Agnarsson & Agnarsson (No 2)
[2023] FedCFamC1F 1066
•13 December 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Agnarsson & Agnarsson (No 2) [2023] FedCFamC1F 1066
File number: CAC 491 of 2023 Judgment of: AUSTIN J Date of judgment: 13 December 2023 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Review of decision – Property – Where the wife seeks review of a selection orders of a senior judicial registrar (“the registrar”) – Where an aspect of the dispute concerns three parcels of real property – Where the registrar made orders requiring the wife to transfer to the husband all her proprietary interest in the properties, subject to him re‑financing the debt encumbering the properties – Where the wife seeks the sale of the properties – Where the wife is the exclusive legal owner of two of the properties and may sell and discharge the mortgages of those properties if she wishes – Where the orders of the registrar are discharged – Where the parties shall lease the jointly owned third property and apply the net rent in payment of the loan secured by mortgage against the property – Where the wife seeks to vary an order made by the registrar by broadening the terms of her permissive redactions in disclosed documents – Where there is no reason to disturb the order made by the registrar – Where the registrar made orders requiring the wife to place certain valuable into safe custody and for the parties to appoint a single expert to value it – Where the wife seeks replacement orders enabling the sale of some valuables and the valuation of any retained valuable – Where the orders were made to preserve assets and their value, pending the determination of the proceedings and need not be disturbed – Where the review application was partially successful – Costs reserved for 28 days. Legislation: Family Law Act 1975 (Cth) Pt VIII, s 114 Cases cited: Gabel v Yardley (2008) FLC 93-386; [2008] FamCAFC 162
Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143; [2003] FamCA 395
Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52
Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466; [2009] FamCAFC 166
Division: Division 1 First Instance Number of paragraphs: 51 Date of hearing: 11 December 2023 Place: Newcastle (via MS Teams) Counsel for the Applicant: Ms Lawson Solicitor for the Applicant: Farrar Gesini Dunn Counsel for the Respondent: Ms Haughton Solicitor for the Respondent: Elringtons Lawyers ORDERS
CAC 491 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR AGNARSSON
Applicant
AND: MS AGNARSSON
Respondent
ORDER MADE BY:
AUSTIN J
DATE OF ORDER:
13 DECEMBER 2023
THE COURT ORDERS THAT:
1.Orders 11, 12, 13 and 14 made by the senior judicial registrar on 26 October 2023 are discharged.
2.The parties shall forthwith do all acts and things necessary to lease the jointly-owned real property at B Street, Town C, NSW and to apply the net rent in payment of the loan secured by mortgage against the property.
3.Otherwise:
(a)the Application in a Proceeding filed on 25 August 2023 is dismissed;
(b)the Application in a Proceeding filed on 19 September 2023 is dismissed;
(c)the Response to an Application in a Proceeding filed on 6 October 2023 is dismissed;
(d)the application for the orders contained within the Minute of Orders filed on 20 October 2023 is dismissed;
(e)the Application for Review filed on 9 November 2023 is dismissed; and
(f)the Application in a Proceeding filed on 28 November 2023 is dismissed.
4.Costs are reserved for 28 days.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Agnarsson & Agnarsson has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
AUSTIN J:
The parties to these proceedings are engaged in a dispute over the division of their property interests pursuant to a cause brought under Pt VIII of the Family Law Act 1975 (Cth) (“the Act”).
On 26 October 2023, the senior judicial registrar (“the registrar”) made a suite of orders to determine multiple interlocutory disputes between the parties.
Presently before the Court for determination are, first, the wife’s application to review a selection of those orders, and secondly, her application to stay some of the registrar’s orders until they are reviewed. The second application is superfluous as the first application is now being determined.
Background
These proceedings for financial relief between the parties were commenced by the husband in March 2023, following matrimonial separation in late 2022.
Numerous interim orders were made with the parties’ consent in March, April and May 2023.
On 25 August 2023, the husband filed an Application in a Proceeding seeking more interlocutory relief. Then, on 19 September 2023, the husband filed a second Application in a Proceeding seeking even more interlocutory relief.
On 6 October 2023, the wife filed a Response to an Application in a Proceeding, which was intended to respond to both of the husband’s applications. She sought the dismissal of the husband’s applications and the grant of interlocutory relief in relation to a slew of other issues not covered by the husband’s two applications. However, in advance of the interim hearing before the registrar, the wife revised the form of relief she sought by filing a Minute of Orders dated 20 October 2023, which was intended to substitute for the Response.
The registrar heard the dispute on 25 October 2023 and pronounced judgment the next day.
The review application, filed by the wife on 9 November 2023, seeks to review the registrar’s orders, but only in these limited ways:
(a)in respect of Orders 11, 12 and 13 (which require the wife to transfer to the husband all her proprietary interest in three parcels of real property, subject to him re-financing the debt encumbering the properties, or in the event he cannot re-finance, compelling him to lease two of the properties and apply the rent to maintain the mortgages), the wife:
(i)initially wanted supplementary orders compelling a trustee to sell the properties if the husband fails to maintain the mortgage repayments (Application for Review, proposed Orders 1, 2 and 3); but then
(ii)reverted to her original position of seeking the sale of the properties (Minute of Orders, proposed Order 9).
(b)the discharge of Order 14 (which requires the husband to maintain insurance policies of certain values over the three properties) (Application for Review, proposed Order 4);
(c)the variation of Order 16 (which gives the wife permission to redact entries in her bank account statements disclosed to the husband) by broadening the terms of her permissive redactions within disclosed documents (Application for Review, proposed Order 5); and
(d)the discharge of Orders 17, 18, 19 and 20 (which require the wife to place certain valuables into safe custody, the parties to appoint a single expert to value it, and the husband to pay for the storage and valuation fees) and their replacement with other orders enabling the sale of some of the valuables and the valuation of any retained valuables (Application for Review, proposed Orders 6, 7, 8 and 9).
The review hearing requires the de novo consideration of the parties’ anterior applications, as modified by their current proposals, the ambit of which hearing is limited by the extent of the review sought by the wife.
Evidence
The wife relied upon:
(a)her financial statement filed on 25 September 2023;
(b)her affidavit filed on 6 October 2023;
(c)her affidavit filed on 24 October 2023;
(d)her affidavit filed on 9 November 2023; and
(e)the State family violence order made against the husband for her protection in mid‑2023 (Exhibit W1).
In accordance with the husband’s objection, the wife was refused leave to rely upon another affidavit she filed on 28 November 2023. The wife could not articulate what important evidence it supposedly provided over and above her multiple other affidavits.
The husband relied upon:
(a)his affidavit filed on 25 August 2023;
(b)his affidavit filed on 19 September 2023;
(c)his financial statement filed on 23 October 2023; and
(d)a bank letter dated December 2023 confirming his approval for finance (Exhibit H1).
Real properties
This aspect of the dispute concerns three parcels of real property, being: D1 Property (“the first property”); D2 Property (“the second property”); and the Town C property (“the third property”).
The wife is the sole legal proprietor of the first and second properties.
The parties are the joint legal proprietors of the third property.
Each property is encumbered by mortgage. The evidence is less than clear, but the husband seems to be at least a guarantor of the loans secured over the first and second properties, but he is presumably one of the primary debtors in respect of the third property. The combined value of the encumbrances approximates $5.2 million.
The husband is interested in retaining the three properties (subject to their encumbrances) as part of his ultimate share of the property settlement, whereas the wife wanted the properties sold and the net sale proceeds used to retire debt. However, her position at the commencement of the review hearing was to retain the orders made by the registrar, but subject to additional orders compelling the sale of the properties if the husband defaults in maintaining repayments on the mortgages and other liabilities. During the review hearing, the wife reverted to her application for the three properties to be sold. The husband also altered his position during the hearing by submitting to the additional orders sought by the wife in her review application (which he initially opposed), but he maintained his opposition to the sale of the properties.
The husband complained of his denial of procedural fairness in having to deal with the wife’s amended proposal on the run, so the hearing was suspended for 30 minutes to enable him to confer with his lawyers. Upon resumption of the hearing, the husband disavowed the need for any further adjournment, as had been mooted, and was content to press ahead with his submissions to finalise the dispute.
Accordingly, the wife wanted the three properties sold, whereas the husband wanted to retain the orders made by the registrar and for the Court to make the extra orders the wife proposed in her review application (but subject to his re-finance of the properties only having to occur contemporaneously with the wife’s transfer of title in them to him, rather than within seven days). The husband was well able to meet the wife’s amended position because it was the same proposal she advanced before the registrar.
Unless and until the Court makes a property adjustment order in the exercise of discretion under Pt VIII of the Act or restrains the wife from exercising her proprietary rights by an injunction made under s 114(1) of the Act, as the exclusive legal owner of the first and second properties, the wife can do as she pleases with them. That is the corollary of her sole proprietorship.
No property adjustment order under Pt VIII of the Act – either final or interim – should be made unless the Court is satisfied it is just and equitable to make the order and it must not be assumed the parties’ rights to or interests in property are or should be different from those that exist (Stanford v Stanford (2012) 247 CLR 108 at [22], [35], [38] and [50]).
There can only be one exercise of power under Pt VIII to adjust the parties’ property interests (Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at [40]–[48]; Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 at [105]–[113]). The power may be exercised partially or on an interim basis until it is entirely spent or exhausted (Gabel v Yardley (2008) FLC 93-386 at 82,958; Strahan at [114]), though it is preferential for there to be only a singular exercise of the power (Strahan at [115]–[118] and [225]–[228]). There must be a principled reason for fragmenting the process (Stanford v Stanford at [41] and [43]), which reason would ordinarily be the need to cause one party to furnish the other with sufficient funds for legal costs to enable the financial proceedings to be contested on a level litigious field (Strahan at [224]). But that could not have been the reason why the registrar ordered the three properties be transferred into the husband’s exclusive title.
Before an injunction under s 114(1) of the Act can be made, by its legislative terms, the Court must be satisfied the proposed injunction is “proper” with respect to the matter to which the proceedings relate.
The husband sought no order at all in respect of the first property, which he occupies pursuant to an interim consent order made on 8 May 2023, giving him exclusive use and occupation of it. However, by way of the orders proposed by the wife to the registrar in October 2023, she sought authority to sell it and numerous other parcels of real property. The husband did not then and does not now advance any reason why it would be “proper” to extend the restrictive injunction made against the wife in respect of the first property in May 2023, granting him exclusive occupation of the property, now that her former consent to his occupation of it is withdrawn. Nor did he seek any property adjustment order in respect of the first property. Nor did he then or now advance any reason why the first property should be transferred to him, aside from his bare refrain that he would like to retain it as part of his share of the ultimate property settlement.
In respect of the second and third properties, the husband did not then and does not now seek any interim property settlement order under Pt VIII of the Act. Nor does he seek any restrictive injunction against the wife under s 114(1) of the Act restraining her from exercising her proprietary rights. Instead, the husband sought mandatory injunctions compelling the wife to (Application in a Proceeding filed 25 August 2023, proposed Orders 1-4):
(a)lease the second property;
(b)act in concert with him to lease the third property; and
(c)pay the rent from both properties to him, or alternatively, into a trust account, or alternatively, divide the rent equally between them.
The husband offered no evidence and no submission to explain why it would be “proper” to make the mandatory injunctions in the terms he proposes.
For reasons which are not apparent from either the evidence adduced or submissions made during the review hearing, the registrar ordered the wife to transfer her title in the three properties to the husband upon condition that he take over exclusive responsibility for meeting the mortgage repayments and other liabilities. Having received the benefit of orders to that effect, the husband wants to retain the benefit, but does not explain why he ought be able to do so by the application of established principles in respect of Pt VIII and s 114(1) of the Act.
The husband demonstrated he has the capacity to borrow about $5.8 million if he acquires sole title in and can cross-collateralise the three properties (Exhibit H1). However, the debt secured over the three properties currently amounts to only about $5.2 million and the wife objects to the husband securing extra debt of some $600,000 against the properties merely so he can discharge a personal tax liability of about $420,000 to the ATO. The husband expressly declined to be bound by an order which would limit the extent of his re-finance loan to the lesser amount necessary to discharge the mortgages secured over the three properties. It follows that the husband wants interlocutory orders changing the ownership of three significant assets and re-structuring substantial debt just because it suits him, which is not a good enough reason to make interim property adjustment orders.
The Court has no business meddling in the parties’ complicated financial affairs in a piecemeal and arbitrary way in advance of the trial, which is when their financial circumstances can be addressed comprehensively. If they are in a mess, it is by reason of their own conduct. It is not for the Court to extricate them when the posited interlocutory solutions are hotly contested.
No injunction should be made in respect of the first property. The wife may sell it and discharge the mortgage, as she is the sole owner. It is up to her whether she maintains an insurance policy over it. The husband will remain entitled to sole occupation of the property pending its sale by the wife, as nobody sought the discharge of the order made in May 2023 temporarily giving him sole occupation.
No injunction should be made in respect of the second property. The wife owns the property and may sell it and discharge the mortgage if she wishes. Similarly, it is up to her whether she insures the property.
If the husband wants to acquire sole ownership of either of those two properties, there is nothing to stop him from purchasing them if and when the wife elects to sell them. His voluntary acquisition of ownership in that way causes no prejudice to the wife.
As the third property is jointly owned, the wife cannot sell it without the husband’s agreement and the husband cannot lease it without the wife’s agreement. It would be proper to make some form of order to break the parties’ impasse. They both remain liable under the mortgage secured against the property, so they both suffer detriment while the property is retained in an idle state. As the husband wants to ultimately retain the property, to at least keep that option open for him until the trial without prejudice to the wife, the best solution is to compel the parties to lease the property and to apply the net rent in payment of the loan secured by mortgage against the property. The fate of the property will abide the outcome of the trial. The parties will have to decide, as joint owners, whether they wish to insure the property in the meantime.
Wife’s bank statements
As part of her continuing duty of financial disclosure, the wife must disclose her bank account statements to the husband.
In her Minute of Order filed on 20 October 2023, the wife sought this order:
27.That the wife be at liberty to redact from her personal bank statements produced by way of disclosure anything which would or may identify places she frequents.
The registrar granted the wife’s application by making this order:
16.The Wife be at liberty to redact from her personal bank statements, produced by way of disclosure, anything which would or may identify places that she frequents.
One is left to wonder why the wife now reviews the order which granted her application. She did not provide any answer to that question in her submissions.
Upon this de novo hearing, the wife now seeks an amended order in these terms:
5.That Order 16 of the Orders made on 26 October 2023 be varied to include the following:
“and the Wife is not required to produce information or documents by way of disclosure to the Husband that will or may identify such vehicles any vehicles in her motor vehicles such as make, model, colour, licence plate, and VIN Number”.
(As per the original)
The wife offered no evidence and no submission as to how or why an order could or should be made in those terms. An order in those terms would not form part of any review of orders made by the registrar. There is no reason to disturb the order made by the registrar.
Valuables
Both parties individually own and possess valuables, which they wish to keep.
However, the wife is the sole shareholder and sole director of a corporation named E Pty Ltd, the business of which corporation is trading such valuables. There is a live dispute between the parties about the identity and value of the valuables owned by E Pty Ltd.
On 28 March 2023, an interim consent order was made restraining the parties from dealing with their valuables. That order is not under review.
On 12 April 2023, an interim consent order was made requiring the wife to provide to the husband an inventory of the E Pty Ltd valuables. Pursuant to that order, in July 2023, the wife produced an inventory of the E Pty Ltd valuables to the husband. He believes some expensive items were omitted from the inventory.
The wife deposes to the E Pty Ltd valuables being worth between $150,000 and $200,000, whereas the husband believes it is worth much more.
The husband wants the E Pty Ltd valuables placed into safe custody and its independent valuation, at his cost, which is not an unreasonable proposition. E Pty Ltd is the wife’s alter ego corporation, even though not separately joined as a party to these proceedings. For the purpose of these proceedings, the wife’s shareholding in E Pty Ltd forms part of the parties’ property interests and is amenable to a property adjustment order under Pt VIII of the Act. E Pty Ltd is not currently trading and so the value of the wife’s shareholding in E Pty Ltd is likely to be equivalent to the value of E Pty Ltd’s trading stock.
The wife admits she holds the E Pty Ltd valuables in her safe possession. She does not want to pay for its valuation, but that problem is overcome by the husband’s willingness to bear that cost. She concedes E Pty Ltd is not currently trading, so the deprivation of its trading stock will not hinder any current trading activity. Her suggestion that E Pty Ltd should instead be valued as a “going concern” lacks force when it is evidently not presently a going concern.
To preserve assets and their value, pending the determination of these proceedings, an order should be made compelling the wife to deposit the E Pty Ltd valuables into safe custody, the cost of which custody should be borne by the husband. More orders should be made appointing a single expert witness to value the E Pty Ltd valuables at the husband’s cost. That is the overall effect of Orders 17, 18, 19 and 20 made by the registrar, so those orders need not be disturbed.
It follows that the application made by the wife on 28 November 2023 to stay Orders 17, 18, 19 and 20 may now be dismissed.
Conclusion
Aside from the discharge of Orders 11, 12, 13 and 14 made by the registrar and their replacement with an order concerning only the third property, the review application is dismissed. All other antecedent applications brought by the parties are also dismissed.
Accordingly, the review application was partially successful. On that basis, neither party seems to have a competent claim to recover their costs of the review hearing, though they should have leave to apply for costs if they consider it appropriate.
I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Austin. Associate:
Dated: 13 December 2023
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