Zamir & Zamir
[2021] FedCFamC1F 9
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Zamir & Zamir [2021] FedCFamC1F 9
File number(s): PAC 2751 of 2021 Judgment of: HANNAM J Date of judgment: 2 September 2021 Catchwords: FAMILY LAW – PROPERTY – INJUNCTIONS -Review of a Registrar’s decision – Where the wife seeks a broad injunction restraining the husband from disposing, dealing with or diminishing the value of assets held in his sole name – Where a risk exists that assets may be dissipated or disposed of by the husband – Where the wife seeks an injunction that the husband repay $1.9 million withdrawn from the offset account secured over the former family home – Where consideration of applicable principles – Where appropriate for an injunction to be granted restraining the husband pending further order – Where not appropriate for an injunction to be made requiring the husband to repay funds. Legislation: Family Law Act 1975 (Cth) s 114
Family Law Rules 2004 r 18.10(1)
Cases cited: Palmer v Parbery [2019] QCA 27
Patterson v BTR Engineer (Aust) Ltd (1989) NSWLR 319
Tsiang & Wu and Ors [2019] FamCAFC 128Division: First Instance Number of paragraphs: 91 Date of hearing: 12 August 2021 Place: Sydney Counsel for the Applicant: Mr Kearney SC Solicitor for the Applicant: Unified Lawyers Counsel for the Respondent: Mr Fermanis Solicitor for the Respondent: Gramelis Attorneys ORDERS
PAC 2751 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR ZAMIR
Applicant
AND: MS ZAMIR
Respondent
ORDER MADE BY:
HANNAM J
DATE OF ORDER:
2 SEPTEMBER 2021
THE COURT ORDERS THAT PENDING FURTHER ORDER:
1.Orders 1, 2 and 3 made 2 August 2021 be set aside.
2.The Husband be and is hereby restrained from:
(i)Transferring or encumbering, or causing to be transferred or encumbered, the property known as and situated at B Street, Suburb C, New South Wales, Certificate of Title Folio Identifier: … (“Suburb C Property”) registered in his sole personal name, without the wife’s prior written consent or except as permitted by an Order of the Court.
(ii)Withdrawing or transferring funds from any available redraw facility, credit facility, line of credit or home loan account held in his sole name (or jointly with any other person) with Westpac Banking Corporation, D Bank or any other financial institution secured over the Suburb C Property.
(iii)Removing from Australia or in any way disposing of, dealing with or diminishing the value of any assets in Australia (“Australia assets”) without the wife’s prior written consent or except as permitted by an Order of the Court.
(iv)Disposing of, dealing with or diminishing the value of any assets outside of Australia (“ex-Australia assets”) without the wife’s prior written consent or except as permitted by an Order of the Court.
3.The husband is permitted to operate upon any bank account in his name for the following purposes which operations are excluded from the restraint in Order 2:
(i)Meeting his day to day living expenses and those of the children in the usual course;
(ii)Making any required repayments in respect of the debts owed by him to the D Bank and the E Bank;
(iii)Meeting other necessary expenses in relation to the property at B Street Suburb C; and
(iv)Making any required payments for his legal fees and disbursements in respect of these proceedings.
4.For the purpose of Order 2 above, Australia assets and ex-Australia assets include:
(a)All assets, held in the husband’s name either solely or jointly with any other person or entity:
(b)All assets which the husband has the power, directly or indirectly, to dispose of or deal with as if it were his own. For these purposes the husband is to be regarded as having such power if a third party holds or controls the asset in accordance with his direct or indirect instructions: and
(c)Including but not limited to the following assets in particular:
(i)Real property and shares in private and publicly listed companies or entities held in Australia, Country F and Country G;
(ii)Any funds held in any bank accounts or with any financial institution in the husband’s sole name or held jointly with any other person or entity, whether held in Australia or overseas, including but not limited to Country H, Country F and Country G; and
(iii)Any funds available to be redrawn from any loan secured over any property or any line of credit or credit facility secured over any property.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Zamir & Zamir has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
HANNAM:
INTRODUCTION
A husband (‘the husband”) who is engaged in property settlement proceedings with his wife (“the wife”) from whom he is separated, seeks a review of certain injunctive orders (“the orders”) made by a Senior Registrar on 2 August 2021.
Rule 18.10 (1) of the Family Law Rules 2004 provides that such an application for review is to be heard as an original hearing.
The husband seeks that the wife’s application for orders (which are substantially as those she sought before the Senior Registrar) be dismissed. The wife seeks in her Response to this application that injunctive orders be made in substantially the same terms as made by the Senior Registrar.
The question for me to determine is whether the orders sought by the wife in relation to the husband’s property are proper, that is, reasonable and just in the circumstances.
BACKGROUND
The parties who are both 45 were born in an overseas country (“the overseas country”).
The wife migrated to Australia with her family as a child and met the husband, who is her first cousin, when he came to Australia for a holiday in about 1996.
In 1997 the parties married in the overseas country and shortly thereafter the wife returned to Australia.
In the early months of 1998 the husband arrived in Australia on a spousal visa and he and the wife began living together. The husband has since obtained Australian citizenship.
Neither of the parties had any assets of substance at the commencement of their relationship.
Over the course of their marriage the parties had five children, two of whom are now adults (“the adult children”). They also accumulated property including a house in Sydney though there is significant dispute about other property owned by the parties.
After the birth of the adult children, the parties and those children moved to live in the overseas country for the purposes of the husband’s employment in a professional capacity. The parties each established bank accounts in the overseas country.
In April of the following year, 2005, the family moved again in connection with the husband’s employment to another country (“the Middle Eastern country”). The husband also established a number of bank accounts in this country.
The three youngest children (“the children”) were born in the Middle Eastern country where the family continued to live for some years.
Throughout the marriage the husband, who is a very well paid professional, was the principal breadwinner while the wife was mainly involved in the care of the children and the household, though she also engaged in some paid employment outside the home.
In 2012 a house was built in the overseas country on land owned by the paternal family. The wife claims that this land was given to the husband by his father (“the paternal grandfather”) and that the parties spent about $1 million dollars from accounts held in the husband’s name building and furnishing this house. The husband claims that the property in question is owned by the paternal grandfather and says that while he did provide financial assistance to the paternal grandfather for this house, it was never intended that he have an interest in the property (“the disputed property in the overseas country”).
In 2015 the parties purchased a property in a Sydney suburb which was to become the family home (“the family home”). This property which was registered in the husband’s sole name was purchased for $2.4 million dollars using $480,000 in savings together with a loan of $1.92 million dollars advanced by a bank and secured by a mortgage.
In October 2015 a term deposit account was opened in the overseas country in the name of the parties’ only son (then aged nine) in the sum of $1.1 million dollars. The husband operates this account through a Power of Attorney.
In 2018 another property was purchased in the overseas country (“the overseas unit”) for US$350,000. The husband borrowed an unknown sum for this purchase which is secured by a mortgage over this property. The wife claims that the overseas unit was purchased in the husband’s name, while the husband denies that he is the owner. The husband agrees that he makes the repayments for the loan on this property but asserts that it is owned by the parties’ only son, now aged 15. He deposes that in the overseas country property may be legally owned by children.
In mid-2018 the wife and children temporarily relocated to Australia as the two adult children were to begin at university. At this stage the loan on the family home had effectively been paid off as it was fully offset by funds held in an associated offset account.
In December 2019 the wife and the children returned to live in the Middle Eastern country, while the adult children remained in Australia.
The husband claims that in January 2020 the wife abandoned the children at a restaurant and flew back to Australia for ten days before returning to the Middle Eastern country.
The wife claims that the parties separated on a final basis in February 2020 while the husband claims that at this time the wife once again returned to Australia leaving the children with him.
By March 2020 restrictions had been put in place in the Middle Eastern country due to the global Covid-19 pandemic and the children’s schools were closed. It was agreed between the parties that the children would move to Australia to live with the wife in the family home. The older two of the children continued with their education in the Middle Eastern country through distance education and the youngest child was enrolled in a school near the family home.
In August 2020 the wife visited the Middle Eastern country and she claims that at this time the parties attempted to reconcile their marriage but this was unsuccessful. The wife also claims that at this time the husband informed her that the parties had approximately $1.5 million dollars in the overseas country held in a term deposit. During the wife’s visit to the Middle Eastern country the children remained living in Australia with the adult children.
In September 2020 the parties travelled to Sydney but there is a dispute between them about the circumstances of the husband’s presence in Australia and the status of their relationship. The wife claims that at around this time the husband informed her that he had purchased a unit in a third overseas country for US$300,000. The husband denies that he told the wife that he owned such a property and denies owning any property in this country.
In October 2020 the husband and older two of the children (twins now aged 15) returned to the Middle Eastern country and have lived there since that time. The parties’ adult children and youngest child have remained in Australia living with the mother in the family home.
Following his return to the Middle Eastern country the husband reduced the amount of the monthly payments he previously made to the wife for the support of the family in Australia but continued to meet some payments such as utilities from his bank accounts.
From November 2020 there were a series of transactions on various accounts held in each of the party’s names both in Australia and the Middle Eastern country. Of particular significance, is a series of withdrawals and deposits of large sums of money between various bank accounts each in the husband’s sole name. These transactions include a withdrawal on 12 November 2020 of $1.88 million from the home loan offset account in relation to the family home and a deposit to a savings account, also held in the husband’s sole name. By 8 December 2020 the husband had transferred $1.85 million into one of other accounts in his name held overseas. The wife was not aware of any of these transactions at the time.
It is the husband’s case that the funds he removed from bank accounts held in Australia, which were subsequently transferred to bank accounts in his name overseas, were ultimately donated to a social enterprise (“the social enterprise”) with which his sister is associated in the overseas country and neighbouring countries. There is considerable dispute between the parties about this matter to which I will return, though it suffices to say that the wife contends that there are many suspicious and improbable features of the husband’s evidence concerning this alleged donation.
Banking records indicate that on 13 January 2021 the husband transferred $700,000 to an account in his sister’s name. On 14 and 15 January 2021 the husband transferred two further sums of $600,000 each from an account held in his sole name in the Middle Eastern Country to another account held in his name in Switzerland (“the first Swiss bank account”). On 4 February 2021 the husband’s sister transferred $700,000 back to the husband by payment into the first Swiss bank account. As a result of these transactions, by 4 February 2021 the husband held a total of $1.9 million in the first Swiss account in his sole name. In his affidavit of 5 August 2021 the husband gives a detailed account of these transactions for the first time and deposes that as the $1.9 million funds “were to be for the benefit of [his sister]” he had completed a document declaring his sister to be the beneficial owner of the first Swiss bank account in his name.
In April 2021, in the course of an argument between the parties about the wife’s intention or otherwise to relocate with the adult children and the youngest child to the Middle Eastern country, the husband told the wife that if this did not happen “this marriage has ended”. The wife contends that she already considered the marriage to be at an end at this stage but the husband deposes that these words were said in the heat of the moment and subsequently withdrawn the following day and that he considered that the marriage was at this stage still intact.
On 21 May 2021 the wife commenced these property settlement proceedings in which she seeks orders that would see her receive 70% of the parties’ property interests. The wife also filed an Application in a Case seeking various interim orders including an urgent ex-parte injunction against the husband restraining him from encumbering, transferring or otherwise disposing of his interest in the family home. The wife subsequently filed an amended application seeking broader injunctions restraining the husband from withdrawing or transferring funds from any facility or account with any financial institution secured over the family home.
On 3 June 2021 a Senior Registrar made various injunctive orders in the terms sought by the wife (“the first injunction”). These orders in summary restrain the husband from further encumbering or transferring ownership of the family home to another person or withdrawing from or transferring funds from any available redraw facility or home loan account secured over that property without the wife’s written consent or as permitted by an order of the court.
The husband was first served with the wife’s Initiating Application and the orders made by the Senior Registrar on 3 June 2021 including the first injunction, the following day. He maintains that he was unaware that the parties were separated until that date.
The husband’s lawyers filed a Notice of Address for Service on 8 June 2021.
The wife requested financial disclosure from the husband’s lawyers on 17 June 2021. When disclosure was made by letter dated 1 July 2021 from the husband’s lawyer the wife became aware for the first time of the various transactions on the accounts held in the husband’s name in November 2020. In particular, she became aware that the husband had drawn down funds in the sum of $1,879,000 from the offset account associated with the mortgage secured over the family home.
On 2 July 2021 the wife through her lawyers requested urgent particulars and further disclosure in relation to the funds withdrawn from the offset account.
On 6 July 2021, at a time when he was seeking an extension of time in which to respond to the wife’s request for further particulars, the husband transferred just under $1.9 million dollars from the first Swiss bank account in his name (which the claims is beneficially owned by his sister) to an overseas account also in the name of his sister. The husband contends that this transfer represents a donation to the social enterprise associated with his sister.
By letter dated 9 July 2021 sent by his lawyer, the husband advised that the funds withdrawn from the home loan offset account had been “gifted to a third party” though that third party was not identified as his sister or the social enterprise. The wife’s lawyers then immediately requested that the husband provide full details in relation to this gift but those particulars were not then provided as sought.
On 20 July 2021 the wife filed a further application for orders including further broad injunctions restraining the husband dealing with property in Australia and overseas and requiring the husband to transfer $1,879,000 into a nominated loan account held in Australia.
On 30 July 2021 the husband filed his Response and documents upon which he relied with respect to the further application for interim orders made by the wife. In that Response the husband also indicated that he sought final property settlement orders that would see the parties’ property interests be divided equally.
On 2 August 2021 a Senior Registrar made orders substantially in terms as sought by the wife. The orders under review provide in summary:
·That the sum of $1,879,000 be paid by the husband into a nominated home loan account within 7 days.
·That the husband be restrained from removing from Australia or in any way disposing of, dealing with or diminishing the value of any assets in Australia and outside Australia without the wife’s prior written consent or as permitted by court order. For the purposes of this order the husband’s Australia assets and overseas assets are defined as all assets whether held in the husband’s sole name or jointly with another person or entity and assets which the husband has the direct or indirect power to dispose of or deal with as if they were his own. The husband’s assets are specified to include real property and shares in Australia and two overseas countries, any funds held in any bank accounts or financial institution in the husband’s sole name or jointly with another person or entity in Australia or overseas and any funds available to be redrawn from any loans secured over any property or any line of credit or credit facility secured over any property.
On 6 August 2021 the husband filed and served an Application in a Case seeking to review the orders made by the Senior Registrar as just summarised. On the same day the husband’s lawyer provided further disclosure as sought by the wife’s lawyer and the wife filed and served a Response to the husband’s Application essentially seeking that orders in substantially the same terms as made by the Senior Registrar be made in these proceedings.
The Review, being a hearing de novo, was heard on 12 August 2021 and judgment reserved.
THE ORDERS SOUGHT
The wife seeks an order that the husband’s Application for Review is dismissed and that orders be made in virtually the identical terms to those made by the Senior Registrar on 2 August 2021. The terms of the orders sought by the wife are as follows:
(1)Order 2 made by Senior Registrar Murdoch on 3 June 2021 be varied to include:
(a)The Husband be and is hereby restrained from:
(i)Removing from Australia or in any way disposing of, dealing with or diminishing the value of any assets in Australia (“Australia assets”) without the wife’s prior written consent or except as permitted by an Order of the Court.
(ii)Disposing of, dealing with or diminishing the value of any assets outside of Australia (“ex-Australia assets”) without the wife’s prior written consent or except as permitted by an Order of the Court.
(2)For the purpose of Order 1 above, Australia assets and ex-Australia assets include:
(a)All assets, whether or not they are held in the husband’s name and whether held solely by the husband or jointly with any other person or entity:
(b)All assets which the husband has the power, directly or indirectly, to dispose of or deal with as if it were his own (the husband is to be regarded as having such power if a third party holds or controls the asset in accordance with his direct or indirect instructions): and
(c)Including but not limited to the following assets in particular:
(i)Real property and shares in private and publicly listed companies or entities held in Australia, [the overseas country] and [another overseas country]:
(ii)Any funds held in any bank accounts or accounts held with any financial institution held in the husband’s sole name or held jointly with any other person or entity, whether held in Australia or overseas, including but not limited to [the Middle Eastern Country, the overseas country and another overseas country]; and
(iii)Any funds available to be redrawn from any loan secured over any property or any line of credit or credit facility secured over any property.
(3)Within 48 hours, the husband shall do all things an sign all documents necessary to transfer to cause to be transferred the sum of $1,909,069.19 in the [specified home loan account]
The terms of the orders sought do not include the words “pending further order”. As there is no doubt that the orders are intended to be interim orders this is treated as an oversight.
By way of evidence the wife relies upon a Financial Statement filed 21 May 2021, affidavits affirmed on 20 July 2021 and 2 June 2021, an undertaking as to damages and a tender bundle of documents.
The husband seeks orders in the following terms:
(1)That Orders 1, 2 and 3 of the Orders of 2 August 2021 be discharged.
(2)Pending further order, and without prejudice and without admission the husband shall pay as and when the same fall due:
(a)All repayments required in respect of the D Bank mortgage secured on the title of the property at [the family home];
(b)All statutory rates and charges in respect of [the family home]; and
(c)Such premiums as are necessary to maintain a current policy of insurance in respect of [the family home].
(3)That all outstanding interim/interlocutory applications be dismissed.
(4)That the costs of each party in respect of such interim/interlocutory applications be reserved to trial.
The husband relies upon a Financial Statement filed 30 July 2021 and two affidavits filed 30 July 2021 and 5 August 2021 respectively.
THE LAW AND DISCUSSION
Section 114 of the Family Law Act 1975 (“the Act”) provides that the court may make such order or grant such injunction as it considers proper with respect to the matter to which the proceedings relate including an injunction in relation to the property of a party to the marriage. The proceedings under consideration relate to the property of the parties. This section confers a broad discretion upon a court to make an order as it considers proper.
The Restraint
The first of the injunctions sought by the wife in these proceedings is a restraint upon the husband from dealing with his property. For such an injunction to be granted the wife must first have an existing or potential claim to an order altering property interests and there must be a serious issue to be tried[1]. She must also establish a danger that the claim may be defeated or prejudiced unless the injunction is granted.
[1] See for example the Full Court in Tsiang & Wu and Ors [2019] FamCAFC 128 (“Tsiang”) in which the approach to interim injunctions is reviewed. In this regard the applicant must “show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo”.
The applicant wife must next demonstrate that the balance of convenience favours making the order sought. As the Full Court said in Tsiang at [21]:
As part of this, the applicant must show that there is a “danger” or risk of dissipation of or dealing with assets which will frustrate any judgment in favour of the applicant.
So far as the serious issue to be tried is concerned, there seems to be little dispute that the wife will succeed in an application for adjustment of property interests. The entirety of the parties’ property interests are in the husband’s sole name and he also proposes orders that will see the parties property accumulated over their 23 year marriage be divided between the parties equally.
The significant issue in this dispute relates to the requirement that the wife must demonstrate the danger or risk of dissipation or dealing with assets which will frustrate any judgment in her favour. In this regard, the Full Court in Tsiang at [22] referred to the NSW Court of Appeal decision in Patterson v BTR Engineer (Aust) Ltd (1989) NSWLR 319 where Gleeson CJ said after discussing the discretionary nature of the remedy at 321-325;
As a general rule a plaintiff will need to establish, first a prima facie cause of action against the defendant, and secondly a danger that, by reason of the defendant’s absconding, assets being removed out of the jurisdiction or disposed of within the jurisdiction or otherwise dealt with in some fashion, the plaintiff, if he succeeds, will not be able to have his judgment satisfied…
It is not difficult to imagine situations in which justice and equity would require the granting of an injunction to prevent dissipations of assets pending the hearing of an action even though the risk of such dissipation may be assessed as being somewhat less probable than not.
The Full Court in Tsiang went on to say:
23. As McDougall J in Skyworks v 32 Drummoyne Road [2017] NSWSC 343 said:
24.The Court is required to undertake a qualitative evaluation of all the evidence that is available, to see if there is a sufficiently serious risk of frustration to justify the making of a freezing order. Further, the two considerations [namely, (1) whether there is a good arguable case and (2) whether there is a real risk of judgment frustration] should be analysed together (as each may impact on the other), and with an appreciation of both the underlying purpose of the rule and the relative risks of granting or withholding relief – the customary discretionary calculus.
24.In this case the identified risk was that the wife might dispose of assets in Australia and in her name in order to defeat the husband’s claim and, equally it was asserted that there was a risk that the second and third respondents too might deal with the partnership assets in a way so as to defeat the husband’s possible judgment or claim to that entity.
25.It is unnecessary to demonstrate a positive intention but merely the possibility of the event occurring: Mullen and De Bry (2006) FLC 93-293 at [49]. The determination about the balance of convenience may thus be an inference drawn from the facts and circumstances established by the applicant’s evidence: Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319 at 321-322.
26.Nor is it the role of the judge determining the question of the injunction to, in effect conduct a trial of the disputed evidence to resolve those disputes (see Shercliff v Engadine Acceptance Corporation Pty Ltd [1978] 1 NSWLR 729).
27.As to the determination of the existence of the risk and its magnitude, in Palmer v Parbery [2019] QCA 27 [“Palmer”] McMurdo JA (with whom Fraser and Gotterson JJA agreed) said:
119.The determination of whether there exists a sufficiently serious risk of the dissipation of assets involves the evaluation of future possibilities, rather than the ascertainment of historical facts. The risk of dissipation might justify an order although the probability of the risk eventuating is less than 50 per cent. But, as the risk of dissipation must be a real and not merely a theoretical one, it must have an evidentiary basis. Where a fact is alleged by the plaintiff in support of its case about the risk, but there is contrary evidence from the defendant, must the fact be proved to the court’s satisfaction as if the application for the freezing order was the trial of the case? In my view, a plaintiff need not do so. A freezing order is interlocutory in nature; it does not involve a final determination of the parties’ positions. Usually it is made in circumstances of urgency in which the court is unable to conduct an extensive and conclusive factual inquiry in a way which is fair to both parties. Where the factual basis for the plaintiff’s case about the risk of dissipation is disputed, the risk will commonly have to be evaluated with the recognition that the factual basis for it is in doubt. Nevertheless, the possibility of the plaintiff’s evidence being correct, considered with other facts and circumstances, might mean that there is a sufficiently serious risk of the frustration of the satisfaction of a judgment as to justify the making of a freezing order. …
As was explained in Palmer as extracted by the Full Court in Tsiang the question of serious risk of dissipation of assets involves the evaluation of future possibilities, rather than the ascertainment of historical facts. The risk of dissipation must be a real and not merely theoretical one, and must have an evidentiary basis.
The evidentiary basis for the risk of dissipation is based to a large extent on matters which are in dispute between the parties. First, significant focus in the submissions made on the wife’s behalf is on the husband’s conduct related to the transactions undertaken between November 2021 and July 2021 whereby he withdrew around $1.9 million from a loan account secured by a mortgage over the family home and which he ultimately deposited into an account held overseas in the name of the his sister.
The wife’s counsel referred in oral submissions to many curious and unusual features about the husband’s account of his conduct relating to these transactions. These include the husband’s failure to notify the wife about the circumstances in which $1.9 million dollars from a loan account related to the family home was drawn down and came to be deposited in his sister’s account, the absence of any corroborative evidence from his sister, and the varying explanations he has given about these transactions including his initial explanation that the $1.9 million dollars was transferred to a nameless “third party” as a gift. The wife’s counsel also highlighted in submissions alleged inconsistencies and irregularities about the husband’s account that the $1.9 million was given to a social enterprise associated with his sister. These include the husband’s explanation about his sister having to carry out “due diligence” concerning the social enterprise when the sister herself was the founder of the enterprise, the timing of the various transactions and implausible explanation about the sister’s beneficial ownership of the Swiss bank account in the husband’s name.
Particular submissions made on behalf of the wife in relation to the risk of dissipation include the timing of the various transactions in which funds were moved from accounts in the husband’s sole name given the events in the proceedings. In particular, as outlined earlier in this judgment, the wife first became aware of the husband’s drawdown of $1.88 million from the home loan offset account (which occurred in November 2020) when a response was given by way of financial disclosure to the wife’s request for the same on 1 July 2021.
The following day the wife’s solicitor expressed concern about the incomplete nature of the husband’s disclosure in relation to these transactions, especially as the funds drawn down were subsequently transferred overseas. She sought details including where those funds were then held and how they had been applied as well as requesting an undertaking from the husband that the funds would be paid back into the home loan account and that “he will not otherwise dispose of, dissipate or deal with those funds”.
On 5 July 2021 the husband’s solicitor sent an email to the wife’s solicitor claiming that there was insufficient time in which to obtain instructions about these matters from the husband. By email in reply the following day it was pointed out to the husband’s solicitor that the wife seeking particulars on an urgent basis upon receiving the husband’s disclosure about the withdrawal of funds would come as no surprise to the husband but nonetheless an extension of the timeframe for the husband to comply with the request to 4pm 7 July 2021 was given. By the time the husband responded to that request he had already transferred the funds (almost $1.9 million) to an account in the name of his sister.
Another matter of significance relevant to the question of risk of dissipation of assets is the ownership or control of the funds in the first Swiss bank account in the husband’s name from which the $1.89 million was transferred to an overseas account in the name of his sister. Although I understand it is now the husband’s contention that this transfer was a donation to the social enterprise associated with his sister and that the first Swiss bank account from which the funds were transferred, although held in his own name was beneficially held by his sister he did not inform the wife of either of these matters at the time. Rather, by letter dated 9 July 2021 sent by his lawyer, the husband advised that the funds withdrawn from the home loan offset account had been “gifted to” an unnamed “third party”.
It is the wife’s contention that the husband owns or controls the funds in the Swiss bank account from which the $1.9 million was transferred on 7 July 2021.
Although the husband’s affidavit evidence is not entirely clear, he deposes that the bank requested in early February 2021 that he complete a document entitled “Declaration of Identity of Beneficial Owner” and that he executed this form, declaring his sister as the sole beneficial owner, on the basis that the funds in this account were intended to be for the sister’s benefit.
I cannot of course make any positive findings in relation to the first Swiss bank account and the veracity of the husband’s evidence concerning beneficial ownership. However, in assessing the possibility that the wife’s contentions are correct and the question of the need to protect assets such as the funds in overseas bank accounts, I consider the following matters weighty.
First, the “Declaration of identity of Beneficial Owner” was executed on the same day that the husband’s sister returned the $700,000 to the husband’s first Swiss bank account on the basis, according to the husband that his sister “wished for me to retain the $700,000 until she was ready to proceed with the investment”. A transfer from the husband’s sister to this account is completely at odds with the contention that this account was beneficially owned by the sister herself.
Further, as noted by the wife’s counsel the husband does not depose to establishing the first Swiss bank account with the intention that the sister be the beneficial owner. The husband deposes that the bank requested that he complete a “Declaration of Identity of the Beneficial Owner” (without deposing to any context for this request) and that he completed it declaring his sister as the sole beneficial owner on the basis that the funds were intended to be for her benefit.
It is in my view also significant that transfers by the husband into accounts in the name of his sister and his evidence that the funds were intended for her benefit is at odds with his evidence elsewhere that he donated the money to a social enterprise. This contention that the donation was made to the social enterprise is also entirely uncorroborated by any documentation from the social enterprise which may be considered curious given the amount involved.
The wife’s contentions also focus on the husband’s alleged ongoing failure to disclose his financial circumstances, to the wife as required and in these proceedings.
In relation to this allegation of non-disclosure by the husband, in addition to the transactions relating to the $1.9 million, attention was drawn in submissions by the wife’s counsel to a second Swiss bank account held in the name of the husband and various transactions upon that account.
In particular, the wife’s counsel identified in records relating to the second Swiss bank account a deposit of $24,950 on 26 January 2021 and further deposit from the account held by the husband in the Middle Eastern country of $424,935. On 2 July and 7 July 2021 the husband transferred $440,000 and $9728 respectively from the second Swiss bank to his sister. The wife submits that it is of particular significance to her contentions about non-disclosure that the husband provides no explanation at all about the transfer of almost $450,000 including the source of these funds and the disposition to his sister in circumstances where he provides great detail in his affidavit by way of explanation about the $1.9 million and both sets of transactions took place at around the same time, both involved accounts held with the same bank in Switzerland and in both cases the recipient of funds was his sister.
In summary, it is the wife’s contention that the husband is in control of both the Swiss bank accounts in his name. So far as the second Swiss bank account is concerned, it must be taken for the purposes of this application that that contention is not in dispute. The husband gives a detailed explanation of the various transactions through a number of bank accounts held in Australia, the Middle Eastern country and Switzerland in relation to the $1.9 million and in particular refers to the first Swiss bank account which, as noted, he contends is beneficially owned by his sister. He makes no reference even to the existence of the second Swiss bank account or to the transactions whereby he transferred a further almost $450,000 in funds to his sister.
As indicated I do not make any findings in relation to the husband’s control over the first Swiss bank account when the payment of $1.9 million was made from it to an account in his sister’s name on 7 July 2021. However, the curious features of his evidence concerning ownership and control of those funds must be considered in conjunction with the undisputed facts surrounding the timing of the various transactions whereby $1.9 million was drawn down from the home loan offset account came to be deposited in the name of the husband’s sister relative to the other events in the proceedings. When these matters are considered together with the evidence concerning similar transactions on the second Swiss bank account by the husband whereby he transferred a further $450,000 to his sister at around the same time (which is entirely omitted from the his evidence) I am of the view that the wife has established a real risk of dissipation.
While the husband does not deny the wife’s prima facie case for injunctive relief the focus of submissions made on his behalf relate to the balance of convenience. It is contended on his behalf that the restraint under consideration is not necessary as it has no utility and that it also goes further than necessary “to prevent the abuse or frustration of the court’s process in relation to the matter within its jurisdiction”[2] infringing the limits of such claims contrary to established principles.
[2] In the Marriage of Waugh & Waugh (1999) 27 Fam LR 63; (2000) FLC 93-052
In relation to the utility of the injunction as proposed by the wife, it is submitted on the husband’s behalf that any concerns about dissipation of the equity in the family home are appropriately addressed by the first injunction made on 3 June 2021 which remains undisturbed.
Although it was conceded by the husband that the transactions of concern relating to the ultimate disposition of the $1.9 million overseas was the culmination of events occurring after the first injunction was made, and did not contend that the wife was in some way prevented from seeking to expand those injunctions in the circumstances the utility of the further injunction of this breadth was questioned. In this regard, reference was made in submissions on the husband’s behalf to other assets apart from the balances in bank accounts in various overseas countries and in particular to both pieces of real property in the overseas country being assets in which the wife contends that the husband has an interest, a matter he denies.
In relation to one of these properties, the overseas unit, the husband contends there is no utility to the proposed injunction as both parties agree that it is substantially encumbered. The evidence does not in my view support such a submission. The wife deposes to the parties’ purchasing that property in the husband’s sole name in 2018 and borrowing the entire purchase price but deposes to being unaware how much has been repaid on that loan. The husband, although conceding that he took out a personal loan for the purposes of purchasing this property and that he continues to make repayments on it does not provide any further evidence to support a submission that there is no utility in making an injunction directed to this property. Similarly, there is a disagreement about the second disputed property in the overseas country and in particular the husband’s ownership of it. Given the husband’s evidence that he provided financial assistance (in an unspecified sum) for the house to be built there is a question which remains to be resolved as to the husband’s interests.
In relation to the balance of convenience and the breadth of the proposed injunction generally, two further submissions are advanced on behalf of the husband. First, the husband’s counsel raises practical difficulties such as that this injunction if granted would prevent him from meeting his obligation to third party creditors including banks, prevent him from meeting expenses to support himself, the two children in his care and supporting the wife and the child in her care and prevent him from funding legal advice and representation in the proceedings.
The wife effectively conceded these practical difficulties and agreed that there would need to be some variation or “carve out” of the orders she proposes to overcome these practical difficulties. An order along these was made pending this judgment varying the orders under review, which permits the husband to operate upon the relevant bank accounts in his name to meet his day to day living expenses and those of the children in the usual course, to meet required repayments in relation to loans and other necessary expenses for the family home, and allow for payment of his legal fees and disbursements in respect of the proceedings. So far as I understand it, the wife’s concession is that it would be proper to continue this variation which amounts to a variation of her initial proposal.
The husband’s second contention in relation to the breadth of the injunction is that the restraint as sought if made would impermissibly create additional rights or interests to which the wife may later seek to have recourse in her section 79 application. It is argued on the husband’s behalf that freezing all monies that may be deposited into the husband’s account will extend to freezing his future income. This, it is submitted will impermissibly in effect convert that income which is not property into property. In my view, the husband’s income, once paid into a bank account may be properly characterised as property. For this reason I do not accept the submission that it is impermissible on this basis to restrain the husband operating on the bank account into which his income is paid.
It is the husband’s general contention that the first injunction is sufficient to prevent the abuse or frustration of the Court’s processes and that there is no real danger that the wife’s claim will be defeated or prejudiced unless the restraint under consideration is granted.
For the reasons given, I consider that each of the matters that must be satisfied for the discretion to be exercised as sought by the wife are satisfied. The wife has an existing claim to an order altering property interests, and there is a sufficient likelihood that she will succeed in having the existing matrimonial property interests (all of which are held by the husband in his sole name) altered. She seeks an adjustment that 70% of the parties’ property interests be transferred to her, while the husband seeks the adjustment that would see each of the parties’ hold each of their property interests equally.
In relation to the danger that the wife’s claim may be defeated unless the injunction is granted, there is no dispute that the final events which caused $1.9 million drawn down from an account secured over the family home to be transferred to the husband’s sister occurred after the first injunction was made. While making no findings, I consider that there is a possibility that the wife’s evidence about the $19 million transactions will be accepted which gives rise to an ongoing risk of dissipation of the parties’ assets.
In the circumstances of this case, where the wife contends that the husband has other property interests overseas including real property and bank balances, the wife has also established the danger that her claim may be defeated or prejudiced unless a further injunction is granted.
I have also considered whether the balance of convenience favours the making of the orders sought and the contentions of the husband concerning the breadth of the proposed restraint. As explained, it was conceded on the wife’s behalf that certain variations to the orders she initially proposed are proper to overcome the practical difficulties arising from the breadth of that proposed injunction so that the husband may operate upon the bank accounts sought to be restrained to meet the day to day living expenses and those of the children in the usual course, to meet required repayments in relation to loans and other necessary expenses for the family home and to allow for payments of his legal fees and disbursements in the proceedings.
As touched upon previously, the husband regards the first injunction order as being sufficient to prevent the abuse or frustration of the Court’s process. However, there may be a question about the validity of that injunction as it is not clear that the Senior Registrar who made that injunction exercised a power delegated to her at the time. As it was contended on behalf of the husband in the course of oral submissions that the first injunctive orders made by the Senior Registrar are “undisturbed by anyone and no one, indeed, seeks to disturb them” and given neither party raises the issue of the validity of the injunction, I re-make the injunction as made by the Senior Registrar to ensure its validity.
In all of the foregoing circumstances, I am satisfied that it is proper to make the injunctions made by the wife subject to these last mentioned variations. I have also made some small amendments to the wording of the orders which in my view are necessary for their effective operation.
The repayment order
The husband submits that the Court cannot make the second of the injunctions sought by the wife, that the husband effectively return the $1.9 million removed from the offset account on the basis that there is no evidence upon which the court could be satisfied he has the ability to comply with such an order.
The wife accepts that the only basis upon which such an order may be made is if the court is satisfied that the husband controls the funds in the account in which they are now deposited. Otherwise she concedes that the husband has no capacity to comply with the order she seeks that those funds be transferred to the nominated account held in Australia.
There is in my view no basis upon which I could be satisfied, especially at this interim stage when no findings about disputed matters may be made, that the husband does now have control over the $1.9 million. The account in which the funds are held is in the name of the husband’s sister who is not a party to these proceedings. There are no identified funds from which this payment could be otherwise made and the wife’s counsel conceded on her behalf that if the court is not satisfied about her contentions concerning the husband’s control over these funds then it would not be proper for the court to make such an order. In these circumstances, I am not satisfied that such an order is proper and for this reason the application for such an order is dismissed.
In all of the foregoing circumstances, I make the first of the injunctive orders sought by the wife subject to certain variations for the reasons given. As these injunctions are clearly sought as interim orders, they will be made as sought pending further order.
I certify that the preceding ninety-one (91) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Hannam. Associate:
Dated: 2 September 2021
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