Cirillo & Cirillo
[2021] FedCFamC1A 45
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Cirillo & Cirillo [2021] FedCFamC1A 45
Appeal from: Cirillo & Cirillo (No. 2) [2021] FamCA 398 Appeal number(s): EAA 74 of 2021 File number(s): SYC 4192 of 2020 Judgment of: AUSTIN, REES & WILSON JJ Date of judgment: 2 November 2021 Catchwords: FAMILY LAW – APPEAL – Property – Where the primary judge dismissed the wife’s application for injunctive orders seeking to restrain the husband from dealing with the parties’ assets.
LEAVE TO APPEAL – Where orders were subsequently made preserving the assets of the parties – No substantial injustice demonstrated – Sufficient doubt – Whether the primary judge erred in admitting a judgment of the New South Wales Supreme Court into evidence – Where s 91 of the Evidence Act 1995 (Cth) is not a prohibition on the admission into evidence of a judgment in other proceedings – Where the wife was unable to point to any finding of a fact in issue which was based on acceptance of a finding in the Supreme Court judgment – Leave to appeal refused.
APPLICATION IN AN APPEAL – Adduce further evidence – Where there is no appeal within which to adduce the further evidence – Application dismissed – Costs to be determined in chambers on written submissions.
Legislation: Evidence Act 1995 (Cth) s 91
Family Law Act 1975 (Cth) s 94AA
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 28(3), 35(b)
Cases cited: Ainsworth v Burden [2005] NSWCA 174
Medlow & Medlow (2016) FLC 93-692; [2016] FamCAFC 34
Number of paragraphs: 58 Date of hearing: 20 October 2021 Place: Heard in Sydney, delivered in Newcastle Counsel for the Appellant: Mr Livingstone Solicitor for the Appellant: Marsdens Law Group Counsel for the Respondent: Mr Richardson SC Solicitor for the Respondent: Boyce Family Law & Mediation ORDERS
EAA 74 of 2021
SYC 4192 of 2020FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MS CIRILLO
Appellant
AND: MR CIRILLO
Respondent
ORDER MADE BY:
AUSTIN, REES & WILSON JJ
DATE OF ORDER:
2 NOVEMBER 2021
THE COURT ORDERS THAT:
1.The application for leave to appeal from the orders of a judge of the Family Court of Australia (as it then was) made on 17 June 2021 is dismissed.
2.The application to adduce further evidence filed 8 October 2021 is dismissed.
3.The question of costs is reserved.
4.Within 14 days the husband file and serve any affidavit and written submissions in relation to costs.
5.Within a further 14 days the wife file and serve any affidavit and submissions in relation to costs.
6.Within a further 7 days the husband file any response to the wife’s submissions in relation to costs.
7.The issue of costs be determined in chambers without further appearances.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Cirillo & Cirillo has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
AUSTIN, REES & WILSON JJ:
By an Amended Notice of Appeal filed 5 October 2021, Ms Cirillo (“the wife”) seeks leave to appeal, and if leave is granted, to appeal against orders of a judge of the Family Court of Australia (as it then was) made on 17 June 2021 dismissing her application for orders by way of injunction in proceedings between herself and Mr Cirillo (“the husband”).
If leave is granted, the wife seeks leave to adduce further evidence.
In an Application in a Proceeding filed 25 February 2021, the wife sought a suite of orders which would have the effect of restraining the husband from exercising powers as appointor; dealing with the assets owned by three trusts, other than in the ordinary course of business; causing the trusts to make distributions in his favour; or dealing with the real estate and commercial assets in Country H which he owns personally.
By orders made on 17 June 2021, the primary judge dismissed the wife’s application, giving rise to this appeal.
It is common ground that, the orders appealed from being interim orders in financial proceedings, leave to appeal pursuant to s 28(3) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (“the Act”) was required.
It is necessary to provide some background facts in order for the issues which arose in the appeal to be understood.
BACKGROUND
The husband and the wife married in 1975 and separated in 2020.
Although there is a dispute as to the net value of the asset pool, it is agreed to be not less than $90 million as the wife presently asserts.
The husband and the wife both seek an equal division of the asset pool. With the exception of the former matrimonial home, which is jointly owned, the husband has the sole control of the assets of the marriage. Relevantly, the substantial portion of those assets is held in three trusts which are controlled by the husband.
B Pty Limited as trustee of the D Trust owns four commercial properties, LL Property, MM Property, PP Property and QQ Property.
The sale of one of those commercial properties, LL Property, was pending and is now subject to a contract for sale dated 24 September 2021. The sale price is $78.1 million. It is not in dispute that the sale price exceeded the valuation of the property and that the sale price was some $18 million more than the price for which the wife had been prepared to sell in 2020.
B Properties Pty Limited is the trustee of the D Investment Trust and owns property in Country H.
F Pty Limited is the trustee of the Cirillo Family Trust (No. 2) and owns the FF Property.
The husband owns real properties in Country H and also has businesses in Country H.
Since the making of the orders the subject of the appeal, further orders have been made in the primary proceedings.
On 14 September 2021 and 27 September 2021, the wife filed further Applications in a Proceeding seeking freezing orders against the proceeds of sale of LL Property, settlement being anticipated to occur on 30 November 2021.
On 1 October 2021, Aldridge J made orders in the following terms:
1. B Pty Ltd be joined to the proceedings as the second respondent.
2.The [husband] is to provide the [wife] the contract for sale of the business known as LL Property (“LL Property”) (which trades from the property located at Q Street, Suburb U in New South Wales (“the Suburb U property”) forthwith in two forms, one with the name of the purchaser and agent redacted and one without. The unredacted version of the contract for sale is, until further order, to be retained by the lawyers acting for the [wife] in these proceedings and is to be shown to no other person including the [wife].
3.Pending further order of the Court, that on settlement of the Suburb U property and the business known as LL Property, B Pty Ltd as the trustee for the D Trust, shall not deal with the proceeds of sale, other than in the following manner:
(a)In payment of the agent’s commission, marketing and advertising costs, legal and conveyancing costs and any other expense properly incurred in respect of the sale of the property;
(b)In payment of all amounts then outstanding to G Pty Ltd as necessary to discharge the mortgage secured by G Pty Ltd against the title to the property; and
(c)In payment to the [wife] or as she otherwise directs in writing the sum of $1,500,000 in full satisfaction of the [husband’s] obligations pursuant to Order 1 of the orders dated 9 August 2021 in these proceedings.
4.That, without admissions, in the event that the [husband] intends or proposes to sell, transfer, dispose, mortgage or otherwise encumber the property at Q Street, Sydney in New South Wales (“the MM Property”) the [husband] shall provide the [wife] with not less than 21 days written notice, along with full particulars and all disclosure documents reasonably requested by the [wife] in respect of such proposed transaction before doing any act or thing to enter into such transaction.
5.The parties are to file and serve short written submissions and identify the relevant parts of evidence on which is to be relied on in relation to the outstanding issues, namely being Orders 3.4, 3.5, 3.6, 4 and 5 of the [husband’s] Minute of Order dated 1 October 2021, by 5.00 pm on Tuesday, 5 October 2021.
6.The matter is adjourned for further hearing to 12.00 pm on Wednesday, 6 October 2021.
On 8 October 2021, Aldridge J made further orders in the following terms:
1.The orders made on 1 October 2021 are varied by the addition of the following orders at the end of Order 3(c):
(d)In payment to the husband or as he directs in writing the sum of $1,500,000 by way of interim property settlement, of which $500,000 is to be used by the husband for the sole purpose of paying legal costs in relation to these proceedings;
(e)In payment of the expenses set out in Schedule A to the report of Mr A dated 22 September 2021;
(f) The balance then remaining to be deposited in a controlled monies account (“CMA”) operated by TT Firm (“TT Firm”) and, subject to Order 3(g) below, thereafter applied to all business, taxation and other expenses and liabilities properly incurred by B Pty Ltd, the D Trust and/or the husband or entities related to the husband that arise after the date of settlement and for no other reason unless agreed in writing between the parties, or further order of the Court;
(g) That the solicitor for the husband shall provide TT Firm and the solicitor for the wife written notification and copies of each invoice in respect of the expenses referred to in Order 3(f) to be paid from the CMA, and TT Firm shall be at liberty to apply such funds the CMA as necessary to pay the invoice fourteen (14) days thereafter on the condition that TT Firm has received at the time of payment, written notice from the solicitors from [sic] the husband that the wife has been provided with copies of the invoices for expenses at the time they were provided to TT Firm; and
(h) The husband is to provide to the wife every Monday a copy of the bank statements of B Pty Ltd for the preceding week, and a copy of management accounts within seven (7) days of their production.
2. Liberty to apply on three (3) days’ notice.
THE LEAVE APPLICATION
The Full Court in Medlow & Medlow (2016) FLC 93-692 stated (at [57]):
We are of the opinion that, subject to the caveat just discussed, the test to be applied in applications for leave to appeal under s 94AA of the Act is whether, in all of the circumstances, the decision is attended by sufficient doubt to warrant it being reconsidered by the Full Court and whether substantial injustice would result if leave were refused, supposing the decision to be wrong.
The provisions of s 94AA of the Family Law Act 1975 (Cth) replicate what is now known as s 28(3) of the Act.
Having regard to the orders made on 1 October 2021 and 8 October 2021, what is the substantial injustice asserted by the wife?
In the Summary of Argument, the solicitor for the wife defined the injustice as:
…the husband has since dealt with the property pool in a manner adverse to the wife, which has occurred since the date of the primary judgment.
(Wife’s Summary of Argument filed 5 October 2021, paragraph 7)
Having regard to the orders which had been made on 1 October 2021 and which were subsequently made on 8 October 2021, that submission cannot be sustained.
The effect of the orders made on 1 October 2021 and 8 October 2021 is to preserve the net proceeds of sale of the LL Property and to require the husband to give notice of any intention to deal with the MM Property.
Thus the following assets are preserved:
·The former matrimonial home at Suburb P. There is no evidence of the value of the property. Before the primary judge, the husband’s estimate of value was $30 million. The property is subject to a mortgage of $2 million. If the husband’s estimate is correct, the net value of the home is $28 million.
·The net proceeds of the sale of the LL Property after payment of the secured debts and payment of $1.5 million to each of the parties. Debts totalling some $54 million are currently secured (Husband’s affidavit filed 21 April 2021, Exhibit “B”). Net proceeds will be some $20 million.
·The MM Property which was valued in October 2020 at $32.3 million (Husband’s affidavit filed 16 April 2021, Exhibit “L”). The MM Property will be unencumbered once the sale of LL Property is completed.
Both the husband and the wife agree that the wife should receive half of the net assets.
If the net assets of the marriage are not less than $90 million, as the wife asserts and which was adopted by the primary judge (at [3]) and the value of those preserved assets is as much as $80 million, then the effect of the orders is to secure substantially more than half of the net assets and the wife’s interests are more than adequately protected.
In those circumstances, no injustice is demonstrated.
We turn then to consider whether the judgment is attended by sufficient doubt as to warrant its being reconsidered.
GROUNDS 1 AND 2
Those grounds, which were argued together, assert:
1.The primary judge erred in admitting the judgment of Justice Black known as [omitted] over the objection of the wife and contrary to section 91 of the Evidence Act 1995 (Cth).
2. In admitting the judgment of Justice Black known as [omitted] for limited purposes of providing context, the primary judge erred in adopting the findings or paragraphs of Justice Black’s judgment, which impermissibly infected the reasoning process of the primary judge.
The judgment (“the Supreme Court judgment”) arose in proceedings in the Supreme Court of New South Wales (“the Supreme Court”). Relevantly, the parties’ adult daughters were the plaintiffs. The husband was the first defendant.
Put shortly, those proceedings arose out of a transaction whereby the husband executed a Deed of Assignment transferring to the parties’ adult daughters a debt of some $18.5 million owed to him by the D Trust (“the trust debt”). The plaintiffs sought an order that the D Trust pay to them, out of the assets of the trust, the trust debt and an order removing the trustee and appointing a new trustee, thus removing the husband’s control of the trust.
By orders made on 14 April 2021, a judge of the Supreme Court set aside the Deed of Assignment and declined to remove the trustee.
Before the primary judge, the husband sought to tender the reasons of the Supreme Court, that application being opposed. After argument, the reasons were admitted into evidence for the limited purpose of providing context but not to prove the existence of any asserted fact (Transcript 22 April 2021, p.9 lines 1–3).
Section 91 of the Evidence Act 1995 (Cth) (“the Evidence Act”) provides:
Exclusion of evidence of judgments and convictions
(1)Evidence of the decision, or of a finding of fact, in an Australian or overseas proceeding is not admissible to prove the existence of a fact that was in issue in that proceeding.
(2)Evidence that, under this Part, is not admissible to prove the existence of a fact may not be used to prove that fact even if it is relevant for another purpose.
However, s 91 of the Evidence Act is not a prohibition on the admission into evidence of a judgment in other proceedings. Rather, as the NSW Court of Appeal held in Ainsworth v Burden [2005] NSWCA 174 (at [109]) per Hunt AJA (with Handley JA and McColl JA agreeing):
It is clear that s 91 does not prevent the tender of judgments which contain findings as to the existence of facts relevant to the issues in the trial in which they are tendered. It merely prevents the judgments from being tendered for the purpose of proving the existence of those facts. If they are admissible for some other purpose — as they are in the present case, in order to demonstrate that they would have persuaded any honest-minded person that the defendant’s allegations were false — they may not then be used to prove the existence of those facts, a consequence which would otherwise have flowed from s 60 of the Evidence Act.
Counsel for the wife was unable to point to any finding of fact in the reasons of the primary judge which was a finding of a fact in issue and was based on acceptance of a finding in the Supreme Court judgment.
Ground 1 must fail.
As to Ground 2, counsel for the wife was unable to identify any finding of fact which “impermissibly infected the reasoning process of the primary judge”.
Whilst it is accepted that the primary judge made comments which were unfavourable in relation to certain things done by the wife, the wife’s conduct was not a factor which was relevant to the determination.
That determination was based on other matters:
·Whether or not the husband had breached an undertaking to the Court given on 11 January 2021 (at [6] and [20]–[28]).
·The finding that the wife had not demonstrated that the husband had breached the undertaking (at [28]).
·If, at final hearing, the wife established that the husband had acted to diminish the value of an asset, any perceived loss could be adjusted in her favour (at [34]).
·The balance of convenience did not fall in favour of granting the injunction sought by the wife (at [36]).
·The restraints sought by the wife could constitute a default event under the terms of the relevant agreement for the provision of finance and that for the husband to exercise his power of appointment to remove and replace the trustee of the D Trust and the D Investment Trust would be a default under the terms of the finance agreement (at [44]–[45]).
·
There was no evidence to justify the making of orders relating to other entities
(at [46]–[48]).
In none of those matters was the wife’s conduct relevant.
Ground 2 fails.
GROUND 3
Ground 3 asserts:
The primary judge identified the applicable principles in PJ[13] but failed to apply the said principle in the exercise of the Court’s discretion.
It was conceded that the primary judge correctly stated the applicable principles (at [9]).
The primary judge, having considered the conduct of the husband, of which the wife complained (at [16]–[28]), stated (at [29]):
Overall the question is whether the [wife] has established to the reasonable satisfaction of the Court that there is a danger that, by reason of the [husband] dissipating or otherwise dealing with the assets, she will be prejudiced in her claim for property distribution.
The primary judge stated (at [32]):
Despite what might be loosely described as his conduct, described above, it is still hard to see how the husband is seeking to dissipate any of the relevant assets, or act contrary to the best interests of the family as a whole, including the wife.
It was not submitted that finding was not open to the primary judge, but rather that the primary judge gave insufficient weight to the wife’s evidence as to the risk posed by the husband’s conduct.
That submission, however, does not go to a failure to apply correct principles.
This ground is not made out.
CONCLUSION
The wife has not demonstrated that the decision is attended by sufficient doubt to warrant its being reconsidered or that there is any utility in the appeal, having regard to the subsequent orders.
Leave to appeal will not be granted.
APPLICATION TO ADDUCE FRESH EVIDENCE
The only evidence sought to be tendered, to which submissions were addressed, was a Financial Statement sworn by the husband on 18 June 2021, after the delivery of judgment by the primary judge.
Counsel for the wife submitted that, in the updated Financial Statement, the husband estimated that the net value of the assets to be more than $90 million which had been his previous estimate.
How that difference would have affected the reasoning of the primary judge so as to cause him to determine the matter differently was not explained.
Since leave to appeal is refused there is neither an appeal within which to adduce the further evidence pursuant to s 35(b) of the Act nor any re-exercise of discretion.
The application for leave to adduce fresh evidence will be dismissed.
COSTS
The respondent seeks to adduce evidence in relation to offers of settlement and both parties will have leave to file evidence and written submissions in relation to the issue of costs which will be dealt with in chambers.
I certify that the preceding fifty-eight (58) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Austin, Rees & Wilson. Associate:
Dated: 2 November 2021
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