Swift & Swift
[2021] FedCFamC1F 14
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Swift & Swift [2021] FedCFamC1F 14
File number(s): CAC 658 of 2020 Judgment of: GILL J Date of judgment: 2 September 2021 Catchwords: FAMILY LAW – PROPERTY – Interim distribution – Partial property distribution ordered – Injunction to restrain disposal of proceeds of business sale – Other restraints – Orders relating to disclosure Legislation: Family Law Rules 2004 (Cth) r 1.04
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 1.04, 6.02 and 6.09
Family Law Act 1975 (Cth) ss 79 and 114
Cases cited: In the Marriage of Sieling (1979) 24 ALR 357
Shelbourne & Shelbourne [2019] FamCAFC 196
Strahan & Strahan [2009] FamCAFC 166
Swift & Swift [2020] FamCA 991
Wenz v Archer (2008) 40 FamLR 212
Zadenev & Zadenev [2013] FamCA 838
Zschokke & Zschokke (1996) FLC 92-693
Division: Division 1 First Instance Number of paragraphs: 75 Date of hearing: 3 August 2021 Place: Canberra Counsel for the Applicant: Mr Campton SC Solicitor for the Applicant: Farrar Gesini Dunn Counsel for the Respondent: Mr Williams QC Solicitor for the Respondent: Barkus Doolan ORDERS
CAC 658 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS SWIFT
Applicant
AND: MR SWIFT
Respondent
ORDER MADE BY:
GILL J
DATE OF ORDER:
2 SEPTEMBER 2021
THE COURT ORDERS THAT:
It is noted that:
The property held in the husband’s name at JJ Street, Suburb KK (“the Suburb KK property”) in the ACT was due for settlement of sale on 9 August 2021.
It is ordered until further order that:
1.The husband shall deal with the proceeds of the sale of the Suburb KK property in the ACT in the following manner:
(a)To pay all costs commissions and expenses of the sale;
(b)To pay the usual rates adjustments;
(c)To pay to Westpac Banking Corporation the amount required to discharge Mortgage registration number …42;
(d)To place the remaining proceeds of sale in an account in the husband's name; and
(e)Unless otherwise provided for in these Orders, or as agreed between the parties the husband must provide the wife with at least 28 days' notice prior to dealing with the proceeds of sale of the Suburb KK property, other than to pay any tax liabilities that may arise as a result of the disposal of the husband's interest in the Suburb KK property in the ACT.
2.The husband forthwith provide the wife’s solicitors with copies of all records evidencing the settlement and terms of the settlement of the Suburb KK property in the ACT.
3.Order 9 of the Orders of 25 November 2020, which provided for the valuation of the Suburb KK property in the ACT is discharged.
4.Within 14 days, the parties shall jointly provide M Valuers with updated instructions advising that the Suburb KK property is not to be valued.
5.Unless otherwise provided for in these orders, or as agreed in writing between the parties the husband is hereby restrained from doing any act or thing to deal with, in any way, the proceeds of the sale of the V Group made up of, but not limited to V Partnership ABN …, W Trust, X Trust and Y Pty Ltd, (the V Group), including any payment received by way of distribution to Swift Pty Ltd and/or the Swift Family Trust.
6.Within 14 days of any distribution received by Swift Pty Ltd, and/or any other entities in which the husband has an interest as a result of the disposal of the interest in V Group, the husband do all acts and things necessary both personally and in his capacity as a director to cause the monies to be dealt with as follows:
(a)72% of any distribution, less the payment to the wife made in accordance with Order 7 below, to be paid into a controlled monies account in the name of Swift Pty Ltd, with such funds to be held, pending written agreement between the parties or further Order.
(b)The balance, being 28% of any distribution to be retained by Swift Pty Ltd to deal with as it determines.
7.Within 7 days of any distribution received by Swift Pty Ltd, and/or any other entities in which the husband has an interest as a result of the disposal the V Group, the husband shall do all acts and things necessary both personally and in his capacity as a director to cause payment, by way of partial property settlement of $500,000 to the Wife, to the ACT Law Practice Trust Account BSB: … Account: … Reference: ….
8.Within 24 hours of the husband receiving any information as to or documents recording any distribution, payment, receipt, transfer or other benefit or proposed distribution, payment receipt, transfer or other benefit, as a result of or in connection with the sale of V Group, the husband shall:
(a)notify the wife’s solicitors in writing of the information or documents received; and
(b)provide to the wife’s solicitor copies of all records in this regard.
9.Within 72 hours of receiving a copy of the agreement between V Group and LL Company for the sale of the V Group the husband shall provide such to the wife’s solicitors and to the single expert, Ms Q.
10.The husband shall respond to any requests made by the single expert Ms Q within 3 days of any such request.
11.Within 7 days of the date of these Orders the husband shall provide the wife with read only access to the bank accounts for Swift Pty Ltd and NN Pty Ltd.
12.Within 7 days of the date of these Orders the husband shall deliver to the solicitors for the wife copies of the records and disclosure, other than those already provided, as set out at ‘Annexure A’ of these Orders.
13.Within 21 days of the date of these Orders the husband do all things necessary to:
(a)File and serve an undertaking pursuant to Rule 6.02 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (‘the Rules’); and
(b)Serve the solicitors for the Wife with a list of documents pursuant to Rule 6.09 of the Rules.
14.Unless he has already done so, within 24 hours of the making of these Orders the husband shall pay to the wife the total amount of the funds he has withheld from the wife from her spousal maintenance pursuant to Order 2 of the Orders dated 25 November 2020 (noting that as at 26 July 2021 the amount owing to the wife was $1,000).
15.Unless otherwise provided for in these Orders, or as agreed between the parties, the husband shall provide the wife with at least 28 days' notice prior to doing the following:
(a)Causing or permitting any change in the office holdings and/or shareholdings of each Swift Pty Ltd and NN Pty Ltd;
(b)Causing or permitting the closing of the following accounts:
(i)Westpac account number …63;
(ii)Westpac account number …55; and
(iii)Westpac account number …55.
16.In the event that a party seeks an order for costs then such party is to file written submissions and all evidence in support of such within 14 days of this judgment.
17.In the event that a party opposes the making of such a costs order then such party is to file written submissions and any evidence relied upon in response within 28 days of this judgment.
18.Unless otherwise advised by the parties any question as to costs will then be determined in chambers.
ANNEXURE A
1.The following records:
(a)Financial Statements and Tax Returns for the financial year ending 30 June 2020, for each of the following entities:
(i)Swift Pty Ltd (previously S Pty Ltd) ABN …;
(ii)Swift Family Trust ABN …;
(iii)the Swift Family Trust;
(iv)The V Group ("VG"), including, but not limited to:
A.V Partnership ABN …;
B.W Trust;
C.X Trust; and
D.Y Pty Ltd;
(v)DD Pty Ltd ABN …;
(vi)AA Pty Ltd;
(vii)BB Pty Ltd; and
(viii)CC Pty Ltd.
2.All Management Accounts for the period 1 July 2020 to 30 June 2021, as soon as they become available, for each of the following entities:
(a)Swift Pty Ltd (previously S Pty Ltd) ABN …;
(b)Swift Family Trust ABN …;
(c)the Swift Family Trust;
(d)The V Group (VG), including, but not limited to :
(i)V Partnership ABN …;
(ii)W Trust;
(iii)X Trust; and
(iv)Y Pty Ltd;
(e)DD Pty Ltd ABN …;
(f)AA Pty Ltd;
(g)BB Pty Ltd; and
(h)CC Pty Ltd.
3.The Husband's personal Tax Return and Notice of Assessment for the financial year ending 30 June 2020;
4.A copy of the binding agreement entered into by LL Company with VG;
5.Copies of all minutes of the VG Board meetings for the period 1 January 2019 to present;
6.Copies of all resolutions of the VG Board for the period 1 January 2019 to present;
7.All records recording the source of the $240,000 paid by way of cheque to our client dated 19 February 2021;
8.Statements for the following accounts:
(a)Personal Westpac Bank Account # …65 for the period 29 June 2020 to date;
(b)OO Bank # …83 Account for the period 14 June 2020 to date;
(c)Joint Westpac Bank Account # …34 for the period 30 June 2020 to date;
(d)ANZ Rewards Travel Credit Card for the period 15 June 2020 to date;
(e)PP Company AMEX for the period 29 June 2020 to date; and
(f)QQ Finance Mastercard for the period 14 July 2020 to date.
9.Copies of all records regarding the Husband's Shareholding Portfolio identifying each species of shareholding, the total number of shares held and the ASX value of each holding in the portfolio as at today's date;
10.Member statements and transaction reports in relation to the Husband's airline memberships for the period from 1 January 2016 to date and updated balance statements; and
11.A copy of the Trust and Office Ledgers in relation to the Husband’s family law matter since 13 July 2020 to present.
12.Copies of all contract or other arrangement for LL Company to acquire VG and all related documentation;
13.Copies of all documents recording the details of:
(a)The date of the acquisition of VG by LL Company;
(b)The terms of the acquisition of VG by LL Company; and
(c)Any details as to what would be received by parties' interest.
14.In relation to the property located at JJ Street, Suburb KK (the "Suburb KK Property")
(a)All correspondence (including emails and text messages) between the Husband and/or his agents and prospective purchasers of the Suburb KK Property;
(b)All correspondence (including emails) between the Husband and/or his agents and MM Real Estate regarding the Suburb KK Property;
(c)All correspondence (including emails) between the Husband and/or his agents and any other real estate agency regarding the Suburb KK Property;
(d)All appraisals and valuations obtained by the Husband and/or his agents for the Suburb KK Property;
(e)Any draft or final Contract for Sale for the Suburb KK Property; and
(f)A copy of the current Tenancy Agreement.
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 Swift & Swift has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
GILL J:
The general background of the current dispute between the parties is set out in the judgment of 25 November 2020, as it dealt with interim property distribution, spousal maintenance, disclosure and injunctive relief. Those circumstances need not be repeated here.
Against that background there are a number of matters controversial between the parties to be resolved. In general terms, they concern firstly the making of a further interim property adjustment pursuant to s 79 of the Family Law Act 1975 (Cth). In relation to this matter the primary position of both parties is that there should be a further adjustment made on an interim basis, although they disagree as to the quantum of such. The parties are further in dispute as to extent and nature of the injunctive relief that ought to be granted in respect of an $18 million payment that is to be made to a company associated with the parties, Swift Pty Ltd (SPL), in relation to the sale of V Group (VG), an entity partly owned by SPL.
The parties are also in disagreement as to whether or not a valuation previously ordered should still take place regarding a property owned by the husband in Suburb KK which was, at the time of hearing of the matter, subject to a contract for sale to be completed on 9 August 2021.
The parties were in further dispute as to various other restraints and as to disclosure issues.
However, at the time of the hearing a number of matters emerged as no longer being controversial between the parties. Firstly, although the parties have been in dispute regarding the husband's withholding of $1,000 owing under the spousal maintenance orders of 25 November 2020, the husband ultimately agreed that he would pay the outstanding amount, despite the complaints that he makes about that payment. Secondly, the husband agreed that he would return read-only access to the wife for the bank accounts for the two entities SPL and NN Pty Ltd, thereby resolving one of the disclosure issues.
Orders sought by the applicant wife
In her outline of case document, the wife describes that she pursues relief by her Application in a Case filed 16 July 2021:
(a)As to the distribution payment to each party of $3,500,000 from the proceeds of sale of V Group (“VG”);
(b)As to the payment to the wife of $50,000 from the proceeds of sale of the Suburb KK Property;
(c)To preserve the balance of the proceeds of sale of VG;
(d)To enforce compliance with previous Orders (resolved by consent by the husband’s agreement to pay the spousal maintenance arrears of $1,000 to the wife);
(e)To address ongoing issues relating to disclosure (partially resolved by consent insofar as the husband will return read only access to the accounts for SPL and NN Pty Ltd to the wife);
(f)That the husband pay the wife’s costs.
Orders sought by the respondent husband
By his Response to Application in a Case filed 29 July 2021 the husband seeks the following:
(a)Orders regarding the husband receiving the net proceeds of the sale of the Suburb KK property, with a notice requirement prior to dealing with such proceeds;
(b)Discharge of the obligation to have the Suburb KK property valued;
(c)That in relation to the proceeds of the sale of the VG interests, that the wife receive $500,000, that $4,500,000 be retained in a controlled monies account, to be dealt with subject to the joint agreement of the parties, with the balance to be retained by SPL (effectively controlled by the husband) to deal with, without restraint;
(d)In the alternative that 72 per cent of any proceeds received from the VG sale be restrained subject to the agreement of the parties, with the balance to be dealt with by SPL without restraint;
(e)Disclosure requirements upon the husband in relation to the disposal of the VG interests by SPL, coupled with obligations to provide the single expert valuer with information regarding the disposal and other information as sought by the single expert;
(f)Various other restraints and disclosure obligations; and
(g)The husband sought his costs.
DOCUMENTS RELIED UPON
The applicant wife relies upon:
(a)Application in a Case filed 19 July 2021;
(b)Affidavit filed 19 July 2021;
(c)Financial Statement filed 19 July 2021;
(d)A case outline document; and
(e)Various exhibits tendered at the interim hearing on 3 August 2021.
The respondent husband relies upon:
(a)Response to Application in a Case filed 29 July 2021;
(b)Husband’s Affidavit filed 29 July 2021;
(c)Exhibits to the husband’s affidavit dated 29 July 2021;
(d)Financial statement filed 29 July 2021;
(e)Orders of Gill J made, and Reasons for Judgment published, on 25 November 2020; and
(f)Various exhibits and a case outline document.
THE DISPUTED MATTERS
The contested issues may be divided into issues concerning partial property settlement, injunctive relief in respect of the receipt of proceeds from the VG sale and Suburb KK property sale, the valuation of the Suburb KK property post sale, and disclosure orders.
The partial property distribution
The primary positions of each party accepted the payment of a sum to the wife as a partial property settlement, although they differed as to the amount. To the extent that the husband accepted that a payment of $500,000 could be made to the wife, he tacitly accepted that such a payment did not prejudice the ultimate disposition of the case, or his claim in respect of property adjustment. However, the husband sought that order amidst a suite of other orders. He maintained criticism as to the basis for the wife’s pursuit of a partial adjustment.
Prior to moving to the wife’s claim for partial adjustment, it should be observed that the wife abandoned the claim that she initially made that, pursuant to s 114, injunctive relief should be granted to compel the payment of a dividend to the wife from SPL.
However, abandoning this issue still left the wife’s claims pursuant to s 79, being firstly that she should receive $3.5 million from the recent sale of shares held by SPL and secondly, that she should receive $50,000 from the proceeds of sale of the property at Suburb KK immediately.
The relevant law in respect of interim s 79 adjustments is set out in the judgment of 25 November 2020. As canvassed in that judgment, Strahan & Strahan [2009] FamCAFC 166, Zadenev & Zadenev [2013] FamCA 838 and Wenz v Archer (2008) 40 FamLR 212 set out the steps in determining whether to make an interim property distribution. Considerations relevant to the analysis are indicated in the judgments of Shelbourne & Shelbourne [2019] FamCAFC 196 and Zschokke & Zschokke (1996) FLC 92-693.
Subject to the interests of justice, the usual approach in respect of s 79 is a once and for all order (Swift & Swift [2020] FamCA 991 at [16] (“Swift”)). In moving from that usual approach it is not necessary for the wife to provide compelling reasons. However, that does not detract from the underlying consideration that it is the reasons that are provided by the wife that are what are directed to whether the interests of justice point to a move away from a once and for all approach in this case (Swift at [16]).
The wife, however, proposed three reasons why that position should be departed from in this instance:
a.To secure the Suburb C property in which she currently lives by paying out the balance of the outstanding mortgage on that property;
b.For the situates of life, being an undefined amount to be paid for undefined reasons; and
c.For the further funding of her litigation under circumstances where she has already spent $240,000 but, contrary to previous estimates now faces an overall legal bill, incorporating a potential final hearing, in the sum of $600,000.
The first and third of the above bases rested upon assertions relating to the husband's non-compliance, tardy compliance, non-disclosure, and delayed disclosure as undermining confidence that he will discharge the obligations previously imposed upon him in respect of the Suburb C property and as greatly increasing the cost of the wife’s litigation under circumstances where he holds or controls the vast bulk of the pool of property of the parties.
The second of the bases proposed by the wife, being the ephemeral “situates of life” was unexplained.
The wife’s case for property division was therefore heavily reliant upon the conduct of the husband. Similarly, she was reliant upon these matters to found the basis for the restraint of the husband in dealing with the proceeds of the sale as the further implication drawn by the wife is that the husband will deal with the proceeds of the sale of the VG interests as he chooses and without regard for the wife.
The wife identified a number of matters.
The first related to a disparity between the husband's income as disclosed to the Court by him for the hearing of November 2020 with the financial returns that he has subsequently disclosed to the wife on 28 July 2021. The wife notes that the husband initially disclosed receiving a wage of $160,000 per year, along with other payments comprised of drawings, loans and trust distributions for the 2020 year of some amount in excess of $1.3 million.
Against those amounts the wife points to Exhibit W3, being an Income Tax Return Summary, which has now disclosed an income to the husband as at 30 June 2020 of $2.7 million. She observed that this significantly differed from what was asserted by the husband as at November 2020. She further observed that according to the husband's current financial statement he now receives an income just shy of $3,600 per week, an amount increased from that which he had disclosed to the Court as at November 2020.
The wife complains that she was not on notice of these differing payments being made to the husband until approximately a year beyond when it was that the payments had been made. For example, she notes that the husband was paid a dividend of $1.8 million on 30 June 2020 yet she was not advised of such payment having been made until receiving the financial returns from the husband on 28 July 2021.
It may be noted that if the husband received such a payment on 30 June 2020, it was not made apparent to the court at the hearing in November 2020.
The wife further complains that the payment is a dividend from SPL under circumstances where, despite being an equal shareholder in SPL, and a holder of the same class of shares, the wife received no corresponding dividend from SPL.
In answer to the wife's criticisms about the payment of the dividend the husband raised a number of contentions. Firstly, he says that the magnitude of what he has received as at 30 June 2020 was adequately described in the November judgment, where his receipts were described as “in excess of $1.3 million”. Whilst grammatically correct, there is, however, a not insignificant difference between “in excess of $1.3 million” and his actual overall receipt of $2.7 million. There is also a substantial difference between providing material that only allows an assessment of the income as “in excess of $1.3 million” when in fact the income, at a point 4 months earlier, was $2.7 million.
The wife’s criticism is well placed.
The husband further contends that the dividend he received was the equivalent of the then existing division 7A loan from SPL, which was expunged by the payment of the dividend. However, it may also be observed that the division 7A loans were only noted to be at $1.5 million, not the $1.8 million and so this does not fully describe the significance of the payment of the dividend.
Whilst this indicates that to the extent that the payment was for a division 7A loan the pool of property has not been depleted, it detracts neither from the late notice, nor does it identify what has happened to the funds as a whole.
Thirdly, the husband contends that although he and the wife both hold shares in SPL, the wife holds her shares on trust for him. This contention received some support from the ASIC register as reproduced at Exhibit W4. There it is recorded that the wife does not hold those shares for her own benefit. It is unclear whether this is contentious, but would explain the difference in the payment to the husband.
Allied to these complaints, the wife has also made complaints about lack of disclosure. She identifies that she has specifically sought a notice of the distributions that have been made to the husband and associated persons such as his family members up to 6 November 2020. She made the request and repeated the request from 16 December 2020. In response the husband explained that there were no such distributions to advise of, and that on 16 February 2021 he identified that no further payments had been made.
The wife further complains that the husband has advised her that there will be future delay regarding disclosure of trust distributions being made for the financial year ending 30 June 2021. He asserts that such distributions will not be finalised until May 2022 and so will not be disclosed until then.
It is somewhat difficult to understand this advice from the husband. While it may be understandable that he will not be in possession of his full accounting records for the financial year until they are finalised, and that they may not be finalised until May 2022, it cannot be the case that the trust distributions will not be finalised until that date. If the trust distributions are to have occurred during the financial year that ends on 30 June 2021 then they will have taken place by that date, and will accordingly be known by the husband to have taken place by that date. There is no justification for delaying informing the wife as to such distributions in the manner forewarned by the husband.
While the wife also complains regarding distributions having been previously made to the husband’s family members from the SPL Family Trust, observing that distributions were made to the husband’s deceased father, these complaints appear to predate the previous hearing.
In further support of her contention as to the husband’s unreliability, the wife complains that following the judgment of 25 November 2020, where an agreed order was omitted, being an order that required the husband to remove his partner as an officeholder for SPL, the wife sought the husband's consent for insertion of such an order pursuant to the slip rule. Although the husband initially gave that consent, he subsequently withdrew it. He asserts that the withdrawal is well explained on the basis that he has subsequently removed his partner as an officeholder. However, he did not do so for approximately six months after the wife had commenced making requests for the amendment of the order under the slip rule.
In relation to complaints regarding disclosure the husband says that he identified the timing within which disclosure would be made for the 2020 financial year, informing the wife in April 2021 that he was waiting for the completion of accounts. He notes that Exhibit W5, the wife's request for disclosure made on 25 June 2021, was a request prior to when he said that the accounts would be available. Similarly, the wife’s current application of 19 July 2021 was made prior to when he said he would make disclosure. He then says that on 28 July 2021, and in advance of the date that he had originally nominated, he disclosed the material in excess of 900 pages. He submits that the wife’s request for further disclosure was in the context of previous disclosure made by him, and where he advised that he was awaiting the documents that he has now produced. He has further advised that other documents are not in existence or not relevant.
While this may explain accounts not being produced to the wife for the 2020 financial year until July 2021, it does not explain the lack of specific disclosure complained of by the wife, such as to the real level of remuneration received by the husband for that year, or the trust distributions that had taken place.
There remain further outstanding disclosure issues. Exhibit W6 constitutes the wife’s request in relation to what the husband has said he either cannot or will not produce. One particular document or class of documents that have not been provided are documents evidencing the sale of the VG shares by SPL, being the sale which will see SPL receiving something in the order of $18 million. This, on its face, is an important transaction and it is appropriate that the wife should receive information and documents under the husband's control in relation to that transaction. The husband has advised that he will provide such documents when they are to hand. However, his evidence is also that he does not have the documents and will never be provided with documents because of confidentiality requirements in respect of them.
These matters were identified by the wife as circumstances justifying the $3.5 million and $50,000 distributions that she seeks. They need to be considered in the light of the three bases put forward by the wife for the partial distributions.
The three bases were to secure the Suburb C property, for the situates of life and for legal fees exceeding the previous estimate put forward.
The husband resists the justification put forward by the wife in respect of securing the Suburb C property because he says he is being utterly compliant with the orders relating to that property. It was not suggested otherwise by the wife, although she has pointed to other defaults by the husband, particularly relating to disclosure.
However, the other defaults do not point to a sufficient likelihood of non-compliance by the husband in respect of Suburb C to justify such a step.
It may be observed that the situates of life pursued by the wife, being absent content, is also unpersuasive of the appropriateness of a partial settlement.
The husband otherwise resists the payments pursued by the wife on the basis that, even without the requirement for compelling reasons, the payments in the sum sought by the wife are not justified and further, on his case, the adjustment potentially prejudices the ultimate disposition of the property.
That submission is made in the context that the husband offers a payment of $500,000, a position that implicitly accepts that some further adjustment of the property is both just and equitable and that such an adjustment would not prejudice his case.
This amount more than meets the key remaining reason for payment to the wife to ensure that she is able to meet her further legal costs.
While the husband submits that the wife’s costs are excessive, and while they may be seen as monumentally large costs, they cannot as yet be determined to be excessive under circumstances where there is a complex pool, the husband is the information holder and appears to have been, at best, sluggish in complying with his disclosure obligations. The wife is correct to point to the husband’s conduct as an explanation for her accelerating legal costs, with those providing an adequate to depart from a once and for all approach.
In the context of the husband’s primary position, these matters point to the appropriateness of the payment of $500,000, as an amount that does not prejudice the parties’ interests, and as an amount more than adequate for the meeting of legal fees (even if it turns out not all of the funds will be ultimately required for such).
The restraints upon the disposal of the proceeds of the VG sale to SPL
The wife's position then is that there is a risk to the pool involved in the husband having unfettered control of the sale funds to be received by SPL. That risk is seen in the light of the prior flow of money, in a manner inconsistent with what was subsequently disclosed to the Court and which was advised to the wife following a significant delay of approximately 12 months.
The husband submitted that any disclosure issues are matters that go to the issue of costs rather than the issue of restraint. That is not the case. To draw a bright line against which it is suggested that non-disclosure cannot be a matter that informs the broad powers of the Court to grant injunctive relief creates a legal distinction without justification. This is particularly the case where the non-disclosure or late disclosure in the face of proceedings is connected to a large or significant disposition of property, and the lateness of the disclosure means that knowledge of such a disposition was withheld from the other litigant.
The husband’s conduct in relation to making significant dispositions to himself, and delaying disclosure to the wife of such, as seen in the significant variance between what was disclosed for the court in November 2020 and what was actually the case, points to risk of disposal in the absence of some restraint being in place.
It should, however, be noted that the husband does not seek unfettered use of the VG funds. He agrees to there being some restriction in relation to his use of the proceeds of the sale of VG on the basis that the proposed restraint that he puts forward is enough to secure the wife's contested 50-50 claim. On either set of orders proposed by him there is to be the practical restraint of a portion of the sale proceeds being in a controlled monies account and subject to authorisation for withdrawals being given by the parties. His orders sought variously provide for either $4.5 million or 72 per cent of the proceeds to be restrained, and the balance controlled by SPL, which in turn is controlled by the husband.
The husband concedes that he puts forward no positive case of prejudice to himself should the restraints be made as proposed by the wife. The wife’s primary application is that each party receive $3.5 million at this stage. Implicit in such orders is her acceptance that providing the husband with unfettered access to a portion of the funds will not prejudice the ultimate disposition of the case.
The legal framework in relation to granting injunctive relief was also canvassed in the previous judgment (Swift at [61]). In that judgment (at [61]) I quoted from In the Marriage of Sieling (1979) 24 ALR 357 at 374:
The power to grant injunctions is, of course, a discretionary power, not to be exercised lightly. The court must balance the hardship to each party of granting or refusing an order, and frame its order in such a way as to impose no further restriction that is necessary to achieve the protection of the applicant's interest. It will not lightly interfere with the rights of an owner of property on the basis of a vague or uncertain claim. There must be circumstances arising out of the marital relationship which make it necessary to restrain, temporarily, a spouse from using his or her property rights to the detriment of the other party. Within these limits, it is our view that there is power to grant an injunction in respect of property under s 114(1) where this is necessary to prevent the frustration of a later claim under s 79.
The considerations that underpin the making of injunctions of the nature of those sought by the wife pursuant to s 114 are that there be both a serious issue to be tried between the parties, here as to the adjustment of property, and that there be a real risk of dissipation. The first issue is uncontroversial, in that it is accepted by the parties that the wife has a proper claim for the adjustment of property. The second aspect is answered by the husband’s conduct assessed above, and in particular the conduct involving the dispositions that were not disclosed at the November 2020 hearing and not disclosed to the wife until approximately July this year. Where there is a significant further sum about to come under the control of the husband, such conduct is sufficient to demonstrate risk.
However, it is also the case that the terms of the injunctive relief be those that are reasonably necessary, in this case, to protect the wife’s claim under the Act, and that the balance of convenience supports the granting of the relief.
The husband has not identified prejudice flowing from arrangements proposed by the wife. He has, by his alternate orders pursued, accepted that up to 72 per cent of the proceeds may be restrained. There was no suggestion by the wife that securing 72 per cent of the proceeds would be insufficient to protect her claim. The balance of convenience and reasonable necessity supported by the risk identified by the wife are met by restraints that, taking into account the $500,000 payment to the wife, do not exceed the 72 per cent mark
In arriving at this position, it should be recognised that the arrangements proposed by the husband were so proposed in the context that they fell within a suite of orders. While it is not the case that any particular protection proposed by the husband is consented to by him absent its place within the suite of orders, the nature of the proposals in his orders are still apt to illuminate the necessary balance of convenience.
Accordingly, orders will be made to restrain 72 per cent of the proceeds, from which is to be released the sum payable to the wife.
The Suburb KK property
The wife further seeks that there be a valuation conducted in relation to the Suburb KK property which has now been sold. As noted previously, a valuation was provided for in the earlier orders, but has not yet been completed. Rather, the property has been sold under circumstances where the husband identifies that it was on the open market for a period and where he says that he has taken the advice of his real estate agent in negotiating the sale price. He has offered the wife access to the real estate agent. Accordingly, he says that a valuation is no longer required.
The wife alleges that the sale is under market value, falling beneath an estimate given by a real estate agent.
Noting the obligations set out in the then applicable Rules for the conduct of proceedings at Rule 1.04 of the Family Law Rules 2004 (Cth), or now as Rule 1.04 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (the Rules), as they provide for proceedings to be resolved inexpensively as well as justly, this matter may be resolved simply.
The sale is apparently a sale on the open market. That means that a valuation is not required unless there is an adequate contraindication as to the sale truly being below value. In the face of the husband's evidence the wife's assertions and the appraisal that she has received are insufficient to warrant a valuation being maintained as a step in the litigation process. Accordingly, in the absence of evidence that sufficiently demonstrates the need for such valuation to still take place the order will be discharged for the valuation of the Suburb KK property.
The wife also sought that she receive a portion of the net proceeds of this property. Noting the consideration above of the partial distribution to the wife such a further distribution is not justified, even in circumstances where the wife indicates that there will be a delay before she receives the other proceeds the subject of these orders.
Disclosure issues
The husband, during the hearing of the matter, indicated that he would reinstate the wife’s read-only access to the bank accounts of SPL and NN Pty Ltd. It is difficult to understand why such access was previously removed, particularly as not only is it a significant asset of the parties, but the wife is also a director and shareholder. The concession by the husband simplified some of the disclosure issues.
The wife seeks orders for disclosure of documents relating to the sale of the VG interest by SPL. The husband by his Response to an Application in a Case seeks orders to impose such an obligation upon himself. There can be no doubt about the importance of the wife being appraised of the sale process from SPL. In circumstances where the wife was not given prior notice of the sale itself, the obligations of disclosure already imposed upon the husband should be reinforced by specific orders in relation to such documents, as sought by the wife at Order 5 of the orders sought by her Application in a Case.
The wife also seeks that the documents concerning the sale of the VG interest be provided to both herself and the single expert valuer in the proceedings. The husband contends both that he will provide documents evidencing the agreement for sale should they come into his control, but also that being subject to confidentiality requirements, he will not come into possession of such. Again it appears an odd position that the wife, as a co-director was not appraised of the documents at least in that capacity, but this was not an issue explored at the interim hearing, and so no particular view can be taken about it.
Given the husband’s position, orders will be made for the provision of documents under his control. It appears however that the wife will be forced to have recourse to the use of a subpoena to obtain the documents.
The wife also seeks a suite of other documents, as set out in Annexure A of her Application in a Case. The husband agrees to such an order by his Response in an Application in a Case conditioned on the provision of such being within fourteen days and only to the extent that he has not already done so. The husband is silent as to the directions sought by the wife for the filing of an undertaking and a schedule of documents pursuant to the Rules. It is appropriate that such directions be given in the context of the less than timely disclosure of the husband’s 2020 financial year income as described earlier in the judgment. The husband will be directed to file an undertaking pursuant to Rule 6.02 of the Rules. Further the husband will be directed to provide a list of documents to which the duty of disclosure applies, as provided for in Rule 6.09.
Other restraints
The wife seeks restraints from closing various bank accounts, further encumbering the Suburb C property, providing the single expert with the documents concerning the sale of the VG interest, and from changing office holders for either SPL or NN Pty Ltd.
The orders made in November 2020 already prevent the further encumbering of the Suburb C property and so this is not a matter that requires further orders.
Whilst the sale documents for the VG interest should be provided to the single expert, as noted above, this appears to be a matter that will need to be addressed by the issue of a subpoena, unless the documents unexpectedly come back into the possession or control of the husband.
The husband offers, by his Response to an Application in a Case, to provide the wife with all sale documents regarding the Suburb KK property and, after the payment of relevant expenses, to refrain from dealing with the proceeds without giving the wife fourteen days’ notice of his intention to do so. The husband, again by his Response to an Application in a Case seeks orders that restrain him from altering the office holders, or shareholders in SPL or NN Pty Ltd, or from closing the associated bank accounts without giving fourteen days’ notice of his intention to do so.
Sufficient protection is given to the wife, despite the context of previous alterations of office holders, or withdrawal of access to bank accounts, by a notice provision being imposed upon the husband. However, the 14 days that he proposes is insufficient. Rather, 28 days should be the notice provision to give the parties better opportunity to resolve the issue or, if necessary to have the matter relisted. The husband pointed to no matter that would indicate that a notice period greater than the proposed fourteen days would be an onerous imposition.
Costs
Each party sought costs. In the event that a party pursues costs directions will be made to facilitate their determination in chambers or, if requested by the parties, in Court.
I certify that the preceding seventy-five (75) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Gill. Associate:
Dated: 2 September 2021
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