, to the solicitors for the Applicant husband dated 23 October 2019, it was stated that the First Respondent wife was not a member of the fund in 2012 and 2013. Nevertheless, at paragraph 45 of the Financial Statement of the First Respondent filed 19 March 2018, there is reference to the First Respondent wife having an interest in the self-managed Mr S Superannuation Fund Pty Ltd with a Gross Value of AUD$100,000. In those circumstances, documentation relating to the management and size of the fund, including at those historical dates, may be potentially relevant to issues in dispute and I will make the order sought in proposed order 2(b)(x).
Senior counsel for the Second to Fourth Respondents, with respect, justifiably questioned whether the Court has power to make the order sought in proposed order 2(b)(xi). It is, however, unnecessary to determine that issue as the proposed order is unreasonably broad and, in that sense, oppressive. Specifically, without identifying the document or class of documents sought other than by identifying that they are in respect to “the Mr S family trust and the estate of the late Mr S”, it is not possible for the Court to give consideration to those matters set out in r 13.22(3) to which I have referred. Accordingly, I will not make that proposed order.
CASE MANAGEMENT ORDERS
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.
I certify that the preceding eighty (80) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Deputy Chief Justice McClelland. Associate:
Dated: 23 December 2020
SCHEDULE OF PARTIES
PAC 1189 of 2018 Respondents
Fourth Respondent:
P LTY LTD AS TRUSTEE OF THE P UNIT TRUST
0
17
3