Harding & Callaghan
[2023] FedCFamC1F 91
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Harding & Callaghan [2023] FedCFamC1F 91
File number(s): SYC 6218 of 2020 Judgment of: HARPER J Date of judgment: 22 February 2023 Catchwords: FAMILY LAW – PROPERTY – Injunctions – Property pool of up to $69 million – Husband seeks injunctions to prevent wife dealing with asset management and bank accounts without providing notice – Where wife holds majority of control over assets – Arguments that wife has undertaken transactions without providing notice – Allegations of non-disclosure not able to be determined at interlocutory stage – Where evidence of dissipation is not sufficient to justify injunctions – Proceedings listed for trial in five weeks – Balance of convenience does not favour the grant of injunctions sought – Application dismissed. Legislation: Family Law Act1975 (Cth) ss 90SM, 114 Cases cited: Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57; [2006] HCA 46
Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618; [1968] HCA 1
Businessworld Computers Pty Ltd v Australian Telecommunications Commission (1988) 82 ALR 499; [1988] FCA 127
Jessica Estates v Lennard (2007) 13 BPR 25,297; [2007] NSWSC 1434
MP Water Pty Ltd v Veolia Water Australia Pty Ltd [2021] NSWSC 582
Mullen and De Bry (2006) FLC 93-293; [2006] FamCA 1380
Sarto & Sarto [2022] FedCFamC1A 16
Tsiang & Wu (2019) FLC 93-911; [2019] FamCAFC 128
Warner-Lambert Co LCC v Apotex Pty Ltd (2014) 311 ALR 632; [2014] FCAFC 59
Division: Division 1 First Instance Number of paragraphs: 20 Date of hearing: 8 February 2023 Place: Sydney Counsel for the Applicant: Mr Kearney SC Solicitor for the Applicant: Pearson Emerson Counsel for the Respondent: Mr Richardson SC Solicitor for the Respondent: Barkus Doolan Winning ORDERS
SYC 6218 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR HARDING
Applicant
AND: MS CALLAGHAN
Respondent
order made by:
HARPER J
DATE OF ORDER:
22 February 2023
THE COURT NOTES THAT:
A.Orders sought in the Application in a Proceeding filed by the Applicant Husband (“the husband”) on 2 February 2023 relating to the appointment of adversarial expert evidence, disclosure, and instructions to a single expert were made by consent on 8 February 2023.
THE COURT ORDERS THAT:
1.The Application in a Proceeding filed by the husband on 2 February 2023 be otherwise dismissed.
2.All questions of costs are reserved.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Harding & Callaghan has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
HARPER J:
These are complex financial proceedings which are listed for final hearing to commence on 27 March 2023 with an estimate of six days.
The parties were in a de facto relationship. They both seek alternation of property interests pursuant to s 90SM of Pt VIIIAB of the Family Law Act1975 (Cth) (“the Act”). The applicant is the husband, and the respondent is the de facto wife.
By Application in a Proceeding filed on 2 February 2023, the husband sought a range of orders, including leave to adduce adversarial valuation evidence, disclosure, and orders in the nature of injunctions restraining the wife from certain financial dealings without notice and compelling the wife to bring about “viewing access” to specified bank accounts.
The husband provided an updated proposed Minute of Orders in his Case Outline filed on 7 February 2023.
It was common ground that the asset pool which will be the subject of division was extremely large, somewhere between $51 and $69 million, according to the husband.
The husband’s application was listed for hearing on 8 February 2023. On that date, the issues between the parties were resolved by agreement other than the question of injunction. The wife resists injunctive relief.
The proposed injunctions fall into several categories. The first category is formulated as restraints or prohibitory injunctions. Order 6 seeks a restraint on dealings with funds held in the “[B Finance] Asset Management Account” with not less than eight weeks’ notice. This account is an investment account held by C Pty Ltd as trustee for the C Trust, together with B Finance Group. The account holds a large amount of money, being about $17.6 million as at 20 December 2022. The wife is the sole director and shareholder of C Pty Ltd and thus controls the C Trust. The B Finance Group was not clearly defined but there was no dispute that, broadly speaking, it refers to an assemblage of entities controlled and operated by the wife.
Order 8 then seeks to restrain B Finance Group in respect of the B Finance Asset Management Account, as well as the D Trust in respect of the C Pty Ltd D Trust Account …70, from changing the nominated bank account for receipt of all and any payments from the C Pty Ltd Westpac Account …14. Order 9 is consequential to Order 8, requiring a copy of the sealed orders to be provided to B Finance Group and D Trust, together with an irrevocable direction to cause payments to be made into account …14.
The Court has a broad power to grant injunctive relief pursuant to s 114 of the Act. The principles applicable to the grant of an interlocutory injunction are well known and set out in the decision of Tsiang & Wu (2019) FLC 93-911 (“Tsiang”) at [20]–[23]. The applicant first must show a prima facie case, that is, a sufficient likelihood of success to justify, in the circumstances, the preservation of the status quo pending trial and secondly, whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs, or is outweighed by, the injury which the defendant would suffer if an injunction was granted: Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618; Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57. These are related, not independent, questions: Warner-Lambert Co LCC v Apotex Pty Ltd (2014) 311 ALR 632 at [70]. In the context of applications pursuant to s 79 or s 90SM of the Act, part of the consideration relating to the balance of convenience is the applicant must show that there is a “danger” or risk of dissipation of or dealings with assets which will frustrate any judgment in favour of the applicant: see also Mullen and De Bry (2006) FLC 93-293 (“Mullen”). In Tsiang at [27] the Full Court confirmed the risk must be real and not theoretical, and be based in the evidence. It has also been said by the Full Court that a more liberal approach to asset preservation orders is warranted in family law matters: Mullen at [43].
It was the husband’s contention that, on any view, he would receive a property adjustment order with a value approximately somewhere in excess of $20 million. The wife did not appear to contest this broad contention. But, it should be born in mind, as Austin J said in Sarto & Sarto [2022] FedCFamC1A 16 at [19] that:
… the success of the husband’s claim depends upon an eventual exercise of discretion in his favour under [Pt VIIIAB] of the Act adjusting the spouses’ existing property interests. Unless and until that adjustment occurs, he has no proprietary interest at all in the property (Lin & Ruan [2021] FamCAFC 90; (2021) FLC 94-024 at [41], [48] and [49]) …
The husband proffered an undertaking in damages in writing.
One of the substantial assets on the balance sheet is the former relationship home at F Street, Suburb G (“the Suburb G property”) which has been the subject of some construction works. The value of that property is disputed, but is somewhere between $20 and $23 million or up to $17 million once liabilities are taken into account. There are, according to the evidence, issues concerning rectification and repair works needed in relation to the property prior to it being available either for occupation or sale. As a consequence, E Council has not issued an occupation certificate for the Suburb G Property.
Orders have been made for the single expert valuations of a number of assets. These valuations have not yet been completed.
The husband contends that he is entitled to injunctive relief because until there are updated valuations, the only liquid interests of the parties are almost entirely in the control of the wife and total some $29.6 million. He claims that those interests have been unilaterally reduced by the wife since late 2019 by the payment of some $7.56 million to persons or entities other than the parties. He points to the fact that orders were made on 17 December 2020 which, in part, required notification by the wife to the husband within seven days of the date of a number of transactions taking place. He argues the wife has not complied with this order as she has not provided him timely or proper notice of, or information concerning, transactions she has undertaken since the orders were made.
For example, he claims that in late 2022 the wife made a redemption request of $9.6 million for release in early 2023 and made no disclosure about this redemption. He claims that the wife has made other redemptions without proper disclosure. He gave evidence that the wife has opened a United States investment account, without the requisite notice.
He also claims that there is no prejudice arising from the proposed orders because, according to her own evidence, the wife presently has no plans about the utilisation or disposition of existing assets under her control.
The wife resists the proposed restraints. She points out that there is no evidence that the redemption of $9.6 million was proceeded with and, indeed, her evidence demonstrates that it did not proceed. She also argues that $2 million of the amount of $9.6 million she utilised was a payment to reduce the mortgage secured against the Suburb G property. She argued that there was no demonstrated risk of dissipation to the existing property pool which would justify altering the status quo which has been in place since the orders were made on 17 December 2020. She makes the point that the assets which would be affected by the injunctive relief are not assets in which the husband claims any proprietary interest; in other words, they are conceded to be assets of the wife. She denies opening any US investment account as contended by the husband, but agrees she opened a US dollar account with Westpac, which she has disclosed.
The second category of orders are in nature mandatory interlocutory injunctions seeking to compel the wife to take the necessary steps to cause the restoration of viewing access to the husband of C Pty Ltd D Trust Account …70 (Orders 7, 10, and 11). Despite earlier controversy, it appears settled in Australia that the same principles apply to interlocutory mandatory injunctions as prohibitive restraints: Businessworld Computers Pty Ltd v Australian Telecommunications Commission (1988) 82 ALR 499 at 503; MP Water Pty Ltd v Veolia Water Australia Pty Ltd [2021] NSWSC 582 at [58]–[61]. It is true that “restorative” injunctions have been recognised as a category of mandatory injunction compelling a defendant to restore the consequences of a wrongful act, such as breach of an express negative covenant, by exercise of a discretion which is judicial, not unfettered: Jessica Estates v Lennard (2007) 13 BPR 25,297 (“Jessica Estates”) at [22]–[23].[1] Assuming the exercise of discretion pursuant to s 114 of the Act for the grant of such an injunction is subject to the same principles, before such an injunction could be granted at an interlocutory stage, the applicant must establish both the existence of a prima facie case and that the balance of convenience favours granting the injunction.
[1] Reversed on appeal but not in relation to the statement of principle concerning mandatory injunctions: Lennard v Jessica Estates Pty Limited (2008) 71 NSWLR 306.
The wife argues that she has been told by Westpac that the husband’s proposal for viewing access could not be implemented by the bank. She further argues that, in the event the Court is minded to impose such an order, it should be subject to the reservation that in the event the bank purports to deny liability for any fraudulent transactions taking place by reason of the viewing access, the wife be permitted to apply to discharge the order. She also points out that, pursuant to orders made on 4 March 2022, the wife is obliged to provide to the husband each three months, commencing from 31 March 2022, updated disclosure documents in relation to investments that they hold.
I am not persuaded the evidence is sufficient to justify the injunctive relief sought by the husband. I accept there is some evidence of possible dissipation, but it is disputed and has not been shown to be likely on the evidence or any greater than the possibility of dissipation inherent in all litigation. Although the husband characterised his mandatory injunctions as restoring a situation which had obtained in the past, they are not “restorative” in the sense explained in Jessica Estates. They do not relate to any undisputed wrong committed by the wife; rather they would be, if ordered, an interlocutory procedural measure, designed really as an aid to, or aspect of, disclosure. Although allegations of non-disclosure have been made by the husband, they are disputed by the wife, and I am unable to resolve this dispute for interlocutory purposes. Furthermore, the proximity of the final hearing undermines the utility of the notice sought by the husband. The proximity of trial also suggests that any alteration to the existing balance sheet will be readily taken into account at final hearing. I do not accept the husband’s argument that the relief he seeks at this point in time would also be necessary or convenient to preserve the status quo pending delivery of final judgment after the final hearing takes place. It is of course open to either party to make an application at trial for further interlocutory relief, on a proper basis, if so advised. Accordingly, I decline to make the injunctions sought by the husband.
I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Harper. Associate:
Dated: 22 February 2023
11
0