Kendling and Kendling and Ors (No. 3)

[2008] FamCA 342

FAMILY COURT OF AUSTRALIA

KENDLING & KENDLING AND ORS (NO. 3) [2008] FamCA 342

FAMILY LAW – INJUNCTIONS

Family Law Act 1975 (Cth)
APPLICANT:		T Pty LTd
RESPONDENT:	Mrs Kendling
SECOND RESPONDENT	Jeremy Kendling
THIRD RESPONDENT	Penelope Kendling
FOURTH RESPONDENT	L Pty Ltd
FIFTH RESPONDENT	Mr Kendling
SIXTH RESPONDENT	A Pty Ltd
SEVENTH RESPONDENT	Mr Z
EIGHTH RESPONDENT	B Ltd
NINTH RESPONDENT	I Pty Ltd
TENTH RESPONDENT	Mr PS

FILE NUMBER: SYF 2903 of 2003

DATE DELIVERED: 19 May 2008

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: O'Ryan J

HEARING DATE: 15 May 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Cashem of Senior Counsel

SOLICITOR FOR THE APPLICANT: Broun Abrahams Burreket

COUNSEL FOR THE HUSBAND AND 8^TH

RESPONDENT:

Mr Gardner

SOLICITOR FOR THE HUSBAND AND 8^TH

RESPONDENT:

Dorrough Smart Solicitors

COUNSEL FOR THE RESPONDENT 

WIFE:

Mr Beaumont

SOLICITOR FOR THE RESPONDENT 

WIFE:

Michael Conley Solicitors

Orders

1. The orders made on 28 April 2008 be varied as follows:

   1.1insert at the end of order 3.1 the words “and a fixed and floating charge over the [ML Facility] and [D Business] businesses and the asset located on the [E] location to the value of $12 million only ”.

   1.2insert order 3.5.3 “is for a term of six months only as from 28 April 2008”.

   1.3insert at the end of order 3.6 the words “subject to and ranking after the grant of a fixed and floating charge in Order 3.1”.

   1.4delete in order 5 the words “13 May 2008” and insert in lieu thereof “23 May 2008”.

2. [T] Pty Ltd within 21 days obtain a written valuation by the valuer […] confirming the valuation of the [R] location based on Interim Development Approval and confirmation Development Approval of not less than $12 million and thereafter provide a verified copy of the valuation to the Wife and her lawyers.

3. The Husband be and is hereby restrained from paying to, or conferring upon, [T] Pty Ltd and or [Penelope Kendling] and or [Jeremy Kendling] any money, pecuniary benefit, or any other financial advantage of any kind whatsoever directly or indirectly and from authorising and/or directing any person or entity from paying to, or conferring upon, [T] Pty Ltd and or [Penelope Kendling] and or [Jeremy Kendling] any money, pecuniary benefit, or any other financial advantage of any kind whatsoever directly or indirectly .

4. Each of [B] Ltd and [T] Pty Ltd provide to the Wife and or her accounting and legal advisers within seven days of any written request by the Wife and or her accounting and legal advisers any information or documents requested by any of them relating to any item and amount disclosed in the cash flow summaries provided by [B] Ltd and [T] Pty Ltd in accordance with current orders.

5. The Wife be permitted to provide to the National Australia Bank a copy of all judgments I have delivered and orders I have made.

IT IS NOTED that publication of this judgment under the pseudonym Kendling and Kendling and Ors is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT

FILE NUMBER: SYF 2903 of 2003

T Pty Ltd

Applicant

And

Mrs Kendling

First Respondent

And

Jeremy Kendling

Second Respondent

And

Penelope Kendling

Third Respondent

And

L Pty Ltd

Fourth Respondent

And

Mr Kendling

Fifth Respondent

And

A Pty Ltd

Sixth Respondent

And

Mr Z

Seventh Respondent

And

B Ltd

Eighth Respondent

And

I Pty Ltd

Ninth Respondent

And

Mr PS

Tenth Respondent

REASONS FOR JUDGMENT

1. Before me for hearing is an application by T Pty Ltd for a variation of the following orders I made on 29 April 2008:

   1.      The application of [T] Pty Ltd, [Penelope Kendling], [Jeremy Kendling] and [L] Pty Ltd in relation to the filing of evidence in chief by the Wife and other matters be dismissed.

   2.      The costs of the Wife of the application by [T] Pty Ltd pursuant to r 11.03(1) of the Family Law Rules to rely upon the application filed on 20 February 2008 are reserved.

   3.      Order 2 of the Orders made on 27 September 2007 be varied to the extent necessary to permit [T] Pty Ltd to do all acts and things and sign all documents necessary to refinance the existing loan from the National Australia Bank Limited and in particular:

   3.1grant to the National Australia Bank, a first mortgage over the real estate contained within folio identifier […] (being the [E] location) but excluding the proposed subdivided lot on which is situate the [service business];

   3.2 substitute the mortgage in favour of [B] Ltd over the real estate contained within folio identifier […] (being the [E] location) with the real estate contained within folio identifiers […] and […], […],[…] and […] and […] (the [R] location), […],[…],[…],[…] and […] (the [F] location) and a second ranking mortgage over […] (being the [E] location);

   IF AND ONLY IF contemporaneously with the grant of the mortgage pursuant to Order 3.1:

   3.3the National Australia Bank provides to [T] Pty Ltd in registrable form documents necessary to discharge all existing mortgages in favour of the National Australia Bank secured on all real estate owned by [T] Pty Ltd; and

   3.4 the amount secured by the mortgage referred to in Order 3.1 secures no greater liability than the amount secured by the mortgages being discharged pursuant to Order 3.3; and

   3.5the mortgage in favour of [B] Ltd referred to in Order 3.2:

   3.5.1secures the amount of $45,326,264; and

   3.5.1is guaranteed and indemnified by [Penelope Kendling] and [Jeremy Kendling] the directors of [T] Pty Ltd for $46,326,264.

   AND

   3.6[B] Ltd is also granted a registered first mortgage debenture over [T] Pty Ltd.

   AND

   3.7All costs and expenses including stamp duty and registration fees of giving effect to these orders are paid by [T] Pty Ltd.

   AND

   3.8The Husband and or [B] Ltd provide to the Wife’s solicitors a verified copy of all documentation both of the National Australia Bank and [B] Ltd and [T] Pty Ltd that comes into existence to give effect to this order.

   4.      Until further order [B] Ltd be and is hereby restrained from paying to, or conferring upon, [T] Pty Ltd and or [Penelope Kendling] and or [Jeremy Kendling] any money, pecuniary benefit, or any other financial advantage of any kind whatsoever directly or indirectly.

   5.      By 4:00 pm on 13 May 2008 the Husband and [B] Ltd are to serve on the Wife’s solicitors written verification of the acceptance or rejection by the National Australia Bank of the terms and conditions in Order 3 hereof in so far as they relate to the proposed refinancing as at 31 April 2008 of the amount of $12 million.

   6.      The application by the Wife for the repayment by [T] Pty Ltd to [B] Ltd of all debt be adjourned.

   7.      In the event that the Husband and [B] Ltd fail to comply with order 5 hereof or in the event that the National Australia Bank will not accept the above terms and conditions in Order 3 hereof in so far as they relate to the proposed refinancing as at 31 April 2008 of the amount of $12 million then by 4:00 pm on 10 June 2008 [T] Pty Ltd repay to [B] Ltd all of the debt owed by [T] Pty Ltd to [B] Ltd being the amount of approximately $45 million.

   8.      Upon receipt by [B] Ltd of the amount referred to in Order 7 hereof [B] Ltd forthwith deposit the amount to the credit of an interest bearing controlled moneys account in the joint names of the Husband and the Wife and [B] Ltd.

   9.      Until further order each of the Husband and the Wife and [B] Ltd be and are hereby restrained from making any withdrawals from the account referred to in Order 8 hereof and are further restrained from encumbering by mortgage or charge or otherwise any interest in the money held in the account.

   10.   The application by the Wife for the appointment of a receiver and manager to all of the property, undertaking and business of [B] Ltd be adjourned.

   11.   Liberty be granted to restore the applications referred to in orders 6 and 10 hereof.

   12.   I note the undertaking as to damages by the Wife.

   13.   By way of variation of Order 15 of the orders made on 7 April 2008:

   13.1the Wife be entitled to treat the sum of money paid by [B] Ltd in the sum of $54,000 as a payment or part payment by [B] Ltd by way of discharge or partial discharge (as applicable upon taxation or agreement) of its liability to pay the costs of the Wife referred to in Order 13 of the orders of 7 April 2008;

   13.2the Wife is accordingly no longer required to hold that money in a controlled monies account by her solicitors on behalf of the Husband, [B] Ltd or the Wife, but is instead entitled to disburse those funds in payment of any past, present or future legal costs or disbursements in relation to these present proceedings, subject to the Wife accounting to [B] Ltd with respect to all such payments;

   13.3the alteration of the treatment of the said $54,000 is not taken to be a full discharge of either of the liabilities of [B] Ltd or the Husband to pay the Wife’s costs as referred to in order 13 (or otherwise) but only discharges so much of the liability of [B] Ltd as corresponds with the receipt by the Wife of the $54,000;

   13.4in the event that upon taxation or other agreement the Wife is entitled to receive by way of payment of the costs referred to in order 13 (or otherwise) a sum of money less than $54,000, then the Wife is to pay to [B] Ltd the difference between the sum of $54,000 and the sum owing to her pursuant to order 13 by [B] Ltd

2. I refer my judgment delivered on 28 April 2008.

3. On 12 May 2008 an application in a case was filed on behalf of T Pty Ltd.  In support of the application an affidavit was sworn by Penelope Kendling on 12 May 2008.

4. I had the benefit of written submissions on behalf of T Pty Ltd and the Wife.

CONCLUSION

1. In my judgment of 28 April 2008 I said that the revised terms of the loan by B Ltd to T Pty Ltd be subject to conditions.  I said that the first mortgage in favour of B Ltd secure the amount of $45 million; be guaranteed and indemnified by Penelope Kendling and Jeremy Kendling as the directors of T Pty Ltd for $45 million and that B Ltd is also granted a registered first mortgage debenture over T Pty Ltd. Further that all costs and expenses including stamp duty and registration fees of giving effect to the orders are paid by T Pty Ltd.

2. I am not going to go into any detail as to how the current application comes about.  Partly it is because of what was previously contended for on behalf of T Pty Ltd as to the value of the E location and the ability to place a separate value on the ML Facility and D Business.  I am now informed that the National Australia Bank assert that there is a substantial risk that the effect of the implementation of the orders of 29 April 2008 would leave the Bank with priority over the real estate only.  In my judgment I proceeded on the basis that the National Australia Bank would have first mortgage security over the E location and the value was $19.85 million.  Contrary to the submissions previously made by senior counsel for T Pty Ltd, it is now contended that the there may be a separate value of the land which hypothetically could be less than $19.85 million.

3. I am going to accede to the application and make orders as set out in “Option 2” in the Application.  However the National Australia Bank must realise that as far as I am concerned the secured creditor with priority is B Ltd, not the Bank.  I am acceding to the application, among other things, because of what I had previously intended and also because of the imminence of the hearing of the applications for final orders.

4. However, I remain concerned about what is proposed and what may happen.  There was reference to “commercial standard”.  Notwithstanding what I previously ordered I remain of the view that what has happened and what I propose in relation to the indebtedness of T Pty Ltd to B Ltd does meet what I think is intended to be meant by that description.

5. As well I was provided with further cash flow summaries and more questions are raised (Exhibits A and B).  Further, subject to the evidence, the Wife contends that the indebtedness of T Pty Ltd to B Ltd may exceed $45 million and there may be some justification for this concern given what I previously said about further undisclosed payments by B Ltd to T Pty Ltd.  In other words that contention is not unsurprising.

6. In the circumstances I am going to require that the term of the loan from B Ltd to T Pty Ltd be for six months only and not five years.  B Ltd will have first mortgage security for the amount of $45 million over all property of T Pty Ltd including all of the R location and the F location but excluding the E location.  I will make no orders about the interest rate as this may be addressed in other ways at the final hearing.  This should put it beyond doubt that all of the issues, if they remain relevant, in relation to the indebtedness of T Pty Ltd to B Ltd will have to be dealt with at the hearing in August 2008 and concluded findings made.  Further I am going to make an order that the Husband be restrained from paying to, or conferring upon, T Pty Ltd and or Penelope Kendling and or Jeremy Kendling any money, pecuniary benefit, or any other financial advantage of any kind whatsoever directly or indirectly.

7. I am also going to make orders in relation to the cash flow summaries.  There continue to be issues about the information provided and it has to be addressed.

8. I am also going to make the order I previously considered in relation to ensuring that the National Australia Bank is informed of what has happened. There should be no possible issue about notice to the Bank. In other words, if for example it came to pass that the security in favour of the National Australia Bank either has an effect of reducing the value of T Pty Ltd and or B Ltd or the ability of the Husband to meet any order in favour of the Wife then the loan to the Bank may be the subject of proceedings under s 106B of the Family Law Act 1975 (Cth).

9. I am going to permit Penelope Kendling to give a personal guarantee to the National Australia Bank in support of the advance of $12 million.  However in so doing it is on the basis that she made a full and frank disclosure of her financial circumstances in her financial statement of 8 February 2008.  She has property interests of a net value in excess of $4.75 million.  I am going to permit Jeremy Kendling to give a personal guarantee to the National Australia Bank in support of the advance of $12 million.  However in so doing it is on the basis that he made a full and frank disclosure of his financial circumstances in his financial statement of 8 February 2008.  He has property interests of a net value in excess of $3.69 million.  It may be necessary to seek undertakings as to how they each deal with their property interests pending the final hearing.

I certify that the preceding thirteen (13) paragraphs are a true copy of the reasons for judgment of the Honourable Justice O’Ryan

Associate: 

Date:  19 May 2008