Cleave & Cleave
[2023] FedCFamC1F 200
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Cleave & Cleave [2023] FedCFamC1F 200
File number(s): ADC 1857 of 2019 Judgment of: BERMAN J Date of judgment: 28 March 2023 Catchwords: FAMILY LAW – PROPERTY MATTERS – Interim – Where the parties have significant asset pool and complex structure of entities – Where the parties seek a trial listing date – Where the asset pool has not yet been crystallised – Where the husband seeks orders for disclosure – Where the husband seeks an order for the valuation of various entities – Where the husband seeks for the delivery up of a motor vehicle and industrial equipment – Where the wife seeks for the husband’s application to be dismissed – Orders. Legislation: Family Law Act 1975 (Cth) ss 78, 114(3) Cases cited: In the Marriage of Farr (1976) FLC 90-133
Lampros and Anor & Lampros & Anor [2012] FamCA 415
Division: Division 1 First Instance Number of paragraphs: 60 Date of hearing: 14 March 2023 Place: Heard in Adelaide, delivered in Sydney Counsel for the Applicant: Dr Gray KC Solicitor for the Applicant: Barnes Brinsley Shaw Lawyers Counsel for the First Respondent: Mr Roberts Solicitor for the First Respondent: Rosey Batt & Associates Counsel for the Second Respondent: Mr Jordan Solicitor for the Second Respondent: Jordan & Fowler Family Lawyers ORDERS
ADC 1857 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR CLEAVE
Applicant
AND: MS CLEAVE
First Respondent
MR B CLEAVE
Second Respondent
order made by:
BERMAN J
DATE OF ORDER:
28 March 2023
THE COURT ORDERS THAT:
1.On or before 4.00 pm on 31 March 2023, the parties do all such things as may be required to jointly instruct Mr J to value the industrial interests controlled by the C Trust and/or the applicant and/or the first and second respondents.
2.The parties respond within 14 days to any request by Mr J (including as to the provision of such documents, information and materials) as Mr J may reasonably require to facilitate a valuation of the industrial interests controlled by the C Trust and/or the applicant and/or the first and second respondent.
3.On or before 31 March 2023, the first and second respondents provide to Mr K all information and documents required by him in order to enable him to complete a valuation of L Company controlled by the C Trust and/or the first and second respondents and/or the applicant.
4.The parties respond within 14 days to any further requests by Mr K (including as to the provision of such documents, information and materials) as Mr K may reasonably make to facilitate a valuation of L Company controlled by the C Trust and/or the first and second respondents and/or the applicant.
5.On or before 31 March 2023, the wife and the second respondent provide full disclosure to the husband in respect of the current financial position of the C Trust and L Company including as to the following categories:
(a)Bank statements for all accounts maintained by L Company and the C Trust for the period 1 July 2021 to the current date;
(b)Copies of any communications with the Bankers for L Company and the C Trust for the period 1 July 2021 to the current date;
(c)Notes evidencing discussions with the Bankers for the L Company and C Trust for the period 1 July 2021 to the current date;
(d)Documents relating to the possible sale of the M Property; and
(e)Documents recording the details for crops planted on the M Property and of crops removed from the M Property and all other properties.
6.The wife and the second respondent, in their personal capacity and in their capacity as Directors of E Pty Ltd as Trustee of the C Trust, be restrained and an injunction be granted restraining them from disposing of any asset of the C Trust or the property of the parties save with the consent in writing of the husband or by Order of this Honourable Court.
7.The wife and/or second respondent do forthwith deliver up to the husband, Motor Vehicle 1, the original body and the industrial equipment fixed upon the said body.
8.Within 7 days of the date of this Order, the second respondent do make full disclosure in relation to the sale by him of Motor Vehicle 2.
9.Upon giving 21 days written notice, the husband in the company of a solicitor, be permitted to attend upon the properties owned by C Trust, G Trust and the Superannuation Fund 1 to inspect the properties and to check upon the condition and location of the husband’s property still stored at L Company property.
10.Upon giving 7 days written notice, the husband be permitted to attend with a mechanic and other assisting persons at the N Town property to inspect and repair the industrial vehicle and to remove it and to remove other vehicles and equipment situate on the N Town property.
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).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BERMAN J
INTRODUCTION
Mr Cleave (“the husband”) and Ms Cleave (“the wife”) are unable to reach agreement in respect of property settlement and division.
The husband commenced proceedings by Initiating Application sealed 13 May 2019. There appears to be broad agreement between the husband and the wife as to the adjustment of property but not the manner by which that it is to take place.
The proceedings were made more complex by the successful application of Mr B Cleave (“the second respondent”) who filed a Notice of Intervention on 22 April 2020 and was given leave to be joined as a second respondent to the proceedings.
By Response filed 6 May 2020 and the affidavit of Andrew Ley Jordan annexing a Statement of Claim, the second respondent seeks a declaration pursuant to s 78 of the Family Law Act 1975 (Cth) (“the Act”) as to his right, title, and interest in E Pty Ltd as trustee for the C Trust. In addition, the second respondent contends that he has a significant credit loan account in the C Trust.
The history of the acquisition and development of the crop and processing operation is not contentious.
The husband was the sole appointor of the trust entity that was the precursor to the C Trust.
The parties acquired properties in 1985 and transferred their interest in the property to the C Trust in 1997. The C Trust commenced production under the label “L Company”.
The husband’s contention is that he was diagnosed with an illness in 2006 and was advised in 2014 that he only had a short time to live. He resigned as the appointor of the C Trust and from his position as one of two directors of the trustee company.
It was at that point that the wife became the first appointor and thereafter the second respondent became the second appointor.
The parties are in high conflict and are not able to resolve their differences either as to the extent of interest, if any, of the second respondent nor the division of assets as between the husband and wife.
It has been a feature of the proceedings that the wife sought that the husband not enter or remain on properties held by the C Trust and G Trust which effectively encompasses the crop and processing operation.
The parties have each given various undertakings with the underlying intention to preserve the status quo pending the final determination.
On 3 July 2019, the wife undertook that she would not resign from her position as appointor of any trust or any directorship of any company which is the trustee of a trust and further that she would not exercise a power of appointment.
The wife’s undertaking was also that she give 42 days’ notice of any intention to sell or dispose of any asset which is the property of a trust.
For his part, the husband gave an undertaking on 28 November 2019 that subject to the wife removing the husband’s plant and equipment from the crop properties to a place of collection by the husband, he undertook not to enter or remain on the properties held by the C Trust and G Trust.
The proceedings have been before the Court since 9 May 2019.
Each of the parties and the second respondent are keen to bring the litigation to an end. Various attempts have been made to mediate a resolution and it appears that despite their endeavours, a settlement eludes them.
THE AMENDED APPLICATION IN A PROCEEDING OF THE HUSBAND
The husband filed an amended Application in a Proceeding on 3 March 2023 seeking that the matter be listed for trial and that further orders be made to progress the valuation of industrial interests held or controlled by the C Trust, the applicant and/or the first and second respondents. The husband further seeks that the wife and second respondent provide information to enable the nominated valuer to complete a valuation of L Company.
The Application was the subject of a Response filed by the wife on 14 March 2023, seeking that various orders set out in the husband’s Application in a Proceeding be dismissed.
The second respondent, at the time of the hearing, was overseas and his solicitor advised that even though absent from Australia, instructions were able to be taken in anticipation of his return on or before 30 March 2023.
Subject to changing the date of instruction, there is agreement in respect of proposed orders 1 to 4 inclusive.
Proposed order 5 is not the subject of substantial opposition save that the wife contends that she does not have the documents described in 5.5 and 5.7. It may be that the second respondent has documents described in 5.5 and 5.7.
Proposed order 6 seeks that the wife and second respondent, both in their personal capacity and in their capacity as Directors of the Trustee of the C Trust, be restrained from disposing of any assets of the Trust without the consent of the husband or an order of the Court.
The husband’s solicitors were advised by letter on 21 December 2022 that the wife intended to sell the M Property used by L Company. The M Property is owned by P Pty Ltd a company controlled by the C Trust. The letter of intention was sent pursuant to the wife’s undertaking of 3 July 2019, being that she is not to sell or dispose of any asset or property of the C Trust without providing 42 days written notice.
The initial response of the husband was to oppose the sale and the wife was advised of same by letter dated 16 January 2023.
The wife’s solicitor forwarded further correspondence of 30 January 2023 which sets out the basis for the proposed sale of the M Property in the following terms:[1]
…
We are instructed that [M Property] is excess to the needs of the […] business. We are instructed that many of the [crops] on this property were diseased and have been removed.
We are instructed that at present, the […] business has debts to the bank in the order of $5,003,250.00.
We are instructed that the […] business requires additional cash to continue operations through 2023 and is under pressure from the bank to reduce its current borrowings. Payroll will be a challenge in the near future.
The sale of [M Property] is integral to the continuing business of [L Company].
[1] Andrew Leo Barnes’s Affidavit filed 8 February 2023, page 26.
The husband’s response was to seek the financial information that underpins the wife’s assertion that without the sale of the M Property the financial position of L Company may be precarious.
Whilst some documents were provided, the husband did not consider that they adequately explained the financial position of L Company.
Accordingly, the husband seeks the documents set out in proposed order 5.
Until the husband has had an opportunity to assess issues relating to the financial viability of L Company, his position is that he will not consent to the sale of M Property.
The husband seeks an injunction restraining the wife and second respondent from disposing of any asset of the C Trust and the property of the parties.
The Court has broad powers to grant injunctive relief including for the purpose of preserving the property of the parties and/or otherwise regulating the conduct of the parties pending final hearing.
The Family Law Act 1975 (Cth) (“the Act”) empowers the Court to make orders in positive as well as negative terms, as in the case of mandatory injunctions, such order must be considered proper. The term “proper” means “reasonable and just in the circumstances” (see In the Marriage of Farr (1976) FLC 90-133).
In those circumstances, pursuant to s 114(3) of the Act, the Court must be satisfied that it is just or convenient to grant such an injunction or to make an interlocutory order. As was observed by Forrest J in the decision of Lampros and Anor & Lampros & Anor [2012] FamCA 415:-
50.In this Court particularly, interim injunctive relief is primarily utilised to maintain things as they are, or to restore things to as they were until they were abruptly changed to the prejudice of an interested party, to protect claims that parties have or may have to substantive relief after a final hearing.
The husband seeking an injunctive order bears the onus of satisfying the Court that the circumstances justify the making of that order.
By way of summary, the following principles are relevant to the Court’s consideration of an application for injunctive relief:-
(a)Insofar as the purpose of the proposed injunction is to restrain dealing with property pending the final hearing, the Court must address the question as to whether there is evidence of a risk of the disposal of any asset that would defeat any anticipated order in the substantive proceedings. However, that is but one of a number of factors to be considered.
(b)The husband seeking such order must establish “a real risk of the asset being disposed of” prior to final hearing.
(c)In assessing that risk, it is not necessary for the husband to satisfy the Court as to the probability of success of the husband’s case.
(d)In that context, the husband bears the onus of establishing on the evidence that there is a risk of the asset being disposed of, that the asset pool thereby be diminished, and that there was a potential risk of the party’s claim being defeated or prejudiced if the injunction was not granted.
The intention of the wife and also the second respondent was to exclude the husband from the business operation of L Company.
The wife and second respondent seek to sell the M Property in order to reduce the potential for financial stress arising from a liability in excess of $5,000,000.
The undertaking entered into by the wife did not involve or bind the second respondent.
An undertaking by the second respondent is not proposed and as such I consider that there should be an injunction granted in terms as sought by the husband.
By Orders made 14 March 2023, all applications for final orders have been listed for final hearing to 23 October 2023 with an opportunity for trial directions or other argument to be heard on 14 April 2023.
Given the management of the matter, opportunity is readily available to the parties should agreement not be reached as to the status of the M Property and its proposed sale.
The delivery up of Motor Vehicle 1 and industrial equipment
The husband seeks that the wife and/or the second respondent deliver up Motor Vehicle 1 and industrial equipment fixed to the back of the vehicle. The second respondent concedes that the industrial equipment will be delivered up together with the original body that had been fixed to Motor Vehicle 1. It appears that the wife and/or the second respondent removed the body and industrial equipment from Motor Vehicle 1, fixed a new body and then appropriated Motor Vehicle 1 for crop purposes.
It is acknowledged that the vehicle was owned by Q Pty Ltd of which the husband is the sole Director and shareholder.
Moreover, it appears that the vehicle had been driven in an unregistered and uninsured state resulting in the husband receiving an Expiation Notice on 6 February 2023.
There is apparently a dispute between the parties as to who was driving the vehicle.
The wife has not advanced any good reason for the retention of Motor Vehicle 1 in circumstances where there is an acknowledgment that it does not form part of the assets of L Company or the C Trust. It is not suggested that the removal of the body and industrial equipment was with the husband’s consent or knowledge.
It is not disputed that the industrial equipment is of significant value.
The wife does not refer to Motor Vehicle 1 in her Affidavit sealed 14 March 2023 however, it is likely that the second respondent who has the day to day management of L Company has knowledge of the use of Motor Vehicle 1 and could find out who was driving the vehicle.
I am satisfied that there has not been any response to correspondence from the husband’s solicitors as to the identity of the driver of the Motor Vehicle 1 at the time that it incurred an Expiration Notice. I am also satisfied that the truck remains the property of Q Pty Ltd and that the husband has a good and proper use for the vehicle, the original body and its capacity convey the industrial equipment.
I propose to order that the wife and/or the second respondent deliver up Motor Vehicle 1, the original body, and the industrial equipment as sought by the husband.
Husband’s intention to inspect the properties owned by the C Trust, G Trust and Superannuation Fund 1
The husband gave an undertaking that he would not enter or remain on the properties of the C Trust and the G Trust.
The wife concedes that there is financial difficulty in the ongoing management of L Company. The husband contends that there has been significant change to the property crop plantings and given that he has not attended the property since November 2019, the husband seeks the opportunity to inspect the crop and processing business which prior to 2014, had been controlled by the husband and wife.
The wife opposes the husband’s application and contends that his attendance may disrupt the business given that it is currently conducting harvest and production and that crop will be harvested until mid‑2023.
The wife is prepared to allow the husband to inspect the properties after harvest, in the presence of his solicitor and not on a business day.
The orders sought by the husband is that upon giving 7 days written notice he seeks to attend to inspect the properties in the presence of a solicitor.
I propose to make an order in terms of proposed order 12 of the husband’s Application but to extend the written notice required from 7 days to 21 days.
Other matters
The wife and the second respondent do not oppose the husband attending with a mechanic at the N Town property to inspect and repair the industrial vehicle and to remove it and other vehicles and equipment, as set out in the husband’s supporting affidavit.
Finally, I am uncertain whether the second respondent has made full disclosure in relation to the sale of the husband’s Motor Vehicle 2. If it has not occurred, I propose to make an order that the second respondent provide details in relation to the purported sale of the vehicle to a third party.
I make orders as appear at the commencement of these reasons.
I certify that the preceding sixty (60) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Berman. Associate:
Dated: 28 March 2023
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