Calvin & Calvin

[2020] FamCA 591

FAMILY COURT OF AUSTRALIA

CALVIN & CALVIN AND ORS [2020] FamCA 591

FAMILY LAW – PROPERTY – Interim – Where the parties are unable to agree about the continued management of their partnership pending resolution of their property dispute – Where the wife contends that restrictions and/or obligations should be placed on the husband in his continued management of the partnership and other entities – Where the husband seeks orders enabling him to have sole control of the partnership but be required to seek the wife’s approval for any expense above $30,0000 – Where it is apparent that the parties (jointly) are unable to make timely decisions – Where orders will be made enabling the husband to have sole control of the partnership but he will be required to seek the wife’s approval for any expense above $25,000.

FAMILY LAW – PROPERTY – Interim – Where the husband seeks to be permitted to apply for an extension of a loan facility and an increase in borrowings by not more than $2,000,000 in order to meet the parties’ ongoing expenses pending resolution of the substantive proceedings – Where the wife opposes the increase in borrowings sought by the husband and instead seeks the sale of three real properties – Where if the properties the wife seeks to sell were sold it would deprive the husband of his livelihood – Where these are interim proceedings and the status quo should be maintained as far as possible – Where the husband will be permitted to apply for an extension of the seasonal market rate facility and an increase in borrowings.

FAMILY LAW – PROPERTY – Interim – Where the parties have agreed to the sale of a real property – Where the husband seeks it be sold via private treaty to the parties’ adult son – Where the wife seeks it be sold via auction – Where the property will be sold, if possible, via auction.

Family Law Act 1975 (Cth) s 114

Australian Broadcasting Corporation v Lenah Game Meats (2001) 208 CLR 199
Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57
Soli & Bedwynne [2010] FamCA 510
Tsiang & Wu and Ors (2019) FLC 93-911

APPLICANT: Mr Calvin

1st RESPONDENT: Ms Calvin

2nd RESPONDENT: Calvin Pty Ltd

3rd RESPONDENT: Mr B Calvin

4th RESPONDENT: D Pty Ltd

5th RESPONDENT: F Pty Ltd in its own right and ATF G Trust

FILE NUMBER: BRC 4190 of 2019

DATE DELIVERED: 21 July 2020

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Carew J

HEARING DATE: 10 July 2020

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr S Williams QC

SOLICITOR FOR THE APPLICANT: Fox & Thomas Solicitors

COUNSEL FOR THE 1ST RESPONDENT: Mr G Richardson SC

SOLICITOR FOR THE 1ST RESPONDENT: Broun Abrahams Burreket

SOLICITOR FOR THE 2ND RESPONDENT: Arnold Bloch Leibler

COUNSEL FOR THE 3RD RESPONDENT: Ms S Minnery

SOLICITOR FOR THE 3RD RESPONDENT: Phillips Family Law

COUNSEL FOR THE 4TH RESPONDENT: Ms S Minnery

SOLICITOR FOR THE 4TH RESPONDENT: Phillips Family Law

COUNSEL FOR THE 5TH RESPONDENT: Ms S Minnery

SOLICITOR FOR THE 5TH RESPONDENT: Phillips Family Law

Order

Definitions

In this Order, the following definitions will apply:

(a)       Calvin Contracting means Calvin Pty Ltd ACN …, a company duly incorporated in the State of Queensland of which the applicant and his son, Mr B Calvin, are directors and in which the applicant and the first respondent and Mr B Calvin all hold 8 ordinary shares each as trustee for the Calvin Trust;

(b)       Calvin Contracting Trust means a trust settled by a deed on 24 September 2014 between Calvin Pty Ltd as trustee and H Services as settlor of which the applicant and first respondent and Mr B Calvin are the appointors, collectively with the trustee referred to in this order as Calvin Contracting;

(c)       J Pty Ltd means J Pty Ltd ACN … in respect of which the applicant and first respondent are the directors and equal holders of "A" and "B" class shares, and Mr K Calvin the holder of a "C" class share, and Mr B Calvin a holder of an ordinary share;

(d)       L Street means the residential property situated at L Street, N Town NSW and contained in folio identifiers … and … and registered in the name of the first respondent;

(e)       S loans means the S innovation fund loan ending …61 in the names of the applicant and first respondent;

(f)        partnership means a partnership between the applicant and first respondent known as Calvin & Calvin in which each partner has a one-half interest;

(g)        partnership accounts means:

(i)the business management account with the National Australia Bank N Town ending …29 in the name of the applicant and first respondent and having an overdraft limit of $500,000;

(ii)any further account established by the applicant for the purposes of the partnership;

(h)       NAB loans means:

(i)the NAB seasonal market rate facility loan account ending …28 in the name of the applicant and first respondent as trustees of the Calvin & Calvin Trust of $3.375M; and

(ii)the NAB low interest loan account ending …74 in the name of the applicant and first respondent as trustees of the Calvin & Calvin Trust of $5.055M;

(i)        rural properties means the properties located in the N Town area and more particularly described as:

(i)X Property, being folio identifier … and registered in the name of the applicant and first respondent as joint tenants as trustees for the Calvin & Calvin Family Trust;

(ii)Y Property, being auto consol …, folio identifier …, … and … and registered in the name of the first respondent;

(iii)Z Property, being folio identifier … and registered in the name of the applicant;

(iv)W Property, being folio identifier …, … and … and registered in the name of the applicant;

(j)        Seasonal market rate facility means the NAB seasonal market rate facility loan account ending …28 in the name of the applicant and first respondent as trustees of the Calvin & Calvin Trust of $3.375M; and

(k)       Calvin & Calvin Family Trust means the deed of settlement between Mr P as settlor and the applicant and first respondent as trustees on 3 March 1997 of which the applicant and first respondent are appointors;

(l)        R Street means the land contained in title reference … and … situated in Suburb Q, Queensland of which the applicant and first respondent are registered proprietors as tenants in common in equal shares;

(m)      R Street loan means the NAB home loan account ending …93 in the names of the applicant and first respondent of $2.8M and secured by mortgage on R Street;

(n)       ‘V Property’ means the property known as and situate at ‘V Property’ ;

(o)       T Pty Ltd means T Pty Ltd ACN … in respect of which the applicant is the sole director and shareholder;

(p)       T Pty Ltd bank account means the NAB overdraft account ending …84.

IT IS ORDERED BY CONSENT BETWEEN THE APPLICANT AND FIRST RESPONDENT THAT

1. Pending further order:

   (a)       the applicant has the sole right to occupy the rural properties and L Street;

   (b)       the first respondent has the sole right to occupy R Street;

   (c)        the applicant pay all moneys as and when they fall due and owing on the NAB loans and the S loan secured by way of registered mortgages and caveats over the rural properties from the funds available in the partnership accounts.

IT IS FURTHER ORDERED THAT

1. The applicant cause to pay from the funds available in the partnership accounts as and when they fall due:

   (a)       The following outgoings of the rural properties:

   (i)all rates and other local and state taxes;

   (ii)any land tax;

   (iii)the premiums for the continuation of current insurance policies; and

   (iv)utility expenses including but not limited to gas and electricity usage.

   (b)       The mortgage, rates, and insurance on R Street;

Management of partnership

1. Pending further order:

   (a)       the first respondent be restrained from dealing in any way with the conduct and management of the partnership and the partnership accounts and J Pty Ltd other than in accordance with this Order;

   (b)       the applicant take possession of and collect and protect all assets of the partnership and J Pty Ltd;

   (c)       the applicant be at liberty to sell such of the plant and equipment of the partnership and J Pty Ltd that the applicant considers are no longer necessary for the conduct of the partnership business;

   (d)       in the event the applicant sells any plant and equipment of the partnership or J Pty Ltd, the applicant will keep the first respondent informed by email by:

   (i)providing the first respondent with copies of tax invoices issued to any purchaser of the plant and equipment sold;

   (ii)advising the first respondent of the payout of equipment finance encumbering the plant and equipment sold;

   (iii)within 7 days of receipt of the proceeds of sale of any plant and equipment sold, providing to the first respondent evidence of the deposit of the proceeds of sale into a bank account of the partnership or J Pty Ltd as the case may be;

   (iv)and the applicant be at liberty to select the method of sale of the plant and equipment by either online auction or private treaty;

   (e)       the applicant conduct the rural enterprise of the partnership in accordance with its usual business operations including engaging Calvin Contracting to undertake work on the properties in circumstances where the partnership or J Pty Ltd do not have the requisite plant and equipment;

   (f)       within 24 hours of this Order, the applicant and first respondent do all acts and things and sign all necessary documents to change the signatory arrangements and passwords for the partnership accounts and J Pty Ltd so that the applicant is the sole signatory and operator on the accounts;

   (g)       subject to paragraphs (6) herein (where applicable), the applicant pay from the partnership accounts:

   (i)the usual business expenses incurred in the conduct of the partnership business of growing crops, and in the management of the rural properties;

   (ii)the repairs, maintenance and equipment finance payments for the partnership including that of J Pty Ltd; and

   (h)       the applicant cause to be deposited into the partnership accounts all income received from the sale of crops grown on the rural properties, fuel rebates, GST refunds, and other income generated by or due to the partnership.

2. The applicant be at liberty to provide a copy of this Order to the partnership bankers, National Australia Bank and the partnership accountants Accession3 of AA Town.

3. The applicant and first respondent do all acts and things necessary to allow the first respondent to have view only online access to the partnership, J Pty Ltd, T Pty Ltd (‘V Property’) and Calvin Contracting bank accounts.

4. If the applicant intends to incur an expense greater than $25,000 in any one event, then:

   (a)       he will seek, by email, the written consent of the first respondent;

   (b)       the first respondent shall not unreasonably refuse consent; and

   (c)       if the first respondent does not provide her consent within 48 hours, the applicant be at liberty to urgently relist the matter before the Honourable Justice Carew on the giving of 24 hours’ notice to the first respondent in writing.

Extension and increase of borrowings

1. The applicant be at liberty to seek and do all things necessary to:

   (a)       make application to the National Australia Bank (Bank) to obtain an extension to the seasonal market rate facility;

   (b)       make application to the Bank to obtain an increase in the seasonal market rate facility of not more than $2,000,000; and

   (c)       once the increase in borrowings have been approved by the Bank,

   (i)draw down from the seasonal market rate facility such amount or amounts as may be required from time to time to:

   A.restore the partnership business management account ending …29 to within its overdraft limit;

   B.pay all of the outstanding and ongoing accounts of the partnership and J Pty Ltd except for those creditors on crop terms;

   C.make payments to the Australian Taxation Office on behalf of the applicant and first respondent; and

   D.make payments to the first respondent and the applicant an amount of $3,500 per month each for living expenses.

‘V Property’

1. The applicant conduct the farming operation on ‘V Property’ in accordance with usual business operations and deposit into the T Pty Ltd bank account all income from crops harvested on ‘V Property’ and provide to the first respondent copies of all invoices paid from income or from the T Pty Ltd bank account and any surplus funds are to be used as agreed with the first respondent or to reduce the seasonal market rate facility. 

Sale of W Property

1. The applicant and first respondent do all acts and things and sign all documents necessary to market ‘W Property’ for sale and in particular will:

   (a)       List W Property for sale with an agent agreed upon by the applicant and first respondent within 7 days of the date of this Order and, failing agreement, the first respondent forthwith in writing nominate three agents from which the applicant will, within a further 7 days, select one and, failing which, the first respondent will select one who shall be the agent appointed (“the W Property agent”);

   (b)       execute all documents requested by the W Property agent in a form agreed upon by the applicant and first respondent and in the event that the applicant and first respondent cannot agree on the terms of the W Property agent’s contract within 7 days of the agent being selected, the contract is to be in the W Property agent’s standard terms and with the W Property agent’s standard fees;

   (c)       give such instructions as are agreed upon by the applicant and first respondent as are necessary to a legal practitioner agreed upon by the applicant and first respondent to act on the sale within 7 days of the date of this Order and, failing agreement, the first respondent will forthwith in writing nominate three legal practitioners from which the applicant will, within a further 7 days, select one and, failing which, the first respondent will select one (“W Property legal practitioner”);

   (d)       list W Property for sale by public auction on a date within 6 weeks of the date of the selection of the W Property agent (“first auction”) at a reserve price agreed between the applicant and first respondent and, failing agreement, to be listed at a price recommended by the W Property agent;

   (e)       in the event that W Property does not sell at the first auction, market W Property for sale with the W Property agent by way of private treaty for a period of 12 weeks during which time the applicant and first respondent will accept any offer made to purchase W Property within 5% of the reserve price of the first auction unless the applicant and first respondent otherwise agree;

   (f)        in the event that W Property is not sold at the first auction and is not sold in the period provided for sale by private treaty, market W Property for sale by public auction with the W Property agent on a date within 6 weeks of the date of the conclusion of the period of sale by private treaty at a reserve price agreed between the applicant and first respondent and, failing agreement, 5% below the reserve price at the first auction;

   (g)       attend any auction pursuant to this Order and in the event that the reserve price set for that auction is not reached, negotiate with the highest bidder and the second highest bidder and accept the highest offer to purchase made within 5% of the reserve price set for that auction unless the applicant and first respondent otherwise agree;

   (h)       execute the contract for sale in a form agreed upon by the applicant and first respondent and in the event that the applicant and first respondent fail to agree on the terms of the contract for sale, the terms recommended by the W Property legal practitioner will be adopted;

   (i)        co-operate in every way with the W Property agent in relation to the sale of W Property at all times requested by the agent and ensure that W Property is in a neat and clean condition; and

   (j)        execute all other documents necessary to complete the sale within the time required by the contract for sale to ensure that the purchasers do not have a right to terminate or rescind due to failure to do so.

2. That on settlement of the sale of W Property, the applicant and first respondent will do all acts and things necessary to sign all documents necessary to distribute the proceeds of sale in the following manner and priority:

   (a)       payment of the agent’s commission, auctioneer’s fee, marketing fees and any other expense properly incurred and unpaid in respect of the sale of W Property by the W Property agent;

   (b)       payment of the costs and disbursements of the W Property legal practitioner of and coincidental to the sale of W Property;

   (c)       payment into a bank account of the applicant and first respondent for any estimated Capital Gains Tax arising as a result of the sale;

   (d)       payment of the balance to reduce the NAB loans and/or the R Street loan in such proportions as determined by the National Australia Bank.

Miscellaneous

1. Pursuant to Section 106A of the Family Law Act 1975 (Cth), in the event either the applicant or first respondent refuses or neglects to execute any deed or instrument necessary to give effect to this order then the Registrar of the Family Court of Australia is hereby appointed to execute such deed or instrument in the name of the defaulting party and do all acts and things necessary to give validity and operation to the deed or instrument.

2. The balance of the interim orders sought by the applicant and first respondent (other than those already adjourned to 4 September 2020 and any application for costs) be dismissed.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Calvin & Calvin has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

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 r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 4190 of 2019

Mr Calvin

Applicant

And

Ms Calvin

First Respondent

And

Mr B Calvin

Second Respondent

And

Calvin Pty Ltd

Third Respondent

And

D Pty Ltd

Fourth Respondent

And

F Pty Ltd in its own right and ATF G Trust

Fifth Respondent

REASONS FOR JUDGMENT

1. Mr & Ms Calvin were married for nearly 33 years before separating on 18 September 2018. They are now divorced.

2. They are unable to agree about the continued management of their rural partnership pending resolution of their property dispute. They came close to resolving all matters in April 2020 but now the dispute has escalated and further parties have been joined to the litigation by the wife, including one of their adult children, Mr B Calvin. For ease of reference I will refer to him by his first name. The husband and wife agree that their net assets should be divided equally but there is now a significant dispute about the composition of the net assets. 

3. The interim dispute involving the husband, wife, Mr B Calvin and the other third party entities resolved on 10 July 2020 and has been adjourned until 4 September 2020. The husband and wife were able to agree on some matters, including the sale of one of the rural properties and a consent order reflecting their agreement was also made on 10 July 2020.

Issues

1. The parameters of the interim dispute between the husband and wife remaining for determination comprise the following:

   a)What restrictions and/or obligations should be placed upon the husband in his continued management of the rural partnership and/or the Calvin Trust and/or T Pty Ltd and/or J Pty Ltd?

   b)Should the husband be permitted to apply for an extension of the existing seasonal market rate facility and increase borrowings by not more than $2,000,000?

   c)Should the property known as ‘W Property’ be sold to Mr B Calvin for the single expert valuation of $5,775,000 or should it go to auction?

   d)Should the properties known as ‘Y Property’, ‘Z Property’ and ‘X Property’ be sold?

   e)What monthly drawing should be paid to the husband and wife?

Background

1. The husband is 59 years of age and has been a farmer all his working life. The wife is 56 years of age and not currently engaged in employment. Throughout the marriage, the husband and wife operated a rural partnership involving cropping and an agricultural contracting service business. Towards the end of their marriage, the wife operated a retail business. The wife contends that she is currently in poor health and unable to work.

2. The husband and wife have three adult children.

3. The husband continues to live in the former matrimonial home near N Town in New South Wales, known as ‘L Street’. The wife lives in an investment property at R Street, Suburb Q, Queensland which she hopes to retain as part of the property settlement. That property is worth about $3,000,000 with an outstanding debt of about $2,800,000.

4. The husband and/or the wife and/or entities controlled by them own property valued in the vicinity of $23,000,000 and have liabilities in the vicinity of $13,000,000. Included in their assets are five rural properties known respectively as ‘L Street’, ‘X Property’, ‘Y Property’, ‘W Property’ and ‘Z Property’. All properties, save ‘W Property’, were acquired during the marriage. The properties are all outside N Town in New South Wales. ‘L Street’ and ‘W Property’ are to be sold by agreement, although the method and price of sale for ‘W Property’ is in dispute. 

5. The rural enterprise operated during the marriage comprised the growing of crops on land owned and/or leased by the parties and the supply of agricultural contracting services, with the latter enterprise being largely operated by the parties’ son, Mr B Calvin. The rural enterprise has historically been conducted via a partnership between the husband and wife known as Calvin & Calvin, although the operational entity for the contracting services business was changed in 2014 to include Mr B Calvin.  

6. All of the rural property was valued by a single expert in July 2019. The wife contends that the valuations are no longer reliable because of the effluxion of time and recovery of the area from drought.

7. Liabilities to the National Australia Bank (“NAB”) are secured on the properties and the estimated outstanding debt as at 1 July 2020 was as follows:

Facility name	Principal debt	Monthly repayments[1]
Term loan #…74	$5,055,000	$17,660
Seasonal market rate facility #…28 (was required to be rolled over in December 2019)	$3,375,000	$14,568
R Street loan #…93	$2,799,956	$14,260
Overdraft #…29	$500,000	-
Total	$11,729,956	$46,488

[1] The monthly repayments are not being met.

1. In addition, there are other liabilities including:

Liabilities
Description	Estimate of value
Y Property Farming equipment finance	$92,926
NSW Rural Adjustment Authority loan payment	2 missed payments	$10,352
N Town Council Rates	Arrears	$22,000
Creditors	$240,791
Missed direct debits to the business management account for plant equipment insurance to 14 April 2020	$4,871
Income tax due 28 April 2020	Husband	$23,611
Income tax due 28 May 2020	Wife	$33,488
Total	$428,039

1. The sale of ‘W Property’ and ‘L Street’ are expected to reduce overall debt by about $7,500,000.

2. There are a number of crops planted/to be planted on the rural properties which are anticipated to produce an income if and when harvested. A summary of those crops and anticipated income is set out below:

Crop	Hectares	Estimated Output	Gross income	Expected payment
Seed Crop 1	Unknown	20 tonnes	$12,000 (20 tonnes @ $600/tonne)	Late June 2020
Crop 1	1,186 ha	4,269.6 tonnes (3.6 tonnes/ha)	$1,280,880 (4,269.6 tonnes @ $300/tonne)	December 2020/January 2021
Crop 2	260 ha on Z Property	520 tonnes (2 tonnes/ha)	$312,000 (520 tonnes @ $600/tonne)	December 2020/January 2021
Total	$1,604,880

1. There are a number of crops planted/to be planted on ‘V Property’, the leased property, which are anticipated to produce an income if and when harvested as follows:

Crop	Hectares	Estimated Output	Gross income	Expected payment
Crop 1	75ha	270 tonnes (3.6 tonnes/ha)	$81,000 (270 tonnes @ $300/tonne)	December 2020 -February 2021
Crop 2	270 ha (according to Husband) or 217 ha (according to Mr BB)	434 - 540 tonnes (2 tonnes/ha)	$260,400 - $324,000 (434 - 540 tonnes @ $600/tonne)	December 2020 - February 2021
Crop 3	130 ha	195 bales (average 1.5 bale/ha)	$97,500 (195 bales @ $500 ea)	July 2020
Total projected income	$438,900 - $502,500	$97,500 in July 2020 and between $341,400 - $405,000 in December 2020 – February 2021

1. The husband and wife are the sole directors and shareholders of J Pty Ltd, which owns plant and equipment used by the partnership.

2. Since 2014, the agricultural contracting business has operated via the Calvin Trust. The trustee of the Calvin Trust is Calvin Pty Ltd. The husband and Mr B Calvin are the directors of the trustee company and the husband, wife and Mr B Calvin are equal shareholders of the trustee company and also the appointors of the Calvin Trust. Mr B Calvin largely managed the day to day operations of the contracting business for which he was paid a managerial wage and receives other benefits such as accommodation on ‘Y Property’, motor vehicles, gas, electricity and fuel. After the establishment of the Calvin Trust, the husband continued to work in the contracting business but was not paid a wage. The business, trust and trustee company are collectively be referred to as Calvin Contracting in these reasons.

3. In March 2016, Calvin Contracting purchased a harvesting machine. The use of the harvesting machine makes harvesting much more viable, particularly in times of drought. The affairs of the partnership and Calvin Contracting are intermingled.

4. The N Town area was in drought from about 2017 until January 2020. It was formally declared a drought area in 2018.

5. On 14 May 2019, Mr B Calvin established F Pty Ltd and on 15 May 2019, D Pty Ltd. Mr B Calvin is the director of both entities and F Pty Ltd is the non-beneficial owner of all the shares in D Pty Ltd.

6. The wife contends that at least from 25 May 2019, Mr B Calvin’s entities have undertaken contracting work that should have been done by Calvin Contracting, and in particular for the period 25 May 2019 to 13 August 2019 Mr B Calvin’s entities rendered invoices totalling $1,500,000 which the wife alleges should have been earned by Calvin Contracting. These matters are now the subject of a dispute between Mr B Calvin and the wife.

7. On 25 October 2019, the husband established T Pty Ltd and entered into a 13 month lease on 1 November 2019 for the rural property known as ‘V Property’, which had previously been leased by the partnership for the same annual rent of $105,000. The first six months’ rent was paid in advance from a $200,000 borrowing facility set up by the husband in his own name and secured on the property known as ‘Z Property’.

8. Since separation, the husband has continued to farm the various rural properties and to manage the partnership.

9. Actions allegedly undertaken by each of the husband and wife have resulted in mutual distrust between them.

10. The husband accuses the wife of being obstructionist and thwarting the legitimate operations and interests of the partnership and Calvin Contracting. The husband contends that he has been negotiating with the wife in good faith since June 2019 to agree to the rollover of the existing seasonal market rate facility, and to obtain an extension of that facility to meet ongoing expenses relating to the operation of the partnership and to meet all of their liabilities including their day to day living expenses. He contends that the wife constantly delayed in making a decision and/or sought to impose unreasonable conditions e.g. insisting that the payment of wages to their long term farm employee and bookkeeper be subject to the wife’s whim.

11. The wife accuses the husband of excluding her from the operations of the partnership and creating the current financial position to diminish the assets to her detriment. In particular, the wife accuses the husband and/or Mr B Calvin of establishing other entities to take over substantial contracting work from existing customers of Calvin Contracting, thereby diverting income from the partnership. In addition, the wife accuses the husband of restricting her access to funds for necessary living expenses and her legal fees so as to pressure her into a settlement.

12. Both parties have had a substantial portion of their respective legal fees (in the vicinity of $500,000 combined to date) met from the partnership account.  

Husband’s submissions

1. The order sought by the husband is intended to reduce debt, reduce interest payable on loans, dispose of surplus plant and equipment, increase liquidity so that the farming activities can continue and enable the efficient operation and management of the partnership for the joint benefit of the husband and wife.

2. The husband contends that he is at “the end of his tether” in trying to continue the efficient operation of the partnership. As he puts it:

   … any issue which needs the wife’s signature becomes a battle involving lawyers and huge expense. The partnership simply cannot operate if I have to engage in a two-month exchange of lawyers’ correspondence to reach agreement on funding or repairs and other items to run the properties and the business until trial.

3. According to the husband, while the wife has been aware of the precarious financial position of the partnership, due in large part to an extended drought from 2017 to 2019, she has withdrawn funds from the partnership account at times leaving insufficient funds to meet outgoings necessary to meet the running costs and monthly liabilities for the partnership and the parties’ personally. When the wife refused to provide an undertaking not to continue to do so, the husband removed the available funds from the partnership account so that he could ensure liabilities were met.

4. The husband contends that he has been negotiating with the wife, through lawyers, since July/August 2019 for an extension of the seasonal market rate facility by $450,000. The bank at that time had indicated their approval. The wife insisted on unworkable and unjustified conditions e.g. she wanted the final say on the ongoing payment of wages for employees despite the husband proposing the wages be capped at $1,500 per fortnight, the consequence being that he had to suspend one of the employees who had worked for the partnership for over 30 years because he could not guarantee payment of his wages. By the time the wife finally agreed to the extension of the seasonal market rate facility in about March 2020, the bank said it would be irresponsible to lend only that sum when the budget prepared by the bank indicated that $2,000,000 was required to ensure cash flow through to January 2021. The wife also failed to sign documents to roll over the seasonal market loan facility of $3,375,000 which then attracted default interest of 9.5% per annum.

5. When the husband proposed the sale of ‘L Street’ in August 2019, the wife insisted on expenditure of $80,000 on the property prior to sale, money they did not have. Agreement to the sale of ‘L Street’ has only just been forthcoming from the wife.

6. In May 2019, Mr B Calvin offered to buy the Calvin Contracting plant and equipment for $1,900,000. The wife rejected the offer. The plant and equipment has since been valued at $1,435,000 resulting in a notional loss of $465,000.

7. On 14 October 2019, the wife was informed that the lease payment of $52,500 for ‘V Property’ was due two days later (in accordance with the terms of the lease, which was provided to the wife in April 2019) and that there was less than $61,000 available credit and insufficient funds to meet that payment and the ongoing expenses of the partnership. No response was forthcoming. So that a crop could be planted, the husband secured the lease without the wife’s co-operation by borrowing funds and taking out the lease in a new entity’s name which he controlled.

8. The wife has not been on the properties for about two years. She has no hands on farming experience or experience in relation to the financial aspect of running the business. Yet she is seeking to restrict the husband in the ongoing operation of the farms by delaying decisions which need to be made promptly e.g. if rain is forecast crops sometimes have to be planted immediately.  

9. The husband is highly thought of in the farming community as the evidence from the various agricultural consultants attest.

10. The wife has benefited significantly from the husband’s continued commitment to the partnership to which he devotes 12 hours per day seven days a week. The wife lives in the parties’ investment property in Brisbane which requires monthly loan repayments of nearly $14,000. As the wife now occupies that property, the loan repayments and outgoings are non-deductable payments. All the outgoings on the home including utilities have been met from the partnership account as well as the loan repayments on her motor vehicle 1 of $3,000 per month (until the vehicle was stolen earlier this year). The wife then received the insurance payout of $73,000 on the understanding by the husband that the entire dispute had been resolved. In addition, the wife has been receiving the same monthly drawings of $4,500 as the husband. While the wife contends that she has no earning capacity, her assertion is unsupported by any evidence.  

11. The impasse over borrowing sufficient funds to continue the farming operation resulted in the husband having to borrow $25,000 from his brother for fuel, and obtaining, for the first time, ‘crop terms’ so that he could purchase seed, chemicals, and fertiliser and pay after harvest.

12. The husband opposes the interim sale of the rural properties known as ‘X Property’, ‘Y Property’ and ‘Z Property’ for two reasons. Firstly, in circumstances where the husband has operated a very successful rural enterprise which has enabled the acquisition of all of the parties’ current assets (save the ‘W Property’ property which the husband brought into the marriage) he wishes to retain these properties and continue doing what he has done for the past 43 years i.e. farm. Whether or not a sale of these properties is required is a triable issue. Secondly, even if the borrowing of further money may at a point in time appear to put the parties in a worse net position (which is not admitted), one cannot ignore the fact that the partnership has been very profitable and any shortfall is likely to be short term particularly when the parties have agreed to the sale of two properties which will reduce debt by about $7,500,000.

13. The husband also contends that he should be permitted to sell ‘W Property’ to Mr B Calvin at the single expert valuation. The sale can happen promptly and avoid unnecessary sale costs.

14. The orders sought by the husband are submitted to be proper within the meaning of s 114 of the Family Law Act 1975 (Cth) (“the Act”) for the preservation of property. It is argued that the order sought by the husband will achieve the continuation of the partnership and provide funds for the servicing of a substantially reduced level of indebtedness (after the sale of property). There will be transparency to the wife by the ongoing disclosure requirements and any alleged loss to the parties by the further borrowing (which is disputed by the husband) can be adjusted at trial.

Wife’s submissions

1. The wife contends that as a partner of Calvin & Calvin, she has as much right to make decisions about the partnership and access funds as the husband but he does not accept that and seeks to exclude her. She argues that the order sought by the husband is extreme and cannot be justified, particularly in circumstances where the wife argues that the husband cannot be trusted to do the right thing. The order sought by the wife is intended to create a more responsible regime in how the husband continues to manage the farm, in particular, in relation to expenditure.  

2. She points to his alleged underhanded practice of moving certain assets “off the balance sheet” for the purposes of this case and cites as an example his claim that there were insufficient funds to pay the ‘V Property’ rent when, on his own evidence, there were sufficient funds and yet he caused the lease to be terminated, set up another entity, took over the lease and borrowed funds using one of the rural properties as security and then planted crops which are not accounted for. Additionally, he has allegedly assisted Mr B Calvin to divert the business of Calvin Contracting to the detriment of the wife in circumstances where the income from that source has been well over $1,000,000 since May 2019 and should have been received by Calvin Contracting but has been diverted to Mr B Calvin’s entities. The wife points to the purchase by Calvin Contracting of a harvesting machine on 10 May 2019 for $825,000 for which the bank advanced the funds and within days of Mr B Calvin setting up his own entities the harvesting machine was transferred to Mr B Calvin on 8 June 2019 and the loan paid out. In addition, everyone told the wife that Mr B Calvin was not working in Calvin Contracting and had not done so for months, but he not only continued to draw a wage until April 2020, he also took over the work that would have produced income for Calvin Contracting.

3. The wife disputes that she refused to agree to the extension of the seasonal market rate facility by $450,000.  The parties negotiated terms but by the time agreement had been reached the bank refused to advance that sum.

4. The wife submits that the Court could not be satisfied that the injunctions sought by the husband would preserve property. She also points to the absence of any undertaking as to damages offered by the husband. There is no expert evidence that the continued holding of the remaining rural properties will result in a greater value to be redeemed. The Court could not be satisfied that there is an economically achievable business to salvage when it has accrued debt of $12,000,000.

5. In support of her argument that the parties will in fact be worse off after borrowing up to $2,000,000 as proposed by the husband, she cites the budget relied upon by the bank and submits that there will be a shortfall of $624,018 by February 2021.

6. The wife also submits that, as the husband now has crops on ‘V Property’ which will produce in the order of $500,000 in cash flow in the coming weeks and months, he is not being frank with the Court when claiming he needs to borrow up to another $2,000,000 and have the entire management and control of it.

7. It is submitted by the wife that it is not just and equitable to “compel” further borrowing.

8. The sale of ‘W Property’ to Mr B Calvin should not be permitted when the valuation is now out of date and was undertaken at a time when the area was in the middle of a drought. Further, the valuation of ‘W Property’ makes no provision for the value of the crop currently planted on it. A sale by auction will not prevent Mr B Calvin acquiring the property.

Discussion and Conclusion

1. Under the Act, the Court has power to grant such injunction in a ‘matrimonial cause’ as it considers proper with respect to property of the parties to the marriage or either of them,[2] or to grant an injunction where it appears just and convenient to do so and either unconditionally or upon such terms and conditions as the court considers appropriate.[3] A ‘matrimonial cause’ is defined in s 4 of the Act as including proceedings between the parties to a marriage with respect to property of the parties arising out of the marital relationship in relation to completed divorce proceedings or proceedings between the parties to a marriage for an order or injunction in circumstances arising out of the marital relationship or any other proceedings relating to concurrent or pending proceedings of the type just mentioned.

   [2]Family Law Act 1975 (Cth) s 114(1).

   [3] Ibid s 114(3).

1. The power invested in the Court to grant an injunction attracts the operation of particular principles derived from equity courts,[4] although the term ‘injunction’ “takes its colour from the statutory regime in question”.[5] The term ‘just and convenient’ is not “at large”.[6]

   [4]Australian Broadcasting Corporation v Lenah Game Meats (2001) 208 CLR 199 at 240, [88].

   [5] Ibid at 240, [89].

   [6] Ibid at 248, [105].

2. Whether or not an injunction should be granted involves an inquiry as to whether or not there is a serious issue to be tried i.e. whether or not the applicant for the injunction has established a prima facie case for the substantive relief sought. If there is a serious question to be tried, the Court must assess where the balance of convenience lies i.e. which of the parties will suffer the most injury/inconvenience if the injunction is or is not granted. [7] It is not necessary for the applicant to establish that it is more probable than not that the substantive claim will succeed, rather, “it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial”.[8] “How strong the probability needs to be depends, no doubt, upon the nature of the rights the plaintiff asserts and the practical consequences likely to flow from the order he seeks.”[9]

   [7]Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at 68, [19], 81–84, [65]–[72].

   [8] Ibid at 81–82, [65].

   [9] Ibid quoting Kitto, Taylor, Menzies and Owen JJ in Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 at 622.

3. The nature of the enquiry of what is just and convenient in the family law setting is particularly concerned with preserving the subject matter of the proceedings. In Tsiang & Wu and Ors the Full Court of the Family Court (Strickland, Ainslie-Wallace and Aldridge JJ writing jointly) noted that “[t]he determination about the balance of convenience may thus be an inference drawn from the facts and circumstances established by the applicant’s evidence”.[10]

   [10] (2019) FLC 93-911 at 79,138, [25]; See also Waugh & Waugh (2000) FLC 93-052 at 87,810, [45]–[46]; Mullen & De Bry (2006) FLC 93-293 at 80,995–80,999, [35]–[56].

4. In this case, there are allegations and counter allegations as between the husband and the wife about unreasonable and underhand conduct including, withdrawing money from the overdraft account without consultation or agreement with the other party, diverting assets and income to third parties, and generally acting contrary to their joint interests in the partnership.

5. On the face of the material, each party appears to have some legitimate cause for complaint but whatever the rights or wrongs of the situation, it is now apparent that the parties (jointly) are unable to make timely decisions affecting their joint interests and a circuit breaker is needed.

6. As the husband is the one on the spot, so to speak, and has historically made the decisions relating to the day to day operation of the rural properties and ‘V Property’ (see the evidence from Mr BB, Mr CC and Mr DD) it seems to me that he should continue to do so. The fact that the husband does not offer an undertaking as to damages if the injunctions are granted is not fatal to his case. As Cronin J explained in Soli & Bedwynne,[11] if adjustments can be made at trial there may be no need for such an undertaking. That is the case here. 

   [11] [2010] FamCA 510 at [41].

7. Whether or not any funds are clawed back from the operation of the contracting business by Mr B Calvin’s entities is a matter for another time.  

8. In the meantime, NAB has assessed that further funds will be necessary for the continued operation of the partnership. On 10 March 2020, NAB said:

   You both have a copy of the budget for the partnership which shows $2,000,000 would be required to fund working capital for the partnership until winter crop proceeds are received in Jan 2021. (full cash cycle)

   …

   It would be irresponsible of Me/the Bank to only lend $450,000 when the budget provided shows the operation requires $2,000,000.

   …

9. The budget reflects anticipated income from crops of $1,764,000, operating expenses for farming of ($1,177,684) and when combined with other outgoings including meeting the interest on existing loans, drawings, capital expenditure, vehicle expenses, taxation, insurance and rates there is a net cash flow of ($624,018). Overall, the budget forecasts a reduction in debt from the opening balance of ($10,210,561) to the closing balance of ($9,609,018). The additional $2,000,000 borrowing (or just short of that sum) will be necessary according to these figures in order to meet ongoing liabilities, including in relation to crops. Whether the entire $2,000,000 will be needed depends on a number of factors.

10. For instance, the budget does not factor in the sale of ‘W Property’ and ‘L Street’, which the parties have now agreed to, and the anticipated reduction in debt thereby of about $7,500,000. However, there is no way of knowing when these properties will sell, particularly if there is not an immediate sale of ‘W Property’ to Mr B Calvin.

11. Income received from crops harvested on ‘V Property’ does not overcome the immediate need for funds, given that most will not be harvested until late 2020. Nor does the wife’s proposal for a sale of the other three rural properties when it cannot be known how long sales might take. Additionally, a sale of all rural property would deprive the husband of his livelihood which ultimately may not be necessary.

12. Without an injection of funds from some source, the parties have no capacity to meet their existing and anticipated outgoings. Whether or not this situation is as a result of hiving off Calvin Contracting to Mr B Calvin or the wife’s obstruction is a matter for trial. It will not advance matters now to say that the husband should have used money from the contracting business rather than permitting Mr B Calvin to effectively take that business over. If ultimately that is found to be the case, there is sufficient net property from which to make any appropriate adjustments.

13. It is nevertheless reasonable for the wife to be kept informed about all relevant matters and to have access (view only) to the bank accounts used for the farming endeavours including any set up by the husband for ‘V Property’, and any new facility created for any further borrowings. The husband had previously proposed a cap on his spending of $25,000 without agreement and I consider that to be reasonable.

14. As these are interim proceedings it is important in my view to maintain the status quo as far as possible pending trial. The continuation of the farming business by the husband accords with the reality of the situation since at least separation. 

15. The husband also proposes that various injunctions be issued restraining the wife from selling or dealing with property e.g. ‘Y Property’ and R Street, but there is no evidence of any risk that the wife is likely to take any of the actions referred to.

16. The drawings by each party have been $4,500 per month for quite some time. There is no evidence that particularly addresses why that should be decreased to $3,500 per month, other than the fact that the parties are carrying considerable debt and may need to tighten their belts. In those circumstances, I propose to reduce the monthly drawings as proposed by the husband.

17. Lastly, the sale of ‘W Property’ to Mr B Calvin at the single expert valuation, while attractive on one view in that it would be a source of immediate funds (assuming Mr B Calvin could raise the necessary funds), the wife raises a legitimate issue, namely, the valuation was obtained during a period of significant and prolonged drought. Circumstances have significantly changed. An auction would enable the market to be tested and still enable Mr B Calvin to acquire the property if he is able to meet the right price. 

I certify that the preceding sixty-seven (67) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Carew delivered on 21 July 2020.

Associate: 

Date:  21.07.2020