Pond and Thurga
[2007] FamCA 75
•16 February 2007
FAMILY COURT OF AUSTRALIA
| POND & THURGA | [2007] FamCA 75 |
| FAMILY LAW - PROPERTY - Anton Piller orders |
| Family Law Act 1975 (Cth) |
Anton Piller KG Manufacturing Process Ltd (1976) 1 Ch 55
Talbot and Talbot (1995) FLC 92-586
Stowe and Stowe (1981) FLC 91-027 at 76,260
| APPLICANT: | Ms Pond |
| RESPONDENT: | Mr Thurga |
| INTERVENORS: | Mr Hedger (Second Respondent) B Pty Ltd (Third Respondent) X &T Pty Ltd (Fourth Respondent) S Ltd (Fifth Respondent) |
| FILE NUMBER: | SYF | 3665 | of | 2005 |
| DATE DELIVERED: | 16 February 2007 |
| PLACE DELIVERED: | Sydney |
| JUDGMENT OF: | O'Ryan J |
| HEARING DATE: | 9 February 2007 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Harris |
| SOLICITOR FOR THE APPLICANT: | Cameron & Myers |
| COUNSEL FOR THE RESPONDENT: | Mr Campton |
| SOLICITOR FOR THE RESPONDENT: | York Family Law |
| COUNSEL FOR THE INTERVENORS (SECOND, THIRD AND FOURTH RESPONDENTS): | Mr Lucarelli of Counsel |
| SOLICITOR FOR THE INTERVENOR (SECOND, THIRD AND FOURTH RESPONDENTS): | Minter Ellison |
Orders
The Applicant Wife be granted leave to forthwith issue a subpoena to Y Accountants and Blake Dawson Waldron, Lawyers in the form of draft subpoena comprised in Exhibit A of 9 February 2007 and subject to any objection by Y Accountants and Blake Dawson Waldron, Lawyers I direct that the Second, Third and Fourth Respondents have first access to inspect any such documents produced in response to the said subpoena for seven days from the date of production of any documents.
Paragraphs 1, 2, 3, 5, 6 and 7 of the application filed on 11 September 2006 on behalf of the Second, Third and Fourth Respondents be dismissed.
The application by the Second, Third and Fourth Respondents for a variation of order 1 made on 12 September 2006 and/or order 11 made on 20 November 2006 to enable the payment of the legal costs in the invoices rendered by Minter Ellison, Lawyers identified in Exhibit B of 9 February 2007 be dismissed.
It be noted that order 11 made on 20 November 2006 will continue until further order.
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYF 3665 of 2005
| Ms Pond |
Applicant
And
| Mr Thurga |
Respondent
And
| Mr Hedger |
Second Respondent
And
| B Pty Ltd |
Third Respondent
And
| X & T Pty Ltd |
Fourth Respondent
And
| S Ltd |
Fifth Respondent
REASONS FOR JUDGMENT
Introduction
Before me for hearing are a number of applications. The Wife is Ms Pond. The Husband is Mr Thurga. The Second Respondent is Mr Hedger. The Third Respondent is B Pty Ltd. The Fourth Respondent is X & T Pty Ltd. The Fifth Respondent is S Ltd.
On 4 September 2006 an application was filed on behalf of the Wife in which she seeks:
Orders Pending Further Order;-
1. That the second respondent forthwith in his capacity as director, secretary and/or shareholder of the companies [B] Pty Limited & [X & T] Pty Limited, the third and forth respondents herein, do all acts and things, pass all necessary motions, sign all necessary documents and give all necessary authorities to cause the proceeds of sale of all that piece or parcel of land know as […] in Deposited plan […] to be disbursed as set out in order 3 herein.
2. Simultaneously with order 1 herein that the third and forth respondents, do all acts and things, pass all necessary motions, sign all necessary documents and give all necessary authorities to cause the proceeds of sale of all that piece or parcel of land know as […]in Deposited plan […] to be disbursed as set out in order 3 herein.
3. That the proceeds of the sale of […] in […] be disbursed in the following order and priority;-
(a)in payment of any real estate agent’s fees or commissions arising from the sale of the said lot;
(b)in payment of any legal fees and disbursements arising in connection with the sale of the said lot;
(c)in payment of any local council rates and strata title levies due in respect of the said lot;
(d)in payment of such other debts as are agreed in writing between the 2nd, 3rd, 4th respondents and the applicant and the first respondent;
(e)the balance then remaining to be held in trust by [Mr A] solicitor, and invested in the names of all the parties jointly in a controlled monies account pending the final determination of these proceedings or agreement in writing authorised by each of the parties to these proceedings.
4. In the event that the 3rd respondent, [B] Pty Limited has incurred debt or debts in the normal course of its business being debts that the 3rd Respondent requires to be paid from the monies held in trust as provided for in 3 herein then the 3rd respondent shall provide to each of the parties to these proceedings in writing particulars of the said debt or debts including any documentation supporting the existence of the debt and the manner in which the debt was incurred and if agreement in relation to the payment of the said debt or debts cannot be reached within 14 days of the 3rd respondent providing particulars to the parties as set out in these orders then the parties shall do all acts and things necessary to have the matter relisted before Justice O’Ryan or as His Honour directs for the determination of whether such debt or debts should be paid from the monies held in trust.
5. That [Mr G] and the partners of the firm know as Minter Ellison Lawyers individually or by solicitors in the employ of that firm be restrained from acting for any person, real or corporate who is or subsequently becomes a party to these proceedings.
7(a) That all the respondents to these proceedings file within 21 days a list of objections to the inspection of any documents seized by [Mr A] solicitor on pursuant to orders of this Court.
(b)That issue of inspection of the documents seized by [Mr A] on be listed for hearing before Justice O’Ryan on a date not before the expiration of 28 days from the date of these orders.
8. That the wife be given leave prior to the conclusion of the resolution phase of these proceedings, to ask each of the parties to these proceedings for answers to more than 20 specific questions (as provided for in Part 13 of the Family Law Rules), such questions to be asked within 14 days of the determination of Justice O’Ryan provided for in order 7(b) herein.
9. That the respondents or such of them as receive requests to answers for specific questions from the wife, serve the answers to such question upon the wife’s solicitors as provided for in Part 13.27 of the Family Court Rules.
10. That the wife be given leave to file a further Amended Application for Final Orders within 21 days of receiving the answers to specific questions verified by affidavit from each of the parties to whom such requests were directed and in the event that the answer are not served by all the respondents simultaneously then time shall begin to run from the day of the receipt of the last served set of answers from a party.
11. That the costs of this application be reserved.
I was informed that at present the Wife sought orders 5, 8, 9, 10 and 11. In a written outline of case and argument for the Wife the following is also sought:
12. That in the event that [B] Pty Ltd enters into and completes any further contract for the sale of the land comprised in the “[B] Pty Ltd” development then in that event orders in the terms of paragraphs 1, 2, 3 and 4 herein shall apply to the proceeds of sale of each Lot or Lots.
The Wife sought that an application by Mr Hedger, B Pty Ltd and X & T Australia Pty Ltd be dismissed.
The Wife did not oppose orders sought by the Husband in paragraphs 1, 3, 4, 6, 7, 8, 12, 13 and 14 of his application of 10 January 2007. However, as to order 5 of the application of the Husband the Wife also seeks:
5(b) The sum referred to in 5(a) herein shall be disbursed as follows:
(i)The sum of $115,000 paid to the wife or as she directs.
(ii)The sum of $115,000 paid to the husband or as he directs.
(iii)The balance then remaining to be paid into a controlled monies account in the names of the husband and the wife jointly to be invested pending final order of the court or agreement as between the husband and the wife in writing as to the disbursement of any amount.
On 11 September 2006 an application in a case was filed on behalf of Mr Hedger, B Pty Ltd and X & T Australia Pty Ltd in which the following orders are sought:
1. That the ex parte orders made by Judicial Registrar Loughnan on 28 July 2006 be set aside.
2. That the first respondent to this Application in a Case (hereinafter referred to as the applicant wife) be restrained from filing any further applications in a case without leave from his Honour Justice O’Ryan.
3. That the applicant wife be restrained from seeking any further Anton Piller orders or other ex parte orders without leave from his Honour Justice O’Ryan.
4. That the applicant wife be restrained from filing any further subpoenas without leave from his Honour Justice O’Ryan.
5. That the applicant wife and the second respondent to this Application in a Case (hereafter referred to as the respondent husband) be restrained from issuing any further caveats without leave from his Honour Justice O’Ryan.
6. That the applicant wife and the respondent husband be restrained from making any complaints to the Legal Services Commissioner without leave from his Honour Justice O’Ryan.
7. That the applicant wife and respondent husband be restrained from making any complaints to the New South Wales Police or Federal Police about issues arising in relation to these proceedings, without leave from his Honour Justice O’Ryan or in circumstances where there is an immediate threat of violence.
8. That the subpoena filed 5 June 2006 and issued to Minter Ellison Lawyers be set aside on the basis that it lacked legitimate forensic purpose.
9. That the applicant wife pay security for costs to the second respondent for these proceedings, in such amount as the Court thinks appropriate.
10. That the applicant wife pay security costs to [B] Pty Ltd and [X &T] Pty Ltd, the third and fourth respondents in the proceedings, as required pursuant to s 462(4) of the Corporations Act 2001, in such amount as the Court thinks appropriate.
11. Any further order that this Honourable Court deem necessary.
At the commencement of the hearing I was informed that Mr Hedger, B Pty Ltd and X & T Pty Ltd were seeking orders 1, 5, 6, 7, 8, 9 and 10 and further sought:
10. That pursuant to Rule 19.10 of the Family Law Rules 2004, the solicitor for the applicant wife pay the costs incurred by the second, third and fourth Respondents in respect of the Anton Pillars orders made by Judicial Registrar Loughnan on 28 July 2006.
11. Upon the Applicant Wife by her Counsel proffering to the Court the usual undertaking as to damages, until further order:
(a)50% of the net proceeds of the sale of […] Deposited Plan […] be deposited into the control money account established by Minter Ellison Lawyers pursuant to the orders of the Court on 12 September 2006 (‘Account’).
(b)All interest accruing on the Account be credited to the Account; and
(c)There be no withdrawals from the Account.
In summary, it was submitted that I should only deal with the review of an Anton Piller order, the application by the Wife for leave to issue further subpoena; restraining orders against the Husband and the Wife and a variation of previous Mareva injunctions to enable the payment of legal costs payable to Minter Ellison, Lawyers.
On 10 January 2007 an Application in a case was filed by the Husband and he seeks:
1. That the Second, Third and Fourth respondents’ Amended Application filed 11 September 2006 as amended in their Submissions filed 5 December 2006, be dismissed.
2. That the husband and his legal representatives and advisers including Counsel or Senior Counsel or any forensic accountant retained be entitled to have access to documents seized following the execution of the Anton Pillar Order made on 28 July 2006.
3. That in relation to the Subpoena issued to Minter Ellison, leave be granted to the Parties and their legal representatives to inspect documents produced under Subpoena by Minter Ellison Lawyers and for all parties to have photocopy access to the said documents.
Husband’s Interests in [X &T] Pty Limited
4. That the transfer of the two shares owned by the First Respondent Husband, [Mr Thurga], in the Fourth Respondent Company [X &T] Pty Limited, which occurred on 17 January 2005, be set aside.
5. That in the alternative to Order 1 hereof, within seven days from the date of the making of these Orders, the Second Respondent, [Mr Hedger], do all acts and things and pay to the First Respondent Husband the sum of $330,000 together with interest pursant to the Family Law Rules as and from the date of payment pursuant to the informal agreement reached between the First and Second Respondent of 17 January 2005, which sum represents the balance of the sum agreed between the First and Second Respondents in relation to the value of the two shares owned by the First Respondent in the Fourth Respondent Company, [X &T] Pty Limited.
Variation to Order 5.2 of 20 November 2006 Orders
6. That order 5.2 of the Orders made on 20 November 2006 be varied so that any documents that are required to be photocopied for the purposes of the preparation of the Financial Accounts or Income Tax Returns of the Third and the Fourth Respondents be photocopied at the Exhibits Section of the Family Court of Australia at Sydney.
Reinstatement of Husband as Director of 3rd and 4th Respondents
7. That the Second, Third and Fourth Respondents forthwith do all acts and things and sign all necessary documents to reinstate the husband as a director of the companies [B] Pty Limited and [X &T] Pty Limited.
Sale proceeds of [B Pty Ltd] Land
8. That in the event that [B] Pty Limited sells the balance of the parcels of land registered in its name then the proceeds of sale shall be applied in the following manner and priority:
(a)In payment of agent’s commission and legal fees associated with the sale;
(b)In payment of council and water rates adjustments;
(c)Payment of GST and any CGT on disposal; and
(d)The balance to be deposited in a controlled monies account pending determination of these proceedings.
Provision of Financial Information and completion of Financial Statements and Tax Returns
9. That within 60 days from the date of these Orders the Second, Third and Fourth Respondents account to the Husband by way of providing the following documents in relation to the operation of the Third and Fourth Respondents Companies, [B] Pty Limited and [X & T] Pty Limited respectively:
(a)Financial Statements, Income Tax Returns and Income Tax Assessments for each of the Third and Fourth Respondents from 1996 to date;
(b)all settlement sheets in relation to the sale of each of the lots in the [B Pty Ltd] development;
(c)all bank statements and cheque butts of the Companies;
(d)all tax invoices received by or issued by [B] Pty Limited and/or [X & T] Pty Limited.
10. That the Third and Fourth Respondents forthwith do all acts and things and give instructions to the said Companies accountants to prepare, finalise the Financial Statements (being Balance Sheet, Profit and Loss Statements, Notes to Accounts, Cash flow Statements) of the Third and Fourth Respondents and lodge with the Australian Taxation Office all tax returns in relation to any financial year where Financial Statements have not been prepared and signed off by the Director(s) or tax returns not lodged for the period up to and including 30 June 2006 such that the said Financial Statements and Taxation Returns be prepared and lodged respectively within 60 days from the date of these Orders and copies of the same be provided to the Parties to the proceedings.
11. That the Second, Third and Fourth Respondents do all acts and things and provide to the Husband on a monthly basis the following documents in relation to the operation of the Third and Fourth Respondents:
(a)MYOB records setting out a Trial Balance, Balance Sheet, Profit and Loss Statement in relation to the Third and Fourth Respondents;
(b)all bank statements on a month to month basis or, in the event that the bank statements are received at a frequency of less than once per month, then within seven days of receipt by the Third and Fourth Respondents of the bank statements for each of the Third and the Fourth Respondents accounts (being all accounts including savings, investments, term deposits, loan or mortgage accounts, credit card accounts and all other bank or financial institutions accounts);
(c)all ledger accounts in relation to the Third and the Fourth Respondents;
(d)copies of all tax invoices received by or issued by the Third and the Fourth Respondents;
(e)copies of all cheques issued against any account operated by the Third and the Fourth Respondents.
Restraining Orders
12. That the Second, Third and Fourth Respondents be restrained by injunction from giving instructions or retaining Minter Ellison Lawyers to act on their behalf in these proceedings in the Family Court.
13. That in the alternative to Order 9 hereof, Minter Ellison Lawyers be restrained by injunction from acting on behalf of the Second, Third and Fourth Respondents in these proceedings.
Costs
14. That the Second, Third and Fourth Respondents pay the husband’s costs of and incidental to this Application.
I was informed by the Husband’s counsel that he sought, in the following order of priority, orders 12, 13, 8, 6, 2 and 3. I was told that orders 4, 5, 7, 9, 10 and 11 of the application were not urgent.
On behalf of the Husband it was submitted that the applications fall into three distinct categories being:
1 Orders restraining Minter Ellison from acting for [Mr Hedger], [B] Pty Ltd and [X & T] Pty Ltd, or in the alternative, that the said Second to Fourth Respondents be restrained from giving instructions to Minter Ellison in these proceedings.
2 Orders as to the inspection of documents seized pursuant to the Anton Pillar Orders made on 28th July 2006, the application to set aside the subpoena for the production of documents directed to Minter Ellison and the variation of Order 5.2 made on 20th November 2006.
3 Injunctive Orders as to the application of the proceeds of sale of the [C] properties, the Orders for the provision of financial information and completion of financial statements and tax returns, Injunctive Orders as to the reinstatement of the husband as a director of [B] Pty Ltd and [X & T] Pty Ltd, Injunctive Orders as to the restraint to obtain further Apprehended Violence Orders, complaints to the Legal Services Commission, and as to the lodgement of further caveats and Orders as to security for costs.
It was submitted on behalf of the Husband that, as a matter of both substantial and procedural fairness, and by way of proper application of public policy considerations and practice, that the relief by way of an order that Minter Ellison cease to act for the Second, Third and Fourth Respondents be determined prior to the other categories of relief identified above.
As it transpired counsel for Minter Ellison complained that certain directions I had previously made were not complied with and that there was insufficient time to prepare a response to the orders sought against Minter Ellison. Although I am of the view that Minter Ellison have known about the issue for a considerable period of time, because of the failure by the Husband to comply with my directions I have given Minter Ellison the opportunity sought. However, the issue will have to be dealt with. At this stage I have only dealt with the four matters outlined by counsel for Mr Hedger, B Pty Ltd and X & T Pty Ltd.
There are pending proceedings for settlement of property. The property proceedings were commenced by application filed on behalf of the Wife in the Local Court at F on 5 July 2005. The proceedings were later transferred to the Family Court.
The final order sought by the Wife is set out in a further amended application filed on 20 September 2006. She seeks:
1. A declaration that the first respondent husband is beneficially entitled to a 50% interest in the company [B] Pty Ltd.
2. That the first, second, third and fourth respondents do all acts and things, pass all necessary motions, give all necessary consents and authorities and transfer all necessary shareholdings to cause the first respondent husband to hold a 50% interest in the company [B] Pty Ltd.
3. An order pursuant to s 79 that the husband pay to the wife an amount equal to 75% of the value of his interest in [B] Pty Ltd.
4. That the First, Second, Third, Fourth and Fifth Respondents pay the applicant wife’s costs of these proceedings.
In an amended response filed 10 January 2007 the Husband seeks the following:
Husband’s Interests in [X & T] Pty Limited
1. That the transfer of the two shares owned by the First Respondent Husband, [Mr Thurga], in the Fourth Respondent Company [X & T] Pty Limited, which occurred on 17 January 2005, be set aside.
2. That in the alternative to Order 1 hereof, within seven days from the date of the making of these Orders, the Second Respondent, [Mr Hedger], do all acts and things and pay to the First Respondent Husband the sum of $330,000 together with interest pursant to the Family Law Rules as and from the date of payment pursuant to the informal agreement reached between the First and Second Respondent of 17 January 2005, which sum represents the balance of the sum agreed between the First and Second Respondents in relation to the value of the two shares owned by the First Respondent in the Fourth Respondent Company, [X & T] Pty Limited.
[S] Limited Bearer Share Certificates and Company Register
3. That the First Respondent Husband be entitled to receive the share certificates and the company register of [S] Holdings Limited being three binders seized during the execution of an Anton Pillar Order at the home of the Second Respondent.
Reinstatement of Husband as director of 3rd and 4th Respondents
4. That the Second, Third and Fourth Respondents do all acts and things and sign all necessary documents to reinstate the First Respondent as a director of the Companies, [B] Pty Limited and [X & T] Pty Limited.
Sale of [C] Lots
5. That the Third Respondent forthwith do all acts and things and sign all necessary documents and sell for the best price reasonably obtainable the balance of the blocks of land situated at [C] in the State of New South Wales as follows (“the [C] Lots”):
(a)list the [C] Lots for sale by private treaty with such agent as the Parties may agree to appoint and in default of agreement as to agent within fourteen (14) days with such agent as the President of the Real Estate Institute of New South Wales shall appoint (“the agent”) the costs of and incidental to such appointment to be borne equally by the parties as and when same fall due;
(b)the sale price at which the [C] Lots shall be listed shall be mutually agreed upon by the Parties or, in the absence of agreement reached within fourteen (14) days of the date of these Orders shall be the price nominated as the fair market value thereof by a valuer appointed by the President for the time being of the New South Wales Division of Australian Institute of Valuers and Land Administrators (Incorporated) (“the valuer”), the costs of and incidental to such appointment and valuation to be borne equally by the parties as and when same fall due;
(c)the valuer shall, if requested by either the husband or the wife at a date three calendar months after the date upon which the [C] Lots are first listed pursuant to paragraph (a) hereof and thereafter at three (3) calendar monthly intervals until the [C] Lots are sold, nominate a sale price other than the originally nominated sale price;
(d)the Parties shall each co-operate in every way with the agent including (without limiting the generality of the foregoing):
(i)allowing inspection of the [C] Lots at all reasonable times requested by the agent;
(ii)doing or saying nothing to hinder or prevent a sale being effected;
(iii)ensuring the [C] Lots including the grounds are in a neat and clean condition at the time of inspection by the agent and prospective purchasers; and
(iv)signing all documents requested by the agents in relating to the listing for sale of the [C] Lots except a contract or agreement for sale which has not been authorised by the parties solicitors;
(e)the Third Respondent shall execute a contract for sale in the form prepared by the solicitors having the conduct of the sale at a price agreed upon by the parties or, in the absence of any agreement, at or above the price nominated by the valuer pursuant to paragraphs (b) and (c) hereof;
(f)the parties shall instruct such solicitor as they agree upon to have the conduct of the sale on behalf of both parties or, in the absence of agreement reached within fourteen (14) days of the date of these Orders, shall instruct such solicitor as may be appointed by the President for the time being of the Law Society of New South Wales (“the solicitor”) the costs of and incidental to such appointment to be borne equally by the parties as and when same fall due;
(g)no party to these Orders may confer on any agent without the consent of the other party any right to any sole or exclusive agency in respect of the [C] Lots or to any commission;
(h)the party not in possession shall be entitled once per fortnight to attend upon and view the [C] Lots;
(i)if the agent shall certify in writing to the parties’ solicitors it is reasonably necessary for the work specified in such notice to be carried out to the [C] Lots so as to assist in effecting a sale and provided the cost of any such work is less than $1,500 for each lot any of the Parties to these Orders may cause such work to be carried out and the costs thereof shall be recoverable by that party from the proceeds of sale.
6. In the event either or both of the [C] Lots are not sold by private treaty within three calendar months from the date of these Orders, then:
(a)the parties shall list the [C] Lots (whichever of them not sold) for sale by public auction with the agent appointed pursuant to Order 5(a) hereof;
(b)the reserve price for the purpose of such auction shall be such as the parties agree upon within fourteen (14) days after the date upon which the [C] Lots remaining for sale are first listed for auction in accordance with Order 6(a) hereof or in the absence of agreement a price determined by the valuer appointed pursuant to Order 5 (b) and (c) hereof;
(c)in the event the bidding at the auction does not reach the reserve price the parties may negotiate with the highest bidders or any other interested person and effect a sale of the [C] Lots at a price which is not more than 10% below the reserve price;
(d)if the [C] Lots remain unsold, the parties shall do all acts and things and sign all documents necessary to immediately relist the [C] Lots for sale by public auction again, on a date nominated by the said agent until the [C] Lots are sold and to this extent Orders 5 and 6 herein shall apply mutatis mutandis.
7. That on settlement of the sale of the [C] Lots, the proceeds of sale shall be applied in the following manner and priority:
(a)all costs and expenses of sale including legal costs and disbursements, agents commission, valuers fees, and auction expenses (including repayment of any such expenses as have been paid by any of the Parties to these Orders);
(b)the amounts required to pay all municipal and water rates adjustments outstanding with respect to the [C] Lots;
(c)the amount required to repay to the party carrying out work for the [C] Lots for the cost of such work carried out in accordance with Order 5(i) hereof;
(d)the balance then remaining shall be deposited in a controlled monies accounts in the names of the Parties solicitors to be disbursed in accordance with these Orders.
Dealing with the Assets and Winding up of the 3rd and 4th Respondents
8. That within 30 days from the date of settlement of the sale of the [C] Lots, the First, Second and Third Respondent:
(a)join in holding a meeting of the directors and then a meeting of the shareholders of the Third and Fourth Respondents;
(b)at such meeting or meetings to pass all such resolutions as may be necessary as to solvency and a resolution resolving voluntarily to wind up the Third and Fourth Respondents;
(c)appoint a Chartered Accountant as the Parties may agree upon within 14 days after settlement of the sale of the [C] Lots and in the absence of agreement such Chartered Accountant as appointed by the President of the Institute of Chartered Accountants to act as liquidator of the Third and Fourth Respondents; and
(d)do all acts and things and sign all documents as may be required pursuant to the provisions of the Corporations Act or otherwise required by ASIC in respect of the winding up of the Third and Fourth Respondents.
9. That the Fourth Respondent, [X & T] Pty Limited, as the shareholder of the Third Respondent join in requesting the liquidator as their agent to distribute all the assets including cash, bank accounts and interest bearing deposits less any liabilities of the Third Respondent by paying or transferring in specie all such assets to the Fourth Respondent.
10. That the Second Respondent in his personal capacity and in his capacity as Director and shareholder of [Q] Limited, the First Respondent in his personal capacity (if Order 1 hereof is made) and in his capacity as director and shareholder of [S] Limited (if Order 3 hereof is made) or otherwise in relation to the balance of the shareholdings of the Fourth Respondent as this Honourable Court determines, join in requesting the liquidator of the Fourth Respondent as their agent to distribute all the assets including cash, bank accounts and interest bearing deposits less any liabilities of the Third Respondent by paying or transferring in specie all such assets to the shareholders of the Fourth Respondent equally after paying the liquidator’s fees expenses, all taxes including capital gains tax, income tax of the Third Respondent.
11. That the Parties indemnify the liquidator in respect of any liability of the Third and Fourth Respondents for any income and tax.
12. That the liquidator so appointed must prior to compliance with Order 10 hereof attend to the following:
(a)Investigate the operation of the Third and Fourth Respondents and audit the accounts so as to ascertain the true trading of the Third and Fourth Respondents and in particular the sale proceeds of the whole of the [C] development site and all expenses paid towards the development site;
(b)Investigate the operation of any loan accounts by any of the directors of the Third and Fourth Respondents and ascertain whether any loans obtained or advanced have been paid back;
(c)Adjust the entitlement of each of the shareholders of the Third Respondent by reason of any matter that arises in the investigation of the Third Respondent’s operations pursuant to this Order.
Property Settlement Orders between Husband and Wife
13. That after compliance with Order 10 hereof, and as between the Applicant Wife and the First Respondent Husband, the Wife shall be entitled to 30% of the net property pool of the Husband and the Wife taking into account the Husband and the Wife’s assets, liabilities, superannuation and financial resources as at the date of hearing of this matter.
Costs
14. That the Wife pay the Husband’s costs of and incidental to these proceedings insofar as they relate to the family law issues between the Husband and the Wife and otherwise that the Second, Third and Fourth Respondents pay the husband’s costs of and incidental to the husband having to enter in relation to the proceedings against the Second, Third and Fourth Respondents.
Mr Hedger is the Husband’s brother in law. He is married to the Husband’s sister.
The current director of B Pty Ltd is Mr Hedger. The Husband was a director from 3 October 1996 to 14 January 2005. There are currently 1,595,918 issued ordinary shares in B Pty Ltd. The current shareholder is X & T Pty Ltd and an ASIC company extract reveals that it beneficially holds all of the issued share capital. The extract reveals that at one time X & T Pty Ltd previously held nine ordinary shares, the Husband beneficially held one ordinary share and O beneficially held one ordinary share.
The current director of X & T Pty Ltd is Mr Hedger. The Husband was a director from 3 October 1996 to 14 January 2005. An ASIC company extract reveals that there are 20 issued ordinary shares. The current shareholders are Q Ltd which beneficially holds eight ordinary shares, S Ltd which beneficially holds eight ordinary shares and Mr Hedger who beneficially holds four ordinary shares. The ASIC extract reveals that previously the Husband beneficially held two ordinary shares; Q Ltd held one ordinary share and S Ltd held one ordinary share. The address given for Q Ltd and S Ltd is […], Singapore.
There was no appearance by or on behalf of the Fifth Respondent.
The Husband and Wife commenced cohabitation in 1998 and were married in September 2001. They separated in February 2004. There are two children of the marriage T born in October 1999 and L born in May 2003. The children reside with the Wife.
I had a number of affidavits including of the Husband and the Wife.
The solicitors for Mr Hedger, B Pty Ltd and X & T Pty Ltd are Minter Ellison. The partner of Minter Ellison who carries out the work is Mr G and he is assisted by Ms W.
The solicitors for the Wife are Cameron & Myers. The partner who carries out the work is Mr M. Evidence was given by Mr M and also Mr L who is a solicitor and the “city agent” for Cameron & Myers.
Affidavits were sworn by Mr A. Mr A is a solicitor and he is the trustee appointed pursuant to Anton Piller orders. On behalf of the Wife affidavits were also sworn by Mr K. Mr K is a chartered accountant and he has been retained by the Wife for the purposes of the proceedings before this Court.
I also had extensive written submissions on behalf of all parties.
Background
Given the relief sought which I am currently dealing with, and other applications yet to be dealt with, it is necessary to put the applications into some context and this requires an understanding of what the evidence currently reveals. I hasten to say that the hearing proceeded in a truncated way and there was no cross examination of any witness. Further, I have no doubt that in the pending proceedings there is still a deal of evidence to be placed before the Court.
I should also add that given the duration of the cohabitation of the parties to the marriage, and other matters, I am concerned about the cost of the litigation. The ultimate entitlement of the Wife will obviously depend upon what is found to be the extent and value of the assets of the Husband. In my view, this is the significant issue.
Mr Hedger was born in California in the United States in July 1961.
The Husband was born in the United States in June 1971. The Wife was born in April 1973.
On 9 March 1995 V Pty Ltd was registered in New South Wales. It later changed its name to X & T Pty Ltd. The Husband gave evidence, which I will not repeat in this judgment, about a conversation his late father had with the Husband and Mr Hedger. The Husband did say that in relation to X & T Pty Ltd the initial “X” stands for the Husband’s sister Xenia and the initial “T” stands for the Husband. The principal place of business of X & T Australia Pty Ltd is H and this is also the registered office of the company.
On 16 June 1995 N Pty Ltd was registered in New South Wales. It later changed its name to B Pty Ltd. The registered office of the company is L and the principal place of business is H.
On 26 June 1995 Mr Hedger was appointed a Director of B Pty Ltd. He resides at H.
Mr Hedger contends that B Pty Ltd was incorporated for the purposes of development of 31 acres at C into community title residential estate. In the period May/June 1995 B Pty Ltd acquired three parcels of land at C which together comprised the estate which is called “[K]”. The Husband contends that in about 1995 his late father bought land at C. He contends that at the time the land was purchased with funds his father paid of approximately $3,000,000. Mr K contends that in about October 1995 B Pty Ltd purchased three blocks of land in C for a total price of $2,050,000. There is attached to an affidavit of the Husband a diagram which reveals that G Ltd owned 100% of S Ltd and Q Ltd and that it was proposed to prepare an acknowledgement of debt of $3,405,315.20 from S Ltd and Q Ltd in favour of G Ltd and that all monies for loans came from the Husband’s father.
In the written submissions on behalf of the Husband it was contended that in 1995 the late father of the Husband by way of B Pty Ltd acquired land at C for $3 million. B Pty Ltd had 10 issued shares. Nine were held by X & T Pty Ltd and one share held by the Husband’s late father. X & T Pty Ltd borrowed funds from related parties outside Australia to finance the C project. Those funds were borrowed from companies which were resident in the British Virgin Islands being Q Ltd (incorporated as Z Ltd) and S Ltd. (incorporated as E Ltd)
In June 1995 Mr AB was appointed a director of X & T Pty Ltd. In June 1995 V Pty Ltd changed its name to X & T Pty Ltd. In June 1995 Mr BB was appointed a director of X & T Pty Ltd.
In February 1996 Mr AB and Mr BB ceased to be directors of X & T Pty Ltd. In February 1996 the Husband and Mr Hedger were appointed directors of X & T Pty Ltd.
The Wife annexed to an affidavit a copy of a letter dated 24 April 1996 from P, Solicitors in Singapore. The letter was addressed to Mr Hedger and the Husband, care of “[…], Singapore”. The document was headed “Incorporation of Companies in the [British Virgin] Islands (BVI)”. The letter was signed by Mr R. In the letter Mr R referred to a telephone conversation he had with Mr Hedger wherein Mr Hedger requested that two companies be incorporated for Mr Hedger and the Husband. Mr R said that on their behalf two British Virgin Island companies were purchased namely, Z Ltd and E Ltd. Mr R requested confirmation as to which company Mr Hedger would hold and which company the Husband would hold. In respect of each of the companies Mr R identified certain documents he enclosed which included a share certificate and bearer share certificate. He said that with regards to the share certificates there are normal share certificates and there are bearer share certificates and that if the shares are issued to a named shareholder the death or incapacity of the shareholder would hinder the operation of the company and it was therefore more advisable to issue bearer share certificates. A request was made for instructions as to whether or not normal share certificates be issued or bearer certificates. A request was made that the Husband and Mr Hedger sign various documents for each of the companies and return them to Mr R. There was also enclosed an invoice addressed to both the Husband and Mr Hedger.
The Wife also annexed to an affidavit a copy of a letter dated 21 May 1996 written by Mr Hedger to Mr R in which was enclosed the British Virgin Island company documents signed as requested and as well, the bearer share certificates also signed. It was stated by Mr Hedger that the Husband was to hold E Ltd and Mr Hedger was to hold Z Ltd. Mr Hedger advised Mr R that the Husband wished to change the name of his company to S Ltd and Mr Hedger wished to change the name of his company to Q Ltd. A request was also made that Mr R’s firm maintain the company books and that the address of P, Solicitors in Singapore be used to receive “official correspondence”. The Wife also annexed a copy of a bearer share certificate which revealed one share issued in May 1996 in E Ltd. This certificate was signed by Mr Hedger as a director/secretary and the Husband as a director.
The Husband contends that the shelf companies that Mr R obtained and established in the British Virgin Islands to own the majority of the shareholding in X & T Pty Ltd were E Ltd and Z Ltd and that the name of E Ltd was changed to S Ltd which he described as “my company” and the name of Z Ltd was changed to Q Ltd being Mr Hedger’s company.
In the written submissions of the Husband it is contended that the known single issued shares in each of Q Ltd and S Ltd are “bearer shares” – that is, that the bearer of the share certificate is entitled to the said share. The Husband held the bearer share in S Ltd and Mr Hedger held the bearer share in Q Ltd.
On 3 October 1996 the Husband was appointed a director of B Pty Ltd.
In a letter dated 5 November 1996 written by Blake Dawson Waldron, Solicitors, to Mr Hedger it was stated that X & T Pty Ltd was introduced because the proposed development was originally proposed as a joint venture arrangement between “[O] and the [Thurga] Family”. However, the joint venture arrangement “is no longer in place”. It was stated that consideration should be given to winding up X & T Pty Ltd and that the only rationale for retaining the company was for the company to act as the holding company of the “[Thurga] Investments in Australia”. Elsewhere, it was stated that Mr Hedger was not proposing to wind up X & T Pty Ltd.
The Husband annexed to his affidavit a copy of a further letter dated 5 November 1996 from Blake Dawson Waldron, Lawyers to Mr Hedger. In this document under the heading “Structure after the proposed restructure” it was stated that all loans will be made by E Ltd and Z Ltd to X & T Pty Ltd in equal shares and all loans to B Pty Ltd will be provided by X & T Pty Ltd. It was stated that all shares in B Pty Ltd are held by X & T Pty Ltd (nine shares) and the husband’s father as to one share. Obviously the matters raised will have to be investigated. However, various documents were enclosed including powers of attorney for each of E Ltd and Z Ltd.
The Husband contends that from 1995-1996 Mr Hedger undertook the role of managing the development undertaken by B Pty Ltd and that the Husband was working on other projects for companies associated with his father and also the development of a software program. He was travelling extensively around the United States, Europe and Australia. The Husband contends that notwithstanding he was not involved on a day to day basis with the management of B Pty Ltd he and Mr Hedger had many meetings regarding the progress of the development. However, at no time has B Pty Ltd accounted to X & T Pty Ltd in relation to the financial aspects of the development project.
The Wife contends that during the relationship of the parties to the marriage, the Husband spoke to her about his involvement in the subdivision of 18 or 19 blocks of land at C and that he spent “literally hundreds of hours” working on the C subdivision.
The Husband and the Wife met in October 1997 and began going out in about December 1997. They commenced cohabitation in 1998.
On 1 October 1997 Mr Hedger tendered his resignation as a director of S Ltd. On 1 October 1997 the Husband tendered his resignation as a director of S Ltd. According to a document which purports to be a directors’ resolution signed by both the Husband and Mr Hedger, Mr R was appointed a director of S Holdings Ltd as from September 1997. The Husband contends that this was done for reasons associated with tax and estate planning and at the direction of his father. Then, the Husband and Mr Hedger, at the direction of the Husband’s father, appointed Mr R as a director of both companies. The Husband however, contends that the resignation notices were never put into effect and accordingly he and Mr Hedger continued to be directors of both companies referring to both S Holdings Ltd and Q Ltd. In the written submissions on behalf of the Husband it is contended that notwithstanding the Husband and Mr Hedger signed resignations as directors of the said entities in 1997, such resignations were not effected. The Husband and Mr Hedger between 1999 and 2003 signed a number of documents guaranteeing and indemnifying loans made between B Pty Ltd, X & T Pty Ltd, S Ltd and Q Ltd.
In 1998 the Husband and the Wife went to the British Virgin Islands and the Husband told the Wife that he needed to do some business setting up some companies.
On 31 March 1999 a Loan Agreement was entered into by I Pty Ltd as lender and B Pty Ltd as borrower for an advance of $500,000, secured by registered mortgage over “[C]”, guaranteed by the Husband, his father, Mr Hedger, X & T Pty Ltd, Q Ltd and S Ltd. There were variations of the loan agreement on 27 May 1999, 10 August 1999, 7 September 1999, 13 October 1999, 12 November 1999, 7 January 1999, 2 February 2000 and 23 March 2000. Mr K said that the documents were executed on behalf of Q Ltd by Mr Hedger as director and by the Husband as director and secretary and on behalf of S Ltd by the Husband as director and by Mr Hedger as director and secretary.
Mr K said that S Ltd and Q Ltd are companies with the registered offices in Singapore but are incorporated in the British Virgin Islands. He said that the British Virgin Islands is a tax haven and a non financial disclosure country. He contends it is not possible to obtain searches to determine the true owners of Q Ltd and S Ltd and that having looked at documentation he was of the belief and opinion that the companies are beneficially owned by Mr Hedger and the Husband respectively. This is what the Husband contends. This was made very clear in a letter dated 4 January 2005 written by P and Company to Minter Ellison.
The Husband contends that in 1999 his father considered restructuring B Pty Ltd and a meeting was held between the Husband’s father, the Husband and Mr Hedger and also meetings with Y Company. The Husband attached to his affidavit a copy of a report prepared by Y Company dated 2 December 1999 titled “Proposed restructure of [B] Group”. In the written submissions of the Husband it is contended that in 1999 a re-structuring of the shareholdings in X & T Pty Ltd occurred and extensive advice was obtained as to related party loans so that Q Ltd held eight shares; S Ltd held eight shares; the Husband held two shares and Mr Hedger held two shares. It is contended by the Husband that Minter Ellison provided advice to the shareholders as to the taxation and other effects and impacts of the re-structuring and as to the recovery of related party loan arrangements.
On 6 February 2001 B Pty Ltd registered a plan of subdivision of blocks at C which resulted in the registration of 20 new lots in Deposited Plan […]. Since about February 2001 B Pty Ltd has sold 15 of the blocks of land for a total consideration of $10,872,500. Mr Hedger contends that B Pty Ltd arranged for all relevant infrastructure such as roads, sewerage, water and electricity to be installed in respect of all 19 lots. Mr Hedger said that the C properties “have been on sale” since early 2000.
The Husband contended that Minter Ellison received instructions from, and were retained by B Pty Ltd as vendor in relation to the sale of five parcels of the C land between 6 March 2001 and 5 February 2004. The transfer documents completing such sales were allegedly executed by the Husband in his capacity as a director of that entity. The Husband contends that his signature on such documents is a forgery.
The Husband also contends that at no time has B Pty Ltd accounted to X & T Pty Ltd in relation to “the financial aspects of the [C] Development Project”. Additionally, that B Pty Ltd has not attended to the preparation of statutory financial statements and/or taxation returns since 2001 and 2002, nor has B Pty Ltd declared any dividends in favour of X & T Pty Ltd.
According to Mr K documents produced by I Investments Pty Ltd reveal a peak debt of $4,924,000 on 14 June 2001 and interest charged of $663,978.95. The debt was finally repaid in full on 22 June 2005.
The Husband and Wife were married in San Francisco in September 2001.
The Husband’s father died in December 2002.
On 16 June 2003 a Guarantee and Indemnity was entered into between I Investments Pty Ltd as lender and B Pty Ltd as borrower for an advance of $500,000 secured by registered mortgage over “[C]” and guaranteed by the Husband, his father, Mr Hedger, X & T Pty Ltd, Q Ltd and S Ltd. The address of Q Ltd was shown as H.
The Wife contends that the Husband and Wife separated in February 2004 although they remained residing in the same residence until June 2004.
The Husband contends that by approximately 2004 he and Mr Hedger had a “falling out” as the Husband had not received any money from the C development and he was also concerned as to the running of B Pty Ltd and the lack of accounting by Mr Hedger. He contends that he had numerous discussions with Mr Hedger.
The Husband gave evidence about a meeting held in January 2003 at Mr Hedger’s home. I am not going to repeat the Husband’s evidence. The Husband also contends that later in 2003 and in 2004 on many occasions he said to Mr Hedger that he wanted certain documents of S Ltd and share certificates and Mr Hedger stated that he did not have them and had never seen them.
The Husband gave evidence about a conversation he had with Mr Hedger in September 2004. In about mid November 2004 the Husband received from Mr Hedger a document titled “Offer” stated to be “valid” until 17 November 2004. The Husband contends that by late 2004 he was becoming desperate for money and had a lot of debts including legal expenses. He also contends that he was suffering from significant back problems and required an operation.
In late 2004 the Husband commenced proceedings in the Supreme Court of New South Wales for the appointment of a provisional liquidator of B Pty Ltd and in early 2005 commenced further proceedings seeking that Mr Hedger hand over various records concerning S Ltd. On 6 January 2005 the Husband swore an affidavit which was filed in proceedings in the Supreme Court of New South Wales, Equity Division.
The Husband contends that in early January 2005 he met with Mr Hedger and they had a conversation. The Husband contends that Mr Hedger stated that if the Husband transferred the two shares he owned in X & T Pty Ltd to Mr Hedger, Mr Hedger would pay the Husband $400,000 by instalments. Mr Hedger would pay an amount of $45,000 and thereafter as from 1 July 2005 for a period of 12 months an amount of $2,500 per month and on 1 July 2006 he would pay the remainder in one lump sum. The Husband agreed.
The Husband contends that on 17 January 2005 he again met Mr Hedger who gave him certain documents to sign which he did. The Husband contends that he felt under duress and needed money and he reluctantly signed a resignation as a director of B Pty Ltd and X & T Pty Ltd and also signed a share transfer whereby he transferred his two shares in X & T Pty Ltd to Mr Hedger. Mr Hedger then handed the Husband a cheque for $45,000.
The Wife annexed to an affidavit a document dated 14 January 2005 which purported to be signed by the Husband and was addressed to Mr Hedger. In the document the Husband stated that he resigned as a director of B Pty Ltd and X & T Pty Ltd and transferred his entire shareholding in X & T Pty Ltd to Mr Hedger for two dollars. The Wife also annexed documents titled “Notice of Resignation” dated January 2005 signed by the Husband wherein he resigned as a director of B Pty Ltd and X & T Pty Ltd. The Wife also annexed a document titled “Transfer of Shares” dated 17 January 2005 wherein the Husband transferred his two ordinary shares in X & T Pty Ltd to Mr Hedger.
In the written submissions of the Husband what occurred is summarised as follows. On 6 January 2005 the Husband filed a claim in the Supreme Court for the appointment of a provisional liquidator of, and otherwise seeking the records of S Ltd. The First Defendant to those proceedings was X & T Pty Ltd, the Second Defendant was B Pty Ltd, and the Third Defendant was Mr Hedger. During the course of the Supreme Court proceedings, Minter Ellison held instructions to act for X & T Pty Ltd, B Pty Ltd and Mr Hedger. The Husband objected to Minter Ellison acting for the Defendants. However, such objection did not proceed upon a compromise being achieved later that month. Against the background of the Supreme Court proceedings, the Husband entered an agreement with Mr Hedger to transfer his two shares in X & T Pty Ltd to Mr Hedger for a consideration of $400,000. The Husband thereafter executed documents transferring his shareholding in X & T Pty Ltd and resigned as a director of B Pty Ltd. Mr Hedger provided to the husband a sum of $45,000 at the time of such transfer and subsequent sums of $15,000.
According to an ASIC company extract the Husband ceased to be a director of B Pty Ltd on 14 January 2005. He also ceased to be a director of X & T Australia Pty Ltd on 14 January 2005.
The debt owed to I Investments Pty Ltd was finally repaid in full on 22 June 2005.
The Husband said that on 1 July 2005 Mr Hedger gave him $2,500.
The Husband said that in about August 2005 Mr Hedger gave him a cheque for $2,500.
On 5 July 2005 the application for final orders was filed in the Local Court at F by the Wife in which she sought final parenting orders, spousal maintenance and property settlement. By way of property settlement she sought that the Husband pay $250,000 on or before 1 July 2006 on the basis that the Husband retain all his right, title and interest in the development project at C owned by B Pty Ltd.
On 26 July 2005 a response was filed on behalf of the Husband. In the response he also sought parenting orders. In relation to the Wife’s application for property settlement and spousal maintenance the Husband sought that the application be dismissed. On 25 July 2005 the Husband swore a Financial Statement and he gave his occupation as chef and company director. He identified his employer as ST and CB Pty Ltd. In relation to his assets he contends that he had “possible investment in [B] Pty Ltd”.
On 2 August 2005 an order was made in the Local Court that the proceedings in that Court be transferred to the Family Court.
On 12 September 2005 an affidavit was sworn by the Wife. On 12 September 2005 an affidavit was sworn by Mr N on behalf of the Wife. In these affidavits evidence was given about the behaviour of the Husband. The affidavits appear to have been for the parenting proceedings although they are now relied upon by Mr Hedger, B Pty Ltd and X & T Pty Ltd.
Counsel for Mr Hedger, B Pty Ltd and X & T Pty Ltd submitted that at the time of the application for a second Anton Piller order there was no disclosure of the unreliability of the Husband’s evidence. It was submitted that according to the Wife’s evidence the Husband is a mentally unbalanced, drug addicted and violent individual. The Husband has not yet been cross examined and as well, at present there is no evidence from Mr Hedger or B Pty Ltd or X & T Pty Ltd dealing with the significant issues. In the result, I am unable to and do not form any opinion about the unreliability of the Husband’s evidence. This may ultimately be established, however I am unable to make such an assessment at this point in the proceedings.
On 15 September 2005 orders were made by consent resolving the parenting proceedings.
A Case Assessment Conference was held on 22 September 2005 before a Registrar and during this conference the Husband said that he had transferred his shares to Mr Hedger for no consideration although he had done a handshake deal with Mr Hedger that he would pay around $350,000. Further, Mr Hedger pays him $2,500 per month from B Pty Ltd.
The Husband said that in September 2005 Mr Hedger gave him a cheque for $10,000. The Husband contends that thereafter Mr Hedger ceased making the instalments and failed to make the final payment which was due on 1 July 2006.
In October 2005 an application was filed on behalf of the Wife in which she sought: “1. That [Mr Hedger] of [H] be joined as a party to proceedings no. SYF 3665 of 2005 in the Family Court Sydney Registry”. I can understand why the Wife sought to involve Mr Hedger given, amongst other things, what the Husband had said about his financial circumstances and the property order he sought. In October 2005 the Wife lodged a caveat over properties owned by Mr Hedger.
On 31 October 2005 an amended application was filed on behalf of the Wife. In this application, amongst other things, she sought that until further order Mr Hedger hold the two shares transferred to him by the Husband and X & T Pty Ltd upon trust for the Husband.
On 4 November 2005 an amended application for final orders was filed on behalf of the Wife in which she sought spousal maintenance, a property settlement of $750,000 and relief pursuant to s 106B Family Law Act 1975 in relation to the transfer by the Husband of the two shares previously held by him in X & T Pty Ltd to Mr Hedger.
On 10 November 2005 Mr G received two letters from Mr M. On 21 November 2005 Mr G wrote to Mr M setting out orders that Mr Hedger would consent on a without admission basis. On 21 November 2005 Mr M wrote to Mr G indicating that the Wife did not consent to the orders proposed by Mr Hedger.
On 21 November 2005 by facsimile transmission Mr G wrote to Mr M and contended that the Wife was funded in the Family Court proceedings by Mr N and that Mr M was in fact obtaining his instructions from Mr N. Mr G asked Mr M certain questions and contended that the answers would enable Mr G to advise his client as to whether or not he should seek a stay of the proceedings on the basis that they are an abuse of process. It was responded to by a facsimile transmission also dated 21 November 2005 written by Mr M to Mr G. Mr M said that he does not and has not received instructions from Mr N in relation to the proceedings. He went on to state that Mr Hedger had not filed a response nor filed any affidavit material “in support of his position”. Further, that Mr G had previously contended that valuable consideration was paid for the shares transferred to Mr Hedger in X & T Pty Ltd by the Husband. Mr M then said “for the third time we again ask that you provide us the following documentation that would support your client’s contention” and requested a stamped copy of the share transfer and a copy of any ruling with regard to stamp duty and the valuation that was used to calculate the stamp duty. I am of the view that the request for a copy of the transfer was reasonable. I was unable to locate a response to the request although I do not suggest that I have identified all of the correspondence.
On 23 November 2005 Judicial Registrar Johnston made the following orders:
1. That by consent and without admissions orders are made in accordance with paragraphs 2, 3 and 4 of the wife’s Amended Application in a Case filed on 31 October 2005 as set out hereunder:-
“2.That [Mr Hedger] of [H] be joined as a party to proceedings no. SYF 3665 of 2005 in the Family Court Sydney Registry.
3.That until further order [Mr Hedger] hold the two shares transferred to him by the husband in [X & T] Pty Ltd (“the company”) upon trust for the husband.
4.That until further order [Mr Hedger] be restrained from exercising any rights or powers attaching to those shares without the prior consent in writing of the wife.”.
2. That Mr Hedger may be excused from these immediate proceedings.
IT IS NOTED:
A. That in relation to the subpoena served on Minter Ellison solicitors the documents will be produced to this Registry today.
IT IS FURTHER ORDERED:
3. That all legal representative and the husband personally may have leave to inspect all documents produced by Minter Ellison.
4. That [Mr Hedger’s] costs are reserved.
5. That all parties are given leave to inspect all documents produced on subpoena by [T] Accountants and [SC Company].
6. That the wife pay to [T] Accountants within 30 days their costs in these proceedings which are assessed by the Court in the amount of $1,250.
7. That by consent orders are made in accordance with paragraphs 5 and 6 of the wife’s Amended Application in a Case filed on 31 October 2005 as set out hereunder:
“5.That until further order the husband be restrained from exercising any rights or powers as a shareholder of the company.
6.That until further order the husband inform the wife in writing of notice of any proposed meeting of shareholders of the company within 24 hours of receiving such notice.”.
8. That the husband and the wife attend a financial conciliation conference at 11:00 am on 22 February 2006.
IT IS FURTHER NOTED:
B. That in the event that [Mr Hedger] does not wish to attend such conference the husband and the wife are given leave to re-list these proceedings for an order requiring [Mr Hedger’s] attendance at the conciliation conference.
On 28 November 2005 on behalf of B Pty Ltd an application was lodged for a lapsing notice in respect of a caveat lodged over property owned by B Pty Ltd. The lapsing notice was issued and served on the Wife on 2 December 2005 and as a consequence the caveat duly lapsed on 3 January 2006.
On 22 December 2005 Mr M sent a facsimile transmission to Mr G in which it was stated that unless Mr Hedger was willing to discuss settlement of the proceedings Mr M would continue to issue subpoena and make further applications seeking orders against Mr Hedger and the joinder of various companies. Counsel for Mr Hedger, B Pty Ltd and X & T Pty Ltd relied significantly on this correspondence. He described its contents as confirming the Wife’s abusive purpose.
On 22 December 2005 the Wife sought to lodge a further caveat over various properties.
On 11 January 2006 an application was filed on behalf of the Wife in which she sought the following:
1. That [B] Pty Ltd and [X & T] Pty Ltd be joined as party to the proceedings SYF 3665 of 2005 in the Family Court Sydney Registry.
2. That [S] Limited a company incorporated in the [British Virgin] Islands be joined as a party to these proceedings SYF 3665 of 2005 in the Family Court Sydney Registry.
3. That until further order [B] Pty Ltd and [X & T] Pty Ltd be restrained from dealing with disposing of or encumbering any of the properties namely Lots […], […], […] and […] in Deposited Plan […] or any other asset of the companies.
4. That [B] Pty Ltd and [X & T] be restrained from encumbering or increasing any indebtedness of the companies.
5. That leave be granted to serve short notice of this application.
6. That until further order [S] Limited hold the shares in [X & T] Pty Ltd (“the company”) upon trust for the husband.
7. That until further order [S] Ltd be restrained from exercising any rights or powers attaching to those shares in the company without the prior consent in writing of the wife.
8. That until further order the husband be restrained from exercising any rights or powers as a shareholder of the company.
9. That until further order the husband inform the wife in writing of notice of any proposed meeting of shareholders of the company within 24 hours of receiving such notice.
10. That the hearing of the application of the wife pursuant to s106B of the Act be expedited.
11. Such further or other order as the Court seems fit.
On 11 January 2006 a response was filed on behalf of the Husband in which he simply said that he agreed with paragraphs 1 to 11 of the application filed on behalf of the Wife. Mr G contends that prior to 11 January 2006 the Husband had not taken an active role in the proceedings since the joinder of Mr Hedger and at the time he was self represented.
Mr K swore an affidavit on 11 January 2006.
On 16 January 2006 Mr M wrote to Mr G and contended that Minter Ellison was in a position of conflict and would be a material witness in the proceedings. A request was made that Minter Ellison withdraw from acting and if they failed to do so the issue would be referred to the Law Society of New South Wales. On 20 January 2006 Mr G sent a letter to Mr M and stated that Minter Ellison had no record of ever acting for or in relation to S Ltd and further, no record of ever acting for or in relation to Q Ltd.
On 17 January 2006 an affidavit was sworn by the Wife. On 18 January 2006 an application in a case was filed on behalf of the Wife in which she sought the following:
1. That the matter be heard ex-parte and be made returnable instanter in the first instance for consideration of making the following Anton Piller Order:
2. That forthwith upon being served with a copy of these orders, the Applicants application and supporting Affidavit, the second Respondent, [Mr Hedger] is hereby ordered to do the following acts and things:
(a)to deliver up all keys to the premises known as and situated at [H] to [Mr A] (“Mr [A]”) (an independent Solicitor); and
(b)Accompany Mr [A], the Applicant wife and such persons authorised by her to [H]; and
(c)Open any safe located at the property situated at [H];
3. That the Second Respondent, [Mr Hedger], whether by himself or by any person appearing to be in control of the premises hereinafter mentioned, permit [the wife], [Mr M], [Mr A] and any such other person or persons duly authorised by the Applicant wife and supervised at all times by [Mr A], to enter forthwith the premises known as [H] in the State of New South Wales, for the purposes of looking for and taking into custody of the said [Mr A] the following:
(a)all documents relating to the incorporation of the company known as [S] Limited;
(b)All share certificates of [S] Limited.
(c)A 3 ring white binder and contents marked [S] Limited.
(d)Incorporation documents and register of [S] Limited;
4. That except as is necessary to comply with his obligation under these orders, while the Applicant wife is looking for the items referred to in orders 3 above or until 8:00pm on the day of which service of these orders is effected whichever is the earlier, [Mr Hedger] by himself his agents and servants is hereby restrained by injunction from attending at or upon the premises situated and known as [H].
5. That the said Mr [A] shall make an inventory at the conclusion of the execution of these Orders;
6. That as soon as practicable after the execution of these orders the Solicitors for the Applicant Wife shall file and serve an Affidavit of Mr [A] setting out the facts and circumstances of these orders and include a copy of the said inventory taken by him.
7. That Mr [A] shall keep the items taken together with the inventory in safe keeping and in trust pending further Order.
8. That the matter be listed in the Duty Judicial List at 10:00am on a date to be fixed by the Court.
On 18 January 2006 a further amended application for final orders was filed on behalf of the Wife. The Wife sought a declaration that the shares held in X & T Pty Ltd by S Ltd are held upon trust for the Husband and further, that the Husband, Mr Hedger and B Pty Ltd and X & T Pty Ltd transfer Lots […], […], […] and […] in Deposited Plan […] to the Wife.
On 23 January 2006 there was further correspondence by facsimile transmission between Mr G and Mr M in relation to the contention that Minter Ellison was in a position of conflict. Mr G denied that there was any conflict of interest.
On 23 January 2006 Mr G informed Mr M that subpoenas issued to B Pty Ltd and X & T Pty Ltd lacked “legitimate forensic purpose” and an application would be made to have them set aside.
On 24 January 2006 the Husband delivered a letter to Mr G in which he contends that Minter Ellison was in a position of conflict. The Husband contends that signatures on some transfers of land were not his but had been forged by Mr Hedger or somebody acting at his request. I note that the Husband also said that he would be making a complaint to the Legal Services Commission.
On 25 January 2006 Mr M wrote to Mr G indicating that if the subpoenaed documents were not produced by B Pty Ltd and X & T Pty Ltd then the Wife would seek “the issue of a bench warrant”. The subpoenas were returnable on 24 January 2006. Mr M stated that the purpose was to enable an expert to provide a value of B Pty Ltd.
On 25 January 2006 Mr G received a letter from Mr M in which reference was made to the letter of 24 January 2006 that had been received from the Husband.
On 25 January 2006 a notice of address for service was filed on behalf of X & T Pty Ltd by Minter Ellison and on the same day a notice of address for service was filed on behalf of B Pty Ltd by Minter Ellison.
On 30 January 2006 Judicial Registrar Johnston made the following orders:
1. That orders are made in accordance with paragraphs 1, 2, 3, 5, 6, 7 and 9 of the wife’s Application in a Case filed on 18 January 2006 as set out hereunder:-
“1.That the matter be heard ex-parte and be made returnable instanter in the first instance for consideration of making the following Anton Piller Order:
2.That forthwith upon being served with a copy of these orders, the Applicants application and supporting Affidavit, Mr [Hedger], [Mr Hedger] is hereby ordered to do the following acts and things:
(a)to deliver up all keys to the premises known as and situated at [H] to Mr [A](“Mr [A]”) (an independent Solicitor); and
(b)Accompany Mr [A], the Applicant wife and such persons authorised by her to [H]; and
(c)Open any safe located at the property situated at [H];
3.That the Second Respondent, Mr [Hedger], whether by himself or by any person appearing to be in control of the premises hereinafter mentioned, permit [the wife], [Mr M], [Mr A] and any such other person or persons duly authorised by the Applicant wife and supervised at all times by [Mr A], to enter forthwith the premises known as [H] in the State of New south Wales, for the purposes of looking for and taking into custody of the said [Mr A] the following:
(a)all documents relating to the incorporation of the company known as [S] Limited;
(b)All share certificates of [S] Limited.
(c)A3 ring white binder and contents marked [S] Limited.
(d)Incorporation documents and register of [S] Limited;
…
5.That the said [Mr A] shall make an inventory at the conclusion of the execution of these Orders;
6.That as soon as practicable after the execution of these orders the Solicitors for the Applicant Wife shall file and serve an Affidavit of [Mr A] setting out the facts and circumstances of these orders and include a copy of the said inventory taken by him.
7.That [Mr A] shall keep the items taken together with the inventory in safe keeping and in trust pending further Order.
…
9.That the parties be granted liberty to apply on 2 hours notice to the Court and to the other party.”.
2. That these proceedings are otherwise adjourned to the Judicial Registrar's Duty List at 10:00 am on 21 February 2006.
IT IS NOTED:
A. That these orders have been made on the wife having given the usual undertaking to the Court in relation to damages through her solicitor.
On 1 February 2006 Mr G wrote to the Husband and advised that Minter Ellison had no record of having acted for the Husband let alone jointly with Mr Hedger.
On 1 February 2006 at 7.00 am the orders made on 30 January 2006 were executed by the Wife and others at the home of Mr Hedger.
On 1 February 2006 Mr G wrote to the Husband in response to his letter of 24 January 2006.
On 2 February 2006 Mr M sent to Mr G a copy of a subpoena addressed to Mr Hedger. The subpoena sought a copy of the articles of association and/or constitution of Z Ltd “being a company incorporated in the [British Virgin] Islands”. Mr M contended that it was believed the document was in the possession of Mr Hedger and it was not recovered at the time of the execution of the Anton Piller order.
On 2 February 2006 a bank account in the joint names of the Husband, Mr Hedger and X & T Pty Ltd with the Commonwealth Bank at XJ was closed.
On 2 February 2006 the second caveat sought to be lodged by the Wife over various properties was rejected by the Department of Lands.
On 3 February 2006 the Husband caused a caveat to be lodged over properties owned by B Pty Ltd.
On 6 February 2006 the Husband sent a letter to Mr G. The Husband enclosed copies of transfers of 15 blocks of land and he contends that he had highlighted those signatures that were not signed by him and that had been forged. He also contends that he had not been consulted in respect of the transfers and that Minter Ellison were or should have been on notice that the transfers required his signature. He also contends that in previous Supreme Court proceedings Mr Hedger had given evidence that certain bearer shares were held by P, Solicitors and that this was wrong because such shares had always been in the possession of Mr Hedger or the possession of the Husband from time to time. I note that Mr A gave evidence of the discovery of bearer shares at the home of Mr Hedger.
On 7 February 2006 Mr G wrote to Mr M and enquired as to whether or not the solicitors for the Wife had assisted the Husband in preparing a caveat or his letter of 6 February 2006.
On 8 February 2006 Mr M sent a facsimile transmission to Mr G. It was contended that the Wife would be seeking a declaration that the shares held by S Ltd in X & T Pty Ltd were held for the benefit of the Husband.
On 8 February 2006 the Husband sent a letter to Mr G again complaining about “fraudulent documents.”.
On 9 February 2006 on behalf of B Pty Ltd Mr G lodged an application with the Department of Lands for a lapsing notice in respect of the caveat lodged by the Husband. The lapsing notice was served on the Husband on 15 February 2006 and the caveat has since lapsed.
On 9 February 2006 Mr G wrote to Mr M enquiring as to whether the solicitors for the Wife had assisted the Husband in relation to the lodgement of a caveat and preparation of a response that was filed on 11 January 2006.
On 14 February 2006 Mr M wrote to Mr G seeking assurances in relation to a possible claim by Mr C.
On 15 February 2006 an affidavit was sworn by Mr A. Mr A gave evidence about what happened at the home of Mr Hedger on 1 February 2006 when the Anton Piller order made on 30 January 2006 was executed. Mr A ascertained that documents which related to E Ltd were relevant and he saw documents which on the face of it appeared to reflect that E Ltd was the original name of S Ltd. He said that he also looked through an envelope which contained two bearer share certificates for E Ltd and Z Ltd both incorporated in the British Virgin Islands and he asked Mr Hedger to provide a copy of the bearer share certificate for Z Ltd.
At this point I note that both Mr A and Mr M have given evidence about some of what happened at the home of Mr Hedger on 1 February 2006 and the behaviour of Mr Hedger. Mr Hedger has not as yet given any evidence about what happened however, subject to such evidence the evidence of Mr A and Mr M is relevant to the abuse of process issue as Mr Hedger appears to have attempted to hide what may be relevant evidence.
On 17 February 2006 Mr M wrote to Mr G. On the same day a further letter was sent by Mr M indicating that the Wife intended to join Mr Hedger’s wife to the proceedings.
On 20 February 2006 an affidavit was sworn by Mr Hedger. He said that he is the managing director of B Pty Ltd which is wholly owned by X & T Pty Ltd. He said that neither he nor the Husband are or ever have been shareholders of B Pty Ltd. He said that B Pty Ltd is the owner of 4 lots at C being lots […], […], […] and […] of DP […]. He contends that these properties are the sole asset and potential source of income of B Pty Ltd. He gave no evidence in relation to the shareholding in X &T Pty Ltd nor the ownership of the shares in Z Ltd or E Ltd or Q Ltd or S Ltd.
In my view it is clear, and has been known by all parties for a considerable period of time, that the Wife and those advising her have been attempting to ascertain the ultimate beneficial ownership of X & T Pty Ltd a company which according to Mr G is controlled by Mr Hedger and in which the Husband was a shareholder at the time of separation. I understand that Mr Hedger, B Pty Ltd and X & T Pty Ltd now agree to file by a specified time affidavits setting out particulars and giving evidence in relation to each of their contentions as to the beneficial ownership of the shareholdings of B Pty Ltd and X & T Pty Ltd and shall annexe all source documents supporting their contentions and assertions. This should have happened a lot earlier.
On 21 February 2006 an affidavit was sworn by the Wife. The Wife contends that during the search on 1 February 2006 at the home of Mr Hedger a letter signed by Mr Hedger was found that was written to P, Solicitors and it requested that P, Solicitors change the name of E Ltd to S Ltd. Further, that the letter disclosed that the Husband was the owner of the company. I note that the Husband’s first name is U. The bearer share certificate was taken by Mr A. There was also a letter to P, Solicitors that confirmed that the instruction to change company names to S Ltd and Q Ltd had been carried out by P, Solicitors. The Wife contends that during her relationship with the Husband from time to time he would talk about P, Solicitors and often refer to that firm. She contends that the Husband would often refer to P, Solicitors as “P [S]” and that the firm would undertake administrative tasks to do with companies that the Husband and Mr Hedger operated. The Wife also said that she was aware that the solicitors for Mr Hedger had written to Mr A and advised him that he was not to provide a copy of the documents to anyone as the documents were the subject of legal professional privilege.
On 21 February 2006 a minute of orders sought was filed in Court on behalf of the Wife in which she sought various injunctions.
On 23 February 2006 Mr G sent a facsimile transmission to Mr M. Amongst things he complained that the affidavit of the Wife of 21 February 2006 discussed the contents of documents over which a claim for privilege was made. Mr G did not identify the documents he was referring to or the relevant parts of the affidavit of the Wife. I presume he was referring to what was said about S Ltd and Q Ltd.
On 24 February 2006 Mr M sent a response to Mr G and this further letter was responded to by letter of 6 March 2006. Mr G contends that at no point has Mr M filed an affidavit explaining his conduct during the execution of the Anton Piller order. Mr G contends that Mr M was familiar with the contents of documents obtained under the Anton Piller order over which a claim for privilege had been made. In summary, on behalf of Mr Hedger it is contended that the documents in respect of which claim for privilege was made came into existence for the purpose of obtaining or receiving legal advice and that they referred to or arise directly from legal advice. Again presumably this was referring to the documents that may demonstrate that the Husband and Mr Hedger owned S Ltd and Q Ltd. In other words documents that may assist in ascertaining the ultimate beneficial ownership of B Pty Ltd.
On 23 February 2006 a Notice to Admit Facts was served on Mr Hedger on behalf of the Wife.
By letter dated 27 February 2006 EN & Co, Solicitors, wrote to Mr G on behalf of the Husband. This is an important letter and I do not know if it was answered but I will presume that it was.
On 2 March 2006 Mr G received a letter from the Legal Services Commissioner enclosing a copy of a complaint lodged by the Husband against Mr G personally. The Husband contends that Mr G had acted in a position of conflict of interest for the Husband in the proceedings, misled the Court, failed to properly account and failed to obtain proper authority to disburse funds.
On 9 March 2006 a Notice to Dispute Facts was filed by Mr Hedger. It was in answer to the Notice to Admit dated 23 February 2006. Mr Hedger was asked to admit whether in his own capacity or as a director he authorised and directed that the names of E Ltd and Z Ltd be charged to S Ltd and Q Ltd. In response to this it was stated that Mr Hedger objected to the paragraph on the basis that it arose out of privileged information which was communicated to the Wife by her solicitor after it was viewed by the solicitor during the execution of an Anton Piller order and that Mr Hedger had not at any time waived any privilege that attached to the document. Mr Hedger was asked whether or not the bearer share certificate held by Mr A for E Ltd was the bearer share certificate for the company now known as S Ltd and Mr Hedger did not admit. Mr Hedger was asked whether or not on the date on which E Ltd changed its name to S Ltd the Husband was the beneficial owner of S Ltd and Mr Hedger said that he did not admit this paragraph. Mr Hedger was asked whether or not the Husband gave or transferred his shares in S Ltd and shares in X & T Pty Ltd to Mr Hedger and Mr Hedger responded that he admitted that the shares previously held by the Husband in X & T Pty Ltd were transferred to Mr Hedger but did not admit that the Husband gave or transferred any bearer shares in S Ltd to Mr Hedger. I note that in his affidavit of 20 February 2006 Mr Hedger gave no evidence in relation to the shareholding in X & T Pty Ltd nor the ownership of the shares in Q Ltd and S Ltd.
By letter dated 26 October 2006 Mr M wrote to Mr G making an open offer to resolve on a “no admission” basis the Apprehended Violence Order proceedings.
On 17 November 2006 a response was filed on behalf of the Husband and he sought:
1. That the Respondent Husband be declared the owner of the barer [sic] share in [S] Ltd.
2. That the Wife be ordered 50% of the Husband’s net assets.
3. That the Wife’s application otherwise be dismissed.
On 15 November 2006 a further affidavit was sworn by Mr G.
On 20 November 2006 I made the following orders:
1. Any Application in a Case filed by any party is, in the first instance, to be listed before O’Ryan J.
2. No party to issue any further subpoenas without prior leave of O’Ryan J.
3. Any application for the issue of a subpoena must be made in writing with a copy of the draft subpoena included and forwarded to the solicitors for all parties at the same time as forwarded to the Associate to O’Ryan J.
4. Any application for the issue of a subpoena may be determined in chambers without hearing from any party.
5.1 Subject to Order 5.2 hereof upon the undertaking of [Mr G], Solicitor to retain possession of the documents specified in the Schedule in Order 5.2 hereof, the Second, Third and Fourth Respondents be granted leave to uplift such documents for photocopying purposes.
5.2 Not less than 48 hours prior to Mr [G] uplifting the documents referred to in Order 5.1 hereof Mr [G] shall provide to the solicitors for the Wife and the solicitors for the Husband or the Husband a schedule of the documents which Mr [G] proposes to uplift in accordance with the authority provided by Order 5.1 hereof.
5.3 Mr [G] shall provide the Court with a schedule of the documents uplifted pursuant to the authority in Order 5.1 hereof.
5.4 It be noted that copies of the documents are sought to enable tax returns and financial statements to be prepared.
6. All documents uplifted pursuant to Order 5 be returned to the Court within 14 days from being uplifted.
7. The Second, Third and Fourth Respondents file and serve by 4.00 pm on 4 December 2006 an outline of argument and list of affidavit material relied upon in support of their Application in a Case filed 11 September 2006.
8. Any application in a Case by the First Respondent seeking relief with respect to Minter Ellison acting for any of the Second, Third or Fourth Respondents be filed by 4.00 pm on 18 December 2006 and be made returnable before O’Ryan J on 9 February 2007.
9. The Applicant Wife and the First Respondent Husband file and serve by 4.00 pm on 18 December 2006 an outline of argument and list of affidavit material relied upon in support of their (or either’s) Application in a Case referred to in Order 8 hereof.
10. The matter be listed for mention before O’Ryan J, by telephone conference facility on Monday 11 December 2006 at 9.30 am (the purpose of that mention being as indicated in discussion namely considering with the legal representatives for the Husband their state of preparedness).
11. Upon the Applicant Wife by her Counsel giving to the Court the usual undertaking as to damages, until further order or 4.00 pm on 10 February 2007:
11.1100% of the net proceeds of sale of Lot […] Deposited Plan […] be deposited into the controlled money account established by Minter Ellison Lawyers pursuant to the orders of the Court on 12 September 2006 (‘Account’).
11.2All interest accruing on the Account be credited to the Account.
11.3There be no withdrawals from the Account.
12. It be NOTED that in Order 11.1 the description “net proceeds of sale” is intended to be the balance of the sale price after the payment of all costs and associated disbursements relating to the sale of the said property.
13. Each of the Husband and the Wife are to file and serve by 4.00 pm on 18 December 2006 any further evidence on which they would seek to rely in relation to Order 11.
14. All parties be granted liberty to apply to seek a discharge or variation of Order 11 upon giving to the Court and the other parties 48 hours notice.
15. The Second, Third and Fourth Respondents file and serve by 4.00 pm on 31 January 2007 any affidavits on which they would seek to rely in relation to Order 11.
17. The hearing of the Application in a Case is adjourned to 10.00 am on 9 February 2007.
On 27 November 2006 the Apprehended Violence Order application by the Wife against Mr Hedger was dismissed. On 30 November 2006 the Apprehended Violence Order by the Wife against Mr Hedger’s wife was dismissed.
On 11 December 2006 I made the following orders:
1. Order 8 made on 20 November 2006 be amended by the deletion of “18 December 2006” and the insertion in lieu thereof “10 January 2007”.
2. So far as it relates to the First Respondent Husband Order 9 made on 20 November 2006 be amended by the deletion of “18 December 2006” and the insertion in lieu thereof “10 January 2007”.
3. The execution of Order 5.1 made on 20 November 2006 be stayed in the period 19 December 2006 to 10 January 2007.
On 9 January 2007 an affidavit was sworn by the Husband. The Husband swore a Financial Statement on 9 January 2007. It is not necessary for me to repeat all of what he stated in this document in relation to his financial affairs however, he did disclose eight shares in S Ltd.
On 10 January 2007 an application in a case was filed on behalf of the Husband. On 10 January 2007 an amended response to an application for final orders was filed on behalf of the Husband.
The Husband swore a further affidavit on 22 January 2007. He annexed to his affidavit a copy of a number of transfers of real property relating to the sale of various lots owned by B Pty Ltd. He contends that a number of the signatures that appear on the transfers purporting to be his signature are in fact not his signature and he identified the forged transfers as being 6 March 2001, 7 January 2004, 16 January 2004, 5 February 2004 and 2 January 2004.
On 23 January 2007 an affidavit was sworn on behalf of the Wife by Mr L and he gave evidence in relation to documents produced in response to subpoena by B Pty Ltd and X & T Pty Ltd.
Mr A swore an affidavit on 29 January 2007. He referred to paragraphs 23 to 26 of his affidavit of 15 February 2006 and recalled that on locating the first of the bearer shares which were in the name of E Ltd, Mr Hedger took the bearer shares and said “this is not related to these proceedings”. Mr A said that Mr Hedger was sitting next to him at the time and he recalls Mr Hedger placed the shares in his pocket. Mr A recalled asking Mr Hedger for the bearer shares to be returned which he did. Mr M also gave evidence about the actions of Mr Hedger and the bearer share certificates.
On 2 February 2007 by consent the proceedings were adjourned to 9 February 2007.
In a letter of 5 February 2007 Mr G contends that the case against Mr Hedger, B Pty Ltd and X & T Pty Ltd changed significantly and that the security for costs application and conflict of interest application should be dealt with by the Federal Court. As well notice was given of an intention to make an application against the Husband for security for costs.
On 8 February 2007 a further affidavit was sworn by Mr G. Mr G contends that it was apparent from the application of the Husband of 10 January 2007 that the dispute in so far as it relates to Mr Hedger, B Pty Ltd and X & T Pty Ltd is a complex dispute regarding share ownership of a number of companies and that he was instructed to make an application to have the matter in so far as it relates to Mr Hedger, B Pty Ltd and X & T Pty Ltd transferred to the Federal Court.
On 6 February 2007 Mr G wrote to Mr M and also the Husband setting out a proposal to transfer the proceedings to the Federal Court. Mr G also said that he was requested to seek an order for the release of $33,518.39 from the proceeds of the sale of properties owned by B Pty Ltd and held in a controlled monies account to enable the payment of invoices for legal fees dated 30 November 2006 and 22 December 2006.
Anton Piller Order
An Anton Piller order is an interlocutory injunction made ex parte for the mandatory production, inspection and removal for safekeeping, documents and things, and the preservation of property the subject matter of the proceedings. It is used to preserve threatened evidence or property: Anton Piller KG v Manufacturing Process Ltd (1976) 1 Ch 55. The order authorises the applicant to demand entry to the respondent’s premises, and search for and seize for a short time, evidence or documents that may otherwise be destroyed or removed.
The Family Court has the jurisdiction and power to make such an order: Talbot and Talbot (1995) FLC 92-586. The procedure for making an application for an Anton Piller order is set out in Rule 14.04 of the Family Law Rules.
The relief is discretionary and the applicant must make a full disclosure of all material facts. A material non-disclosure of facts relevant to the granting of an order may be fatal to the validity of an order: Stowe and Stowe (1981) FLC 91-027 at 76,260.
In Anton Piller KG v Manufacturing Process Ltd Ormrod, L.J said at 62 that there are three essential preconditions for the making of such an order: “First, there must be an extremely strong prima facie case. Secondly, the damage, potential or actual, must be very serious for the [applicant]. Thirdly, there must be clear evidence that the [respondents] have in their possession incriminating documents or things, and that there is a real possibility that they may destroy such material before any application inter parties can be made”. See also Talbot and Talbot (supra).
Conclusionhttp://sydnotes1.familycourt.gov.au/intranetii/fcoapublishing.nsf/Content/Anton Piller Orders - top#top
On behalf of Mr Hedger, B Pty Ltd and X & T Pty Ltd it is submitted that the second Anton Piller order was a blatant abuse of process calculated to advance the Wife’s stated intention to humiliate and pressure the B respondents into a settlement and it should be set aside.
As I have indicated on a number of occasions in discussion it is not difficult to understand, at least in a broad way, the issues in this case. There are pending proceedings for settlement of property. There is an issue as to the extent and value of the financial circumstances of the Husband. The Husband at first contended that he may have a possible interest in the C land development. It has now been revealed that the Husband may have sold two ordinary shares in X & T Pty Ltd for $400,000 and he may be owed a balance of $340,000 although given what Mr Lucarelli told Moore J on 23 June 2006 the Husband may still beneficially retain his two ordinary shares and this may be because of the non-payment by Mr Hedger of the balance of the $400,000. As well, the evidence prima facie establishes that the Husband may be the beneficial owner of a company called S Ltd which in turn owns eight ordinary shares or 40 per cent of the issued capital of X & T Pty Ltd. This is the Husband’s contention. X & T Pty Ltd in turn owns all of the issued capital of B Pty Ltd. B Pty Ltd in turn owns land at C and has over a period of years sold blocks of land.
There is an issue as to the value of the Husband’s shares and this will require expert evidence. There is also an issue between the Husband and Mr Hedger and others as to what Mr Hedger has done with funds received from time to time from the sale of land by B Pty Ltd. As between the Husband and Mr Hedger there will have to be an accounting. As well, there may be other assets because the Wife contends that the Husband told her that there was money overseas.
At no time has Mr Hedger or B Pty Ltd or X & T Pty Ltd put any of the above into issue even though, in my view, it has been apparent for some considerable time what the contentions of the Wife are as to the extent of the Husband’s assets. It has also been apparent for some considerable time what the contentions of the Husband are as to the extent of his assets. I have difficulty accepting any notion that it has only recently become apparent what the nature and extent of the issues are and what the claims against Mr Hedger and others may be. Mr Hedger, B Pty Ltd and X & T Pty Ltd have now accepted that they will have to shortly file evidence of what they contend to be beneficial ownership of the issued capital in X & T Pty Ltd and evidence establishing their contentions in so far as they may disagree with the evidence that is already filed. As well, as I have said, they will probably have to provide an accounting and this has been accepted.
I note that in the written submissions on behalf of Mr Hedger, B Pty Ltd and X & T Pty Ltd it is submitted that the Wife’s “prospects of success can reasonably be stated as “problematic” given the legal shareholder relations between the B respondents and the parent companies”. I do not express any view at this stage given that the B respondents have yet to file evidence that deals with the issues I have identified and what are called the “legal shareholder relations.” However, this gap will shortly be overcome.
The Anton Piller order was executed and it is accepted that the application to set it aside has no real practical consequence except to support the application for costs and also because of the humiliation and embarrassment it is contended the execution of the order caused to Mr Hedger’s wife. As to the first matter no evidence was given as to the quantum of such costs. As to the second matter I do not see this as particularly relevant and in any event there is no evidence from Mr Hedger or Mr Hedger’s wife. What however is relevant is that if the obtaining of the order was an abuse of process then the order should be set aside. An abuse of process is a significant matter and should not be ignored simply because it may have no future practical relevance.
Ordinarily the application would be dealt with by the Judge who made the order. However, the hearing proceeded as if it was a review of the order of the Judicial Registrar even though it was not filed within the time prescribed in the Rules.
In this case a number of submissions were made both orally and in a written form on behalf of Mr Hedger, B Pty Ltd and X & T Pty Ltd. I am not going to repeat these submissions however I have given them very careful consideration.
The property settlement proceedings were commenced in July 2005 and have now been on foot for a significant period of time. Because of what the Husband said at the Case Assessment Conference on 22 September 2005, on 5 October 2005 an application was made by the Wife to join Mr Hedger. On 18 January 2006 the Wife applied for an Anton Piller order which was made on 30 January 2006 and executed on 1 February 2006. As a result the Wife was able to obtain documents which appear to establish that there were bearer shares for S Ltd and that as between the Husband and Mr Hedger the Husband is the beneficial owner of the shares. There was no application to set aside the Anton Piller order made on 30 January 2006.
Mr Hedger swore an affidavit on 20 February 2006 and as I have said notwithstanding the execution of the Anton Piller order on 1 February 2006 he gave no evidence in relation to the ultimate beneficial ownership of S Holdings Ltd. So also on 9 March 2006 when Mr Hedger provided a response to the Notice to Admit Facts his response, in my opinion, subject to further evidence was not satisfactory and for example when he was asked if the Husband had transferred the share or shares in S Holdings Ltd to Mr Hedger, Mr Hedger did not admit this request.
In my view, there has been no or little attempt to assist the Wife and those advising her to ascertain the beneficial ownership of the shares in X & T Pty Ltd and when she spoke to the Husband he said that Mr Hedger was not going to assist and “may shred the lot”.
The Wife then made a further application for an Anton Piller order and she relied on an affidavit she swore on 19 July 2006 and an affidavit of Mr K of 27 July 2006. The order was made on 28 July 2006 and it was executed on 1 August 2006. As to what transpired I refer to the subsequent affidavits of Mr A and Mr K and also to the affidavits of Mr G.
I have no doubt, in all the circumstances, given the nature of the issues, the correspondence that had passed between Mr M and Mr G, the extent of the disclosure by the Husband, the extent of disclosure by the B Respondents, the position adopted by Mr Hedger and the threat that the Husband conveyed to the Wife that it was appropriate to seek a further Anton Piller order, that there was no material non disclosure and that it was an appropriate case to make such an order. I do not consider that there has been an abuse of process. I have come to the conclusion that in all the circumstances the order should not be set aside.
Subpoena
This issue was resolved on the basis that I grant leave to the Wife to issue subpoenas to Y Accountants; and Dawson Blake Waldron, Lawyers in the form of draft subpoenas comprised in Exhibit A on 8 February 2007 and direct that Mr Hedger, B Pty Ltd and X & T Pty Ltd have first access to any documents produced pursuant to such subpoenas, for seven days from such production. This is said to be so the B respondents can consider any issue of legal professional privilege.
Restraining orders
Mr Hedger, B Pty Ltd and X & T Pty Ltd are seeking various restraining orders namely:
·That the Wife be restrained from seeking any further Anton Piller orders or other ex parte orders without leave from me.
·That the Wife be restrained from filing any further subpoenas without leave from me.
·That the Wife and the Husband be restrained from issuing any further caveats without leave from me.
·That the Wife and the Husband be restrained from making any complaints to the Legal Services Commissioner without leave from me.
·That the Wife and Husband be restrained from making any complaints to the New South Wales Police or Federal Police about issues arising in relation to these proceedings, without leave from me or in circumstances where there is an immediate threat of violence.
I am not going to make an order restraining the Wife from seeking any further Anton Piller orders or other ex parte orders without leave from me. The proceedings have been assigned to me for case management and I am satisfied that it is clear that if I am available any such application would come before me. This was confirmed by me on 4 August 2006.
I have already made an order in relation to subpoenas. However, having regard to the issues I have no doubt that there may be further subpoena.
I am not going to make an order that the Wife and the Husband be restrained from issuing any further caveats without leave from me. A caveat can only be lodged if there is a caveatable interest and even though such an idea has not in the past deterred caveats being lodged I would expect that this will be understood in the future.
I am not going to make an order that the Wife and the Husband be restrained from making any complaints to the Legal Services Commissioner without leave from me. The Husband has made a complaint that has been disposed of.
I am not going to make an order that the Wife and the Husband be restrained from making any complaints to the New South Wales Police or Federal Police about issues arising in relation to these proceedings, without leave from me or in circumstances where there is an immediate threat of violence. As I indicated in discussion I have some doubts about my jurisdiction and power to make such an order. In any event, I have no doubt that if such a complaint was made it would be appropriately dealt with by the authorities.
Variation of injunction
Mr Hedger, B Pty Ltd and X & T Pty Ltd are seeking to vary order 11 made on 20 November 2006 to enable the disbursement of amounts to pay the costs rendered to the B respondents by Minter Ellison. On 9 February 2007 I made an order that the said order continue until further order.
As I understand the situation the Husband complains that a number of the C blocks have been sold and there has been no accounting for what has happened to the proceeds of sale. He contends that no dividends have been declared in favour of X & T Pty Ltd. He contends that B Pty Ltd has not attended to the preparation of the statutory financial statement and or taxation returns. He contends that he has an entitlement by reasons of his shareholding in X & T Pty Ltd and S Ltd. The funds secured in the relevant account are the recent proceeds of sale of one or more blocks and the Husband is concerned that the disbursement of these funds for the benefit of the B respondents may be to his ultimate detriment.
There was no evidence before me as to the financial circumstances of Mr Hedger. It may be that ultimately there is a contest between the Husband and Mr Hedger and if so, at this stage, it is difficult to know why B Pty Ltd would be paying the costs of Mr Hedger. It may be that the Husband is successful and there is then an issue as to what has happened to various funds.
At this stage of the litigation I am not prepared to make an order that authorises the disbursement of the proceeds of sale to pay legal costs. It may be that the issue can be revisited when the evidence of the B respondents is filed and more is know about the financial circumstances of B Pty Ltd, X & T Pty Ltd and perhaps Mr Hedger.
I certify that the preceding 210 paragraphs are
a true copy of the reasons for judgment
of the Honourable Justice O’Ryan
……………………………………..
Associate:
Date: 16 February 2007
IT IS NOTED that this judgment for all publication and reporting purposes be referred to as THURGA & POND
Key Legal Topics
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Family Law
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Civil Procedure
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Commercial Law
Legal Concepts
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Appeal
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Costs
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Discovery
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Jurisdiction
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Procedural Fairness
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Standing
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