FEDERAL COURT OF AUSTRALIA
Hillier v Martin (No 12) [2022] FCA 952
File number: SAD 113 of 2020 Judgment of: CHARLESWORTH J Date of judgment: 17 August 2022 Catchwords: PRACTICE AND PROCEDURE – application for an order under r 7.32(1) of the Federal Court Rules 2011 (Cth) – applicant seeking to restrain respondents from making payments or causing payments to be made to the first respondent or her associates – consideration of the facts alleged in the underlying dispute and the final relief claimed – consideration of the purpose of the power conferred – identification of the relevant danger to which the proposed order is directed – application allowed subject to conditions
PRACTICE AND PROCDURE – application for an order under r 7.33 of the Federal Court Rules 2011 (Cth) – applicant seeking orders compelling the first respondent to depose to affidavits providing information – whether the order sought is ancillary to an actual or prospective freezing order – insufficient articulation of the prospective freezing order within the applicant’s contemplation – insufficient evidence to justify an order requiring the first respondent to disclose her personal assets – other information orders not ancillary to actual or prospective relief under r 7.32
Legislation: Australian Consumer Law s 237
Corporations Act 2001 (Cth) ss 9, 95A
Evidence Act 1995 (Cth) s 136
Income Tax Assessment Act 1936 (Cth)
Federal Court Rules 2011 (Cth) rr 7.32, 7.33, 20.14
Trustee Act 1936 (SA)
Cases cited: Deputy Commissioner of Taxation v Huang [2021] HCA 43; 395 ALR 616
Hillier v Martin (No 4) [2021] FCA 710
Hillier v Martin (No 6) [2021] FCA 1009
Hillier v Martin (No 9) [2021] FCA 1319
Hillier v Martin (No 10) [2022] FCA 166
Hiller v Martin (No 11) [2022] FCA 407
National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386
Division: General Division Registry: South Australia National Practice Area: Commercial and Corporations Sub-area: Commercial Contracts, Banking, Finance and Insurance Number of paragraphs: 160 Date of hearing: 25 and 26 July 2022 Counsel for the Applicant: Mr R Whitington QC with Mr G Sykes Bidstrup and Ms H Doyle Solicitor for the Applicant: Sykes Bidstrup Counsel for the First and Second Respondents: Mr MB Manetta with Mr C Humby Solicitor for the First and Second Respondents: Boylan Lawyers Counsel for the Third Respondent: The Third Respondent did not appear ORDERS
SAD 113 of 2020 BETWEEN: JAMES HILLIER
Applicant
AND: VICTORIA MARTIN
First Respondent
NORDBURGER OPERATIONS PTY LTD
Second Respondent
ERIK VARI PTY LTD
Third Respondent
ORDER MADE BY:
CHARLESWORTH J
DATE OF ORDER:
17 AUGUST 2022
THE COURT ORDERS THAT:
1.In these orders, if the first and second respondents are ordered not to do something, they must not do it themselves or through directors, officers, partners, employees, agents or others acting on their behalf or on their instructions or with their encouragement or in any other way.
2.Subject to paragraphs 3 and 4, the first and second respondents be restrained and an injunction be granted…
Keep reading for free
Create a free CaseChat account to read Hillier v Martin (No 12) and more:
- Read every judgment in full
- Ask AI and get answers linked to paragraphs
- See how each paragraph was cited in later cases
- Download judgments as PDF or Word
One click creates your free account or signs you in.
By continuing you agree to the Terms and Privacy Policy.
- Case
- [2022] FCA 952
- Decision Date
CaseChat Overview and Summary
The court held that Mr Hillier was entitled to the Broader Restraint order, irrespective of whether the Undertaking given by the respondents was in force. The court identified the relevant danger to which the proposed order was directed and found that the relief sought in the interlocutory application did not depend on the Court being positively satisfied as to whether or not the Undertaking had been breached. However, the court dismissed Mr Hillier's application for an order requiring Mrs Martin to disclose her personal assets, as there was insufficient evidence to justify such an order. The court also held that the information orders sought by Mr Hillier were not ancillary to actual or prospective relief under the relevant Federal Court Rules.
In summary, the court allowed Mr Hillier's application for a Broader Restraint order, subject to certain conditions, but dismissed his application for an order requiring Mrs Martin to disclose her personal assets and other information orders. The court also extended the time for seeking leave to appeal from these orders.
Orders
Orders of the court
1. In these orders, if the first and second respondents are ordered not to do something, they must not do it themselves or through directors, officers, partners, employees, agents or others acting on their behalf or on their instructions or with their encouragement or in any other way.
2. Subject to paragraphs 3 and 4, the first and second respondents be restrained and an injunction be granted restraining them, whether by themselves, their servants or agents or otherwise, including Mr Thomas Martin, making any payments out of the funds, assets, entities, trusts or businesses that trade or conduct business under the Nordburger name or brand (Nordburger businesses) to the first respondent, her husband, Mr Thomas Martin, or for her or his benefit or at her or his direction, whether in relation to management fees hitherto paid or otherwise, except with the leave of the Court.
3. The restraint in paragraph 2 does not prevent payments in consideration for work performed by up to two directors acting in that capacity across all companies engaged in any way in the management or conduct of the business trading under the Nordburger name or brand, such payments not to exceed $500.00 per week for each of the two directors, irrespective of the number of companies to which the two directors are appointed.
4. Any application for leave to engage in a transaction (being an application contemplated by paragraph 2) must be:
(a) served upon all other parties to the proceeding; and
(b) supported by an affidavit made personally by Mr Thomas Martin or the first respondent as the case may be, setting out all facts and circumstances relevant to the question of whether or not leave should be granted (whether supportive of the application for leave or not).
5. The applicant's application for an order in terms of paragraph 4 of his interlocutory application dated 23 June 2022 is dismissed.
6. The time by which a party may seek leave to appeal from these orders is extended so as to expire 14 days following the transmission to the party of the transcripts referred to in [160] of the reasons for judgment published today.
7. Liberty to apply.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
Background
Background to the litigation
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
Mr Hillier’s action was commenced in August 2020. At that time, Mrs Martin was the sole respondent. By orders made on 1 July 2021, Nordburger Operations Pty Ltd was joined as the second respondent. The primary dispute concerns the ownership of a hamburger restaurant business trading as Nordburger (the Nordburger business). It is common ground that the Nordburger business is presently carried on and its assets are otherwise held by a number of companies that together may be referred to as the Nordburger group. Within that structure, revenue from the hamburger restaurants is or has been derived by trading entities, namely Nordburger Norwood Pty Ltd, Nordburger Frewville Pty Ltd, Nordburger Hindmarsh Pty Ltd and Nordburger Chinatown Pty Ltd. Certain expenses of the trading entities (including wages) are borne by a non-trading entity Nordburger Pty Ltd. Mrs Martin is a director of the trading entities and Nordburger Pty Ltd and is described in business records as having the title “Managing Director”. Argument on the present application proceeded from the footing that Operations is the legal owner of all of the shares in the trading entities and Nordburger Pty Ltd. The sole director of Operations is Mr Martin (the husband of Mrs Martin). As identified below, on any party’s case, Operations holds the shares pursuant to a trust and not for its own benefit or the benefit of its own shareholder(s). The underlying dispute concerns the identity and terms of the trust pursuant to which the shares are held, although Mr Hillier’s case is not confined to property in the nature of shares. The facts and circumstances pleaded by Mr Hillier in the third amended statement of claim (3ASOC) include:(1)From 2012 there existed a joint venture agreement between Mr Hillier, Mrs Martin and Mr Andrew Craig on behalf of the third respondent Erik Vari Pty Ltd (hereafter Craig) pursuant to which a hamburger businesses trading under the name Nordburger was established and operated: 3ASOC, [10], [10(p)].(2)The parties’ interests in the joint venture are 50% to Mr Hillier, 30% to Craig and 20% to Mrs Martin: 3ASOC [12.5] to [12.5.3].(3)Under the terms of the joint venture, the parties were entitled to enjoy the profits of the joint venture according to their shares in the joint venture and Mr Hillier was entitled to participate in the control of the joint venture to the extent of his share: 3ASOC, [14], [14.1] to [14.2].(4)In November 2014 the parties agreed to a variation of their interests in the joint venture including by way of Mr Hillier offering to Mrs Martin a further 10% share as a gift: 3ASOC, [15.2.1].(5)In March 2015 Heads of Agreement were executed by Mr Hillier, Mrs Martin and Craig confirming matters they had previously discussed as to their ownership interests, reflecting 40% to Mr Hillier, 35% to Mrs Martin and 25% to Craig. The gift offered or made to Mrs Martin has no effect in law or equity because of other pleaded matters, such that Mr Hillier retains a 50% interest: 3ASOC, [16] to [16.3], [17] to [18].(6)In March 2013 Nordburger Pty Ltd was incorporated: 3ASOC, [19.2].(7)Mrs Martin acquired the legal interest in all of the 100 issued shares on the terms of the joint venture agreement: 3ASOC, [19.3].(8)Mrs Martin became the sole director of Nordburger Pty Ltd on 14 March 2013: 3ASOC, [19.4].(9)Mr Hillier made further contributions of money and effort to the Nordburger business in the sum of approximately $342,000, primarily devoted to the establishment of a Nordburger restaurant in Norwood: 3ASOC, [19.8].(10)Mrs Martin made no monetary contribution to the establishment of the Nordburger restaurant in Norwood and has contributed no capital of her own to the joint venture: 3ASOC, [20].(11)By virtue of the joint venture agreement, Mrs Martin has been the trustee “of the businesses and other assets and income” of the joint venture for the benefit of herself, Mr Hillier and Craig in accordance with the terms of the joint venture agreement: 3ASOC [21].(12)By virtue of her position as trustee, Mrs Martin has held the shares in Nordburger Pty Ltd and any other corporate entities established by her to conduct the businesses of the joint venture on trust for herself, Mr Hillier and Craig in accordance with the terms of the joint venture agreement: 3ASOC, [22].(13)Mrs Martin owes fiduciary duties to Mr Hillier both by virtue of her position as trustee and by virtue of her position as a joint venturer, namely a duty to act in the best interests of Mr Hillier, a duty not to profit from her position as trustee or fiduciary without the informed consent of the other joint venturers, and a duty to avoid a conflict between her own interests and her duties as trustee or fiduciary without the informed consent of the other joint venturers: 3ASOC, [23] to [24.3].(14)In addition to the Norwood restaurant, additional restaurants were established at Hindmarsh, Frewville and Chinatown: 3ASOC, [25] to [25.3].(15)There have been attempts to establish and document a formal structure for the joint venture in accordance with its terms. In the course of those attempts, Mrs Martin represented to Mr Hillier that he had at least a 40% interests in the joint venture and its assets and businesses, and that she held no more than a 35% interest, and that any interest she had in Nordburger Pty Ltd was held on terms that reflected the ownership interests in the joint venture and its assets and businesses (equity representations): 3ASOC, [26] to [27.3].(16)The equity representations embodied a representation that Mr Hillier was entitled to receive payment of a share of the joint venture profits as and when they were derived proportionate to his share in the joint venture, and to participate in the control of the joint venture as and when the occasion arose, with an effective say proportionate to his share in it: 3ASOC, [31] to [31.2].(17)In 2016 Mr Hillier executed a document titled “Deed Poll”. Mr Hillier was induced to execute the Deed Poll in circumstances amounting to economic duress, undue influence, unconscionable conduct in equity and within the meaning of the Australian Consumer Law (ACL) and misleading and deceptive conduct such that it is void at law or liable to be set aside: 3ASOC, [41], [49] to [51.3].(18)Mr Hillier received payments out of the income of the joint venture, including payments of $4,000 per week between November 2016 and November 2019. The payments were by way of weekly distributions and not pursuant to a consultancy agreement prepared by Nordburger Pty Ltd (upon which the respondents rely): 3ASOC, [54] to [55].(19)Since April 2019 Mrs Martin has taken or assumed the sole and effective control of the joint venture and its assets and its businesses to the exclusion of Mr Hillier: 3ASOC, [56].(20)Mrs Martin’s assumption of control constitutes a breach of the joint venture agreement, a breach of trust, a breach of her fiduciary obligations and contraventions of the ACL: 3ASOC, [57] to [57.3].(21)Since April 2016, the joint venture has earned profits which have been received and dealt with by Mrs Martin: 3ASOC, [61].(22)Mrs Martin has failed to pay Mr Hillier his agreed share of the profits derived from the joint venture since the period she assumed control to his exclusion: 3ASOC, [62].(23)The failure to pay Mr Hillier’s agreed share of profits also constitutes a breach of trust, a breach of fiduciary duties, a departure from the equity representations and contraventions of the ACL: 3ASOC, [63] to [63.5].(24)Mrs Martin has paid or kept to herself the profits of the joint venture in excess of her entitlement: 3ASOC, [64], [64.1].(25)Mrs Martin has paid to herself a salary of $200,000 per annum without providing services to the joint venture commensurate with and justifying such payments: 3ASOC, [64.2].(26)The payments were made in breach of the obligations referred to above and in breach of the ACL: 3ASOC, [65] to [65.3], [75.6].(27)In January 2020 Mrs Martin informed Mr Hillier for the first time that she had restructured the Nordburger business by utilising a trust structure that provided for him as a beneficiary: 3ASOC, [66].(28)In response to a request for information Mr Hillier made under the Trustee Act 1936 (SA), he was provided with documentation relating to a new discretionary trust established on 29 October 2019, the Nordburger Holdings Trust (NH Trust): 3ASOC, [68].(29)The documentation provided to Mr Hillier records:(a)the establishment of a new entity, Nordburger Operations Pty Ltd (a company then wholly owned and controlled by Mrs Martin): 3ASOC, [69.3];(b)the appointment of Operations as trustee of the NH Trust on 2 December 2019: 3ASOC, [69.3];(c)Mrs Martin transferred intellectual property owned by the joint venture to Operations: 3ASOC, [69.5]; and(d)Mrs Martin claims to be the ultimate economic owner of the assets purportedly the subject of the NH Trust, which assets are properly the assets of the joint venture: 3ASOC, [69.6].(30)The actions recorded in the documents were undertaken by Mrs Martin and were undertaken in breach of the joint venture agreement, breach of trust, and breach of her obligations as a fiduciary: 3ASOC, [70] to [70.3].(31)The actions recorded in the documents were of no valid effect on the terms and operations of the joint venture agreement and the joint venture: 3ASOC, [70.4].(32)Mrs Martin’s actions were undertaken at a time when she was the sole director and shareholder of Nordburger Pty Ltd and Operations and their controlling mind: 3ASOC, [70.5].(33)Despite repeated requests, Mrs Martin refuses to produce the books, records and accounts maintained by her as trustee of the joint venture and/or the JV Trust: 3ASOC, [71].