REAGAN & REAGAN

[2011] FamCA 173

FAMILY COURT OF AUSTRALIA

REAGAN & REAGAN [2011] FamCA 173

FAMILY LAW – PROPERTY SETTLEMENT – Agreement to adjournment subject to interim orders being made – Wife seeks an interim injunction and husband opposes same – Where Wife alleges there has not been full disclosure by the husband – Whether injunctive relief in the Wife’s favour would burden the Husband’s business – Caveats to remain over parties’ property – Interim injunctions granted over property held  by the parties and their subsidiaries – Husband restrained from dealing with property relevant to proceedings that exceeds $5000 – Reasonable legal expenses and loan payments are excepted – Further exceptions may be negotiated by parties in writing – Wife to file an undertaking as to damages

APPLICANT:

Ms Reagan

RESPONDENT: Mr Reagan

FILE NUMBER: BRC 728 of 2010

DATE DELIVERED: 28 February 2011

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Barry J

HEARING DATE: 28 February 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Looney with Mr Shoebridge of Counsel appearing for the Applicant Wife

SOLICITORS FOR THE APPLICANT: Schultz Toomey O’Brien Lawyers

COUNSEL FOR THE RESPONDENT: Mr Foley of Counsel appearing for the Respondent Husband

SOLICITORS FOR THE RESPONDENT: North Coast Law

Orders

IT IS ORDERED THAT:

1. The proceedings be adjourned to the Judicial Duty List at 10.00 am on
   28 March 2011 at the Brisbane Registry of the Family Court.

1. The parties’ legal representatives to comply with the costs rules as to disclosure of quantum costs, the source of same and the estimate of costs to be incurred in future, in writing to the other parties’ legal representatives within fourteen (14) days.

IT IS ORDERED UNTIL FURTHER ORDER THAT:

1. The Husband is not to, and is not to cause, aid or assist any other person to, dispose of, deal in any way with or diminish the value of the property of the parties or with any other property relevant to these proceedings, without the prior written consent of the Wife, except where the amount of funds relevant to the subject dealing is $5,000 or less.

1. For the purposes of interpretation, the property that is relevant to these proceedings includes (but is not limited to):

a.      all property held by or on behalf of M Pty Ltd;

b.      all property held by or on behalf of the Reagan Family Trust;

c.      all property held for the benefit of either of the parties to these proceedings;

d.      all property held for the benefit of the Reagan Family Trust; and

e.all property held by or on behalf of any subsidiary of M Pty Ltd.

1. This Order does not prohibit the Husband from:

a.paying $5,000 a month to the Wife for her ordinary living expenses;

b.paying to the Wife such further amounts as agreed between them in writing;

c.paying up to $5,000 a month on the Husband’s ordinary living expenses;

d.paying the Husband’s reasonable legal expenses;

e.paying any interest and principal payments due in respect of amounts owing by the parties to Suncorp Metway; and

f.in relation to matters not falling within paragraphs 5(a) to 5(e) inclusive, dealing with or disposing of any of the Husband’s assets in discharging obligations bona fide and properly incurred under a contract entered into before this Order was made provided that before doing so the Husband gives the Wife at least two (2) working days written notice of the particulars of the obligation.

1. The Husband and the Wife may agree in writing that the exceptions in the

   preceding paragraph are to be varied.  In that case the Husband or the Wife must as soon as practicable file with the Court and serve on the other a minute of a proposed

   consent order recording the variation signed by or on behalf of the Husband and

   the Wife, and the Court may order that the exceptions are varied accordingly.

1. The Wife within forty-eight (48) hours is to file an undertaking as to damages in the following terms:

a.to submit to such Order (if any) as the Court may consider just for the payment of compensation (to be assessed by the Court or as it may direct) to any person (whether or not a party) affected by the operation of the injunctions sought; and

b.to pay the reasonable costs of anyone other than the Husband (or any entity controlled by him) which have been incurred as a result of the injunctions sought;

c.if the Orders sought by the Wife cease to have effect she will promptly take all reasonable steps to inform in writing anyone who has been notified of this Order, or who has reasonable grounds for supposing may act upon this Order, that it has ceased to have effect.

1. Costs reserved to the trial Judge.

It is noted that publication of this judgment under the pseudonym Reagan & Reagan is approved pursuant to s 121 (9) (g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: No. BRC 728 of 2010

Ms Reagan

Applicant

And

Mr Reagan

Respondent

REASONS FOR JUDGMENT

1. By way of an amended application in the case which was signed on Friday and filed by leave on today’s date, the applicant wife seeks orders which, in summary form, include interim injunctions, orders for interim disclosure, orders for questions to be answered under oath and an order for costs.  Those orders are in a different form to the orders that had previously been sought by way of an earlier interim application.

2. The response of the husband was filed on 25 February 2011.  Clearly it relates, in part, to the earlier application, as he is seeking orders for $200,000 to be distributed to the wife in lieu of the $300,000 she was seeking.  That is no longer relevant.

3. Relevantly, for present purposes, he is seeking that the wife cause to be released within 14 days all caveats filed by her over the property of the Reagan Family Trust; that she be restrained from filing any further caveats in the future; and that the she provide within 14 days full and proper disclosure of all documents in her possession and control. 

4. A report of a forensic accountant engaged by the wife, Mr M, was made available on Friday; it is the second report of Mr M.  He had prepared an earlier report which was made available about 12 months ago. Mr M’s report, prima facie, seems to be a very detailed one.  On today’s date, the husband seeks an adjournment on the basis that he has not had a proper opportunity to study Mr M’s report, and also to consider the changed nature of the application, as sought by the wife, by way of interim orders.

5. The wife does not oppose the adjournment provided certain interim injunctions are made - the husband opposes the granting of any such injunctions.

6. It is common ground there should be an adjournment, but whether it is granted with or without the making of injunctive orders is the principal question for determination today.  What I propose to do is adjourn this matter before myself on 28 March 2011.

7. Two issues remain for consideration - firstly, whether an interim injunction should be granted in any form, and secondly whether there should be an order for the removal of the caveats.  In relation to the injunctions she seeks, the wife proffers the usual undertaking as to damages.

8. For the husband it is said the injunctions should not be granted as firstly, the wife has failed to demonstrate that damages would not be an adequate remedy, secondly, such orders would be a burden on the trust, and the husband’s ability to operate the business effectively, and thirdly, the wife’s material does not demonstrate a risk of disposal of properties.  Written submissions have been provided by counsel.  The written submissions for the husband at paragraph 6 refer to the decision of Waugh & Waugh (2000) in relation to the disposal of property in order to defeat a judgment. 

9. I note in paragraph 18 of the wife’s written submissions, reference is made in paragraphs 18.1 through to 18.9 a series of transactions for which the wife, seemingly, has not received a satisfactory explanation.  Counsel for the husband submitted that all of these transactions related to events that occurred some eight to 12 months ago.  That may be so;  but the husband does not adduce any evidence that he has informed the wife at that time, or at any time since the date of the transaction of:

   (a)      the nature of the transaction; and

   (b)      the reason for same. 

10. One example will suffice.  It appears from paragraph 18.1 the husband directed that $1.672 million be paid from the trust to Law Firm 1.  The reference given is Mr M’s second report, schedule 6, and annexure F to the wife’s affidavit filed on 15 February this year. It appears to be – and it is a matter of conjecture at this stage – that another firm of accountants had seemingly been owed a considerable sum of money.  Now, how long ago that transaction relates to was not clear on the material before me.

    RECORDED:  NOT TRANSCRIBED

    The point that comes across is that the only information the wife says she has received about this is courtesy of Mr M’s investigations, and not otherwise.  As has been submitted by counsel for the wife, it is common ground on the husband’s part that the wife is to receive 50 per cent of the assets of the parties, which includes the assets of the trust.  She is seeking a distribution of 60/40.  I will have more to say on that shortly, but it would seem to me that there should be full disclosure at all times.  Paragraphs 18.10 and 18.11 were said to be recent transactions; $900,000 was the result of a property that had been transferred from the superannuation fund of the husband to the trust.  It was said that the superannuation fund needed liquidity.  The husband is under 65.  How he is able to draw on funds in the super account remains something that in the fullness of time, presumably, will be disclosed.

11. The husband asserts that the trust is short of funds and has a significant liability to the mortgagee.  Why this transaction was necessary may be explained in the fullness of time, but it is causing the wife concern that these transactions are happening, and no disclosure of any sort is taking place.  In relation to the transaction in 18.11, it refers to the attempted sale of lot B, which is an adjoining property to where the wife currently resides.  The information I am given would appear to be that after the contract had been signed on a Friday, the wife’s advisors were given a copy of the contract, and called upon to respond.  By the time they were able to respond, there was a signed contract.  It must have been a conditional contract as eventually the purchasers resiled from the contract.

12. It is a concern that as a matter of common courtesy, the husband would not notify the wife, wait for her response and take into account that it is a neighbouring property, and any other aspects that she may wish to be heard on.  I have, in the limited time available, perused Mr M’s report.  Suffice it to say, sufficient concerns are raised by Mr M to alert the wife’s legal advisors that full disclosure needs to be made, and it needs to be made promptly.  I am informed, and for present purposes I accept, that many of the matters raised by Mr M in his second report are simply a repeat of matters that had been raised in his first report.  One would have thought they would have been attended to by now.  It is not necessary to determine which version of the facts be correct; it is simply sufficient to note that the wife’s concerns appear to be corroborated, to some extent, by the forensic accountant.

13. If, as may be asserted, the husband has kept the wife informed, one might ask the rhetorical question, “Why should she be paying a forensic accountant to conduct an investigation if she is already in possession of the information?”  I note a submission was made about the disconnect between paragraph 19 of the husband’s affidavit, and paragraph 28.  Paragraph 19:

    I have made a full and complete disclosure of my business dealings both by way of documents and in the information which I have given to this honourable Court and to the applicant wife’s solicitors. - - -

    He then goes on to say, quite correctly, that he has permitted a forensic accountant to spend considerable time at his offices.  Paragraph 28 says:

    In the application the applicant wife seeks that I produce certain evidence in relation to certain transactions about which she has concerns.  In particular, the applicant wife draws attention in her affidavit to various issues of disclosure and discovery.  I am working with my advisers in obtaining all appropriate documentation and information some of which is already available. - - -

14. The view that I form, having regard to submissions made that the husband is no longer funding operations, the entertainment industry side has been wound down, other aspects are not being fully operated, that the husband would not be hamstrung in the operation of the business, should the injunction be granted.  If a significant transaction is involved, he can write directly to the wife, or through the solicitors, and provide full details, what he wishes to sell, the amount involved in the sale, to whom, and what he proposes to do with the proceeds; pay off the mortgage debt of the trust, I expect  It is not a difficult task.  If the wife refuses to cooperate with any reasonable proposal, the husband may forthwith apply to the Court, and she may well find herself paying the costs of any such application if there has been an unreasonable refusal to cooperate. 

15. What she is entitled to know is what is being sold, when and for how much.  As I have noted, the property may be held in a trust structure which is controlled by the husband, but it is matrimonial property to which she has an entitlement, and that entitlement is recognised by the orders that the parties are seeking.

16. I issue this caveat - if the husband does not comply with the letter and spirit of the court orders that I am about to make, he may find even greater restrictions placed upon him.  It would not be the first time that I have seen an application for the appointment of a manager for the businesses.  The Court has that power, and is not slow to exercise it if circumstances warrant it.  I suggest both parties behave as model litigants.  It is advice based on experience; it is advice that you are far more likely to be found to have greater credibility if the matter proceeds to a hearing. 

17. The orders will be in place for a month.  I am looking at what has to be determined thereafter - I assume, in effect, these are interim orders.  I would urge the parties to try and resolve issues of disclosure and the other matters raised in the wife’s material.  The parties have not been given a trial date at this point in time, and yet everything is being prepared for trial.  I am going to have inquiries made as to when the likely date is, but it seems to me the trial affidavits will be in by 17 March 2011 and I am going to review the matter on 28 March 2011.  I will give it a green light to be allocated dates of trial at that time, if I am satisfied there has been full disclosure.  It is in the interests of the parties to have this matter finalised, whether by way of negotiation or litigation, it is a matter for them.  I appreciate there are significant sums of money involved, and the size of the pool would be the most significant issue in the forensic exercise.  I note the actual percentage distribution being sought is only a 10 per cent differential. 

RECORDED:  NOT TRANSCRIBED

ORDERS DELIVERED

1. Now, I turn to the orders that I propose to make.  I am not minded to lift the caveats.  It is as clear as crystal from what I have been saying, I am going to make orders in terms of the injunctions as sought.  The injunctive orders, as sought, are very wide.  As I say, they may be, but they are not all that different from orders that have been made on a regular basis in this jurisdiction.  If there is any difficulty whatsoever, the matter can be referred back to me in the coming month.  If not, I will then take further submissions in a month’s time.  At this stage I will issue interim injunctions in terms of paragraphs 1A, 1B, 1C, 1D of the wife’s application dated 25 February 2011.

RECORDED:  NOT TRANSCRIBED

ORDERS DELIVERED

I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Barry delivered on 28 February 2011.

Associate: 

Date:  28 February 2011