CARTER & CARTER (No.2)
[2011] FMCAfam 935
•21 September 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CARTER & CARTER (No.2) | [2011] FMCAfam 935 |
| FAMILY LAW – Property – interim orders – injunction. PRACTICE & PROCEDURE – Whether proceeding should be transferred to the Family Court of Australia – whether resources of the Federal Magistrates Court are insufficient to hear and determine the proceedings – length of final hearing. |
| Family Law Act 1975, s.114 |
| Carter & Carter [2011] FMCAfam 750 M v DB (2006) 36 Fam LR 454; [2006] FamCA 1380 Waugh v Waugh (1999) 27 Fam LR 63; (2000) 158 FLR 152; [2000] FamCA 1183 |
| Applicant: | MS CARTER |
| Respondent: | MR CARTER |
| File Number: | SYC 443 of 2011 |
| Judgment of: | Scarlett FM |
| Hearing date: | 1 August 2011 |
| Date of Last Submission: | 1 August 2011 |
| Delivered at: | Sydney |
| Delivered on: | 21 September 2011 |
REPRESENTATION
| Solicitors for the Applicant: | Swaab Attorneys |
| Solicitors for the Respondent: | In person |
ORDERS
UNTIL FURTHER ORDER the Respondent husband is restrained from selling, transferring, assigning or further encumbering the following items of real estate without the written consent of the Applicant or leave of the Court:
(a)Property R;
(b)Property Q
(c)Property E; or
(d)Property W in the State of New South Wales.
The parties’ costs are reserved.
IT IS NOTED that publication of this judgment under the pseudonym Carter & Carter (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYC 443 of 2011
| MS CARTER |
Applicant
And
| MR CARTER |
Respondent
REASONS FOR JUDGMENT
Application
This is a further Application for interim orders. In this instance, the Applicant wife has filed an Application in a Case seeking an order:
That pending further order of the court the husband be restrained from selling, transferring, assigning or further encumbering:
(a) Property R;
(b) Property Q;
(c) Property E;
(d) Property W.
The Applicant also seeks costs.
The Respondent opposes this Application. He told the Court that he was “only too happy” to inform the Applicant fully about any proposals to sell any item of real estate, but did not wish to be bound by a court order.
Background
The Application is brought in the context of the Applicant’s substantive application for property orders. On 1st August this year the Court made interim Orders in respect of an earlier application by the wife (Carter & Carter[1]), providing that, until further order, within seven days:
(a) The Respondent must do all acts and things and sign all necessary documents in order to cause [C] Pty Limited as Trustee of the Carter Family Trust to pay to the Applicant the sum of $50,175.00 by way of her unpaid distribution in relation to the year ended 30 June 2009.
(b) The Respondent must pay to the Applicant by way of partial property settlement the sum of $37,000.00.
[1] [2011] FMCAfam 750
Evidence
The Applicant relies on her affidavit sworn on 1st July 2011, to which she annexed various items of correspondence between her solicitors and the Respondent and his former solicitors. The Applicant deposes at paragraph 5 of her affidavit that she had previously deposed in her affidavit sworn on 25th January 2011 that the Respondent had said to her on 20th December 2010, words to this effect:
“If you leave me I will financially ruin you. I will drag this case out as long as possible and you will be left with nothing more than a legal bill. You came into the marriage with nothing and you will leave with nothing”.
The Applicant deposes that she fears that the Respondent will sell or further encumber the assets of the marriage in order to deprive her of a proper property settlement.[2]
[2] Affidavit of Ms Carter 1.7.2011 at paragraph [5]
The Respondent did not rely on any affidavit.
Submissions
The Applicant’s solicitor, Ms Hauptmann, submitted that the Respondent had filed five affidavits in the proceedings to date and had never denied that he had made the statement attributed to him, that he would ruin the Applicant financially. She submitted that all the Applicant wanted was for the matter to proceed in an orderly fashion but she had been unsuccessful in persuading the Respondent to agree to orderly directions for the future progress of the matter.
The Applicant relies on the decision of the Full Court of the Family Court in M v DB[3].
[3] (2006) 36 Fam LR 454; [2006] 2006] FamCA 1380
The Respondent submitted that he had “never threatened to financially ruin anyone”. He said that he had recently received his 2010 Tax Returns and would happily provide copies of those. He also said that after the decision of this Court on 1 August 2011 he was now insolvent.
The Respondent denied that he was earning $1,200.00 per week and said that in the last financial year his income as a [omitted] was $17,000.00.
He asked the Court not to impose a burden on him by an order that he was not to sell any real estate without the wife’s consent. He said that he undertook to inform the wife’s solicitors fully of any step taken towards selling the real estate. He submitted that he was under enormous financial pressure.
Conclusions
In M v DB the Full Court (Kay, Warnick and Boland JJ) held that the Full Court in the earlier decision of Waugh v Waugh[4] did not lay down the principle that it was fundamental to the making of an order preserving property under s.114(3) of the Family Law Act 1975 that the Court should be satisfied on the balance of probabilities of the existence of a scheme to defeat a property judgment.
[4] (1999) 27 Fam LR 63; (2000) 158 FLR 152; [2000] FamCA 1183
Their Honours came to these conclusions:
[46] Finally, we think it helpful to recognise that the essential power being exercised in this case is simply described in s 114(3):
A court …may grant an injunction…in any case in which it is just or convenient to do so…
[47] Ultimately, each case will involve an overall assessment of a number of factors to determine the just or convenient result. Not all cases with the same identity of factors will necessarily produce the same result because of varying weight individually and comparatively.
[48] We perceive that a real, though perhaps subtle, difference exists between, on the one hand, establishing on the balance of probabilities a risk or danger of a disposal of property intended to defeat an order and, on the other hand, proving to the civil standard and as an independent issue that a scheme to defeat an order exists.
[49] In some cases, the possibility (based on some evidence) of an intention or scheme may, with other factors, be sufficient to establish the probability of an objective risk of disposal with intent to defeat an order.
[50] It follows that we do not say that, in addressing the question of whether there is a risk of disposal of assets to defeat an order, it is unnecessary to enquire whether there is any evidence of an intention, plan or scheme to dispose of assets. But in an enquiry into the risk of disposal, the question of intention or scheme is but one of a number of factors relevant to the objective risk of disposition to defeat an order.[5]
[5] (2006) 36 Fam LR 454 at [46]-[50]
In this case, the Respondent has placed on record his wish to sell items of real estate in order to obtain finance. In his letter to the applicant’s solicitors dated 27 June 2011 annexed to the Applicant’s affidavit, the Respondent says:
My circumstances are such that I must immediately get further finance and try and sell property. I wish to try and sell all of the property on the North Coast which will be difficult to sell in the current market and I anticipate not being able to sell it immediately…
I need to get finance to meet existing debt and loan commitments and to meet the costs of the marketing of and preparing of assets for sale until something is sold. I hereby give you notice of my intention to sell [Property E], [Property W] and [Property R] and, if necessary, to further encumber any property I have for the purpose of:
1 Meeting my existing financial obligations
2 Meeting my debts
3 Meeting my reasonable living expenses including expenses for [name omitted][6]
4 Preparing and marketing of the [Property R] for sale
[6] I understand [name omitted] is a dog
5 Preparing and marketing the [Property W] for sale
6 Preparing and marketing [Property E] for sale[7]
[7] Affidavit of Ms Carter 1.7.2011 Annexure “A”
Clearly, the Respondent is intending selling those properties and expending money on them beforehand for the purposes of sale. That may well be a necessary step in order to avoid insolvency. The properties concerned are all in the Respondent’s name, not in the Applicant’s name. However, they will form a substantial part of the Applicant’s property claim. It is hardly surprising that she would wish to monitor, at least, the progress of any sale and to avoid the prospect of any “fire sale” of the assets.
Against this, a blanket prohibition on the sale of any of the assets may well be to the Respondent’s detriment, or to the detriment of both parties, if a sale is necessary to raise much needed cash.
The Applicant’s solicitor has suggested that the injunctive order sought may be modified by the addition of the words “except for the purpose of complying with court orders without the Applicant’s written consent”. However, this may not give sufficient flexibility to the parties to negotiate a timely sale in a situation where it appears that the Respondent’s financial situation is precarious.
In my view, the parties should consent to the sale of a particular asset in order to ensure transparency to the process of sale, should a sale be necessary. I am not persuaded that the Respondent should be given carte blanche to sell off assets and deal with them as he pleases, as there is a risk that he may act in a way that would defeat the Applicant’s legitimate property claims.
If the Applicant consents and a procedure is put in place to ensure accountability in respect of the sale of any asset, then that would appear to be to both parties’ benefit. However, in the event of an unreasonable withholding of consent, one or other party needs to be able to come back to Court to have the question of any proposed sale considered.
I propose to grant the injunction, but any such sale must be either subject to the Applicant’s consent or the Court may have to decide. Clearly, there would be a need for liberty to apply on reasonable notice.
Seven days’ notice would appear to be appropriate.
It is not appropriate to deal with costs at this stage. The parties’ costs should be reserved until the final hearing.
Final Hearing
The Application should be listed for final hearing. The parties have attended a conciliation conference before a Registrar without any resolution of the matters being reached. The number of properties concerned and the amount of evidence to be given raises the question whether a final hearing can be kept down to four days or less. If a final hearing is estimated to exceed four days, then it should be transferred to the Family Court. The resources of the Federal Magistrates Court are insufficient to deal with a matter whose final hearing time is estimated to exceed four days.
I certify that the preceding twenty-four (24) paragraphs are a true copy of the reasons for judgment of Scarlett FM
Date: 21 September 2011
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