Hassell and Hassell & Ors - [2021] FCWA 162

JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA
ACT: FAMILY LAW ACT 1975
LOCATION: PERTH
CITATION: HASSELL and HASSELL & ORS [2021] FCWA 162
CORAM: SUTHERLAND CJ
HEARD: [OMITTED]
DELIVERED : [OMITTED]
FILE NO/S: [OMITTED]
BETWEEN: MR HASSELL
Applicant
AND
MS HASSELL
First Respondent
AND
LUCAS HASSELL
Second Respondent
AND
DOROTHY HASSELL
Third Respondent
AND
LUXURY PRODUCT FARM PTY LTD (in its own right and as Trustee for the Luxury Product Farm Trust (ACN REDACTED))
Fourth Respondent
AND
HASSELL PROPERTY GROUP PTY LTD (in its own right and as Trustee for the Hassell Property Development Trust (ACN REDACTED))
Fifth Respondent
AND
LUXURY PRODUCT FARM PTY LTD (as Trustee for the LPF Trust (ACN REDACTED))
Sixth Respondent
AND
HASSELL PROPERTY MANAGEMENT PTY LTD (in its own right and as Trustee for the HPD Trust (ACN REDACTED))
Seventh Respondent
AND
NATIONAL LUXURY PRODUCT INTERNATIONAL PTY LTD (ACN REDACTED)
Eighth Respondent

Catchwords:

PRACTICE AND PROCEDURE - Application for summary dismissal of claim by wife seeking relief under s 106B of the Family Law Act 1975 (Cth) - Case turns on its own facts

Legislation:

Family Law Act 1975 (Cth)

Category: Not Reportable

Representation:

Counsel:

Applicant	:	Mr Berry SC
First Respondent	:	Mr Penglis SC
Second Respondent	:	Mr Davies
Third Respondent	:	Mr Wilson SC
Fourth Respondent	:	No Appearance
Fifth Respondent	:	No Appearance
Sixth Respondent	:	No Appearance
Seventh Respondent	:	No Appearance
Eighth Respondent	:	No Appearance

Solicitors:

Applicant	:	Paynes Lawyers
First Respondent	:	Bannerman Solicitors
Second Respondent	:	O'Sullivan Davies
Third Respondent	:	Kim Wilson & Co.
Fourth Respondent	:	N/A
Fifth Respondent	:	N/A
Sixth Respondent	:	N/A
Seventh Respondent	:	N/A
Eighth Respondent	:	N/A

Case(s) referred to in decision(s):

[2020] FCWA 196
[2020] FCWA 38
[2020] FCWA 59
Ascot Investments v Harper (1981) 148 CLR 337
Custodio and Pinto & Ors (2006) FLC 93-279
Gitarro & Gitarro [2008] FamCA 358
Hospitals Contribution Fund of Australia v Hunt (1982) 44 ALR 365
R v T [2020] WASCA 109
Ritter & Ritter and Anor (2020) FLC 93-957

IT IS NOTED that publication of this judgment by this Court under the pseudonym Hassell and Hassell & Ors has been approved by the Family Court of Western Australia pursuant to s 114Q(2) of the Family Law Act 1975 (Cth).

This copy of the Court's Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 312(b) Family Court Rules 2021 (WA)), or to record a variation to the orders pursuant to r 311 Family Court Rules 2021 (WA).

Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

INTRODUCTION

1These reasons assume that the reader is familiar with my previous decisions handed down in this matter and in particular, my Reasons delivered [in] April 2020 (April 2020 Reasons);[1] [in] October 2020 (October 2020 Reasons);[2] and [in] March 2021 (March 2021 Reasons).[3]
[1] [2020] FCWA 59.
[2] [2020] FCWA 196.
[3] [2020] FCWA 38.
2For the purposes of this decision, the relevant parties are as follows:
(a)The applicant is [Mr Hassell] (the husband).
(b)The first respondent is [Ms Hassell] (the wife).
(c)The second respondent is [Lucas Hassell] ([Lucas]) the husband's brother.
(d)The third respondent is [Dorothy Hassell] ([Dorothy]), the husband's mother.

(e)The fourth to eighth respondents inclusive are: [Luxury Product Farm Pty Ltd] (in its own right and as trustee for the [Luxury Product Farm Trust]); [Hassell Property Group Pty Ltd] (in its own right and as trustee for the [Hassell Property Development Trust]); Luxury Product Farm Pty Ltd as trustee for the [LPF Trust]; [Hassell Property Management Pty Ltd] (in its own right and as trustee for the [HPD Trust]); and [National Luxury Product International Pty Ltd] (together referred to as the BSA Entities).

3The BSA Entities, together with the husband, Lucas and Dorothy, are parties to a Business Succession Agreement dated 30 June 2010 (the BSA). On 16 March 2021, the wife filed an amended Form 1A Response, seeking relief under s 106B of the Family Law Act 1975 (Cth) (the Act) in relation to the BSA (the s 106B application).[4] The husband now seeks, amongst other things, the summary dismissal of the s 106B application.

ISSUES FOR DETERMINATION

[4] The wife filed a further amended Form 1A Response on 14 June 2021, specifically naming Lucas, Dorothy and the fourth to eighth respondents as parties to the family law proceedings, given that, along with the husband, they were other parties to the BSA.

4The specific issues that were unable to be agreed[5] between the parties at the interim hearing before me [in] July 2021 and which require determination are as follows:
[5] The parties were able to reach agreement in relation to paragraph [1] of the orders sought by the wife in her Form 2 Application filed on 20 April 2021 (injunctions) and orders made accordingly: see paragraphs [1] to [4] inclusive of the orders made by the Court [in] July 2021.
(a)The husband seeks[6] that the s 106B application[7] be summarily dismissed. Lucas and Dorothy support the husband's application. The wife opposes the husband's application.
[6] Husband's Form 2A Response filed 18 May 2021 at paragraph [1].
[7] Wife's Further Amended Form 1A Response filed 14 June 2021 at paragraphs [14] to [17] inclusive. The husband's senior counsel confirmed during the hearing that the husband seeks that paragraphs [14] to [17] inclusive be summarily dismissed.

(b)The husband seeks[8] the suspension of the consent order made by the Court [in] December 2019 appointing Mr [G] of [Accounting Firm] as the single expert witness to value the husband's and wife's interests in "the [Luxury Product Farm's] business and all of its associated entities" (the 2019 Business Valuation Order). Instead, the husband seeks that the said order be amended to provide that Mr G only value the husband's and wife's interests in certain specified entities.[9] In short, the husband seeks to exclude from the valuation process the BSA Entities. Lucas and Dorothy support the husband's application. The wife opposes the husband's application.

BACKGROUND TO THESE INTERIM PROCEEDINGS

Introduction

[8] Husband's Form 2A Response filed 3 February 2021 at paragraph [2]. The orders sought by the husband incorrectly refer to orders made [in] December 2020 – the orders were made [in] December 2019.

[9] Husband's Form 2A Response filed 18 May 2021 at paragraph [5]. In particular, the specified entities sought to be valued by the husband were as follows: (1) [Luxury Product Farming Pty Ltd] including in its capacity as trustee for the [LP Farming Trust]; (2) [Mr Hassell Pty Ltd] including in its capacity as trustee for the [Hassell Property Trust Region E]; (3) [Company J Pty Ltd]; (4) [Company K Pty Ltd]; (5) [Company L Pty Ltd]; and (6) [Company M Pty Ltd].

5As I observed in the April 2020 Reasons (from [6] - [10] inclusive):
[6]The husband was born [in] 1968 and the wife was born [in] 1969. The parties commenced cohabitation in [Regional Town A] in early 1997 and were married [in] 1998.
The parties have two children: [Paula], who was born [in] 2002, and [Tom], who was born [in] 2010.
[7]The parties dispute the date of their final separation: the husband maintained it was [in] March 2019 and the wife maintained it was [in] May 2019. Nothing turned on this issue for the purposes of the interim hearing. After separation, the husband moved out of the [Regional Town A] residence and the wife, [Tom] (and [Paula] when she was not at boarding school in Perth) continued to live in the [Regional Town A] residence.

[8]The husband's evidence (which the wife did not appear to dispute to any significant extent) was that:
(a)At the commencement of the parties' cohabitation, he was employed by [Company B] (a company originally established by his parents) in various businesses operated by his family in [Regional Town A]. The company acted as the trustee for various trusts, including the [Hassell Property Development Trust], the [Region E Trust] and the [Luxury Product Farm Trust]. At the commencement of cohabitation, the husband's father was deceased and the husband's mother, [Dorothy], was the guardian and appointor of the three trusts. The husband's brother, [Lucas], also worked in the businesses.
(b)Throughout the marriage and since the parties' separation: (1) the husband continued to work in his family's businesses on a full time-basis and was the primary income earner for the family; and (2) the wife was primarily engaged in homemaking and parenting roles.
(c)The parties initially lived in a property in [Regional Town A] which was owned by the [Region E Trust]. The parties subsequently purchased (in their joint names) the land upon which the [Regional Town A] residence was built and then resided in that property after the home was built.
(d)In 2005, the [LPF Trust] was established to own the premises upon which [Luxury Product Farm] operated its businesses. [Dorothy] was the appointor of the trust.
(e)In 2010 the husband, [Dorothy] and [Lucas] reached agreements for [Dorothy] to hand over some of her control of the trusts to the husband and [Lucas]. Pursuant to the various agreements ("the 2010 agreements"):
(i)[Company B] resigned as trustee and various new trustee companies were appointed to act as trustees of the various trusts.

(ii)The husband, [Dorothy] and [Lucas] were appointed as the joint guardians and appointors of the [Hassell Property Development Trust], the [Luxury Product Farm Trust] and the [LPF Trust], but in each case providing that any person named as guardian and/or appointor would be excluded from acting and no longer empowered to act while suffering a "disqualifying event", which was defined to include a "family breakdown".
(iii)A shareholders agreement between the husband, [Dorothy], [Lucas] and the various entities in the [Luxury Product Farm Group] set out various rights and obligations of the relevant parties; and a business succession agreement between those same parties set out the arrangements for the disposal of any equity interest by a party in the event of a family breakdown.
(iv)The husband and the wife were appointed as the joint guardians and appointors of the [Region E Trust], but again on the basis that they would be excluded from acting and no longer empowered to act while suffering a "disqualifying event", which was defined to include a "family breakdown".

[9]For the purposes of these reasons, the current key relevant entities are as follows:
(a)[Luxury Product Farm Pty Ltd]:
(i)The directors of the company are the husband and his brother [Lucas].
(ii)The shareholders of the company are the husband, [Lucas] and [Dorothy].
(iii)The company is the trustee of the [Luxury Product Farm Trust] and the [LPF Trust].

(b)[Luxury Product Farm Trust]:
(i)The husband, [Lucas] and [Dorothy] are the joint guardians and appointors of the trust (albeit the husband asserted he is now the subject of a disqualifying event pursuant to the 2010 agreements).
(ii)The trust conducts a number of businesses in [Regional Town A] and in the Perth metropolitan area, including [Luxury Product Farm], [Luxury Products Accessories Shop], the [Retail Shop N] and various tourism related businesses in the [Regional Town A] locality.

(c)[LPF Trust]:
(i)The husband, [Lucas] and [Dorothy] are the joint guardians and appointors of the trust (albeit the husband asserted he is now the subject of a disqualifying event pursuant to the 2010 agreements).
(ii)The trust owns various real estate and the [luxury good factory] located in [Regional Town A].

(d)[Hassell Property Group Pty Ltd] as trustee for the [Hassell Property Development Trust]:
(i)The directors and shareholders of the company are the husband and [Lucas].
(ii)The husband, [Lucas] and [Dorothy] are the joint guardians and appointors of the trust (albeit the husband asserted he is now the subject of a disqualifying event pursuant to the 2010 agreements).
(iii)The trust owns various real estate, including the [Street 1 property], which although registered in the name of the wife, is held by her for the trust pursuant to a written declaration of trust.

(e)[Mr Hassell Pty Ltd] as trustee for [Region E Trust], in relation to which:
(i)The husband is the sole director of the company.
(ii)The husband and the wife are the shareholders of the trustee company.
(iii)The husband and the wife are the joint guardians and appointors of the trust (albeit it was asserted by the husband that both are now the subject of a disqualifying event pursuant to the 2010 agreements).
(iv)The trust owns the [Suburb O] residence and shares in other companies. It also has liabilities, including the [Bank P] home loan.

[10]The husband commenced parenting proceedings on 7 June 2019. The wife filed responding documents on 28 June 2019, also raising financial issues, followed by an amended response on 15 July 2019. Unhelpfully, the wife did not specify the final orders sought by her in relation to financial issues. The husband filed his reply in relation to financial issues on 14 August 2019.

The Business Succession Agreement

6I summarised the relevant terms of the BSA in my March 2021 Reasons (at [17]) as follows (footnotes omitted):
[17]In summary, the BSA provides that in the event a Principal (defined in Annexure A to be the husband and [Lucas]) is affected by an "option event" (defined in Annexure A to include death, TPD, insolvency and family breakdown), then various options are created as set out in the agreement. In particular:
(a)Clause 1 provides that:
If a Principal ("the Exit Principal") is affected by an option event then:
(a)the Exit Principal and his/her related owner ("Exit Owner") will have the option to require the other owners to buy the Exit Owner's equity interest in the Entity;

(b)the other Principal and their related owners will have the option to require the Exit Principal and the Exit Owner, to sell the Exit Owner's equity interest in the Entity, to them.
(c)Clause 73(c) of the BSA defines "Entity" as being each of the entities listed in Annexure A, which are: [Luxury Product Farm Pty Ltd] in its own right and as trustee for the [Luxury Product Farm Trust]; [Hassell Property Group Pty Ltd] in its own right and as trustee for the [Hassell Property Development Trust]; [Luxury Product Farm Pty Ltd] as trustee for the [LPF Trust]; [Hassell Property Management Pty Ltd] in its own right and as trustee for the [HPD Trust]; and [National Luxury Product International Pty Ltd] ([the BSA Entities]).
(d)Clause 6 of the BSA provides that:
If the Exit Principal has been affected by an option event and the other Principals or their related owners wish to buy the equity interest owned by the Exit Owner, either the Principals or the owners can exercise an option to buy those equity interests as the case may be, by giving written notice to the Exit Owner that is substantially the same as the notice set out here:
[Form of notice was then set out in the agreement]
(e)Clause 7 provides that in the event that a Principal has suffered a Family Breakdown, then the option granted under paragraph 1 "must be exercised within 2 calendar years after the date of the commencement of the Family Breakdown".
(f)Clause 9 provides that in the event an option is exercised, it must be exercised in relation to all the equity interests covered by the option.

(g)Clauses 10 and 11 set out the responsibilities of Exit Owner (the Seller) and the other Principals or their related owners (the Purchaser) of the equity interests. Those parties are required to undertake a variety of actions on the date of exchange. Relevantly, clause 11(c) provides that: "On the date of exchange, the Purchasers must, subject to the provisions of this Agreement, arrange for the Entity to pay any loan accounts the Entity owes the Seller or anyone related to the Seller."
(h)Clause 13 provides that the Seller "irrevocably appoints" each of the Purchasers (and other persons appointed by the Purchasers) severally as the attorneys of the Seller to take all such steps and proceedings and to do an execute all such acts, deeds and things for securing or perfecting the performance of the Seller's obligations arising under clause 10 of the agreement.
(i)Clause 17 provides the mechanism for calculating the purchase price for the equity interests bought under an option as follows:
Purchase price = Market Value of the equity interests – Insurance Proceeds
(Market Value is the market value of the shares and units at the date on which the relevant option was exercised.)
(j)Clause 18 provides how market value is determined. I set that provision out in full, as follows:
[18]The market value of the equity interests is to be set as follows:
(a)The market value is to be the value the Seller and the Purchasers agree on within three months after the exercise of the option.

(b)However, if the Seller and the Purchasers cannot agree on a market value under (a), then the market value is to be the last current amount entered in the market value register (see Schedule A to this Agreement). For the amount to be current for the purposes of this agreement:
(i)each of the parties must have signed their names in the appropriate column and in the same horizontal row that the amount has been entered in;
(ii)the date on which the parties signed the market register must be inserted in the appropriate column; and
(iii)the date of that signing must not be more than 1 year before the relevant option was exercised.

(c)If the Seller and Purchasers can not (sic) agree under (a), and there is no current amount entered in the market value register under (b), then the market value is to be determined by the accountant for the time being of the Entities. The accountant is to determine the market value in the way set out in the next clause.
(d)Subject to clauses 18(a) and 18(b), either the Seller or the Purchaser may request the Entities to instruct the accountant to prepare the valuation under clause 18(c), upon which the Entities shall instruct the accountant and procure that the valuation is completed within 1 (one) month of the accountant being instructed.

(k)Clause 19 then sets out how the accountant is to determine the market value. I also set this provision out in full, as follows:
19.If the accountant is determining the market value, then they are to do so on the basis of their opinion of the fair selling value between a willing seller and a willing purchaser, and in accordance with the valuation methodology set out in Annexure A. They are to determine the value as an expert and not as an arbitrator. Any rules about arbitrations do not apply to the valuation.
The parties must arrange for the Entity to provide the accountant with all balance sheets, income and expenditure statements, and other financial information which the accountant requires to determine the value of the equity interests in the Entity.
Without limiting the accountant's discretion, they must have due regard to:

(a)the value of the goodwill of any business or venture owned by the Entity;
(b)any loan accounts owed by the Seller and anyone related to the Seller, to the Entity; and
(c)any loan accounts owed by the Entity to the Seller and anyone related to the Seller. However, the chartered accountant must ignore any money payable to the Entity from the proceeds of a policy with respect to a Principal who has been affected by an Option Event.

(l)Annexure A sets out the valuation methodology applicable if the accountant is determining the market value pursuant to clause 19, as follows:
1.The valuation of a Principal's Equity Interest in the Entities (ie shares) shall be valued on a notional basis, as if the Equity Interests were a proportionate interest (currently one-third) in the underlying assets of the Entities (ie trust assets).
2.The most recent financial statements for the Entities are to be relied upon by the accountant as the source of assets values, except in the case of real properties, for which asset values must be based on sworn valuations obtained not more than 2 years prior to the valuation.
3.To the extent that sworn valuations less than 2 years old are not available, new sworn valuations must be obtained by the accountant prior to preparing the valuation.
4.The valuation must take into account:
(a)the asset values referred to under item 2 above including sworn valuations where required;
(b)the average EBIT for the last 3 financial years prior to the valuation; and
(c)stock on hand at cost.

Events surrounding the execution of the Business Succession Agreement

7In her affidavit sworn on 16 March 2021 (and filed on 15 April 2021), the wife set out detailed evidence in relation to the events surrounding the drafting and execution of the BSA.
8In summary, the wife's evidence was that:
(a)At the time, the wife only had a limited understanding of the business and personal succession planning arrangements being put in place by the husband, Lucas and Dorothy.

(b)Although the wife recalled seeing and/or signing some documents, they largely related to her and the husband's personal succession planning arrangements, rather than the business succession planning arrangements.
(c)Although the wife received a draft copy of the BSA from the husband in January 2010, she did not see a final copy of the BSA and does not believe that [Mr P] did either. (Mr P was a solicitor who gave the wife legal advice in relation to the business and personal succession planning arrangements in mid-2010 as set out below).
(d)Although the wife received legal advice from Mr P during a telephone appointment and then subsequently in writing, she was unaware that Mr P had previously met with [Mr Q] (a solicitor from [Law Firm A] who was acting on behalf of the husband, Lucas and Dorothy and/or the Hassell business entities). Further, Mr P did not provide her with legal advice, either orally or in writing, about: (1) what would happen in the event of "family breakdown"; or (2) the impact on her interests.

9After the husband's and wife's final separation in 2019, the wife located various documents on a USB relating to the events surrounding the drafting and execution of the BSA. The wife's evidence is that she was not aware of the contents of these documents until finding them on the USB. I now discuss a number of the documents contained on the USB, as well as other relevant documents identified by the wife, as follows:

Succession Plan - [Hassell] Family June 2009 notes:

10The wife maintains that in July 2009, the husband prepared some notes entitled, "Succession Plan - [Hassell] Family June 2009" (the Succession Plan Notes)[10] which he sent to Lucas and Dorothy, in preparation for a meeting with Mr Q in early August 2009. It appears the Succession Plan Notes were subsequently emailed to Mr Q.[11] In summary, the said notes proposed that:
(a)Each of the husband, Lucas and Dorothy would hold a one third interest in the business.
(b)A Succession Agreement be put in place by creating a buy/sell agreement, "that can be triggered either by death or a claim against either [Lucas] or [Mr Hassell]".
(c)In the case of death of either Lucas or Mr Hassell then their assets will be distributed in a specific way. However, in the event of divorce in which the buy/sell agreement can be triggered, "the buyout amount will be significantly less if possible, as there is no [insurance] policy to fund it. Each brother will rely on the trust of the other brother on the protection of assets. We will need legal advice for this arrangement."
(Emphasis added)

Email from [Mr Q] to the husband, [Lucas] and [Dorothy]:

[10] Wife's affidavit filed 15 April 2021, annexure "H", commencing at page 151.

[11] Ibid, page 165.

11On 24 August 2009, Mr Q emailed[12] the husband, Lucas and Dorothy in relation to their "Business & Personal Succession Project" wherein he referred to their meeting earlier in August and in particular noted that:
It is clear that the [Hassell's] are very proud of their families and the business built by [Dorothy], [Lucas] and [Mr Hassell]. All of you expressed desire to properly document the succession plan so as to avoid, wherever possible, disputes and maintain harmony within and between the various families. Making sure the right assets end up in the right hands and at the right time is at the heart of this project.
(Emphasis added)

October 2009 Proposal:

[12] Wife's affidavit filed 15 April 2021, annexure "B", commencing at page 79.

12In October 2009, Law Firm A prepared a 30-page document entitled, "Business and Personal Succession Planning Proposal" (the October 2009 Proposal).[13] I make the following observations about the October 2009 Proposal;
[13] Ibid, annexure "I", commencing at page 166.
13Firstly, by way of background, Law Firm A recorded they had received instructions from the husband on behalf of the [Hassell] Group on or around 28 May 2009 to provide business and family succession advice. Since this time, Mr Q had met with the husband, Lucas and Dorothy and various documents had been collated and reviewed.
14Secondly, the core objective was stated to be to ensure security for the family members and to protect the Hassell family from risk, disputes and challenge that could disturb that security arising from both planned and unplanned succession.[14]
[14] Ibid, page 170, clause 3.1(b) of the Proposal.
15Thirdly, at clause 7.2 of the October 2009 Proposal, Law Firm A discussed the issue of "family breakdown" in the context of the proposed BSA as follows:[15]
(k)The Succession Notes state that bankruptcy and family breakdown are to be option events that also trigger the BSA. We suggest that these triggers be treated differently to death, total and permanent disablement or trauma. We suggest that in the event of bankruptcy or family breakdown, the principal be removed from all controlling positions, and as a beneficiary of the trusts, for the duration of the event. The principal could be reinstated upon the cessation of the event.
(l)These two events are uninsurable so the purchase price would be payable over, say, a 3 year period. We suspect that the family would not wish the principal to be permanently removed from the Group in any event.
(m)We have discussed below the Family Law implications of the Group's succession planning. Generally though, the Family Court, and a trustee in bankruptcy under the Bankruptcy Act 1966, have extensive powers to look through trusts and companies and to disregard or reverse actions that are taken to remove a party from benefiting from or controlling those entities.
[15] Ibid, page 185.

16Finally, at clause 11 of the October 2009 Proposal, Law Firm A advised on "Family law Considerations" as follows:[16]
[16] Ibid, page 193.
(a)The Family Court has extremely wide powers to 'look through' and in effect disregard corporate structures. Its powers extend to a review and examination of the financial affairs and financial documents of the relevant trust and any related entities.
(b)Traditionally, the assets of a Discretionary Trust (including a Testamentary Trust) have been found not to automatically become part of the martial assets in respect of a family court property settlement. Such trusts are likely to be considered as a resource of the relevant spouse when it comes to an allocation of the marital assets.
(c)However, recent High Court decisions have suggested that there is now a risk that Trust assets may be considered "property" of a party to a marriage and be available for distribution between the parties to the marriage. This will be heavily dependant [sic] on the factual circumstances of the matter.
(d)The Family Court also has powers to make orders against third parties including banks, financiers, business associates and family members.
(e)At this stage, no effective mechanism has been identified for overcoming these powers, other than for the spouse in question to:
(i)hold no positions of control (ie shareholder, director, appointor); and
(ii)not be a beneficiary under the relevant Trust.

(f)A removal from a controlling position or removal as a beneficiary in anticipation of Family Court proceedings will unlikely be effective as the Family Court can disregard the action that has been taken and 'reverse' the position.
(g)However, there is some suggestion that implementing a documented mechanism to remove a person from these positions may be effective if it is undertaken at an early enough point in time (for example via a business succession document as part of routine succession planning) and is not connected with any Family Court proceedings either anticipated or on foot.
(h)We use these mechanisms in our documents as one means of attempting to safeguard the Group against Family Court proceedings. However, there is no guaranteed action that can be taken. In all cases, the best course of action is for the relevant parties to enter into a Binding Financial Agreement with the assistance of a family lawyer.
(i)We confirm our advice that for each of [Lucas] and [Mr Hassell], the notional one third interest in the Group will form part of any Family Court property settlement.

(Emphasis added)

Letter from [Law Firm A] to the husband, [Lucas] and [Dorothy] dated 20 November 2009:

17By letter dated 20 November 2009,[17] Law Firm A wrote to the husband, Lucas and Dorothy, referring to the October 2009 Proposal and enclosing a copy of the draft BSA. The letter recorded that the BSA was drafted to operate in the event of "death, total and permanent disablement, insolvency and family breakdown" relating to the husband or Lucas, but not Dorothy.

Letter from [Law Firm A] to [Mr P] dated 26 May 2010:

[17] Ibid, annexure "F", commencing at page 95.

18By letter dated 26 May 2010[18] Law Firm A provided Mr P with a written briefing in relation to the proposed Hassell succession planning arrangements. I make the following observations about the letter:
[18] Ibid, annexure "D", commencing at page 83.
(a)On its face, the letter enclosed a copy of the October 2009 Proposal.
(b)Mr Q referred in the letter to the fact that he had previously met with Mr P and had spoken to him on the phone about the proposed personal and business succession planning, and also referred to the fact that he had earlier provided Mr P with a number of documents representing "the full suite of documentation".
(c)The letter provided Mr P with an executive summary of the proposed business and personal succession arrangements. Although the letter set out detailed information in relation to the BSA, the letter did not specifically refer either to: (1) "family breakdown" being a disqualifying event / option event under the BSA; or (2) Law Firm A's advice contained in the October 2009 Proposal regarding the use of the BSA, inter alia, as a mechanism "to safeguard the Group against Family Court proceedings" in the event of a family breakdown between the husband and the wife.

Letter of advice from [Mr P] to the wife dated 2 June 2010:

19In the March 2021 Reasons, I discussed the letter of advice that Mr P provided to the wife, as follows (footnotes omitted):
[18]Prior to the execution of the BSA, the wife received written legal advice about the arrangements from a solicitor, Mr P, by letter dated 2 June 2010. As is evident from the letter: Firstly, the wife limited the scope of Mr 'P's instructions to providing "an opinion as to whether or not [the wife] and [the wife's] family are adequately protected should an unfortunate event happen to [the husband] such as death, trauma or TPD". Secondly, Mr P confirmed that he had "not undertaken a thorough and detailed analysis" of the documents as would ordinarily be the case "because of [the wife's] specific instructions [that she] was concerned with the amount of fees that would otherwise be involved". It was in that context that Mr P advised as follows:
[13]I believe that on a cursory review of the documents and all other information provided by [the solicitors who drafted the Business Succession Agreement], that the documents (some of which still need to be signed and finalised) reflect the succession planning initiatives of the [Hassell] family within which I believe your interest are adequately protected. Based on the documents vetted I can confirm that on the occurrence of the disqualifying event a payment will be made to either you or [the husband] as the case may be which will be reflective of the value of the notional one third interest in the Group. It would also appear to me that [Dorothy], [the husband] and [Lucas] are being dealt with in an equal manner and there is nothing within the Agreements provided which cause me any concern in that regard. I also believe that you and [the husband] are being fairly dealt with by [Dorothy] and notwithstanding that there may appear to be a complex array of documents, the bottom line is that when all of these are taken together they achieve the outcomes being promoted by the family.

[19]I observe that nowhere in Mr P's letter was the wife advised specifically about the operation of the BSA in the context of a family breakdown (although, the general effect of the agreement upon the occurrence of a "disqualifying event" was explained in paragraph 13 of the letter, as extracted above).

20It was also notable that Mr P's letter did not:
(a)Specifically refer to, or set out any legal advice to the wife in relation to, 'Law Firm's advice contained in clause 11 of the October 2009 Proposal regarding the use of the BSA, inter alia, as a mechanism "to safeguard the Group against future Family Court proceedings" in the event of a family breakdown between the husband and the wife; or
(b)Set out any legal advice to the wife regarding the potential adverse consequences to her flowing from the BSA in the event of family breakdown, including in relation to the specific valuation methodologies to be adopted in valuing the husband's interests in the Hassell entities, if Lucas exercised his option.

Relevant events after separation

21The parties separated on a final basis in 2019.[19] The husband commenced parenting proceedings in June 2019. The wife filed responding documents in June 2019, also raising financial issues.
[19] The parties do not agree the date of their final separation: the husband maintained it was [in] March 2019 and the wife maintained it was [in] May 2019. Nothing turned on this issue.
22I have already set out in my March 2021 Reasons (at [22] – [51]) the circumstances leading to Lucas exercising his option under the BSA. It is unnecessary to repeat them here.
23On 16 March 2021, the wife filed an amended Form 1A Response, including the s 106B application.[20] The specific orders sought by the wife in relation to the BSA are as follows (errors are as per the original text):
[20] The wife filed a further amended Form 1A Response on 14 June 2021, specifically naming [Lucas], [Dorothy] and the fourth to eighth respondents as parties to the family law proceedings, given that, along with the husband, they were other parties to the BSA.
Business Succession Agreement
In this section, the following definitions apply:
"Act" means the Family Law Act (Cth) 1975
"BSA" means the Business Succession Agreement dated [in] June 2010 between the Applicant Husband, [Lucas Hassell], [Dorothy Hassell] and the BSA Entities.
"BSA Entities" means [Luxury Product Farm Pty Ltd] in its own right and as trustee for the [Luxury Product Farm Trust], [Hassell Property Group Pty Ltd] in its own right and as trustee for [Hassell] Property development Trust, [Luxury Product Farm Pty Ltd] as trustee for the [LPF Trust], [Hassell Property Management Pty Ltd] in its own right and as trustee for the [HPD Trust] and [National Luxury Product International Pty Ltd].
15.Pursuant to section 106B of the Family Law Act 1975 (Cth) ("Act"), the BSA be set aside.
16.In the alternative to paragraph 15 above, pursuant to s 106B of the Act, the BSA be set aside insofar as it applies to a Family Breakdown (as that term is defined in the BSA) involving the Applicant, on the basis that it was made to defeat an anticipated order in these proceedings.
17.In the alternative to paragraphs 15 and 16 above, pursuant to section 106B of the Act, the making of any disposition of any interest in the BSA Entities (or any of them) by the Applicant to the Second Respondent pursuant to the BSA be restrained on the basis that it is likely to defeat any anticipated order in these proceedings, and a permanent injunction is hereby granted restraining the same.
18.The Applicant Husband and/or [Lucas Hassell] pay the Respondent Wife's cost of an incidental to the implementation of the orders in this section.

24On 20 April 2021, the wife filed a draft Statement of Claim in support of her s 106B application. In short, the wife's position is that:
(a)The valuation methodology required to be followed pursuant to the terms of the BSA results in an artificially low valuation of the BSA Entities.
(b)The BSA was made, inter alia, to defeat any order under s 79 of the Act made in proceedings between the husband and the wife.
(c)Further, and in the alternative, the BSA is likely to defeat any order made in these proceedings pursuant to s 79 of the Act.
(d)Further, and in the alternative, the BSA is likely to defeat the 2019 Business Valuation Order.
(e)Further, and in the alternative, the making of any disposition of any interest in the BSA Entities (or any of them) by the husband to Lucas pursuant to the BSA is proposed to be made to defeat any order anticipated to be made in these proceedings pursuant to s 79 of the Act.
(f)Further, and in the alternative, the making of any disposition of any interest in the BSA Entities (or any of them) by the husband to Lucas pursuant to the BSA is likely to defeat any order pursuant to s 79 of the Act anticipated to be made in the proceedings.
(g)Further, and in the alternative, the making of any disposition of any interest in the BSA Entities (or any of them) by the husband to Lucas pursuant to the BSA is likely to defeat the 2019 Business Valuation Order.[21]
[21] Wife's draft Statement of Claim in support of her application for relief pursuant to s 106B of the Family Law Act 1975 (Cth), filed 20 April 2021, [76] – [81].

25Although the wife initially sought to prevent the husband and Lucas from proceeding with the exercise of 'Lucas' option under the BSA, eventually on 14 July 2021, the Court made orders as follows:

1.By consent as between the Applicant, [MR HASSELL], the Second Respondent, [LUCAS HASSELL], and the Third Respondent, [DOROTHY HASSELL], and unopposed by the First Respondent, [MS HASSELL], on or before 28 July 2021, the Applicant do all things and sign all documents necessary to facilitate:
(a)the transfer of his interest, and that of the entities he controls in the BSA entities, to the Second Respondent pursuant to the Notice of Exercise of Option dated 18 December 2020 issued by the Second Respondent;
(b)the transfer of his shareholding in [Luxury Product Farming Pty Ltd] (ACN [REDACTED]) to the Second Respondent;
(c)his resignation as Director of [Luxury Product Farming Pty Ltd] (ACN [REDACTED]); and
(d)his retirement as appointor of [LP Farming Trust].

2.By consent as between the Applicant, the Second Respondent, and the Third Respondent, and unopposed by the First Respondent, the Second Respondent pay or cause to be paid to the Applicant's solicitors trust account or to whomever the Court may Order, the sum of $107,327 on the payment terms prescribed by the BSA.
3.By consent as between the Applicant, the Second Respondent, and the Third Respondent, and unopposed by the First Respondent, paragraph 16 of the First Respondent's Amended Form 1A Response filed on 14 June 2021 be dismissed.
4.The preceding orders are made on the basis of the undertaking given by the Second Respondent to the Court that in the event that, after the trial of this action, the Court upholds the First Respondent's claim for relief with respect to the Business Succession Agreement and determines the value of the Second Respondent's interest in the Entities is greater than the $107,327 paid to the Applicant, the Second Respondent will pay to the Bannerman Solicitors Trust Account, or as otherwise directed to the Court, and within such time period as directed by the Court, an amount equal to the said value of the Applicant's interest in the Entities less $107,327.

APPLICABLE LAW

26The husband applied for summary orders pursuant to Rule 10.12(d) of the Family Law Rules 2004 (Cth) (the Rules) for the wife's s 106B application to be dismissed, on the basis he asserted it has no reasonable likelihood of success.
27The parties agreed the principles governing summary dismissal applications were as set out in paragraph [41] of the husband's written submissions as follows:
In Schmalhorst and Schmalhorst [2018] FCWA 76 (27 April 2018), Duncanson J considered an application by the Wife and her Mother to summarily dismiss the Husband's Application pursuant to section 106B. Her Honour held at 34:
In Ebner & Pappas (2014) FLC 93-619 at 79,663-79,664 the Full Court considered the meaning of the phrase "no reasonable likelihood of success" in the following terms (emphasis added):
59.The phrase "no reasonable likelihood of success" is, at least in relation to the test to be applied in the summary dismissal proceedings, of relatively recent origin.
60.In Bretton & Bondai [2013] FamCAFC 168 Finn and Strickland JJ at [59], and May J at [122], considered this is a conceptually different test to the "doomed to fail" test.
61.In Spencer v Commonwealth of Australia (2010) 241 CLR 118, referring to a Federal Court Rule in similar terms to Rule 10.12, Hayne, Crennan, Kiefel and Bell JJ said at [56]:
Because s 31A(3) provides that certainty of failure ("hopeless" or "bound to fail") need not be demonstrated in order to show that a plaintiff has no reasonable prospect of prosecuting an action, it is evident that s 31A is to be understood as requiring a different enquiry from that which had to be made under earlier procedural regimes. It follows, of course, that it is dangerous to seek to elucidate the meaning of the statutory expression "no reasonable prospect of successfully prosecuting the proceeding" by reference to what is said in those earlier cases.
62.The applicable test was considered by another intermediate court of appeal, the Victorian Court of Appeal in Lysaght Building Solutions Pty Ltd (t/as Highline Commercial Construction) v Blanalko Pty Ltd [2013] VSCA 158. At that time the relevant legislative test in Victoria was "no real prospect of success". There at [27] Warren CJ and Nettle JA said:
… whatever might be the practical effect of the new test, it is difficult to disagree with McMurdo J in Gray v Morris and McMurdo P in the Commissioner of Taxation v Salcedo that it should be applied by reference to its own language, without paraphrase or comparison with the previous rule, always bearing in mind the principle that the power to award summary judgment is only to be exercised with caution and, therefore, not unless it is clear that there is no real question to be tried.
(Footnotes omitted)

63.Their Honours continued at [35]:
Upon the present state of authority:
(a)the test for summary judgment under s 63 of the Civil Procedure Act 2010 is whether the respondent to the application for summary judgment has a 'real' as opposed to a 'fanciful' chance of success;
(b)the test is to be applied by reference to its own language and without paraphrase or comparison with the 'hopeless' or 'bound to fail test' essayed in General Steel;
(c)it should be understood, however, that the test is to some degree a more liberal test than the 'hopeless' or 'bound to fail' test essayed in General Steel and, therefore, permits of the possibility that there might be cases, yet to be identified, in which it appears that, although the respondent's case is not hopeless or bound to fail, it does not have a real prospect of success;
(d)at the same time, it must be borne in mind that the power to terminate proceedings summarily should be exercised with caution and thus should not be exercised unless it is clear that there is no real question to be tried; and that is so regardless of whether the application for summary judgment is made on the basis that the pleadings fail to disclose a reasonable cause of action (and the defect cannot be cured by amendment) or on the basis that the action is frivolous or vexatious or an abuse of process or where the application is supported by evidence.

28I also bear in mind the decision of Hospitals Contribution Fund of Australia v Hunt,[22] where the Master said:
…a court at first instance should be particularly astute not to risk stifling the development of the law by summarily throwing out of court actions in respect of which there is a reasonable possibility that it will be found, in the development of the law, still embryonic, that cause of action does lie. The risk of injustice to the plaintiff, which summary termination of his claim would entail, is real. One cannot predict, with firm assurance, what the future holds as the final formulation of the new development.
[22] Hospitals Contribution Fund of Australia v Hunt (1982) 44 ALR 365, 373.

29Having regard to the above, I proceed on the basis that in determining the application for summary dismissal, the husband bears the onus of persuading the Court that the wife has no reasonable likelihood of succeeding with the s 106B application. In determining whether the s 106B application has no reasonable likelihood of success, the application need not be hopeless or bound to fail. Leaving aside any uncontested facts which the court may take into account,[23] the assessment is based upon the material relied upon by the wife, taken at its highest, unless the wife's version is inherently incredible or unreliable.[24]
[23] Custodio and Pinto & Ors (2006) FLC 93-279 at 80,760-1 (per Finn J).
[24] Ritter & Ritter and Anor (2020) FLC 93-957, [66].
30Although formal pleadings are not required by the Act or the Rules, the court will regularly require parties to file documents in the nature of pleadings, particularly when orders are sought against third parties. However, even when parties are required to file documents in the nature of pleadings, the court is not thereby "a court of pleadings" and the court "is entitled to rely upon the documents filed by the parties to indicate what case they are conducting."[25] Accordingly, the s 106B application must be considered, not in isolation, but also in the context of the wife's evidence in support thereof.

[25] Gitarro & Gitarro [2008] FamCA 358, [10].

31Section 106B of the Act provides as follows (irrelevant subsections for the purposes of this decision have been omitted):
106B Transactions to defeat claims
(1)In proceedings under this Act, the court may set aside or restrain the making of an instrument or disposition by or on behalf of, or by direction or in the interest of, a party, which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.

…
(2)The court may order that any money or real or personal property dealt with by any instrument or disposition referred to in subsection (1), (1A) or (1B) may be taken in execution or charged with the payment of such sums for costs or maintenance as the court directs, or that the proceeds of a sale must be paid into court to abide its order.
(3)The court must have regard to the interests of, and shall make any order proper for the protection of, a bona fide purchaser or other person interested.

…
(4A)In addition to the powers the court has under this section, the court may also do any or all of the things listed in subsection 80(1) or 90SS(1).
(5)In this section:
disposition includes:
(a)a sale or gift; and
(b)the issue, grant, creation, transfer or cancellation of, or a variation of the rights attaching to, an interest in a company or a trust.

interest:
(a)in a company includes:
(i)a share in or debenture of the company; and
(ii)an option over a share in or debenture of the company (whether the share or debenture is issued or not); and

(b)in a trust includes:
(i)a beneficial interest in the trust; and
(ii)the interest of a settlor in property subject to the trust; and
(iii)a power of appointment under the trust; and
(iv)a power to rescind or vary a provision of, or to rescind or vary the effect of the exercise of a power under, the trust; and
(v)an interest that is conditional, contingent or deferred.

32In R v T [2020] WASCA 109, the Western Australian Court of Appeal recently surveyed the authorities as to the proper interpretation of s 106B in the context of the mirror provision contained in the Family Court Act 1997 (WA), namely s 222. Buss P and Murphy JA[26] observed commencing at [135] (footnotes omitted, but case citations have been inserted in the body of the quoted text where appropriate):
[26] With Vaughan JA agreeing as to the issue of the proper interpretation of s 222.
[135]Section 222(1) of the Act provides:
222.Transactions to defeat claim - FLA s 106B
(a)In proceedings under this Act, the court hearing the proceedings may set aside or restrain the making of an instrument or disposition by or on behalf of, or by direction or in the interest of, a party which is made or proposed to be made to defeat an existing or anticipated order under this Act or which, irrespective of intention, is likely to defeat any such order.

[136]Section 222(1) of the Act has its present counterpart in s 106B of the Family Law Act 1975 (Cth). Section 106B is, for present purposes, in materially identical terms with s 222 of the Act.

[137]The predecessor of s 106B was s 85 of the Family Law Act. Section 85(1) of that Act provided:
In proceedings under this Act, the court may set aside or restrain the making of an instrument or disposition by or on behalf of, or by direction or in the interest of, a party, which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order. (emphasis added)

[138]The italicised words of s 85(1) referred to above were not in the statutory predecessor to s 85(1), namely s 120(1) of the Matrimonial Causes Act 1959 - 1973 (Cth). Section 120(1) of that Act provided:
In proceedings under this Act, the court may set aside or restrain the making of an instrument or disposition by or on behalf of, or by direction or in the interest of, a party, if it is made or proposed to be made to defeat an existing or anticipated order in those proceedings for costs, damages, maintenance or the making or variation of a settlement. (emphasis added)

[139]Under s 120(1) of the Matrimonial Causes Act, the italicised words above were construed as requiring a subjective intention to defeat an existing or anticipated order. In Kriwoschejew v Kriwoschejew, Gerard Investments Ltd (1975) 6 ALR 206, Selby CJ observed [at 266 – 267]:
[I]t is necessary to consider whether s 120(1) applies. The subsection is applicable in the present case only if the court is satisfied that the instrument or disposition was made to defeat an anticipated order for the making of a settlement.
With regard to the question whether it can be said that, at the time of the making of the contract there was 'an anticipated order for the making of a settlement', I agree, with respect, with the words of Joske J in Ganas v Ganas (1971) 18 FLR 298, where his Honour said, at p 300: 'Where orders are asked for in a suit, one is entitled to say that those are orders which it might very well be anticipated will be made'.
It will be noted that s 120(1) does not specifically refer to an intention to defeat, but the relevant words are 'made or proposed to be made to defeat …'. However, it is clear that there must be evidence from which a court can properly infer that such an intent existed.
In Laws v Laws (1964) 6 FLR 202, Allen J held that the section deals only with the case in which there is an intention to defeat a claim as opposed to the situation in which the transaction under attack merely has that effect. This view was followed by Lucas J in Walker v Walker (1966) 9 FLR 59; by Starke J in Burns v Burns (1967) 10 FLR 441, [1968] ALR 59, and by Sangster J in Ovenstone v Ovenstone (1972) 20 FLR 94. With respect, I am entirely in agreement with these views.

[140]In Benjamin v Benjamin (1976) 11 ALR 211 the court considered the application of s 120(1) of the Matrimonial Causes Act in circumstances where the impugned transaction occurred prior to the commencement of proceedings. Glass JA (Samuels JA agreeing) said [at 214 – 216]:
I think the language is wide enough to cover an anticipated order both in existing proceedings and in future proceedings. The phrase 'in those proceedings' refers back to the initial phrase 'proceedings under this Act' in which the power may be exercised. At that stage they must, of course, be on foot. But I see no reason why an anticipating state of mind may not be proved so as to satisfy the section which relates to proceedings, the commencement of which then lies in the future, although it must be in the past when the power is invoked. It is easy to comprehend why the legislature, as a goal of policy, would wish to nullify transactions completed before proceedings were commenced no less than those completed after proceedings brought, provided that prohibited intent could be demonstrated. In my view the language shows it is adequate to achieve this purpose.
It was next submitted that the evidence failed to make out the requirements of the section. I believe that what the parties seeking an order must show in such a case is that the respondent party contemplated as a real possibility that proceedings would be brought against him and further contemplated, as a real possibility, the making in those proceedings of an order of the various kinds mentioned which would redound to his financial disadvantage and that he entered into the transaction to defeat that order.

The powers given by the section are designed to give the trial judge a flexible control over the financial position.
[(my emphasis added)]

[141]Section 85(1) of the Family Law Act effectively extended the scope of the operation of its predecessor in s 120(1) of the Matrimonial Causes Act by (relevantly) adding the italicised words in [137] above. As Hannon J observed in relation to s 85(1) in the case of In the Marriage of Hajduk (1993) 109 FLR 218 [at 222]:
The subjective state of mind of the [disponor] is no longer an essential element required to be established before the Court may exercise its discretion to set aside a transaction.

[142]The second limb of the concluding words of s 85(1), namely whether the disposition 'irrespective of intention' was 'likely to defeat any such order', imported an objective test: Halabi v Artillaga (1993) 17 Fam LR 675 [at 679].
[143]Further, in Halabi, Nicholson CJ said of s 85(1) of the Family Law Act [at 679 – 680]:
The section therefore lays down two sets of circumstances which will cause it to operate, namely that an instrument has been made with the intention of defeating an anticipated order in the proceeding, or secondly, regardless of the intention with which it has been made it is likely to have the effect of defeating such an order.
…
In In the Marriage of Gelley (No 2) (1992) 15 Fam LR 483; [1992] FLC 92-291, Treyvaud J rejected the proposition that the making of the instrument with the intention of defeating an order alone, is sufficient for the section to operate. His Honour was of the view … that a causal connection must be shown between the making of the instrument in question, and the likely defeat of the order. His Honour also rejected arguments to the effect that if the making of the instrument significantly reduced the amount available for consideration by the court then that should be interpreted as having the effect of defeating an anticipated order.
For my part, I have some difficulty in accepting a proposition that where an instrument is made with the intention of defeating an anticipated order, it cannot be set aside unless it is shown that it was likely to do so.
It seems to me that the section clearly contemplates two possibilities, one being that the instrument was made with the intention of defeating an order, and the second being that, regardless of the intention with which it was made, it did have the effect of being likely to defeat an anticipated order. I consider that if the necessary intention has been demonstrated there is nothing in the section which imposes the further requirement that the instrument is likely to defeat such an order. However, I think that it is clear enough that if it cannot be shown that … the instrument is made with the intention of defeating the order, or even if the contrary can be shown, ie that it was not made with the intention of defeating the order, then it can still be set aside if it can be established that it was, at the time that it was made, likely to defeat any such order.

[144]With reference to the second limb of s 85(1), Nicholson CJ said:
I would add that I have difficulty in accepting the proposition of Treyvaud J that in cases where [it] is necessary to show that the instrument or disposition is likely to defeat any such order, this cannot be done by demonstrating that the pool from which any such order is to be made is and was anticipated to be significantly reduced by the making of the instrument or disposition. I consider it self-evident that if the pool is significantly reduced then in most cases the applicant will be likely to receive significantly less than would have been the case if the instrument or disposition had not been made.

[145]The observations of Nicholson CJ in Halabi have been approved of in a number of authorities including by the Full Court of the Family Court in VC v GC, and in In the Marriage of Grace, and by Bryson J in Newjur Pty Ltd v Panjas. It may also be observed that in Kennon, French CJ and Gummow and Hayne JJ found no error where the primary judge had set aside dispositions (including one prior to the commencement of the proceedings) on the basis that the dispositions were made with the intention to defeat anticipated orders within the meaning of s 106B(1) of the Family Law Act.

[146]The observations of Nicholson CJ in Halabi referred to above apply equally to the ordinary meaning of s 222(1) of the Act and give effect to its evident purpose. They should be accepted in the present context. At least ordinarily, proof of the requisite intention for the purposes of the first limb of s 222(1) of the Act would involve proof of the matters referred to by Glass JA in Benjamin referred to in [140] above. Nevertheless, observations on a method of proof should not be taken as a substitute for the statutory text. The question under the first limb remains whether the disponor has (relevantly for present purposes) made the disposition with the intention to defeat an existing or anticipated order under the Act.

DISCUSSION AND CONCLUSIONS

33I am not satisfied that the wife's s 106B application has no reasonable likelihood of success, such that it should be summarily dismissed. This is for the following reasons:
34Firstly, the husband submitted the wife's application must fail in circumstances where the BSA was but one instrument among many that were executed as part of an overall agreement that effected a change of control and change of ownership of the BSA entities from Dorothy to the husband, Lucas and Dorothy. The husband argued that the various Deeds/instruments should be read together, and it is not open to the wife to argue that the husband should receive the benefits conferred by the various instruments, whilst ignoring the conditions attached to those benefits.[27] Senior counsel for the husband relied on Ascot Investments v Harper (1981) 148 CLR 337 (in particular, at 354-355) in support of the contention that the Family Court must take the property of a party to the marriage as it finds it.
[27] Husband's written submissions filed 7 July 2021, [31] – [32].
35In answer, senior counsel for the wife argued that s 106B may apply to the facts of this case, where pursuant to the suite of documents executed in 2010, the husband received property interests that were deliberately embedded with a "poisoned pill", that is: a mechanism intended to safeguard him against future Family Court proceedings in the event of family breakdown. Further, it was argued that there is nothing in the text of s 106B which confines its operation having regard to the point in time when certain property interests were created.

36I observe that Ascot Investments was not a case concerning s 106B, nor its predecessor s 85. Absent direct authority on point, I am not persuaded the wife's claim - that s 106B is broad enough to apply to a situation where property interests are created with an embedded "poisoned pill" designed to put those interests beyond the reach of the Family Court - has no reasonable likelihood of success. There was no argument advanced before me that the language and text of s 106B was not capable of accommodating the wife's claim. Nor was I referred to any authority to the effect that agreements in the nature of the BSA fall outside the scope of s 106B. Having regard to the authorities as to the proper interpretation of s 106B (as set out above, in the quoted portion from R v T), it is a matter for trial as to whether s 106B properly responds to the facts as alleged by the wife (to the extent they are proved at trial).
37In oral submissions, senior counsel for the husband also argued that Dorothy only agreed to cede control and ownership of the BSA entities to the husband, Lucas and Dorothy on particular terms and conditions, and she may not have done so if the provision in the BSA concerning "family breakdown" was omitted. What Dorothy would or would not have done in 2010 had the wife taken issue at the inclusion of the "family breakdown" mechanism in the BSA is a factual controversy that will need to be determined at trial.
38Secondly, to the extent the husband complained that: (1) the wife only sought to impugn part of the BSA, and not the instrument in toto; or (2) the wife only sought to impugn the BSA, and not the other instruments executed in 2010 that formed part of the "overall agreement", senior counsel for the husband appropriately referred me authority to support the proposition that reference to "instrument" in s 106B includes either the whole or part of a document,[28] and that a "disposition" covers any step in a sequence of transactions by which that disposition is carried out.[29] The husband submitted that where only part of a document is sought to be set aside, the mandatory considerations in s 106B(3) assume particular significance. In my view such assessment can only occur at trial, and after the evidence has been properly tested.

[28] Ibid, [51].

[29] Ibid, [49].

39Thirdly, the husband also submitted that it was not open to the Court to find that the BSA was made with the intention to defeat an order, or that irrespective of intention, the BSA had the likely effect of defeating an existing or anticipated order. In particular, the husband maintained that he received his interests pursuant to a suite of documents executed in 2010, well prior to the breakdown of his marriage to the wife.[30]
[30] Ibid, [33].
40However, I am not persuaded by the husband's submissions in circumstances where I am satisfied that, taking the wife's evidence at its highest, the wife has established an arguable case pursuant to both the first and second limbs of s 106B that the BSA should be set aside. On their face: (1) the Succession Plan Notes prepared by the husband in advance of the meeting with Mr Q raised the question of how the husband (and Lucas) could protect their assets in the event of a divorce (and noting the only person the husband could divorce at the time of preparing the Notes was the wife); (2) the Succession Plan Notes recorded husband's intention that where the buyout was triggered by divorce, the buyout amount would be "significantly less if possible"…and that he and Lucas would rely on the trust of the other to protect assets; and (3) the October 2009 Proposal responded directly to these issues, including by recommending a mechanism be included in the BSA to safeguard against a future family law claim (albeit, of doubtful efficacy, according to its authors).
41Having regard to my earlier findings, I am not persuaded that there is any basis to either suspend the 2019 Business Valuation Orders, or to amend the said orders to exclude the BSA Entities from the valuation process. This is because there is a live issue (having regard to the wife's s 106B application) as to the market value of the BSA Entities, compared with the value attributed to them by application of the valuation mechanism in the BSA.
42I intend to make the following orders:
1Paragraphs 1 and 5 of the Form 2A Response filed by the husband on 18 May 2021 be dismissed.
2Paragraph 2 of the Form 2A Response filed by the husband on 3 February 2021 be dismissed.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Family Court of Western Australia.
KV
Associate
3 SEPTEMBER 2021