Allan and Allan and Ors

[2011] FamCA 401

FAMILY COURT OF AUSTRALIA

ALLAN & ALLAN AND ORS [2011] FamCA 401

FAMILY LAW – PROPERTY – interim

Family Law Act 1975 (Cth)
APPLICANT:	Ms Allan

RESPONDENT: Mr Allan

3^rd RESPONDENT: Ms B

4^th RESPONDENT: Mr C

5^th RESPONDENT: Ms D

6^th RESPONDENT: Ms E

INTERVENORS: Mr O & Mr P (“Receivers”)

FILE NUMBER: SYC 3842 of 2008

DATE DELIVERED: 2 June 2011

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Watts J

HEARING DATE: 12 November 2010

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Paul & Paul Lawyers (not participating in this application)

COUNSEL FOR THE RESPONDENT: Mr O’Brien

SOLICITOR FOR THE RESPONDENT: John de Mestre & Co

COUNSEL FOR 3^RD - 6^TH RESPONDENTS: Mr Bell

SOLICITOR FOR THE RESPONDENT: Horowitz & Bilinsky Pty Ltd

COUNSEL FOR THE INTERVENOR: Mr Roberts

SOLICITOR FOR THE INTERVENOR: Kelly & Co Lawyers

Orders

(Orders made 12.11.2010)

IT IS ORDERED THAT:

1. Order 3 as sought in the Application in a Case filed by the 3^rd to 6^th Respondents on 11 November 2010 be dismissed. 

2. Each parties’ costs for today be reserved.

NOTATION:

1. The effect of these orders is that there is no order stopping the Receivers selling the three paintings which have been the subject of this application at auction on Sunday 14 November 2010.  The Receivers of course do this at their own risk.

2. I am not dealing with applications 4 to 6 today.

3. I reserve my reasons for these orders. 

IT IS NOTED that publication of this judgment under the pseudonym Allan & Allan and Ors is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 3842 of 2008

Ms Allan

Applicant

And

Mr Allan

Respondent

And

S Nominees

2^nd 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

Mr O & Mr P

Intervenors

REASONS FOR JUDGMENT

INTRODUCTION

1. The wife asserts that certain collectables which are assets of a family trust form part of the pool of assets to be divided between the husband and wife. Many of those collectables were sold at an earlier auction, and a further auction was scheduled for 14 November 2010. Three items in the catalogue for the second auction are paintings by an important artist, claimed by the parties’ children to belong to them. The children, Ms E (“Ms E”), Ms D (“Ms D”), Ms B (“Ms B”) and Mr C (“Mr C”) are the applicants in this case but are the 3^rd to 6^th Respondents in the substantive hearing. For the purposes of this judgment, I will refer to them as “the children”.

2. The children seek that the Receivers for S Nominees (“Receivers”) be restrained from auctioning and selling the three paintings.

APPLICATIONS

1. The children seek the following orders, injunctions and declarations in their Application in a Case dated 11 November 2010:

   SHORT SERVICE AND NOTICE

   1.Order and directions that the matter be returnable instantaner.

   2.Leave be granted to the Third to Sixth Respondents to notify the Second Respondent, in the first instance, by email or telephone or as agreed between the respective legal representatives.

   INJUNCTIONS

   3.Order the Second Respondent, by it’s servants or agents, be restrained pending further order from selling the paintings described as:

   a.“Painting 1”;

   b.“Painting 2”;

   c.“Painting 3”.

   DECLARATIONS

   4.That the Fourth Respondent (Ms B) be declared the owner of the painting referred to as “Painting 1” [sic]).

   5.That the Fifth Respondent (Mr C) be declared the owner of the painting referred to as “Painting 2”.

   6.That the Sixth Respondent (Ms D) be declared the owner of the painting referred to as “Painting 3”.

   COSTS

   7.Costs.

   8.Such further relief for directions as to the court shall deem just.

2. The Receivers seek an order that the application of the children be dismissed.

DOCUMENTS RELIED UPON

1. The following documents were relied upon by the children:

   5.1.Application in a Case dated 11 November 2010;

   5.2.Affidavit of Mr EE dated 11 November 2010;

   5.3.Affidavits of Ms D filed 27 May 2010 and 26 August 2010;

   5.4.Affidavit of Mr C filed 27 May 2010;

   5.5.Affidavit of Ms B filed 26 August 2010;

   5.6.Affidavit of Ms E filed 26 August 2010;

   5.7.Affidavit of Mr CC filed 27 May 2010; and

   5.8.Affidavit of Mr W Allan filed 31 August 2010.

2. The following documents were relied upon by the receivers:

   6.1.Affidavit of Ms Allan sworn 4 June 2010; and

   6.2.Affidavit of Mr P sworn 2 November 2010.

3. I also take as an agreed fact, the assertion by Mr O, in his affidavit of 4 September 2009, that the date of the fixed and floating charge is 3 December 2003.

SHORT SERVICE AND NOTICE

1. My orders of 17 June 2010 provided that the children may relist the matter regarding the ownership of the paintings only, on 14 days notice. In bringing this application, the children gave less than one day’s notice, in circumstances where the paintings were to be sold at auction less than 3 days later.

2. The children claim their delay was a result of a lack of proper notice of the auction. My orders of 17 June 2010 required the Receivers to give 28 days notice of their intention to sell the paintings.

3. The Receivers say that from 16 July 2010 the children were aware of their intention to sell the paintings. The children claim that there was no proper notice and they received information from another source that the paintings were to be auctioned on 14 November 2010. The children acknowledge the notice of 16 July 2010 but argue that this notice was negated by a chain of correspondence which they say demonstrates a negotiation aimed at determining a mutually agreeable time to rehear the matter and demonstrates the Receivers acquiesced to the children’s proposal for determination. 

4. I do not accept the children’s claim that no proper notice was given. Proper notice was given on 17 July 2010 of the Receivers’ intention to sell the artworks. It does not matter that no specific date for auction was supplied in that notice – the children knew and were reminded in the notice that they had 28 days to bring an Application. The Receivers never gave any indication that they had agreed not to sell, in fact the correspondence acknowledges the need for an Application to be brought and for evidence to be filed.

5. Having said that, I do not intend to dismiss the application solely because of inadequate notice to the Receivers. The Receivers indicated they were in a position to argue the merits of the application.

DECLARATIONS

1. I note that orders 4 to 6 which are sought in this application have been sought in proceedings before me previously. I indicated that I would not deal with an application for those orders again in this Court event.

INJUNCTION

1. Although I have not dismissed the application for the children’s lack of 14 days notice, it remains a relevant discretionary factor to be considered in the context of whether the injunction should be sought.

2. The relevant principle in deciding whether to award the injunction is the balance of convenience.  In relation to the matters to be considered, the High Court in Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 said:

   The first [consideration] is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief … The second inquiry is … whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted.

3. In Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 Gummow and Hayne JJ referred to the doctrine in relation to a ‘prima facie case’ in Beecham, and said that whether such a case is established, “depends, no doubt, upon the nature of the rights he asserts and the practical consequences likely to flow from the order he seeks.”

Asserted ownership of the paintings

1. Ms B claims she owns “Painting 1”.  Mr C claims he owns “painting 2”.  Ms D claims she owns “Painting 3”.  Ms E has taken and sold “Painting 4”, which she claims was owned by her.

Prima Facie Case

1. I now set out the evidence adduced by the children as to the ownership of the paintings..

2. Paragraph 6 of the Affidavit of Ms D filed 27 May 2010 said:

   When I became engaged to [Mr DD] my father said to me during a telephone conversation, “I’m going to give you one of the … paintings. I have a beautiful one for you.  It is one with a woman standing next to a man in Shakespearian costume.  It’s in [R Property] and you can come and collect it at any time”.

   Ms D says she did not collect the painting as her parents separated and she felt uncomfortable doing so.

3. Paragraph 9 of the Affidavit of Ms D filed 26 August 2010 said that the husband told the girls that paintings, belonged to the children. Paragraph 10 also says the husband said to Ms D:

   I’m going to give you and [Mr DD] one of the … paintings. I have a beautiful one for you. It is one with a woman standing next to a man in Shakespearian costume…

4. Paragraph 7 of the Affidavit of Mr C filed 27 May 2010 records the Husband saying, while referring to the antique gun collection, furniture and artworks, “Mr [C] look after these because one day they will belong to you and your sisters”.

5. Paragraph 11 of the Affidavit of Ms B sworn filed 26 August 2010 records the husband discussing ‘Painting 2’ with Ms B after her engagement and saying:

   “That painting is my gift to you for your engagement. I particularly want you to have this one. I have earmarked ‘[Painting 3]’ for [Mr C]. I’ve also chosen a painting each for [Ms E] and Ms D. They can choose between ‘Painting 1’ and ‘painting 4’. Ms E and Ms D seem to have similar tastes and I think it’s only fair to give them a choice.”

6. Paragraph 12 of Ms B’s Affidavit also records that just before her wedding on 18 October 2003 the husband:

   …pointed to the paintings known as ‘Painting 1’, ‘Painting 2’ and ‘painting 3’, and said, “don’t forget that those three paintings belong to you girls” (meaning Ms E, Ms D and me)” and “There is one for each of you.”

7. The Affidavit of Ms E filed 26 August 2010 has a number of recollections as follows:

   24.1.At Paragraph 16 she recalls the husband saying “I am giving each of you girls (referring to my two sisters and me) one of the … paintings.  You can take them when you become engaged.  [Mr C] can also have one”.

   24.2.At Paragraph 17 she also recalls him saying at Ms B’s wedding “Don’t forget girls, those paintings are yours (and he pointed to the [paintings] that were hanging in the bedroom)”.

   24.3.At Paragraph 18 [Ms E] records “[Mr AA] and I became engaged in 2004 and I went into the bedroom of [R property] and admired our gift, ‘Painting 1’. My father said, “[Ms B] already has ‘[Painting 2]’ but she hasn’t taken it yet”.

   24.4.At Paragraphs 18 to 20, [Ms E] describes having to sell ‘[Painting 4]’ due to financial difficulties, and says she wasn’t aware of any court orders which precluded her taking and selling it.

8. Paragraph 6 of the Affidavit of Mr CC filed 27 May 2010 records that the husband:

   During discussions with [Mr W Allan] over the years he has frequently said to me words to the effect of, “I have amassed this collection for my family” or “this is for my wife and children” or Catalogue this collection in full - it is for my family to inherit”.

9. Paragraphs 10, 11 and 12 of the Affidavit of Mr W Allan filed 31 August 2010 the husband refers to the paintings he bought over the years. He reiterates the children’s evidence that there was one painting for each of the children, specifying that Ms B was to receive ‘Painting 1’.  His evidence does not correspond with Ms B’s in relation to allocating specific paintings to the other three children.

10. In her affidavit of 4 June 2010 the wife denies any knowledge of the paintings being gifted to Ms E or Ms D. The wife’s affidavit predates the children’s affidavits that mention gifts for the other two children.

11. There is also no first hand evidence from Mr C nor the husband that Mr C was promised the specific gift of the painting ‘Painting 3’. The only evidence is a single sentence in Ms B’s affidavit extracted above.

12. The affidavit of Mr O of 4 September 2009 says that S Nominees granted a fixed and floating charge over all its assets and undertakings in favour of N Pty Ltd on 3 December 2003.

13. Counsel for the receivers noted that the gift to Ms D occurred after the date of security and therefore cannot be enforced. Her affidavit said she began living with her partner in 2007 so presumably her engagement (when she was to receive the gift) occurred on or after that date. Ms B’s gift allegedly occurred before the Charge, as she was married on in 2003. Counsel claimed that in circumstances where there is no first hand evidence about Mr C’s specific gift, and Ms D’s gift is unenforceable, only Ms B had any possibility of showing a prima facie case. I find there is some force in these submissions.

14. Having brought the Application at such minimal notice, neither the Receivers nor any other party had sufficient time to test the evidence before the Court. I note in passing that the husband is asserting that he made gifts to each of his four children of paintings of different monetary value. I also pause to note that these “gifts” would not have been made by the husband in his personal capacity but as trustee for S Nominees. There is no evidence before me, by way of financial records of the trust, which evidences the transfer of ownership which is asserted by the children. I am wary too that the paintings weren’t collected by the children and remained at R property for what the children and husband say was ‘safekeeping’. These matters weaken the strength of the children’s prima facie case.

15. The strength of Ms B’s prima facie case is stronger than Mr C’s which is stronger than Ms D’s but none of them are compelling.

Balance of Convenience

1. The disruption to the Receivers is significant if the injunction is awarded. A reading of the Affidavit of Mr P and a perusal of the auction catalogue demonstrates that the paintings are a major drawcard for the auction and have received ‘specific interest’. Buyers are attending from overseas, and to remove the paintings from the catalogue, where the catalogue is far smaller than the initial auction, would likely disappoint potential buyers, reduce their numbers and raise suspicion from potential buyers about the bona fides of the auction. Consequently the competition for the remaining items to be auctioned may be reduced leading to reduced sales. Any reduced competition could also lead to a reduction in the price of particular items.

2. Already a considerable amount of work has been conducted to prepare the auction including advertising and marketing, producing a glossy catalogue, holding inspections of the items, paying for and preparing the premises for auction, contacting key potential buyers and including details and images on a website.

3. The damage involved in removing the paintings from the catalogue cannot be quantified but I infer it would be significant.

4. The receivers have indicated they are willing to have the proceeds of the auction of disputed items placed in a controlled money account until such time as the ownership of those items is determined, and that money may be used for compensatory damages if need be.

5. The children have provided no written undertaking as to damages, but indicated to counsel that they would proffer one. As I have no evidence of the financial position of the children, I cannot assess the value of any undertaking. There is no evidence before me that damages would not be an appropriate remedy should the paintings be sold. I take note that Ms E, as a response to her own financial difficulties, saw fit to convert the value of one of the paintings into cash. The other children have given no evidence about whether they intend to keep the paintings or not.

6. Even if I had concluded that each of the children had established a prima facie case, the balance of convenience favours the receivers. I will not order an injunction against the auction proceeding.

I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Watts delivered on 2 June 2011.

Associate:

Date: 2 June 2011