SALTZER & PACEK (No.2)
[2020] FCCA 1303
•25 May 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SALTZER & PACEK (No.2) | [2020] FCCA 1303 |
| Catchwords: FAMILY LAW – Property – injunction – where applicant sought earlier injunctive relief to secure sale of matrimonial home – where injunction of earlier sale refused – where applicant then seeks ex parte injunction hearing – where no notice was given to respondent – applicant seeks to restrict respondent from executing contract of sale – application for such relief not sought in original application – applicants affidavit does not identify that intended purpose of interim relief is to afford him opportunity to purchase property – where affidavits adduce no evidence of ability to purchase property – where applicant sells shares in company without notice to respondent – application principles – respondent’s legal right to exercise power as director to enter contract properly conceded – no allegation of oppression by respondent as shareholder in procuring company to enter contract and sell property – no legal right established – no serious question to be tried – balance of convenience favours refusal – discretionary considerations favour refusal of relief – where respondent seeks orders – appropriate relief – role of the court is not to give imprimatur to terms of contract – costs – application refused with costs. |
| Legislation: Family Law Act 1975 (Cth), ss.106A, 114, 117 Federal Circuit Court Act 1999 (Cth), ss.67, 68 |
| Cases cited: Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570 Resources: |
| Applicant: | MR SALTZER |
| Respondent: | MS PACEK |
| File Number: | MLC 2954 of 2020 |
| Judgment of: | Judge A. Kelly |
| Hearing date: | 21 May 2020 |
| Date of Last Submission: | 21 May 2020 |
| Delivered at: | Melbourne |
| Orders pronounced: | 21 May 2020 |
| Delivered on: | 25 May 2020 |
REPRESENTATION
| Counsel for the Applicant: | Ms Jenkins |
| Counsel for the Respondent: | Ms Fisken |
| Solicitors for the Respondent: | Mr Cornelius |
ORDERS
Pursuant to ss.67-68 of the Federal Circuit Court of Australia Act 1999 (Cth), direct that the parties be allowed to appear and to make submissions before the court via audio and video link.
The applicant husband’s application in a case filed 8 May 2020 be dismissed.
The respondent wife be permitted to enter into and execute a contract of sale for the sale of A Street, Suburb B in the State of Victoria (property).
The nett sale proceeds from any sale of the property be applied as follows:
(a)first, to pay all costs and expenses of the said sale, including any costs incurred pursuant to paragraph 7 of this Order;
(b)secondly, to discharge any and all liabilities associated with the property, including but not limited to the mortgage to Westpac Banking Corporation and any goods and services tax or capital gains tax as assessed; and
(c)thirdly, the balance, to be placed in a controlled monies account held on behalf of the parties by Domantay Legal.
The balance of any proceeds held in the controlled monies account from the sale of the property pursuant to paragraph 4(c) of this Order be further distributed in accordance with any agreement of the parties in writing.
By 4:00pm on Thursday, 28 May 2020, the applicant husband do all such acts and things, and sign all such documents as may be required to execute, at his expense, and lodge, a withdrawal of the caveat ... lodged by him upon title to the said property.
In default of compliance with paragraph 6 of this Order, pursuant to
s 106A(1) of the Family Law Act1975 (Cth), the respondent’s solicitor, Rod Cornelius, be authorised to execute the withdrawal of the caveat for and on behalf of the husband.
Subject to paragraph 9 of this Order, the applicant husband be restrained whether by himself, his servants, his agents or howsoever otherwise from interfering or taking any step to interfere in any sale of the property.
Paragraph 8 of this order shall not operate to prevent the applicant, whether by himself or his legal representatives from making enquiries, in writing, of the respondent’s legal representatives respecting the progress and completion of any sale of the property.
By 4:00pm on Thursday, 28 May 2020, the applicant provide to the respondent’s solicitors discovery of documents related to any transactions, or purported transactions, undertaken by him or on his behalf:
(a)to resign as a director of C Pty Ltd (C Pty Ltd);
(b)to appoint or purporting to appoint Mr D or any other person as a director of C Pty Ltd;
(c)to dispose of any shares in C Pty Ltd.
(d)to make any changes or additions to the register of shares in C Pty Ltd.
The parties be at liberty, on reasonable notice, to apply.
The applicant husband pay the respondent wife’s costs of and incidental to his application in a case dated 8 May 2020 and her response dated
18 May 2020.
Final Hearing:
The matter be fixed for Final Hearing at 10.00am on 4 February 2021 in the Federal Circuit Court of Australia at Melbourne before
Judge A Kelly with an estimated hearing time of 2 days.
The following directions are made respecting discovery and use of documents at trial:
(a)no later than four months before the trial date, the parties are to confer and identify all documents upon which they propose to adduce in evidence at trial (Documents);
(b)no later than two months before the trial date, the applicant shall prepare, serve and file an indexed paginated folder of the Documents arranged in chronological order;
(c)no Documents (including any valuations, family report or other expert reports) are to be attached to any affidavit, but may only be referred to in an affidavit by page number and volume (if necessary), from the folder(s) of Documents;
(d)save with leave of the Court, no document identified pursuant to paragraph 14(a) of this Order may be relied upon or adduced in evidence at trial.
Each party be permitted to rely upon only one affidavit of evidence in chief for any witness including the applicant and respondent (noting that affidavits relied upon for previous hearings cannot be relied upon as evidence in chief) and further:
(a)the applicant electronically file and serve any affidavits to be relied upon at the final hearing not later than 28 days prior to the hearing;
(b)the respondent electronically file and serve any affidavits to be relied upon at the final hearing not later than 21 days prior to the hearing.
Other than as provided in this Order, no party may file or rely upon any further evidence without leave of the court.
The evidence in chief of each party and any witness be by way of affidavit as provided by paragraphs 15 to 16 of this order.
Not later than one month prior to the final hearing all parties do electronically file and serve an Outline of Case Document
(not exceeding 12 pages) including a complete statement of:
(a)the precise orders to be sought;
(b)each of the items said to constitute the parties, assets, liabilities, financial resources and superannuation interests;
(c)the affording of procedural fairness to the trustees affecting any of the parties’ superannuation interests.
IT IS NOTED that publication of this judgment under the pseudonym Saltzer & Pacek (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 2954 of 2020
| MR SALTZER |
Applicant
And
| MS PACEK |
Respondent
REASONS FOR JUDGMENT
(Revised from ex tempore reasons)
Introduction
These reasons for judgment explain my conclusions respecting a further application for urgent interim relief in relation to certain property which, in the present application, is not owned by either of the parties but which is owned by a corporation, E Pty Ltd (E Pty Ltd), of which the respondent wife is sole director and shareholder and which is not trustee of any trust. They should be read together with the reasons for judgment in Saltzer & Pacek (No 1).[1]
[1] [2020] FCCA 854.
The procedural history of the matter in the period 18 March – 14 April 2020 is described in Saltzer No 1. Since that time, on 27 April 2020, orders were made by a Registrar in the court’s discrete property list to facilitate the orderly preparation and conduct of the interlocutory steps required to prepare the matter for mediation and, if necessary, trial. Orders were also made by consent that each party receive $250,000 by way of part property settlement from certain money which is presently held on trust.
In addition, a notation to the parties’ consent order of 27 April 2020 provided that if the applicant sought to pursue any substantive interim application he should do so by filing and serving an application and affidavit in an appropriate form. Each of the parties was legally represented at that Registrar’s hearing.
The procedural history of the matter since 14 April 2020 has been less than satisfactory. Contextually, as a consequence of the Covid-19 pandemic, an initiative was taken in the court to establish a list to deal with matters considered to require urgent consideration.
Late on Friday, 8 May 2020, the applicant sought to file an Application in a Case seeking an urgent interim injunction to restrain the respondent from executing a contract on behalf of E Pty Ltd with a prospective purchaser, F Pty Ltd, for the sale of certain land situate at A Street, Suburb B, in the State of Victoria.
The request for the urgent listing of the application is notable in a number of respects. First, on 14 April 2020, the applicant’s application for an injunction to restrain completion of the sale of the former matrimonial home had been refused. Secondly, the applicant’s new lawyer appears to have approached a Registrar seeking urgent relief, doing so on the basis that the matter was appropriate to be dealt with on an ex parte basis. Thirdly, it appears the respondent’s solicitors had not been notified of the proposed application. Fourthly, the parties were able to agree on an interim arrangement whereby the status quo would be preserved until a hearing of the application could be undertaken.
In consequence of the Registrar’s referral of the proposed application under the Covid-19 protocol, the court made arrangements for enquiries to be made of the parties as to when the matter could be listed for hearing, but with directions being made to ensure each party had been afforded an adequate opportunity to lodge any relevant evidence and to supply an outline of argument. When those enquiries were made of the parties it emerged, for the first time, that the respondent’s lawyers had no notice of the proposed application. For the applicant to have proceeded on that course was, in all the circumstances, entirely inappropriate. The cases in which it may be appropriate for parties in a pending proceeding to seek ex parte relief are rare, and cogent reasons should be demonstrated to exist before the court may be satisfied that any such relief should be granted except on proper notice.
Further, having regard to the existing restrictions on the conduct of proceedings other than by audio and video link,[2] when directions were given requiring the parties to file an Outline of Case, those directions were largely ignored with Outlines of Case being filed some five – six days after the appointed date. Further, the applicant sought to rely upon a raft of corporate and other records, none of which had been tendered in evidence. As the applicant was the moving party and had been afforded nearly two weeks in which to have the matter fully prepared for the urgent hearing which he had requested, the court declined to consider any material which had not been proved by the parties’ affidavits.
[2] Federal Circuit Court of Australia Act, ss 67 – 68.
Finally, although the applicant was afforded an opportunity to furnish instructions following counsels’ oral submissions, I determined that in all the circumstances it was appropriate to decide the application.
It is against that background that the applicant now seeks urgent relief.
Current applications
By his Application in a Case, the husband sought orders that the matter be listed urgently in the circumstances described above, together with an injunction to restrain the respondent from executing the contract. Further relief was sought to restrain each party from disposing of or selling any other matrimonial assets including but not limited to the real properties described in a schedule to the Application in a Case.
By a response to that application, the wife sought Orders for dismissal of the Application in a Case and Orders permitting her to enter into and execute the proposed contract “on such terms as provided for in the contract which was proved by the evidence, and for Orders respecting the dispersal and preservation respectively of the net proceeds of sale. Ancillary relief was sought: (1) permitting the parties to distribute the balance of those proceeds in accordance with their written agreement but conditioned upon the receipt of taxation advice from the parties’ former financial advisor, Mr G, or by some other accountant appointed by the court; (2) restraining the applicant from making any “direct enquiries in relation to the sale of the property, other than through his legal representatives. Relatedly, an order was sought to compel the applicant to remove a caveat he had lodged over the property.
A further claim for relief sought by the respondent was for the disclosure by the applicant in relation to the transfer of a directorship and share owned by the parties in C Pty Ltd.
Evidence
The background to the present application is, in part, set out in the reasons for judgment in Saltzer No 1 and is incorporated in these reasons.
Each of the parties was afforded ample opportunity to file affidavits containing the evidence upon which they sought to rely. They did so. The applicant did not answer the matters deposed to by the respondent. Regrettably, the applicant also sought to rely upon a significant volume of additional material, some of which was transmitted by email on the morning of the hearing. As noted the court declined to accept the ‘tender’ of any of that material, none of which was proved by any affidavit.
As these reasons address orders made at an interim hearing, none of the matters set out below can be treated as findings of fact made after a fully contested final hearing. To the contrary, they indicate the matters contained in the parties’ respective affidavits which I have considered.
The essential facts are not in dispute. E Pty Ltd is the registered proprietor of the property and the respondent is the sole director and shareholder of that company. E Pty Ltd is one of the companies comprised in the group of companies through which the parties have pursued their business operations, the group being known as the H Group. It was quite properly accepted the respondent has the legal entitlement to exercise her powers and authorities as a director of E Pty Ltd and that she is legally entitled to exercise all of the rights which attach to and inhere in her shares in that company.
Since late 2019, the parties engaged in discussions respecting the sale of the property. Proposals were made as to the appointment of sales agents. While it is unnecessary to investigate the relevant history from 2019 in particular detail, there is persuasive evidence that, at this time, the parties were essentially agreed upon an orderly sale of their assets including the property which is the subject of this application.
In January 2020, a sworn valuation was prepared by an expert,
J Group, which expert had, by agreement, been jointly appointed by the parties to provide a sworn valuation their many assets. When the J Group’s valuation was produced, the applicant did not accept the opinion of this valuer. Consequently, the applicant proceeded to engage a new valuer to furnish a further sworn valuation of those assets. This further sworn valuation was also provided in early 2020. However, when the applicant came to prepare his first affidavit in this proceeding, it appears he maintained his disagreement with the opinion evidence of both valuers, describing the values in the asset pool as being estimates, but only doing so on the basis that “the respondent has not yet made full disclosure and is withholding financial records from me.”
On 17 March 2020, the respondent’s lawyers transmitted to the applicant the terms of an offer received for the property being for a purchase price of $4.65M. This offer is to be considered in the context that in
January 2020 the parties joint expert, J Group, gave a sworn valuation of the property of some $3.4M.[3] It is immediately apparent that the present offer is substantially in excess of current value.
[3]This figure is based upon the sum of the two estimates of Lots ... and ... as stated in the applicant’s primary affidavit.
On 24 April 2020, consistently with submissions which had been made to the court at a hearing on 14 April 2020, the respondent’s solicitors informed the applicant’s new lawyer that an estate agent had been appointed for the purposes of sale and of the progress of negotiations for the sale of the property to that point.
It was only on 24 April 2020 that the applicant, for the first time, indicated his opposition to a sale of the property.
The respondent produced the proposed contract in evidence. The contract is at present unexecuted. The respondent’s evidence is that from her discussions held on 30 April 2020 with the purchaser, the contract will be executed on the terms contained in that contract.
Contrary to some of the submissions and evidence, the property has not in fact been subdivided. The land is encumbered by a mortgage to Westpac Banking Corporation of about $1.5M.
On the respondent’s case, the property has never been required for the parties’ business operations but has been an investment. The applicant now maintains that he wishes to park his various trucks trailers and tippers on the property. There is other evidence that those vehicles and equipment are in fact parked on another property owned within the H Group which is situated at K Street, Suburb L.
A matter of some significant concern is that the respondent’s representatives have recently undertaken a search of a company C Pty Ltd (C Pty Ltd). In this context, a notable feature of the present Application in a Case is that while it contains a schedule of the companies said to now comprise the H Group, that schedule contains no reference to C Pty Ltd. The results of that search indicate that the applicant has resigned as a director of C Pty Ltd and appointed, Mr D, who is described by the respondent as an associate of the applicant. Concerningly, in circumstances which are presently not known by the respondent and are otherwise, remarkably, not explained by the evidence, both the applicant’s and respondent’s shares in C Pty Ltd have purportedly been transferred to Mr D.
The respondent’s evidence is that she has not consented to Mr D’s appointment as a director of C Pty Ltd, she has not agreed to a purported sale of any shares in that company, whether by herself or the applicant; and that no disclosure has been made to her by or on behalf of the applicant of the matters respecting the purported change in directorship and shareholding in C Pty Ltd as described above.
Consideration
It must be recognised that the capacity to evaluate and weigh the material on an interim hearing is constrained by the circumstance that, as the court has not conducted a final hearing, the evidence has not been finally tested and is often in conflict. For that reason the conclusions expressed at an interim hearing are necessarily couched in qualified terms.[4]
[4] Marvel & Marvel [2010] FamCAFC 101, [120]; SS & AH [2010] FamCAFC 13, [88].
The applicable principles were not in dispute. By s 114(1) of the Act, the court has jurisdiction and power to make such orders as would grant such injunctions as it considers proper with respect to the matter to which the proceeding relates, including an injunction in relation to the property of a party to the marriage. The power to grant an injunction, where it otherwise appears proper to do so, is constrained by the requirement that the proceeding is of a kind referred to in par (e) of the definition of matrimonial cause. In s 4 (1) of the Act, that term is relevantly defined as meaning a proceeding between the parties to a marriage or an order or injunction in circumstances arising out of the marital relationship. Counsel for the applicant properly accepted that the test applicable for the grant of injunctive relief required the applicant to demonstrate that there was a serious question to be tried and that the balance of convenience favoured the grant of relief.
Relevantly, the ‘property’ which is identified as the subject of the present application was said to be the property in A Street, Suburb B. However, on further consideration it was accepted that that land is owned by E Pty Ltd which is not a party to the proceeding. More precisely, the subject ‘property’[5] with which the present application is concerned might be identified as the rights which inhere in and attach to the respondent’s office as a director, and her ownership as a shareholder, of all of the shares in that company: cf Kennon v Spry.[6]
[5] Act, s 4; cf Cleave & Cleave [2020] FamCA 34.
[6] [2008] HCA 56; (2008) 238 CLR 366.
Threshold questions which might otherwise arise need not be considered. First, each of the parties accepted that the court could be satisfied in all the circumstances that it would be just and equitable for an order to be made adjusting the interests of the parties to the proceeding: act, s 79(2). Secondly, they also accepted that the parties, having had a long relationship would prima facie be entitled to an equal division of the parties’ net asset pool. As to this, both the initiating application and response implicitly contend for an equal division of property.
As counsel further accepted, on the assumption that the only asset owned by E Pty Ltd is the A Street, Suburb B property, the value of the respondent’s sole shareholding in that company is represented by the net value of the property. I accept that the subject property underlying the value of the shares in E Pty Ltd is of substantial value.
The immediate question is whether the applicant has demonstrated a serious question to be tried such as would warrant the grant of relief. As to this, an analogy was properly sought to be drawn by counsel for the applicant of circumstances where a party to proceedings sought to restrain the sale of a former matrimonial home, doing so on the basis that, at trial, an order would be sought enabling the applicant, in effect, the opportunity to “buy-out” the respondent, in default of which an order for sale would be made. So much was accepted by the respondent.
However, having regard to the definition of matrimonial cause, it is important to consider whether the proceeding, as presently constituted was a proceeding for an order or injunction in relating to the property or the respondent’s directorship of, and shareholding in, E Pty Ltd. In this connection, no application has been made by the applicant by his originating process to purchase the A Street, Suburb B property. Relatedly, it was also submitted with some force that the basis upon which the applicant’s affidavit in support of the Application in a Case for ex parte relief was made was simply that “I do not want any further property sold until the parties have gone through the discovery process and attended private mediation.” I am not satisfied that the applicant has identified a serious question to be tried in relation to this property and I accept the submission of counsel for the respondent that the applicant has, in effect, again approbated and reprobated in relation to another sale.[7]
[7] Compare Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570, [57].
Just as he transferred the former matrimonial home to the respondent and agreed the sale of their property (indeed at a lower value), and was fully involved in the sale process, it was only at the eleventh hour that he had a change of heart and sought to prevent the sale, doing so on the basis that he wished to preserve to himself the opportunity to purchase that property. Again, counsel for the applicant accepted that her client had been actively involved in a process for the sale of the property the subject of this application but had, as he maintains, consistently held the view since March 2020 that he does not wish the property to be sold. It may be questioned whether he has only held that view since April 2020.
In this respect, the applicant sought to place great weight upon the absence of any written agreement by him or on his behalf to any such sale. As explored in the course of submissions, it is not apparent how or why the applicant has any legal right to participate in the sale process of a property owned by E Pty Ltd, a company of which he is neither a director nor shareholder. While it may be to the credit of the respondent that she has sought to involve the applicant and keep him actively informed of the sale process, this does not confer any legal right upon him respecting any such sale. Instead, the respondent’s conscious decisions to keep the applicant informed of the progress of any such sale serves to undermine any suggestion the respondent may be pursuing a course of dissipating the parties’ assets or selling at undervalue. No legal right was identified by the applicant, the infringement of which was alleged, as may support the grant of an injunction to prevent the respondent’s execution of a contract of sale respecting this property. The applicant having conceded that the respondent had the legal right is a director to exercise the powers on behalf of the company to enter the contract to sell the property no serious question could arise on that basis. Nor could it be submitted that the respondent in her capacity as sole shareholder of the company was conducting herself in a manner that was oppressive to the interests of a minority.
In those circumstances, it became necessary to search for some other legal or equitable right as may ground an entitlement to injunctive relief. Accepting that there is power under the Act to grant such injunction as the court considers proper with respect to the matter to which the proceedings relate, and that this would clearly extend to property as defined for the purposes of the Act, it remained for the applicant to identify some conduct on the part of the respondent sufficient to support a conclusion that there had been an infringement of such right or that such infringement was threatened as to make it proper to grant relief.
On the evidence there is no basis for any suggestion that the respondent has engaged in conduct as would constitute either waste of the property or the sale of any assets at undervalue. Indeed, had any such suggestion been made, it may have been appropriate to reserve that question for further consideration at trial to the extent necessary to accommodate any adjustments for any identified or suggested undervalue.
Further, there is no suggestion that the respondent is dissipating assets such as would warrant the grant of a Mareva injunction: see Meagher, Gummow & Lehane, Equity, Doctrines & Remedies.[8]
[8] (LexisNexis, 5th ed, 2015) at [21-430] – [21-435].
Upon that basis it is strictly necessary to consider the question of balance of convenience. However, I make the following further observations.
As addressed in Saltzer No 1 at [7], the net asset pool has an indicative value of about $2.6M. While I accept the careful submission of counsel for the applicant that the figures stated in the applicant’s initial affidavit provided estimates which were, in truth, reflective of the two sworn valuations then held by the parties, I was not informed in detail of the precise extent of the variations or adjustments in the figures as contained in that affidavit. Nonetheless, I am prepared to accept there may be some increase in the figures as stated by the applicant in his primary affidavit.
The question whether the balance of convenience favours a conclusion that the applicant might be permitted at trial an opportunity to purchase the subject property arises in the context that there is, at present, an offer of $4.65M; that is to say, the property has a value far in excess of 50% of the net asset pool (i.e. $1.3M). Further, the balance of convenience is to be assessed having regard to the constantly changing nature of the applicant’s position. His initiating application contains no prayer for relief that he might be permitted to purchase this property. His affidavits, and in particular his affidavit in support of the present application for an ex parte injunction, contains no suggestion that he might do so. Further, just as occurred upon the hearing of the first application, there is no evidence supportive of a conclusion that the applicant has the means or ability to pay a sum of $4.65M to purchase this property or that any finance might be available to him to do so. To the contrary, there is some evidence suggesting that particular characteristics of the land in question is such that bank finance is unlikely to be available.
I consider the resolution of the case is overwhelmingly in favour of the refusal of injunctive relief. I have described above that the property has been the subject of not one but two sworn valuations in 2020, each of which is for a sum markedly below that which the present purchaser is prepared to offer. In those circumstances, I accept the submission of counsel that it cannot be said the respondent is not acting properly in the discharge of her duties as a director in pursuing a sale of the property. Counsel for the applicant accepted the respondent had the legal right to dispose of the property. That submission was properly made.
I am also not satisfied that there would be any prejudice to the applicant by the refusal of relief. As the respondent’s counsel submitted persuasively, the present offer of $4.65M is highly advantageous to both parties. The attractiveness of the offer is to be considered in the wider context that it is for a sum significantly in excess of two sworn valuations.
A further suggested complication was that the parties had been running the H Group (which involves a large number of vehicles), such that if the property was sold, there was nowhere to store those vehicles. On this basis it was said that a sale of the property could put the entire business in jeopardy. While there is no cogent evidence as to where the vehicles are being stored, some of the evidence indicates that some or all of the equipment is in fact stored on another property.
Discretionary considerations would also favour the refusal of relief. As outlined above, the circumstances giving rise to this application included the most unsatisfactory procedural history and this would mark against the grant of relief. As the matter remains in my docket and I am concerned to determine an interlocutory application, I have deliberately not determined whether the submissions of a lack of “clean hands” should be accepted, including in relation to C Pty Ltd.
Relief
For the foregoing reasons the application to restrain the respondent from executing the contract should be refused. So too, the application to restrain either party “from disposing of or selling any of the matrimonial assets” should be refused. No evidence was adduced or reason suggested by the respondent as to why relief of such breadth should be granted, and given her persistent pattern of conduct to date whereby, in particular, no basis is shown to support a conclusion of waste, dissipation, or failure to account for the sales of, assets on the part of the respondent, I would also refuse that application on those grounds.
To this point, the respondent has consistently adopted a practice of transparently informing the applicant and his solicitors of the proposed mode of sale including in circumstances where the assets are the subject of sworn valuations. It is not to the point that the applicant disagrees with those valuations. As discussed above, the parties agreed to a joint sworn valuation being obtained and this was provided in January 2020. When the sworn valuation was obtained it appears the applicant rejected the results so provided and instead proceeded to retain a further firm of valuers who would also provide a sworn valuation shortly thereafter.
In those circumstances, I cannot see that the applicant has demonstrated any present basis that exists to suggest the respondent is disposed to waste, dissipate or to sell any assets at undervalue.
Moreover, the respondent has been equally transparent in consulting with the applicant as to the appointment of agents for sale, advertising and the receipt of offers as they have been made. Contrastingly, there is some evidence suggesting the applicant has been less than transparent in selling other assets; however, that is not a matter I need address further at this stage. The matter will remain in my docket and issues which require resolution can be determined at trial if the matter is not resolved by mediation.
Again, the respondent has adopted the orthodox approach of dealing with the net proceeds of sale as by paying the advertising sales costs and commissions and retaining the balance in the trust account of her solicitors pending agreement as to their dispersal. To have done so on more than one occasion also undermines a suggestion that the respondent has a propensity to dissipate or conceal the parties’ assets. As the relief sought by the respondent commendably included that the net proceeds of any sale should be held on trust until disbursed pursuant to order or by agreement, I am prepared to make orders which will operate for the parties’ mutual protection so as to require that the net proceeds of sale of the property be dealt with in that manner.
A quite separate question arises in relation to the ambit of relief as to the terms of the contract of sale. While the respondent exhibited a copy of the proposed contract to her affidavit in opposition to the application, I decline to grant the respondent some of the relief in the terms sought. In particular, I do not accept that it is appropriate for the court to authorise the director of a company to enter into a contract on particular terms. The court should not give its imprimatur to what is essentially a business decision to be made by the respondent as a director of E Pty Ltd “in circumstances where no issue as to power, propriety, reasonableness or requiring the exercise of judgement on a legal issue arises” Re Ansett Australia (No 3);[9] see also Yeo & Rambaldi as Trustees of the Bankrupt Estate of Sandles v Sandles.[10] While those cases concern the availability of judicial advice in the case of corporate trustees (and it was agreed in this case that E Pty Ltd is not a trustee), those considerations reinforce the conclusion that it would otherwise be inappropriate for the court to give its imprimatur to the terms upon which the respondent may decide to sell this or other property.
[9] (2002) 115 FCR 409, [67] (Goldberg J).
[10] [2020] FCCA 988, [49]-[52] (McNab J).
Suffice it to say, counsel for the respondent made the compelling submission that as sworn valuations had recently been obtained, on not one but two occasions, and a proposed purchaser is prepared to pay a sum substantially above the independent values as obtained, no basis was shown to support a conclusion that the respondent is proposing to sell the property other than on advantageous terms.
For similar reasons, it is not for the court to facilitate or endorse advice upon the appropriate taxation implications of any such sale. Again, the respondent in the proper discharge of her duties as a director will be free to seek appropriate legal, accounting and taxation advice as to the manner of any sale. I decline to make orders in the broad term suggested that may be misunderstood as marking the court’s approval upon such issues and indeed before the contract of sale has been executed, completed and the net proceeds received from the purchaser.
I am, however, disposed to make orders for the withdrawal of the caveat lodged on behalf of the applicant over title to the property including ancillary relief pursuant to s 106A of the Act. Should the caveat not be removed, the respondent should not be required to dedicate further resources, time or expense in yet a further application to this court for relief to permit completion of any sale. To that end, I also do not consider it is necessary that the respondent should be put to the further cost of seeking for a registrar of the court to execute documents necessary to secure the removal of the caveat. Sub-section 106A(1) of the Act authorises the Court to appoint “an officer of the court or other person” to execute a deed or instrument in the name of the person against whom an order has been made. It would in this case be more efficient, and I see no reason not to, make an order appointing the respondent’s solicitor, Rod Cornelius, pursuant to S106A(1) to execute a withdrawal of caveat should the applicant declined to do so. The respondent’s solicitor, being a barrister and solicitor of the Supreme Court of Victoria is both “an officer of the court”[11] in its wider sense and a person who can appropriately perform this function should it be required.
[11]This expression is not defined by the Act. To give the expression a wide meaning would facilitate that the power conferred on the court by s 106A(1) is not hedged about by unwarranted limitations: cf Owners of the Ship, “Shin Kobe Maru”: v Empire Shipping Company Inc (1994) 181 CLR 404, [29].
Equally, I am prepared to make orders to restrain the applicant from interfering in any proposed sale in the manner sought by the respondent. Relief of that kind was considered appropriate in Saltzer No 1.
As concerned the respondent’s claim for relief that the applicant provide a detailed account of any transactions undertaken by him to dispose of the parties’ interests in C Pty Ltd, it was accepted and I am satisfied it is appropriate to do so. Again, the relief sought by the respondent was framed in terms which included a requirement that the applicant notify the respondent of his “failure to notify” her of such sale without her knowledge. At present, I consider this latter form of relief is too wide and it will be a matter for the parties to consider further whether any such explanation is warranted. It may, however, be a matter which requires investigation at trial, particularly if the issue is not adequately explained in the interim.
Each of the parties sought orders that the other pay all of their costs “of and incidental to” the present application. Having considered the requirements of ss 117(1), 117(2) and 117(2A) of the Act, I am of the opinion that the circumstances of the present application do justify an order for costs being made in relation to this application. I adverted to the question of costs in Saltzer No 1. I have had regard to the parties’ financial circumstances and their conduct in this matter as described in this and my earlier judgment. In addition, in considering such other matters as the court considers relevant, I am persuaded that a party, properly advised, would not have issued an Application in a Case for the type of relief being claimed in this proceeding: see Colgate-Palmolive Co v Cussons Pty Ltd.[12] I do not wish to be misunderstood as suggesting whether the solicitor presently acting for the applicant had, or had not, given proper advice in this matter. That is not the test. The question is whether, objectively, a party properly advised would not have instituted or pursued a particular application. For present purposes, I pass over the inappropriateness of seeking relief on an ex-parte basis. Of greater relevance is that on all of the facts and circumstances of this case the respondent has been prepared to pursue a sale on terms which are objectively in the parties’ best interests and has undertaken to hold in trust balance of the net proceeds of sale. It follows that the institution and pursuit of the present application was entirely unwarranted.
[12] (1993) 46 FCR 225.
Conclusion
As noted above, since the matter was last before me, an order was made by consent on 27 April 2020, by a Registrar of the court addressing discovery, valuations, mediation and part property settlement. Having regard to the recent history of the matter, I am satisfied that the proceeding should be set down for trial. I consider it is appropriate to do so, if only so as to secure the result that the matter can be brought to a conclusion at the earliest available date. In that way, if the matter is not resolved by mediation in 2020, the parties can approach the court and make further submissions respecting any other interlocutory steps as may be required to ensure the matter is otherwise ready for trial.
I express my gratitude to counsel for their submissions.
I certify that the preceding sixty (60) paragraphs are a true copy of the reasons for judgment of Judge A. Kelly
Associate:
Date: 25 May 2020
2
10
0