CAMPBELL and LOUIS

[2017] FCWA 44

JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA

ACT: FAMILY COURT ACT 1997

LOCATION: PERTH

CITATION: CAMPBELL and LOUIS [2017] FCWA 44

CORAM: O'BRIEN J

HEARD: 2 FEBRUARY 2017

DELIVERED : 31 MARCH 2017

FILE NO/S: PTW 4513 of 2009

BETWEEN: MS CAMPBELL

Applicant

AND

MR LOUIS
Respondent

Catchwords:

DE FACTO FINANCIAL PROCEEDINGS - application for interlocutory orders setting aside transactions whereby securities transferred into superannuation fund - enforcement of interim orders for de facto partner maintenance - litigation funding and costs - disclosure - reinstatement of party as director of corporate trustee for self-managed superannuation fund.

Legislation:

Corporations Act 2001 (Cth) s 135, s 203C
Family Court Act 1997 (WA) s 205ZD, s 205ZG, s 205ZI, s 219A, s 222, s 237, s 243
Family Law Act 1975 (Cth) s 106B
Superannuation Industry (Supervision) Act 1993 (Cth) s 17A
Superannuation Industry (Supervision) Regulations 1994 (Cth)

Category: Not Reportable

Representation:

Counsel:

Applicant: Mr R Hooper SC

Respondent: Self-Represented Litigant

Solicitors:

Applicant: Paterson & Dowding

Respondent: Self-Represented Litigant

Case(s) referred to in judgment(s):

Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337

In the Marriage of Zschokke (1996) FLC 92-693

VC & GC (2010) FLC 93-434

WORDS IN SQUARE BRACKETS REPLACE WORDS USED IN THE ORIGINAL JUDGMENT - PARTIES’ NAMES AND IDENTIFYING DETAILS HAVE BEEN CHANGED

Introduction

1The matters which fall for determination arise from the amended Form 2 application of the applicant, [Ms Campbell], filed on 18 January 2017. The applicant and the respondent, [Mr Louis], lived together in a de facto relationship for approximately nine years until they separated in January 2008. They did not marry.

2The substantive proceedings have a long and difficult history. They were commenced by the applicant’s Form 1 application filed on 31 August 2009. They have continued with variable intensity since then, over a course of over 60 separate court events.

3There has been no activity in the parenting proceedings between the parties for some considerable time. While those proceedings have not been finalised, it appears that the matters in dispute between the parties abated after the publication and consideration of the report of a Single Expert Witness.

4The financial proceedings continue. A judicial conference between the parties was facilitated by the court in May 2014 but did not lead to any resolution. Little progress was made subsequent to the judicial conference until May 2016 when the Honourable Justice Moncrieff made orders to program the matter towards trial.

5The matter was listed for trial before me to commence on 5 September 2016. The parties did not comply with the orders which had been made by Moncrieff J to ready the matter for trial and the trial date was vacated.

6By that point, both parties had been self-represented for some time. The applicant clearly had difficulty in formulating her financial claim, struggling not only with the court’s requirements but also with the complexities associated with the respondent’s financial dealings. The documents filed by the respondent in relation to the financial case were minimalist at best; they fell well short of full disclosure of his financial circumstances and the evidence required to enable the true issues in the case to be properly understood and addressed.

7The applicant then engaged solicitors. With their assistance, she has taken steps to advance the proceedings towards readiness for trial.

The ex parte orders

8The original Form 2 application filed on 25 November 2016 first came on for hearing on an ex parte basis on 2 December 2016. Orders were made on that day restraining the respondent from taking any steps which would have the effect of changing the corporate structure of any entity in which he holds a position or has an interest. Further orders were made restraining him from disposing of or encumbering property in which he has an interest, whether personally or through his interest in an entity, and limitations were also placed on his ability to transact on various accounts other than to meet his personal living expenses and his existing obligations to pay child support and spousal maintenance. Orders were also made to restrain him from taking other steps which might have the effect of divesting assets or control of assets, and from deleting or destroying documents which might be discoverable.

9It is unnecessary for the purpose of these reasons to recite in detail the evidence which led to the making of those ex parte orders. It is sufficient to observe that in the applicant’s affidavit filed on 25 November 2016, both in support of the original Form 2 application filed that day and for the purposes of trial, she deposed to the following:

1.She had been able to identify a number of corporate entities in which the parties or either of them had an interest, and estimated that the value of the legal and equitable interests of the parties in property and superannuation amounted to something in the vicinity of $4,800,000.00;

2.At the date of separation, the parties were the only members of the [Superannuation Fund A] (“the [Super Fund A]”) and the only directors of the corporate trustee of the Super Fund A, [Company A];

3.Subsequent to separation, she was removed as a director of Company A without her knowledge and the respondent’s mother and daughter were appointed as directors;

4.The respondent is presently living on a property in [Albany] which is owned at least in part by the Super Fund A;

5.The respondent’s member entitlement in the Super Fund A as at 30 June 2007 (being the end of the financial year immediately prior to separation) was $393,535.00;

6.By 30 June 2008, some six months after separation, that member entitlement had increased to approximately $813,000.00;

7.By 30 June 2012, the respondent’s member entitlement had increased to approximately $1,220,000.00 and continued to increase relatively gradually thereafter, until 30 June 2015;

8.The [Investment Trust A] ([“Trust A”]) was established in 1998. It is a unit trust and Company A is the trustee. The respondent holds 1,000 of the 1,001 issued income units, with the other income unit being held by Company A. Another entity controlled by the husband, which was deregistered in November 2014, held the two issued ordinary units. That entity and Company A each held one of the two discretionary capital units;

9.On or about 31 August 2016 various securities were transferred from Trust A to the Super Fund A. Those securities were estimated by the applicant to have a value totalling approximately $418,000.00;

10.At the time of separation the respondent was one of five directors of [Company B] and owned 3,200 of the 4,040 issued shares in that entity. Company B was the vehicle through which the respondent operated accounting services. On 19 August 2010, Company B sold the business to [Company C] for $3,000,000.00, payable in instalments;

11.The production of documents from Westpac under subpoena revealed payments of numbered instalments from Company C into an account operated by Company A. The respondent had not disclosed either the account or the payments; email exchanges between the respondent and an associate in March 2012 showed the respondent contemplating what he described as “cunning ideas” to “get the balance of my money out of Company B before Ms Campbell tries to get it”; and

12.Enquiries by the solicitors for the applicant led her to believe that Company C has not completed its payments and that an amount of approximately $650,000.00 remains still to be paid.

10It is against that background that the ex parte orders were made.

11In his financial statement sworn on 29 July 2016 the respondent disclosed his interest in Trust A, asserting that his “share” in that entity was 50 per cent and that the value of that share was $1,005.00. As noted above, only a few weeks after that financial statement was sworn Trust A transferred to the respondent’s member account in the Super Fund A securities to a value of approximately $418,000.00. At the hearing on 2 February 2017 the respondent said that the securities so transferred had been accumulated over the last two years, but did not explain in any satisfactory way how that fact could be reconciled with his sworn evidence as to the value of his interest in Trust A.

12The respondent acknowledged at the same hearing that the value of his member interest in the Super Fund A is now approximately $1,800,000.00, with the fund having a total value of approximately $1,920,000.00.

13Of course, as the parties were never married, the court is unable to make superannuation splitting orders.

14The applicant draws attention to the commercial and accounting acumen of the respondent, what she would assert to be his desire to minimise or defeat her proper entitlements, and the increase in value of his member interest in the Super Fund A from $393,535.00 as at the 30 June 2007 financial statements immediately prior to separation to approximately $1,800,000.00 now.

15She draws attention also to various other transactions and communications which she would assert are indicative of an intention on the part of the respondent to at the very least render difficult an accurate assessment of his financial position.

Financial obligations of the respondent pursuant to existing orders

16On 25 June 2013 an order was made requiring the respondent to pay de facto partner maintenance to the applicant in the sum of $1,700.00 per week until further order.

17On the applicant’s evidence, the respondent has never complied with that order. The order has not been discharged or varied.

18By the same token, there is no evidence that the applicant has taken any active steps to enforce the order prior to the filing of the original Form 2 application on 25 November 2016.

19In late 2009, the applicant sought and obtained a child support assessment. On her evidence, the respondent is currently assessed to pay $2,816.67 per month. Up until the making of the ex parte orders on 2 December 2016, the respondent was paying the assessed amount; on the applicant’s evidence, he ceased those payments following service of the orders on him and is presently making no payments to her.

20The applicant registered the respondent’s de facto partner maintenance liability with the Child Support Agency. On her evidence, supported by a certificate of debt issued by the agency, the respondent’s liability in respect of child support and de facto partner maintenance payments stood at $360,304.17 as at 4 November 2016.

21In his affidavit sworn on 23 January 2017 the respondent did not assert that he had complied with the obligations leading to the debt; rather, he complained that Centrelink (sic) “continue to refuse to provide a statement of account setting out the basis of the amount owing”. He went on to detail various payments which he would allege he made to or for the benefit of the applicant, asserting that at trial “the court will be tasked with characterising” those payments.

22The relief sought by the applicant in her Form 2 application seeks to prevent dissipation of assets (or the placement of those assets beyond her reach), compel disclosure, and access funds by reference not only to the asserted liability in respect of child support and de facto partner maintenance but also by reference to what she would assert to be her eventual entitlements in her substantive application for alteration of property interests and her incurred and anticipated legal costs.

Relief sought at the hearing on 2 February 2017

23As the orders of 2 December 2016 were made on an ex parte basis, the respondent was given liberty to apply to set aside or vary those orders on giving notice to the solicitors for the applicant. No such notice was given and no such application was made.

24Accordingly, it is appropriate for paragraph 5 of the orders made on 2 December 2016 to now be discharged. The orders made that day will remain in force until further order. The discharge of the provision giving the respondent liberty to apply on short notice does not of course affect his ability to make any further proper application in the normal course.

25The applicant seeks orders which may be summarised as follows:

1.Orders for the immediate payment of the amount of $360,304.17 being the maintenance and child support debt owed as at 4 November 2016;

2.Orders pursuant to s 222 of the Family Court Act 1997 (WA) (“the Act”) setting aside the transactions and instruments whereby the various securities were transferred from Trust A to the Super Fund A on or about 31 August 2016;

3.Consequential orders to effect the sale or liquidation of those securities and the distribution of the proceeds of sale to satisfy the maintenance and child support debt, with any outstanding balance to be held pending trial;

4.Procedural orders whereby Company A and Trust A would not be required to be joined as parties to the proceedings on the basis that those entities are the alter ego of the respondent or the parties, and that service on those entities in any event be dispensed with;

5.Her reappointment as a director of Company A; and

6.Orders diverting to her any future payments to be made by Company C or any third party on its behalf, with any funds received by her by that process to be characterised either as payments by way of interim provision of litigation funding, or otherwise characterised by the trial Judge.

26It is convenient to deal with each of those prayers for relief individually, noting that the evidence and submissions in relation to each will to a certain degree overlap such that repetition is not required.

Order for immediate payment of the maintenance and child support debt

27Senior Counsel for the applicant properly acknowledged that there was no readily identifiable source of funds from which the payment sought could be made, unless and until the other orders sought (and in particular the order seeking to set aside the transfer of securities from Trust A to the Super Fund A) are made and implemented.

28Nevertheless, it is appropriate to consider at this point the broader question of whether, if able, the court should make orders to enforce payment of the debt.

29The court is not obliged to enforce its own orders; it retains the discretion in appropriate circumstances to decline to do so. There is, however, a strong presumption in favour of enforcement.

30The respondent acknowledges that he has never complied with the order for de facto partner maintenance. The arrears under that order comprise the vast bulk of the combined maintenance and child support debt.

31The respondent has never applied to set aside the order for de facto partner maintenance, nor did he appeal against it. The vague assertions in his affidavit, to the effect that payments have been made which he would claim should offset his liability pursuant to that order, are not sufficiently particularised to enable them to be afforded any weight.

32That said, in exercising its discretion in relation to enforcement it is appropriate for the court to take into account any efforts on the part of the beneficiary of the relevant orders to enforce them prior to the present application. While s 219A of the Act makes it clear that the court “must not require that there be special circumstances that justify enforcing the maintenance order merely because the maintenance payable under it is more than 12 months old”, that section does not render irrelevant the question of any efforts to enforce in the interim period.

33There is no evidence presently before the court to suggest that there has been any attempt, formal or informal, by the applicant to enforce compliance with the order of 25 June 2013 since it was made.

34I observe nevertheless that it is open to the court to make orders at any stage which have the effect of compelling partial satisfaction of a debt arising from an enforceable order, without inhibiting any legitimate claim the respondent might have to oppose the enforcement of the debt in full.

35I am satisfied that it would be an appropriate exercise of discretion to make orders enforcing at least the part payment of the de facto maintenance and child support debt if a source of payment can properly be identified.

The involvement of Company A and the Investment Trust A

36The applicant sought orders in the following terms:

[Company A] and [Trust A] not be required to be joined by the Applicant as parties to these proceedings on the basis that those entities act as the alter ego of the Respondent or the parties.

To the extent required to satisfy the requirements of procedural fairness, service of these interim orders on [Company A] and [Trust A] be dispensed with on the basis that:

(a)the Respondent is a Director of [Company A] and [Trust A]; and

(b)[Company A]’s registered address is the property at [Address A], being the same address as the Respondent’s address for service in these proceedings.

37The respondent sought orders deferring consideration of that issue to trial, apparently on the basis of his mistaken belief that the trial would commence on 2 May 2017. He did not address the issue at all in the affidavit filed in support of his response.

38At the hearing on 2 February 2017, the respondent contended that the other directors of Company A (his daughter and his elderly mother) are very active in their roles. He pointed to the exhibited minutes of a meeting of the directors of Company A on 11 December 2016 whereby the directors discussed issues arising from the orders made on 2 December 2016 and passed various resolutions.

39He did not actively oppose orders being made in the terms sought by the applicant. Rather, he submitted that as he is not the only director of Company A he was not prepared to consent to those orders without conferring with the other directors. He said it was “remiss” of him not to have done so prior to the hearing.

40The orders sought by the applicant are based on the premise that Company A and Trust A “act as the alter ego of the respondent or the parties”. That recognises the limitations on the power of the court to make orders affecting the interests of third parties, except in the case of shams and entities that are mere puppets of a party to the marriage. If a company is “completely controlled” by a party, such that an order against the company is in reality an order against the party, those limitations may not apply: Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337.

41In the present case, Company A performs at least three functions. It is the trustee of each of the Super Fund A, [Trust B] and Trust A.

42As already noted, the respondent’s mother and daughter are both directors of [Company A]. The daughter is also a shareholder, albeit she owns only one of the 103 issued shares with the respondent owning the balance.

43The difficulties in the proposition that Company A and Trust A can be conclusively found at this interlocutory stage of the proceedings to be the alter ego of the respondent, or the parties, include:

1.[Company A] is, as noted, trustee of the [Super Fund A]. The respondent’s mother and daughter are both members of that fund. They are, for that reason, required to be directors of [Company A] and [Company A] in turn has obligations to them;

2.No copy of the Constitution of [Company A] is in evidence. Accordingly, I have no evidence as to the voting rights which might attach to different classes of shares or other provisions of the Constitution which might rebut or for that matter support the proposition that the company is “completely controlled” by the respondent;

3.The respondent is the Appointor and Guardian of [Trust B], but no copy of the trust deed is in evidence;

4.The Trust Deed for [Trust A] is in evidence, as an exhibit to the respondent’s financial statement filed on 18 August 2016. The Deed provides that the Trustee may vary the trusts power terms and conditions of the deed with the consent of the Unit Holders. The deed includes provisions for a right of first refusal on the part of existing unit holders where units are sought to be transferred. It also includes provisions whereby the Trustee may be removed by unanimous resolution, and a replacement appointed by special resolution.

5.The evidence does not, however, permit a finding as to the identity of all the present Unit Holders. I cannot, therefore, presently make a finding as to whether a unanimous resolution or a special resolution could be passed at the exclusive behest of the respondent, even were I to conclude that he completely controls [Company A].

44On the evidence presently available, I am not prepared to make the suggested finding that Company A and Trust A are the alter egos of the respondent, or the parties. I express no view as to whether in due course such a finding is likely to be open.

45I note however that the minutes of the meeting of the directors of Company A placed into evidence by the respondent show that on 11 December 2016 the directors resolved in the following terms:

[Law Firm A] is instructed to:

(a)liaise with Westpac and other third parties to ensure that the business of the [Super Fund A] could continue uninterrupted; and

(b)represent the [Super Fund A] in relation to any Orders sought by [Ms Campbell] in Family Court Proceedings between [Mr Louis] and [Ms Campbell].

46I conclude that Company A had notice of both the orders to be sought on an interim basis by the applicant and the evidence relied upon in support of her application.

47While I am not prepared to make the finding sought to the effect that Company A is the alter ego of the respondent, I am prepared to make orders as to the requirement for service of documents on that entity so as to avoid entirely pointless delay and expense being incurred in circumstances where the respondent is a director of the company, is at the very least actively involved in the direction of its affairs and resides at the address which is recorded as its registered office.

Orders setting aside the transfer of securities from Trust A to the Super Fund A and consequential orders for liquidation of the securities, payment of the child support and de facto partner maintenance debt

48Section 222 of the Act is in the following terms:

(1)In proceedings under this Act, the court hearing the proceedings may set aside or restrain the making of an instrument or disposition by or on behalf of, or by direction or in the interest of, a party which is made or proposed to be made to defeat an existing or anticipated order under this Act or which, irrespective of intention, is likely to defeat any such order.

(2)A court referred to in subsection (1) may order that any money or real or personal property dealt with by any such instrument or disposition may be taken in execution or charged with the payment of such sums for costs or maintenance as the court directs, or that the proceeds of a sale are to be paid into court to abide its order.

(3)A court referred to in subsection (1) must have regard to the interests of, and must make any order proper for the protection of, a bona fide purchaser or other person interested.

(4)A party or a person acting in collusion with a party may be ordered to pay the costs of any other party, or of a bona fide purchaser or other person interested, of and incidental to any such instrument or disposition and the setting aside or restraining of the instrument or disposition.

(4a)In addition to the powers a court referred to in subsection (1) has under this section, such a court may also do any or all of the things listed in section 205ZI(1).

(5)In this section —

disposition includes —

(a)a sale or gift; and

(b)the issue, grant, creation, transfer or cancellation of, or a variation of the rights attaching to, an interest in a company or a trust;

interest —

(a)in a company includes —

(i)a share in or debenture of the company; and

(ii)an option over a share in or debenture of the company (whether the share or debenture is issued or not); and

(b)in a trust includes —

(i)a beneficial interest in the trust; and

(ii)the interest of a settlor in property subject to the trust; and

(iii)a power of appointment under the trust; and

(iv)a power to rescind or vary a provision of, or to rescind or vary the effect of the exercise of a power under, the trust; and

(v)an interest that is conditional, contingent or deferred.

49As I perceive it, there are two orders which the applicant would assert are intended or likely to be defeated by the dispositions which she seeks to set aside; the anticipated order for enforcement of the existing order for de facto partner maintenance, and payment of the arrears accrued pursuant to that order, and the further anticipated order for alteration of property interests.

50The interim relief sought by the applicant directs attention primarily to the former, but that is not to say that she makes no claim in respect of the latter.

51While the wording of s 222 differs slightly from the wording of s 106B of the Family Law Act 1975 (Cth) (“the Family Law Act”), the differences are not of substance for present purposes, and authorities in which the application of s 106B has been considered are relevant.

52For an order pursuant to s 222 to be made, the relevant instrument or disposition must be intended to defeat an existing or anticipated order, or be likely to defeat such order irrespective of intention. Accordingly, it is not necessary for the applicant to prove an actual intention to defeat the anticipated order by the disposition; the court may look to the effect of the transaction without proof of its purpose.

53That said the relevant order must be existing or anticipated; an anticipated claim is not sufficient. The test is whether the order in question is one which would be anticipated by the reasonable disponer at the time of the disposition, properly considering all the circumstances of the case.

54For the disposition to defeat or be likely to defeat the anticipated order, it must be shown that the anticipated order cannot otherwise be satisfied, without the disposition being set aside.

55The onus is on the applicant to establish the necessary elements. Even if all of the requirements of the section are satisfied, the grant of relief is purely discretionary.

56The Full Court has pointed to the difficulty associated with any attempt to deal with an application for orders pursuant to s 106B of the Family Law Act in a discrete manner prior to or at the commencement of trial.

57In VC & GC (2010) FLC 93-434 at [8] and [9] the Full Court said:

…we think it is appropriate we should express our view that it is generally undesirable to have a discrete hearing of a s 106B application. This is especially so where, as was the case here, findings of credibility are likely to be important. The judge may well make a favourable or unfavourable finding in determining the s 106B questions but, in the light of what subsequently transpires in the balance of the s 79 proceedings, wish that he or she had not done so.

Also the questions that are answerable in a discrete hearing may be more limited than is often appreciated. Questions of intention and whether an order was “anticipated” or not may be answerable, but whether, even if those questions are answered affirmatively, an anticipated order is likely to be defeated, might well not be answerable until the completion of s 79 proceedings.

58In that case, the application for a discrete hearing was prompted by the fact that the father of the husband in the proceedings, who was a respondent and a party to various of the transactions sought to be set aside, was terminally ill. While the husband’s father had sworn an affidavit, he was not available for cross-examination. Significant issues arose on appeal as to the weight given to his evidence.

59In the present case, I am asked to make orders pursuant to s 222 of the Act “on the papers” in circumstances where:

(a)the asset pool available for division between the parties is not by any means established;

(b)all the evidence which will be available at trial as to the matters which must be taken into account in determining the applicant’s entitlement, if any, to orders for alteration of the parties’ interests in those assets is not yet available; and

(c)the evidence presently available has not been tested.

60It would be unsafe in those circumstances for me to conclude at this point that the relevant dispositions were either intended to defeat an anticipated order for alteration of property interests in favour of the applicant or regardless of intention, are likely to have that effect.

61I accept the submission of the respondent that the consideration of that issue is properly a matter for trial.

62In reaching that conclusion, I do not ignore the evidence of the diversion by the respondent or at his direction of significant assets into superannuation, which in turn is not susceptible to a splitting order that would be available were these parties married. The suspicions held by the applicant and those advising her cannot be said, on the evidence presently available, to be without foundation. That, however, is insufficient to ground the relief sought on an interim basis though it may very well be that the claim is proven at trial to be well-founded.

63As already noted, the potential defeat of an anticipated order for alteration of property interests is not the only basis upon which the applicant seeks that the relevant transactions be set aside. The applicant sought interim orders consequential to the setting aside of the dispositions, to require the sale or liquidation of the relevant securities and the payment to her of the amount required to discharge the child support and de facto partner maintenance debt she asserts is owing to her.

64It cannot be said that the dispositions in question were intended to defeat, nor have the effect of defeating, the existing order for periodic payments of de facto partner maintenance. The applicant’s contention must therefore be that, regardless of intention, the dispositions have the effect of defeating an anticipated order for payment of the arrears which have accrued pursuant to the existing order.

65While I am satisfied that it would be appropriate if practicable for the court to exercise its discretion to enforce the de facto partner maintenance order at least in part, I cannot be satisfied on the evidence that the dispositions in question were intended to defeat the existing order or irrespective of intention, would have that effect.

66The evidence does not support a conclusion that an order for the payment of a lump sum in satisfaction of the debt arising from the respondent’s failure to comply with the interim order for de facto partner maintenance would have been anticipated by a reasonable disponer at the time the disposition was made. There was no application for such an order on foot at that time and there is no evidence of any less formal efforts on the part of the applicant to enforce or at least seek compliance with that order at the time of the disposition.

67It follows that, as the evidence presently stands, the disposition cannot be set aside by reference to the defeat of an anticipated order to enforce the maintenance obligation. My observations above as to the difficulties inherent in any proposition that a transaction be set aside at an interlocutory hearing also refer.

68As already noted, the respondent did not seek the dismissal of this aspect of the application; rather, he sought only its deferral to trial. The application for the relevant dispositions to be set aside will accordingly remain on foot and available to be pursued by the applicant at trial. I record that I would have made orders to that effect even had the respondent sought the dismissal of the application.

Orders for the reinstatement of the applicant as a director of Company A

69The applicant seeks an order in the following terms:

The Respondent forthwith do all acts and sign all documents necessary to re-appoint the Applicant as a Director of [Company A].

70In his Form 2A response the respondent sought the deferral of that issue to trial, again on the basis of his apparent misunderstanding that a trial was to commence on 2 May 2017.

71In her affidavit sworn on 11 November 2016, the applicant said that she became aware of the following matters only by reviewing the searches conducted by her solicitors:

1.That she was appointed as a director of [Company A] on 31 March 2003, at about the time that she rolled her previous superannuation entitlements into the [Super Fund A];

2.That at the date of separation she and the respondent were the only members of the [Super Fund A] and the only directors of [Company A];

3.That on 23 March 2009 the respondent’s mother was appointed as a director of [Company A];

4.That on 28 June 2009 the respondent’s daughter was appointed as a director of [Company A]; and

5.That on 27 September 2012 she was removed as a director of [Company A].

72The applicant’s evidence was that she did not at any time consent to her removal as a director nor did she sign any documents to give effect to it.

73In his affidavit in response, the respondent does not deny the evidence of the applicant. Rather, he exhibits to his affidavit a letter of advice dated 6 September 2012 from a firm of “superannuation lawyers” in which those lawyers express an opinion as to the propriety of actions taken by the applicant in relation to funds previously held in two ANZ bank accounts. The withdrawal of the funds from those accounts by the applicant was pursuant to orders made on 4 July 2012; a subsequent application by the respondent for the monies to be returned to the self-managed fund was dismissed.

74The letter of advice makes clear that based on the instructions provided by the respondent, the author of the letter disagrees with the decision made by the court. For obvious reasons, that is neither here nor there.

75In the same letter, and again based on instructions provided by the respondent, the author expresses opinions to the effect that the applicant, by withdrawing the funds, breached the Superannuation Industry (Supervision) Act 1993 (Cth) (“SIS Act”) and the Superannuation Industry (Supervision) Regulations 1994 (Cth) (“SIS Regulations”).

76In his affidavit, the respondent says that the letter of advice went further to advise that the applicant “should be removed from office” as a director of Company A. Leaving aside the accuracy or relevance of any such opinion, I note that contrary to the evidence of the respondent it does not appear anywhere in the letter referred to.

77The respondent goes on to exhibit to his affidavit a document which he says is a resolution dated 27 September 2012 by himself and his daughter “being all of the members of the company” effecting the removal of the applicant as a director of Company A.

78Otherwise, the entirety of his evidence in relation to this issue is as follows:

[Ms Campbell] is not a suitable director. The appointment and removal of a director is regulated under the Corporation Act, namely Section 203. If the Applicant wishes to challenge the validity of her removal she should do so under the remedial provisions that Act. (sic)

79Section 203C of the Corporations Act 2001 (Cth) (“the Corporations Act”) provides for the removal of a director of a proprietary company by resolution of the members. That section is, however, a replaceable rule.

80Section 135(1) of the Corporations Act provides that a section or subsection expressed to be a replaceable rule applies as a replaceable rule to each company registered after 1 July 1998 and any company registered before 1 July 1998 that repeals or repealed its constitution after that date.

81Subsection 135(2) of the Corporations Act provides that a provision of a section or subsection that applies to a company as a replaceable rule can be displaced or modified by the company’s constitution.

82There is no evidence before me as to the date on which Company A was registered, nor whether its constitution has been repealed after 1 July 1998. The Constitution of the company is not in evidence.

83I cannot, accordingly, make a finding on the evidence before me as to whether the removal of the applicant as a director of Company A was valid.

84There is, however, a critical issue not addressed in the respondent’s evidence or argument. Company A remains the trustee of the Super Fund A. The applicant remains a member of that fund.

85Section 17A of the SIS Act provides that a superannuation fund (other than a fund with only one member) is a self-managed superannuation fund if and only if it satisfies certain conditions. Included in those conditions are requirements that if the trustee of the fund is a body corporate, each director of the body corporate is a member of the fund and each member of the fund is a director of the body corporate: s 17A(b) and (d)(ii). If indeed the applicant was, by virtue of the resolution purportedly passed by the applicant and his daughter, effectively removed as a director of Company A while remaining a member of the Super Fund A, the fund has by virtue of that resolution ceased to comply with s 17A of the SIS Act. As already noted above, notwithstanding the respondent’s evidence to the contrary, the “superannuation lawyer” from whom he sought advice did not recommend the removal of the applicant from her position as a director of the trustee company.

86That in turn may mean that the respondent and his daughter are, by their actions, responsible for any taxation and other consequences which may flow if the fund is noncomplying. Given their respect member entitlements, any consequences that flow may impact more severely on the respondent than the applicant, but it is likely both would be affected. The evidence does not permit of a conclusion in that regard at this point in the proceedings.

87The evidence does, however, permit a conclusion that it is an appropriate exercise of discretion to order the respondent to do all things within his power to procure the reinstatement of the applicant as a director of Company A, and to restrain him thereafter from taking any steps which would facilitate her removal.

88I express no view as to whether or to what extent that step will prevent or alleviate the consequences which might otherwise flow from actions taken by either party which might have rendered the self-managed fund non-complying.

Orders for the diversion of the Company C payments to the applicant

89The final component of the relief sought by the applicant is in the following terms:

The Respondent forthwith do all acts, sign all documents and give all directions and instructions necessary to cause any future payments to be made to or for the benefit of the Respondent and/or [Company A] or other related entity by [Company C] or any other third party in relation to the sale of [Company B], to be directed to the Applicant.

Any funds received by the Applicant pursuant to the preceding paragraph be characterised as follows in order of preference:

(a)As an order for the interim provision of litigation funding pursuant to:

(i)Section 237 of the Family Court Act 1997; or

(ii)Section 205ZD of the Act;

(b)By the Trial Judge upon the Court noting the power in Section 205ZG in conjunction with Section 205ZI of the Act.

Pursuant to Section 243(8)(g) of the Family Court Act 1997, the Applicant have liberty to disseminate a copy of the preceding two paragraphs of these orders to the directors of [Company C] and any other third parties involved in the payments arising from the sale of the business operated by [Company B].

90The applicant’s evidence is that pursuant to a sale agreement executed in August 2010 the accounting business operated by Company B was sold to Company C for $3,000,000.00, payable by instalments. The respondent owned in his personal capacity 3,200 of the 4,040 issued shares in Company B. The applicant goes on to give evidence that over the period of October 2013 to 23 September 2016 various amounts bearing references which would suggest they were instalment payments pursuant to the sale agreement were deposited into a Westpac account held in the name of Company A. She says that the respondent did not disclose either the account or the payments.

91She further gave evidence to the effect that approximately $650,000.00 of the instalment payments remain outstanding. She seeks the diversion of any further payments to her, to be applied in the manner referred to in her orders sought.

92In response, the respondent does not address directly the allegation of nondisclosure. Rather, he says that monies received from Company C are disclosed as periodic income in his financial statement and that the monies have been used for the benefit of the applicant and the children. He says that “any personal benefit received from the transaction, namely dividends, has been reflected in tax returns and disclosed to the applicant”. That statement rather ignores the applicant’s evidence, which is not contradicted or disputed by the respondent, to the effect that he has not disclosed tax returns or financial statements for himself or the relevant entities for the 2009 to 2012 financial years inclusive.

93The respondent does not address at all the evidence of the applicant as to the payments into the Westpac account operated by Company A, the exhibited email exchanges between the respondent and his associates as to his “cunning ideas” to “get the balance of [his] money out of Company B before Ms Campbell tries to get it” or the balance of payments still outstanding. In submissions, he admitted that he was previously receiving regular payments from Company C but asserted that payments had ceased in response to what he alleged was the hacking by the applicant of the Company C server.

94The evidence supports a conclusion that the respondent remains entitled to receive, and is entitled to insist on receiving, further periodic payments from Company C in a significant amount, potentially as high as $500,000.00.

95The question then remains as to whether orders should be made to divert all or part of those monies to the applicant and, if so, on what basis.

96The court is constrained in that regard by the form of the relief sought by the applicant. She seeks the diversion of the relevant funds either:

1.As an order for the interim provision of litigation funding pursuant to s 237 of the Act; or

2.As an order for the interim provision of litigation funding pursuant to s 205ZD, pursuant to which the court may make such order as it considers proper for the maintenance of a de facto partner, taking account only the matters referred to in sub-s 205ZD(3); or

3.To be characterised by the trial Judge, upon noting the court’s power to make orders for alteration of property interests pursuant to s 205ZG in conjunction with the general powers of the court set out in s 205ZI.

97The order for diversion of the relevant funds is not sought in the alternative by way of enforcement of the respondent’s obligations pursuant to the interim order for de facto partner maintenance. The relief sought in that regard is based solely on the proposed setting aside of dispositions from Trust A to the Super Fund A.

98The three alternative proposals for the characterisation of any payments received by the applicant as a consequence of the diversion of the funds are expressed to be “in order of preference”, in the order in which they are set out above. It is appropriate, therefore, to consider the primary preference first.

Payment of interim litigation funding pursuant to s 237 of the Act

99Subsection 237(1) of the Act provides that subject to sub-s 237(2) each party to the proceedings shall bear his or her own costs.

100Subsection 237(2) provides that if the court is of the opinion there are circumstances that justify doing so, the court may, subject to sub-s 237(3) make such orders as to costs as it considers just. Subsection 237(3) sets out the matters to which the court must have regard in considering what order for costs if any is to be made.

101The discretion in that regard is very broad, as is evident from the inclusion of sub-s 237(3)(g) which provides that the court must have regard to such other matters as the court considers relevant, apart from the specific matters listed in the earlier subsections.

102The factors set out in sub-s 237(3) are not to be read in any restrictive way and any one of them may, in appropriate circumstances, be the sole basis for an order for costs.

103An orders for costs may be anticipatory. In such cases, the applicant should have at least an arguable case for substantive relief, deserving of a hearing; that requirement is readily satisfied in this case. There should be evidence of the applicant’s likely costs of the litigation; that evidence, albeit in somewhat limited scope, is contained in the applicant’s affidavit, which also contains evidence as to legal costs already incurred by her. It is sufficient for the purpose of these reasons to say that the estimates of future costs are reasonable in all the circumstances given the history of the matter, its complexities and the demonstrated approach of the respondent to the litigation.

104It is not essential for the making of an order that the applicant’s lawyers will not continue to act unless costs are paid or secured; in any event, in this case the applicant’s evidence is that her present solicitors will not be prepared to represent her to trial without payment being made.

105An order may be made in respect of costs already incurred, whether or not an order for anticipated costs is made.

106Caution must be exercised in framing the orders both to protect the parties from any risk arising from the manner in which the funds are expended, and to ensure that the order itself, and any payment pursuant to, can appropriately be taken into account in the ultimate determination of the substantive proceedings. That said, as the Full Court observed in In the Marriage of Zschokke (1996) FLC 92-693 at p 83,221:

…[while] uncertainty of the amount of the [applicant’s] eventual property settlement award may be fatal to an application under [section 205ZI] it is not necessarily so to an application under [section 237]. It is just one of the matters to be balanced in the exercise of the discretion under the latter sub-section.

107It is generally required that the respondent to the application for anticipatory costs or interim costs should be in a financial position superior to that of the applicant and able to fund his or her own representation. I find that the present financial circumstances of the respondent, while incapable of precise assessment because of the manner in which he has presented his evidence, are superior to those of the applicant and that he is presently self-represented by choice rather than by virtue of impecuniosity.

108Neither party is in receipt of assistance by way of Legal Aid. The consideration of whether any party to the proceedings has been wholly unsuccessful in the proceedings, or whether any party has made a relevant offer of settlement in writing, are not relevant in the determination of an application for anticipatory costs; in any event, there is no evidence as to any offers.

109The present proceedings are at least in part necessitated by the failure of the respondent to comply with previous orders of the court both substantive and procedural.

110I refer to my earlier observations in relation to the conduct of the proceedings by the respondent; his financial disclosure and other evidence have to date been minimalist at best and evasive or deceptive at worst. A number of the communications exhibited to the applicant’s affidavit evidence the respondent’s apparent intention to do what he can to minimise any amount which might eventually be received by the applicant, whether by failure to disclose, by taking steps to place assets out of reach, or by other means.

111Having taken all those matters into account, I conclude that there are circumstances which justify the making of an order as to costs.

112I conclude further that the proposed diversion of funds which stand to be received by the respondent from Company C is an order appropriate to support the proposed order as to costs.

113The question then remains as to the appropriate form of order and the appropriate quantum.

114The respondent has chosen not to address in his affidavit material the assertion by the applicant at paragraph 195 of her affidavit affirmed on 11 November 2016 to the effect that an amount of approximately $650,000.00 remains owing to Company B by Company C, that regular payments are being made and that larger amounts are paid when possible. As already noted, the respondent’s ownership share of Company B is just under 80 per cent.

115Bearing in mind the uncontested evidence as to the applicant’s incurred and anticipated costs, I am satisfied that an order making provision for payment to her of a sum of $100,000.00 by way of costs is just. For present purposes, it is not necessary to apportion that amount between past and future costs; that is a matter which can be addressed by the trial Judge.

116I do not propose at this stage to make further orders in relation to the payment to the applicant of any amount over and above that sum which might yet be received from Company C. I take that approach because it is not yet clear just what further amounts will be received, nor when. I expressly leave open the possibility of the applicant seeking further orders in respect of any additional funds from that source, whether pursuant to the power of the court to make orders in relation to costs, or the court’s powers in relation to maintenance and alteration of property interests. Those aspects of the applicant’s present application will stand adjourned generally, with liberty to seek a relisting.

117As the proposed order is to be made pursuant to the court’s power to make orders in relation to costs, it is unnecessary, at this stage at least, to consider the merits of the applicant’s alternative prayers for relief seeking payments under the maintenance and property powers.

Proposed orders

118Subject to any submissions as to form, I propose to make the following orders:

1.Until further order of the Court, special service on [Company A] or the [Investment Trust A] of any documents filed in these proceedings to date, this order and any subsequent order, and any documents filed subsequent to these orders which would otherwise be required to be served on those entities or either of them be dispensed with on the condition that the said documents and orders are forwarded by prepaid post to [Address A] in the State of Western Australia.

2.[Mr Louis] (“the Respondent”) forthwith do all things within his power to procure and complete the reinstatement of [Ms Campbell] (“the Applicant”) as a director of [Company A], and thereafter until further order of the Court the Respondent be restrained and an injunction is hereby granted restraining him from taking any step to facilitate or cause her removal as a director other than with her consent.

3.The Respondent forthwith do all acts, sign all documents and give all directions and instructions necessary to cause any future payments to be made to him or for his benefit or to any third party or entity at his direction or request by [Company C] or any other third party in relation to the sale of [Company B], to be directed to the Applicant.

4.From the funds received by the Applicant pursuant to the order contained in the immediately preceding paragraph, the Applicant be at liberty to disburse to her solicitors the sum of $100,000.00 by way of costs.

5.Until further order of the Court, the Applicant be restrained and an injunction is hereby granted restraining her from disbursing or dealing with any funds in excess of that sum received by her pursuant to these orders other than to deposit the said funds into a controlled money account to be operated by her solicitors, with the funds so deposited to be retained in that account unless further disbursement or release is authorised by order.

6.Pursuant to s 243(8)(g) of the Family Court Act 1997 (WA), the Applicant have liberty to disseminate a copy of the preceding two paragraphs of these orders to the directors of [Company C] and any other third parties involved in the payments arising from the sale of the business operated by [Company B].

7.Paragraph 5 of the orders made on 2 December 2016 be and is hereby discharged.

8.The amended Form 2 application of the Applicant filed on 18 January 2017 and the Form 2A response of the Respondent filed on 24 January 2017 otherwise stand adjourned generally with liberty to either party to seek a relisting on reasonable notice.

9.The costs of both parties in relation to the said application and response stand reserved to the trial Judge.

119I will hear from the parties as to any further procedural or other orders required to advance the matter towards trial and as to whether orders might now be made to finalise the seemingly dormant parenting proceedings.

I certify that the preceding [119] paragraphs are a true copy of the reasons for
judgment delivered by this Honourable Court

Associate
31/03/2017