Collins, D.J. and Collins, M.Y.

[1987] FamCA 1

In the marriage of COLLINS, D.J. and COLLINS, M.Y.

(1987) FLC ¶91-800

Other publishers' citations: (1987) 11 FamLR 382

Full Court of the Family Court of Australia at Sydney.

Judgment delivered 8 January 1987.

Before: Ellis, Simpson and Buckley JJ.

Ellis, Simpson and Buckley JJ.: This is an appeal by the husband from a decree made by Nygh J. on 30 July 1986.

On that date the learned trial Judge ordered as follows:

``1. That until further order of the Court orders numbered 1(4) and 1(5) made herein on the 30th day of April 1986 be continued.

2. That within seven (7) days from this date the wife cause to be served on Gail Lorraine Collins the application of the wife filed herein on the 27th day of May 1986 and the affidavit in support thereof together with a copy of this order and that the said Gail Lorraine Collins be at liberty to apply herein on seven (7) days notice.

3. That the parties and the said Gail Lorraine Collins be at liberty to vary by mutual agreement in writing the investment of funds subject to order number 1 herein.

4. That each party be at liberty to apply herein on seven (7) days notice.''

The orders numbered 1(4) and 1(5) referred to in para. 1 of the decree dated 30 July 1986 provide as follows:

``4. The Husband and Gail Lorraine Collins are restrained from dealing with the proceeds of sale of [two properties at] Woolwich prior to 4 p.m. on 30 June 1986.

5. The Husband and Gail Lorraine Collins shall notify the solicitors for the wife of any proposed sale of any real estate presently registered in the name of either or both of them (or in respect of which either or both have a beneficial interest) prior to exchange of any contract for sale.''

Accordingly it will be appreciated that the effect of the orders made by his Honour on 30 July 1986 is to restrain the husband and Gail Lorraine Collins (his present wife) from dealing with the proceeds of the sale of the nominated properties until further order.

At the outset it should be noted that Gail Lorraine Collins (``Mrs Gail Collins'') has not appealed from the said decree of 30 July 1986 or otherwise taken any steps to set the orders aside.

The parties were married on 1 November 1977. At the time of their meeting and marriage the husband was operating an import/export business through a company D.A. Collins & Son Pty. Ltd. (``the company''). That company had been operating for some years prior to the association of the parties. It is not necessary for the purposes of the appeal to discuss the dispute between the parties as to whether the wife assisted the husband in the improvement of the business. Suffice it to say that in comparatively recent times the principal asset of the company, namely import quotas, was sold for some $28 million.

The husband was a minority shareholder in that company — being entitled to just less than 50% of the shares — and there was no finding by the trial Judge to suggest that the husband was able to control the company or that in some other way it was the husband's alter ego.

The other shareholders in the company are the husband's mother, who owns fractionally more than 50% of the issued shares, and his sister who has a very small holding. There was some litigation in the Supreme Court of New South Wales between the husband and the other shareholders but that action was resolved in favour of the shareholders other than the husband but nevertheless the husband's interest in the company had a value of approximately $12 million.

It appears that following the sale of its principal asset the company was put into voluntary liquidation and that liquidation has been substantially completed.

There is one child of the marriage, A, born on 13 September 1978.

The parties separated in 1983. The husband alleges the marriage came to an end in June 1983 whereas the wife alleges the marriage was on foot until October 1983. Nothing turns on that dispute. The child has remained with the wife since separation.

The husband instituted property proceedings pursuant to sec. 79 of the Family Law Act (``the Act'') on or about 1 August 1984 and on or about 15 November 1984 the wife made a cross-application seeking an award of $2 million and requesting a financial enquiry pursuant to reg. 99 of the Family Law Regulations then in force. It should be noted that at that stage the wife did not seek relief under sec. 85 of the Act.

It seems that in or about June 1985 the husband received approximately $7,200,000 by way of distribution from the company but, according to the husband's statement of financial circumstances, by June 1986 the total value of his assets had been reduced to approximately $1,565,000. Those assets included two properties owned jointly with the wife and according to the husband's affidavit evidence the value of the balance of his interest in the company amounted to only approximately $880,000. Also in August 1984 the husband swore that Mrs Gail Collins was dependent upon him for support.

In 1978 the company had acquired a house property at Woolwich. It was occupied by the parties from time to time, it being a matter of dispute as to whether it could be properly considered to have been the matrimonial home of the parties. The wife is the sole registered proprietor of a home at Bilgola Beach which was also occupied by the parties on occasions and the husband asserts that that was the matrimonial home of the parties.

In June 1985 Mrs Gail Collins purchased the house property at Woolwich from the company for $320,000. The funds for that purchase were provided to Mrs Gail Collins by the husband who obtained the moneys from the company.

Subsequently in 1985 Mrs Gail Collins purchased another property at Woolwich from a stranger at a price of $1,050,000. Once again the funds to enable Mrs Gail Collins to complete the purchase were provided by the husband from the same source.

Although it is not strictly relevant to this appeal it appears that the husband also provided Mrs Gail Collins with further amounts totalling $4,625,000 to enable her to purchase properties at Hunters Hill in one of which the husband presently resides.

In 1986 Mrs Gail Collins sold both the Woolwich properties for a total price of approximately $1,700,000 and that sale was due to be completed on 30 April 1986.

The wife registered caveats on the titles to the two properties and Mrs Gail Collins instituted proceedings in the Supreme Court of New South Wales for the removal of the caveats. Whilst the latter proceedings were pending in the Supreme Court the wife filed an application in this Court on 29 April 1986 whereby she sought, inter alia, the following order:

``That the husband DAVID JOHN COLLINS AND GAIL LORRAINE COLLINS be restrained pending further order of this Court from receiving the proceeds of sale of [the two properties at Woolwich].''

That application came on for hearing on 30 April 1986 and the husband and Mrs Gail Collins were both represented by counsel and orders were made as follows:

``IT IS ORDERED: —

1. That by consent orders be made in terms of paragraphs 1 to 7 inclusive of the document titled `Draft Minutes of Order' dated the 30th day of April 1986 and filed herein as set out hereunder: —

`1. The husband is to file and serve within 36 days —

(a) Affidavit in Answer and/or Cross-Application to the wife's application filed 29.4.1986.
(b) Full particulars in compliance with Order 17.

2. The wife is to file and serve within 36 days full particulars in compliance with Order 17.
3. Gail Lorraine Collins is to file and serve any affidavit on which she wishes to rely within 36 days.
4. The Husband and Gail Lorraine Collins are restrained from dealing with the proceeds of sale of [the two properties at] Woolwich prior to 4 p.m. on 30 June 1986.
5. The Husband and Gail Lorraine Collins shall notify the solicitors for the wife of any proposed sale of any real estate presently registered in the name of either or both of them (or in respect of which either or both have a beneficial interest) prior to exchange of any contract for sale.
6. Liberty to Husband and G.L. Collins to apply for discharge of Order 4 on 14 days notice.
7. Application stood over to 30 June 1986.''

By consent also the wife's caveats were removed from the titles to the two properties and the sales thereof were completed.

On 27 May 1986 the wife filed a further application in this Court whereby she enlarged her claim for property settlement to a sum of $5 million and sought, inter alia, the following orders:

``2. If the husband asserts that he does not have any real or personal property in Australia exceeding the value of $5,000,000.00 an Order be made pursuant to Section 85 of the Family Law Act setting aside all transfers of funds and/or real estate by the husband in favour of Gail Lorraine Collins.

3. Pending compliance by the husband with Orders for Property Settlement to be made in favour of the wife in these proceedings the husband and Gail Lorraine Collins be restrained from transferring out of Australia any asset or financial resource without first obtaining the leave of the Court.

4. That each of the husband and Gail Lorraine Collins be restrained pending further Order from selling, mortgaging or otherwise alienating the title of all real estate in respect of which each or either of them is the owner of the beneficial interest.''

That application was returnable on 10 June 1986 but on that occasion there was no appearance by or on behalf of Mrs Gail Collins. The application was heard by Nygh J. but his Honour refused to grant the relief sought by the wife at that stage but stood the application over to 30 June 1986. In addition his Honour made some procedural orders including an order that ``within twenty-one (21) days from this date the wife file and serve upon the husband and upon Gail Lorraine Collins any material on which she seeks to rely in respect of her applications filed herein''.

On 30 June 1986 both the husband and wife were represented but there was no appearance by or on behalf of Mrs Gail Collins. On that date orders were made by consent in the following terms:

``1. Orders 1.4 and 1.5 made on 30th April, 1986 are continued until 4 p.m. 29th July, 1986.

2. Wife's application filed 27th May, 1986 is stood over to July 29th, 1986.

3. Liberty to restore on seven days' notice.''

The proceedings with which we are immediately concerned came on for hearing, and were determined by Nygh J. on 30 July 1986. Both husband and wife were represented by counsel but there was no appearance by or on behalf of Mrs Gail Collins.

At the conclusion of the hearing the learned trial Judge delivered an ex tempore judgment. In the course thereof his Honour said:

``In the course of argument I have outlined the basis upon which an injunction of this kind could be granted. In this case, as I have indicated, there are three matters to be considered: firstly, whether the wife has made out a prima facie claim for relief. Secondly, whether or not that relief would be defeated if the injunctions were granted and in this particular case since the injunction is being sought against a third party, whether the leave sought by the wife against the third party is reasonably incidental to a claim she may have under sec. 85(1) of the Act.

Dealing with the preliminary issues which were raised by [counsel for the husband], I would express my agreement with him on a number of points. Mrs Gail Lorraine Collins does not appear in these proceedings and [counsel for the husband] has no instructions to appear on her behalf. It appears that she has not been served with the application under sec. 85(1). I agree with [counsel for the husband] that the fact that previously consent was given to the making of these orders on her behalf does not necessarily mean that she consents to the jurisdiction of this Court to continue those proceedings. On the renewal of an injunction the whole matter has to be considered afresh. It is only relevant in so far as it cannot be put in the mouth of Mrs Collins to say at this stage that the matter came totally and utterly as a surprise to her, that she has no notice of it. At the moment she is not a party to the proceedings and she has not been served with the latest application. It is clearly a defect which has to be remedied. It does not mean, however, that I cannot grant an injunction against her, provided, of course, I am satisfied the conditions above are met and provided, she is given a proper opportunity to present her case to the Court and to seek, if need be, the discharge of the injunction made against her.

Since this Court is declared to be a superior court, in sec. 21(2) of the Act, those injunctions, even if they were made without jurisdiction, cannot in my view be ignored. Someone has to come in and seek their discharge and point out to the Court the errors of its way, either to this Court or to another higher tribunal.

Dealing then with the three factors, the wife by her amended application filed on [27 May] now seeks an order of the magnitude of $5,000,000. Having regard to the exhibits that have been produced to me, a considerable amount of money has gone through the hands of the husband recently. Whilst I cannot say with any certainty that an order of $5,000,000 is likely to be made in this case, the wife has produced evidence that she has made substantial contributions to the marriage. Subject to any evidence the husband may lead to the contrary, it may well be that the wife is entitled to receive a substantial amount. It would also seem from the husband's statement of financial circumstances that the amounts that are currently available in his own name are not sufficient to meet any order of any magnitude.

In those circumstances, I am satisfied that the wife has made out a prima facie case for relief although not necessarily of the magnitude she is seeking and I am also satisfied that if orders preserving the assets are not made the husband will not have sufficient assets to meet the orders sought by the wife within the range which may be ordered by this Court.

The next issue is the question as to whether there is a prima facie case that the wife is entitled to have certain transactions which passed between the husband and Gail Lorraine Collins set aside under sec. 85(1). The husband has given answers to the questions which were filed in this Court which would seem to indicate that the moneys were made available to Gail Lorraine Collins in the first instance by, or at the direction of, the husband. In those circumstances there is in my view an arguable case that in so far as the husband caused those moneys to be provided to Mrs Gail Lorraine Collins, those are transactions which prima facie fall within sec. 85(1). Consequently she should be restrained from dealing with those assets until the issue of whether or not those transactions may be set aside can be determined. This, I understand, involves assets to the value of some $1,700,000.

I must, of course, make it clear, as is indeed indicated in order No. 2 sought, that the transaction which has to be set aside is not any dealing which took place between Mrs Collins and the company in which the husband had a minority interest, but any financial transaction by, or at the direction of, the husband and Mrs Collins. In other words, it is the money she can be ordered to restore, not any property dealing.

That money, as a result of the sale of the property, is presently held by her pending determination of these proceedings. In my view she should be restrained from dealing with it. Of course, I do not know the exact amount, since the husband has not disclosed the exact nature of the transactions which took place and that is clearly a matter which the husband can rectify by disclosing that. In the light of the evidence it may well be that a restraining order in respect of $1,700,000 is excessive in that it exceeds the amount of any moneys made available by him to Mrs Collins. It is of course up to him or Mrs Collins to provide the evidence to the Court.''

His Honour then proceeded to make the orders about which the husband now complains.

We leave aside for the moment the propriety of the husband exercising a right of appeal in relation to the orders directed against Mrs Gail Collins in the light of her failure to take any steps to have the orders set aside and of the absence of complaint by the husband in relation to the second part of the injunction.

By his notice of appeal the husband appealed from the whole of the subject decree on the following grounds:

``1. Failed to give sufficient weight to rights and interests of third party. That his Honour Mr Justice Nygh erred in making orders for extension of injunctions in relation to the proceeds of sale.

2. Failed to give sufficient weight to basis upon which applicant wife increased her claim from $2 million to $5 million and so thereby restrained the disposition of property in excess of amount so claimed as amended.

3. That his Honour erred in law in finding available grounds upon which to base a decision to continue orders restraining the use of funds of a third party.''

In support of those grounds counsel for the husband referred to the fact that there was no finding by the trial Judge that the transactions between the company and Mrs Gail Collins were a sham or that she was the puppet of the husband. It was submitted on behalf of the husband that in the absence of such a finding the Court had no jurisdiction to make an order binding on a third party.

It was also contended that the wife was not seeking to set aside the transactions whereby Mrs Gail Collins acquired the properties at Woolwich. Nor was the wife claiming that the matrimonial property included the husband's interest in the company. Counsel for the husband also found comfort in the fact that the price received by the company on the sale of its import quotas was in the nature of a windfall of the company, or the husband, and accordingly that it was not matrimonial property to which the wife was entitled to make any claim.

However, basically the argument on behalf of the husband was that the Court had no jurisdiction to make the orders because those orders had the effect of interfering with the rights of a third party. Reliance was placed by counsel for the husband on the decisions of the High Court in Ascot Investments Pty. Ltd. v. Harper and Harper (1981) FLC ¶91-000; (1981) 145 C.L.R. 337 and Re Ross-Jones; Ex parte Green (1984) FLC ¶91-555; (1984) 156 C.L.R. 185. Reference was also made to the decision of Gee J. in Hudson and Hudson (1986) FLC ¶91-768.

It was also urged on behalf of the husband that the trial Judge was in error in taking into account the application by the wife under sec. 85 of the Act, or the impact of that section in the circumstances of this matter, in determining whether to extend injunctions which were originally granted before the filing of any application under sec. 85.

Also it was submitted on behalf of the husband that, in any event, there is no power in the Court under sec. 85 to order restitution even if the Court had the power to set aside the relevant transactions, namely the provision of funds by the husband to Mrs Gail Collins in a total amount of $1,370,000 to enable her to purchase the properties at Woolwich. The latter submission was made on the basis of the proper construction of sec. 85 supported by the fact that there is no property affected by the injunction which can be said to be property of the parties of the marriage.

It appears clear from the husband's answers to specific questions put to him on behalf of the wife that the husband provided the relevant funds to Mrs Gail Collins although he declined to specify whether the provision was by way of gift, loan or otherwise. The submission was repeated that there is no power under the Act, even if the Court had the jurisdiction to set aside the dispositions consisting of the transfers of funds from the husband to Mrs Gail Collins to order her to repay those funds to the husband.

It seems to us to be appropriate to consider first the submission that the trial Judge was in error in taking into account the application by the wife under sec. 85 of the Act which, as we have previously mentioned, was filed by the wife on 27 May 1986; that is after the making of the orders of 30 April 1986.

We consider that submission to be ill-founded. It was not his Honour's task to decide the dispute on the basis that he was giving consideration merely to the extension of existing injunctions. Rather it was the trial Judge's obligation to decide firstly whether the Court had jurisdiction to make the injunctions sought by the wife, and secondly whether, as a matter of discretion, it would be proper to restrain the husband and Mrs Gail Collins in the manner sought by the wife.

In our view his Honour was obliged to make his determination in respect of the injunctions sought by the wife on any evidence on which the parties wished to rely. We consider it would have been an error on his Honour's part to have dealt with the proceedings on 30 July 1986 on the basis that the wife was confined to relying on material filed prior to the making of the orders on 30 April 1986.

Now that we have dealt with that aspect of the submissions made on behalf of the husband it would be convenient to dispose of the arguments advanced in relation to the proper construction of sec. 85 of the Act and the limits of the jurisdiction of the Court thereunder.

Section 85 of the Act provides as follows:

``85(1) 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.

(2) The court may order that any money or real or personal property dealt with by any such instrument or disposition may be taken in execution or charged with the payment of such sums for costs or maintenance as the court directs, or that the proceeds of a sale shall be paid into court to abide its order.

(3) The court shall have regard to the interests of, and shall make any order proper for the protection of, a bona fide purchaser or other person interested.

(4) A party or a person acting in collusion with a party may be ordered to pay the costs of any other party or of a bona fide purchaser or other person interested of and incidental to any such instrument or disposition and the setting aside or restraining of the instrument or disposition.

(5) In this section, `disposition' includes a sale and a gift.''

There was a similar provision under the repealed Act, namely sec. 120, which provided as follows:

``120(1) 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, if it is made or proposed to be made to defeat an existing or anticipated order in those proceedings for costs, damages, maintenance or the making or variation of a settlement.

(2) The court may order that any money or real or personal property dealt with by any such instrument or disposition may be taken in execution or charged with the payment of such sums for costs, damages or maintenance as the court directs, or that the proceeds of a sale shall be paid into court to abide its order.

(3) The court shall have regard to the interests of, and shall make any order proper for the protection of, a bona fide purchaser or other person interested.

(4) A party or a person acting in collusion with a party may be ordered to pay the costs of any other party or of a bona fide purchaser or other person interested of and incidental to any such instrument or disposition and the setting aside or restraining of the instrument or disposition.

(5) In this section, `disposition' includes a sale and a gift.''

It will be noted that sec. 85 of the Act enlarges the power of the Court to set aside a disposition ``irrespective of intention'' in the making of the disposition.

We mention the corresponding provision in the repealed Act because it seems to us that the authorities decided in relation to that provision are of relevance in relation to the proper construction of sec. 85 of the Act, and more particularly for present purposes, the power of the Court to order restitution.

Our understanding of the law and practice in respect of sec. 120 of the repealed Act is that the courts proceeded on the basis that there was power to order restitution in an appropriate case. The Family Court has consistently adopted the same approach. It seems to us to be clear as a matter of construction that sec. 85 of the Act enables the Court not only to set aside a disposition, but also (inter alia) to order the repayment of any amount paid by a party to the proceedings to a third party. It would be an affront to commonsense to construe sec. 85 in the restricted manner urged by counsel for the husband.

We should proceed on the basis that sec. 85 of the Act is a valid exercise of the constitutional power of the Commonwealth. In those circumstances we consider that sec. 114(3) of the Act (quite apart from any jurisdiction under sec. 85(1)) enabled the trial Judge to grant the injunctions that he did in relation to the exercise by the Court of its jurisdiction in the wife's proceedings under sec. 85 of the Act.

We are also of the opinion that it was an appropriate case, as a matter of discretion, for his Honour to exercise his jurisdiction under sec. 114(3) of the Act. Reference to some of the relevant authorities may be found in Aldred and Aldred (No. 2) (1985) FLC ¶91-602.

We now turn to the major argument advanced on behalf of the husband, namely that the trial Judge had no jurisdiction to make the orders because those orders had the effect of interfering with the rights of a third party, namely Mrs Gail Collins.

The relevant authorities are reviewed in an article by D. Kovacs to be found in the University of New South Wales Law Journal (1985) Vol. 8 No. 1 at p. 21.

It seems to us to be essential to keep in mind that his Honour had before him, inter alia, an application by the wife under sec. 85 of the Act by which the wife sought to set aside ``all transfers of funds'' by the husband in favour of Mrs Gail Collins. In effect what the wife was seeking was the setting aside by the husband of the transactions whereby the husband paid to Mrs Gail Collins a total amount of $1,370,000 and, by implication, the repayment of that sum by Mrs Gail Collins to the husband. The wife sought to secure the payment of that amount by having the proceeds arising from the sale of the relevant properties by Mrs Gail Collins held intact until the determination of the wife's proceedings under sec. 85 of the Act.

In neither Ascot Investments Pty. Ltd. v. Harper and Harper nor Re Ross-Jones; Ex parte Green (supra) was the High Court considering a third party who was a respondent to an application under sec. 85. Accordingly the various pronouncements of the members of the High Court in those cases must be considered in the light of the proceedings with which the High Court was concerned.

For practical purposes sec. 85 of the Act would be denuded of its efficacy in many cases if the recipient of a relevant disposition could not be made subject to an injunction under sec. 114(3) of the Act having the effect of preserving the fruits of the disposition.

We do not understand that the High Court in either Ascot Investments Pty. Ltd. v. Harper and Harper or Re Ross-Jones; Ex parte Green intended to so limit the jurisdiction of the Family Court.

We conclude our consideration of this aspect of the matter by recording that in our view the decision in Hudson and Hudson (supra) is authority contrary to the view urged by counsel for the husband.

For the foregoing reasons we consider that the trial Judge had jurisdiction to make the orders he did against Mrs Gail Collins even though it could be said that the orders have the effect of interfering with her rights. Mrs Gail Collins has the right, at any time, to seek a discharge of the injunction. In fact the husband's appeal is, in reality, an appeal on behalf of the third party.

We noted at the outset of these reasons, that Mrs Gail Collins has not appealed from the decree made on 30 July 1986, nor has she taken any other steps to seek a discharge of the injunctions. Counsel for the wife submitted that the husband had no standing to exercise the right of appeal in this matter (leaving aside the question of jurisdiction) in the light of his stance that the funds, the subject of the first injunction, are not the property of the husband.

It is not necessary for us to decide that question because we are of the view that the appeal should be dismissed on the merits. Accordingly we content ourselves with noting that it is not easy to reconcile the statements made in some of the Australian authorities which are of relevance, and we refer particularly to: Peter v. Shipway (1908) 7 C.L.R. 232 at p. 259; Unsworth v. The Commissioner for Railways (1958) 101 C.L.R. 73 at p. 94; Imperial Chemical Industries of Australia and New Zealand v. Murphy and Others (1973) 47 A.L.J.R. 122; Kelly v. Newcastle Protective Coating Pty. Ltd. and Andrew Cook and Sons Pty. Ltd. (1973) 2 N.S.W.L.R. at p. 45; The Commercial Banking Company of Sydney Ltd. v. George Hudson Pty. Ltd. (In Liquidation) and Another (1974) 131 C.L.R. 605. The English authorities are referred to in the Notes to O. 59 r. 3 of the English Supreme Court Practice.

We would dismiss the appeal and award the wife her costs of the appeal in the sum of $1,250.

The order of the Court is as follows:

1. That the appeal be dismissed.

2. That the husband pay the wife's costs of the appeal fixed in the sum of $1,250 within 14 days of this date.