Coates & Harris & Anor

[2012] FamCA 805

FAMILY COURT OF AUSTRALIA

COATES & HARRIS AND ANOR [2012] FamCA 805

FAMILY LAW – PROPERTY – application by the wife seeking orders that action taken by the Bank of Western Australia (‘the Bank’) to appoint a receiver and manager of the parties’ two companies be set aside pursuant to section 106B – where the wife questions the bona fides of the husband and the Bank in taking such action – where the companies have fallen into default in payments due to the Bank – where the Court was not of the view that it should exercise its discretion – application dismissed.

FAMILY LAW – PROPERTY – application by the wife seeking orders restraining the Bank from taking any further action in relation to its security – where the Bank has been joined as a third party to the proceedings – whether an injunction should be made setting aside the appointments made by the Bank – consideration of whether such an order was proper in the circumstances – where the Court was not satisfied that it was proper in the circumstances to make orders restricting the Bank from exercising its rights – application dismissed.

Family Law Act 1975 (Cth) ss 90AF & 106B

APPLICANT: Ms Coates

FIRST RESPONDENT: Mr Harris

OTHER PARTY: Bank Of Western Australia

FILE NUMBER: ADC 1718 of 2011

DATE DELIVERED: 10 September 2012

PLACE DELIVERED: Adelaide

PLACE HEARD: Adelaide

JUDGMENT OF: Dawe J

HEARING DATE: 10 September 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Howe

SOLICITOR FOR THE APPLICANT: Howe Martin & Associates

COUNSEL FOR THE FIRST RESPONDENT: Mr Di Rosa

SOLICITOR FOR THE FIRST

RESPONDENT:

Di Rosa Lawyers

COUNSEL FOR THE OTHER PARTY: Mr Berman SC

SOLICITOR FOR THE OTHER PARTY: Finlaysons

Orders

1. The Applications in a Case filed by the mother on 31 August 2012, 7 September 2012 and 10 September 2012 are dismissed.

2. The question of the other party’s costs is reserved (Bank of Western Australia Ltd).

IT IS FURTHER ORDERED THAT

1. The father do provide to the mother’s solicitors within seven [7] days:

3.1a draft profit and loss statement for V Pty Ltd for the year ended 30 June 2012 and for the period from 1 July to 31 August 2012;  and

3.2bank statements for each of the companies for the prior month, with future statements to be provided not less than seven [7] days after receipt of them by the father.

1. The net proceeds of sale (being the sale price obtained after payment of all agents’ commissions and sale expenses and the amount necessary to discharge Mortgage Nos 10835667, 10835668 and 11520054) of the property situated at Property G in the State of South Australia be paid into an interest bearing trust account in the name of D Pty Ltd pending final determination of the mother’s claim for property settlement with neither party to deal with the funds without an order of this Court.

1. The father do file and serve within seven [7] days:

5.1a Financial Statement;  and

5.2an affidavit setting out all relevant matters relating to property settlement which affidavit must include the amount of his legal costs and disbursements incurred in these proceedings and in the proceedings in the District Court of South Australia and the source of funds used to meet those costs.

1. The question of the wife’s costs is reserved.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Harris & Coates and Anor 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 ADELAIDE

FILE NUMBER: ADC 1718 of 2011

Ms Coates

Applicant

And

Mr Harris

First Respondent

And

Bank Of Western Australia

Second Respondent

EX-TEMPORE REASONS FOR JUDGMENT

1. This is an application brought before me this morning in what can be described as unusual circumstances.  The proceedings in relation to the application for final property settlement orders between the husband and wife have been on foot for a considerable period of time, having been instigated last year. 

2. The proceedings, which were before me last week, related to an application by the wife and were adjourned on the basis that the husband would file answering documents. 

3. In that Application in a Case filed by the wife, she was seeking significant orders replacing the wife as the sole director originally of the two companies but, in final submissions in relation to at least the land-holding company (the two companies being companies which own and operate significant real estate asset and business in Adelaide) said to be worth, in combined terms, in excess of $2 million. 

4. The Application in a Case which is now before me is the Application in a Case now filed by the wife seeking orders that the actions taken on Friday afternoon by the Bank of Western Australia, otherwise known as Bankwest, appointing receivers and managers of both companies, be set aside. 

5. The Application in a Case filed by the wife seeks orders pursuant to section 90AF of the Family Law Act1975 (Cth) (“the Act”), that the action taken by the bank to appoint the receiver and manager of D Proprietary Limited be set aside and that the bank be restrained from taking any further action in relation to the security over the property.

6. The history of the matter is set out in a series of affidavits filed by the wife’s solicitors, beginning in late August, in support of the Application in a Case which was filed on 31 August 2012, including the affidavits filed on 3 September 2012, the affidavits filed on 7 September 2012 and the affidavit in support of the Application in a Case which I received today.  The solicitor for the wife has provided a chronology and a summary of argument in relation to the various matters.

7. In this matter, the significant factor is that the timing of the actions by the husband and the bank are called into question when establishing the bona fides of the actions which have been taken. 

8. What is clear from the material before me at the moment is that, at all times up until today, the husband has been the sole director of the two companies which own the real estate and control the business and that the properties are now at risk because the companies have not met their obligations to Bankwest at a time when the husband was the person solely in control of those activities.  That has brought about a situation where the companies are now in default of their obligations to Bankwest.

9. The Court is aware that there were attempts made by the wife and her solicitors to negotiate an outcome with the husband and his solicitors for the orderly sale of the real estate to meet the obligations of the bank.  There is, however, no affidavit or evidence of any significance whatsoever from the husband.  The only material from the husband is an affidavit from his recently appointed solicitor, annexing to it correspondence between the husband’s solicitors and the wife’s solicitors, setting out the disagreements which have arisen as to the type of sale, the type of agent to be appointed for the sale and how the companies and management of the companies will be controlled. 

10. There is no evidence from the husband whatsoever in relation to the monies received coming in from the businesses and the position in which the bank has now found itself, namely that the bank has not been paid any of the obligations due to it for the last three months.

11. The bank appears this morning opposing, through counsel, the orders sought by the wife and calling into question the capacity of the Court to make the orders that are sought. It is submitted that section 106B of the Act does not apply.

12. Counsel for the wife, however, say that it does apply because the bank is now a party to the proceedings. 

13. Section 106B provides that:

    In proceedings under this Act, the court may set aside or restrain the making of an instrument or disposition by or on behalf of, or by direction or in the interest of, a party, which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.

14. The summary of that is that the Court has the power to set aside an instrument made by a party or in the interests of a party which is likely to defeat any order of the Court in these proceedings. 

15. The difficulty in the application of section 106B is that at the time the bank made the instrument, which had the effect of appointing receivers of the business and the company which owned the real estate, it was not a party to the proceedings. I am not able to be satisfied on the information currently before me that it was a disposition at the direction of or in the interests of either the husband or the wife in these proceedings.

16. Even if I were satisfied in those difficult circumstances it is necessary to consider whether I would exercise my discretion under section 106B on an interim basis, bearing in mind the difficulties in the allegations. The significant factor is that it is clear that the Bankwest is owed $2 million and arrears are continuing to accrue.

17. The factors then need to turn to consideration of the provisions of section 90AF. It is not conceded that the Court should exercise the discretion under section 90AF in these proceedings. Division 3 of Part VIIIAA of the Act refers to orders and injunctions which can be made against third parties. Section 90AF(1) says:

    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.

1. The provisions of section 90AF(3) set out the conditions which apply. Section 90AF(2) refers to directing:

   ... a third party to do a thing in relation to the property of a party to the marriage

   or

   alters the rights, liabilities or property interests of a third party in relation to the marriage.

2. It is therefore a possibility that the Court could direct the third party, Bankwest, in a manner which would be an injunction setting aside the appointments made by Bankwest, but the provisions of section 90AF(3) and (4) clearly take into account that often a third party is involved unwillingly in proceedings in this Court.

3. I am satisfied that the Court would have the jurisdiction and the power to make an order, but it is a question of whether the Court should exercise that power in these proceedings.

4. The provisions of section 90AF(3) and (4) emphasise that the rights of a third party have to be clearly given consideration. In this instance, the Court does not have a great deal of information which would allow it to consider the background to the matter other than that the husband has controlled the entities which have failed to meet their obligations to the bank. Therefore, he has brought about the situation which means that the bank is not receiving the repayments which it is due under the mortgage or mortgages.

5. The position, therefore, is whether the Court can be satisfied that an order as sought by the wife would not bring about a situation where the Court is interfering with the rights of the third party. Particularly the provisions of section 90AF(3)(d) require that the injunction is made on the basis that:

   …the Court is satisfied that, in all the circumstances, it is proper to make the order or grant the injunction...

6. It is clear from the material that is before the Court that the wife has attempted to take steps to bring about a sale of the properties and the businesses in circumstances in which she has alleged would maximise the amount available to the parties when considering final property settlement. 

7. It is also clear from the correspondence from the husband’s solicitors that the husband has been unable to agree to those arrangements, notwithstanding his knowledge of the imminent steps being taken by Bankwest to enforce their rights. 

8. However, I am not in a position yet to determine the overall property settlement proceedings between the parties for the obvious reason that the parties have been unable to agree on a method of ascertaining the true value of the various properties and entities concerned.

9. In taking into account the matters set out in section 90AF(3) and (4), the most significant factor is that Bankwest is an independent entity who has been brought into the matrimonial proceedings unwillingly. It has rights pursuant to its securities. The significant factor which would impact upon the Court considering setting aside the appointment is the allegation that the sale by the receiver and manager of the entities would reduce the amount available to the parties.

10. It will be a question for latter determination as to how any such loss should be considered, if indeed it is a loss, rather than a reduction of the ongoing litigation between the parties, which would be an increase in the amount available to the parties as distinct from the various legal representatives involved.

11. I am not satisfied that in all of the circumstances it is proper to make the order sought by the wife restricting Bankwest from exercising its rights.  Therefore I decline to make the orders setting aside that appointment to either of the companies.

I certify that the preceding twenty-eight (28) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Dawe delivered on 10 September 2012.

Associate: 

Date:  20 September 2012