B1 v B2 (No. 4)

[2018] NSWDC 497

District Court

New South Wales

• Amendment notes

Medium Neutral Citation:	B1 v B2 (No. 4) [2018] NSWDC 497
Hearing dates:	17 May 2018
Date of orders:	24 May 2018
Decision date:	24 May 2018
Jurisdiction:	Civil
Before:	Gibson DCJ
Decision:	See [74]
Catchwords:	Application to set aside freezing order – whether “a good arguable case” – whether there is a likelihood that any prospective judgment will be wholly or partly unsatisfied – whether full disclose of information had been made by the defendant – balance of convenience – variation of freezing order
Cases Cited:	B1 v B2 (No. 3) [2018] NSWDC 108 In the marriage of Elias (1977) 3 Fam L R 11,496; (1977) FLC 90-267; 29 FLR 393 Thomas A Edison Ltd v Bullock (1912) 15 CLR 679 Weldon v Levitt [2017] FCCA 3072
Texts Cited:	Chisholm, R., “Exclusion of evidence inconsistent with earlier statements: the rise and fall of the ‘Elias principle’” (2001) 15 Australian Journal of Family Law 1
Category:	Procedural and other rulings
Parties:	Plaintiff: B1 Defendant: B2
Representation:	Counsel: Plaintiff: Mr M J Lewis Defendant: Ms D Woods   Solicitors: Plaintiff: Diamond Conway Defendant: Lawhouse
File Number(s):	2017/180457
Publication restriction:	Names of the parties have been anonymised

Judgment

The freezing orders the subject of this application

1. On 26 April 2018, the plaintiff brought an application for an ex parte freezing order in relation to the proceeds of sale of the defendant’s primary asset, a property situated at Saratoga in the State of New South Wales. The basis for the freezing order was for the preservation of assets pending the hearing of defamation proceedings between the plaintiff and defendant, who were formerly married.

2. The orders that I made were as follows (see B1 v B2 (No. 3) [2018] NSWDC 108):

1. An order that the Court grant leave that this motion may be filed in Court.

2. An order that this motion be returnable instanter.

3. An order that:

1. The time for service of this motion and supporting affidavits is abridged and service is to be effected by 5pm on Thursday 26 April 2018.

2. Service on the defendant is deemed to be effective if sent by email to the attention of the Defendant's solicitor.

4. An order that this motion shall be further listed for hearing at 9 am on Thursday 3 May 2018 for a further hearing in respect of this motion before Judge Gibson.

5. An order that orders (6) to (20) inclusive to have effect up to and including Thursday 3 May 2018.

6. Pursuant to s 46 of the District Court Act 1973 (NSW) and r 25.11 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) and upon the applicant giving an undertaking as to damages, as the Court considers appropriate:

1. A freezing order restraining the Defendant from removing any assets located in Australia or from disposing of dealing with or diminishing the value of those assets (“Australian assets”) up to the unencumbered value of $250,000 (the “Relevant Amount”) until further order;

2. If the unencumbered value of the Defendant's Australian assets exceeds the Relevant Amount, the Defendant may remove any of those assets from Australia or dispose of or deal with them or diminish their value so long as the total unencumbered value of the Defendant's Australian assets still exceeds the Relevant Amount;

7. For the purposes of these orders:

1. Assets include:

1. all of the Defendant's assets, whether or not they are in her name and whether they are solely or co-owned;

2. any asset which the Defendant has the power, directly or indirectly, to dispose of or deal with as if it were her own (the Defendant to be regarded as having such power if a third party holds or controls the asset in accordance with her direct or indirect instructions); and

3. the following assets in particular: (A) the proceeds of sale of the property at 210 Steyne Road, Saratoga NSW

2. the value of assets is the value of the interest the Defendant has individually in the assets;

3. unencumbered value means value free of mortgages, charges, liens or other encumbrances.

8. Order (6) will cease to have effect if the Defendant:

1. Pays the relevant amount into Court; or

2. Pays the relevant amount into a joint controlled monies account in the name of the Defendant's solicitor and the Plaintiff's solicitor as agreed in writing between them; or

3. Provides security in that sum by a method agreed in writing with the Plaintiff to be held subject to the order of the Court.

9. If order (6) ceases to have effect pursuant to order 8(a) (above), the Defendant must as soon as practicable file with the Court and serve on the Defendant a notice of that fact.

10. Any payment made or any security provided pursuant to order (8) will not provide the Plaintiff with any priority over the Defendant's creditors in the event of the Defendant's insolvency.

11. An ancillary order pursuant to r 25.12 UCPR that the Defendant inform the Plaintiff in writing of all of her Australian assets, giving their value, location and details (including any mortgages, charges or other encumbrances to which they are subject) and the extent of the Defendant's interest in the Australian assets and to swear or affirm and serve on the Plaintiff an affidavit setting out the above information on or before the Return Date.

12. This order (12) applies if the Defendant objects to complying with order (11) on the grounds that some or all of the information required to be disclosed may tend to prove that the Defendant:

1. has committed an offence against or arising under an Australian law or a law of a foreign country; or

2. is liable to a civil penalty.

3. The Defendant must:

1. disclose so much of the information required to be disclosed to which no objection is taken; and

2. prepare an affidavit containing so much of the information required to be disclosed to which objection is taken, and deliver it to the Court in a sealed envelope; and

3. file and serve on the Plaintiff a separate affidavit setting out the basis of the objection.

13. Subject to the conditions noted in orders (14) to (17) these orders does not prohibit the Defendant from:

1. paying her ordinary living expenses;

2. paying her reasonable legal expenses up to $20,000;

3. dealing with or disposing of any of her assets in the ordinary and proper course of your business, including paying business expenses bona fide and properly incurred; and

4. in relation to matters not falling within paragraph (13) (a), (b) or (c), dealing with or disposing of any of her assets in discharging obligations bona fide and properly incurred under a contract entered into before this order was made, provided that before doing so the Defendant gives the Plaintiff, if possible, at least two working days written notice of the particulars of the obligation. Conditions to the exceptions offered above.

14. In so far as the Defendant is not prohibited from paying ordinary living expenses pursuant to order 13(a) above, until further order of the Court the Defendant shall keep a written record of all such expenditure.

15. Insofar as the Defendant is not prohibited from paying reasonable legal expenses pursuant to order 13(b) above, until further order of the Court the Defendant shall instruct any lawyer acting on her behalf to produce, as and when you require, a statement of legal expenses incurred and, a statement that they have been reasonably and properly incurred by the Defendant.

16. Insofar as the Defendant is not prohibited from dealing with or disposing of any assets in the ordinary and proper course of your business pursuant to order 13(c) above, until further order of the Court the Defendant shall keep a written record of all dealings and any such dispositions.

17. The Defendant and the Plaintiff may agree in writing that the exceptions in the preceding paragraph are to be varied. In that case, the Defendant or the Plaintiff must as soon as practicable file with the Court and serve on the other a minute of the proposed consent order recording the variation signed by or on behalf of the Plaintiff and the Defendant and the Court may order that the exceptions are varied accordingly.

18. Order (13) shall not apply if the unencumbered value of the Defendant's Australian assets exceeds the Relevant Amount.

19. Anyone served with or notified of this order, including the Defendant, may apply to the Court at any time to vary or discharge this order or so much of it as affects the person served or notified.

20. The court notes the undertaking of the solicitor for the Plaintiff pay the filing fee of the notice of motion within 7 days.

21. Costs reserved to Thursday 3 May 2018.

22. Stand over the plaintiff’s notice of motion for hearing on Thursday, 3 May 2018 at 9am in the Defamation List (estimate of 1 hour plus).

3. A short history of the case management of these proceedings is set out in B1 v B2 (No. 3) at [2]-[4]. The parties are also engaged in Family Court proceedings which it would be fair to characterise as being combative. There are also criminal proceedings commenced in relation to the plaintiff which had been set down for hearing in November 2018.

The applications before the court

4. The plaintiff seeks a continuance of the orders, and the defendant brings an application to set those orders aside.

5. The principles of law upon which such orders may be made are not in dispute. While the defendant concedes that the plaintiff can demonstrate the first of the three necessary elements to obtain a freezing order, namely that the plaintiff has “a good arguable case”, the defendant submits that there is no evidence of danger that a prospective judgment will be wholly or partly unsatisfied, in that a full account has been provided in relation to the whereabouts of the funds, and that the balance of convenience favours the terminating, rather than the granting, of the freezing orders.

6. In addition, the defendant claims that the plaintiff failed to disclose six relevant items of information, any one of which would have resulted in the orders not being made in the first place.

The circumstances in which the orders were made

7. The circumstances leading to the claim for defamation and the freezing orders the subject of this application are the subject of further evidence from the defendant, but the background facts are largely not in dispute.

8. The plaintiff and defendant, after an acrimonious ending to their marriage, entered into a full settlement of all Family Court related litigation by way of terms of settlement signed by each of the parties and registered in the Family Court in or about mid-2016. That agreement contained a number of clauses relevant to this application, including the following:

“H. The parties agree that the children will attend [NSW High School] for high school and, in this regard, the parties have enrolled [Child 1] to commence High School at [NSW High School] commencing 2017.

I. Where the parties have agreed in writing on extra-curricular activities for the children, the Father shall meet 100% of the costs of such activities.

J. The parties have simultaneously with these Orders, entered into a Binding Child Support Agreement, annexed to these Orders and marked with the letter “B”.

…

29. That each party inform the other, in writing via text message or email, of any change to his or her residential address not less than fourteen (14) days prior to such change occurring and of any change to his or her contact telephone within twenty-four (24) hours of such change occurring.

…

37. That the parties do all things necessary to ensure that the children remain enrolled at [NSW Primary School] during primary school years unless otherwise agreed by the parties in writing.

38. That the parties shall do all things and sign all documents necessary to enrol the children in [NSW High School] when the children reach High School age, unless otherwise agreed by the parties in writing.

…

40. That pursuant to s.65DA(2) of the Family Law Act 1975 (Cth), the particulars of the obligations these Orders create and the particulars of the consequences that may follow if a person contravenes these Orders are set out in the Fact Sheet, attached hereto and these particulars are included in these Orders.

Notation

A. The Mother intends to remain living on the [place in NSW];

B. The Father intends to remain living within the [place in NSW];

C. Both parties agree to use their best endeavours to provide a bed for each of the children when the children are in their respective care.

…

Part B Certification

1. Whether a child has been or is at risk of abuse, neglect or family violence

Complete one section only under this heading

[ ] I certify that I do, or the party I represent does, consider that a child concerned in the draft order has been or is at risk of being subjected to or exposed to abuse, neglect or family violence.

[X] I certify that I do, or the party I represent does, not consider that a child concerned in the draft order has been or is at risk of being subjected to or exposed to abuse, neglect or family violence.

2. Whether a party has been or is at risk of family violence

Complete one section only under this heading

[ ] I certify that I do, or the party I represent does, consider that I, the party I represent or another party to the proceedings has been or is at risk of being subjected to family violence.

[X] I certify that I do, or the party I represent does, not consider that I, the party I represent or another party to the proceedings has been or is at risk of being subjected to family violence.

3. Allegations of or risk of abuse, neglect or family violence

Complete one section only under this heading

[X] I certify that no allegations of or risk of, abuse, neglect or family violence have been made in:

1. Any document filed or exhibited in the proceedings; or

2. Any report prepared for the proceedings; or

3. Any document subpoenaed to the court in the proceedings.

OR

[ ] Allegations of or risk of abuse, neglect or family violence have been made in:

[Table not filled in]

…

[Signature of plaintiff and defendant]”

9. The defendant’s signature was placed on the annexure to draft consent parenting order on 30 June 2016.

10. The defendant concedes that, without informing the plaintiff, she placed her home on a property website for sale on 6 November 2017 and made plans to move, together with the children of the marriage, to Queensland to live with her new partner. At some time prior to the end of the school term (or possibly in the school vacation over the period December 2017 and January 2018) the defendant enrolled both children in a College in Queensland and, on 23 January 2018, first terms fees for both children were paid (affidavit of Kelly Durant, Exhibit 1, p. 34). The address given for the defendant is an address in Queensland, not the address in the Family Court proceedings. The defendant’s explanation for this is that she believed she was not obliged to inform the plaintiff, that he became aware of these matters in any event in January 2018 and that the stress caused by the criminal charges and her financial difficulties warranted her taking the course that she did.

11. The defendant has now provided a copy of her affidavit for Family Court proceedings concerning proceedings in the Family Court when the plaintiff sought orders in relation to these changes. This affidavit contains information about the changes and about the financial circumstances she claims were relevant to the decision.

12. The defendant’s affidavit sets out that she was carrying on business as a writer and motivational speaker for which she was deriving “minimal income” (affidavit of Kelly Durant, paragraph 20(b)). According to paragraph 21 of that affidavit, the defendant’s circumstances “and those of her two children” changed significantly following the making of the consent orders in August 2016 and the granting of the Family Court’s divorce order on 7 October 2016. According to paragraph 21 of that affidavit, on 30 October 2016, some three weeks after the divorce, the two children of the marriage notified the defendant of “incidents of physical violence” which occurred during an access visit to the plaintiff, which were reported by the defendant to NSW Police. It was on 25 and 27 November 2016 that the defendant made two posts on her Facebook account which resulted in the commencement of these proceedings on 16 June 2017.

13. On 10 July 2017, the two children for the first time reported to the defendant incidents involving the plaintiff which were of a sexual nature. The defendant arranged for the children to see their long-time psychologist, Debbie Case, and these allegations were referred to The Entrance Joint Investigation Response Team. On 15 August 2017, the plaintiff was charged with 13 criminal charges of physical and sexual assault, and an apprehended domestic violence order was made. As a result of the apprehended domestic violence order, and subsequent orders in the Local Court and Family Court, it would appear that the plaintiff no longer has access to the children at all.

14. The defendant had commenced a relationship with a third person who resides in Queensland. It is unclear when this relationship had started. The person with whom the defendant had commenced the relationship offered her work, as well as a place to live. The defendant’s affidavit material in the Family Court contains references to her being on Centrelink benefits and had an overdraft bank loan, as well as credit card debt.

15. According to paragraph 22 of the affidavit of Kelly Durant, the defendant informed the plaintiff that:

1. She put the Saratoga property on the market for sale in order to pay personal and business debts, ongoing living expenses and legal costs in these proceedings;

2. Due to her financial circumstances and the opportunity of more regular paid employment, the defendant and her two children moved to the Gold Coast;

3. She is now working in a production role in her current partner's company.

16. The explanation for the sale of the plaintiff’s home is then set out as being that the legal costs of defending these defamation proceedings:

“…has left me with no choice but to sell the only asset I have, which is my [NSW] cottage, to pay for these legal bills and the cost of living for myself and my two children. After many attempts for legal aid and pro bono to receive legal representation for Family Court, I have not been granted this because of the [NSW] cottage asset. So now, upon sale of the property, I will also be able to use these funds to better represent myself and my children in Family Court.” (Exhibit 1, p. 47)

17. The defendant goes on to state that the plaintiff had “breached the orders and stopped paying child support” and “literally does not pay one dollar to contribute to the children’s food, education, medical, clothes, lifestyle or wellbeing” (Exhibit 1, p. 47).

18. The defendant went on to say that she was “devastated these ongoing legal proceedings have forced me to close down a business which was making such a positive impact in the world, particularly to children and women in need” and she then stated:

“By relocating to the Gold Coast, I have been able to take up a production position in my partner’s production company, which he has been running for over 30 years. I now finally have consistent and regular paid work on the Gold Coast, which has given myself and my children enormous financial relief and allowed me to pay for all their living expenses including food, clothes, school, sports, lifestyle, wellbeing, medical, etc. Being able to be employed and earn money for the children over the past 3 months due to relocating to the Gold Coast has provided me with more income than I have earned in over 3 years. I literally need this job to feed my children. I cannot do this production job from anywhere other than located on the Gold Coast.” (Exhibit 1, p. 47)

19. The defendant stated that her daughter “was not thriving at [NSW High School]” (Exhibit 1, p. 49) and that her other child is receiving “a private education unlike what he was receiving at [NSW Primary School]” (Exhibit 1, p. 49).

19. The defendant goes on to say that “I need family and community support during this stressful time and long term legal process” and “the Gold Coast provides great support, comfort and care for the children and me, the mother”. She adds that the children do not want to live on the [place in NSW] and that they wanted to live on the Gold Coast with herself, her partner and her partner’s children. She also told the court that her house was “an old cottage that has been on the market for four months” (Exhibit 1, p. 52). She also sets out a series of criticisms of her own parents as being unfit to care for the children, presumably in the event that these persons were available to provide supervised access between the children and the plaintiff.

20. The legal costs of these proceedings are $25,050 to date, according to the schedule set out at page 33 of the annexures to Kelly Durant’s affidavit. The plaintiff’s total indebtedness for her business and personal assets, including this sum, is $229,486.86.

21. The defendant’s affidavit paints a vivid picture of an extraordinarily bitter dispute which now straddles three courts.

22. I have made it clear in relation to the orders sought in these proceedings that, while I would take into account all of the issues traditionally considered in relation to freezing orders, my principal concern is to ensure the wellbeing of the plaintiff’s and defendant’s children. Ultimately, however, this is a matter for the Family Court, rather than this court. I note that the proceedings in the Family Court have been postponed until December 2018, to enable the criminal proceedings to be completed.

Whether there is a danger that the judgment will go unsatisfied

24. The parties agreed that as the issue of “arguable case” is conceded, the remaining two issues are whether the judgment will go unsatisfied and balance of convenience requirements. The plaintiff bears the onus.

25. Ms Woods submits that I should accept the evidence of the defendant accounting for the proceeds of sale of the property. The property was sold for a net amount of $735,513.61 and she has provided evidence of payments totalling $229,468.86, leaving a total of $506,044.75 (Exhibit 1, p. 33). That sum is currently invested with the ANZ (Exhibit 2).

26. In order to determine whether I can accept the assurance of the defendant that she will not dissipate her assets under restricted, I must have careful regard to the defendant’s conduct. Mr Lewis draws my attention to a total of nine issues which he submits reflect upon her credibility.

Credibility issues and inconsistent evidence in Family Court proceedings

27. The nature of the marital relationship has resulted in the development of a series of principles which are applied in Family Court proceedings. I drew the attention of the parties to these principles (often referred to as “the Elias principle”: In the marriage of Elias (1977) 3 Fam L R 11,496; (1977) FLC 90-267; 29 FLR 393), as these need to be taken into account where a party is making claims in the Family Court of Australia.

28. The issue in In the marriage of Elias was, as here, an asserted inconsistency between evidence given to the Deputy Commissioner of Taxation to that provided to the Family Court. Goldstein J held that a party could not resile in court from statements made for tax purposes. A series of decisions since that time, dealing with asserted fraud or deception of a court or other authority, has first modified and then doubted the correctness of the Elias principle, as Richard Chisholm points out in his careful analysis of the law up until 2001 (“Exclusion of evidence inconsistent with earlier statements: the rise and fall of the ‘Elias principle’” (2001) 15 Australian Journal of Family Law 1). The continuation of authority on this issue since that time is helpfully explained by Riley J in Weldon v Levitt [2017] FCCA 3072 at [115] – [127].

29. At the risk of gross oversimplification, the approach of courts dealing with lies of this kind in family disputes (no doubt based upon the court’s experience of lying in the context of the marital relationship) is that the court is still required to look at all of the evidence, including the asserted false evidence, and assess the facts in what Riley J calls “all the circumstances”.

30. The result is that the defendant’s signed statement that there was no domestic violence should not necessarily be treated as proof of the fact. All of the circumstances need to be taken into account. Similar caution must be taken in relation to apparently inconsistent statements to other authorities and courts about income and outgoings. That is not to say that lying is an inevitable concomitant of the Family Court process, but that lies in the context of a family relationship should not necessarily be regarded in the same way as, for example, lying in a commercial or business context.

Application of these principles to the evidence in this case

31. In the defendant’s outline of submissions at paragraph 33, Ms Woods states:

“On the defendant’s case, the statement made in the certificate attached to the Consent Orders was a false statement. This will obviously be addressed in the defendant’s evidence (and heavily scrutinised) at trial, but for the purposes of the current application is that the certificate is but one piece of evidence relevant to the defendant’s defence of the defamation claim.”

32. What this means is that the defendant is explaining having ticked all three boxes in relation to domestic violence in relation to herself and the children as having not been a factor was false. The explanation given by Ms Woods is that the defendant was desperate to settle the Family Court proceedings and knowingly ticked these boxes in the negative to ensure that the settlement went through. This would seem to suggest that at no stage in the course of the Family Court proceedings, including when she was legally represented, did the defendant ever advised the court or her lawyers, in affidavits or otherwise, of any domestic violence or sexual assault problem of any kind.

33. Mr Lewis draws to my attention that there is no affidavit evidence in this regard, including any explanation on information and belief from Mr Durant. I also note that the defendant in her affidavit in the Family Court states “I have told the truth in all my affidavits and evidence submitted to the court” (Exhibit 1, p. 52), although this cannot be so since she must know that she provided false information deliberately to the court in order to effect a settlement that the court will not otherwise have approved.

34. However, applying the caution exercised by the Family Court when dealing with lies of this sort, I do not regard the defendant’s inconsistent statements as being of the significance that Mr Lewis claims. I need to consider all of the evidence in all of the circumstances.

35. The next issue of concern is that the defendant justifies her conduct by complaining that the plaintiff has himself breached orders for child support, including stopping paying child support. At the time that the home was placed on the market (6 November 2017), the plaintiff was in fact up to date with his child support payments and he continued to pay child support until January 2018. In circumstances which indicate a degree of hostility between the parties, it would appear that since that date he has been paying the child support into a special account for this purpose, for the period from February 2018 to date. That is in breach of the child support orders, but need to be seen in the context of the deteriorating relationship between the parties.

36. The defendant additionally states, both to this court and in her affidavit, that the plaintiff failed to pay school fees. This also is at best a misstatement. The plaintiff has paid school fees and those additional fees which fall within the parameters carefully outlined in the consent orders in the Family Court set out above. He has not paid fees for the new school, but Mr Lewis pointed out that these fees had not been put before him until they were seen as an attachment to the affidavit of Kelly Durant. Since the memorandum of fees in question shows that the first payment was made on 23 January 2018, that may well be the explanation. I do not regard the plaintiff as having been in breach of these orders at all.

37. The evidence is less satisfactory in relation to the plaintiff’s non-payment of medical insurance, but even assuming that this were the case, it pales into insignificance compared with the defendant’s obvious breach of the court orders set out above, particularly with regard to changing the children’s school and place of residence. All of the evidence points to the defendant taking the children to live on the Gold Coast in secret, to live not only with another partner and his children, but in another State, in circumstances where there is no notification to the plaintiff or his legal representatives until March 2018.

38. It is not to the defendant’s credit that her explanation for breaching court orders is that she considers the plaintiff has similarly breached orders. To wrongs do not make a right.

39. Finally, I note the arch response of the defendant’s solicitors, presumably on instructions and perhaps the most relevant evidence at all, namely evidence in relation to the defendant’s current financial position.

40. However, caution needs to be exercised when dealing with all of these issues. The level of hostility between the plaintiff and defendant is the trigger for most of these disputes.

41. There is, however, one area of evidence which is of concern, since it directly relates to the honest disclosure of the defendant’s financial position, which is relevant to the potential dissipation of assets, namely failure to provide the court with full current information about her income and outgoings.

42. Although the defendant was prepared to tell the Family Court that she had earned more money working in her new position in Queensland than she had made in the three previous years of employment, a very different position emerged in these proceedings. I was told from the bar table that the defendant has earned $13,000 for three pieces of “freelance” work, all of which were paid prior to 1 March 2018. Since that time, the plaintiff has not been paid at all, which Ms Woods put down to the work in question being “freelance”.

43. However, the plaintiff’s Family Court affidavit refers to regular paid work, not to freelance work where there would be periods of several months where she will not be paid at all. It is this last piece of evidence which is of most concern to me because it indicates a degree of unreliability about financial matters which is of particular relevance in terms of whether or not the defendant may continue to dissipate the funds the subject of this order.

44. I am of the view that the inconsistencies in evidence as to the defendant’s financial position mean that I can have no confidence that the plaintiff will not dissipate her assets or otherwise put them beyond the reach of the plaintiff. In those circumstances, subject to balance of convenience issues, the freezing orders should continue.

45. However, this is not the end of the matter because I must also consider the degree to which reliance should be placed on the claims of the plaintiff. The principal ground upon which the application to set aside these orders is made is that it is the plaintiff’s non-disclosure of material facts at the ex parte hearing warrants the discharging of the order and the refusal of any continuance, no matter how strong the evidence against the defendant may be.

The plaintiff’s asserted failure to disclose relevant material on the ex parte application

46. Ms Woods submitted that there were six significant failures by the plaintiff to disclose relevant material.

The first failure: Failure to put the facts concerning disclosure of the sale of the property before the court

47. Ms Woods submits that, contrary to the submissions made on the ex parte application, the defendant had no obligation to give the plaintiff prior notice of selling the Saratoga property. In addition, it is asserted that the plaintiff was already aware as early as January 2018 (because the defendant had told him) that the Saratoga property “was being sold” and she had relocated to the Gold Coast with the two children, as well as enrolling the children in a school on the Gold Coast. The plaintiff had in fact referred to some of these matters in the Reply filed on 21 March 2018.

48. However, what the plaintiff had told the Family Court in her 1 March 2018 affidavit is, as I have set out above, that the home she was selling was “an old cottage” which had been on the market for four months. The plaintiff had no information that the property had been sold. Upon hearing that contracts had been exchanged, his solicitors sent two letters enquiring about the exchange and foreshadowing freezing orders in relation to the proceeds. All of this material was put before the court. Some allowance must be given for the fact that the plaintiff had been seeking orders from the Family Court in relation to the schooling of the children and this application was made only after the Family Court had effectively postponed that application pending the hearing of the criminal proceedings. Mr Lewis put it that his client was faced with a fait accompli.

49. I am satisfied that I was given full disclosure in relation to these issues.

The second failure: failure to disclose that the plaintiff was himself in breach of maintenance orders

50. The second asserted relevant non-disclosure was the plaintiff’s failure to pay maintenance. As I have set out above, I am satisfied that the plaintiff had in fact regularly paid maintenance, the last payment being in January 2018, following which he ill-advisedly started putting maintenance in a separate account (which I gather was a stance raised in the course of correspondence or court proceedings).

51. I do not regard this as being non-disclosure of a failure to comply with obligations but as further evidence of the hostility between the parties.

The third failure: failure to disclose the criminal charges laid against the plaintiff

52. The third issue raised was an asserted failure to disclose the criminal charges.

53. Extensive information was put before me by Mr Lewis on this topic as the transcript and affidavits make clear. They are particularised at length in the defence and Reply. My orders were made in the full knowledge of these criminal charges. That is one of the reasons why the names of the parties have been and continue to be anonymised.

54. I view most seriously the fact that the plaintiff has been charged with criminal offences and that these include sex abuse and violence charges. While I note the presumption of innocence, the fact that these charges have been laid are important matters in any ex parte application, and have been given very great weight. However, to say that these were not disclosed flies in the face of all of the evidence that was put before me on the ex parte application, including the pleadings in the case, to which I had careful regard in relation to the requirement to establish an arguable case.

The fourth failure: failure to set out the change of circumstances of the defendant

55. The fourth asserted area of non-disclosure is the impact of the change of circumstances upon the defendant’s financial circumstances in that she was raising the children by herself with no regular employment and little income.

56. These, however, were matters that the defendant, not the plaintiff, should be putting before the court. The affidavits in support of the application gave a frank account of the relevant events and the circumstances in which the plaintiff, through his solicitors, learned of the exchange of contracts. I am satisfied that there was full disclosure of the material that he was obliged to put to the court.

The fifth failure: failure to provide copies of Family Court affidavits concerning the change of address and sale of the property

57. The fifth asserted non-disclosure is that I was not given a copy of the defendant’s Family Court affidavit or information about the reasons she had given to that court for having to sell her home and move.

58. For the purpose of making an interim order on an urgent basis, in circumstances where the defendant would have an opportunity to put that material before the court in very short compass, I consider that it was no unreasonable of the plaintiff’s legal advisers to have put before me material which was informative without being exhaustive.

59. The defendant’s Family Court affidavit did not in fact refer to the sale of the property at all. It contains no information which would have resulted in my refusing to make the freezing order. Similarly, the failure to provide full details about the circumstances in which the application in relation to the children’s schooling did not go ahead on 9 March 2018 in the Family Court was not a matter which was crucial to the orders being made.

The sixth failure: misrepresentation of the correspondence between the solicitors

60. The sixth matter raised by Ms Woods relates to the correspondence of 18 April 2018 which Ms Woods submits indicates sharp conduct on behalf of the solicitors for the plaintiff, in circumstances where the plaintiff had long known of this property being on the market for sale (written submissions, paragraph 38(b)).

61. I consider these are appropriate letters for the solicitors for the plaintiff to have written, once they knew of the exchange of contracts. I do not consider they were written to mislead the court or “based on a false premise” (written submission, paragraph 38(b)).

Conclusions concerning the asserted failures to disclose

62. The obligation to disclose all material matters to the court including those adverse to the applicant’s case is clear: Thomas A Edison Ltd v Bullock (1912) 15 CLR 679. An applicant must act with the utmost good faith and fully and fairly disclose and state the case. The question of what is material will depend on the circumstances of each case.

63. I am satisfied that the plaintiff, through his solicitors and counsel, made sufficiently full disclosure of the material facts to warrant the making of the order. In fact, the additional material in the defendant’s affidavit concerning her financial situation, which Ms Woods submits should have been shown to me, does not assist the defendant, but makes the case against her even stronger.

Balance of convenience

64. The scant information provided to me about the defendant’s currently living conditions and financial position was provided to me from the bar table and is not the subject of affidavit or even referred to in the written submissions. There is no mention of her current partner in Ms Woods’ submissions, although it was acknowledged that a significant factor in the defendant’s move to Queensland is that she went to live with him to continue her relationship with him as well as to accept the job he offered to her. I have no other evidence as to her financial position, including the assertion that she has not been paid for any work since 1 March 2018.

65. Ms Woods submits that the defendant is living off the interest on the monies invested and that she needs to utilise the interest for this purpose. She has no plans for use of the principal apart from buying another property in the future, apparently as an investment.

66. Mr Lewis submits, and I accept, that there is no evidence of any prejudice to the defendant apart from the loss of use of a percentage of the interest in relation to the sum. Although the orders were made on 26 April 2018, which is close to a month ago, there is no evidence that the defendant suffering any hardship in the interim.

67. The defendant’s living expenses appear to be paid for by her partner (see Exhibit 1, p. 48).

68. Any hardship caused to the defendant through the loss of access to the interest on the sum of $250,000 can readily be fixed by continuing the freezing order in relation to the sum of $250,000 but permitting the defendant, from time to time, to withdraw the interest on this sum. This will mean she is in no worse position than before.

64. The terms of the freezing order could, in fact, assist the defendant. The continuation of the freezing order may be made conditional upon:

1. The plaintiff paying to the defendant the sum in the special account he set up for maintenance, and to continue to pay maintenance in accordance with his obligations as determined from time to time by the Family Court;

2. In addition, since the reason for his difficulties in relation to medical insurance expenses is that he needs information from the defendant, an obligation for him to pay this figure, as well as his portion of the school fees for the children, can be included as well; and

3. A third term could be his continuation of payment of school fees.

70. The net result will be that the defendant is in fact in a better position than she was in before. The cost to the plaintiff of maintaining the freezing order will be compliance with his obligations for school fees, health insurance and maintenance, which will hopefully put an end to at least some of the arguments on these issues. The defendant will hardly be out of pocket at all, in that she will continue to be able to access the interest on the sum the subject of the freezing order (namely $250,000), which can remain safely invested. Most importantly of all, such an arrangement ensures the welfare of the children of the marriage, whose continued financial security is a matter which I consider to be essential to the balance of convenience.

71. I propose to continue the freezing order until further order. I am unfamiliar with the precise orders concerning maintenance, health insurance and school fees, and I propose that the parties should prepare Short Minutes of Order reflecting the additional requirements that the freezing order’s continuation is conditional upon the plaintiff discharging his obligations in relation to child maintenance, medical insurance and school fees, in accordance with his obligations under the Family Court settlement deed.

72. I will give liberty to apply in relation to these orders, in the event that the parties require further elucidation or information.

73. The parties will attend a court ordered mediation in June 2018. In the interest of ensuring that a greater degree of comity applies than currently appears to be the case, I propose to reserve the issue of costs.

Orders

74. According, the orders I make are as follows

1. Freezing orders made on 26 April 2018, subject to the variations set out in the Short Minutes of Order to be prepared by the parties, to continue until further order.

2. The parties are to bring in Short Minutes of Order reflecting:

1. Orders in relation to the payment of interest on the sum of $250,000 to the defendant from such time to time as they may agree;

2. Orders for the payment by the plaintiff to the defendant of maintenance, health insurance and school fees for the children including child support/maintenance payments paid to a special account by the plaintiff since January 2018 and his proportion of 2018 school fees;

3. Orders for the further conduct of these proceedings, including a directions hearing date after the mediation, and

4. An acknowledgment by the plaintiff that the continuation of the freezing order is dependent upon his compliance with obligations under the relevant orders of the Family Court of Australia concerning child support/maintenance, health insurance and school fees.

3. Liberty to apply on two days’ notice.

4. Costs reserved.

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Amendments

26 June 2019 - paragraphs 14 and 15(c) - removed name

Decision last updated: 26 June 2019