Krupin & Krupin
[2023] FedCFamC1F 412
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Krupin & Krupin [2023] FedCFamC1F 412
File number(s): BRC 5459 of 2014 Judgment of: HOWARD J Date of judgment: 17 May 2023 Catchwords: FAMILY LAW – PROPERTY – Interlocutory injunctions – Where there is prima facie evidence of an intention to dispose of assets – Where the parties do not oppose the issuing of injunctions to protect the matrimonial property pending judgment – Serious question to be tried – Balance of convenience. Legislation: Family Law Act 1975 (Cth) ss 90AF, 114 Cases cited: American Cyanamid Co v Ethicon Ltd [1975] AC 369
Blueseas Investment Pty Ltd v Mitchell (1999) FLC 92-856
Norton v Locke (2013) 50 Fam LR 517
Waugh v Waugh (2000) FLC 93-052
Yunghanns & Yunghanns (1999) FLC 92-836
Division: Division 1 First Instance Number of paragraphs: 16 Date of hearing: 17 May 2023 Place: Brisbane Counsel for the Applicant: Mr Waterman Solicitor for the Applicant: Hofstee Lawyers Counsel for the First Respondent: Mr Jones Solicitor for the First Respondent: Robert Bax & Associates Counsel for the Second Respondent: Mr Hartnett Solicitor for the Second Respondent: Genuine Legal The Third Respondent: Litigant in person and attending on behalf of the Fourth Respondent ORDERS
BRC 5459 of 2014 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR KRUPIN
Applicant
AND: MS KRUPIN
First Respondent
MS ANGELOFF
Second Respondent
MS PETROV
Third Respondent
B PTY LTD
Fourth Respondent
order made by:
HOWARD J
DATE OF ORDER:
17 MAY 2023
THE COURT, OF ITS OWN MOTION AND AFTER HEARING FROM THE PARTIES, ORDERS UNTIL FURTHER ORDER:
1.That, pursuant to ss 114 and 90AF of the Family Law Act 1975 (Cth) (“the Act”) and pending final order in this case, an injunction issue forthwith restraining the Applicant, the First Respondent, the Third Respondent and the Fourth Respondent from dealing with, disposing of or encumbering, or attempting to deal with, dispose of or encumber the properties located at E Street, Suburb F QLD (Lot … on …) and G Street, Suburb H QLD (Lot … on …).
2.That, notwithstanding the above order, the parties mentioned in Order 1 are permitted to use rental income generated by the aforementioned properties (if any) to make mortgage repayments and any other payments or outgoings that are necessary to be made in relation to the two named properties – provided that in the event any person does utilise such monies to make such payments – that person shall keep a written record of such payments and upon request shall provide a copy of such written record to the other parties and to the Court within seven (7) days of the receipt of the request.
3.That, pursuant to s 90AF of the Act and pending final order in this case, the Third Respondent is hereby forthwith restrained from transferring or attempting to transfer or in any other way dealing with or attempting to deal with her shareholding in B Pty Ltd.
4.That, pursuant to ss 114 and 90AF of the Act and pending final order in this case, the Applicant, the Third Respondent and the Fourth Respondent are hereby forthwith restrained from resigning or in any other way dealing with the directorships of B Pty Ltd – without obtaining permission (by way of further order) of this Court.
NOTATION:
A.None of the parties opposed the making of these orders and injunctions. Reasons for Judgment were delivered ex tempore on 17 May 2023.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Krupin & Krupin has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
EX TEMPORE REASONS FOR JUDGMENT
HOWARD J:
A. These reasons were delivered ex tempore on 17 May 2023 and have been settled and corrected for grammatical errors and in order to convey the precise intention of the Court.
Before the Court is the property trial in respect of the Krupin family. There are various competing claims, both legal and equitable, in relation to three pieces of real estate situated at G Street, Suburb H (registered in the name of B Pty Ltd as trustee for the Krupin Family Trust); C Street, Suburb D (registered in the name of Ms Angeloff); and E Street, Suburb F (currently registered in the names of the husband and the wife, that is, Mr Krupin and Ms Krupin). The reference in these reasons to “the wife” is a reference to “[Ms Krupin]”. The third respondent is Ms Petrov.[1] The fourth respondent is B Pty Ltd.
[1] Ms Petrov is currently married to Mr Krupin. Ms Krupin is the former wife of Mr Krupin but in these reasons for judgment is referred to as “the wife”.
In this case there are voluminous amounts of material, including an affidavit from the applicant with annexures totalling almost 3000 pages. Yesterday afternoon during the giving of his evidence, I asked the applicant husband about the directorships and the shareholding of B Pty Ltd. Before turning to the husband’s evidence from yesterday afternoon, I note the husband’s trial affidavit filed 24 February 2023 at paragraph 249 as follows:
“249.The Applicant removed the First Respondent from directorship of the [B Pty Ltd] because of her intention to destroy this company and failing to perform her duties as a director and pay her share associated with the running company.”
The applicant husband is the appointor of the family trust. B Pty Ltd is the trustee of the family trust. Initially, Mr Krupin and Ms Krupin were the directors of B Pty Ltd and also the shareholders. As Mr Krupin says at paragraph 249 of his trial affidavit – he removed Ms Krupin from the directorship. Ms Krupin says in her evidence that the removal was without her consent and knowledge. This removal was effected in 2017. There are some ASIC company searches in evidence that show Ms Krupin ceasing to be a director. I do not know upon what legal basis that occurred.
As the appointor of the trust (paragraph 19 of the Trust Deed)[2] – Mr Krupin had a proper legal basis to remove the trustee. Removal of the trustee would require removal of B Pty Ltd. I am not currently satisfied that there was any legal basis for the removal of Ms Krupin as a director of the company. The power that he had as appointor of the trust was to remove B Pty Ltd completely and replace it with another trustee.
[2] Page 49 of 410 in the affidavit of Ms Petrov filed 24 February 2023.
Of particular note in relation to the issuing of the injunctions contemplated is the evidence provided by the husband, Mr Krupin, on Tuesday 16 May 2023 at page 155 of the Transcript. Through the interpreter, the following evidence was given by the husband:
“HIS HONOUR: No, no, no. Please ask; was the wife 50 per cent shareholder in the company that owned [G Street]?
[MR KRUPIN]: Until 2017, your Honour.
HIS HONOUR: Until – what happened then?
[MR KRUPIN]: I moved her out from the board of directors because…
HIS HONOUR: What about the shareholding?
[MR KRUPIN]: The same. The shares moved to myself.
HIS HONOUR: Well, did she transfer her shares to you?
[MR KRUPIN]: I transferred. It wasn’t her decision.”
I am not currently satisfied that there was any proper legal basis for the transfer of the shareholding from Ms Krupin to Mr Krupin – that is, the shareholding in B Pty Ltd. The shareholding transfer effected by Mr Krupin and the directorship change effected by Mr Krupin coupled with the evidence that the wife did not know about it – (it was done without her knowledge) – leads me to conclude that there is evidence that there was an intention to dispose of assets to impact upon, if not defeat, a judgment which the wife might obtain in the substantive proceedings.
That is the fundamental question: was there any evidence of any intention to remove assets to defeat a judgment? I think at the moment I could say there is prima facie evidence of an intention to dispose of an asset, the outcome of which has been effectively to remove Ms Krupin from any position of control or membership of B Pty Ltd. As to the legal implications of those matters, I still need to determine all of that. But it seems to me that there are serious questions to be tried and the balance of convenience favours the making of various injunctions relating to G Street and in relation to the company B Pty Ltd – that is, there will be no transfer of shares in B Pty Ltd and no change of directorships in B Pty Ltd. There will be no selling or attempting to sell or mortgage or attempting to mortgage G Street.
I would say that, noting as I have so far, the evidence to which I have referred (paragraph 249 of the applicant’s affidavit and the oral evidence of the applicant husband yesterday concerning the shareholding) that there is sufficient evidence to issue injunctions in respect of two properties, namely E Street and G Street. I include E Street as well as G Street because the applicant and the first respondent are currently the registered owners of E Street. The actions of the applicant relating to G Street are concerning and require closer scrutiny by the Court. The first respondent does not oppose the injunctions and is being restrained also – to ensure that no further dealings occur in relation to the property of the parties.
There is already a caveat on C Street and there is no evidentiary basis for me to issue an injunction concerning C Street even though it was not opposed. There will be no injunction concerning C Street. And it is protected anyway because there is a caveat, as I say, and I am told it is a non-lapsing caveat. But E Street is owned by Mr Krupin and Ms Krupin, and G Street is in the name of the trustee, and the evidence to which I have referred is sufficient on a prima facie basis for me to conclude that the fundamental question has been satisfied and the other requirements are also satisfied for the issuing of injunctions.
In coming to this conclusion, I have had regard to a number of cases including: American Cyanamid Co v Ethicon Ltd [1975] AC 369, Yunghanns & Yunghanns (1999) FLC 92-836 at 85,723; Blueseas Investment Pty Ltd v Mitchell (1999) FLC 92-856, Waugh v Waugh (2000) FLC 93-052; Norton v Locke (2013) 50 Fam LR 517.
In paragraph 56 of Blueseas Investment Pty Ltd v Mitchell, I note it was stated:
“56.There is no doubt that in proceedings for interlocutory injunctions the Court, before making an order, is required to find that there is a serious issue to be tried and that the balance of convenience supports the making of an order…”
I note from the decision of Waugh v Waugh what the Full Court said at paragraph 46:
“46.While his Honour certainly seems to have considered issues of balance of convenience and hardship between the parties, it seems to us, with respect, that he did not give consideration to the fundamental question whether there was any evidence of any intention by the husband to dispose of any assets pursuant to any scheme to defeat any judgment which the wife might obtain in the substantive proceedings, or whether he merely wished to continue to trade, as he always had done, prior to and since the separation of the parties.”
In Norton v Locke, I note what the Full Court had to say at paragraphs 67 and 68, in particular endorsing the earlier decision of Waugh:
“67. Neither counsel referred in written or oral argument to the decision of this court in Waugh. There, this court said (in the context of a case for Mareva order in which there was no issue of the establishment of facts necessary to found jurisdiction) that the “fundamental question” when determining whether or not an interlocutory injunction restraining a party from dealing with property ought be granted is “… whether there was any evidence of any intention by the [appellant] to dispose of any assets pursuant to any scheme to defeat any judgment which the [respondent] might obtain in the substantive proceedings …” (at 76). As we have already sought to make plain, in our view the “fundamental question” identified by the Full Court in Waugh is akin to the “compelling circumstances” referred to by Wilson and Dawson JJ in Ex parte Green and, at the core of each, is the necessity to establish a real risk that the court’s function will be undermined in the absence of the interlocutory relief sought.
68. The judgment in Waugh refers to the possibility of substantive relief in a matrimonial cause providing a context for the relevant principles to have a different emphasis than that which applies when the substantive proceedings relate to a debt. By analogy, similar considerations may be applicable when the substantive proceedings are a de facto financial cause (see, also analogously, Crone v Konig [2001] QSC 284). However, in the present case, that potential circumstance will matter little if, otherwise, the circumstances are insufficiently compelling to require an interlocutory injunction.”
There seems to have been unilateral action by Mr Krupin in relation to Ms Krupin’s directorship of B Pty Ltd and in relation to Ms Krupin’s shareholding in B Pty Ltd. I am not yet satisfied there was any proper legal basis for those actions, and it seems to me in those circumstances the injunctions are warranted. In any event, Mr Waterman for Mr Krupin does not oppose the making of the injunctions. The third respondent does not oppose the making of the injunctions but I am giving permission for rental monies to be used from any of the properties to pay mortgages and other outgoings. But the parties will be prevented from trying to sell the properties or trying to mortgage them, and the third respondent will be prevented from transferring the shares in B Pty Ltd until the Court has a chance to hear from all the parties, deliver a judgment, make findings on credit and work out what needs to happen in relation to the competing legal and equitable interests of these parties on a final basis.
All of the requirements of s 90 AF and s 114 of the Act have been satisfied.
The injunctions are effective now.
I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Ex Tempore Reasons for Judgment of the Honourable Justice Howard. Associate:
Dated: 23 May 2023
0
2
0