Ledarn and Ledarn

FAMILY COURT OF AUSTRALIA

LEDARN & LEDARN

[2010] FamCA 1107

FAMILY LAW – INJUNCTIONS – Exclusive occupation of business premises

Family Law Act 1975 (Cth)

Davis and Davis (1983) FLC 91-320
Jackson v Sterling Industries Ltd (1987) HCA 23; (1997) 162 CLR 612
Mareva Compania Naviera SA v International Bulkcarriers SA (1975) 2 Lloyds Reports 509
Mullen and De Bryn (2006) FLC 93-293
S & S (2002) FamCA 59
Waugh and Waugh (2000) FLC 93-052

APPLICANT:

MR LEDARN

RESPONDENT:

MS LEDARN

FILE NUMBER:

MLC

6423

2010

DATE DELIVERED:

2 December 2010

PLACE DELIVERED:

Melbourne

PLACE HEARD:

Melbourne

JUDGMENT OF:

THE HONOURABLE JUSTICE CRONIN

HEARING DATE:

23 NOVEMBER 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT:

MR NORTH SC WITH MR HUTCHINS

SOLICITOR FOR THE APPLICANT:

AUGHTERSONS

COUNSEL FOR THE RESPONDENT:

MR GEDDES QC

SOLICITOR FOR THE RESPONDENT:

SAXBYS LAWYERS

Orders

That the hearing on 23 February 2011 be vacated.
That the initiating application of the wife filed 21 September 2010 and the response thereto filed by the husband on 9 November 2010 be referred to the Co-ordinating Registrar for the purposes of appointing a conciliation conference to conducted as soon as practicable.
That until further order and unless otherwise agreed, the wife be and is hereby, restrained from being on the premises at S2 other than between the hours of 8.30 am to 10.30 am on any day in any week.
That until further order and unless otherwise agreed, the husband be and is hereby, restrained from being on the premises at S2 between the hours of 8.30 am to 10.30 am on any day in any week.
That the application in a case of the husband filed 9 November 2010, the response by the husband filed 9 November 2010 to the wife’s application in a case, the application in a case of the wife filed 21 September 2010 and the response to the husband’s application filed by the wife on 15 November 2010 be dismissed.
That each party have liberty to apply on short notice for further orders, such applications to be arranged in writing with my Associate.

IT IS CERTIFIED:

That pursuant to Order 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel, including senior counsel to attend.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 6423 of 2010

MR LEDARN

Applicant

And

MS LEDARN

Respondent

REASONS FOR JUDGMENT

Competing applications were lodged by Ms Ledarn (“the wife”) and Mr Ledarn (“the husband”) seeking injunctive orders after a long marriage in which they have apparently ended up with a very successful business and millions of dollars of property. Even an interlocutory dispute such as this was bitterly fought. For reasons which follow, I do not propose to make orders that would substantially interfere with the legal rights of either party.
The parties began living together in about 1979, and were married in 1980. The marriage has come to an end although it is not clear precisely when that decision was made or when the parties separated.
There are four adult children of the marriage who are estranged from the husband. All children are financially independent.
Both parties are 51 years of age and have been conducting their business which manufacturers, sells and installs automotive parts for specific vehicles for many years. The businesses are conducted under a variety of entities. These businesses operate out of two factory premises at S2 and S1. Although it was substantially disputed, I am satisfied that S1 is predominantly where the administration is conducted and that has essentially been the premises occupied by the wife. S2 property is a production factory which has been more or less entirely occupied by the husband. The two factories are across the road from one another.
From the wife’s perspective, working with the husband has become intolerable. From the husband’s perspective, the problems of the business relating to cash flow, are all as a result of mismanagement of the wife. In respect of the latter, I am not able to make any finding as there are significant discovery issues as yet unresolved.

The applications

Whilst the husband was overseas on what he described as long service leave, the wife filed an application on 21 September 2010. She sought and (on the basis of the evidence she submitted) was granted an urgent hearing. There is some significance in that having regard to her subsequent compromise.
In the wife’s application filed 21 September 2010, she sought that the husband resign from the various entities, he be restrained from entering the business premises and also be restrained from dealing with assets. She sought orders that he be restrained from discussing proceedings with employees and that otherwise she pay him $8000 per month. She also sought that the husband account to her for money that he had received.
The parties came before me in the Judicial Duty List on 12 October 2010 at which time, the court record shows that the husband had not filed any material. I shall return to those orders in a moment.
On 9 November 2010, the husband filed his responding material. He sought that the wife’s application be dismissed. He sought orders that the wife be restrained from disposing property, drawing cheques unless signed by both and changing corporate details. The husband then sought various financial information be provided to him by the company’s accountant.
Perhaps not high on the agenda of the husband when the response was filed was a request for an order that the wife relocate her administration offices back to S1 and allow him undisturbed use of S2 property.

The orders of 12 October 2010

Both parties appeared on 12 October 2010 represented by senior counsel. They were unable to resolve all of the matters in their respective applications and agreed to a temporary position pending an ultimate determination at an adjourned hearing on 23 February 2011 which was expected to take one day.
Importantly, both parties compromised their respective positions for the period until 23 February 2011.
The orders of 12 October 2010 provided for each party doing whatever was necessary so that each was paid $12,000 per month from the business and a variety of restraining orders was made in relation to business activities. The wife was restrained from acting upon resignation documents and company change details because she had possession of documents signed by the husband. The wife’s position in respect of those documents was that the husband willingly signed them and the husband’s position was that the wife had put them under his nose in a bundle of documents and tricked him into signing them.
Neither party agreed to orders for the exclusion of the other from the respective business premises.
When the affidavit material was read in relation to the circumstances giving rise to the applications for the exclusion orders, it was abundantly clear that the parties had a different view of what each other had done not only in terms of their personal backgrounds but also their activities in relation to the business.
The compromise on 12 October 2010 appeared a sensible one on the basis that the parties would continue to work together and monitor the financial arrangements.

Intervention order

Only weeks after the 12 October compromise, the parties embroiled the police in their dispute which led to the wife obtaining an intervention order in the State Magistrates Court. The police applied on her behalf, arising out of an incident on 4 November 2010. Even the circumstances under which that incident occurred were hotly contested. Having regard to all of the evidence I heard, I am not able to make any finding about how that incident arose. It is important to point out however, that a magistrate was prepared to make an intervention order excluding the husband from S1. Albeit the husband’s perception was that the intervention order should not have been made because it was not comprehensively dealt with by the Magistrates Court, I am satisfied it is an order that makes sense having regard to the state of the personal relationship between the parties. Even on the husband’s own evidence, the administration was conducted from S1 and there was little need for him to be there in circumstances where there was adequate email access between the parties at a time when their personal relationship was at a very low ebb.
What was bizarre arising out of the intervention order hearing however was that it was common ground that at the conclusion of the long day before the magistrate, he said to the wife that it might be prudent for her not to attend S2 property. Within hours of the statement being made by the learned magistrate, the wife attended the premises because she said she had to complete the payroll. Why that could not have been done from S1 is unclear. That incident provoked police intervention again and there may very well yet be proceedings arising out of that incident.

The husband files an application 9 November 2010

With the intervention order having been made and the husband being excluded from S1, on 9 November 2010, he filed an application seeking orders that the wife be restrained from attending at or near the S2 property.
In final address, Mr North SC for the husband offered a compromise position to allow the wife to attend at the S2 property from 8.30am to 10.30am each day. Mr North said that the offer was made by the husband to enable the wife to “massage the bruised morale” of the staff. I suspect the staff’s morale is not only bruised but at a very low ebb but I am satisfied that that is not a basis upon which I should determine this case for reasons that follow.
It will be evident that the husband brought the application to exclude the wife because the compromise of 12 October 2010 had completely broken down and having been excluded from S1, he wanted the protection similar to that of the wife under the intervention order.

The wife’s response

On 15 November 2010, the wife filed a response which unashamedly gave the appearance of abandoning the compromise position of 12 October.
The wife sought orders that the October orders be discharged and the husband be restrained from selling, pledging, encumbering, disposing of or dealing in any way with any of the assets of a variety of entities. A variety of orders was also sought in relation to being permitted to change locks, pay wages and provide information to the husband. However, she also specifically sought the following order:
Attending at or loitering near the business premises situated at [S1]…and at [S2 property]…
In early discussion, Mr Geddes QC on behalf of the wife conceded that she could not seek an order in those terms in respect of S1. That led to considerable argument about jurisdiction and I delivered extempore reasons finding that I did have jurisdiction to deal with the application in respect of S2 property.
In her counsel’s final submissions, the wife resiled from the application to seek orders discharging those made on 12 October saying that the focus of her present application was simply to exclude the husband from the premises at S2.

The hearing

By the orders I shall make and because this matter has had sufficient court time, I propose to vacate the hearing on 23 February 2011. I do so in the knowledge that the wife has not pursued a number of orders. The parties always have the opportunity to bring a further application in the event that either the orders I propose to make break down or some other issue of substance arises.
Each party had filed and relied upon a series of affidavits. Those affidavits set out many controversial facts. I indicated in the initial hearing that I was unable to determine the matter on the basis of those papers and adjourned the hearing to a full day in which I indicated I would permit limited cross-examination. That gave the parties an opportunity to ventilate and test the issues most crucial to them.

The positions of the parties

The positions of the parties are therefore simple. The wife wants absolute control of the business and its premises and the exclusion of the husband save for him being given information about the activities of the business. From her perspective, that supports the status quo because in her view, the husband has not been an integral participant for some time anyway. Her argument was that the orders she proposed would protect the property of the parties.
The husband simply wanted the wife to return to the place where she had maintained an office until he went on holidays in August 2010 and for the compromised position to continue. That meant that the business would be jointly conducted albeit in a very strained atmosphere.

Jurisdiction

Section 39 of the Family Law Act 1975 (Cth) (“the Act”) gives jurisdiction to the Court in relation to matrimonial causes.
Matrimonial cause is defined in s 4 of the Act relevantly as:
Proceedings between the parties to a marriage for an order or injunction in circumstances arising out of the marital relationship…
The provisions under which I am determining this matter are found in s 114(1) of the Act. That provision says:
(1) In proceedings of the kind referred to in paragraph (e) of the definition of matrimonial cause in subsection 4(1), the court may make such order or grant such injunction as it considers proper with respect to the matter to which the proceedings relate, including:
(a)an injunction for the personal protection of a party to the marriage;
(b)an injunction restraining a party to the marriage from entering or remaining in the matrimonial home or the premises in which the other party to the marriage resides, or restraining a party to the marriage from entering or remaining in a specified area, being an area in which the matrimonial home is, or the premises in which the other party to the marriage resides are, situated;
(c)an injunction restraining a party to the marriage from entering the place of work of the other party to the marriage;
(d)an injunction for the protection of the marital relationship;
(e)an injunction in relation to the property of a party to the marriage; or
(f)an injunction relating to the use or occupancy of the matrimonial home.
The wife’s application is brought under s 114(1)(e).
Senior counsel for the husband described the power being exercised as similar to that in s 114(1)(f). In other words, I was to determine the matter on the same basis that I would about exclusive occupancy of a matrimonial home.
Section 114(1)(b) provides for the type of situation also envisaged by the husband because the injunction relating to exclusive occupancy concern parties’ personal protection. Here, the power sought to be exercised under s 114(1)(e) by the wife relates to the protection of property.
Section 34(1) of the Act provides that the Court has power in relation to matters within its jurisdiction to make orders of such kinds as it considers appropriate.
Given the jurisdiction to which I have referred, the power of the Court is very wide. When the similar provision in the Federal Court of Australia Act was considered by the High Court in Jackson v Sterling Industries Ltd (1987) HCA 23; (1997) 162 CLR 612 Deane J said:
There may have been a time when it would have been strongly arguable that the making of an interlocutory order to preserve assets of a defendant pending the determination of proceedings against him could not properly have been seen as “appropriate” to be made by a court in relation to the exercise of the jurisdiction to entertain the substantive proceedings. If that be so, that time has passed. Orders preventing a defendant from disposing of his assets so as to create a situation in which any judgment obtained against him would not be satisfied may be of comparatively recent development. They have however, become an accepted incident of the jurisdiction of superior courts throughout most of the common law world.
In Waugh and Waugh (2000) FLC 93-052, the Full Court was critical of a trial judge whose reasons did not disclose whether he considered injunctive orders were necessary and went no further than necessary, to prevent the abuse or frustration of the Court’s process in an application for property settlement. The Full Court said:
46.Whilst 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.
…
52.Had there been some clear evidence given by the wife (even if denied by the husband) of some disposition of property by the husband, or other conduct by him from which an inference might reasonably be drawn that he had embarked, or was about to embark, upon a course of action which was designed to or, irrespective of design, would be likely to defeat any anticipated order in the substantive proceedings in the wife’s favour, then perhaps we might be persuaded to uphold his Honour’s orders notwithstanding his failure to identify the factual basis (whether attested to by the wife or inferred by his Honour) upon which he proceeded in so doing.
In an indication of what approach should be taken, the Full Court went on to say:
53.The wife’s affidavit in support of her application was replete with statements that she “feared” the husband would do this or that with the property under his control, or with one or other of the trusts through which he conducts his business operations, but it contained no assertion that he had in fact disposed of anything or incurred any liability other than in the ordinary course of his business operations…
In many cases where parties pursue “Mareva” type orders (see Mareva Compania Naviera SA v International Bulkcarriers SA (1975) 2 Lloyds Reports 509, their ultimate intention is to seek a cash payment or division of assets but not always to seek to retain a business which has often created their wealth. Where conduct which has the effect of diminishing value is alleged, orders are made with conscious regard to the protection of the value of the “pool” of assets. However equitable adjustment can often be made between the parties where there are other adequate assets to meet that need.
Waugh was re-examined in Mullen and De Bryn (2006) FLC 93-293. There the Full Court in referring to Waugh said various remarks about s 114 of the Act implied a more liberal approach in applications in this Court for preservation of property than at general law. Their Honours said there was nothing in Waugh which required an applicant to establish there was a scheme to defeat a judgment in the substantive proceedings. Their Honours said that each case involved an assessment of a number of factors to determine the just or convenient result. Varying weight would have to be given to individual circumstances.
The Full Court went on to say:
48.His Honour did not address this issue at all in his reasons for judgment published on 9 September, 1999, and he made no findings of fact, either then or in the course of the hearing on 22 and 25 June, 1999, going to this issue. The only comments which his Honour made, in the course of the hearing, apparently in response to Mr Harding’s submissions outlined in paragraph 47 hereof, were to the following effect:-
(at Appeal Book p.176 line 18 – in response to the second statement of Mr Harding quoted in paragraph 47 above): “There are all sorts of funny things happen in these situations with businessmen who have many entities and history suggests caution.”;
(at Appeal Book p.177 line 30 – in response to Mr Harding’s third statement quoted in paragraph 47): “Well no doubt she’s advised by competent people. … If they’re just killing the goose well she won’t get the golden egg, there’ll be no golden egg for anybody.”; and
(at Appeal Book p.178 line 1 – in response to the fourth statement of Mr Harding quoted above): “Well, there were problems in New Zealand, weren’t there? Substantial losses in New Zealand. That would scare anybody. If a person is skating on the edge, you would want to be sure that things were secured while you are litigating about all of the worldly goods, particularly if you’ve been married for a long time and have children.”
49.This issue was raised again by the husband’s then counsel (Mr Lloyd) at the continued hearing on 25 June, 1999, and again not really dealt with by his Honour, as the following extract from the transcript of the proceedings on that date (at Appeal Book p.211 lines 8-46) demonstrates:-
“MR LLOYD:No, there hasn’t, your Honour, however, what my friend in his submission really went to was not the essence of what the applicant for an injunction has to prove to the court. It was a submission based on some documents that are in fact here but there is a plethora, as your Honour is well aware, of case law and it’s the husband’s submission that there simply is no fear, no danger, no apprehended fear shown by the wife to justify this court exercising its discretion in granting the injunctions that the wife seeks; it simply is not there in the affidavit material. Further, your Honour has been asked to look at draft valuations that are in essence the best my client could do given such short notice in these proceedings. So I have some submissions at law, your Honour, that I would make with respect to what the applicant needs to show this honourable court in order to be successful.
HIS HONOUR: This is an interim application, you can assume some legal knowledge in the court but if you want to state the principle shortly to remind us all I’m happy to hear it but I don’t want to be taken through the case once more.
MR LLOYD:Thank you, your Honour, I appreciate that. I’ll state it very simply, your Honour; the applicant must show that the fear or danger is real, that it’s not illusory – off the top of my head I think it was Stowe’s case – we say that that evidence simply is not before the court. There are certain objections that I would take the wife’s affidavit, however, given that these are interlocutory proceedings - - -
HIS HONOUR: For instance, in interlocutory proceedings hearsay is normal and appropriate. Fear and danger; your client is in a notoriously dangerous area of business activity. I draw inferences that those that involved in this sort of activity stand to make great riches and also stand to hit hurdles and the incentive of course is to play hard and hope for the big riches but there is in the nature of the enterprise significance [sic.] risks. It’s not as if he’s trading in an old family firm in iron and brass.
MR LLOYD:Quite, your Honour, indeed.
HIS HONOUR: He’s in a more sophisticated and dangerous activity. Now, you know enough about this case to know that my ambition is very simple although the attainment of it may be a little harder, it is to try and put the parties in a comfortable state pending the litigation at present they’re determined to have so I want your client to be able to get on with his life and exercise his undoubted skills to maximise his position in the world but I want the wife to have security.”
50.The reference by counsel, in that passage, to Stowe’s case, we take to be a reference to Stowe and Stowe (1981) FLC 91-027 in which (at 76,273-4) the Full Court held that to found an interlocutory injunction for the preservation of property, an objective risk of disposal must be established.
51.Counsel for the wife made no submissions before his Honour on this issue. That is not surprising, since it became apparent, from a very early stage of the hearing on 22 June, 1999, from the comments of his Honour (some of which we have quoted in paragraph 45, above, and others of which are to be found at various points in the transcript – e.g. at Appeal Book p.180 line 15 and at Appeal Book p.186 line 32) that his Honour was firmly minded to grant an injunction in some form to provide the wife with reasonable security in respect of her property claim, and that the only question exercising his mind was the precise form of the order to be made. It is also clear from the whole of the transcript of the proceedings, both on that date and on 25 June, 1999, that his Honour never departed from that position, and perhaps the clearest example of that is to be found in his Honour’s statement at the end of the exchange with Mr Lloyd which we have quoted in paragraph 49 hereof.

In a case such as this, the applicant needs to show some evidence of conduct inconsistent with the ordinary course of business activities but also evidence which, if unrestrained, would have the effect of pointing to a diminution in value of the very asset the parties each desire to retain.
In Mullen (supra), the remarks of the Full Court were directed largely to the disposal of property and the scheme to defeat an order. Here, quite the contrary to those issues, each party asserts a desire to retain the asset and clearly its value. In the case of the wife, she asserts that the husband’s conduct has the potential to destroy the asset or at least damage it. In the case of the husband, he asserts the problem is akin to the application of the exclusive occupancy because he wants quiet enjoyment of his part of the business premises. In the latter, the underlying issue is the protection of the individual (see Davis and Davis (1983) FLC 91-320).
In S & S [2002] FamCA 59, the Full Court (Kay, Holden and Monteith JJ) refused leave for the wife to appeal against an interlocutory order under which she was excluded from the former matrimonial home. The order had been made on the basis that there was substantial verbal conflict which was not likely to improve pending the final hearing. The situation in the home was described as one of “tension”. The judge making the order referred to the philosophy of the Family Law Act. The Full Court noted the applicant for leave was appealing against a discretionary interlocutory order and that had those same judges of the Full Court been determining the matter, they would have been reluctant to make the order. Their Honours said:
38.An injunction that prohibits a person from living in their own home is of such gravity that it ought only be granted in restricted and exceptional circumstances. We agree with the sentiments expressed in G v J (Ouster Order) [1993] 1 FLR 1008 where the English Court of Appeal cited with approval a passage from Lloyd LJ in Burke v Burke [1987] 2 FLR 71 at 73 where his Lordship said:
"It must never be forgotten that an ouster order is a very serious order to make. It is described by Ormrod LJ…as a ‘drastic order’ and an order that should only be made in cases of real necessity. It must not be allowed to become a routine stepping-stone on the road to divorce on the ground that the marriage has already broken down and that the atmosphere in the matrimonial home is one of tension…"
39.Butler Sloss LJ described it as " an extreme order …that should be looked at with the greatest possible care" in Tuck v Nicholls [1989] 1 FLR 283 at 286, and as an “exceptional remedy" in Silvester v Silvester [1997] EWCA Civ 1788.
40.There are no words of limitation in s 114 other than the grant of the injunction must be "proper". But, even so, it is difficult to see how the grant of such an injunction could be said to be proper unless there is an appropriate factual base supporting it.
41.In this case the evidence was of a dysfunctional family home life, with tension and discomfort, especially for the adult child, and to a lesser degree for the 15-year-old. It would be unlikely that the mere existence of tension and argument in the home, short of unacceptable conduct or a clear detriment to the welfare of a child, would lead us to exclude an owner of the home from the lawful occupation of his or her own home. This would be especially true if there was no immediate viable alternative accommodation available. But we were not the ones who were asked to exercise the discretion.
I think there is a basis to say that the husband can be viewed to be in a similar position to that of an applicant for a sole occupancy of the home. He seeks personal protection but despite that, the order must only be made if it is proper in all of the circumstances to exclude another person from what is otherwise a place they have every right to have access. The husband’s application must therefore be approached on a different basis to that of the wife. The wife seeks an order for the protection of property. The husband needs to establish more than just tension; there must be some unacceptable conduct on the part of the wife which has every possibility of recurrence if not stopped.

The evidence

It is impossible in this case to set out the evidence sequentially because of the variety of affidavits upon which each party relied. What follows therefore is a synopsis of the evidence including those matters about which I cannot make findings.
Whilst the wife described the relationship of working together as intolerable, the husband denied that.
The wife said that the marriage was characterised by “violence and abuse”. She said there were “too many” instances to recount. Despite that statement, and I accept violence has many facets, in cross-examination, the wife was asked whether the events that gave rise to the intervention order on 4 November 2010 were unusual. Her response was that they were because the husband had never raised a fist at her before.
The wife said that the children were not on speaking terms with their father and they had witnessed much of his abuse and behaviour which had had a lasting impact on them.
The wife then turned to the fact that the husband’s “violence” had extended into the workplace. She described that as being the situation where employees were intimidated by him and his bullying behaviour. She said she observed the employees being careful about what they said around him, he swore at them and went into fits of temper for no apparent reason. She said that that was disruptive in the business and had the “potential” to directly impact upon the business. She said that it was affecting the morale of the employees.
The wife said that prior to the making of the intervention order, the husband had sat in her office and refused to leave, hindered her ability to work and made accusations against her. He had come into the office on a number of occasions and tried to kiss her and then arguments arose. All of that no doubt convinced the learned magistrate to make the intervention order. Even on the day of the hearing before me, the wife asserted that the husband had touched her in the carpark and the husband’s explanation for that was that he saw the wife and she was crying. All of those matters no doubt can be dealt with by the appropriate court.
In terms of the wife’s application, relating to the protection of the business, she said that if he continued to have an active role until the final hearing, she believed that the “damage” that may be done to the business would be so great that it would be diminished because his staff would go, production would stall and potential competitors would move in. Broad and vague and perhaps even alarmist as those statements are, there was no evidence that supported it. I shall turn to the views of the staff below but I have no evidence about diminution of value or how significant particular employees are and their replacement. I have no idea why production would stall nor how potential competitors would be able to “move in”.
In respect of the husband’s application to exclude the wife from S2 property, she said she needed to have access to all of the books, records and staff. She said the operations of the businesses were not segregated and they were spread across both factories. This evidence too was largely unhelpful. The wife conceded that up until the husband went away in August, her office was predominantly at S1. The administration was largely undertaken from there.
In turning to what prompted the application culminating in the 12 October orders, the wife said that she needed to bring the application due to the husband’s “mental illness” and associated behaviour which was directly affecting the staff. She said there were other reasons as well. She then gave instances in which the husband had made several suicide attempts or threats to do so over the past five years. The last of those appears to have been in October 2009. In response, the husband said that he was perfectly able to continue his involvement in the business and that his health was stable and had been so for the past 12 months or thereabouts. That would appear to be correct on the basis of both parties’ versions. He referred to the fact that he was taking his medication. The wife however said that the husband was not currently under the care of a psychiatrist or taking any medication for his mental illness to the best of her knowledge. The husband agreed. None of that evidence would suggest that there is a basis for any of the orders sought by either party.
As for the wife’s perception of the husband’s interest in or enthusiasm for the business, she said that he had not been attending on a full-time basis and in recent times, had become less frequent in attending. She said he was focussed on renovating properties that he bought including the house in which he currently lives. She said the businesses were not a priority for him. She referred to the fact that he went on holidays in March 2010 and then subsequently had trips to the Gold Coast and Thailand. She said that whilst the husband was away, his absence had no impact on the business and the day to day operations went more smoothly than usual. That seemed to be because of the fact that she and the staff were more relaxed and productive. She said that in August 2010, he informed her that he was going overseas and did so for three weeks. It must be said however that the wife too went overseas for some days to obtain some medication required for the daughter of the parties. One might presume that the absence of either party would not necessarily be a major factor in the running of this business because there are competent staff including a manager of production. There are also employees referred to as bookkeepers.
The wife said that the husband had spent several hours of the day sleeping in his office and the husband conceded that that occurred predominantly as a result of the effects of the medication.
None of these matters would appear to me to give rise to any concern about the diminution of the value of the business.
Of some significance was the fact that the wife referred to the husband’s role in the business and in particular, more recent questions of new product development. She said that over the last few years, most new product development had been a team effort with the husband being directly involved. She said there were times where the new product development had stalled because the husband had obstructed it. That evidence would suggest that the husband has not lost interest but rather that the parties disagree on what sort of things should be done within the operation. None of those matters would suggest that there is damage to property occurring.
The wife then returned to the issue of staff problems. Initially in September when she filed her affidavit, she said that she did not want to be specific about complaints made by staff members because they had approached her in confidence and were afraid of intimidation from the husband. The complaints however related to things that the staff were asked to do and how they were requested not to tell her about certain things that the husband was doing. All of that was vague. However, the wife said she found drawings of designs and was told by a staff member that this was a secret project. When she challenged the husband, she said he told her that he would like to develop a new and cheaper product and she was aware that the key staff had been working on that. She disagreed with the plan. Despite the disagreement, the wife said the husband said he would go ahead anyway. All of that indicates anything other than a lack of interest.
The wife turned to the question of the husband pressing her to provide him with information about the business and in particular cash flow. She said he had the same access to information as she did. I have some doubts about that and will return to that subject when I deal with the cross-examination of the parties. The wife complained that the husband subsequent to the October orders had provided the accountants with a constant stream of requests either by himself or his newly appointed accountant. She said she received an excessive number of emails which were repetitive and unnecessary. All of that too was the subject of some cross-examination. It was quite clear that the wife was not only indicating her long term desire to retain this business but that she has a view that she has already moved into that position of control.
Many of the issues about the internal workings of the corporate entity save for issues of discovery between the parties seemed to me to be more issues for disputes under the corporations law or perhaps even matters of industrial relations. Those are not matters to which this Court should pay great attention. Importantly, many of those issues were compromised by the parties on 12 October 2010.
The wife’s attention to the staff problem permeates her case. In September, she said that the husband not only put the staff under a great deal of pressure which was affecting their health but that they had told her they would resign if the husband “got” the business. In his response, the husband said he was unaware of all that and no-one had complained to him. This subject too was a matter about which cross-examination occurred.
The wife complained that the husband had created stress for her which was affecting her concentration and her health. That is an issue that is of concern but the wife chose to seek an order for personal protection under the state legislation and an order is in existence. The behaviour of both parties should be controlled by that order. If the husband continues to defy the order as the wife alleges, no doubt he will face the problems of a serious nature in another court.
It is not appropriate that I deal with the evidence of the parties in relation to the intervention order. That matter has been determined by the State Magistrates Court and I see no reason to return to it.

The cross-examination of the parties

The husband

It was put to the husband that the wife needed to come and go in both premises. The husband denied that and pointed to the fact that until his holiday, there had been an arrangement in place for some time. It was put to him that the businesses were not separate and that until the purchase of S2 property in 2008, everything was done at S1. The husband denied that and said that the production was carried out in a separate factory. It is of some importance that the wife did not dispute that.
Senior counsel for the wife in cross-examining the husband concentrated on the issue of the sale of a luxury motor car. The husband accused the wife of delaying the completion of the sale. He said he had frequently requested its sale and disposal because he wanted to alleviate what he understood to be a cash flow crisis. The husband was cross-examined about the fact that he had been made an offer but had lost interest in the sale. In her affidavit, the wife asserted that the husband had advertised the vehicle for sale without consultation. The husband responded that he had had it advertised for 12 months but after it was “written-off” in the books of the company. He said it had not been sold. He said when he came back from overseas, he found it missing from the factory where he had left it and found out that the wife was holding it at her home.
What followed was a trail of emails. Predominantly, the husband was complaining about not receiving the money that he was entitled to under the orders of October 2010. Despite the purpose for which the emails were filed which was to show the attitude of the husband, interestingly, it also showed that as late as the end of October, albeit each was making decisions about the business, there was civil dialogue going on between them about money issues. That suggests that both parties were aware of the financial problems of the business. As for the vehicle and its sale, none of the evidence established that the husband was not credible or that he was lying such that I could find that the wife should have absolute control of the business.
Senior counsel for the wife cross-examined the husband also about a modest issue which appeared to be an inconsistency in the statement made by the husband to the police at the time of the intervention order application. The husband said in his affidavit to this Court that he told an employee that the wife had punched him. He then went on to say that the person told him that he had not witnessed it. In his police statement which he annexed to his affidavit, he said the wife asked the employee whether he had witnessed the husband punching her and he said he did. Doing the best I can, there seems to be two different issues involved. Accordingly, nothing turns on that issue.
I have set out in some detail above, the respective positions in relation to staff. The husband said he had not placed the staff under pressure or created health issues. That was clearly a subjective view. However, he said in his affidavit that he did not accept that key staff members had said that they would resign if he got the business. That statement was made by the husband in an affidavit sworn 11 October 2010. The staff certainly said it when they swore their affidavits in November 2010. However and perhaps unsurprisingly, none of the staff had said that they had told the husband of their views. Accordingly, nothing turns on that issue.
In summary therefore, there was nothing in the husband’s evidence tested under cross-examination that would enable me to find that he is now mentally ill, self-destructive, intent on damaging the business or doing any more than asking for what he is legally entitled to have.

The wife

The wife was cross-examined about the husband’s role in the business. She said he was involving himself less in the business but did not say that he had abandoned it.
The wife complained that she needed to go to S2 property because of staff morale and because there was no management there. Both of those matters can be addressed by the proposal put by the husband.
The wife said she could not have meetings with the staff at S2 from those that were working at S1 because she would have to leave the staff unsupervised. In terms of seriousness, the response had a hollow ring about it.
When asked about the statement of the staff leaving if the husband got control, the wife’s answer curiously, was “it’s a grey area”.
To indicate the depth to which two adults in a successful business environment have fallen, when asked about the husband having electronic access to business accounts, the wife said it was difficult with two people doing that and in any event, he could always open the mail. This latter statement was odd because it indicated the wife did not want the husband to have the instant access to information which presumably he should be entitled to if he is an owner of the business.
Nothing in the wife’s evidence tested under cross-examination indicated that she could not continue to successfully run her part of the business without going to the husband’s part of the factory save for the period of time each day suggested by the husband.
The wife relied on a series of affidavits from the staff.
Mr W said that he was the production manager. He said that if the husband got full control of the businesses he would resign from his position. After the incident that gave rise to the intervention order, Mr W went to see his doctor and got a certificate to say that he was unfit for work for a week. He said he was stressed about work but then went back on the following Monday only to find that he could not concentrate. He said he did not want to be at work if he was not going to be productive.

Mr W described the husband as difficult to work for and his approach to the workplace created a tense and unpleasant atmosphere.
Much of the evidence of Mr W relates to the protection of the wife and the problems of the personal relationship of the parties. That was obviously what gave rise to the intervention order. The other matters to which Mr W referred were matters of an industrial relations type but not affecting the production of the business. Mr W gave evidence about the husband’s suicidal ideation but none of that was relevant having regard to the fact that the orders were made in October 2010 after a compromise between the parties.
As for Mr W leaving, when asked about what problems would occur if Mr W left, the husband said that other people could be employed.
Mrs W provided an affidavit in which she said that the husband had an office at S2 but for three months now, the wife has had an office there as well. She referred also to the wife’s office at S1. She set out much of the things about how unhappy it was working in the factory and if she had to work constantly under the husband’s supervision she would not be able to tolerate his behaviour and would resign and look for another job. She did not say she was resigning immediately.
Mr B described himself as the purchasing manager of the business. He said he had been there since 2006 and he worked primarily in the factory at S1 but sometimes went to S2. He referred to the various problems of marital conflict between the husband and the wife and said that it was impacting on staff morale and productivity. Much of this was unfortunate having regard to the fact that the husband and wife were the owners of the business.
Mr B went on to say that he noticed the attendance levels of the husband at work had declined over the last few years but he then referred to the fact that the husband’s interest depended upon the project to which he was applying himself. He made a pertinent observation in this case that when the husband was around, he could “micromanage (sic)” every facet of a new project. I drew the inference that the husband showed a considerable interest in the business.
Mr B went on to say that he found it frustrating that he could not “incite” change within the organisation without getting the approval of all senior management. Presumably that is what happens in everyday working environments when owners disagree. He said with the current deadlock it was impossible to negotiate hiring of new staff and restructuring of roles needed to take the businesses to the next level. That may be so but that is still a matter for the owners.
Mr B then said that the situations between the husband and the wife had become heated in the office and he had always observed the husband to be the aggressor. That problem should now be resolved in any event by virtue of the intervention orders.
Mr B then said that if the husband was “awarded” sole ownership/management of the businesses, he did not believe any existing staff would remain under his employment out of personal choice. He said he believed they would resign including himself. Again, this was a curious choice of language. No employee has at this stage said they would resign immediately unless the husband was excluded. Each has indicated clearly that they intend to remain until the outcome of these proceedings.
Jeanette Swann is the solicitor for the wife. She included two statements given to the police by various employees. They relate to the intervention order issues. None of that evidence assists.
Mr D said that he was an employee whose job was that of a production assistant. He worked mainly at S1 but said the staff frequently moved between the two. He made a variety of complaints about the husband’s approach to things and said that he did not believe he could work with him if the husband got control of the businesses.
Mr P is a mechanic/fabricator. He said much the same sort of thing as other employees and that if the husband was the sole owner of the business he would seek employment elsewhere.
Ms H is a part-time bookkeeper who works mainly at S1. She made a number of observations critical of the husband. Her role too would come to an end if she had to work for the husband.
Ms N is an employee of the business who deals with debtors and creditors. She mostly works at S1. She said she had not had much to do with the husband. Her evidence was that there were problems associated with the business arising out of the relationship between the parties and if the husband obtained control of the business she would reconsider her employment as she did not want to continue to work for the husband.
Ms R is the receptionist of the business but her position was the same as the others. She said she would consider looking for another job if she had to work with the husband.

Submissions

Senior counsel for the husband submitted that the allegations of the wife had been going on for ten years despite which, the business had managed to survive. He said the wife was manoeuvring herself into a position of advantage at trial. He argued that what the wife was seeking was all but the finality of what she wanted at trial and there was no reason in this case to exclude the husband from active involvement in the business. He said that the Court ought only interfere to the extent necessary to preserve the assets. It was at that point, he made the offer on behalf of the husband that the wife have access to S2 between 8.30am and 10.30am each morning to the exclusion of the husband.
Senior counsel for the wife said that the application was relating to the preservation of property. He said that after the orders of 12 October 2010, things had gone a lot further. With that submission, I agree save that for many of the personal protection issues, the intervention order dealt with those.
Senior counsel for the wife submitted that the parties could no longer be expected to work together in the spirit of compromise and the situation had deteriorated since the orders of October. He said that unless something was done soon, there would be further deterioration. He argued that the wife’s evidence showed that she could preserve the property but that would require the exclusion of the husband.

Conclusion

In respect of the personal protection application of the husband, I am satisfied on the evidence that there is more than mere tension and argument between the parties. To a very large degree, the problem of the tension and argument was ameliorated by excluding the husband from S1 but the wife’s conduct in pushing further contrary to the suggestion of the magistrate indicates to me that there is a need to avoid an escalation of that situation. In my view, the wife’s conduct was unacceptable and unnecessary in pursuing the office at S2. In cross-examination, her evidence clearly indicated she does not agree she should be excluded and would persevere if not prevented. In my view for the personal protection of the husband, that should cease but by the same token, the genuine concerns I accept she has in relation to the staff can be catered for by allowing her to attend the premises for the two hours each day.
The test in relation to any of these matters is the balance of probabilities. The findings I can make are limited. Assessing all of the factors in relation to the question of the protection of property, I could not be satisfied that there is a real risk or danger of a diminution in that property which both parties want. Even if the risk may begin to increase as a result of the attitude of the staff and perhaps even the behaviour of the parties, in the exercise of my discretion, I would not find it is proper to exclude the husband completely from the premises and therefore from the business at this stage. In those circumstances, I decline to make the orders sought by the wife.

I certify that the preceding Ninety Nine (99) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 2 December 2010.

Associate:

Date: 2 December 2010

[2010] FamCA 1107

2 December 2010

Key Legal Topics

Areas of Law

Family Law

Civil Procedure

Legal Concepts

Injunction

Remedies

Costs

Procedural Fairness