Duggan and Duggan

[2019] FCCA 1310

FEDERAL CIRCUIT COURT OF AUSTRALIA

DUGGAN & DUGGAN [2019] FCCA 1310

Catchwords:
FAMILY LAW – Property – interim application for property adjustment – injunctive relief to restrain disbursal of funds.

Legislation:

Family Law Act 1975, ss.114, 79

Cases cited:

M v DB (2006) 36 Fam LR 454; [2006] FamCA 1380

Sieling & Sieling (1979) FLC 90-627

Stowe & Stowe (1981) FLC 91-027

Waugh & Waugh [2000] FamCA 1183

Applicant: MS DUGGAN

Respondent: MR DUGGAN

File Number: NCC 245 of 2019

Judgment of: Judge Costigan

Hearing date: 29 March 2019

Date of Last Submission: 29 March 2019

Delivered at: Newcastle

Delivered on: 17 May 2019

REPRESENTATION

Counsel for the Applicant: Mr Bateman

Solicitors for the Applicant: Reid Lawyers

Counsel for the Respondent: Ms Ticehurst

Solicitors for the Respondent: Aubrey Brown Partners

ORDERS

1. Order 1(f) of the Orders made on 18 March 2019 is discharged.

2. The matter is adjourned to 24 May 2019 at 11.30am for a directions hearing in the Federal Circuit Court sittings at Newcastle.

3. Liberty granted for the Solicitor for the Applicant and Respondent to appear by telephone link on 24 May 2019.

IT IS NOTED that the parties can take part in the Court telephone link by:

a.  Dialling the free call number 1800 132 423
b.  When prompted dial in the meeting room number 953 817 6497#.
c.  Waiting on the line until the court dials in as “the moderator”.
d.  Please ensure you have dialled in several minutes prior to the listing time.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT NEWCASTLE

NCC 245 of 2019

MS DUGGAN

Applicant

And

MR DUGGAN

Respondent

REASONS FOR JUDGMENT

Introduction

1. These are interim property proceedings between Ms Duggan (‘the Wife’) and Mr Duggan (‘the Husband’).

2. The single issue for immediate determination is whether an order should be made by which the Husband should be restrained from reducing his AMP bank account below a specified amount of $100,000.

3. The Wife says that there is a genuine risk that the Husband will dissipate the monies standing in that account which form part of the asset pool in relation to which she is seeking orders under s.79 of the Family Law Act1975. 

4. The Husband opposes any order that would, in effect, freeze his AMP account.

Background

1. The Husband is 62 years of age and the Wife is 55 years of age.

2. The parties commenced cohabitation in … 2010 and were married on … 2012.

3. There are no children of the relationship but the Husband has eight children from prior marriages and the Wife has two children from a prior marriage. When the parties commenced their relationship, three of the Husband’s children and two of the Wife’s children, lived with them.

4. At the outset of the relationship the Husband says that he owned the former matrimonial home at Street A, Town B. In … 2010 the property was valued at $650,000 and subject to a mortgage of $235,000. The Husband also had superannuation of approximately $161,000 and a motor vehicle.

5. The Wife owned a property at Street C, Town B, a motor vehicle, savings of around $3,000, furniture and contents, an interest in AMP superannuation and a business which was subject to a mortgage.

6. In 2011 the Wife sold her home at Street C, Town B and realised a sum of approximately $200,000 which she says she applied to the mortgage on the former matrimonial home.

7. In 2012 the Wife also sold her business. The Husband says there were debts associated with the business of around $10,000.

8. In or around 2014 the Wife established a new business.

9. In 2013 the Husband commenced working on the development of a business known as Business D and as part of his agreement with the business he received shares in the company.  The Husband currently has 101,758 shares which he holds as Trustee for his self-managed superannuation fund.  The work he did for Business D was conducted outside his normal working hours for Employer.

10. In … 2018 the Husband was diagnosed with bowel cancer. The Husband says he immediately ceased worked and commenced chemotherapy treatment.[1]

    [1] Husband’s affidavit filed

11. The Husband had significant accrued sick leave and annual leave with his employer and therefore was on full pay until November 2018.

12. The parties separated on 18 December 2018 when the Wife says she was excluded from the former matrimonial home.

13. On 5 January 2019 the Wife was charged with common assault and a provisional apprehended violence order was made for the protection of the husband.

14. On 7 January 2019 at a meeting of the Trustees of the Duggan Super Fund, the Wife was removed as a Trustee and the Husband’s son Mr E was appointed in her place. 

15. On 23 January 2019 the Husband signed a contract for the sale of the former matrimonial home. The sale price was $1,175,000.  The Husband concedes that he sold the former matrimonial home without notice to the Wife. 

16. Following completion and an exchange of correspondence between the parties’ representatives, the Husband caused the sum of $870,000 to be paid into the trust account of the Wife’s solicitor and held on behalf of the parties.

17. The Wife commenced these proceedings by way of Initiating Application filed on 30 January 2019. 

18. On or around 11 February the Husband placed some of the Wife’s personal chattels and furniture in storage with Town F Storage and Removals.

19. On 18 February 2019 the Wife filed an application in a case seeking injunctions against the Husband’s disposal of assets.

20. The Husband filed his Response to the Initiating Application and a further Response to the Application in a Case on 12 March 2019.

21. The matter first came before Registrar Clarke in the financial applications program on 15 March 2019 and was transferred to my duty list on 18 March 2019. On that date I made orders:

    1.  The husband be restrained by injunction from:

    a.  Withdrawing, transferring or otherwise disposing of his interest in the Duggan Super Fund;

    b.  Withdrawing, transferring or otherwise disposing of his interest in the Duggan Super Fund;

    c.  Amending or changing the rules of the Duggan Fund;

    d.  Changing the beneficiaries or officeholders of the Duggan Fund;

    e.  Transferring or otherwise disposing of his shares in Business D;

    f.   Reducing the funds in the AMP bank account below $100,000.

    2.  The matter is adjourned to 29 March 2019 at 2.15pm for an interim hearing in the Federal Circuit Court of Australia.

    3.  The husband file and serve his response to the wife’s spousal maintenance claim by 9.00am 29 March 2019.

    4.  Both parties are to file and serve updating affidavits by 9.00am 29 March 2019.

    5.  The wife’s costs of today are reserved to the final hearing.

22. The competing interim applications were heard on 29 March 2019 and provided by way of submissions only. The parties were both legally represented by counsel; the Wife by Mr Bateman and the Husband by Ms Ticehurst. Following the interim hearing I reserved this decision.

Competing Applications

1. The interim orders sought by the Wife in her amended initiating application were as follows:

   1. The Respondent pay spousal maintenance for the Applicant in the sum of $1,000 per week each week, the first payment to be made 7 days after the date of this order.

   2.  The Respondent do all acts necessary to cause the payment of spousal maintenance in Order 1 to be made to a bank or other account nominated by the Applicant.

   3. The Respondent is restrained and injunction is granted, pending further order from destroying selling, gifting or in any other way disposing of the furniture and contents of the former matrimonial home at Street A, Town B and including the personal property of the Applicant, that is presently in the care or control of the Respondent.

   4. The Respondent cause an inventory to be prepared, at his expense, of the furniture and contents of the said former matrimonial home and of the personal property of the Applicant that he took into his care or control and have that inventory and a document indicating the location of each of these items, delivered to the solicitors for the Applicant within 7 days from the date of this order.

   5. The Respondent is restrained and an injunction is granted pending further order, from alienating, withdrawing or in any way diminishing the contents of his account No’s … and … with Super Fund G (client  no. …) without the prior written consent of the Applicant.

   6. The Applicant is granted liberty to apply in relation to the implementation of these orders.

2. As previously stated the parties agreed that the Wife would receive the sum of $50,000 to be uncharacterised for the purposes of the final hearing and to be drawn from the monies standing in the trust account of the Wife’s Solicitor representing the proceeds of sale of the former matrimonial home.

Husband

1. The Husband sought orders in accordance with his response to an application in a case filed 12 March 2018 as follows:

   1. That the Application in a Case be dismissed.

   2. That the Wife pay the Husband’s costs of the application in a case made by the Wife.

Issues

1. At the commencement of the interim hearing the controversy between the parties had been reduced to the single issue of whether or not the injunction restraining the Husband from reducing his AMP deposit account below $100,000 should continue.

Evidence and Submissions

1. The Wife relied on the following documents:

   ·Her application in case filed 18 February 2019;

   ·Her amended initiating application filed 14 March 2019;

   ·Her affidavits filed 18 February 2019, 28 March 2019 and 29 March 2019; and

   ·Her Financial Statement filed 30 January 2019.

2. In addition, the Wife tendered a Joint Balance Sheet.

3. Counsel for the Wife submitted:

   ·     The Wife says that since separation the Husband has reduced the AMP account by approximately $85,000, of which $40,000 was spent on a holiday for him and his family to Queensland.

   ·     The Husband’s case is that he needs access to those funds to purchase medication at a rate of $6,000 per dose once every two or three weeks. The Wife says the drug is available on the Pharmaceutical Benefits Scheme (PBS) for $40.30, so absent that expense, she says there is no need to disturb the interim orders of 18 March 2019.

   ·     The AMP account is a general purpose account into which the husband pays his income and funds from Business D and draws various expenses. Since separation in December 2018 the husband has reduced the AMP account by approximately $85,000 and as he deposes in his response material, $40,000 of that sum was spent on a family holiday to Queensland for him and his children. The Wife was not consulted in relation to any of the expenditure. She says that this is a pattern of behaviour on the part of the Husband of reducing the matrimonial assets.  There is a risk, she says, to the corpus of the fund and it is a reasonably anticipated risk in view of the attitude of the Husband.

   ·     The Wife is living with her parents. Her personal chattels and business equipment is locked away in containers in storage. She will require assistance to access the possessions in storage and was been quoted by the storage company a figure of $120 per hour.

   ·     The Wife was put out of the former matrimonial home and unable to return.  The Husband initiated AVO proceedings that are before the Town F Local Court on 1 April 2019 and will be contested. The Wife’s position is that she had no choice but to make the application currently before this Court.

   ·     There is disagreement between the parties in relation to the value of item 17 in the Wife’s Balance Sheet which is the Husband’s Self-Managed Superannuation (Duggan Super Fund) and which holds the shares in Business D.  It will require valuation.

Husband

1. The Husband relied on the following documents:

   ·His  response to an application in a case filed 12 March 2019;

   ·Paragraphs 13, 30, 31, 32, 34, 35, 36, 37, 38 (x2), 52, 53, 60 and 63 of his affidavit filed 28 March 2019; and

   ·His Financial Statement filed 12 March 2019.

2. Counsel for the Husband submitted:

   ·     He has been diagnosed with ‘metastatic colerectal cancer’. His prognosis is bleak.

   ·     A report from his Oncologist Dr H dated 21 March 2019 reads as follows:

   ‘….He is on palliative chemotherapy, unfortunately his disease is incurable…..His recent scan has shown that his metastatic disease is stable, but the primary cancer has progressed.  We have discussed starting him on immunotherapy, which is not a standard treatment. The standard option for Mr Duggan is to continue with chemotherapy. Mr Duggan’s cancer is terminal, though it is not predictable on life expectancy and based on response to cancer therapy.’ [2]

   [2] Annexure V, Husband’s affidavit filed 28 March 2019

   ·     The Husband says that he has elected to undertake immunotherapy which requires a dose of Pembrolizumab (Keytruda) once every three weeks.  Keytruda is available on the Pharmaceutical Benefits Scheme for certain types of cancers including melanoma but not for bowel cancer. The Husband says he will have to pay for the course of treatment.  He has negotiated a reduced price of $4,516 every 3 weeks.[3]

   ·     His evidence is that his weekly expenses of $4,542 exceed his weekly income of $2,100. His AMP account is his operating account. His financial statement filed 12 March 2019 shows that the current balance is $137,992 so he has another $37,992 available to him under the operation of the current interlocutory injunction.

   ·     On the Wife’s Balance Sheet the matrimonial asset pool is approximately $1.72 million which includes $662,000 of superannuation. The Husband made the greater initial contributions to the relationship.  It was a relationship of some eight years duration. It was a second marriage for them both and they both had children from prior relationships. It would be unusual if the Wife’s claim could not be met from the monies currently held in trust even less the $50,000 to be paid by way of an interim distribution. The Wife still has her furniture, motor vehicle and $160,000 in superannuation.  Even taking the Wife’s case at its highest the injunction sought is unnecessary.

   ·     In relation to the Husband’s conduct earlier in the year, he agrees that he sold the former matrimonial home without notice to the Wife. He also agrees that he has withdrawn the sum of $85,745.43 from the AMP account since separation but denies that the money has been wasted or that the expenditure has been unusual, with the possible exception of the Queensland holiday which at $40,000 represented almost half of the total expenditure for the period.

   ·     In relation to the Queensland family holiday the Husband agrees he did not tell the Wife.  He is terminally ill and knows he has little time left.  He knew there was a real possibility that he might pass away before the trip and had instructed his children to scatter his ashes at Queensland.[4] To criticize his non-disclosure would be unreasonably harsh in the circumstances.

   ·     The Husband sets out at paragraph 53 of his affidavit how the monies were disbursed. It included rectification work to the former matrimonial home following storm damage[5], credit card payments ($9,666), mortgage payments ($1,768.67), car tyres ($755), removalist costs ($4,125), bond and rent on the Town J, Qld property where he now resides ($9,700) a washing machine and other household items ($1,283.69). The balance of around $18,500 he says related to daily living expenses.  Any suggestion that his expenditure is inappropriate is ill-founded.

   ·     At paragraphs 30 and 31 of his affidavit the Husband sets out the monies that have come into the AMP account: $75,854.22 by way of an insurance payout from AMP for his terminal illness and a total of $94,000 from Business D in payment of accounts rendered. He currently receives income insurance of $6,547.26 per month from AMP Life Insurance which will continue until his death or until he turns 65, whichever first occurs.[6] 

   ·     In relation to the balance of convenience the Husband says that he should have access to the money in his AMP account as it will not threaten the Wife’s overall property claim. In view of his current state of health it would be impractical if he were required to return to Court to make further applications for access to funds. It would also be callous if he were denied the opportunity to properly fund his medical treatment.

   ·     The husband would accept a continuation of the interlocutory injunctions in relation to his AMP Accumulation Super and the Duggan Self-Managed Super Fund.  His objection relates only to the AMP Account.

   ·     The Husband and his son Mr E are the Trustees of Duggan Super Fund. His son Mr E also holds his Power of Attorney.

   [3] Annexure W, Husband’s affidavit filed 28 March 2019

   [4] Husband’s affidavit filed 28 March 2019 at [37]

   [5] The husband says that he $12,127.73 from the Insurance company but it seems that there was expenditure (though not clearly identified) that was not covered.

   [6] Husband’s affidavit filed 28 March 2019 at [32]

The Law - Injunctions

1. The jurisdiction to grant interlocutory injunctions under the Family Law Act 1975 is derived from section 114(3). In Sieling & Sieling[7] the Full Court of the Family Court stated:

   The power to grant injunctions is, of course, a discretionary power not to be exercised lightly.[8]

   [7] (1979) FLC 90-627

   [8] Ibid at 78,264

2. In order to grant an injunction there must be a reasonable claim to an order altering property interests under s.79, and a danger that the claim be defeated or prejudiced unless an injunction is granted. Consideration must also be given to other factors, such as the probability of success of the applicant in the proceedings and the balance of convenience between the parties[9].

   [9] Stowe & Stowe (1981) FLC 91-027

3. Counsel for the Wife referred to the decision of Waugh & Waugh[10] in which the Full Court examined the circumstances in which a court may grant an interlocutory injunction pursuant to s.114(3). Not only must the court consider issues of balance of convenience and hardship to the parties but also,

   “… the fundamental question whether there was any evidence of any intention by the husband to dispose of any assets pursuant to any scheme to defeat any judgment which the wife might obtain in the substantive proceedings, or whether he merely wishes to continue to trade, as he always has done, prior to and since the separation of the parties”

   [10] (2000) FLC 93-052

4. In M v DB the Full Court (Kay, Warnick and Boland JJ) held that the Full Court in Waugh v Waugh[11] did not lay down the principle that it was fundamental to the making of an order preserving property under s.114(3) of the Family Law Act 1975 that the Court should be satisfied on the balance of probabilities of the existence of a scheme to defeat a property judgment. The Full Court said:

   [46]  Finally, we think it helpful to recognise that the essential power being exercised in this case is simply described in s 114(3):

   A court …may grant an injunction…in any case in which it is just or convenient to do so…

   [47]  Ultimately, each case will involve an overall assessment of a number of factors to determine the just or convenient result. Not all cases with the same identity of factors will necessarily produce the same result because of varying weight individually and comparatively.

   [48]  We perceive that a real, though perhaps subtle, difference exists between, on the one hand, establishing on the balance of probabilities a risk or danger of a disposal of property intended to defeat an order and, on the other hand, proving to the civil standard and as an independent issue that a scheme to defeat an order exists.

   [49]  In some cases, the possibility (based on some evidence) of an intention or scheme may, with other factors, be sufficient to establish the probability of an objective risk of disposal with intent to defeat an order.

   [50] It follows that we do not say that, in addressing the question of whether there is a risk of disposal of assets to defeat an order, it is unnecessary to enquire whether there is any evidence of an intention, plan or scheme to dispose of assets. But in an enquiry into the risk of disposal, the question of intention or scheme is but one of a number of factors relevant to the objective risk of disposition to defeat an order.[12]

   [11] (1999) 27 Fam LR 63; (2000) 158 FLR 152; [2000] FamCA 1183

   [12] (2006) 36 Fam LR 454 at [46]-[50]

Discussion

1. The Wife sets out in her Balance Sheet the assets known to her as at 15 March 2019. They total a net amount of $1,729,024.21. The assets in the joint names of the parties total $775,772.50 which amounts to 44 per cent of the known pool (if the agreed interim distribution of $50,000 is taken into account the sum of $725,772.50 represents 41 per cent).  In her affidavit material the Wife has detailed her contributions and her future needs.  The relationship was of around eight (8) years duration. Both parties had children from prior relationships who, at various times, lived with the parties and were supported by them.  The Wife is in receipt of a pension of $703 per week from Employer, being a hurt on duty pension, following the death of her first husband.   She is unemployed but has applied for a number of positions in the customer service industry without success. She is hopeful that once she has access to her possessions in storage and retrieves her qualification certificates, she may have more success.  The Husband does not provide her with any support.  In the substantive proceedings the Wife asserts that she is entitled to periodic spouse maintenance of $1,000 per week or lump sum spouse maintenance of $300,000 but has yet to particularise her application for alteration of property interests. In my view and without seeking to pre-empt any final decision, the Wife has a reasonable claim to an order altering property interests.

2. The Wife’s Counsel submitted that evidenced by his recent pattern of behaviour, the Husband is intending to dissipate assets and hide assets. Certainly, significant funds have been withdrawn by the Husband from his AMP account without notice to the Wife. However, within the context of these interim proceedings he has disclosed what has occurred to those funds.

3. The Wife’s submits there have been a number of dealings by the Husband which show that he has a scheme or an intention to remove or dispose of assets,  including selling the former matrimonial home without notice and removing her as a Trustee from the Duggan Super Fund and installing his son Mr E as the new Trustee.

4. In this regard the Court notes that the balance of the proceeds of sale of the former matrimonial home in the sum of $775,772.32 (less the interim distribution to the wife of $50,000) are currently held in the trust account of the Wife’s solicitors. In his affidavit filed 28 March 2019 the Husband agrees that the Wife was removed as a Trustee of the SMSF but disputes the value attributed by the Wife to the fund of $203,775.  He says that the value of the fund is $259 represented by cash at bank. The balance of $101,758 is in shares which the fund holds in Business D at a nominated value of $2 per share but he says the shares currently have no value. The parties agree that a valuation will be required.

5. Putting to one side the holiday to Queensland, I am not of the view that the husband’s expenditure from his AMP account and for which he has accounted, is unreasonable.  The portion which appears attributable to daily living expenses ($18,500 ÷ 9 weeks[13] = $2,055) is not excessive and is broadly consistent with the Husband’s income disclosed in his Financial Statement.

   [13] 18 December 2018 to 20 February 2019

6. In relation to the Queensland holiday, while it would have been preferable for the Husband to advise the Wife of his plans. It is a large sum of money but then he does have a large family. I accept the submission of Counsel for the Husband that, in the context of a terminal diagnosis, it is an unwarranted criticism and on balance, I am not satisfied that there is a real risk of the Husband disposing of assets to defeat an order.

7. I accept there may be detriment to the Husband if the injunction in relation to the AMP account were continued.  It is his daily operating account and he does not have access to any other account. It is the account into which his income is paid. The medication costs associated with the immunotherapy treatment option are high. His personal expenses will exceed his income and will have to be supplemented from savings.  If the interlocutory injunction is made the Husband may be required to apply to the Court each time he requires further funds, thereby increasing the costs of the litigation.   

8. There is also a concern that the application may an exercise in asset creation rather than asset protection in the sense that the subject of the proposed injunction is a bank account that is primarily (not the Court accepts not exclusively) a repository for the Husband’s post separation income.

9. On a final basis, the Husband proposes that the Wife receive $300,000 from the monies held in her Solicitors’ trust account in full and final settlement of all claims. As previously mentioned, the Wife has not particularised her claim for final relief beyond a claim for spouse maintenance, so it is difficult for the Court to make a detailed assessment of the competing applications. However, it is highly unlikely that the release of the funds sought by the Husband will render nugatory the Wife’s applications for final relief.

10. Whatever the Wife’s ultimate position at final hearing, if she successfully prosecutes her application, then the assets available to meet any judgment would include the assets in her current possession and control which total $887,033 and which on the Wife’s case, represents 51% of the net asset pool.  The Husband has also acceded to a continuation of the interlocutory injunctions against the Duggan Super Fund (on the Wife’s case worth $203,775) and the AMP accumulation fund ($32,617.91).

11. As the authorities indicate above, the Court must exercise a high degree of caution where it is invited to make orders that are bound to have an impact on the property of the person restrained.  For the above reasons, I am not satisfied that such an injunction against the AMP account is warranted and the Wife’s application is refused.

Expedition of Final Hearing

1. Both parties seek the expedition of the final hearing in view of the Husband’s significant health issues and I am satisfied that this is a matter that justifies expedition.

2. The parties agree that the matter is likely to occupy two days. I am prepared to allocate two days for final hearing between 29 July and 9 August 2019 and will adjourn the proceedings to a further date to confirm the hearing dates.

I certify that the preceding fifty two (52) paragraphs are a true copy of the reasons for judgment of Judge Costigan

Date: 17 May 2019