Parsi & Zomorod
[2021] FamCA 240
•28 April 2021
FAMILY COURT OF AUSTRALIA
Parsi & Zomorod [2021] FamCA 240
File number(s): SYC 1965 of 2021 Judgment of: HENDERSON J Date of judgment: 28 April 2021 Catchwords: FAMILY LAW – PROPERTY – Interim property – where the respondent de-facto husband agreed to the continuing of injunctions made in March 2021 pending further order and to provide further and ongoing disclosure – where the applicant de-facto wife seeks an interim dollar for dollar costs order and for the de-facto husband to be restrained from leaving the Commonwealth of Australia – where applicant de-facto wife in a superior financial position to that of the respondent de-facto husband – where any interim costs order if made could not be reversed – no evidentiary basis upon which an order restraining the respondent de-facto husband from leaving Australia could be made – interim application otherwise dismissed. Legislation: Family Law Act 1975 (Cth) s 79 Cases cited: Beamish & Coburn (Deceased) (2021) FLC 94-005
Medlow & Medlow (2016) FLC 93-692
Pilkvist & Coburn (Deceased) [2020] FamCA 92
Strahan & Strahan (interim property orders) (2011) FLC 93-466
Number of paragraphs: 74 Date of hearing: 21 April 2021 Place: Sydney Counsel for the Applicant: Mr Lethbridge SC Solicitor for the Applicant: Mills Oakley Lawyers Counsel for the Respondent: Mr Schonell SC Solicitor for the Respondent: York Law Family Law Specialists ORDERS
SYC 1965 of 2021 BETWEEN: MS PARSI
Applicant
AND: MR ZOMOROD
Respondent
ORDER MADE BY:
HENDERSON J
DATE OF ORDER:
28 APRIL 2021
BY CONSENT THE COURT ORDERS THAT:
1.The interim injunctive orders made by his Honour Deputy Chief Justice McClelland by consent on 30 March 2021 are to continue pending further order.
2.That within twenty-eight (28) days the Respondent provide the following documents by way of disclosure:
(a)Original B Pty Ltd shareholders agreement, and any subsequent documents varying or amending same;
(b)B Pty Ltd statutory accounts for 2016 to date;
(c)Documents in respect of informal or formal valuations of B Pty Ltd for the purposes of capital raising, including but not limited to term sheets, convertible notes, simple agreements for future equity and subscription agreements;
(d)Statements for all bank accounts in which B Pty Ltd holds an interest for the period 9 November 2016 to date;
(e)A copy of the loan ledger and loan agreement/s between B Pty Ltd and the Respondent;
(f)A copy of the loan ledger and loan agreement/s between and the Respondent and his parents;
(g)Statements for his Commonwealth Bank account ending #...98 for the period 1 January 2017 to 22 October 2018, and for the period 23 October 2020 to date;
(h)Statements for his Commonwealth Bank account ending #...03 for the period 1 January 2017 to 11 November 2018, and for the period 12 February 2021 to date;
(i)Statements for his Commonwealth Bank account ending #...21 for the period 1 January 2017 to 16 October 2018, and for the period 12 February 2021 to date;
(j)Statements for his Commonwealth Bank account ending #...14 for the period 1 January 2017 to 5 August 2018, and for the period 6 February 2021 to date;
(k)Statements for his H Bank accounts ending #...36 and #...69 for the period 1 January 2017 to 31 August 2020;
(l)Statements for his J Bank account/s for the period 1 January 2017 to the date of compliance with this order; and
(m)Copies of all documents and correspondence between B Pty Ltd, or any employee or agent acting on behalf of B Pty Ltd, and the Respondent in respect of the Respondent being ‘standing down’ from his position at B Pty Ltd from November 2020 to date.
THE COURT FURTHER ORDERS THAT:
3.The Application in a Case filed by the applicant de-facto wife on 19 March 2021 is otherwise 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 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Parsi & Zomorod has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
This was an application filed by the applicant de-facto wife seeking an urgent hearing in relation to her application for:
(1)Interim spousal maintenance;
(2)Injunctions in relation to the respondent dealing with his interest in the company B Pty Ltd (“the Company”);
(3)Further disclosure by the respondent;
(4)An interim costs application for $100,000 to prosecute her claim.
At the interim hearing before me on 21 April 2021 the applicant substantially amended the orders she had initially sought in her application initiating proceedings filed on 19 March 2021 and sought as follows:
(1)A continuation of injunctions made by consent on 30 March 2021 when the matter was before his Honour Deputy Chief Justice McClelland;
(2)That the respondent be restrained from leaving the Commonwealth of Australia;
(3)A request for additional discovery to that which had been provided;
(4)A dollar for dollar costs order.
The respondent opposed the making of any order and had by letter to the applicant’s lawyers dated 14 April 2021 consented to, without concession, a continuation of the interim injunctive orders made by his Honour by consent on 30 March 2021. This letter formed part of the respondent's Exhibit 2.
I note this letter contained an error in that it referred to interim orders made on 8 April 2021 when interim orders had been made by consent on 30 March 2021. This should not have caused the applicant or her legal team any concern as they were well aware of when orders were made and this was clearly a typographical error.
Mr Lethbridge SC acted for the applicant and Mr Schonell SC acted for the respondent.
The applicant abandoned her claim for spousal maintenance at the hearing before me in circumstances where she had, on 22 March 2021, entered into an employment agreement for a salary of $1,500 per week together with a commission. It is of concern to the Court that the applicant did not immediately withdraw her application for maintenance upon obtaining employment or at least when the matter was before the Deputy Chief Justice on 30 March 2021.
I note that the respondent's lawyers had, on 14 April 2021, noted that the wife was seeking an urgent spousal maintenance order in circumstances where she had secured employment and that they failed to see how her application for interim spousal maintenance would succeed.
Further, I note this matter had been given a priority listing in part due to the applicant’s claim for interim spousal maintenance maintained before the Deputy Chief Justice on 30 March 2021 in circumstances where she had already secured employment. When these facts were revealed and after analysing the evidence it was clear this priority listing was not justified on any basis given the respondent's consent to continue the injunctive orders made by consent on 30 March 2021 and her employment on 22 March 2021.
EVIDENCE FOR THE INTERIM HEARING
For the applicant:
(1)Application in a Case filed 19 March 2021;
(2)Affidavit of the applicant filed 19 March 2021;
(3)Financial Statement of the applicant filed 19 April 2021;
(4)Affidavit of solicitor Susan Warda filed 19 March 2021 in support of the interim costs application;
(5)Case Outline of Mr Lethbridge SC filed 21 April 2021;
(6)Annexures attached to the applicant’s affidavit;
(7)Applicant’s Exhibit 1, a letter dated 15 April 2021 from the applicant's lawyers to the respondent's lawyers requesting “further particulars and documents as follows…"
For the respondent:
(1)Response filed 14 April 2021;
(2)Affidavit of the respondent filed 14 April 2021;
(3)Financial Statement of the respondent filed 14 April 2021;
(4)Affidavit of Mr C filed 20 April 2021;
(5)Case Outline of Mr Schonell SC filed 20 April 2021;
(6)Respondent’s Exhibit 1, Orders of Deputy Chief Justice McClelland dated 30 March 2021;
(7)Respondent’s Exhibit 2, a bundle of letters between the lawyers of the applicant and respondent dated 9 April 2021, 14 April 2021 and 15 April 2021.
SHORT CHRONOLOGY
The applicant asserts cohabitation commenced in December 2016 and the respondent says January 2017. Little turns on that timing.
Separation occurred in November 2020.
There are no children of the relationship.
Cohabitation was four years.
The respondent is 32 and the applicant is 27 and she is a professional.
The respondent created a company, B Proprietary Limited, the Company, in November 2016.
The respondent is a professional and has completed a degree. He studied at D University from 2013 to 2014.
The friend with whom the respondent commenced the Company with is Mr F.
The respondent determined to live permanently in the United States in 2019.
The respondent remained living in the United States from 2019 until November 2020 when he and the applicant returned to Australia for a wedding.
The applicant went to America in June 2020 and the parties lived in G City.
The respondent travelled to and from Australia and America from 2019 until November 2020.
Upon the parties’ return to Australia in November 2020 an incident occurred in a hotel and the respondent was charged with assault offences against the applicant, which charges were dismissed after a contested hearing on 3 March 2021. He was also charged with historical assault charges for incidents the applicant asserted occurred in 2019 and they are listed for hearing on 24 June 2021.
The respondent was placed on bail in respect of these charges, restrained from leaving the country and was required to surrender his passport. Upon the assault charges resulting from the incident in November 2020 being dismissed on 3 March 2021, the respondent’s passport was returned to him and he is no longer subject to a travel ban.
An Apprehended Violence Order (“AVO”) had been also taken out by police in relation to this incident in November 2020 and that was withdrawn on 3 March 2021.
PARTIES’ EVIDENCE
The respondent tells the Court at paragraph 37 of his affidavit:
I intend to defend the charge [of assault]. I have also been charged with a breach of the AVO which is also listed for hearing on 24 June 2021 and which I will be defending. If I am convicted of either offences in June 2021, then I do not believe I can return to the USA and my position in the company will be in jeopardy.
Going to the application before the Court.
The respondent agrees to continue the injunctions made by consent on 30 March 2021 in relation to his shareholding in the Company. This was agreed to by him on 14 April 2021 and was therefore unnecessary to be further litigated.
In relation to the application for further disclosure, the respondent agrees to provide that disclosure within 28 days and that order will be made by consent.
In relation to the remaining orders sought, namely order 3, the injunctive order restraining the respondent from travelling outside Australia and order 5, an interim costs order on a dollar for dollar basis, after a careful analysis of the evidence as will follow, I agree with the respondent's position that the applicant’s application is doomed to fail and was so at the outset.
I asked on what basis and upon what evidence did the applicant assess that the value of the respondent’s interest in the Company was $20 million and that she was entitled to be paid $10 million. What follows is doing the best I can to understand the basis of the applicant's claim. It may be trite however I cannot make an interim costs order under section 79 of the Family Law Act 1975 (Cth) (“the Act”) in the absence of any property or asset of the parties or to which they have an entitlement or interest in.
Looking at the respective financial positions as set out in their Financial Statements, the applicant is in a far superior position to the respondent at present. The applicant has a job where she earns $1,500 per week together with commission, has superannuation of $56,000, owns 62 seed preference shares in the Company and had $35,000 in the bank. This money has been paid to her lawyers for legal costs.
The respondent's financial position is that he is earning no income and is drawing down, by way of director’s loans, monies to support himself from the Company, which loans will have to be repaid, has been effectively unable to continue his work as he had been restrained from returning to America, has $33,000 in assets, owns 38 per cent of the ordinary shares issued in respect of the Company, and has $85,000 in debts. I note that 10,000 ordinary shares in total have been issued in respect of the Company. From the affidavit of Mr C, a manager at B Pty Ltd and filed at the insistence of the applicant, the respondent is being supported by drawings from the Company characterised as director’s loans.
The respondent has a 38 per cent shareholding in the Company, his friend 38 per cent and the remainder is owned by others. As the respondent says in his affidavit, money he is now using to support himself and/or pay legal fees is money loaned from the Company and will have to be repaid by him whereas the money the applicant expends is money from her income and work and/or savings and is not required to be repaid.
At paragraph 44 of his affidavit the respondent describes that the Company is in its infancy. That he and his friend are endeavouring to obtain further share capital to grow the Company. That it is straddled with a US$2.5 million convertible note which debt can be called in at any time. I note that $2,282,759.82 is sitting in the Company account with H Bank as at 31 March 2021 as set out in an annexure to the affidavit of Mr C and marked “Exhibit 5”. The similarity of the value of these funds and the value of the convertible note debt is not a mere coincidence and the assertion on behalf of the applicant that this company was flush with money on these facts is not accepted at this time. Further this is company money, not the husband’s money.
That the respondent had been able to organise a capital raise of US$14 million by November 2020 and that this has fallen through.
The only other evidence that the applicant led as to the value of this company was that the applicant paid $30,000 for 62 seed preference shares. That is $483 per share. That there are 2,823 seed preference shares issued which, when multiplied by $483, is a value of $1.36 million. This calculation carried out by Mr Lethbridge SC to assist the Court to understand where the applicant obtained her extraordinary valuation from did not assist me to understand the value of the Company which has 10,000 ordinary shares issued of which the Respondent owns 38 per cent.
The only evidence to support the applicant's bold assertion is at paragraph 34 of her affidavit, namely that the respondent had asserted to her the Company was worth “USD$20,000,000” in his endeavour to raise capital for the Company. This is far from satisfactory evidence as to the value of the respondent's interest in the Company and I would be entitled to find the applicant has plucked this figure out of the air particularly as the capital venture raising has not yet been successful.
Mr Lethbridge SC did his very best to enable me to understand how the applicant arrived at this figure of $20 million however, in the absence of any cogent evidence, I do not accept the wife's mere assertions.
The applicant's lawyers became alarmed when looking at H Bank documents of the Company's bank account, clearly discovered by the respondent, and found that $500,000 had been paid into his account on 15 March 2021 and had been immediately withdrawn.
Quite properly this was an important issue that needed to be investigated and a request for an explanation was sent to the respondent’s lawyers. The respondent obtained a letter from a manager of the Company, Mr C, dated 15 April 2021 and forwarded this to Ms Warda, the wife’s solicitor, explaining that this had been an error in a transaction carried out by Mr C and that the respondent had taken no part in the transaction.
In response to the provision of this information Ms Warda wrote on 16 April 2021, as annexed to the affidavit of Mr C and marked “Exhibit 4”:
We refer to your correspondence of 15 April 2021 and the wholly unsatisfactory explanation contained therein of the transfer and disbursement of USD$500,000 from your client’s H Bank account on 15 March 2021.
It is remarkable that your client would suggest that any employee of a company from which he has allegedly been stood down was somehow able to withdraw USD$500,000 from your client's personal account without providing any notice to your client. With respect, the daily limit for H Bank Client account’s is $100,000. It is therefore a nonsense to suggest that a non-account holder was about to withdraw a sum five times the daily limit without any recourse whatsoever to the account holder. Naturally we require Mr C to swear an affidavit with respect to his evidence and to be available for cross-examination at the hearing of this matter.
I note whether cross-examination takes place at an interim hearing is a matter within a judge’s discretion and power and not a right of a party, however I digress.
In order to placate the applicant, the respondent had Mr C swear an affidavit and his affidavit was as one with the letter he had written on this issue, provided to Ms Warda and dated 15 April 2021. Mr C says at paragraph 7:
In respect of the company banking, I have [been given two] ID logins being:-
a. The first is that of the company login id which id I utilise to access the company bank account online and use the same to pay vendors. The payments are made from the company Cheque account.
He attaches a screenshot of that company login ID with H Bank. He continues:
b. The second login id I have is the one that is in Mr Zomorod’s name and where on that id I see 4 accounts being:
(i). 2 accounts are the personal accounts of Mr Zomorod;
(ii). The company business Cheque Account;
(iii). The Business Savings Account
8. On 15 March 2021 I intended to transfer funds from the Business Cheque Account to the Saving Account to comply with company procedures in relation to liquidity in the cheque account and to allow the company to earn some interest on the funds. That day, I intended to transfer $US500,000. On that day I transferred US$500,000 from the Business Cheque Account ending with #...11 and I intended the transfer to be made to the Company Savings ending with #...93 however I inadvertently transferred the funds to Mr Zomorod’s personal account ending with #...69. Within one minute of the transfer taking place, I realised the mistake and I immediately initiated and transferred the $U[S]500,000 from Mr Zomorod’s account to the company savings account ending with #...93. As the 4 accounts of Mr Zomorod’s login id are linked, there was no issue about the transfer limit.
Mr C further explained that he rang the respondent, told him what had happened, sent a letter dated 15 April 2021 explaining what had happened and apologised for this error. The aggressive tone of Ms Warda's letter to Mr Wahhab, the Respondent's lawyer, on this clear mistake was unnecessary and indicates how quickly the respondent responded to the request for Mr C to file an affidavit in these proceedings.
INTERIM COSTS ORDER
The applicant asserts I can make a dollar for dollar costs order because the respondent is having his costs paid and so ought the applicant. That he can simply take whatever he needs by way of money from the Company. That the Company has over $2 million in funds available to it and that the applicant is in need of litigation funding. I reject those submissions in their entirety for the following.
The respondent is not paying his costs from a company owned by he and applicant, or their savings or an asset they own, rather via loans from a Company in which the respondent has an interest along with others, and the value of that interest is, at this point in time, unknown and may be ultimately nil. The money he is accessing is not his money but company money.
As Mr Schonell SC correctly pointed out, one of the important principles for a judge to be satisfied of in exercising their power to make an interim property distribution under section 79 of the Act and consistent with the authorities such Strahan & Strahan (interim property orders) (2011) FLC 93-466 (“Strahan”) and Medlow & Medlow (2016) FLC 93-692 (“Medlow”), is that repayment of money paid under an interim costs order can be reversed at later time.
In Medlow at 91,090 the Court found that:
The onus was clearly upon [the applicant] to establish that there were sufficient assets available for the interim distribution and that the effect of any interim order was capable of being reversed as part of the final hearing or at least would not defeat [the respondent’s] property claims. The onus was not on [the respondent] to adduce such evidence.
In Strahan at 85,656 the Court held:
S 80(1) is couched in the permissive. Hence, although the Court must give consideration to the matters set out in s 79(4) when hearing an application for an interim payment, it has no obligation to make an interim order. The Court “may” do so if it considers that it should in the exercise of its discretion.
Further, at 85,657:
The Court must first identify circumstances that make it appropriate to give consideration to exercising its power to make an interim order…once the Court has determined that the interests of justice require it to exercise the power, the conditions on which the power is to be exercise are governed only by the obligation to make an order that is “appropriate” and to ensure that the proposed order is “just and equitable” by reference to the matters set out in s 79(4).
On the facts in this matter there can be no reversal of any money the applicant receives under a dollar for dollar order as she has no funds to repay any payment to him. If I made any order for interim costs the money being paid to the applicant would not be “their” money or money to which one or either of them was entitled, rather the Company’s money, and thus a fundamental principle in interim costs applications under section 79 of the Act is not fulfilled and it could not be otherwise proper to make any such order, be it interim costs in a fixed sum or dollar for dollar.
Further the applicant will not receive these funds, her lawyers will, and in these circumstances I must be satisfied such an order can be reversed and at this point in time I am not so satisfied.
I am not satisfied that the Company is flush with funds and the $2 million plus in the Company account as at 31 March 2021 is likely the convertible note funds and not the respondent’s money.
The parties have no assets of any value at this point in time. They are young, have many years of work ahead of them and will move on from the breakdown of their relationship. Taking the applicant’s case at its highest, there may be a potential value in the respondent's interest in the Company at some time. At this time the evidence of this potential value is the applicant’s assertion as to the value and this assertion of value is not accepted by me.
Further, the applicant has paid her lawyers $35,000 from her savings, earns $90,000 a year and lives with her parents and has been able to pay her own legal costs. The evidence is that her financial position is superior to that of the respondent at present.
For those reasons, her application for an interim costs order, being a dollar for dollar order, must fail as would any other interim costs application as there is not a fund of money or asset owned or controlled by the parties from which an interim costs order could be paid.
RESTRAINING RESPONDENT FROM LEAVING AUSTRALIA
The applicant’s application to restrain the respondent from returning to America where he lives to continue his work with the Company was without merit on the facts for the following.
The respondent had been restrained from leaving Australia as a consequence of the assault charges laid against him, which charges have been now been dismissed after a contested hearing in March 2021. The respondent now has no travel restrictions imposed upon him by the State and the applicant was aware of this when the matter was before the Court on 30 March 2021 and this issue was not raised until this hearing.
It is highly relevant that the respondent is not subject to any travel restriction despite there being a further defended hearing in June 2021 on the historical assault charges the applicant asserts occurred. It is important to reiterate that it was the applicant's allegations of assault in Australia in November 2020 that impelled the police to lay the assault charges and, when he was bailed on those charges, to impose restrictions on his travel. This has not occurred in respect of the historical charges the respondent is defending in June 2021.
The application to restrain the respondent from travelling was only revealed the night before, or morning of, this interim hearing and I was not taken to any facts or evidence that I could have relied upon to exercise such a draconian power.
Further I accept that the respondent will return to Australia as it is an imperative he successfully defends these charges to enable him to continue to work in America and maintain his relationship with his family who live in Australia by travelling back and forth.
When I asked what evidence was in the material that could possibly support the making of such an order Mr Lethbridge SC, again doing his very best, told me it was because the respondent had failed to make full and frank disclosure. On a careful analysis of the facts this alleged failure was not made out.
Disclosure in financial matters is an ongoing and continuing obligation. In matters such as this, where there are company structures, various types of shares, interests of other parties in companies, it may be some time before disclosure required by the other side has been made to their satisfaction. Although there is a dispute as to when disclosure was first sought by the applicant from the respondent, at the earliest it was late January and, and the latest, sometime in early March 2021. It is now only mid-April 2021. Unsurprisingly, disclosure is continuing and has not been completed at this time.
It is clear the respondent has previously provided documents that he had in his possession or control in a timely fashion on the applicant's own evidence, remembering he has been stuck in Australia due to the applicant’s allegations of assaults perpetrated by him upon her, for the following reasons.
The bank statement of 15 March 2021 showing a deposit of US$500,000 into the respondent's account and an immediate withdrawal of that money was clearly provided by the respondent to the applicant.
In the Minute of Order sought by the applicant, additional documents were sought to be disclosed as set out in order 4(a)-(m). Upon a careful reading of that order it of itself indicates the respondent has disclosed documents to the applicant, for example order 4(g) asks for “statements for your client’s Commonwealth Bank account ending #...98 for the period 1 January 2017 to 22 October 2018, and for the period 23 October 2020 to date” indicating documents between 22 October 2018 and 23 October 2020 have been provided. Similarly with the documents sought in orders 4(h), (i) and (j).
Further, the letter dated 15 April 2021 from Ms Warda to the respondent's lawyers, being the applicant's Exhibit 1, clearly sets out as follows:
We refer to your client’s financial disclosure provided under cover of your letter dated 9 April 2021. We require further particulars and documents as follows…
Thus, on the applicant's own evidence it is clear disclosure by the respondent was given when sought, is ongoing and, unsurprisingly given the short timeframe, has not yet been completed. Thus, consistent with the respondent's evidence, he is continuing to provide that which the applicant seeks when he can and in a timely fashion and agreed to all the orders sought in respect of additional disclosure in the applicant’s amended minute of order. Thus the basis upon which the applicant sought the Court restrain the respondent from leaving Australia falls away and would not have been sufficient in any event to ground the exercise of my discretion to so restrain the respondent.
On these facts the application upon which the applicant was granted urgency, namely spousal maintenance and a continuation of injunctions, had no prospects of success as the respondent agreed to continue the injunctions by letter dated 14 April 2021 and she had obtained employment and had so at the time the urgent application was pressed.
The orders sought at the interim hearing before me, particularly order 3 seeking to restrain the respondent by order from leaving the Commonwealth of Australia, and the dollar for dollar interim costs order also had no prospects of success on the facts the wife presented to me.
Accordingly, I dismiss the application of the applicant for an interim costs order and a restraint on the respondent leaving the Commonwealth of Australia and her interim application as a whole.
In passing I note the bringing of applications on evidence which, even if accepted at its highest, could not support the orders sought such as that pertaining to the husband's alleged failure to provide disclosure grounding an order to restrain him from leaving Australia, is a concern to the Court. Practitioners should be aware of a recent Full Court decision[1] wherein the Court upheld a decision of a trial judge of the Family Court to order costs against a solicitor and barrister in favour of a respondent after a final hearing on the basis that the matter run by the applicant's legal team had, inter alia, no prospects of success. The decision is Pilkvist & Coburn (Deceased) [2020] FamCA 92.
[1] Beamish & Coburn (Deceased) (2021) FLC 94-005.
I certify that the preceding seventy-four (74) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Henderson. Associate:
Dated: 28 April 2021
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