Allan & Allan

[2012] FamCA 931

FAMILY COURT OF AUSTRALIA

ALLAN & ALLAN AND ORS [2012] FamCA 931

FAMILY LAW – PRACTICE AND PROCEDURE – where the husband is protector of a trust – where there is an order restraining the husband from exercising power as protector - whether the husband has standing to bring an application to discharge that order – whether the husband ought to provide security for costs for any application he may bring 

Family Law Act 1975 (Cth)

APPLICANT: Ms Allan

1^st RESPONDENT: Mr Allan

3^rd RESPONDENT: Ms B

4^th RESPONDENT: Ms C

5^th RESPONDENT: Ms D

6^th RESPONDENT: Ms E

7^th RESPONDENT: F Nominees

8^th RESPONDENT: Ms G

9^th RESPONDENT: Mr H

10^th RESPONDENT: Mr J

11^th RESPONDENT: Mr K

12^th RESPONDENT: Mr L as trustee for M Trust

13^th RESPONDENT: Mr L

INTERVENORS  : Mr O & Mr P (Receivers)

FILE NUMBER: SYC 3842 of 2008

DATE DELIVERED: 29 October 2012

PLACE DELIVERED: Cairns

PLACE HEARD: Sydney

JUDGMENT OF: Watts J

HEARING DATE: 20 June 2012

LAST WRITTEN SUBMISSIONS RECEIVED: 12 July 2012

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Paul & Paul Lawyers

COUNSEL FOR THE 1^ST RESPONDENT: Mr Burbidge, QC

SOLICITOR FOR THE 1^ST RESPONDENT: Litigant in person

SOLICITOR FOR THE 12^TH RESPONDENT: Delaney Lawyers

COUNSEL FOR INTERVENORS: Mr Roberts

SOLICITOR FOR INTERVENORS: Kelly & Co Lawyers

FINDING AND ORDERS

1. The husband has standing to bring an application to discharge the order that restrains him from exercising his powers as protector of the M Trust. 

2. Within 28 days the husband provide security from a third party in the sum of $30,000 to secure the costs of the wife as to $15,000, and as to the Receivers as to $15,000 in respect of a hearing as to whether or not:

   2.1.It would be appropriate to discharge the order which restrains the husband from exercising his powers as trustee of the M Trust;

   2.2.Whether or not the compromise that has been reached between the current trustee of the M Trust, the Receivers and the wife should be sanctioned by the court making orders which reflect that compromise.

3. Within 28 days the husband file and serve one affidavit from himself and one affidavit from any witness upon whom he relies to support his application that the order restraining him from exercising his powers as protector of the M Trust be discharged.

4. This matter be listed for mention on 12 December 2012 at 9.15am so that in the event the husband has complied with these orders, directions can be made in relation to the filing of any material in reply and the setting of a hearing date or days. 

IT IS NOTED that publication of this judgment by this Court under the pseudonym Allan & Allan and Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT CAIRNS

FILE NUMBER: SYC 3842 of 2008

Ms Allan

Applicant

And

Mr Allan

1^st Respondent

And

Ms B

3^rd Respondent

And

Mr C

4^th Respondent

And

Ms D

5^th Respondent

And

Ms E

6^th Respondent

And

F Nominees

7^th Respondent

And

Ms G

8^th Respondent

And

Mr H

9^th Respondent

And

Mr J 

10^th  Respondent

And

Mr K 

11^th Respondent

And

Mr L as trustee for M Trust

12^th Respondent

And

Mr L

13^th Respondent

And

Mr O & Mr P (Receivers)

Intervenors

REASONS FOR JUDGMENT

INTRODUCTION

1. This matter involves an argument about two limited interlocutory issues:

   1.1.Whether the husband has standing to bring an application to discharge the order that restrains him from exercising his powers as protector of the M Trust;

   1.2.Whether he should give security for costs in respect of that application.

ORDERS SOUGHT

1. A joint application was made by the applicant wife, the 12^th respondent (who is trustee for the M Trust), and the intervenors who are the Receivers of S Nominees.

2. The orders that were jointly sought by them (“the proposed orders”) were in the following terms:

   1.The Receivers cause to be paid out of the account created pursuant to order numbered 5 of the orders of this court made 17 June 2010 (BankSA Investment cash account No. …) (“controlled account”) the sum of $600,000 (inclusive of GST) into a controlled monies account under the joint control of Michael Paul as solicitor for the wife and Michael Delaney as solicitor for Mr L as trustee of the M Trust to abide the further order of the court.

   2.The Receivers be at liberty to have access to and deal with the balance of the funds remaining in the controlled account following the payment contemplated by paragraph 3 above in accordance with their obligations as Receivers and Managers of S Nominees (Receivers and Managers appointed ) (in liquidation).

   3.The Receivers be relieved from the undertaking referred to in paragraph 1 of the orders of this court dated 4 November 2010 and that they be at liberty to sell the items identified in paragraph 9 of the affidavit of Mr L sworn on 2 November 2010 and filed in these proceedings.

   4.The 12^th respondent be released from order 3 made on 17 June 2010.

3. The orders proposed by the wife, the trustee and the Receivers constitute a compromise in relation to a dispute that had previously existed between the trustee and the Receivers as to the ownership of certain items, some of which were the subject of an auction sale and previous orders by me freezing the proceeds of that sale for further argument.

4. What is being proposed may require a consideration of whether order 3 made 17 June 2010 is discharged. That order restrains the trustee of the M Trust from dealing with any asset of the trust pending further order.

5. The significance of the wife being a party to the proposed orders arises from the fact that the wife currently has extant an application under s 85A filed on 23 September 2010 which, if successful, would make the assets of the M Trust available as assets which can be the subject of an order under s 79 Family Law Act1975 (Cth) (“FLA”).

6. At the core of that dispute, was the issue as to whether or not those items had been owned by S Nominees (and therefore subject to the security held by the Receivers) or the M Trust (in respect of which the Receivers held no security).

7. So the current trustee of the M Trust wishes to compromise the claim and seeks that the court make consent orders to give effect to that compromise. For that purpose, the wife, the Receivers and trustee have signed a Deed which records the compromised agreement. The orders sought seek the court’s approval of their arrangement.

ORDERS SOUGHT BY THE HUSBAND

1. On 20 June 2012 the husband, who is a bankrupt, through his senior counsel, sought orders in accordance with a document entitled Orders dated 20 June 2012. For the purposes of the proceedings before me on 20 June, the husband only referred the first order sought:

   That order number 4 made 10 June 2010, being a restraint on the husband in respect of his role as Protector of the [M Trust], be discharged.

2. Order 4 made 10 June 2010 is in the following terms:

   Until further order, the respondent husband be restrained from doing any act or thing whatsoever in his capacity as protector of the [M Trust] including but not limited to causing the trustee of the [M Trust] to be removed as trustee and to appoint any substitute or alternate trustee.

THE POSITION OF OTHER PARTIES

1. The only identified beneficiaries of the M Trust, the children of the husband and wife, had previously indicated an opposition to the proposed orders being made, but by the hearing before me on 20 June 2012 they had withdrawn from any active involvement in the argument. The children filed a notice of discontinuance. The children are still represented by Mr Bilinsky. The children say that they will abide by the court’s order.

2. The husband’s trustee in bankruptcy had also indicated that he was not interested in being involved in the argument.

THE HUSBAND’S STANDING

1. The husband himself does not make any application under s 85A in relation to the M Trust and does not seek that any of the assets of the M Trust form part of the pool of matrimonial assets to be divided between the wife and his Trustee in Bankruptcy. Senior counsel for the husband concedes that the husband has abandoned the right to make any such claim as a result of the Amended Application in a Case which he has now filed.

2. It follows the only s 85A application that is before me relates to the wife in effect seeking that either $600,000 or in the alternative, $200,000 of the assets of the M Trust be placed back into the matrimonial pool as a result of the application of s 85A FLA.

3. Senior counsel for the husband asserted that the husband’s standing turned upon the proposition that the wife sought to potentially bring a s 85A claim under the FLA against the M Trust.

4. In so far as the wife does not press any s 85A claim in relation to the M Trust to the extent that it would interfere with the compromise that has been reached between the Receivers and the Trustee, that proposition can have no substance.

5. I find that the husband’s standing to oppose the consent orders entered into between the Trustee, the Receivers and the wife does not arise from any application that he or his Trustee in Bankruptcy might have arising from any interest arising from the provisions of the FLA. The question is rather; whether or not the husband has standing, as an undischarged bankrupt, to make the application he seeks on an altruistic basis as protector of the M Trust. At paragraphs 57 and 58 of his affidavit filed on 5 June 2012, he specifically concedes that he has no personal interest in this application and what he is doing, he is doing as a representative of the family.

6. The Receivers conceded that the fact that the husband was an undischarged bankrupt did not in itself disentitle the husband from arguing that the injunction made against him exercising powers of protector of the M Trust should be discharged.

7. Senior counsel for the husband originally announced the husband’s purpose in the following terms:

   And your Honour, there’s no secret about our position;  we seek to have the restraint removed so that Mr Allan can accept the resignation which [Mr L] wishes to proffer, to a – well, sorry, I will rephrase that – to accept or, in some way, relieve [Mr L] of his position – I point out that one of his affidavits he asserts that he wishes to retire – he says that – and to replace him with a trustee – a new trustee – with the intent that there will be an application if it be necessarily [sic] on the examination of the factual background to apply to this court to set aside the purported agreement of settlement executed between [Mr L]

8. Later in submissions, senior counsel for the husband made it clear that it would be the husband’s expectation that when he removed Mr L as trustee and appointed a new trustee, that new trustee would consider for herself/himself whether or not the proposed settlement was an appropriate settlement. Senior counsel for the husband said that “it must be for the (new) trustee alone”.

9. I have already heard some arguments that go to the substantive issue as to whether or not the husband should be restored as protector but those arguments have not been fully developed.

10. Also, by way of factual background to the argument, I heard some submissions that really went to the substance of whether or not the compromise was a proper one that should attract the sanction of the court. Prima facie there were reasons advanced by the Receivers, the wife and the 12^th respondent as to why a compromise settlement is appropriate. Central to those reasons is what they claim to be inconsistent sworn evidence given by the husband in other proceedings on an earlier occasion relating to the ownership of these disputed items when compared to the position the husband now wishes to assert.

11. The husband apparently wishes to argue that Mr L has some conflict of interest which disentitles him from entering the compromise but that argument has not been developed. Whether or not that is so may be relevant to the discretionary decision which is to be made as to whether the husband is restored as protector and put in the position to be able to remove the current trustee.

12. I have not yet heard the full argument as to the application that Mr Allan makes in relation to restoration of his powers to act as protector.

13. I find, however, that Mr Allan does have standing to bring an application that his power to act as protector be restored. Whether or not as a discretionary matter I make that order is yet to be seen.

SECURITY FOR COSTS

1. In the event that the husband wishes to make that argument however, the next issue to consider is the application that has been made for the husband to provide security for costs. The wife on 30 May 2012 filed an application in which she sought the husband (and/or his trustee in bankruptcy) provide security for costs of the wife in relation to any application which the husband might file.

2. The amount of the security sought was $25,000.

3. As noted, on 23 May 2012, the Receivers also sought that the husband provide security for costs.

4. The form of that order is included in a draft minute of orders dated 20 June 2012. No amount is specified by the Receivers. An additional order is sought in the following terms:

   In the event that the husband fails to provide the security referred to in order 4 above within 28 days from the date of this Order, that the husband’s application in a case dated 5 June be stayed.

5. I assess an appropriate amount for security for cost at $15,000 each for both the wife and the Receivers, in order for them to prepare and make submissions about whether the husband should be restored as protector of the trust.

6. The husband is an undischarged bankrupt. Any security for costs provided by him is of no value unless it is supported by some third party security. The husband will have 28 days to provide that security and to file one affidavit from himself and one affidavit from any witness upon whom he relies to support his application that the order restraining him from exercising his powers as protector of the M Trust be discharged.

7. The matter will be listed after the expiration of that time so that directions can be made in relation to the filing of any material in reply and the setting of a hearing date or days.

8. I should make it clear that the next hearing will not be about whether S Nominees or the M Trust was the owner of the 23 items but will, inter alia, be about whether or not the current trustee has sought to inappropriately compromise the claim made against the trustee by the Receivers in relation to the proceeds of the sale of the 23 items.

I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts delivered on 29 October 2012

Associate: 

Date:  29.10.2012