HAJAR & AMARI
[2019] FCCA 2402
•28 August 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| HAJAR & AMARI | [2019] FCCA 2402 |
| Catchwords: FAMILY LAW – Proceedings transferred to the Family Court of Australia – order made. |
| Legislation: Family Law Act 1975 (Cth), ss.75, 79 |
| Cases cited: Morris & Rosetti [2017] FamCA 249 Re W: Publication Application (1997) 137 FLR 205 |
| Applicant: | MS HAJAR |
| Respondent: | MR AMARI |
| File Number: | PAC 5202 of 2017 |
| Judgment of: | Judge Newbrun |
| Hearing date: | 21 August 2019 |
| Date of Last Submission: | 21 August 2019 |
| Delivered at: | Parramatta |
| Delivered on: | 28 August 2019 |
REPRESENTATION
| Counsel for the Applicant: | Mr Baran |
| Solicitors for the Applicant: | Mr Boutros |
| Solicitors for the Respondent: | Ms Tawbe |
ORDERS
These property proceedings are forthwith transferred to the Family Court of Australia at Parramatta at 17 September 2019 at 9:30am.
Leave to the wife to make photocopies of all documents produced under subpoena upon the usual implied undertaking as to their use.
Extend the time for filing of an Amended Initiating Application to 1 November 2019.
Notation: The wife proposes to issue questions pursuant to rule 13.26 of the Family Law Rules.
IT IS NOTED that publication of this judgment under the pseudonym Hajar & Amari is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT PARRAMATTA |
PAC 5202 of 2017
| MS HAJAR |
Applicant
And
| MR AMARI |
Respondent
REASONS FOR JUDGMENT
The within Reasons for Judgment relate to this Court’s Order of 21 August 2019 reserving its decision as to whether these property proceedings be transferred to the Family Court of Australia at Parramatta. The wife had made application, through her counsel, that these property proceedings be so transferred.
Information was provided by the parties to the Court on 21 and 23 August 2019 such that it is clear that the property proceedings are unlikely to be completed within four days of final hearing, and in any event, are complex. The Court refers to the helpful Case Outline prepared by the wife’s counsel and dated 23 August 2019 and which appears in Appendix A to these reasons.
The wife contends, inter alia, that the husband operates 2 profitable businesses. She contends that these businesses were previously conducted through companies that the husband has either caused to be placed into voluntary liquidation or deregistered; she contends that such events have rendered previous Orders directing valuations of the businesses redundant (see the Orders of 20.12.17 and 24.5.18). She contends that the husband has caused monies to be transferred to third parties from these businesses with a view to deliberately reducing the asset pool. The wife contends that the two businesses continue to trade and thrive. She contends that the ownership of these businesses is unknown and it is apprehended that the owners are alter egos of inter alia the husband.
The wife contends that the Court’s jurisdiction pursuant to section 106B of the Family Law Act 1975, Commonwealth, may well be attracted by virtue of the conduct of the husband.
The liquidator has apparently produced significant documents to the Court under subpoena indicating that one business had an annual turnover of $1.7-1.9m. The wife contends that such documents indicate the relevant company the subject of the liquidation was far from insolvent. She contends that the liquidation was a sham transaction having the effect of defeating her rights to property settlement. The wife contends that the relevant company, the subject of the liquidation, went on to sell the business for a sum of just under $12,000 in cash. She contends that the liquidator has indicated in reports that he has reservations about the transaction.
The wife contends that there will need to be a thorough investigation of the accounts of the businesses.
The wife proposes to shortly administer interrogatories to the husband in relation to the 2 businesses.
Issues in dispute
The issues in dispute include the following:
(1)Property:
a) The ownership of the businesses;
b) The value of the businesses;
c) Whether the husband has cause the businesses to transfer monies to third parties with a view to reducing the asset pool;
d) Whether such monies should be clawed back under s106B of the Family Law Act 1975 (Cth) (the Act);
e) Whether the liquidation of the company was a sham transaction having the effect of defeating the wife’s rights to property settlement.
f) complex valuation evidence in relation to the husband’s businesses;
g) the parties’ respective financial and non-financial contributions pursuant to section 79 of the Family Law Act 1975 (Cth) (the Act);
h) the parties home maker and parent contributions pursuant to section 79 of the Act;
i) the parties’ relevant needs under section 75 of the Act.
Relevant statutory provisions and principles
The Court refers to the decision of Tree J in Morris & Rosetti [2017] FamCA 249. His Honour sets out in that decision, in relation to transfers of proceedings between this Court and the Family Court of Australia, the relevant statutory provisions and principles, and refers to a Protocol, agreed to between the heads of jurisdiction of this Court and the Family Court of Australia, in relation to such transfers, as follows:
The heads of jurisdiction of both Family Court and the Federal Circuit Court have agreed upon, and published, a protocol for the guidance as the appropriate Court in which parties should commence proceedings. It provides as follows:
If any one of the following criteria applies, then the application for final orders ordinarily should be filed and/or heard in the Family Court of Australia (“FCoA”), if judicial resources permit, otherwise the matter should be filed and/or heard in the Federal Magistrate Court (“FMC”).
(1)International child abduction.
(2)International relocation.
(3)Disputes as to whether a case should be heard in Australia.
(4)Special medical procedures (of the type such as gender reassignment and sterilisation).
(5)Contravention and related applications in parenting cases relating to orders which have been made in FCoA proceedings; which have reached a final stage of hearing or a judicial determination and which have been made within 12 months prior to filing.
(6)Serious allegations of sexual abuse of a child warranting transfer to the Magellan list or similar list where applicable, and serious allegations of physical abuse of a child or serious controlling family violence warranting the attention of a superior Court.
(7)Complex questions of jurisdiction or law.
(8)If the matter proceeds to a final hearing, it is likely it would take in excess of four days of hearing time.
Note: The FCoA has exclusive jurisdiction in relation to adoption and the validity of marriages and divorces.
Transfers
Either the Court on its own motion or on application of a party can transfer a matter to the other Court.
There is no right of appeal from a decision as to transfer.
It is pertinent to make the following observations in relation to the protocol:
a)The protocol speaks about the appropriate Court in which proceedings should be commenced. It does not speak, necessarily or directly, to the matters which might inform transfer by either Court, although there may be an expectation that the matters enumerated in it would be relevant to the exercise of the discretion to transfer;
b)The language of the protocol admits of exception: for instance the direction that certain matters “ordinarily” should be filed in the Family Court, and the reference to “if judicial resources permit;”
c)Some of the criteria require a degree of subjective interpretation, for instance, the reference to “serious” allegations of abuse, and “complex” questions of law. Necessarily, these are matters upon which reasonable minds may legitimately reach different conclusions;
d)Notwithstanding those observations, the intent of the protocol is to effect a relatively clear division of work between the two Courts, with the Family Court undertaking work more suited to a superior Court of record. Whilst terms such as “complex,” “difficult” or “complicated” might on occasion be used to try and describe that division, none are perfectly apt to describe the line of demarcation between the two Courts’ work. That is because, particularly in children’s matters, there is almost always some degree of complexity, difficulty and complication involved in determining where the best interests of children lie.
The other point which should be made about the protocol is that it is an agreement between the heads of both jurisdictions. As such, it cannot lawfully fetter the discretion of either Court to transfer proceedings to the other: see for instance, Re W: Publication Application (1997) 137 FLR 205 at 240 per Finn J. In fairness to those who drafted the protocol, it does not, on a plain reading of its contents, seek to do so in any event. To cast that proposition slightly differently, a judicial officer who regarded the exercise of their discretion to transfer as being required to be in conformity with the protocol would be imposing an unlawful fetter. At most, the protocol is a potentially relevant consideration.
Section 39 of the Federal Circuit Court of Australia Act 1999 relevantly provides:
(1) If a proceeding is pending in the Federal Circuit Court of Australia, the Federal Circuit Court of Australia may, by order, transfer the proceeding from the Federal Circuit Court of Australia to ... the Family Court.
…
(4) In deciding whether to transfer a proceeding to the Family Court under subsection (1), the Federal Circuit Court of Australia must have regard to:
(a) any Rules of Court made for the purposes of subsection 40(4);
(b) whether proceedings in respect of an associated matter are pending in the Family Court;
(c) whether the resources of the Federal Circuit Court of Australia are sufficient to hear and determine the proceedings; and
(d) the interests of the administration of justice.
Rule 8.02 of the Federal Circuit Court Rules provides as follows:
(1) The Court may, at the request of a party or of its own motion, transfer a proceeding to the Federal Court or the Family Court.
(2) Unless the Court otherwise orders, a request for transfer must be made on or before the first Court date for the proceeding.
(3) Unless the Court otherwise orders, the request must be included in a Response or made by an Application supported by an Affidavit.
(4) In addition to the factors required to be considered by the Court under subsections 39(3) and (4) of the Act for transfer of proceedings to the Federal Court or the Family Court, the following factors are relevant:
(a) whether the proceeding is likely to involve questions of general importance, such that it would be desirable for there to be a decision of the Federal Court or the Family Court on one or more of the points in issue;
(b) whether, if the proceeding is transferred, it is likely to be heard and determined at less cost and more convenience to the parties than if the proceeding is not transferred;
(c) whether the proceeding will be heard earlier in the Court;
(d) the availability of particular procedures appropriate for the class of proceeding;
(e) the wishes of the parties.
Discussion
There is likely to be significant evidence, including cross-examination, in relation to all the above issues (under the heading, at the beginning of these Reasons, “Issues in Dispute”).
There is likely to be extensive and significant cross-examination at the final hearing of:
a)expert witnesses, including accounting experts and valuers of corporations and businesses;
b)the husband and wife, in relation to a multiplicity of issues, as referred to above;
c)lay witnesses.
To date, there have been filed numerous subpoenae for production of documents, and there are likely to be further subpoenae issued to third parties in relation to a multiplicity of issues.
There is likely to be tendered in evidence extensive documentary evidence.
It will be necessary for the Court, at the final hearing of these proceedings, to hear the competing oral submissions of the parties, based upon the likely extensive evidence before the Court.
In the above circumstances, these proceedings will likely take more than four days of final hearing, and, in the view of the Court, having regard to the Protocol alone, the proceedings should be transferred.
Further, as to section 39(4)(c) of the Act, the resources of this Court are not sufficient to hear and determine the proceedings in a timely fashion.
Further, as to section 39(4) of the Federal Circuit Court of Australia Act 1999 and Rule 8.02 of the Federal Circuit Court Rules 2001:
a)The proceedings are likely to be heard and determined at less cost and more convenience to the parties than if the proceedings are not transferred; in this Court, there are likely to be significant delays in appointing a fixture for a final hearing, compared to the Family Court of Australia. Further, in property proceedings of this nature, in particular involving complex accounting and valuation evidence, alleged transactions to defeat claims including liquidation of corporations, the Family Court of Australia has greater expertise.
b)The final hearing of these proceedings is likely to be heard earlier in the Family Court of Australia than in this Court.
c)These proceedings are complex by reason, inter alia, of the significant dispute between the parties relating to accounting and valuation evidence, and transactions to defeat claims.
d)Again, having regard to the issues to be determined between the parties, these proceedings are likely to take in excess of four final hearing days.
e)The administration of justice is best served by transferring these proceedings, and the Court has regard to its discussions above.
The Court, on application by the wife, transfers these proceedings to the Family Court of Australia, with the husband not opposing the transfer.
The Court will also make further procedural orders, not made on 23 August 2019, as sought by the wife in her Case Outline.
I certify that the preceding twenty-seven (27) paragraphs are a true copy of the reasons for judgment of Judge Newbrun
Date: 28 August 2019
Appendix A
WIFE’S CASE OUTLINE
CHRONOLOGY
| … 1987 | Date of Birth – Ms Hajar (“the wife”). |
| … 2009 | Marriage (Country C). |
| … 2011 | First child born. |
| … 2013 | Second child born. |
| May 2015 | Separation. |
| 6 June 2017 | Parenting Orders made. |
| 17 October 2017 | Wife commenced proceedings by way of Initiating Application for a property settlement pursuant to section 79 of the Family Law Act 1975 (Cth). |
| 20 December 2017 | Procedural Orders made. |
APPLICANT’S LIST OF DOCUMENTS
Affidavit of the wife sworn 24 April 2019.
FACTUAL BACKGROUND
These are proceedings for property settlement brought by the wife pursuant to section 79 of the Family Law Act 1975 (Cth) (“the Act”). The proceedings were recently mentioned before his Honour Newbrun J for procedural directions.
It will be seen at once that the wife has been unable to comply with a series of directions to file an amended application seeking relief pursuant to section 79 of the Act. The explanation was identified in court and is further expanded upon here.
By way of summary, the husband was a businessman and was both directly and indirectly involved in at least three corporations and their related businesses. These may be variously described as: A Pty Ltd, and B Pty Ltd. A Pty Ltd, at various times operated large businesses which are still operating in Suburb D and Suburb E. They are large businesses. B Pty Ltd is another company.
A series of procedural orders were made last year by this court to undertake valuations of the various businesses, and at one stage, A Pty Ltd was joined as a second respondent to the proceedings.
On or about January 2019, the husband (on the wife’s case) undertook a series of transfers whereby he no longer held himself out as being a shareholder of A Pty Ltd. The board thereafter convened a meeting to voluntarily windup A Pty Ltd in liquidation. The intention to undergo this process operated to completely defeat the orders that were made by the court in 2018 for the valuation of A Pty Ltd, and had the wife complied with those orders, would have resulted in a situation where no further case could be advanced against A Pty Ltd.
In short, there is every reason to believe that prima facie the court’s jurisdiction pursuant to section 106B of the Act is attracted by virtue of the conduct of the respondent.
The respondent has a record of dishonest conduct and has been convicted of dishonesty offences whereby he was sentenced to a custodial sentence. It is unknown whether or not he is presently on parole or if he is at liberty as a consequence of the expiration of his custodial sentence. The wife was only able to state what she knew. What is clear from the wife’s affidavit is that the husband had access to, and probably still has access to, significant sums of cash which he has either loaned or given to third parties.
At the last directions hearing, the legal representatives representing the wife obtained the court’s leave to issue six subpoenas which resulted inter alia in the production of documents by the liquidator of A Pty Ltd of numerous documents which were created for the purposes of the winding-up. They show that the company was far from insolvent. Rather, the company had a very high cash flow and although its expenses appeared to be high, it nonetheless was trading reasonably well.
Further, the only major creditor that the company had was an outstanding tax debt to the Commissioner of Taxation in the sum of $230,000.00. There is no evidence that the Commissioner of Taxation ever commenced court proceedings either against the company or its former directors to recover that debt. There is some evidence to suggest that a garnishee order had been taken out which does not involve the court’s intervention pursuant to the income tax legislation, but it was for a small deductable amount of just over $300.00.
In all other respects, there seems to be no other reason upon which the company would have gone into voluntary liquidation. The list of trade creditors is very small and the amounts owing are also equally small. The wife was not notified of the liquidation and neither was the court, as best the wife understands the position.
It is far from a coincidence that when A Pty Ltd was joined as a second respondent in these proceedings, that moves to liquidate the company took place.
Additionally, it would appear that the company, which based on the liquidator’s documentation had high turnovers well exceeding $1 million, went on to sell the “business” for a sum of just under $12,000.00 paid in cash. The liquidator has indicated in reports that he has reservations about the transaction and the parties to the transaction are still as yet unknown. The figure appears to be based upon a report that has been produced by the liquidator from professional valuers who have valued the chattels of the business, namely items of furniture and equipment used by a business. However, the goodwill attaching to the business and all other aspects of the business do not appear to have been valued.
It is the wife’s case that the liquidation of A Pty Ltd was a sham transaction which certainly had the effect of defeating her rights for a property settlement, being an interest that the husband would have had in the business which would be divisible between the husband and the wife pursuant to section 79 of the Act for the purposes of a property settlement.
A Pty Ltd has now been revealed to have been deregistered as at July of this year, thus, technically speaking, the two entities of which the applicant was a former shareholder and director no longer exist.
However, the two businesses situated at Suburb D and Suburb E continue to trade, and as the wife understands the position, continue to thrive. The ownership is unknown it is apprehended that the owners are alter egos of inter-alia the Husband.
Given this state of affairs, the husband has engaged in conduct which has not been full and frank in terms of his obligations of disclosure to the wife, and more importantly, to the court. The wife, being completely ignorant of the liquidation, did not get the opportunity to seek urgent injunctive relief, or for that matter, make a claim as a contingent creditor in the liquidation.
When the matter was recently in court, these issues were raised before the court as involving very serious issues regarding the husband’s lack of disclosure. Accordingly, further procedural orders were made, and this case outline is provided to give the court an insight into the issues the wife contends will be required to be determined.
The husband, through his legal representatives, has been critical that the wife has not filed an amended initiating application. With the greatest respect, such an assertion is extraordinary in circumstances where the husband has not disclosed to the court what he was doing behind the scenes in terms of his shareholding in A Pty Ltd, the fact that the company went into voluntary liquidation and even more seriously, there would appear to have been a Phoenix scheme in operation, with a further aggravating factor being that the wife has absolutely no idea as to what is happening regarding B Pty Ltd and its status.
Accordingly, the procedural orders were sought on the basis that the wife has an ethical obligation to articulate a claim which is a claim that actually exists as opposed to a claim which is only going to be defeated by the respondent telling the court belatedly that the a corporate body is in liquidation or a company is otherwise deregistered.
The question was asked from the bench as to whether or not this is a case that would take more than four days and would involve complex issues. The answer, in the absence of any agreement to a resolution of these proceedings is in the affirmative. This is a case where if the husband continues to maintain his position, the wife will have no alternative but to obtain the services of a forensic accountant, which will be at the cost of the husband. Further subpoenas need to be issued and more procedural steps need to be undertaken so that appropriate relief can be sought and inappropriate transactions brought into account for the benefit of the wife who currently has the care of two children.
Accordingly, the wife contends that the following orders should be made:
(i)Leave be granted to the wife to issue a further ten subpoenas.
(ii)Leave be granted to the wife to inspect all current documents produced under subpoena.
(iii)Leave be granted to the wife to make photocopies of all documents produced under subpoena upon the usual implied undertaking as to their use.
(iv)Extend the time for the filing of an amended initiating application to 1 November 2019.
(v)Note that the wife will issue questions pursuant to rule 13.26 of the Family Law Rules.
(vi)Order that the proceedings be transferred to the Family Court of Australia on the basis that this is a complex matter which is likely to take more than four days.
23 August 2019
David E Baran
Counsel for the Applicant Wife
Barrister-at-Law
Jack Shand Chambers
Level 55, MLC Centre, 19-29 Martin Place, Sydney NSW 2000
DX 171 SYDNEY
Tel: (02) 9233 8164
Fax: (02) 9232 8975
Email: [email protected]
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Jurisdiction
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Procedural Fairness
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Remedies
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Discovery
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