Costello and Teresi and Anor
[2018] FamCA 687
•7 September 2018
FAMILY COURT OF AUSTRALIA
| COSTELLO & TERESI AND ANOR | [2018] FamCA 687 |
| FAMILY LAW – PROPERTY – setting aside judgment of NSW Supreme Court - availability of remedies under jurisdiction of the NSW Supreme Court – where remedies are available – accrued jurisdiction – identification of single justiciable controversy – where exercise of accrued jurisdiction non-discretionary – summary dismissal inappropriate where serious legal issue to be tried – undertaking as to damages – application for sole occupancy order – application for spousal maintenance. |
| Family Law Act 1975 (Cth) Uniform Civil Procedure Rules 2005 (NSW) |
| Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559 Autodesk v Dyason (1993) 176 CLR 300 Blueseas Investments Pty Ltd v Mitchell (1999) 151 FLR 298 F Firm v Ruane (2014) 52 Fam LR 230 Houghton v Arms (2006) 225 CLR 553 Lindon v The Commonwealth(No 2) (1996) 136 ALR 251 Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457. Valceski& Valceski (2007) 70 NSWLR 36 Warby v Warby (2001) 28 Fam LR 443 Wentworth v Woollahra Municipal Council (1982) 149 CLR 72 |
| APPLICANT: | Ms Costello |
| 1st RESPONDENT: | Mr A Teresi |
| 2nd RESPONDENT: | Mr B Teresi |
| FILE NUMBER: | CAC | 269 | of | 2018 |
| DATE DELIVERED: | 7 September 2018 |
| PLACE DELIVERED: | Canberra |
| PLACE HEARD: | Canberra |
| JUDGMENT OF: | Gill J |
| HEARING DATE: | 15 August 2018 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Giacomo |
| SOLICITOR FOR THE APPLICANT: | Cater & Blumer |
| COUNSEL FOR THE 1ST RESPONDENT: | Mr Hogg |
| SOLICITOR FOR THE 1ST RESPONDENT: | Tierney & Dowd |
| COUNSEL FOR THE 2ND RESPONDENT: | Mr Price |
| SOLICITOR FOR THE 2ND RESPONDENT: | Mackenzie & Vardanega Solicitors |
Orders
That the Second Respondent be restrained by injunction from taking any steps to enforce the judgment debt against the First Respondent in the Supreme Court of New South Wales of … March 2018 in proceedings No: ….
The Wife’s application for interim orders as part of her Amended Initiating Application filed 23 May 2018, is otherwise refused.
The Respondent’s application for interim orders is refused.
The Second Respondent’s applications for dismissal and summary dismissal are refused
The matter of costs is reserved pending full trial.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Costello & Teresi and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT CANBERRA |
FILE NUMBER: CAC 269 of 2018
| Ms Costello |
Applicant
And
| Mr A Teresi |
Respondent
And
Mr B Teresi
Second Respondent
REASONS FOR JUDGMENT
Background
The Applicant Wife in this matter is Ms Costello, the First Respondent Husband is Mr A Teresi, and the 2nd Respondent, the Husband’s brother, is Mr B Teresi.
The parties separated on 25 April 2017 after a 17-year relationship. The Wife commenced property proceedings on 13 February 2018.
A major issue in proceedings is the judgment entered into against the Husband in favour of the 2nd Respondent in the New South Wales Supreme Court in March 2018, in the sum of $1,978,208.77. The judgment allegedly stems from a debt owed by the Husband to the 2nd Respondent. The 2nd Respondent was joined to the current proceedings on 11 April 2018 by orders made by Judge Neville. The matter has subsequently been transferred to the Family Court of Australia.
Material relied upon:
The Wife relies upon the following:
i.Amended Initiating Application filed 23 May 2018;
ii.Affidavit of the Wife filed 13 February 2018;
iii.Financial statement of the Wife filed 13 February 2018;
iv.Affidavit of the Wife filed 23 May 2018; and
v.Affidavit of Mr C filed 23 May 2018.
The Husband relies upon the following:
a)Amended response of the Husband filed 27 June 2018;
b)Affidavit of the Husband filed 20 March 2018; and
c)Affidavit of the husband filed 27 June 2018.
The 2nd Respondent relied solely upon a Response filed 15 August 2018.
Orders Sought:
Without reciting the orders sought in an exhaustive manner, the Wife seeks on a final basis orders that include the payment to her of $750,000, the setting aside of judgment entered against the Husband by the 2nd Respondent in the Supreme Court of NSW in March 2018 (case number …/2018) along with the setting aside of two mortgages entered into by the Husband, to the benefit of the 2nd Respondent in May 2017.
The Wife seeks by way of interim orders:
i.An injunction restraining the second Respondent from taking any steps to enforce the Supreme Court judgment;
ii.Sole occupation of the home the parties occupied during their relationship in which she currently resides;
iii.An order that the Husband continue to pay rates, insurance and utilities on the property in which she currents resides; and
iv.Costs.
The Husband seeks on an interim basis:
i.Joint occupation of the home; and
ii.An order that the expenses of the home be paid for equally by both parties.
The Second Respondent seeks that:
i.The Wife’s interim application for an injunction against him be dismissed;
ii.Summary dismissal of the Wife’s substantive application for s 106B orders and orders setting aside the Supreme Court judgment; and
iii.Costs against the Wife.
The Wife seeks remedies in respect of the debt relating to the Supreme Court judgment (the judgment debt). The Wife alleges that both the mortgages and the Supreme Court judgements are devices being used to defeat a s 79 claim by the Wife.
The relevant background to that debt appears to be as follows.
The Husband and the 2nd Respondent have operated a business in partnership since 2007. The partnership derives a significant portion of its income from growing fruit. Plants are listed on the depreciation schedule for the partnership.
The parties separated in late April 2017. The mortgages were entered into on 11 May 2017, immediately following the withdrawal of $303,000 from an account operated by the Husband. The Wife was neither aware of the mortgage, nor of the alleged debt. The withdrawal of the funds was also described by her as unusual. No explanation was advanced at the hearing for the withdrawal, nor a description of the background to the monies the subject of the mortgages.
The mortgage documents described, firstly, a sum in relation to the partnership of $157,000 and secondly $1,324,599 for the planting of fruit. They total $1,481,599.
The Wife points out that, despite the sums apparently relating to the business of the partnership, the responsibility for the repayment was solely upon the Husband.
The Wife also notes that the terms of the mortgages entered into by the brothers, less than a year before the commencement of the Supreme Court proceedings, did not provide for any payment to be due in relation to the loans until 30 June 2018. This was emphasised by Exhibit W1, which was correspondence sent by the 2nd Respondent’s solicitor to the 2nd Respondent on 11 August 2017, advising that no action was available for the 2nd Respondent against the Husband in relation to the mortgages. He was advised that no action could be available for enforcement until there was a breach of the terms or a failure to make the interest payment, the first of which was not due until mid-2018.
Despite there being no breach of the mortgage agreement by the Husband, proceedings were then commenced by the 2nd Respondent on 7 February 2018, four months before there could be a default.
The Supreme Court claim by the 2nd Respondent commenced 7 February 2018 against the Husband was expressed to be in relation to monies advanced to the Husband over many years. The claim was for $1,978,208.77, on the basis of unidentified oral contracts between the Husband and the 2nd Respondent. No specific reference was made to the mortgage debts. No explanation was advanced for the disparity between the amount of the claim as opposed the amount secured by the mortgages.
The Husband acknowledged the claim and judgment was entered.
The remedies sought by the Wife are firstly that the judgment be set aside in the jurisdiction of the Supreme Court of NSW by the exercise by the Family Court of Australia of an accrued jurisdiction; secondly, that the judgment debt be set aside pursuant to s 106B of the Family Law Act 1975 (Cth) (“the Act”) as a disposition likely to defeat an order; thirdly that the underlying transactions be set aside pursuant to s 106B of the Act again as dispositions or instruments likely to defeat an order.
Remedies available through the jurisdiction of the Supreme Court of NSW
As to the first remedy, the Wife says that there is a cause of action available to her in the Supreme Court of NSW, either as an aspect of the inherent power of the Supreme Court to set aside a judgment for fraud, or by virtue of the operation of r 36.15 of the Uniform Civil Procedure Rules 2005 (NSW) (“Civil Procedure rules”) which provides, under the heading General power to set aside judgment or order, that:
(1) A judgment or order of the court in any proceedings may, on sufficient cause being shown, be set aside by order of the court if the judgment was given or entered, or the order was made, irregularly, illegally or against good faith.
(2) A judgment or order of the court in any proceedings may be set aside by order of the court if the parties to the proceedings consent.
The 2nd Respondent disputes both the availability of the remedy and, if there is such a remedy, that the Wife can still avail herself of the remedy in the light of alleged failures on her part to seek the remedy in a timely fashion.
He points to the fact that the Wife was on notice of the alleged existence of the debt from the time of a mediation in December 2017. She was then aware of the filing of the claim in the Supreme Court from 23 February 2018. The judgment was not entered until March 2018. The Husband placed the Wife on notice that he would acknowledge the debt the day before he did so. These circumstances, the 2nd Respondent said, had given the Wife her opportunity to dispute the judgment.
The 2nd Respondent also asserted that the Wife had remedies available to her in the Supreme Court for a period of 28 days following the entry of the judgment. Those remedies were firstly to file either a notice of appeal or a notice of intention to appeal within 28 days. The Wife did not do so.
Further, he said, the Wife could have filed a Notice of Motion to set aside, pursuant to r 36.16.1 of the Civil Procedure rules, within 14 days. Rule 36.16 follows on from r 36.15 which is set out above and which deals with a general power to set aside. Rule 36.16 is headed Further power to set aside or vary judgment or order and provides as follows:
(1) The court may set aside or vary a judgment or order if notice of motion for the setting aside or variation is filed before entry of the judgment or order.
(2) The court may set aside or vary a judgment or order after it has been entered if:
(a) it is a default judgment (other than a default judgment given in open court), or
(b) it has been given or made in the absence of a party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order, or
(c)in the case of proceedings for possession of land, it has been given or made in the absence of a person whom the court has ordered to be added as a defendant, whether or not the absent person had notice of the relevant hearing or of the application for the judgment or order.
(3) In addition to its powers under subrules (1) and (2), the court may set aside or vary any judgment or order except so far as it:
(a) determines any claim for relief, or determines any question (whether of fact or law or both) arising on any claim for relief, or
(b) dismisses proceedings, or dismisses proceedings so far as concerns the whole or any part of any claim for relief.
(3A) If notice of motion for the setting aside or variation of a judgment or order is filed within 14 days after the judgment or order is entered, the court may determine the matter, and (if appropriate) set aside or vary the judgment or order under subrule (1), as if the judgment or order had not been entered.
(3B) Within 14 days after a judgment or order is entered, the court may of its own motion set aside or vary the judgment or order as if the judgment or order had not been entered.
(3C) Despite rule 1.12, the court may not extend the time limited by subrule (3A) or (3B).
(4) Nothing in this rule affects any other power of the court to set aside or vary a judgment or order.
For the 2nd Respondent it was put that the Wife’s ability to have the judgment set aside in the Supreme Court of NSW had ended by virtue of the time limit in this Rule. That is not the case. Even assuming that the Rule would have application to the current case, it may be observed to provide an additional manner for setting aside that does not derogate from those identified by the Wife above.
The critical point to be extracted from the above submissions is the notion that the Wife has had, but not taken, the opportunity to deal with the issue in the Supreme Court. This is said by the 2nd Respondent to disqualify her from seeking the remedies she currently seeks by means of accrued jurisdiction. Of particular emphasis by the 2nd Respondent was the importance of finality of proceedings.
In support of this the 2nd Respondent pointed to Mason J’s judgment in Autodesk v Dyason (1993) 176 CLR 300 and also Wentworth v Woollahra Municipal Council (1982) 149 CLR 72 at 684. Both of these cases dealt with the entry of judgment in the absence of a party to the proceedings and pointed to the need for explanation, given the importance of maintaining the finality of proceedings, before allowing a judgment to be set aside.
Against the background of what he contends were lost opportunities for the Applicant to have the matter dealt with in the Supreme Court, the 2nd Respondent asserts, in the context of the Applicant’s failure to give an explanation, that these cases tend against giving the Wife a remedy in the Family Court proceedings.
While the two cases remind of the importance of finality, there is an important distinction between each of them and the circumstances here. In this case the Wife was not a party to the proceedings in the Supreme Court. There was no failure by her to attend proceedings that required explanation as she was never made a party. Perhaps if she had been joined to those proceedings this would have constituted a better argument. But she was not.
The 2nd Respondent also alleged that the Applicant was estopped from seeking a remedy through the Family Court on the basis that she was bringing a new claim that could have been previously litigated in the Supreme Court, as a form of Anshun estoppel. However, the Applicant was never a party to the previous proceedings so as to be bound by such an estoppel.
The 2nd Respondent ultimately conceded that if the Supreme Court powers accrued to the Family Court in this case then there is a power to go behind the orders for fraud (if fraud is established).
Against this, the 2nd Respondent complained that the Wife had not pleaded fraud to support her claim. However, the 2nd Respondent also accepted that the Family Court is not a court of pleadings. While, absent pleadings, it is still necessary to identify with particularity that it is a fraud that is alleged, along with the factual basis for that fraud, in this case the Wife has set out in a case outline document filed 14 August 2018 the particular facts relied upon and identified that she sought that the Supreme Court orders be set aside, including on the grounds of “against good faith.”
The 2nd Respondent also asserted that there was no basis by which it could be sustained that the transaction, and the subsequent proceedings, could be regarded as fraudulent, and so the 2nd Respondent sought the summary dismissal of the Wife’s application.
Rule 10.12 deals with summary dismissal and sets the bar for summary dismissal at no reasonable likelihood of success.
However, the matters identified by the Wife are sufficient at this stage of the proceedings to mean that such a conclusion should not be reached. The circumstances pointed to by the Wife including the timing of the entry into the mortgages shortly after the end of the relationship, the assumption by the Husband of the whole of debts that on their face related to the partnership (without explanation), the commencement of proceedings in the face of advice that proceedings could not be taken in relation to the mortgages as there was no breach, the disparity between the claim and the mortgage amount, the acquiescence in the obtaining of the judgment debt, the close business relationship of the Husband and the 2nd Respondent, along with the proximity of these matters to the end of the relationship and the commencement of s 79 proceedings by the Wife, which, absent explanation, leave potential for an inference of fraud to defeat the Wife’s claim.
Accrued jurisdiction
The remaining question in relation to the remedies sought by the Wife is whether an accrued jurisdiction is attracted in these proceedings.
In Warby,[1] the Full Court determined that:
The Family Court of Australia is not restricted to the determination of a family law claim or proceeding; it may exercise accrued jurisdiction to determine the non-federal aspects of a justiciable controversy of which the family law claim or cause of action forms a part. The factual circumstances of the case will determine whether the jurisdiction arises and whether it is appropriate to exercise the jurisdiction.
[1]Warby v Warby (2001) 28 Fam LR 443.
The features of accrued jurisdiction have been recently dealt with by the Full Court in F Firm v Ruane.[2] The key to determination whether an aspect of the dispute attracts the accrued jurisdiction is whether it, together with the aspects that in the normal sense attract the jurisdiction, form a single matter. That is, whether they form a single justiciable controversy.
[2](2014) 52 Fam LR 230.
There are a number of characteristics that have been identified that may result in such a conclusion.
In Warby, the Full Court identified six characteristics that may be considered, being:
a)what the parties have done;
b)the relationships between or among them;
c)the laws which attach rights or liabilities to their conduct and relationships;
d)whether the claims are part of a single justiciable controversy and in determining that question whether the claims are “attached” and not “severable” or “disparate”;
e)whether the claims are non-severable from a matrimonial cause and arise out of a common sub-stratum of facts; and
f)whether the court has the power to grant appropriate remedies in respect of the “attached” claims.
In Warby at [91] the court further said that:
We consider that a court’s assessment of these matters will allow it to determine whether it should exercise its accrued jurisdiction. As the authorities indicate, a rigid filter is difficult to define without close inspection of the particular facts and we would not wish to create an exhaustive definition which must be applied beyond the circumstances posited in this case.
This elasticity of considerations was reflective of what was observed by Brereton J in Valceski& Valceski (2007) 70 NSWLR 36 at [39], and approved by Thackray J in F Firm v Ruane, that “it must always be borne in mind that the ultimate question is not the existence of each of the several suggested indicia, but whether there is in substance a single justiciable controversy”. It appears that insofar as the characteristics are applicable, they funnel into the consideration of the question as to whether the matter forms a single justiciable controversy.
A lingering issue from Warby was as to whether there is a discretion to decline to exercise an accrued jurisdiction. This question flowed from Barwick CJ’s description of accrued jurisdiction in Philip Morris:[3]
It is settled doctrine in Australia that when a court which can exercise federal jurisdiction has its jurisdiction attracted in relation to a matter, that jurisdiction extends to the resolution of the whole matter. This accrued federal jurisdiction is not limited to matters incidental to that aspect of the matter which has in the first place attracted federal jurisdiction. It extends, in my opinion, to the resolution of the whole matter between the parties. This accrued jurisdiction carries with it the authority to make such remedial orders as are necessary or convenient for, or in consequence of, that resolution. For this purpose, the court exercising federal jurisdiction may enforce rights which derive from a non-federal source. This exercise of this jurisdiction, which for want of a better term I shall call 'accrued' jurisdiction, is discretionary and not mandatory, though it will be obligatory to exercise the federal jurisdiction which has been attracted in relation to the matter.
[3]Philip Morris Inc v Adam P Brown Male Fashions Pty Ltd (1981) 148 CLR 457.
In Houghton v Arms,[4] however, the High Court accepted what had been said in Edensor,[5] stating:
In Edensor, the Court saw no harm in the continued use of the term “accrued jurisdiction” provided it be borne in mind that, whilst there might be several claims made in litigation, there was but one “matter”, and that jurisdiction conferred with respect to that matter is not “discretionary” and ordinarily is to be exercised by the court concerned.
[4] (2006) 225 CLR 553.
[5]Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559.
This non-discretionary approach appears to have now been adopted by the Family Court. In F Firm Strickland J said as follows:
However, that criteria was promoted at a time when it was thought that Federal Courts could elect, in the exercise of discretion, not to exercise accrued jurisdiction. Indeed, the existence of such discretion was assumed in the second question posed for determination by the Full Court in Warby and assumed by the Full Court at [90] and [91] in answering the question. Thus, for example, it was understood that the Family Court might decide not to exercise the jurisdiction if the remedies sought were those more commonly granted in another court that had jurisdiction such as a State Supreme Court.
It is common ground now that, “questions of abuse of process, forum non conveniens, and the like aside,” once a court has jurisdiction it has no discretion whether it will exercise it: ASIC v Edensor Nominees Pty Ltd (2001) 204 CLR 559, at 585-586; Houghton v Arms (2006) 225 CLR 553, at 564; Bergman & Bergman (2009) FLC 93-395. (I note that although Edensor was decided before Warby, the Full Court in Warby was not taken to that decision.)
In answering the question of whether the various aspects of the dispute constitute a single justiciable controversy, it is important to note that the considerations that apply in this case are similar to those identified in Warby and also in the various examples cited by Thackray J in F Firm.
On the question of whether the aspects formed a single justiciable controversy, Thackray J in F Firm noted a number of examples where aspects were found to be part of a single justiciable controversy:
It is instructive to note that in those cases in which, to date, the Full Court has upheld, or sanctioned, the use of the accrued jurisdiction such as Wade-Ferrell & Wade-Ferrell (2001) FLC 93-069, Warby & Warby (2001) FLC 93-091 and Bishop & Bishop (2003) FLC 93-144, it has been the determination under state law of what is the property of the parties that has been essential for the purposes of the Family Court's jurisdiction under s 79 of the Act and thus has been the subject of the accrued jurisdiction.
These are consistent with the application of accrued jurisdiction in Warby at [93] itself, which was described as follows:
The Family Court cannot determine and settle the property of the parties without determining the relative beneficial interests of the parties to the marriage and the wife’s father in the property. It is not to the point that a State court could make orders as to the dispute between the parties to the marriage and the wife's father, and that the Family Court of Australia could then determine the family law dispute between the parties to the marriage. It is enough to say that even taking the narrow view of accrued jurisdiction represented by Wilson J’s judgment in Philip Morris, in this case “the federal question could not be resolved without the determination of the non-federal question”. The Family Court of Australia must ascertain as a first step the property pool of the parties available for distribution.
Critical to the resolution of the Federal claim between the Wife and Husband is the identification of the Husband’s property interests (see Stanford). It is those interests that are the subject of the claim of the 2nd Respondent against the Husband. Further, the existence or non-existence of the debt to the 2nd Respondent is a relevant consideration in determining any adjustment of property interests meaning that, not only are the Husband’s property interests with respect to the 2nd Respondent central to both claims, but the 2nd Respondent’s rights with respect to the Husband are also relevant to the Federal claim. A common factual substratum spans both claims and is necessary to resolve the Federal claim.
In this case, of the Warby characteristics, the attached, non-severable nature of the claims and the common substratum of facts are key to the identification of a single justiciable controversy. Such a conclusion is also reinforced by the Family Court having sufficient remedy to deal with all of the claims in the event that accrued jurisdiction is attracted, by virtue of the addition of the remaining remedies identified above.
To the extent that the 2nd Respondent relies upon a failure on the part of the Wife to join the Supreme Court proceedings at an earlier stage, if such a factor is relevant, it is counteracted by the failure of the 2nd Respondent to join the Wife to those proceedings to bind her in the result.
It should be concluded that the Court has, by virtue of the single justiciable controversy, an accrued jurisdiction to exercise. That jurisdiction is not discretionary and therefore must be exercised.
The applicability of s 106B
As identified above, there are two potential applications of s 106B. The first relates to the underlying asserted loan transactions and mortgages between the Husband and the 2nd Respondent. The identification of matters above that go to the question of fraud are sufficient to defeat the 2nd Respondent’s claim for summary dismissal.
The second use of s 106B relates to the undoing of the Supreme Court judgment.
The 2nd Respondent has identified a serious issue to be determined, being whether the Supreme Court judgment constitutes a “disposition” in the context of s 106B. If it does not, then s 106B cannot have application to the judgment.
In relation to this aspect of summary dismissal, where there is a serious legal issue to be determined, Kirby J in Lindon v The Commonwealth(No 2),[6] stated:
Summary relief of the kind provided for by O 26, r 18, for absence of a reasonable cause of action, is not a substitute for proceeding by way of demurrer. If there is a serious legal question to be determined, it should ordinarily be determined at a trial for the proof of facts may sometimes assist the judicial mind to understand and apply the law that is invoked and to do so in circumstances more conducive to deciding a real case involving actual litigants rather than one determined on imagined or assumed facts.
[6](1996) 136 ALR 251.
The 2nd Respondent’s legal argument that the Supreme Court judgment is not a disposition may ultimately succeed. However, in accordance with what was expressed by Kirby J, now is not the time to determine that. It is an issue for trial.
Undertaking as to damages
The 2nd Respondent points to the fact that the Wife, in seeking relief by injunction to prevent him from enforcing the judgment debt in the Supreme Court, has offered no undertaking as to damages. As an aspect of potential damage he points to the interest that may accrue on the debt.
It may be accepted that, generally in civil litigation, an undertaking as to damages will be required before an injunction is imposed. However, the Wife pointed to Blueseas Investments Pty Ltd v Mitchell,[7] which establishes different considerations in litigation under the Act:
Against this however, there is a well-known principle that poverty or straitened circumstances should not bar a litigant's access to justice -see in Re the Will of FB Gilbert (dec.) [1946] 46 SR (NSW) 318 at 323, cited in Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc (1981) 148 CLR 170 at 177.
It should be noted that these principles in relation to undertakings as to damages are principles of equity derived from civil litigation. There is, we think, an additional highly relevant matter that distinguishes litigation under the Family Law Act from ordinary civil litigation: that is the fact that very often the wealth of the parties is controlled by one rather than both of them. This in turn means that it is not uncommon for one of the parties to have no means of meeting any liability that may be incurred pursuant to an undertaking as to damages.
[7] (1999) 151 FLR 298.
Further on the Court observed that:
No doubt in ordinary civil litigation the impecuniosity of a party is a matter that may be relevant to the issue of balance of convenience. For the reasons already stated however, we consider that family law cases must be looked at in a different light. In our view it would be unconscionable to accept a broad principle that the impecuniosity of a party in family law proceedings would be given such weight as to prevent an injunction being granted where all the other requirements for the grant of such an injunction are present. Indeed, it may even be doubtful whether the impecuniosity of one of the parties to family law proceedings would usually be a factor militating against a grant of interim or interlocutory injunctions if the other tests for the grant of the same were otherwise satisfied. This is not to say that such a factor would never be relevant but in the present circumstances at least, where the injunction may have the effect of preserving the only piece of property to which the wife might have recourse, it would be unreasonable in the extreme for her impecuniosity to operate to prevent an injunction being granted.
It should be remembered that Blueseas, like this case, involved the contention that the property that on its face belonged to a third party properly formed a part of the pool of matrimonial property. The fact that the injunction bore upon the third party did not alter the principles referred to above.
In this case, the financial statement of the Wife indicates that she is impecunious.
There also appears to be a significant disparity between the parties as to the ownership of matrimonial property. In his affidavit,[8] the Husband set out the purported assets of the parties and the partnership. The Husband gave an approximate combined valuation of $1,621,000 for property held in his name only. Against this, his only alleged liability was the disputed loan from the 2nd Respondent, in the amount of $1,978,208.
[8] Affidavit of Mr A Teresi filed 14 March 2018.
The Husband provided an approximate gross valuation of $1,285,000 for the partnership assets, with the net position of his share being $156,126.50.
The Husband provided an approximate valuation for the Wife’s assets. The only asset held solely by the Wife was a Japanese motor vehicle valued at approximately $3,000.
The Husband also listed a retail business as jointly-owned by the parties, with an approximate value of $34,000. However, the Wife’s financial statement does not list any interest in this property.[9]
[9] Financial Statement of Ms Costello filed 13 February 2018.
The Wife’s position is then that she holds almost no assets following the seventeen year relationship. Depending on whether the debt alleged by the Husband is sustained, the Husband is the holder of significant assets.
In this case, given the background recited above, it would be unreasonable to refuse the interlocutory injunctive relief sought be the Wife absent an undertaking as to damages.
The sole occupancy and related applications
The Wife seeks a sole occupancy order in relation to the home at D Street, Suburb E, in which she and the Husband lived from early 2016.
The property was purchased by the Husband and the 2nd Respondent as tenants in common in equal shares on 31 May 2015. The partnership has been receiving rental income from the sheds on the property, and has been paying the outgoings on the property. It appears that neither the Husband nor the Wife has been required to pay rent on the property.
The Husband says that the partnership is currently conducting building works on the property that the Husband is involved in.
The Wife alleges that she has been sexually assaulted by the Husband in September 2017, at which point she says that he vacated the premises. He claims to be still living there, although on the basis that the house is divided into two separate residences.
I am not, at this stage, able to determine whether the Husband and Wife are both living at the house.
The Wife also alleges that the Husband has entered into her portion of the home while she has been absent and removed items. The Husband agrees that he has, removing a refrigerator, microwave and table. He asserts that they were items that it was agreed that he could have. In support of this he provided a document at Annexure C of his affidavit. The items taken do not obviously appear on the list.
It may be accepted that, even on the basis that the residence has separate areas, and separate entrances, in the context of the allegation of sexual assault it is not tolerable for the parties to be living in such close proximity.
However, where it appears that the Husband and 2nd Respondent own the property, operate a part of their business from the property, where there is apparently construction work being undertaken that involves the Husband, and where the business pays the outgoings, I am unable to conclude that the balance of convenience lies with an exclusion of the Husband from the premises, despite the intolerability of the Husband and Wife sharing a house, even a divided house.
I am also unable to see utility in an order to compel the Husband or partnership to pay the outgoings they are already responsible for and paying.
The Husband sought an order that the Wife pay half of the home expenses, presumably as a form of spousal maintenance order. The Husband failed to disclose any information in relation to his income in his affidavit material, and did not seek to rely on his financial statement. Given the lack of requisite preconditions for the making of a spousal maintenance order, I decline to make the order.
Conclusion
The current claim attracts the accrued jurisdiction of the Court being the exercise of the jurisdiction of the Supreme Court of NSW in relation to the 2nd Respondent’s judgment debt against the Husband.
Pending the disposition of the claim by the Wife, the 2nd Respondent should not be at liberty to enforce the judgment debt obtained in the Supreme Court.
The application for summary dismissal of the Wife’s claims fails.
The Wife’s claim for sole occupancy also fails.
I certify that the preceding eighty-four (84) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Gill delivered on 7 September 2018.
Associate:
Date: 7 September 2018
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