LUDLOW & LUDLOW

[2011] FamCA 42

FAMILY COURT OF AUSTRALIA

LUDLOW & LUDLOW [2011] FamCA 42

FAMILY LAW – INJUNCTION – interim orders – where the wife seeks to have the financial agreement previously entered in to by the parties be set aside – where the settlement date is due to take place in the immediate future – where the wife has commenced proceedings against the husband and a company which acts as the trustee of two family trusts – whether injunctions ordered during the adjourned period should apply to both trusts – where consideration was given to the protection of assets to ensure that any future orders are capable of being enforced – where the Court was satisfied that there were sufficient assets to meet the wife’s claim in any event – no orders for injunction in relation to the second trust

FAMILY LAW – LEGAL PRACTITIONERS – where the husband’s counsel has also received instructions from the second respondent – where there is a risk of a conflict of interest arising – where the close proximity of the settlement date does not allow for the matter to be adjourned – where the Court proceeded on the view that interim orders need be just and equitable for all parties

Family Law Act 1975 (Cth)

APPLICANT: Ms Ludlow

RESPONDENT: Mr Ludlow

FILE NUMBER: ADC 3236 of 2008

DATE DELIVERED: 25 January 2011

PLACE DELIVERED: Adelaide

PLACE HEARD: Adelaide

JUDGMENT OF: Dawe J

HEARING DATE: 25 January 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr R Richards

SOLICITOR FOR THE APPLICANT: Kelly & Co

COUNSEL FOR THE RESPONDENT: Ms M Pyke QC

SOLICITOR FOR THE RESPONDENT: Richards Commercial Lawyers

Orders

IT IS ORDERED DURING THE PERIOD OF THE ADJOURNMENT THAT

(1)An injunction is granted restraining the husband and W Pty Ltd (“W Pty Ltd”) from dealing with, assigning or transferring funds received by W Pty Ltd as trustee of the Ludlow Family Trust arising from the sale of its shares held in Z International Pty Ltd or such other companies within the Z Group of Companies that are party to any agreement with G Group Limited for the sale or purchase of any such shares pending further order of the Court SAVE AND EXCEPT the husband and W Pty Ltd are at liberty to pay monies due and owing to Westpac Bank as required by the bank not exceeding the sums set out in annexure “WJL2” and any accrued interest or fees in relation thereto.

(2)Until further order the husband is restrained and an injunction is granted restraining the husband as follows:

(a)in the husband’s capacity as director of:

(i)Z International Pty Ltd;

(ii)A Pty Ltd;

(iii)Z Engineering Pty Ltd;

(iv)Z Industrial Pty Ltd;

(v)Z Products Pty Ltd;

(vi)B Nominees Pty Ltd;

(vii)C Pty Ltd;

From resigning as director or secretary of any of the said companies without the written consent of the wife, save as to comply with his obligations under any agreement with GWA Group Limited;

(b)in the husband’s capacity as director and shareholder of:

(i)W Pty Ltd;

(ii)W Investments Pty Ltd;

(iii)Z Manufacturing (NSW) Pty Ltd;

(together with the companies referred to in 2(a) hereafter described as “the Z Group of Companies”);

from resigning as director or secretary, selling, assigning, transferring or encumbering his shareholding in any of the said companies or any company in which he has any interest without the written consent of the wife, save as to comply with his obligations under any agreement with G Group Limited;

(c)from resigning or relinquishing any position he holds as trustee or appointer of any trust including the Ludlow Family Trust and the Ludlow Superannuation Fund (ABN …) or any trust in which he has any interest without the written consent of the wife;

(d)from selling, assigning or transferring or otherwise encumbering:

(i)his boats;

(ii)the berths at P and S Marinas;

(iii)his savings or investment accounts;

(iv)his entitlement to superannuation.

(3)Until further order the husband and W Pty Ltd are restrained and an injunction is granted restraining them:

(a)from selling, assigning or transferring, dealing with or encumbering their shareholding in Z International Pty Ltd and the other Z Group of Companies, other than to complete the sale of shares to G Group Limited;

(b)from selling, assigning or transferring or otherwise encumbering any of the land and property owned by him or by W Pty Ltd including the properties situated at:

(i)J Street, SA;

(ii)D Street, SA;

(iii)H Street, SA;

(iv)K Street, SA;

(v)N Street, SA;

(vi)Lots 50 and 51 P Street, SA.

(4)The husband and W Pty Ltd are restrained and an injunction is granted restraining them from selling, assigning, transferring, dealing with or encumbering their interest in any of the real estate as follows:

(a)     Lots 50 and 51 P Street, SA;

(b)     the Victorian property;

(c)     the western Sydney, NSW property;

(d)     the Newcastle, NSW property;

(e)     the Brisbane, Qld property;

(f)     J Street, SA;

(g)     the Island, Qld property;

(h)     N Street, SA; and

(i)     the Gold Coast, Qld property.

(5)Further consideration of the matter is adjourned to Thursday 3 March 2011 at 9.15 am before the Honourable Justice Dawe.

(6)The parties to file and serve any affidavit material upon which they seek to rely by 4.00 pm on 21 February 2011.

(7)Full disclosure, discovery and inspection of documents to take place by 21 February 2011.

(8)Within seven [7] days the husband in his capacity of W Pty Ltd to ensure that the proceedings are served upon his son B Ludlow.

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

FAMILY COURT OF AUSTRALIA AT ADELAIDE

FILE NUMBER:

MS LUDLOW

Applicant

And

MR LUDLOW

Respondent

EX-TEMPORE REASONS FOR JUDGMENT

1.This is a matter dealing with an interim application for orders.  The orders sought were part of the initiating application filed by the wife on 17 January 2011.  Although the parties are divorced I refer to them as the husband and the wife.  The final orders sought seek to have the financial agreement entered into between the parties dated 2 November 2010 set aside and seek substantial orders by way of alteration of interest in property and lump sum spousal maintenance.  The parties were married some time ago and the divorce proceedings started in 2008.  I am told from the bar table that the parties have been separated for approximately 24 years.  The parties are now divorced.

2.The wife started property settlement proceedings in August 2009, which, on the face of it, appear to have been resolved when the proceedings were dismissed following an indication that the parties had entered into the financial agreement which the wife now seeks to set aside.  The interim hearing before me is obviously listed on an urgent basis due to the evidence which discloses there is a significant settlement to take place on 3 February.  Because of the urgency of the matter, the Court and the wife’s solicitors have received the affidavit of the husband only this morning, that affidavit being sworn on 25 January.

3.The Court has, therefore, on the face of it, the material filed by the wife in support of her application with a significant number of annexures and the affidavit of the husband and annexures.  There is not necessarily any agreement about many of the significant factors, namely, whether the financial agreement is binding and should be set aside and what the consequences of any such order might be by way of final property settlement.  Indeed, the parties are significantly apart in the assessment of the rights involved in this matter. 

4.The Court has also been faced with the difficulty that the proceedings commenced by the wife named the husband as the first respondent and the company W Proprietary Limited (“W Pty Ltd”) as the second respondent because of its significant role as trustee of a family trust.  It transpires from the affidavit material now available from the husband, (the affidavit of 25 January 2011), that that company is not only the trustee of the family trust known as the Ludlow Family Trust, but also trustee of the Ludlow Family Trust Number 2.  The affidavit of the husband asserts that the Ludlow Family Trust Number 2 was established in September 2008 with the same beneficiaries as the Ludlow Family Trust but, quote:

“The trust was established for the benefit of [B Ludlow] and his wife and children.”

B Ludlow is the eldest son of the parties.

5.This paragraph of the affidavit also indicates that the first trust owns 28 per cent of Z International Proprietary Limited (“Z International”), a company which operates the Z Australian business, and that the second trust owns 23 per cent of the company.  The affidavit then sets out some particulars in relation to the history of the negotiations between the parties and the steps taken to conclude the financial agreement.

6.The affidavit also sets out particulars of the sale of the Z interests in Australia to a company known as G Ltd.  Paragraph 23 sets out the fact that W Pty Ltd, the trustee of both trusts, will be paid some $10,267,600 representing the 28 per cent ownership of the first trust’s share in the company.  It is therefore asserted by the wife that there will be a significant figure of approximately $7 million to be received by the trustee company representing the second trust’s 23 per cent interest in the company which has also been sold. 

7.The extra complication is that Ms Pyke appears this morning, instructed by the husband’s solicitor who was also instructed, on the face of it, by W Proprietary Limited.  The question of the conflict of interest arises concerning the interests of the second trust and the beneficiaries, and in particular the parties’ son, B Ludlow.

8.It is therefore appropriate to adjourn the matter to enable those significant issues to be dealt with, particularly as it relates to a possible conflict of interest.  But with the settlement due on 3 February the Court does not have available to it sufficient time to allow the adjournment of the matter.  Orders need to be made today to ensure that arrangements are put in place which are just and equitable in all the circumstances for both the husband, wife and the other possible parties affected by the proposed orders.

9.The Court was able to adjourn the matter to the middle of February, but at counsel for the husband’s request the matter is now to be adjourned to 3 March at 9.15, when further consideration will be given to all of the matters before the Court today.  On an interim basis therefore I am required to consider, pursuant to the provisions of the Family Law Act, and particularly those in relation to injunction proceedings, what orders are appropriate, just and equitable. 

10.It is not possible today to determine the significant disputes between the parties as to their entitlements, nor in relation to the status of the asserted binding financial agreement.  What is significant is that there are some liabilities referred to in the husband’s affidavit, which on the face of it should be met so as not to disadvantage either of the parties unnecessarily.  At the same time sufficient protection should be provided to ensure that any future orders that the Court might make are capable of being enforced.

11.The most significant issue to determine is whether the orders to be made during the period of the adjournment should apply to both trusts, namely the Ludlow Family Trust and the Ludlow Family Trust No. 2.  On behalf of the husband it is asserted that in relation to the funds which were to be received by the Ludlow Family Trust No. 2, steps have been taken on behalf of the trustee company to make arrangements to pay those moneys directly to other persons.  The obligation of the trustee, however, is clearly an obligation to ensure that the proper steps are taken in accordance with the terms of the trust, which it is asserted in paragraph 7 of the affidavit are identical to the terms of the first trust.  That is phrased:

“Even though the intention of the promoters of the second trust was to restrict the distribution of capital and income to [B Ludlow] and his wife and children.”

12.Those shares were transferred at a date that is not actually indicated to the second trust for no consideration.  The second trust, however, was established in September 2008 shortly after the husband and wife were divorced.  The Trust No. 2 owns a significant share of the business which is being sold, a business which was established some years ago.  In that context, however, it must be noted that the parties separated approximately 24 years ago and there has been ongoing development of the business since then.  These are matters which of course will require close consideration when all of the evidence is before the Court and can be appropriately tested. 

13.The husband is asserting that the assets remaining after the disposition of the proceeds to the second trust are sufficient to meet any claim by the wife.  That assertion is supported by the retention of significant equity in real estate by the husband or the first trust, and by the retention of a significant proportion of the first trust’s share of the proceeds of the sale of the Z interest.

14.This is an order which will apply on the understanding that if the Court in due course determines that the assertion by the husband (that the moneys payable to the son, B Ludlow, should not be taken into account) proves to be correct then that will be a factor which will weigh against him in the final property settlement.

15.At this stage I do not propose to injunct the funds to be received by the second trust, on the basis that the wife’s claim will be sufficiently covered by the injunctions I propose to make in relation to the moneys to be received by the first trust and other assets of the husband and Trust.

I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Dawe delivered on 25 January 2011.

Associate: 

Date:  8 February 2011