Broxham and Broxham & Ors
[2012] FamCA 775
•10 September 2012
FAMILY COURT OF AUSTRALIA
| BROXHAM & BROXHAM AND ORS | [2012] FamCA 775 |
| FAMILY LAW – INJUNCTIONS – Mareva – where orders were made by consent in the New South Wales Supreme Court the effect of which was the appointment of statutory trustees to sell a property and distribute the proceeds in the proportion of 50 per cent to the applicant and second respondent and 50 per cent to the second and third respondents – where the wife now seeks an order in this Court injuncting the parties from receiving the proceeds of sale in accordance with the consent orders – where the wife contends that the whole of the property, and the proceeds of sale thereof, should form part of the pool in the s 79 proceedings between herself and the first respondent – whether the wife has established a prima facie case – whether balance of convenience favours the granting of the injunction – whether there is a risk that the third parties will dissipate assets that may form part of the property pool in the s 79 proceedings between the husband and wife – where prima facie case made out – where the wife failed to demonstrate a risk that the third parties would dissipate assets – where the balance of convenience does not favour granting the injunction – where the application for injunction dismissed. FAMILY LAW – INJUNCTIONS – Jurisdiction and generally – where the wife also seeks an injunction restraining third parties from enforcing a costs order made by consent in the New South Wales Supreme Court – where the wife has not applied to stay or alter the costs order in that court – whether this Court has the jurisdiction to make an order restraining third parties from enforcing a costs order made in a different court, in entirely different proceedings – consideration of ss 90AF and 114, Family Law Act 1975 (Cth) – where this Court could not be satisfied that the granting of the injunction, is reasonably necessary, or reasonably appropriate and adapted, to effect a division of property between the parties to the marriage – where there is no nexus between the costs order and the s 79 proceedings – where no jurisdiction to grant the injunction sought. |
| Conveyancing Act 1919 (NSW) Family Law Rules 2004 (Cth) |
| Ascot Investments v Harper (1981) 148 CLR 337 |
| APPLICANT: | Ms Broxham |
| 1ST RESPONDENT: | Mr Broxham |
| 2ND & 3RD RESPONDENTS: | Mr Broxham Senior and Ms Broxham Senior |
| FILE NUMBER: | BRC | 7505 | of | 2010 |
| DATE DELIVERED: | 10 September 2012 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Murphy J |
| HEARING DATE: | 6 August 2012 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Dr Sayers |
| SOLICITOR FOR THE APPLICANT: | Hopgood Ganim Lawyers |
| SOLICITOR FOR THE 1ST RESPONDENT: | Mr Hall of JHL Lawyers |
| COUNSEL FOR THE 2ND & 3RD RESPONDENTS | Mr Hackett of Counsel |
| SOLICITOR FOR THE 2ND & 3RD RESPONDENTS | Quinn & Scattini Lawyers |
Orders
The Application in a Case filed by the wife on 21 June 2012 is dismissed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Broxham & Broxham 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: BRC7505 of 2010
| Mr Broxham |
Applicant
And
| Ms Broxham |
1st Respondent
And
| Mr Broxham Senior and Ms Broxham Senior |
2nd & 3rd Respondents
REASONS FOR JUDGMENT
Injunctions are sought by the wife by way of interim relief in financial proceedings between her and the husband. The husband’s parents (“the parents”) are joined to those proceedings by the wife having filed an amended response (r 6.03(2), Family Law Rules 2004). The parents are also respondents to the wife’s claim for interlocutory relief.
The injunctions sought by the wife are set out in an application in a case filed by her on 21 June 2012:
1.That the Husband, the Wife and the Second Respondent and Third Respondent do all acts and things and sign all documents necessary to cause the trustees acting upon on the sale of [Property A] to pay the net proceeds of sale of [Property A] into the Hopgood Ganim Trust Account and to thereupon authorise Hopgood Ganim to invest the net proceeds of the sale of [Property A] in an investment account in the names of F Pty Ltd. and the Second and Third Respondents, until further order or written agreement between the parties.
2.That the Second and Third Respondents be restrained from taking any action to enforce costs orders obtained by them against [F] Pty Ltd. as trustee of the [L] Trust and the Wife on 23 and 26 September 2011 respectively, in the Supreme Court at Sydney, until final orders are made in these proceedings.
No affidavit material has been filed by the parents or the husband in respect of the interlocutory application. The parents seek an order dismissing the application in a case filed by the wife on 21 June 2012.
Submissions by counsel for the parents contend that there is no “serious issue to be tried”. As will shortly be seen, in terms of authority, that convenient expression in wide use might more fulsomely be expressed as “… whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is, there is a probability at the trial of the action the plaintiff will be held entitled to relief …” (Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at 82).
Here, it is argued that there is no prima facie case in the relevant sense because orders made by the Supreme Court of New South Wales between the same parties have brought to an end the causes of action that the wife now seeks to pursue. Alternatively, it is said that issues central to her claim have been decided in those Supreme Court proceedings and she is estopped from raising those issues in this Court. Those issues are, it is said, pivotal to the central issue in these proceedings of whether a prima facie case in the relevant sense has been established.
It is also argued that there is no prima facie case because the wife’s case is otherwise flawed. As an example, it is said that an agreement is pleaded that does not satisfy the relevant Statute of Frauds provisions. Those arguments are not, though, amplified; the husband has filed no material and a later application to strike out the wife’s claim is mooted.
Attention is, then, focussed upon the proceedings in the Supreme Court of New South Wales, the orders there made, and their effect.
Additionally, it is argued by the parents that the wife does not establish any risk of dissipation of funds and, it is said, that is crucial to the relief sought. It is argued that the application by the wife should also fail for that reason.
The Final Relief Sought in this Court
A consideration of the instant application occurs within the context of proceedings in which the wife, by an amended response filed 21 June 2012, seeks, relevantly, the following final orders (underlining omitted):
Final Property Orders Sought Against [the parents]
11. In these orders, sought, unless the context indicates otherwise:
a.“[Property A]” means all the land contained in Lot […] in DP […]89 and Lots […] and […] in DP […]88, known as “[Property A]” at […] in the State of New South Wales.
b.“The net proceeds of the sale of [Property A]” means the proceeds of sale of [Property A] after payment of the loan secured by the [Property A] mortgage; the costs of the trustees acting upon the sale of [Property A]; all commission payable in respect of the sale of [Property A] and after adjustments for all rates and charges adjusted upon the settlement statement for the sale of [Property A].
c.“The [Property A] mortgage” means mortgage registered number […]6W secured over [Property A], with [the parents] and [F] Pty Ltd as mortgagors.
d.“The loan secured by the [Property A] mortgage” means the liability from [the parents] to ANZ Banking Corporation Ltd, account number unknown, pursuant to letter of variation from Landmark Operations Ltd to [the parents] dated 15 October 2009 providing a loan facility of $1,400,000.
e.“The trustees acting upon the sale of [Property A]” means [Mr H] and [Mr T] of [Accounting Firm S], appointed as trustees for the sale of [Property A] pursuant to a Court Order dated 23 September 2011.
12.In the event that as at the final hearing of these proceedings, no sale of ‘[Properyt A]’ has occurred pursuant to the orders of Hon Justice Bergin in the Supreme Court of New South Wales of 26 September 2011 (file no 2009/291728) (“the Supreme Court proceedings”), this Court declare pursuant to s78 Family Law Act 1975 that –
a.[The parents] hold all their right, title and interest in ‘[Property A]’ subject to a resulting or constructive trust in favour of the [wife] and [husband]; or in the alternative
b.[The parents] hold their right, title and interest in ‘[Property A]’ subject to a constructive trust in favour of the [wife] and [husband] in such share or proportion as this honourable Court may determine.
13.In the event that as the final hearing of these proceedings ‘[Property A]’ has sold pursuant to the orders in the Supreme Court proceedings, this Court declare pursuant to s.78 Family Law Act 1975 that –
a.The whole of the net proceeds of sale of ‘[Property A]’ form part of the net property pool available for division between the [wife] and [husband]; or in the alternative
b.The whole of such share of the net proceeds of sale as [the parents] might hold or otherwise be entitled pursuant to the orders in the Supreme Court proceedings (“the proceeds”) is held by them on resulting or constructive trust for the [wife] and [husband] (“the trust amount”); or in the alternative
c.[The parents] hold the proceeds on constructive trust for the [wife] and [husband] in such proportion as this honourable Court may determine.
And
14.That as between the [wife] and the [husband] on the one part and [the parents] of the other part, [the parents] be declared liable for the indebtedness of [F] Pty Ltd as trustee for the [L] Trust incurred pursuant to a lease agreement entered on 27 February 2009 between [F] Pty Ltd as trustee for the [L] Trust as Lessee and [Mr F] as Lessor, for the lease of part of a farm named “[P]”, for the period 26 February 2009 to 25 February 2013, and indemnify the [wife] and [husband] in respect of that indebtedness.
That amended response sought to join (for the first time), the husband’s parents as respondents to the relief sought by the wife in this case. That document is accompanied by a “Statement of Factual and Legal Contentions…”
The relief claimed by the wife, insofar as it affects, potentially, the third parties, is, then, comprised of two broad categories of claim. The first seeks a declaration of trust in respect of the Property A; the second asserts claims based in quantum meruit and other money claims.
The Correct Respondent?
As will be seen, orders were made in the Supreme Court of New South Wales appointing named persons as statutory trustees for sale. An order was also made, by consent, vesting in them title to the property for the purposes of that sale.
It follows, in my view, that there is substance to the assertion made in written submissions on behalf of the third parties that paragraph 12 of the response which seeks to have an equitable interest declared in favour of the husband and wife is “misconceived”; such relief is available, if at all, against the person or persons holding legal title to the land. If, pursuant to the terms of the consent order made in the Supreme Court of New South Wales title has passed to the trustees as contemplated by the orders, the relief is, indeed, in terms, misconceived.
That point is, however, not pursued with any great vigour in the proceedings before me; perhaps this is a tacit recognition that, if that were the only difficulty confronting the wife, it is a difficulty that might potentially be cured by amendment. Also, the parents moot a future application to “strike out” the wife’s claim for final relief.
Jurisdiction and Power?
The final relief sought by the wife involves the pursuit of a case that property interests be declared such that the interest so declared would be “…property of the parties or either of them…” within the meaning of s 79, Family Law Act 1975 (Cth) (“the Act”). Absent the application of Part VIIIAA of the Act, the power of the Court to grant injunctions against third parties is subject to the restriction referred to by Gibbs J in Ascot Investments v Harper (1981) 148 CLR 337 at 354 – 355.
However, there is no doubt that the principle there discussed is not offended by interlocutory “asset-preservation” injunctions; this Court has the jurisdiction and power to make an interlocutory order against a third party joined to the proceedings, the effect of which is to preserve the interest contended for pending final resolution by the Court. (See, for example, In the Marriage of Stowe (1981) FLC 91-027, at 76,273 – 76,274; Yunghanns & Ors v Yunghanns & Ors (1999) FLC 92-836 at 85,718; Deputy Commissioner for Taxation v Kliman & Anor (2002) FLC 93-113 at 89,115; 89,130 - 89,132).
There is, then, jurisdiction and power to grant the first of the injunctions sought by the wife. The effect of the injunction sought in respect of the costs order made by the Supreme Court of New South Wales is, however, a different matter.
First, an application is made to this Court for an order that directly affects an order in an entirely different jurisdiction in respect of entirely different proceedings (noting, in addition, that the order was made with the consent of the person now seeking to alter its implementation). No application was made to the Supreme Court of New South Wales to stay the execution of the order (nor, as it seems to me, could it have been in the circumstances of the case) and no application for its alteration is otherwise made to that court.
For the wife to seek an order from a different court in a different jurisdiction in proceedings that, while distinct, were nevertheless in her contemplation (indeed, the contemplation of all parties) at the time the order for costs was made is, in my view, tantamount to an abuse of process. All the more so, I would have thought, when, as here, the order sought to be circumvented was made by consent. In addition to that matter, and the associated and important issue of comity between courts, there is, in my view, a more central problem; this Court does not have the power to make the order sought.
Part VIIIAA of the Act does not permit of the order sought. Even if (which I doubt) it could be said that the order sought seeks to direct “… a third party to do a thing in relation to the property of a party to the marriage…” (s 90AF(2)(a)) or to alter “… the rights, liabilities or property interests of a third party in relation to the marriage” (s 90AF(2)(b)), I cannot see how it could be said the Court could be satisfied that “the making of the order, or the granting of the injunction, is reasonably necessary, or reasonably appropriate and adapted, to effect a division of property between the parties to the marriage…” (s 90AF(3)(a)). In any event, of course, no case in Part VIIIAA is either pleaded or argued.
Plainly, s 114(1) does not provide a source of power to make the order sought (see, Kliman at [110], per Coleman J). If power exists to make the orders sought it is to be found in s 114(3)). The terms of s 114(3) are, on their face, wide - but they are not unlimited. The need for there to be a nexus between the injunction sought and substantive relief within the jurisdiction of this Court is well established. (See, in particular, R v Ross-Jones; Ex parte Green (1984) 156 CLR 185, in particular at 199; Kliman). In my view, there is no such nexus in respect of the injunction here (see, Ross-Jones at 199 per Gibbs J).
The application for the injunction sought in paragraph 2 of the application in a case will be dismissed.
The other interlocutory order sought – expressed as a mandatory injunction – can be seen as an “asset-preservation” or “mareva-type” injunction.
What are the Applicable Principles?
The nature of the relief sought by the applicant is an interlocutory “mareva-type” injunction whose purpose, it is asserted, is to preserve property the subject of substantive proceedings at the suit of the applicant.
It is often said that an applicant for relief of that type must first establish that there is a “serious issue to be tried”. That expression emanates from English authority and its meaning has been the subject of decisions by the High Court of Australia. Some caution needs to attend its use. (See, O’Neill at 83 – 84).
The discretion whether to grant an injunction of the instant type is informed by two inquiries. First, an applicant for relief must “… show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial…” (O’Neill at 59). A second enquiry is “… whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted” (Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 at 623).
Further, enquiry must be directed toward whether a defendant is “… likely to dispose of [relevant] assets…” (Jackson v Sterling Industries Ltd (1987) 162 CLR 612, per Deane J at 624). Expressed as the corollary, “[t]he plaintiff must establish a real risk of assets being disposed of…” (Cardile v LED Builders Pty Ltd (1999) 198 CLR 380, per Kirby J at 428) or, as expressed in Mullen v De Bry (2006) FLC 93-293 at [49] “…the probability of an objective risk of disposal.” As each of the High Court authorities just referred to make clear, because the assessed risk must be balanced against the right of the defendant to otherwise enjoy the assets, the injunction, if granted, should be confined to restrictions that meet the risk and be no wider.
In the context of matrimonial litigation these principles have been considered in Waugh & Waugh (2000) FLC 93-052 which such decision was subsequently explained by a later Full Court in Mullen. In the later case, the Full Court pointed out (at [43]) that the “…essential power being exercised…” is referenced to s 114(3) of the Act which provides that the Court may grant an injunction “…in any case in which it is just or convenient to do so …” and pointed out further that the grant of the relief in any given case must depend upon “…an overall assessment of a number of factors to determine the just or convenient result.” (Mullen at [47]).
The Full Court pointed out that there may be a distinction in relief of this type between proceedings in this Court for s 79 relief and common law proceedings for debt or damages. The essence of the distinction drawn by the Full Court turns, though, in my view, on the important circumstance that the applicant and respondent in the proceedings for injunction are spouses. (See, in particular, Mullen at [31]).
The Full Court referred in that case to the ostensibly wide power to grant injunctions contained in s 114(3) of the Act. Its terms are not dissimilar to s 23 of the Federal Court of Australia Act 1976 (Cth) relating to the grant of interlocutory and other orders. That section was the subject of comment in the joint judgment of the High Court in Patrick Stevedores Operations No. 2 Pty Ltd v Maritime Union of Australia (No 3) (1998) 195 CLR 1. The emphasis is upon the grant of the relief so as to avoid the frustration of the court’s process or “…to ensure the effective exercise of the jurisdiction invoked…” (see, Cardile at 401). Recently, Adamson J said in Provident Capital Ltd v Anderson & Anor [2012] NSWSC 525 at [49] “… the purpose of a Mareva injunction is to protect the Court’s own processes from abuse by a defendant who may dissipate its assets so as to render any judgment obtained in the proceedings worthless …” (italics in original).
The constant emphasis of the cases is that the grant of the relief is dependent upon the circumstances of the particular case and the requirements of justice, but, as the High Court said in Cardile (at 404) “[A Mareva order] should not be granted lightly…” because “…if granted, [it] imposes a severe restriction upon the defendant’s right to deal with his or her assets.”
How Did These Proceedings Arise?
The parties were involved in family businesses on the property “[Property A]”. F Pty Ltd is the trustee of the L Trust. The husband and the wife are the directors and shareholders of F Pty Ltd. The L Trust (settled on 27 January 2004) has as it’s “guardians and appointors” the husband and wife. The husband and the wife are the “specified beneficiaries”.
Property A was purchased, in April 2004, by F Pty Ltd as trustee of the L Trust and the parents in equal shares as tenants in common. Each of the owners provided around $300,000 towards the purchase of the property. The wife asserts that F Pty Ltd’s $300,000 came from her, being the proceeds of sale of a property she owned prior to marriage. Vendor finance provided the balance of the purchase price.
The financial interrelationship between the parties thereafter is the subject of controversy. That controversy informed, at least in part, proceedings in the Supreme Court of New South Wales to which detailed reference will shortly be made.
The parents’ farming partnership operated on Property A (as well as elsewhere). Property A secured loans by the farming partnership. The husband and wife lived on Property A. Allegations are made about improvements undertaken by one or both of them, monies spent on the property and the like. A further issue is the wife’s assertion that she was unaware that a mortgage by the parents taken over Property A in respect of finance obtained by them to pay out the vendor/lender and obtain finance through a third party (Landmark) increased from about $2,000,000 to over $6,000,000 without her knowledge. That mortgage was further secured by a guarantee given by her.
Central to the current issues is a claim by the wife that she relied upon a promise, “[m]ade by [the parents] to retain all farming income from Property A; pay the vendor finance obligations and, in the future transfer their interests in Property A to [the husband] and myself unencumbered.” So, too, the wife makes claims in respect of the use of Property A by the parents farming partnership and improvements asserted to have been made by her (and the husband) to that property.
Those issues are central to the financial proceedings in this Court because, if the interest in Property A owned by the parents excludes the interest(s) or amount(s) at the heart of the wife’s claims, the “…property of the parties or either of them…” within the meaning of s 79 is modest and significantly less than it would be if the asserted interest(s)/amount(s) by the wife are included.
The parties commenced cohabitation in April 2001, married in 2002 and separated finally on 16 April 2010 (divorcing on 13 September 2011).
At the time the proceedings in the Supreme Court of New South Wales commenced (at the end of 2009), the husband and the wife had not separated and pursued their (then common) interests jointly.
The wife deposes:
124.When [the husband] and I first filed our Statement of Claim in the Supreme Court proceedings, our marriage relationship was intact. We were both estranged from [the parents], who had earlier commenced the Supreme Court proceedings. We each deposed to affidavits on 14 December 2009 supporting the amended statement of claim. Both [the husband] and myself conferred with [their common litigation solicitors] to provide the instructions for the drafting of that document. We later separated on 16 April 2010.
125.I was informed by [the litigation solicitors] by letter dated 27 October 2010 that they had that day notified [the husband] of the termination of their retainer with him.
126.On 16 September 2011, from hearing Counsel acting for [the parents] at the bar table in the Supreme Court proceedings, I heard that [the husband’s] position in respect of the Supreme Court proceedings was that he offered no evidence in respect of this Statement of Claim. I had been notified of [the husband’s] position within a week prior to that date, through his present solicitors notifying [the litigation solicitors].
It will immediately be appreciated that the husband’s altered position had a significant impact upon the wife’s position and upon the litigation in the Supreme Court. The events which occurred subsequently, including, crucially, the orders made by Bergin CJ in Eq are said to found the estoppel earlier referred to.
The Supreme Court proceedings
On 16 December 2009 an amended statement of claim was filed by the husband and wife jointly. It is annexed to the wife’s affidavit in the proceedings before me. The prayer for relief seeks:
1.A declaration that upon proper construction of the 2004 agreement, it was an implied term of the 2004 agreement that the defendant’s rights, title and interest in [Property A] would be transferred to the Plaintiffs unencumbered.
2.In the alternative, a declaration that it was the common intention of [the husband and wife] and [the parents] at the time of entry into the 2004 agreement that the Defendants’ rights, title and interest in [Property A] would be transferred to the Plaintiffs encumbered.
The statement of claim goes on to plead details of the “2004 AGREEMENT”. It contends that, on 20 January 2004, the husband and wife and the parents entered into an agreement that “…after 5 years from the date of purchase of [Property A], the [parents’] rights, title and interest in [Property A] would be transferred to [the husband and the wife]…”. Paragraph 24 of the statement of claim pleads an estoppel arising, it is contended, “…through their representations to the Plaintiffs made on 20 January 2004.” It is said that in reliance upon the representations the husband and wife moved onto the property, expended money and effort and otherwise acted to their detriment.
It might be observed that the prayer for relief pleads common intention whereas the substance of the statement of claim pleads estoppel by representation.
A summons filed by the parents sought an order that specified trustees be appointed as trustees for the sale of the land and that:
2.… An order that the Land be vested in the Trustees subject to any encumbrances affecting the entirety of the land but free from any encumbrances, if any, affecting any undivided share or shares therein to be held by the Trustees upon the statutory trust for sale under Division 6 of Part IV of the Conveyancing Act 1919.
3.An order that upon sale of the Land and after payment of all costs of the sale, the Trustees distribute the net proceeds of the sale in the following proportions
(a)the plaintiffs as to 50%;
(b) the defendant as to 50%;
or such other proportions as the Court may order.
A money claim is pleaded by the wife in the alternative relating to half the profits from the sale of crops, the cost of improvements, costs of relocation and damages for the loss of opportunity to crop, as well as a claim in damages for “…the loss of opportunity to crop Property A after 23 April 2009.” Other orders are sought in respect of plant and machinery.
Shortly after the filing of the statement of claim, the summons filed by the parents was amended on 31 January 2011. In addition to the orders sought for the appointment of statutory trustees for sale and the vesting of Property A in those trustees for that purpose, further claims were sought for a declaration that “[t]he defendant is indebted to the plaintiffs in the sum of $832,648” and “[a] declaration that the plaintiffs are entitled to payment of [that amount] from the proceeds of sale of the Land prior to the distribution of the net proceeds …”
Proceedings instituted by each of the parties (and F Pty Ltd) in respect of the financial interrelationship between them were, on 14 December 2009, ordered to be heard together.
The consolidated proceedings were subsequently set down for trial to commence 26 September 2011 over four days. Earlier procedural directions had been made in respect of the case management of those proceedings. The events of the two weeks commencing 15 September 2011 and concluding 26 September 2011 are important to the instant proceedings.
On 15 September 2011 the wife applied to the Supreme Court to vacate the trial and for her claims against the parents to be transferred to the Family Court. The Supreme Court refused to grant that relief on 16 September 2011. On that date, the husband advised the Court that he did not intend to present evidence in respect of his joint claim with the wife.
On 14 September 2011, proceedings had also been filed in this Court by the wife against the husband and parents. Those proceedings were dismissed as an abuse of process on 8 November 2011 and costs ordered to be paid by the wife to the parents fixed in the sum of $2,000. There are no reasons before me in respect of that order but it would appear that the proceedings were dismissed on the basis that they had been filed at a time when proceedings covering the issues were not only pending before the Supreme Court of New South Wales but had been set for a trial to commence about a fortnight after the application in the Family Court was filed.
On 19 September 2011 the husband filed a notice of discontinuance in respect of the proceedings pertaining to one of the claims by the husband and wife against the parents (No. 291728/09).
A notice of motion was filed by the wife on behalf of herself and F Pty Ltd on 23 September 2011. That notice of motion sought – in proceedings 291728/09 and in proceedings 291531/09, pertaining to a claim by the husband and wife against the parents and a claim by the parents against F Pty Ltd – orders for the appointment of trustees for sale.
That is, it should be noted, the wife and F Pty Ltd sought by way of notice of motion the same orders, at least in part, that had been sought by the parents for the appointment of trustees for sale. In particular, the wife’s notice of motion (in which F Pty Ltd joined) sought an order:
4. That upon sale of the Land and after payment of all costs of the sale, including discharge of any mortgage, the Trustees distribute the net proceeds of the sale in the following proportions: The plaintiffs’ [sic] as to 50%; The defendant as to 50%.
That same notice of motion sought, in the alternative (by paragraph 6) orders that the trial commencing 26 September be vacated and that the wife’s claim in respect of the agreement and the claim for debt by the parents and its payment from the net proceeds of sale, be transferred to this Court (paragraphs 7 and 8). In the alternative the notice of motion sought orders that the declarations, referred to in [45] above, sought by the parents be dismissed and an order for accounts. In the further alternative it also sought that “[t]he [wife] be granted leave to discontinue the proceedings 291728/09 as they relate to her …” and that “…otherwise all of the balance of the proceedings be dismissed …” If leave to discontinue was not granted, the wife sought, in the further alternative, orders dismissing “…all of the Amended Statement of Claim” or, alternatively, all of the wife’s “…claims in these proceedings.”
What Were the Orders Made?
Ultimately, orders were made, relevant to the instant issues, on 23 September and 26 September 2011. In light of the arguments in the proceedings before me, it is important to set out those orders in full.
On 23 September 2011, Bergin CJ in Eq made the following orders:
1.I grant leave to the second plaintiff to file in court a Notice of Motion on the second plaintiff’s solicitor’s undertaking to pay the appropriate filing fees in the Registry.
2.I grant leave to the second plaintiff to file in court the affidavit of [Mr W] affirmed on 22 September 2011.
3.I grant leave to the defendants to file in court the affidavit of [Mr U] sworn 22 September 2011.
4.By consent I make the orders in paragraphs 2 to 5 inclusive of Notice of Motion initialled by me and dated today.
4.2That [Mr H] and [Mr T] of [Accounting Frim S] be appointed as trustees (“the Trustees”) of the lands described as “[Property A]”, the title particulars of which are described in Schedule 1 of the Summons filed herein, referred to as “the Land”.
4.3The Land be vested in the Trustees subject to any encumbrances affecting the entirety of the Land but free from any encumbrances, if any, affecting any undivided share or shares therein to be held by the Trustee upon the statutory trust for sale under Division 6 of Part IV of the Conveyancing Act 1919.
4.4That upon sale of the Land and after payment of all costs of the sale, including discharge of any mortgage, the Trustees distribute the net proceeds of the sale in the following proportions: The plaintiffs’ [sic] as to 50%; The defendant as to 50%.
4.5The Defendant in 291531/09 pay the Plaintiffs’ costs of the Summons.
5.By consent those orders are stayed until 5pm on 26 September 2011.
6.By consent the matter is listed on Monday 26 September 2011 at 10am.
It will be noted that, by that order, the property vested in the trustees as and from that date so as to have them effect the ordered sale.
As can be seen, the orders were stayed so as to enable the parties to engage in settlement discussions. The stay would permit those discussions to take place without involving the statutory trustees. The orders were stayed until 5.00 pm on 26 September 2011. The significance of that date, of course, is that it was the first day of the four day trial between the parties.
On 26 September 2011 (that is, the first day of the trial), the following orders were made. First, in proceedings 291531/09, it was ordered:
1.By consent grant leave to the [parents] to discontinue the balance of the claims in the Amended Summons with no order as to costs.
2.Extend the stay of the orders made in proceedings 291531/09 up to and including 5.00pm on 29 September 2011.
Secondly, in proceedings 291728/09, it was ordered:
1.Grant leave to the second plaintiff [being, the wife] to discontinue these proceedings.
2.Order that the second plaintiff pay the defendant’s costs of these proceedings.
3. Grant leave to the first plaintiff to discontinue these proceedings.
4.As between the first plaintiff and all other parties in respect of the first plaintiff’s proceedings made no order as to costs.
5.By consent grant leave to the cross claimant to discontinue the cross claims with no order as to costs.
Central to the issues to be determined by me is the question of what issues were resolved by those orders. Put another way, what issues were the subject of agreement of the parties, which ultimately merged in the consent orders which the parties’ agreement became.
If issues now sought to be agitated in the ultimate proceedings between the parties in this Court have been the subject of earlier agreement and consequent consent orders, the party or parties seeking to again agitate them are estopped from doing so. (See, Port of Melbourne Authority v Anshun (1981) 147 CLR 589). If those issues cannot be agitated again in this Court there would be “no serious question to be tried” and the application for injunction would fall at the first hurdle.
Similarly, in respect of the other orders made by Bergin CJ in Eq, a question arises as to whether those orders brought to an end the causes of action before Bergin CJ in Eq such that those causes of action merged in that order. If so, the wife is precluded from re-agitating them (Blair & Perpetual Trustee Co Ltd v Curran (1939) 62 CLR 464 at 532). Alternatively, do issues raised now by the wife constitute a “…state of fact or law … the existence of which is a matter necessarily decided by the prior judgment, decree or order.” If so, the wife if estopped from re-agitating that issue or issues (Blair at 532, per Dixon J).
The question is, then, what, if any, issue or issues – or, alternatively cause or causes of action – have merged into the judgments entered in the proceedings in the Supreme Court of New South Wales.
Counsel for the parents argues that the husband and wife’s claim encompassed by the statement of claim was in essence, a defence to the parents’ claim for the appointment of statutory trustees for sale. Thus, it is argued, when the trustee for sale orders were made by consent, the necessary effect was to bring to an end the other litigation between the parties. Counsel points to the references during the proceedings on 16 September 2011 (Exhibit W2) by Bergin CJ in Eq to the fact that the wife’s claim was in respect of “an agreement” and her Honour’s reference to “the real issue” (for example, Exhibit W2, p 5, lines 3 – 4; lines 15 – 16) and to references by counsel for the wife to the “real dispute” in support of a contention that the proceedings were, in effect, non-divisible.
In further support of that contention, counsel points to her Honour saying “so the proceedings here are in relation to the land, in relation to the agreement and in relation to property” (Exhibit W2, p 7, lines 23 – 24) to which counsel responds “yes”. (It might be noted, however, that, more accurately, counsel’s answer is caveated, although the caveat is not expanded upon because her Honour’s question intervened (see Exhibit W2, p 7, lines 23 – 28). Later, counsel for the wife told her Honour that “…our case really is that the whole of these [issues] ought properly be transferred to the Family Court” (Exhibit W2, p 8, lines 5 – 6). As has been seen, that application was refused. So, too, the application to adjourn the trial was refused.
When the matter again came before that Court on 23 September 2011 (a Friday – the trial was due to commence the following Monday, 26 September) it was the wife who had filed a notice of motion. As earlier referred to, that notice of motion effectively sought orders which were, in effect, the same orders as those which had been sought by the parents.
In those circumstances it was argued on behalf of the wife before her Honour that the issues, in so far as they affected the wife and the third parties, were different thereby permitting of the renewal of an application to transfer the matters to the Family Court.
In respect of the order to be made by consent, agitated by reason of the wife’s notice of motion as earlier explained, counsel for the wife said (transcript of proceedings, 23 September 2011 (Exhibit W3), p 3, lines 38 – 49):[1]
NAGLE:Thank you. Your Honour, orders 2 through 5 resolve the claim by [the parents] in relation to their summons and your Honour…The [parents’] proceedings is 66G, we consent to that, we consent to trustees being appointed. We also consent to the mortgage being discharged without any admission as to liability but that should cure that prejudice which could result in possible default procedures by the bank.
HER HONOUR: Mr Pesman?
PESMAN:The second plaintiff wishes to consent on behalf of … the company –
[1] References to the transcript to “Nagle” are a reference to counsel for the wife in those proceedings; references to “Pesman” are a reference to counsel for the parents and “her Honour” is Bergin CJ in Eq.
Later, her Honour says (Exhibit W3, p 4, lines 16 – 25):
HER HONOUR: The proceedings are not really to be fought any more by [F Pty Ltd], it does appear that Mr Nagle’s client is able to agree to the orders on behalf of the company, as I understand the parties’ intentions, and so I could finalise those proceedings today.
PESMAN:Yes, your Honour, I accept that given the various other issues that may or may not require resolution the status of our – the effect of making an order now make it more difficult to settle the proceedings on the steps of the court. We are content with your Honour’s half way house of doing adjourning it to Monday.
(Emphasis added)
There then followed a discussion resulting in the order for stay so as to allow settlement discussions to take place without involving the trustees for sale as I have earlier referred to.
There can, in my view, be little doubt that her Honour distinguished between the end of the s 66G claim and those claims by the wife relating to a promise or agreement as asserted by the wife (see, for example, Exhibit W3, p 9, line 30 – p 10, line 35). Subsequent to the making of the consent orders, the Supreme Court plainly considered that the “promise proceedings” at the suit of the wife, could still be pursued at the trial on the following Monday (Exhibit W3, p 11, lines 34 – 45). Counsel for the parents (effectively) conceded it was still alive at that point, but indicated that, should it proceed at the trial the following Monday, issues resolved there would be pleaded as a bar to the wife’s claim in Family Court proceedings (Exhibit W3, p 12, lines 1 – 18).
Her Honour then pointed to some of the complexities and permutations in the proceedings which remained live (and suggested there should be settlement discussions (Exhibit W3, p 12, line 39 – p 13, line 6)). The proceedings on 23 September 2011 having, to use her Honour’s words, “…take[n] care of the 66G application…”, discussion then ensued as to what might occur in respect of the balance of the proceedings before the Court (Exhibit W3, p 5, line 11 – p 7, line 26).
The following Monday (26 September 2011), at the commencement of the scheduled trial, counsel for the wife made submissions that leave should be granted to permit the wife to discontinue the outstanding proceedings, including the “promise proceedings” (transcript of proceedings, 26 September 2011, (Exhibit W4), p 1, lines 36 – 40). It was conceded by the wife that in doing so, she would need to submit to an order for costs (Exhibit W4, p 2, lines 10 – 14).
The reasons for an application by the wife in that form was specifically to avoid the consequences of her claim being dismissed (Exhibit W4, p 2, lines 35 – 41); the latter might give rise to the wife being precluded from later litigating those issues in this Court. The parents opposed the wife being given leave to discontinue (Exhibit W4, p 3, lines 8 – 9) and agitated, in effect, for a dismissal (Exhibit W4, p 4, lines 17 – 41). Plainly enough, the purpose of that contention was to give rise to the estoppel just referred to.
In respect of the argument advanced on behalf of the parents, the following exchange occurred with her Honour (Exhibit W4, p 3, lines 8 – 34):
PESMAN:The defendants oppose that. It is, with the exception of costs, essentially the same application which your Honour rejected.
HER HONOUR: To transfer the proceedings to the Family Court.
PESMAN:It has an identical effect. The more important consideration is this: these proceedings have been listed for some time and the Court has allocated four days. The costs have already been incurred and the costs of a hearing of the evidence – all the parties are here. The fact of the matter is, the claims brought here are classically within the equitable jurisdiction.
HER HONOUR: You don’t have to address me on that. The way the case has developed now, with Mr [Broxham] present and [Ms Broxham] locked into proceedings that make it very difficult for her in the circumstances when previously she had a co-plaintiff who was asserting an agreement and he, too, was asserting the same agreement.
Ultimately, the parents’ argument was rejected and leave was given to the wife to discontinue proceedings in the Supreme Court (Exhibit W4, p 7, lines 3 – 14). The orders were stayed (presumably to permit of further settlement discussions) until 29 September 2011 (Exhibit W4, p 7, line 11).
Counsel for the parents argues before me that there has been no reservation of rights by the wife and that, in effect, the whole of the case in respect of the argument made in defence of the claim for the appointment of trustees for sale has been merged in the order consenting to sale.
In my opinion the terms of the orders themselves make it clear that the only issues merged in the judgment of the Supreme Court of New South Wales are those relating to the appointment of trustees for sale, the vesting of the property in those trustees for that purpose and the discharge of mortgage referred to in the orders. So, too the only agreement between the parties manifested in the consent to that order is to that effect.
That view of the orders is reinforced, in my view, by a reading of the totality of the proceedings before Bergin CJ in Eq over the course of three different appearances.
The wife confronted unusual circumstances; her co-plaintiff did not pursue a joint claim raised by a common pleading leaving her to establish the once-joint case alone. In those circumstances, the wife sought to transfer proceedings to the Family Court. When that was unsuccessful she was confronted by a number of difficulties in Supreme Court proceedings. First the bank was pressing and the sale of the property needed to be effected lest the mortgagee did so. Secondly, a number of the matters contained in the (joint) statement of claim could, as a matter off practical effect, only be pressed by the husband as first plaintiff – that is, they were claims in which the wife had no cause of action in her own right. Thirdly, as counsel for the wife frankly conceded, the pursuit by the wife of Supreme Court proceedings and the potential for adverse findings, led to the possibility of her being estopped in respect of adducing evidence in respect of those matters in the Family Court proceedings. Counsel frankly conceded that was an issue when seeking to discontinue the proceedings.
Counsel for the third parties, understandably enough, sought before her Honour to resist the wife being granted leave to discontinue and, significantly, did so in circumstances where he realised that the discontinuance (as opposed to a dismissal or a judgment on the merits) would permit of the possibility of the wife agitating issues not resolved by orders in the Supreme Court in another jurisdiction.
Her Honour did not adopt a course whereby the respective claims (other than the sale by the trustees for sale) would be dismissed. Rather, discontinuance was permitted. That course meant that there remained the possibility of the wife’s claims being pursued in another jurisdiction. Indeed, as it seems to me, if all of the claims had merged into the consent order, there would have been no need for the wife’s application to be made and, more importantly, no need for the subsequent order.
Accordingly, the contention that there is no “serious question to be tried” by reason of the wife being precluded from seeking to agitate the issues relevant to those claims in this Court should be rejected. Put another way, in my judgment the wife makes out a prima facie case in the sense described in Beecham and O’Neill, above.
Risk and Balance of Convenience?
As earlier referred to, the interests of justice must govern an application for an injunction of the type sought in this case. The law recognises that each of the parties, prior to the determination of the central issues between them, have legitimate interests and rights to which regard should be had. Those interests and rights need to be balanced against any prejudice and injustice that might be caused if the relief is not granted.
The issue of risk is to be determined solely on the basis of the evidence read in the proceedings before me by the wife. Neither the husband nor the third parties seek to adduce evidence in these proceedings.
The written submissions on behalf of the third parties’ assert:
28. …The affidavit [the wife] is silent on any risk of dissipation by [the parents] who are aged in their 70’s and 60’s respectively, have three (3) other children and engaged otherwise in a farming enterprise. Apart from writing to the solicitors for [the parents] to ask them to agree the relief sought and a response in the negative, there are no facts that would justify the grant of the relief sought even if Your Honour finds a serious question to be tried …
The submission goes on:
28.…At best for [the wife] she has money claims against [the parents] … The undisputed history reveals she did not prosecute those claims when given the opportunity to do so in the Supreme Court of New South Wales. About 3 years has elapsed since the Supreme Court of New South Wales [action] was commenced. Why should funds to which [the parents] are lawfully entitled pursuant to the consent orders now be restrained to allow [the wife] to prosecute the same claims? In the above circumstances, the balance of convenience does not favour the grant of the relief sought against [the parents] even if Your Honour were satisfied that there was a serious question to be tried, which [the parents] submit there is not.
The written submissions on behalf of the applicant wife are silent on the question of risk and on the question of the balance of convenience.
Facts relevant to risk and the balance of convenience might be inferred from facts otherwise deposed to if such inferences are reasonably open. So, too, although the parents (and the husband) have not filed affidavits, inferences favourable to their position with respect to risk or balance of convenience can be inferred if reasonably open from facts otherwise in evidence before the Court.
To the extent that a case for risk, in the relevant sense, can be inferred favourable to the wife’s position, consideration can be given to the following:
· The claims speak of actions taken without regard to the rights or interests of, relevantly, the wife;
· Without the proceeds otherwise payable, the “pool” is modest and the prospective s 79 entitlement for the wife more so;
· The parents, and the father in particular, have exercised effective control over finances which include the husband and wife’s finances;
· The father has significant antipathy towards the wife and has engaged in conduct which resulted in her obtaining as against him an Apprehended Domestic Violence Order; and
· The parents borrowed sums which the wife has personally guaranteed and those borrowings have increased from $2,200,000 to $6,100,000 without her knowledge or her inclusion in any discussions about same.
Yet, the significant difficulty confronting the wife in respect of the nature of the remedy sought by her is that there is, in fact, very little evidence directly relevant to the risk of dissipation or the risk of the fruits of any judgment not being available to her, or evidence from which the requisite risk can, properly, be inferred.
The wife deposes to Property A being passed in at an auction conducted by the trustees for sale and that she is informed “… by the trustees for sale and believe that they are considering accepting an offer of $3,500,000 in respect of Property A. I do not know any details in respect of the expected time of completion, if that offer is accepted.” It will be appreciated from all that I have earlier said that, for the purposes of this application, I do not accept the submission on behalf of the parents that “[a]t best for [the wife] she has money claims against [the parents].” Reference to the wife’s pleadings suggests that the wife contends for a trust interest in her favour (or, perhaps more accurately, in favour of she and the husband) which, upon sale of the property the subject of the mooted trust would, one assumes, be said to be traceable into the proceeds of sale. It appears from the Supreme Court proceedings that a debt claim by the parents would also be live in respect of those proceeds. There is no evidence before me by which I could conclude (in a similar prima facie sense to that earlier referred to) that the claim in debt by the parents is wholly without foundation or, indeed, to pass any judgment upon its prospects of success.
Whilst matters such as those earlier referred to might be seen to pertain to the conduct of the parents (if accepted), nothing in the evidence before me suggests that any behaviour by the parents – for example, in and about the Supreme Court proceedings – would be indicative of them dissipating assets that might be the subject of relief if such relief is established.
Moreover, there is no evidence on the part of the wife that suggests that any “trust claim” or any other money claim by the wife (both of which, subsequent to the sale of Property A, would need to be met in money terms) is not available against any other property that the parents might have. Indeed, the affidavit material filed before me gives no real picture of the asset position of the parents and whether there is any asserted inability on their part to meet any judgment that might be obtained by the wife in the proceedings in this Court if the preservation injunction is not granted. As an example, whilst concerns might be raised by the wife by reason of the increase in borrowing to which I have earlier made reference, it might also be thought that a commercial lender would not lend $6,100,000 unless they were satisfied that (among other things) there was sufficient asset backing to provide adequate security and a capacity to meet repayments.
On the evidence before me, I am not satisfied that there is any risk of the dissipation of assets so as to found the injunctive relief sought by the wife.
That finding crucially informs any issue of balance of convenience. Otherwise, the balance of convenience might be expressed by saying that in respect of complex litigation that was pursued in the Supreme Court over a number of years, which resulted in the orders earlier discussed, the balance favours each of the parties being permitted to pursue their respective financial lives unless and until actions that might have results pointing otherwise are heard and determined and other claims or interests established, or not established, as the case may be.
In my judgment, the wife does not satisfy the requirements for the grant of the injunctive relief she seeks and the application should be dismissed.
Conclusion
The Application in a Case filed by the wife on 21 June 2012 will be dismissed.
I order accordingly.
I certify that the preceding one hundred and one (101) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Murphy delivered on 10 September, 2012.
Associate:
Date: 10 September 2012
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