Cirillo & Cirillo (No. 2)

Case [2021] FamCA 398

FAMILY COURT OF AUSTRALIA

Cirillo & Cirillo (No. 2) [2021] FamCA 398

File number(s): SYC 4192 of 2020
Judgment of: ALTOBELLI J
Date of judgment: 17 June 2021
Catchwords: FAMILY LAW – PROPERTY – interim injunctions – significant asset pool available for distribution – where one party has sole control and operation of the parties’ relevant interests – sale of a primary asset pursuant to a loan agreement – whether listing property for sale constitutes a breach of an undertaking to the Court – assessment of risk – whether there exists an objective risk that joint property will be dissipated – exercise of the Court’s discretion – application dismissed – costs reserved.   
Legislation:

Bankruptcy Act 1966 (Cth)

Contracts Review Act 1980 (NSW)

Personal Property Securities Act 2009 (Cth)
Cases cited:

Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57; [2006] HCA 46

Downs Distributing Co Pty Ltd v Associated Blue Star Stores Pty Ltd (in liq) (1948) 76 CLR 463

In the Marriage of Omancini (2005) FLC 93-218; [2005] FamCA 195

Medlow & Medlow (2017) FLC 93-796; [2017] FamCAFC 159

Mullen and De Bry (2006) FLC 93-293; [2006] FamCA 1380

Palmer v Parbery (2019) 136 ASCR 26; [2019] QCA 27

Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319

Re Netherby Hall Pty Ltd (1974) CLC 40-110

Robertson v Grigg (1932) 47 CLR 257

Shercliff v Engadine Acceptance Corporation Pty Ltd [1978] 1 NSWLR 729

Skyworks v 32 Drummoyne Road [2017] NSWSC 343

Stockco Ltd v Gibson [2012] NZCA 330

Taylor v White (1964) 110 CLR 129; [1964] ALR 595

Trevi & Trevi (2018) FLC 93-858; [2018] FamCAFC 173

Tsiang & Wu and Ors [2019] FamCAFC 128
Number of paragraphs: 49
Date of last submission/s: 22 April 2021
Date of hearing: 22 April 2021
Place: Sydney
Solicitor advocate for the Applicant: Mr Reeve
Solicitor for the Applicant: Marsdens Law Group
Counsel for the Respondent: Mr Richardson SC
Solicitor for the Respondent: Boyce Family Law & Mediation

ORDERS

SYC 4192 of 2020
BETWEEN:

MS CIRILLO
Applicant
AND:

MR CIRILLO
Respondent

ORDER MADE BY:

ALTOBELLI J

DATE OF ORDER:

17 JUNE 2021

THE COURT ORDERS THAT:

1.The Application in a Case filed on 25 February 2021 be dismissed.

2.The costs of and incidental to the Application in a Case filed 25 February 2021 be reserved for determination at the conclusion of these proceedings.

3.The matter be referred back to the Docket Registrar for further case management.

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

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).

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

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AGLC
Cirillo & Cirillo (No. 2) [2021] FamCA 398
Case
[2021] FamCA 398
Decision Date

CaseChat Overview and Summary

In *Cirillo & Cirillo (No. 2)*, Altobelli J of the Family Court of Australia considered an application by the wife for interim injunctions. The dispute arose in the context of significant assets available for distribution in family law proceedings. The wife contended that the husband, who had sole control over certain relevant interests, had breached an undertaking given to the Court by listing a primary asset for sale. She sought to prevent the dissipation of joint property.

The Court was required to determine whether the husband's actions constituted a breach of his undertaking to the Court not to deal with the assets of a Trust other than in the ordinary course of business. Furthermore, the Court had to assess whether there was an objective risk that joint property would be dissipated, thereby frustrating any potential judgment in favour of the wife. This involved an exercise of the Court's discretion in granting interim injunctions.

Altobelli J applied the principles for granting interim injunctions as summarised in *Tsiang & Wu* [2019] FamCAFC 128. These principles require the applicant to demonstrate a serious issue to be tried, meaning an arguable case or a sufficient likelihood of success. The applicant must also show that the balance of convenience favours the making of the order, which includes demonstrating a danger or risk of dissipation of assets. The Court noted that a qualitative evaluation of all available evidence is necessary to ascertain a sufficiently serious risk of frustration. The risk of dissipation need not be more probable than not, but it must be a real risk with an evidentiary basis, and the Court should not conduct a full trial of disputed evidence at this interlocutory stage.

Ultimately, the Court dismissed the wife's application. The costs of and incidental to the application were reserved for determination at the conclusion of the proceedings, and the matter was referred back to the Docket Registrar for further case management.

Orders

Orders of the court

SYC 4192 of 2020

BETWEEN:

MS CIRILLO

Applicant

AND:

MR CIRILLO

Respondent

ORDER MADE BY:

ALTOBELLI J

DATE OF ORDER:

17 JUNE 2021

THE COURT ORDERS THAT:

1. The Application in a Case filed on 25 February 2021 be dismissed.

2. The costs of and incidental to the Application in a Case filed 25 February 2021 be reserved for determination at the conclusion of these proceedings.

3. The matter be referred back to the Docket Registrar for further case management.

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

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).

Background

Background to the litigation

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Evidence

Evidence Before The Court

On 11 January 2021, the husband gave the following undertaking to the Court:Pending the hearing of the Applicant Wife’s Application in a Case filed 23 December 2020, the Husband undertakes to the Court that he will not do any act or thing, or permit any act or thing to be done, to have the assets of the Trust dealt with, other than in the ordinary course of business.THE EVIDENCE In the wife’s case, she sought to rely on the following documents:(a)Her Application in a Case filed 25 February 2021;(b)Her Affidavit filed 6 April 2021 and corresponding exhibit book C-6; (c)A Case Outline document filed 19 April 2021; (d)An Undertaking as to Damages tendered during the hearing as exhibit A1; and(e)An amended minute of orders sought, marked by the Court as exhibit A2. In the husband’s case, he sought to rely on the following documents:(a)His Response to an Application in a Case filed 19 April 2021;(b)His Affidavit filed 16 April 2021 and corresponding exhibit bundle;(c)A Case Outline document filed on 20 April 2021; and(d)A letter dated 3 February 2021 tendered during the hearing as exhibit R1.THE APPLICABLE LAW. The orders sought by the Wife are interim injunctions. In Tsiang & Wu and Ors [2019] FamCAFC 128 the Full Court has helpfully summarised the relevant law at [20]- [27]:20. The grant of an injunction is discretionary and the basis on which such an order is made is well established.2 A purpose, as in this case, is to preserve the status quo pending resolution of the controversy.3 An applicant must demonstrate first that there is a serious issue to be tried.4 While that statement has been the subject of various iterations, in essence it requires the demonstration of an arguable case or as was said in Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at [65], the applicant must “show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo”.21. Next the applicant must demonstrate that the balance of convenience favours making the order sought.5 As part of this, the applicant must show that there is a “danger” or risk of dissipation of or dealings with assets which will frustrate any judgment in favour of the applicant.22. In Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319, Gleeson CJ said after discussing the discretionary nature of the remedy at 321–325:… as a general rule a plaintiff will need to establish, first, a prima facie cause of action against the defendant, and secondly, a danger that, by reason of the defendant’s absconding, or of assets being removed out of the jurisdiction or disposed of within the jurisdiction or otherwise dealt with in some fashion, the plaintiff, if he succeeds, will not be able to have his judgment satisfied....It is not difficult to imagine situations in which justice and equity would require the granting of an injunction to prevent dissipation of assets pending the hearing of an action even though the risk of such dissipation may be assessed as being somewhat less probable than not.23. As McDougall J in Skyworks v 32 Drummoyne Road [2017] NSWSC 343 said:24. The Court is required to undertake a qualitative evaluation of all the evidence that is available, to see if there is a sufficiently serious risk of frustration to justify the making of a freezing order. Further, the two considerations [namely, (1) whether there is a good arguable case and (2) whether there is a real risk of judgment frustration] should be analysed together (as each may impact on the other), and with an appreciation of both the underlying purpose of the rule and the relative risks of granting or withholding relief – the customary discretionary calculus.24. In this case the identified risk was that the wife might dispose of assets in Australia and in her name in order to defeat the husband’s claim and, equally it was asserted that there was a risk that the second and third respondents too might deal with the partnership assets in a way so as to defeat the husband’s possible judgment or claim to that entity.25. It is unnecessary to demonstrate a positive intention but merely the possibility of the event occurring.6[1] The determination about the balance of convenience may thus be an inference drawn from the facts and circumstances established by the applicant’s evidence.726. Nor is it the role of the judge determining the question of the injunction to, in effect conduct a trial of the disputed evidence to resolve those disputes (see Shercliff v Engadine Acceptance Corporation Pty Ltd [1978] 1 NSWLR 729).27. As to the determination of the existence of the risk and its magnitude, in Palmer v Parbery [2019] QCA 27 McMurdo JA (with whom Fraser and Gotterson JJA agreed) said:119. The determination of whether there exists a sufficiently serious risk of the dissipation of assets involves the evaluation of future possibilities, rather than the ascertainment of historical facts. The risk of dissipation might justify an order although the probability of the risk eventuating is less than 50 per cent. But, as the risk of dissipation must be a real and not merely a theoretical one, it must have an evidentiary basis. Where a fact is alleged by the plaintiff in support of its case about the risk, but there is contrary evidence from the defendant, must the fact be proved to the court’s satisfaction as if the application for the freezing order was the trial of the case? In my view, a plaintiff need not do so. A freezing order is interlocutory in nature; it does not involve a final determination of the parties’ positions. Usually it is made in circumstances of urgency in which the court is unable to conduct an extensive and conclusive factual inquiry in a way which is fair to both parties. Where the factual basis for the plaintiff’s case about the risk of dissipation is disputed, the risk will commonly have to be evaluated with the recognition that the factual basis for it is in doubt. Nevertheless, the possibility of the plaintiff’s evidence being correct, considered with other facts and circumstances, might mean that there is a sufficiently serious risk of the frustration of the satisfaction of a judgment as to justify the making of a freezing order. … Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170; Cardile v LED Builders Pty Ltd (1999) 198 CLR 380. Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 at [9]–[12], [15] (per Gleeson CJ) and [245] (per Callinan J). Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148 at 153-154; Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 at 328–329; Blueseas Investments Pty Ltd v Mitchell and McGillivray (1999) 2-856 at [56]. Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at [19]. Mullen and De Bry (2006) FLC 93-293 at [49]. THE WIFE’S CONTENTIONS

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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