Beach and Beach and Anor (No. 4)

[2007] FamCA 1632

FAMILY COURT OF AUSTRALIA

BEACH & BEACH AND ANOR (NO. 4) [2007] FamCA 1632

FAMILY LAW - PROPERTY – Claim by intervenor for payment of unsecured debt – Dismissed

Family Law Act 1975 (Cth)

HUSBAND: Mr Beach

WIFE: Ms Beach

INTERVENOR: H Pty Ltd

FILE NUMBER: MLF 2761 of 2003

DATE DELIVERED: 17 December 2007

PLACE DELIVERED: Melbourne

JUDGMENT OF: Justice Brown

HEARING DATE: 17 December 2007

REPRESENTATION

COUNSEL FOR THE HUSBAND: Mr I.N. Brewer

SOLICITOR FOR THE HUSBAND: Wilmoth Field Warne

COUNSEL FOR THE WIFE: Mr I.F. Mawson SC

SOLICITOR FOR THE WIFE: Gillian Coote Family Law

COUNSEL FOR THE INTERVENOR: Ms A.S. Bartfeld

SOLICITOR FOR THE INTERVENOR: MMR Legal Pty. Ltd.

Orders

1. BY CONSENT IT IS ORDERED in accordance with the Minutes of Proposed Orders sealed and attached hereto AND IT IS DIRECTED that such Minutes remain upon the Court file.

2. That all extant applications be otherwise dismissed.

3. That these proceedings be removed from the List of matters awaiting finalisation.

4. That the reasons for judgment this day in respect of the orders sought by the intervenor, be transcribed and that copies be made available to the parties.

5. That pursuant to Rule 19.50 of the Family Law Rules 2004 this matter reasonably required the attendance of counsel, including senior counsel.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 2761 of 2003

MR BEACH  

Husband

And

MS BEACH

Wife

And

H PTY LTD ACN …
Intervenor

REASONS FOR JUDGMENT

1. The court is asked to determine a narrow but potentially complex point.  Proceedings between the husband and wife commenced in 2003.  They have been lengthy and contentious; numerous orders and directions have been made.  The applications have been listed for hearing on a number of occasions and, for various reasons, have not proceeded.  They were again listed for hearing before me today. 

2. On 13 December, 2007 a company, H Pty Ltd, filed a document described as a notice of intervention by a person entitled to intervene. That notice refers on its face to rule 6.06 of the Family Law Rules 2004.  Together with the notice of intervention was filed an affidavit, sworn by Mr U, a director of H Pty Ltd.  Mr. U deposed that in August 2006 the husband retained H Pty Ltd to provide accounting services.  Pursuant to its agreement with him, a one per cent administration fee is charged to overdue accounts, on a monthly basis.  Between April and October 2007, Mr U deposed, work was done for and at the request of the husband by H Pty Ltd and a total sum of $15,224 is due and payable in respect of that work, including GST.  In addition there is $630.74 outstanding, by way of accruing administration charges.  Mr U also deposed that the husband rented office space from H Pty Ltd at $1,100 per month for the months of June, July and August this year.  He failed to pay the rent and there is $3,300 owing. 

3. H Pty Ltd retained a solicitor, who wrote a letter of demand to the solicitor then on the record for the husband in these proceedings.  Mr. U deposed to receiving no response from either the husband or solicitor.  In that letter, H Pty Ltd advised that if the outstanding sums were not paid by the husband, they would intervene in these proceedings. Mr U deposed to the husband's financial position being poor; he based that assessment on accounts prepared by H Pty Ltd for the husband to 30 June, 2006.  Were the matter to proceed further that might give rise to an interesting point, as to whether an accounting firm retained by a client can rely on documents prepared for that client in this way, or whether equity might intervene to protect confidential information.  At this stage I do not need to consider the question.

4. When the case was called this morning, all parties were represented.  The matter was stood down for discussion. A little after 1:00 pm all parties returned to the courtroom.  The court was advised that as between the husband and wife, final orders were to be made, by consent.  Nothing was said at that time by counsel for the intervenor.  Having read the affidavits filed by the husband and wife, and the terms of the proposed orders, and after hearing further from counsel, final orders were made, determining the competing property applications. No application was made by counsel for the intervenor.  She has now advised me that she did not play a role in the discussions between counsel for the husband and counsel for the wife. 

5. A person or entity only has a right to intervene pursuant to s.79 (10) of the Family Law Act1975 as a creditor if the creditor may not be able to recover his or her debt if orders between the parties were made.  It would be at least arguable, on the material filed by the parties, that if (pursuant to a final order) the wife became the sole proprietor of a particular asset, for example, the home, that asset would not otherwise be available to the intervening creditor.  One of the problems with a case like this is that the asset pool really cannot be quantified, as Mr Mawson SC made clear in his submissions.  The husband may be saying he is taking all the debt and the wife is getting the assets, but that may not in fact be accurate.

6. In my judgment, the intervenor faced almost insurmountable legal problems.  Its lack of success will not be attributable to its counsel’s decision not to seek to be heard earlier.  There may have been sound tactical reasons for that course.  The outcome would be the same, because this is not the forum in which, in the context of proceedings between the husband and wife, the court would find it appropriate to determine a disputed, unsecured debt between the husband and the intervenor.  It is clear from reading the husband’s material (the intervenor may not have had access to this) that there are many disputed debts and, as counsel for the husband has advised, this would be yet another.  It is not an admitted debt. 

7. This court's role is not to determine a dispute between an unsecured creditor (who is only one of many unsecured creditors) and one party to a marriage, for an alleged debt incurred well after separation.  The debt is not secured by any charge or mortgage.  It is disputed.  It might be different if it were a judgment debt, but it is not.  A claim for the sum alleged to be due falls squarely within the jurisdiction of State law, not Federal law.  The claim has nothing to do with the controversy between the husband and wife.  Part of it is a claim for work and labour done, a fertile field for litigation, as counsel for the intervenor will know.    

8. In my judgment, to endeavour to make this claim in this court was misguided.  It misconceives the nature of the alleged debt, the nature of the justiciable controversy in this court and the role this court can play in determining a dispute between an unsecured creditor and a party to a marriage when the dispute, and the alleged debt, have nothing to do with the other party to the marriage and the alleged debt is not secured over matrimonial property.  Other choices might have been open to the debtor, up to and including bankruptcy.  In those circumstances, different considerations could apply.  In my view, the claim is not made out by the intervenor and will be dismissed.

I certify that the preceding 8 paragraphs are a true copy of the reasons for judgment herein of her Honourable Justice Brown AM.

Associate

17 December 2007