Cook and Cook

[2010] FamCA 699

FAMILY COURT OF AUSTRALIA

COOK & COOK [2010] FamCA 699

FAMILY LAW – PROPERTY – Hearing concluded and judgment pending – Substantial commercial and financial events that have occurred impacting upon the pool of assets – Interim injunctions – Alleged disposal of shares and dealing with assets – Discover and inspection of documents – Need to preserve and protect assets – Further evidence required – Short adjournment

APPLICANT: MS COOK

RESPONDENT: MR COOK

FILE NUMBER: MLF 1997 of 2003

DATE DELIVERED: 10 AUGUST 2010

PLACE DELIVERED: MELBOURNE

PLACE HEARD: MELBOURNE

JUDGMENT OF: YOUNG J

HEARING DATE: 10 AUGUST 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT: MR J.W. ST JOHN SC

SOLICITOR FOR THE APPLICANT: MARSHALLS & DENT

COUNSEL FOR THE RESPONDENT: MR R.J. SPICER

SOLICITOR FOR THE RESPONDENT: KENNEDY PARTNERS

Orders

IT IS ORDERED:

1. THAT the further hearing of this interim application be adjourned to 30 August 2010 at 10.00 a.m. before Young J and be consolidated with other applications then before the Court.

2. THAT on or before Monday 16 August 2010 at 4.00 p.m. the husband provide to his solicitors who are to provide to the wife’s solicitors copies of all documents within his power, possession or control and relating to:

   (a)the sale of shares in any company (including Y Pty Ltd and NTC Pty Ltd) including any offers of purchase, conditional offers of purchase, notice given of a possible or potential sale, notice of the performance of due diligence, acceptance of offer of purchase (including any condition offer of purchase), calculation(s) of sale price(s) and all correspondence from any company advising of a possible purchase, conditional purchase or actual purchase of the company, or share in that company.

   (b)the purchase, allocation or receipt by the husband (or any company of which he is a shareholder or trust of which he is a potential beneficiary) of any shares in any company, including relevant share transfers and share certificates.

   (c)the receipt of any proceeds of sale, or other consideration, in respect of the sale of a company, or shares in a company, received by the husband (or on his behalf).

   (d)the disposition of any proceeds of sale or other consideration arising from the sale or transfer of the shares in Y Pty Ltd and NTC Pty Ltd and any other company, including (but not limited to) relevant bank accounts (or like institutional accounts) into which monies were received and receipt(s) in respect of monies disbursed;  and

   (e)payments made by the husband (or at his direction) to BDO, including all correspondence or receipts evidencing the payment(s) made and the debt(s) to be satisfied.

3. THAT until 30 August 2010 the husband be and is hereby restrained by himself, his servants or agents from disposing of, transferring, encumbering or in any way diminishing his assets and including:

   (a)any shareholding held in his name or on his behalf;

   (b)any interest or entitlement in the estate of his late mother or father;  and

   (c)his joint registered proprietorship of the northern Queensland property

   without first obtaining the written consent of the wife or Court order and noting that these Orders do not restrict any expenditure of money upon his usual and reasonable living expenses or compliance with extant Family Court Orders for costs or spousal maintenance.

4. THAT the extempore reasons for judgment be transcribed, be placed upon the Court file and be made available to the parties.

5. THAT all issues of the costs of and incidental to the appearance at Court of Counsel, including Senior Counsel and Solicitors on this day be reserved to 30 August 2010.

IT IS CERTIFIED

1. THAT pursuant to Rule 19.50 of the Family Law Rules this matter reasonably required the attendance of Senior Counsel for the wife and Counsel for the wife.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 1997 of 2003

MS COOK

Wife

And

MR COOK

Husband

REASONS FOR JUDGMENT

1. This is the second ex tempore judgment delivered today in this day in the matter.  Again, I have not left the bench and these reasons are delivered at approximately 3.40 p.m. and close to the end of the court hearing day. Thus, they are ex tempore and they will be limited in their scope.  The remaining applications before the court are those identified by the wife in her application in the case, filed 30 July 2010, paragraphs 1 and 2 thereof. 

2. Dealing first with paragraph 2, what is there sought is the disclosure, delivery and photocopying on behalf of the husband to the wife or her solicitors of identified documents said to be within his power, possession or control.  The relevant subparagraphs are (d)-(h) inclusive thereof. 

3. On behalf of the husband Mr Spicer has indicated that those documents can and will, insofar as they are in the possession of the husband or within his control, be made available.  His qualification was that the husband should not pay;  they should be produced at the expense of the wife.  The husband has some knowledge of the quantum of documents involved and indicated through his counsel to the court that there was, perhaps, 150 pages or thereabouts.  What is of fundamental importance, and I take the care and time to emphasise, is that this disclosure must include any and all documents of any relevance or significance to issues of and involving the sales of shares in Y Investments Pty Ltd or NTC Pty Ltd or any related company, inclusive of any shares that were received in the acquiring company MPC, an Indian-based offshore company identified by the husband in paragraph 32 of his affidavit filed in support.

4. I will order by Monday 16 August at 4 pm, the discovery of all documents on the basis that they are copied by the husband and provided to his solicitors for delivery forthwith and within that timeframe to the wife’s solicitors. 

5. I turn to paragraph 1 of the injunctive relief sought.  I first record that there is no opposition to the order sought in subparagraph (c) thereof.  That is, the husband agrees not act to divest himself of or deal with, or otherwise transfer or encumber any of his joint interest in the property in North Queensland. 

6. The particular order sought in paragraph 1 is that until further order, the husband be restrained by himself, his servants, or agents, from disposing of, transferring, encumbering, or diminishing assets in his name or held on his behalf, and to include any shares or any interest or entitlement in the estate of any deceased person, together with the northern Queensland property, save for the consent of the wife first obtained or to discharge his current court financial obligations to her, or for usual and reasonable living expenses.  On behalf of the husband, Mr Spicer has opposed absolutely any injunctive order be made under the umbrella of any estate of any deceased person and does not agree with the need for restraint on shareholdings.

7. I deal firstly with the issue of shareholding, and do so in brief form, having regard to the limited submissions before me, the time of day, and the requirement of the court to preserve and protect any available assets in the unique and ongoing circumstances of this case.  It is known to all parties that a defended hearing over some 12 days concluded in July of 2009.  Written submissions and subsequent oral arguments took place over the following months.  Thereafter, there were commercial and legal developments in relation to a major development project (XC project) that had attracted the detailed interest of the parties in evidence and the focus of the court, and for that and many other reasons, including the identity of assets and liabilities and ascertaining the available net pool of assets, no judgment on section 79 issues has, as yet, been able to be delivered.  It is therefore within the context of that concluded defended hearing and the current applications to reopen the case from both husband and wife that are separately the subject of brief ex tempore reasons and orders, and all other financial issues, that this injunctive order is considered.

8. There was, in the defended hearing, evidence of and related to the company referred to as Y Investments Pty Ltd and its associated companies.  By recollection, the husband’s evidence in the trial was that he held a shareholding of some 2.18 per cent or thereabouts in that company and, from memory, his brother and sister also held shares in that company or group of companies.  The orders of the wife in the defended proceedings sought a transfer to her of the husband’s shareholdings.  For the purposes of the defended hearing, a value of some $8000 or thereabouts had been ascribed, somewhat historically, to that shareholding by the single expert valuer Mr f.  That valuation had been accepted by the husband but was certainly a matter of real contest by the wife.  The husband had held that shareholding for a number of years, perhaps seven years, and he had both an interest in the company and its product, and had some level of expectation for its future long-term wellbeing. 

9. There always was, in those defended hearings, a contest as to ownership and value of those shares, and that was a matter that was left to the court in its deliberations.  What seemingly has now occurred is that, on a date unknown, but without any prior notice to the wife or her solicitors, the husband has dealt with his shareholding and perhaps other members of his family have also dealt with their shareholding by way of a sale.  Many questions arise beyond that which is now updated in paragraph 32 of the husband’s recently filed affidavit.  There are issues as to the quantum of shares sold.  There are issues as to the moneys received.  What does seem clear is that some or all of the moneys received had been paid by the husband to his solicitors in discharge of his liabilities to them.  That is covered in paragraph 32 of that affidavit. 

10. As to when the sale was first proposed, as to the level of disclosure to the court, as to the husband’s involvement in the sale process, as to the total financial benefits received, and as to the timetable thereof, all of those matters are the subject of the discovery and disclosure orders that are to be made this day.  Some documents were provided to the wife’s solicitors, and three of those documents form part of exhibit “H1” in evidence today.  They detail various parcels of shares in each of the Y Group companies sold for various consideration sums.  One of the documents is dated 10 May 2010.  The other two documents are undated.  All documents bear what purports to be the signature of the husband.  Further discovery and all information will, no doubt, become available. 

11. The second bundle of documents produced today and marked exhibit “H2” is an Australian Securities and Investments Commissions search of Y Investments Pty Ltd, which at page 7 thereof shows the husband’s dealings with 457 shares in that company, thereby increasing his total shareholding to 704.  The explanations for that, again, will likely be forthcoming by way of discovery, disclosure, or further court hearing.  Those transactions form the backbone of the interim injunction order now sought.  The court is clearly aware of the evidence in the substantial hearing, of the dispute in value, and the contest in ownership of the shares. 

12. Indeed, Mr St John, in his submission today identified, and by recollection I think it is correct, that the husband proposed his holding of those shares on an ongoing basis, as a form of security, to better ensure compliance or completeness of financial orders that may be imposed on him.  Seemingly, that was overlooked in the sale or disposal of shares and the payment of the proceeds of sale to his solicitors. 

13. Much has been made today of the fact that the wife has received a partial settlement of property and, likewise, has dealt with those assets by securing a mortgage on the O property to pay her solicitors, and thus reduce equity in that property.

14. On the other hand, it is said that the husband has merely dealt with an asset which was not restricted to, likewise, pay down his substantial debts to lawyers.  I make no finding one way or the other, but record those balancing facts.  The reality of this matter is that I find there should have been an obligation upon the husband to keep both the wife’s solicitors, and the court, better informed, on a real-time basis, of his dealing with those shares.  It will be a matter of some investigation, hereafter, as to the actual timetable of such transactions to sell or otherwise dispose of the shares.  At this stage I say no more, pending proof and evidence before the court. 

15. There may be other shares held by the husband in that group of companies, or elsewhere.  What I intend to do, pending 30 August 2010, when the matter returns to me on separate issues, is to restrict the husband from disposing of, encumbering or transferring by himself, his servants or agents, any shareholding of value which he has;  and I do not limit that to the Y group of companies, which may, in many ways, now be a past tense scenario. 

16. The matter of particular dispute before me relates to any interest or entitlement in any estate.  The husband’s mother passed away some years ago.  The husband’s father died in July of this year.  Probate would not have yet been taken out.  The assets of the estate of his late father are not known in detail, nor as to the entitlement, if any, of the husband therein.  There was a Will of the late father in evidence and, from the bar table, Mr Spicer has volunteered that there was no codicil to the will.  It is said that the assets of the late father were left, in a testamentary form of trust, to his three children, and not directly to the children; but what matters, of real significance, flow from that are for another day. 

17. I will not, in the terms of the orders sought, restrain directly any deceased estate.  That is simply too wide.  However, as I am aware from the defended hearing that there were monies managed by, or on behalf of, the husband’s father of the estate of his late mother, and as I have no knowledge, or evidence, as to the dealings with those monies, it would be both prudent and cautious and expected that the husband should not deal with or have any benefit of the estate of his late mother or father, pending further order of the court.

18. I will limit the operation of that order to 30 August of this year, but always retaining the obvious circumstance of rolling forward that order, on an ongoing basis, to preserve and protect any available asset that might on-flow to the husband.  I leave to one side all issues of contribution or, likewise, section 75(2) factors.  They are not currently the subject of my consideration.  I act merely to preserve and protect any potential asset in a case where assets have rapidly diminished, and there may be far less available for division, given all of the concurrent commercial and property issues and the concept floated by the husband that he may be approaching bankruptcy or insolvency, depending on the outcome of one and many other related commercial transactions. 

19. I form the conclusion in the particular aspects of this case (and with the defended judgment pending), that there are proper grounds for an interim injunction, initially for a limited period, as to both the shares and the particular estates identified, and, of course, on an unopposed basis, the northern Queensland property.  There are sufficient protections provided so that the husband can continue to meet his costs or spousal maintenance obligations imposed by court order, and his usual and reasonable living expenses, to the extent that the marriage of his daughter next April has been floated, that is not an immediate concern such as to justify the refusal to make any injunctive order. 

20. The form of application drawn for interim orders contemplates that all of the assets of the husband are injuncted from disposal or of his dealing with them pending further order.  I have concentrated upon his shareholding and the interest in the estates of his late parents.  I conclude however that it is appropriate until the further order, and with the caveats built into the application and the orders that I will pronounce that the husband otherwise does not dispose of wider assets, or any financial resources that are within his power or control.  What I intend is to provide the opportunity to the solicitors for the wife to have a proper level of urgent inspection and discovery and to be able to make an informed decision as to the expenditure of monies, or any other asset that may have occurred to date.  I conclude there is no injustice to the husband for such a brief injunction, as against his assets, and on the basis of preserving and protecting monies and assets to the further consideration of the Court.

21. I emphasise that, at this stage, I have reached no conclusion that these injunctions are or should be permanent or ongoing.  They are now wholly interim.  I am conscious that there are many potential issues and great, great cost to the parties in this litigation.  But that said, the court must deal with issues as they arise in the overwhelming and unique circumstances of this case.  I find therefore that it is proper and it is in accordance with the necessary guidelines of and for an interim injunction to act to restrain the husband until 30 August and, possibly, thereafter, as may be determined on subsequent evidence or further submissions.

I certify that the preceding paragraphs are
a true copy of the reasons for judgment herein
of The Honourable Justice Young

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Associate: