Duan & Ren (No 2)
[2024] FedCFamC1F 310
•10 May 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Duan & Ren (No 2) [2024] FedCFamC1F 310
File number: SYC 2533 of 2024 Judgment of: SCHONELL J Date of judgment: 10 May 2024 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Where the wife seeks for the continuation of injunctive orders to prevent the completion of the sale of a property at Suburb D between the husband and second respondent and disposing of assets and of an order granting her exclusive possession of the Suburb D property – Where the second respondent seeks an order for the wife to vacate the Suburb D property or in the alternative pay security for damages, and for an order allowing for the completion of the transfer of the Suburb D property – Where the second respondent agrees to an undertaking not to deal with the Suburb D property – Where the balance of convenience favours the wife retaining exclusive possession of the Suburb D property. Legislation: Family Law Act 1975 (Cth) ss 79, 106B, and 114
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)
Cases cited: Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57; [2006] HCA 46
Sieling and Sieling (1979) FLC 90-627; [1979] FamCA 23
Tsiang & Wu and Ors (2019) FLC 93-911; [2019] FamCAFC 128
Division: Division 1 First Instance Number of paragraphs: 52 Date of hearing: 9 May 2024 Place: Sydney Counsel for the Applicant: Mr Ahmad Solicitor for the Applicant: Alton Legal Counsel for the First Respondent: Mr Dura Solicitor for the First Respondent: Korn Tlais Defence Lawyers Counsel for the Second Respondent: Mr Reynolds Solicitor for the Second Respondent: JC Legal Practice ORDERS
SYC 2533 of 2024 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS DUAN
Applicant
AND: MR REN
First Respondent
MS MANDEL
Second Respondent
ORDER MADE BY:
SCHONELL J
DATE OF ORDER:
10 MAY 2024
THE COURT ORDERS THAT:
1.Order 8 made 11 April 2024 is discharged.
2.Upon the Undertaking of the second respondent, the second respondent is restrained from doing any act or thing to encumber or transfer or otherwise deal with the property being Lot … Strata Plan … otherwise known as C Street, Suburb D in the State of New South Wales. The Court notes that the second respondent does not object to the lodgement by the wife of a caveat over that property.
3.The interim relief sought by the wife in her Amended Initiating Application sealed 9 May 2024 is dismissed.
4.The interim relief sought by the husband in his Response dated 19 April 2024 is dismissed.
5.The interim relief sought by the Second Respondent in her Response sealed 27 April 2024 is dismissed.
6.For the abundance of clarity, Order 7 made 11 April 2024 continues.
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).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of 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 Duan & Ren has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
SCHONELL J:
The current proceedings before the court involve the continuation of injunctive orders that were first made by a Senior Judicial Registrar on 11 April 2024. This is the first time when the court has actually determined whether or not the injunctions should continue. The proceedings are between the applicant wife (“the wife”), the respondent husband (“the husband”) and a Ms Mandel, the second respondent.
The wife contends that the husband and the second respondent are in an intimate relationship. The husband does not address the wife’s contentions in her affidavit nor does the second respondent. The second respondent’s counsel describes the relationship between the second respondent and the husband as one of friendship and a joint investor in property.
The wife relied upon:
(1)Amended Initiating Application sealed 9 May 2024;
(2)Affidavit of the wife sealed 26 April 2024;
(3)Affidavit of the wife sealed 10 April 2024;
(4)Affidavit of Mr F sealed 10 April 2024; and
(5)Financial Statement sealed 10 April 2024.
The husband relied upon:
(1)Affidavit of the husband filed 24 April 2024; and
(2)Financial Statement filed 9 May 2024.
The second respondent relied upon:
(1)Response to Initiating Application filed 27 April 2024;
(2)Affidavit of the second respondent filed 27 April 2024; and
(3)Affidavit of the second respondent filed 8 May 2024.
Each of the second respondent and the wife relied upon Case Outline documents.
BACKGROUND
The husband and wife were married in Country B in 2015 and have one child, X born 2019 who is five years of age.
It would appear that the wife during the course of the relationship and until late 2023 has always lived in Country B.
The husband gives evidence of having travelled between Country B and Australia on a regular basis. In that respect, he contends that between 2015 and 2017 he lived in Country B, came to Australia in 2017 and then returned to Country B for a year, travelled to Australia in 2019 staying until early 2021 then returned to Country B until late 2022 when he came to Australia and then returned after two months to Country B where he remained until late 2023 when he came to Australia returning to Country B in early 2024.
Since the wife’s arrival in Australia in late 2023 she has lived in Australia.
The wife contends that in early 2024 she was assaulted by the husband. The husband in his affidavit contends that he has entered a guilty plea in relation to the charges associated with the Apprehended Domestic Violence Order (“ADVO”) but is in the process of, to use his words, “traversing my plea”, whatever that means.
The wife contends having discovered that the husband was in a personal and intimate relationship with the second respondent.
The husband says that in early 2024 he commenced proceedings in Country B. In those proceedings the husband identifies that there are assets for division in Country B. It seems not in issue that the value of those assets is the equivalent of approximately 13 million AUD.
The husband does not say in his affidavit what the orders are that he is seeking in Country B. The commencement by him of proceedings in Country B follows letters sent by the wife’s solicitors commencing 18 January 2024 which sought the husband provide the wife with a sum of money and financial disclosure within 14 days in accordance with the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth). Receipt of that correspondence is acknowledged by a solicitor acting on behalf of the husband.
I am satisfied that the husband commenced proceedings in Country B at a time when he knew the wife was seeking in this country the provision of finance and disclosure of documents consistent with the processes of this Court.
After a number of attempts to engage with the husband through correspondence, the wife commenced proceedings in Australia on 9 April 2024.
Unbeknown to the wife, the husband had in early 2024 exchanged contracts for the sale of a property at C Street, Suburb D, NSW (“the Suburb D property”) and settled the sale of that property to the second respondent on 8 April 2024.
On 11 April 2024 the husband appeared through counsel and orders were made granting the wife exclusive occupation of the Suburb D property and restraining the husband from taking any steps to progress the settlement of the sale of that property as well as a general restraint upon the husband from dealing with monies in his bank account other than in the ordinary course of business.
The second respondent says in her affidavit that following payment of the purchase price but before settlement she discovered that a caveat had been lodged on the Suburb D property by the wife. She says she was not previously advised by her conveyancer that a caveat had been lodged. She says that she would not have paid the full purchase price had she known that she could not obtain “a clear title to the property on settlement”. She also contends that she was shocked that her conveyancer had released the purchase monies to the husband without ensuring that she would have clear title.
She says that she did not contemplate an order of the court at the time that she signed the contract on 11 March 2024. The extent of the second respondent’s knowledge will, I anticipate, become an issue in the proceedings.
The husband in his affidavit says that he sold the property to the second respondent as a land tax policy had been introduced with a 4 per cent surcharge for foreign investors. He says the second respondent is an Australian resident and so she did not have to pay the surcharge. I note that the husband contends that he holds Australian residency.
The husband says that on 10 April 2024 the money that he received from the sale of the Suburb D property, being 3.3 million AUD, was transferred to Country B and on 15 April 2024 the money was paid to his mother as she had loaned him funds. The husband in his affidavit said that he did not disclose to the wife that he intended to sell the Suburb D property because according to him it was not their home.
As part of the wife’s final relief, she seeks to set aside the disposition of the Suburb D property to the second respondent.
BRIEF OVERVIEW OF SUBMISSIONS
The wife submitted that the transfer by the husband to the second respondent was a transaction designed to defeat a claim. Counsel for the wife refers to the transfer out of Australia of large sums of money. The wife also contends that the husband has failed to comply with directions to file a Financial Statement. The wife has issued a subpoena to Westpac to obtain banking records of the husband and the second respondent and that the second respondent has filed an objection to that subpoena. The wife submits that this, together with the transfer of the Suburb D property, should been seen as part of a campaign to defeat her claim. It is clear that the wife very much puts in issue that the second respondent is a bona fide purchaser. The wife submits through her counsel that she requires a residence to live in Sydney and otherwise relies on the contentions set out in her written outline.
The husband did not seek to be heard upon the various applications. In those circumstances, Order 6 made 11 April 2024 shall continue.
Counsel for the second respondent contended that the Court would not be satisfied that there was a serious question to be tried and that the balance of convenience did not favour the making of the injunctions sought by the wife. He contended that the wife has no right to occupy the property in circumstances where she has resided primarily in Country B, and that the second respondent is a bona fide purchaser for value and that to permit the wife to remain in occupation frustrates the ability of the second respondent to rent the property and to meet the outgoings associated with ownership. He also sought the discharge of the injunction that prevented the second respondent being registered on title.
ORDERS SOUGHT
The wife seeks to continue the injunction made on 11 April 2024 to the following effect:
6.The Respondent Husband and his servants or agents be restrained from disposing of or further encumbering any interests or assets standing in his name in Australia, whether such assets be held by him or on his behalf including any assets in which he may have an equitable interest, including but not limited to any money standing to his credit in any bank account or any real property, without providing at least 30 days notice and obtaining the Applicant Wife’s consent save and except in the ordinary course of business and up to $3000 per week for the Husband’s necessary living expenses.
7.Until further order, the Applicant Wife is granted exclusive occupation of the property [C Street, Suburb D] NSW […].
8.Until further order, the Respondent Husband is restrained from taking any steps to progress the settlement of the sale of the [Suburb D] property, including the registration of the transfer.
as varied by Order 6 made 26 April 2024 to the following effect:
6.That Order 6 of the Orders dated 11 April 2024 shall continue pending further Order save that the Respondent Husband is permitted to apply any funds transferred to, or any funds held in, the Trust Account of his Solicitor to his legal costs and disbursements and it is further noted that the interests of the proposed Second Respondent are not affected by this Order (such interest including her rights and entitlements in respect of the property situated [E Street], Sydney NSW […]).
The second respondent seeks orders to the following effect:
1.Order 1 of the Interlocutory Orders sought in the Amended Initiating Application filed on 12 April 2024 be refused insofar as it seeks a continuation of orders 6-8 made by [the] SJR on 11 April 2024.
2.The First Respondent Husband do all acts and things and sign all documents to transfer the title of the property located at [C Street, Suburb D] NSW […] ([Suburb D] Property) (Folio Identifier […]/SP […]) to the second respondent [Ms Mandel].
3.Within 30 days from the date of these orders, the wife shall vacate the [Suburb D] Property and deliver all the keys and access card of this property to the Second Respondent’s solicitor office.
4.Upon vacating the property in accordance with order 3, the Applicant Wife must professionally clean the [Suburb D] Property and ensure all her personal items and effects are removed from the [Suburb D] Property.
5.In the event the wife fails to move out of the [Suburb D] Property pursuant to order 3, the Second Respondent is at liberty to change the lock of the property and remove all of the Applicant Wife’s personal belongings and store them in a self-storage unit, and is entitled to be reimbursed by the Applicant Wife for all costs incurred in relation to changing the lock, the relocation and storage of the Applicant Wife’s personal effects, and professionally cleaning the property
6.The wife is to pay rent of $2,800.00 per week to the Second Respondent from 8 April 2024 until the date the wife vacates the [Suburb D] Property.
7.If the Court continues orders 6-8 made on 11 April 2024, then the Applicant Wife is to pay such amount as the Court considers fit into Court as security for her undertaking as to damages.
8.The Applicant Wife pays for the Second Respondent’s costs of the application.
During the course of submissions, counsel for the second respondent indicated that he had instructions that the second respondent would undertake not to otherwise deal with, encumber or transfer the Suburb D property pending further order, and would consent to the lodgement by the wife of a caveat over that property for the purposes of protecting her interest. Such concession by the second respondent was without prejudice to the maintenance of the primary relief that she sought.
Notwithstanding that concession, the wife pressed her primary relief for a continuation of the injunctions.
APPLICABLE LAW
The circumstances in which the Court will grant an injunction are well settled.
Section 114 of the Family Law Act 1975 (Cth) (“the Act”) provides the Court power to grant injunctions.
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)
To ground the 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.
The question of balance of convenience, including prejudice to the respondents, needs to be considered and the order made should be no more than is necessary. It is the party seeking the injunction who bears the onus of satisfying the Court that the circumstances justify the making of the order (Sieling and Sieling (1979) FLC 90-627 at 78,262).
The Court would in the exercise of its discretion also consider the question of an undertaking as to damages.
SERIOUS ISSUE TO BE TRIED / PRIMA FACE CASE
The wife seeks an order for adjustment under s 79 of the Act as well as s 106B relief. The wife in her affidavit sworn filed 10 April 2024 sets out a history of her contributions. They are not the subject of any challenge. In circumstances where he has had an opportunity to respond and has not, I accept for the purposes only of this application her evidence.
The wife seeks, as part of her final relief, a setting aside of the transfer of the Suburb D property by the husband. The property was transferred for approximately 3.3 million AUD. Apart from the Suburb D property, there is located in Australia in bank accounts according to the husband approximately 480,000 USD as well as an interest that the husband has in a property with the second respondent. The wife contends that the second respondent holds her interest in that property on trust for the husband. The proceeding are very much at an early stage, and I accept that the wife’s claim is not advanced with the degree of precision and particularity that it should otherwise be.
The wife invites the Court to view, with a high degree of suspicion, the disposal of the Suburb D property to a person whom she asserts the husband is in a personal and intimate relationship.
The husband has not yet quantified the relief that he seeks on a final basis. The husband made no submissions before the Court as to the wife’s prima facie case.
I am not determining the final factual contest. I only need be satisfied that there is a “sufficient likelihood of success” (Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at [65]). Even a “weak” case (as submitted by the respondents) may ultimately be successful at trial. I am satisfied based on the submissions made by the wife that she has an arguable case.
BALANCE OF CONVENIENCE
Counsel for the second respondent contends that the balance of convenience favours the second respondent and the refusal of the injunctions. I do not accept that that is so. Beyond the assertion by the second respondent that she wishes to rent and/or occupy the subject property, she provides no evidence as to when it is that she intends to return to Australia to occupy the property. In relation to the rental of that property she identifies that it has a market rent of something in excess of 2,800 AUD per week and that she wishes to rent the property to defray the financial cost associated with ownership. Beyond the assertion that she would suffer hardship if she was not able to rent out the property to receive the rental income, she does not provide the Court with any evidence of the extent of her income, expenses, assets, or liabilities to be able to determine that she would in fact suffer hardship.
On the other hand, I am satisfied that the applicant would suffer hardship if the injunction were not continued. The applicant is the primary carer of the parties’ only child. An examination of her Financial Statement discloses that she has, according to that document, no income and other than a property in Country B and some jewellery, no assets of any substance. Her inability to support herself in Australia by the payment of rent is established. The husband does not offer to pay her rent.
The husband puts in issue the contention as to the extent of her wealth asserting that she holds bank accounts in Country B having a value of up to 600,000 AUD. Given the circumstances of these proceedings, I am simply unable to resolve the competing contentions.
Whilst I accept that there may be a prejudice to the second respondent, I am satisfied that the balance of convenience favours the wife.
Having regard to all the evidence, I am satisfied the wife has demonstrated that she has an arguable claim for the relief that she seeks and that the balance of convenience favours the wife notwithstanding any asserted prejudice to the respondent. I note the wife has proffered an undertaking as to damages.
I am satisfied that it is proper that the injunction in relation to occupation should continue and I will make orders accordingly.
The second respondent seeks as an alternative order in the event that the Court declines to grant the second respondent’s primary relief, that the wife pay such amount as the Court considers fit into court as security for her undertaking as to damages. During the course of submissions, the second respondent contended that such amount should cover the rent that the second respondent would otherwise not receive by the wife occupying the property.
I am not satisfied that it is necessary at this stage for the wife to provide security for her undertaking as to damages. The proceedings are at a very early stage. The second respondent contends “the wife’s financial disclosure is woefully inadequate, and the court should not accept that she does not have access to significant funds in [Country B]”. This submission goes on to point to her evidence of renovations to a home in City G contending that it is implausible that the wife would only have a modest amount of funds in bank accounts. On one version of the evidence, accepting what the husband says, the wife has a significant sum of money in Country B. The wife contends otherwise.
If the second respondent is correct, then the wife has significant funds ultimately to meet any loss sustained by the second respondent. The wife has an unsatisfied application for financial adjustment under s 79 as well as the benefit of financial proceedings in Country B instituted by the husband where the husband asserts that the parties’ assets have a value of approximately 13 million AUD. I am not satisfied that a case has been made for the wife to provide security for her undertaking as to damages.
I am also not satisfied that the injunction in relation to completion of the transaction in relation to the Suburb D property should continue. The contract has settled and the transfer I am told is with the Lands Titles Office. Subject to the injunction and caveat proffered by the second respondent counsel for the wife could not identify any prejudice to the wife other than expressing some “trepidation” about allowing the transfer to be registered. More than that is required to sustain the injunction.
That injunction will be discharged.
I note that counsel for the husband advised the Court that he was no longer seeking a stay of the Australian proceedings. I will make any order dismissing his interim relief.
I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 10 May 2024
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