Denton and Denton and Ors

[2007] FamCA 1718

FAMILY COURT OF AUSTRALIA

DENTON & DENTON AND ORS [2007] FamCA 1718

FAMILY LAW - COSTS

Family Law Act 1975 (Cth)

APPLICANT: Ms Denton

RESPONDENT: Mr Denton

INTERVENORS: and Ors

FILE NUMBER: MLC 11893 of 2007

DATE DELIVERED: 14 December 2007

PLACE DELIVERED: Melbourne

JUDGMENT OF: Mushin J

HEARING DATE: 14 December 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr T. North SC with Mr Wilson

SOLICITOR FOR THE APPLICANT: Richard Calley Pty Ltd

COUNSEL FOR THE RESPONDENT:	Mr M. Bartfeld QC, with Mr A.I. Strum
SOLICITOR FOR THE RESPONDENT:	Taussig Cherrie & Associates

COUNSEL FOR THE 2^ND - 5^TH RESPONDENTS: Mr S.K. Wilson QC, with Mr J. Melilli

SOLICITOR FOR THE 2^ND - 5^TH RESPONDENTS: Kenna Teasdale Lawyers

Orders

1. Until further order the respondent husband give written notice to the wife forthwith upon:

   a.receipt by him of any notice of directors’ meeting at which a declaration of dividend or a loan to the husband is to be considered in respect of D Pty Ltd (formally S Pty Ltd); and

   b.any application by him for, or offer by the said company of, a loan or advance to him from the said company.

2. The orders made by the Honourable Justice Bennett as contained in paragraph 2 of the Minute of Consent Orders being part of the order made by the Court on 31 October 2007 (“the October orders”) be and is hereby discharged.

3. Paragraph 3 (b) and (d) of the October orders be discharged.

4. The wife’s Application in a Case filed 30 October 2007 and her Application for Contravention filed 30 November 2007 be dismissed.

5. The wife particularise her claim by filing an amended Application for Final Orders in which she pleads as to the basis of her claim under the provisions of section 79A of the Family Law Act 1975.

6. The 2^nd to 6^th respondent inclusive be discharged as parties in these proceedings.

7. The wife’s Application in a Case filed 30 October 2007 be dismissed save that the wife be at liberty to reinstate her application for discovery upon compliance with her obligations in accordance with the provisions of order 5 hereof and is so advised.

8. The husband have leave to withdraw his Application in a Case filed 30 November 2007 with a right of reinstatement if so advised.

9. The orders contained in paragraphs 2 and 3 of the Minutes of Consent Orders adopted by paragraph 4 of the orders of Justice Bennett made 31 October 2007 as against the 2^nd to 5^th respondents be set aside.

10. The Contravention Applications against the 2^nd to 5^th respondents be dismissed.

11. The proceedings against the 2^nd to 5^th respondents by way of Application for Final Orders be dismissed.

12. Failing agreement as to costs as between the 2^nd to 5^th respondents inclusive and the wife within 28 days the said respondents’ costs be assessed as between the parties pursuant to the provisions of the Family Law Rules and when so assessed be paid by the wife with a stay of 3 months.

13. Failing agreement as to costs as between the husband and the 6^th respondent and the wife within 28 days the said respondents’ costs be assessed as and from 15 November 2007 pursuant to the provisions of the Family Law Rules and when so assessed be paid by the wife with a stay of 3 months.

14. General liberty be reserved to both parties to apply.

IT IS CERTIFIED

1. Pursuant to Rule 19.50 of the Family Law Rules 2004 this matter reasonably required the attendance of Counsel including Senior Counsel.

IT IS NOTED that publication of this judgment under the pseudonym Denton & Denton is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 11893 of 2007

MS DENTON

Applicant

And

MR DENTON and OTHERS

Respondents

REASONS FOR JUDGMENT

1. Arising out of the reasons for judgment delivered by me earlier this week in this matter and the orders which I have so far pronounced as a result of that hearing, I now have applications on behalf of the second to fifth respondents inclusive, and the husband and the sixth respondent for costs to be paid by the wife.

2. These proceedings were commenced by the wife on 30 October 2007. While they do plead the inherent jurisdiction of the court, in my view the substantive application to be relied on would need to be section 79A of the Act seeking a variation or discharge of the orders and a further trial on matters of alteration of property interests.

3. The orders made on 31 October 2007 were by consent, but as a result of a significant discussion in court between counsel, then appearing on behalf of the husband and the wife, and her Honour, in particular the second to fifth respondents inclusive were not parties to those proceedings and were only brought into the proceedings subsequently.  It is clear from the transcript before her Honour on 31 October 2007 that during that proceeding the husband was urged to provide a copy of at least one of the relevant contracts for the sale of the business as distinct from the sale of the company to the wife.

4. The essential issue here is that if the sale of the company were the subject of the transaction then it was arguable that assets were being dissipated in circumstances which might deprive the wife of the fruits of a successful judgment in circumstances in which only the business was being disposed of.  Essentially all that was occurring was that the business itself was being substituted for cash.

5. In my view there is no evidence to suggest any real concern that that would be disposed of.  As well as that, the wife who was relying on hearsay material as to that important fact - that is whether it was the sale of the company or the business - was that there was no direct evidence of that, it was hearsay evidence and obviously subsequently has been conceded in error.

6. Dealing first with the application of the second to fifth respondents inclusive, in my view the question as to costs is clear and that is that they should have their costs to be agreed or assessed.  The basis on which I make that finding is that they were effectively brought into the proceedings in circumstances which were not established as necessary, they were not given a say in the injunctions by which they were bound, and when the matter came to court and they were able to make submissions, the continuation of the injunctions against them was not sought.  In fact all that has been ordered is essentially a flagging order to enable the wife to have notice of any competing claim.

7. In those circumstances, particularly given that the companies cannot be said to have behaved in any manner contrary to the interests of the wife, and certainly not with any mala fides, they should have their costs.  I am not persuaded that the fact that the husband was one of the directors of the companies relieves the wife of that responsibility and there will be, accordingly, an order against the wife for payment of all costs of and incidental to these applications in respect of the second to fifth respondents inclusive.

8. The position of the husband and the sixth respondent - and I treat the sixth respondent as being the alter ego of the husband - is a little more complicated.  The husband consented to the orders on 31 October in circumstances in which, in my view, the wife obtained relief which she might consider herself quite fortunate to have obtained.  The orders were made by consent and although the contact was provided on that date - thereby putting in train a series of events concluding with the wife's acceptance of the erroneousness of the essential fact in the transaction - the fact of the consent to those orders, in my view, militates against the wife's liability to the husband in respect of 31 October.

9. However, it is abundantly clear from the correspondence that from approximately 15 November 2007, that is several weeks before these proceedings came before me, the wife at least should have - and in my view would have - had full knowledge of what the situation was.  I think the wife in that respect is effectively the author of her own undoing in that she has not made the necessary concessions as to the erroneousness of the facts until the very last moment.  Those concessions were only made - certainly as far as open court is concerned and there is nothing to suggest to the contrary out of court - when the matter was opened before me at the beginning of this hearing early this week.

10. In those circumstances, in my view the husband was not obliged to say anything.  The wife has to make her case before this matter goes any further, and the fact that she has the opportunity to amend her application is on one view a reasonably fortunate result for her.  I will exclude 31 October but in my view, in those circumstances, the wife is liable to pay the costs of the husband as between parties from 15 November.  I will order accordingly.

11. In respect of both sets of costs, I accept the submission of senior counsel for the husband that it is not necessarily a result of these proceedings that the wife will receive funds from which any costs order can be debited.

12. Accordingly, I am against a stay pending the disposition of the proceedings, but I will order a stay of three months.

I certify that the preceding twelve (12) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Mushin

Associate

Date:  19 November 2008