JAYE & WALES

[2020] FamCA 518

FAMILY COURT OF AUSTRALIA

JAYE & WALES [2020] FamCA 518

FAMILY LAW – PROPERTY – Interim – Where the applicant wife seeks an injunction obliging the husband to cause the company, that the parties jointly own, to advance to her $2,400,000 to buy her preferred property – Where the wife currently lives in an unencumbered property of a similar value and has sought to retain that property since the commencement of the proceedings – Where there is evidence that the order that the wife seeks could cause loss to the parties – Where no injustice will be caused by refusing to make an interim property adjustment order – Where the application is dismissed.

FAMILY LAW – INJUNCTIONS – Preservation of Property – Where the applicant wife seeks an injunction restraining the respondent husband from dealing with assets of the company of which he is a sole director, without the wife’s written consent – Where the respondent husband opposes the making of an injunction – Where there is potential for the husband, having sole control of the majority of the parties’ property interests, to, if not restrained, act in ways that could prejudice the wife’s claim for property adjustment – Where the balance of convenience favours an injunction being granted – Where the husband will be restrained from dealing with the assets of the company, without first providing the wife with at least 14 days’ written notice of his intention to do so. 

FAMILY LAW – PRACTICE AND PROCEDURE – Disclosure – Where the wife seeks certain documents be disclosed by the husband – Where the husband asserts that the wife has failed to establish the relevance of the documents she seeks – Where the Court is satisfied that the documents sought by the wife are relevant at this point in time to an issue in the proceedings and a fair disposal of these issues necessitates the disclosure – Where the husband also seeks orders for disclosure by the wife – Where those orders will also be made.

Family Law Act 1975 (Cth)

B & B (1979) 1 All ER 801
Marchant & Marchant (2012) FLC 93-520
Smith v The Queen (2001) 206 CLR 650
Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466

APPLICANT: Ms Jaye

RESPONDENT: Mr Wales

FILE NUMBER: BRC 9298 of 2019

DATE DELIVERED: 29 June 2020

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Forrest J

HEARING DATE: 22 June 2020

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Alexander

SOLICITOR FOR THE APPLICANT: Evans Brandon Family Lawyers

COUNSEL FOR THE RESPONDENT: Mr Kirk QC

SOLICITOR FOR THE RESPONDENT: Damien Greer Lawyers

Orders

Interim Injunction

1. That until further order, the husband is hereby restrained from:

   (a)selling, transferring, assigning, encumbering or alienating any of his shares and/or interest of any nature in the company B Pty Ltd and/or appointing any directors or otherwise acting in such a way as to cause a reduction in the value of the assets of B Pty Ltd, or incurring expenses or liabilities in the name of  B Pty Ltd except in the ordinary course of the business run by B Pty Ltd;

   (b)Selling, transferring, otherwise disposing of or encumbering any of the non-core business assets of B Pty Ltd including but not limited to the house he lives in, the motor cars he uses, money owed to the company by his parents, and shares in ASX listed companies;

   (c)Withdrawing, transferring or otherwise spending money from B Pty Ltd’s bank accounts other than in the ordinary course of the business run by B Pty Ltd or, to be specific, to pay weekly amounts to himself and to the wife in accordance with the regular transfer arrangements already in place;

   without first giving the wife, through her solicitors, Evans Brandon Family Lawyers (or such other firm as the wife may advise him she instructs in these proceedings from time to time), at least fourteen (14) days’ written notice of his intention to do so. 

Disclosure

1. That within twenty eight (28) days, the Respondent Husband provide to the Applicant Wife, by her solicitors, copies of the following documents by way of disclosure:

   (a)For the Husband's personally held ANZ share portfolio (numbered …72), documents in relation to the portfolio holdings between 1 July 2018 and the current date showing the parcels and stocks held and movements in the value and quantum of same by way of buying and selling transactions;

   (b)Documents relating to the ANZ cash investment account/share portfolio numbered …90 held by B Pty Ltd dated 1 July 2018 to current including documents showing the transactions engaged in since 30 June 2018 and movements in the associated bank account;

   (c)Documents relating to the "Cash on hand and Cash Draw" asset referred to in the balance sheet sent by the Husband's solicitors to the Wife's solicitors by email dated 3 December 2019 including, if applicable, petty cash history for B Pty Ltd for 1 July 2018 to current;

   (d)Documents relating to the "Debtors" asset referred to in the balance sheet sent by the Husband's solicitors to the Wife's solicitors by email dated 3 December 2019;

   (e)Documents showing advance of company funds to the Husband's parents for the purchase of a real property and any repayments received from or for them, referred to in the balance sheet sent by the Husband's solicitors to the Wife's solicitors by email dated 3 December 2019;

   (f)Documents, including any relevant ledgers, showing the calculation and movement of the existing "Division 7A loan balance" item referred to in the balance sheet sent by the Husband's solicitors to the Wife's solicitors by email dated 3 December 2019;

   (g)Any signed Division 7A loan agreements in respect of the Division 7A loan balance item referred to in the balance sheet sent by the Husband's solicitors to the Wife's solicitors by email dated 3 December 2019;

   (h)Copies of any emails from the accountant for B Pty Ltd providing advice about Division 7A issues from time to time since the inception of Division 7A loans between B Pty Ltd and either party;

   (i)Documents relevant to the acquisition of the Golf buggy 1 referred to in the balance sheet sent by the Husband's solicitors to the Wife's solicitors by email dated 3 December 2019;

   (j)The FYE2019, or any subsequent, depreciation schedule and detailed plant and equipment list for B Pty Ltd;

   (k)Documents relevant to the acquisition and performance of the "sports" and "website" assets referred to in the balance sheet sent by the Husband's solicitors to the Wife's solicitors by email dated 3 December 2019;

   (l)Disclosure relating to any gambling accounts held by the Husband;

   (m)In relation to the bank accounts held by B Pty Ltd:

   (i)Copies of the ANZ “Multipayment/Pay Anyone” information setting out the details of the payees of the multipayments, for those multipayments made since 30 June, 2018, including but not limited to payee, payee ABN or payee reference and payee account details; and

   (ii)Copies of the instructions to the ANZ Bank which gave rise to payments entitled (in the statements), “Direct Entry ANZ Transactive File Value” including but not limited to the payee, payee reference and payee/recipient account details for the period 30 June, 2018 and the current date;

   (n)In relation to the records of B Pty Ltd, the data showing the Husband’s drawings or benefits in addition to his wage or salary after 30 June, 2018 whether this is recorded in fringe benefits tax records, drawings, loan accounts, ledger records or source documents, including costs for the Motor Vehicle 1 and a vessel and Husband's personal travel;

   (o)Statements for the ANZ Negotiator Account ending ...05 for 29 June 2019 to 30 July 2019;

   (p)Payslips for 1 July 2018 - 13 October 2019;

   (q)Detailed General Ledger entries for the Directors Loan arrangements between B Pty Ltd and the parties and source documents for 1 July 2014 - current, setting out dates of payments, purpose of payments, data supporting the calculations of the loans described as follows and any further directors' loans arising since FYE2018:

   (i)…10 – ‘Loan to Directors - Mortgage Loan 2015’;

   (ii)…11 – ‘Loan to Directors -  2016’;

   (iii)…99 – ‘Loan to Director – Clearing a/c’;

   (iv)…12 – ‘Loan to Director – 2017’; and

   (v)…13 – ‘Loan to Director – 2018’;

   (r)Copies of any company minutes, resolutions and similar documents dated between FYE2015 and current;

   (s)Copies of any Division 7A loan calculations and any working papers or ledgers prepared for FYE 2019 and for the current financial year;

   (t)Copies of documents, including relevant tax portal account records and any ATO correspondence, showing the tax liabilities owing by B Pty Ltd referred to in the balance sheet sent by the Husband's solicitors to the Wife's solicitors by email dated 3 December 2019;

   (u)Bank statements for the ANZ credit cards ending #...74 and #...16 for 1 January 2019 to current; and

   (v)Copies of the construction contract and other documents setting out the construction costs for the property at C Street.

2. That unless otherwise agreed, provision of the copies of documents required to be disclosed to the Wife by operation of Order (2) above shall be provided to the Applicant Wife through her solicitors in electronic format and may be transmitted via a cloud-based document sharing program.

Valuation Date

1. That the date of valuation for B Pty Ltd and D Pty Ltd to be prepared by F Accounting be 31 December 2019.

Disclosure

1. That within twenty eight (28) days of the date of these Orders the Wife provide to the Husband's solicitors the following documents and information by way of disclosure:

   D Pty Ltd

   (a)Commonwealth Bank Business Transaction BSB: … A/N: …93 statements from:

   I.1 January 2019 to 31 March 2019;

   II.1 November 2019 to 31 December 2019; and

   III.23 January 2020 to date;

   (b)Documents relating to the “Cash on Hand” asset referred to in the financial statement of D Pty Ltd for the financial year ended 30 June 2019 including, if applicable, petty cash history for D Pty Ltd from 1 July 2018 to date;

   (c)Documents relating to the “Trade Debtors” asset referred to in the financial statement of D Pty Ltd for the financial year ended 30 June 2019 including, if applicable, petty cash history for D Pty Ltd from 1 July 2018 to date;

   (d)Depreciation schedule and detailed plant and equipment list for D Pty Ltd as at 30 June 2019 and 31 December 2019;

   (e)In regards to the Loan from Director 2015/2016:

   I.The executed Division 7A loan agreement;

   II.Division 7A loan calculations; and

   III.The General Ledger entries for the Loan;

   (f)In regards to the Loan from Director 2016/2017:

   I.The executed Division 7A loan agreement;

   II.Division 7A loan calculations; and

   III.The General Ledger entries for the Loan;

   (g)In regards to the Loan from Director 2017/2018:

   I.The executed Division 7A loan agreement;

   II.Division 7A loan calculations; and

   III.The General Ledger entries for the Loan;

   (h)In regards to the Loan from Director 2018/2019:

   I.The executed Division 7A loan agreement;

   II.Division 7A loan calculations; and

   III.The General Ledger entries for the Loan;

   (i)Copies of any company minutes, resolutions and similar documents dated between the financial year ended 30 June 2015 and the financial year ended 30 June 2019;

   (j)All payments and receipts for the time target software used by D Pty Ltd;

   (k)All payments and receipts made in regards to any office fit-out undertaken by D Pty Ltd since 1 January 2019;

   (l)         Business Activity Statements from April 2020 to date;

   (m)A schedule of all payments made from D Pty Ltd to Ms G from January 2019 to date;

   Joint Bank Account

   (n)Documents executed and/or authorised by the Wife to close the Commonwealth Bank joint account BSB: … A/N: …13;

   Loan from Wife to Mr H (son)

   (o)Loan agreement between the Wife and Mr H regarding the amount of $50,000 loaned by the Wife to Mr H on or around 19 May 2019;

   Bank Accounts

   (p)Commonwealth Bank Smart Access BSB: … A/N: …90 statements from 26 March 2020 to date;

   (q)Commonwealth Bank Youth Saver (Mr J) BSB: … A/N: …02 statements from 10 February 2018 to date;

   (r)Bank Smart Access BSB: … A/N: …67 statements from 26 March 2020 to date;

   (s)Commonwealth Bank Smart Access BSB: … A/N: ...51 statements from 30 June 2019 to 30 September 2019 and 23 January 2020 to date;

   (t)Commonwealth Bank COIA account BSB: … A/N: …56 statements from 26 March 2020 to date;

   (u)Commonwealth Bank account BSB: … A/N: ...47 statements from 26 March 2020 to date;

   Investments

   (v)For the Wife's personally held Comsec Share Portfolio (account number …81), documents in relation to the portfolio holdings between 30 June 2019 to date showing the parcels and stock held and movements in the value and quantum of same by way of buying and selling transactions;

   (w)Documents relevant to the acquisition and performance of the sports assets owned by the Wife;

   Miscellaneous

   (x)Disclosure relating to any gambling accounts held by the Wife.

Retrospective Valuation of K Street, Suburb L, Victoria

1. That M Company are appointed as the single expert for the purposes of preparing a valuation of K Street, Suburb L, Victoria as at December 2017.

2. That the Husband and the Wife provide to M Company an agreed letter of instruction within twenty eight (28) days of the date of these Orders.

3. That the Wife must do all acts and things and sign all documents as are necessary and comply with any reasonable request of M Company to provide information and documentation to complete their report within 7 days of any request.

4. The Husband shall cause B Pty Ltd to pay for the cost of the valuation.

Specific Questions

1. That pursuant to Order 11 of the Orders of Judge Howard dated 3 December 2019 the Wife answer the following questions which have been asked but not answered:

   (a)The Wife provide an explanation as to how she was able to close the Commonwealth Bank joint account BSB: … A/N: …13 without the Husband’s knowledge and consent;

   (b)The Wife provide an explanation as to why she took $159,000 from the parties’ joint CSA bank account;

   (c)The Wife provide an explanation as to how she became aware of the Husband’s alleged involvement in the renovation of the N Business;

   (d)The Wife provide an explanation as to how she became aware of that the Husband “may” have purchased a number of new sports assets between 6 and 9 January 2020.

2. That all other applications contained within the Amended Application in a Case of the Wife filed 17 June 2020, are 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 Jaye & Wales 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 BRISBANE

FILE NUMBER: BRC 9298 of 2019

Ms Jaye

Applicant

And

Mr Wales

Respondent

REASONS FOR JUDGMENT

1. On 8 August 2019, the wife in this matter commenced proceedings in the Federal Circuit Court of Australia at Brisbane seeking property adjustment Orders on a final basis. It came before Judge Howard of that Court on its first return date of 3 December 2019. Represented by experienced family law solicitors and barristers, the husband and wife were able to reach an agreement in terms of interim orders they asked the Court to make that day. Judge Howard made those Orders they asked for.

2. Those Orders provided for interim litigation costs funding, and a process for the parties to identify disputes between them in respect of their property and superannuation interests and, in the event of disputes as to valuation to have their property interests valued. Those Orders also provided for the parties to attend mediation in a timely fashion with a view to resolving their dispute if possible and also for a process of interrogation, if necessary, by specific questions. They also provided for a transfer of the matter to this Court.

3. In December 2019, the husband’s solicitors forwarded a “balance sheet” to the wife’s solicitors setting out what he contended were the assets, liabilities and superannuation interests of the parties and his estimates of the value of those things. The wife’s solicitors wrote back, responding on behalf of the wife to the assertions of value by the husband, pointing out matters of disagreement and informing the husband’s solicitors of particular disclosure the wife requested in respect of particular entries in the balance sheet.

4. The husband, through his solicitors, responded, disputing many of the wife’s requests for particular disclosure.  A stand-off arose and on 28 April, this year, the wife caused an Application in a Case to be filed in this Court seeking Orders in respect of further and better disclosure and partial property adjustment Orders on an interim basis. That was listed before me for hearing in the Judicial Duty List on 22 June 2019. The husband filed his Response to the Application in a Case on 16 June 2019 and the wife filed an Amended Case Application on 17 June 2020. In that, she sought additional Orders in the form of mandatory interim injunctions aimed at preserving property pending final resolution of the entire dispute. The husband opposes that application as well, and seeks his own orders in respect of valuation matters and disclosure by the wife.

Some Background

1. The husband is 48 years old. The wife is 45 years old. They started living together in February 2001, married in 2006 and separated in January 2019. The wife had three young sons of a former relationship when they started living together and two more sons of her marriage to the husband. All five are now young adult men but for the youngest who will turn 18 later this year.

2. When the husband was around 19 years old he had a part-time job where he lived in Victoria. The manager asked him to take over their contract and he did, through a company he acquired (“the Company”). In less than thirty years, that business he started has grown into a truly national company with an annual turnover of around $50 million and annual profits of up to around $7 million in recent years. The husband is the sole director of that company and holds two-thirds of its issued shares. The wife holds the other third. There is another company that was acquired to take care of staff payroll and entitlements. The wife is the sole director and shareholder of that company.

3. Several years ago, the husband and wife and family moved to live at the northern end of P Region. The husband runs the business from there. The amazing success of the business has enabled them to accumulate significant wealth.

4. They bought a house in joint names which was recently valued at $2,400,000. There is no mortgage debt encumbering it. The wife currently lives in it.

5. They jointly own a property in Victoria recently valued at $410,000 and they jointly own 50% of another property in Victoria (the wife’s parents own the other 50%) and their half interest was recently valued at $812,500. There is another property in Queensland that is registered in the wife’s name that was recently valued at $500,000.

1. The husband has a bank account in his own name. It had $16,500 in it late last year. The wife has approximately eleven bank accounts in her own name. They had approximately $275,000 in them in total late last year. They have two joint bank accounts which had about $6,700 in them late last year.

2. The husband has a share portfolio. It had $120,767 worth of shares in it late last year. The wife has a share portfolio. It had $245,473 worth of shares in it late last year.

3. They jointly own a vessel recently valued at $3,000,000.

4. The wife’s motor car is said to be worth $30,000. The husband owns a smaller boat and 3 jet skis said to be worth $55,000.

5. The company that runs the national business has significant assets. It owns a recently constructed home in the same neighbourhood as the former family home. The husband currently lives in that home with their sons and pays rent to the company for it, the Court was told. It was recently valued at $5,500,000. There are two other properties in Queensland owned by the company, one recently valued at $285,000, the other said in late last year to be worth $880,000. The company bank account has $7,291,770 in it, and there is another bank account it has that has about $500 in it. There is cash on hand of around $1,500, ‘debtors’ of $1,182,443, another debt owing to the company by the husband’s parents of $600,000, an ANZ share portfolio in the company name with shares worth $2,575,440, the director’s loan account balance said to be a Division 7A [Tax Act] loan of $2,832,223 as at 31 December 2018, a motor car in the wife’s possession worth $49,000, another motor car in the husband’s possession worth $320,000, a motor car in the possession of one of the sons worth $15,000, two golf buggies worth a total of $17,000 and plant and equipment at its depreciated value of $748,391.

6. The other company is said to only have cash assets at bank of about $50,000.

7. The parties also own interests in said to be worth about $250,000 and the contents of each of the houses they live in worth around $50,000 each.

8. As for liabilities, the husband owes the director’s loan to the company and the company has tax liabilities, said to be about $114,000 as at the end of 2018. It is also asserted by the husband (I am unsure of the wife’s position in respect of this) that there is a latent tax liability of $5,500,000 in respect of $19,795,366 in retained earnings as at 30 June 2018. That is said to have increased since then, too, as the retained earnings have increased by several million dollars since then.

9. The parties have been paid $2,400 per week each by the company since before separation, as an after tax income, with the company paying the tax on that. The balance of the substantial annual profit the business has been making over the years has been utilised in buying the valuable assets that I have listed above (many of which could not reasonably be considered core assets of the business) rather than being paid out to the shareholders in dividends, though the husband has been borrowing from the company by drawing against his loan account.

10. In addition, the parties have superannuation interests said, at the end of last year, to be worth around $572,000 with the husband’s being $302,000 of that and the wife’s $270,000.

11. Without even including a value of the goodwill of the business based on a notional capitalisation of its future maintainable earnings, which at first glance could be expected to be not insubstantial, to say the least, the net value of the property and superannuation interests of the parties or either of them exceeds $22 million.

The Wife’s Application for interim property Adjustment Orders

1. Against a background of each party initially seeking final orders that the wife retain as her property solely, amongst a larger pool of property and cash she is to retain, the real property in which she is currently living, the wife comes to the Court ten months later telling the Court that she no longer wishes to retain that property, no longer wishes to live in it, even on an interim basis, and that she has seen another property down at the southern end of P Region, that she would like to buy and to move into.

2. The wife tells the Court that her reasons for now wanting to move are that the current home has some unhappy memories for her and that there is a prospect of running into the husband or, at least, driving past him, because they live in houses about 800 metres apart in the same ‘gated community’ at the northern end of P Region. She talks in general terms of the husband’s “very difficult behaviours” towards her but without giving any more specific particulars at all. She says “it does not feel like home to me anymore and I find myself feeling quite depressed living there”. At the hearing, her counsel pointed to the husband’s evidence about the wife’s alleged excessive drinking and alleged family violence towards him, including physical assaults the husband says she subjected him to, as further evidence of how badly the husband regards and treats her and as to how reasonable it is that she wants to be able to move to a different home.

3. There can be no doubt, save for where the best interests of children may command otherwise, that a person who has come out of a broken relationship is entitled to move as far away from their ex-partner as he or she wants and for whatever reason that motivates him or her. Moving from one end of P Region to the other is, after all, not too far relative to the size of this country that is itself an entire continent. If the wife wants to leave their jointly owned $2.4 million unencumbered property that is entirely a matter for her. But in this case, it is not as simple as that. The wife seeks a mandatory injunction obligating the husband as sole director of the company that she and the husband jointly own, to cause the company to advance her all the cash that she needs to buy her preferred property, which is in the order, she says, of around $2.4 million, pursuant to a commercial loan agreement. The terms of that loan agreement should be the same as the terms of the agreement the husband has with the company in respect of his “Division 7A” director’s loan, the wife says. She seeks orders that obligate her to give the company a mortgage over the property with the debt to be repaid upon the sale of the jointly owned property in which she is currently living, the property that the husband seeks to have the wife ordered to retain in the final property settlement. She seeks orders that require the husband to join with her in causing that property to be sold in an orderly manner as part of this interim property adjustment. The wife’s counsel described the orders that the wife seeks as a “swap” of the former marital home she is currently living in for a new property.

4. The husband opposes the wife’s proposal. Queen’s Counsel’s submissions highlighted a number of aspects of the evidence. He referred to the fact that the wife is currently residing in the unencumbered former matrimonial home worth $2.4 million and that she also has $200,000 in the bank and $245,000 worth of shares in a share portfolio in her own name. He referred to the fact that the husband’s application for final orders actually includes an application for an order that the wife retain the former matrimonial home at a value of $2.7 million as last year she refused to sell the house when both parties were trying to sell it upon receipt of an offer of $2.7 million and a subsequent offer of $2.5 million, whilst now it is worth $2.4 million.  I informed Queen’s Counsel that, at first blush, I do not find that argument very attractive, particularly as the wife no longer wants to retain that property, Queen’s Counsel maintained that it was the husband’s position. Furthermore, though untested, the husband’s evidence was that he had only ‘run into’ the wife approximately three times since separation and that on one of those occasions the wife had been verbally rude to him.

5. In addition, Queen’s Counsel submitted that the wife’s application was specifically to source money from the company’s cash at bank and any money that came from there would therefore either be subject to tax or interest on a commercial loan (that is what the wife proposes). He submitted that the 2019-2020 benchmark interest rate set by the ATO is 5.37% and that would mean the wife “would have to fund interest of $128,800 which is not tax deductible for her but is taxable in [the company’s] hands”. He submitted that consequently the proposed arrangement is “not financially sensible” and could not be regarded as “appropriate” as it is required to be.

The Applicable Principles

1. There was no disagreement between counsel for the parties as to the applicable principles. Both referred to Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 (“Strahan”) and Queen’s Counsel referred to the subsequent decision of the Full Court in Marchant & Marchant (2012) FLC 93-520 (“Marchant”) where the relevant statement of principle in Strahan was approved. 

2. Relevantly, the determination of an application for interim property orders pursuant to s 79 and s 80 (1) (h) of the Family Law Act 1975 (Cth) (“the Act”) (the legislative source of power to make such orders) is to be undertaken in two stages. The first stage involves the determination of whether or not the Court should exercise its discretion to entertain the application. An applicant does not have to demonstrate compelling circumstances for that question to be answered in the affirmative, but it is necessary to establish that it would be appropriate for the Court to exercise the power. The overarching consideration in determining that is the interests of justice. In Marchant, the Full Court said in [25]:

   Recognising that in the context of s 79 proceedings, the interests of justice will usually be best served by one single and final determination of property orders, it will not be appropriate to exercise the power merely because, on such a final determination, the applicant would receive the interim property sought or in excess of that sought.

   (My emphasis)

3. Counsel for the mother relied on a passage out of Strahan. In his written submissions, he cited it as being “said by the Court at paragraph 57(e)”. It was:

   Orders under s.79 are to provide relief to parties to the marriage by ensuring that they receive “appropriate” shares of the matrimonial resources. It would be naïve to overlook the significant power differential between parties in many cases as a result of access to financial resources in the interim, pending final orders under s.79. It may well be unjust and inequitable for one party to be denied access to matrimonial property for a substantial period whilst awaiting a trial.

4. With respect to counsel, the cited passage was actually contained within paragraph 128 of the judgment of Boland and O’Ryan JJ and was part of a long passage from the judgment of Riethmuller FM in Wenz v Archer (2008) 40 Fam LR 212 quoted by their Honours and seemingly approved of by them at [130] of their own judgment.

5. Counsel for the wife went on to submit that this is a case where the husband controls the majority of the assets but that the wife will, on any view of it having regard to the application of s 79(4) considerations to the facts, ultimately be the beneficiary of property adjustment orders that would well and truly see her being able to purchase a property such as the one she now wants to purchase, and still have millions of dollars’ worth of other property. He submitted that the husband’s current opposition just bears the hallmarks of control and even “bullying” that the Full Court has emphasized is able to be overcome by the principled exercise of the interim property adjustment powers available to the Court.

6. He pointed to the fact that the husband now has the sole benefit of many assets that have been purchased with money generated by the business owned and run by the jointly owned company, such as the $5.5 million dollar home, a $450,000 Motor Vehicle 1, a $3.5 million dollar vessel to name the most significant examples. Whilst it may be the case that the husband currently has the use of those items of property, they were all purchased when the parties were still a couple and they are items of property that will nevertheless be considered in the eventual determination of adjustment orders that are just and equitable. The fact that the husband retains the interim use of that property does not in itself prove the appropriateness of acceding to the interim application of the wife.

7. He pointed out that the husband also now solely controls the company which has in excess of $7 million dollars cash at bank. He submitted that it is not now ‘just and equitable’ for the husband to hold the wife out of access to a portion of those funds which is significantly less than the amount which she will almost certainly get in the end in any event, whilst the proceedings remain pending. There is more weight in this point, I consider.

8. As Riethmuller FM (as his Honour then was) pointed out in Wenz at [53], the Full Court unanimously said in Blueseas Investments (1999) 25 Fam LR 65 at [54] a “highly relevant matter that distinguishes litigation under the Family Law Act from ordinary civil litigation … is the fact that very often the wealth of the parties is controlled by one rather than both of them.”  His Honour went on to say in Wenz:

   It cannot be the case that a party who has an irresistible claim to a substantial share of the property of the parties should be held out of that property whilst the matter is litigated, left to rely upon applications for exclusive occupation of the matrimonial home or spousal maintenance alone, particularly where the parties are asset rich but have relatively modest incomes ... Nor could it be appropriate that a party should be denied the ability to liquidate assets when there are real needs for those resources, such as to meet debts which may result in the party being pursued by creditors, or the need for the party to make payments for the benefit of the children, or to take advantage of other financial opportunities (for example the superannuation contribution cases).

9. In Strahan at [133] Boland and O’Ryan JJ pointed out that in Harris and Harris (1993) FLC 92-378 at 79,930, the Full Court set out some examples of circumstances where it may be appropriate to exercise the power that is being considered. Those included “where both parties agree to the disposal of some assets pending the trial”. That example, being the circumstance of interim consent, does not help much in this case. More relevantly though, those examples included “urgent situations” to “avoid injustice”, and the far more familiar circumstance where the party who is without control of the assets and resources “requires funds to assist in defraying the costs of litigation without which funds an injustice may be caused.”

The Determination of the Interim Property Application

1. It is clear the Full Court has expressed the view that in the context of s 79 proceedings, the interests of justice will usually be best served by one single and final determination of property orders and that it is generally not enough for one party to say, figuratively, that they want part of the slice of the cake that they expect to get on finalisation of the matter now before that finalisation without them being able to point to facts that the Court would consider constituting an injustice on an interim basis.

2. Is it an injustice for a person to be expected to live in a jointly owned, unencumbered home in a prime location that is valued at $2.4 million dollars because it houses some unparticularised, unhappy memories of the time when the former couple lived in it together? Is it more or less unjust to expect a person to live in that home because their former partner lives in another home just under a kilometre away and they may see each other sometimes, coming and going from their homes? With respect to the wife’s right to choose where she wants to live, I do not consider those circumstances to cry out with injustice.

3. There was no argument mounted for the wife against Queen’s Counsel’s reference to the financial consequences of the Orders the wife seeks. Accepting those foreshadowed consequences as likely to be correct, making the Orders the wife seeks will ultimately cost the wife, or both of the parties, tens of thousands of dollars that will be lost to the pool of property that will be subject to division. There is no principle that says an interim property order cannot be made where the circumstances are otherwise appropriate and the justice of the matter demands it but where there will loss to the parties. However, in circumstances where the wife has an otherwise suitable property to live in and funds and assets at her disposal to use to obtain other temporary accommodation, if she chooses not to live in the former matrimonial home that is available for her until property settlement is finalised, I do not consider it sensible or appropriate to make interim orders that will likely cause the parties loss. This Court is very often asked to make orders that preserve the parties’ property interests on an interim basis. Sometimes it has to refuse to make orders that one party asks for with the same goal – preservation of property on an interim basis – in mind.

The Injunction Sought  

1. The wife sought the following injunctions:

   That the Husband is hereby restrained, including in his capacity as Director and/or shareholder by injunction from:-

   (a)Selling, transferring, assigning, encumbering or alienating any of his shares and/or interest of any nature in the company B Pty Ltd (the Company) and/or appointing any directors or otherwise acting in such a way as to cause the reduction in the value of the assets of the Company or incurring expenses or liabilities in the name of the Company except in the ordinary course of business or with the Wife’s written consent; and/or

   (b)From withdrawing, transferring or otherwise spending any sum from the Company’s bank accounts excepting payment of the salaries of the Husband and the Wife at the rate of $250,000 per annum each unless with the Wife’s written consent

2. In his written submissions, Queen’s Counsel for the husband said the husband will provide an undertaking in relation to dealing with his shares or appointing other directors. The Court was told the husband wanted to adjourn the balance of the wife’s application for injunctions to give him time to respond but his position changed at the hearing as he was given leave to file and read a further affidavit that morning, unopposed by the wife. Nevertheless, I still understood him to be opposing the granting of the interim injunctive relief sought by the wife.

3. Queen’s Counsel referred the Court to the first instance decision of Kent J in Patton & Patton [2015] FamCA 1083 (“Patton”) in which he submitted his Honour had “succinctly” dealt with the applicable principles at [25] to [29]. His Honour pointed to ss 34(1) and 114(3) as the sources of power and set out certain principles that he said “would seem to be well settled by authority”.[1] I respectfully consider it worth citing the following from his Honour’s judgment:

   [1]  And his Honour referred to the following cases as authority for that proposition - Waugh & Waugh (2000) FLC 93-052 and Mullen & De Bry (2006) FLC 93-293 and the authorities cited in those cases; Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; Beacham Group Ltd v Bristol LaboratoriesPty Ltd (1968) 118 CLR 618; Blue Seas Investments Pty Ltd v Mitchell & McGillivray (1999) FLC 92-856; Stowe & Stowe (1981) FLC 91-027; Yunghanns & Ors v Yunghanns & Ors (1999) FLC 92-836; Sieling & Sieling (1979) FLC 90-627; Giumelli v Giumelli (1999) 196 CLR 101; Norton & Locke (2013) FLC 93-567; and Martinello & Martinello (1981) FLC 91-050.

   28.…

   a)The applicant has the onus of demonstrating two central requirements, namely:

   i)That the applicant has an existing (or potential) claim to an order altering property interests under s 79 of the Act; and

   ii)An objective risk or danger that the claim may be prejudiced unless an injunction is granted;

   b)There is no “fundamental” or “threshold” question whether a scheme to defeat a judgment exists, to be answered in the affirmative on the balance of probabilities in every case before an order preserving property can be made.  In an inquiry into the risk of disposal of assets, the question of an intention or scheme is but one of a number of factors relevant to the objective risk of disposition to defeat an order;

   c)The Court is required to take into account the balance of hardship and the balance of convenience between the parties and in that context the Court will not usually restrain a party from ordinary business dealings unless there exists a substantial risk of dissipation of assets or some substantial reason justifying such a restriction;

   d)Any injunction granted ought be limited to that which is in the reasonable protection of a legal or equitable right and it is not the function of an injunction to provide an applicant with security in advance of a judgment.

   29.     In Sieling & Sieling (supra) the Full Court observed:

   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 as to impose no further restriction that 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.

   …

1. I respectfully agree with Queen’s Counsel’s submissions that Kent J succinctly and correctly stated the applicable principles.

2. There is no doubt that after all their years of marriage and cohabitation during which two children of the relationship were raised, the wife has a reasonable claim to an order altering property interests under s 79 of the Act. Is there an objective risk or danger that the claim may be prejudiced unless an injunction is granted? I expect Queen’s Counsel for the husband would say “not with the undertaking the husband will give in relation to dealing with his shares or appointing other directors”.

3. Restraint from dealing with his majority shareholding in their jointly owned company and from appointing other directors might go some way towards giving the wife comfort that her claim will not be prejudiced. However, there is no doubt that as the sole director of the company that has an enormous turnover, a very significant profit (most of which is retained as earnings each year), very valuable “non-core” assets and huge cash reserves, there is potential for the husband to act in ways that could prejudice the wife’s claim. He certainly solely controls the majority of the parties’ property interests by far and, unrestrained, could act in a way that prejudices the wife’s claim.

4. There is certainly no evidence of a “scheme to defeat a judgment”. But that is not determinative of the matter. It is but one of the factors relevant to the objective risk. Counsel for the wife points to some other relevant matters. He submits the husband’s unwillingness to give the wife the disclosure she seeks is concerning, but he also points to the evidence that the husband continues to gamble in a way that I would describe as habitual, if not indicative of an addiction. Evidence shows that from 9 March this year to 12 June this year, the husband transferred funds to a betting account with one online gambling business totalling over $71,000, made up of parcels of hundreds of dollars, sometimes thousands of dollars, on almost a daily basis. Additionally, counsel for the wife submits that the husband’s unilateral expenditure on sports assets post-separation (which the Court was told the husband conceded was in the order of $300,000) is another matter of concern, as some, if not all of those funds were sourced from the company, not just the husband’s salary that he is paid from the company. He submits that the history of using company funds to purchase valuable, luxurious, non-core business assets, albeit whilst the marriage relationship existed, also shows the husband does not baulk at such action.

5. I am of the view that the wording of the particular injunction sought is relevant when considering the balance of convenience between the parties. The actual injunction sought by the wife would, in my respectful view, tip the balance well in her favour. It would require the husband to get her written consent to act in a way that causes the reduction in the value of the assets of the company or incurring expenses that are not in the ordinary course of business. It would require him to get the wife’s written consent to withdraw, transfer or spend any money from the company’s bank accounts other than in payment of their respective salaries at the rate of $250,000 per annum. That is bound to cause difficulty and more likely to result in further interim proceedings in the time before this matter makes its way to trial.

6. During his oral submissions, counsel for the wife told the Court that if the Court considered some form of Order requiring a reasonable period of notice to be given to the wife of any intent to do any of those things otherwise sought to be restrained was more appropriate, then the wife would accept that.

7. I do consider that the evidence of the husband’s expenditure practices during the time of cohabitation and post-separation and his position of sole control of the majority of the parties’ wealth do provide satisfactory basis for an objective assessment that there is a risk that the wife’s claim could be prejudiced if he is left to run the company and spend money as he sees fit in a completely unrestrained manner. I will grant injunctions in very similar form to those sought by the wife which will simply require the husband to give the wife at least fourteen days written notice of intention to do that which is sought to be restrained. That way, if the wife has any questions about his intentions she can ask him and if she has a reasonable basis for seeking further injunctive relief from this Court she can apply to the Court in time to seek same. In my judgment, that is a better balancing of matters of convenience as between them.

8. The orders I will make in this respect will be:

   That the husband is hereby restrained from:

   (a)selling, transferring, assigning, encumbering or alienating any of his shares and/or interest of any nature in the company B Pty Ltd (the Company) and/or appointing any directors or otherwise acting in such a way as to cause a reduction in the value of the assets of the Company, or incurring expenses or liabilities in the name of the Company except in the ordinary course of the business run by the Company;

   (b)Selling, transferring, otherwise disposing of or encumbering any of the non-core business assets of the Company including but not limited to the house he lives in, the motor cars he uses, money owed to the company by his parents, and shares in ASX listed companies;

   (c)Withdrawing, transferring or otherwise spending money from the Company’s back accounts other than in the ordinary course of the business run by the Company or, to be specific, to pay weekly amounts to himself and to the wife in accordance with the regular transfer arrangements already in place;

   without first giving the wife, through her solicitors, Evans Brandon Family Lawyers (or such other firm as the wife may advise him she instructs in these proceedings from time to time), at least fourteen (14) days’ written notice of his intention to do so. 

9. Though the husband’s barrister did say the husband would give an undertaking, no undertaking was handed to the Court. In these circumstances, I simply consider it more convenient to make the Orders to include that which it was said the husband would undertake to do. That is not to be understood as an unwillingness by the Court to accept an undertaking from the husband but rather as the most convenient and expeditious way of now achieving the determined result on this issue.

10. I will also make specific reference to the “ordinary course of the business run by the Company” as the precise meaning of the phrase “ordinary course of business” became an issue in respect of this particular company at the end of the hearing. It was drawn to the Court’s attention that this company does not just run the business but also has bought a property and built a house on that property, has bought a very expensive, exotic sports car for the husband’s use, and has bought interests in sports assets. I understood that to be brought to the Court’s attention to raise the prospect that the husband might consider that type of activity to be in the “ordinary course of business” of the company. To be clear, I do not consider those activities or the expenditure of money on them, to be “in the ordinary course of the business of the Company”. My orders are intended to restrain him from those sorts of activities without first giving the wife 14 days’ notice in writing so that she may take advice and give further consideration to whether her interests in these proceedings need to be protected in any further way.

The Disclosure Sought

1. The parties quickly entered into dispute about disclosure after initial agreements about mutual disclosure were not fruitful. In a letter written by the wife’s solicitors to the husband’s solicitors in December 2019, the wife’s solicitors asserted that the company bank account had reduced “by about one third or $3.5M in the post-separation period”. He also asserted that the company’s share portfolio’s value was said to be $2.5 million in late 2019 whereas it had been $3.2 million only in September, 2019 – a $700,000 reduction. He asserted that this concerned his client who “asks for transparency in the company accounts”. He then asked for quite specific disclosure to be made in respect of the company’s accounts, and documentation that related to particularised costs.  Those were quite particular and precisely described and also quite extensive.

2. That request was responded to by the husband’s solicitors after the Christmas/New Year holiday season in early January this year. The letter in response began as follows:

   We refer to previous communications in this matter.

   Your client’s disclosure

   We note your client seeks further disclosure from our client. To date your        client’s provision of disclosure to our office has been deficient.

   We again request that your client provide the following disclosure documents:

   It then set out a list of 21 further categories of documents requested to be disclosed by her. Then it went on to say:

   We note your client has requested further disclosure documents from our client in your correspondence dated 10 December 2019. Our client is currently complying (sic) the relevant disclosure.

   Please notify our office when your office has received the above requested disclosure documents from your client so that we can arrange an exchange of disclosure.

   The letter then went on to give some explanations for the change in the company’s bank account balances and the value of the share portfolio owned by the company. One of the comments included is as follows:

   In regards to your office’s request for details of those payments since 30 June 2018 [referencing “withdrawals to pay contractors”] we are instructed that documents will be made available for your office to view at our office; however, our client cannot provide your client with copies due to privacy issues.

3. Within days, the wife’s solicitors wrote back and answered saying that in August last year they had provided the wife’s disclosure. They noted the husband was “working to gather the requested disclosure materials” and requested some disclosure in respect to a few more categories of documents particularly described. They also pressed their previous request for disclosure of the documents relating to the bank accounts of the company to be provided to them electronically rather than by their attendance at the husband’s solicitors’ offices with inspection rights only. They cited the implied undertaking of the wife not to use any document or information acquired through the disclosure for an ulterior purpose or other than in these proceedings lest she be in contempt of Court and asserted that was sufficient to address any privacy concerns of the husband.   

4. The husband’s solicitors quickly responded, raising some fresh issues, pressing for some further disclosure by the wife and confirming their client’s position on the bank account documents not being provided to the wife’s solicitors other than at the husband’s solicitors’ offices. The previous extensive request for disclosure made by the wife’s solicitors was not really addressed.

5. In March this year, the wife’s solicitors wrote again. They firstly referred to the further disclosure their client was providing as requested. It was sent electronically at around the same time as the letter. Again, they respectfully asked for the disclosure from the husband that had previously been requested and pressed the request for electronic disclosure of all documents, negating the need to attend at the husband’s solicitors’ office.

6. The matter was before a Registrar of this Court soon thereafter for management. Disclosure was obviously discussed. On 22 April, 2020, the wife’s solicitors wrote again referring to the disclosure dispute, setting out their position and mentioning that they would prepare an application to the Court if necessary.

7. The Application in a Case was subsequently filed in late April and listed for hearing on 22 June this year. On 16 June, the husband provided some documents by way of disclosure. Counsel for the wife says in his written submissions that it was not all of the documents sought by the wife. That it was only a small portion of those documents is apparently evident from the amendments made in her Amended Application in a Case filed late in the week before the hearing. Some of the categories of documents sought were deleted, but many remained.

The Applicable Principles

1. There is an obligation on each party to a case to give full and frank disclosure of all information relevant to the case, in a timely manner. (Rule 13.01(1) of the Family Law Rules 2004 (Cth) (“the Rules”)) The duty of disclosure applies to each document that is or has been in the possession, or under the control, of the party disclosing the document and is relevant to an issue in the case. (Rule 13.07)

2. Pursuant to s 55 of the Evidence Act 1995 (Cth), evidence that is “relevant” in a proceeding is evidence that could rationally affect (directly or indirectly) the assessment of the possibility of the existence of a fact in issue in the proceeding. Applying that same definition in the context of a duty to disclose documents that are “relevant” to an issue in the case, documents, the contents of which could rationally affect the assessment of the existence of a fact in issue in the proceeding, are to be disclosed.

3. Queen’s Counsel for the husband effectively submitted that there is an obligation on the wife to depose to and establish the “relevance” of the documents she seeks disclosure of. There is, on the determination of an application such as this, some merit in that submission. Ordinarily, when the disclosure obligation is being met by the parties initially, decisions about what documents must be disclosed because they are “relevant to an issue in the case” can be legitimately expected to be made by the individual party and his or her legal representatives. Of course, in most civil litigation, what is and is not “an issue in the case” is usually determined by reference to the pleadings that are filed by each side. They set the parameters of the dispute and define the issues. From that point, disclosure takes place with the parties expected to be able to readily determine what documents have relevance to the issues in the case. The party disclosing makes his or her determination as to what documents are relevant to an issue and discloses those. If the other party is aware that there are other documents that she or he believes are relevant that have not been disclosed, short of persuasion of the other party to that effect, she or he must apply to the Court for orders and, on that application, the need to persuade the Court to the relevance of the as yet undisclosed documents must be appreciated.

4. In property adjustment litigation conducted pursuant to the Act in this Court, pleadings, though once tried for a short while, apparently unsuccessfully, are not mandatorily required. The determination of an application for property adjustment orders pursuant to s 79 of the Act, though a discretionary exercise, must be undertaken in accordance with the provisions of s 79 and according to principles established in authoritative decisions of the High Court of Australia and the Full Court of this Court. Accordingly, a trial judge approaches the task of determining property adjustment orders knowing generally what has to be done and what has to be considered. For example, it is clear that the trial judge must start the process by identifying the property of the parties or either of them and ascribe a value to each item of property. In addition to determining whether justice and equity require any adjustment order to be made at all, the trial judge must then assess and evaluate the parties’ various contributions as set out in s 79(4)(a)–(c), determine factual matters as set out in s 75(2) in so far as they are relevant, consider the matters set out in s 79(4)(d),(f) and (g), and then go on to fashion an adjustment order, if one is to be made, that is just and equitable. Clearly, there is scope for many issues to arise between parties at each and every point in this process.

5. This immediate dispute about the extent of the disclosure provided by the husband has its genesis in the delivery of a balance sheet by the husband’s solicitors to the wife’s solicitors for her consideration and response. That process itself always had the potential to immediately generate dispute or “issues” as between the parties. The wife’s solicitors took her instructions and sent back the balance sheet having inserted on it whether their client agreed with the valuations ascribed to items of property on the list and otherwise identifying “issues” the wife had with the list and the ascribed values, and identifying the types of documents she wanted disclosed in respect of those “issues”.

6. Initial indications in response from the husband’s solicitors gave the wife’s solicitors little cause for thinking that the requested disclosure would not be provided. Later, it became apparent that many of the requested documents were not going to be willingly disclosed. Other than informing the wife’s solicitors that the husband simply did not have some of the documents requested, the relevance of the remainder to issues in the proceedings has been denied. As I have already observed, at the hearing, for the husband it was asserted that the wife has not made out the necessary relevance.

7. In Smith v The Queen (2001) 206 CLR 650 Gleeson CJ, Gaudron, Gummow and Hayne JJ said at 653–654, [6] – [7]:

   ... although questions of relevance may raise nice questions of judgment, no discretion falls to be exercised. Evidence is relevant or it is not. If the evidence is not relevant, no further question arises about its admissibility. Irrelevant evidence may not be received. Only if the evidence is relevant do questions about its admissibility arise. These propositions are fundamental to the law of evidence and well settled. They reflect two axioms propounded by Thayer and adopted by Wigmore:

   "None but facts having rational probative value are admissible",

   and

   "All facts having rational probative value are admissible, unless some specific rule forbids."

   In determining relevance, it is fundamentally important to identify what are the issues at the trial. On a criminal trial the ultimate issues will be expressed in terms of the elements of the offence with which the accused stands charged. They will, therefore, be issues about the facts which constitute those elements. Behind those ultimate issues there will often be many issues about facts relevant to facts in issue. In proceedings in which the Evidence Act 1995(NSW) applies, as it did here, the question of relevance must be answered by applying Pt 3.1 of the Act and s 55 in particular. Thus, the question is whether the evidence, if it were accepted, could rationally affect (directly or indirectly) the assessment by the tribunal of fact, here the jury, of the probability of the existence of a fact in issue in the proceeding.

8. In Kirby J’s judgment in the same matter, his Honour said at 658–659, [23]:

   Questions of relevance raise the logical connection between proof of a propounded fact and a conclusion about a matter having persuasive significance for an issue for trial. Notions about the relevance of particular facts to ultimate conclusions in a trial can vary as between the parties, who may see the issues differently. Perspectives of relevance may also develop during the course of a trial as the issues become clearer, as immaterial issues fall away and as understandings of the applicable law become more certain. This is why appellate courts ordinarily defer to the rulings of trial judges about the issue of relevance. Such deference also rests upon a recognition of the fact that practical considerations usually require such rulings to be made on the run and sometimes, as here, in a preliminary decision, before all, or most, or any of the evidence is adduced. Rulings as to relevance therefore depend substantially upon judicial impression.

1. I make the Orders set out at the commencement of these written reasons.

I certify that the preceding seventy-nine (79) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Forrest delivered on 29 June 2020.

Associate: 

Date:  29 June 2020