Lishi & Fenge (No 2)
[2022] FedCFamC1F 587
Federal Circuit and Family Court of Australia
(DIVISION 1)
Lishi & Fenge (No 2) [2022] FedCFamC1F 587
File number(s): SYC 2088 of 2022 Judgment of: CAMPTON J Date of judgment: 12 August 2022 Catchwords: FAMILY LAW – PROPERTY – Interim applications – Where the wife seeks an interim distribution of $4.5 million from monies held on trust for two corporate entities that are wholly owned and controlled by the husband – Where it is agreed that the nett value of the property available for distribution is in excess of $100 million – Where the husband seeks an interim distribution from the same source of funds of $8 million – Where the Court is unable to determine that it is in the interests of justice for a partial interim property distribution to be ordered – Where the wife additionally seeks orders for the exclusive occupation of the property in which she and the children presently reside, and for the husband to meet the mortgage repayments and outgoings on that property – Where the orders sought by the wife reflect the status quo – Where the wife has not adduced evidence to satisfy the Court that such orders would be proper, or just and convenient – Each of the wife and the husband’s interim applications dismissed. Legislation: Family Law Act 1975 (Cth) ss 44, 79, 80, 114 114
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 43, 68
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) ch 6, r 1.04
Cases cited: Cardile v LED Builders Pty Limited (1999) CLR 380; [1999] HCA 18
Lishi & Fenge [2022] FedCFamC1F 292
Marchant & Marchant (2012) FLC 93-520; [2012] FamCAFC 181
Medlow & Medlow (2016) FLC 93-692; [2016] FamCAFC 34
Stanford & Stanford (2012) 247 CLR 108; [2012] HCA 52
Strahan & Strahan (2011) FLC 93-466; [2011] FamCAFC 126
Swift & Swift [2020] FamCA 991
Townsend & Townsend (1995) FLC 92-569
Division: Division 1 First Instance Number of paragraphs: 89 Date of hearing: 9 August 2022 Place: Sydney Counsel for the Applicant: Mr Maddox Solicitor for the Applicant: Lexsons Law Firm Counsel for the Respondent: Mr Jackson Solicitor for the Respondent: Legal Point Lawyers & Attorneys ORDERS
SYC 2088 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS LISHI
Applicant
AND: MR FENGE
Respondent
order made by:
CAMPTON J
DATE OF ORDER:
12 AUGUST 2022
By Consent It is ordered That Pending further order:
1.The wife shall have, as against the husband, exclusive use and occupation of the property at BB Street, Suburb N (“the Suburb N property”).
2.The husband be restrained from doing any act or thing so as to cause, or prevent, or fail to facilitate the wife receiving the rental income from the property jointly owned by the husband and the wife at J Street, Suburb W (“the J Street property”).
3.The husband be retrained from transferring his right, title and interest in the property located at CC Street, DD Town, City E, Country EE.
4.Order 1 made on 29 April 2022 be discharged.
5.On the wife’s Undertaking as to Damages filed on 27 April 2022:
(a)The husband and the wife shall within 16 days of the date of this order do all things to cause the funds currently held in the trust account of the wife’s solicitor pursuant to Order 1 made on 29 April 2022 to be deposited into a controlled monies account in the names of the parties or their respective solicitors; and
(b)Each of the parties are restrained from operating, or withdrawing funds from, or dealing with, that controlled monies account without the consent of the other in writing or an order of the Court; and
(c)The husband shall by way of injunction in his personal capacity and as a director of D Pty Ltd do all things necessary to facilitate D Pty Ltd complying with Order 5(a) above.
THE COURT ORDERS THAT:
6.The balance of the interim relief sought by the wife by way of her Initiating Application filed on 29 March 202 and Amended Application in a Proceeding filed on 13 July 2022 is otherwise dismissed.
7.The balance of the interim relief sought by the husband in his Response to an Initiating Application filed on 22 July 2022 shall otherwise be dismissed, save that his relief as to the anti-suit injunction preventing the wife from prosecuting her claim as to the property at CC Street, DD Town, City E, Country EE in the FF Court, City E, Country EE, is dismissed without prejudice and without having been determined on the merits, such that the husband shall have the ability to make such further application for relief on that subject matter as he may be advised.
8.Any application as to costs of the interim proceedings now determined as may be made by either party shall be filed and served within 28 days of the date of this order.
9.Within 14 days of the date of this order, the wife shall serve upon the husband a joint draft balance sheet to include all assets, liabilities, superannuation interest and financial resources suggested to be relevant and to include values as alleged by each party, and
(a)The husband shall then within seven (7) days of receipt of the draft balance sheet make any additions to the balance sheet as required to reflect his contra allegations and any values that are agreed (if applicable); and
(b)Wheresoever controversy exists as to the inclusion of an item or the value of an item, a footnote shall be appended to explain the controversy; and
(c)The husband shall file the final settled version of the joint balance sheet within 14 days thereafter.
10.The proceedings are listed before Campton J for case management in the Major Complex Financial Proceedings list at 11.30 am on 21 October 2022 by Microsoft Teams.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Lishi & Fenge has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CAMPTON J:
Introduction
These are substantive proceedings for property adjustment pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”) as between Ms Lishi “(the wife”) and Mr Fenge (“the husband”) subsequent to their marriage in 2000 and separation on 1 February 2016.
By her Initiating Application filed on 29 March 2022, the wife commenced proceedings in Division 2 of the Federal Circuit and Family Court of Australia seeking orders on a final basis for property settlement and interlocutory relief including injunctive restraints on the husband, exclusive occupation of real property in Australia and Country EE, orders regulating as to the distribution of rental income from real property and interim property adjustment.
A general background to the parties’ relationship is recorded in Lishi & Fenge [2022] FedCFamC1F 292. These reasons assume familiarity with those reasons and the orders made on 29 April 2022. Relevantly to this application, those orders provided for:
(a)The husband to be restrained in his personal capacity and his capacity as a director, shareholder and member of two companies, C Company (“C Company”) and F Company (“F Company”), from distributing the proceeds of sale received from a corporate entity, D Pty Ltd (“D Pty Ltd”) upon the sale of a property at G Street, Suburb K NSW(“the Suburb K site”) save and except to be held on trust for C Company and F Company in the trust account of the wife’s solicitors; and
(b)The husband and each of the corporate entities identified to have leave to apply to have the above restraint set aside on 48 hours’ notice to my chambers and each other party; and
(c)Requiring the wife to serve a sealed copy of the orders made on that date on the husband, and for the husband to thereafter file a Response to the wife’s Initiating Application, his affidavit evidence and a Financial Statement on or before 27 May 2022.
Counsel for the husband agreed at the hearing that notwithstanding the parties’ divorce in Country EE in January 2015, and the fact that they did not separate until February 2016, as recorded at [61] and [62] of my reasons delivered on 29 April 2022, there is no requirement for the wife to seek leave to initiate her application for property adjustment in this forum pursuant to s 44(3) of the Act.
The competing applications
The wife’s interim relief
The wife’s interim relief sought by way of her Amended Application in a Proceeding filed on 13 July 2022 is broadly fourfold, being that:
(a)The husband pay to the wife $4.5 million by way of interim or partial property settlement from the sum of $8,175,910.96 held in the wife’s solicitors trust account on behalf of F Company and C Company (each entity being legally and beneficially owned and controlled by the husband) regulated by the injunctive orders made 29 April 2022; and
(b)The husband pay all mortgage payments and other outgoings as to:
(i)The jointly owned property of the parties at BB Street, Suburb N (“the Suburb N property”), being the home of the wife and the parties’ children;
(ii)The properties held by the L Family Trust (“the family trust” at 1 and 2 H Street, Suburb O (“the Suburb O properties”); and
(iii)The property owned by the husband at CC Street, DD Town, City E, Country EE (“the City E property”);
(c)The husband do all such things as are necessary to ensure that the wife receives the rental income from:
(i)The properties held by the family trust at Suburb O properties;
(ii)The unencumbered property of the parties at J Street, Suburb W (“the J Street property”); and
(iii)The City E property (if it is rented);
(d)The wife have, to the exclusion of the husband, the sole use and occupation of the Suburb N property and the City E property.
The wife opposed the interim relief sought by the husband.
The husband’s interim relief
The husband opposed the orders sought by the wife in her Amended Application in a Proceeding.
The interim relief sought by the husband in his Response to Initiating Application filed on 22 July 2022 broadly sought that:
(a)The sum of $8,175,910.96 held in the wife’s solicitors trust account regulated by the orders made 29 April 2022 be paid to him by way interim or partial property settlement; and
(b)His mother have, as to the exclusion of the wife, the sole use and occupation of a property at GG Street, City E, Country EE (“the second City E property”); and
(c)The wife do all things so as to cause 50 per cent of the rental income collected from Suburb O properties to be paid to him; and
(d)By way of anti-suit injunction, the wife be restrained from further prosecuting a claim filed against the husband in the FF Court, City E, Country EE as to the property the City E property.
Remarkably, the parties agreed that:
(i)An exercise of an interim or partial property power ought to only occur in their favour and on their terms as sought, and opposed the exercise of any discretion to make any interim or partial property adjustment from the said funds in favour of the other; and
(ii)The husband conceded that the net proceeds of sale held by F Company and C Company from the Suburb K disposal “represents for the purposes of the Family Law Act 1975 (Cth) …matrimonial property”, notwithstanding his contention that he in reality made the direct contribution towards the acquisition of the interest in that real property subsequent to separation; and
(iii)While each was seeking to access the funds injuncted by way of the orders made on 29 April 2022, being held on trust for C Company and F Company from the proceeds of sale of the Suburb K property, they each had a default position that in the event their partial or interim property relief as sought was not achieved, either in whole or in part, the whole or any balance of the injuncted funds ought to continue to be held and regulated by injunction save that they be transferred to a controlled monies account broadly in accordance with the intention identified in a minute that became Exhibit 6.
The evidence
The wife read and relied on the following documents:
(a)Her Initiating Application filed on 29 March 2022;
(b)Her Amended Application in a Proceeding filed on 13 July 2022;
(c)Her Affidavit filed on 29 March 2022;
(d)Her Affidavit filed on 5 August 2022;
(e)Her affidavit filed on 9 August 2022;
(f)Her Financial Statement filed on 29 March 2022;
(g)Her Case Outline document filed on 5 August 2022, being Exhibit 1;
(h)Wife’s Financial Questionnaire filed on 29 March 2022, being Exhibit 2.
The husband read and relied on the following documents:
(a)A Response to an Initiating Application filed on 22 July 2022;
(b)His affidavit filed on 22 July 2022;
(c)His Financial Statement filed on 22 July 2022;
(d)His affidavit filed on 8 August 2022;
(e)His Case Outline document filed on 6 August 2022, being Exhibit 3;
(a)His Financial Questionnaire filed on 21 July 2022, being Exhibit 4; and
(b)Exhibit 5 being a document entitled “Enforcement Verdict” against the husband and others in the FF Court, dated late 2020.
It was agreed during the course of the hearing that I would not have regard to any document in the tender bundles of each party or exhibits to any affidavit for the purpose of this interim determination unless that document had been identified in submissions.
The refinement of each party’s relief
The relief prosecuted by each party was refined during the course of the hearing.
The wife agreed to withdraw her relief as to:
(a)The husband paying the mortgages and outgoings on the City E property; and
(a)She having the exclusive occupation of the City E property; and
(b)She receiving rental income from the City E property (if it is rented); and
The wife did not oppose an injunctive order being made restraining the husband from transferring his interest in that City E property, and on that basis his application for an anti-suit injunction as to the litigation initiated by the wife in City E, Country EE being dismissed without prejudice and absent any determination on the merits, reserving a capacity for the husband to bring such antisuit injunction at a future time should he be so advised. The terms of this agreement was reduced in part to writing a document which became Exhibit 7.
The husband agreed to:
(a)An order as to the wife having exclusive occupation of the Suburb N property; and
(b)An order as to the he wife continuing to have the benefit of all of the rental income generated from the jointly owned J Street property.
He withdrew his relief as to:
(a)His mother having the sole occupation of the second City E property at the exclusion of the wife;
(b)The wife directing 50 per cent of the rent from the Suburb O properties to him; and
(c)His anti-suit injunctive relief as to the wife prosecuting her claim in Country EE on terms.
Interim or partial property
Each party identified reliance on ss 79 and 80(1)(h) of the Act to ground their primary relief sought on this subject matter. The High Court in Stanford & Stanford (2012) 247 CLR 108 (“Stanford”) observed that it is necessary for the Court to be satisfied that justice and equity will be achieved as part of the adjustment process to be undertaken pursuant to s 79 of the Act.
The requirements identified by the High Court are readily satisfied in this matter having regard to:
(a)The long marriage of the parties;
(b)Their relationship having broken down and them living apart now more than six years;
(c)The title to the home and the J Street property together with other interest being jointly owned by the parties needing to be changed when consideration is given to the contribution and other factors; and
(d)By way of the fact that both parties have invoked s 79 seeking orders for property settlement which they agree is necessary, including each party contending that it is just and equitable to exercise an interim or partial property discretion but only in their favour and on their terms, and not in favour of the other.
As to the exercise of an interim or partial property power pursuant to ss 79 and 80(1)(h), the Full Court in Strahan & Strahan (2011) FLC 93-466 (“Strahan”) revisited the principles effectible to interim or partial property orders, and set out effectively two steps being:
(a)First, establishing that s 80(1)(h) is enlivened. The test is not confined to “compelling circumstances”. Subject to the interests of justice, the usual approach in respect of s 79 is a once and for all order (see Swift & Swift [2020] FamCA 991 at [16]). That said, more is required than the mere fact that upon a final hearing the party seeking the order would receive the property sought (Marchant & Marchant (2012) FLC 93-520). The “overarching considering” as to the appropriateness of the exercise of an interim property power by the Court must be answered in the affirmative in the interests of justice; and
(b)The second step requires regard to be had to the “usual matters in a s 79 determination” and therefore some assessment of s 79 factors. Given it is an imprecise exercise in the making of these orders, any discretion ought be:
(i)Conservative so as to ensure the final property outcome is not compromised; and
(ii)That the remaining property is sufficient to meet the legitimate expectation of both parties at the final hearing – in this case, a very significant matter against the exercise of discretion having regard to long standing, substantive, and continuing disclosure failures; and
(iii)The interim or partial order is capable of being reversed or adjusted if it is subsequently considered necessary to do so – in this case, a determinative factor against an exercise of discretion
The Full Court in Medlow & Medlow (2016) FLC 93-692 (“Medlow”) reinforced the caution identified for trial judges in making orders by way of the exercise of an interim property power that have a real prospect of depleting the property of the parties. That said, as was explained by the Full Court in Strahan, s 80(1)(h) is a wide enabling provision for interim property decisions.
As to the identification of, and value of, the property of the parties, a joint balance sheet was not tendered. It was agreed between the parties that the net property available for adjustment was valued in excess of $100 million. The value of each party’s corporate and trust interests are yet to be valued and are unknown.
The wife in her affidavit filed 29 March 2022, together with her Financial Statement, attempted to set out sequentially her assets and liabilities, and “what she says are the husband’s assets and liabilities, and… their joint assets”. The wife contended that if her evidence as to the identification of the property of the parties was accepted (without taking into account the unknown value of the husband’s corporations outside Australia), the property of the parties could be represented as follows:
[The wife] Net Value Percentage Property Pool [The husband] Net Value Percentage Property Pool Net Assets in Country EE $22,228,729 13.03% Net Assets in Country EE $110,749,117 64.92% Net Assets in Australia $23,662,382 13.87% Net Assets in Australia $13,965,902 8.18% Total(A): $45,891,111 26.90% Total (B) $124,715,019 73.10% (As was recorded, Exhibit 1, p. 6)
It was submitted on behalf of the husband by way of his Case Outline document that “it is premature to provide the Court with what would be a detailed list of items… referable in [part] to several real properties located in both Australia and [Country EE]”. This submission was refined by counsel to convey that the construction of what might be described as a “balance sheet identifying the property of the parties on the Court format” was a complex and difficult task at the current stage of the proceedings.
The Financial Statement of the husband filed 22 July 2022 broadly records as follows:
(a)He only has one real property, being the City E property which on his evidence is valued around $5 million;
(b)He has no funds in held in banks or any other financial institutions, no cash and no motor vehicles or any other personal property;
(c)Of his identified interests in corporate entities in Country EE, only one is of value (estimated at “$549,000 profit”) and the other six identified entities have a net negative equity or no value;
(d)He has $60 million in debts arising from a corporate entity in Country EE, and has a personal business liability of $8 million for his “Court Case”;
(e)Save for D Pty Ltd, he does not refer to any other corporate or trust interests or assets that he holds in Australia, including those held jointly with the wife.
The wife identified that the husband’s Financial Statement records that he is insolvent.
On enquiry as to how the contents of the husband’s Financial Statement reconciled with the agreed position that the net property available for adjustment was valued in excess of $100 million, it was submitted the husband’s affidavit evidence recorded his contention that the gross property of the parties was $190 million, that the value of the property controlled by the wife in Australia was $98 million, and that the debts of the parties were as contained in his Financial Statement in the range of $68,560,000.
I do not accept that this is an accurate representation of the husband’s evidence. That said, on the case as submitted by the husband, if accepted, not less than property in the range of $90 million is available to him and is largely controlled by him in Country EE.
The obligation of disclosure of the parties is absolute as to documents and information as codified in ch 6 of the Federal Circuit and Family Court of Australia Rules 2021 (Cth) (“the Rules”). In the event a party prosecutes an application for interim or partial property orders, it is insufficient to merely identify the “net value of the pool available for adjustment”. The composition of the items forming the pool of property available to the parties and how the value of each item makes up that pool of property is a basal ingredient to the exercise of an interim or partial ss 79 and 80(1)(h) discretion. For the purposes of the exercise of an interim or partial property power, this evidence underscores one of the foundations as to why it is appropriate for such an order to be made.
The wife broadly seeks by way of final property adjustment for the husband to transfer to her his interest in the Suburb N property, the J Street property and the City E property, in addition to the husband paying to her $18 million.
On a final basis, the husband broadly sought orders that:
(a)The wife transfer to him her interest in the J Street property, and a property at HH Street, Suburb W (“the HH Street property”), and that pending that transfer the wife be responsible for meeting all mortgage payments and outgoings in respect of each of those properties;
(b)That he transfer to the wife his interest in the Suburb N property, and that the wife refinance the mortgage on the property into her sole name;
(c)That the Suburb O properties be sold and the net proceeds of sale be divided equally between the parties, but that pending the sale, the wife be responsible for meeting all mortgage payments and outgoings in respect of the properties;
(d)That the wife account to the husband for 50 per cent of the net proceeds of sale of a property already sold at JJ Street, Sydney; and that
(e)The parties otherwise each retain their legal and equitable ownership of any other real and personal property held in their respective names, including that the husband retain all his interest in companies in which he is an officer, or shareholder, or indirectly holds shares via other shareholders.
As recorded in her Financial Questionnaire, the wife contended that at the commencement of their relationship, she had cash of approximately $2 million but otherwise had no real or personal property, or liabilities of significance. She contended the husband had no significant assets but had a financial resource by way of two corporate entities in Country EE. She said that they purchased their first property together in City E for approximately $166,000 shortly after they began living together, funded by way of a “superannuation loan”. The wife still owns this property and it is her evidence that her sister lives there with her family.
It was agreed at the hearing that the husband lived between City E and Australia from 2006, and that he has not resided in or visited Australia since 2016.
Since separation, she said that she has had the sole care of the parties’ three children, namely:
(a)Ms X, born 1999, currently 23 years of age (“Ms X”);
(b)Ms Y, born 2003, currently 18 years of age (“Ms Y”); and
(c)Z, born 2007, currently 15 years of age (“Z”).
The wife’s care of the children was undertaken in circumstances where the husband left Australia in 2016. She otherwise gave detailed evidence of a series of additional financial and non-financial contributions relating to the management of real properties in Australia as recorded in the reasons for judgment delivered Lishi & Fenge [2022] FedCFamC1F 292.
The wife’s Financial Questionnaire contends that a finding of equality as to contribution up to the current time ought be made and thereafter a ten per cent adjustment to the contribution findings be made in her favour pursuant to the matters identified in s 79(4)(d to g) of the Act.
The husband by his Financial Questionnaire contended that he had assets in excess of $8 million at the commencement of his and the wife’s relationship, and that she had no assets, superannuation or financial resources of significance. In an affidavit sworn by the husband on 29 April 2022, marked Exhibit 5 when the proceedings came before me on 29 April 2022, he deposed that:
10. When we first married, neither party had any substantial assets.
The husband did not explain this inconsistency in his evidence.
It is his case recorded in his Financial Questionnaire that during the course of the parties’ relationship he made significant direct financial contributions, including “setting up the main financial resource” being the parties’ interests in corporations and real property, swamping the contributions of the wife. He contended a contribution finding of 95 per cent in his favour at the time of the parties’ separation. I enquired of counsel of the husband during the course of the hearing as to whether this was a misprint. Counsel indicated that such contention may be reviewed.
The husband conceded that since separation the wife had used rental income received from investment properties in Australia to repay the mortgages owing on those properties and that she has had the sole care of the children. The husband thereafter submitted a contribution to the current time as to 60 per cent in his favour and 40 per cent to the wife. He contended a 20 per cent adjustment in his favour arising by way of consideration of the factors identified in s 79(4)(d to g).
I had some difficulties in understanding how, when cast against the husband’s own evidence in this matter, that such an adjustment of property would be just and equitable in all the circumstances of this marriage relationship.
The wife’s relief for interim or partial property settlement
The wife submits that an urgent and compelling reason exists (albeit she does not need to establish same – she must establish that it is in the overarching interests of justice for such a discretion to be exercised) for the exercise of an interim or partial property power in her favour so as to achieve a payment of $4.5 million from the sum of $8,175,910.96 injuncted pursuant to the orders made on 29 April 2022, in circumstances where:
(a)Each of the two adult children (Ms X and Ms Y) exchanged contracts to purchase units “off the plan” an apartment at KK Street, Sydney for over $3 million in mid-2017, and for a second apartment at KK Street, Sydney for over $1.5 million in mid-2018. Collectively, the bare acquisition cost for the two apartments absent stamp duty was over $4.5 million.
(b)Over $4 million is now due on both purchases by way of notice issued by the vendor on 1 August 2022. The notice scheduled completion in mid-2022
(c)She requires $1 million to complete renovations to the Suburb N property.
It appears that the wife paid a 10 per cent deposit on each of the KK Street units on behalf of her two children.
The gravamen of the wife’s submissions to establish that the overarching interests of justice grounding an interim property distribution in her favour was to the effect that the husband currently controls 71 per cent of the overall property of the parties, that the minority of the that property is in Australia, and that she has no or little control as to the husband’s use and application of the property of the parties in Country EE.
She contends that the husband will not be prejudiced in the event of the exercise of an interim or partial property order in the terms that sought having regard to the value of property she contends he controls and currently enjoys.
During the course of submissions I raised with the wife the impact of her proposed use and application of funds in the event she achieved the exercise of an interim or partial property discretion, being that the most of the said funds would be paid for the benefit of a third party to which a presumption of a resulting trust would be rebutted. The wife submitted initially that her application of funds could be the subject of an exercise is discretion by the trial judge to notionally add back to the balance sheet at trial pursuant to the principles identified by the Full Court in Townsend & Townsend (1995) FLC 92-569. After further exchanges over the course of the hearing she amended her relief sought such that if it were achieved it would be on condition that she would agree to the notional add back of those funds provided to the children of the parties to complete the purchases as being part of her property entitlement at trial.
The husband in submissions confirmed that he received little comfort from that condition profit by the wife identifying that notwithstanding in such admission, the wife retained a capacity to seek at trial to be released from that condition.
The wife further submitted that the entry by the adult children under her oversight to the off the plan purchases in 2017 and 2018 was grounded from her reliance on the terms of the “settlement agreement” entered by she and the husband on 12 January 2015. I do not accept this submission. The agreement did not provide for the husband to make available funds in the range of $4 million to enable the two older children of the parties to purchase real property in Australia. The controversial “supplementary agreement” between the husband and the wife was entered two years after the adult children entered the contract for the purchase of the off the plan units.
The husband submitted that the fact of wife identifying the disposal of the Suburb K site and the subsequent flow of funds it produced as being at all relevant times the proposed source to complete the purchases on behalf of the children of the marriage was not available. He said that the submission was simply opportunistic and not available on the evidence. I accept that submission.
There was no evidence in the wife’s case as to the current financial circumstances of her daughters, or as to any efforts they, or she on their behalf, have undertaken over the past four years to secure finance to complete the acquisitions of the off the plan purchases.
It is agreed that the wife is the personal trustee of the family trust (the L Family Trust) and that it is a discretionary trust. The parties were uncertain as to the identity of the appointer of the trust at the time of the hearing. As recorded in these reasons, that trust owns each of the properties at H Street, Suburb O.
The wife’s Financial Statement records that:
(a)The Suburb O properties are collectively valued at over $22 million and are subject to loans in the range of $8 million from the Commonwealth Bank and $6 million from the ANZ Bank, creating an equity of over $8 million. On the wife’s evidence these commercial properties produce an income of over $1 million per annum;
(b)A second trust in which she and the husband have an interest, the MM Trust, holds two properties in Suburb LL, collectively valued at over $25 million and subject to a loan of over $14 million, creating equity of around $11 million.
(c)She owns the HH Street property in her sole name, and that it has an unencumbered value of over $1 million. It produces rental income from this property of nearly $50,000 per year;
(d)The jointly owned J Street property has an unencumbered value of over $1.5 million, and also produces rental income of nearly $50,000 per year;
(e)She has some $480,000 cash in bank accounts (some of which are held jointly with the husband); and
(f)She receives investment income from real properties in Country EE of approximately $325,000 per year.
The wife did not put into evidence any of the financial statements of the family trust or the deed establishing the trust. The wife as the trustee manages and makes decisions as to the trust. She did not put into evidence the financial statements of MM Trust. These evidentiary failures militates against the exercise in interim property power in her favour as sought.
As is self-evident, the wife has a capacity, should she consider it appropriate, to apply her own property and resources to assist her children in the completion of the off the plan purchases. The wife’s evidence did not identify why she cannot use her own property and resources, should she consider it appropriate to do so, to settle funds on the adult children of the marriage. There is no injunctive order preventing her from accessing her own property to meet that requirements if she so elects.
The wife did not explain how she proposes that the husband’s receipt of funds from each of F Company and C Company would be received in his hands, either by way of loan or dividend, prior to its adjustment in her favour. She put no evidence before the Court as to the revenue impost of that potential distribution.
The wife did not adduce any evidence by way of documents to support this quantum claimed for the works to be undertaken to the Suburb N property, including any quotes from builders or contractors engaged, and no such builder or contractor was identified. The fact of the requirement for funds and its foundation were bare assertions.
The evidence of the wife does not achieve the level of satisfaction to establish the “overarching consideration”, that it is in the interest of justice for the Court to exercise an interim property power at this time to enliven s 80(1)(h) of the Act.
Her application for interim or partial property orders will be dismissed.
The husband’s relief for interim or partial property settlement
The husband grounded his application for interim or partial property relief so as to access all of the injuncted funds on the basis the overarching interest of justice were achieved in circumstances where he was required to urgently pay a creditor associated with City E, Country EE based civil litigation and consequential judgment debts in Country EE that had been the subject of a series of enforcement orders in that forum.
It was the husband’s contention that “if he does not make such payment, he will suffer bankruptcy”. The wife correctly identified that, save and accept such bald assertion, there was no objective evidence to support that conclusion.
On his evidence the last enforcement order was late 2020. That was almost two years ago. He produced no documents to verify more recent enforcement activity.
The evidence records that the husband is liable to pay the City E debt. It was valued initially in the range of $14,138,000. There are four judgment debtors. It is “a joint debt”.
The husband contended that the other debtors are of a corporate character. He says that one, in which he has the controlling interest, is “insolvent”. As to the second, he has no controlling interest but says he has provided a personal guarantee. As to the third being, he has the controlling interest but it has no funds. Each of these assertions were bald. They were not supported by any objective evidence. The husband conceded that none of the Financial Statements for any of the other joint debtors were in evidence, nor was there any evidence of their financial circumstances. I give these assertions little weight.
There was no evidence as to the husband requesting contributions to the judgment debt from the other joint debtors, or as to his capacity to pursue such contributions.
The husband gave evidence of thus far paying $5,447,000 to the judgment debt to date. The husband said that the judgment debt was accruing interest at a rate of 24 per cent per annum or in the range of $25,000 per week.
The husband asserted in his evidence that he had been placed on a “black list”. He did not give evidence as to the nature of that list, or the impact of his placement on it.
The husband’s submission was that “noting the size of the net matrimonial pool accepted to in excess of $100 million, and early distribution of the little less than $8.2 million or less (in his favour) is easily capable of adjustment”.
The wife opposed the distribution of the funds to the husband. She said that in the event the funds were paid to the creditors in Country EE, they could not be recovered. On the husband’s absence of evidence, this submission would attract weight. She further identified, as lightly touched upon in submissions, that difficulties may be encountered in enforcing any order, if made, for the repatriation of property and/or monies from Country EE. Although it was not the subject of evidence before me, there were some exchanges in the course of the hearing as to a number of recent authorities where findings have been made by way of expert evidence as to Country EE Courts not recognising or enforcing orders made in Australia.
I find that the husband’s evidence is currently anything but transparent in relation to his relevant financial circumstances, especially in Country EE. His Financial Statement cannot be reconciled with his contention as to the net value of the pool of property available for adjustment between the parties being valued in excess of $100 million.
Counsel for the husband submitted that the best evidence available to the Court as to the husband’s property in Country EE is his Financial Statement, where he deposes that he holds only one real property in Country EE and “that’s it”.
The husband has not disclosed, nor did put into evidence, any of the Financial Statements of what the wife contends are a raft of his corporate and other entities in Country EE.
I am anything but currently satisfied that the husband has disclosed his current relevant financial circumstances as mandated by ch 6 of the Rules.
The husband has not identified why his conceded vast remaining resources in Country EE cannot be applied to meet any judgment debt that he has in that forum.
On the evidence, in the circumstances of the husband’s disclosure failures, he has not achieved the first step identified in Strahan to establish an “overarching consideration” that it is in the interest of justice for the Court to exercise an interim or partial property power in his favour. In such circumstances, the Court cannot be satisfied that it is just and equitable to make the interim property order sought by the husband.
Additionally the submissions of the wife as to her incapacity to “claw back” the specific funds that are sought to be remitted to Country EE when cast against her substantive claim attract weight. The husband’s disclosure failures support a conclusion that her proper entitlement cannot be amenable to adjustment at a final hearing from the Australian property alone, or is in capable of being reversed by recourse to that Australian property alone, so as to potentially defeat her claim as sought in her substantive Initiating Application. The husband’s relief would fail on the second limb identified in Strahan and for the reasons identified in Medlow if he had achieved a sufficient evidentiary foundation to establish the “overarching consideration of justice” to enliven s 80(1)(h) of the Act.
His application for interim or partial property orders will be dismissed.
The balance of the relief prosecuted by the wife
I requested that the wife identify the relevant head of power supporting her orders sought as to the husband paying the mortgage instalments and outgoings in respect of the home at Suburb N and the Suburb O properties owned by the family trust.
As is self-evident, the identification of the relevant head of power supporting the relief sought is necessary because it is the source of power that determines the preconditions and relevant considerations for the making of the order. Additionally, identification of the source of power helps frame the order and determines what legal requirements must be met before the orders will be made.
The wife specified that the source of power relied upon was not of a spouse maintenance character (s 74), but was by way of “preservation of property”. On further enquiry as to whether the relief sought was of an injunctive nature the wife confirmed that it was, and as to whether it was by way of s 114(1) or s 114(3) of the Act, the wife contended it was “both”.
The wife was directed during the course of the hearing to well established authority that identifies that the basis for the exercise of discretion to achieve injunctive relief by way of each of the identified sections was somewhat different. That said, in any event, if I understand the gravamen of the wife’s case correctly, she was seeking to preserve a status quo pending resolution of the substantive s 79 controversy between the parties.
In considering the nature of the injunctive relief, it is important to be aware of the general principle that equity intervenes to the minimum extent necessary to do justice.
As noted by the plurality in Cardile v LED Builders Pty Limited (1999) CLR 380 (“Cardile”) at [31]:
…that the court may grant an injunction in all cases in which it appears to the court to be just and convenient to do so – does not confer an unlimited power to grant injunctive relief. Regard must still be had to the existence of a legal or equitable right which the injunction protects against invasion or threatened invasion, or other unconscientious conduct or exercise of legal or equitable rights.
(Citations omitted omitted)
Irrespective of the source of power relied upon by the wife to ground the injunctive orders sought, there was an absence of evidence to illustrate a foundation to justify the injunctive orders sought.
There was no evidence as to any necessity for orders to be made to preserve the status quo or as to there being a risk of any of the trust properties or the Suburb N home being in danger of sale so as to frustrate the final relief as sought by the wife. There is no evidence as to the mortgage payments or outgoings in respect of the Suburb N property or the Trust properties at Suburb O not being met. There is no evidence at to the other current assets or liabilities of the trust. The wife, as a matter of law and in reality in her capacity as the personal trustee of the family trust, regulates the trusts income and expenses. The wife determines any distributions of capitol or income from the trust. Her relief as to the order that she receive any rental income from the Suburb O properties is of no utility.
The conduct of the wife since separation illustrates her stewarding of the property of the parties in Australia so as to ensure that the investments by way of the real property producing income that meets the expenses of the home and the investment properties, whether they be held personally by the parties or the family trust legally controlled by the wife.
I am not persuaded the wife has demonstrated a prima facie case that the status quo as to the subject matters she agitates by way of injunctive relief are at risk, or that there is any material risk if the additional injunctive orders she now seeks are not made such that the final orders of the court will be frustrated if that relief is refused.
Irrespective of the section relied upon, I am not satisfied that injunctive relief sought by the wife described as for the “preservation of property” was proper, or was just and convenient, as identified by each respective section of the Act. It will be dismissed.
The Husband’s Application for an antisuit injunction to restrain the wife from prosecuting proceedings she commenced in Country EE
Exhibit 7 was tendered during the course of submissions. The husband sought an adjournment of this prayer for relief. He proffered the conditions of the adjournment by way of Exhibit 7 which included an injunctive order that he not deal with the Country EE property.
Having regard to the provisions of ss 43 and 68 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) and r 1.04 of the Rules, I confirmed that I would not adjourn the husband’s application for an antisuit injunction generally. It was a matter for him to either prosecute the anti-suit relief sought on the evidence he placed before the Court, or to abandon it.
It was agreed by the parties that in the event his anti-suit prayer for relief was dismissed it would be on the basis that the husband would not be prejudice in bringing any further application of an antisuit character relating to the wife commencing litigation in Country EE as to the City E property as he was advised. An order will be made in those terms. So that it is clear his application for that anti-suit injunction was not determined on its merits.
I certify that the preceding eighty-nine (89) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Campton. Associate:
Dated: 12 August 2022
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