HEJIZ & HEJIZ

[2017] FamCA 444

FAMILY COURT OF AUSTRALIA

HEJIZ & HEJIZ [2017] FamCA 444

FAMILY LAW – INJUNCTIONS – Where application for orders/injunctions as to property of the parties – Whether husband fails in obligations as to disclosure – Where negotiations as to the sale of a primary asset without regard to the wife – Where appropriate for orders to be made requiring ongoing full and frank disclosure by the husband and engagement of the wife in sale process.

Family Law Act 1975 (Cth) ss 114, 114(1), 114(3)
Family Law Rules 2004 (Cth) r 13.01

Oriolo (1985) FLC 91-653
Stanford v Stanford [2012] HCA 52

APPLICANT: Mr Hejiz

RESPONDENT: Ms Hejiz

FILE NUMBER: PAC 2891 of 2014

DATE DELIVERED: 27 June 2017

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: Foster J

HEARING DATE: 23 June 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Gardiner

SOLICITOR FOR THE APPLICANT: Coleman Greig Lawyers

COUNSEL FOR THE RESPONDENT: Ms Druitt

SOLICITOR FOR THE RESPONDENT: Thornton Storgato Law Pty Ltd

Orders, pending further order

1. That the husband do all necessary things and sign all necessary documents so that upon sale of the C Business (the business) occurring the whole of the sale price of the business and stock at value after payment of:

   (a)selling costs, including brokers fees, solicitors fees and accountancy fees relevant to the sale only, as agreed to by the husband and wife in writing;

   (b)funds are sufficient to discharge the ANZ Bank Tailored Commercial Facility applicable to the business as advised by the ANZ bank and as agreed to by the husband and wife in writing;

   (c)funds sufficient to discharge the parent company charge that it holds over the business as agreed to by the husband and wife in writing;

   shall be paid into a controlled monies account in the names of the solicitors for the husband and wife in trust for the parties with those monies to be paid out as agreed to by the husband and wife in writing for the following:

   (d)funds sufficient to meet statutory employee entitlements of staff terminated provided that such staff does not include the husband, his relatives nor any member of the D family;

   (e)funds to meet claims of unsecured creditors;

   (f)any balance remaining to be held in trust for the husband and wife pending further order or agreement in writing between the husband and wife.

2. That the husband forthwith do all things necessary to authorise and direct Mr E, Solicitor or such other solicitor who acts on the husband’s behalf on sale of the business to copy in all correspondence and/or communication with the solicitors for the purchaser to the wife’s solicitors within 24 hours of any such correspondence or communication.

3. That the husband forthwith do all things necessary and sign all necessary documents to authorise and direct F Accountants or such other accountant or accountants who act on the husband’s behalf as accountants for sale of the business to copy in all correspondence and/or communication with the purchaser, the purchaser’s solicitors or purchaser’s accountant to the wife’s solicitors within 24 hours of any such correspondence or communication.

4. That the husband do all things necessary and sign all necessary documents to authorise and direct his solicitor on the sale of the business to provide to the solicitor for the wife no later than 48 hours prior to the anticipated settlement of the sale the following:

   (a)details as to the expected stock figure relevant to the contract for sale of the business together with all relevant documents including correspondence with the purchaser in relation to such figure and the final stock audit report;

   (b)in relation to parent company the account ledger in respect of all invoices and payments for purchases or other dealings for the last six months prior to the date of these orders together with a copy of the most recent statement of account from the parent company;

   (c)cheque directions and settlement statement/instructions in final form.

5. That the husband do all things necessary and sign all necessary documents to authorise and direct his solicitor on the sale of the business or his accountant to provide to the solicitor for the wife by no later than 5.00 pm 14 days prior to the date of settlement a list of alleged unsecured creditors of the business together with copies of the most recent statements of account relevant to such indebtedness and calculations of staff entitlements on termination or adjustment with the purchaser of the business.

6. That the husband do all things necessary and sign all necessary documents so as to provide to the solicitors for the wife by no later than 5.00 pm 14 July 2017 copies of the following documents:

   (a)       copies of invoices from parent company which caused payment of the following amounts to the parent company by C Business on or about the following dates:

   (i)22 July 2015 $500,000.00

   (ii)21 September 2015 $500,000.00

   (iii)22 September 2015 $500,000 .00

   (iv)22 October 2015 $500,000.00

   (v)26 October 2015 $500,000.00

   (vi)24 November 2015 $500,000.00

   (vii)23 December 2015 $1 million

   (viii)29 January 2016 $481,852.00

   (ix)24 March 2016 $260,000.00

   (x)26 April 2016 $150,000.00

   (xi)24 June 2016 $169,483.00

   (xii)25 July 2016 $153,302.00;

   (b)Copy of receipts from the parent company issued to C Business acknowledging payments of the amounts set out above;

   (c)The management software reports for the business for each order generated during the period 1 July 2015 to date;

   (d)the packaging slip and delivery receipts listing stock supplied by the parent company to the business in the period 1 July 2015 to date.

7. That the husband’s time to provide verified answers to questions administered by the wife dated 3 April 2017 be extended to 5.00 pm 14 July 2017.

8. That orders 1 to 5 above shall apply to any further sale of a similar business by the husband.

9. That in the event of any application for costs such application be made by filing and serving written submissions in support within 28 days from this date with any submissions in response to be filed and served within a further 14 days with judgment then reserved to chambers.

10. That, otherwise, all interim applications be dismissed.

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

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT PARRAMATTA

FILE NUMBER: PAC 2891  of 2014

Mr Hejiz

Applicant

And

Ms Hejiz

Respondent

REASONS FOR JUDGMENT  

1. In the context of ongoing parenting and property proceedings the wife filed an Application in a Case on 15 June 2017 seeking urgent injunctions in relation to the anticipated disposition by the husband of one of the primary matrimonial assets.

2. Relevantly on 12 May 2017 an order was made in the following terms:

   The husband shall in the event that he intends to exchange contracts for sale of part or all of his interests in the … businesses, howsoever held, the husband shall notify the wife in writing of such intention as soon as practicable in any event within 48 hours with such writing to include SMS or email communication and in any event no later than 28 days before the expected completion of any such sale.

3. The wife’s Application in a Case sought orders that in summary provided for the husband to be restrained from:

   a)completing the contract for sale of the C Business, that contract being dated 2 June 2017; and

   b)otherwise selling the C Business.

4. In support of her application the wife relied upon:

   a)her affidavit filed 15 June 2017;

   b)her affidavit filed 3 May 2017 as to paragraphs 94 to 96 and 113 to 120;

   c)her affidavit filed 10 May 2017 as to paragraphs 13 to 16.

5. The husband, notwithstanding directions to do so, filed no documents in response but relied upon his affidavit filed 10 May 2017 as to paragraphs 49 to 57.

6. At the interim hearing the wife sought more expansive orders that, in summary, provided:

   a)that upon sale of the C Business occurring provided that the sum paid for stock is no less than $1.65 million the whole of the sale price of the business and stock be paid into a controlled monies account in trust for the parties with those monies to be paid out not earlier than 48 hours after the provision of itemised invoices for the following to the wife’s solicitors:

   i)selling costs including solicitors fees and accountancy fees relevant to the sale only;

   ii)funds sufficient to discharge the ANZ Bank Tailored Commercial Facility applicable to the business as advised by the ANZ bank;

   iii)funds sufficient to discharge the parent company charge that it holds over the business;

   iv)funds sufficient to meet statutory employee entitlements of staff terminated provided that such staff does not include the husband, his relatives nor any member of the D family;

   v)funds to meet claims of unsecured creditors as agreed in writing by the husband and wife;

   vi)any balance remaining to be held in trust for the husband and wife pending further order or agreement in writing between the husband and wife.

   b)That the husband do all things necessary to authorise and direct Mr E, solicitor or such other solicitor who acts on the husband’s behalf on sale of the business to copy in all correspondence and/or communication with the solicitors for the purchaser to the wife’s solicitors within 24 hours of any such correspondence.

   c)That the husband do all things necessary and sign all necessary documents to authorise and direct F Accountants or such other accountant who acts on the husband’s behalf as accountant for sale of the business to copy in all correspondence and/or communication with the purchaser, the purchases solicitors or purchases accountant to the wife’s solicitors within 24 hours of receipt of any such correspondence or communication.

   d)That the husband do all things necessary and sign all necessary documents to authorise and direct his solicitor on the sale of the business to provide to the solicitor for the wife no later than 48 hours prior to the anticipated settlement of the sale the following:

   i)details as to the expected stock figure relevant to the contract for sale of the business together with all documents including correspondence with the purchaser in relation to such figure and the final stock audit report;

   ii)in relation to the parent company the account ledger in respect of all invoices and payments for purchases or other dealings for the last six months together with a copy of the most recent statement of account;

   iii)cheque directions and settlement statement/instructions in final form.

   e)That the husband do all things necessary and sign all necessary documents to authorise and direct his solicitor on the sale of the business to provide to the solicitor for the wife by no later than 5.00 pm 21 days prior to the date of settlement a list of alleged unsecured creditors of the business, together with copies of the most recent statements of account relevant to such indebtedness.

   f)That the husband do all things necessary and sign all necessary documents so as to provide to the solicitors for the wife by no later than 5.00 pm 30 June 2017 copies of the following documents:

   i)copies of invoices from the parent company which caused payment of the following amounts to the parent company by C Business on or about the following dates:

   (i)22 July 2015 $500,000.00;

   (ii)21 September 2015 $500,000.00;

   (iii)22 September 2015 $500,000.00;

   (iv)22 October 2015 $500,000;00;

   (v)26 October 2015 $500,000.00;

   (vi)24 November 2015 $500,000.00;

   (vii)23 December 2015 $1 million;

   (viii)29 January 2016 $481,852.00;

   (ix)24 March 2016 $260,000.00;

   (x)26 April 2016 $150,000.00;

   (xi)24 June 2016 $169,483.00;

   (xii)25 July 2016 $153,302.00;

   ii)Copy of receipts from the parent company issued to C Business acknowledging payments of the amounts set out above;

   iii)The management software reports for the business for each order are generated during the period 1 July 2015 to date;

   iv)the packaging slip and delivery receipts listing stock supplied by the parent company to the business in the period 1 July 2015 to date.

   g)That the husband’s time to provide verified answers to questions administered by the wife dated 3 April 2017 be extended to 5.00 pm 7 July 2017.

   h)That orders a) to e) above shall apply to any further sale of a similar business by the husband.

   i)Costs.

7. For his part the husband sought orders on interim hearing to the following effect:

   a)That upon sale of the C Business the proceeds of sale be applied as follows:

   i)in payment of all selling costs including brokers fees, solicitors fees and accountancy fees;

   ii)to discharge the ANZ tailored commercial facility applicable to the business;

   iii)in payment of sufficient funds to parent company so as to cause the release of the charge which they hold over the business;

   iv)to meet all statutory employee entitlements;

   v)in payment of all other monies owed to creditors of the business;

   vi)in payment of the balance remaining to be held in trust by the solicitors for the husband pending further order or agreement being reached between the parties.

   b)That the husband forward to the wife’s solicitors copies of all relevant documents evidencing each of the liabilities in i) to v) inclusive immediately upon such information becoming available and in any event prior to completion of the sale of the business.

   c)That the husband cause to be provided to the wife’s solicitors copies of the stock take audit, settlement adjustment sheet and any directions to pay as soon as such information becomes available and shall otherwise keep the wife informed generally as to the sale of the business.

   d)That the husband authorise and direct Mr E solicitor acting for the husband in respect of the sale of the business to provide to the wife’s solicitor copies of all correspondence and written communication with the solicitors for the purchaser.

   e)That the husband authorise and direct F Accountants who acts for the husband to provide to the wife’s solicitors copies of all correspondence and written communication with the solicitors for the purchaser.

The wife’s evidence

1. The parties married in late 2003 and separated in May 2014 when the husband left the then matrimonial home. There are two children of the marriage now aged nine and seven.

2. During the marriage the husband acquired four businesses, those being at Suburb G, Suburb H, Suburb I and the C Business in Sydney.

3. Those businesses were valued by a single expert valuer as follows:

   a)Suburb H $4,293,000.00;

   b)Suburb I $7,932,000.00;

   c)Suburb I $2,785,000.00;

   d)C Business $8,269,000.00.

4. In the joint balance sheet filed 27 February 2017 the husband disclosed finance secured over the businesses as follows:

   a)Suburb H $406,700.00;

   b)Suburb I $692,000.00;

   c)Suburb G $517,000.00;

   d)C Business $4,930,700.00.

5. On the 31 May 2017 the husband’s solicitors informed the wife’s solicitors of his intention to exchange contracts for sale of the C Business on 2 June 2017 with settlement on 26 June 2017. That information did not disclose the expected sale price of the business, that sale price was subsequently disclosed to be $5,850,000.00 plus stock at value by email dated 8 June 2017.

6. By letter dated 13 June 2017 to the husband’s solicitors the wife expressed her concern as to the difference between the sale price and the single expert valuation of the business and her further concern that the sale may not be an arm’s length transaction by reason of what appears to be the involvement of the parties single expert in the sale transaction.

7. The wife otherwise complains as to the husband’s lack of full and frank disclosure as to what may comprise the proceeds of sale and holds concern as to certain related party transactions that may inappropriately diminish the net proceeds of sale.

8. For her part, the wife does not oppose an orderly sale of the businesses that are proposed by the husband.

9. The wife holds concern in relation to the more recent payments paid from the business to the parent company. Average monthly payments for the business for the period from July 2014 to March 2015 were just over $100,000.00. Average monthly payments by the business from April 2015 to October 2016, was just over $900,000.00. A threefold increase in payments to the parent company over the same periods is evident in relation to the Suburb G business.

10. Otherwise, the wife asserts that since 2013 the husband has cause to be paid significant monies to various members of the D family such funds provided variously by way of salary, superannuation, the provision of motor vehicles. The wife asserts that payments to D family members Mr N, Ms J, Mr K, Ms L and Ms M total $1,232,000.00 for the period from late 2013 to October 2016 in circumstances where no services are provided to the business other than some bookkeeping services by Ms J.

11. The wife otherwise expresses concern as to payments made to Mr O Hejiz and Ms P Hejiz in the period from late 2013 to October 2016 totalling over $517,000.00 where such persons did not work in the business.

12. There is no issue between the parties that the matrimonial asset pool is of significant substance. Comprising two real estate properties having a combined value of more than $5 million together with the various businesses referred to above that are in the process of being sold. Otherwise, the wife contends for various notional add backs to the pool by reason of funds had and expended by the husband of over $5 million.

13. Other than the matrimonial home at Suburb Q that is occupied by the wife and children, the husband exercises control over the whole of the matrimonial property.

The husband’s evidence

1. The husband contends (Exh “D”) that the diminution in value of the C Business as compared to the single expert valuation has been a consequence of a significant proposed rental increase in relation to the premises occupied by the business and what he contends has been a downturn in the performance of the business particularly related to the closure of C Business for the construction of the Sydney light rail.

2. The husband contends that the negotiations for sale of the C Business have been conducted at arm’s length and that the sale price represents a fair market value.

3. The husband expresses concern that the wife’s “involvement” in the sale of the businesses may jeopardise sales if he was required to give her the information she seeks. The basis for such a contention is not made out and the contention stands at odds with the husband’s obligation for full and frank disclosure of all circumstances relating to the matrimonial assets particularly in circumstances where he is in effective control of the overwhelming bulk of those assets.

4. The husband denies that he has acquired an interest in any business other than the four businesses the subject of the present application.

Discussion

1. It is well established that parties to proceedings have an obligation to make full and frank disclosure of all relevant matters. That general principle was articulated by the Full Court in Oriolo (1985) FLC 91-653.

2. Rule 13.01 of the Family Law Rules 2004 (Cth) establishes a general duty of disclosure in that: “...each party to a case has a duty to the court and to each other party to give full and frank disclosure of all information relevant to the case, in a timely manner.”

3. It is patently clear that the wife is entitled to expect from the husband who has effective control of the overwhelming majority of the matrimonial assets appropriate information such as to enable her to form a view with the assistance of professional advice as to whether such assets in his control are being managed and/or dealt with appropriately in all the circumstances.

4. Her application before this Court is simply that the husband accept that obligation.

5. The wife has clearly raised concerns as to the nature of various underlying transactions the true circumstances of which will ultimately be a matter for final trial if they remained in dispute.

6. Section 114(1) of the Act provides that the Court may make such order or grant such injunction as it considers proper with respect to the property of a party to the marriage. Section 114(3) provides that the Court may grant an injunction, by interlocutory order or otherwise in any case in which it appears to the Court to be just and convenient to do so and either unconditionally or upon such terms and conditions as the Court considers appropriate.

7. Section 114 of the Act enables the Court to provide a discretionary remedy. The fundamental principle is that an order should only be made if it is proper. Discretionary though the remedy may be, it is not unfettered and must be exercised according to law (see Stanford v Stanford [2012] HCA 52).

8. It is clear from the discussion above that the import of the orders sought by the wife is to require the husband to properly comply with his ongoing obligation for full and frank disclosure and to protect the property of the parties by ensuring an orderly sale of the subject business and agreement as to some aspects of the application of the net proceeds of sale.

9. In all of the circumstances it is proper and just to make orders substantially as sought by the wife.

10. Orders will be made as set out at the forefront of these reasons for judgment.

I certify that the preceding thirty four (34) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 27 June 2017.

Associate: 

Date:  27 June 2017