Rand and Rand and Ors
[2006] FamCA 1530
•10 January 2006
FAMILY COURT OF AUSTRALIA
| RAND & RAND AND ORS | [2006] FamCA 1530 |
| FAMILY LAW – PROPERTY SETTLEMENT – Where husband’s family has deliberately misdirected matrimonial assets |
| Family Law Act 1975 (Cth) |
| APPLICANT WIFE: | Ms S Rand |
| RESPONDENT HUSBAND: | Mr M Rand |
| 2nd RESPONDENT: | Mr G Rand |
| 3rd RESPONDENT: | Mrs N Rand |
| 4th RESPONDENT: | RE Pty Ltd (in Liq) |
| 5th RESPONDENT: | MI Pty Ltd |
| 6th RESPONDENT: | GD Pty Ltd |
| 7th RESPONDENT LIQUIDATOR OF 4th RESPONDENT: | Mr RMS |
| 8th RESPONDENT: | Mr PM |
| 9th RESPONDENT: | Mr WJ |
| 10th RESPONDENT: | S Pty Ltd |
| 11th RESPONDENT: | C Pty Ltd |
| 12th RESPONDENT: | H Pty Ltd |
| TRUSTEE IN BANKRUPTCY: | Mr PL |
| FILE NUMBER: | SY | 2153 | of | 2001 |
| DATE DELIVERED: | 10 January 2006 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Rowlands J |
| HEARING DATE: | 9-13 and 23-27 September 2002; 2-5 December 2002; 14-18 and 21-25 November 2005 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Richardson SC |
| SOLICITOR FOR THE APPLICANT: | Adrian Twigg & Co |
| FOR THE RESPONDENT HUSBAND: | In person |
| COUNSEL FOR THE 2ND, 3RD, 4TH, 5TH, 6TH AND 11TH RESPONDENTS: | Mr Auldridge SC |
| SOLICITOR FOR THE 2ND, 3RD, 4TH, 5TH, 6TH AND 11TH RESPONDENTS: | Watts McCray |
| COUNSEL FOR THE 7TH RESPONDENT: | Mr Simpson |
| SOLICITOR FOR THE 7TH RESPONDENT: | NOT Lawyers |
| FOR THE 8TH RESPONDENT: | In person |
| COUNSEL FOR THE 9TH, 10TH AND 12TH RESPONDENTS: | Mr Paul |
| SOLICITOR FOR THE 9TH, 10TH AND 12TH RESPONDENTS: | Paul and Paul Lawyers |
| COUNSEL FOR THE TRUSTEE: |
| SOLICITOR FOR THE TRUSTEE: | The Argyle Partnership |
ORDERS
UPON THE APPLICATION OF THE WIFE TO THE COURT IT IS ORDERED:
That RE Pty Limited (in liquidation) and/or the liquidator of RE Pty Limited (in liquidation) forthwith execute a Deed of Assignment to assign to the Wife any entitlement it has in any debt owed to it by, or cause of action it has against, each of S Pty Limited, Mr G Rand (the husband’s father), Mrs N Rand (the husband’s mother), GD Pty Limited, and C Pty Limited.
That the Husband do all acts and things necessary to transfer to the Wife all of his entitlements in the Rand Family Trust and further, if requested to do so by the Wife in writing, cause to be transferred to the Wife all of the entitlements that the said trust may have in S Pty Limited, and then if requested to do so by the Wife in writing resign as trustee and appoint the Wife as trustee of the said trust, And thereafter be permanently restrained from exercising his power of appointment or removal in relation to the trust.
And Declared that the Wife (subject to Order 11 hereof) is entitled to one half of any profits arising out of the patents or other intellectual property relating to the conversation of waste material to building products and further order that the Husband account and (subject to Order 11 hereof) pay to the Wife one half of any profits received in respect of the intellectual property of the various companies known as NR Technology Pty Limited, NR Corporation SARL, B Pty Limited and related entities.
That upon the Husband and RE Pty Limited (in liquidation), complying with orders 1, and 2 hereof, the Wife transfer to the Husband all of her shareholding and entitlements in the company RE Pty Limited (in liquidation) and further order that the Wife resign any office she may hold in the said company upon the Husband indemnifying the Wife and saving her harmless forever in relation to any suits, claims, demands or liability in relation to her ever having held any office or shares in the said company.
That each of:
(a) the Husband's father, Mr G Rand,
(b) the Husband's mother, Mrs N Rand,
(c) RE Pty Limited (in liquidation),
(d) Mr RMS as either liquidator or administrator of RE Pty Limited (in liquidation),
(e) GD Pty Limited,
(f) C Pty Limited,
(g) MI Pty Limited,
(h) NR Technology Pty Limited, and(i) NR Corporation SARL.
be restrained pending further order from commencing, maintaining, or pursuing any claims, actions or suits against the Husband, the Wife, or RE Pty Limited (in liquidation), including, without limiting the generality thereof, any actions in relation to any director's loan accounts (whether joint or individual), or any actions arising from any assertions of insolvent trading by either the husband and/or the wife.
That pursuant to s9OAE(1)(b) of the Family Law Act, that in respect of any or all of the alleged indebtedness of the Wife to the entities and persons referred to in Order 6 hereof, the Husband be substituted for the Wife, and be solely responsible for the indebtedness.
That pursuant to s 106B of the Family Law Act:
(a)That the allotment of shares in S Pty Limited [ACN …] ("[S Pty Ltd]") on or about 31 October 2003 comprising 20,000 ordinary shares to C Pty Limited [ACN …] ("[C Pty Ltd]"), and 10,000 ordinary shares to H Pty Limited [ACN …] ("[H Pty Ltd]"), be set aside.
(b)That S Pty Ltd forthwith cancel any share certificates issued in respect of the allotment referred to in (a) and expunge the said allotted shares from the share register.
That pursuant to s233 of the Corporations Act 2001:
(a) That forthwith upon compliance with Order 7 S Pty Ltd be wound up and a liquidator appointed (if that has not already taken place)
(b) Mr WJ, the husband’s father, and each other director of the Company be restrained from:
(i)Doing any act or thing which has the effect of altering the shareholding in the company, except as sought in these orders, including issuing or allotting any shares;
(ii) Doing any act or thing which has the effect of altering the company's assets or liabilities, without giving the Wife and her solicitors 14 days' written notice setting out the proposed alteration, and providing details of the basis of such proposal.
(c) There forthwith be appointed an administrator (if one or like person has not already been appointed) pending the implementation of orders (a) and (b) above.
That pursuant to s90AE(1)(b) of the Family Law Act RE Pty Limited (in liquidation) shall forthwith do all acts and things necessary to substitute the Husband for any indebtedness to that company by the wife pursuant to any loan account or as a consequence of any alleged breach of the Corporations Law in respect of alleged insolvent trading.
That pursuant to s106A of the Family Law Act, a Registrar or Deputy Registrar be empowered to sign any documents required to give effect to these orders in the event that the Husband, the husband’s father or any other person required to sign a document to give effect to these orders, fails to do so and return to the Wife's solicitor, within 7 days of being provided with the document to be signed.
That the Wife's entitlement to profits pursuant to Order 3 above be limited in amount to the sum of:
(a) any balance outstanding in respect to the sum of $4,417,406 referred to in the final paragraph of the Reasons for Judgment of 10 January 2006, plus
(b) any costs ordered in favour of the Wife in respect of these proceedings including their enforcement, plus
(c) interest on sums outstanding referred to in (a) and (b) above, at the rate of interest prescribed by the Family Law Rules or as otherwise ordered.
And Declared that nothing contained in these orders contemplates any limitation upon the rights of a party pursuant to Section 79A of the Family Law Act 1975.
That a copy of these orders be served upon any liquidator or administrator or like person appointed in respect of S Pty Ltd.
That each party have liberty to apply to the Court in respect to the implementation of these orders.
That the costs of and incidental to these proceedings be reserved.
IT IS NOTED that publication of this judgment under the pseudonym Rand & Rand and Ors is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SY 2153 of 2001
| Ms S Rand |
Applicant Wife
And
| Mr M Rand |
Respondent Husband
And
| Mr G Rand |
2nd Respondent
And
| Mrs N Rand |
3rd Respondent
And
| RE Pty Ltd (in Liquidation) |
4th Respondent
And
| MI Pty Ltd |
5th Respondent
And
| GD Pty Ltd |
6th Respondent
And
| Mr RMS |
7th Respondent
And
| Mr PM |
8th Respondent
And
| Mr WJ |
9th Respondent
And
| S Pty Ltd |
10th Respondent
And
| C Pty Ltd |
11th Respondent
And
| H Pty Ltd |
12th Respondent
And
| Mr LP |
Trustee in Bankruptcy
REASONS FOR JUDGMENT
Introduction
The Husband (45) and the Wife (42) commenced cohabitation in July 1984, having married in Sydney on that day. They separated in October 2000.
The couple have three children:
• a son born September 1989 (16)
• a son born December 1991 (14)
• a son born December 1993 (12)all of whom live with the Wife and have contact with the Husband.
These proceedings were commenced by the Wife's Application of 16 January 2001 with an Amended Application filed by her on 21 February 2001 seeking a matrimonial property settlement under Part VIII of the Family Law Act 1975 following the break down of the marriage. However she now moves on a Further Amended Application of 17 August 2005.
When considering a couple's competing property applications the Court looks at Part VIII of the Family Law Act 1975. That provision requires first the establishment of the property before considering whether or not it is just and equitable to make any, and if so, what alteration to the holdings of the Husband and Wife in their property.
In broad terms, in considering these matters the Court is obliged to take into account the financial contributions made directly or indirectly by each party to the acquisition, conservation or improvement of the property, and the contributions in the capacity of homemaker. Having looked at these contribution factors, the Court should then go on to consider the matters referred to in Section 75(2) of the Act, sometimes in the past called "needs" factors, before determining what is a just and equitable outcome in the circumstances.
The matter was complicated by the Husband's interest in NR Technology and various building and development projects. These will be discussed during a consideration of the parties' property. The NR Technology involved the exploitation of patents for building blocks. The projects concerned developments around Sydney by legal entities associated with the Husband, his family and others.
The projects resulted in the joinder of numerous parties as becomes apparent.
The case became further complicated when, while these family law proceedings were part heard, on the 28th November 2002, the Husband became bankrupt on his own petition. He had debts to various people and entities but by far the largest creditors were the Husband's father, Mr G Rand (the Second Respondent) and his company GD Pty Limited (the Sixth Respondent) of which the Husband was a director.
The Wife applied for an annulment of the Husband's bankruptcy. That application was dismissed by this Court.
Assets of the Husband's at the time of his bankruptcy became part of his bankrupt estate and not available for consideration as part of the matrimonial pool of assets in these proceedings under Part VIII. The trustee of the Husband's bankrupt estate, Mr PL, has disavowed any claim or interest in relation to the Rand Family Trust. He does claim an interest, the Husband's share, in the couples' former matrimonial home at H Road, Suburb A. It appears that the trustee, at this stage, has not formed a view whether his claim is for 50% or for 16.43% of the home; the Wife claims, on equitable principles, an 83.57% equitable interest in the property.
The Wife's claim, which I accept, comes about from a resulting trust which flowed from the following circumstances. When the Husband and Wife married she owned a one fifth share of a property at N Street in Suburb A. In 1985-6 she purchased, in her name, the remaining four fifths of that property from her father.
The N Street property was sold for $465,000 in 1996. The couple then purchased the matrimonial home in H Road for $700,000. Together with the proceeds of the sale of the N Street property (owned by the Wife) the parties borrowed $300,000 from the Newcastle Building Society to fund the H Road purchase.
The Wife says she did not intend to benefit the Husband or make any advances to him by reason of the acquisition of the H Road property in their joint names.
Joinders etc
In a decision of the 2nd July 2004 1 granted the wife's application to add the following parties to the proceedings: the 2nd, 3rd, 4th, 5th, 6th and 7th Respondents and provided reasons for that decision on the 2nd July 2004.
Mr PL as the husband's trustee in bankruptcy had earlier obtained leave to intervene and it was accepted that he would be styled "the trustee" in these proceedings.
On the 28th October 2005 I granted the wife's application to join the following further parties to the proceedings: the 8th, 9th, 10th, 11th and 12th Respondents.
The 2nd, 3rd, 4th, 5th and 6th Respondents were restrained, at that time, by an interim injunction from taking action to pursue any claims against the Husband, the Wife and RE Pty limited (in Liquidation) — the Husband's company and a respondent.
Further the Husband was ordered to appoint the Wife trustee of the Rand Family Trust and the directors of S Pty Ltd were restrained from altering the shareholdings or the assets or liabilities of the company (without giving notice).
Interim applications by the 8th, 9th, 10th and 12th Respondents for summary dismissal of the proceedings against them and security for costs were dismissed, also on the 28th October.
While the reasons for the orders of the 28th October 2005 will become more apparent during the course of this Decision it is appropriate to say something in that regard at this stage.
The general law and the Family Law Rules 6.02(1) require that any person whose rights may be directly affected by an issue in a case and whose participation as a party is necessary for the Court to determine all issues in dispute must be included as a party to the case.
It is clear, as will be explained, that Messrs WJ and PM and H Pty Ltd (Mr WJ’s company) and S Pty Ltd are directly involved with a key portion of the parties' property – the Rand Family Trust. This includes involvement following the wife's application under Section 233 under the Corporations Act and Section 106B of the Family Law Act. C Pty Ltd (The husband’s father’s company now) is directly affected by considerations relating to RE Pty Ltd (the Husband's company) concerning a joint venture as will be explained further.
The Wife's case suggests that the parties the subject of the interim injunctions (orders 2 and 5 of 28 November 2005) were concerned with actions, transferences and alterations to property in corporations, particularly S Pty Ltd – a major asset of the Rand Family Trustee (matrimonial property) and/or RE Pty Ltd (the Husband's entity); to the detriment of her interests in this property case. The proposed injunctions were interim in nature and within the proper exercise of the Court's power (Waugh v Waugh (2000) FLC 93-052); they were appropriate, given the history of the matter, to halt potential activity, pending the determination of the case or further order.
The mandatory requirement in relation to the trustee of the Rand Family Trust flows from the Court's concern following an apparently invalid appointment of Mr PM as the trustee of this matrimonial asset in attempted defiance of the order of the Court restraining the Husband (as trustee) from such an action. This concern was magnified by the purported behaviour of the Husband in relation to asset disposal and by the statement of Mr PM to the Court on the 26th October 2005 that he saw it as his duty as trustee to act for the benefit of particular beneficiaries.
The Wife was available, appropriate and within the direct purview of the Court. She appeared, in the circumstances, a suitable stable trustee.
In relation to the summary dismissal applications none of the respondents for joinder were able to establish that there was no arguable case against them. An application of the principles enunciated by the Full Court in Pelerman v Pelerman (2000) FLC 93-037 at 87-582, applied to the circumstances here meant the matters were appropriately for determination at trial. Given the parties and the subject matter in the husband's bankruptcy case (under the Bankruptcy Act) and in this case no estoppel arose.
The applicants for security for costs were not able to make out a case for such action.
A consideration of Section 117 of the Family Law Act (the Costs section) reveals the necessary factors were not canvassed such as financial circumstances, conduct etc, on behalf of the applicants. Recourse to the Family Law Rules — Order 19.05 — reinforces the need for a consideration of financial means, and also prospects and genuineness. I was satisfied that the Wife's application had both merit and genuineness and further that any order relating to security would be oppressive.
The Property
29 It appears that the couple's property is as set out below:
Assets
| 1. | Matrimonial home | $1,169,980 | |
| (83.57% of $1,400,000) | |||
| 2. | Furniture and effects | $15,000 | |
| 3. | NR Corporation SARL | $123,997(1) }Total worth unknown but a large sum in the order of a million dollars or more | |
| 4. | NR Technology Pty Ltd | ||
| 5. | NR International Pty Ltd | ||
| 6. | RE Pty Limited (add back) | $1,499,210 | |
| 7. | Rand Family Trust | $2,355,217 | |
| 8. | Husband's legal costs to 10.9.2002 | ||
| (add back) | $111,953 | ||
| 9. | Wife's legal fees (add back) | $459,147 | |
| (10. | HI Pty Limited | $499,874)* | |
| 11. | Husband's superannuation RE Pty Limited | $21,250 | |
| Known Assets, | $5,755,754 | ||
(1) Order 30A Statement (it does not include intellectual property).
Liabilities
A.Mortgage on matrimonial home
(83.57% of $280,000) $233,996
(B.FH Family Trust
* Not included in the "globo" exercise Net Assets Known
Property Consideration
- Former Matrimonial Home
The actual value of the former matrimonial home (Asset 1) and the mortgage (Liability A) and the Furniture and Effects (Asset 2) is the subject of agreement. I proceed for the reasons earlier outlined on the basis that the Wife's equitable claim as to 83.57% of the home (as distinct from 50%) will be sustained. It was not contended to the contrary by the Husband. The trustee, for understandable reasons, took no active party in the family law proceedings which concluded last month.
- H Family Assets
While it is appropriate to deal with the bulk of the parties assets and liabilities together, `In Globo', as is the norm, the Wife's shares in HI Pty Ltd (Asset 10) and the liability in relation to the FH Family Trust (Liability B) should be dealt with separately. They came to the marriage relationship from the wife's family, the H Family. The Husband made no contribution to them in any form. They remain, of course, for consideration under Section 75(2) of the Act. The evidence supports a net figure of $208,342 for their worth.
- Further Agreements
It appears to be appropriate to add back the couple's accepted paid legal fees (Assets 8 and 9) as expenditure from matrimonial assets.
Superannuation of the Husband (Asset 11) is agreed.
- NR Technology
This technology involves the "agglomeration" (forming of mass) from waste products, particularly from the by-product of power stations, such as fly ash (fine ash which is produced from coal burning). With treatment by chemicals the by-product may be used to make building blocks.
It is clear that the Husband has been keenly interested in ventures, including a large one in South Africa, relating to the commercial development of this technology. His present position appears to be that the venture is not succeeding and he has no interest in it nor is he part of it or linked to it.
It is the Wife's case that the Husband remains associated with the project to exploit the technology (with associated patents) and that he fails to provide a full and frank disclosure to her, and the Court, in relation to it. In support of her case the Wife relies on:
material before the Court explaining the nature of the technology (see Affidavit of Mr WC sworn 29 April 2002 and, Exhibits WB70 and WB71). The exhibits provide an insight into developments to 2004 including the involvement of N Pty Ltd and W Holdings Pty Ltd (Business Plan — 29.3.2004).
the Husband's enthusiasm to transfer patents (see Exhibits W21, W22, W33, W36, W37 and W47).
The Husband's strong assertions in support of the technology and advances in it's development:
28 September 2000 — letter to Westpac Ex W12
2 January 2001 — Email to Mr NP Ex W32
15 February 2001 — Email to Mr DH Ex W18
7 March 2001 — Email to Mr PB Ex W17
2, 3 April 2001 — Emails to Mr NP Ex W23
9 May 2001 — Email to Mr PH Ex W24
6 September 2001 Email to Mr JL of D Company Ex W25
13 September 2001 — Email to… (a.k.a Mr HC) Ex W27
October 2001 — Email to Mr JD; Mr DC re WG Ex W28
Exhibit W32 (3.1.2001) included the following statement by the Husband:
"I am sure that we can go forward.
I have just signed licences for fly ash in Australia and the fee for the rights is $32,000,000 million over the next six years. This is the licence fee only which includes 10% equity in the plant as a minimum inclusive and 5% of turn over. This is because I have negotiated a $10 per tonne fee paid to the [NR] licence and signed a distribution agreement with the biggest hardware retailer and wholesaler in Australia. They will take all the product we produce from all the plants.
If you remember the washery tailing technology that I developed which I showed you the lastly (sic) time you were here. I have just licenced it to a company that will have 10.2 million tonnes of this waste and 280 million tonnes in the ground that the QLD government wants to use and the EPA is requiring the five biggest mining companies in the world to solve or they will close their mines.
[NR] Australia the new licence owner for Australia and South Africa is the company that is providing the technology for these projects.
All systems go.
Best Regards
[Husband]"
Exhibit W28 (18.10.2001) included these statements by the Husband:
"We have reached agreement with [D Company] to have all their ash at all four power stations and instead of charging them $4 at [WG] only, we are charging them $2.00 for all the power stations...
I will make shore (sic) my families licences do not over charge them to take their ash utilisation...
Next month I will be meeting with Senior management of Toyota regarding the sale of coal in Japan from their mine...
WE CHARGE THEM $10 USD FOR SOLUTION AND THEY SAVE $6 USD PER TONNE AND WE SELL PRODUCT AND RECEIVE ANOTHER $10 PER TONNE PROFIT RETURN WHEN PRODUCT SOLD AT HALF RETAIL PRICE IN JAPAN.
They sell their coal for $5X.00 per tonne. (I would never tell them your price as I would never tell you their price). They agree that it is worth at least $10.00 USD per tonne on the coal price.
They get $6X.00 USD per tonne and my family will build own and operate the plants in Japan at the power stations. We receive $5.00 USD from their coal price.
Toyota will organise the distribution and should win another $5.00 per tonne as a return for distribution.
We will sell their distributor the products we make at half the retail price in Japan. Nice little business. Should be worth a few Billion a year...
I would be happy to take you to lunch at the Sheraton Westin, which is the old GPO in Martin Place.
Best Regards
[the husband]
[NR] Corporation"
These strong representations are quite contrary to the Husband's statements that the technology had failed by December 2000 (see paras 66 and 67 of his affidavit sworn 3 May 2002). The couple, it will be recalled separated in October 2000 i.e. a year before Ex W28 (above) was created.
As is apparent from Exhibit W21, 2 January 2001, the Husband instructed Ms Eve Wood, patent attorney, to transfer the patent from NR International to NR Corporation SARL. The Husband was Managing Director of NR Corporation and of NR International.
On the 16th January 2001 the Wife commenced proceedings in this Court.
On the 17th January 2001 the Husband emailed Eve Wood, the patent attorney, seeking the patent to be transferred to one MM Rand of an address in Suburb A. That man who is a relation of the Husband's and in fact lives in Lebanon has never lived in Suburb A or indeed in Australia.
Following an email of the 20th May 2001 Ms Wood replied:
"Due to the fact that this will now be the third assignment please confirm assignees details...(as)...[NR] International Ltd is a [M] based company W 1 PO requested that the investors were incorporated in this application... I have contacted W1PO and requested their formal requirements" (Ex W36 p2).
By email of 9 July 2001 (Ex W22) the patent attorney, Ms Wood, sent to the Husband a document for the assignment of the patent from NR International Limited to NR Corporation to be signed by the Husband as Director for and on behalf of NR International Limited.
During the cross-examination of the Husband by Senior Counsel for the Wife the following exchange took place:
"In any event on 14 June 2001, one of the payments I asked you about was a consultancy fee recorded to Sprucen and Ferguson, $5622.30?---Yes.
Pausing there, Sprucen and Ferguson are a firm of patent attorneys, are they not?---That's correct.
[RE Pty Ltd] holds no direct interest in any patents or licences, is that correct?---That's correct.
It was your evidence earlier today, was it not, that by the beginning of 2001, none of the entities associated directly with you had any interest in any patent or licences for patents, is that correct?---That's correct.
And yet this cheque butt was in your handwriting, wasn't it?---Yes.
To what account was that posted? This consultant fee that was put down?---That would have been the loan account to [NR] Corporation. Repayment.
In June 2001, at a point of time when you're in financially desperate circumstances, as we understand your evidence?---That's right.
Why is [RE Pty Ltd] paying patent attorneys on behalf of [NR] Corporation?---Because [NR] Corporation had loaned [RE Pty Ltd] $100,000.
Why was [NR] Corporation being called upon to pay these patent attorneys any money at all in June 2001?---Because of my – my obligations – sorry, [NR’s] obligations.
But [NR] no longer had any interest in any patents or licences by that time, isn't that your position?---The licences had expired, yes.
Is that right? – The licence had expired, we'd tried to – you know, I had to pay my – what I owed.
In any event, if you paid this in June 2001, you must have the invoice. Haven't you?---Yes.
Have you discovered it?---Yes, it should be in the (indistinct) files, with the – all the invoices."
p 180 transcript 23.9.2002.
It is apparent from the foregoing that, on the balance of probabilities, despite his protestations to the contrary, the Husband, through entities owned and controlled by him, had an ongoing interest in the "Process of Agglomerating Particulate Material" as the invention is called in the assignment document emailed on the 9th July 2001 (Ex W22). His entities include the Lebanese Company Nu-Rock Corporation SARL (in which the Husband owns some 98% of the shares), NR International Limited of M for whom he signs and NR Technology Pty Limited of which he is the beneficial owner.
See Husband's affidavit 4 May 2002 at para 39(e) then affidavit of Dr M sworn 26 July 2002 paras 2 and 3 and also evidence of Husband's father at transcript 25.9.02 p 31 "I knew [NR] is owned by – by [the husband], yes. I don't know what arrangements he did.".
It appears that the owner of the invention may be NR Corporation SARL or NR Technology Pty Limited. However Exhibit W70 contains a draft licence from N Pty Ltd to W Pty Ltd for MM Rand technology.
The Husband's assertion that the present owner is MM Rand cannot be accepted at face value. If he is then the exercise to have him the nominal owner appears to be a "sham" to seem to remove that asset from the Husband's entities. Apart from the matrimonial problem the Husband's status as a bankrupt (2002-2005) had to be accommodated.
That MM Rand association with the enterprise is deceitful is first suggested by his false address at Suburb A in Australia, when the fact is he has never been to this country. It is shown again in the "witnessing" by the Husband of a signature of MM Rand in Australia (transcript 12.9.02 p 49, see also p 54). It is conceded he does not speak English.
There has been no demonstration from the one best placed to provide it, the Husband, of any real purpose for the involvement in or any genuine association with the technology by Mr MM Rand of Beirut in Lebanon.
In all the circumstances of the case, I am left with the impression that the Husband in fact has access to and control in respect of the invention and the technology. This is based upon by a consideration of the evidence detailed and the evidence in the Husband's affidavit of 3 May 2002 at para 39, and in exhibits. It demonstrates the Husband's likely corporate activity in relation to the technology to 2004 and beyond. This must be coupled with his lack of disclosure and the fact that much of the revealed material was only obtained by zealous efforts on behalf of the Wife. The technology appears to be `his' from the way in which he operates in relation to it.
The credit of the Husband in relation to these matters, and generally, was damaged by his apparent `humbug' in relation to an alleged payment by MM Rand to him – (for the company NR Technology). The Husband's evidence is to be found on pages 52 to 57 of the transcript of 12th September 2002, but the flavour is contained in the following passage:
"Tell us, when you were paid the dollar by Mr [MM Rand], when was that? The one you have just told us about at a time when [NR] Technology didn't have a bank account?---It would have – I think probably February of '95.
Well, you and he weren't in the same country then, were you?---No.
Well, how did you receive this dollar from him?---With the person who brought the contract back from Lebanon.
I see. Who was that person?---I can't recall. You have no recollection of it?---No.
Was it in Lebanese pounds, or was it in Australian dollars?---It was Australian dollars. Yes, pretty sure it was Australian dollars.
Do you have a recollection of this, or are you just making it up as you go?---No, I – well, I wasn't present when the contract came back."
Pages 54-55
(earlier the Husband had said he had put the one dollar in his pocket (p 52)).
At page 53, there appears this question and answer:
"[NR] Technology, from its inception, was as far as you were concerned, your company, was it not?---yes" (p 53).
When viewed in context the various "legal" and other documents created by the Husband are not convincing, there is also confusion in relation to the "distancing" exercise with parties to documents being apparently confused in Annexures A and C and E to the Husband's affidavit 3 May 2002 (option and licence agreements concerning Mr MM Rand).
The totality of the evidence, on balance suggests that the Husband has access to the technology; with the probability, on his own admissions, that its value is significant. He is obviously anxious to distance himself from it for the present. It is significant that post separation, while suggesting to the Wife that there had been a failure, he was much later confirming to others the great financial worth of the project.
Further the facts are "peculiarly within the knowledge of the" Husband. The Wife has presented evidentiary material in relation to both the property being the Husband's and of it's high value. In such circumstances the principles explained in Hampton Court Limited v Crooks (1957) 97 CLR 367 at 371-2 per Dixon CJ, operate to her advantage.
It is well understood in this Court, in addition to developments in the general law, that each party has a duty to fully and frankly disclose their property and its worth in proceedings of this nature under the Family Law Act. I will not loiter now to develop further such an established proposition, beyond observing that authority makes clear the Court may be the more bold when facing a situation of this nature (Weir v Weir (1993) FLC 92-338).
A breakthrough in the obtaining of some of the evidence earlier set out in relation to the technology was the work of Mr S, an expert, who gave evidence concerning the contents of the hard drive of the Husband's computer. The Husband's response to that was, in substance, that was in the past the prospects are now dead.
The evidence of Mr PM suggests that from June 2002 a company called N Pty Ltd (clearly under the control of the Husband then, see also W Pty Ltd below) was running the operation, using the equipment which had been NR’s. Indeed it rented premises at L Place, Suburb B, an address connected with other Rand entities, although this was unequivocally denied by the husband’s father, an action which dented his credibility in these proceedings.
I infer the Husband's technology operations continue from records available as late as 2004 (see Exhibits WB70 and 71). It is appropriate to infer continuance in light of the earlier false denials in relation to such matters and the material concerning current matters set out below.
With the bankruptcy of the Husband now past it is reasonable to assume that interests controlled by the Husband held by his father or entities, will in due course benefit the Husband as the circumstances allow.
The general impression I gained from the evidence including from Mr PM and Mr WJ, concerning Rand business, was that while the husband’s father was "canny" it was the Husband who provided direction and energy.
Further factors are indicative of the value of technology. The Husband has spent significant time and money on it, a South African venture partner has spent millions of dollars building a plant to utilise it, Mr PM gave up lucrative positions to devote himself to it. An asserted failure has not been satisfactorily explained.
The evidence suggests that in Australia the present utiliser is W Holdings Pty Limited. It seems that the shareholders are Mr PM; Ms A, the Husband's de facto Wife or girlfriend; her father Mr A; and a friend of the Husband – he witnessed his bankruptcy statement of affairs.
The Husband appears "coy" about the status of Ms A. On the 18th November, 2005 the Husband asserted that despite the number of nights he spends with her (his evidence was that he had investigated what constituted a de facto relationship and concluded that if he spent less than 10 out of 14 nights with her they would not be regarded as in a de facto relationship) he "did not know" if she had anything to do with the NR technology.
Mr MM Rand, the Husband's uncle, was not called to give evidence nor was his absence appropriately explained. I accordingly proceed on the basis that his evidence would not have assisted the Husband's case.
The Husband, despite his obligation to make a full and frank disclosure did not do so in relation to these matters. The Wife and her representatives by a series of subpoenae; a Mareva injunction seizure and analysis of a computer hard drive together with ASIC and other searches and investigations brought the evidence before the Court.
In all of the circumstances, the evidence and the Husband's approach permits the finding I make that the technology is worth to the Husband something in the order of a million dollars or more.
Senior Counsel for the Wife in support of her NR position in the case usefully called in aid what amounts to an asserted "modus operandi" when he suggested that:
"Exhibits W33, Annexure "A" to the Husband's affidavit of 3 May 2002 (the purported 5 year option of 4 January 1995), and Annexure "B" to the Wife's affidavit (the application for the patent of 2 June 2000), lead to the conclusion that it is most likely that the intellectual property remains with [NR]Technology, and therefore effectively with the Husband.
This would also seem to be consistent with the efforts of the Husband and/or his father [G Rand] by the issue of a specious claim for rent against [NR] Technology (Exhibit W42) on 30 January 2001 in respect of purported rent for the property at [L Place, Suburb B]. The sum claimed was $389,050, and on any view, if valid, would have left [NR] Technology without funds to pay the sum, and thus vulnerable to liquidation. [The husband’s father], in his evidence, denied that he had made any demand.
This sort of process – make a claim against the company, force the company into liquidation, claim the company's assets – was something the [Rands] were well familiar with, having used precisely the same technique to acquire the assets of the predecessor company, [F], and get rid in effect of the other shareholders.
It was the same technique that the Husband and his father later used to liquidate [RE] Pty Limited (and set in train procedures to in effect take over the company and cause the liquidator not to pursue [the husband’s father] and [GD Pty Ltd] for claims [RE Pty Ltd] had against them). It was a similar technique later used to dilute the [Rand] Family Trust's interest in [S Pty Ltd] from 1/3 of the shares to 1/30003.
The claim against [NR] Technology for rent was not pursued when Dr [M] – at that time a director and shareholder (in trust for the Husband) – who is related to the Wife in these proceedings by marriage – "put up a fight" and the claim against [NR] for rent seems to have been abandoned. Indeed, the Husband in his [statement of] financial circumstances then claimed he was responsible for the same "debt".
The evidence...[suggested]...that the letter demanding rent of $389,050 was a document in fact created by the Husband himself."
On the balance of probabilities this apparent series of similar actions supports the general thesis of the wife in relation to these contentious property items:
NR Technology
RE Pty Ltd and
RE Family Trust — S Pty Ltd
in this case.
Returning to the NR Technology item. Given the approach the authorities encourage me to take: the evidence suggests a finding that the Technology is within the beneficial control of the husband, that he has or had had the benefit of it and that it is worth a million dollars or more but otherwise I cannot be more precise.
If the husband has disposed of the technology without benefit deliberately then that amounts to waste in the "Kowaliw" sense, as later discussed in these reasons. - RE Pty Limited (in Liquidation)
The Fourth Respondent, RE Pty Limited (the Company), was the couple's "family company" under the control of the Husband. It was placed into liquidation as the result of an unsatisfied creditor's demand of the 22nd October, 2002 (i.e. some 2 years after the couple separated and after the commencement of the trial in this case) by GD Pty Ltd, the company of Mr G Rand (the Husband's father and the Second Respondent). The Husband, prior to his bankruptcy, (28 November 2002) was a director of that company. Mr RMS (Seventh Respondent) was appointed liquidator of the Company.
At first glance it seems surprising that the Husband's father, through his company GD Pty Ltd, would take the action he did. Father and son are close. This has been financially demonstrated by the father paying out large sums for the Husband's legal costs, living expenses, bills and holidays. At times during these proceedings they have lived together.
In evidence, the husband’s father expressed the view that there was no point in liquidating a company if there were no assets in it with nothing to be gained (a view also adopted by the Husband — Transcript 23rd November, 2002 at p156).
Neither the Husband or the husband’s father during the hearing in September 2002 or in the 3 years since, have provided appropriate evidence in support of GD Pty Ltd’s claims against the Company.
A Deed of Company Arrangement (DOCA), proposed by C Pty Limited, followed the liquidation.
Attention is properly drawn, on behalf of the Wife, to the activities of C Pty Ltd — a company of the husband’s father. It is neither a creditor or a debtor of the Company. Nonetheless, it provided $140,000 for distribution in the terms of the DOCA. When asked why he did this the husband’s father said, "I don't know. The solicitors told me to". There is significant detriment to the Wife in this course of action. There is relief for the Husband.
The Deed of Company Arrangement in substance provided that the liquidator would not pursue claims against or concerning:
the Suburb C development project
the Suburb D development project
the Husband.
The DOCA provided that the $140,000 supplied by C Pty Ltd would be applied to unrelated creditors. They lodged claims in the amount of $188,987. The ambition of C Pty Ltd included a compromise with these people. This was achieved. That it was hoped would result in a return of the control of the company to a director nominated by C Pty Ltd. However C Pty Ltd varied the DOCA to provide that "related creditors" would not be compromised but be subordinated and repayable if the Company was in funds. They had claimed $1,129,193 but Mr RMS admitted for proof:
MK Rand & Associates $715
NR Corporation SARL $110,906
GD Pty Ltd $548,171.
("Related creditors" are defined as a related entity to the Company including the husband’s father, MK Rand, NR Technology, NR Corporation and GD Pty Ltd – MK Rand is the Husband's brother and an advisor to the husband’s father).
The variation of the DOCA resulted in Barret J in the Supreme Court declining to make an order terminating the winding up. Upon completion of the DOCA the company remains in liquidation (see Affidavit of Mr G affirmed 9 November 2005); with the apparent agenda outlined below.
Mr RMS says that the only claims he as liquidator has to pursue are against the Wife: the loan account of the husband and the wife totalling $438,238 and an insolvent trading claim against her. Any recovery would benefit the "Related Creditors".
The loan account includes debits originating from the Husband for court ordered maintenance and mortgage payments and his own legal costs.
The effect of the Agreement was basically to abandon any claims against the Husband or RE Pty Ltd, but to pursue all claims against the Wife.
The Wife does not seek to impugn Mr RMS here, she is content to accept that he recovers as financed to recover. What she does seem to say is that the financing directs him to her alone and she impugns the motive of those who create that prospect, i.e. the Husband's father, Mr G Rand and his associated entities and perhaps others associated with him. Without personal wrongdoing, Mr RMS becomes a vehicle for that activity.
Nonetheless, the Wife does rely on the statements in the Notice to Creditors of the liquidator of 3rd April, 2003 suggesting that if the DOCA be executed (it was), insolvent trading claims would not be pursued nor would the couple's joint loan account in the Company (see pages 46 and 50 of the Exhibit WB61).
In an affidavit sworn on the 26th March 2004 Mr G, solicitor for the liquidator of RE Pty Ltd (In Liquidation) Mr RMS (Fourth and Seventh Respondents respectively), seeks to explain the liquidator's position in paragraphs 10 and following.
The wife claims she was not informed of the position change and acted to her detriment in not taking court action available to her.
She seeks a restraining injunction in these proceedings against the liquidator this being available, it is urged, under Section 90 AE of the Family Law Act and otherwise, as explained in Ascot Investments Pty Ltd v Harper (1981) FLC 91-000.
In this discretionary area, where the liquidator is appointed pursuant to an order of the Supreme Court of New South Wales and operates under that court's general supervision, both comity and order suggest to me that if relief is to be sought against his activities then it is best pursued in the Equity Division.
However the matter has been lightly aired in this Court and there are troubling features about the apparent inequity of the targeting of the wife at the instance of C Pty Limited, an entity of the husband’s father, a man intimately entwined with activities, as I find, designed in collusion with the Husband, to frustrate the Wife's claims here. It is concerning for instance that aspects of the loan account the Wife is asked to pay relate directly to the Husband and his obligations. I am also concerned as to the potential beneficiaries, in the circumstances of this case, of the ongoing recovery action.
In the circumstances I propose to grant (or continue) an interim injunction, pending further order, here or in the Supreme Court. This permits the liquidator (or others with an interest) to take, and explain, the matter further if there is merit in that course. It also aids a more orderly conclusion to this case, in which there has been altogether too much "strategy", by providing some breathing space at the resolution stage.
The Husband said that there were three reasons for the collapse of the Company causing it to be placed into liquidation:
the need to comply with onerous Family Court orders;
the failure of the Wife to provide security to enable the project at Suburb D to be completed in accordance with the contract; and
the failure of the Suburb C project with losses due to geotechnical difficulties.
- Court Orders
The "onerous orders" were the orders of Registrar Henderson (as she then was) of 5th April, 2001. They provided for the payment to the Wife of $425 per week spouse maintenance, the payment of the mortgage on the matrimonial home and certain other payments. These were not, of course, obligations of the Company. They accorded with the couple's current lifestyle. There is no evidence the Company became insolvent consequent upon such orders.
Subsequent to the orders the Husband and the Company continued spending as the following matters illustrate:
On 9th April, 2001, the Husband sent an email to … concerning two Mercedes motor vehicles saying: "Get going on the Merc I need it finished ASAP before settlement.
On 15th April, 2001, NR Corporation entered into "Heads of Agreement" (concerning the Technology).
On 9th May, 2001, the Husband advised that NR was ordering two plants for production of the NR Technology.
In June 2001, the Husband purchased four new 20" wheels and tyres for his Mercedes (owned by the Company) at a cost of $4,600. Twelve months later he bought four new tyres.
On 14th June, 2001, the Company paid $5,622 for patents (marking it as a Suburb C expense).
On 15th June, 2001, the Company paid the Husband's family law legal bill of $10,572, marking it as a C Suburb expense.
These activities are not consistent with the financial difficulties asserted by the Husband.
- Suburb D
The Wife claims that the whole arrangement whereby the husband’s father’s company and, thereafter, the husband and the wife, acquired the D Suburb property, was a sham. This is supported by an analysis of the surrounding circumstances.
The Husband's assertions that the Company's failure to complete the building project on time was due to the Wife's failure to permit security to be provided to enable the completion of the job, does not accord with the evidence. The Wife did sign finance documents. These included for $3 million mentioned below.
The Husband obtained an indicative approval for a sum of $3 million to buy out the interest of others in the property. The Husband declined this financial offer as apparently $3.4 million was required to acquire the interest. On the 8th November, 2000 the Husband obtained approval for $3.4 million (Exhibit H14). He declined to take it up. In an application the Husband said the property was worth $5.5 million and that it would be finished by 20th November, 2000.
On 19th January, 2000, the Company and GD Pty Ltd (the husband’s father’s company) entered into a development agreement with C Pty Limited (at that time not related to the Rands) concerning the Suburb D property. The agreement was in the nature of a joint venture, it was certainly not a mere building contract. Pursuant to the agreement, upon sale of D property, $2.7 million was to be paid to the Owner (C Pty Limited); $900,000 or the building costs, whichever was the lesser, was to be paid to the Company and GD Pty Ltd (the Contractor) and any leftover profit to be divided as to two-thirds to the Owner, one-third to the Company and GD Pty Ltd. In the recitals, the "Contractor", the Company and GD Pty Ltd, agreed to look for payment only from the proceeds of sale.
100 By 12th July, 2000, the Company had expended $598,000 on building the Suburb D project (Exhibit W 10). In the liquidator's report, the liquidator determines the figure to be $482,622.
101 On the 10th October, 2000 the parties separated.
102 On the 13th November, 2000, the Husband's father effectively acquired C Pty. Limited and thereby obtained a greater interest in the Suburb D project.
103 On the 16th January, 2001 the Wife commenced proceedings in this Court.
104 On the 24th January, 2001, the NAB offered the husband’s father and mother a loan of $3.2 million to acquire and complete D project at a purchase price of $2.53 million (and estimated building costs of $400,000). The husband’s parents offered, as part of the security, the D Suburb project. At that time the January 2000 agreement continued to operate.
105 On the 12th February, 2001, there was a purported resolution of shareholders of C Pty. Limited (Ex W9) that a letter of termination be served on the Company in relation to failure to complete the Suburb D project by July 2000. The letter dated 19 February 2001 was purportedly signed by the husband’s father (Exhibit W 8). C Pty Ltd was, of course, at this stage his company.
106 The husband’s father, in evidence, disclaimed the letterhead and the terms of the contract referred to in it.
107 There was no similar notice served on the other "Contractor", namely GD Pty Ltd.
108 On the 20th February, 2001, C Pty. Limited purported to hold a meeting (Ex W9, W43) at which it accepted the request of the Company (see next paragraph) dated six days later, namely the 26th February, 2001 (Exhibit W8, W 43).
109 On the 26th February, 2001, the Husband allegedly wrote to his father at C Pty Limited on the letterhead of the Company’s trading name (Exhibit W8, W43):
"Dear [Mr G Rand]
My company is not able to complete the works because the other Director of the Company refuses to sign any documents for a loan to pay to complete the works. My Company accepts the fact that I am eight months over the completed date of the project and that my company is responsible for the liquidated damages.
My Company asks that you please keep the money that I have put into this project in total and not sue me for the future damages under the contract, which is the time from this acceptance of termination till you complete the works.
I know that the works are still six months off completion and that I cannot fund the project to completion.
At Present I would have $65,000 dollars over the Liquidated Damages and ask that you please accept our offer to save perusing (sic) damages that My Company would not be able to repay."
110 He signed as Managing Director of RE Pty Ltd.
111 Both the Husband and his father (and his mother) were at this time living at the Suburb D property (Transcript 23rd September, 2002 p117.17).
112 On the 18th May, 2001, the Husband's parents had transferred to them the Suburb D property for $2.6 million. During his evidence on the 17th November 2005, the Husband's father gave evidence that all they had to pay for was kitchen cupboards.
113 The Husband successfully obtained finance for a further $700,000 (Exhibit H 14). Under the terms of the building contract, he could demand that the D property, itself, be used as security.
114 It is apparent that the project was close to completion at separation. The Husband did not use the second mortgage finance option. The Wife signed finance documents for $3 million, not merely a sum to complete the project, but to buy out the joint venture partner (C Pty. Limited). This progressed then to $3.4 million for the same exercise.
115 Capacity for mere completion (rather than buy out) was also potentially available through S Capital. The Husband had the opportunity for further finance but did not avail himself.
116 The husband’s father, in the witness box, effectively conceded that he signed documents placed before him by his sons. In response to what appears to have been an "engineered" notice, the Husband wrote the supine response, dated 26th February, 2001, which was "considered" on the 20th February, 2001 by C Pty Ltd:
117 By giving up, in favour of his father's company any entitlements to the D property, the Husband abandoned (on the basis of Mr M’s valuation of $5 million rather than the Husband's value of $5.5 million):
$598,000 repayment of actual building costs i.e. monies expended by the Company;
profit being half of one-third of ($5 million - $2.7 million - $900,000) = $233,333;
Less overrun of costs, etc. stated by the husband (above) to be $65,000.
TOTAL abandoned $766,333.
118 Had the Husband proceeded to purchase the property using the finance available, the Company would have derived a greater profit:
Value of property ($5 million)
Less payout of owner ($2.7 million) TOTAL $2.3 million.
With GD Pty Ltd retaining its one-third profit ($2.3 million - $598,000), the Company would have $1,732,666.
119 However the Husband's failure to avail himself (and the Company) of that business opportunity could be viewed as a commercial decision not to take a particular course (as Mr Auldridge argued). This is quite different to the Company abandoning monies available to it.
120 The Wife's claim in relation to the "[S Pty Ltd] claim" of $483,574 is not made out here. It is probably the same money as the "loan account" I find, later in this decision, in the sum of $430,837, to be that of the Rand Family Trust rather than RE Pty Ltd (the Company).
121 The abandonment of a return of at least $766,333 is consistent with an ambition to defeat the Wife's claim while leaving assets in the Rand family, as the Wife asserts.
122 The events, in the circumstances discussed, together with the unimpressive nature of the evidence of the Husband and his father, lead me to be satisfied, to the appropriate degree, that the opportunity foregone by the Company resulted from deliberate action with the two men acting together.
123 They pretended the Company was in a difficulty it was not in. They created a show, with documentation, of a demand and submission the circumstances did not require. It was a pretence, a sham, to which both were a party.
124 It amounted to waste by the Husband as that concept was discussed by Baker J In TheMarriage of Kowaliw (1981) FLC 91-092; and more recently recognised and explained in the Full Court decision of In the Marriage of Browne v Green (1999) 25 Fam LR 482
125 The plan to which, at the very least, the Husband and his father were a party, appears clearly designed to remove the financial return from the Suburb D project from the property of the Husband and Wife while retaining it within the Rand family; probably for the whole or partial ultimate enjoyment of the Husband in due course. However that may be the Husband embarked upon a course of conduct designed to "minimise the effective value or worth of matrimonial assets" per Baker J in Kowaliw (supra). The husband’s father worked with the Husband to achieve this objective.
126 This all means the sum of $766,333 was money available to the Company, the company of the couple (or the Husband) which he had the opportunity of receiving, an opportunity he rejected. Accordingly it is appropriate to deem that money as having been notionally received and then dissipated. In such circumstances I have determined that it should be added back to the matrimonial property as principle permits.
- Suburb C project
127 The material before the Court suggest that the estimated profit on the C project was to be some $1.2 million to the Company, with a net profit $732,877.25 estimated at 1st November, 2000 – see Wife's Affidavit sworn 19th February 2002 paragraph 46 and annexure "A".
128 In Exhibit W 12, the Husband estimated $8.5 million return for the project.
129 The Husband and the husband’s father have not demonstrated a loss from the C project. Those best placed to counter the Wife's assertions, which have been squarely raised by her in the evidence referred to above, have either been unable to or are unwilling to do so. They are the Husband, the Second Respondent (the husband’s father) and the Seventh Respondent (the liquidator of the Company, Mr RMS). The appropriate inference to be drawn is that they cannot.
130 I refer back to the earlier discussion when NR matters were being considered and the principles stated in the High Court of Australia in Hampton Court Limited v Crooks (1957) 97 CLR 367 at 371-2. The Applicant Wife has offered evidence of the profit. The respondents do not explain that material away. Accordingly "the evidence should be weighed according to the power of the party to produce it" – per Dixon CJ at 371.
131 The evidence is that the husband’s father was able to take payments in respect of the C project while the Company was left to make payments for building expenditure. This process provided a further overt indication of the collusive activity between father and son.
132 I have come to the conclusion in respect to the C project, for similar reasons to those with regard to the D project, that the opportunity of the Company was given up and this amounted to waste. This having a value of $732,877. Following the same path of reasoning as for the D project the money should be "added back".
- The Rand Family Trust
133 The worth of the Rand Family Trust (the Trust) depends upon the value of its interest in the company called S Pty Limited and the value of S Pty Ltd ultimately depends upon the value of a property at Suburb E.
134 The Husband was the trustee of the Trust which is a family discretionary trust for the benefit of his family including the Wife.
135 It is clear that trust property can be treated as the property of the trustee, in proceedings under Section 79 of the Family Law Act, where the party to a marriage effectively controls the trust and treats its property as his own (In the Marriage of Ashton (1986) FLC 91-777). This was the case, in relation to the Husband and the Trust.
136 The Husband's trustee in bankruptcy, Mr PL, has disclaimed any interest in the Trust.
137 By order of the 2nd December, 2002 (ExW51) the Court restrained the Husband from resigning as trustee or appointing a new trustee. The Husband, in person, consented to the order and the trustee in bankruptcy, who was represented, did not oppose it. Despite the order, the Husband wrongfully attempted to appoint Mr PM trustee. This failed because he was not appointed in writing in accordance with the terms of the trust deed. The Husband in fact remained trustee until the Wife became trustee by Court Order late last year.
138 The Trust held one-third of the issued share capital in S Pty Ltd, i.e. one share. By an allotment in November 2003, 30,000 shares were issued. This reduced the Trust's interest in S Pty Ltd to one of 30,003 shares.
139 The Husband and his father (Mr G Rand) deny that the Husband took part in Trust meetings after the purported change of trustee. They receive the reluctant support of Mr PM in that position.
140 However, Mr WJ (a retired accountant, lawyer and business associate of the Rands particularly in relation to S Pty Ltd) clearly states that the Husband was present and active, including at the allotment of shares. I accept his evidence in that regard.
141 Mr WJ acknowledged that it was apparent to him that the purpose of the allotment transaction, the "watering down" plan, was to frustrate the Wife's claim against the Husband. It is clear that all of the participants were well aware of these proceedings.
142 Whether or not there was real equity in S Pty Ltd the Trust was thereby deprived of the ability to benefit from future gain in the E real estate.
143 The suggestion by the Rand interests that this was a necessary raising of $30,000 is unconvincing, not least because within weeks S Pty Ltd repaid the husband’s father $52,000 on his loan account.
144 The desired reduction of the Trust's interest by the Rands was obvious to Mr WJ. He indicated that as he had a minority interest he was in no position to resist. Mr PM was complicit, although in fact he as "trustee" was never on the shareholders register of S Pty Ltd: his appointment as trustee of the Trust not being effective, in any event. Nonetheless, he acted as if trustee (albeit apparently dominated by the Husband).
145 The relief sought by the Wife here is:
a declaration that the resolutions for the allotment of the 30,000 shares was invalid and did not operate to allot the shares, this being based upon a meeting without proper notice to the proper people, or
orders under Section 233 of the Corporations Act to have S Pty Ltd wound up, as the conduct of S Pty Ltd resulting in the reduction of the Trust's pro rata interest in it was oppressive as against the interests of the Trust, together with relief pursuant to Section 106B of the Family Law Act setting aside the resolutions for the allotment of shares.
146 Although there is some evidence suggesting that no proper notice of the meeting concerning the allotment of shares was provided to all proper people it is more satisfactory to address the more substantive issues in the orders sought in (b) above, rather than determine the matter on a procedural point.
147 Section 232 of the Corporations Act provides that the Court may make an order under Section 233 if the conduct of a company's affairs is contrary to the interest of members as a whole or oppressive to, unfairly prejudicial to, or unfairly discriminatory against, a member or members. The Court may among other things, under Section 233, wind the company up.
148 The Wife, as the trustee of the Trust, has standing. (Note Orders of 16 November, 2005 consequent upon which the Wife became the trustee — see also Trustee Act 1925 (NSW) Sections 6(8) and 9(1).)
149 In determining whether the company has been oppressive or unfairly prejudicial to the Wife, the Court is guided by such authorities as:
O'Neill v Phillips [1999] 1 WLR 1092 at 1104
Zephyr Holdings P/L v Jack Chia (Rust) Ltd (1988) 7 ACLC 239
Morgan v 45 Flers Ave Pty Ltd (1986) 10 ACLR 692
in relation to the standard.
150 In O'Neill's Case, in the House of Lords, Lord Hoffman said at 1098 — 1099:
"(A) member of a company will not ordinarily be entitled to complain of unfairness unless there is some breach of the terms on which he agreed that the affairs of the company should be conducted. But there will be cases in which equitable considerations make it unfair for those conducting the affairs of the company to rely upon their strict legal powers. Thus unfairness may consist in a breach of the rules or in using the rules in a manner which equity would regard as contrary to good faith".
151 I have come to the conclusion that, in this case, the actions of the company in doing what was done was "using the rules in a manner which equity would regard as contrary to good faith".
152 In Morgan's Case, in the Supreme Court of New South Wales, Young J said:
"It has been accepted that one no longer looks at the word "oppressive" in isolation but rather asks whether objectively in the eyes of the commercial bystander, there has been unfairness, namely conduct that is so unfair that reasonable directors, who consider the matter, would not have thought the decision fair".
153 Likewise, using the test suggested by this experienced New South Wales commercial judge, I conclude that the actions of the company (here acting through its shareholders) would not be regarded, when viewed objectively by a commercial bystander (or reasonable directors), as fair.
154 A reading of the Section in light of the authorities suggests that, given the facts found here, it is appropriate to make an order under Section 233 winding up S Pty Ltd unless that is now not necessary because of action by the Bank.
155 Some further comfort for this course of action is gained from a consideration of such cases as:
Ebrahimi v Westbourne Galleries Ltd (1973) AC 360 per Lord Wilberforce at 379; and
Triulcio v Chase Property Investments Pty Ltd [2004] NSWSC 311 (per Gzell J at para 31)
156 Where a company acts in a broad sense as a partnership between interests, the law accepts if the fact of the partnership falls away, when the "partners" are no longer able to function together, the Court may wind up the company to permit the "partners" to move on.
157 Mr WJ and the Husband both conceded in the witness box in November that S Pty Ltd was a vehicle for three separate interests (namely the Trust, Mr WJ and the husband’s father — the latter two men through their companies) to combine to acquire the Suburb E property. Each accepted that, in origin, it provided a friendly and convenient way in which to invest — as a partnership under a corporate umbrella. As Mr WJ said, it also provided a single financing vehicle for them.
158 The actions of S Pty Ltd at the instigation of the husband’s father and the Husband, with the passive acceptance of Mr WJ (he saying he had no choice: he also gained protection) resulted in the Trust (and its beneficiaries) suffering. And as I find, it oppressed and unfairly prejudiced the Trust, within the meaning of Section 233.
159 It is now appropriate to state, with more precise detail, the actions which resulted in this oppression and unfair prejudice.
160 First, S Pty Ltd "watered down" the Trust shareholding from one-third to one in 30,003. It effected one shareholder, the Trust.
161 Second, directors and members failed to obtain or attempt any proper valuation that the allotment of shares at $1 was a fair price.
162 Third, S Pty Ltd attributed the loan account of the Trust (some $420,000) to RE Pty Ltd. This resulted, through the deed of company arrangement, in these assets becoming those of the husband’s father (through GD Pty Ltd). This action was contrary to earlier accounts prepared by Mr WJ and contrary to his representation by letter on S Pty Ltd letterhead "for and on behalf of [S] Pty Limited" to the solicitors for the liquidators of RE Pty Ltd (see Exhibit WB 61, p 78 and 129). This action meant, among other things, the Trust was denuded of funds from which to take up an allotment of new shares.
163 Fourth, there was an apparently spurious reason given for the need for the share allotment, i.e. to raise $30,000 to meet necessary expenses which could not otherwise be funded. Notwithstanding this assertion, S Pty Ltd had sufficient funds to pay the husband’s father $52,000 in reduction of his loan account within weeks of the resolution for the allotment. No satisfactory evidence was provided in support of any necessity.
164 The mechanism for the issue was for the entities of Mr WJ and Mr the husband’s father to be offered and take 10,000 shares each. The Trust was also offered 10,000 shares which, through its purported (but not actual) trustee, Mr PM, it refused. That particular parcel of 10,000 shares was then offered to Mr WJ’s entity, H Pty Limited, which it (through him) refused. Those shares were then offered to the husband’s father’s entity. He took them. Thus, apart from one of 30,003 shares left with the Trust, the husband’s father had two-thirds and Mr WJ one-third of S Pty Ltd. This charade appears to have been pre-planned.
165 Fifth, there was no proper notice of meetings to the proper people pursuant to the requirements of the Corporations Act.
166 Sixth, Mr PM was accepted as a shareholder, i.e. to represent the Trust as trustee, without registration as a shareholder. In fact, he should not have been recognised in any event because he was not a properly appointed trustee of the Trust pursuant to the terms of the Trust, i.e. in writing.
167 Seventh, the Husband and the husband’s father acted together to defeat the interests of the Wife. Mr WJ gave evidence that this was obvious from their behaviour. He had to accept it as he only had a one-third interest (which they did not seek to reduce). Mr PM accepted there was an understanding as to what was going to happen concerning the share allotment before the need for funds was discussed. He said he opposed the loan account change without success.
168 Eighth, there was no attempt to explore any other financing option.
169 Although there was a suggestion that S Pty Ltd had no equity in the E property, the evidence does not support that as a probability; in any event, the dilution of shares in S Pty Ltd would deny the Trust "future upside" i.e. proper participation in growth.
170 A further consideration is that the relationship between two of the three real people behind the entities in S Pty Ltd, the Wife and the husband’s father, is clearly now very poor (leaving aside Mr WJ whose relationship must now be "strained" with the others). S Pty Ltd could not appropriately continue (see earlier reference to partnership concept in the corporate structure).
171 Turning now to the value of the Trust's interest in S Pty Ltd, first, it is contended there is the loan account of some $420,000. This was acknowledged, at least between Husband and Wife, in the Order 30A statement of the accountants. Their figure was $430,837. That evidence has, of course, general credibility being the combined evidence of two experts. There is then the evidence, already mentioned, flowing from the S Pty Ltd accounts at 22 March 2002 (Ex WB61 at page 78) where the sum is $430,837.
172 Against this stands the assertion of the Rands, latterly joined by Mr WJ, following a change of heart, that the money may be attributed to the husband’s father’s company GD Pty Ltd.
173 I prefer the evidence supporting the loan account of $430,837 in S Pty Ltd being that of the Trust in the circumstances outlined, particularly given the history prior to the family dispute as to the attribution and the unsatisfactory corporate and general behaviour thereafter.
174 The other real asset of interest is the E property. The value of the E property is in dispute. However, its sale now seems inevitable so the market will determine the issue. This flows from the fact that the National Australia Bank holds a charge over the assets of S Pty Ltd (Ex WB61 at page 8). I was informed by Mr Paul (for S Pty Ltd), at the conclusion of the case, that the Bank is moving to wind up S Pty Ltd. A receiver has been appointed. It was said the bank debt could be something between $3.7 m and $4.37 m.
175 In any event, given the generally unsatisfactory nature of the various valuations before the Court, this is a case for sale on principles accepted in family law property cases.
176 Concerning issues in relation to the valuations of the property which ranged from $4.425 million to $10.5 million included: date, approach, depth and method. The property is said to be unique.
177 Despite the apparent course it is still necessary to look a little closer at the value of first E property and then S Pty Ltd in order to have some appreciation of the worth of the Trust.
178 Turning to the valuation issue in a little more detail.
179 Three real estate valuers were asked to assist the Court in relation to the value of the E property. The evidence of all of them was properly before the Court.
180 Mr GG gave evidence in relation to the value of the property in the 2002 portion of the hearing. He has not, however, updated his valuation of $4.4 million provided at that time. With the passage of time his valuation figure is of little assistance now.
181 Mr WS gave evidence in November 2005. However his valuation was based on a continuance of the present use of the property as one for letting space to commercial tenants. He did not undertake any appropriate assessment of its potential for development. Mr WS did, nonetheless, concede that that might be its highest and best use. This failure to address the paramount issue means I cannot with any comfort rely upon his valuation of E property.
182 Mr M provided an earlier report but also one for the November 2005 hearing. Although he had difficulty with comparables, the building's features and other matters, he addressed the key issues including the value of the building considering its highest and best use value: namely as a development.
183 He, like Mr GG, indicated that such a valuation was quite appropriate in the absence of a current development approval. There had been a DA which has now lapsed. That was, he said, of real assistance in obtaining another one. He was influenced, he said, by the recently expressed optimism of council officers in the building department. I accept that evidence.
184 Despite the flaws in his work Mr M provided the only valuation which can be acceptably used as a working one in the circumstances outlined. It was $10, 518,745 profit on redevelopment.
185 The valuation of the Rand Family Trust, as is appreciated, requires a factoring in of the E property value to obtain S Pty Ltd’s worth.
186 For the task of valuing S Pty Ltd and the Trust the Court had the benefit of two experts for the November 2005 hearing, namely Mr BA and Mr JA both of whom are experienced Chartered Accountants. Others had been earlier involved and there was an Order 30A report, Ex X filed 26 July 2002, signed by the Accountants Ms EX (on behalf of the Wife) and Mr LA (on behalf of the Husband).
187 Ultimately I preferred the evidence of Mr JA (although it was necessary to correct an arithmetical error in his work). This provides a value of $7,065,651 for S Pty Ltd with a net asset value for the Rand Family Trust of $2,556,048 (corrected to $2,355,217).
188 I concluded that Mr BA placed too much emphasis upon the income stream. The E property, the real asset in S Pty Ltd, is not returning a good income. Its value is in its development potential. Therein lies the worth of S Pty Ltd – not in its dividend stream.
189 Second he resisted the concept explained in such cases as Ebrahimi (supra) and Triulcio (supra) of the "corporate partnership", which two of the three principals in S Pty Ltd conceded was the essence of the arrangement and is apparent in the circumstances. The effect, among others, is that if the substance of the "partnership" ceases the Court will enable withdrawal so "partners" can withdraw capital and invest elsewhere.
190 In such circumstances a discount at the level for which Mr BA contends is unwarranted; Mr JA provided a modest discount, which included recognition of the corporate structure, of 10% for the minority interest.
191 As has been indicated it is appropriate, while seeking an indicative value of S Pty Ltd, to proceed on the basis of Mr JA’s valuation (Affidavit sworn 14 November 2005) which I accept using, as he does the updated real estate valuations of Mr M, with the correction of an arithmetic error referred to by Mr BA (Ex WB 97). This results in his valuation of a one-third interest in S Pty Ltd at $2,355,217 (rather than $2,437,754).
192 The Wife seeks orders, under Section 106B of the Family Law Act 1975, that the allotment of the shares in October 2003 be set aside and that the Company cancel any share certificates issued and that the allotted shares be expunged from the share register. The Section provides:
In proceedings under this Act, the court may set aside or restrain the making of an instrument or disposition by or on behalf of, or by direction or in the interest of, a party, which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.
(IA) If:
a party to a marriage is a bankrupt; and
the bankruptcy trustee is a party to proceedings under this Act;
the court may set aside or restrain the making of an instrument or disposition:
which is made or proposed to be made by or on behalf of, or by direction or in the interest of, the bankrupt; and
which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.
(1B) If:
a party to a marriage is a debtor subject to a personal insolvency agreement; and
the trustee of the agreement is a party to proceedings under this Act; the court may set aside or restrain the making of an instrument or disposition:
which is made or proposed to be made by or on behalf of, or by direction or in the interest of, the debtor; and
which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.
The court may order that any money or real or personal property dealt with by any instrument or disposition referred to in subsection (1), (IA) or (1B)may be taken in execution or charged with the payment of such sums for costs or maintenance as the court directs, or that the proceeds of a sale must be paid into court to abide its order.
The court must have regard to the interests of, and shall make any order proper for the protection of, a bona fide purchaser or other person interested."
193 The Section also provides for other forms of relief where transactions are aimed at defeating claims, including in respect to costs; it empowers the Court to invoke the general powers set out in Section 80(1) of the Act.
194 The outlined evidence I accept supports the making of the orders sought under Section 106B that the share allotments and transactions leading to the share allotment be set aside.
195 The husband’s father was an active participant in the actions of the company S Pty Ltd designed to defeat the anticipated order as was the Husband. It was apparent to Mr WJ what was occurring. Despite his ambiguous status that must have also been the case with Mr PM.
196 The husband’s father and Mr WJ (and their entities) are "other persons interested" apart from the Husband and the Wife. They and their relevant entities are party to these proceedings.
197 Enough has been said about the husband’s father. The position of Mr WJ is not seriously altered. He continues with effectively a one-third share in S Pty Ltd, winding up now appears inevitable. He was in any event privy to the activities which were taking place.
198 As has been recited, all were aware of these proceedings.
199 Here I have little hesitation in exercising the discretion the Court has in a case of this kind. The effect on third parties is considered in the context outlined.
200 The ingredients under the Section for an order have been established. The proceedings are under the Family Law Act, S Pty Ltd’s disposition was made in the interest of a party (the Husband) to advance his position against the Wife to defeat an anticipated order under Section 79 of the Act.
201 The Trust will, following the orders of the Court, receive one-third of the net value of S Pty Ltd upon the winding up and realisation.
Credit
202 In relation to credit it appears that the Husband is wholly untrustworthy. It is obvious from much that has already been said, he was prepared to attempt various ploys to avoid his family law obligations.
203 The Wife was a more credible witness.
204 The husband’s father does not have his son's education but in a simpler but strong fashion he supports the Husband in his dishonest behaviour designed to frustrate the wife's claim.
205 Mr PM is a loyal ally of the Rands with whom he is linked in business enterprises. He has a greater technical knowledge of corporate organisation if not the fertile mind of the Husband. Unless driven to avoid appearing obviously ridiculous or dishonest I believe he would generally "back" the Rand story in his own commercial interest as he perceived it. An example of his not falling into line in the witness box concerned the changed attribution of the Trust's $420,000 loan account with S Pty Ltd.
206 Perhaps based on his professional background and sense of preservation, as well as a genuine concern for the events he was caught up in, Mr WJ appears to have been generally inclined to tell the truth. Certainly the need to be dishonestly "loyal" was not so apparent and his respect for the oath higher, than was the case for Mr PM. An example being his evidence of the presence of the Husband at S Pty Ltd meetings after Mr PM acted as "trustee" of the Trust. Mr WJ gained no apparent advantage from conceding the presence of the husband and providing detail of his approach; indeed one would imagine the Rands would have been disappointed by this behaviour. Nonetheless, I was left with an impression that if his commercial or personal position was at risk his evidence could not necessarily be regarded as wholly reliable.
Bankruptcy Costs
207 As has been mentioned the Husband on his own petition became bankrupt on the 28th November 2002. The wife failed in her application for the annulment of the bankruptcy and she was ordered to pay the Husband's costs of those proceedings. The case was heard and determined in the middle of 2005. There remains, on his evidence, uncertainty as to the Husband's costs liability.
208 It does not appear appropriate to include the Wife's cost liability for herself or for the Husband's costs in the equation here being considered concerning the division of the couple's matrimonial assets following the breakdown of their marriage.
Contributions
209 The Wife brought significant assets to the marriage, namely: a new Carolla motor vehicle, a shareholding in HI Pty Ltd (presently valued at $499,874) together with a one fifth share in the parties' first matrimonial home at N Street, Suburb A. The Wife also received from her family further benefits which became contributions from her side of the ledger. These were assistance in the purchase of the N Street property, assistance in respect to the mortgage and accommodation for the couple in the Wife's parents' home. The Husband's primary initial contribution was an interest in a modestly priced home unit.
210 During the course of the marriage the Wife was the primary child carer and homemaker. Thereafter she properly undertook the care of the parties' three young boys who are now aged from 11 to 16 but were some 4 years younger at separation.
211 The Husband had the role in the marriage of `breadwinner'. He was well placed to undertake that task. The Husband has the benefit of a substantial period of tertiary education particularly suited for the calling he followed in building and property development. As the Husband said he fell one subject short of obtaining a degree in Architecture.
212 I accept that he worked enthusiastically in building and developing with the prospect of good and continuing returns occurring and in prospect for the family. It is put however that ultimately his actions in concert with others particularly his father (Mr G Rand) led to a `negative' contribution, or at least a nil contribution, and `waste'.
213 The concept of negative contribution has not gained acceptance within family law. A nil contribution here seems to involve a deduction from established contribution to arrive firmly at zero when contribution activities are considered overall. Assuming some contribution for `breadwinner' (and initial contributions) then to arrive firmly at zero contemplates a negative contribution for later activity (or inactivity). This involves a trespass into the negative contribution zone.
214 The concept of `waste' is another issue and I have dealt with that in relation to particular items of property earlier. The Husband's actions have lead to the diminution or attempted diminution of the pool of matrimonial assets. (The word `waste' is used here as a convenient short hand for the whole concept earlier referred to emanating from the decision of Baker J in Kowaliw 's Case).
215 I refer back to the discussion in respect to NR Technology, RE Pty Ltd and the Rand Family Trust. It will be appreciated that because of the NR situation it is appropriately dealt with among the Section 75(2) factors. RE Pty Ltd and the Rand Family Trust permit some appropriate estimation of the property found and in the case of RE Pty Ltd "added back" to the pool for consideration. These property items, of course, form part of the Husband's "breadwinning" activities.
216 Looking at contribution generally I find that the parties' contributions may be regarded as equal.
Section 75(2) Factors
217 The Husband (45) has significant experience and contacts within the building and property development industries. These include supportive family connections, particularly his father. He has education at a tertiary level, earlier explained, which is relevant to and obviously helpful for, the areas in which he has in the past, and continues, to work. The Husband, it appears, has recently ceased to be a bankrupt. (This was expected to occur in November 2005). A status which permits him to trade and freely earn. Having regard to the matters outlined it is the Court's expectation, and I gather his own, that he will prosper.
218 The Wife (42) has the continuing care of the parties' three boys who are aged from sixteen to twelve years of age and at school. Although earlier orders of the Court have helped the Wife with some of the expense of the children including some of their school fees the Husband has substantially avoided providing support for their upkeep.
219 Although in the future it appears to me that the Husband will have a capacity to make significant contributions to the boys' support, if history be the guide, with the displayed approach continuing, receipt by the residential parent for the children's welfare is likely to be uncertain.
220 The husband has contact with his children. The impression I gain is that holidays and gifts rather than support, in the wife's household, for the basics of their life, including education, are the more likely to be forthcoming from the Husband. This places a particular burden on the residential parent, the Wife in the circumstances of this case.
221 During the course of the marriage the Husband and the Wife had a good lifestyle. This included overseas travel with first class accommodation.
222 The evidence is not altogether clear but I am left with the impression that each of them, certainly from time to time, since separation, enjoyed periods of good living including trips overseas. The probable sources of these opportunities were the couples' respective families. Certainly, the husband travelled overseas, drove expensive cars and used an American Express Card in support of his lifestyle.
223 In considering these Section 75(2) matters I have regard to the fact that the Wife has the H Family assets with a net worth of some $208,342.
224 The Husband is in apparent good health.
225 The Wife suffers from acrophobia with anxiety-panic attacks for which she has attend courses, taken the drugs Tofranil and Toluon upon the prescription of medical practitioners. She has also undergone hypnotherapy and sought the assistance of a clinical psychologist to assist her condition.
226 The Wife during the marriage worked in a shop, then one was bought, but ultimately her condition meant a manager had to be engaged.
227 Given the Wife's general circumstances, including her condition and responsibilities to the boys at a difficult stage of their lives, she does not have anything approaching the Husband’s capacity to work and earn. However, like him, she has a supportive family and in particular a father of apparent means who has demonstrated his support to date.
228 Leaving aside the unquantified asset related to NR, a consideration of the Section 75(2) factors, particularly having regard to the superior earning capacity of the Husband and the Wife's obligations to the children, suggests a substantial movement for these factors in the wife's favour so that she receives 65% of the parties net assets and the Husband 35%.
229 However NR must be considered as a Section 75(2) factor whether regarded as a financial resource or approached in the manner the Full Court explained in Foda v Foda (1997) FLC 92-753 (referring to Weir v Weir (1993) FLC 92-338), as a deliberate non-disclosure of a significant asset. Whichever way this is done here, a Section 75(2) adjustment is called for which goes substantially beyond that considered without the NR factor. Each approach, to my mind, would lead to the same conclusion namely a division of the parties' assets 80:20 in the Wife's favour.
Justice and Equity
230 The final step of the exercise is to consider in all the circumstances of the case, after standing back and looking at the totality of the matter, whether or not it is just and equitable, to make any and if so what alteration in the parties' interest in their property.
231 It is submitted on behalf of the Wife that in the circumstances here any order whereby the Wife did not receive the whole of the known asset pool, would not be a just and equitable outcome.
232 Following a consideration of the legislative requirement for Justice and Equity (Section 79(2)), a developing concept, in the circumstances of this particular case I have concluded that it is just and equitable to order that the Wife receive 80% and the Husband 20% of the known net property pool which I have found as $5,521,758. This may be achieved by the making of orders which seek to effect the following result:
Husband receive $1,104,352 Wife receive: $4,417,406
233 That broadly contemplates a division of the kind shown in the table below although the ultimate outcome in the terms above, rather than particularly as suggested by items and sums below, is sought.
Husband
Wife
NR Corp SARL
$123,997
Matrimonial home (Net Value)
$935,984
RE Pty Ltd
Pty Ltd (add back)
$1,499,210
Furniture
$15,000
Husband's Legal Fees
$111,953
Wife's Legal Fees
$459,147
Husband's Super
$21,250
Rand Family Trust
$2,355,217
Payment to Wife ($652,058) Payment from Husband $652,058 (and 2nd Respondent)
$1,104,352 (20%) $4,417,406 (80%)
Orders
234 In order to carry out effectively the terms of this decision so far that is practical it appears appropriate to make orders in the following terms:
UPON THE APPLICATION OF THE WIFE TO THE COURT IT IS ORDERED:
That RE Pty Limited (in liquidation) and/or the liquidator of RE Pty Limited (in liquidation) forthwith execute a Deed of Assignment to assign to the Wife any entitlement it has in any debt owed to it by, or cause of action it has against, each of S Pty Limited, Mr G Rand (the husband’s father), Mrs N Rand (the husband’s mother), GD Pty Limited, and C Pty Limited.
That the Husband do all acts and things necessary to transfer to the Wife all of his entitlements in the Rand Family Trust and further, if requested to do so by the Wife in writing, cause to be transferred to the Wife all of the entitlements that the said trust may have in S Pty Limited, and then if requested to do so by the Wife in writing resign as trustee and appoint the Wife as trustee of the said trust, And thereafter be permanently restrained from exercising his power of appointment or removal in relation to the trust.
And Declared that the Wife (subject to Order 11 hereof) is entitled to one half of any profits arising out of the patents or other intellectual property relating to the conversation of waste material to building products and further order that the Husband account and (subject to Order 11 hereof) pay to the Wife one half of any profits received in respect of the intellectual property of the various companies known as NR Technology Pty Limited, NR Corporation SARL, B Pty Limited and related entities.
That upon the Husband and RE Pty Limited (in liquidation), complying with orders 1, and 2 hereof, the Wife transfer to the Husband all of her shareholding and entitlements in the company RE Pty Limited (in liquidation) and further order that the Wife resign any office she may hold in the said company upon the Husband indemnifying the Wife and saving her harmless forever in relation to any suits, claims, demands or liability in relation to her ever having held any office or shares in the said company.
That each of:
(j) the Husband's father, Mr G Rand,
(k) the Husband's mother, Mrs N Rand,
(l) RE Pty Limited (in liquidation),
(m) Mr RMS as either liquidator or administrator of RE Pty Limited (in liquidation),
(n) GD Pty Limited,
(o) C Pty Limited,
(p) MI Pty Limited,
(q) NR Technology Pty Limited, and
(r) NR Corporation SARL.be restrained pending further order from commencing, maintaining, or pursuing any claims, actions or suits against the Husband, the Wife, or RE Pty Limited (in liquidation), including, without limiting the generality thereof, any actions in relation to any director's loan accounts (whether joint or individual), or any actions arising from any assertions of insolvent trading by either the husband and/or the wife.
That pursuant to s9OAE(1)(b) of the Family Law Act, that in respect of any or all of the alleged indebtedness of the Wife to the entities and persons referred to in Order 6 hereof, the Husband be substituted for the Wife, and be solely responsible for the indebtedness.
That pursuant to s 106B of the Family Law Act:
(c)That the allotment of shares in S Pty Limited [ACN …] ("[S Pty Ltd]") on or about 31 October 2003 comprising 20,000 ordinary shares to C Pty Limited [ACN …] ("[C Pty Ltd]"), and 10,000 ordinary shares to H Pty Limited [ACN …] ("[H Pty Ltd]"), be set aside.
(d)That S Pty Ltd forthwith cancel any share certificates issued in respect of the allotment referred to in (a) and expunge the said allotted shares from the share register.
That pursuant to s233 of the Corporations Act 2001:
(a) That forthwith upon compliance with Order 7 S Pty Ltd be wound up and a liquidator appointed (if that has not already taken place)
(b) Mr WJ, the husband’s father, and each other director of the Company be restrained from:
(iii)Doing any act or thing which has the effect of altering the shareholding in the company, except as sought in these orders, including issuing or allotting any shares;
(iv) Doing any act or thing which has the effect of altering the company's assets or liabilities, without giving the Wife and her solicitors 14 days' written notice setting out the proposed alteration, and providing details of the basis of such proposal.
(c) There forthwith be appointed an administrator (if one or like person has not already been appointed) pending the implementation of orders (a) and (b) above.
That pursuant to s90AE(1)(b) of the Family Law Act RE Pty Limited (in liquidation) shall forthwith do all acts and things necessary to substitute the Husband for any indebtedness to that company by the wife pursuant to any loan account or as a consequence of any alleged breach of the Corporations Law in respect of alleged insolvent trading.
That pursuant to s106A of the Family Law Act, a Registrar or Deputy Registrar be empowered to sign any documents required to give effect to these orders in the event that the Husband, the husband’s father or any other person required to sign a document to give effect to these orders, fails to do so and return to the Wife's solicitor, within 7 days of being provided with the document to be signed.
That the Wife's entitlement to profits pursuant to Order 3 above be limited in amount to the sum of:
(d) any balance outstanding in respect to the sum of $4,417,406 referred to in the final paragraph of the Reasons for Judgment of 10 January 2006, plus
(e) any costs ordered in favour of the Wife in respect of these proceedings including their enforcement, plus
(f) interest on sums outstanding referred to in (a) and (b) above, at the rate of interest prescribed by the Family Law Rules or as otherwise ordered.
And Declared that nothing contained in these orders contemplates any limitation upon the rights of a party pursuant to Section 79A of the Family Law Act 1975.
That a copy of these orders be served upon any liquidator or administrator or like person appointed in respect of S Pty Ltd.
That each party have liberty to apply to the Court in respect to the implementation of these orders.
That the costs of and incidental to these proceedings be reserved.
Costs
235 I do not think it appropriate to make costs orders before an opportunity for all the matters which can properly be out before the Court, including offers, and consideration by the parties of the Reasons for Judgment, is offered.
236 It may be that, in the ultimate, the orders contended for by the Wife against the Husband and the Second Respondents, with no other orders being made, will be the outcome in the circumstances of the case. However the issue remains for future determination.
I certify that the preceding two hundred and thirty six (236) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rowlands
Associate:
Date:
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