Shuren & Fang (No 3)
[2023] FedCFamC1F 906
•20 October 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Shuren & Fang (No 3) [2023] FedCFamC1F 906
File number MLC 3815 of 2023 Judgment of WILSON J Date of judgment 20 October 2023 Catchwords FAMILY LAW – INJUNCTIONS – husband not fully complying with orders previously made for the return of financial records on computers taken by him – orders made for husband to exhaustively comply with orders previously made. Legislation Corporations Act 2001 (Cth), s 1306
Family Law Act 1975 (Cth), s 79A
Cases cited Shuren & Fang [2023] FedCFamC1F 712
Shuren & Fang(No 2) [2023] FedCFamC1F 880
Division Division 1 First Instance Number of paragraphs 17 Date of last submission 20 October 2023 Date of hearing 20 October 2023 Place Melbourne Counsel for the applicant Mr L Glick KC Solicitors for the applicant Australian Legal Advisory Centre Counsel for the first and second respondents Mr A Baker Solicitors for the first and second respondents Aston Legal Group Counsel for the third respondent Mr L Glick KC Solicitors for the third respondent Australian Legal Advisory Centre ORDERS
MLC 3815 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN MS SHUREN
Applicant
AND MR FANG
First Respondent
C PTY LTD
Second Respondent
B PTY LTD
Third Respondent
ORDER MADE BY
WILSON J
DATE OF ORDER
20 OCTOBER 2023
THE COURT ORDERS THAT –
1.The husband whether by himself, his servants or agents or howsoever otherwise, print and deliver to the solicitors for the wife by 4:00pm today all books and records as defined by the Corporations Act 2001 and all financial documents of B Pty Ltd which are recorded or stored on any computer in the power, possession or control of the husband alleged by the wife as having been taken on 16 October 2023.
2.Orders regarding costs are hereby 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 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Shuren & Fang has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
EX TEMPORE REASONS FOR JUDGMENT
WILSON J
This proceeding is in the Major Complex Financial Proceedings List of this court to determine a s 79A[1] application. Despite its relatively short life, the case has already been the subject of several applications before me, one in the anonymised case described as Shuren & Fang[2] and the second, in a decision 12 October 2023.[3] More recently, on applications before me this week, other decisions have been handed down, one ex parte on 17 October 2023 another inter partes later the same day on 17 October 2023 and today.
[1] Family Law Act 1975 (Cth).
[2] [2023] FedCFamC1F 712.
[3] Shuren & Fang (No 2) [2023] FedCFamC1F 880.
To put the present application in context, a little backtracking is required. On 16 October 2023 at an extraordinary general meeting of B Pty Ltd the husband was removed as a director of that company. At or about the time of the meeting – although the precise time of which I am unable to say – on 16 October 2023 property alleged to be owned by B Pty Ltd was removed from the possession, power and control of B Pty Ltd and taken in such a way that B Pty Ltd was deprived of the use of the financial information retained on its computers.
A dispute has arisen about the circumstances of the taking of the computers. A subset of that dispute relates to the information allegedly taken from the possession, power and control of B Pty Ltd. On 17 October 2023 at 11.30am Mr Glick KC made an ex parte application for orders commanding the delivery up of all computers and documents or other property of B Pty Ltd taken by the husband from B Pty Ltd’s offices at about 3pm on Monday 16 October 2023. At 2.15pm that day, (that is to say, 17 October 2023) upon service on the husband and interested parties of the ex parte order, an inter partes dispute was heard by me, resulting in an amendment to the orders made earlier that day, but only in a modest way substituting for the word "restore" the concept of delivery up of B Pty Ltd’s property to B Pty Ltd at its proper office.
That was Tuesday of this week. Since that day and earlier on Monday, B Pty Ltd has been without certain financial information that had been stored on its electronic records relating to its business. B Pty Ltd acts as a trustee of a hybrid trust. It has been asserted that the financial information recorded electronically, which B Pty Ltd presently needs, covers such things as B Pty Ltd’s chequebook, minute book, documentation in respect of loans, its asset register, its depreciation schedule, contracts for sale, electronic banking records, documents concerning business activities, documents relating to Z Pty Ltd management fees and all accountancy information retained and stored on MYOB electronic accountancy packages.
Compliance with the orders made on 17 October 2023 has been problematic. On 19 October 2023 – that is to say, yesterday – the solicitors for the husband wrote in exquisite detail in elaborate terms about why the orders made 17 October 2023 were not being performed "forthwith" as previously ordered. No useful purpose is served rehearsing the three pages of dense argument advanced on behalf of the husband. That prompted the wife's solicitors, who by their senior counsel informed me today and who also represents B Pty Ltd, to apply to my chambers for the urgent listing of this proceeding.
I arranged in the afternoon of 19 October 2023 for this proceeding to be mentioned before me at 10am today, consonant with the spirit and intendment of the urgency to hear and determine applications in urgent circumstances where cases are listed in the Major Complex Financial Proceedings List. That appears to have spurred the husband's solicitors to go to print by email, sent at 6.42pm last night, recording in selective terms what had been extracted from the electronic documents on B Pty Ltd’s computers, which I can only infer was derived from accessing the computers removed from B Pty Ltd’s possession, power and control on or about 16 October 2023.
The list is brief. It is enumerated under two categories, one entitled "project document list" and the second under a fewer still number of categories headed "[B Pty Ltd] finance document list". None of the information in those two documents goes anywhere near approximating the categories of documents that Mr Glick KC suggested ought to be retained among the financial records required by s 1306 of the Corporations Act[4] to be stored by a company. Those documents, so Mr Glick said, included such things as the company chequebook, minute books, loan sales documents, asset register, leases, contract of sale, depreciation schedule and the others canvassed above, most importantly, MYOB records.
[4] Corporations Act 2010 (Cth).
During the inter partes dispute this morning, Mr Glick advanced the contention that the word "forthwith" as is recorded in the 17 October 2023 orders embodies a degree of immediacy, none of which has been exhibited by the husband. Mr Glick submitted that it was only upon the threatening of the listing of this proceeding yesterday that at 6.42pm last night the inadequate two listings attached to the 19 October 2023 email from the husband's solicitors emerged. To my mind, there is some force in that contention. Mr Baker, who again appears for the husband – he having not been present on the application in Shuren & Fang (No 2)[5] –contended that the husband is diligently and faithfully discharging his obligations to comply with my orders.
[5] [2023] FedCFamC1F 880.
Nevertheless, Mr Baker submitted that it is proper and reasonable to expect that the husband provides his affidavit evidence to explain precisely the events of 16 October 2023 in accordance with orders previously made when he files his affidavit on 24 October 2023 and that in the meantime it is also reasonable for the husband to take unrushed time to consider the electronic records of B Pty Ltd that are in his possession, power and control to answer whether they meet the terms previously ordered for him to "forthwith" produce. When the husband undertakes that activity, Mr Baker submitted that it is also proper for the husband's solicitors to be involved before any information is in fact provided to the wife or to B Pty Ltd.
I confess to having some difficulty following that submission. Company directors are only too aware, in my experience, of the way in which documents meet the description of books of the company as set out in s 1306 of the Corporations Act. It was submitted on behalf of the wife that it is a simple activity to command the electronic storage facility, on which the financial records of B Pty Ltd are presently stored, to be printed instantaneously and that to do so would comply with the order reposed in paragraph 2 of the ex parte orders made on 17 October 2023.
It seems to me that the intendment of s 1306 of the Corporations Act, especially in s 1306(1)(b), is such that books required by the Act are to be kept as defined –
by recording or storing the matters concerned by means of a mechanical, electronic or other device
and that those books as meet the description for the purposes of Part 9.3 of the Act can be produced, literally, by the push of a button. It is not appropriate for me to pass upon the method being adopted by the husband to comply with the orders reposed in the 17 October 2023 orders. His explanation for the events of 16 October 2023 have yet to be recorded in affidavit form. That awaits 24 October 2023 and when I will see to what he swears then I will be better informed as to precisely what occurred on that day.
That said, Mr Fang is currently an employee of B Pty Ltd. He no longer retains the office of director. He concurrently occupies a role within the entity Z Pty Ltd. A dispute exists as to the entitlement of Z Pty Ltd to substantial management fees. It may well be that the information currently stored, and which is sought by B Pty Ltd as well as by the wife, goes some way to better informing the parties in this case about the entitlement of Z Pty Ltd to management fees. It is too early to tell and is not proper for me to now make any definitive findings to that end.
I must say, however, that at this juncture it seems readily apparent that the dispute earlier advanced on behalf of the husband that he was not involved in the removal of the computers and that he did not have ready access to the information stored on them is to be either rejected or looked at quizzically, having regard to the information produced at 6.42pm last night. It strikes me that the husband has access to the information sought by the wife the subject of the order made ex parte and later renewed inter partes on 17 October 2023. The word "forthwith" means what it says. There is an abundance of case law on the point. It imports a high degree of immediacy.
I am at a loss to understand why or how it is appropriate for the husband to insinuate into his compliance with the obligation of immediacy reposed in the concept of "forthwith", the need for him to take a leisurely approach to inspecting the computer records and then obtain advice as to whether a document meets the description of "book" for the purposes of s 1306 of the Corporations Act. He is most likely to be a very sophisticated businessman, acutely aware of the financial information that he has been ordered to produce.
In the end, Mr Glick KC asked for an order to the effect that the husband, whether by himself, his servants or agents or howsoever otherwise, forthwith print and deliver to the solicitors for the wife all books and records as defined by the Corporations Act and all financial documents of B Pty Ltd, which are recorded or stored on any computer in the power, possession or control of the husband, alleged by the wife as having been taken on 16 October 2023. Mr Baker quite properly submitted that if I were to make that order, the moment I pronounced it, the husband is in breach. I accept what he says and am willing to make the order but extended to 4pm today, and I decline to express the order in such manner that it must be complied with forthwith.
Otherwise, I am persuaded that it is appropriate to make the order as sought by the wife. As to what will emerge on 24 October 2023, we must wait and see. The husband has two more business days within which to provide instructions and to draft and settle affidavit material. He also has time within which to bring such application as he is so advised to discharge orders previously made. I cannot see that as founding a basis for extending time for him to comply with orders he has previously been ordered to do. He has been ordered, three days ago, to immediately undertake certain things that he has only partially done and the extent to which he has complied with those orders is woefully defective and deficient.
That seems to me to be provide ample support for the making of the orders sought by Mr Glick, which I have hereby pronounced, albeit amended, by the insertion of a time limiting compliance. Among the material to which the husband must depose on 24 October 2023 is the circumstances of his extraction of computers apparently owned and controlled by B Pty Ltd. He no longer occupies the status as a board member of that company although he does owe fiduciary duties to the company in his capacity as an employee one such duty of an employee being an impermissibility of unilateral appropriation of company property.
I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the ex tempore Reasons for Judgment of the Honourable Justice Wilson. Associate:
Dated: 20 October 2023
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