Coalter & Loxton (No 3)
[2022] FedCFamC1F 1033
Federal Circuit and Family Court of Australia
(DIVISION 1)
Coalter & Loxton (No 3) [2022] FedCFamC1F 1033
File number(s): SYC 4681 of 2016 Judgment of: SCHONELL J Date of judgment: 20 December 2022 Catchwords: FAMILY LAW – INJUNCTIONS – Ex parte application – Where the de facto wife sought to restrain the de facto husband from dealing with funds held in his solicitor’s trust account – Where no notice had been given to the de facto husband – Where there is an in principle agreement between the parties – Where the de facto husband has a history of non-compliance – Where the de facto wife has established at a prima facie level that the de facto husband deposited monies into his solicitor’s trust account in accordance with the agreement – Where the evidence indicates that the monies should have been paid to the de facto wife – Orders made as sought by the de facto wife. Legislation: Family Law Act 1975 (Cth) ss 90SM, 114
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 2.34
Cases cited: Ansah v Ansah [1977] 2 All ER 638
Sieling & Sieling (1979) FLC 90-627; [1979] FamCA 23
Stowe and Stowe (1981) FLC 91-027; [1980] FamCA 92
Tsiang & Wu and Ors (2019) FLC 93-911; [2019] FamCAFC 128
Division: Division 1 First Instance Number of paragraphs: 31 Date of hearing: 19 December 2022 Place: Sydney Solicitor for the Applicant: MCW Lawyers The Respondent: Did not participate ORDERS
SYC 4681 of 2016 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS COALTER
Applicant
AND: MR LOXTON
Respondent
order made by:
SCHONELL J
DATE OF ORDER:
20 DECEMBER 2022
NOTING the applicant de facto wife’s Undertaking as to Damages given this day orally through her solicitor THE COURT ORDERS THAT:
1.Orders are made in accordance with paragraphs 1 to 5 of an Application in a Proceeding filed 19 December 2022, as set out hereunder:
1.That the matter be listed on short notice.
2.That the matter proceed ex-parte of the Respondent.
3.That the requirement for service of the Application and supporting Affidavit on the Respondent and/or his solicitor be dispensed with until the determination of the Application.
4.Pursuant to Section 114 of the Family Law Act, Mr Loxton be hereby injuncted and restrained from providing instructions and directions to Mr Dickran Yakenian and/or any other person at Juris League Consultancy from transferring or otherwise disposing of the monies held in the Trust Account of Juris Legal Consultancy Law Practice Trust Account without an Order of the Court.
5.That Mr Dickran Yakenian and/or any other principal solicitor at Juris League Consultancy is hereby injuncted and restrained from transferring or otherwise disposing of the monies held in the Juris League Consultancy Law Practice Trust Account on behalf of Mr Loxton without further Order of this Court.
2.Copies of these orders together with the Application in a Proceeding and affidavit filed 19 December 2022 be served by 4.00 pm today upon:
(a)the husband;
(b)Mr Dickran Yakenian; and
(c)Juris Legal Consultancy Law Practice;
in the first instance by way of email.
3.I list this matter before me for further hearing of the Application in person at 9.30 am on Thursday, 22 December 2022.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Coalter & Loxton has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
SCHONELL J:
On 19 December 2022, the applicant de facto wife (“the de facto wife”) by way of ex parte application sought injunctive relief restraining the respondent de facto husband (“the de facto husband”) from dealing with funds that were deposited into his solicitor’s trust account.
After hearing some short evidence from the solicitor for the de facto wife, the Court made orders as sought by the de facto wife in her ex parte application. These are the reasons for the making of those orders.
The de facto wife relied upon the following documents:
(1)Application in a Proceeding filed 19 December 2022; and
(2)Affidavit filed 19 December 2022.
The documents had not as yet been filed nor had the de facto husband or his solicitor been given notice that the de facto wife intended to make the application.
The parties commenced a de facto relationship in or about 2010 and separated in August 2014. There are two children of the relationship; twins aged nine years. The children live in the primary care of their mother and spend no time with their father.
The Court is informed that the de facto husband is in business who currently resides in Queensland.
An application for property settlement was filed by the de facto wife on 27 July 2016. The Court is informed that no final orders have been made in that application.
The Court is informed by the de facto wife’s solicitor that there have been numerous applications seeking to have the de facto husband engage in the proceedings, including a number of orders requiring his attendance and that he provide disclosure. The de facto wife’s solicitor informed the Court that the proceedings have previously been listed for sentencing following the hearing of a contravention application.
The matter was before the Court on 9 November 2022 on which occasion the Court stood over the sentencing and recorded the following in the orders made that day:
5.In the event that issues between the parties are resolved in part or in totality the parties are at liberty to file terms of settlement with the court for orders to be made by consent in accordance with the relevant Rules.
The de facto wife in her affidavit identifies that the parties reached an in principle agreement as to property settlement on 9 November 2022. In her affidavit, she says the following:
4. During the course of that day, [Mr Loxton] and I reached an in-principle Agreement finalising our financial relationship between us. Part of that Agreement required [Mr Loxton] to make a number of payments to me over a period of time. Such money was to be deposited into my solicitor’s Trust Account.
5. [Mr Loxton] has failed to comply with the terms of that Agreement.
6. [In late] 2022, [Mr Loxton] deposited $350,000 into his solicitor’s Trust Account, being one of the part-payments pursuant to our in-principle Agreement.
In accordance with what the de facto wife describes as the parties’ in principle agreement, monies were deposited into the trust account of the de facto husband’s solicitor. Annexed to the de facto wife’s affidavit as Annexure A is a trust account receipt recording receipt from Mr Loxton for the sum of $350,000. The receipt has the description “[p]roperty/financial settlement” and under the heading “reason”, the words appear “[p]ayment 1 of property settlement agreement entered into on 9 November 2022”.
The de facto wife says that on 18 November 2022, her solicitor had a telephone conversation with the solicitor for the de facto husband. She annexes to her affidavit a file note of the conversation, which records:
Telephone call with Dickran, Juris League - he advised that he was transferring the $350,000 into our trust account tonight, however it would not show up in our account until Monday morning. I asked if he had the trust account details and he confirmed that he did.
(De facto wife’s affidavit filed 19 December 2022, Annexure B)
The affidavit refers to a further conversation with the de facto husband’s solicitor on 25 November 2022. The file note of that conversation records:
His instructions are that [Mr Loxton] wants assurances that he gets to see the children before he authorises release of the funds held in Trust.
[Mr Loxton’s] exact words are “happy to pay whatever the fuck she wants. I just want to see the kids”.
(De facto wife’s affidavit filed 19 December 2022, Annexure C)
The de facto wife says that as at the date of her affidavit the money has not been received into her solicitor’s trust account.
The de facto wife says that the de facto husband is an undischarged bankrupt. The de facto wife’s solicitor informed the Court that notice has not been provided to the de facto husband’s trustee in bankruptcy of the in principle agreement reached between the parties.
The de facto wife through her solicitor gave an oral undertaking as to damages.
Dispensing with service and proceeding ex parte
The Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) provide that the Court may proceed without service of an application. In summary, the Rules provide as follows:
(1)Rule 2.34(1) provides that a party who is unable to serve a document may apply, without notice, for an order to dispense with service of the document, with or without conditions.
(2)Rule 2.34(2) provides that when considering an application under r 2.34(1), the Court may have regard to a number of factors including the nature of the proceeding.
(3)Rule 2.34(3) provides that if the Court orders that service of a document is dispensed with, then the document is taken to have been served.
The de facto wife bears the onus of establishing to the satisfaction of the Court that the orders that she seeks should be made without notice to the de facto husband.
In Stowe and Stowe (1981) FLC 91-027 (“Stowe”), the Full Court of the then Family Court of Australia made the following observations at 76,258–76,259:
Ex parte orders are dealt with in reg. 42. That regulation makes it clear that ex parte orders are to operate only until a specified time or (as in the present case) until further order of the Court (para. (5)). The Court is empowered to give directions as to the service of the order and the hearing of an application for a further order (para. (6)). Regulation 42 was considered by the Full Court in the case of Sieling (1979) FLC 90-627, where reference was made, with approval, to Ansah (1977) 2 W.L.R. 760. In that case, the Court of Appeal emphasised that if an order was made ex parte it should be limited in time to the shortest possible period which must elapse before a preliminary hearing could be arranged. It is implicit in the decisions of Sieling (supra) and Ansah (supra) that wherever possible short notice of the proceedings should be given to the respondent:
“The general principles are that the Court must be satisfied that the matter is of such urgency that the applicant’s interests (or the interests of the child) can be protected only by an immediate order. It is necessary to balance the likelihood of harm to the applicant against the hardship to the respondent of making an order without hearing him. The more drastic the order the more grave must be the risk to be averted and the more important the requirement that the respondent be heard at the earliest opportunity. An order that a party be excluded from the home or that a child be removed from the custody of a party must be supported by evidence of an imminent risk of such a nature that the Court cannot wail even the period of time necessary for short service.” (Sieling (1979) FLC 90-627 at p. 78,254.)
In those limited circumstances where it is necessary to make an ex parte order, the onus rests upon the applicant for the injunction both at the ex parte stage and at the later hearing of the matter to satisfy the Court that the circumstances justify the making and continuation of the order. This is so irrespective of whether the respondent formally applies to set aside the order. Counsel for the appellant husband submitted – correctly in our view – that the Court's discretion could miscarry if the onus were put upon the respondent to satisfy the Court that the order should be discharged.
Thus, in making an order ex parte, the Court is required to have regard to the nature and imminence of risk of harm.
To proceed in the absence of and without notice to a party is an extraordinary thing for a court to do. The circumstances in which a court does so have in the authorities been variously described as ‘anomalies’ or ‘exceptional’. The Full Court in Stowe as referred to above, cited with approval the observations of the United Kingdom Court of Appeal in Ansah v Ansah [1977] 2 All ER 638. Their Lord Justices observations bear repeating, where they stated at 642:
Orders made ex parte are anomalies in our system of justice which generally demands service or notice of the proposed proceedings on the opposite party (see Craig v Kanseen [1943] 1 KB 256 at 262). Nonetheless, the power of the court to intervene immediately and without notice in proper cases is essential to the administration of justice. But this power must be used with great caution and only in circumstances in which it is really necessary to act immediately. Such circumstances do undoubtedly tend to occur more frequently in family disputes than in other types of litigation … but even in such cases the court should only act ex parte in an emergency when the interests of justice or the protection of the applicant or a child clearly demands immediate intervention by the courts. Such cases should be extremely rare … Circumstances, of course, may arise when prior notice cannot be given to the other side; for example, cases where one parent has disappeared with the children, or a spouse, usually the wife, is so frightened of the other spouse that some protection must be provided against a violent response to service of proceedings, but the court must be fully satisfied that such protection is necessary.
I am satisfied that the circumstances of this matter are exceptional and that there is a basis established on the evidence to which I have earlier referred to proceed ex parte.
Injunctions
Section 114 of the Family Law Act 1975 (Cth) (“the Act”) provides that the Court may make such order or grant such injunction as it considers proper, including an injunction in relation to the property of a party to the marriage.
In Tsiang & Wu and Ors (2019) FLC 93-911, the Full Court summarised the relevant law in relation to injunctions in the following terms:
20.The grant of an injunction is discretionary and the basis on which such an order is made is well established. A purpose, as in this case, is to preserve the status quo pending resolution of the controversy. An applicant must demonstrate first that there is a serious issue to be tried. While that statement has been the subject of various iterations, in essence it requires the demonstration of an arguable case or as was said in Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at [65], the applicant must “show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo”.
21.Next the applicant must demonstrate that the balance of convenience favours making the order sought. As part of this, the applicant must show that there is a “danger” or risk of dissipation of or dealings with assets which will frustrate any judgment in favour of the applicant.
22.In Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319, Gleeson CJ said after discussing the discretionary nature of the remedy at 321–325:
… as a general rule a plaintiff will need to establish, first, a prima facie cause of action against the defendant, and secondly, a danger that, by reason of the defendant’s absconding, or of assets being removed out of the jurisdiction or disposed of within the jurisdiction or otherwise dealt with in some fashion, the plaintiff, if he succeeds, will not be able to have his judgment satisfied.
...
It is not difficult to imagine situations in which justice and equity would require the granting of an injunction to prevent dissipation of assets pending the hearing of an action even though the risk of such dissipation may be assessed as being somewhat less probable than not.
23.As McDougall J in Skyworks v 32 Drummoyne Road [2017] NSWSC 343 said:
24.The Court is required to undertake a qualitative evaluation of all the evidence that is available, to see if there is a sufficiently serious risk of frustration to justify the making of a freezing order. Further, the two considerations [namely, (1) whether there is a good arguable case and (2) whether there is a real risk of judgment frustration] should be analysed together (as each may impact on the other), and with an appreciation of both the underlying purpose of the rule and the relative risks of granting or withholding relief – the customary discretionary calculus.
24.In this case the identified risk was that the wife might dispose of assets in Australia and in her name in order to defeat the husband’s claim and, equally it was asserted that there was a risk that the second and third respondents too might deal with the partnership assets in a way so as to defeat the husband’s possible judgment or claim to that entity.
25.It is unnecessary to demonstrate a positive intention but merely the possibility of the event occurring. The determination about the balance of convenience may thus be an inference drawn from the facts and circumstances established by the applicant’s evidence.
26.Nor is it the role of the judge determining the question of the injunction to, in effect conduct a trial of the disputed evidence to resolve those disputes (see Shercliff v Engadine Acceptance Corporation Pty Ltd [1978] 1 NSWLR 729).
27.As to the determination of the existence of the risk and its magnitude, in Palmer v Parbery [2019] QCA 27 McMurdo JA (with whom Fraser and Gotterson JJA agreed) said:
119.The determination of whether there exists a sufficiently serious risk of the dissipation of assets involves the evaluation of future possibilities, rather than the ascertainment of historical facts. The risk of dissipation might justify an order although the probability of the risk eventuating is less than 50 per cent. But, as the risk of dissipation must be a real and not merely a theoretical one, it must have an evidentiary basis. Where a fact is alleged by the plaintiff in support of its case about the risk, but there is contrary evidence from the defendant, must the fact be proved to the court’s satisfaction as if the application for the freezing order was the trial of the case? In my view, a plaintiff need not do so. A freezing order is interlocutory in nature; it does not involve a final determination of the parties’ positions. Usually it is made in circumstances of urgency in which the court is unable to conduct an extensive and conclusive factual inquiry in a way which is fair to both parties. Where the factual basis for the plaintiff’s case about the risk of dissipation is disputed, the risk will commonly have to be evaluated with the recognition that the factual basis for it is in doubt. Nevertheless, the possibility of the plaintiff’s evidence being correct, considered with other facts and circumstances, might mean that there is a sufficiently serious risk of the frustration of the satisfaction of a judgment as to justify the making of a freezing order. …
(Footnotes omitted)
Thus to ground the de facto wife’s relief, she needs to establish that there is a serious issue to be tried, alternatively expressed as a prima facie case for relief. She must also establish that her claim for relief will be imperilled if the injunction is not granted. To that extent, the Court might be satisfied about risk of dissipation by an assessment of future possibilities of an event occurring, which may be established by the drawing of inferences from the applicant’s evidence.
The question of prejudice to the respondent needs to be considered and the order made should be no more than is necessary. It is the applicant for the injunction who bears the onus of satisfying the Court that the circumstances justify the making of the order: Sieling & Sieling (1979) FLC 90-627 at 78,262.
The de facto wife has before the Court an undetermined application for financial adjustment under s 90SM of the Act. The evidence would appear to demonstrate that the parties have reached an in principle agreement in relation to the de facto wife’s application. I am satisfied that the de facto wife has established at a prima facie level that the de facto husband has made a payment in part satisfaction of that agreement as evidenced by the trust account receipt, which identifies that the reason for payment is described as “[p]ayment 1 of property settlement agreement entered into on 9 November 2022” (de facto wife’s affidavit filed 19 December 2022, Annexure A).
The de facto wife through her solicitor informs the Court that the de facto husband has failed to comply with orders in the past. She points to proceedings having been brought for contravention, including sentencing proceedings and the issuing of a warrant in relation to the de facto husband’s failure to comply with orders.
I am satisfied that the evidence indicates that the monies in the trust account were to be paid to the de facto wife. An email dated 18 November 2022 from the de facto husband’s solicitors to the de facto wife’s solicitors advised that they had received $350,000 into their trust account and the email recorded “[w]e will forward these funds shortly” (de facto wife’s affidavit filed 19 December 2022, Annexure A).
I am satisfied that the funds have not yet been paid to the de facto wife.
As the de facto husband has not had notice of the proceedings, he has not had an opportunity to put before the Court evidence as to any prejudice occasioned to him by the making of the orders. I am satisfied that the orders that I made directing service by 4.00 pm on 19 December 2022 and bringing the matter back before the Court on Thursday, 22 December 2022 mitigates, to the extent possible, any prejudice occasioned to the de facto husband together with the undertaking as to damages.
I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 20 December 2022
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