JANKO & JANKO

[2018] FamCA 300

FAMILY COURT OF AUSTRALIA

JANKO & JANKO [2018] FamCA 300

FAMILY LAW – INJUNCTIONS – where the husband proposed to divest a family trust of its interest in a company and its associated entities – where the wife sought information in relation to the proposed disposal of those interests and the opportunity to consider that proposal – where the injunctive relief sought by the wife is temporary in nature and would not unduly interfere with the conduct of the business – where orders were made restraining the husband from transferring or disposing of interests in the company and its associated entities pending further order.

Waugh & Waugh (2000) FLC 93-052

APPLICANT: Mr Janko

RESPONDENT: Ms Janko

FILE NUMBER: MLC 4869 of 2016

DATE DELIVERED: 9 May 2018

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Macmillan J

HEARING DATE: 13 April 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Berger

SOLICITOR FOR THE APPLICANT: Berger Kordos Lawyers

COUNSEL FOR THE RESPONDENT: Mr Strum QC with Mr Werner

SOLICITOR FOR THE RESPONDENT: Taussig Cherrie Fildes

Orders Made 18 April 2018

IT IS ORDERED THAT

1. Leave is granted to the wife to make an oral application for orders in terms of paragraphs 2 to 9 of her Application in a Case filed 9 April 2018.

2. By 4.00 pm on 24 April 2018 the husband shall serve the wife with copies of all bank statements for all accounts in the name of B Pty Ltd (BPL) for the period 1 December 2016 to date including any corporate credit card statements, term desposits or loans.

3. By 4.00 pm on 24 April 2018 or within 24 hours of receipt by him the husband, whichever first occurs, provide to the wife the following documents:

   (a)all written agreements (including drafts) pertaining to the matters deposed to by him in his affidavit filed 16 March 2018 in this Court;

   (b)all advice (accounting and legal) received by him or BPL or C Pty Ltd or Janko Family Trust pertaining to the matters deposed to by him in his Affidavit filed 16 March 2018 in this Court save for the legal advice provided by or on behalf of Berger Kordos to the husband in relation to these proceedings.

4. Until further order, the husband by himself his servants or agents be and is hereby restrained from entering into any transaction or disposition or further agreements in relation to his interest or the interest of the Janko Family Trust in:

   (a)B Pty Ltd;

   (b)B Unit Trust;

   (c)the real property situate at D Street Melbourne in the State of Victoria.

5. The husband and wife do all such acts and things and sign all such documents as may be required to enable a Business Broker nominated by the wife to attend BPL, review the accounts and such other documents as may be required to provide advice in relation to the best method of sale and proposed sale price of BPL.

6. The husband and wife do all such acts and things and sign all such documents as may be necessary to appoint Mr E, Company F (“Remuneration Expert”) as the single expert in remuneration to provide an opinion in relation to:

   (a)the appropriate income for the husband from BPL;

   (b)the husband’s income earning capacity in the open market if he no longer works at BPL.

   Including by no limited to executing the attached joint letter of instructions marked as “B” in the Application in a Case filed by the wife on 9 April 2018.

7. The cost of the Remuneration Expert and of the Business Broker be paid by the wife at first instance and the question any reimbursement be reserved for determination on a date to be fixed.

IT IS FURTHER ORDERED THAT

1. By 4.00 pm on 27 April 2018 the husband file and serve any response to the wife’s Application in a Case filed 9 April 2018 and any affidavit in support of same upon the wife and by prepaid post upon Mr G addressed to him at D Street Melbourne in the State of Victoria.

2. The wife cause a sealed copy of the order made this day to be served upon Mr G addressed to him at D Street Melbourne in the State of Victoria.

3. The Application in a Case filed 9 April 2018 be adjourned for hearing in the Judicial Duty List at 10.00 am on 9 May 2018 AND THE COURT NOTES THAT the matter will be heard by Justice Macmillan on that date.

4. My reasons for the orders made this day be reserved.

IT IS CERTIFIED THAT

1. Pursuant to Rule 19.50 of the Family Law Rules 2004 this matter reasonably required the attendance of counsel including senior counsel.

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 Janko & Janko 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 MELBOURNE

FILE NUMBER: MLC 4869  of 2016

Mr Janko

Applicant

And

Ms Janko

Respondent

REASONS FOR JUDGMENT

1. On 13 April 2018 I granted the wife leave to make an oral application in the terms of her Application in a Case filed 9 April 2018, notwithstanding that application was not formally listed before me on that day. Thereafter I made orders restraining the husband from entering into any transaction or disposition or any agreement in relation to his interest or the interest of the Janko Family Trust (“the Trust”) in B Pty Ltd (“BPL”) and its associated entities. I made further orders for the provision of documents, adjourned the matter for further hearing in the Judicial Duty List on 9 May 2018 and reserved my reasons. These are those reasons.

2. The matter was listed for a trial management hearing on 2 March 2018. In accordance with the orders made on 8 February 2018, the husband filed an Amended Initiating Application on 23 February 2018, in which he sought orders, inter alia, that he do all things necessary to divest the Trust’s interest in BPL. The sale of the business had not been proposed prior to the husband filing his Amended Initiating Application. This is not withstanding the matter having been previously listed for final hearing in October 2017.

3. On 2 March 2018, I made orders, inter alia, requiring the husband to file and serve an affidavit setting out with particularity any agreement between himself and Mr G, who also has an interest in BPL, or any entity controlled by either of them as to how their interest in BPL would be dealt with if either wished to divest themselves of that interest and in particular, as to how he proposed divesting of the Trust’s interest in BPL. The husband was to serve that affidavit together with a copy of the order made that day upon Mr G. All extant applications for final orders were otherwise adjourned for hearing before me on 13 April 2018.

4. On 16 March 2018, the husband filed an affidavit in which he outlined how he proposed to unwind his business relationship with Mr G with respect to BPL and B Unit Trust (“BUT”). He deposed that the estimated completion date was 30 April 2018 and that Mr G had advised that this agreement was to be completed by no later than 15 May 2018, or he would terminate the agreement.

5. On 23 March 2018, Mr G filed an affidavit in which he deposed to having been served with the husband’s affidavit and the orders made 2 March 2018 and confirmed the husband’s evidence as to the verbal negotiations undertaken between he and the husband regarding their future business arrangements. He further deposed that it was not his intention to continue operating BPL or BUT with the husband in the future.

6. On 9 April 2018 the wife filed an Application in a Case together with an affidavit in support of that application seeking an injunction that the husband, his servants or agents be restrained from entering into any transaction or disposition or further agreements in relation to his interest or the interest of the Trust in BPL, BUT or the real property situate at D Street, Melbourne without providing the wife with 21 days’ notice in writing. The wife also sought orders for the production of documents, including bank documents for BPL, all written agreements (including drafts) pertaining to the matters in the husband’s affidavit filed 16 March 2018, all advice (accounting and legal) received by him or BPL or C Pty Ltd or the Trust pertaining to those same matters.

7. The wife also sought orders that she and the husband do all acts and things required to enable a business broker nominated by the wife to attend BPL to review the accounts and such other documents that may be required to provide advice as to the best method of sale and the proposed sale price. To that end, the wife also sought an order appointing a remuneration expert to assess the husband’s income earning capacity both in his employment with BPL and in the open market if no longer employed by BPL.

8. When the matter came on for mention before me on 13 April 2018 the wife made an oral application for orders in the terms of paragraphs 2 to 9 of her Application in a Case filed 9 April 2018.  In support of her application the wife relied upon the following matters:

   a)That there is a dispute as to the interest of the Trust in BPL;

   b)That it was not until the husband filed his Amended Initiating Application on 23 February 2018 that there was any proposal for a sale of the Trust’s interest in BPL or its associated entities and no details were provided at that time;

   c)That the proposed purchaser of the Trust’s interest in BPL is H Pty Ltd, a company of which Mr J is both the sole director and the secretary;

   d)That Mr J is a close friend of the husband’s, on occasions having attended Court with him;

   e)That H Pty Ltd was incorporated on 15 March 2018, the day before the husband filed his affidavit; and

   f)That the wife’s solicitors’ requests for documents supporting the proposed sale were met with the response that “…matters were discussed personally between our client a, Mr G and Mr J. A contract is to be prepared in accordance with the agreement reached and will be disclosed in due course.”

9. Although by the time the matter came on for hearing on 13 April 2018 the husband’s solicitor had provided the wife’s solicitor with a draft of the alleged agreement and it is the wife’s case that although she does not oppose in principle to the husband divesting his or the Trust’s interests in BPL, she requires the documents she has requested, and the advice of a business broker and accounting expert to enable her to consider her position viz a viz both the disposition proposed by the husband and to receive advice as to whether there is a more tax effective way of realising the interests in BPL and maximising the value of the assets available for division. In my view, this is not an unreasonable request.  

10. When the matter was first called, it appeared likely that the husband would consent to most if not all of the orders sought by the wife, including the injunctive relief, at least until the matter could be listed for an interim hearing. However, after the matter was stood down to enable the husband’s solicitor to obtain further instructions, his instructions were to oppose the application for injunctive relief and the other orders sought by the wife, including the orders for the production of documents.  

Legal Principles

1. The Court clearly had the power to grant the injunctive relief sought by the wife and it was not submitted otherwise. If the Court is to accede to the wife’s application, it must be satisfied that there is, as there is in this case, an existing claim for orders adjusting property interests and that that claim may be defeated or prejudiced unless an injunction is granted.  As the Full Court said in Waugh & Waugh (2000) FLC 93-052 at 87,810 the Court must give consideration to

   …the fundamental question whether there was any evidence of any intention by the husband to dispose of any assets pursuant to any scheme to defeat any judgement which the wife might obtain in the substantive proceedings, or whether he merely wished to continue to trade, as he always has done, prior to and since the separation of the parties.

2. The order sought in this case is one of limited duration to allow the wife to be properly informed as to the proposed sale of the Trust’s interest in BPL and to consider her position pending further hearing when the Court will be in a position to deal with the matter, if it is necessary to do so. It was not submitted that the proposed injunction would interfere with the day to day operations of BPL. Although the husband now submits that the business cannot go on trading and that the sale should be allowed to proceed, that is in circumstances where it was only when he filed his Amended Initiating Application on 23 February 2018 that he raised the possibility of a sale. Furthermore, no information was provided by him to the wife or her solicitors with respect to the proposed sale. It was only when he was ordered to do so by the Court that any information was provided. In the face of the Court’s order requiring him to file an affidavit as to how he proposed divesting himself or the Trust of its interest in BPL and a forthcoming hearing, it appears that the husband proceeded with the negotiations and pressed for that sale to proceed.

3. Leaving aside the bona fides of the proposed sale which the wife will now have the opportunity to assess, I am satisfied that there is a very real possibility of prejudice to the wife’s claim if the sale is to proceed in the short term.  At the very least she would be deprived of the opportunity to avail herself of advice as to the best way of realising the maximum value of this asset and ensuring that its disposition is tax effective.

4. In my view as the injunction is of a temporary nature and not intended to unduly restrict the way in which the husband conducts his business, the balance of convenience weighs in favour of an injunction being granted. Had the husband been as concerned as he now says he is as to the viability of the business in the short term, he could already have provided the wife with the documentation she needs to satisfy herself that that is the case.

5. The orders made for the provision of documents are for documents and information which the husband should be providing in any event, having regard to the requirement for full and frank disclosure. I am also satisfied that in circumstances where it is the husband who is engaged in the operations of BPL and now proposes a sale, that it is reasonable for an order to be made requiring him to do all things necessary to enable a business broker nominated by the wife to attend at the business premises to review the accounts and such other documents as may be required to provide advice as to the proposed sale.

6. The value of BPL will likely be relevant if the Court is faced with a contested application for sale or a dispute as to the terms of sale, particularly in circumstances where there is an allegation, as there is in this case, that the proposed sale may not be at arm’s length and that the sale may not be realising its true value.

7. It is in circumstances where the single expert valuer, Ms K, has based two of her valuations scenarios on assumptions as to the appropriate remuneration for the husband, that the wife seeks the appointment of a remuneration expert. I am satisfied, particularly in circumstances where the wife has agreed to pay at first instance for the opinion of a remuneration expert as to the husband’s remuneration, that it is proper to make the order the wife seeks.

8. In my view the more evidence the Court has in relation to the proposed sale, the method of sale and the value of the business the better placed it will be to determine whether the husband should be permitted to proceed with the sale. I made the orders sought by the wife on that basis.

I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered on 9 May 2018.

Associate:

Date:  9 May 2018