Lawson & Crawford and Ors - [2014] FamCA 1012

FAMILY COURT OF AUSTRALIA

LAWSON & CRAWFORD AND ORS

[2014] FamCA 1012

FAMILY LAW – PRACTICE AND PROCEDURE – INJUNCTIONS – Wife’s application for interlocutory injunctions and orders for discovery and disclosure by the husband –where the wife alleges the husband and other respondents are dealing with property to her detriment – where the husband and other respondents deny any impropriety – consideration of the prejudice to the parties.

Family Law Act 1975 (Cth) s 114

Family Law Rules 2004 (Cth)

Mullen and De Bry (2006) FLC 93-293
Waugh and Waugh (2000) FLC 93-052

APPLICANT:

Ms Lawson

RESPONDENT:

Mr Crawford

THIRD RESPONDENT:

Ms A Crawford

FOURTH RESPONDENT:

Mr B Crawford

FIFTH RESPONDENT:

D Pty Ltd (in its own capacity and D Trust)

SIXTH RESPONDENT:

E Pty Ltd (in its own capacity and E Trust)

SEVENTH RESPONDENT:

F Pty Ltd (in its own capacity and F Trust)

FILE NUMBER:

MLC

4101

2013

DATE DELIVERED:

14 November 2014

PLACE DELIVERED:

Melbourne

PLACE HEARD:

Melbourne

JUDGMENT OF:

Macmillan J

HEARING DATE:

2 October 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr O’Bryan QC

SOLICITOR FOR THE APPLICANT:

Lander & Rogers

COUNSEL FOR THE RESPONDENT AND THE SEVENTH RESPONDENT:

Mr Bartfeld QC
with Mr Mellas

SOLICITOR FOR THE RESPONDENT AND THE SEVENTH RESPONDENT:	Taussig Cherrie Fildes
COUNSEL FOR THE THIRD, FOURTH, FIFTH AND SIXTH RESPONDENTS:	Mr Corbett QC

SOLICITOR FOR THE THIRD, FOURTH FIFTH AND SIXTH RESPONDENTS:

Kenna Teasdale Lawyers

ORDERS*

IT IS ORDERED THAT

Until further order the husband and the third and fourth respondents be restrained in their capacities as directors of Crawford Developments Pty Ltd (“Crawford Developments”) from:
1.1voting in favour of any resolution or taking any steps which would have the effect of issuing further shares in Crawford Developments;
1.2appointing any other person as a director or office holder;
1.3voting in favour of any resolution or taking any steps which would have the effect of distributing funds to the unit holders of Crawford Developments Unit Trust (of which Crawford Developments is trustee);

save with the wife’s prior written consent, and provided further that transactions for which the wife’s consent is sought are documented in full to the wife and any reasonable queries made by the wife are addressed, not less than 14 days prior to any of the transactions proposed in paragraphs 1.1, 1.2 or 1.3 hereof.

Until further order the husband and the third and fourth respondents provide the wife with 14 days prior notice of the proposed incorporation of any new corporate entity (and the intended purpose of said entity) which they or any of them seek to incorporate, in which:
2.1they or any of them are to become director or shareholder;
2.2any corporate entity in which they or any of them currently hold an interest (or of which they or any of them are currently a director or shareholder) is to hold shares in the proposed new corporate entity;
2.3they or any of them (or any corporate entity of which they are currently a director or shareholder) will be a beneficiary of any trust of which the proposed new corporate entity will be trustee.
By 4.00 pm on 12 December 2014 the husband provide to the wife an itemised schedule identifying the date and subject matter of all documents electronically discovered by him to date except where same has already been provided.
Until further order the husband provide to the wife an itemised schedule identifying the date and subject matter of all further documents discovered by him from the date of these orders.
The parties be permitted to serve up to 50 questions in writing upon each of the other parties pursuant to rule 13.26 of the Family Law Rules 2004 (Cth).
All questions of costs be reserved for determination.
By 4.00 pm on 12 December 2014 the parties file and serve any written submissions in support of any application for costs arising out of or incidental to the wife’s Application in a Case filed 1 September 2014.
By 4.00 pm on 16 January 2015 the parties file and serve any written submissions in reply to any application(s) for costs.
The wife’s Application in a Case filed 1 September 2014 and the responses thereto, save and except for any applications for costs, be otherwise dismissed.

IT IS CERTIFIED THAT
Pursuant to Rule 19.50 of the Family Law Rules 2004 this matter reasonably required the attendance of counsel including senior counsel.

*These orders have been amended where underlined to accord with the orders as pronounced by the Honourable Justice Macmillan on 14 November 2014.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Lawson & Crawford and Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 4101 of 2013

Ms Lawson

Applicant

And

Mr Crawford

Respondent

And

Ms A Crawford

Third Respondent

And

Mr B Crawford

Fourth Respondent

And

D Pty Ltd (in its own capacity and D Trust)

Fifth Respondent

And

E Pty Ltd (in its own capacity and E Trust)

Sixth Respondent

And

F Pty Ltd (in its own capacity and F Trust)

Seventh Respondent

REASONS FOR JUDGMENT

On 1 September 2014 Ms Lawson (“the wife”) filed an Application in a Case in which she sought leave to adduce expert evidence from a forensic IT specialist in relation to the authenticity of electronic copies of documents purportedly executed by her, orders with respect to discovery by Mr Crawford (“the husband”) and injunctive relief against the husband, the third named respondent Ms A Crawford (“the third respondent”) and the fourth named respondent Mr B Crawford (“the fourth respondent”) in their capacity as directors of Crawford Developments Pty Ltd (“Crawford Developments”) (both in its own capacity and as trustee for the Crawford Developments Unit Trust (“CDUT”)).
The matter was listed for hearing before me on 2 October 2014. On that date, I made orders by consent in relation to the wife’s application to adduce expert evidence. The wife’s application for injunctive relief was opposed by the husband and the third and fourth respondents and her application seeking orders with respect to discovery was opposed by the husband.

THE EVIDENCE

The wife relied upon the following documents in support of her Application in a Case filed 1 September 2014:
(a)her affidavit sworn and filed 1 July 2014;
(b)her affidavit sworn 26 August 2014 and filed 1 September 2014; and
(c)her affidavit sworn and filed 2 October 2014.
The husband relied upon the following documents in support of his Response to an Application in a Case filed 1 October 2014:
(a)summary of argument on behalf of the husband dated 2 October 2014;
(b)his affidavit sworn and filed 1 October 2014;
(c)the affidavit of Mr G sworn and filed 1 October 2014; and
(d)the affidavit of Ms A Crawford sworn and filed 30 September 2014.
The third and fourth respondents relied upon the following documents in support of their Response to an Application in a Case filed 30 September 2014:
(a)their outline of submissions filed 2 October 2014; and
(b)the affidavit of the third respondent sworn and filed 30 September 2014.
Notwithstanding rule 15.06 of the Family Law Rules 2004 (Cth) (“the Rules”) both the husband and the wife sought to rely upon affidavits filed in support of previous applications, the husband in particular by reference to those affidavits in his affidavit filed 1 October 2014. Whilst referring to and incorporating previous affidavits may assist the drafter of the current affidavit it is somewhat frustrating for the reader of that affidavit and in particular the judicial officer hearing the matter who must go backwards and forwards between the various affidavits to glean the relevant evidence.
These are interim proceedings and the hearing proceeded on the basis of the parties’ various affidavits, the documents that were tendered by the parties, and the submissions made by the respective counsel on behalf of the parties. The evidence has not been tested and the Court is not able to make any findings of fact where those facts are in dispute.

BACKGROUND

The husband was born in 1959 and is 55 years of age. The wife was born in 1965 and is 49 years of age. The husband and wife commenced cohabitation in 1998 and were married in 2000. They separated in May 2013, having cohabited for a period of approximately 15 years. A divorce order was made on the application of the husband on 10 July 2014 which became final on 11 August 2014.
The husband was previously married and the third and fourth respondents are the adult children of that marriage. The wife has two adult children of a previous marriage.
Both prior to and during the marriage, the husband and wife operated a number of companies and associated entities, including Crawford Developments, collectively known as “the Crawford Group” through which they conducted their business interests primarily relating to the development, construction and operation of care facilities. The principal trading entity of the Crawford Group is H Ltd (“H”), an unlisted public company. The husband is the Chief Executive Officer of H.
The husband is the founding director of Crawford Developments and was, according to the wife, until May 2013 the sole director and until July 2014 the owner of the two issued shares in that company. Crawford Developments is responsible for the design and construction of care facilities for H.
The third and fourth respondents are directors and shareholders of both H and Crawford Developments, and they and the entities that they control, and an entity controlled by the husband, have been joined as parties to these proceedings as the fifth, sixth and seventh named respondents (“their associated entities”).
The wife commenced proceedings by way of her Initiating Application filed on 24 May 2013 seeking, inter alia, an order for property settlement but that she be excused from particularising the final orders she seeks pending the valuation of the corporate and personal assets of the husband and the wife. The wife filed an amended application for final orders on 12 June 2014 seeking orders in similar terms save that she sought to join the third and fourth respondents and their associated entities as parties to the proceedings and sought, inter alia, orders pursuant to s 106B(1) of the Family Law Act 1975 (Cth) (“the Act”) setting aside various transactions whereby, inter alia, those parties had been allocated shares in H and had received distributions of capital or interest from various trusts associated with and controlled by H of which the husband is or was the Appointor.
The issue of the increased interest of the third and fourth respondents and their associated entities and the corresponding decrease in the husband’s interest – or the husband and the wife’s interest – in the Crawford Group is central to the issues in dispute in this case, both in relation to the various interim hearings and ultimately at the trial which has been set down for hearing before me commencing on 9 February 2015. There have been a number of interim hearings, undertakings have been given and the Court has made various orders during the course of these proceedings in relation to this issue.
The genesis of the orders the wife seeks in her amended application for final orders is that on various dates but particularly on 10 June 2010 she, the husband, and the third and fourth respondents purportedly executed a number of documents, including a shareholders’ agreement which provided that the shareholders of H – who were the husband, the wife, and the third and fourth respondents – would work towards equal ownership of shares in the company within 36 months of the execution of the agreement by the addition of new shares or the transfer of existing shares. The wife’s evidence is that she does not recall signing these documents, which she says were discovered by the husband during the course of the proceedings, and she questions their authenticity, particularly the authenticity of the shareholders’ agreement and the other documents it is asserted she signed on 10 June 2010. In her amended application the wife seeks to set aside the allocation of any shares pursuant to this agreement.
The husband and the third and fourth respondents deny any impropriety or irregularity with respect to the documents they say were signed by the wife. However, it is in this context that the wife in her Initiating Application filed 24 May 2013 also sought interim orders restraining the husband from, inter alia, selling, disposing of, transferring or otherwise parting with possession or control of any shares owned by the husband and the wife or either of them, other than in the normal course of business, and from voting in favour of any resolution which might have the effect of issuing further shares.
The matter was listed for hearing on 27 May 2013. On that date, Dessau J made orders by consent. Those orders were made upon an undertaking given by the husband as follows:
[The husband] will not deal with any interest or shareholdings in any company, partnership, business or trust that the [h]usband and/or the [w]ife has (“Entities”), save in the ordinary course of business or with the [w]ife’s written consent (which shall not be unreasonably withheld), by:
(a)selling, disposing of, transferring or otherwise parting with possession or control of any shares in his name;
(b)resigning from any directorship or position of office;
(c)relinquishing, abandoning and assigning any interest held by him as an appointor or guardian;
(d)causing, suffering or permitting the entities or any of them to increase any existing liability or to incur any further liability secured upon any real or personal property owned by him;
(e)causing, suffering or permitting any of the Entities to increase any existing liability or to incur any further liability in respect of which the [w]ife has given a guarantee or is liable (in her personal capacity or in her capacity as a director of any entities);
(f)from voting in favour of any resolution which may have the effect of issuing further shares in any of the Entities or altering the constitution, memorandum or articles of association of trust deeds of any of the Entities.
On 18 July 2013 Cronin J made orders by consent, including an order that the wife resign as a director and company secretary of H and as a director of H One Pty Ltd (“H One”) and H Two Pty Ltd (“H Two”). It was further ordered that, upon the wife’s resignation as a director of these entities, thereafter the husband provide to the wife, with respect to those entities, the following documents which arise and come into existence from that time:
7.1All applications for finance made by the said companies to any bank or financial institution including the ANZ Bank;
7.2All correspondence to and from the said banks and financial institutions relating to the provision of finance to the said companies;
7.3All correspondence to and from any Government (Federal, State or Local) relevant to the operation, licensing and finance of any care facility held by the companies (or the trusts of which they are Trustees);
7.4All applications for funding made by the said companies to any Government (Federal, State or Local), and in addition:
7.5All correspondence to and from [I Pty Ltd] relevant to the purchase, sale, operation, licensing and finance of any care facility held by the companies (or the trusts of which they are Trustees);
7.6Notice of all resolutions of the directors of the said companies as and when same is provided to them or any of them.
In her affidavit filed 3 June 2014 the wife deposes that at a meeting of directors on 27 March 2014 resolutions were passed which provided for the repayment of principal sums owing pursuant to loan agreements between H and entities of each of the husband and the third and fourth respondents, as a result of which the husband and/or his entities received in excess of $12.87 million and the third and fourth respondents and/or their entities each received in excess of $6.4 million. The wife’s evidence is that she did not receive notice of the proposed resolutions and did not receive a copy of the minutes of that meeting of directors ‘until some five weeks later’ which, she said, were “buried” in almost 900 pages of discoverable documents on a disk provided by the husband’s solicitors.
The husband’s evidence in relation to the meeting on 27 March 2014, as contained in his affidavit filed 12 June 2014, is that:
·   the loan repayments were made in accordance with the various loan agreements, the terms of which the wife was well aware;
·   prior to the wife’s resignation as a director, she was provided with notices of directors’ meetings and copies of the minutes of those meetings when same was provided to all other directors;
·   once the wife resigned as a director it was no longer necessary that she be provided with notice of directors’ meetings;
·   no resolutions were circulated prior to the meeting;
·   he was not present at the meeting when the resolutions were proposed, discussed and passed;
·   the resolutions were passed in the ordinary course of business;
·   he provided the wife with a copy of the minutes of that meeting in accordance with his obligation to provide full and frank disclosure on an ongoing basis; and
·   the minutes were not “buried” on the disk as alleged by the wife nor was there anything untoward about his conduct.
On 3 June 2014, having received a copy of the minutes of the meeting of directors on 27 March 2014, the wife filed an Amended Application in a Case seeking, inter alia, orders joining the third and fourth respondents and their associated entities as parties to the proceedings and orders restraining them from dealing with the monies paid to them pursuant to the resolutions passed on 27 March 2014.
On 12 June 2014 Thornton J made orders by consent that, inter alia, until further order the husband and the third and fourth respondents and their associated entities be restrained from disposing of or dissipating the balance of any funds paid to them pursuant to the resolutions passed on 27 March 2014 except in certain circumstances specified in the said orders. Paragraphs 1 to 3 of the consent orders are as follows:
1.The [h]usband and the Third, Fourth, Fifth, Sixth and Seventh Respondents be restrained from disposing of or dissipating the balance of any funds paid to them pursuant to the resolutions passed at the 27 March 2014 Directors Meeting of [H] repaying the loans owed to the respective Respondents (“the Funds”) save:
a)   for the purposes of advancing the Funds or any part thereof back to [H]; or
b)     meeting taxation assessed against the relevant Respondents arising from [H] distributions made for the 30/6/13 or 30/6/14 financial years; or
c)     otherwise upon the giving of 21 days prior written notice to the wife’s solicitors, including details of the proposed application of the Funds.
2.In the event the Respondents advance monies to H from the Funds and such sums are subsequently repaid to them, those monies are to be subject to paragraph 1 hereof.
3.In the event the Board of [H] resolves to make any distributions in the Financial Year ended 30 June 2014 then:
a)   any sums so allocated to the Respondents shall be loaned back to [H] on the same terms as provided in the Loan Agreements entered into in June 2013;
b)     such distributions are without prejudice to each party’s position in relation to the proper entitlements of each in the [Crawford] Group of Companies;
c)     that any sums so advanced, which are the subject of a resolution passed by [H] or a decision by [H], to repay same in part or in full, shall be subject to paragraph 1 herein.

THE INJUNCTIVE RELIEF

The wife’s case

There are, in effect, two limbs to the wife’s application for injunctive relief.
The first of those limbs relates primarily to what counsel for the wife alleges are the steps taken by the husband and the third and fourth respondents to fundamentally alter the beneficial ownership of [Crawford] Developments, the consequences of those changes being that Crawford Developments as the trustee of the CDUT operates for the benefit of the unit holders of the trust and not the shareholders. It is the wife’s case that the units in the CDUT being held equally by the husband and the third and fourth respondents and/or their associated entities, the CDUT was created to benefit the husband and the third and fourth respondents at her expense.
The CDUT was established by a deed of trust dated 3 December 2013. Although the wife complains about the way in which discovery of the trust deed was provided, she does not dispute that she was provided with a copy of that deed.
On 23 June 2014 the wife’s solicitors forwarded a letter to the husband’s solicitors. This was the first in a series of letters referred to and relied upon by counsel for both the husband and the wife. The relevant parts of that letter are as follows:
We acknowledge receipt of your letter dated 20 June 2014 addressing the disclosure of documents in relation to the [CDUT].
We have now had the opportunity of perusing the CD-ROM forwarded by [the third respondent] on 13 January 2014, which you assert contained a copy of the trust deed.
You are aware that we have previously complained about documents being “buried” within discoverable documents contained on the CD-ROMs forwarded to our office. With respect, the disclosure on this particular document is a perfect example of our complaints. The document was not included as a standalone document. In fact, its provision was on one view, cleverly contained within construction specifications at page 6,065 of 11,700 discoverable pages (in which further attachments were embedded, taking the total to considerable (sic) more than this figure).
You are correct that it was subsequently forwarded to [Mr J] on 29 January 2014. We note, however, that the deed was apparently executed on 3 December 2013. There was no specific disclosure of same to our office until some 6 weeks later, when it was attached to the documents as referred to above. We also note that that although [Mr K’s] report contained a group structure diagram, the [D Group Trust] does not appear in same. The closest nominated trust is the [D Trust]. Is this one and the same, or is this a different entity?
Further, although the deed was apparently executed on 3 December 2013, no doubt the instructions to prepare the trust deed would have been given a considerable time earlier. Please advise when those instructions were given. Please also advise when the trust deeds for the trusts which hold the units in the [CDUT] were executed, and when the instructions for their creation were provided.
Referring to the Deed itself, it suggests that 33 units have each been allocated to the D Enterprises Trust and the E Investments Trust. Please advise whether any transactions have been conducted by the [CDUT] in favour of any of the unit-holders since the creation of the trust. Please also advise whether it is intended that there be any distributions in favour of any of the unit holders prior to 30 June 2014 as, with respect, your commentary as to [Mr L’s] views (that he “does not anticipate that the trust will become operational prior to 30 June 2014”) is non-committal.
[Emphasis in original]
The next letter in that chain of correspondence, also tendered by counsel for the husband, was a letter from the husband’s solicitors to the wife’s solicitors dated 25 June 2014. It reads, relevantly, as follows:
With respect to the various aspersions cast in your latest letter (which are denied), we instructed as follows:
1.Once again we deny your assertion that the trust deed for the [CDUT] or any other document, was or have been “buried” within CD[-ROM] disks of discoverable documents provided to your office or that there was something improper in the manner in which documents were saved on the disk enclosed in our letter dated 12 February 2014 (or on any other disk). Notwithstanding your “complaints”, we note that your client abandoned paragraph 8 of her last application.
2.As stated in our letter dated 20 June 2014 and re-stated in paragraphs 3 and 4 of your letter, the [CDUT] was established on 3 December 2013, the trust deed for which was disclosed in correspondence sent or copied to your office on 13 and 29 January 2014 including as a specific enclosure to our letter to [Mr K]. It is unclear how the alleged delay in its disclosure could have possibly impacted on your client’s case, especially when the trust is still not operational.
…
5.With respect to the second sentence of paragraph 6 of your letter, we confirm the advice in our previous letter dated 20 June 2014 that no transactions have been undertaken by the [CDUT]. Had any transactions been undertaken, the trust would be operational.
6.[Mr L] has confirmed his previous advice that he does not anticipate that the trust will become operational prior to 30 June 2014. We understand there is a possibility (albeit extremely remote) that funds may be received by the trust from [I Pty Ltd] in the current financial year. [Mr L] has advised that, even if this occurs, it is highly unlikely there will be any distributions made in favour of the unit holders in the current financial year.
…
[Emphasis in original]
The wife deposes that on 30 June 2014 her solicitors received a letter from the husband’s solicitors attaching minutes of various directors’ meetings both for H and other entities in the Crawford Group. The husband’s solicitors advised in that letter, inter alia, as follows:
With respect to paragraph 3 of your letter, in circumstances where the [CDUT] is not operational and [Mr L] has advised that there is an “extremely remote” possibility of funds being received by the trust in the current financial year and, even if this occurs, it is “highly unlikely” there will be any distributions made in favour of the unit holders in the current financial year, we join issue with your suggestion that this somehow “avoids the issue and leaves [y]our client vulnerable…”
[Emphasis in original]
The minutes attached to that letter included the minutes of a meeting of the directors of Crawford Developments on 27 June 2014 in which, under the heading “Background”, it was noted as follows:
[Crawford Developments] … has operated as a Commercial Registered Builder in the States of Victoria, Australian Capital Territory and Queensland with [the fourth respondent] appointed as the nominated Director by requirement, of the relevant Builder Licensing Registration in each State or Territory. The directors sought advice in November 2013, and have acted on advice and established the [CDUT] for future asset protection for [the husband] and [the fourth respondent] as directors of [Crawford Developments], in particular given the warranties and undertakings provided personally by [the husband], [the fourth respondent] and [the third respondent] and [Crawford Developments], [CDUT], and [H Ltd] as Trustee for the [H Trust] ... (“[H]”) and that all parties have guaranteed performance in the contracts with [I Pty Ltd] (I Pty Ltd), including unlimited warranties for current and future projects to be delivered to [I Pty Ltd] under Design, Develop and Construction Contracts. The Directors assessed that as the Guarantors under the [I Pty Ltd] Contracts require each director’s guarantee, their unit holdings in [CDUT] shall reflect the current and future risk in the performance of the contract arrangements with both H and [I Pty Ltd].
A number of resolutions were passed at that meeting, including the following:
(b)That the company cease trading under the name [Crawford Developments] … as of 30 June 2014 … in its own capacity, and will continue trading as trustee for [CDUT] from 1 July 2014, and the [CDUT] be entitled to receive all income payable under any Building Contract or arrangement with … [H];
(c)That all current and future Income and receivables due to [Crawford Developments] with the exception of Paid Up Share Capital of [Crawford Developments] be paid to the [CDUT] and the [CDUT] shall pay all [Crawford Development’s] expenses which are outstanding and accrued as of 1 July 2014;
It is also part of what I have described as the first limb of the wife’s case that at a directors meeting of Crawford Developments on 11 July 2014:
·     the husband, who was both a director and secretary of Crawford Developments, resigned as company secretary of Crawford Developments;
·     the third respondent was appointed as a director and company secretary of Crawford Developments; and
·     the husband acquiesced in the issuing of further shares in Crawford Developments to the third and fourth respondents.
It is not the subject of dispute that the wife was not notified of the meeting of directors on 1 July 2014 nor provided with any proposed resolutions. The wife makes the point in her affidavit filed 1 September 2014 that this occurred in the face of the Court having made orders on 12 June 2014 upon her Amended Application in a Case filed 3 June 2014, orders which she submits were made as a result of the husband failing to provide prior notice of resolutions regarding the repayment of trust distributions by H as he was required to do pursuant to the orders made by consent on 18 July 2013.
Although the wife concedes that the orders did not require the husband to either give her notice of the meetings or proposed resolutions with respect to Crawford Developments and that on that basis the husband cannot be said to have breached the orders, it is her case that nonetheless he has acted ‘against the spirit and intent’ of the orders which, she says, were designed to ensure she had sufficient information about the corporate entities and trusts in which matrimonial property is held. The wife does however submit that the husband’s actions in resigning as company secretary of Crawford Developments, the appointment of the third respondent in his stead, and the issue of shares to both the third and fourth respondents is in breach of the undertaking given by him on 27 May 2013.
The second limb of the wife’s application for injunctive relief is that the husband is using Crawford Developments to deal with property in which he or they have an interest to her exclusion and possible detriment.
The wife deposes that H has contracted a significant part of its obligations pursuant to its contracts with I Pty Ltd for the design and construction of care facilities to Crawford Developments for risk management purposes. However, the wife asserts that the husband is inflating the true costs incurred by Crawford Developments in order to minimise the profits flowing to the entities which historically benefited from the contracts with I Pty Ltd, allowing the husband to control and distribute monies to an entity in which he now holds only a one third interest, being the CDUT, as against those trusts of which H, H One and H Two are trustees and which are the subject of injunctions made by this Court in the course of these proceedings.

The husband’s case

Counsel for the husband made the following submissions in response to the wife’s case:
·   that the wife in her Amended Application for final orders has not particularised her claim for property settlement and she must do so first if the Court is to determine the fundamental question of whether the proposed injunctions are necessary for the preservation of property;
·   that there is no evidence contained in the wife’s material as to what property the wife says has been dissipated or lost and that this is a fatal flaw in the wife’s application;
· that the wife has already joined as parties all of the people about whom she complains and is seeking orders against them pursuant to s 106B(1) of the Act, such that it cannot be said that even if the husband had, as she submits, diluted his interest in “the business” that the wife will not be able to obtain a property settlement by setting aside all the major transactions made in the operation of the business; and
·   relying upon the chain of correspondence – to which I have already referred – it is inappropriate and wrong for the wife to suggest that she was not kept informed about the activities of the Crawford Group.
Counsel for the husband also submitted that the injunctive relief sought by the wife would, in effect, give the wife a veto that would make it impossible to carry on the business, meaning the Crawford Group would effectively grind to a halt if Court intervention were required if the wife’s approval could not be obtained prior to the making of any business decision.

The third and fourth respondents’ case

Counsel for the third and fourth respondents submitted that the injunctions sought by the wife are too wide, too vague, are unworkable and would require the supervision of the Court. It was further submitted that the wife had not adduced any evidence of conduct that would justify such wide-ranging mandatory injunctions.
Counsel for the third and fourth respondents, in answer to counsel for the wife’s submission with respect to the creation of the CDUT which counsel for the wife submitted fundamentally altered the structure of beneficial ownership of an entity in which the husband had previously held all issued shares, made the following submissions:
·   that the wife and her solicitors were aware that since 2013 the fourth respondent had become a director of Crawford Developments;
·   that the wife and her legal advisers had been aware of the creation of the CDUT and the involvement of the trust in Project M since January 2014, documents in relation to the creation of the trust having been the subject of discovery by the husband at that time, and the wife had not objected either at the time the documents were produced nor sought injunctive relief in the terms of the orders she now seeks at the time of the previous hearings; and
·   that the resignation of the husband as the secretary of Crawford Developments and the appointment of the third respondent as secretary in his place was a pragmatic decision made in the usual course of business.
It was submitted on behalf of the third and fourth respondents that it is not intended to issue any further shares in Crawford Developments or to appoint any other directors or office holders pending the trial of this matter in February 2015 and hence there is no necessity for the injunctions sought by the wife and, in particular, those sought in paragraphs 2.1 and 2.2 of her Application in a Case. That being said, the third and fourth respondents – albeit it is their case that there was no evidence to support the wife’s case that they were likely to take such steps or that if they did it would be detrimental to the wife’s interests – were prepared to give undertakings to that effect.

DISCUSSION

In Waugh and Waugh (2000) FLC 93-052 (“Waugh’s case”) the Full Court (per Lindenmayer, Coleman and Brown JJ), although it considered it constructive to have regard to the principles which had been developed in other jurisdictions in relation to Mareva injunctions, reiterated that the jurisdiction this Court has to grant injunctions of the type sought by the wife in this case is a statutory jurisdiction deriving from s 114(3) and/or s 34(1) of the Act. Section 114(3) provides that this Court ‘may grant an injunction … in any case in which it appears to the court to be just or convenient to do so and either unconditionally or upon such terms and conditions as the court considers appropriate.’
The decision of the Full Court in Waugh’s case was discussed by the Full Court in Mullen and De Bry (2006) FLC 93-293 (“Mullen and De Bry”). The Full Court, rejecting the proposition that the Full Court in Waugh’s case had intended to prescribe a threshold question to be answered in the affirmative on the balance of probabilities as to the existence of a scheme to defeat judgment before making an order preserving property, said at paragraph 44 as follows:
Significantly, in our view, all that was said in Waugh in paragraph 46 was that the trial Judge did not consider “…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.”
Their honours did not say that the trial Judge had to find on the balance of probabilities, as a matter fundamental to success, that there was such a scheme.
Put another way, all that the Court said in Waugh was that the trial Judge had taken a fundamentally flawed approach and ought have addressed the question of whether there was any evidence of intention, as part of an enquiry into the risk of disposal of assets to defeat judgment.
[Emphasis in original]
The Full Court went on to say as follows:
46. Finally, we think it helpful to recognise that the essential power being exercised in this case is simply described in s 114(3).
“A court … may grant an injunction … in any case in which it is just or convenient to do so…”
47. Ultimately, each case will involve an overall assessment on a number of factors to determine the just or convenient result. Not all cases with the same identity of factors will necessarily produce the same result because of varying weight individually and comparatively.
48. We perceive that a real, though perhaps subtle, difference exists between, on the one hand, establishing on the balance of probabilities a risk or danger of a disposal of property intended to defeat an order and, on the other hand, proving to the civil standard and as an independent issue that a scheme to defeat an order exists.
49. In some cases, the possibility (based on some evidence) of an intention or scheme may, with other factors, be sufficient to establish the probability of an objective risk of disposal with intent to defeat an order.
50. It follows that we do not say that, in addressing the question of whether there is a risk of disposal of assets to defeat an order, it is unnecessary to enquire whether there is any evidence of an intention, plan or scheme to dispose of assets. But in an enquiry into the risk of disposal, the question of intention or scheme is but one of a number of factors relevant to the objective risk of disposition to defeat an order.
51. Moreover, while ultimately a particular factor may overwhelm others, it is generally unwise to commence with a rigid focus on finding, to a particular standard of proof, one or more of a number of factors relevant only at a discretionary level and subsidiary to the ultimate question.
[Emphasis in original]
It is not in dispute that this Court has the power pursuant to s 114(3) of the Act to make the injunctions sought by the wife. However, it is submitted on behalf of the husband and the third and fourth respondents that the Court should not exercise its discretion in the wife’s favour in this case.
The husband in this case previously gave an undertaking to this Court that he would not deal with any interests or shareholding in any company, partnership, business or trust that he and/or the wife have an interest in save in the ordinary course of business or with the wife’s consent including but not limited to:
·selling, disposing of, transferring or otherwise parting with possession or control of any shares in his name;
·resigning from any directorship or position of office; and
·from voting in favour of any resolution which may have the effect of issuing further shares in any of the entities or altering the constitution, memorandum of articles of association of trust deeds of any entities.
There is no dispute that at the directors’ meeting on 11 July 2014 the husband resigned as secretary of Crawford Developments and that the third respondent was appointed as a director and as secretary in his stead. It is the husband’s case and that of the third and fourth respondents that this occurred in the normal course of business.

The wife asserts that the husband also acquiesced in causing further shares in Crawford Developments to be issued to both the third and fourth respondents. The husband’s case is that he did not vote for the issue of those shares and that, in any event, the issue of those shares similarly occurred in the normal course of business. The husband did not offer any explanation as to why he abstained from voting. It was submitted by counsel for the wife that the clear inference that can be drawn is that the husband sought to distance himself from the decision. Although I am not in a position to make a finding, the husband’s decision to abstain is difficult to reconcile absent any explanation if, as he submits, the issue of the shares was in the normal course of business.
The husband similarly deposes that he was not at the meeting of directors on 27 March 2014 when resolutions were passed providing for the repayment of principal sums owing pursuant to loan agreements between H and the associated entities of each of the husband and the third and fourth respondents. The wife deposes that, not only did she not receive notice of the meeting or any of the proposed resolutions, it was not until some five weeks after the meeting that she received a copy of the minutes of that meeting. It was submitted on behalf of the wife that it is inconceivable that a transaction involving the repayment of more than $25 million would be raised for the first time during the meeting. Both the husband and the third respondent depose to the substantial operations of the Crawford Group and, whilst the husband and the third and fourth respondents may ultimately prove on the balance of probabilities that this is the way in which it conducts its business, it would seem somewhat unusual for an enterprise such as this one.
The reasons given for these changes by the husband and the third and fourth respondents, in summary, are as follows:
·that the husband has been open and transparent about taking a less active role in both H and Crawford Developments since turning 55 in May 2014;
·that the third respondent holds the position of company secretary of H, H One and H Two and is H’s legal compliance manager. As the work the third respondent has previously undertaken for H has been taken over by Crawford Developments, her appointment as company secretary of that company was a pragmatic and appropriate use of her skills and experience;
·that it is standard business practice that where there is more than one director appointed to a company, cheques and other documents (such as bank and legal documents) must be signed by two directors or by one director and the company secretary. The appointment of the third respondent as company secretary means that two directors or one director and the company secretary will still be available to sign cheques and documents when one of the directors is on leave or otherwise unavailable;
·that the third and fourth respondents and the husband have personally and through their associated entities provided guarantees to both I Pty Ltd and the ANZ Bank, which the husband deposes includes the loan facility for Crawford Developments; and
·that as directors and shareholders of Crawford Developments, the third and fourth respondents will be required to guarantee Crawford Developments’ obligations in relation to any loans of the company or of the company in its capacity as trustee for the CDUT and that this is standard business practice to ensure that all unit holders assume proportional responsibility for debt of the enterprise.
The fact that as Crawford Developments is trustee of the CDUT neither the third nor fourth respondents gained any advantage by the issue of the additional shares as they or their associated entities hold units in the CDUT in my view, based upon all of the circumstances, fails to address the issues in the case. The creation of the CDUT, in combination with the appointment of the third respondent as both a director and secretary of Crawford Developments, which is now the trustee of the CDUT, does represent what would appear to be a structural change in the corporate structure giving potential entitlements to the third and fourth respondents that they previously did not have.
The evidence of the husband, and the third respondent’s assertion, that these steps were taken in the normal course of business because I Pty Ltd wanted Crawford Developments or CDUT to undertake the building work, and/or because the fourth respondent is the only person who held a registered commercial builder’s licence, and/or because both the third and fourth respondents have provided extensive personal guarantees to I Pty Ltd in relation to Crawford Developments responsibilities under the relevant contract, does not, in my view, sit comfortably with other parts of the evidence in this case, including the following:
·that as the husband deposed, Crawford Developments has been exclusively designing, developing and constructing aged care facilities for H as “project managers” since 2006;
·the fact that the fourth respondent was already a director of Crawford Developments and, according to the wife’s evidence, has been since 16 May 2013;
·the husband’s evidence that since separation he has, through CDUT ‘moved to continue and expand the business enterprise which [he] commenced before meeting the wife’, in circumstances where CDUT was created by deed of trust dated 3 December 2013, and its creation was not disclosed until the trust deed itself was sent to the wife’s solicitors on 14 January 2014 together with some 11,000 other pages of documents contained on a CD-ROM; and
·that the solicitors for the husband wrote to the wife’s solicitors on 25 June 2014 advising that the CDUT was not operational, which was confirmed in their letter to the wife’s solicitor dated 30 June 2014, in circumstances where the various deeds and design and construct contracts to which both Crawford Developments and CDUT are parties to were signed on 29 January 2014.
There are many cases in which parties are unable to particularise their claim for property settlement. This may be, amongst other reasons, because all of the necessary information is not available or because valuations have not been completed. I do not accept that it is on that basis not open to a party in those circumstances to seek injunctive relief to protect property even if they cannot, at the time that they seek that injunctive relief, specify with particularity the orders they seek by way of property settlement. Nor do I accept that it is necessary for the wife in this case to have demonstrated what property she says has been dissipated or lost in order for the Court to make the orders she seeks. As the Full Court said in Mullen and De Bry, the question the Court must address is whether there is a risk of the disposal of any assets to defeat an order based upon any evidence of there being such an intention, plan or scheme, but that that in any event is but one of a number of factors to be considered.
In this case, there is evidence of both a change in the corporate structure and, subject to the husband satisfying the Court that those changes in the corporate structure were in the usual course of business, a possible failure on the husband’s part to abide by his undertaking to the Court. Those changes, on their face, dilute the husband’s interest in Crawford Developments, which, based upon his evidence, is and has been for some time an integral part of the operations of the Crawford Group. Although it may be that in the fullness of time when the evidence is tested that the Court will be satisfied that the changes in the company structure occurred with the wife’s consent and/or in the normal course of business, having regard to all of the circumstances of this case and the history of these proceedings with respect to the conduct of the Crawford Group generally, but more particularly Crawford Developments, I am satisfied that it is both just and convenient to accede to the wife’s application for injunctive relief, at least in relation to what I have described as the first limb of her application.
The wife seeks to preserve the status quo and, in my view, is entitled to conduct the litigation on the basis of that status quo rather than having to retrospectively identify transactions that have occurred which may alter or have altered the corporate structure and determine what, if any, impact those transactions have upon the conduct of the case and/or her entitlements. It is not, in my view, sufficient to say that as the third and fourth respondents and their associated entities are parties to the proceedings that that will be sufficient protection of the wife’s ultimate entitlements in this case. The wife would in those circumstances first be required to establish what changes, if any, have been made to the corporate structure and how that might impact, if at all, upon her entitlements before being in a position to seek orders against the third and fourth respondents. In my view, she should not be required to conduct the litigation in this manner.
It is submitted by the husband and the third and fourth respondents that they do not have any intention of making any further changes in the structure of the Crawford Group, and more particularly Crawford Developments, prior to the final hearing. In those circumstances, any prejudice to the husband and the third and fourth respondents as a consequence of making the orders the wife seeks in paragraphs 2.1 and 2.2 of her application is limited. I am not satisfied in circumstances where there is a dispute as to whether actions of the husband and the third and fourth respondents, of which the wife complains, have occurred in the normal course of business that it is either appropriate or workable for the orders to contain an exception for actions asserted to be carried out in the normal course of business. The orders I propose to make will permit both the issue of shares and changes in the office holders of Crawford Developments with the wife’s prior written consent conditional upon the provision of documentation that would enable her to make an informed decision. It is always open to the husband and the other respondents to seek orders permitting them to issue further shares or change the office holders of Crawford Developments in the event that the wife were to unreasonably withhold her consent.
I must weigh up the possible prejudice to the husband and the third and fourth respondents of making the orders sought by the wife as against the prejudice to the wife of not making those orders. There is, in all of the circumstances, arguably no prejudice to either the husband or the third and fourth respondents caused by the orders sought by the wife restraining them from making any further changes to the corporate structure of the Crawford Group. However, I am satisfied that the prejudice to the wife in the conduct of these proceedings is significant and I propose to make orders in terms of paragraphs 2.1 and 2.2 and 5 of the wife’s Application in a Case filed 1 September 2014. There is, in relation to at least this part of the wife’s application, no evidence of any damages that might be incurred by the husband or the third and fourth respondents which would support or require the wife to give an undertaking for damages.
Although I am satisfied that the wife has established a basis for the injunctive relief sought in paragraphs 2.1 and 2.2 and 5 of her Application in a Case, I agree with counsel for the husband and counsel the third and fourth respondents that neither the evidence nor the balance of convenience supports the granting of the wide-ranging mandatory injunctions sought by the wife in paragraphs 3 and 4 of that application.
The wife in her affidavit filed 1 September 2014 deposes to the following matters:
·that the husband may be using Crawford Developments to deal with matrimonial property to her exclusion, inflating the true costs incurred by Crawford Developments in order to minimise the profits flowing to the other entities;
·that she is concerned the husband has attributed his personal costs and those of the third and fourth respondents to Crawford Developments. By way of example, the wife annexed an invoice for the purchase of firearms and ammunition, and it was her evidence that the husband and the fourth respondent have ‘a keen interest in recreational shooting’;
·that there are anomalies in what has been accepted as the industry cost of funding the construction of aged care facilities on a “per bed” basis and the basis and the amounts charged by Crawford Developments; and
·that is her belief that the “wash through” to Crawford Developments (and consequently the CDUT) is designed to reduce the interest held by the husband to a one-third interest and that the CDUT has been set up to divert funds which would otherwise flow to the other entities within the Crawford Group.
I am not satisfied on the balance of probabilities that, even if the corporate structure has been altered to enable the husband and the third and fourth respondents to benefit themselves to the wife’s detriment as she asserts, that her evidence as it currently stands in relation to H diverting funds to Crawford Developments or attributing personal expenditure to Crawford Developments is sufficient to support the breadth of injunctions sought by the wife in paragraphs 3 and 4 of her Application in a Case with respect to dealing with funds, particularly given the potential prejudice to the operations of the Crawford Group. Although the Court may ultimately determine that the wife’s concerns were well-founded, there is not sufficient evidence as it currently stands to substantiate the wife’s concerns.
It is also necessary, in my view, to distinguish between transactions as between the husband and the third and fourth respondents and their various entities and those between third parties which relate to the day-to-day operations of the Crawford Group, such as payments to staff and contractors engaged in the construction of the aged care facilities.
The third respondent and, in particular, Mr G the accounts officer in the employ of Crawford Developments have set out in some detail in their affidavit material both the volume of transactions and the interdependence between the various projects undertaken by the Crawford Group, such that any failure by Crawford Developments or the CDUT to meet their contractual requirements with respect to any one project would permit I Pty Ltd to elect not to proceed with and/or terminate the other projects.
I am satisfied that the injunctive relief sought by the wife in paragraphs 3 and 4 of her application requiring the husband and the third and fourth respondents and their associated entities to provide notice to the wife of transactions they assert to be in the normal course of business is too broad, onerous and simply unworkable. I agree with counsel for the husband and counsel for the third and fourth respondents that Project M could effectively “grind to a halt” if such injunctions were made, putting the operations of the Crawford Group as well as the parties, and including the wife, at risk.
In all of the circumstances of this case, having weighed up the asserted risk against the inconvenience and prejudice to the husband and the third and fourth respondents and their associated entities, I propose to dismiss paragraphs 3 and 4 of the wife’s Application in a Case.
The orders made by consent on 12 June 2014 address any proposed distributions by H for the financial year ending 30 June 2014; they do not deal with any distributions that might be made by Crawford Developments as trustee of the CDUT to the unit holders of that trust. For the reasons to which I have already set out I am not satisfied that it is just or convenient to make the orders the wife seeks insofar as they relate to and impact upon the day-to-day operations of the Crawford Group. It is for that reason that I do not propose to make an order in terms of paragraph 2.3 of the wife’s Application in a Case. However, I am satisfied, striking a balance between any risk there may be of the disposal of any property and the need to allow the day-to-day operations of the Crawford Group to continue unimpeded, that it is just and convenient to restrain the husband and the third and fourth respondents from voting in favour of any resolution or taking any steps which would have the effect of distributing funds to unit holders of the CDUT (of which Crawford Developments is the trustee) without the wife’s prior written consent.

DISCOVERY

In paragraph 6 of her application the wife also seeks orders that within 30 days the husband provide full and complete discovery by way of the following:
6.1an affidavit of documents identifying all documents electronically discovered by him and relied upon by him to date;
6.2answers to specific questions posed by the [w]ife in relation to information relevant to the case … unconstrained by the limitations of the number of such questions [pursuant to rule 13.26(2) of the Rules]; and
6.3an index or itemised schedule of description accompanying all further documents discovered by him in the future.
The wife has complained throughout the proceedings about the manner in which the husband has provided disclosure of documents in his possession and control relevant to the issues in dispute in this case. The wife deposes that the disks of documents provided by the husband contain large numbers of documents which are not in chronological order, are often unlabelled, and are not identifiable or grouped together by subject matter. The wife further deposes that the husband has made discovery more difficult by interspersing highly relevant documents with irrelevant or extraneous documents, one example being, she says, the deed of trust of the CDUT. It is submitted on behalf of the wife that without a proper schedule of documents there is a very real risk that she will not be properly apprised of the relevant documentation in this case.
Counsel for the husband submits that the number of the documents the husband is obliged to provide is a direct result of the orders made at the behest of the wife on 18 July 2013 and a mark of the size and complexity of the business carried out by the Crawford Group. Insofar as the wife seeks compliance with the orders, counsel for the husband submits she cannot then be heard to complain that there are too many documents.
As submitted by counsel for the husband, the Rules do not make provision for the filing of an affidavit of documents, as sought by the wife in paragraph 6.1 of her application, however the Rules do make provision for disclosure by service of a list of documents. It is also the case that this Court can make orders as to the conduct of matters it considers may be necessary to do justice to the parties.
For disclosure to be meaningful there must be some order to that process. There is a real risk that the provision of a large volume of documents will be contrary to the principle which underpins the parties’ obligation to provide full and frank disclosure. I make no finding as to whether that was the intent of the husband in this case however I am satisfied that it is likely to be the consequence.
Notwithstanding the wife’s complaints in this case, it is her evidence that she has already reviewed at least some of the disks and files previously provided by the husband. It is not disputed that they contain a very large number of documents. However, it is also common ground that the husband has recently provided an index of the documents contained on each disk and, in my view, although I do not propose to require him to file an affidavit of documents I am satisfied that it is proper that he provide an itemised schedule identifying the subject matter of the documents he has produced to date and that the husband continue to do so for any further documentation that he is required to produce, and I will order accordingly.

Answers to specific questions

Although counsel for the husband submitted that the wife had not advanced any evidence to suggest that the operation of the Rules with respect to a request for answers to specific questions should not apply, the main purpose of the Rules is to ensure that each case is resolved in a just and timely manner at a cost to the parties and the Court that is reasonable in the circumstances of the case. Rule 1.12 provides that the Court may dispense with compliance with the Rules and in doing so may consider, inter alia, the main purpose of the Rules, the administration of justice, and the effect that granting relief would have on each party and parties to other cases in the Court.
The circumstances of each case are different and I am satisfied that on the basis of the obvious complexity of this case a limit of 20 questions as provided for in the Rules is not appropriate in this case. I am however mindful of the obligation that is imposed upon the parties having to answer questions and on that basis I am not prepared to allow the wife to request answers to an unlimited number of questions. I am also satisfied that if the wife is to be permitted to request answers to more than the 20 questions prescribed by the Rules, the other parties should similarly have the same opportunity. In all of the circumstances I propose to make an order allowing each of the parties to request answers to 50 questions in this case.

I certify that the preceding seventy-two (72) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered

14 November 2014.

Associate:

Date: 14 November 2014