Bourke & Bourke (No. 4)

[2008] FamCA 1063

FAMILY COURT OF AUSTRALIA

BOURKE & BOURKE (NO. 4) [2008] FamCA 1063

FAMILY LAW – PROPERTY – Partial property settlement – Third party application to strike out

Family Law Act 1975 (Cth) Part VIIIAA, ss 79, 90AE, 106A, 106B, 117(2A)

Gould v Gould and Swire Investments (1993) FLC 92-434

Iopollo (1987) FLC 91-852

APPLICANT: Ms Bourke

RESPONDENT: Mr Bourke

INTERVENOR: S Pty Ltd

FILE NUMBER: MLF 2814 of 2006

DATE DELIVERED: 17 November 2008

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Murphy J

HEARING DATE: 17 November 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr O'Connor

SOLICITOR FOR THE APPLICANT: Callahan Lawyers

RESPONDENT: No appearance by the respondent husband

COUNSEL FOR THE INTERVENOR Mr Davis

SOLICITOR FOR THE INTERVENOR McBain Lawyers

Orders

IT IS ORDERED IN RESPECT OF THE THIRD PARTY’S APPLICATION TO STRIKE OUT THAT

1. Within 14 days of today, the wife file a second Further Amended Application for Final Orders in the nature of a pleading, which properly pleads and particularises her case against the third party.

2. The third party respond to that pleading within seven (7) days of its receipt.

3. The further hearing of the third party’s application to strike out the claim against it, be adjourned to 10.00am (Melbourne time) on 15 December 2008 and that such hearing be held by telephone at the phone numbers listed in the notation below.

4. The wife provide, in respect of the future conduction of this action, security for the costs of the third party, in the sum of $20,000.00, such sum to be held in the trust account of the solicitors for the wife, from the proceeds of settlement received upon the sale of the D property.

5. The wife pay the costs of the third party, thrown away today, fixed in the sum of $4,000.00, such sum to be paid from the proceeds of settlement received upon the sale of the D property.

IT IS FURTHER ORDERED BY WAY OF PARTIAL PROPERTY SETTLEMENT THAT

1. The property known as and situate at M in the State of Victoria (“the M property”) be:

   a.Transferred into the name of the applicant wife solely.

   b.That the husband do all such acts and things and sign al such documents as may be required to transfer to the wife at the expense of the husband all of his right, title and interest in the real property situate and known as M property (Volume … Folio …).

   c.That the husband pay and indemnify the wife against all payments and liability pursuant to the mortgage registered No … to the National Australia Bank Ltd for the period August 2006 to the date of transfer.

   d.Thereafter the wife indemnify the husband against all payments and liability pursuant to the mortgage registered No … to the National Australia Bank Ltd.

2. The proceeds of sale from the property known as and located at D(Volume … Folio …) in the State of Victoria (“the D property”) be paid to the wife via her solicitors. [It is anticipated that the Contract for the sale of the D property will be signed by the proposed purchaser Ms H. However the husband failed to sign the contract note and vendor’s statement which documents are currently with this Honourable court awaiting signature by the court on behalf of the husband vendor.]

3. Pending the completion of the transfer/sale/payment set out in paragraphs 6 and 7 herein:

   a.The parties hold their respective interests in the real property referred to in these orders (“the real property”) upon trust pursuant to these orders.

   b.No party may encumber the real property without the consent in writing of the other party.

   c.The parties will do all such acts and things and sign all documents that may be necessary to effect the sale of the real property.

4. The husband retain, to the exclusion of the wife, the business trading as “B Business” and the associated company B Pty Ltd (“the business”) and the husband forthwith:

   a.Remove the name of the wife from all liabilities associated with the business.

   b.Pay, indemnify and keep indemnified the wife of all past, current and future liabilities, personal or related to the business, including but not limited to:

   i.GST;

   ii.Capital gains tax;

   iii.Stamp duty;

   iv.Any and all liabilities owing to creditors; and

   v.Australian Taxation Office liabilities arising in the name of the husband and/or the wife and/or the business and/or the company, whether past, present or future, related to, or arising from, the business.

5. The husband retain all household furniture.

6. Unless otherwise specified in these orders, and save for the purposes of enforcing any monies due under this agreement:

   a.Each party be solely entitled to the exclusion of the other to all other property (including choses in action) in the possession of that party as at the date of these orders.

   b.Monies standing to the credit of the parties in any bank account are to become the property of the party in whose name the account is registered.

   c.Monies standing to the credit of the parties in any joint bank account are to become the property of the wife.

   d.Each party hereby foregoes any claims they may have to any superannuation, long service leave, redundancy, retirement or retrenchment and like benefits belonging to or earned by the other.

   e.Insurance policies remain the sole property of the named owner.

   f.Each party be solely liable for and indemnify the other against liability encumbering any item of property to which that party is entitled, pursuant to this agreement.

   g.Any joint tenancy of the parties in any real or personal property is hereby expressly severed.

7. All parties have leave to inspect documents produced pursuant to subpoena from the National Australia Bank.

8. It is certified that it was reasonable to brief a lawyer to appear as counsel in the proceedings.

9. A Registrar of this Court is appointed pursuant to s 106A of the Family Law Act to execute in the name of the husband and do all acts and things necessary to give validity to any deeds and documents required to be executed by these orders.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 2814 of 2006

MS BOURKE

Applicant

And

MR BOURKE

Respondent

EX TEMPORE

REASONS FOR JUDGMENT

1. On 23 October 2008 this matter came before me for the second time.  At that time the solicitor who then appeared for the third party company indicated that an application would be made to strike out that much of the application that pertained to the claim against it. 

2. With that in mind I made a number of orders designed to have the case for the striking out of that claim particularised, and to have the claim in respect of the third party equally particularised.

3. In order to best achieve that, I canvassed with each of the representatives of the parties the possibility of a pleading being done with a view to the particulars of the claim being disclosed in that pleading.  I accordingly made orders in terms of paragraph 2 of the orders on that date. 

4. Subsequently, on 7 November 2008, the wife filed a further amended application for final orders.  Insofar as that application is relevant to the instant application, it seeks relief against the third party in these terms:-

   (2) The third party company [S] Pty Ltd within 21 days of the date of this order pay to the wife via her solicitors the market value of [W property] in the state of Victoria, being the whole of the land more particularly described in certificate of title volume […] folio […] ("the [W] property")

   (3) Alternatively to paragraph 2 herein, the third party company [S] Pty Ltd within 21 days of the date of this order, at the expense of the third party company, transfer to the wife, title and interest in the [W] property and sign all instruments and documents and do all acts and things necessary to effect such a transfer.

   (4) Further and alternative to paragraphs 2 and 3 herein, the [W] property be sold and the wife be paid the balance of the proceeds of sale.

5. Those orders constitute the amended claim against the third party in response to the submissions made by the solicitors of the third party on the last occasion.

6. On their face, they are clearly beyond the jurisdiction of this court.  On their face they ought be struck out on that basis, they being orders seeking to alter the substantive rights of a third party without reliance on a proper basis (see e.g. s 106B; Part VIIIAA) and therefore the application in those terms is doomed to fail.

7. On the morning of the hearing today, Mr O'Connor, counsel for the wife, handed up to the court and handed to Mr Davis, who appears as counsel for the third party, a summary of argument.  Contained within that document are orders against the third party referenced to section 106B of the act and Part VIIIAA of the act. 

8. No mention is made of relief pursuant to section 106B or Part VIIIAA in the further amended application filed on 7 November 2008.

9. Mr Davis submits, correctly, with respect, that on its face the application should be struck out.  He also submits that the wife has had an opportunity to properly, as it were, plead her case and to produce evidence in support of the case. 

10. He argues further that the current state of the evidence is such that, even if the claim was properly pleaded, pursuant to section 106B or Part VIIIAA of the act, it is nevertheless doomed to fail.

11. He supports the contention that the claim ought be properly particularised by reference to the decision of Nye J in Iopollo (1987) FLC 91-852, and also a decision of the Full Court in Gould v Gould and Swire Investments (1993) FLC 92-434.

12. He makes the point that the terms of section 90AE, and specifically s 90AE(3)(c) of the Act, make it clear that part of the procedural fairness that needs to be accorded to a third party in proceedings in this court is to have the case against the third party properly outlined and particularised so that the third party, who is a stranger to the marriage, knows the case which it must meet.

13. Mr Davis submits that the evidence brought forward by the wife at the current time is essentially assertion.  It also consists of hearsay, in particular the letter from C Conveyancing said to be a significant component of the wife's case.

14. That letter, which I've read, is hearsay upon hearsay, and hearsay upon hearsay upon hearsay.  The admissible evidence in support of a s 106B claim, or indeed a claim pursuant to Part VIIIAA of the act, is, in my respectful view at the current time, thin to say the least.

15. This court might be seen to be reluctant to, by order, prevent a party to a marriage from maintaining a claim, in circumstances where the circumstances of the case are otherwise that that party is likely to suffer some injustice and where the measure of relief is justice and equity. 

16. As to those matters, in this case I will shortly be asked to make orders pursuant to section 79 in default of appearance by the husband.  The husband has been given many opportunities to both appear and present evidence in the section 79 proceedings against him. 

17. On the occasion before last before me, he was represented by a solicitor.  On 23 October 2008 I gave that solicitor leave to withdraw on his behalf.  There has been no further appearance entered on behalf of the husband.  His name was called three times today and there was no appearance.

18. There is a suggestion in the material - in this respect not otherwise challenged -that the husband has engaged in behaviour with respect to matrimonial property, including damaging it and has engaged in what is broadly described (albeit, as a matter of law, inaccurately) as “negative contributions” towards the property. 

19. As part of the wife's claim in the section 79 proceedings she seeks to add back to the pool of property very significant sums of money which she says have been “wasted” by the husband in the period since separation.  All of the evidence before me suggests that any such add-back is notional in the true sense, that is it is extremely unlikely that any of that money will ever be seen by her.

20. The W property, the subject of the third party claim, has, therefore, significant value in the scheme of things.  There is, it seems to me, significant potential prejudice in the wife not being able to maintain a claim in respect of that property, if such a claim is sustainable as a matter of law. 

21. The potential prejudice to the wife is in my view significantly heightened by reference to the matters which I have just mentioned. 

22. Equally, the third party is a stranger to the marriage and prima facie ought not be involved in proceedings between parties to a marriage unless a proper foundation for that involvement is made out.  At the current time, the application filed by the wife does not make out any such basis.

23. The third party is likely to be subjected to further costs in the event that the claim is properly pleaded and particularised against it and should the claim be unsuccessful the third party would seek to recover any costs thrown away as a result.  Accordingly, it can be seen that the third party too is likely to suffer prejudice by its application to strike out being refused. 

24. It seems to me, however, that in balancing the two potential valid bases for prejudice by each of the two parties, the potential prejudice of the third party can be met by a costs order should the claim against it prove to be unsuccessful, whereas the prejudice to the wife is not so easily met.

25. In my view the potential for prejudice to her is significantly greater than the potential for prejudice to the third party.

26. In my view, the justice of the case requires the wife being given a further opportunity to properly particularise the basis of the claim against the third party.

27. The wife's current financial circumstances, in terms of available funds, is precarious. However, Mr O'Connor points out that, if orders are made by me, either as contended for by her or substantially as contended for by her, she will receive the net proceeds of sale of one property estimated to be approximately $50,000 into her solicitors' trust account and that the process of the sale of that property is now significantly advanced.

28. There is also, potentially, the sale of another property forming part of the property of the parties or either of them.  That is the property that has been the subject of alleged damage by the husband.  It is anticipated that, net of sale costs and the like, that property will result in approximately $240,000 being received by the wife if orders are made along the lines suggested by her in the section 79 proceedings.

29. Mr O'Connor submits that I ought make orders for partial property settlement today if I otherwise adjourn the application with respect to the W property. 

30. Mr Davis does not seek to oppose that course of action (to the extent that his client has standing in respect of it in any event). 

31. It is contended by Mr Davis on behalf of the third party that, in the event that the wife is given, as it were, another opportunity to substantiate the claim against the third party by reference to a properly particularised application setting out the relief sought against the third party, that the wife ought provide security for costs.

32. It seems to me, in light of the circumstances already outlined, including the prior opportunities provided to the wife to identify and particularise the claim against the third party, and, in particular the opportunity given to the wife to do so by my orders made on 23 October 2008, that an order for security for costs is an entirely proper order in the circumstances.

33. Mr Davis informs me that, in contemplation of today's proceedings a bill in taxable form was prepared that indicated costs in the region of $16,000.  He seeks an order for security for costs of $20,000 secured by way of the solicitor for the wife holding such sum in his trust account from the proceeds of sale of the D property once it settles.

34. I sought from Mr O'Connor an assurance that he can, on behalf of the wife, file what I had described during the course of argument as a pleading in respect of the prospective claim for the wife pursuant to section 106B of the act and/or Part VIIIAA of the act.  He tells me he can do that within 14 days and I intend to make an order to that effect.  Mr Davis on behalf of the third party indicates that he can respond to that pleading within seven days thereafter. 

35. I make it clear in these reasons that, despite the fact that the Family Court is not as it were a court of pleadings, in circumstances such as the present where third parties are involved in litigation, between parties to a marriage, it seems to me that pleadings are frequently an entirely proper way to particularise the claim made against that third party.  In any event, in this particular case, it certainly seems to me to be appropriate.

36. Finally, in the event that I determined to adjourn the further hearing of this matter so as to allow the process of pleading to take place, Mr Davis on behalf of the third party seeks an order for the costs of today thrown away.  He submits that, in accordance with section 117(2A) of the act that the wife has been wholly unsuccessful in the proceedings today; that she has been given an opportunity on a prior occasion to properly plead the case against the third party and by allowing a further opportunity the court is according to her a significant indulgence. (I should say, that I took this as a submission with respect to subparagraph (c) of s 117(2A), namely, the conduct of the wife with respect to the proceedings.)

37. Mr Davis would also argue that the further hearing of the matter on an adjourned date is necessitated by the failure of the wife to comply with a previous order of the court, namely, the order made by me on 23 October.

38. Mr O'Connor submits that, if the s 106B claim and/or Part VIIIAA claim is properly made out, then significant questions arise in respect of the conduct of the third party and those who direct it.  Accordingly, he submits that the third party's costs of today ought be reserved. 

39. Whilst it may be right that, if a claim is made out under section 106B or Part VIIIAA, the conduct of the third party might be called into question, it seems to me that, on the previous occasion the wife was granted an indulgence so as to allow her the opportunity to properly plead a case against a stranger to the marriage.  A stranger to the marriage has been brought to the court today in order to present a case arising by reason of the wife's failure to do so.

40. In those circumstances, and taking into account all of the other matters enumerated in section 117(2A) of the act, I propose to exercise my discretion to order the wife to pay the costs of the third party thrown away today which I will fix in the sum of $4000. 

41. I fix the sum of $4000 by reference to submissions made by Mr Davis that the costs thrown away today are his fees and the fees of his instructing solicitors in the sums of $2500 and $1500, respectively, which in my judgment seem reasonable in the circumstances. I certify for counsel.

42. I turn now to consider the application by the wife for partial property settlement.[1]

    [1]          Submissions ensued on this issue. Separate reasons were delivered which, for ease of reference have been consolidated into one set of reasons.

43. I will first outline the orders I will make before briefly recording my reasons.

44. I will make orders in reference to the orders sought at Section H of the “Outline of Case” filed by the wife by leave today.

45. Paragraph 1(c): I will add to that that the husband pay and indemnify the wife against all payments.  I will delete 2, 3 and 4.  I will delete from 7(a) the words "and/or third party". 

1. I will not make orders in accordance with subparagraphs (b) and (c).  I consider that I should not make orders of that type which are, in effect, made in a vacuum.  They can be the subject of future application if need be. 

2. I will not make order (c). Section 117 provides for no orders for costs, subject to the matters in s 117(2A). I will not fetter my discretion with respect to those matters until, at the time the application for costs are made, the circumstances are all known.

3. In paragraph 8(b) I will add the word "pay" so that it reads "pay, indemnify and keep indemnified the wife".  In paragraph 10 I will delete the word

   
   

   "disagreement" and insert the words "these orders".  I will delete 11 from the orders that I make, and obviously 12. 

4. I will not make the order for costs sought because it is, in effect, redundant and is covered in the orders.

5. On the pool as calculated by the wife there is a 70:30 division. But, that is an entirely artificial number.  What in fact will occur is that the wife will in effect receive (leaving aside W property) all of the valuable, realisable assets. 

6. Included in that total sum is, one might think, a significant component of what might otherwise be the subject of an application for costs in circumstances where there has been 15 appearances necessitated by what is clearly, on the face of it, abject recalcitrance by the husband.

7. I accept and rely upon those matters deposed to by the wife at paragraphs 211 through 230 of her affidavit of her evidence‑in‑chief filed on 22 September 2008

8. I note that a number of previous orders have been made by this court, including orders made by Dessau J and Carter J that dealt with the filing of material by the husband, orders for appearance by the husband and orders for disclosure by the husband. 

9. None of those orders have been complied with. 

10. It has been necessary for the wife to appear before this court on approximately 15 occasions in order to attempt to have the husband comply with his clear obligations pursuant to the Act and the Rules of this court.

11. On 10 October 2008, a solicitor appeared on behalf of the husband. He indicated he was seeking instructions from his client and that, if they were not received by a particular time as specified by that solicitor, then that solicitor would seek leave to withdraw. 

12. On 23 October 2008, a further mention of this matter occurred before me by telephone. That solicitor was granted leave to withdraw.  The husband's name was called three times today and there was no appearance again by him today.

13. I accept paragraph 231 of the wife's affidavit of evidence‑in‑chief. She says:

    The respondent has persistently ignored his obligations of disclosure and failed to attend court proceedings.  This has caused me to incur significant additional legal costs, distress and has resulted in me and the children continuing to live since separation in rented accommodation and in poverty. 

14. There is little doubt on the material before me that that this assertion is correct.  The unchallenged material contained in the summary of argument filed by leave today indicates a pool of property which, by reason of the matters just identified, is an approximation. 

15. That pool includes notional add-backs totalling approximately $750,000 which, the wife asserts, the husband has availed himself of improperly, as it were, since separation.

16. Leaving aside the W property, which is the subject of my earlier reasons and will be the subject of further argument, the approximate pool of property, accepting those notional add‑backs and accepting the value of the husband's business by reference to the sale price of it on the Internet, is, in very crude terms, about $1,000,000. 

17. Of that pool of property the wife will receive the net proceeds of the sale of the D real property and the M real property in the net sum of about $290,000. 

18. She will receive then, less than 30 per cent of the property of the parties or either of them as calculated on her uncontradicted assertions and evidence. 

19. It seems clear that in percentage terms this is significantly less than she would receive if the matter was left to judgment by me as to what is just and equitable on the facts and circumstances disclosed by the evidence.

20. Moreover, it seems to me, by reason of the matters contained at paragraphs 211 and following of the wife's affidavit of evidence‑in‑chief, (which I accept), that there would be very good prospects of the wife receiving an order for costs as against the husband. 

21. Taking all of those matters into account, in my judgment, the amounts to be received by the wife, pursuant to orders sought by her, are less than what is just and equitable in the circumstances of this case but constitute all such property as is obtainable realistically by her.

22. Accordingly, I have no difficulty in making the orders sought at Section H of the wife's summary of argument, with the additions and deletions in the wording referred to by me earlier.

23. The history of recalcitrance by the husband in complying with his obligations of disclosure and participating in court proceedings and in compliance with his obligations, including obligations pursuant to orders, is, as I have said, set out in the wife's affidavit of evidence‑in‑chief at paragraph 211 and following.

24. I note that on 15 April 2008 the issue of the husband's compliance with orders and directions specifically relating to the sale of the D property was live and on 15 April 2008, her Honour Dessau J ordered that:

    Pursuant to paragraph 3 of that order that the wife shall have carriage of the sale of the real property, [D property], and in the event that the husband refuses or fails to sign any document required to list the property for sale ought complete the sale. A registrar of the Family Court should be appointed pursuant to section 106A of the Family Law Act to sign any document on the husband's behalf.

25. Subsequently, again within the context of the husband's noncompliance earlier referred to, Dessau J ordered on 3 June 2008 at paragraph 10 that:

    The husband shall forthwith do all acts and things necessary to have his solicitor withdraw the caveat from the title of the property at [D], in light of the order made by me in paragraph 2 of the orders on 14 June 2007.

    This is a reference to her Honour’s orders that the husband be prohibited from further increasing the level of indebtedness secured over that property.

26. In light of that history it seems to me clear that the husband has had notice of earlier proceedings, including, specifically, a requirement by him to remove the caveat over the property so as to allow that sale to complete. 

27. It seems to me further that for the justice of the case it requires the completion of that sale. 

28. Further, s 106A itself provides that:

    If an order under this act has directed a person to execute a deed or instrument…

    In my view, the husband has clearly been directed to execute a deed or instrument, namely, all documents necessary to complete the sale including, specifically, the withdrawal of the caveat and, in the words of the section, has

    refused or neglected to comply with the direction.

29. I note that, the only evidence before me that the husband has neglected to comply comes from the bar table. But I note that s 106A(b) provides that:

    If for any other reason the court considers it necessary to exercise the powers of the court under this subsection, the court may appoint an officer of the court, or other person to execute the deed or instrument in the name of the person to whom the direction was given and to do all acts and things necessary to give validity and operation to the deed or instrument.

30. By reason of the matters I have earlier referred to, and in particular the predicament of the wife in attempting to effect a settlement of property in this case, it is entirely proper for me to exercise the powers of this court under section 106A of the act despite the absence of the husband or any responding material from him.

31. I order accordingly. I will issue orders that consolidate all orders made by me today, to which these consolidated reasons relate.

I certify that the preceding seventy six (76) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Murphy

Associate:  L. McMurray

Date:  4 December 2008