Morad & Fares
[2022] FedCFamC2F 1392
Federal Circuit and Family Court of Australia
(DIVISION 2)
Morad & Fares [2022] FedCFamC2F 1392
File number(s): SYC 6411 of 2022 Judgment of: JUDGE McGINN Date of judgment: 16 September 2022 Catchwords: FAMILY LAW – injunctions – interim application – dealings with property – uncertainty about asset pool – pending property settlement application – undertaking as to damages - costs Legislation: Family Law Act 1975 (Cth)
Federal Circuit and Family Court of Australia (Division 2) (Family Law) Rules 2021
Cases cited: Colgate–Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 Division: Division 2 Family Law Number of paragraphs: 39 Date of last submission/s: 16 September 2022 Date of hearing: 16 September 2022 Place: Adelaide Counsel for the Applicant: Mr Lacey Solicitor for the Applicant: Doolan Wagner Family Lawyers Counsel for the Respondent: Mr Young Solicitor for the Respondent: Harris Freidman Lawyers ORDERS
SYC 6411 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS MORAD
Applicant
AND: MR FARES
Respondent
order made by:
JUDGE McGINN
DATE OF ORDER:
16 SEPTEMBER 2022
UPON NOTING that the applicant has given an undertaking in accordance with Rule 10.18(5) of the Federal Circuit and Family Court of Australia (Division 2) (Family Law) Rules 2021 through her counsel this day.
IT IS ORDERED:
1.That pending further or other order:
(a)the respondent in his capacity as the sole director and shareholder of B Pty Ltd (“the Company”) is restrained and an injunction is granted restraining him from withdrawing, disposing or in any way dealing with the sale proceeds of C(1) Street, Suburb D, NSW (folio number …) or C(2) Street, Suburb D, NSW (folio number …) (“the Suburb D properties”) except in accordance with these orders;
(b)the respondent immediately direct E Solicitors or any other solicitor and conveyancer acting on the sale of the Suburb D properties or either of them to hold the sale proceeds after the discharge of the Bank F (dealing number …), agents fees and legal fees relating to the sale in trust in the company name except for:
(i)weekly withdrawing’s of $2,000 by way of salary or wages before tax;
(ii)car repayments in or about the sum of $390 per week for the wife; and
(iii)payments in or about the sum of $575 per week in respect of school fees and extra-curricular expenses for the parties’ daughter;
unless the written consent of the wife is first had and obtained or pursuant to order of this Honourable Court.
2.Within 21 days of the date of these Orders, each party must exchange with each other party a copy of each of the following documents (to the extent such documents have not already been provided):
(a)the documents mentioned in Rule 6.06 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Division 2) (Cth);
(b)statements for all bank or credit union accounts (including loan, mortgage and credit card accounts) in which the party has an interest for the period from 12 months before the date of separation to the date of these Orders;
(c)any documents which:
(i)support the information contained in the party’s Financial Statement / Financial Summary or affidavit filed to date;
(ii)estimate the value of any property in the party’s possession;
(iii)confirm the date and amount of any inheritance, gift, redundancy or compensation payment received by the party from the date of cohabitation to the date of these Orders;
(iv)detail the party’s acquisition or disposal of property since the date of separation to the date of these Orders;
(v)evidence any increase or reduction in the liabilities of the party from the date of separation to the date of these Orders;
(vi)confirm the value of any superannuation fund in which the party has an interest at the date of cohabitation, the date of separation and the date of these Orders.
3.Within 28 days of the party receiving a written request for a document from another party to these proceedings, the first-mentioned party must provide a copy of the requested document(s) to the requesting party to the extent they are within the first-mentioned party’s power, possession or control.
4.That the parties and their legal representatives are to attend upon Deputy Registrar G on 29 November 2022 at 9.00am for the purposes of a financial conciliation conference.
5.On or before 4.00pm on 22 November 2022 the parties are to exchange for the purpose of the financial conciliation conference the following:
(a)a joint balance sheet;
(b)a conciliation conference paper; and
(c)the specific orders sought by each party to resolve their respective claims for property settlement.
6.The respondent do pay the applicant’s costs fixed in the amount of $1,964 (inclusive of GST), such amount to be paid by the respondent to the applicant’s trust account within five months from the date of these orders.
7.That the application for interim orders sought by the Initiating Application sealed 12 September 2022 and the Response thereto dated 15 September 2022 do otherwise stand dismissed.
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 a pseudonym Morad & Fares has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE McGINN
These are the brief reasons in this matter in relation to the parties’ competing applications with respect to injunctive relief sought on behalf of the applicant wife by her Initiating Application dated 12 September 2022 and which I am told was only served late on the afternoon of 13 September 2022. For the reasons that I am about to give I am disposed to grant an interim injunction in this matter although it will not be upon all of the terms sought in the application and it will be subject to the acceptance of an undertaking as to damages in the usual form on behalf of the applicant wife.
The Court will also be making orders as to the completion of disclosure in this matter and listing of the matter for a financial conciliation conference before a Judicial Registrar or other judicial officer of this Court which shall take place on 29 November 2022 at 9 am. For the purposes of dealing with the Initiating Application which is sealed 12 September 2022 and the Response which has been received and is dated 15 September 2022 to the extent necessary I shall dispense with compliance with the Rules and the Central Practice Directions so as to enable me to deal with those interim applications and to otherwise make orders with respect to the question of disclosure and the listing of the matter for a financial conciliation conference as I have foreshadowed.
In this matter the parties married in 2011 and separated in October 2018 and came to be subsequently divorced in December 2021. Their marriage produced one child who I learn from the applicant’s affidavit material is principally living with her mother and is regularly spending time with her father. Other than the divorce application that has been brought and determined by the Court there are no other orders or proceedings pending between the parties. The wife by her Initiating Application seeks an order for property settlement in general terms calling for a 65 per cent distribution of what is termed to be the “matrimonial pool” - a term which I might pause to add is without any real legal meaning but for the purposes of this application can understood to be those assets and resources and property of the parties which is yet to be ascertained.
In that Initiating Application there was also an application for the injunctive relief which has been the subject of learned argument before me this morning which is seeking orders directed against the respondent husband in his personal capacity as a director and shareholder of a particular company to restrain him in relation to certain dealings with assets of that company. As I have indicated, service was only affected on the afternoon of 13 September 2022 and this application comes before me at short notice to the respondent and since the formal application. I do pause to note, however, that the application was brought in circumstances where there had been communications between the parties and/or their legal representatives at least since 3 August as to the question of property settlement disclosure and the need to use my terms, not those used by the parties – to freeze assets so as to enable the parties (at least on the applicant’s case) to undertake meaningful negotiations, if not finally determine and resolve the question of property settlement.
The Court accepts that the applicant wife is not able to articulate with any specificity what she seeks by way of property settlement given her uncertainty as to the extent and nature of the property and financial resources of each of the parties and that is made evident by her affidavit in support of the application where she identifies the property pool as best she can. The applicant’s affidavit upon my reading of it discloses an unknown asset pool but possibly presently of something in the vicinity of at least $500,000 and perhaps not much more and superannuation of at least $35,000. I agree with the submission made on behalf of the applicant wife that the pool at this stage is to be regarded as modest.
The supporting affidavit of the applicant, although broad in its terms, does satisfy me that the applicant has disclosed prima facie a case for property settlement in circumstances where there is not only the description of the property which is described but her financial statement discloses that she presently holds about $53,000 or so in net non-super assets and superannuation of $35,000. Where the respondent has the ability to control the bulk of the wealth of the parties, as I presently view it on the material before me, I would bring to account informing that view the fact that the respondent is the sole shareholder and director of various companies which hold various assets which are claimed to be of value and against which there are claims by way of various liabilities and with those persons with whom trade is conducted by the companies and which I infer is trade also conducted with third parties by the respondent husband. I am satisfied that there hasn’t been sufficient identification of the pool.
I am also satisfied that there needs to be, in the circumstances of this matter, some reckoning between the parties in an endeavour to finalise their financial relationship insofar as there is a need for some terms of property settlement to be entered into. An endeavour was undertaken by the parties, upon reading of the affidavit material, to do this, it appears informally following the sale of what I am told is the former matrimonial home at Suburb H and which saw, once again, upon my reading of the affidavit material and upon my calculations, a division of those proceeds initially of some $222,000 in favour of the applicant wife and about $618,000 being retained by the respondent husband.
The affidavit material also discloses on behalf of each party that of the monies retained by the applicant wife at least some of the $220,000 retained by her from the Suburb H property was applied to the husband and/or those companies of which he is a sole shareholder and director for the purposes of those companies and I also understand it to mean, the husband could continue to trade and earn his livelihood. Those transactions to which I have just referred occurred as part of what appeared to be an agreement, at the very least, an understanding between the parties as to the use of the property and their respective financial capacities both in terms of the Suburb H property and its proceeds and that which the parties otherwise retained followed the separation of their marriage.
It is evident on the affidavit material that has now been provided that any assumptions that each of the parties maintained about how they would use their property both at the time of their separation and subsequently through what I will term the Suburb H transaction has broken down and, as I say, there is a need now for this property settlement to be made. In considering what orders for property settlement are to be made each of the parties will, in due course, need to go beyond that which they have set out in their affidavit material to date as to the extent and nature of the property that they each hold and identify the financial resources.
It is common ground on the affidavit material that the respondent husband to make his living, which once again it appears to be common ground he does so for not only his own benefit but for that of the respondent and their daughter, at the very least to the extent as disclosed in his financial statement, he does need to trade and deal with property. However, in my view, there has now been a breakdown in the process by which that was happening previously and insofar as I am prepared to infer and I find that there was an unspoken assumption as between the parties that the respondent husband in undertaking his usual trade would be undertaking that for the benefit of the parties.
Questions of disclosure and the need for accounting in respect of transactions and the proceeds from transactions now comes to dominate at least the financial relationship between the parties and in respect of which the Court considers it appropriate that the wife has called for disclosure and the Court is prepared to infer that it is appropriate that the applicant wife have a proper and full understanding as to what might be the respondent husband’s various financial and commercial transactions so that a proper and informed view can be adopted by both the applicant wife and the respondent husband in dealing with their financial circumstances.
It is, in my view, of significance in this context that between 5 and 8 September the applicant wife sought from the respondent husband for him in effect to place – my words and not that out of the affidavit – a “hold” in relation to the proceeds of sale of the two properties which are now the subject of the injunction. The lack of response is a matter which I think I can properly bring to account in considering the nature of the injunctive relief that should be granted and also in forming the view that there is a degree of urgency present because the amounts which may or may not ultimately come to be realised are significant in the context of an asset pool which at the present time, on the face of the material before me, appears to be – and I say with respect to the parties – modest.
Sales and attempted sales of property which have taken place without full and complete notice to the wife are, in my view, matters which justify the granting of certain injunctive relief so as to preserve the pool and the position of the parties as best as it can be approximated at this time to enable the respective applications to go forward and to also enable the parties to make informed decisions as to the interim dissipation of any of those proceeds.
It is with some force that the learned submissions were agitated on behalf of the respondent husband, the application may be regarded as premature or lacking in specificity insofar as it fails to fully and properly bring to account those claims which might be made upon the husband or the company or companies which he controls as a result of the injunctive relief.
Although those are matters of weight the Court considers that they can be appropriately addressed by the framing of an order which will enable the parties to deal with the proceeds either by agreement between themselves in writing or for the parties, as they always have where interim injunctions are granted, to make further application should there be circumstances which arise to, firstly, justify an application and, secondly, the making of any necessary orders.
The test for the granting of an interlocutory injunction in these circumstances given that there is no debate that the power is available to the Court pursuant to section 114 is, firstly, that the applicant must demonstrate that there is a serious issue to be tried. I consider in the circumstances this matter as it presently stands that there is a serious issue to be tried. That being the parties’ respective positions about the question of property settlement and, in particular, that of the wife.
All that the Court has to be satisfied at this time is that there is an arguable case and it does not necessarily have to be a strong case for the Court to be so satisfied. In the circumstances of this matter, I consider that this first criterion is satisfied on the material that is before me.
One need not, in my view, go much further than the fact that the parties themselves acknowledge the need for some property settlement or something of that nature approaching some resolution of their financial relationship when there were arrangements or agreements arrived at in relation to the distribution of the proceeds from the sale of the former matrimonial home at Suburb H which since appears to have broken down.
The second criteria that needs to be satisfied is the question of the balance of convenience of which one factor might be whether there is an intention or the prospect of transactions being undertaken which might defeat the claim. In considering this criterion it is important to note that it is not necessary to demonstrate a positive intention but merely the possibility of such an event occurring. As was correctly put to me in the learned submissions on behalf of the respondent the risk in relation to the defeat of a claim must be a real one and must not be merely a theoretical one. An alternative way to express what the Court must do is that the Court must be satisfied that there is sufficiently serious risk of frustration that the satisfaction of the wife’s claim might not be made out.
The fact that the asset pool is uncertain at this point in time in the circumstances of this particular case and where there is still to be disclosure and particularly disclosure on behalf of the respondent husband heightens the Court’s sensitivity that the risk of frustration is real. The Court in forming this view brings to account the lack of response in relation to the call for material on behalf of the respondent wife. The fact that the respondent husband deals with property – and no doubt from the point of view that he is entitled to do so - but does so without notice to the wife and in those circumstances without necessarily there being a priori notice or advance accounting as to how proceeds might be obtained or utilised or dissipated.
The Court considers that the matters that have been in the learned submissions on behalf of the respondent husband that the contracts or possible contracts in relation to the sale of the two properties to be the subject of the injunction has yet to come to the point where they must be carried into effect or will be carried into effect is not of sufficient weight as to displace the need for an injunction in this matter. The effect of the injunction sought on behalf of the applicant will be to precipitate on behalf of the respondent notice and disclosure being provided to the applicant in relation to dealings with the two properties that are named.
The application was brought forward on the basis that there was no undertaking proffered in seeking the injunctive relief from this Court and, indeed, appears to have been disavowed in the course of some correspondence as between the parties or at least their legal representatives.
The Court considers that an undertaking should be given in the circumstances of this matter even though it may well turn out to be that that undertaking is of limited efficacy at the present time given the rather difficult financial circumstances which are depicted in the applicant’s financial statement.
There is a distinction to be drawn between the fact that a party is willing to give an undertaking or an undertaking as to damages as part of the price for obtaining an interlocutory injunction and the question as to whether that injunction amounts to anything in a practical sense.
The fact that the applicant is now prepared to give that undertaking is a matter which the Court considers of weight and persuades the Court that certain injunctive relief should be granted. The Court considers that that undertaking having been given notwithstanding that it may be or may turn out to be of limited efficacy in due course, and assuming that a Court at some time in the future might be persuaded to make some order for compensation (which a Court, of course, is not bound to) does not displace me from the view that the giving of that undertaking is a factor that also persuades that the injunction should be granted in a particular form.
It was also raised in the submissions on behalf of the respondent that there are certain duties that he will have to undertake, pursuant to the Corporations Law, as a director of the company which holds the properties. The Court has no evidence before it at the present time that there is any direct or real conflict between those duties and the injunction that might be granted. Some may emerge in the future or none may not. Again, there will be facility in the terms of the injunction which I propose to grant which will, in effect, provide that should such conflict arise and not be able to be appropriately addressed through agreement between the parties that application shall have to be made on the basis of either changed circumstances or other necessity as would usually be the case in respect of any interim orders that are granted by a Court.
The formal orders that I, therefore, shall make upon the interim application contained in the initiating application 12 September 2022 and the response to the initiating application dated 15 September 2022 are as follows:
1.That pending further or other order:
(a)the respondent in his capacity as the sole director and shareholder of B Pty Ltd (“the Company”) is restrained and an injunction is granted restraining him from withdrawing, disposing or in any way dealing with the sale proceeds of C(1) Street, Suburb D, NSW (folio number …) or C(2) Street, Suburb D NSW (folio number …) (“the Suburb D properties”) except in accordance with these orders;
(b)the respondent immediately direct E Solicitors or any other solicitor and conveyancer acting on the sale of the Suburb D properties or either of them to hold the sale proceeds after the discharge of the Bank F (dealing number …), agents fees and legal fees relating to the sale in trust in the company name except for:
(i)weekly withdrawing’s of $2,000 by way of salary or wages before tax;
(ii)car repayments in or about the sum of $390 per week for the wife; and
(iii)payments in or about the sum of $575 per week in respect of school fees and extra-curricular expenses for the parties’ daughter;
unless the written consent of the wife is first had and obtained or pursuant to order of this Honourable Court.
2.Within 21 days of the date of these Orders, each party must exchange with each other party a copy of each of the following documents (to the extent such documents have not already been provided):
(a)the documents mentioned in Rule 6.06 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Division 2) (Cth);
(b)statements for all bank or credit union accounts (including loan, mortgage and credit card accounts) in which the party has an interest for the period from 12 months before the date of separation to the date of these Orders;
(c)any documents which:
(i)support the information contained in the party’s Financial Statement / Financial Summary or affidavit filed to date;
(ii)estimate the value of any property in the party’s possession;
(iii)confirm the date and amount of any inheritance, gift, redundancy or compensation payment received by the party from the date of cohabitation to the date of these Orders;
(iv)detail the party’s acquisition or disposal of property since the date of separation to the date of these Orders;
(v)evidence any increase or reduction in the liabilities of the party from the date of separation to the date of these Orders;
(vi)confirm the value of any superannuation fund in which the party has an interest at the date of cohabitation, the date of separation and the date of these Orders.
3.Within 28 days of the party receiving a written request for a document from another party to these proceedings, the first-mentioned party must provide a copy of the requested document(s) to the requesting party to the extent they are within the first-mentioned party’s power, possession or control.
4.That the parties and their legal representatives are to attend upon Deputy Registrar G on 29 November 2022 at 9.00am for the purposes of a financial conciliation conference.
5.On or before 4.00pm on 22 November 2022 the parties are to exchange for the purpose of the financial conciliation conference the following:
(a)a joint balance sheet;
(b)a conciliation conference paper; and
(c)the specific orders sought by each party to resolve their respective claims for property settlement.
6.The respondent do pay the applicant’s costs fixed in the amount of $1,964 (inclusive of GST), such amount to be paid by the respondent to the applicant’s trust account within five months from the date of these orders.
7.That the application for interim orders sought by the Initiating Application sealed 12 September 2022 and the Response thereto dated 15 September 2022 do otherwise stand dismissed.
Before me today following on my determination of interim applications in relation to injunction an application has been made on behalf of the applicant for costs and that has been opposed by the respondent. It has been pressed upon me that in terms of section 117 of the Act that I should place particular emphasis on the financial circumstances of the parties - it being that the applicant’s position is inferior to that of the respondent, secondly, that the respondent was not responsive in an appropriate way or to a sufficient extent so as to preclude the proceedings and that there were – to borrow a phrase from the applicant counsel’s learned submissions a number of “olive branches” that could have been adopted and avoiding the proceedings and that as it has been pressed upon me that the terms of the orders indicate that the respondent has been unsuccessful or wholly unsuccessful.
The learned submissions on behalf of the respondent is that none of those grounds are made out.
In addition, there has been pressed upon the Court an application that costs be made on an indemnity basis.
The Court will deal, first of all, with the question of the application being dealt with on an indemnity basis. The Court rejects that application. Orders for costs on an indemnity basis are only made in exceptional circumstances. Further, for the Court to be able to even commence to entertain such an application it needs to be informed about the terms of costs agreements that a party might be bound for and the terms of those costs agreements under Rule 12.13, subrule (4) which is absent here.
Secondly, the Court does not consider that in the circumstances of this matter whereby there have been requests for information and positions put as between the parties a lack of response to be so exceptional as to justify an order for indemnity costs. None of the non-exhaustive categories identified in the case of Colgate–Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 appear to resonate with in the circumstances that are present in this matter.
Therefore, the application for costs on an indemnity basis is declined.
In relation to the question of costs should they be granted on any other basis, the Court takes the view that if it were to be disposed to make an order for costs it would endeavour to fix the sum by reference to schedule 1 of the Scale in this Court’s Rules and identify and fix that amount so as to save the parties the cost and expense associated with assessment processes under the Rules.
In all of the circumstances, particularly given the difference in the respective financial positions of the parties and the extent to which the applicant has been successful and the need for her to bring the application to this Court which was wholly opposed by the respondent and to that extent the respondent might be regarded is wholly unsuccessful in his opposition justifies the making of an order for costs in the circumstances of this matter.
The Court in the circumstances of this matter would be disposed to fix the amount of costs.
In the circumstances, the Court would make an order for costs in favour of the applicant in the amount of $1,964 inclusive of GST, such an amount to be paid by the respondent to the applicant within five months from today’s date.
I should also remark that the hearing today has also been utilised by the Court to progress this matter to a financial conciliation conference and the Court brings to account the fact that the respondent’s counsel as well as the applicant’s counsel pressed for such orders and directions to be made by the Court.
These reasons have been corrected for errors of expression and syntax in an attempt to make the orally delivered reasons amenable to being read. Some headings have been inserted to assist in this regard.
I certify that the preceding thirty-nine (39) numbered paragraphs are a true copy of the Reasons for Judgment of Judge McGinn. Associate:
Dated: 16 September 2022
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