Christie v Christie
[2007] FamCA 125
•23 February 2007
FAMILY COURT OF AUSTRALIA
| CHRISTIE & CHRISTIE & ORS | [2007] FamCA 125 |
| FAMILY LAW - INJUNCTIONS - Jurisdiction and generally - Family Law Act Part VIIIAA - Injunctions against third parties - reach of section 90AF to cover proceedings initiated by third parties in Supreme Court - Distinction between commencing and continuing proceedings - Requirement under S90AF(3) for conditions to be fulfilled before making injunction against third parties - anti-suit injunctions - Request for direction that notice be given to Attorneys-General under s78B of the Judiciary Act. |
| Family Law Act 1975 (Cth) Judiciary Act 1903 (Cth) |
Ascot Investments Pty Ltd v Harper (1981) FLC 91-000
CSR Limited v Cigna Insurance Australia Ltd (1997) 189 CLR 345
Deputy Commissioner of Taxation v Klimin & Anor (2002) FLC 93-113
Finlayson, ex parte Finlayson (1997) 72 ALJR 73
Glennan v Commissioner of Taxation [2003] HCA 31
Hughes-Kempe and Kempe and Others (2005) FLC 93-237
H & H & Ors (unreported) [2005] FamCA 849
H & H & Ors (unreported) [2006] FamCA 167
In the marriage of Gillies (1981) FLC 91-054
Lederer and Hunt (unreported) [2007] FamCA 55
Re Ross-Jones ex parte Green (1984) FLC 91-555
Samootin v Wagner and Another (2006) FLC 93-265
W & W & Anor [2006] FamCA 163
| APPLICANT WIFE: | MRS C CHRISTIE |
| RESPONDENT HUSBAND: | MR S CHRISTIE |
| SECOND RESPONDENT: | MR R CHRISTIE |
| THIRD RESPONDENT: | MR CLAUSEN |
| FOURTH RESPONDENT: | MRS CLAUSEN |
| FIFTH RESPONDENT: | CHRISTIE NOMINEES PTY LTD |
| SIXTH RESPONDENT: | D PTY LTD |
| SEVENTH RESPONDENT: | P PTY LTD |
| FILE NUMBER: | MLF | 3391 | of | 2005 |
| DATE DELIVERED: | 23 February 2007 |
| PLACE DELIVERED: | Melbourne |
| JUDGMENT OF: | Cronin J |
| HEARING DATE: | 25 January 2007 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | MS SMALLWOOD |
| SOLICITOR FOR THE APPLICANT: | S FARMER & ASSOCIATES |
| COUNSEL FOR THE RESPONDENT: | MR TREVORAH |
| SOLICITOR FOR THE RESPONDENT: | E P JOHNSON & DAVIES |
| COUNSEL FOR THE THIRD AND FOURTH RESPONDENTS: | MR SPICER |
| SOLICITOR FOR THE THIRD AND FOURTH RESPONDENTS: | MADDOCKS |
| COUNSEL FOR THE SECOND, FIFTH, SIXTH AND SEVENTH RESPONDENTS: | MR TREVORAH |
| SOLICITOR FOR THE SECOND, FIFTH, SIXTH AND SEVENTH RESPONDENTS: | KENNA TEASDALE LAWYERS |
Orders
The oral application of the 2nd, 5th, 6th, and 7th respondents for a direction that notices be given under section 78B of the Judiciary Act (Commonwealth) is refused.
THAT UNTIL FURTHER ORDER:
The 5th respondent is restrained by injunction from prosecuting proceedings numbered 8857 of 2006 in the Supreme Court of Victoria against the husband and the wife.
The 2nd, 5th, 6th, and 7th respondents are restrained by injunction from prosecuting proceedings numbered 10139 of 2006 in the Supreme Court of Victoria against the husband and the wife.
To give effect to paragraphs 2 and3 hereof, the 2nd, 5th, 6th, and 7th respondents and the hisband and the wife sign all necessary documents to adjourn the proceedings referred to herein.
To the extent that it is necessary to do so, a copy of these orders may be provided to the Prothonotary for the Supreme Court of Victoria for the purposes of its retention on the court file.
The Form 2 Application in a Case filed 21 december 2006 and the Form 2A Response to an Application in a Case are otherwise dismissed.
IT IS CERTIFIED:
That pursuant to Order 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend.
BY THE COURT
JUDGE
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLF 3391 of 2005
| MRS C CHRISTIE |
Applicant
And
| MR S CHRISTIE |
Respondent
And
| MR R CHRISTIE |
Second Respondent
And
| MR CLAUSEN |
Third Respondent
And
| MRS CLAUSEN |
Fourth Respondent
And
| CHRISTIE NOMINEES PTY LTD |
Fifth Respondent
And
| D PTY LTD |
Sixth Respondent
And
| P PTY LTD |
Seventh Respondent
REASONS FOR JUDGMENT
These are proceedings of an interlocutory nature heard in the Judicial Duty List on 25 January 2007. I subsequently made orders but was unable due to time constraints to deliver even oral reasons for those orders. These are my reasons for Judgment.
By Form 2 – Application in a Case filed 21 December 2006, the Applicant Wife sought an injunction against the Second, Fifth, Sixth and Seventh Respondents in the following terms:
(i)That pending further order of this Court each of the Respondents be restrained from further prosecuting the proceedings No. 8857 of 2006 and 10139 of 2006 in the Supreme Court of Victoria and from issuing any further proceedings in any other Court against the Husband or the Wife.
(ii)That the Applicant and the First, Second, Fifth, Sixth and Seventh Respondents sign all documents and do all things reasonably necessary to effect a stay of the proceedings No. 8857 of 2006 and No. 10139 of 2006 in the Supreme Court of Victoria at Melbourne pending the final determination of these proceedings by the Family Court of Australia.
The Second Respondent is the Husband’s Brother.
The Fifth, Sixth and Seventh Respondents are corporate entities. The Wife alleges that the entities are controlled exclusively by the Second Respondent.
For the record, it should be noted that different solicitors act for the Second Respondent and the three corporate entities although, before me, the four Respondents were represented by Mr Spicer of Counsel.
The Wife’s Application also seeks the same orders against the Husband.
Mr Spicer for the four Respondents raised a preliminary point. He said that if this Court is to contemplate exercising jurisdiction and making the orders contemplated, it would be beyond power and that I should direct notices given under section 78B of the Judiciary Act 1903 (Cth).
The Wife says that notwithstanding the wording of section 90AF of the Family Law Act 1975 (Cth), the power is clear in Part VIIIAA.
To complete the courtroom picture, Mr Duckett appeared on behalf of the Third and Fourth Respondents who have been joined by the Husband.
The Third and Fourth Respondents are the parents of the Wife. Mr Duckett says that he had no real part in these interlocutory proceedings but his clients involvement and the fact that they have been so joined adds to the factual matrix. What is odd is that the Husband has not sought orders against the Wife’s parents and, as yet, the Wife’s parents have not sought to be removed from the proceedings.
Background
The Husband and Wife married in 1981.
The Wife and the Husband agree that they separated for nine months in 1988, reconciled and then continued to live together until final separation. The Wife said the marriage came to an end in 2004, the Husband said separation under the one roof, occurred in about August 2005.
There are two children V aged 21 years and A aged 14 years.
Everyone still lives in the one house.
The Husband is an engineer and the Wife is a teacher.
The First Proceedings
The Wife issued proceedings on 16 November 2005 seeking both parenting and financial orders. Significant for my purposes and amongst other orders, she sought an order in the following terms:
That the Husband be wholly responsible for and indemnify the Wife in relation to all monies owing, if any, to the husband’s brother.
On 15 December 2005, the Husband filed a Response seeking inter alia dismissal of the Wife’s Application and:
That the matrimonial assets of the parties (including superannuation) be divided on a just and equitable basis.
Procedural orders have been made as to the conduct of the proceedings.
On 24 May 2006, before a Conciliation Conference was set to occur, the Wife filed an Amended Application. In doing so, by naming the Husband’s brother as Second Respondent on the title face of the document, he became a party.
The Wife sought the following orders against both the Husband and his brother in the following terms:
That pursuant to Section 90AE of the Family Law Act 1975, this Honourable Court make an Order that neither the Husband nor the Wife owe any monies to the Second Named Respondent and/or the following entities:
10.1. Mr R Christie;
10.2. P Pty Ltd;
10.3. D Pty Ltd;
10.4. Christie Nominees Pty Ltd;
10.5. R Christie Family Trust;
10.6 Any other related entities,such alleged loans as detailed in:
(a) Schedule attached to the Husband’s Form 13 Financial Statement sworn and filed 15 December 2005; and
(b) Paragraphs 3, 23(i) and 24(v)(ii) and (iii) of the Husband’s Affidavit sworn and filed 15 December 2005.Again before the Conciliation Conference, further parties were joined using the practice to which I have just referred. This time, it was the Husband who joined the Third and Fourth Respondents by filing an Amended Response on 14 June 2006.
In respect of those third parties, the Husband sought the following orders:
6.That [Mr and Mrs Clausen] (“the wife’s parents”) be joined as party (sic) to these proceedings.
7.That the wife assign to the husband her right to sue her parents for funds advanced to renovate the property at [L] and any other amounts advanced from the matrimonial asset pool to the wife’s parents, the wife’s brother [I] and/or other family members.
This document gave rise to the question of what orders (if any) have been sought by the Husband against the Wife’s parents but it is conceivable that they needed to be joined because they are persons whose interests may be affected by orders.[1] The Husband says that he sees the necessity to file another response seeking relief with particularity against the Wife’s parents. I make no comment otherwise but raise this issue because what is unfolding is an internecine war between two families over money that at various points was (or was not) running through the hands of the Husband and Wife.
[1] Family Law Rule 6.02(1)
A Registrar conducted a Conciliation Conference on 19 June 2006 and the records show that there were four legal representatives present notwithstanding that no substantive documents were filed by the non-marriage parties.
In the ensuing months, the Husband and Wife each changed legal practitioners.
During this hiatus, the following occurred:
a)On 22 September 2006 the Fifth Respondent issued a Writ out of the Supreme Court of Victoria naming the Husband and the Wife as Defendants and seeking damages or alternatively, $140,000.00 plus interest pursuant to an agreement said to have been made on or about 30 June 2000; and
b)On 6 December 2006 the Second, Sixth and Seventh Respondents issued a Writ out of the Supreme Court of Victoria naming the Husband and Wife as Defendants and seeking various sums which on my view total nearly $900,000.00.
The Wife has apparently filed a Defence to the first Writ but says that she has not been served with the second.
In her Financial Statement filed 16 November 2005, the Wife asserted that the assets of she and the Husband amounted to just over $1,000,000.00. The Husband’s assertion at around the same time suggested much less because of liabilities to various lenders who are now the Second, Fifth, Sixth and Seventh Respondents.
The amounts in the Husband’s Financial Statements and the Writs are a little difficult to reconcile.
The issuing of Supreme Court proceedings brought the proceedings back before this Court again.
On 21 December 2006, the Wife filed another Amended Application. This document did two things:
a)It joined the Fifth, Sixth and Seventh Respondents by naming them on the title page; and
b)It sought the amended and/or additional orders involving the Fifth, Sixth and Seventh Respondents as follows:
That pursuant to Section 90AE of the Family Law Act 1975, this Honourable Court make an Order that neither the husband nor the wife owe any monies to the second, third, fifth, sixth and seventh named respondents or any related entities as claimed in Supreme Court proceedings numbered. 8857 of 2006 and 10139 of 2006 respectively or otherwise.
That the husband and the second-named respondent indemnify the wife in respect of any claims made against the wife by the husband’s mother.
The question of whether that course of action undertaken by the Wife was appropriate has not been the subject of argument.
At the same time as the Amended Form 1 Application was filed, the Wife’s Form 2 Application in a Case seeking injunctive relief was filed.
The Wife’s Position
The Wife in her affidavit filed 21 December 2006 asserted:
(a)At the separation in 1988 the Husband told her that he would ensure she “got nothing” on separation.
(b)That after the 1988 separation, the Husband was no longer a Director of one of the entities now before the Court and had become an employee.
(c)Various share and property transfers occurred between the Husband and his family members.
(d)She could not find evidence of monies purported to be paid for inter-family transactions.
(e)The Husband worked long hours.
(f)The Husband in 2005 had told her they owed $260,000.00 notwithstanding he had earlier on several occasions said that they owed nothing.
(g)The various family demands for repayments related to loans that were “trumped up”.
(h)The one loan agreement document she was supposed to have signed, she could not recall signing and the one she could remember was in 1999 and was signed under pressure to enable some renovations to the home to be done.
The Husband’s Position
In his Affidavit in Reply, the Husband said:
(a)In 1988, because of his mental state, he sold his business interest to his brother for $100,000.00 and thereafter he worked as an employee until comparatively recent times.
(b)His brother provided loans and advanced sums in “some hundreds of thousands of dollars” enabling the Husband and Wife to support a lifestyle they would not otherwise have been able to enjoy including private education for their children and an expensive car.
(c)In respect of his Wife’s position of ignorance of the money situation, it was “patently and demonstrably absurd” and that she was fully aware of the loans and advances.
(d)In respect of the first Writ, he said that he knew that the claim was “indefensible”.
(e)His borrowings from the bank were almost at the limit and even if his brother took no action on his debts, he would not expect the bank to wait for the outcome of proceedings in this Court.
(f)The Wife was mistaken about the outcomes of some transactions and in respect of some assertions such as her attribution to him that he called her a “gold digger”, were a fiction.
The factual dispute therefore involves both sides of the family of the Husband and the Wife.
The other parties’ position
Counsel for the four Respondents therefore says that it is his clients’ right to proceed as citizens in their Court of choice and that this Court has no power under Part VIIIAA to interfere with the workings of the Supreme Court. He asks whether the recent amendments to the Family Law Act by the inclusion of Part VIIIAA are simply a change to procedures or to substance. I inferred from the argument that these respondents challenge the reach of particular parts of Part VIIIAA more so than the whole of the Part.
Based on his clients’ position and the question just asked, Mr Spicer says that notices should be given to the Attorneys-General under section 78B of the Judiciary Act or at least the Attorney-General of the State of Victoria because if orders were made of the nature sought by the Wife, they would “stifle” proceedings in the Supreme Court.
The wife’s response to the request for notice to be given.
The Wife’s Counsel says that this is not a matter arising under the Constitution or its interpretation but rather a matter that can be dealt with appropriately under section 90AF(1)(a) and (b) of the Family Law Act.
In addition, it is argued for the Wife that this is also an appropriate matter to be determined by the use of this Court’s accrued jurisdiction because:
(a)The matters claimed by the Second, Fifth, Sixth and Seventh Respondents are not severable from the issues between the Husband and the Wife.
(b)The issues are firmly attached to the subject matter.
(c)There is a common substratum of facts; and
(d)It would be just and convenient for all matters to be dealt with in this Court.
I do not believe that there is any necessity in this case to decide the issue of the applicability of accrued jurisdiction.
Before looking at Part VIIIAA and although it was not argued, I have considered the power to grant what is effectively an anti-suit injunction.
Power of the Court to “Interfere with a Person taking out a proceeding”
In the marriage of Gillies[2] was a decision handed down just after the High Court delivered its Judgment in Ascot Investments Pty. Ltd. v Harper[3]. In Gillies, the Husband’s mother argued that the matrimonial home in the husband’s name was held on trust for her and issued proceedings in the Supreme Court. The trial judge in the Family Court proceedings between the Husband and the Wife issued an injunction preventing the continuation of the proceedings. The Full Court held that there was power to make the orders. Simpson J held that it was incidental to the relief sought by the Wife. His Honour said:
the decree does no more than prevent the Appellant from pursuing her rights in equity until the property proceedings between the Husband and the Wife have been finalised. In the course of those proceedings the Family Court will have to determine what interest the Husband has in the subject property.
[2] (1981) FLC 91-054
[3](1981) FLC 91-000
Fogarty J held that it was clearly within power to restrain a party to proceedings in the Family Court from conducting proceedings raising similar issues in another Court. His Honour ordered that the non-marriage party had voluntarily opted to join the Family Court proceedings and thus the Court could make its orders against her. Had she not joined the proceedings, his Honour thought it may be a different question but he did not have to decide that.
That decision is of assistance because the Full Court contemplated the statement by Gibbs J in Ascot Investments Pty Ltd v Harper[4]
The authorities to which I have referred establish that in some circumstances the Family Court has power to make an order or injunction which is directed to a third party or which will indirectly affect the position of a third party. They do not establish that any such order may be made if its effect will be to deprive a third party of an existing right or to impose on a third party a duty which the party would not otherwise be liable to perform. The general words of sec. 80 and 114 must be understood in the context of the Act, which confers jurisdiction on the Family Court in matrimonial causes and associated matters, and in that context it would be unreasonable to impute to the Parliament an intention to give power to the Family Court to extinguish the rights, and enlarge the obligations, of third parties, in the absence of clear and unambiguous words. It can safely be assumed that the Parliament intended that the powers of the Family Court should be wide enough to prevent either of the parties to a marriage from evading his or her obligations to the other party, but it does not follow that the Parliament intended that the legitimate interests of third parties should be subordinated to the interests of a party to a marriage, or that the Family Court should be able to make orders that would operate to the detriment of third parties. There is nothing in the words of the sections that suggests that the Family Court is intended to have power to defeat or prejudice the rights, or nullify the powers, of third parties, or to require them to perform duties which they were not previously liable to perform. It is one thing to order a party to a marriage to do whatever is within his power to comply with an order of the court, even if what he does may have some effect on the position of third parties, but it is quite another to order third parties to do what they are not legally bound to do. If the sections had been intended to prejudice the interests of third parties in this way, it would have been necessary to consider their constitutional validity.
The position is, I think, different if the alleged rights, powers or privileges of the third party are only a sham and have been brought into being, in appearance rather than reality, as a device to assist one party to evade his or her obligations under the Act. Sham transactions may always be disregarded. Similarly, if a company is completely controlled by one party to a marriage, so that in reality an order against the company is an order against the party, the fact that in form the order appears to affect the rights of the company may not necessarily invalidate it.
Except in the case of shams, and companies that are mere puppets of a party to the marriage, the Family Court must take the property of a party to the marriage as it finds it. The Family Court cannot ignore the interests of third parties in the property, nor the existence of conditions or covenants that limit the rights of the party who owns it. To take two obvious examples, the Family Court could not compel a husband to assign to his wife a lease without obtaining the necessary consent of the lessor, and could not order the transfer to a wife of land owned by a husband free of mortgage, when in fact the land was mortgaged to a third party. Thus, in the present case, the Court must deal with the husband's shares in A as they in fact are, that is, as shares in a company whose memorandum and articles contain a restriction on transfer.
[4] Page 76, 061
In the subsequent High Court decision of Re Ross-Jones ex parte Green[5] the Court determined that the Family Court’s powers were no wider at the interlocutory stage but it did have power to maintain the position of the parties by injunction whilst it determined whether or not it had jurisdiction. However in respect of Gillies, Gibbs CJ[6] commented that the first party had intervened in the Family Court. No criticism was made in the statement in Gillies that as a consequence of intervening, the Family Court had power to prevent an abuse of process by restraining a party to its own proceedings. It seems to me that a similar process was followed in Deputy Commissioner of Taxation v Klimin & Anor[7] in which an important issue remained whether or not the third person was a party to the proceedings. In the case before me the Second, Fifth, Sixth and Seventh Respondents have not sought to be removed as parties and more importantly, only want to argue the extent of jurisdiction.
[5] (1984) FLC 91-555
[6] 79,487
[7] (2002) FLC 93-113
More recently, in H & H & Ors, [8]O’Ryan J dealt with this Court’s power to interfere with the right of a third party to take action in another court. It is important to note that in that case, no-one argued that there was no jurisdiction to make the orders sought. In his reasons for judgment, O’Ryan J. said:[9]
69.Where proceedings are pending in a court which could be brought in another jurisdiction, a court may adjourn the proceedings or temporarily or permanently stay the proceedings. A court may stay the local proceedings if it is satisfied that it is a clearly inappropriate forum: Voth v Manildra Flour Mills Pty Ltd (1990) 171 CLR 538. Further, provided it has personal jurisdiction over the party concerned a court may restrain a domestic or foreign party from taking or continuing proceedings in a foreign or local jurisdiction and an order in such terms is referred to as an anti-suit injunction.
70.The source of power to make an anti‑suit injunction is either under s 34 of the Family Law Act or the inherent jurisdiction of the Family Court to make orders which are necessary and appropriate to avoid injustice. In this case it is not contended by any party that I lack the power to grant the injunction.
[8] O’Ryan J 8 August 2005 (unreported) [2005] FamCA 849
[9] paras 69-70
His Honour referred to the views expressed by the High Court in CSR Ltd v. Cigna Insurance Australia Ltd[10] and said[11]:
72.The exercise of the power to grant an anti‑suit injunction is not restricted to defined or closed categories. It is to be exercised when the administration of justice requires, or where necessary for the protection of the court's own proceedings or process. The power may also be exercised to avoid an injustice. The approach to be taken, however, in considering whether to grant an application for an anti‑suit injunction is not the same as that taken to an application for a stay on the basis that the local jurisdiction is an inappropriate forum.
[10] (1997) 189 CLR 345
[11] Para 72
On 9 February 2007, the Full Court[12] dismissed an appeal against the decision of O’Ryan J and said:
33.There was no issue before O’Ryan J or before us that in the appropriate circumstances the Family Court has the power to make the anti-suit injunction which the wife sought in this case (that is, an anti-suit injunction directed to proceedings in another Australian superior Court), nor that the source of such power was, as his Honour explained (in paragraph 34 of his reasons), either s 34 of the Act or the inherent (or, we would add, implied) jurisdiction of the Family Court “to make orders which are necessary and appropriate to avoid injustice”. (See in relation to anti-suit injunctions directed to proceedings in a foreign court Dobson and Van Londen (2005) FLC 93-225 (Paragraph 42), which was the subject of an unsuccessful application for special leave to the High Court specifically in relation to an anti-suit injunction made by this Court in relation to proceedings in the Netherlands).
[12] Bryant CJ Finn and Boland JJ (unreported) [2007] FamCA 55
The Full Court said:
39.In CSR under the heading “Principles governing stay of proceedings on forum non conveniens grounds and the grant of anti-suit injunctions” (at 389-390) the majority explained that:
[t]he question whether a dispute as to legal rights should be litigated in the courts of one country or those of another is one that permits of resolution, if resolution is possible, by one court staying its proceedings in favour of the other or by it granting an anti-suit injunction restraining a person amenable to its jurisdiction from commencing or continuing proceedings in that other country[,]
and:
[a]lthough stay orders and anti-suit injunctions are not governed by the same principles, … in some cases, the power to grant anti-suit injunctions is an aspect of the power which authorises a court to stay its own proceedings…[a]nd … that, in other cases, the power to grant anti-suit injunctions should not be exercised without the court concerned first considering whether its own proceedings should be stayed.
Further, the Court said:
51.It will thus be seen that not only is there no general rule that an anti-suit injunction will not be granted unless the applicant for the injunction has sought a stay in the “foreign jurisdiction”, but more significantly for present purposes, that the High Court majority considered that such a rule would serve no purpose in cases where an injunction is sought to protect the integrity of the proceedings or the processes of the court concerned. As we have already pointed out, one of the bases for the injunction which was granted in this case was to protect this court’s proceedings and processes.
Insofar as I am being asked to ignore the rights of third parties to bring their proceedings in their court of choice and am stepping away from the principle of comity between courts, I say that having regard to what I have set out in paragraphs 24, 34 and 35 above, there is a serious matter to be tried in this Court and I am endeavouring to protect the process of this Court by granting the injunction against parties who have been participating in this Court’s process.
As I have set out however, the wife has chosen to proceed under Part VIIIAA of the Family Law Act.
The Injunction under Part VIIIAA
Although Mr Spicer did not specifically raise it in his opening remarks, one of the dilemmas facing me is that the Wife seeks that the various respondents be restrained from ‘further prosecuting their proceedings” (emphasis mine) and that they do whatever is required to “effect a stay of those proceedings”.
Does section 90AF allow this Court to restrain a Third Party from continuing as distinct from commencing proceedings? Section 90AF(1) reads:
In proceedings under section 114, the court may:
(a) make an order restraining a person from repossessing property of a party to a marriage; or
(b)grant an injunction restraining a person from commencing legal proceedings against a party to a marriage.
That provision is supported by section 90AF(2) which reads:
In proceedings under section 114, the court may make any other order, or grant any other injunction that:
(a)directs a third party to do a thing in relation to the property of a party to the marriage; or
(b)alters the rights, liabilities or property interests of a third party in relation to the marriage.
There are however clear conditions under which any order can be made. I shall return to them later.
Having regard to the fact that Mr. Spicer alleges that the extent of the injunction sought by the wife using Part VIIIAA would be beyond the power of the Commonwealth and that the reach of Part VIIIAA does not go that far, should the Attorneys-General be provided with notice to argue the matter?
Section 78B of the Judiciary Act; should notice be given?
The relevant parts of s 78B of the Judiciary Act read:
(1) Where a cause pending in a federal court including the High Court or in a court of a State or Territory involves a matter arising under the Constitution or involving its interpretation, it is the duty of the court not to proceed in the cause unless and until the court is satisfied that notice of the cause, specifying the nature of the matter has been given to the Attorneys‑General of the Commonwealth and of the States, and a reasonable time has elapsed since the giving of the notice for consideration by the Attorneys‑General, of the question of intervention in the proceedings or removal of the cause to the High Court.
(2) For the purposes of subsection (1), a court in which a cause referred to in that subsection is pending:
(a)may adjourn the proceedings in the cause for such time as it thinks necessary and may make such order as to costs in relation to such an adjournment as it thinks fit;
(b)may direct a party to give notice in accordance with that subsection; and
(c)may continue to hear evidence and argument concerning matters severable from any matter arising under the Constitution or involving its interpretation.
…
(5) Nothing in subsection (1) prevents a court from proceeding without delay to hear and determine proceedings, so far as they relate to the grant of urgent relief of an interlocutory nature, where the court thinks it necessary in the interests of justice to do so.
Because of section 78B(5), I am given the discretion to determine these proceedings notwithstanding the mandatory nature of section 78B(1) provided it is necessary and in the interests of justice to do so in a case of urgent interlocutory relief. In this case, I am intending to exercise that power because:
(a) The proceedings are of an interlocutory nature;
(b)There is a listing of the matter in the Supreme Court of Victoria within a few days;
(c)The Husband is not defending those Supreme Court proceedings notwithstanding as Mr Spicer points out, a Judge of the Supreme Court would still deal with that issue appropriately and responsibly according to law;
(d)The parties to the Supreme Court proceedings have submitted to the jurisdiction of this Court having been joined administratively as parties and not taken any steps to be removed;
(e)The Second, Fifth, Sixth and Seventh Respondents (either directly or indirectly and through the Second Respondent) did not issue the first of their proceedings until after they had participated in the proceedings before this Court. I say this in the sense that although the last three corporate entities were only joined in December 2006, there is a strong suggestion that they are controlled effectively by the Second Respondent and controlled in the sense of “directing mind and will”.[13]
(f)There is a specific procedure under Chapter 6 of the Family Law Rules for the party or parties to give notice under section 78B of the Judiciary Act and that course has not been followed.
[13] See Tesco Supermarkets v Nattrass [1972] AC 153
Despite what I have said however, it is also important to note what Toohey J said in Finlayson, ex parte Finlayson[14]
in terms of section 78B, a cause does not “involve” a matter arising under the constitution or involving its interpretation merely because someone asserts that it does. That is not to say that the strength or weakness of the proposition is critical. But it must be established that the challenge does involve a matter arising under the constitution”.
[14] Finlayson, ex parte Finlayson (1997) 72 ALJR 73 Page 74
As was made clear by the High Court in Glennan v Commissioner of Taxation[15], the making of the judgment absent notices if it was considered in the interest of justice to do so, does not nullify the continued exercise of jurisdiction.
[15] [2003] HCA 31
On 14 March 2006 H & H & Ors[16], O’Ryan J found that Part VIIIAA was a valid law of the Commonwealth. Whilst I am asked to rule on the reach of the particular provision, having regard to what O’Ryan J has said, I do not believe that it would be sensible or productive to consider the Constitutionality issue again. His Honour said:
83.In conclusion, when consideration is given to each of the provisions of Part VIIIAA it is clear that they are directed to making effective the powers under s 79 and s 114 of the Family Law Act. In my opinion, this is necessary given the need in financial proceedings between parties to a marriage under the Family Law Act to deal with issues that arise which interface between the interests of parties to the marriage and the rights, duties and obligations of third parties.
…
121.I am of the opinion that s 90AE(2) and s 90AF(2) are laws with respect to marriage, divorce or matrimonial causes, or at least incidental thereto, given that they are to be made in the case of s 90AE, in proceedings under s 79 for division of property orders, which orders are “central” to the marriage power and in the case of s 90AF, in proceedings under s 114, which confers power on the Court to grant injunctions, but only in proceedings of the kind referred to in para (e) of the definition of “matrimonial cause” in s 4(1). This creates a sufficient connection with each of the marriage, divorce and matrimonial causes powers.
122.The scheme of Part VIIIAA and the relevant impugned provisions is such as to ensure that the capacity of the court to make orders which affect third parties is carefully constrained and remains sufficiently connected to the marriage, divorce or matrimonial cause powers which support it.
123.I am of the opinion that s 106B of the Family Law Act is a valid law of the Commonwealth.
[16] Unreported [2006] FamCA 167
Based on the views of O’Ryan J with which I respectfully agree, the literal reading of Part VIIIAA makes it clear that its reach is extremely wide.
Mr. Spicer brought to my attention Hughes-Kempe and Kempe and Others[17] but that related to the joining of third parties and whether, when they were joined, the application against them was “doomed to fail”.
[17] (2005) FLC 93-237
In Samootin v Wagner and Another[18] the Full Court dismissed the Wife’s appeal against orders of Boland J refusing to allow the Wife to join her former solicitor to the proceedings in circumstances where the Wife acknowledged the debt to the solicitors was hers but she wanted it taken into account as a liability when calculating the pool of assets. The Wife had sought the orders including injunctions under section 90AF(1)(b) to prevent the creditors instituting bankruptcy proceedings against her. The Full Court looked at Part VIIIAA but there was no challenge as to its constitutional validity. However, Kay J with whom Bryant CJ and Coleman J agreed said:
for the reasons clearly expressed by Her Honour in paragraph 52, it would be almost impossible to argue that it was proper for an injunction to be made that would restrain the respondents to the application and the respondents to this Appeal from enjoying the fruits of the Judgment regularly obtained, in circumstances that really have nothing to do with the proceedings pending before this Court or the relationship between the Husband and Wife, nothing in any direct sense.
[18] (2006) FLC 93-265
In that case unlike this one, judgment had been properly and regularly obtained and that there was no connection as there is here. The Appeal was otherwise unsuccessful because it was against the discretionary order of a trial judge and there was no point of principle.
In the case before me, unlike that before the Full Court, the disputed debts are all interwoven with the commercial as well as personal transactions of the Husband and the Wife. That is so where the Wife alleges that they are “trumped up” and the Husband alleges that the Wife’s knows fully what occurred. It is not my task to discern the truth of that issue. On the brief material, I am not prepared to say that it would be impossible to argue either case. Much of the outcome will depend upon discovery and the credibility of witnesses.
These various authorities I have mentioned all turn on various unrelated factual issues and there is no other reported authority on the width or breadth of section 90AF or specifically anything on the question of the reach of the provision.
In examining the question of the reach of Part VIIIAA, it is instructive to look at the individual sections and then at them in the context of the whole of Part VIIIAA.
Section 90AF(1) commences with the requirement that there be proceedings under section 114 of the Family Law Act.
For my purposes, the relevant part of section 114(1) reads:
In proceedings of the kind referred to in paragraph (e) of the definition of matrimonial cause in subsection 4(1), the court may make such order or grant such injunction as it considers proper with respect to the matter to which the proceedings relate, including:
…
(e)an injunction in relation to the property of a party to the marriage;…
Section 90AD(2) says:
For the purposes of paragraph 114(1)(e), property includes a debt owed by a party to a marriage.
Section 90AF(1)(b) says:
(1) In proceedings under section 114, the court may:
…
(b)grant an injunction restraining a person from commencing legal proceedings against a party to a marriage.
The word “commencing” may be read literally to mean “starting”. To a large degree that would make a nonsense of the provision. For example, a non-marriage party could thwart the whole intention of the legislation simply by issuing proceedings in another court. “Commencing” could also mean starting a hearing as distinct from initiating a process. Whatever the intention was, the issue needs clarification to overcome any difficulty. For my purposes the Wife does not rely upon section 90AF(1) alone.
Section 90AF(2) widens the scope of the provision so that in the section 114 proceedings, the Court may direct: “a party to do a thing in relation to the property of the party to a marriage”.
In respect of section 90AE(2) which carries identical words, O’Ryan J said:
When section 90AE(2) is read in conjunction with section 90AE(3), section 79 and Part VIIIAA generally, it is clear that what is contemplated is not some arbitrary invasion of the rights of the Third Party but an alteration of those rights where they are sufficiently connected to the division of the property between parties to a marriage.
The relevance of the connection to the division of property between the parties to the marriage is important.
It would also seem odd that the Parliament would limit the Court’s power in relation to proceedings in other Courts only before they have been commenced but not afterwards yet it would allow Courts to order a non-marriage party to do a thing, for example, in relation to a debt of a party of the marriage regardless of whether there has been any proceeding in relation to the debt.
Accordingly, I do not think anything significant turns on the word “commencing” in section 90AF(1)(b) but if I am wrong about that, section 90AF(2)(a) seems wide enough to cover the action of a creditor against a party to a marriage. That was the argument by Ms Smallwood on behalf of the applicant.
Having regard to the literal reading of the various provisions just referred to, I think that there is a sufficiently wide reach to enable parties within a marriage to seek injunctive relief from this Court to prevent creditors both commencing and continuing to prosecute claims providing that there is sufficient connection with the marriage relationship and the matters to which I shall now turn are met.
Before a Court can exercise its powers under section 90AF(1) or (2), section 90AF(3) and (4) needs to be satisfied. Those provisions are:
(3) The court may only make an order or grant an injunction under subsection (1) or (2) if:
(a)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; and
(b)if the order or injunction concerns a debt of a party to the marriage--it is not foreseeable at the time that the order is made, or the injunction granted, that to make the order or grant the injunction would result in the debt not being paid in full; and
(c)the third party has been accorded procedural fairness in relation to the making of the order or injunction; and
(d)for an injunction or order under subsection 114(1)--the court is satisfied that, in all the circumstances, it is proper to make the order or grant the injunction; and
(e)for an injunction under subsection 114(3)--the court is satisfied that, in all the circumstances, it is just or convenient to grant the injunction; and
(f)the court is satisfied that the order or injunction takes into account the matters mentioned in subsection (4).
(4) The matters are as follows:
(a)the taxation effect (if any) of the order or injunction on the parties to the marriage;
(b)the taxation effect (if any) of the order or injunction on the third party;
(c)the social security effect (if any) of the order or injunction on the parties to the marriage;
(d)the third party's administrative costs in relation to the order or injunction;
(e)if the order or injunction concerns a debt of a party to the marriage--the capacity of a party to the marriage to repay the debt after the order is made or the injunction is granted;
(f)the economic, legal or other capacity of the third party to comply with the order or injunction;
(g)if, as a result of the third party being accorded procedural fairness in relation to the making of the order or the granting of the injunction, the third party raises any other matters--those matters;
(h)any other matter that the court considers relevant.
In this case, is it reasonably necessary to make the order? In what circumstance could it be argued that it was “reasonably necessary”? In an unreported decision of Bennett J on 27 February 2006 of W & W & Anor[19], her Honour granted a very limited injunction against a bankruptcy trustee because he was about to evict the Wife and two children and sell the house in which they lived. Her Honour granted the injunction because the Wife wanted to keep the house and was endeavouring to raise the finance. I think “reasonably necessary” means that without the order, the property proceedings between the Husband and Wife will be thwarted in the same way that Bennett J was referring to it.
[19] Unreported [2006] FamCA 163
The provision goes on also to say “or reasonably appropriate and adapted” and I interpret those words to mean “convenient”. On what I have read in these proceedings, it would be more convenient for all issues to be determined in this Court and the Respondents would not be prejudiced.
Section 90AF(3)(b) relates to whether at this moment it is foreseeable that the injunction would result in the debt not being paid in full. Nothing I am prepared to order would have that effect on the basis that I am allowing the Respondents to litigate their cause in this Court and the ultimate payment of their debt would be dependent upon them proving the debt. If they are successful it seems clear that there are probably sufficient funds for them to be paid. In respect of their involvement in the proceedings, I am taking into account that the current provisions of section 79(10) permit them to participate in the proceedings.
Under section 90AF(3)(c), the Respondents have been accorded procedural fairness.
Under section 90AF(3)(d), is it proper to grant the injunction? I think it is in this case having regard to the fact that the Respondents were aware of the proceedings in this Court and participated in them. To then start their own litigation is an interesting issue but one about which I have little sympathy where there are close familial ties and allegations of “trumped up” arrangements. I find it is therefore proper to make the order.
Under section 90AF(3)(e), I have to be satisfied that it is just and convenient to grant the injunction. For the reasons that I have just given, I find that it is.
Under section 90AF(4), I have taken into account that on the limited information I have, there are unlikely to be taxation implications for any party. These “debts” are all of some age and apart from some arguments about accruing interest which would presumably accrue income tax, or if the Respondents have used the debts as bad debts for tax purposes, the revenue would be protected by an order under which money was paid. I do not see the taxation matter as an issue in this case.
I do not know what social security implications there are but expect that despite these orders, the parties would continue to litigate and the public purse will not be affected.
I have taken into account the costs that the Respondents have and will incur of an administrative nature. They were already parties to the proceedings. I do not see that they have been disadvantaged in the cost sense.
I have taken into account that this is an argument about a debt of the Husband and/or the Wife. I have already commented that at least on the Wife’s version there is money available to pay the debts claimed.
Finally, I have taken into account the capacity of the Respondents to comply with any orders. I see no reason to be concerned about this because they are companies in some cases and the brother in the other. In both cases, both parties have legal practitioners acting for them including Counsel in appearing before me and another member of counsel who was instructed to draw a Supreme Court Statement of Claim. I conclude that they have some economic and legal strengths.
It is important to note in this case also that no undertaking as to damages has been sought by any of the Respondents before me.
On the basis of the provisions of Part VIIIAA, I therefore propose to grant the injunctions.
I certify that the preceding ninety four (94) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin
Associate:
Date: 23 February 2007
IT IS NOTED that this judgment for all publication and reporting purposes be referred to as CHRISTIE & CHRISTIE & ORS
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