LINDLEY & LINDLEY

[2017] FamCA 1092

FAMILY COURT OF AUSTRALIA

LINDLEY & LINDLEY [2017] FamCA 1092

FAMILY LAW – INJUNCTIONS – husband fails to appear – corporate assets at risk – orders made.

FAMILY LAW – COSTS – indemnity – where husband fails to appear albeit has counsel appear – counsel unable to explain husband’s absence.

Family Law Act 1975 (Cth)

APPLICANT: Ms Lindley

RESPONDENT: Mr Lindley

FILE NUMBER: MLC 8538 of 2017

DATE DELIVERED: 8 December 2017

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 8 December 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Sweeney

SOLICITOR FOR THE APPLICANT: Schetzer Constantinou

COUNSEL FOR THE RESPONDENT: Mr McLeod

SOLICITOR FOR THE RESPONDENT: Mr Lindley/CBD Family Lawyers

Orders

1. The application initiating proceedings of the wife filed 22 August 2017 is adjourned to 9.00am on 21 February 2018 for a management hearing.

2. If the husband failed to comply with the order of Registrar Lethbridge of
   21 November 2017 by filing a response and financial statement by the return date, the wife has leave to seek to proceed on an undefended basis.

3. The application in a case filed 24 October 2017 is dismissed.

4. Until further order the husband be and is hereby restrained from drawing on or withdrawing funds from any bank account held with any financial institution by:

   (a)       B Pty Ltd;

   (b)       C Pty Ltd;

   (c)       D Pty Ltd;

   (d)       E Pty Ltd;

   (e)       F Pty Ltd;

   (f)       G Pty Ltd;

   (g)       H Pty Ltd;

   (h)       I Ltd;

   (i)        J Ltd;

   (j)        K Pty Ltd  

   or any subsidiaries or related companies ("the D Group").

5. Until further order the wife authorise and approve any cheques, payments or transfers of monies made by the D Group.

6. Pursuant to s 114(3) of the Family Law Act 1975 (Cth) (“the Act”) and
   s 90AF(2)(a) of the Act, National Australia Bank is directed to give effect to these orders.

7. That National Australia Bank has leave to seek to set aside any order affecting it upon notice to the parties.

8. That both the husband and the wife have liberty to apply on short notice in respect of any interlocutory issue and if practicable, such applications be listed before the Honourable Justice Cronin.

9. That the husband be served with a copy of this order as follows:

   (a)      email to the husband’s last known email address;

   (b)personal service (if practicable) on the husband’s last known residential address;

   (c)      leaving it at D Group in L Street, Suburb M.

10. That a copy of this order be served on the National Australia Bank by post.

11. That the husband pay the wife’s costs fixed in the sum of $5950.

12. That the reasons this day be transcribed and be made available to the parties.

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 8538 of 2017

Ms Lindley

Applicant

And

Mr Lindley

Respondent

REASONS FOR JUDGMENT

1. On 24 October 2017 Ms Lindley filed an application in a case seeking a variety of orders concerning Mr Lindley.  Those orders were of an injunctive nature based on her affidavit which indicated that Mr Lindley was doing some very strange things with money in which she had an interest.  Having regard to the discussions that took place that day I adjourned the proceedings until this morning and made a specific direction that Mr Lindley attend in person.

2. For a second time, Mr McLeod of counsel has appeared for Mr Lindley, and although in the interim period his instructor filed a notice of ceasing to act, as a matter of courtesy and on the instructions of Mr Lindley, he attended this morning anticipating that his client was going to be here.  For the second time Mr Lindley has failed to attend.  On 6 December I made an order that if Mr Lindley did not attend then the wife had leave to seek a warrant for his arrest as well as other orders.  The wife has decided today not to seek that order, presumably on the basis that it would not advance the matter much further anyway, and has taken the steps to which I will turn in a moment.

3. On 6 December I made an order that the wife have leave to issue a subpoena to the chief executive officer of the D Group, Mr N, who attended this morning in response to the subpoena and who has participated in an oral examination undertaken by Mr Sweeney of counsel for the wife. 

4. I accept Mr N’s evidence.  I accept his candid responses bearing in mind the difficult position he is in because apart from being the chief executive officer of one of the two arms of the organisation, he is also a friend of long standing of Mr Lindley.  It would seem that he also has an interest in ensuring that things within the group of companies are put back under control again because some two weeks ago he with the assistance of Mr Lindley, approached the regulatory authority to enable him to effectively become the chief executive officer of both of the arms of the group.

5. On any view Mr Lindley is out of control.  There are allegations of drugs and alcohol abuse.  There are allegations of violence and intervention by police.  I have been told by Mr N that the husband was hospitalised as a result of his own health. 

6. This is a company with significant assets, and it needs to be under control.  The wife is now taking steps to protect her assets as well as other people who are obviously affected by the organisation’s potential demise.

7. The proposed order is that until further order Mr Lindley be restrained from drawing or withdrawing funds from any bank account held by a number of the companies with the National Australia Bank.  I accept that is the first step in getting control of the situation to avoid significant sums of money being not only spent without explanation, but potentially wasted.  The second order proposed is that until further order the wife authorise and approve any cheques to be drawn out of the D Group’s accounts.  The difficulty with that order is its enforceability.

8. The power for the court to make either of the two orders lies in s 114 (3) of the Family Law Act 1975 (Cth) (“the Act”), which gives the court an extraordinarily wide power to make such orders in a matrimonial cause as it considers both proper and just and convenient. It is an asset protection order. To ensure that the group’s bank cooperates, the power in s 90AF(2)(a) is being used to direct the bank to do whatever is necessary to give effect to the two orders.

9. It is sad that Mr Lindley is not here today to give his side of the story, but he has had two opportunities now and on both occasions has been represented by counsel, who has been unable to articulate his instructions.  I draw some comfort from the fact that having been to a solicitor at least on two occasions now and having briefed counsel, Mr Lindley understands exactly what is going on and the possibilities of these sorts of orders being made.  In the circumstances I am satisfied that it is proper to make orders of an asset protection nature, and I require the National Australia Bank to assist in their implementation.

10. Section 90AF also requires the court before making an order to take into account a number of matters.  Those matters are the taxation effect of the order or injunction on the parties.  In this case the asset protection orders will have no taxation effect because there is no transfer of property.  There is no social security effect in this case.  The bank’s administrative costs in this case will be minimal because of the fact that it is simply ensuring that the signatory is effectively under the control of the wife. 

11. The National Australia Bank is aware of the problem because the wife previously sought a reconciliation of an account, and the bank provided that but, at least as at the last hearing, was unable to explain how money had been drawn from the account which required joint signatories.  This order may assist the bank in the implementation of its own contractual obligations. 

12. The third issue is that the injunction must not affect the capacity of a party to repay a debt after the injunction is granted.  In a commercial operation there will be creditors.  It seems to me that on the basis that the wife is protecting her own interests as well as those of the group, I can presume that she would, with the assistance of Mr N, ensure that all of the creditors of the company are properly protected as well.  On that basis it is appropriate to make the orders under s 90AF. 

    ORDERS DELIVERED

13. It is unnecessary, I think, for me to repeat the previous order, but if the husband does not comply, he may find himself excluded because the wife can make that application on the day.

    ORDERS DELIVERED

14. The final issue is the issue of costs.  Mr Sweeney seeks $5950, which probably exceeds the scale costs. 

15. Section 117 of the Act provides that in proceedings under the Act each party shall bear their own costs unless there are circumstances to justify a departure from that principle. If the court is deciding to depart from the principle, it has to consider the matters set out in s 117(2A) of the Act. This is the second hearing before me, and I am satisfied that on both occasions the husband was aware of the proceedings, which is evident by the fact that he briefed counsel.

16. His failure to attend and effectively tying the hands of his counsel has meant that the court has not been assisted by his conduct, in addition to which he has failed to file any responding material. That necessitated the bringing of the subpoena to bring the chief executive officer here today. In my view, the absence of assistance by the husband entitles the court to conclude that the general cost provision should not apply here, and the question then remains under s 117(2A) whether the factors are satisfied. The husband does not seem to have any concerns about financial matters because he draws significant money at will, and the wife’s financial position is put at peril.

17. There are no community issues such as legal aid or social security matters to take into account. One of the most significant issues under s 117(2A) is the question of conduct. The absence of filing material, the absence of attendance and the failure to attend court all mean that the husband is not showing due regard to the responsibilities of the court to resolve matters quickly.

18. On the basis of those matters I would make an order for costs here.  The general rule is that the costs order should only reflect those amounts set out in the scale.  The Court can depart from that scale only in exceptional circumstances.

19. In my view, this is an exceptional circumstance on the basis that I specifically set the hearing today requiring the husband to attend and he has put the wife to the expense of being here and proving her case, including by calling Mr N.  On that basis an order for indemnity costs is appropriate.  In my view, the amount of $5950 is just and equitable in the circumstances.  I will make that order as well.

I certify that the preceding nineteen (19) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 8 December 2017.

Associate: 

Date:  19 December 2017