Regan & Regan

[2021] FamCA 586

FAMILY COURT OF AUSTRALIA

Regan & Regan [2021] FamCA 586

File number(s):	BRC 7426 of 2021
Judgment of:	BAUMANN J
Date of judgment:	15 July 2021
Catchwords:	FAMILY LAW – PROPERTY – Where the wife seeks to injunct settlement funds deriving from two properties – Where urgency exists as settlement was to take place the following day – Where the husband unilaterally made arrangements with creditors to pay settlement funds towards debts that are not yet due and payable – Orders made for the wife to receive $100,000 partial property settlement.
Number of paragraphs:	21
Date of last submission/s:	15 July 2021
Date of hearing:	15 July 2021
Place:	Brisbane
Counsel for the Applicant:	Mr P Hackett
Solicitor for the Applicant:	Hirst & Co
Counsel for the First Respondent:	Mr T Kirk QC
Solicitor for the First Respondent:	Hopgood Ganim Lawyers
Solicitor for the Second Respondent:	Mr Phillips, Phillips Family Law
Solicitor for the Third Respondent:	Mr Phillips, Phillips Family Law

ORDERS

BRC 7426 of 2021

BETWEEN:

MS REGAN

Applicant

AND:

MR REGAN

First Respondent

AND:

MR REGAN

Second Respondent

AND:

B PTY LTD ACN ... AS TRUSTEE FOR THE C TRUST

Third Respondent

ORDER MADE BY:	BAUMANN J
DATE OF ORDER:	15 JULY 2021

THE COURT ORDERS UNTIL FURTHER ORDER:

1. That until 4.00pm on 19 August 2021 or earlier order, the First Respondent, both in his personal capacity or as a director of H Pty Ltd ACN ... be restrained, whether by himself, or his servants or agents from dealing with the sum of $3,058,377.03 payable upon the refinance or discharge of the first mortgage H Pty Ltd ACN ... as Trustee as granted by B Pty Ltd ACN ... as Trustee, other than to pay or cause to be paid:

   a.$2,958,377.03 into the trust account of Hopgood Ganim Lawyers; and

   b.$100,000.00 to the trust account of Hirst & Co Family Lawyers by way of partial property settlement.

2. That the parties’ costs be reserved.

Note:   The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).

IT IS NOTED that publication of this judgment by this Court under the pseudonym Regan & Regan has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

EX TEMPORE REASONS FOR JUDGMENT

BAUMANN J:

1. The Application before me today has been brought on urgently on the basis that the wife seeks to restrain the husband, who will become the controller of funds – as the exchange between the parties and events today have reflected – as a result of a refinance undertaken in respect of a property that will become available tomorrow, 16 July 2021.  The sum is $3,762,056.73 as per the settlement statement annexed to the husband’s affidavit filed and sworn today, 15 July 2021 at 12.18pm.  The settlement statement reveals that the husband, as the person in control of the entity, H Pty Ltd, has directed the entity providing the funds being either the Second Respondent or the Third Respondent (entities associated with his professional business partner, solicitor Mr Neagle) how to distribute the total advance of $3,721,453.30.

2. There was a dispute as to those funds being available to H Pty Ltd and part of the availability of the funds arises from, it seems, a claim by a third party entity, E Pty Ltd, who the husband would seek to direct part of the refinance funds so as to allow a discharge of a second mortgage over a property, also due for settlement tomorrow 16 July 2021, being a unit at F Street, Suburb G to the Third Respondent for $1,900,000.  The settlement statement for that transaction is an annexure to the husband’s said affidavit.

3. Mr Hackett, although initially and not happily conceding that those funds should be paid to E Pty Ltd, accepted logically that this entity, who had been a financier of some of the parties’ commercial activities but is now at the end of its security, would most likely not offer a release of their mortgage over the Suburb G property for the mere return of $1,257,614.72 which was available from the sale of the property according to aforesaid settlement statement.  The wife indicated that she wants that transaction to proceed.  The benefit of which, will be at the very least, that a debt to Westpac Banking Corporation for approximately $1,300 000 will also be discharged with that Bank holding the first mortgage.

4. What then comes to be decided is whether the funds then remaining, which amount to $3,058,377.03, ought be paid as the husband, as the controller of the entity H Pty Ltd seeks, to the Commonwealth Bank of Australia, or the wife’s position, that the funds should be held and injuncted until the matter comes before me on 19 August 2021 in one month’s time as originally listed.

5. The Court is being asked to exercise its injunctive power (under s 114 of the Family Law Act 1975 (Cth)), and the experienced and highly competent Counsel that appear before me did not cavil with the principles identified in their summaries of argument that are to be applied. I do not, for the purpose of these ex tempore Reasons, do other than to say that the principles have been appropriately identified.

6. Having heard oral submissions as well from Mr Hackett for the wife and Mr Kirk QC for the husband, I intend to injunct part of the funds.  I will indicate which part of the funds shortly, but I intend to injunct part of the funds to the tune of $2,958,377.03, until 4.00pm on 19 August 2021.  I propose to order, for reasons which I will explain shortly, that of the funds being paid tomorrow, $100,000 be paid to the wife.  My reasons for this order, imperfect as they might be now expressed ex tempore, follow.

7. I accept on the evidence that the husband puts before the Court, most recently in the balance sheet attached to his affidavit filed on 12 July 2021, that these parties have at as this time liabilities exceeding assets.  In a round figure, and today it has often been mentioned, the husband says that the deficit is in the order of $10 million.

8. The husband says, through his submissions of his learned Counsel today, that he has a hope that he will be able to negotiate or otherwise manage the assets of what has been called loosely, the H Group, and the enormous debts they carry in a way that will avoid, possibly, if not probably, personal bankruptcy.  Mr Kirk QC, when discussing the balance sheet that I was referred to, directed me to what seems to be a major asset in the balance sheet, being property, plant, and equipment, at a figure of $18,667,181.  In accordance with usual principles, the balance sheet makes an allowance for depreciation that may have been claimed previously in the financial statements of the various entities.

9. These assets seem to be part of a business known as D Pty Ltd.  Mr Regan says that the operation of the business and its difficulties, as well as other entities over which he has control, have been adversely affected by the COVID-19 pandemic.  I can accept that there may have been an affect but I am unable to assess what that affect is at the moment.  However, what is important is that husband says that there is a prospect that he will be able to manage the affairs of this group in such a way as to avoid the very, very severe consequences which seem almost inevitable on the current evidence.  It is inevitably the fact that to do so he will need the largesse support or forbearance of the major secured creditor, the Commonwealth Bank of Australia.

10. The attitude of the Commonwealth Bank of Australia is not the subject of any direct evidence from a representative from the bank, save for two letters to which I have been directed.  The first letter from the Commonwealth Bank to the husband personally dated 6 July 2021, identifies a range of loans to entities including J Lawyers, K Trust, D Pty Ltd, and D Pty Ltd, that mostly being asset finance. It is noteworthy that the entity, H Pty Ltd, is not set out in the letter of 6 July 2021 as an entity that owes money to the Commonwealth Bank.  That letter referred to a discussion between the Bank and the husband and detailed “the current balances and current arrears of your group facilities with Commonwealth Bank of Australia”.

11. It made the point that the balances and arrears are as of “today’s date”.  The husband was invited by the Bank to nominate an appropriate time to discuss the full repayment of all facilities and cancellation of limits.  The second letter to which I was referred to try and reflect the attitude of the Bank, is one dated 14 July 2021.  It is attached to the husband’s most recent affidavit filed 15 July 2021.  It identifies similar entities owing sums of money.  Again, none of which include H Pty Ltd.  It says as follows:

    As discussed, your facilities which have expired and are in arrears require your immediate attention, our ongoing support of the group position requires the position to be addressed.

    Your advice that net settlement funds from your recent sale will be applied across your group facilities for debt reduction is confirmed. Upon repayment, these limits are to be cancelled. If funds are not applied as proposed, we seek a meeting next week (being the week commencing 19 July) to confirm alternate payment plans.

12. I accept that the husband who had on his own admission, failed to keep the wife informed of the dire financial consequences of the group and in circumstances where – if not a personal liability, he has some liability in the scheme of things.  The husband has been working assiduously to try and support arrangements with the Bank to give him time – he says as much in his affidavit.

13. However, there is no guarantee that the Bank will give him or his entities any time at all.  There is nothing on the material to suggest what other options the Bank may take and how long the Bank may take to exercise any available remedies.  The Bank has, it seems from the letter of 14 July 2021, made it clear that any further drawdowns or access to facilities are at an end.  I am not satisfied that the husband, bearing in mind an earlier undertaking given by him to the Court or to the wife, had the unilateral power to make any arrangement with the Commonwealth Bank as he has done.  But I do not need to make a decision today, based on whether he did or did not have that power.

14. In my view, the funds from the refinance payable to H Pty Ltd that were secured by a first mortgage as a result of a transaction relating to the Suburb L home, are the funds of H Pty Ltd to which the Commonwealth Bank can demonstrate at this stage, no interest or security other than as an entity who has, at the very least, the benefit of a personal guarantee from the husband and perhaps other securities over other property.  For those reasons, as we sit here today, those funds are at the disposal of the parties.  Whether it would be prudent to disperse them in a particular manner is a different issue.

15. I accept that from the wife’s perspective, her concern is reflected in the submissions of Mr Hackett are shaped by the realism that these funds might represent the only funds which could – and I say could not would – be available in the end analysis.  This couple are the proud parents of five young children.  Their financial situation is disastrous.  Whilst the husband, no doubt acknowledges the disastrous circumstance of the family, it seems clear that he believes the only way he can assist the family from totally being wiped out is to pay monies which the bank is not due or entitled to, but may expect as a result of his discussions so as to buy him some time to negotiate these various other transaction and loan obligations.

16. There are of course significant prejudices and consequences to both parties.  However, on the face of the husband’s view about the financial position which is the best evidence I have at the moment, at the very least even until 19 August 2021, all that the Court is achieving is possibly holding off the inevitable.  I would invite, although would not order, that if the Commonwealth Bank wishes to be heard on the use of the monies which will be injuncted, they can do so.  They will have time to do so.  The husband might invite them to do so.  They clearly have an interest in the matrimonial property settlement.  But at this point in time, in the hope that I may have more evidence that may assist me on 19 August 2021 than I have today, it is in my Judgment and in the exercise of my discretion, it is appropriate to injunct $2,958,377.03 until 19 August 2021.

17. The wife should not draw any significant comfort from the Judgment today, that the Court may not release the injunction at the next occasion, but it will be injuncted until then.  During the final submissions it occurred to me, considering the disastrous nature of these parties’ circumstances, at the moment their overwhelming obligations as parents to provide homes for their children, and to be the support in their life to the extent that they can, not in preference to the needs of the Commonwealth Bank, but in reality, that I should consider whether in fact the parties obtain a sum of money from the funds which are available to them legally, but may not be available in the future.

18. I gave the parties an opportunity to provide instructions to their experienced Counsel on the Court’s proposition.  Upon return, Mr Hackett on behalf of the wife, reminded the Court that in fact, there is an Application by the wife for some lump sum payment and that it is an Application which is still listed before the Court on 19 August 2021, as it was originally.  Mr Hackett says that I have the power to make an order (I infer as a partial property order).  Reflective of the position that the wife feels herself in and somewhat emotionally (not by Mr Hackett but no doubt the wife), she indicated to the Court that she is living with the maternal grandmother; gets minimal child support, and does not draw down on the Commonwealth Bank, as I anticipated from submissions I heard may have been occurring.

19. Whilst those matters, of course, are relevant to the wife, they are not of themselves determinative of the exercise of discretion.  However, I believe it is just and equitable in circumstances where they may ultimately be, as the husband contends is a possibility, a pool of assets available for distribution.  This is the husband’s hope.  I propose to direct that the husband, in his position as a director of H Pty Ltd, pay to the Trust account of the solicitors for the wife tomorrow, the sum of $100,000. It matters little to me whether that remaining $2,958,377.03 are held by the solicitors for the wife or the solicitors for the husband, but if there is a dispute about that, I propose – considering that the husband is in control of the funds – that they be held by the solicitors for the husband. If they do not wish to hold them, they will be held by the solicitors for the wife.

20. I record that the husband does not wish to take the benefit of an interim property order to receive $100,000.  In my view, his position is entirely consistent with what he has argued to the Court and consistent with, it seems, the position he has put to the Commonwealth Bank.  To that extent, he should be in a position to say to the Commonwealth Bank, that the fact that there is $100,000 less available now is not as a result of any actions of his.  If that gives him some comfort or the Commonwealth Bank, then so be it.  However, it was available to him, and he has elected through his Counsel not to take it today, and I acknowledge that.

21. I will reserve the costs of today.

I certify that the preceding twenty-one (21) numbered paragraphs are a true copy of the extempore Reasons for Judgment of the Honourable Justice Baumann.

Associate:  

Dated:       6 August 2021