Kelby and Kelby (No 2)
[2017] FamCA 625
•15 May 2017
FAMILY COURT OF AUSTRALIA
| KELBY & KELBY (NO 2) | [2017] FamCA 625 |
| FAMILY LAW – PROPERTY –INTERIM PROCEEDINGS – Where the wife sought orders for a further partial distribution of the parties’ matrimonial property – Insufficient evidence – Application dismissed. FAMILY LAW – PROPERTY – INTERIM PROCEEDINGS – INJUNCTIONS – Where the wife sought restraints against the parties’ company – Where the wife failed to address the matters set out in section 90AF(3) of the Family Law Act1975 (Cth) – Where even if the orders sought were to restrain the husband from dealing with the company in a certain way there was insufficient evidence – Where the wife’s orders go beyond what is reasonably necessary – Application for provision of information – Where no attempt to settle the issue was made pursuant to Note 1 of Rule 13.22 of the Family Law Rules 2004 (Cth) – Application dismissed. |
Family Law Act1975 (Cth) ss 79, 79(4), 80, 80(1)(h), 114, 114(3) 90AF, 90AF(3), 90AF(4)
| Family Law Rules 2004 (Cth) rr 5.09, 13.22 |
| Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 Mullen and De Bry (2006) FLC 93-293 Norton & Locke (2013) FLC 93-567 |
| APPLICANT: | Ms Kelby |
| RESPONDENT: | Mr Kelby |
| FILE NUMBER: | SYC | 8071 | of | 2014 |
| DATE DELIVERED: | 15 May 2017 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | McClelland J |
| HEARING DATE: | 19 April 2017 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Fernon |
| SOLICITOR FOR THE APPLICANT: | Yates Beaggi Lawyers |
| SOLICITOR FOR THE RESPONDENT: | McGirr Lawyers |
Orders
The wife’s Amended Application in a Case filed 27 March 2017 is 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 Kelby & Kelby (No 2) 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: SYC8071 of 2014
| Ms Kelby |
Applicant
And
| Mr Kelby |
Respondent
REASONS FOR JUDGMENT
introduction
This matter concerns an application by Ms Kelby (“the wife”) seeking orders for a further partial distribution of the parties’ matrimonial property and a restraint against the company, J Pty Limited A.C.N. … (“the company”) which is controlled by Mr Kelby (“the husband”). The restraints seek to prevent that company from being operated in a manner that the wife asserts could reasonably be expected to impact upon the matrimonial property pool prior to that Court dealing with the parties’ respective claims at final hearing. The wife also seeks orders for the production of documents relating to the company.
The orders sought by the wife are set out in an Amended Application in a Case filed on 27 March 2017. The application has been made in the context where interim property orders were made by Rees J on 24 August 2016.
Background
The parties commenced cohabitation in 1974 and were married in 1975.
The parties have three adult children.
The parties separated on 14 November 1999 after a relationship of 24 years.
Proceedings were commenced in this Court on 22 December 2014.
On 24 August 2016 Rees J made the following interim orders:
(1)That within twenty-eight (28) days of the date of these Orders, the husband pay to the wife, by way of interim property settlement, the sum of $250,000.
(2)In default of payment of the sum referred to in Order 1 by the due date, the husband do all acts and things and sign all documents required to effect the sale of the property at [B Street, Suburb C-Property D] (“[Property D]”), to pay the costs of the real estate agent and the legal costs of sale and to pay one half of the balance remaining to the wife by way of interim property settlement.
(3)That the wife’s application for spousal maintenance is dismissed.
(4)That, in the event the husband proposes to dispose of, encumber or deal with his interest in the property at [E Street, Suburb F], he shall give the wife no less than fourteen (14) days’ notice in writing of his intentions.
(5)That the wife’s application for restraining orders contained in Orders 4 and 5 of the Amended Application in a Case filed 14 July 2016 is dismissed.
(6)That the wife’s application for the provision of documents contained in Order 6 of the Amended Application in a Case filed 14 July 2016 is dismissed.
The husband did not make a payment to the wife in accordance with Order 1 of the Orders made on 24 August 2016. Accordingly, the Property D property has recently been sold in accordance with Order 2. As at the date of the proceedings before me, no distribution had been made from the net proceeds of that sale.
Procedural History
This matter was listed in the judicial duty list before me on 19 April 2017.
When the matter was first mentioned on that day the solicitor for the husband indicated that he wished to apply for an adjournment as the husband had been unable to properly prepare for the hearing as a result of ill health.
Counsel for the wife opposed the husband’s application for an adjournment unless the husband was prepared to agree to a proposal that a portion of the proceeds of sale of the property located at B Street, Suburb C-Property D (“the Property D property”) be placed in a controlled monies account pending further hearing of the wife’s interim application.
When the matter was first mentioned before the Court on 19 April 2017, I drew the legal representative’s attention to the requirements of r 5.09 of the Family Law Rules 2004 (Cth) (“the Rules”) which relevantly provides:
5.09 Affidavits
The following affidavits may be relied on as evidence in chief at the hearing of an interim or procedural application:
(a) subject to rule 9.07, one affidavit by each party;
(b) one affidavit by each witness, provided the evidence is relevant and cannot be given by a party.
(emphasis added)
I indicated to the parties that, in the absence of an application for an order dispensing with the requirement of the Rules, it would be necessary for the parties to comply with that Rule.
When the matter was called after the luncheon adjournment on that same day, the solicitor for the husband did not pursue his adjournment application. The matter therefore proceeded and Counsel for the wife indicated that his client intended to move upon the following:[1]
·The wife’s Amended Application in a Case filed on 27 March 2017;
·The wife’s affidavit filed on 27 March 2017, together with annexures to that affidavit which were marked as Exhibit “W1” in the proceedings; and
·An affidavit of Mr N filed 6 February 2017. Mr N is the wife’s solicitor.
[1] Transcript of proceedings dated 19 April 2017 at page 18.
The solicitor for the husband indicated that he opposed the wife’s application but did not intend to rely upon any evidence.
Proposed orders
The orders proposed by the wife in her Amended Application in a Case filed on 27 March 2017 are as follows:
1. The Respondent Husband, upon completion of the sale of the property described as [B Street, Property D] in the State of New South Wales (Property) pay the proceeds of sale as follows:
a)In payment and discharge of any mortgage or encumbrance registered over title to the Property;
b)In payment of any sums due with respect to rates, or other Government duties;
c)In payment of commission to the selling Agent;
d)In payment of the reasonable legal costs of the solicitor acting in connection with the sale of the Property;
e)In compliance with Order 1 made by Her Honour Justice Rees on 24 August 2016, by paying the sum of $250,000.00 to the Applicant Wife;
f)In payment of the residue of proceeds by way of further interim property settlement to the Applicant Wife.
AssetFreezing
2.The net proceeds of sale of the [Suburb F] Property, after payment of all encumbrances, fees and costs associated with the sale, shall be held in joint interest bearing bank account to be opened in the joint names of the solicitors for the Applicant Wife and the Respondent Husband and shall not otherwise be disposed of or dealt with without the consent in writing of both parties or absent agreement order of the Court.
3.That until further order and subject to order 11 below the Company described as [J] Pty Limited A.C.N … (Company) by its directors be restrained from selling, disposing, encumbering or otherwise dealing with its assets.
4.The Company by its directors undertake the ordinary day to day business of the Company however any decisions to be made by the Company regarding the following items must be approved by both directors before the decision is deemed to be made and the matter is implemented.
a)engagement or employment of any person for consideration in excess of $5,000 per annum including any statutory superannuation contribution;
b)the making of any loan, borrowing of any money, or provision of any guarantee, except in respect of amounts less than $5,000.00;
c)the lease of any asset, compromise of any claim, acquisition of any property, the entering into of any contract or the undertaking of any liability present or contingent for a sum of more than $5,000.00;
d)the adoption by the Company of a budget or business plan and the approval of any financial statements;
e)any material alterations to the Business of the Company including the acquisition of any business or the entry into any new business;
f)the issue of any shares, options or other securities in the Company;
g)the entry into any agreement or arrangement by the Company with any Director or an associate of any director for the supply of material or services;
h)raising of financial contribution of any nature or kind except temporary accommodation of less than $5,000.00;
i)the incurring of any creditor or payment to any creditor from funds of the company that exceeds $5,000.00;
j)That within 48 hours of order the Company through its Director, [Mr Kelby], make available to the co-director [Ms Kelby] all books and records as defined in section 9 of the Corporations Act 2001, including without limitation all primary and source records for receipts and payments of the company from 1 July 2000 to date.
Costs
5.The Respondent Husband pay the Applicant Wife’s costs of and incidental to this application on an indemnity basis.
The solicitor for the husband conceded that the husband had purchased a property at O Town on the Central Coast of New South Wales with his current wife as tenants in common in equal shares (“the O Town property”). This was reflected in Exhibit “W4”. The solicitor for the husband further conceded that the O Town property had been acquired utilising funds obtained from the sale of the property at E Street, Suburb F (“the Suburb F property”). In those circumstances, counsel for the wife did not press Order 2 contained in her Amended Application in a Case. However, as will be discussed, the wife relied upon the circumstances in which the O Town property was acquired to support her application for her proposed Orders 3 and 4.
Submissions of the wife – further partial property distribution
The oral submissions of counsel for the wife expanded upon the wife’s case outline document which, in respect to the wife’s application for an order for a further distribution of property, primarily focussed on the change in the position of the wife since the orders of Rees J were made on 24 August 2016.
Those changed circumstances were summarised in paragraphs [28] to [38] of the wife’s case outline which was Exhibit “W5” in the proceedings and were as follows:
Change in the Position since August 2016.
28. The orders of Rees J made on [24] August 2016 provided for the payment of $250,000 or one half of the net proceeds of the Property [D] which was valued for the purposes of that application at $500,000 (see [13] of the Judgment).
29. The sale apparently undertaken of the Property [D] was for $431,000. The Wife’s expectations are that she will only receive approximately $180,000 after payment of expenses from the sale although it is likely she will receive something in excess of $200,000 as agent and legal costs of sale are unlikely to exceed $31,000.
30. The Husband asserted he was unable to pay the $250,000 as ordered yet then proceeded to exchange contracts on the purchase of the [O Town] Property into his own name for $1,450,000 and paying a 10% deposit on exchange.
31. Further, the Husband brought an application to have a joint expert accountant removed. That application has been heard and judgment is reserved. The Wife has had to meet the costs of opposing that application. The Husband failed and declined to sell the [Property D] for a reasonable sum, even withdrawing the property from sale at some time. It was only in response to the Wife’s Application in this case (as originally framed) that the [Property D] was sold. However, the Wife has had to incur further legal costs in bringing this application.
32. Accordingly, the expected interim property settlement payable to the Wife has reduced significantly. However, the Wife’s legal costs have increased substantially, largely due to the actions of the Husband.
33. The Wife’s needs are several.
34. Her current income of $293 per week permits only a very basic, subsistence standard of living. The Wife was injured at work …, so that she can no longer work. Her weekly living expenses are necessarily limited, including food of $40 per week with no allowance for clothes, medical, entertainment, holidays, repairs, or other incidentals.
35. The Wife’s property is in urgent need of repair, to fix water leaks, collapsing ceilings, walls and floors, dangerous electrical wiring and unmaintained grounds. These matters, set out by [Mr P] in a report dated 6 June 2016 (updated on 8 March 2017), are calculated to cost $83,776.
36. The Wife has unpaid rates owing to the [Suburb Q] Council of $1,140.30 in respect of the [Property I], of which she is ultimately 50% responsible.
37. [Company P], forensic accountants are owed $4,236.26 for their review of the Company’s records. These expenses are being shared with the Husband.
38. The Wife has incurred legal expenses of in excess of $200,000 which she is unable to pay.
Consideration - Application for partial property distribution
Sections 79 and 80(1)(h) of the Family Law Act 1975 (Cth) (“the Act”) confer power on the Court to make orders for interim property settlement. Section 80 is not, in itself, a source of jurisdiction for an order for the partial distribution of property to be made in the course of interim proceedings. Rather, the section is an “enabling provision” that provides various ways in which the general power in s 79 may be exercised in individual cases. In that respect in Davidson and Davidson (No 2) (1994) FLC 92-469, the Full Court stated:
Section 80(1) is limited by its introductory words, namely that “The court, in exercising its powers under this Part, may do any or all of the following ...”. That is, s. 80(1) is activated by the exercise by the court of some other of the powers in Part VIII. [2]
[2] Davidson and Davidson (No 2) (1994) FLC 92-469 at 80,874.
In this case the relevant power in Part VIII is to be found in Section 79. That section confers a discrete power on the Court to make orders for property settlement. The power can be exercised prior to final hearing including through “a succession of orders until the power ... is exhausted” or until a final order dealing with all the known property of the parties is made.[3] Accordingly, the fact that an order for partial property distribution was made by Rees J on 24 August 2016 does not preclude a further order being made.
[3] Gabel & Yardley (2008) FLC 93-386, cited in Strahan & Strahan (Interim Property Orders) (2011) FLC 93‑466 at 85, 640 [113].
However, the consideration of this application is not to be commenced with the assumption “that one or other party has the right to have the property of the parties divided between them.”[4] An applicant for orders for the adjustment of marital property carries the onus of satisfying the Court that the legislative criteria for the exercise of its discretion are satisfied. This is the case whether the application is made in the context of interim proceedings or final hearing
[4] Stanford v Stanford (2012) 247 CLR 108 at 121 [40]; Medlow & Medlow (2016) FLC 93-692 at 81,089.
In Strahan & Strahan[5] the Full Court said that there are two steps to considering an application for an order for partial property distribution prior to final hearing. The first step is to resolve whether to exercise the power before a final hearing, and if it is resolved to do so, the second step involves the exercise of the power pursuant to s 79 of the Act.[6]
[5] Strahan & Strahan (Interim Property Orders) (2011) FLC 93‑466.
[6] Ibid at 85,641 [118].
As noted by the High Court in Stanford:[7]
…s 79(2) provides that “[t]he court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order”. Section 79(4) prescribes matters that must be taken into account in considering what order (if any) should be made under the section.
(Emphasis added)
[7] Stanford at 120 [35].
In Stanford[8] the High Court referred to R v Watson; Ex parte Armstrong[9] in emphasising that in family law property proceedings:
The judge called upon to decide proceedings of that kind is not entitled to do what has been described as ‘palm tree justice’. No doubt he is given a wide discretion, but he must exercise it in accordance with legal principles, including the principles which the Act itself lays down.
[8] Ibid at 121 [38].
[9] (1976) 136 CLR 248 at 257 per Barwick CJ, Gibbs, Stephen and Mason JJ.
It is to be noted that these are interim proceedings and the parties are yet to finalise their evidence to present at final hearing. Nevertheless, the difficulty that I have is that, even allowing for the fact that these are interim proceedings, the wife has not presented evidence in the proceedings before me in respect to those matters referred to in section 79(4) of the Act. As noted, the Act prescribes that the Court must consider those matters before making an order under s 79.
It may well have been that such evidence was presented to Rees J when she considered the wife’s earlier application on 24 August 2016. However, even if that was the case, it remains the fact that such evidence was not presented to the Court on 19 April 2017. The decision of Rees J, which was made in the context of interim proceedings, does not create an issue of estoppel in respect to any factual determination set out in her Honour’s Reasons for Judgment delivered on 24 August 2016.
On page 7 of the Applicant Wife’s Case Outline document, at an incorrectly numbered paragraph 35, it is submitted that it is “in the interests of justice that an order for maintenance be made.” This appears to be a summation of the immediately preceding paragraph numbered 39(a) - (l), which sets out the wife’s contentions in respect to matters to be taken into account pursuant to s 75(2). The heading to paragraph 39 is entitled “Section 75(2) – Matters to be taken into consideration.” This, and the following paragraph 35, makes it clear that the material is set out in support of an application for spousal maintenance. In that respect, it could be argued that the material set out in paragraph 39 of the Wife’s Case Outline document includes material that is relevant to section 79(4)(e) in so far as it seeks to address the matters set out in s 75(2) of the Act. However, there are two difficulties with that. The first is that the factual contentions, contained in paragraph 39(a) - (l), are not based on the evidence contained in the affidavits relied upon by the wife in these proceedings. The second is that the wife has not addressed the remainder of s 79(4).
Accordingly, on the evidence before me, I am not in a position to consider those matters set out in section 79(4), which, as noted, I am required to consider before making an order pursuant to section 79 of the Act, including an order for a partial distribution of property as sought by the wife. The wife’s application for Order 1 as set out in her Amended Application in a Case, dated filed on 27 March 2017, must therefore be dismissed.
Application for injunctions
Injunctions against a third party
As noted, the wife’s proposed Orders 3 and 4, seek restraints against the Company. While I accept that the Company is controlled by the husband it is nonetheless a separate corporate entity.
The Court’s power to grant an injunction, under s 114 of the Act, that binds a third party to the proceedings, is set out in s 90AF.
Section 90AF(3) precludes the Court from making such an order unless the Court is satisfied of all the matters referred to in s 90AF(3). Sections 90AF(3) and (4) provide:
(3) The court may only make an order or grant an injunction under subsection (1) or (2) if:
(a) the making of the order, or the granting of the injunction, is reasonably necessary, or reasonably appropriate and adapted, to effect a division of property between the parties to the marriage; and
(b) if the order or injunction concerns a debt of a party to the marriage--it is not foreseeable at the time that the order is made, or the injunction granted, that to make the order or grant the injunction would result in the debt not being paid in full; and
(c) the third party has been accorded procedural fairness in relation to the making of the order or injunction; and
(d) for an injunction or order under subsection 114(1)--the court is satisfied that, in all the circumstances, it is proper to make the order or grant the injunction; and
(e) for an injunction under subsection 114(3)--the court is satisfied that, in all the circumstances, it is just or convenient to grant the injunction; and
(f) the court is satisfied that the order or injunction takes into account the matters mentioned in subsection (4).
(4) The matters are as follows:
(a) the taxation effect (if any) of the order or injunction on the parties to the marriage;
(b) the taxation effect (if any) of the order or injunction on the third party;
(c) the social security effect (if any) of the order or injunction on the parties to the marriage;
(d) the third party's administrative costs in relation to the order or injunction;
(e) if the order or injunction concerns a debt of a party to the marriage--the capacity of a party to the marriage to repay the debt after the order is made or the injunction is granted;
Note: See paragraph (3)(b) for requirements for making the order or granting the injunction in these circumstances.
Example: The capacity of a party to the marriage to repay the debt would be affected by that party's ability to repay the debt without undue hardship.
(f) the economic, legal or other capacity of the third party to comply with the order or injunction;
Example: The legal capacity of the third party to comply with the order or injunction could be affected by the terms of a trust deed. However, after taking the third party's legal capacity into account, the court may make the order or grant the injunction despite the terms of the trust deed. If the court does so, the order or injunction will have effect despite those terms (see section 90AC).
(g) if, as a result of the third party being accorded procedural fairness in relation to the making of the order or the granting of the injunction, the third party raises any other matters--those matters;
Note: See paragraph (3)(c) for the requirement to accord procedural fairness to the third party.
(h) any other matter that the court considers relevant.
The difficulty I have with the wife’s application is that, even if it can be assumed that the company has been afforded procedural fairness in so far as the husband, who is a director of the company, is aware of these proceedings, it remains the case that the matters set out in s 90AF(3) have not been addressed, and there is insufficient evidence to enable the Court to be satisfied of the matters set out in that subsection by reference to s 90AF(4).
Accordingly the wife’s application for Orders 3 and 4 must also be dismissed.
Injunctions against a party to proceedings
If, contrary to my construction of the wife’s proposed orders, Orders 3 and 4 are intended to apply to the directors of the Company rather than the Company itself, for reasons that I will discuss, the wife has failed to satisfy me that, in all the circumstances, it would be just or convenient for the orders to be made.
The basis upon which the wife seeks her proposed Orders 3 and 4 are set out in paragraphs [36] to [42] of the wife’s case outline document, which are as follows:
The Freezing Order
36. Since the breakdown of the relationship in 1999, the Wife has received no benefits from the Company and no financial information in relation to the Company. The Wife seeks to appoint an investigative accountant to review the affairs of the Company.
37. After the proceedings were commenced, the Husband entered into an option to sell the Suburb F property. No disclosure or information concerning this sale was ever provided to the Wife.
38. The Wife is a director and secretary of the Company, however, the Husband has taken steps to remove her as a signatory and failed to provided (sic) any financial information in respect of it.
39. The Husband continues to buy and sell property without reference to the Wife yet fails to pay the moneys ordered to be paid to the Wife. The Husband has no such difficulties in meeting the obligations.
40. Given her involvement in the Company, the relief sought in the proceedings and the Husband’s attempt to sell the Suburb F Property and not to disclose the dealings of the Company, the Wife is concerned as to the Husband’s intentions in respect of the assets of the parties.
41. The application for the freezing order was dealt with by Rees J in her reasons for decision of 22 August 2016. Her honour did not order a freezing order noting there was no evidence of dissipation of evidence (sic). However, she ordered the Husband to give 14 days notice to the Wife of his intention to dispose or encumber or deal with his interest in the [Suburb F] Property. The Husband has sold an asset in his own name (the [Suburb F] Property) and apparently put the proceeds into the joint names of himself and a third party.
41. She seeks orders restraining the Husband dealing with these assets other than with her consent.
42. The provision of documents is sought in aid of the freezing order.
Further, the wife states the following at paragraphs 41, 43 and 44 of her affidavit filed 27 March 2016:
41. I have reviewed the transaction records of the Company’s Account and noticed that there were instances where large sums of money were transferred from the Company Account to [the husband and his new wife’s] Joint Account. The following table outlines some of the relevant transactions:
From
To
Amount
Date
Company Account
[The husband and his new wife’s] Joint Account
$2,946.75
14 Jul 2014
Company Account
[The husband and his new wife’s] Joint Account
$15,000
19 Oct 2015
Company Account
[The husband and his new wife’s] Joint Account
$15,000
20 Oct 2015
Company Account
[The husband and his new wife’s] Joint Account
$10,000
25 Jan 2016
Company Account
[The husband and his new wife’s] Joint Account
$5,000
28 Sep 2016
…
43. The RMS Records indicate that the Company owns vehicles with a combined value of approximately $344,000.00. Furthermore, the Company has sold 10 vehicles since 26 August 2016 to date, therefore the Company continues to generate revenue.
44. I do not have access to the Company’s records and accounts, and am concerned that [the husband] may take steps to dissipate the assets of the Company.
Relevant legal principles
By way of summary, the following principles are relevant to the Court’s consideration of the wife’s’ application for injunctions in this matter:
a)In so far as the purpose of the proposed injunction is to restrain dealing with property pending the final hearing, the Court must address the question as to whether there is evidence of a risk that there may be a disposal of any assets that would defeat any anticipated order in the substantive proceedings. However, that is but one of a number of factors to be considered.[10]
[10] Lawson & Crawford and Ors [2014] FamCA 1012 at [52] referring to Mullen and De Bry (2006) FLC 93‑293.
b)The applicant seeking such orders must establish “a real risk of assets being disposed of” prior to final hearing.[11]
[11] Cardile v LED Builders Pty Ltd (1999) 198 CLR 380 at 428 [122].
c)In that context, as was noted in Kelleher & Anderson [2007] FamCA 137 at [195]:
[The applicant] for injunctive relief… bears the onus of establishing, on the evidence, a real risk of assets being disposed of and also that such disposal may cause [his or her] claim to be defeated or prejudiced. It would not be sufficient merely to show that there is a risk of disposal of assets, or the asset pool being diminished, without also establishing that there is a risk that the [party’s] claim may be defeated or prejudiced if the injunction is not granted.
d)In considering the nature of the injunctive relief sought by the applicant, it is important to be aware of the general principle that “equity intervenes to the minimum extent necessary to do justice”.[12]
e)In the context of family law proceedings, in Sieling and Sieling (1979) FLC 90-627 at 78,264, the majority of 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.
f)In Martiniello and Martiniello (1981) FLC 91-050, 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.”[13]
[12] Norton & Locke (2013) FLC 93-567 at 87,612 [72], referring to Giumelli v Giumelli (1999) 196 CLR 101 at [10].
[13] At 76,421.
The wife carries the onus of satisfying the Court that the circumstances of the case justify the making of the injunctive orders that she seeks.
The fact that the transactions referred to in paragraph 41 of the wife’s affidavit, filed on 27 March 2017, have been made does not in itself establish a misappropriation or misuse of the funds of the company, or that the funds will be depleted to the point where the wife’s claim will be defeated or prejudiced if injunctive orders are not granted.
I further note that the wife asserted that the husband’s actions in selling the Suburb F property were indicative that he may try to dispose of other assets. Important however, is the fact that the orders of Rees J made on 24 August 2016 did not preclude the husband from selling the Suburb F property. Her Honour’s orders, rather, required the husband to give 14 days’ notice to the wife if he intended to do that. It is not alleged that the husband failed to give that notice. The fact that the husband sold the Suburb F property and utilised the proceeds of sale to purchase the O Town property jointly with his current wife does not indicate that the husband intends to deal with the affairs and property of the Company such that the property of the parties will be depleted or disbursed prior to the final hearing of this matter.
Finally, the fact that, at paragraph 43 of the wife’s affidavit filed 27 March 2017, the wife gives evidence that the company continues to generate revenue does not establish conduct that may reasonably be expected to deplete the marital assets such that her claim will be defeated or prejudiced if the injunction is not granted.
In summary, I am not satisfied that there is a sufficient evidentiary basis upon which an injunctive order can be made, particularly as the power to do so is "not to be exercised lightly.”
Even if, contrary to my findings, the wife had established a real risk of the property of the Company being depleted or disbursed such that her claim would be defeated or prejudiced, I would not have exercised my discretion to grant the injunctions that she seeks because:
· The orders that the wife seeks go beyond that which are reasonably necessary. In that context, I note that the orders, as sought by the wife, could reasonably be expected to impact on the business operations of the company; and,
· In the context of the above, the orders proposed by the wife do not include any notation of an undertaking as to damages, on the part of the wife. This is in circumstances where the orders she seeks have the potential to have an adverse impact on the operations of the company.
Accordingly, for these reasons, even if I had been of the view that the requirements of s 90AF did not apply to this application, I would have dismissed the wife’s application for Orders 3 and 4.
Provision of information
In so far as proposed Order 4(j) seeks an order requiring the provision of the books and records of the Company, I note that there is no power contained in the Act or the Rules which enables the Court to make an order for third party discovery.
Again, if, contrary to my construction of the order, it is contended that the order applies to the husband, then I note that the Rules provide that a party can apply for appropriate orders compelling the other party to comply with their obligations of disclosure. However, Note 1 to r 13.22 makes it clear that before making such an application “a party must make a reasonable and genuine attempt to settle the issue.”
In that respect, at paragraph 57 of her Reasons for Judgment dated 24 August 2016, Rees J suggested how such an accommodation may be achieved. There is no evidence before me that such an effort has been made.
In those circumstances I dismiss the wife’s application for proposed Order 4(j).
Conclusion
For all of these reasons set out above I dismiss the wife’s Amended Application in a Case filed on 27 March 2017.
I certify that the preceding fifty (50) paragraphs are a true copy of the reasons for judgment of the Honourable Justice McClelland delivered on 15 May 2017.
Associate:
Date: 15 May 2017
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