Celanta and Yarkienes and Ors

[2009] FamCA 331

FAMILY COURT OF AUSTRALIA

CELANTA & YARKIENES AND ORS [2009] FamCA 331

FAMILY LAW – PROPERTY – Joinder of parties – Restraints on dealing with businesses

FamilyLaw Act 1975 (Cth)

APPLICANT: Ms Celanta

1^st RESPONDENT: Mr Yarkienes

2^nd RESPONDENT: L Pty Ltd

3^rd RESPONDENT: F Pty Ltd

4^th RESPONDENT: M Pty Ltd

5^th RESPONDENT: D Pty Ltd

6^th RESPONDENT: B Pty Ltd

FILE NUMBER: SYC 953 of 2009

DATE DELIVERED: 18 March 2009

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Judicial Registrar Loughnan

HEARING DATE: 18 March 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Cook

SOLICITOR FOR THE APPLICANT: Slade Manwaring Solicitors

SOLICITOR FOR 1^st RESPONDENT: No appearance

SOLICITOR FOR 2^nd RESPONDENT: No appearance

SOLICITOR FOR 3^rdRESPONDENT: No appearance

SOLICITOR FOR 4^thRESPONDENT: No appearance

SOLICITOR FOR 5^thRESPONDENT: No appearance

SOLICITOR FOR 6^thRESPONDENT: No appearance

Orders

1. The proceedings are adjourned to the Judicial Registrar’s Call-over at 9:30 am on 6 May 2009.

2. Orders are made in terms of paragraphs 1 and 3 of the document titled “Further Orders” marked Exhibit 2 as follows:

   1.That D Pty Limited (ACN …) and B Pty Ltd (ACN …) be added as the 5^th and 6^th Respondents respectively to these proceedings.

   ….

   3.That D Pty Limited be restrained and is hereby restrained from selling, mortgaging, charging, encumbering or in any way dealing with the property known as [W property] (Folio I/SP […]).

3. Until further order, orders are made in terms of paragraph 3 (as amended by the Court), paragraphs 4.3 and 4.4 (as amended by the Court) and paragraphs 8, 9, 10, 11, 13, 14 and 16 of the Interim or Procedural orders sought by the wife in her Amended Initiating Application filed 13 March 2009, marked Exhibit 1 as follows:

   Definitions:

   A.“Companies” means:

   a.F Pty Ltd;

   b.L Pty Ltd;

   c.M Pty Ltd;

   d.B Pty Ltd;

   e.D Pty Limited.

   ….

   3.That until further Order, and subject to Order 4 below, the first, second, third, fourth and fifth Respondents be and are hereby restrained by injunction from doing, causing or permitting any act or thing to be done or giving any direction in relation to any of the companies which might have the effect of:

   3.1    Altering any of the rights of any of the existing shareholders;

   3.2Issuing any further shares in the companies or reducing the capital of the companies;

   3.3Registering any shares already issued but not as yet registered in the companies;

   3.4Altering the rights attaching to any shares already issued in the companies;

   3.5Appointing any further Directors of the company or to appoint any additional Secretary or alternate Secretary of the companies;

   3.6Dismissing any or all of the Directors presently appointed to the companies;

   3.7Assigning, transferring or disposing of or in any way dealing with any asset of the companies;

   3.8Guaranteeing any loan or contractual liability of any other person or other corporations or entities;

   3.9Affixing the common seal of the companies to any contract, agreement, instrument or other document other than in the ordinary course of business;

   3.10Incurring any legal fees in the name of any of the companies other than in the ordinary course of business;

   3.11Selling, mortgaging, charging or encumbering any asset of the companies;

   3.12Making any loan advanced to any other person or any other corporation or entity;

   3.13  Terminating any lease hold of any of the companies;

   3.14Altering or varying the signatories to the bank accounts of the companies;

   3.15Signing any cheque of any of the company accounts without the consent of the Applicant, unless the Respondents gives the Applicant 21 days prior written notice of his intention to sign such a cheque and that such notice includes details of the payee and the purpose of payment;

   3.16Altering or varying Company Constitutions and/or Memorandum of Articles of Association;

   3.17Causing or permitting any act or thing to be done or giving any directions in relation to any of the companies which may have the effect of increasing the superannuation benefits or payments of or to the Respondents or any other person on his behalf, without either:

   3.17.1        Written consent of the Applicant; or

   3.17.2        Further Order of this Court.

   4.That the first, third, fourth and fifth Respondents forthwith do all acts and things and sign all documents necessary to, and reasonably required by the Applicant:

   …

   4.3Reinstate the Applicant as the sole Director and secretary of F Pty Ltd and D Pty Limited;

   4.4Transfer the Respondent’s 100 Ordinary shares in F Pty Ltd and D Pty Limited to the Applicant.

   …

   8.That, pending further Order, each of the parties be restrained from doing any act or thing as a Director or Shareholder of any company which acts as a trustee of any Trust which might have the effect of:

   8.1    Removing the trustee;

   8.2    Appointing a new trustee;

   8.3    Altering in any way the provision of the trust deed or settlement;

   8.4Assigning, transferring or disposing of any asset of the Trust, other than in the ordinary business of the Trust;

   8.5Transferring or assigning the power of appointment of the trustee or the role of guardian to any person or corporation;

   8.6Causing the Trust to advance or loan any monies to any person or corporation.

   9.That within 28 days from the date of these Orders, the Respondent pay to the solicitor for the Applicant Wife the sum of $100,000.00 to be applied only to the costs and disbursements of the Applicant incurred during the course of these Family Law proceedings.

   10.That the categorisation of the payment referred to above be reserved to the Trial Judge.

   11.That the Respondent pay to the Applicant, as she may direct in writing, spousal maintenance in the sum of $1,395 per week, with the first payment to be made immediately and weekly thereafter.

   …

   13.That within 14 days of the date of these Orders, the Respondent shall make available for inspection by the Applicant all bank statements in relation to the facilities of the companies for the period 1 July 2006 to date, including all bank statements recording the transfer funds from all accounts operated by the companies, or by him for the said period and thereafter the Respondent shall make available for inspection by the Applicant all other documents relating to the affairs of the companies as may reasonably be requested by her from time to time;

   14.That the Respondent shall cause the Applicant to be provided with a copy of all management and financial reports forthwith upon the preparation of same in relation to the operation of the companies, which reports are prepared in the usual course on a monthly basis.

   …

   16.That in the event that either party refuses or neglects to execute any deed or instrument within 14 days of a written request to do so, the Registrar of the Family Court be empowered and appointed pursuant to Section 106A to execute such deed or instrument in the name of such party and to do all acts and things necessary to give validity to the operation to the deed or instrument.”

1. The costs of the wife are reserved.

2. That a sealed copy of these orders be served on the respondents as soon as practicable, in the case of the husband that service is to be effected in accordance with the order for substituted service made on 11 March 2009.

THE COURT NOTED

1. These orders are made on the wife’s undertaking as to damages.  Confirmation of that undertaking is to be provided to the chambers of Judicial Registrar Loughnan prior to 2:00 pm on 19 March 2009.

2. That orders are sought by the wife in these proceedings, in relation to a company M Pty Ltd.

3. It appears that the husband had notice of these proceedings prior to proceedings being commenced in the Supreme Court of New South Wales in relation to that company.  Those proceedings are next before that Court on 23 March 2009.

4. Notwithstanding that evidence has been provided in support of orders in relation to that company, that it appears the husband has sought to avoid service and has elected to take no part in these proceedings, those orders are not made at this stage, as a matter of comity between the Courts.

5. If there is no appearance by or on behalf of any respondent on the adjourned date, orders may be made on that date in terms of any application of which that respondent has notice, in the absence of that respondent.

IT IS FURTHER ORDERED

1. Leave is granted to any party or person or entity affected by these orders to restore the proceedings to the list on giving 24 hours’ notice to the Court and to each affected party.  In the event that that leave is exercised by the husband it is to be accompanied by the filing of a Response to the wife’s Amended Initiating Application and a Financial Statement.

2. Leave is granted to the wife to request the issue of such subpoenas as she may be advised.

IT IS NOTED that publication of this judgment under the pseudonym Celanta & Yarkienes is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 953 of 2009

MS CELANTA

Applicant

And

MR YARKIENES

Respondent

REASONS FOR JUDGMENT

1. These are proceedings in relation to settlement of property.  The wife is 31 years of age.  The husband is 53. They started to live together in 2000, were married in October 2006, had separations in 2001 and through 2001 into 2002 and then finally separated on 4 October 2007 when the wife left the former matrimonial home.  The parties have no children, although the husband has adult children from a previous relationship.

2. The proceedings have been on foot since 20 February 2009.  The matter came on on short notice, was first returnable on 3 March 2009 and some orders were made effectively on an ex parte basis, there being some ambiguity about whether the husband had been served.  The Court on that occasion noted that there was some urgency and leave was given to the wife to proceed ex parte and the orders were made on the usual undertaking in relation to the damages.  Orders were made until 6 pm on 11 March 2009 restraining the husband in relation to something he might do in relation to any of the companies, and certain companies were specified. He was restrained from doing anything that changes the management, shareholding or significantly affecting the rights of members of the company. Similarly each of the parties were restrained from doing things as a director or a shareholder of the company which acts as a trustee to change the thrust of the arrangements under any such trust.  The documents were to be served personally on the husband as soon as possible and the matter was adjourned to 11 March 2009.

3. On 11 March 2009 the matter came before Registrar Campbell.  There was no appearance for the husband and the matter was adjourned to 18 March 2009.  The injunctions were not continued but an order was made for substituted service and the costs of the wife were reserved. The order for substituted service provided for the wife to cause a process server to leave documents at the husband's address at W, to post them to a factory address at G and to email them to the husband at six email addresses.  The background had been that on 24 February 2009 the wife’s solicitor had arranged for documents to get to a process server.  On 25 February 2009 a solicitor, David Farrar, telephoned.  On 25 February 2009 an email was sent to the husband with copies of the documents attached to it, sent to a number of email addresses.  There was an automated reply from one of those addresses to the effect that Mr Farrar was out of the office.  Then on 27 February 2009 Mr Farrar said that he did not hold instructions to act for the husband in any family law proceedings or to accept service and that he had not provided the documents to the husband.

4. An email was sent on 27 February 2009 to give notice of the Court date 3 March.  Documents were sent on 2 March 2009 in a sealed envelope.  They were returned opened without any note on 2 March 2009.  On 3 March the wife’s solicitor instructed a process server to effect service at the W residential address and also the G factory.  On 4 March 2009 letters were sent by facsimile, including the other documents and a copy of the 3 March 2009 orders to various entities, including Farrar Lawyers and some accountants.  Emails were sent to the various addresses.  No responses were received, not even an automated reply. It is pointed out that there was an automated reply in relation to one of those addresses on a previous occasion.

5. The wife’s solicitor found out from T Accountants that somebody at that firm had received an email from the husband last week. The accountants refused to provide that address but confirmed that they had provided a copy of the orders of 3 March 2009 to the husband.  They would not say whether that had been done by email or mail.  A bundle of documents were left at the office of the wife’s solicitor on 9 March 2009, being the documents that had been served at either the factory address or the husband's home.  They were wet and the first page of the initiating application had been torn. On 13 March 2009 a process server left another set of documents at the husband's residential address. 

6. There has been no appearance by or on behalf of the husband or anybody else today.  The parties have a connection with a company, M Pty Ltd, and process issued out of the Supreme Court has been served on the wife.  The documents are dated March.  The matter was before the Supreme Court on 16 March 2009. The wife is named as a party and the matter is next before that Court on 23 March 2009. As I understand it, Farrar Solicitors are involved in those proceedings. 

7. It beggars belief that the husband does not have notice of these proceedings so it is appropriate in my view that the matter proceed undefended against him.

8. The wife has a claim for settlement of property.  She seeks final orders including a payment of $1 million or in the alternative a transfer of interest in and shareholdings in companies to her.  She seeks to retain certain intellectual property.  She seeks spousal maintenance of $1395 a week.  By way of interim orders, a raft of orders are sought to preserve assets and to put the wife in funds for daily living and for the litigation.  Because events have been unfolding, an amended application was filed on 13 March 2009. The husband cannot be said to have had sufficient notice of that application and for that reason I have indicated that I would not be prepared to make the orders unless an undertaking as to damages in similar terms to that proffered in relation to the husband is proffered by the wife for the future.

9. The wife identifies the elements of her property case.  She says the husband had assets when they met.  She did not have much.  She says that she made the lion's share of homemaker contribution.  She says that she provided support in relation to the husband's broader family (that is probably a matter under s 75(2)(o)); she says that she provided financial contributions and was directly involved in the development of intellectual property and in the establishment, running, design and so on of businesses.  In particular as an offshoot of a company I think that related to confectionery that the husband had been operating, she developed a formula and worked on the production, testing, delivery to market of a confectionary product. She has been working on a related product, and indeed the company that was the vehicle for that enterprise, a company called L Pty Ltd, she says turned over $2 million in the 07/08 income tax year and before tax says there was something like $1.4 million in profit.  So she points to her contributions.  She does not have to make that case today.

10. She says that the husband has done a raft of things to water down assets including the value of companies.  She points to her case about that issue. She does not have to make it.  She says that there are bank statements for the period December 2007 to March 2009 showing a reduction in a bank balance for L Pty Ltd from 20 February 2009 at $837,368 to 10 March 2009 where the balance has been reduced to $19,562.  Those payments include $104,000 to the husband, as to $160,000 to D Pty Ltd, which was a company that holds the former matrimonial home on trust and some other significant payments.  The wife says that by unilateral action through electronic means the husband has changed the membership of various companies to remove her as an officeholder and shareholder and replace her with somebody else.

11. There have been transfers of funds to reduce moneys held in the accounts of various entities associated with the husband to a significant extent in recent times. Finally, there is the fact that the husband has had notice of these proceedings and has made no reasonable effort to take any meaningful part in the proceedings.  Strictly speaking that is his right.  If he does not oppose the orders he does not have to come to Court. He was on notice from the initial application of the wife being concerned about his conduct of F Pty Ltd, L Pty Ltd, M Pty Ltd and B Pty Ltd.  He was on notice that the wife sought $100,000 by way of interim costs.  He was on notice that she sought $1395 per week by way of interim spousal maintenance.  He was on notice that she sought disclosure of various sorts.  He was on notice that the wife would seek to restrain him from retaining the services of a solicitor who, it will be alleged, the wife has previously instructed and as a result there is a conflict of interest involving that solicitor acting for the husband in these proceedings.  The amending application includes additional prayers and further respondents are added, L Pty Ltd, F Pty Ltd and M Pty Ltd, and of recent times because of a transfer in the ownership of D Pty Ltd from the husband to one of his sons being involved. The wife seeks that company and she also will seek to join B Pty Ltd for reasons that I have not been told about as yet.

12. The orders sought were cast in terms of particular funds of money and I think what is now pressed is O 3 but adding D Pty Ltd to the list of companies sought to be restrained; O 4, and I have indicated that only 4.3 and 4.4 should appropriately be ordered at this stage given that the wife is on notice that there are proceedings in relation to M Pty Ltd in the Supreme Court; O 8, which relates to restraints in respect of trustee companies; O 9, which is the interim costs; 10, which is a notation; 11 in relation to spousal maintenance; the discovery orders 13 and 14 and 16, which is a 106A order; and I will reserve the question of costs.  She also seeks, as I said, that D Pty Ltd and B Pty Ltd be added as fifth and sixth respondents.  That is normally done by seeking orders against them, so it does not mean much in that form but it is probably important that there be a recording of that fact for the benefit of those people, and she seeks that D Pty Ltd now be restrained in relation to the former matrimonial home.

13. The orders are not opposed.  The substance of the injunctions has not been opposed.  The discovery is not opposed.  The interim maintenance is not opposed nor is the interim costs, but I should say something very briefly about those matters.  In relation to discovery, the husband is taking no meaningful part in the proceedings and the Court requires information.  In relation to interim spousal maintenance, the wife has a Newstart allowance.  She has in prospect something like $1577 a week in outgoings.  She is currently living with her mother.  She subsidises her mother's rent.  We do not quite know why that came about but she has foreshadowed some costs in relation to setting up accommodation and she has the recurrent costs of a proper rent. She has a shortfall of income over outgoings.  On the face of it, the husband has significant assets.  The wife has given evidence about what he came into the marriage with, some of the companies I have mentioned, the property owned by D Pty Ltd and so on, and she gives evidence that at various times during the marriage he has had large sums of cash kept in a drawer. He told her the cash came from the companies. We know that he has had access, for example, to $104,000 a week or so ago. The husband is in a stronger position than her.  The husband has exclusive access to funds from the enterprises. She says she is retraining and wants to become a personal trainer or something of that nature but she needs time to finish that training.  So on the face of it, the wife has a shortfall, the husband has the capacity.  The parties were married and there is a proper reason for the wife’s claim. She has been locked out of the enterprises that the parties had conducted together.  This is not a case where she was a silent partner.  The was significantly involved in the confectionery aspects of the husband's business.  In relation to interim costs, there is some evidence about the wife’s likely costs and the costs she has incurred to date.

1. There is some complexity in the proceedings.  There is a deficiency of knowledge in the wife.  The husband seems to have, at least in the early stages, taken a very tough stance in relation to the litigation. The obligations that fall to an applicant on an undefended basis are far more onerous than they would be in defended litigation.  Her costs are by definition likely to be greater than those of the husband.  It is clear that the husband still instructs attorneys at some level and it is only proper that the wife be in a position to litigate the case.  In the case of the third parties, they are all connected to the husband.  Where ownership is moved, there is a connection between the new director or shareholder and the husband, whether it is by being one of his accountants or whether it is being a son. The new owners are not strangers in the traditional sense. In any event there is an undertaking as to damages that will protect them. Further, all of these orders can be the subject of a hearing on the merits. Any  of the respondents or any person affected can ask for these matters to be proved at a contested hearing. Because of the husband's lack of involvement here, it not been possible to have a hearing on the merits. For those reasons the orders sought are appropriate.

ORDERS DELIVERED

1. The Court noted that orders are sought by the wife in relation to a company M Pty Ltd.  It appears that the husband had notice of these proceedings prior to proceedings being commenced in the Supreme Court of New South Wales in relation to that company.  Those proceedings are next before that Court in March 2009.  Notwithstanding that evidence has been provided in support of orders in relation to that company and it appears that the husband has elected to take no effective part in these proceedings, the orders sought by the wife are not made at this stage as a matter of comity between Courts.  If there is no appearance by or on behalf of any respondent on the adjourned date, orders may be made in terms of any application of which that respondent has notice in the absence of that respondent on the adjourned date.  Leave is granted to any party or any person or entity affected by these orders to restore the proceedings to the list on giving 24 hours' notice to the Court and to each affected party.  In the event that that leave is exercised by the husband, it is to be accompanied by the filing of a Response to the wife's Amended Initiating Application and a Financial Statement.  I give leave to the wife to issue such subpoenas as she may be advised.

I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of the Judicial Registrar Loughnan

Associate: 

Date:  5 May 2009