Newman & Newman
[2025] FedCFamC1F 32
•28 January 2025
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Newman & Newman [2025] FedCFamC1F 32
File number(s): MLC 14165 of 2022 Judgment of: CARTER J Date of judgment: 28 January 2025 Catchwords: FAMILY LAW – PROPERTY – Interlocutory application – Where the husband seeks the discharge of orders for the sale of corporate entities as he now wishes to retain the entities – Where the wife and additional respondents seek the resumption of the sales process to the exclusion of the husband – Where the corporate entities were on the market in 2024 and minimal interest was demonstrated – Where the valuation of the entities is in dispute – Where the final hearing is imminent – Where the husband is a majority shareholder – Order for sale discharged.
FAMILY LAW – PROPERTY – Interlocutory application – Where the wife and additional respondents seek injunctions against the husband – Injunctive relief not granted.
FAMILY LAW – PROPERTY – Interlocutory application – Where the parties do not agree as to the appointment of solicitors to act on behalf of the corporate entity in a fee dispute with another firm – Orders made appointing solicitors.
Legislation: Family Law Act 1975 (Cth) ss 4, 79, 11, 4
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 7
Division: Division 1 First Instance Number of paragraphs: 56 Date of hearing: 8 January 2025 Place: Melbourne Counsel for the Applicant: Ms Mooney SC Solicitor for the Applicant: Blackwood Family Lawyers Counsel for the First Respondent: Mr Austin KC & Mr Lane Solicitor for the First Respondent: Taussig Cherrie Fildes Counsel for the Second to Sixth Respondents: Mr Ainsworth Solicitor for the Second to Sixth Respondents: MGA Lawyers ORDERS
MLC 14165 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS NEWMAN
Applicant
AND: MR NEWMAN
First Respondent
MS MENZIES
Second Respondent
MR FIELDER (and others named in the Schedule)
Third Respondent
ORDER MADE BY:
CARTER J
DATE OF ORDER:
28 JANUARY 2025
THE COURT ORDERS THAT:
1.Order 4 of the orders made 20 September 2023 be discharged.
2.Order 6(c) and Order 7 of the orders made 20 September 2023 be amended to include the following words after the words “[Mr C]”
“or such other person appointed by the parties in his place”.
3.The parties forthwith engage D Lawyers to advise and represent them in the E Company Fee Dispute on behalf of the F Group, with the costs to be paid by the F Group.
4.All interim applications be otherwise dismissed save the husband’s application pursuant to r 7.08 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
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).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of 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 has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUSTICE CARTER
The interlocutory applications currently before the Court are as follows:
(a)the wife’s Application in a Proceeding filed 21 November 2024; and
(b)the husband’s Response to an Application in a Proceeding filed 20 December 2024.
The husband and wife separated in April 2020 following a 55-year marriage. The major matrimonial asset is the husband’s interest in the F Group. That group is made up of F Holdings Pty Ltd (“F1 Holdings”), and F2 Pty Ltd (“F2 Pty Ltd”) (collectively referred to as “the F Group”). F1 Holdings owns F1 Group Pty Ltd, which in turn wholly owns another eight F Group entities.
The husband owns 76 per cent of the shares in F1 Holdings.
The additional respondents are:
(a)Ms Menzies who owns 4.7 per cent of the shares in F1 Holdings;
(b)Mr Fielder, the general manager of F1 Holdings and is a 5 per cent shareholder;
(c)the parties’ adult son Mr B Newman, who is the managing director of the F Group, and sole director and shareholder of Newman Investments Pty Ltd;
(d)Newman Investments Pty Ltd which owns 14.2 per cent of the shares in F1 Holdings; and
(e)Mr Brown, the Chief Financial Officer of the F Group.
F2 Pty Ltd is owned by the same shareholders as F1 Holdings, and in the same proportions.
Orders were made by consent on 20 September 2023 for the sale of the F Group.
The interim applications were heard on 8 January 2025. All parties were competently represented by counsel. A number of issues were able to be compromised, and consent orders were made in relation to several matters. Additionally, the orders made that day included vacating the trial listed for 28 January 2025 and relisting the matter for five days commencing 12 May 2025.
Some orders sought were not pressed or were amended and narrowed. The matters that remained to be determined by me are as follows:
(a)in relation to the orders for the sale of the F Group as provided for in the orders made 20 September 2023:
(i)whether these orders should be set aside (as sought by the husband); or
(ii)whether the sale process should resume (as sought by the wife); and
(iii)in the event the sale process is resumed, whether the husband should be excluded from that process, and the wife have sole conduct of the sale on behalf of herself and the husband (as sought by the wife and opposed by the husband);
(b)whether the husband should be restrained;
(i)from attending the home of any F Group employee (as proposed by the wife and resisted by the husband); and/or
(ii)from approaching or remaining within 200 metres of the F Group Head Office at G Street, Suburb H Victoria, F Group Workshop at J Street, Town K Victoria and any other F Group site (as proposed by the wife and resisted by the husband); and
(c)in relation to the fee dispute between the F Group and E Company, whether;
(i)D Lawyers should be appointed as the lawyers on behalf of the F Group and/or the husband excluded from the negotiations and resolution of that fee dispute (as sought by the wife); or
(ii)whether another firm should be so appointed by nomination of three options by the husband and the selection of one by the wife (as sought by the husband).
Counsel for the 2nd to 6th respondents indicated his clients supported the orders sought by the wife.
THE SALE OF THE F GROUP
The parties jointly engaged Ms L of M Accountants to provide a valuation of the various entities (“the single expert”). That report is dated 2 August 2023. The single expert valued the husband’s interest in the F Group at approximately $58.9 million, with a total value of the F Group in excess of $77.5 million. The collective marital corporate interests were valued in excess of $76 million.
Following the release of that report, the additional respondents were joined to the proceedings and orders were made on 20 September 2023 by consent for the sale of the assets or their shares in F1 Holdings, the F Group and F2 Pty Ltd.
Pursuant to those orders the parties jointly appointed Mr C to advise them as to the sale of the F Group. The parties agreed to abide by Mr C’s recommendations in the event of disagreement as to any aspect of the sale. Although there was no time frame for the sale process in the orders, the letter of instruction to Mr C on 18 October 2023 provided for his appointment for six months from the date of the letter to him (concluding on 18 April 2024).
The final hearing initially listed for 15 July 2024 was adjourned to 28 January 2025 to enable the sales to occur. The sales process commenced in late 2023, stalled in June 2024 and has been unsuccessful.
It is the wife’s case, and that of the additional respondents, that the husband has been highly uncooperative in relation to the sale, to the extent that Mr C and D Lawyers (the firm appointed by Mr C to assist with the sale) have withdrawn from the sales process. Mr C has also prepared a report dated 26 June 2024 filed under cover of an affidavit. Mr C reported that the husband was obstructive throughout his engagement and described that “there has been a high degree of non-compliance” by the husband with the sales process.
The husband denies he has obstructed the sale. He accepts that his working relationship with Mr C has ruptured. However he said that occurred in the context where the sales process (with which the husband said he fully cooperated) failed to adduce any serious offers despite the business being marketed for over six months, and according to the husband, he was increasingly marginalised and excluded from the process. The husband is frustrated that the engagement of Mr C has been at considerable expense to the parties, without any progress being made.
It is not in dispute that whilst there have been some bids from external third parties, none have progressed to binding offers.
The only meaningful offers made have been as follows:
(a)an indicative offer by the Management Buyout Group – which is comprised of the 3rd, 4th and 6th respondents; and
(b)an informal offer made by the husband to buy out the wife’s interest in the F Group.
As best as I can understand it, the offers were made on the basis that the F Group was worth between approximately $45 million and $49.5 million – well below the valuation given by Ms L.
Neither of these offers have been accepted by the wife.
The husband seeks the discharge of the orders for sale. The wife and the 2nd to 6th respondents seek the sales process be resumed, and the husband be excluded from participation in that process.
The husband asserts there is no utility in resuming the sales process in circumstances where the F Group was actively marketed for around six months and despite what senior counsel for the husband described as an exhaustive testing of the market, produced no external genuine interest and certainly no interest at the price identified by the single expert. He says there is no evidence that the market has changed such that there will now be external purchasers interested in making binding offers. Moreover, it is his case now that he wishes to purchase at least the wife’s shares from her as part of the s 79 proceedings pursuant to the Family Law Act 1975 (Cth) (“the Act”), which he said may well be achievable as the F Group and his interest in it appear to be worth considerably less than the single expert’s valuation. In those circumstances he says the interim orders for sale ought be discharged.
Conversely, the wife and additional respondents assert that whilst the F Group was marketed in 2024, the behaviour of the husband severely hampered the process. They say a sale can be achieved if the husband is excluded – and unable to undermine and obstruct Mr C. They say further that the F Group was marketed for only six months, and given the value of the entity, it is not unreasonable to assume it may take longer than that to find and secure a buyer. Moreover, the wife argues that the husband has failed to adduce any evidence that would indicate he is able to raise the funds to pay her out – so that as a matter of practical reality the sale of the husband’s interest in the F Group will be necessary in order to pay her entitlements pursuant to s 79 of the Act.
As noted, the final hearing is now listed in May 2025. That is in about four months’ time. Even if the sales process was resumed, it may well be that the F Group would still be on the market as at the date of the final hearing. In circumstances where the final hearing is imminent, and the husband no longer wishes to sell his interest in the F Group and instead wishes to pursue options that would enable him to pay the wife out, I am of the view that it is appropriate to discharge the interim orders for sale. If at trial the husband remains unable to point to an ability to borrow funds to pay the wife her entitlement it may ultimately be that a sale is ordered.
I note the husband sought the discharge of Orders 4 to 8 inclusive of the orders made 20 September 2023. I am only discharging Order 4. That is the order actually compelling the parties to sell their assets and shareholding. The additional orders include giving the parties liberty to apply if there is a dispute about the sale (Order 5), ensuring the wife’s participation in any sale discussions (Orders 6 and 7) and a rectification of the constitutions of various entities so that voting rights accord with proportional shareholding (Order 8). I will not discharge those orders as the parties may reach an agreement about sale (as opposed to being compelled to sell) or there may be an issue with the terms of any proposed sale. If that were the case, the wife should continue to be involved in those discussions. I note that Order 6(c) and 7 refer to Mr C who is unlikely to remain involved – so those orders will be amended to provide “or such other person appointed by the parties in his place”.
There were no submissions made as to why Order 8 should be discharged.
The husband now does not accept the valuation by the single expert. When the parties appeared before me on 8 January 2025, they agreed the single expert will be engaged to provide an updated valuation. The husband has flagged that if he remains of the view that the single expert’s report and methodology are flawed after that updated report has been completed – and the processes for a conference and clarification as contemplated in rr 7.25 and 7.26 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) undertaken – he may pursue his application to adduce evidence from an adversarial expert. It was conceded the husband’s application to appoint an adversarial expert was premature until those matters had been attended to.
In circumstances where I have determined to discharge the orders for sale, there is no need for me to consider whether the husband should be excluded from any sales process. If the husband’s behaviour is ultimately found to have been as disruptive and uncooperative as is asserted – once the evidence has been tested – it may then be appropriate to exclude him from the sales process if that is ordered. No doubt these matters will be fully ventilated at trial.
INJUNCTIVE RELIEF
It is the wife’s case that the husband has engaged in highly disturbing and abusive behaviour in the workplace and that he should be excluded from attending the premises and from attending at the homes of any business employees.
The allegations she makes include that the husband has:
(a)yelled abuse at staff;
(b)threatened to kill a member of staff;
(c)made racist remarks to staff;
(d)carried a weapon case to work and advertised he has had his weapons licence returned to him;
(e)behaved in a sexual manner towards staff;
(f)threatened to sack staff members;
(g)threatened a member of staff with a tool; and
(h)attended at the home of an employee after she made a formal complaint regarding the husband’s behaviours.
The wife has no direct knowledge of these events. Affidavits have been filed by some of the respondents, and other staff members deposing their experiences and observations of the husband.
Mr Fielder deposed that the husband has been obstructive and abusive since February 2022 providing examples including that the husband would bring tools to the office and tell staff he would use it to “fire them up”, and that he brought a weapon case into his office. Mr Fielder further deposed that the husband acted poorly towards female employees in particular, has been disruptive, angry and aggressive in meetings and that as a result of the husband’s behaviour a number of employees have left the F Group. Mr Fielder further deposed that the husband has previously yelled at and threatened him and that the husband’s erratic and unpredictable behaviour has impacted him and his team.
Mr B Newman in his affidavit corroborates that he has observed the husband to behave in an abusive and disruptive manner in the workplace. Mr B Newman deposed the husband plays a very minor role in the day to day running of the business, although it seems that the husband does attend at the premises in person. Like Mr Fielder, Mr B Newman said a number of staff members, particularly women, have left the F Group as a result of the husband’s behaviours. Mr B Newman also deposed that the husband sought to terminate his role as managing director. Additionally, Mr B Newman observed the husband to bring a weapon case into the office in early 2024. This greatly upset at least one member of staff who went to the police. The husband’s weapons licence was then revoked in early 2024. Mr B Newman deposed the husband subsequently displayed his reinstatement of his weapons licence on the door to his office, causing consternation for at least some staff members.
Mr Brown corroborates many allegations regarding the husband’s behaviour. He deposes that the husband’s behaviour has resulted in Mr Brown taking extended leave.
An affidavit has also been filed by Mr N, a manager at the F Group. Mr N deposed that the husband consistently bullies, harasses and threatens him. He said the husband yells at him, and at other staff members, undermines and belittles him, threatens to get police involved, and threatens his job security. Mr N said the husband’s threats, actions and behaviours have negatively impacted his health.
Ms O – a manager at the F Group – also deposed an affidavit. She similarly deposed that the husband is frequently verbally aggressive to her, raises his voice, and is often rude and personally denigrating about other employees. She deposed further that he threatens her with contacting the police, and that she witnessed the husband, in late 2020 (more than four years ago) walking around the office with a tool, and stating he was going to harm people to ‘fire them up’. Ms O said in early 2024 another employee told her that the husband had threatened to kill someone and the following day the husband brought in a weapon case. Ms O said she remains concerned that the husband may use the weapon now that his licence has been reinstated. Ms O gave additional examples where other employees had been highly distressed and fearful of the husband’s behaviour. She further deposed to the husband making gratuitous comments to staff members of a sexual nature, or commenting on people’s clothes and underwear, or physical appearance. She said she has had to take extended time off work on three occasions due to the stress she has felt in relation to the husband’s actions and behaviours, that her personal wellbeing has been negatively impacted by him and that the attends the office each day “with trepidation”.
Mr P is a manager at the F Group. Mr P also deposes that the husband has been aggressive and intimidatory towards him, undermining his work and his role, threatening him with legal action, and causing him stress and embarrassment. He deposed further that the husband had inappropriately intervened in a response from human resources at the F Group following a complaint by Mr P about the husband. Mr P also saw the husband with the tool in 2022 and with the weapon case in 2024. In addition Mr P said the husband has taken photographs of employees, and recorded conversations without consent. He has heard the husband use racist language to describe an employee.
Mr Q is a manager at the F Group. He also experienced the husband being threatening and aggressive and described a “toxic” environment at head office as a result. He deposed he has also been threatened with legal action by the husband, and that he is “emotionally and mentally exhausted by the treatment” he receives from the husband.
It was the husband’s case that no basis for the relief has been established to exclude him from the business premises or restrain him from attending at the residence of any employee. He strenuously denied most of the behaviours as alleged. He said some of his actions or words were taken out of context, misconstrued or exaggerated. He said if he raised his voice, it is because he sometimes has difficulty hearing. He also asserted that those who have provided affidavits are “allies of [Mr B Newman’s]” – which I understood to suggest they are unreliable.
It was the husband’s assertion that the relief sought was far flung, extensive, drastic and draconian. He opposed the injunctions being granted on the basis of the untested evidence, and that the relief sought was contrary to his majority shareholding in the business. In addition senior counsel for the husband asserted that it was inappropriate for the Court to interfere with internal management where there was no evidence that the value of the business had been impacted.
The legislative basis for injunctive relief
Section 114(1) of the Act provides:
(1)In proceedings of the kind referred to in paragraph (e) of the definition of matrimonial cause in subsection 4(1), the court may make such order or grant such injunction as it considers proper with respect to the matter to which the proceedings relate, including:
(a) an injunction for the personal protection of a party to the marriage;
(b)an injunction restraining a party to the marriage from entering or remaining in the matrimonial home or the premises in which the other party to the marriage resides, or restraining a party to the marriage from entering or remaining in a specified area, being an area in which the matrimonial home is, or the premises in which the other party to the marriage resides are, situated;
(c)an injunction restraining a party to the marriage from entering the place of work of the other party to the marriage;
(d)an injunction for the protection of the marital relationship;
(e) an injunction in relation to the property of a party to the marriage; or
(f)an injunction relating to the use or occupancy of the matrimonial home.
This is a matter which falls within s 4(1)(e) of the Act, as the wife seeks orders or injunctions in circumstances arising out of the marital relationship.
Injunction – Non–attendance at business premises
The evidence of the other parties, and witnesses as to the husband’s behaviour in the workplace is untested. However, at an interim hearing the fact that the material is untested and challenged by the husband does not mean I must disregard it. Rather, I am obliged to act on the strength of the evidence presented.
It seems to me that the evidence of the wife, the other parties, and their witnesses regarding the husband’s behaviour and the impact it has on the employees is plausible. Their evidence is consistent. Some of the behaviours are not denied by the husband. According to their evidence, the behaviour is enduring, longstanding and has impacted their sense of safety and wellbeing.
However, it is a significant matter to restrain a majority shareholder from physically attending his business premises. I note further:
(a)the wife is not a part of the business. She does not work for the business. There is no evidence she attends at the premises. The injunctive relief sought would accordingly not be for her personal protection;
(b)there is no evidence that the husband’s behaviour as alleged has negatively impacted the value of the business. Indeed, it is the evidence of the wife and the other respondents that the business is thriving and may have increased in value. There is much force in the submission made by senior counsel for the husband that there is little foundation for the injunctive relief sought by the wife in circumstances where the preservation of the asset does not appear to be at risk, and where the injunction is not for the protection of the wife; and
(c)the 2nd to 6th respondents do not have their own applications on foot. They were joined only so that the sale orders could be made binding upon them. They otherwise have no application before the Court.
In all the circumstances I am not satisfied that it is proper to grant the relief sought. The substantive proceedings on foot are proceedings between the husband and wife pursuant to s 79 of the Act. I am not prepared in the circumstances to interfere with the internal management of the business as between the husband and the other shareholders – particularly where there is no evidence that the behaviours alleged have reduced the value of the business. Presumably the other shareholders and employees will have remedies they can pursue elsewhere – which do not currently form any application before me.
My determination not to grant the relief sought should not be seen as minimising the alleged behaviours. If the behaviour is proven, it may impact on the determination as to how the sale of the business will be conducted in the event it is to be sold. Similarly, if at trial it is established that the husband’s behaviours have negatively impacted the value of the business, that can be taken into account.
Injunction – Non-attendance at residences
There are around 300 employees at the F Group. Only one employee is named in the wife’s material as having received a visit at home from the husband. There is no evidence that there has been a ‘pattern of conduct’ by the husband that would suggest he will inappropriately and uninvited attend at the home of any other employee.
I am not of the view that it is appropriate to grant the relief as sought.
E COMPANY FEE DISPUTE
Following the offer by the Management Buyout Group, and in circumstances where the sales process had ground to a halt, E Company issued an invoice to the F Group for $1.05 million, being the ‘non-completion fee’. That included an additional amount of $250,000 which according to an email from Mr R of E Company on 4 July 2024 was imposed as a result of the husband’s behaviour during the sales process. Mr R wrote:
Given that the major Shareholder has clearly breached our Engagement Letter, interfered in the sale process we were engaged to run, threatened [E Company] staff, and our time costs are around $1.5m to date, we believe an additional $250,000 is at the bottom end of what we would consider reasonable. Due to the actions of the major Shareholder, [E Company] has lost the opportunity to earn a fee that would give us a reasonable return on our at-risk investment in this project. When we started the mandate our expectation was a fee in the order of $1.5m-$2m.
In November 2024 E Company’s lawyers wrote to the F Group demanding payment of this fee, and asserting that if the fee was not paid by 26 November 2024 they would issue legal proceedings against the F Group.
It is agreed that the parties need to appoint a legal advisor to act on behalf of the F Group in relation to any claim to recover monies that might be brought by E Company.
The wife has proposed that D Lawyers be jointly appointed. That was agreed to by the 2nd to the 6th respondents.
The husband does not agree that D Lawyers should be appointed. It is his case that they are conflicted, as they were appointed as legal advisors for the sellers, being the husband, the wife, and the additional shareholders. The husband says the conflict arises as the sellers are no longer ad idem (as there is no longer a common intention to sell to a third-party purchaser) and in circumstances where Mr C has also been using D Lawyers for advice in regards to the sale process and his liaisons with E Company. Additionally it was asserted by senior counsel that D Lawyers’ conduct may have played some role in the triggering of the fee.
It is the husband’s proposal that he nominate three legal advisors and the wife and additional respondents select one within seven days. He further proposed that in the event they are unable to jointly agree as to the legal advisor, the parties have liberty to apply.
I am satisfied that it is appropriate that D Lawyers be appointed on behalf of the F Group to resolve the dispute with E Company. It will be expensive – and potentially time consuming – to engage another set of lawyers. The legal and other fees incurred by the F Group are already significant. I note that there is an obligation on the Court to facilitate the just resolution of disputes as quickly, inexpensively and efficiently as possible. I am also not satisfied that D Lawyers is conflicted as asserted by the husband.
I am not prepared to exclude the husband from the negotiations regarding any settlement with E Company at this point. He is a major shareholder and the outcome of the dispute will impact him financially. However, if the situation is unable to be promptly resolved, and there is credible evidence that the husband has acted in a manner that is interfering with or obstructing negotiations, his involvement in them can then be reconsidered. If a further interim hearing was required on this point, there could be costs consequences for the unsuccessful party.
I certify that the preceding fifty-six (56) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Carter. Associate:
Dated: 28 January 2025
SCHEDULE OF PARTIES
MLC 14165 of 2022 Respondents
Fourth Respondent:
MR B NEWMAN
Fifth Respondent:
NEWMAN INVESTMENTS PTY LTD
Sixth Respondent:
MR BROWN
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