Waugh & Waugh
[2000] FamCA 1183
•9 October 2000
[2000] FamCA 1183
FAMILY LAW ACT 1975
IN THE FULL COURT OF THE
FAMILY COURT OF AUSTRALIA
AT SYDNEY Appeal No.ALE11 OF 1999
File No. SY3992 OF 1999
IN THE MATTER OF: WAUGH
BARRY ARTHUR
Appellant/Husband
AND: WAUGH
ROSEMARY SHERRYL
Respondent/Wife
CORAM: LINDENMAYER, COLEMAN & BROWN JJ
DATE OF HEARING: 28 OCTOBER, 1999
DATE OF ORDER: 29 OCTOBER, 1999
DATE OF PUBLICATION OF JUDGMENT: 9 OCTOBER, 2000
JUDGMENT OF THE COURT
Appearances: Mr Errington of Counsel (instructed by McDonell Milne Toltz, Solicitors, 75 Castlereagh Street, Sydney, NSW, 2000) for the Appellant/Husband
Mr Connor of Counsel (instructed by Clinch Neville Long, Solicitors, 95-99 York Street, Sydney, NSW, 2000) for the Respondent/Wife
INJUNCTIONS – Preservation of property – A risk of disposal of property in order to defeat a judgment must be established before ordering an injunction
Stowe and Stowe (1981) FLC 91-027; Jackson v Sterling Industries Ltd (1987) 162 CLR 612 and Cardile and Ors. V. LED Builders Pty Ltd (1999) 162 ALR 294 discussed and followed.
Family Law Act s114(3)
This was an application instituted by the husband for leave to appeal, and in the event that leave was granted, an appeal, against interlocutory injunctions, of both a mandatory and prohibitory nature, made by Rowlands J on 28 June, 1998. The injunctions had the combined effect of imposing obligations on the husband which delineated the specific manner in which particular funds could be dealt with, in conjunction with restraining him from dealing with certain income, trading entities and trusts, pending the determination of a property settlement between him and his former wife.
The husband and the wife, both aged 44 at the time of the appeal, were married on 6 February, 1981, and finally separated when the wife left the matrimonial home on 14 February, 1999. There were two children of the marriage, a son aged 15 and a daughter aged 13.
The substantive proceedings, regarding the parties’ property, were commenced by the wife on 1 April, 1999.
On 11 June, 1999, a further application filed by the wife which sought various injunctions restraining the husband from certain dealings in relation to his business entities, was heard by JR Johnston and interim orders, in favour of the wife, were made.
The matter then came before the trial Judge on both 22 and 25 June, 1999, for re-hearing.
In his judgment, the trial Judge noted the need to preserve, if possible, the substantial assets in contention, whilst still allowing the husband’s enterprises to trade.
Given that the husband’s business was potentially hazardous and had previously been close to financial disaster, the trial Judge found the wife’s concerns were justified. On the balance of convenience, his Honour found that given the need to do justice between the parties and the risk associated with the husband’s ventures, it was desirable to order an injunction to sufficiently preserve assets capable of satisfying the wife’s claim, whilst still permitting the husband to trade with minimum inconvenience.
Subsequently, his Honour restrained the husband from dealing with property, rental income, trusts, business entities or ventures and caveats, in a way which would possibly alter the benefits of the wife. His Honour also ordered the husband to inform the wife of any new business ventures and provide her with particular documents.
In addition to requiring the wife to confirm her undertaking as to damages, his Honour restrained the wife from contacting the husband’s business associates and any of the companies or trusts, except to seek documents pursuant to the orders.
On Appeal, the husband submitted that the trial Judge erred, firstly, through failing to apply the correct legal principles when making the interlocutory injunctions, and secondly, through failing to perceive that the evidence relied on by the wife failed to provide any basis for the imposition of the injunctions.
Held, in granting leave to appeal and allowing the appeal,
The trial Judge erred in law through starting from the premise that the wife was entitled to proper security over the property unless extraordinary circumstances existed to persuade the court that an injunction was not necessary.
The trial Judge erred in law through failing to consider whether the imposition of the injunction was necessary. Before the Court can make an interlocutory injunction, it must be satisfied that a risk of disposal of property in order to defeat a judgment is evident. The trial Judge erred through failing to determine whether the husband possessed such a perverse intention, as opposed to an intention to merely continue trading as he had done prior to and since separation.
The trial Judge erred in law through failing to consider whether the injunctions went no further than necessary to prevent abuse or frustration of the Court’s process with respect to the substantive proceedings.
REPORTABLE
INTRODUCTION
By an application filed on 28 July, 1999, Barry Arthur Waugh (“the husband”) sought leave to appeal against interlocutory injunctions granted by Rowlands J on 28 June, 1999, at the suit of Rosemary Sherryl Waugh (“the wife”). Those interlocutory injunctions (“the orders”) were both mandatory and prohibitory, in that they obliged the husband to deal with certain funds either then under his control or which might come under his control, in certain specific ways, and prohibited him (with certain limited exceptions) from dealing otherwise with those funds and also from doing some acts in relation to the conduct of the business carried on by him through a number of trusts, without giving the wife advance notice thereof.
The orders were made, ostensibly, under s.114(3) of the Family Law Act 1975 (“the Act”), in aid of proceedings which had been instituted by the wife on 1 April, 1999, wherein she sought final orders that the husband pay her “by way of property settlement the sum of $5,000,000” and “by way of final spousal maintenance the sum of $2,000 per week”, those orders being sought pursuant to ss.79 and 74, respectively, of the Act. The husband had filed a response to the wife’s application in those proceedings (“the substantive proceedings”) in which he opposed the final orders sought by her and sought orders the effect of which would be that the wife would retain assets to the net value of about $550,000, and he would retain the balance of the parties’ assets and liabilities which, if the assets and liabilities of all the trusts are included, would seem, on his figures, to amount to something a little over $6,000,000 (Appeal Book p.136).
In accordance with the usual practice of the Court, on the hearing of the husband’s application for leave to appeal we heard argument, also, on the proposed appeal, based upon the grounds of appeal set out in the draft Notice of Appeal annexed to the husband’s solicitor’s supporting affidavit filed on 28 July, 1999 (Appeal Book p.25).
At the conclusion of the appeal hearing on 29 October, 1999, we made orders granting leave to appeal, allowing the appeal, setting aside the injunctions granted by the trial Judge, and remitting the wife’s application for interlocutory injunctions for rehearing. We also made a much more limited order restraining the husband from dealing with two particular properties pending the determination of the remitted proceedings, and ordered that the wife pay the husband’s costs of the application and appeal, but stayed the operation of that order until the determination of the substantive proceedings or earlier order of a Judge of the Sydney Registry.
At the time we made those orders we did not give our reasons for so doing, but indicated that we would publish those reasons at a later time. These are the reasons for the orders which we then made.
BACKGROUND
At the time of the hearing before the trial Judge, both parties were aged 44, and both are now one year older. They were married on 6 February, 1981, and separated, finally on 14 February, 1999. There are two children of the marriage, a son and daughter who were aged, respectively, 15 and 13 years, at the date of the hearing,
As previously indicated, the substantive proceedings were instituted by the wife on 1 April, 1999. In his reasons for judgment (at Appeal Book p.11) the trial Judge noted that those proceedings were listed for hearing over 8 days commencing on 3 April, 2000.
On 10 June, 1999, the wife filed, and served upon the husband’s then solicitors, a Form 8 application seeking a raft of interlocutory orders restraining him, both personally and in his capacity as shareholder and director of a number of named companies, and as trustee, appointor or guardian of any trust in which he is a trustee, appointor, guardian, or potential beneficiary, from doing, or procuring the doing of, a range of acts in relation to a number of properties, companies and trusts referred to in the application, and also (by paragraph 14 thereof) restraining him from instructing his then solicitors, or any member or employee of that firm, to “represent, advise or act for” him in the proceedings. She filed and served with the application a supporting affidavit containing 50 paragraphs which, with annexures, encompassed some 62 pages (Appeal Book pp.58-119).
Having presumably persuaded a Deputy Registrar of the Court that there was a degree of urgency about her application, the wife’s solicitors obtained an expedited return date for that application, namely 11 June, 1999 (the day after it was filed and served), on which date it came before Judicial Registrar Johnston, at 10am. When the matter was called on before the Judicial Registrar, the husband was represented by counsel (Mr Harding) instructed by the husband’s then solicitors, but Mr Harding’s appearance was limited to informing the Judicial Registrar that, in view of the wife’s assertion of a conflict of interest involving a member of that firm of solicitors, the solicitors, and Mr Harding as counsel retained by them, were seeking leave to withdraw from the proceedings, which leave the Judicial Registrar granted. Mr Harding and the solicitors thereupon withdrew, and the matter proceeded before the Judicial Registrar in the absence of the husband or anyone representing him.
Although a copy of the orders made by the Judicial Registrar on that date does not appear in the Appeal Book, it seems from the transcript of the proceedings before the trial Judge on 22 June, 1999 (at Appeal Book pp.173 line 30 and 188 line 40 to 189 line 20) that Judicial Registrar Johnston made orders substantially in the form sought by the wife in her application. It also appears from that transcript (at Appeal Book p.173 line 32) that, rather than then adjourning the proceedings to a further fixed date for hearing, with directions for service of the order upon the husband, and reserving liberty to him to apply earlier to set aside or vary the orders (as would normally be the case if the orders had been made ex parte), the Judicial Registrar considered that, as the husband had been regularly served, it was sufficient to reserve to the husband liberty to restore the matter to the list on short notice, and that it was by that mechanism that the husband was able to arrange a relisting of the matter before the trial Judge on 22 June, 1999 (see the letters at Appeal Book pp.168-171).
Although counsel for the husband, Mr Harding, when announcing his appearance before his Honour on 22 June, 1999, said that he appeared for “the applicant husband”, the Appeal Book does not contain any initiating process filed on behalf of the husband. The only documents filed by the husband in relation to the wife’s Form 8 application, which appear in the Appeal Book, are a response, in Form 8A, dated 18 June, 1999, an affidavit of the husband, sworn on 18 June, 1999, and a financial statement sworn on 23 June, 1999. All of those documents are recorded as having been filed on 24 June, 1999, but that date is misleading, at least so far as the response and the affidavit are concerned, since it is clear from the transcript of 22 June, 1999 (at Appeal Book p.173 lines 33-36) that those two documents were before his Honour on that date. Presumably they were handed up to his Honour in Court by Mr Harding without the usual formal request for leave to file them, and then not formally filed until two days later.
The hearing before the trial Judge took a somewhat unusual course. It took place in two parts, the first on 22 June, 1999, and the second on 25 June, 1999. On each occasion, the wife was represented by Mr Connor of counsel, whilst the husband was represented on 22 June by Mr Harding and on 25 June by Mr Lloyd, both of counsel. At the conclusion of the hearing on 25 June, his Honour, having indicated, in fairly broad terms, during the course of argument, the nature of the orders he was disposed to make, invited the representatives of the parties each to submit, by 11am on Monday 28 June, 1999 (when his Honour would be sitting on circuit at Newcastle) a draft of orders for his consideration, whereupon he would issue the orders from Newcastle at 2.30pm on 28 June, probably without any further appearance or argument (although he left open the possibility of further submissions by telephone hook-up if required), and subject to the filing by the wife, in the meantime, of an undertaking as to damages “in classic form”. He also continued the existing orders of the Judicial Registrar until 3.30pm on 28 June, 1999 to cover the intervening period, pending the issue of his own orders: see transcript of 25 June, 1999 at Appeal Book pp.217-220.
In accordance with the arrangements put in place on 25 June, 1999, his Honour announced his orders in Court at Newcastle at or after 2.30pm on 28 June, 1999, having earlier that day (see judgment at Appeal Book p.12) transmitted a copy of the form of orders he proposed to make to the solicitors for the parties to enable them, if they wished, to seek to make further submissions as to the form of the orders by telephone hook-up (see paragraph 18 of the orders at Appeal Book p.9), an opportunity of which neither party apparently sought to avail himself or herself. The orders then issued in the form which appears at Appeal Book pp.5-9. Those orders seem to be a combination of parts of two drafts, the first (containing orders 1-11) having the appearance of having been submitted by one of the parties (probably the wife) and slightly amended by his Honour, and the other (containing orders 12-18) having the appearance of having been prepared by his Honour, or at least typed by his associate, whether based upon some draft submitted by one of the parties, or otherwise, is unclear.
The origin of the notations A to D (at Appeal Book p.9) is unclear. From the cypher or document identification code which appears below those notations, when compared with that which appears at the bottom of the letter from the wife’s solicitors (at Appeal Book p.171), and from the apparent similarity between the font in the type-script of those notations and that in orders 1 to 11 (at Appeal Book pp.5-7), we think it is likely that these notations originated in a draft provided by the wife’s solicitors. Our only comment in relation to those notations is that we have been unable to find, in any of the material in the Appeal Book, any foundation for what is recorded in notations B and C, and the wife’s undertaking as to damages, referred to in notation D as being “annexed”, is not annexed to the copy of the orders in the Appeal Book, nor is it included elsewhere in the book.
Although nothing turns on the matters referred to in the two immediately preceding paragraphs, so far as this appeal is concerned, we think it appropriate to record that we regard it as less than satisfactory that orders of the Court, which have potentially serious consequences for the parties, should be issued in such an irregular way, and that they should contain notations which have no apparent foundation in the material which was before the Court and upon the basis of which the orders were made.
When announcing the orders in Court on 28 June, 1999, his Honour gave no reasons for the orders he then made. However, he published “reasons for decision” in relation to those orders on 9 September, 1999, and these appear at pp.10-14 of the Appeal Book. We shall have occasion to refer to aspects of those reasons below. At this point, however, we think it appropriate to refer to one aspect of his Honour’s judgment, which has caused us some concern about the approach which he possibly adopted to the proceedings before him.
At Appeal Book p.11, after referring briefly to the proceedings before the Judicial Registrar on 11 June, 1999, his Honour said this:-
“The Judicial Registrar made ex parte orders of the kind indicated on 11 June, 1999. An appeal from the decision of the Judicial Registrar (or an application for injunctions in a different form) came to me.”
With respect to his Honour, we think that that statement involves a misconception by him as to the nature of the proceedings which were before him for determination on 22 and 25 June, 1999. Whilst it is perhaps not strictly accurate to describe the Judicial Registrar’s orders as “ex parte”, since they were made after service upon the husband’s then solicitors on the record, we think his Honour was correct to treat those orders as if they had been made ex parte. After all, they were clearly made in the absence of the husband and, by reserving to the husband liberty to restore “the matter” to the list on short notice, the Judicial Registrar clearly intended his orders to be interim orders to operate only until such time as the Court reviewed “the matter” in the event that the husband availed himself of that right of relisting. Although the husband did not, pursuant to O.36A, r.7 of the Family Law Rules, file an application for review, by the Court, of the Judicial Registrar’s exercise of judicial power embodied in his orders (so as to bring into operation s.26C(2) of the Act), we consider there can be no doubt that what his Honour was required to undertake, when the proceedings came before him on 22 June, 1999, was a rehearing of the wife’s application of 10 June, 1999, and not an appeal from the orders of the Judicial Registrar, nor “an application for injunctions in a different form”, except to the extent that by his response to the wife’s application the husband sought orders different from those sought by the wife, or to the extent that counsel for the parties effectively amended the form of the orders sought by their respective clients in the course of the proceedings before his Honour.
THE ORDERS
The orders made by his Honour on 28 June, 1999, which are the subject of the husband’s application for leave to appeal, are those numbered 2, 3, 4, 5, 7, 8 and 10. Those orders provide as follows:-
“2. That until further Order that the Respondent husband do no act or thing to remove, charge, encumber or otherwise deal with any of the monies held in the bank account of One Five Seven Pty Limited (ACN 007 604 721) ‘157 P/L’ with the Australia and New Zealand Banking Limited at 324 Queen Street, Brisbane being account number [number deleted] (herein after ‘the 157 bank account’).
3. That until further order the Respondent husband do all acts and things to cause all rentals received in relation to the ‘Ann Street property’ (as defined in the wife’s Form 8 Application) to be banked into the 157 P/L bank account and that the Respondent husband do all acts and things to cause all rentals received in relation to the ‘Hindmarsh property’ (as similarly defined in the wife’s Form 8 Application) to be banked to the account of Fairstone Investments Pty Limited (ACN 073 965 894) (hereafter ‘Fairstone Investments’) with the Adelaide Bank at 169 Pirie Street, Adelaide being account number [number deleted] (‘the Fairstone Investments Bank account’) and that any further rental receipts in relation to the Ann Street or Hindmarsh Square properties be banked into the 157 bank account and the Fairstone Investments bank account respectively.
4. That until further Order the Respondent husband do all acts ad things necessary to ensure that rentals for the Hindmarsh Square and Ann Street properties are received and collected and are duly and promptly paid into the respective bank accounts of 157 and Fairstone Investments.
5. Not withstanding any other Orders, that until further Order the Respondent husband be permitted to:-
(a)Collect all rentals for the Hindmarsh Square and Ann Street properties;
(b) Be at liberty to pay the following outgoings in respect of each property from the 157 bank account and the Fairstone Investments bank account respectively:-
(i)Mortgage Interest;
(ii)Rates;
(iii)Land Tax;
(iv)Managing Agent fees;
Provided that the husband shall have access to the net rental receipts for the Hindmarsh Square property after deduction of the expenses referred to at paragraphs (i) through to (iv) above in relation to the Hindmarsh Square property.
7. That until further Order the Respondent husband be restrained from entering into any business transaction that may alter the rights of the wife as an existing or potential beneficiary of any of the Trusts or as a shareholder of any of, 157 P/L, Fairstone Investments, Carrymoor Investments Pty Limited or One Nine Nine Pty Limited, without providing the wife 10 days advance notice of the proposed transaction which the husband seeks to enter.
8. That until further Order the husband inform the wife in writing with 10 days notice of:-
(i) Any proposed new business venture that he proposes to enter into personally or in conjunction with any other person;
(ii) Any applications for any loan or advances to or from any person or institution;
(iii) Any intended borrowings or further charges or encumbrances of any property held or controlled by the husband;
(iv) Any proposed sale of any property held or controlled by the husband.
10. That until further Order the husband do all acts and things necessary to cause his accountants to provide to the wife’s legal advisers all company and trust entities draft and final financial statements, memoranda relating thereto and all financial budgets and cash flow reports for such entities at intervals of no less than 30 days.” [sic.]
In addition to those orders, his Honour made an order (numbered 6) restraining certain named third parties, as appointors of five named trusts, until further order, from doing various acts in relation to those trusts (including the removal of any existing or the appointment of any new trustees, the alteration of any trust deed, the assignment of any power of appointment, the transferring, mortgaging, or disposing of any asset of the trust other than in the ordinary course of business of that trust, and the advancing by the trust of any money to any person or corporation). On the hearing of this appeal we were informed by counsel for the husband that leave to appeal against that order had been granted to the third parties on the previous day. As the matter had not been before the Full Court on the previous day we assumed counsel intended to convey that the third parties had been granted either leave to intervene for the purpose of seeking leave to appeal, or an extension of time within which to file an application for leave to appeal against that order.
THE JUDGMENT OF THE TRIAL JUDGE
In his reasons for judgment issued on 9 September, 1999, his Honour, after referring to the proceedings before the Judicial Registrar on 11 June, 1999, and making the statement which we have already quoted in paragraph 17 hereof, set out (at Appeal Book pp.11-12) a brief history of the proceedings before him, including the circumstances in which he came to make the orders in Newcastle, rather than in Sydney. He then made (at Appeal Book pp.12-13) a number of statements in explanation of the orders which he had made on 28 June, 1999, of which the salient ones appear to be the following:-
“It seems it is the husband’s case that he has successfully put his affairs beyond his own control. This is obviously an issue for trial. My concern, in order to do justice to both parties, was to preserve the assets in contention if that is possible in law and fact and to also permit the husband’s enterprises to trade.”
“To the extent that it appears the husband is the real controller of his affairs, I can be so much more bold, particularly if other persons (whether his alter ego or not) concerned with affairs for his benefit, have prompt and easy access to the Court insofar as they are hindered by the temporary restraining injunctions of the kind imposed.”
“It would be wrong to anticipate the answer to the question to be determined at trial. These orders are in the nature of a holding operation with a flexibility which affords all with an interest, relief pending a final determination of the matter.”
“The husband’s business is a potentially hazardous business activity. The parties have already been close to financial disaster with the filing of the equivalent of a Part 10 arrangement in New Zealand. The husband is trading through entities and trusts. The wife has reason for concern.
The wife’s claim before the Court is significant and there are serious questions to be tried.”
“The husband, by his counsel, proposed less limiting restraining orders than I ultimately imposed. Nonetheless it was not really suggested that an injunction was inappropriate, the issue was coverage.”
“In considering, as I was obliged to, the balance of justice and convenience between the parties, I had regard to the circumstances and history mentioned including the matters referred to in my exchanges with counsel which are recorded in the transcript.
The husband has a number of property interests, the degrees of risk in each venture remains unclear. It was desirable, then to restrain sufficiently to preserve assets capable of satisfying the wife’s claim but permitting the husband to trade with a minimum of inconvenience.”
“The Orders made, in the light of the matters outlined and the submissions put, sought to achieve the necessary balance pending a final determination of the property proceedings between the parties.”
The reference, in the sixth of those quoted passages, to “the matters referred to in my exchanges with counsel which are recorded in the transcript” presents some difficulties, so far as the discernment of his Honour’s reasons is concerned, since the transcript of the proceedings before his Honour on 22 and 25 June, 1999, encompasses some 44 pages (at Appeal Book p.173 to p.220) recording, as it does, almost two and a half hours of actual hearing time. During that period his Honour referred to many matters, in the course of his exchanges with counsel, and it is therefore impossible to be certain which particular “matters” his Honour had in mind when he made that statement in his reasons for judgment of 9 September, 1999. We shall have occasion to refer to some of the statements which his Honour made in the course of the proceedings when he come to deal with the merits of the proposed appeal, below.
THE APPLICATION FOR LEAVE TO APPEAL
The principles governing the grant of leave to appeal from an interlocutory judgment or order, particularly one relating to a matter of practice and procedure (as this is: Minister for the Army v. Parbury Henty and Co Pty Ltd (1945) 70 CLR 459 and 489) are well known, and were not in issue before us in these proceedings. In order to succeed in such an application the applicant (in this case the husband) must satisfy this Court that there has been an error of principle by the trial Judge and/or that the orders which he made worked a substantial injustice to him: Adam P. Brown Male Fashions Pty Ltd v Phillip Morris Inc (1981) 148 CLR 170; Rutherford & Rutherford (1991) FLC 92-255.
Although there has been some debate about whether the twin criteria, of error of principle and substantial injustice, should be applied disjunctively or conjunctively (see Adam P. Brown (supra) at 177 and Rutherford (supra) at 78,715), the High Court (per Gibbs CJ, Aiken, Wilson and Brennan JJ) in Adam P. Brown (supra) at 177, said:-
“For ourselves we believe it may be unnecessary and indeed unwise to lay down rigid and exhaustive criteria. The circumstances of different cases are infinitely various.”
Then, after citing with approval the statement by Sir Frederick Jordan in In re the Will of F.B. Gilbert (dec.) (1946) 46 SR(NSW) 318 at 323, and referring to Brambles Holdings Ltd v Trade Practices Commission (1979) 28 ALR 191 at 193 and Dougherty v Chandler (1946) 46 SR(NSW) 370 at 374, they concluded:
“It is safe to say that the question of injustice flowing from the order appealed from will generally be a relevant and necessary consideration.”
Since, on either view, the question whether leave to appeal should be granted is closely linked to the merits of the proposed appeal, and since we heard argument upon the merits of the proposed appeal with the argument on the application for leave, it is appropriate that before further addressing the issue of leave we should address the merits of the proposed appeal. Obviously, if it is without merit, the application should be refused. Conversely, if it has merit, the application should be granted unless the merit is confined to the trial Judge’s exercise of discretion (involving no error of principle) and/or the orders made work no substantial injustice to the husband.
THE GROUNDS OF THE PROPOSED APPEAL
The grounds set out in the husband’s draft Notice of Appeal (at Appeal Book p.25) are as follows:-
“1. That as a matter of law the evidence relied upon by the Respondent did not establish any basis for interlocutory relief by way of injunction.
2. That the evidence relied upon by the Respondent did not establish any factual basis for the relief granted.
3. That His Honour failed to evaluate the hardship occasioned to the Husband and the various entities as a result of the orders as made.
4. That His Honour failed to establish the Respondent’s capacity to meet any subsequent claim for damages pursuant to her undertaking that regard. [sic.]
5. That His Honour drew inferences against the Husband and his business activities which were not reasonably available and were not supported by the evidence.
6. That His Honour failed to apply the law governing the granting of interlocutory injunctions.”
Counsel for the applicant (Mr Errington), in presenting his argument in support of the appeal, addressed grounds 1, 2 and 6 together, as he did also with grounds 3 and 4. Ground 5 was not addressed in oral argument, nor in the husband’s written “Outline of Submissions” except for the giving of two transcript references.
Grounds 1, 2 and 6
These grounds contain the nub of the husband’s proposed appeal. They challenge his Honour’s orders on the basis of alleged errors of principle in two inter-related respects, namely a failure to apply the correct principles of law which govern the exercise of discretion in applications for interlocutory injunctions of the type sought in this case, and in failing to perceive that the evidence adduced in the proceedings did not provide any basis in law for the making of the orders the subject of the appeal.
As to the principles of law to be applied in this case, counsel for the husband submitted that, as what the wife seeks in the substantive proceedings is payment of a sum of money ($5,000,000) rather than the transfer to her of any property or any interest in the property owned or controlled by the husband, the interlocutory injunctions sought by her were “truly akin to a Mareva injunction” [so called following the decision of the Court of Appeal in Mareva Compania Naviera SA v International Bulk Carriers SA (“the Mareva”) 1980) 1 All ER 213] rather than (as is often the case in proceedings under s.79 of the Act) an injunction to preserve property which is itself the subject, of a claim in the proceedings.
Whilst we do not disagree with that submission, we think that it has limited significance in the context of this case. We consider that in seeking to apply, in proceedings under the Act, principles developed in other jurisdictions (including principles relating to grant or refusal of “Mareva” injunctions) care should be taken to ensure that sight is not lost of the essential differences which may exist between the proceedings in this Court to which it is being sought to apply those principles and the type of proceedings in other jurisdictions out of which those principles have sprung.
For example, we think that it is important to bear in mind that there may be a distinction to be drawn between proceedings at law for a debt or damages in which the plaintiff seeks a “Mareva” injunction to restrain the defendant from dissipating assets to which it is expected that resort might ultimately be had to enforce a judgment obtained in the proceedings, and proceedings under s.79 of the Act in which one spouse seeks an interlocutory injunction to restrain the other from dissipating assets which, although not the subject of a specific claim under s.79, represents property of the parties to the marriage, or one of them, to which the applicant spouse claims to have made a relevant contribution, under s.79(4)(a), (b) or (c) of the Act. In the latter case, there is an essential connection between the substantive proceedings and the relevant property, notwithstanding that the applicant spouse may not seek an order altering the parties’ interests in that property in his or her favour, but only the payment of a lump sum of money as a “settlement”. That essential connection between the property and the proceedings may not, and usually does not exist in the case of proceedings for a “Mareva” injunction in other jurisdictions.
We think it is also important to bear in mind that the jurisdiction to grant interlocutory injunctions under the Act is a statutory jurisdiction derived from s.114(3) and/or s.34(1) of the Act. [As to the latter, compare s.23 of the Federal Court of Australia Act 1976 as applied by the High Court in Cardile & Ors v LED Builders Pty Ltd (1998-99) 162 ALR 294.] Those two subsections provide:-
“34(1) The Court has power, in relation to matters in which it has jurisdiction, to make orders of such kinds, and to issue, or direct the issue of, writs of such kinds, as the Court considers appropriate.
114(3) A court exercising jurisdiction under this Act in proceedings other than proceedings to which subsection (1) applies may grant an injunction, by interlocutory order or otherwise (including an injunction in aid of the enforcement of a decree), in any case in which it appears to the court to be just or convenient to do so and either unconditionally or upon such terms and conditions as the court considers appropriate.”
Having said that, we think it is constructive, in the context of this case, to have regard to the principles which have been developed in other jurisdictions, in relation to the grant or refusal of “Mareva” injunctions or orders, particularly as enunciated and explained by the High Court in the context of consideration of the power granted to the Federal Court by s.23 of the Federal Court of Australia Act 1976 (“the Federal Court Act”), which section bears a striking resemblance to s.34(1) of the Act, set out above (the only difference being the inclusion in the former of the words “including interlocutory orders” after the words “make orders of such kinds” where they appear in the latter).
In the case of Jackson v Sterling Industries Limited (1987) 162 CLR 612, the High Court, by majority (Mason CJ, Wilson, Brennan, Deane and Dawson JJ, Toohey ad Gaudron JJ dissenting) allowed an appeal by a defendant in proceedings in the Federal Court for damages under s.52 of the Trade Practices Act 1974 (Clth) against an order of the Full Court of the Federal Court affirming an interlocutory order of a Judge of that Court requiring the defendant to “provide security in the sum of $3,000,000” for the satisfaction of any judgment that might be entered against him in the proceedings.
The principal majority judgment was that of Deane J, with which Mason CJ, Wilson and Dawson JJ expressed their agreement. In the course of that judgment, Deane J said this (at 623):-
“As a general proposition, it should now be accepted in this country that ‘a Mareva injunction can be granted … if the circumstances are such that there is a danger of [the defendant’s] absconding, or a danger of the assets being removed out of the jurisdiction or disposed of within the jurisdiction, or otherwise dealt with so that there is a danger that the plaintiff, if he gets judgment, will not be able to get it satisfied’: per Lord Denning M.R., Rahman (Prince Abdul) v. Abu-Taha [[1980] 1 W.L.R. 1268, at p.1273; [1980] 3 All E.R. 409, at p.412] quoted with approval by Street CJ in Ballabil Holdings [(1985) 1 N.S.W.L.R., at p.160].
To some extent, the general power of the English High Court of Justice to grant a Mareva injunction was initially seen as based on the provisions of s.45(1) of the Supreme Court of Judicature (Consolidation) Act 1925 (U.K.): see also the Supreme Court Act 1981 (U.K.), s.37(3). That general power should, however, now be accepted as an established part of the armoury of a court of law and equity to prevent the abuse or frustration of its process in relation to matters coming within its jurisdiction. That being so, the power to grant such relief in relation to a matter in which the Federal Court has jurisdiction is comprehended by the express grant to that Court by s.23 of the Federal Court of Australia Act of power, in relation to such matters, ‘to make orders of such kinds, including interlocutory orders, and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate’.”
Then, after expressing the view that, even without s.23 of the Federal Court Act, that Court would have possessed the power to make orders of the kind to which he had referred “as an incident of the general grant to it as a superior court of law and equity of the jurisdiction to deal with” matters properly before it, and expressing agreement with the statement of Bowen CJ in the court below about the implied power of a court to prevent abuse of its process, his Honour turned his attention to the form of the particular order made by the trial Judge in that case and to the question whether it came within the ambit of that power. In holding that it did not, his Honour said this (at 624):-
“The basis of the initial order made by Sheppard J. was plainly adequate to warrant the grant of some relief in the nature of a Mareva injunction. That basis was that it appeared to his Honour that the present appellant, who was a respondent in the proceedings before him, remained in possession of assets representing the whole or most of an identified amount of $4,300,000 and that he was likely to dispose of those assets pursuant to an overall scheme to defeat any judgment which the present respondent, who was the applicant in those proceedings, might obtain against him. If the order had been restricted to injunctive relief preventing the appellant from disposing of so much of that $4,300,000 (or the assets representing that money) as remained in his possession, it would have clearly been within the powers of the Federal Court under s.23 of the Act.” [Emphasis added.]
Finally (for present purposes), in discussing the purpose of a “Mareva” injunction, his Honour said this (at 625):-
“That purpose is not to create security for the plaintiff or to require a defendant to provide security as a condition of being allowed to defend the action against him. Nor is it to introduce, in effect, a new vulnerability to imprisonment for debt, or rather for alleged indebtedness, by requiring a defendant, under the duress of the threat of imprisonment for contempt of court, to find money, which he may or may not have (whether or not at some point of time it may have been available to him), to guarantee to a plaintiff that any judgment obtained will be satisfied. It is to prevent a defendant from disposing of his actual assets (including claims and expectancies) so as to frustrate the process of the court by depriving the plaintiff of the fruits of any judgment obtained in the action.”
In their joint judgment, Wilson and Dawson JJ, whilst expressly agreeing with Deane J, added some observations of their own about the nature, purpose and limitations of the “Mareva” injunction.
Firstly, (at 617) they said this:-
“It [the rationale for the extension of the remedy from foreign defendants to defendants within the court’s jurisdiction] was to be found in the notion that the purpose of the Mareva injunction was to prevent the abuse of the process of the court by the frustration of its remedies: Iraqi Ministry of Defence v. Arcepey Shipping Co S.A. (The ‘Angel Bell’) [[1981] 1 Q.B. 65, at p.72].”
Then (at 617-8) their Honours said this, of the “limits of the remedy”:-
“Its use must be necessary to prevent the abuse of the process of the court. As Ackner L.J. pointed out in A.J. Bekhor & Co. Ltd. V. Bilton [[1981] Q.B. 923, at pp.941-942], the Mareva injunction represents a limited exception to the general rule that a plaintiff must obtain his judgment and then enforce it. He cannot beforehand prevent the defendant from disposing of his assets merely because he fears that there will be nothing against which to enforce his judgment nor can he be given a secured position against other creditors. The remedy is not to be used to circumvent the insolvency laws.”
Finally (at 619) their Honours said this:-
“It has been a criticism of the Mareva doctrine that it constitutes an enlargement rather than the fulfilment of a court’s function: see, e.g. Pivovaroff v. Chernabaeff [(1978) 16 S.A.S.R. 329], per Bray C.J.; Meagher, Gummow and Lehane, Equity: Doctrines and Remedies, 2nd ed. (1984), pars. 2183-2187. The criticism has not generally prevailed but it serves to emphasize the limited scope of the Mareva injunction. It exists not to create additional rights but to enable a court to protect its process from abuse in relation to the enforcement of its orders. It is neither a species of anticipatory execution nor does it give a form of security for any judgment which may ultimately be awarded.”
In his judgment, Brennan J (at 621) described a “Mareva” injunction as:-
“…a remedy which is incidental to the exercise by a court of its jurisdiction to enter judgment for a debt or damages and which is designed to prevent the defendant from divesting himself of his assets whereby enforcement of such judgment might be frustrated.”
Later (at the same reference), after making the point that “the power to grant such an injunction does not support the making of an order which goes beyond what is in reasonable protection of a legal or equitable right which the Court may enforce by judgment”, and that it does not empower the making of an order converting an applicant with a mere personal claim for damages from an unsecured to a secured creditor, his Honour added:-
“A judicial power to make an interlocutory order in the nature of a Mareva injunction may be exercised according to the exigencies of the case and, the schemes which a debtor may devise for divesting himself of assets being legion, novelty of form is no objection to the validity of such an order.”
In their joint judgment in Cardile and Ors. V. LED Builders Pty Ltd (supra), Gaudron, McHugh, Gummow and Callinan JJ, after referring to a number of judicial statements about the limited nature of a “Mareva” order, said this (at 310-311, paras. [50] and [51]):-
“[50] …Nevertheless, those statements should not obscure the reality that the granting of a Mareva order is bound to have a significant impact on the property of the person against whom it is made: in a practical sense it operates as a very tight ‘negative pledge’ species of security over property, to which the contempt sanction is attached. It requires a high degree of caution on the part of a court invited to make an order of that kind. An order lightly or wrongly granted may have a capacity to impair or restrict commerce just as much as one appropriately granted may facilitate and ensure its due conduct.
[51] We agree with the tenor of what was said with particular respect to Mareva relief before judgment by the Court of Appeal of New South Wales (Mason P, Sheller JA, Sheppard AJA in Frigo v Culhaci [17 July 1998, unreported, at 10-11]. See also the observations as to the need for care by Dixon J, with respect to the writ of ne exeat colonia in Glover v Walters [(1950) 80 CLR 172 at 175-6]:
[A Mareva order] is a drastic remedy which should not be granted lightly. …A [Mareva order] is an interlocutory order which, if granted, imposes a severe restriction upon a defendant’s right to deal with his or her assets. It is granted at the suit of a plaintiff whose status as a creditor is in dispute and who need not be a secured creditor. Its purpose is to preserve the status quo, not to change it in favour of the plaintiff. The function of the order is not to [Abelia v Anderson [1987] 2 Qd R 1 at 2-3 per McPherson J]:
‘provide a plaintiff with security in advance for a judgment that he hopes to obtain and that he fears might not be satisfied; nor is it to improve the position of the plaintiff in the event of the defendant’s insolvency’ …
Many authorities attest to the care with which courts are required to scrutinise applications for [Mareva orders]. The leading decision in this State is Patterson v BTR Engineering (Aust) Ltd [(1989) 18 NSWLR 319].”
44. In the same case in his separate concurring judgment, Kirby J said this (at 330, para. 121):-
“To secure an asset preservation order in a case such as the present, it will be necessary for the party seeking it to show, in addition to the conditions ordinary to the grant of relief injunctive in nature that (1) there is a danger that the non-party will dispose of relevant assets or property in its possession or under its control;”
And further (330, para. 122) he said:-
“The grant of such relief is discretionary. They must often be provided (or withheld) in urgent circumstances where a propensity to shift assets, apparently to defeat a judgment, has already been manifested. The plaintiff must establish a real risk of assets being disposed of [Thint Chandris Shipping Corp v Unimarine SA [1979] 3 WLR 122 at 137-8; [1979] 2 All ER 972 at 984-5]. No such relief should be contemplated without the provision of an undertaking as to damages [National Australia Bank Ltd v Bond Brewing Holdings Ltd (1990) 169 CLR 271 at 277; 92 ALR 49].”
45. With respect to the trial Judge, it appears to us that he did not have in mind any of the principles enunciated by their Honours of the High Court in the cases to which we have referred when he came to determine the proceedings before him or, if he did, he did not consider or apply them to the facts of the case as disclosed by the evidence in those proceedings. In particular, we are unable to perceive, from anything said by his Honour in his reasons for judgment delivered on 9 September, 1999, or from anything which he said in the course of the hearing on 22 and 25 June, 1999, that he considered whether the injunctions which he ultimately granted were necessary, and went no further than necessary, to prevent the abuse or frustration of the court’s process in relation to the matter within its jurisdiction, particularly having regard to the nature of the wife’s claim in the property proceedings. Rather, in his approach to the proceedings before him, his Honour seems to have started from the position that the wife was entitled to have “proper security in relation to [the husband’s] property which of course will all be on the table in the case” (transcript of 22 June, 1999 at Appeal Book p.176 line 5), and that it was his aim, unless “persuaded by one of [the parties’ counsel] that there is something absolutely extraordinary about this case” to “secure the wife and let the husband to continue [sic.] to reasonably but not hazardously, trade”. (Appeal Book p.176 line 26).
46. Whilst his Honour certainly seems to have considered issues of balance of convenience and hardship between the parties, it seems to us, with respect, that he did not give consideration to the fundamental question whether there was any evidence of any intention by the husband to dispose of any assets pursuant to any scheme to defeat any judgment which the wife might obtain in the substantive proceedings, or whether he merely wished to continue to trade, as he always had done, prior to and since the separation of the parties.
47. This issue of the absence of evidence of any such intention was squarely raised before his Honour by the husband’s then counsel (Mr Harding) at the hearing on 22 June, 1999. For example, he said:-
(at Appeal Book p.175 line 16): “…so that he [the husband] says on the material which the wife has filed there is no prima facie case made out”;
(at Appeal Book p.176 line 12): “We simply put forward this proposition that we are continuing to trade as we always have, that by the very nature of the industry in which we are involved, we being essentially the entrepreneur in the venture, that we cannot be fettered by any restraints and that traditionally has been the case up until the time when these orders were made.”;
(at Appeal Book p.177 line 19): “So that we say this, in this type of situation where we are dealing with trading concerns it’s not sufficient for the wife simply to say, as she does in her affidavit material, I fear that something may go wrong or I fear that this may expose us, or the husband, to certain liabilities. It’s incumbent in those circumstances where, she having brought on the application on such short notice, the next day, to really put forward material to the court which grounds those fears in some factual or actual situation and we say to the court that in fact what she is doing is misusing the process of the court to obtain in this fashion orders of such an extensive nature without prior notice and they’re directed directly towards the viability of the businesses conducted by these companies and trusts.”; and
(at Appeal Book p.177 line 44): “…so we say for that reason the court should not simply proceed to make orders or permit orders to continue in place which are based purely upon a vague and abstract notion of a fear.”
48. His Honour did not address this issue at all in his reasons for judgment published on 9 September, 1999, and he made no findings of fact, either then or in the course of the hearing on 22 and 25 June, 1999, going to this issue. The only comments which his Honour made, in the course of the hearing, apparently in response to Mr Harding’s submissions outlined in paragraph 47 hereof, were to the following effect:-
(at Appeal Book p.176 line 18 – in response to the second statement of Mr Harding quoted in paragraph 47 above): “There are all sorts of funny things happen in these situations with businessmen who have many entities and history suggests caution.”;
(at Appeal Book p.177 line 30 – in response to Mr Harding’s third statement quoted in paragraph 47): “Well no doubt she’s advised by competent people. … If they’re just killing the goose well she won’t get the golden egg, there’ll be no golden egg for anybody.”; and
(at Appeal Book p.178 line 1 – in response to the fourth statement of Mr Harding quoted above): “Well, there were problems in New Zealand, weren’t there? Substantial losses in New Zealand. That would scare anybody. If a person is skating on the edge, you would want to be sure that things were secured while you are litigating about all of the worldly goods, particularly if you’ve been married for a long time and have children.”
49. This issue was raised again by the husband’s then counsel (Mr Lloyd) at the continued hearing on 25 June, 1999, and again not really dealt with by his Honour, as the following extract from the transcript of the proceedings on that date (at Appeal Book p.211 lines 8-46) demonstrates:-
“MR LLOYD: No, there hasn’t, your Honour, however, what my friend in his submission really went to was not the essence of what the applicant for an injunction has to prove to the court. It was a submission based on some documents that are in fact here but there is a plethora, as your Honour is well aware, of case law and it’s the husband’s submission that there simply is no fear, no danger, no apprehended fear shown by the wife to justify this court exercising its discretion in granting the injunctions that the wife seeks; it simply is not there in the affidavit material. Further, your Honour has been asked to look at draft valuations that are in essence the best my client could do given such short notice in these proceedings. So I have some submissions at law, your Honour, that I would make with respect to what the applicant needs to show this honourable court in order to be successful.
HIS HONOUR: This is an interim application, you can assume some legal knowledge in the court but if you want to state the principle shortly to remind us all I’m happy to hear it but I don’t want to be taken through the case once more.
MR LLOYD: Thank you, your Honour, I appreciate that. I’ll state it very simply, your Honour; the applicant must show that the fear or danger is real, that it’s not illusory – off the top of my head I think it was Stowe’s case – we say that that evidence simply is not before the court. There are certain objections that I would take the wife’s affidavit, however, given that these are interlocutory proceedings - - -
HIS HONOUR: For instance, in interlocutory proceedings hearsay is normal and appropriate. Fear and danger; your client is in a notoriously dangerous area of business activity. I draw inferences that those that involved in this sort of activity stand to make great riches and also stand to hit hurdles and the incentive of course is to play hard and hope for the big riches but there is in the nature of the enterprise significance [sic.] risks. It’s not as if he’s trading in an old family firm in iron and brass.
MR LLOYD: Quite, your Honour, indeed.
HIS HONOUR: He’s in a more sophisticated and dangerous activity. Now, you know enough about this case to know that my ambition is very simple although the attainment of it may be a little harder, it is to try and put the parties in a comfortable state pending the litigation at present they’re determined to have so I want your client to be able to get on with his life and exercise his undoubted skills to maximise his position in the world but I want the wife to have security.”
50. The reference by counsel, in that passage, to Stowe’s case, we take to be a reference to Stowe and Stowe (1981) FLC 91-027 in which (at 76,273-4) the Full Court held that to found an interlocutory injunction for the preservation of property, an objective risk of disposal must be established.
51. Counsel for the wife made no submissions before his Honour on this issue. That is not surprising, since it became apparent, from a very early stage of the hearing on 22 June, 1999, from the comments of his Honour (some of which we have quoted in paragraph 45, above, and others of which are to be found at various points in the transcript – e.g. at Appeal Book p.180 line 15 and at Appeal Book p.186 line 32) that his Honour was firmly minded to grant an injunction in some form to provide the wife with reasonable security in respect of her property claim, and that the only question exercising his mind was the precise form of the order to be made. It is also clear from the whole of the transcript of the proceedings, both on that date and on 25 June, 1999, that his Honour never departed from that position, and perhaps the clearest example of that is to be found in his Honour’s statement at the end of the exchange with Mr Lloyd which we have quoted in paragraph 49 hereof.
52. Had there been some clear evidence given by the wife (even if denied by the husband) of some disposition of property by the husband, or other conduct by him from which an inference might reasonably be drawn that he had embarked, or was about to embark, upon a course of action which was designed to or, irrespective of design, would be likely to defeat any anticipated order in the substantive proceedings in the wife’s favour, then perhaps we might be persuaded to uphold his Honour’s orders notwithstanding his failure to identify the factual basis (whether attested to by the wife or inferred by his Honour) upon which he proceeded in so doing. However, in our respectful opinion, there was no such clear evidence.
53. The wife’s affidavit in support of her application was replete with statements that she “feared” the husband would do this or that with the property under his control, or with one or other of the trusts through which he conducts his business operations, but it contained no assertion that he had in fact disposed of anything or incurred any liability other than in the ordinary course of his business operations. Although the wife asserted that the husband had replaced himself, as appointor of the various trusts, he had apparently done that in 1997 or 1998, many months at least prior to the parties’ separation. In any event, order 6 of his Honour’s orders, which is not the subject of this appeal, prevents any further alienation of the power of control of all the trusts until further order.
54. Although the wife asserted that, since separation, the husband had removed her as a signatory of various trust and company bank accounts with the operation of which she had previously been involved, that is hardly a surprising thing for him to have done, in the circumstances, and is hardly a basis for inferring some intention on his part to dispose of or conceal assets. The wife’s material also disclosed that the husband had already paid to her, in March, 1999, sums totalling almost $570,000 pursuant to a partial property settlement agreement (at Appeal Book pp.77-80) and that he was paying her periodic maintenance of $1,500 per week for her self and the children (at Appeal Book p.36).
55. The wife also asserted, in effect, that since separation she had been effectively excluded by the husband from the operation of the trusts and from access to its business records. Again, however, given the circumstances, including the partial settlement effected between the parties and the payment by the husband of not ungenerous maintenance for the wife, that is hardly surprising, and provides no basis for an inference of impropriety by the husband in relation to any property under his control. If the wife were dissatisfied with the lack of access to the husband’s business records, that could have been dealt with by an appropriate application without seeking to freeze or fetter the conduct of those businesses.
56. In paragraph 26 of her affidavit (at Appeal Book pp.67-68) the wife asserted a conversation with the husband in “mid May 1999” in which, in response to his request to her to remove a caveat which she had lodged over a property at Arthur Street, North Sydney, she requested certain information from him, to which he responded:-
“I am not going to tell you anything. I have instructed my lawyer not to reply. I will do what I like. I’ll let it all go and you will get none of it. It can all go to tax and the bank.”
57. That piece of evidence (denied by the husband in his affidavit – at Appeal Book p.161) represents the high water mark of the wife’s evidence, in so far as it might be relied upon as basis for an inference that the husband was likely to dissipate his assets, in order to defeat the wife’s claim in the substantive proceedings, unless restrained from doing so by order of the Court. However, in our view, that evidence is not sufficient to support such an inference, nor did his Honour make a finding that it did.
58. Moreover, the wife’s application did not fall to be considered by his Honour on the basis that the husband was simply resisting it and offering nothing by way of security to the wife in respect of her property claim. On the contrary, at the hearing on 22 June, 1999, the husband’s counsel, Mr Harding (at Appeal Book p.183), offered the following undertaking by his client, in support of his application to discharge the existing orders of the Judicial Registrar and dismiss the wife’s application, and for an order that she remove caveats which she had lodged over certain trust properties:-
“And that the husband, through me, would give an undertaking to the court, he being the director of the relevant company, that is 157 Pty Limited, that he would not, until further order, cause a company on behalf of the trust to enter into any unconditional contract for sale of the property 157 Anne Street Brisbane without giving to the wife’s solicitors 21 days notice in writing and that similarly until further order he would, as a director of the trustee company, not vote in favour of any increase or cause there to be any increase in the secured borrowings beyond the present level of 8.82, that is $8,820,000. We see, your Honour, the rationale there to be that that would give the wife a security in terms of value and real estate which would match, indeed slightly exceed, that which she is seeking by her application for final orders, the $500,000 in the Queen Street property plus $4,680,000 in the Anne Street property.”
The reference by counsel to “the Queen Street property” is a reference to a property acquired by the wife using the $560,000 paid to her by the husband under the partial settlement agreement previously referred to, in which it was estimated that she had an equity of about $500,000.
59. At the continued hearing before his Honour on 25 June, 1999, the husband’s then counsel (Mr Lloyd) went even further and amended the husband’s response in such a way as to actually seek an order restraining his client from causing, either the property at 157 Anne [sic.] Street, Brisbane, or the property at 10/122 Arthur Street, North Sydney, to be sold, transferred, further encumbered or otherwise dealt with without the consent in writing of the wife or an order of the Court (see Appeal Book p.209 line 40 to p.210 line 34 and p.214 lines 1-12). In addition (at Appeal Book p.212 line 30) Mr Lloyd advised his Honour that, if his Honour were minded to make orders in the form proposed by his client’s amended response, his client would also undertake “not to undertake any new projects”.
60. Nowhere in his reasons for judgment, or in his pronouncements from the bench during the hearing, did his Honour explain why he considered the constraints ultimately proposed by the husband upon his property dealings, through the orders proposed in his amended response and the undertaking offered by his counsel, were insufficient to adequately secure the wife’s position, or why, instead, he proposed to make orders in the form which he ultimately did, based upon a draft minute presented by the solicitors for the wife. Speaking for ourselves, we are unable to perceive why the security thus offered by the husband was inadequate, particularly when coupled with the restraint imposed by his Honour’s order number 6, which has the effect of freezing the control of the various trusts in the hands of those currently controlling them, and which is not the subject of this appeal.
61. For the foregoing reasons, we consider that his Honour erred in principle in making the orders which are the subject of this appeal. We are also of the view that those orders work a substantial injustice to the husband, in the sense that they unduly and unnecessarily fetter his capacity to continue to conduct his business activities, in the way they have always been conducted, and are productive of significant inconvenience and at least of the potential for significant losses in that business (as to which see paragraphs 3 and 7 of the husband’s affidavit at Appeal Book pp.164-167).
62. Accordingly, we conclude that on these grounds the application for leave to appeal should be granted, the appeal allowed, and the orders of the trial Judge set out in paragraph 19 hereof set aside. Having arrived at that conclusion on those grounds it is unnecessary for us to consider the remaining grounds of appeal.
63. Although it may have been open to us to re-exercise the discretion which, in our judgment, the trial Judge failed properly to exercise, we thought it inappropriate to do so, given that his Honour had made no relevant findings of fact, and that some four months had elapsed since the hearing. In addition, neither party invited us to follow that course. We therefore considered it more appropriate to remit the wife’s application for rehearing and to make an interim order (our order number 5 of 29 October, 1999) in the form which was ultimately proposed by the husband in his response, as amended by his counsel, Mr Lloyd, on 25 June, 1999. That order, coupled with his Honour’s order number 6 (not the subject of this appeal), we considered sufficient to protect the wife’s position pending any rehearing of her application.
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