Bowe and Bateman

[2012] FamCA 392

FAMILY COURT OF AUSTRALIA

BOWE & BATEMAN [2012] FamCA 392

FAMILY LAW – PROPERTY – where the applicant is currently developing property that is the subject of substantive proceedings before the Court – where the applicant has applied for a loan to facilitate the development – where the applicant seeks an order that the respondent withdraw caveats over certain property, so that such property may be used as security for the loan – where the respondent resists the application – where both parties will benefit from the development – where the respondent raises potential issues regarding the applicant’s use of funds secured under the loan – whether orders should be made requiring the respondent to withdraw the caveats – where respondent ordered to withdraw the caveats – where applicant restrained from selling or encumbering the properties – where applicant ordered to provide documentation in respect of the loan application, and invoices with respect to the development to the respondent’s solicitors.

Family Law Act 1975 (Cth)

APPLICANT: Ms Bowe

RESPONDENT: Mr Bateman

FILE NUMBER: SYC 5565 of 2010

DATE DELIVERED: 21 May 2012

PLACE DELIVERED: Brisbane

PLACE HEARD: Sydney & Brisbane

JUDGMENT OF: Murphy J

HEARING DATE: 17 & 21 May 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Schonell SC

SOLICITOR FOR THE APPLICANT: Swaab Attorneys

COUNSEL FOR THE RESPONDENT: Mr Hodgson

SOLICITOR FOR THE RESPONDENT: Sharon Moss Legal

Orders

IT IS ORDERED THAT

1. The Respondent do all acts and things and sign all documents necessary to cause to be withdrawn Caveats lodged by him on the following properties:

   a.   … S Street, Suburb M, New South Wales;

   b.   … R Street, Suburb M, New South Wales;

   c.   … C Street, Suburb H, New South Wales.

2. The Applicant be restrained from selling, listing for sale or otherwise transfering or encumbering the properties specified in paragraph 1 of these Orders, save for the purposes of the construction loan.

3. The Applicant be restrained from using any moneys obtained prusuant to any construction loans, save for the purposes of discharging the Applicant’s obligations pursuant to any construction contracts relating to the Suburb H property.

4. The Applicant forward to the solicitors for the Respondent as soon as reasonably practicable, and in any event not later than seven (7) days after the date of these Orders a copy of:

   a.   Any application made by her or on her behalf for finance or any document relating thereto;

   b.   Any document received from any financial institution in relation to any application for finance;

   c.   Any documents relating to any security in respect of any money advanced or proposed to be advanced by any financial institution.

5. Leave be granted to the Respondent to issue a subpoena to the National Australia Bank Limited, Suburb N.

6. Leave be granted to each of the parties, through their legal practitioners, to inspect and copy all documents produced pursuant to subpoena issued pursuant to paragraph 5 of these Orders.

7. In the event that the National Australia Bank raises any objection either to production of any documents or inspection or copying of any documents produced pursuant to subpoena issued pursuant to paragraph 5 of these Orders, that matter be referred to Murphy J urgently, at a date and time to be advised.

8. The Applicant forward to the solicitors for the Respondent, within seven (7) days of receipt:

   a.   Each and every invoice; and

   b.   Any document received by way of quotation or estimate;

from any builder or subcontractor engaged in any work in or about any real property owned by the Applicant.

1. Leave is granted to both counsel to apply, via joint e-mail communication to … @familycourt.gov.au, for the matter to be relisted for hearing before Murphy J. Any such e-mail communication is to include whether such hearing can occur via telephone or video-link and the estimated length of any such hearing. In that event, a further hearing date will be alocated on a date and at at time to be advised.

10. In the event that no application is made to relist the matter pursuant to paragraph 9 by 4:00pm, 2 July 2012, the following directions shall apply:

a.   The Applicant shall file and serve written submissions by 4:00pm, 16 July 2012. Those written submissions shall identify the specific factual findings contended for by reference to the evidence before the Court in respect of the property of the parties or either of them, the liabilities of the parties, the contributions of the parties, and the relevant s 90SF factors.

b.   The Respondent shall file and serve written submissions responding specifically to those matters and addressing all such matters relevant to the Respondent’s case within fourteen (14) days of the receipt of the Applicant’s submissions.

c.   Each set of submissions shall indicate whether it is sought to supplement those submissions orally. In the event that one or both parties request for that to occur, such hearing is to take place via videolink at a date and time to be advised and, if at all possible, within fourteen (14) days of the filing of the Respondent’s submissions.

11. In the event that an application to reopen is made in accordance with paragraph 9 of these Orders prior to 4:00pm, 2 July 2012, the directions outlined in paragraph 10 shall be vacated and on the further hearing date of matter, further directions will be made.

12. The husband shall sign and cause to be forwarded to the solicitors for the Applicant by 4:00pm, 21 May 2012, the original withdrawal of caveats for the properties.

13. Costs of and incidental to the Application in a Case filed by the Applicant on 18 May 2012 are reserved.

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

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER:  SYC 5565 of 2010

Ms Bowe

Applicant

And

Mr Bateman

Respondent

EX TEMPORE

REASONS FOR JUDGMENT

1. I commenced this matter some time ago in Sydney and heard the trial of it over some three days.  Then, the parties required further hearing time, which occurred last week.  On the second day of that additional time, consequent upon the cross-examination of the applicant wife (“Bowe”), the case for the respondent husband (“Bateman”) became, at least to me, less clear. 

2. As a result, I determined to make directions, which I indicated to the parties at that time, for the filing of written submissions. Included in those directions was a direction that the applicant would commence the process of providing those written submissions.

3. At that time, the applicant foreshadowed an application to withdraw caveats which the husband has lodged over real property, the subject of these proceedings.  As it turned out, counsel for the applicant was taken suddenly ill, and the further hearing of that application could not take place on Friday, 18 May.  An application in a case was nevertheless filed on that day, as was an affidavit by the applicant. The husband filed a response to the application in a case, and an affidavit on the same day. 

4. Fortunately, counsel for the wife has been able to appear before me this morning by telephone together with counsel for the husband.  

5. The application by the wife, in simple terms, seeks that “the husband”, by which is meant Bateman, do all acts and things and sign all documents necessary to cause to be withdrawn caveats lodged by him in respect of three specified pieces of real property, the subject of the substantive proceedings before me.  The respondent seeks an order that that application be dismissed.

6. When this application was foreshadowed during the hearing in Sydney, I suggested to the parties that, in light of the evidence that had already fallen during the course of the trial, this particular aspect of the dispute between them could be, or should be, the subject of discussions.  I said at the time that I considered that a sensible resolution could be arrived at, because, as I see it, there are two legitimate competing concerns, particularly given the stage of these proceedings.

7. As the result, as the husband contends, of inadequate disclosure and late applications and late disclosure, he can not be confident, in broad terms, about where money has gone, and he has a concern that if the construction loan taken by the wife in respect of the Suburb H property is completed and moneys borrowed to do so, then the pool of property available for division will be significantly diminished to his detriment. 

8. Conversely, the wife contends that there is nothing surprising or untoward about the construction loan signed by her. In particular, she contends, in broad terms, that the Suburb H property and the development of it can be seen to be the continuation of that which has occurred historically on her part, that is to say, the purchase of property, the development of it and its subsequent sale. 

9. The wife contends further that, if the caveats remain, the building contract which she has signed is significantly in jeopardy, and there is the potential for there to be a breach of that contract by her.  Given that the contract, together with the swimming pool, is in the region of $600,000, this is a matter of some moment.

10. Given the stage of these substantive proceedings, it seems to me that the prima facie concerns of each of the parties can be seen as legitimate.  It surprises me, therefore, that the parties have been unable to reach an agreement in respect of the protection of the legitimate interests which are contended for by each of them. 

11. Nevertheless, they have been unable to do so, and the action earlier described proceeded before me this morning.  The essential arguments on behalf of each of the parties can be seen effectively encapsulated in the affidavit material filed by each of them.

12. The wife deposes to having signed a building contract on 2 February 2012 and an earlier contract on 20 September 2011 to construct a swimming pool.  She deposes to needing to borrow a further $500,000 in order to complete the building contract and the construction contract for the swimming pool so as to complete landscaping and the development of the Suburb H property. 

13. In addition the wife deposes to having entered into negotiations with the National Australia Bank, and to having provisional approval for a loan of $500,000 subject to the requirement that the National Australia Bank hold as security for that loan the properties at Suburb H, S Street Suburb M, and R Street Suburb M – the properties the subject of the substantive proceedings.

14. Ultimately, the wife contends that if she is not able to refinance and borrow those moneys, she cannot complete the building contract, and deposes to the next progress payment of $50,000 being due on 21 May 2012, in default of the payment of which, she deposes, she will be in breach of the building contract. 

15. The husband, in his affidavit opposing the application, refers in particular to the fact that the application, and indeed, the information supporting the application, is late; he deposes that he was first given notice of the application during the continuation of the trial before me last Thursday on 17 May 2012. The application by the wife was received the following day. 

16. The affidavit points out, as do the submissions made by Mr Hodgson for the husband, that this was approximately three months after the wife had entered the building contract with the builders earlier referred to, and in that respect, contends that when the matter was before me on 27 and 28 February 2012 during the first part of the final hearing, the wife failed to disclose her financial commitment to the builder or to the construction of the swimming pool. 

17. The wife was cross-examined about that issue during the hearing before me in Sydney last week, and no doubt, that issue, together with the issue of the wife’s disclosure more generally, will be the subject of submissions in respect of the ultimate conclusion of this matter.

18. The husband’s house contends that it was only on 17 May that he became aware of the intention and/or need of the wife to obtain further finance from the bank, and says in that respect that the material otherwise provided to him indicates that the wife had limited resources with which to meet repayments in respect of any such borrowing. 

19. The husband then makes a series of assertions with respect to an alleged diminution in the “property pool” available for division between the parties, and contends that the wife has been responsible unilaterally for that reduction.  Reference is also made in that affidavit to specific concerns about the reduction, or potential for a reduction, in equity.

20. In that respect, the wife has given evidence in the proceedings before me about the costs of purchase and development, and has also given evidence to the effect that she hopes to be able to sell the Suburb H property for somewhere between $2 million and $2.5 million. The wife was subject to cross-examination about that issue and the sale price that would need to be achieved in order to effect a profit, and therefore, in effect, equity for the purposes of the property pool in these proceedings. 

21. I am satisfied that there are circumstances of urgency attending this application, namely, the requirement of the wife to pay the $50,000 instalment earlier referred to.

22. There may well be issues relating to the procurement and signature of the construction contracts, including the swimming pool contract, and the timing of information provided by the wife to the husband and his legal advisors.  However, in terms of the instant application, I am satisfied that the circumstances require an emergent situation to be dealt with, whatever might be the merits or otherwise, of the matters antecedent to it. 

23. Specifically, insofar as the caveats by the husband are concerned, I note the following:  first, as it seems to me, no evidence before me suggests that the husband has a caveatable interest; a situation, it might be observed that, is not uncommon in proceedings in this Court. In circumstances where it is asserted that there is no caveatable interest, litigants are faced potentially with the prospect of bringing proceedings in a non-Commonwealth court so as to effect orders binding the relevant Registrar of Titles so as to remove the caveat with the attendant difficulties and costs associated therewith.  Accordingly, the issue of whether parties who issued caveats in the circumstances just described have a caveatable interest is rarely dealt with, per se, in this Court.  There is no evidence before me which suggests that the husband has a caveatable interest.

24. Be that as it may, to the extent that an injunction might issue requiring the husband to take all such steps as might be necessary so as to remove the caveat, other matters, relating to what might be conveniently described as the balance of convenience, in my view, apply. 

25. It seems to me that a number of those matters favour the making of an order requiring the husband to remove the caveat but subject to orders properly protecting the interests of the husband by reference to the means by which funds obtained by the wife might be used, orders as to the dissemination of information by the wife to the husband in respect of the utilisation of those moneys and a restriction on the wife as to the use to be made, not only of the moneys, but also in respect of the properties themselves.

26. In that respect, I propose, as I have indicated to counsel, to make orders restraining the wife from selling or listing for sale any of the properties, or otherwise transferring, or preparing to transfer, any of those properties, or encumbering those properties further save for the purposes of the completion of the construction contracts earlier referred to. 

27. Secondly, Mr Hodgson submits, and I accept, that an injunction ought be granted restraining the wife from using the moneys so obtained save for the purposes of the performance of her obligations pursuant to those construction contracts.

28. Further, I propose to address the issue of any potential prejudice to the husband by making orders requiring the wife to forward to the husband’s solicitors any application for finance and any documents supporting same, any document received from any financial institution in relation to any application for finance or any other documents pertaining thereto, and any documents relating to any security in respect of any moneys advanced or proposed to be advanced by any financial institution.

29. Further, by way of protection to the husband, I intend to order that in respect of each and every invoice received from the builder connected with the development of the property, the builder of the swimming pool or any subcontractor engaged by either of them, to be forwarded to solicitors for the husband within seven days of receipt, and further, that the wife be restrained from authorising the payment of any such sum until such time as that document has been produced in accordance with that order. 

30. The application as to whether a mandatory injunction should issue requiring the husband to withdraw the caveats should be seen against the background of those orders to which I have just referred, which are designed to facilitate protection for the husband in the circumstances which he raises.

31. It seems to me that, when those protections are put in place, the balance clearly favours a mandatory injunction issuing so as to require removal of the caveat:

    ·There is the potential for the wife to be in breach of a significant contract, with all of the ramifications that this involves. 

    ·There is a significant query as to whether the husband has a caveatable interest at all. 

    ·The husband does not offer any undertaking as to damages in opposition to the injunction. And

    ·On the evidence before me, whatever else might be argued in respect of the s 79 entitlements of each of the parties, the consequences for the “pool of property”, which will be the subject of ultimate orders by me are, in the event that the contract for construction was to be breached, potentially very significant.

32. For all of those reasons, it seems to me that the balance favours the removal of the caveat subject to the making of the orders for the protection of the husband to which I have earlier referred, and I propose to order accordingly. 

33. Counsel for the husband, Mr Hodgson, indicates in light of the background to which I have earlier referred that he seeks leave to issue a subpoena to the National Australia Bank, and I have no difficulty in making that order. 

34. I also propose, in order to facilitate the most expeditious handling of that matter, to order that each of the parties have leave to inspect and/or copy all such documents produced pursuant to subpoena as they might desire. In the event that the National Australia Bank objects either to the subpoena or to the production, inspection or copying of any documents, then the matter is to be referred to me urgently for the hearing of that issue. 

35. Mr Hodgson also foreshadows that, in circumstances where those documents are produced and indicate matters that need to be dealt with by me prior to the completion of this hearing, that a further date should be allocated, and, unfortunately for these parties, so much seems sensible.  With that in mind, I propose to order a further hearing date, but, again, in the interests of expedition, to permit that to occur upon application facilitated by joint email communication sent to my associate.

36. In the event that it transpires that such further hearing date is not necessary, then the directions that I foreshadowed for the provision of submissions by each of the parties last week shall apply. 

37. It seems, as Mr Schonell submits, sensible to me to provide a cut-off, as it were.  Accordingly, if no application to reopen is made on or before 4.00pm on 2 July 2012, then the directions, including the timetable contained within them, for which I earlier referred, will take effect. 

1. In the event that a further hearing date is required and allocated, then the directions otherwise provided for shall be vacated with a view to new directions being made on that date. 

2. I order then in terms of the orders outlined earlier to counsel during the course of submissions.

I certify that the preceding thirty-nine (39) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Murphy delivered on 21 May 2012.

Associate: 

Date:  30 May 2012