ENGLUND & ENGLUND

[2018] FamCA 775

FAMILY COURT OF AUSTRALIA

ENGLUND & ENGLUND [2018] FamCA 775

FAMILY LAW – PROPERTY – Interim application – Where the wife seeks various injunctive interim property orders in relation to the preservation of the matrimonial pool – Where the wife seeks that certain monies be restored to the matrimonial property pool – The Court makes certain of the orders sought by the wife on the basis that both parties have acted without the consent of the other in dealing with the matrimonial pool since separation – The Court amends the orders sought by the wife so that they go no further than is necessary to protect the matrimonial pool – The Court declines to make certain orders sought by the wife on the basis that the matrimonial property pool can be adjusted to address the wife’s concerns at final hearing.

Family Law Act 1975 (Cth) ss. 79, 114
Family Law Rules 2004 rr. 1.04, 13.01, 13.04

Acton & Burton [2015] FamCA 469
Briese and Briese (1986) FLC 91-713
Cardile v LED Builders Pty Limited (1999) 198 CLR 380
Frigo v Culhaci [1998] NSWCA 88
Glover v Walters (1950) 80 CLR 172
In the Marriage of Farr (1976) FLC 90-133
Iphostrou & Iphostrou and Ors [2011] FamCA 20
Jeeves & Jeeves (No 2) [2008] FamCA 1148
Livesey and Jenkins (1985) 1 All ER 106
Martin & Martin and Ors [2013] FamCA 222
Mertens & Mertens [2016] FamCAFC 136
Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia(No 3) (1998) 195 CLR 1
Philips & Samuels [2017] FamCA 125
Tripp & Tripp [2013] FamCA 1107

APPLICANT: Ms Englund

RESPONDENT: Mr Englund

FILE NUMBER: SYC 2241 of 2018

DATE DELIVERED: 28 September 2018

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: McClelland J

HEARING DATE: 17 September 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Gillies SC

SOLICITOR FOR THE APPLICANT: Marsdens Law Group

COUNSEL FOR THE RESPONDENT: Mr Lloyd SC

SOLICITOR FOR THE RESPONDENT: Clinch Long Woodbridge Lawyers

THE COURT ORDERS, PENDING FURTHER ORDER, THAT:

1. Subject to order 4 herein, within seven (7) days of the date of these orders, the parties do all things and sign all documents necessary to direct that the rental income of the following properties, and any associated leases, including but not limited to parking spaces and storage cages, be deposited into the Commonwealth Bank of Australia joint account of the parties (BSB: …; Account No.: #56):

   (a)PP Street, B Town NSW (“the B Town commercial property”);

   (b)C Street, Suburb D, NSW (“the Suburb D Property”);

   (c)E Street, F Town, NSW (“the F Town property”);

   (d)1 G Street, Sydney NSW (“the 1 G Street property”);

   (e)2 G Street Sydney NSW (“the 2 G Street property”);

   (f)H Street, Suburb J NSW (“the Suburb J property”);

   (g)K Street, Suburb L NSW (“the Suburb L property”);

   (h)M Street, N Town QLD (“the N Town property”);

   (i)O Street, Suburb P NSW (“the Suburb P property”); and

   (j)Q Street, Suburb R NSW (“the Q Street property”).

2. Subject to order 4 herein, within seven (7) days of the date of these Orders, the parties do all things and sign all documents necessary to direct that the rental income of S Street, Suburb P NSW (“the S Street property”) be deposited into a bank account in the name of the Self-Managed Super Fund.

3. Subject to order 4 herein, the parties hereafter be restrained from directing that the rental income of the following properties be paid elsewhere:

   (a)The S Street property;

   (b)The B Town commercial property;

   (c)The Suburb D Property;

   (d)The F Town property;

   (e)The 1 G Street property;

   (f)The 2 G Street property;

   (g)The Suburb J property;

   (h)The Suburb L property;

   (i)The N Town property;

   (j)The Suburb P property;

   (k)The Q Street property;

   (l)T Pty Ltd T/A Z Suburb P;

   (m)U Pty Ltd;

   (n)V Pty Ltd T/A XPL W Town;

   (o)V Pty Ltd T/A XPL B Town; and

   (p)Properties owned by Y Pty Ltd (“YPL”).

4. Orders 1, 2 and 3 herein shall not apply to reasonable deductions made from rental income received from the relevant properties in order to meet expenses incurred in the ordinary operation of the business associated with the leasing of those properties.

5. In the event of either party deducting funds from the rental income received from the properties referred to in order 1, 2 and 3 herein, in terms of order 4 herein, such deduction/s shall be disclosed by that party to the other party in a monthly statement.

6. Within seven (7) days, the Applicant husband do all things and sign all documents necessary to restore the Respondent wife as Director and Shareholder of YPL and thereafter be restrained from removing the Respondent wife from those roles.

7. The parties be granted liberty to apply on 48 hours’ written notice to the Court and the other party.

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

IT IS NOTED that publication of this judgment by this Court under the pseudonym Englund & Englund has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

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 r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 2241 of 2018

Ms Englund

Applicant

And

Mr Englund

Respondent

REASONS FOR JUDGMENT

Introduction

1. This matter was listed for interim hearing on 18 September 2018.  Certain issues in dispute were resolved on that day and are recorded in the orders and notations made.  This decision concerns those issues which remain outstanding.

2. The outstanding issues that require adjudication are in respect to wife’s proposed interim orders 6, 7, 8, 9, 11 and 12 set out in her Response filed on 15 June 2018.  Those proposed orders are, as follows:

   6. That the Applicant Husband be solely liable for the outgoings of the [Suburb D] and the [Suburb P] [sic] up to the date of these Orders and within seven (7) days of the date of these Orders the Applicant Husband shall do all things to ensure any arrears up to the date of these Orders are paid.

   7. That within seven (7) days of the date of these Orders, the parties do all things and sign all documents necessary to direct that the rental income of the properties in Order 2 above, and any associated leases including but not limited to parking spaces, storage cages, with the exception of properties named in 2 (a), (j) & (m), be deposited into the following joint account of the parties: Commonwealth Bank of Australia, BSB: ... Account No. #56.

   8. That within seven (7) days of the date of these Orders, the parties do all things and sign all documents necessary to direct that the rental income of [S Street, Suburb P], NSW be deposited into a bank account in the name of the Self-Managed Super Fund.

   9. That the parties hereafter be restrained from directing rental income of assets in Orders 2 and 3 above to be paid elsewhere except for the property named in 2 (j) & (m).

   …

   11. That within seven (7) days of the date of these Orders, the Applicant Husband do all things and sign all documents necessary to restore the Respondent Wife as Director and Shareholder of [YPL] and thereafter be restrained from removing the Respondent Wife from those roles.

   12. That within (7) days of the date of the Orders, the Applicant Husband repay the sum of $440,000 into the Commonwealth Bank Account Investment Home Loan account #09.

Background

1. The husband was born in 1959 and is currently 58 years of age.  He is a health professional.

2. The wife was born in 1965 and is currently 52 years of age.  She is a health professional.

3. The parties were married in Country AA in 1990 and commenced cohabitation from that date.

4. On 16 May 1991, the wife moved to Australia.

5. The parties have three children, namely:

   a)Mr BB, currently aged 27 years;

   b)Mr CC, currently aged 26 years; and

   c)Ms DD, currently aged 17 years.

6. The husband moved out of the former matrimonial home at EE Street, Suburb R (“the Suburb R property”) in late-2016 and, since that time, the wife has remained living at the Suburb R property with the parties’ two youngest children.

7. Affidavits filed by the parties in these proceedings detail the care arrangements for the parties’ children during their relationship, as well as their financial contributions at the commencement of the relationship, during the relationship and following final separation.  The details of those contributions are not relevant to the issues that the Court is required to adjudicate in this decision.

8. The wife contends that the current net assets of the parties total $25,705,374.56.  The husband disputes that assessment and states that the total net value of the parties’ property pool is in the order of $10,000,000.

9. The parties’ contentions in respect to their investment properties are as follows.

10. In June 2000, the parties purchased their first investment property, being H Street, Suburb J NSW (“the Suburb J property”), through the company Y Pty Ltd (“YPL”).  The wife contends that, without her knowledge or consent, the husband removed her as a director of that company on 6 August 2016 and as a shareholder on 15 February 2018.  That fact did not appear to be disputed by the husband who, in these proceedings, acknowledges that he is now the sole director and shareholder of YPL.

11. In 2001, the parties agreed to open a business.

12. In 2003, the parties purchased a property at 1 G Street, Sydney NSW (“the 1 G Street property”).  That purchase was paid for through YPL.  The parties subsequently leased the 1 G Street property, as well as a car space linked to that property, which was separately leased.

13. On 24 July 2003, the parties purchased a property at 2 G Street, Sydney NSW (“the 2 G Street property”).  The wife contends that, after acquisition of that property, it was leased.  A car space and two storage cases linked to that property were also leased.  The wife contends that she and the husband jointly received rental income from those assets up until January 2016, but that since that time, she has not received any such rental return.

14. In 2003, the parties purchased a property at Q Street, Sydney NSW (“the Q Street property”).  That property was leased from September 2003.

15. In 2007, the husband contends that the parties purchased a property at O Street, Suburb P NSW (“the Suburb P property”) for a purchase price of $410,000.  The wife contends that the purchase occurred in 2004, not 2007.  The husband contends that the Suburb P property was purchased solely with funds from the business, which he operated.  The wife contends that the property was purchased with funds from various of the parties’ entities.  In terms of the Suburb P property, at paragraph 121 of her Affidavit filed on 15 June 2018, the wife contends that:

    After an initial period of engaging an agent, [the husband] changed arrangements so that he leased directly to the tenant, and directed the tenant to deposit money directly into [Mr Englund's] personal [FF Bank] account.

16. In 2005, the parties purchased a property at K Street, Suburb L NSW (“the Suburb L property”).

17. In 2007, the parties purchased a property at GG Street, Suburb HH NSW (“the Suburb HH property”).  That property has been leased for approximately 10 years.  The husband contends that the wife is solely collecting the rental return in respect to that property.

18. In 2008, the parties purchased a property at E Street, F Town NSW (“the F Town property”).

19. In 2010, the parties negotiated the acquisition of a property adjacent to the husband’s business at the S Street property.  The property was purchased in the name of the parties’ self-managed superannuation fund.  The wife contends that the husband has had the rent from the automatic teller machine (“ATM”) located at the S Street property deposited into his personal FF Bank account.

20. In 2010, the parties purchased a property at C Street, Suburb D NSW (“the Suburb D property”).  The husband contends that he exclusively provided the funds for the acquisition of that property and that the rental return from the property is applied to pay its mortgage and outgoings.  The wife disputes the husband’s description of the financial arrangements concerning the Suburb D property and contends that all of the repayments of the mortgage came from the parties’ joint partnership account until that loan was paid.  The wife further contends that the husband has recently drawn down over $440,000 on that mortgage and that she does not know how those funds have been disbursed.  The wife also contends that since October 2016, the rental return from the Suburb D property has been diverted into the husband’s personal FF Bank account.

21. In 2011, the parties purchased the Suburb R property.  The wife contends that the deposit for the property was paid with funds from the U, which is operated by her.  The wife contends that repayments in respect to the mortgage have been made from the parties’ joint accounts.

22. Also in 2011, the parties purchased “XPL W Town” and “XPL B Town” with a leasehold at PP Street, B Town NSW (“the B Town commercial property”).  The husband contends that the mortgage is now completely paid off and the property is operated through a company II Pty Ltd, of which the husband is the sole director and shareholder.

23. In 2012, the parties purchased a property at JJ Street, Suburb KK QLD (“the Suburb KK property”).

24. Also in 2012, the parties purchased a property at M Street, N Town QLD (“the N Town property”).  That property has been leased since 16 February 2004.

25. At paragraph 59 of his Affidavit, the husband contends that the wife has had the sole benefit of rental income from the parties’ investment properties and that she has retained the proceeds of sale from certain of those properties.  Specifically, the husband alleges that the wife has had the exclusive benefit of the following rental income:

    a)The Suburb J property in respect to the period from October 2016 until February 2018 at $1,153 per week;

    b)The Q Street property in respect to the period from June 2017 until February 2018 at $3,846 per week;

    c)The factory within Z Suburb P between 2009 and 2018 at $1,269 per week;

    d)The Suburb HH property between April 2018 and May 2018 and the rate of $1,250 per week; and

    e)The B Town commercial property in respect to the period from 2014 to 2016 at $300 per week.

26. The husband further alleges that the wife has retained for her exclusive benefit the following:

    a)A 10 per cent deposit on the Suburb L property to the value of $79,000.  The wife says that those funds were paid by the UPL;

    b)The proceeds of sale of the Suburb KK property to the value of $850,000; and

    c)Cash from XPL W Town and XPL B Town in respect to the period from 2013 to 2016 totalling $1,100,000.

27. The husband further contends that, during 2013, without his consent, the wife provided funds to their eldest son in the sum of $350,000.  The wife acknowledges that the sum of $338,000 was paid to the parties’ eldest son.  However, the wife contends that those funds were rightfully the son’s.

28. At paragraph 160 of her Affidavit, the wife alleges that the husband has changed the password to the partnership accounts and that she is unable to access the funds in those accounts in order to pay bills relating to the rental properties.  In those circumstances, the wife contends that during the course of 2017, in a period where she did not have access to funds from the partnership accounts, she did collect some rent from the Suburb R and Suburb L properties for a short period to pay the rental property expenses.  The wife contends that she then directed the tenants of those properties, through her solicitor, to deposit those funds into the partnership or to hold them in trust. 

29. The wife contends, at paragraph 160 of her Affidavit, that since 2016, the husband has been receiving rental returns directly from the Suburb P property, the Suburb D property and the S Street property, including in relation to the storage cages at those properties.  The wife further contends that the husband received rental income from the Q Street and Suburb R properties in respect to the period November to December 2017.

30. The wife further contends that between August 2016 and February 2017, the husband has received rental returns from the ATM at the S Street property.

31. The wife further contends that the husband has received rent from the B Town commercial property “in cash in an envelope”.  The wife does not expand upon the inference that the Court should draw from her contention, in that respect.

The law

1. Although not expressly stated, the wife’s proposed orders enliven consideration of the Court’s power under s 114 of the Family Law Act 1975 (Cth) (“the Act”) to make suchorder or grant such injunction as it considers proper in relation to thepropertyof the parties: Philips & Samuels [2017] FamCA 125 at [65].

2. In Martin & Martin and Ors [2013] FamCA 222, Cronin J said at [15]:

   Section 114 of the Family Law Act 1975 (Cth) (“the Act”) enables the Court to provide a discretionary remedy. The fundamental principle is that an order should only be made if it is proper.

3. It is clear that s 114 of the Act empowers the Court to make orders in positive, as well as negative, terms, as in the case of mandatory injunctions: Mertens & Mertens [2016] FamCAFC 136 at [56]. Such an order is discretionary and must be considered proper: Jeeves & Jeeves (No 2) [2008] FamCA 1148 at [29]; Tripp & Tripp [2013] FamCA 1107 at [53]. The term “proper” means “reasonable and just in [the] circumstances”: In the Marriage of Farr (1976) FLC 90-133.

4. The plurality in Cardile v LED Builders Pty Limited (1999) 198 CLR 380 (“Cardile”) at [31] said:

   … that the court may grant an injunction in all cases in which it appears to the court to be just and convenient to do so – does not confer an unlimited power to grant injunctive relief.  Regard must still be had to the existence of a legal or equitable right which the injunction protects against invasion or threatened invasion, or other unconscientious conduct or exercise of legal or equitable rights.  [References omitted].

5. Their Honours referred to the joint judgment of Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ in Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia(No 3) (1998) 195 CLR 1, where the following was stated at [35]:

   The general principle which informs the exercise of the power to grant interlocutory relief is that the court may make such orders, at least against the parties to the proceeding against whom final relief might be granted, as are needed to ensure the effective exercise of the jurisdiction invoked. The … Court had jurisdiction to make interlocutory orders to prevent frustration of its process in the present proceeding.  [References omitted, emphasis added].

6. It is unnecessary for an applicant for interlocutory orders to establish “all of the propositions that would be necessary” to obtain the final relief they are seeking: Cardile at [127]. However, the applicant for such an order must establish:

   a)That there is a real risk of assets being disposed of (Cardile at [122]); and

   b)That, as a result of that risk, there is a real ground for believing that the applicant will be prejudiced in the remedy he or she is seeking (Glover v Walters (1950) 80 CLR 172 at 176).

7. Moreover, the applicant for relief must establish that there is a real risk, rather than a mere assertion, that the other party may deal with their assets in such a manner as to prejudice the ability of the Court to make appropriate orders at final hearing: Frigo v Culhaci [1998] NSWCA 88 at page 8. In this case, the relevant orders are those providing for the just and equitable adjustment of the parties’ interest in the matrimonial property, having regard to the matters set out in s 79 of the Act.

1. In this matter, I am not satisfied that it is necessary to make orders requiring the husband to refund to the monies from the matrimonial property pool which the wife contends have been applied, without her consent, for his sole benefit.  This is because, the net property pool, which it is agreed, is between $10,000,000 and $25,000,000 million can be adjusted, at final hearing, having regard to the amounts in question in these interim proceedings.

2. However, a matter of concern, which I will further discuss below, is that I am not satisfied that the parties have adequately complied with their obligations of disclosure pursuant to Part 13 of the Family Law Rules 2004 (“the Rules”).

3. In particular, Senior Counsel for the wife justifiably complained on behalf of her client that it was not until the morning of the hearing that her client became aware that the husband had entered into a contract for the sale of Z Suburb P (Exhibit “3-H”).  Notably, the wife’s business is currently operated from the premises that are being sold. 

4. The husband, on the other hand, complained that the wife had not provided him with all relevant information in respect to arrangements she has entered into to move her business to a property owned by the parties’ self-managed superannuation fund.

5. A further difficulty in these proceedings is that in interim proceedings, it is not possible to make findings of fact where those facts are in dispute.  In that respect, in Iphostrou & Iphostrou and Ors [2011] FamCA 20 at [44], Cronin J said:

   In any situation of an interlocutory nature where the facts are controversial and in dispute, a court cannot make findings of fact. Findings of fact form the basis upon which orders are made within jurisdiction.

6. Similarly, in Acton & Burton [2015] FamCA 469 at [47], Hogan J said:

   The nature of the interim hearing process is such that parties are afforded a truncated process in which it is not possible to make findings about matters that are significantly in contest between them.

7. In my experience, parties seeking interim relief in this Court frequently overlook the constraints of interim proceedings.  This is the case in respect to the wife’s application for proposed order 6, namely, that the husband pay any arrears in respect to the outgoings of the Suburb D and Suburb P properties.

8. The evidence relied upon by the wife in respect to the Suburb P property is set out in the following paragraphs of her Affidavit:

   81. [The husband] also has full control of the [business at Suburb P] and I am unable to access any accounts or records in relation to those.

   …

   90. My solicitors have written to agents in relation to the account in which rent is deposited. I mark Exhibit “HE-11” letters dated 22 December 2017 to the following:

   ….

   (e) [LL Realty] in relation to [the Suburb P property]; …

9. That letter to LL Realty dated 22 December 2017 is quite lengthy but, in essence, expresses concern that, despite previous requests, the real estate agency has, in the period since November 2016, declined to act upon a request by the wife for rental income from the Suburb P property to be deposited into the parties’ partnership account.  The letter requests that the real estate agency commence acting in accordance with that request and threatens that, in the event of the agency failing to do so, a complaint would be made to the Real Estate Licensing Board. 

10. Further, at paragraphs 190 and 191 of her Affidavit, the wife states:

    190. Since mid to late 2016, as outlined above, [the husband] has been the sole recipient of rental income for 4 properties, namely [Suburb D, O Street, Suburb P] and the Self Managed Superfund property.  I have made numerous attempts to have the rental income be deposited into the partnership account without success. I have not had the benefit of this income, [Mr Englund] has had the exclusive benefit  of this income which amounts to approximately $200,000.00. I say that I am entitled to 50 per cent of this, with the exception of the Self-Managed Superfunds portion, which should be paid to the Self-Managed Superfund to ensure that it is compliant. I therefore ask the court to make an order that [Mr Englund] be responsible for all outgoings with respect to these properties until Orders can be made directing the rental income be deposited into the Partnership account, to ensure that there are no arrears.

    191. I seek an Order that all rental income for our properties with the exception of the property owned by the Self-Managed Superannuation fund and the [Suburb HH] property be deposited into the partnership account with Commonwealth Bank, where neither of us can make any withdrawals without the other's consent. I understand that the outgoings for the property can be paid from this account by way of direct debit, and those arrangements are already in place. I only wish to retain the [Suburb HH] rental income until such a time that I recoup the costs of the repairs I have personally funded after which the rent will be deposited to the partnership account.

11. With respect to the wife, those paragraphs do not establish that the husband has failed to pay outgoings in respect to the Suburb P property.  Insofar as it may be determined, at final hearing, that the husband has failed to properly account for rental income from the Suburb P property, there is no suggestion that, having regard to the agreed range of the net property pool, final orders could not be made to accommodate any necessary adjustment having regard to that alleged failure.

12. The evidence presented by the wife in respect to the Suburb D property is set out in the following paragraphs of her Affidavit:

    78. As for the [Suburb D] property, the agent being [MM Realty] used to deposit the rent into the joint account where all our rent for our investments goes. However, [the husband] has directed them to put the funds also into his personal account. This has been occurring since October 2016. I mark Exhibit "HE-6" a copy of a statement demonstrating the funds were deposited into [the husband’s] personal account.

    …

    200. I have become aware from reading [the husband’s] Affidavit that he has borrowed against the [Suburb D] property as deposed in paragraph 37(k) of his affidavit. We had repaid the debt on this property but left a small amount outstanding so that the facility for $421,000 remained withdrawable. I mark Exhibit "HE-21" a copy of the CBA Statement for the period of 8 June 2016-30 June 2016. I know this because on 18 January 2018 I contacted the bank and they confirmed that this amount was still available. It now appears that since then [the husband] without my knowledge and consent has withdrawn the full amount of the facility and the amount owed is $440,000. I have no knowledge what has happened to these funds. I also no longer have access to this account and I haven't seen any statements since 30 June 2016.

13. Again, there is no evidence that the husband has failed to pay outgoings in respect to the Suburb D property.  Insofar as the wife contends that the husband has failed to properly account for rental income received in respect to that property, for the reasons that I have set out in respect to the Suburb P property, I am satisfied that the wife’s concerns, if established, can adequately be addressed by final orders making necessary adjustments in respect to the distribution of the parties’ matrimonial property.

14. I therefore dismiss the wife’s application for proposed order 6, set out in her Response filed on 15 June 2018.

15. The proposed orders 7, 8 and 9 of the wife’s Response are sought by her as a means of ensuring accountability in respect to rental income received from the parties’ investment properties.  The wife seeks to exclude, however, from the ambit of those orders the following properties:

    a)The S Street property;

    b)The Suburb HH property; and

    c)The Suburb R property.

16. In that respect, an important aspect of family law proceedings is a party’s obligation to comply with the obligation of disclosure.  That obligation exists both at common law and pursuant to statute.

17. In Briese and Briese (1986) FLC 91-713 at 75,182, Smithers J applied the House of Lords decision in Livesey and Jenkins (1985) 1 All ER 106 in determining that:

    … in financial proceedings between spouses each party must make a full and frank disclosure of all material facts. In that case it was made clear that full and frank disclosure was required as a matter of principle in the light of the fact that it was the duty of the court, taking into account a number of designated criteria, to make a decision which basically involved the exercise of a discretion.  [Emphasis added].

18. His Honour further stated at 75,181:

    In my view it is fundamental to the whole operation of the Family Law Act in financial cases that there is an obligation of the nature to which I have referred. Livesey v Jenkins makes it clear that mere compliance with rules of court or practice directions does not alter the basic principle of the need for full and frank disclosure by the parties.  [Emphasis added].

19. In terms of the parties’ statutory obligation of disclosure, Rule 13.01(1) of the Rules relevantly provides that:

    Subject to subrule (3), each party to a case has a duty to the court and to each other party to give full and frank disclosure of all information relevant to the case, in a timely manner.  [Emphasis added].

20. Rule 13.04(1)(a) provides that:

    (1) A party to a financial case must make full and frank disclosure of the party's financial circumstances, including:

    (a) the party's earnings, including income that is paid or assigned to another party, person or legal entity; …

21. Clause 6 of Part 1 of Schedule 1 of the Rules relevantly provides that:

    (6)  At all stages during the pre-action negotiations and, if a case is started, during the conduct of the case itself, the parties must have regard to:

    …

    (i) the duty to make full and frank disclosure of all material facts, documents and other information relevant to the dispute. 

    Note: The duty of disclosure extends to the requirement to disclose any significant changes (see clause 4 of this Part).  [Emphasis added].

22. The fact that the obligation of disclosure exists as a duty to the Court, as well as the other party, is significant.  It is also significant that the obligation is in respect to the disclosure of “information relevant to the dispute”, not simply one that attaches to the production of documents.

23. It is not clear why the wife has excluded the Suburb HH property from her proposed orders in circumstances where, by letter dated 22 December 2017, she requested NN Realty to deposit income from that property into the parties’ Commonwealth Bank Account (BSB: ...; Account No. #56), referred to in proposed order 7.

24. In terms of the S Street property, the wife seeks, at proposed order 8, that the rental income from that property be deposited into a bank account in the name of the parties’ self-managed superannuation fund.  By letter dated 22 December 2017, the wife’s solicitors requested the Suburb P business to deposit rental income from that property into a Commonwealth Bank account titled “OO Trust”.  There is no other evidence that would enable the Court to sensibly adjudicate in respect to whether the S Street property should or should not be named in proposed order 7.

25. It did not appear to be disputed that the wife continues to reside at the Suburb R property and there is no evidence before the Court that rental income is being obtained from that property.  In those circumstances, it is appropriate that that property be identified as an exemption from the operation of proposed orders 7 and 9.

26. I am satisfied that, in circumstances where there is a real issue as to whether the parties in these proceedings have adequately complied with their obligations of disclosure, I propose to make, with certain amendments, orders 7, 8 and 9 as sought by the wife, with the inclusion in order 9 of the properties owned by YPL. 

27. However, I find that the wife’s proposed orders, in the sense of their unqualified operation, go further than is necessary to protect the interests of the parties.  I also find that those orders could unnecessarily adversely impact upon the business activities associated with those properties.  Accordingly, I intend to modify the proposed orders by clarifying that they will not apply to reasonable deductions made from rental income received from the relevant properties in order to meet expenses incurred in the ordinary operation of the business associated with the leasing of the properties.  I will, however, include an additional order requiring the parties to provide a monthly account of expenses so incurred.

28. As previously noted, proposed order 11 requires the husband to do all things necessary to restore the wife as director and shareholder of YPL.  It did not appear to be disputed that the husband has unilaterally removed the wife as a director and shareholder of that company.  No evidence has been provided by the husband as to why that action was taken, particularly without notification to the wife.

29. In those circumstances, I am of the view that it would be proper for orders to be made for the wife to be restored as a director and shareholder of YPL.  The making of such an order would ensure that the wife is in the same position as the husband in terms of making decisions and receiving information regarding the operation of that company and the joint property held in its name.  In considering the respective balance of convenience, it is of note that the husband has not suggested that he would be adversely impacted by any such order.

30. Proposed order 12 sought by the wife appears to be based upon her evidence as set out in paragraph 200 of her Affidavit, to which I have earlier referred.  Essentially, the wife alleges that the husband has, without her knowledge, withdrawn the full amount available through a loan facility that existed in respect to the Suburb D property.  In circumstances where I am unable to make findings of fact in these interim proceedings, I am not in a position to determine whether the husband’s actions were appropriate, in that regard.  Once again, in the context of the parties’ agreement that the net combined property pool in this matter is somewhere between $10,000,000 and $25,000,000, if necessary, at a final hearing, an adjustment can be made having regard to that amount so withdrawn.  Accordingly, I will dismiss the wife’s application for proposed order 12.

Main purpose of the rules

1. It was evident that many of the issues that gave rise to this interim application were capable of resolution if a degree of courtesy and respect had been extended by each party to the other.

2. I take this opportunity to remind the parties and their legal representatives of their obligation to assist the Court in achieving the main purpose of the Rules which is described in Rule 1.04 as:

   … to ensure that each case is resolved in a just and timely manner at a cost to the parties and the court that is reasonable in the circumstances of the case.

3. In that respect, the Court expects the parties and their legal representatives to discuss any complications that arise from these orders or the issues in the proceedings generally.  However, in the event that successful negotiation in that regard is not possible, I will provide for each party to have this matter re-listed on the giving of 48 hours’ written notice to the other party and the Court.

Orders

1. For all these reasons, I make the orders as set out at the commencement of these Reasons for Judgment.

I certify that the preceding seventy-four (74) paragraphs are a true copy of the reasons for judgment of the Honourable Justice McClelland delivered on 28 September 2018.

Associate: 

Date:              28 September 2018