Wither and Wither & Anor

[2024] FCWA 16

JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA

ACT: FAMILY LAW ACT 1975

LOCATION: PERTH

CITATION: WITHER and WITHER & ANOR [2024] FCWA 16

CORAM: TYSON J

HEARD: [REDACTED]

DELIVERED : 31 JANUARY 2024

FILE NO/S: 4906 of 2019

BETWEEN: MS WITHER

Applicant

AND

MR WITHER

First Respondent

AND

MRS WITHER SENIOR

Second Respondent

AND

MR B

Seeking Leave to Intervene

Catchwords:

FAMILY LAW - PRACTICE AND PROCEDURE - Application to Amend Final Relief Sought - Where leave is required - Leave granted - Case turns on its own facts

FAMILY LAW - Application for interlocutory order pursuant to s 106B to set aside the transfer of shares effected by the husband - Where the wife sought final orders, to retain the shares the subject of the disposition - Where the Court is satisfied that the disposition was likely to defeat the anticipated order, irrespective of the husband's intention - Where the Court is satisfied it is appropriate to exercise discretion on an interim basis and set aside the transfer - Case turns on its own facts

FAMILY LAW - Application for injunctions - Where the Court is satisfied the wife has a reasonable claim to alter property interests and that her claim may be defeated or damaged if the injunction is not granted - Where the Court exercises discretion to grant an injunction on balancing the hardship and convenience between the parties - Case turns on its own facts

Legislation:

Family Court Rules 2021 (WA)
Family Law Act 1975 (Cth)

Category: Reportable

Representation:

Counsel:

Applicant	:	Senior Counsel A
First Respondent	:	Self-Represented Litigant
Second Respondent	:	Did not participate
Seeking Leave to Intervene	:	Self-Represented Litigant

Solicitors:

Applicant	:	Law Firm A
First Respondent	:	Self-Represented Litigant
Second Respondent	:	Self-Represented Litigant
Seeking Leave to Intervene	:	Counsel B

Case(s) referred to in decision(s):

ANZ Banking Group Ltd v Harper (1988) FLC 91-938
Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175
Calvin & McTier (2017) FLC 93-785
Carter and Carter (1981) FLC 91-061
Chancellor & McCoy (2016) FLC 93-752
D'Cruz & Pierce and Ors [2008] FamCA 819
Dickons v Dickons (2012) 50 Fam LR 244
Fields & Smith (2015) FLC 93-638
Gelley and Gelley (No 2) 15 Fam LR 483
Gould and Gould; Swire Investments Ltd (1993) FLC 92-434
In the Marriage of Gelley and Gelley (No 2) (1992) FLC 92-291
In the Marriage of Pflugradt (1981) FLC 91-.63
Lovine & Connor and Anor (2012) FLC 93-515
Mallet v Mallet (1984) 156 CLR 605
Mullen & De Bry (2006) FLC 93-293
Norton & Locke [2013] FamCAFC 202
Pflugradt and Pflugradt (1981) FLC 91-052
Riemann & Riemann and Ors (No 3) [2017] FamCA 911
Stowe & Stowe (1981) FLC 91-027
VC & CG and Ors (2010) FLC 93-434
Vedders & Gittens (2023) FLC 94-156
Wallis & Manning (2017) FLC 93-759

WORDS IN SQUARE BRACKETS REPLACE WORDS USED IN THE ORIGINAL JUDGMENT - PARTIES' NAMES AND IDENTIFYING DETAILS HAVE BEEN CHANGED.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Wither and Wither & Anor has been approved by the Family Court of Western Australia pursuant to s 114Q(2) of the Family Law Act 1975 (Cth).

This copy of the Court's Reason for judgment may be subject to review to remedy minor typographical or grammatical errors (r 312(b) Family Court Rules 2021 (WA)), or to record a variation to the orders pursuant to r 311 Family Court Rules 2021 (WA).

Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

TYSON J:

1 [Ms Wither] ("the wife") and [Mr Wither] ("the husband") are unable to agree on orders by way of alteration of property interests and maintenance, following the breakdown of their marriage. Also joined to the proceedings, is the husband's mother, [Mrs Wither Senior], who is the Second Respondent ("[Mrs Wither Senior]").

2 Before the Court for determination is the wife's further amended Form 2 Application in a Case filed 5 January 2024, in which she seeks the following orders (as in original):[1]

[1] As amended orally during the hearing, with respect to order 3.

1To the extent that leave is required, the wife be granted leave to file an Amended Form 1 Initiating Application in terms of the Further Amended Form 1 filed herewith.

2An order that [Company A as trustee for the Family Trust A] be joined as a party to these proceedings.

S106B Application

3An order pursuant to section 106B of the Family Law Act 1975 (Cth) ("the Act") the instrument styled "Australian Standard Transfer Form" transferring seventy-five shares in [Company B (1)] executed by [MR WITHER] as trustee for the [Family Trust B] for the seller on 18 September 2023 and executed by [Company A as trustee for the Family Trust A] for the buyer on 19 September 2023 be set aside.

Injunction

4An Order pursuant to section 114 of the Act, the Husband be restrained by injunction from causing or facilitating the sale, encumbrance or transfer of the shares referred to in paragraph 3, and any shares held by him, or entities controlled by him in the [Company B Group] until the conclusion of the Trial in these proceedings.

Other

5The application pursuant to section 106B be determined at a hearing on the basis of affidavit evidence and submissions.

6In the event that the Court makes an order in terms of paragraph 3 then the proposed intervenor, subject to consent, be discharged as a party to these proceedings.

3 The application is opposed by the husband.[2]

[2] The husband's Form 2A Response filed 7 November 2023; and written submissions filed 16 January 2024.

4 Company A as trustee for the Family Trust A ("Third Party") did not have a formal application before the Court. For the purposes of determining the application, I will join the Third Party, to the proceedings. There is no breach of procedural fairness in doing so where the Third Party has (1) been involved as an interested third party, (2) been served with the relevant material, (3) been granted leave to file evidence and written submissions, and (4) had the opportunity to make oral submissions through counsel.

5 The Third Party opposes the wife's application pursuant to s 106B of the Family Law Act 1975 ("the Act"). The Third Party did not wish to be heard in relation to the wife's application for leave to amend, nor the injunctive relief as against the husband.

Evidence relied upon

6 The wife relies upon her affidavits filed 30 October 2023, 11 December 2023 and 5 January 2024, together with her Undertaking as to Damages filed 30 October 2023. The husband relies upon his affidavits filed 7 November 2023, 18 December 2023 and 18 January 2024. The Third Party relies upon the affidavit of [Mr B] filed 14 November 2023.

7 I have read and carefully considered all of the evidence. I have also had the benefit of written submissions filed on behalf of each of the parties, together with oral submissions. Where I have not referred to part of the evidence, that is not to say I have ignored or overlooked it.

Background Facts

8 The husband is 48 years of age and is a [specialised professional]. The wife is 45 years of age and is a [medical/science professional]. The parties married in [mid] 2003 and separated in [redacted] 2019. They have since divorced. They have three children, who are aged 16, 14 and 11.

9 In July 2019, the wife commenced the current proceedings, seeking orders by way of alteration of property interests. A trial was listed in March 2022. Upon the wife's amended Initiating Application,[3] filed in February 2022, the husband's mother, Mrs Wither Senior, was joined as a party. As a consequence, the trial was then vacated.[4]

[3] The wife's further amended Form 1 Initiating Application filed 18 February 2022.

[4] Orders dated [in] March 2022.

10 The proceedings have since been listed to a further readiness hearing, with various procedural orders, for the filing of further trial material.[5]

[5] Orders dated [in] May 2022.

11 The joinder of Mrs Wither Senior was required, following the wife's claim pursuant to s 106B, in which she seeks to set aside a number of dispositions and transactions, including two acknowledgements of debt and irrevocable authorities dated 30 September 2014 and 6 August 2017, signed by the husband, and two demands signed by Mrs Wither Senior, in relation to each of those instruments.

12 As I understand the wife's case, if the disputed transactions are set aside, the asset pool will increase by $900,000.[6] The husband and Mrs Wither Senior oppose the wife's application. As I understand the husband's case, he contends the parties' asset pool is worth around $184,028.[7] There are other disputed issues as between the husband and the wife.

Company B

[6] The husband's affidavit filed 18 December 2023, JMH6, transcript dated 23 February 2022, page 9.

[7] Ibid.

13 In early 2023, Mr B (who is in a relationship with the husband's sister) established Company B (1) and related entities ("[Company B]"). Company B was formed to explore the prospect of a [sustainable energy] project at [Place A], which is operated through the Third Party, and a partnership with Mr B's parents.[8]

[8] Mr B's affidavit filed 14 November 2023, [4]-[5].

14 Mr B asked the husband and [Mr C] ("[Mr C]") to be directors of Company B, due to his relationship with them, and their professional skills (noting the husband is a [specialised professional] and Mr C [works in finance and banking]).[9] Mr B deposed that shares in Company B were issued to the husband and Mr C, because he was unable to pay either of them for any work they performed.[10]

[9] Ibid [6]-[7].

[10] Ibid [6].

15 [In] January 2023, Company B was incorporated. The husband, Mr C and Mr B were appointed as directors, and issued with the following shares, through entities in which they had an interest:

(a)The Family Trust A, an entity related to Mr B, was issued with 850 shares;

(b)The Family Trust B, of which the husband is the trustee, was issued with 75 shares; and

(c)The Trust C, of which Mr C, is the trustee, was issued with 75 shares.

16 On 13 September 2023, the wife filed a minute, setting out the final relief sought at trial. Material to her present application, the minute included the following additional relief (as in original):

4Within 21 days of extraction of this Order, the Husband pay to the Wife such sum of money as may be required so that the Wife receives not less than 70% of the net asset pool excluding both parties' superannuation entitlements and excluding the Husband's interest, including via an entity, in the [Company B Group] ("The Payment").

…

12The [Company B Group] is defined to include the Husband's interest in the following entities: [Family Trust B], [Company B (1),] [Company B (2)], [Company B (3)], [Company B (4)], [Company B (5)], [Company B (6)], [Company B (7)], [Company B (8)], and any other entity in which the Husband has an interest that is related to and/or a derivative to one of the entities listed herein ([Company B Group]).

13.Within 21 days of the date of this Order, the Wife receive 50% of the [Company B Group] transferred to her personally or to an entity of her choosing.

17 [In] September 2023, the parties attended a Pre-Trial Conference. The Conference File Note recorded the parties agreed the matter was ready to proceed to trial. Following the callover, the proceedings were listed to trial in [month redacted] 2024.

18 On 18 September 2023, the husband executed a share transfer form, transferring the 75 shares issued to the Family Trust B, to the Third Party for $75. The share transfer form was executed by Mr B, on behalf of the Third Party, on the following day ("Share Transfer").[11]

[11] The wife's affidavit filed 30 October 2023, annexure 1.

19 The constitution for Company B provides a mechanism in which existing shareholders can purchase shares, where offered, at a price to be determined by the company's accountant as to the fair market value (clause 6.2.5).

20 The husband deposes that he offered the shares to the Third Party for two reasons: Firstly, the husband considered the shares in Company B were worthless, and secondly, continuing to own the shares would complicate resolution of financial matters with the wife. I will return to his evidence in more detail shortly.

21 The wife asserts that the Share Transfer was not in compliance with the requisite notice period pursuant to the company's constitution. That is not a matter which can be determined on an interim basis.

22 The husband did not give notice to the wife, of his intention to dispose of the [Company B shares] [12] The wife only learnt of the Share Transfer on 19 October 2023, when the transfer was disclosed by the husband, around a month after the disposition.

[12] Ibid [5] and annexure 1.

23 On 21 October 2023, the Share Transfer was registered with ASIC.

24 On 25 October 202[3], the wife's solicitors wrote to the husband, advising that she did not consent to the Share Transfer. She requested the husband "immediately transfer the shares to our client or return the said shares to the [Family Trust B]".[13] No response was received.

[13] Ibid [10] and annexure 2.

25 On 30 October 2023, the wife filed a Form 2 Application, affidavit in support and certificate of conferral, which were served on the husband and the Third Party.

26 On 7 November 2023, the husband filed his Form 2A Response to an Application in a Case and affidavit in support, seeking dismissal of the interim application, and costs.

27 On 11 December 2023, the wife filed an amended Form 2 Application in a Case, which sought to join the Third Party. The interim hearing listed in December 2023 was adjourned, upon the wife's application. Further procedural orders were made, and the interim hearing was listed for 18 January 202[4].[14]

Leave to Amend

[14] Orders dated [in] December 2023.

28 Rule 180 of the Family Court Rules 2021 (WA) provides that a party may amend a substantive application or response without leave at any time before the readiness hearing, or the time at which the case is allocated a date for trial, whichever is the earlier. Permission is required to amend at any later point.

29 The readiness hearing has long since passed and the case is listed for trial. The wife therefore requires permission to amend her substantive application.

30 The wife seeks leave to rely upon her further amended Form 1 Initiating Application filed 5 January 2024, in which she seeks, amongst other matters, to join the Third Party and orders on a final basis, which include:

(a)To set aside the Share Transfer;[15]

(b)A declaration that the husband holds "half of the interests in the [Company B Group] on Trust for the Wife and consequential Orders for transfer to the Wife or her nominee";[16]

(c)In the alternative, an order requiring the husband to resign and appoint the wife as the sole appointer and trustee of the Family Trust B, or such other entity which at the date of trial, holds the husband's interest in the Company B Group.[17]

[15] The wife's further amended Initiating Application filed 5 January 2024, Final Orders Sought, [12].

[16] Ibid, Final Orders Sought, [13].

[17] Ibid, Final Orders Sought, [14].

31 The husband opposes the wife being granted leave to amend, while the Third Party did not wish to be heard on this matter.

32 In considering any application for late amendment of a substantive application or response, the Court exercises a broad discretion. The overarching principle is that justice must be done between the parties. In considering the application, the Court should consider the nature of the issues in dispute and weigh the relative prejudice to each party which would arise from either of the two possible results on the application.[18]

[18] Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175.

33 While case management principles are not an end to themselves, it is nevertheless open to the Court in considering such an application to consider the interests of other litigants awaiting trial dates, the limited judicial resources available to the Court to accommodate the proper desire of parties to have their cases heard promptly, and the proper use of those limited resources.

34 Generally, where a party seeks the exercise of discretion in their favour and to the potential disadvantage of the other party, in circumstances of default or delay, an explanation for that default or delay will be called for.[19]

[19] Ibid [102].

35 Having carefully considered the evidence and submissions made on behalf of the husband and wife, I intend to exercise my discretion, to grant the wife leave to further amend her Form 1 Initiating Application. The orders which the wife now seeks, to set aside the Share Transfer pursuant to s 106B of the Act, could not have been reasonably contemplated at the time of the readiness hearing. Since the wife learnt of the Share Transfer in October 2023, she has unsuccessfully attempted to resolve the issue.

36 While the husband complained about the delay, between October 2023 and January 2024, in making the required application, the delay is not significant, in the context of the proceedings. An explanation has been offered to the extent there was a miscommunication between the wife's [S]enior [C]ounsel and [the husband's] instructing solicitor. I am not satisfied that these matters should be visited upon the wife.

37 The interests of justice support the exercise of discretion to permit the amendment. To deny the leave, would in my view, be unfairly prejudicial to the wife and her claims. While granting the wife leave to amend her application will cause prejudice to the husband, and to the Third Party, who will inevitably be joined as a party to the proceedings, I consider balancing the prejudice, supports the exercise of discretion. There is ample time between now and the trial, to accommodate the filing of further trial material. There was no suggestion that by granting the wife leave, that would jeopardize the trial dates, which all parties are anxious to retain.

38 Orders will be made granting the wife leave to rely upon her further amended Form 1 Initiating Application filed 5 January 2024.

Joinder

39 Counsel for the Third Party conceded that if the wife was granted leave to amend, then the Third Party must be joined as a party to the proceedings. I agree.

40 The wife's further amended Form 1 Initiating Application names the Third Party, as required pursuant to r 97 of the Rules. The issue of joinder has been squarely raised. The wife's affidavits address the maters prescribed in r 97(2). The wife's orders sought on a final basis, impact upon the rights of the Third Party. Accordingly, it must be a party, to enable the "Court to determine all issues in dispute in the case".[20]

[20] Family Court Rules 2021 (WA) r 96(1).

41 Orders will be made joining the Third Party to the proceedings, who will be known as the Third Respondent.

S 106B

42 Section 106B of the Act provides the Court with a discretionary power and wide scope to set aside transactions, including those which may affect the interests of third parties.[21] Relevantly, it provides that:

106B Transactions to defeat claims

(1)In proceedings under this Act, the court may set aside or restrain the making of an instrument or disposition by or on behalf of, or by direction or in the interest of, a party, which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.

…

(3)The court must have regard to the interests of, and shall make any order proper for the protection of, a bona fide purchaser or other person interested.

[21] Gould and Gould; Swire Investments Ltd (1993) FLC 92-434.

43 The legislation identifies the elements which need to be established before the exercise of this discretionary power can be considered. It is the wife who bears the onus of proof of the necessary elements.[22] While the remedy prescribed in s 106B is discretionary, a number of essential pre‑conditions must be satisfied before the discretion can be exercised.[23]

[22] ANZ Banking Group Ltd v Harper& Ors (1988) FLC 91-938.

[23] Gelley and Gelley (No 2) (1992) FLC 92-291.

44 Section 106B does not empower the Court to set aside or restrain any and all conduct at large, but only "the making of an instrument or disposition", and such instrument or disposition must be "made by or on behalf of, or by direction or in the interests of a party".[24] The critical issue is whether it was foreseeable at the time the disposition was made, that it was likely to defeat an order. The test of foreseeability is an objective test.[25]

[24] Family Law Act1975 (Cth) s 106B(1).

[25] Pflugradt and Pflugradt (1981) FLC 91-052.

45 The reference to "party" is a reference to a party to the marriage and not a party to the s 106B proceedings.[26] That does not mean that the relevant spouse must personally be a party to the instrument or disposition, but it must be made at least on their behalf or by their direction, or in their interest.

[26] D'Cruz & Pierce and Ors [2008] FamCA 819.

46 McClelland J in Riemann & Riemann and Ors (No 3)[27] summarised the law as follows:

[27] [2017] FamCA 911.

39.In Haseloff & Korman and Ors, Dawe J referred to relevant authorities in concluding that:

The wording of s 106B is such that the following questions must be answered affirmatively for the wife's claim to succeed:

a)are there "proceedings under this Act"?

b)is there an "instrument or disposition"?

c)was the "instrument or disposition" made "by or on behalf of, or by direction is or in the interests of, a party"?

d)is the interests or disposition "made or proposed to be made to defeat an existing or anticipated order in those proceedings" or "irrespective of intention, is likely to defeat any such order"?

…

41.In Chifley and Ha, Rees J stated that, in order to satisfy the requirements of section 106B, it is at least necessary for the applicant to prove the following:

•That an order for property settlement was actual or anticipated at the time of the transaction;

•That the relevant disposition is likely to defeat an order for property settlement;

•That the transaction was not a bona fide transaction on the part of the person who benefited from the disposition.

42.In Grech v Deak-Fabrikant (No 3), Daly As J said that the following principles emerge from Family Court authorities considering section 106B:

a)it is necessary to establish a causal connection between the transaction and the defeat of the order;

b)an order must be objectively foreseeable, not just a claim;

c)the transaction must be foreseeably likely to defeat that order; and

d)'anticipated' means 'expected' or 'reasonably probable' according to an objective test.

43.It is important to appreciate the different requirement in the respective limbs of section 106B(1). In that respect, in Halabi v Artillaga (Halabi), when considering a predecessor provision to section 106B, Nicholson CJ stated that the Court's jurisdiction to set aside a transfer was enlivened when:

an instrument has been made with the intention of defeating an anticipated order in the proceeding, or secondly, regardless of the intention with which it has been made it is likely to have the effect of defeating such an order (emphasis added)

44.That is, in order to satisfy the first leg of section 106B(1), it is necessary for the applicant to establish the existence of intention on the part of the party disposing of the asset to defeat an anticipated order.

45.However, in order to satisfy the second leg, it is not necessary for the applicant to establish the existence of intention on the part of the party disposing of the asset. Instead, in this case, the task is to establish the likelihood of the anticipated order being defeated by the disposition.

46.Drawing upon the analysis by both Rees J and Daly As J, to which I have referred, in order to satisfy the first limb, it is necessary for the application to establish:

•That an order for property settlement was actual or anticipated at the time of the transaction;

•That an order must be objectively foreseeable, not just a claim;

•That the transaction was not a bona fide transaction on the part of the party disposing of the asset; and

•That the intention of the party disposing of the asset was to defeat an existing or anticipated order.

47.In terms of the second leg of section 106B(1), that is, that the disposition has the likely effect of defeating an existing or anticipated order, in Whitaker and Whitaker, Nygh J said:

… the disposition must be shown to have the direct effect, or the likely direct effect of defeating an existing … order in the sense that if that disposition had not taken place the order would have been effective. Hence, if the order was, or would in any event have been, defeated by other supervening circumstances, it cannot be said that the order was defeated by the disposition or was at any time likely to have been defeated by it.

48.In Gould and Gould and Swire Investments Ltd it was held, relevantly, that:

…an applicant…may establish [the s 106B claim] by demonstrating that the pool of the parties has been diminished by the making of the instrument or disposition in question to an extent that is likely to have an impact on the anticipated orders.

49.Accordingly, in order to satisfy the requirements of the second leg of section 106B(1) it is necessary for the applicant to establish:

•the transaction must be foreseeably likely to defeat the order or anticipated order, where 'anticipated' means 'expected' or 'reasonably probable' according to an objective test; and

•That there is a causal connection between the transaction and the defeat of the order or likely defeat of the order as opposed to the order being defeated by a supervening event.

(footnotes and citations omitted)

47 I respectfully agree and endorse His Honour's remarks.

What is the wife's case?

48 The wife submits there is no question that (1) there are proceedings under the Act, (2) the Share Transfer is an instrument, [and] (3) the Share Transfer was made by the husband, who is a party. These are matters which are seemingly not the subject of controversy. It is the wife's case, that the husband disposed of the shares in Company B, with the intention to defeat an anticipated order. She contends the husband's intention is conceded by his own evidence and the evidence of Mr B.

49 The wife's Senior Counsel highlighted:

(a)the husband's evidence, in which he deposed that he transferred the shares in Company B because if he retained them "it would be another issue which would need to be resolved in my financial settlement divorce matter".[28]

(b)Mr B's evidence, in which he deposes that: (1) the husband approached him about transferring the shares, (2) the transfer was signed by the husband on the same day that he approached Mr B (3) the reason proffered by the husband for transferring the shares, was that "he didn't believe they had any value and it would complicate his ongoing financial settlement proceedings with [the wife] … which he had been unable to settle that day at a settlement conference. He said in effect that having them issued to him in his capacity as trustee for a family trust was just another thing that could be argued about with [the wife] and as he considered they were worthless he couldn't see why he would bother spending more time and money arguing about them with [the wife]."[29]

[28] The husband's affidavit filed 7 November 2023, [6].

[29] Mr B's affidavit filed 14 November 2023, [10].

50 The wife submits the Court can be satisfied on an interim basis, that the husband intended to defeat an anticipated order, without needing to make any credit findings, in light of the chronology of events, coupled with the evidence of Mr B and the husband, referred in the preceding paragraph. Specifically, the wife observes at the time of the Share Transfer, on 18 September 2023, the husband was on notice of the final relief she sought, in terms of her Minute filed 13 September 2023, in which she sought to retain some of the Company B shares. The wife submits the anticipated order was one that may "bring to account the [Company B shares] and potentially provide the wife with some interest in it. In a matter where intention to defeat is shown then the next step of showing that the transaction is likely to actually defeat an order is not required".[30]

[30] The wife's written submissions filed 19 December 2023, [14]-[15].

51 The wife refers to the husband's opposition to her application, which appears to be based upon two bases: firstly, the shares have no value, and secondly, the husband suggests that the shares should either be ignored or excluded by the Court at trial, on the basis they have been acquired since separation.

52 While the husband refers to the shares being "worthless and had no value, and had no impact on my asset position",[31] the wife observes there is no agreement, nor any admissible expert evidence as to the value of the shares, the subject of the disposition. The wife submits the shares have some value, noting they were issued as consideration for the husband's work in relation to Company B.[32] Further, the shares were transferred for $75.

[31] The husband's affidavit filed 18 December 2023, [3].

[32] Ibid, [6], [10] and [16].

53 The wife does not accept the husband's contention, that Company B's pre-emptive rights, means she could not succeed in obtaining the relief she sought, at the time of the Share Transfer. The wife observes if it can be established that the asset pool is reduced through the disposition, that is sufficient to establish the necessary criteria, pursuant to s 106B.[33]

[33] See Halabi v Artillaga & Ors (1994) FLC 92-470.

54 The wife rejects the husband's submission that at trial, the Court should ignore or exclude the shares in Company B, on the basis they were acquired post separation. The wife's Senior Counsel submits that approach is flawed, and inconsistent with the authorities. It will be a matter for the trial Judge to determine: (1) whether the shares are property or a financial resource of the husband; (2) based upon admissible expert evidence, the value of the shares; and (3) whether to adopt one or more pools, for the purpose of assessing the parties' respective contributions, holistically, over the whole period to trial.

55 Finally the wife submits there is no apparent prejudice to either the husband, or the Third Party, if the Share Transfer is set aside on an interim basis, where: (1) the trial will be held shortly; (2) the husband continues to be actively involved in Company B as a director; [and] (3) in the near future, the Court will determine what orders by way of alteration of property interests are just and equitable. If the Court declines to make orders at trial, in relation to the Company B shares, as sought by the wife, then it will be open to the husband to deal with them as he sees fit.

What is the husband's case?

56 The husband contends that it is only as a consequence of delays in the litigation caused by the wife (as referred to in [9] above), that the issue regarding Company B has arisen. He submits that the wife has made no financial contributions towards the shares, which have no value.[34] The husband details at some length, the basis upon which he contends the Court could find that the Company B shares have no value, including:

(a)The loan from the Third Party, which funded Company B;[35]

(b)Company B Group had two employees, one of whom has been terminated because the project has been assessed as uncommercial;[36]

(c)Company B Group obtained a financial modelling report from an independent third party, who assessed that the project was not viable, on the basis it was calculated as having a nil net present value, and being worth negative $1 billion;[37]

(d)The balance sheet for Company B (3) confirms the company has debts which exceed its assets, as at June 2023.[38]

[34] The husband's written submissions filed 19 December 2023, [27g], [27h] and [27j].

[35] Mr B's affidavit filed 14 November 2023, [8].

[36] The husband's affidavit filed 18 December 2023, [9].

[37] Ibid, [13] and annexure 5.

[38] Ibid, annexure 4; The husband's affidavit filed 14 November 2023, annexure [1].

57 In light of the above, at the time of the Share Transfer, the husband had formed the opinion that the Company B shares had no value.[39] As a consequence, he submits the wife cannot demonstrate that the Share Transfer was made to defeat an anticipated order.

[39] The husband's affidavit filed 7 November 2023, [7]-[8].

58 The husband submits that the Court should decline to exercise its discretion in favour of the wife, in circumstances where he points to the procedural history and the "ongoing delays in consideration of a relatively simple determination of financial matters".[40] He deposes to having disclosed all information regarding the value of Company B , including the Share Transfer, which has "no connection whatsoever with the circumstances of the marriage or any common financial assets".[41]

[40] The husband's written submissions filed 19 December 2023, [27a].

[41] Ibid, [27h].

59 The husband submits that the Third Party has paid valuable consideration for the shares, and is a bona fide purchaser for value whose interests are "unimpeachable under s 106B(3)".[42]

[42] Ibid, [27L].

60 The husband relies on Mr B's evidence, observing that Mr B deposes that he will not consent to the wife being a shareholder of Company B and has foreshadowed he will exercise his right of pre‑exemption to acquire the shares.

What is the Third Party's Case?

61 The Third Party supports the husband's assertion, that the Company B shares have no value, and on that basis, the Share Transfer could not defeat an anticipated order.[43]

[43] Mr B's written submissions filed 19 December 2023, [20].

62 The Third Party submits that:

The court would not as a matter of discretion transfer minority shares of no value to (the wife) on a final basis when the Third Party majority shareholder ([Mr B]) expressly says he will "under no circumstances" agree to have the applicant as a shareholder; and

In any event, ([Mr B]) is entitled to exercise his right of pre‑emption to acquire the shares from the (the husband) in the event they are to be transferred from (the husband) to (the wife).[44]

[44] Ibid, [21].

63 Counsel for the Third Party submits the mere fact the Share Transfer occurred post separation, is not a basis, without more, to reverse the transaction. Counsel submits that to grant the wife's application on an interim basis, would effectively determine the issue on a final basis, noting the wife also seeks an order in the same terms, by way of final relief. Counsel for the Third Party contends the question of whether the Share Transfer should be set aside, is more properly determined at trial, consistent with a number of authorities. Counsel further observes that the wife's filed trial material, does not address the amended relief she now seeks to set aside the Share Transfer.

64 The Third Party submits that the Court should not be persuaded of the relevant criteria pursuant to s 106B, on an interim basis. If, contrary to the submissions of the husband and the Third Party, the Court is satisfied that the relevant criteria is established, then it should not exercise its discretion, to set aside the Share Transfer on an interim basis, given: (1) the Court currently cannot make findings as to the composition or value of the asset pool; (2) the evidence has not been tested; [and] (3) all of the evidence which will be available at trial, is not before the Court.

65 Counsel further submitted that if the Share Transfer were set aside, the Third Party would suffer real prejudice, and be deprived of their rights in relation to the 75 shares which have been acquired.

Discussions and Conclusions

66 Each of the parties referred the Court to a number of cases, in support of their respective positions. I have had the opportunity to read and carefully consider each of the authorities which were relied upon. I am mindful that "no single case is ever the same as another, and each must be dealt with on its own facts and merits".[45] For that reason, the Full Court has raised questions as to the utility of comparing cases.[46]

[45] Chancellor & McCoy (2016) FLC 93-752, [48].

[46] See Fields & Smith (2015) FLC 93-638 in which Bryant CJ and Ainslie-Wallace J appeared to warn against the use of a table of comparable cases, compare to Wallis & Manning (2017) FLC 93-759, in which a differently constituted Full Court, comprising of Thackray, Ainslie-Wallace and Murphy J, recognised no two cases are the same, but comparable cases can assist.

67 The decision I am required to make, is based upon the factual circumstances of this case.

68 To the extent it was submitted by the husband, that the Company B shares are not property because they were acquired after the separation between the husband and wife; that cannot be so. It is well‑established that property of the parties includes all assets regardless of when or how they were acquired, for the purposes of s 79 of the Act.[47]

[47] For example see Farmer and Bramley (2000) FLC 93-060; Carter and Carter (1981) FLC 91-061; Calvin & McTier (2017) FLC 93-785.

69 The task of the Court at trial, will be to firstly to identify the existing legal and equitable interests of the parties in their property. Having identified the existing legal and equitable interests of the parties in their property, it will then be necessary to ascertain whether it is just and equitable to make an order altering those interests. The Court is required to conduct a separate and careful deliberation as to whether it would be just and equitable to make any order, in all the circumstances.

70 In that exercise, the Court must consider the respective contributions of the parties, both financial and non-financial, holistically over the whole period to trial.[48] That will require an assessment and analysis of the nature, form, and extent of all contributions, of all types. The task does not lend itself to a strictly mathematical approach.[49] The assessment of contributions is an exercise of a wide discretion, constrained by the relevant legal principles.

[48] Dickons v Dickons (2012) 50 Fam LR 244, [21]; Mallet v Mallet (1984) 156 CLR 605, [640]-[641].

[49] See for example Lovine & Connor and Anor (2012) FLC 93-515, [41].

71 Turning to the requisite elements pursuant to s 106B:

Are there proceedings under the Act?

72 The wife's application for orders by way of alteration of property interests, constitutes proceedings under the Act.

Is there an instrument or disposition?

73 The Share Transfer is an instrument or disposition.

Was the instrument or disposition made by or on behalf of, or by direction or in the interests of a party?

74 The instrument or disposition was made by the husband, who is a party to the proceedings.

Was the instrument or disposition made or proposed to be made to defeat an anticipated order in the proceedings or, irrespective of intention, likely to defeat such an order?

75 This question was the focus of fierce debate between the parties. This involves a consideration of whether the transfer was made to defeat an anticipated order (not a claim) in these proceedings, or, irrespective of intention, was likely to defeat such an order.

76 The test to be applied is an objective one. Elliott J said in Pflugradt and Pflugradt[50] at 76,430 that:

…it is not a question of whether the husband expected or foresaw a subsequent property application by the wife and "anticipated" an order being made, but whether considering all of the circumstances at the time of the disposition such an application by her at some time, with a consequent order, was objectively to be foreseen to be expected by him as being likely or reasonably probable.

[50] (1981) FLC 91-052.

77 As observed, the wife submits that the husband's disposition of the Company B shares was made with the intent to defeat an anticipated order given the evidence detailed in paragraph [49] above, together with the following chronology:

(a)On 12 September 2023, the wife filed her amended minute seeking 50% of the Company B shares in specie;

(b) [In] September 2023, the parties attended a Pre‑Trial Conference;

(c)On 18 September 2023, the husband disposed of shares held in Company B at his initiation. There is no suggestion it was at the request of Mr B, nor is there evidence of any similar request, being made to Mr C.

78 While the husband provides various explanations as to why he entered the Share Transfer, including his conclusion that the shares have no value, a view seemingly shared by Mr B, there is no independent admissible evidence as to value. The Court cannot on an interim basis, make any findings as to the value of the Company B shares. Contrary to the husband's submissions, the wife does not accept that the shares have no value.

79 The available evidence demonstrates that: (1) the shares were issued to the husband, in lieu of payment for services provided by the husband; (2) the shares were issued at a price of $75; and (3) according to the Share Transfer, the shares have been sold for the same price.

80 The husband submits the Court cannot find he intended to defeat an existing or anticipated order, because he believed the Company B shares "had no value and that he had the ability to deal with those shares because the wife, on advice, had never applied to obtain orders to prevent the husband dealing with his assets."[51] The absence of any injunction is not relevant to the consideration.

[51] The husband's written submissions filed 16 January 2024, [10].

81 The critical time at which the likely effect is to be considered is the time of the disposition. In Gelley and Gelley (No 2) (1992) FLC 92‑291, Treyvaud J said [at 79,153]:

Insofar as the order be anticipated, it is one anticipated by the reasonable disponer at the time of the disposition, properly considering all the circumstances of the case.

82 At the time of the disposition, the husband was aware of the orders sought by the wife in relation to the shares in Company B. Notwithstanding the criticisms as to the precise form of the proposed orders, and whether an order was anticipated in the precise terms of the wife's amended minute, there was no question, that the wife was seeking to retain shares in Company B.

83 The husband is silent as to why he failed to provide notice to the wife, of his intention to transfer the shares, or why disclosure of the Share Transfer occurred around a month after the transaction. The lack of evidence from the husband about these matters, in circumstances where he knew of the wife's proposed orders, raise questions as to his intention and attitude towards the wife's claim.

84 Given these are interim proceedings, and the evidence has not been tested, it is both inappropriate and not open to the Court to make any findings, with respect to the husband's credit. I am not satisfied that the evidence supports a finding, on an interim basis, that the husband intended to defeat an anticipated order, based upon his evidence, and the chronology of events. I decline to do so.

85 However, the wife's application may succeed, if the disposition "irrespective of intention, is likely to defeat" an existing or anticipated order.[52] I am satisfied the Share Transfer was likely to defeat an anticipated order. That is so irrespective of the husband's intention, because: (1) the pool of property has been diminished, by the transfer of shares; (2) the Court is unable to make any findings as to the value of the shares; [and] (3) based upon an objective test, the Share Transfer was foreseeably likely to defeat an anticipated order where the wife had articulated her claim to receive Company B shares, by way of her property settlement entitlements. While the Third Party and the husband have set out why, at trial, the Court may not be persuaded to grant the relief sought by the wife, they will be matters for trial. Finally, there was no suggestion that the anticipated order was defeated by other supervening circumstances.

Exercise of Discretion

[52] Family Law Act1975 (Cth) s 106B(1).

86 Each of the parties directed the Court's attention to VC & CG and Ors,[53] in which the wife successfully appealed the trial Judge's orders, dismissing her applications pursuant to s 106B of the Act to set aside a number of transactions. That application was conducted by way of a discrete hearing, in circumstances where the husband's father, who was a party to the proceedings, was terminally ill.

[53] (2010) FLC 93-434.

87 I am mindful of the views expressed by the Full Court, that "it is generally undesirable to have a discrete hearing of a s 106B application"[54] that is severed from the substantive s 79 proceedings, and the further remarks that "…it will rarely, at best, be open to conclude, on a discrete hearing, that the Court would not, in the exercise of its discretion, set aside the instrument. This is because of the prospect that all factors bearing upon the discretion may not be identified until the completion of the final hearing."[55]

[54] Ibid [8].

[55] Ibid [159].

88 McClelland DCJ, sitting in an appellate capacity, recently observed that the Full Court's comments are not authority for the proposition that an application to set aside an instrument pursuant to s 106B can never be heard and determined in a discrete hearing.[56] His Honour stated that while that was "relatively rarely done", it is a matter that is within the power of the Court to determine.[57] I respectfully agree.

[56] Vedders & Gittens (2023) FLC 94-156, [16].

[57] Ibid [18].

89 Having carefully considered the evidence, I am persuaded to exercise my discretion, and to set aside the Share Transfer on an interim basis.

90 Mr B deposed wanting "certainty in relation to my business affairs relating to my [Place A]. Having these legal proceedings pending will impact the ability to proceed with investigate studies on [Place A]".[58] Mr B did not particularise the nature of the prejudice he will suffer, or how the proceedings will impact on the conduct of the Place A, or the investigatory studies. I accept that as a stranger to the marriage, why an early determination of the disputed issues may assist. The Third Party has been joined to the proceedings. As a result, that will involve time, energy and costs.

[58] Mr B's affidavit filed 14 November 2023, [3].

91 The trial will be held in [month redacted] 2024. The wife contends that if the Court exercises its discretion to make an interim order pursuant to s 106B, it may not be necessary for the Third Respondent to remain as a party and to participate at trial. That position is not accepted by the Third Respondent. The Third Respondent will have the benefit of this determination and can consider the extent to which they wish to participate in the substantive proceedings.

92 I am not satisfied that the prejudice to which the husband, or the Third Party, referred mitigates against the exercise of discretion. There was no evidence adduced to indicate any impediments to the reversal of the Share Transfer. Neither the husband nor the Third Party deposed to any tax, accounting or other issues, arising from the reversal of the Share Transfer, which will occur in the same financial year. There was no suggestion of any difficulties to effectively unscramble what is a discrete transaction. Assuming that the Third Party has paid the consideration of $75, for the Share Transfer (which is not clear on the evidence), then the husband will be required to refund the payment, if the Share Transfer is set aside.

93 While I accept that the Third Party will be deprived of the benefit of the Share Transfer, I am not satisfied that is a significant factor against the exercise of discretion, particularly in circumstances where; (1) the Share Transfer occurred at the husband's initiation; (2) the Share Transfer was not part of any effort to remove the husband from Company B; [and] (3) the husband continues to act as a director in the venture.

94 The matters raised both by the husband and the Third Respondent, as to what orders may ultimately be made on a final basis, or the Court's approach to the competing applications for orders by way of property settlement, will be matters for trial. None of those issues persuade me that it is not appropriate to set aside the transaction, on an interim basis.

Injunctions

95 As a consequence of the order to set aside the Share Transfer, the wife seeks an order that the husband be restrained from effectively dealing with the Company B shares pending trial.

96 The Court has the power, pursuant to s 114 of the Act, to make such order or grant such injunction as it considers proper in relation to the property of the parties.

97 I am satisfied that the wife has a reasonable claim to alter property interests under s 79,[59] given the duration of the marriage, the facts of the case, and the parties' competing claims.

[59] Norton & Locke (2013) FLC 93-567.

98 Given the wife seeks to receive some of the shares in Company B the husband's conduct in disposing of the shares without prior notice to the wife, and his explanation for his actions, including the absence of any injunction, I am satisfied there is a real risk that the wife's claim may be defeated or damaged if the injunction is not granted.[60]

[60] Stowe and Stowe (1981) FLC 91-027; Mullen and De Bry (2006) FLC 93-293.

99 The wife has provided an Undertaking as to Damages, in the usual terms. The injunction will operate as a restraint between now and the trial, which is listed relatively shortly. I am not persuaded that the potential prejudice occasioned upon either the husband, or the Third Respondent in granting the injunction, outweighs the potential prejudice to the wife, if the injunction is not granted.

100 In weighing the hardship and convenience between the parties, I am persuaded to exercise my discretion, to grant the injunction sought by the wife.

OTHER

101 In light of these Reasons, I intend to make an order which reserves all parties' costs, to the trial Judge. At trial, the Court will be in a better position, to consider whether the circumstances warrant any costs order. I am not satisfied there should be an interim costs order, in favour of any party.

102 As indicated at the interim hearing, these Reasons will be distributed from chambers. I intend to hear from the parties, as to what further procedural orders are proposed, in light of the joinder of the Third Respondent, and the interim orders granted. I also intend to list the proceedings to a Status Hearing, at a date convenient to the parties.

PROPOSED ORDERS

103 Subject to hearing from the parties as to the form of the orders, and any orders arising, I propose to pronounce orders as follows:

Until Further Order

1.Leave is granted to the Applicant, [MS WITHER], to amend her further amended Form 1 dated 5 January 2024 [and] is accepted for filing.

2.[Company A as trustee for the Family Trust A] be joined as a party to these proceedings, and hereafter be known as the Third Respondent.

3.The instrument styled "Australian standard transfer form" transferring 75 shares in [Company B (1)], executed by the First Respondent, [MR WITHER] as trustee for the [Family Trust B] for the seller on 18 September 2023 and executed by [Company A as trustee for the Family Trust A] for the buyer on 19 September 2023 ("share transfer") be set aside.

4.The Third Respondent do all acts and things necessary to cause any consideration paid by the First Respondent in respect of the share transfer to be refunded to First Respondent.

5.Following compliance with order 3, the First Respondent be restrained by an injunction from causing or facilitating the sale, encumbrance or transfer of the shares referred to in order 3, and any shares held by him, or entities controlled by him in the [Company B Group], until the conclusion of the Trial in these proceedings.

6.The costs of all parties, in respect of the Form 2 Application and Form 2A Response be reserved to the trial Judge.

7.The Applicant's Form 2 Application filed 30 October 2023 and amended 11 December 2023 and 5 January 2024 and the Form 2A Response filed 7 November 2023 and amended 18 January 2024 otherwise be dismissed.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Family Court of Western Australia.

CD

Associate

31 JANUARY 2024