Hobson & Hobson

[2017] FamCA 840

FAMILY COURT OF AUSTRALIA

Hobson & Hobson

[2017] FamCA 840

FAMILY LAW – PROPERTY – INTERIM PROCEEDINGS – INJUNCTIONS – Where the wife sought interlocutory injunctions for the preservation of assets and that the husband provide better disclosure in relation to his business activities – Where the wife contended that the husband had failed to comply with orders that he disclose documents to verify his share trading and that the husband has failed account for the application of proceeds arising out of various stock sales – Where the wife contends that there is a real risk that the reduction of the husband’s share portfolio will adversely impact upon the wife by depleting the parties’ available property for distribution – Where the husband denied failing to make proper disclosure but accepted that there had been instances where proper source documents had not been provided – Where the husband’s reduction in his share portfolio represents 16.26 per cent of the parties’ current net property – Court finds that if the reduction in the husband’s share portfolio continues at its current rate there is a real risk it will reduce the net property available for distribution between the parties at final hearing where the wife’s interests may be prejudiced – interlocutory injunctions granted – orders made for the husband to provide better disclosure to prevent frustration of the court process – orders made requiring the husband to open specific bank accounts into which the proceeds of share trading activities will be deposited and disbursed with the wife to have access for information purposes only. 

Family Law Act 1975 (Cth) ss 75(2), 79(4), 114(3)

Family Law Rules2004 (Cth) ch 13, sch 1, pt 1, s 6(1) - (4), rr 12.02, 12.05

Briese and Briese (1986) FLC 91- 713

Cardile v LED Builders Pty Limited (S61-1998) [1999] HCA 18

Curtis v NID Pty Limited [2010] FCA 1072

Glover v Walters (1950) 80 CLR 172

Martiniello & Martiniello [1981] FamCA 21

Menotti & Lamb [2014] FamCA 518

Patrick Stevedores Operations No2 Pty Ltd v Maritime Union of Australia[No 3] [1998] HCA 30

Sieling & Sieling (1979) FLC 90-627

APPLICANT:

Ms Hobson

RESPONDENT:

Mr Hobson

FILE NUMBER:

SYC

3858

of

2015

DATE DELIVERED:

23 October 2017

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

McClelland J

HEARING DATE:

31 August 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Campton SC

SOLICITOR FOR THE APPLICANT:

Broun Abrahams Burreket

COUNSEL FOR THE RESPONDENT:

Mr Dura

SOLICiTOR FOR THE RESPONDENT:

Delaney Lawyers

Orders

THE COURT ORDERS THAT:

(1)      That pending further Order, within seven days of the date of these Orders, the Husband do all acts and things and sign all documents necessary to establish a new bank account with the Westpac Banking Corporation ("the Husband's Share Proceeds Account") and:

(a)       deposit funds into the Husband's Share Proceeds Account from time to time as required to meet all account keeping fees and charges in respect of the said Account;

(b)      within 24 hours of the establishment of the Husband's Share Proceeds Account cause his legal representatives to provide to the Wife's legal representatives the following details in relation to the Husband's Share Proceeds Account:

(i)       Account Name;

(ii)      Account Type;

(iii)     Account Number;

(iv)     Branch Name;

(v)      Branch Number; and

(c)      within 48 hours of the establishment of the Husband's Share Proceeds Account do all acts and things and sign all documents necessary to cause the Wife to have view-only online access to the Husband's Share Proceeds Account via the Westpac Banking Corporation online banking portal.

(2)      That pending further Order, within seven days of the date of these Orders, the Husband do all acts and things and sign all documents necessary to cause W Investments Pty Ltd to establish a new bank account with the Westpac Banking Corporation ("the W Share Proceeds Account") and:

(a)       deposit funds to the W Share Proceeds Account from time to time as required to meet all account keeping fees and charges in respect of the said Account;

(b)      within 24 hours of the establishment of the W Share Proceeds Account cause his legal representatives to provide to the Wife's legal representatives the following details in relation to the W Share Proceeds Account:

(i)       Account Name;

(ii)      Account Type;

(iii)     Account Number;

(iv)     Branch Name;

(v)      Branch Number; and

(c)      within 48 hours of the establishment of the W Share Proceeds Account do all acts and things and sign all documents necessary to cause the Wife to have view-only online access to the W Share Proceeds Account via the Westpac Banking Corporation online banking portal.

(3)      The Wife is permitted to provide a copy of these Orders to the Westpac Banking Corporation and any share broker.

(4)      That pending further Order, the Husband do all acts and things and sign all documents necessary to cause all proceeds of sale of any listed or unlisted share, debenture, option, convertible note and/or unit ("Stock"):

(a)       owned by the Husband or in which he has a beneficial interest, to be paid to the Husband's Share Proceeds Account, including but not limited to causing any share broker instructed to dispose of Stock to pay the net proceeds after the payment of any brokerage fee to the Husband's Share Proceeds Account; and

(b)      owned by W Investments Pty Ltd or in which it has a beneficial interest, to be paid to the W Share Proceeds Account including but not limited to causing any share broker instructed to dispose of Stock to pay the net proceeds after the payment of any brokerage fee to the W Share Proceeds Account.

(5)      That pending further Order, the Husband be restrained, without first having obtained the written consent of the Wife, from transferring Stock between:

(a)        the Husband; and

(b)      any company of which the Husband is a Director or Shareholder (excluding any publicly listed company); and/or

(c)      any subsidiary company (whether in whole or in part) of a company of which the Husband is a Director or Shareholder (excluding any publicly listed company),

in which the Husband or any of the said companies have interest at law or beneficially.

(6)      That pending further Order, at the end of each calendar month, the husband provide to the wife details in writing of the sale of any Stock that occurred by:

(a)       the Husband; and/or

(b)      any company of which the Husband is a Director or Shareholder (excluding any publicly listed company); and/or

(c)      any subsidiary company (whether in whole or in part) of a company of which the Husband is a Director or Shareholder (excluding any publicly listed company),

held on trust for the benefit of another person or entity, with such details to include:

(i)       Date;

(ii)      Stock;

(iii)     Quantity;

(iv)     Price;

(v)      Broker;

(vi)     Brokerage Fee; and

(vii)     Beneficial Owner.

Disclosure Relief

(7)      That within 21 days of the date of these Orders, the Husband file and serve on the Wife an affidavit in which he, to the extent that he is reasonably able to do so, deposes to the following matters:

(a)      the:

(i)        Account Name;

(ii)      Account Type;

(iii)     Account Number;

(iv)     Branch Name; and

(v)      Branch Number,

of each deposit, credit, cheque, trading, loan, overdraft or other style of account of any financial institution which is operated by, is in the name of and/or holds monies that are beneficially owned by:

(i)       the Husband; and/or

(ii)      any company of which the Husband is a Director or Shareholder (excluding any publicly listed company); and/or

(iii)     any subsidiary company (whether in whole or in part) of a company of which the Husband is a Director or Shareholder (excluding any publicly listed company),

("the Husband and his Companies") in the period 1 January 2014 to date ("the Period");

(b)      the:

(i)       Account Name;

(ii)      Account Type;

(iii)     Account Number;

(iv)     Branch Name; and

(v)      Branch Number,

of each deposit, credit, cheque, trading, loan, overdraft or other style of account of any financial institution or stock broker which is in the name of and/or holds monies that are beneficially owned by:

(i)       the Wife; and/or

(ii)      any company of which the Wife is a Director or Shareholder (excluding any publicly listed company);

(iii)     any subsidiary company (whether in whole or in part) of a company of which the Wife is a Director or Shareholder (excluding any publicly listed company),

("the Wife and her Companies") in the Period excluding those that the Wife has listed in Financial Statements filed in these proceedings;

(c)      the:

(i)        Name;

(ii)      Address; and

(iii)     Account and/or Client Number,

of each broker who has traded Stock for or on behalf of the Husband and his Companies in the Period;

(d)      the:

(i)        Organisation Name;

(ii)      Individual Broker Name;

(iii)     Address; and

(iv)     Account and/or Client Number,

of each broker who has traded Stock for or on behalf of the Wife her Companies in the Period excluding in respect of Stock traded by the Wife listed in Financial Statements filed in these proceedings;

(e)      schedule of all options currently held by the Husband or his Companies and their expiry dates; and

(f)       schedule of all future options allocated to the Husband or his Companies and their expiry dates.

(8)      That within 21 days of the date of these Orders, to the extent that he is reasonably able to do so, the Husband cause to be provided to the legal representatives for the Wife a "csv" file for each bank account identified in order 7 above listing every transaction in the Period.

(9)      That pending further Order, on the seventh day of each calendar month after the making of these Orders, the Husband, to the extent that he is reasonably capable of doing so, cause to be provided to the legal representatives for the Wife a "csv" file for each bank account identified in order 7 above listing every transaction in the preceding month.

(10)     That within 21 days of the date of these Orders, the Husband, to the extent that he is reasonably capable of doing so, cause to be provided to the legal representatives for the Wife, copies of the documents in his custody, possession or control identified in Schedule One to these Orders together with an index of the same.

(11)     That Order 2.4 of the Orders made on 11 May 2016 be varied by adding the words "to the Husband or any company of which he is a Shareholder or Director or any subsidiary company (whether in whole or in part) of a company of which he is a Director or Shareholder".

(12)     That within 14 days of the grant and/or exercise of any option to acquire Stock by the Husband and his Companies, the Husband give written notice of the full particulars of the same to the Wife.

SCHEDULE ONE

DOCUMENTS TO BE PROVIDED BY THE HUSBAND

1.            Issuer Sponsor Holding Statement for the period 1 January 2014 to date ("the Period") for any publicly listed company in which:

1.1.           the Husband;

1.2.           any  company  of which  he is  a  Director  or  Shareholder: (excluding any  publicly  listed company);

1.3.           any  subsidiary  company  (whether  in whole or  in part) of a company  of which  he is a Director or Shareholder (excluding any publicly listed company),

("the Husband and his Companies") has had any interest at law or beneficially.

2.            Issuer Sponsor Holding Statement for the period 1 January 2014 to date ("the Period") for any publicly listed company in which:

2.1.           the Wife;

2.2.           any  company  of which  she is a Director or Shareholder  (excluding any  publicly  listed company);

2.3.           any subsidiary company (whether in whole or in part) of a company of which she is a Director or Shareholder (excluding any publicly listed company),

("the Wife and her Companies") has had any interest at law or beneficially.

3.            Every Sell and Buy Note, Tax Invoice and/or Confirmation document in relation to each share acquired and/or sold:

3.1.           by the Husband and his Companies in the Period save for those which the Husband has previously provided to the legal representatives for the Wife; and

3.2.           by the Wife and her Companies in the Period excluding those that the Wife has listed in Financial Statements filed in these proceedings.

4.            Monthly statements of account for each broker who has traded publicly listed shares and/or option for or on behalf of:

4.1.           the Husband and his Companies in the Period;

4.2.           the Wife her Companies in the Period excluding those that the Wife has listed in Financial Statements filed in these proceedings.

5.            Current printout of the Tax Agent Portal of the Australian Taxation Office for the Husband and his Companies.

6.            BAS Statements for the period 1 July 2016 to date for the Husband and his Companies.

7.            Any general ledger maintained by the Husband and his Companies which records any income and/or revenue received in the Period.

8.            All correspondence, notices, agreements, term sheets, contracts and other documents giving rise to an obligation whether present or future and whether contingent or otherwise for the payment of income and/or revenue for services rendered in the Period to the Husband and his Companies.

9.            All correspondence, notices, agreements, term sheets, contracts and other documents in relation to any allocation of shares offered to and/or received by the Husband and his Companies.

10.         All correspondence, notices, file notes, memorandum and emails recording communications between the Husband and his Companies and the Australian Taxation Office in the Period.

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 Hobson & Hobson 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 Sydney

FILE NUMBER: SYC 3858 of 2015

Ms Hobson

Applicant

And

Mr Hobson

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1.        This matter concerns two issues in relation to the parties’ property dispute. Firstly, the wife’s application for interlocutory injunctions seeking the preservation of assets pending the hearing of the parties’ dispute concerning an appropriate distribution of marital property. The second issue concerns an application by the wife for orders requiring the husband to provide further disclosure in respect to his business activities.

BACKGROUND

2.        The wife was born in 1963 and is currently 53 years of age.

3.        The husband was born in 1963 and is currently 54 years of age.

4.        The parties commenced cohabitation in 1984 and were married in 1985.

5.        The husband commenced employment as a stockbroker between 1985 and1986 and since that time has made substantial income as result of share trading activity.

6.        The parties’ first child B was born in 1985 and the parties’ second child C was born in 1990. The parties’ third child, D, was born in 1994.

7.        The parties separated on a final basis on 30 January 2015 and the husband moved out of the former matrimonial home.

8.        On 16 June 2015 the husband filed an Initiating Application seeking final and interim property orders.

9.        Since that time there have been numerous Court events. For the purpose of these proceedings, the most relevant Court event was on 11 May 2016, when the matter came before Loughnan J and the parties agreed on consent orders.

10.      Those orders were as follows:

1. That pending further order the Applicant Husband and the Respondent Wife each pay:

1.1 within 7 days of the date of the making of this Order one half of the arrears outstanding at that date in relation to the loan accounts with the Westpac Bank Corporation:

1.1.1 Loan Account ..59;

1.1.2 Loan Account ..11;

1.1.3 Loan Account ..79;

1.1.4 Loan Account ..81;

1.1.5 Loan Account ..73;

(“the Westpac Loan Accounts”); and

1.2 therafter as and when they fall due one half of the periodical repayments in respect of the Westpac Loan Accounts.

2. That within 7 days of the date of the conclusion of each calendar month the husband and the wife each provide the legal representative for the other:

2.1 copy bank statements for the preceding month in respect of every bank account of which they or a company of which they are a shareholder or director;

2.2 schedule of all income/receipts from all sources in the preceding month in respect of each of them or a company of which they are a shareholder or director (non-listed companies);

2.3 monthly printout from all brokerage firms/agencies engaged by either party and [W Investments]; and

2.4 documents relating to any new allotments/allocations of shares/options/units.

3. By 1 July 2016, the wife do all things and sign all documents to either exercise or sell the 1.8 million [Company L] options in her name.

4. That within 14 days of the date of this Order the Applicant Husband provide to the Respondent Wife care of her legal representatives, Broun Abrahams Burreket, the following documents and information:

4.1 the date, sale price, number of units, broker and initial acquisition price in respect of any stock, option, shares and/or units traded and/or transferred by the husband or [W Investments] Pty Limited in the period 1 September 2015 to date (“the trades”) and if transfer the transferee;

4.2 all documents created and/or received by him in respect of the trades;

4.3 the application to which any of the proceeds of sale of the trades have been put including but not limited to broker fees and the identification of the BSB number, account number and account name of any account to which the net proceeds of sale have been paid and their subsequent application;

4.4 all documents created and/or received by the husband or otherwise within his power and control in relation to the application of the proceeds of sales of the trades including but not limited to bank statements.

5. Within 48 hours of any sale, transfer or purchase of any stock, option, share and/or unit (whether on or off market) will provide to the other party all documents evidencing the transaction and the proposed application of the sale proceeds.

6. That the husband and the wife have liberty to bring an urgent injunctive application in relation of the sale and/or proceeds of sale any stock, option, share and/or unit (whether on or off market) on 48 hours notice.

7. Notwithstanding anything to the contrary in Rule 13.26 of the Family Law Rules, each party be at liberty to ask up to 50 specific questions, which are to be answered in accordance with Rule 13.27.

8. Within 14 days the parties exchange bank statements for all accounts in their respective names (and in the husband’s case, to include corporate entities in which he has an interest) for the past 6 months.

9. The subpoenae to the entities set out in schedule 1 returnable this day be adjourned to a date to be fixed after the Conciliation Conference.

10. In relation to the documents produced on subpoena by [Company O] pursuant to the wife’s subpoena filed 3 May 2016:

(a) the wife’s solicitors be at liberty to separate and place into a sealed envelope documents the subject of a claim for privilege;

(b) if any such documents are so quarantined, the wife file and serve an Affidavit within 14 days as to the basis of such claim of privilege;

(c) the husband’s solicitors within 7 days be at liberty to inspect any of the documents not the subject of a privilege claim;

(d) any dispute in relation to the privilege claim be listed on a date to be fixed after the Conciliation Conference.

11. That the:

11.1 Application in a Case filed 16 June 2015 and 18 February 2016 be dismissed; and

11.2 Response to Application in a Case filed 25 August 2015 and 10 May 2015,

be dismissed.

12. That each party pay their own costs of and incidental to the said Applications and Responses.

SCHEDULE 1

Hospital Y

Hospital G

Hospital J

Hospital N

Hospital K

Dr M

Dr T

Hospital P

Dr Z

EVIDENCE

11.      The wife relied upon the following documents at the interim hearing:

•         Application in a Case filed 13 June 2017;

•         Affidavit of the wife filed 13 June 2017; and

•         Financial Statement filed 13 June 2017.

12.      The husband relied upon the following documents at the interim hearing:

•         Response to an Application in a Case filed 18 July 2017;

•         Affidavit of the husband filed 18 July 2017;

•         Financial Statement filed 31 May 2017;

•         Affidavit of the husband filed 18 February 2016;

•         Affidavit of the husband filed 16 June 2015;

•         Financial Statement filed 16 June 2015; and

•         Affidavit of the husband filed 22 September 2015.

APPLICATIONS

Orders sought by the wife

13.      The wife sought the following orders in her Application in a Case filed 13 June 2017:

Procedural Relief

1. That this Application in a Case be listed in a Judicial Duty List urgently pursuant to the leave to relist which was granted on 11 May 2016.

Injunctive Relief

2. That pending further Order within seven days of the date of the making of this Order the Husband do all acts and things and sign all documents necessary to establish a new bank account with the Westpac Banking Corporation ("the Husband's Share Proceeds Account") and:

2.1 deposit funds to the Husband's Share Proceeds Account from time to time as required to meet all account keeping fees and charges in respect of the said Account;

2.2 within 24 hours of the establishment of the Husband's Share Proceeds Account cause his legal representatives to provide to the Wife's legal representatives the following details in relation to the Husband's Share Proceeds Account:

2.2.1 Account Name;

2.2.2 Account Type;

2.2.3 Account Number;

2.2.4 Branch Name; and

2.2.5 Branch Number.

2.3 within 48 hours of the establishment of the Husband's Share Proceeds Account do all acts and things and sign all documents necessary to cause the Wife to have view only on line access to the Husband's Share Proceeds Account via the Westpac Banking Corporation on-line banking portal;

2.4 the Husband, his servants and his agents are restrained from operating the Husband's Share Proceeds Account for any purpose save as permitted by Order 6.

3. That pending further Order within seven days of the date of the making of this Order the Husband do all acts and things and sign all documents necessary to cause W Investments Pty Limited to establish a new bank account with the Westpac Banking Corporation ("the W Share Proceeds Account") and:

3.1 deposit funds to the W Share Proceeds Account from time to time as required to meet all account keeping fees and charges in respect of the said Account;

3.2 within 24 hours of the establishment of the W Share Proceeds Account cause his legal representatives to provide to the Wife's legal representatives the following details in relation to the W Share Proceeds Account:

3.2.1 Account Name;

3.2.2 Account Type;

3.2.3 Account Number;

3.2.4 Branch Name; and

3.2.5 Branch Number.

3.3 within 48 hours of the establishment of the W Share Proceeds Account do all acts and things and sign all documents necessary to cause the Wife to have view only on line access to the W Share Proceeds Account via the Westpac Banking Corporation on­line banking portal;

3.4 W Investments Pty Limited, the Husband, his servants and his agents are restrained from operating the W Share Proceeds Account for any purpose save as permitted by these Orders.

4. The Wife is permitted to provide a copy of these Orders to the Westpac Banking Corporation and any share broker.

5. That pending further Order the Husband do all acts and things and sign all documents necessary to cause all proceeds of sale of any listed or unlisted share, debenture, option, convertible note and/or unit ("Stock"):

5.1 owned by the Husband or in which he has a beneficial interest to be paid to the Husband's Share Proceeds Account including but not limited to causing any share broker instructed to dispose of Stock to pay the net proceeds after the payment of any brokerage fee to the Husband's Share Proceeds Account ; and

5.2 owned by the W Investments Pty Limited or in which it has a beneficial interest in to be paid to the W Share Proceeds Account including but not limited to causing any share broker instructed to dispose of Stock to pay the net proceeds after the payment of any brokerage fee to the W Share Proceeds Account.

6. That pending further Order the Husband be permitted to apply any of the monies standing to the credit of the Husband's Share Proceed Account to the following purposes only:

6.1 payment to the Australian Taxation Office of any tax liability and/or General Interest Charge but no penalty in respect of the assessment of income tax of the Husband for the years ended 30 June 2008 to 30 June 2015;

6.2 payment to a share broker to settle the purchase of any Stock acquired by the Husband provided that if the Stock is not acquired within 48 hours of the transfer the amount of that payment is returned to the Husband's Share Proceeds Account;

6.3 payment to Westpac Banking Corporation of the husband's mortgage obligations pursuant to Order 1.2 of the Orders made on 11 May 2016;

6.4 payment of rent for his place of residence;

6.5 payment of his day to day living expenses up to $2,000 per week; and

6.6 insurances in respect of E Street, Suburb Y and gardening for that property.

7. That pending further Order the Husband be permitted to apply any of the monies standing to the credit of the W Share Proceed Account to the following purposes only:

7.1 payment to the Australian Taxation Office of any tax liability and/or General Interest Charge in respect of the assessment of income tax of W Investments Ply Limited for the years ended 30 June 2008 to 30 June 2015; and

7.2 payment to a share broker to settle the purchase of any Stock acquired by the W Investments Pty Limited provided that if the Stock is not acquired within 48  hours of the transfer the amount of that payment is returned to the W Share Proceeds Account.

8. That pending further Order the Husband be restrained without first having obtained the written consent of the Wife from transferring Stock between:

8.1 the Husband;

8.2 any company of which he is a Director or Shareholder (excluding any publicly listed company); and/or

8.3 any subsidiary company (whether in whole or in part) of a company of which he is a Director or Shareholder (excluding any publicly listed company),

in which he or any of the said companies have interest at law or beneficially.

9. That within 14 days of the date of the sale of any Stock by:

9.1 the Husband;

9.2 any company of which he is a Director or Shareholder (excluding any publicly listed company);

9.3 any subsidiary company (whether in whole or in part) of a company of which he is a Director or Shareholder (excluding any publicly listed company) ,

held on trust for the benefit of another person or entity, the Husband cause to be provided to the Wife in writing in relation to the sale:

9.4 Date;

9.5 Stock;

9.6 Quantity;

9.7 Price;

9.8 Broker;

9.9 Brokerage Fee; and

9.10 Beneficial Owner.

Disclosure Relief

10. That within 21 days of the date of the making of this Order the Husband file and serve on the Wife an affidavit in which he deposes to the following matters:

10.1 the:

10.1.1 Account Name;

10.1.2 Account Type;

10.1.3 Account Number;

10.1.4 Branch Name; and

10.1.5 Branch Number,

of each deposit, credit, cheque, trading, loan, overdraft or other style of account of any financial institution which is operated by, is in the name of and/or holds monies that are beneficially owned by:

(a) the Husband;

(b) any company of which he is a Director or Shareholder (excluding any publicly listed company); and/or

(c) any subsidiary company (whether in whole or in part) of a company of which he is a Director or Shareholder (excluding any publicly listed company),

("the Husband and his Companies") in the period 1January 2014 to date ("the Period");

10.2 the:

10.2.1 Account Name;

10.2.2 Account Type;

10.2.3 Account Number;

10.2.4 Branch Name; and

10.2.5 Branch Number,

of each deposit, credit, cheque, trading, loan, overdraft or other style of account of any financial institution or stock broker which is in the name of and/or holds monies that are beneficially owned by:

(d) the Wife;

(e) any company of which she is a Director or Shareholder (excluding any publicly listed company);

(f) any subsidiary company (whether in whole or in part) of a company of which she is a Director or Shareholder (excluding any publicly listed company),

("the Wife and her Companies") in the Period excluding those that the Wife has listed in Financial Statements filed in these proceedings;

10.3 the:

10.3.1 Name;

10.3.2 Address;

10.3.3 Account and/or Client Number;

of each broker who has traded Stock for or on behalf of the Husband and his Companies in the Period;

10.4 the:

10.4.1 Organisation Name;

10.4.2 Individual Broker Name;

10.4.3.    Address;

10.4.4.    Account and/or Client Number;

of each broker who has traded Stock for or on behalf of the Wife her Companies in the Period excluding in respect of Stock traded by the Wife listed in Financial Statements filed in these proceedings;

10.5 In relation to each share acquired and/or sold by the Husband or his Companies in the Period:

10.5.1 Date;

10.5.2 Stock;

10.5.3 Quantity;

10.5.4 Price;

10.5.5 Broker;

10.5.6 Brokerage Fee;

10.5.7 in relation to a sale:

10.5.7.1 the Cost Base of the share, if any;

10.5.7.2 the bank account details of where the net proceeds of sale were paid;

10.5.8 in relation to a purchase, the source including bank account details but also the ultimate source of derivation of the funds used to acquire the shares.

10.6 In relation to each share acquired by the Wife and her Wife's Companies in the Period, excluding those that the Wife has listed in Financial Statements filed in these proceedings:

10.6.1 Quantity;

10.6.2 Price;

10.6.3.   Broker;

10.6.4.   Brokerage Fee;

10.6.5.   in relation to a sale:

10.6.5.1 the Cost Base of the share, if any;

10.6.5.2 the bank account details of where the net proceeds of sale were paid;

10.6.6.   in relation to a purchase, the source including bank account details but also the ultimate source of derivation of the funds used to acquire the shares.

10.7 In relation to any revenue of the Husband and his Husband's Companies received, invoiced and/or to which the Husband and/or the Husband's Companies became entitled in the Period:

10.7.1 the payee;

10.7.2 the means by how the revenue was earned;

10.7.3 the invoice; and

10.7.4 the contract, agreement or other document by which the obligation to pay the revenue is derived.

10.8 schedule of all options currently held by the Husband or his Companies and their expiry dates; and

10.9 schedule of all future options allocated to the Husband or his Companies and their expiry dates.

11. That pending further Order within 21 days of the date of the making of this Order the Husband cause to be provided to the legal representatives for the Wife a "csv" file for each bank account identified in Clause 10.1 above listing every transaction in the Period.

12. That pending further Order on the 7th day of each month after the making of this Order the Husband cause to be provided to the legal representatives for the Wife a "csv" file for each bank account identified in Clause 10.1 above listing every transaction in the preceding month.

13. That within 21 days of the date of the making of this Order the Husband cause to be provided to the legal representatives for the Wife copies of the documents in his custody possession or control identified in Schedule One to this Order together with an index of the same.

14. That Order 2.4 of the Orders made 11 May 2016 be varied by adding the words "to the Husband or any company of which he is a Shareholder or Director any subsidiary company (whether in whole or in part) of a company of which she is a Director or Shareholder".

15. That within 14 days of the grant and/or exercise of any option to acquire Stock by the Husband and his Companies the Husband give written notice of the full particulars of the same.

16. That within 7 days of the date of this Order the husband provide a response to the letter from Broun Abrahams Burreket to Delaney Lawyers dated 28 February 2017.

Costs

17. That the Husband pay the Wife's costs of and incidental to this Application in a Case.

14.      The wife also sought the following additional orders as set out in her case outline document:

1. That the single expert Lauren Cusack of Crowe Horwath be directed to accept information from the husband on the basis such information is not a joint instruction, and a matter for the expert to determine as to the integrity or otherwise of the information.

2. That the husband respond to any outstanding requests for documents and information from the single expert within 21 days.

3. That the husband disclose within seven days documents or information recording or identifying the beneficial ownership of shares held by the wife in Blackwood Capital Partners Fund 1A Pty Ltd.

4. That the prosecution of the husband's Initiating Application filed 9 June 2015 be stayed in the event of his non-compliance with Orders 2.1, 2.2 and 5 made on 11 May 2016, and these Orders, and if the husband has failed to comply within two calendar months, liberty be granted to the wife to proceed on an undefended basis.

Orders proposed by the husband

15.      The husband, in his Response to an Application in a Case and in his case outline document, sought orders dismissing the wife’s application and for the wife to pay his costs.

Contentions

16.      The wife has made a number of allegations about the husband that, if established, would constitute mala fides in respect to the husband’s dealings with her. In these interim proceedings, I am unable to make findings in respect to contentious issues of fact. For the purpose of these proceedings, the wife’s complaints in respect to the husband’s conduct essentially relates to the following matters:

•         the husband has failed to account for the proposed application of proceeds realised from stock sales as is he is obliged to do pursuant to the Orders made on 11 May 2016;

•         the husband has failed to comply with the Orders made on 11 May 2016 for the disclosure of documents that verify his share trading; and

•         in the context of the husband’s inadequate disclosure, there is a real risk that the husband’s conduct in reducing the value of his share portfolio will adversely impact upon the wife in terms of depleting the parties’ available property that will be available for distribution at final hearing.

17.      In response, the husband denies that he has continuously failed to make proper disclosure and asserts that the wife is seeking relief in circumstances where she lacks “clean hands”. In that respect, the husband alleges that the wife has disposed in excess of $2,700,000 worth of property in the period since the parties’ separation. The husband further alleges that the wife has failed to make full and frank disclosure as to how those proceeds have been disbursed and/or disposed of by her.

18.      The husband accepts, however, that there have been occasions when actual source documents have not been provided. The husband nonetheless asserts that he has provided the relevant bank statements identifying whether proceeds of sale of any shares  have been deposited and/or statements evidencing where the source of funds required to acquire further stocks have originated from.

Consideration

19. Section 114(3) of the Family Law Act 1975 (Cth) (“the Act”) provides:

A court exercising jurisdiction under this Act in proceedings other than proceedings to which subsection (1) applies may grant an injunction, by interlocutory order or otherwise (including an injunction in aid of the enforcement of a decree), in any case in which it appears to the court to be just or convenient to do so and either unconditionally or upon such terms and conditions as the court considers appropriate. (emphasis added)

20.      The plurality in Cardile v LED Builders Pty Limited (S61-1998) (“Cardile”) said:

…that the court may grant an injunction in all cases in which it appears to the court to be just and convenient to do so – does not confer an unlimited power to grant injunctive relief.  Regard must still be had to the existence of a legal or equitable right which the injunction protects against invasion or threatened invasion, or other unconscientious conduct or exercise of legal or equitable rights. (references omitted)

21.      Their Honours referred to the joint judgment of Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ in Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia[No 3] [1998] HCA 30 where it was stated that:

The general principle which informs the exercise of the power to grant interlocutory relief is that the court may make such orders, at least against the parties to the proceeding against whom final relief might be granted, as are needed to ensure the effective exercise of the jurisdiction invoked. The [Court] had jurisdiction to make interlocutory orders to prevent frustration of its process in the present proceeding.

22.      To similar effect, in his judgment in Cardile, Kirby J stated that:

…such orders have been developed as much to protect and defend the court's process from abuse as to protect and defend the interests of the potential judgment creditor.  This point was made in the Canadian case of Grenzservice Speditions Ges.m.b.H v Jans where Huddart J observed:

“The Mareva and Anton Piller orders were conceived not so much to protect plaintiffs as to protect the Court’s jurisdiction against defendants bent on dissipating or secreting their assets or evidence in order to render inconsequential the judicial process against them”.(references omitted)

23.      In addressing the first contention of the husband, in opposing the wife’s application for the granting of interlocutory injunctive relief, it is to be noted that in Menotti & Lamb, Cronin J held that the words “just or convenient to do so,” as they are used in section 114 (3) of the Act, include the Court giving consideration to the equitable principle that “if the applicant comes to equity seeking justice, he or she must come with clean hands”.

24.      In these interim proceedings, the Court is not in a position to determine that either party has acted with blatant disregard of their obligations as a litigant or with mala fides towards the other party. Specifically, the Court is not in a position to determine, as the husband contended, that the wife has approached the Court in circumstances where she lacks “clean hands”. I therefore propose to consider the wife’s application for interlocutory relief.

25.      It is unnecessary for an applicant for interlocutory orders to establish “all of the propositions that would be necessary” to obtain the final relief they are seeking. However, the applicant for such an order must establish:

a)        That there is a real risk of assets being disposed of; and

b)        That, as a result of that risk, there is a real ground for believing that the applicant will be prejudiced in the remedy he or she is seeking.

26.      In that respect, in Curtis v NID Pty Limited [2010] FCA 1072, Edmonds J said at paragraphs 8 to 10:

8. The test in Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 is in similar terms to O 25A r 5(4). In that case, Gleeson CJ, with whom Meagher JA broadly agreed, said, at 321 – 322, as follows:

‘[A] plaintiff will need to establish … a danger that, by reason of the defendant absconding, or of assets being removed from the jurisdiction or disposed of within the jurisdiction or otherwise dealt with in some fashion, the plaintiff, if he succeeds, will not be able to have his judgment satisfied.’

9. ‘Danger’, however, is not defined.  In some cases, judges have employed the phrase ‘real risk’ to identify the degree to which a plaintiff must demonstrate that a prospective judgment will go unsatisfied: see, for example, Cardile at [122] per Kirby J; Ninemia [1983] 1 WLR 1412 at 1422 per Kerr LJ. In others, it has been said that an applicant must establish ‘a sufficient likelihood of risk which in the circumstances of a particular case justifies an asset preservation order’: Lifetime Investments Ltd v Commercial (Worldwide) Financial Services Pty Ltd [2005] FCA 226 at [14] per Kiefel J, approving Victoria University of Technology v Wilson [2003] VSC 299 at [36] per Redlich J. There is even a third view, namely, that the plaintiff establishes ‘a sufficient apprehension of dissipation of the … assets’: Vaughan v Duncan [2007] NSWSC 811 at [5] per Hamilton J.

10. What is settled, however, is that solid evidence of a danger of dissipation or disposal of assets be produced. The relevant test was enunciated by Brereton J in Finn v Carelli [2007] NSWSC 261 at [4], where his Honour referred to the NSW Court of Appeal’s decision in Frigo v Culhaci [1998] NSWCA 88:

‘It is not necessary for an applicant to show that the respondent has a positive intention of evading a judgment, and it is sufficient to show that the course on which the respondent proposes to embark is, objectively speaking, calculated to have that effect.  But as the Court of Appeal made clear in Frigo v Culhaci, an applicant must establish, by evidence and not mere assertion, that there is a real danger that by reason of the respondent absconding or otherwise dealing with assets, the applicant will not be able to have its judgment satisfied.  While acknowledging that there has been much debate as to the precise degree to which that has to be shown, the Court emphasised that mere assertion that the defendant was likely to put assets beyond the plaintiff’s reach was inadequate, for which the Court cited Ninemia Maritime Corp v Trave GmbH & Co Kg (The Niedersachsen) [1984] 1 All ER 298 as well as Patterson v BTR Engineering.’

27.      As previously noted, during the course of the parties’ relationship, the husband has made a substantial profit from engaging in share trading activities. The wife has expressed concern that the husband’s share trading activities, in the period since the parties’ separation, has resulted in a reduction of his total share portfolio and, hence, the property pool available for distribution between the parties.

28.      In the period between 11 May 2016 and 18 July 2017, the husband sold shares totalling $2,197,250 in value. In the same period, the husband purchased shares in other entities totalling $681,217. In other words, the difference between sales and acquisitions was $1,516,033. The wife contends that the reduction in the size of the husband’s share portfolio is all the more concerning in circumstances where she asserts that the husband failed to disclose share sales of $1,109,127 and that he failed to disclose share purchases of $334,787. The husband, in reply, asserts that the nondisclosure has been inadvertent in circumstances where there have been a substantial number of transactions.

29.      The parties are not in a position to agree on a balance sheet at this stage of the proceedings. However, in his Financial Statement filed on 31 May 2017, the husband states that the value of his net property is $5,744,496. In her Financial Statement filed on 13 June 2017, the wife states that, leaving aside assets of unknown value, the net value of her property is $3,578,016. Based on the parties’ assertions as set out in their respective Financial Statements, the total known value of their combined net assets is therefore $9,322,512.

30. Accordingly, the reduction in the value of the husband’s share portfolio in the 14 month period prior to 18 July 2017 represents 16.26 per cent of the parties’ present assessment of their combined net property. The wife asserts that, at final hearing, there is likely to be a substantial adjustment of the parties’ property interests in her favour. This is because, the wife argues, in addition to matters that the Court will consider pursuant to section 79(4) and 75(2) of the Act, the wife will argue that the Court should have regard to the substantial contribution that she made as a result of receiving an inheritance. The parties appear to agree that the inheritance was in the order of approximately $3,500,000.

31.      In these interim proceedings, it is unnecessary to make an attempt to predict the likely outcome of these proceedings at final hearing. It is sufficient to note that a final hearing date is likely to be more than 12 months away. If the reduction in the husband’s share portfolio continues at its current rate for that period of time, there is, in my view, a real risk that it will reduce the net property available for distribution between the parties to the point where the wife’s interests may be prejudiced.

32.      Accordingly, for these reasons, I am satisfied this is an appropriate case for the granting of an interlocutory injunction.

33.      I am also satisfied that it is appropriate for the Court to grant injunctive relief in order to prevent frustration of the Court process. This is in the context where the obligation of disclosure is such a vital part of the effective functioning of the family law jurisdiction.

34. The obligation to disclose is set out in Chapter 13 of the Family Law Rules 2004 (Cth) (“the Rules”) and requires an extensive range of information and documentation to be disclosed to the other party. Specific obligations of disclosure apply before the first Court date and before a conciliation conference. There is also an ongoing obligation of disclosure throughout the proceedings.

35.      The legislative obligation of disclosure reflects a long-standing common law principle that, where a Court is being asked to make a decision which essentially involves an exercise of discretion impacting upon the rights of parties, so significant is the obligation of disclosure that lawyers have an obligation to cease to act if a client wishes not to disclose a fact or document that is relevant to the case.

36.      In response to the wife’s argument that he has failed to provide adequate disclosure, the husband contends as follows:

The Husband denies that he has continuously failed to make proper disclosure. The husband accepts that there have been occasions when actual source documents have not been provided however he has provided the relevant bank statements identifying whether proceeds of sales any shares, etc have been deposited and/or statements evidencing whether source of funds required to acquire further stocks, etc have originated from…

37.      Correspondence between the parties’ solicitors indicates that, on a number of occasions, the husband has in fact disclosed the sale of shares and identified the purpose to which the proceeds of the share sales have been applied. This includes identifying some instances where additional shares have been purchased. However, as noted above, this is not the case in respect to all share transactions.

38.      Further, the cross-referencing to other relevant bank statements does not, in all instances, enable an assessment to be made as to the purpose for which the proceeds of the share sales have been applied. In that context, for instance, the bank statements and summaries prepared by the husband identify a number of instances where funds have been transferred to W Investments and also to CommSec. In some instances, the covering letter providing that information includes particulars as to the use or anticipated use of those funds. However, that practice has not been adopted in all cases.

39.      I agree with the submission by senior counsel for the wife that, in a number of instances, the information provided by the husband shows that funds have moved horizontally to another entity including, specifically, W Investments and CommSec. Further, there is no means of readily ascertaining, in every case, what has happened to those funds after the initial transfer to those entities.

40.      In any event, it is quite clear that the practice that has been adopted by the husband is not consistent with that envisaged by the orders made on 11 May 2016 including, in particular, order 5 which imposes a following obligation on the parties to, within 48 hours of any sale, transfer or purchase of any stock, option, share and/or unit (whether on or off market), provide to the other party all documents evidencing the transaction and the proposed application of the sale proceeds.

41.      It is significant that the orders of 11 May 2016 were made by consent. In the circumstances of this matter, where there is regularly a substantial movement of funds as result of the husband’s share trading activities, it is understandable that the parties would insist on there being complete transparency in respect to those transactions and the utilisation of the proceeds of those transactions.

42.      Accordingly, for this additional reason, I am satisfied that the Court should order interlocutory injunctions and better disclosure on the part of the husband.

43.      In considering what orders are appropriate, it is important to apply the principle that any orders that are made must go no further than that which is necessary to  “to limit the disturbance of the property and other assets of the [respondent to the Application] to the potential recovery of [the applicant] and nothing more”. The reason for this was explained in Cardile as being the fact that an order of this nature:

… is bound to have a significant impact on the property of the person against whom it is made:  in a practical sense it operates as a very tight "negative pledge" species of security over property, to which the contempt sanction is attached.  It requires a high degree of caution on the part of a court invited to make an order of that kind.

44.      In the context of family law proceedings, in Sieling and Sieling, the Full Court said:

The power to grant injunctions is, of course, a discretionary power, not to be exercised lightly. The Court must balance the hardship to each party of granting or refusing an order and frame its order in such a way to impose no further restriction than is necessary to achieve the protection of the applicant’s interest. It will not lightly interfere with the rights of an owner of property on the basis of a vague or uncertain claim.

45.      In Martiniello & Martiniello, it was suggested that a party should not be restrained from using their money for ordinary business purposes unless “it could be shown that there was a fear that [the party] would dissipate [the] funds”.

46.      In this matter, the wife has sought orders that go beyond that which is reasonably necessary to ensure proper disclosure and transparency in respect to the husband’s share trading activities. At the hearing on 31 August 2017, it appeared that there was substantial agreement between the parties regarding a number of the orders proposed by the wife. On that basis, the parties were given leave to approach chambers with a view to consent orders being made to reflect their agreement. Regrettably, it does not appear that the parties have been able to achieve a consensus position.

47.      In those circumstances, in order to give efficacy to the injunctions that I propose granting, I will make orders having regard to the totality of the wife’s application, including those matters that had been reserved for the parties’ ongoing discussions.

48.      The orders that I propose making will not restrain the husband from utilising the proceeds of share transactions, because this would have the potential to unreasonably restrain the husband from engaging in share trading activity, to meet reasonable business expenses and to receive a reasonable level of remuneration. However, to ensure transparency, the orders will require the husband to open specific bank accounts into which the proceeds of share trading activities will be deposited and from which funds will be disbursed. The wife will have access to those accounts for information purposes only. Also, in order to ensure transparency, the orders will prevent the horizontal transferring of funds between the husband and other business entities without the consent of the wife.

49.      The orders will also require the husband, insofar as he is reasonably capable of doing so, to provide specific information to the wife. That obligation will not, however, be as extensive as that sought by the wife. I do not propose making those orders sought by the wife that are unreasonably broad and, consequently, have the potential to be oppressive and result in the incurring of unnecessary expense.

50.      For all these reasons I make the orders as set out at the commencement of these Reasons for Judgment.

I certify that the preceding fifty (50) paragraphs are a true copy of the reasons for judgment of the Honourable Justice McClelland delivered on 23 October 2017.

Associate: 

Date:  23 October 2017