Ganem & Ganem & Anor

[2012] FamCA 1118

FAMILY COURT OF AUSTRALIA

GANEM & GANEM AND ANOR [2012] FamCA 1118

FAMILY LAW – PROPERTY – Application for appointment of Receivers and Managers to secure income and property from a family company and a partnership asset – Where there is a dispute about the extent of compliance with requests made by the applicant to view company documents to which she is entitled as a shareholder –Whether Receivers can be appointed to the company and be authorised to sell the company – Where neither party wants to operate the company – Receiver appointed

FAMILY LAW – ENFORCEMENT OF ORDERS – Where previous order made as to receipt and distribution of income from a partnership asset – Whether it is just and necessary for Receiver to take control of partnership property where it is suspected that the payments to be made to the applicant have not been made to the extent required – Receiver appointed

FAMILY LAW – COSTS – Where respondent has demonstrated extraordinary non-compliance with his obligations as a litigant, director of a company and his obligations pursuant to a Costs Order – Consideration of s 117(2A) of the Family Law Act 1975 (Cth) – Indemnity Costs awarded

Corporations Act 2001
Family Law Act 1975 (Cth) ss 117, 117(2A)

Colgate-Palmolive Company and Anor v Cussons Pty Ltd (1993) 46 FCR 225
Yunghanns v Yunghanns (2000) FLC 93-209

APPLICANT: Ms Ganem

FIRST RESPONDENT: Mr Ganem

SECOND RESPONDENT: Ganem Pty Ltd

FILE NUMBER: SYC 931 of 2012

DATE DELIVERED: 5 December 2012

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Ryan J

HEARING DATE: 5 December 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Siggins

SOLICITOR FOR THE APPLICANT: Mason Mia & Associates

FOR THE RESPONDENT: Mr Ganem in person

Orders amended under the slip rule

1. That pursuant to Rule 6.03 that Ganem Pty Ltd (ACN …) be added as a party to these proceedings.

2. That Mr B and Mr A of … C Street, Suburb D, NSW, 2… be appointed as Receivers of the income and property of Ganem Pty Ltd.

3. That pursuant to Section 420B of the Corporations Act 2001, the Receiver sell the business known as Ganem Pty Ltd (ACN …) forthwith.

4. That Mr B and Mr A of C Street, Suburb D, NSW, 2… be appointed as Receivers of the income and property of the partnership known as Mr and Ms Ganem Partners ABN … comprising of … E Street, Suburb H.

5. That in exercising any of its duties under these orders the Receiver have all of the powers ordinarily available to it pursuant to s 420 of the Corporations Act 2001.

6. That in exercising any of its duties under these orders the Receiver be authorised to do anything that the Director of Ganem Pty Ltd may do.

7. That the Receivers’ remuneration be paid by the respondent husband and such remuneration be calculated in accordance with the standard rates effective from time to time of Mr B and Mr A of … C Street, Suburb D, NSW, 2… .

8. That there be no security given by the Receivers.

9. That the husband co-operate with the Receivers and shall:

   (a)provide such documents, financial records, bank statements/books, tax records and any other financial document as required by the Receivers within twenty-four (24) hours of request by the Receivers;

   (b)provide full details to the Receivers within twenty-four (24) hours of request of the names and address of any employer or entity controlled by the husband which has received remuneration within the last seven (7) years;

   (c)provide any other information sought by the Receivers which relate to income or property of the husband.

10. That the Receivers shall submit accounts to the following parties on a monthly basis:

    (a)       Ms Ganem;

    (b)       Mr Ganem.

11. That pursuant to s106A of the Family Law Act, should the respondent husband refuse or neglect to sign any documents necessary to effect the terms of these orders the applicant wife is hereby appointed to execute the document, deed or instrument in the name of the respondent husband and to do all acts and things necessary to give validity and operation to the Deed or instrument. The defaulting party shall bear the cost in relation to any application pursuant to Section 106A of the Family Law Act (1975).

12. That the respondent husband pay the applicant wife’s costs of her Application in a Case filed 30 November 2012 on an indemnity basis in the amount of $8,663.00.

13. The costs pursuant to Order 12 are to be paid within two (2) months.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 931 of 2012

Ms Ganem

Applicant

And

Mr Ganem

First Respondent

And

Ganem Pty Ltd

Second Respondent

REASONS FOR JUDGMENT

1. These reasons were delivered orally.

2. Before the Court is an application by Ms Ganem for a suite of orders which would join a private family company of which the parties are the sole shareholders and directors.  Then in relation to that company, appoint F Partners, receivers and managers.  The receivers and managers would be authorised to sell the company and manage a partnership asset at E Street, Suburb H (“E Street”).  So that it is clear, the partnership is a two party partnership between the applicant wife (“applicant”) and the respondent husband (“respondent”).  Otherwise, there is a suite of orders which, in a sense, are otiose in that they replicate powers otherwise given to receivers pursuant to the Corporations Act 2001 (“Corporations Act”).

3. Provision is sought to provide for appropriate remuneration of the receivers in accordance with the schedule of fees attached to an affidavit under the hand of a partner of the proposed receivers’ practice, dispensing with the requirement for security, directions that the respondent cooperate, for the provision of monthly accounts to the applicant and respondent and for the applicant to sign documents in the event the respondent defaults in so doing.  The gravamen of the application is that in the context of the parties’ separation there is a serious dispute in relation to the operation of Ganem Pty Ltd, that being the company, and the distribution of partnership income received from the rental of E Street. 

4. As the exchanges that have taken place in Court this morning would confirm, neither party regards themselves as in a position to manage Ganem Pty Ltd.  The respondent has previously offered to the applicant that she takes over its operation.  For a variety of reasons the applicant says she is unable to do this.  These include that she has previously not been the operator of the company although she has been its bookkeeper.  Second, since separation, the company has been in the hands of the respondent.  The applicant points to irregularities in relation to the provision of information and documents reasonably requested by her as a shareholder, provision of which has not been forthcoming. 

5. Again, the exchanges between the bench and bar today between counsel for the applicant and the respondent make plain there is a serious issue about the extent of compliance with requests made by the applicant for documents to which she is entitled.  There is a serious dispute between the applicant and the respondent about provision of a tender to a transportation company.  The tender for services being necessary to enable the company to continue to perform the services it has undertaken for many years.  Although it is not entirely clear, it would seem that if a tender has been lodged, it has not been lodged in the name of the company and may have been presented by the respondent under another name. 

6. It is said by the respondent, in any event, the argument is moot because the company to whom the tender should have been submitted has itself lost its key contract with the State Government.  The effect of this, according to the respondent, is that although the company is solvent, it has two assets only and staff and contractors have been laid off, albeit fully paid.  For her part, the applicant is suspicious, and having regard to the contents of Exhibit F with good reason, that the respondent may have secured or be about to secure a contract which otherwise would have come to Ganem Pty Ltd to an entity owned and controlled by him. 

7. I agree with the submissions by counsel for the applicant, that these constitute good reason for the appointment of a receiver manager in the short term.  The point being that an independent party with the appropriate skills can consider the position of the company and if it is a viable concern, capable of producing a sale at value that the sale at value takes place.  In making such an order I take into account the submissions made by the respondent that this is likely to be an expensive exercise to no good purpose. 

8. If everything that the respondent has said, in effect, the collapse of Ganem Pty Ltd:

   (a)having taken place; and

   (b)being occasioned as a consequence of steps beyond his control

   then he has good reason to feel aggrieved about the appointment of a receiver manager if only because of the reason of expense.

9. On balance, there is just reason for making an order along the lines sought by the applicant. 

10. In relation to E Street, the receipt and distribution of income from that property is highly contentious.  Orders have already been made in relation to it by Watts J on 26 March 2012.  It is common ground, as I apprehend it, that the payments to be made to the applicant as a consequence of those orders have not been made to the extent required.  Again, the intervention of a neutral third party to take control of the income and that partnership property is just and necessary. 

11. As I indicated, the orders in relation to the powers and duties of the receivers simply accord with those which are available under the Corporations Act, even if machinery orders as sought are not made. Remuneration must be provided for and the remuneration proposed by the receivers is unremarkable and proposed Order 13 is appropriate. Order 15 as sought includes an order that a failure to comply will be a contempt of court. The proposed Order 15(d) is not an order that I am comfortable with and it will not be made. If a contempt of court is established, it must be established on its facts before the Court, not as an order that presupposes such a finding. Monthly accounts are both necessary and appropriate. Clearly, there have been significant issues in the past about the provision or failure to provide documents which are complete. In this regard, I take into account the evidence that was presented to the Court on the last occasion in the context of maintenance and injunction applications and those which were read in the course of a contempt application which ultimately did not get off the ground. For these reasons I am satisfied that the orders sought, subject to the variation I indicated in Order 15(d) are just and necessary and will be made.

Costs Application

1. Before the Court is an application by the applicant wife that the respondent husband pays her costs of her Application in a Case filed 30 November 2012, which has been heard and determined today.

2. As my reasons for disposition of the Application in a Case thus far would demonstrate, the application was commenced in circumstances where the respondent, on 27 November 2012, informed the applicant that unless she took over the company forthwith, he would deregister it on 1 December 2012 or thereabouts.  The dates might be out by a day or two.  In any event, there are a series of injunctions imposed by this Court which control the conduct of both the applicant and the respondent in relation to the use and disposition of assets including company assets. 

3. On one view, the respondent was required to give 21 days notice of his intention to take steps to deregister the company. There is no dispute that less than 21 days notice was given. On another view, the respondent was unable to take this step without the applicant’s consent, which plainly she did not give. The applicant has been substantially successful today in obtaining orders which will secure income and property of the family company and a partnership asset. It is accepted that the application is brought against a background of persistent failure to comply with disclosure obligations imposed by the Family Law Rules 2004 and reinforced by orders dated 26 March 2012. The default is that of the respondent.

4. As I said on the last occasion, it is outrageous that information in relation to the failure of the head contractor and the lack of ongoing contractual relationships with that contractor was disclosed to the Court and the applicant in the manner it was.  There is no doubt that that information should have been formally conveyed either in a financial statement, an affidavit and directly to those advising the applicant as and when the events were unfolding.  In short, the applicant has demonstrated egregious non-compliance by the respondent with his obligations as a litigant, in his obligations as a director of a two person company in which the applicant is the other shareholder, and his obligations pursuant to orders made on 26 March 2012. 

5. The nature of his non-compliance is, as I said, extraordinary and brings the category of case into one where, consistent with authorities such as Colgate-Palmolive Company and Anor v Cussons Pty Ltd (1993) 46 FCR 225 and Yunghanns v Yunghanns (2000) FLC 93-209, it is appropriate to contemplate an order for indemnity costs in relation to this application. These same matters constitute justifying circumstances as that phrase is used in s 117 of the Family Law Act 1975 (Cth) (“the Act”).

6. Turning to s 117(2A), the first matter is the parties’ financial circumstances. Both have filed affidavits and from those, it is clear that between them they have control of assets of significant value, albeit both say they are presently income poor. The application of s 117(2A) is thus moot, subject only to my satisfaction that, if necessary, the order could be satisfied from property owned by the respondent.

7. Next, subsection 117(2A)(e).  As I have already indicated, the applicant has been wholly or substantially successful today and the application of the subsection weighs in her favour. 

8. Subsection (g) entitles the Court to take into account any other fact or circumstance and I take into account in favour of the applicant my findings made as to justifying circumstances and circumstances which would warrant consideration of an order on an indemnity basis. 

9. The totality of those factors persuades me that an order for costs should be made in the applicant’s favour in the amount sought. 

I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Ryan delivered on 5 December 2012.

Associate:     

Date:              21 January 2013