Dunworth & Falletti
[2020] FamCA 178
•20 March 2020
FAMILY COURT OF AUSTRALIA
| DUNWORTH & FALLETTI | [2020] FamCA 178 |
| FAMILY LAW – INJUNCTIONS – de facto relationship – dispute about existence of de facto relationship. JURISDICTION TO GRANT INJUNCTION – especially where court’s jurisdiction has not been established – review of High Court learning on point – power exists. CRITERIA – whether serious issue to be tried established – held, established – whether balance of convenience favours the grant of a restraint – held, yes. SALE OF LAND – whether caveators arm’s length lenders with valid loans to enforce – serious issue to be tried. SHAM TRANSACTIONS – whether putative loans shams – serious issue to be tried. UNDERTAKING AS TO DAMAGES – impecunious applicant – no mandatory requirement in all cases that undertaking be proffered – none extracted from applicant. |
| Family Law Act 1975 (Cth) Transfer of Land Act 1958 (Vic) |
| Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 Allen v Jambo Holdings Ltd [1980] 2 All ER 502 American Cyanamid Co v Ethicon Ltd [1975] AC 396 Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 Australian Coarse Grain Pool Pty Ltd v Barley Marketing Board of Queensland (1982) 57 ALJR 425 Banks & Banks [2015] FamCAFC 36 Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 Blueseas Investments Pty Ltd v Mitchell (1999) 25 Fam LR 65 Deiter v Deiter [2011] FamCAFC 82 DMW v CGW (1982) 151 CLR 491 Eaby & Speelman [2015] FamCAFC 104 Goodridge & Beadle (2017) 57 Fam LR 425 Hazeldell Ltd v Commonwealth (1924) 34 CLR 442 In the Marriage of Yunghanns (1999) 24 Fam LR 400 Karjala & Gallard [2020] FamCA 110 Kennon v Spry (2008) 238 CLR 366 Marvel v Marvel (2010) 43 Fam LR 348 National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386 Official Trustee in Bankruptcy v Nedlands Pty Ltd (in liq.) (2000) 99 FCR 554 Pollard & Nordberg [2019] FamCA 365 Public Service Association of South Australia Inc v Industrial Relations Commission of South Australia (2012) 249 CLR 398 R v Gray; ex parte Marsh (1985) 157 CLR 351 Raftland Pty Ltd v Federal Commissioner of Taxation (2008) 238 CLR 516 Re Macks; ex parte Saint (2000) 204 CLR 158 Re Will of Gilbert (1946) 46 SR (NSW) 318 Redmond & Redmond [2014] FamCAFC 155 Salah & Salah (2016) 56 Fam LR 299 Scott v Federal Commissioner of Taxation (No 2) (1966) 40 ALJR 265 Snook v London and West Riding Investments Ltd [1967] 2 QB 786 SS & AH [2010] FamCAFC 13 Tableland Peanuts Pty Ltd v Peanut Marketing Board (1984) 58 ALJR 283 |
| APPLICANT: | Ms Dunworth |
| RESPONDENT: | Mr Falletti |
| INTERESTED PARTIES: | Mr B, Ms C & D Pty Ltd |
| FILE NUMBER: | MLC | 10450 | of | 2019 |
| DATE DELIVERED: | 20 March 2020 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | The Honourable Justice Wilson |
| HEARING DATE: | 16 & 20 March 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Not applicable |
| SOLICITOR FOR THE APPLICANT: | Not applicable |
| COUNSEL FOR THE RESPONDENT: | Ms S. Damon on 16 March 2020 and Mr R. Edmunds on 20 March 2020 |
| SOLICITOR FOR THE RESPONDENT: | Condello Lawyers |
| COUNSEL FOR THE INTERESTED PARTIES: | Ms S. Mariole |
| SOLICITOR FOR THE INTERESTED PARTIES: | MNG Lawyers |
Orders
Pending the hearing and determination of this proceeding at trial, or further order, the respondent, his servants or agents is restrained from settling or completing the contract for his sale of E Street, Suburb F pursuant to the contract made between him as vendor and Ms G as purchaser and dated … November 2019.
The respondent must forthwith instruct his servants or agents who may be holding any amount paid by way of deposit to retain that sum and to not disburse any amount whatsoever of that sum until further order.
Mr B, D Pty Ltd and Ms C be and are hereby joined as respondents to this proceeding.
Within 30 days the applicant must file and serve an amended initiating application identifying the claim she makes against each of the newly joined respondents.
Within 60 days of today each respondent is to file and serve a response to the amended initiating application together with any affidavit on which each relies in opposition to the applicant’s claim.
I direct this proceeding is to be further heard before me for mention on a date to be fixed.
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 Dunworth & Falletti 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 MELBOURNE |
FILE NUMBER: MLC 10450 of 2019
| Ms Dunworth |
Applicant
And
| Mr Falletti |
Respondent
And
| Mr B, Ms C & D Pty Ltd |
Interested Parties
REASONS FOR JUDGMENT
(Ex Tempore)
Introduction
On 13 September 2019 the applicant commenced this proceeding seeking a division of property as well as superannuation splitting on a 65% 35% basis. The respondent sought orders for the wholesale dismissal of this proceeding.
On 24 February 2020 the applicant filed an application in a case seeking orders restraining the sale, and disbursement of the proceeds of sale, of E Street, Suburb F pending the hearing and determination of this proceeding. Settlement of the sale is scheduled for noon today.
This application is attended with considerable urgency.
Before addressing the substance of the application it is sufficient to state at this junction that in this proceeding the nature of the de facto relationship said to have existed between the applicant and the respondent is disputed. When this proceeding was before me on 16 March 2020 Ms Damon of counsel informed me that a sale of E Street, Suburb F to an arm’s length purchaser will settle today and that the injunction sought by the applicant should be refused because the grant of it will cause that contract to be upended. Conversely, Ms Damon also told me that all claims by caveators must be met prior to or at the settlement of the sale of E Street and that once those caveators are satisfied in full, there is unlikely to be any surplus over which any dispute in this proceeding can be adjudicated.
Synopsis
For the reasons that follow, in my judgment orders must be made to enjoin the respondent from settling the sale of E Street, Suburb F. I also join the respondent’s father, his company and Ms C as parties to this case.
The jurisdiction argument
On behalf of the respondent it was contended that this court had no jurisdiction to entertain this dispute because the existence of a threshold jurisdictional factual matter had not been established, namely, the existence of a de facto relationship.
Authority at the highest level in the High Court of Australia has held that the very first duty of any court in approaching a cause before it is to consider its jurisdiction. That statement is traceable to Isaacs ACJ in Hazeldell Ltd v Commonwealth.[1] That proposition has been repeated many times since 1924. Almost 100 years later, in the year 2020 the proposition is as valid now as it was when first uttered. In Karjala & Gallard[2] judgment in which was handed down a matter of days ago, I extensively examined the applicable case law the most authoritative of which is at other intermediate appellate level and High Court level.
[1] (1924) 34 CLR 442.
[2] [2020] FamCA 110.
Even if parties do not raise the court’s jurisdiction, it is competent and proper for the court to do so of its own motion, as was held in Official Trustee in Bankruptcy v Nedlands Pty Ltd (in liq.),[3] where highly contestable questions of fact arose on which the court’s authority depends, the grant of jurisdiction carries with it power to determine the existence of fact upon which jurisdiction depends. So much has been held in DMW v CGW,[4] R v Gray; ex parte Marsh,[5] Re Macks; ex parte Saint,[6] Kennon v Spry[7] and Public Service Association of South Australia Inc v Industrial Relations Commission of South Australia.[8].
[3] (2000) 99 FCR 554.
[4] (1982) 151 CLR 491.
[5] (1985) 157 CLR 351.
[6] (2000) 204 CLR 158.
[7] (2008) 238 CLR 366.
[8] (2012) 249 CLR 398.
There is no doubt I have power to determine such facts as are in issue in this case in order to ascertain whether this court has jurisdiction to hear and determine the substantive dispute. As a corollary to that, this court has jurisdiction to prevent an abuse of its own process.
Whether or not an injunction should be granted is determined in accordance with principles of indisputable correctness. They include American Cyanamid Co v Ethicon Ltd,[9] Australian Coarse Grain Pool Pty Ltd v Barley Marketing Board of Queensland,[10] Tableland Peanuts Pty Ltd v Peanut Marketing Board,[11] In the Marriage of Yunghanns[12] and National Australia Bank Ltd v Bond Brewing Holdings Ltd.[13] In essence, an applicant for an injunction must persuade the court –
a)that a serious issue to be tried exists between the parties; and
b)the balance of convenience favours the granting of the injunction.
[9] [1975] AC 396.
[10] (1982) 57 ALJR 425.
[11] (1984) 58 ALJR 283.
[12] (1999) 24 Fam LR 400.
[13] [1991] 1 VR 386.
Other High Court cases on point are Beecham Group Ltd v Bristol Laboratories Pty Ltd[14] and Australian Broadcasting Corporation v O’Neill.[15]
[14] (1968) 118 CLR 618.
[15] (2006) 227 CLR 57.
In cases where a restraint is sought against a party that is not a party to the marriage or to the de facto relationship, often (although not always) an undertaking as to damages will be required as the price of the order (as Brooking J used that phrase in NAB v Bond). However, where the applicant seeking the injunction is impecunious or is otherwise unable to provide an enforceable undertaking as to damages, an injunction may nevertheless be ordered. So much has been held in such cases as Re Will of Gilbert,[16] Allen v Jambo Holdings Ltd,[17] Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc[18] and Blueseas Investments Pty Ltd v Mitchell.[19] In other words, in English and New South Wales authority as well as High Court authority and authority of this court it has been held that the provision of an undertaking as to damages is not mandatory before an injunction may be ordered.
[16] (1946) 46 SR (NSW) 318.
[17] [1980] 2 All ER 502.
[18] (1981) 148 CLR 170.
[19] (1999) 25 Fam LR 65.
The critical issue is whether the applicant establishes the existence of a serious issue to be tried and that the balance of convenience favours the grant of the injunction. Let me now go to that.
The relevant factual setting
The applicant made three affidavits relating to this application. It is necessary to take the contents of each in turn.
Her first affidavit was made 19 February 2020. In it the applicant deposed to the following –
a)she first learned that an item of real property making up the asset pool in this case had been sold;
b)the relevant property was E Street, Suburb F;
c)in 28 January 2020 the applicant had lodged a caveat against the title to that property;
d)contrary to her instructions, on 30 January 2020 the solicitor then representing the applicant removed the caveat she lodged; and
e)the respondent purported to sell the land and improvements known as E Street, Suburb F to his father, Mr B.
Before going to the applicant’s second and third affidavits, it is utile to narrate the issues raised by the respondent, at least in relation to more formal matters. He made an affidavit on 13 March 2020. In it he deposed to the more important matters as follows –
a)between 2013 and 2018 the applicant and the respondent “were in an on/off relationship” (his words);
b)the respondent and the applicant did not live together as a couple on a genuine domestic basis;
c)he was previously married and has three children from his previous marriage, all teenagers now;
d)since 2015 he has resided at premises at H Street, Suburb J where a factory with certain residential facilities are located;
e)occasionally, he stayed overnight at the applicant’s rented accommodation at K Street, Suburb F;
f)the applicant did not accept his children;
g)his children spend every second weekend with him and half of the school holiday time;
h)he purchased E Street, Suburb F in December 2015 or thereabouts for $815,000;
i)he funded the acquisition costs of the property partly from the property settlement he received (I infer from his former wife) and partly from mortgage funds of $450,000 in respect of which he is sole mortgagor; and
j)the dwelling at E Street was once Housing Commission accommodation that the respondent has not occupied nor improved.
It is necessary to interrupt the narrative arising from the respondent’s affidavit to narrate certain other relevant matters. The land known as E Street, Suburb F is more particularly described in certificate of title volume …98 folio …84. The respondent is the sole registered proprietor. The title to the property is burdened by six caveats that are currently registered. In chronological order, they are –
a)caveat …8V registered 30 January 2017 lodged on behalf of Mr B, the interest claimed being pursuant to an unregistered mortgage dated 17 January 2017;
b)caveat …3Y registered on 18 April 2018 lodged on behalf of L Pty Ltd, the interest claimed being pursuant to a charge given by the registered proprietor to the caveator under an agreement made on 4 June 2015;
c)caveat …2F registered on 10 July 2018 lodged on behalf of Ms C, the interest claimed being pursuant to a charge given by the registered proprietor to the caveator under an agreement made on 22 February 2017;
d)caveat …4L registered on 4 October 2018 lodged on behalf of D Pty Ltd, the interest claimed being an agreement between the registered proprietor and the caveator dated 20 September 2018;
e)caveat …3M registered on 28 October 2019 lodged on behalf of Mr B, the interest claimed being pursuant to a contract made 19 July 2019; and
f)caveat …1X registered on 31 January 2020 lodged on behalf of the applicant, the interest claimed being an implied, resulting or constructive trust.
The caveats lodged on behalf of Mr B, Ms C and D Pty Ltd were all prepared by the same solicitors, MNG Lawyers.
Certificate of title volume …98 folio …84 records two withdrawals of caveats. The precise status of those withdrawals is not easy to ascertain. The applicant stated in her first affidavit that contrary to her instructions, her solicitor withdrew her caveat. Yet the title details reveal that her caveat is valid and subsisting, lodged by M Company and that the applicant’s caveat, registered on 31 January 2020 post-dated the withdrawal recorded in dealing number …4H, the day after the applicant’s caveat.
When this proceeding was before me on 16 March 2020, counsel for the respondent told me that the caveats lodged by Mr B and by D Pty would only be withdrawn if those entities were paid in full. That turn of language intrigued me as it seemed plain enough by its use that Ms Damon was contending on behalf of her client, the respondent, that some form of indebtedness allegedly existed between the respondent, Mr B and D Pty Ltd. Some form of explanation, although one that will require a good deal of investigation at the trial of this proceeding, was offered by the respondent in his affidavit made 13 March 2020.
Mr B is the respondent’s father. The respondent deposed to his father advancing to the respondent a substantial amount of money over a period of years. In the passages below I express certain observations about the state of the evidence in relation to those alleged loans.
Ms C is said by the respondent to be his creditor to the extent of $250,000. Similarly, in the passages below I express other observations about the state of the evidence in relation to the loan between the respondent and Ms C. Apparently, she is the respondent’s new partner.
Before embarking on an excursus in respect of the money lending arrangements between the respondent and his putative creditors, I must record that authority binding upon me has cautioned a trial judge in my shoes on the hearing of an interlocutory application to avoid making findings of fact in relation to disputed factual matters. I drew together the learning on point in my judgment in Pollard & Nordberg.[20] In essence, factual findings should be made on an interim hearing with great circumspection. Authorities that have so held include Marvel v Marvel,[21] SS & AH,[22] Deiter & Deiter,[23] Eaby & Speelman,[24] Banks & Banks,[25] Salah & Salah[26] and Redmond & Redmond.[27]
[20] [2019] FamCA 365.
[21] (2010) 43 Fam LR 348.
[22] [2010] FamCAFC 13.
[23] [2011] FamCAFC 82.
[24] [2015] FamCAFC 104.
[25] [2015] FamCAFC 36.
[26] (2016) 56 Fam LR 299.
[27] [2014] FamCAFC 155.
With those judgments in mind, it should suffice to say that nothing in these reasons is intended to be in the nature of concluded factual findings. To the contrary, as these reasons reveal, contested facts that must be tried are raised.
The respondent did not give the date on which his marriage collapsed. It seems to have pre-dated 2013 being the date on which he commenced his relationship with the applicant although that cannot be stated with certainty. I say that because the respondent said he lived in the former matrimonial home until June 2015 after which he took up residence in his family’s factory and loft, he being then unable to meet mortgage or rental amounts, as he asserted in paragraph 6 of his 13 March 2020 affidavit.
In paragraph 12 of his affidavit the respondent stated that following the breakdown of his marriage the company he operated in the conduct of his concreting enterprise was wound up in insolvency by order of the Supreme Court of Queensland on … 2017. The respondent said his company S Pty Ltd owed T Pty Ltd about $83,000 that went unpaid leading to a winding up order being made against S Pty Ltd.
The respondent said in paragraph 13 of his 13 March 2020 affidavit that “for a short period of time” (his words) he was the sole director of N Pty Ltd. He did not exhibit an historical company search from ASIC in relation to N Pty Ltd to verify that assertion of his directorship. That was a simple enough task to perform. That said, I am willing to proceed on the basis that on some date after 2017 the respondent was a director of N Pty Ltd. Whether he was the sole director I am unable to say. He gave no information about the shareholding in N Pty Ltd. An ASIC search would have proved that issue quod erat demonstrandum. It seems likely the respondent was at all relevant times more than the director of N Pty Ltd and that he was its sole shareholder or one of its shareholders as he purported to guarantee the obligations of N Pty Ltd and persons having no proprietary interest in a company do not ordinarily give a guarantee in respect of the company’s indebtedness to another. Conversely, owners of the company usually do.
At all events, the respondent said that N Pty Ltd owed money to creditors. He said N Pty Ltd borrowed money from D Pty Ltd, a company owned and controlled by the respondent’s father. Before going to the loan agreement itself, certain observations emerge about the respondent’s evidence concerning the liabilities of N Pty Ltd. They may be catalogued as follows –
a)the respondent offered no details of the state of indebtedness of N Pty Ltd to its creditors;
b)the respondent did not say whether any of those creditors were pressing for payment nor the monetary value of the debts involved;
c)the respondent did not say whether N Pty Ltd operated an overdraft or had other forms of financial accommodation from financiers; and
d)he gave no information about how he paid his own employees (if he had any) or subcontractors or how he paid for plant and equipment.
Instead, without explaining why N Pty Ltd needed a sum of the magnitude it borrowed and which he guaranteed, the respondent simply asserted in paragraph 13 (and in the passive tense) that “a loan was subsequently entered into with D Pty Ltd, my father’s company, to raise money to pay out the creditors”. The respondent exhibited a loan agreement to his affidavit. It was made between D Pty Ltd as lender, N Pty Ltd and the respondent as guarantor. No emails or details of telephone calls anterior to that loan agreement were put in evidence. No details were provided as to the proceeds of the loan. The respondent did not put in evidence any bank statement to show that D Pty Ltd had in fact deposited the loan amount of $265,000 into an account operated by N Pty Ltd. The respondent did not give any details that he paid creditors using the sum of $265,000 or if less, what became of the unused balance. Bearing in mind that the respondent’s company S Pty Ltd was wound up over $83,000, one would imagine the respondent was very anxious for the creditors of N Pty Ltd to be paid and the liability to them of N Pty Ltd discharged. Yet no information about that was offered by the respondent. I found that most peculiar.
The loan agreement itself looks to be a proper commercial instrument. However, the provisions about repayment, especially clause 4(b) do not at least at first blush resemble a commercial instrument. Clause 5 was curious. Pursuant to that clause, in consideration of the advance, the clause stated that the borrower N Pty Ltd agreed to permit the lender to register a caveat over E Street, Suburb F. N Pty Ltd did not own that property – the respondent did. In any event, the loan agreement did not contain a charging clause so it was arguable (and this will need to be explored at trial) that no interest in land was created by the loan agreement capable of sustaining a caveat for the purposes of the Transfer of Land Act.
No wording of the loan agreement conferring a guarantee were recorded. It was arguable that no valid guarantee was given. I make no finding about that however. A great deal in the way of learning in the decided cases exists about the formalities that must be manifest in an instrument of guarantee, none of which was apparent in this loan document.
Interestingly, the person whose signature appears as having witnessed the respondent’s execution of the document by the borrower, as a deed no less, was Ms C. As mentioned earlier, she is said to be the respondent’s present partner.
A great many issues about the loan agreement, the circumstances of the entry into it, how funds were disbursed in pursuance of it and other matters will require investigation at trial. It will also be relevant to know when and how much has been repaid to the lender along with all appropriately calculated interest. If regular repayments have not been made (and the respondent gave no evidence on point) it will be relevant to know whether the lender has sought to enforce rights consequent upon any default including calling upon the guarantor to make good the default.
It will be immediately apparent that the respondent needed to ensure N Pty Ltd had the financial capacity to meet its indebtedness to D Pty Ltd. No information of a financial nature in relation to N Pty Ltd was given. According to the respondent’s financial statement made 13 March 2020 he said his total average weekly income was $1250 and that his total average weekly expenditure was estimated to be $1192, leaving, at least arguably, the capacity to meet the guaranteed amount to the lender.
On a date not given, the respondent said in paragraph 14 of his 13 March 2020 affidavit that he subsequently ceased operating N Pty Ltd. He did not say –
a)what happened to N Pty Ltd’s unpaid liability to D Pty Ltd
b)what tax and ASIC returns were filed prior to ceasing the operations of N Pty Ltd; and
c)whether N Pty Ltd was wound up voluntarily, wound up in insolvency, or deregistered.
That was important because of the default provisions in the 20 September 2018 loan agreement.
In paragraph 14 of his 13 March 2020 affidavit the respondent stated that upon the cessation of operations of N Pty Ltd, he became an employee of D Pty Ltd.
In paragraph 15 of his affidavit he said several important issues. They were –
a)he had not paid BAS sums due;
b)NAB refused to refinance; and
c)he was unable to afford mortgage amounts.
Presumably, the mortgage payments he could not maintain were those due to Westpac to which he referred in paragraph 10 of his affidavit.
Again, the respondent gave no information about the terms of his employment with D Pty Ltd. Glaringly missing in his evidence was the fate of the loan from D Pty Ltd to N Pty Ltd the obligations under which he guaranteed.
The respondent seemed to have been in straitened financial circumstances by mid-2019. He said Westpac had commenced the process of enforcing its mortgage. He said Westpac attempted to repossess the property and it changed locks. That did not seem likely to me. Mortgagee recovery cases usually involve a court proceeding in a state court for an order for possession. Perhaps the respondent was referring to that. At all events, the respondent stated in paragraph 16 of his affidavit that he negotiated with Westpac to discharge its mortgage by paying out in full the debt which at inception stood at $450,000. The respondent gave no evidence of the extent of his indebtedness to Westpac as at July 2019 nor of how much he had repaid between December 2015 and July 2019.
The respondent stated in paragraph 17 of his affidavit that his father entered into a loan agreement in his personal capacity with the respondent in July 2019. Bearing in mind, that 10 months earlier, at least according to the documentation the respondent exhibited to his affidavit, the father’s company advanced $265,000 to a company directed by the respondent and 10 months later, the father personally promised to advance an additional sum of $485,000, the total in 10 months being $750,000. In debate with Ms Damon on 16 March 2020 she assured me that the loans the respondent said were owing were valid, arm’s length and commercially enforceable. I am forbidden from making factual findings on the hearing of this interlocutory application. However, at trial it will be relevant to know how the lender maintains that his loan advances (whether made personally or through his company) were truly arm’s length and commercially sound when they were made to the respondent whose financial history was severely blemished, to say the least. To underscore the peculiar nature of the so-called loan in July 2019, the lender required its repayment in full four months later. The respondent was in straitened financial circumstances as it was. Expecting him to repay almost half a million dollars in four months was ambitious.
Clause 6 of that loan agreement was curious. It read as follows –
The Borrower grants to the Lender a security interest in the Security until this Loan is paid in full. The Lender will be listed as a lender on the title of the Security whether or not the Lender elects to perfect the security interest in the Security. The Borrower will do everything necessary to assist the Lender in perfecting its security interest.
It is arguable that clause 6 is void for uncertainty. I shall say no more beyond that.
Nevertheless, the respondent contended that somehow an interest in land capable of supporting a caveatable interest was conferred by that clause or by the entire loan agreement. Minds will differ on that issue. A point at trial will no doubt be that one.
The respondent conceded he was unable to repay any amount of any sum his father or his company advanced the respondent. The respondent said that as a result, his father attempted to take his own life.
The respondent said he then became desperate to sell the Suburb F property. He said he appointed an agent who found an arm’s length purchaser. The purchaser, one Ms G, seemed to have executed a contract for the sale of E Street, Suburb F on … November 2019. Pursuant to the contract, settlement is due on … March 2020.
While completely out of chronological sequence, the respondent exhibited yet another loan agreement between his father and him, this one being dated 1 December 2016. Allegedly, by it the father provided an advance to the respondent of $419,555. Item 5 of schedule 1 to that document recited that E Street, Suburb F was “provided as security” (those were the words of the instrument). Those words do not seem to me to involve an hypothecation, as that word is known in security law. It may be argued that the item is void for uncertainty.
No evidence of any debt owing to Ms C was given.
The applicant’s evidence
The details (such as they were) in the applicant’s first affidavit have already been set out. She relied on two further affidavits, one made 15 March 2020 and the other made on 17 March 2020. Let me take each in turn.
In her affidavit of 15 March 2020, the applicant addressed matters that went to her threshold proposition in this case, namely, that she and the respondent were in a de facto relationship for eight and a half years. Specifically, she stated –
a)the respondent admitted to police they were in a relationship;
b)the respondent admitted to police he provided her with financial support;
c)the applicant lived in properties let by the respondent;
d)the applicant and the respondent were in a relationship for eight and a half years;
e)they shared meals together, they stayed overnight regularly, they were known to family and friends as being in a relationship;
f)she denied the assertion that the respondent’s children were not accepted by her and the applicant said she and the respondent stayed at the respondent’s parents’ Suburb O holiday home;
g)the respondent supported her and met all financial expenses;
h)the respondent purchased E Street, Suburb F three and a half years into their relationship and it was purchased as a family home to accommodate their six children, once it had been architecturally mastered;
i)throughout their relationship, they never went without (her words);
j)the respondent purchased luxury items for the applicant during their relationship;
k)despite the liquidation of various of his companies, the respondent always seemed to earn a good income; and
l)according to information given to the Honourable Justice Williams, Ms C is the respondent’s current girlfriend and no information has been given to support the alleged loan of $250,000.
The applicant’s third affidavit was made on 17 March 2020. In it she stated –
a)she and the respondent occupied P Street, Suburb J during their relationship;
b)they occupied Q Street, Suburb R during the relationship;
c)a sexual and intimate relationship existed throughout;
d)they were known as a couple in a genuine relationship; and
e)they were very public in their relationship.
Many of the documents the applicant exhibited to her third affidavit seem to support her contentions, although of course that is a matter for trial.
Applying the law to the facts of this case
At its core, a dispute is alive about the existence or otherwise of a de facto relationship between them. The determination of that issue is a matter of mixed fact and law. The Family Law Act’s definition of “de facto” involves a consideration of several discrete factual matters. Those must be explored in this case.
It seems to me at least one serious issue to be tried in this case is the phenomenon and duration of a de facto relationship.
More pressingly relevant to the injunction application is whether settlement of the sale of E Street, Suburb F will have the effect of causing the proceeds of sale to be lost. That is because the respondent’s father has stated that he will only withdraw his caveats if he is paid in full. For that matter, in terms of common conveyancing practice, pre-PEXA, a caveator brought to settlement a registrable withdrawal of caveat in return for a cheque for the sum due to the caveator. The respondent’s counsel has indicated that the applicant will receive very little if anything from the sale once the father and Ms C’s caveats are withdrawn and that will only happen when they are paid in full.
A serious issue to be tried in this case is whether and if so to what extent the respondent’s father and Ms C are valid creditors. It is arguable, and I say no more than this, that they are not. It is arguable that the loan agreements involving the father and Ms C are shams, within the contemplation of cases such as Raftland Pty Ltd v Federal Commissioner of Taxation,[28] Scott v Federal Commissioner of Taxation (No 2),[29] Snook v London and West Riding Investments Ltd[30] and Goodridge & Beadle.[31] Naturally, it is not appropriate for me to say more now. However, the applicant does raise a valid point that the settlement of the contract of sale should be enjoined until the true details of sale, the alleged entitlements of payees and the residue are better known.
[28] (2008) 238 CLR 516.
[29] (1966) 40 ALJR 265.
[30] [1967] 2 QB 786.
[31] (2017) 57 Fam LR 425.
So far as the balance of convenience is concerned, in my view it favours the applicant. She will suffer a loss that cannot be remedied by damages if the property is sold. Further, it has been publically stated that the respondent’s father wishes to be paid in full as does Ms C from the sale proceeds. That will leave the applicant with nothing meaningful. In view of the fact that –
a)the loans from the respondent’s father to the respondent are dubious;
b)there is next to no evidence of a valid proper commercial arrangement between the respondent and Ms C; and
c)it is yet to be decided whether Ms C is the respondent’s current partner;
in my view it would be most unwise for me to allow the settlement to proceed and for funds to be disbursed to, among others, the respondent’s father (who may be found at trial to have a defective entitlement to any funds) and Ms C (who may not have a validly enforceable loan at all).
In my view the status quo should be preserved.
Then there is the issue of the applicant being required to give an undertaking as to damages. Enough has been said of the authorities to state that no immutable rule of which I am aware in this court requires – dare I say mandates – the giving of an undertaking as to damages in all injunction applications. Were it otherwise, deserving cases would be stultified. Of course I acknowledge with the utmost respect and deference the deep learning espoused by Brooking J in NAB v Bond to the effect that an undertaking, as much for an injunction as for the appointment of receivers, is the price of the order. But in the family law arena the learning is slightly less binary and is moulded to reflect the day-to-day exigencies of mothers and fathers, husbands and wives or de facto partners in their daily operations where the deep learning of equity teaches flexibility – not according to length of the Chancellor’s foot – but to the justice and equity of the situation.
Here, I will not require the applicant to proffer an undertaking as to damages.
Mr B made an affidavit on 19 March 2020. In it he contended that he made payments on behalf of the applicant or at her direction. He did not say what was the nature of those directions. Ms Dunworth disputed that there was any such direction. Self evidently, that is a triable issue. Ms Mariole said that that was an error. It seems extraordinary that such an error was made three times.
Ms C made an affidavit on 19 March 2020. She described herself as the partner of the respondent. She asserted that her loan of $250,000 was valid. She said the respondent sought money from her in February 2017. Real doubt in my mind exists whether the arrangement between the respondent and Ms C is a proper, arm’s length, commercial agreement. I am not persuaded about its legitimacy at this juncture.
Conclusion
The applicant has made out her application.
I order as follows –
a)pending the hearing and determination of this proceeding at trial, or further order, the respondent, his servants or agents is restrained from settling or completing the contract for his sale of E Street, Suburb F pursuant to the contract made between him as vendor and Ms G as purchaser and dated … November 2019;
b)the respondent must forthwith instruct his servants or agents who may be holding any amount paid by way of deposit to retain that sum and to not disburse any amount whatsoever of that sum until further order;
c)Mr B, D Pty Ltd and Ms C be and are hereby joined as respondents to this proceeding;
d)within 30 days the applicant must file and serve an amended initiating application identifying the claim she makes against the newly joined respondents;
e)within 60 days of today each respondent is to file and serve a response to the amended initiating application together with any affidavit on which each relies in opposition to the applicant’s claim; and
f)I direct this proceeding is further heard before me for mention on a date to be fixed.
In making those orders I recognise that the rights of Ms G, seemingly an innocent third party, may have been trammelled to some extent. She has not been heard. The respondent could have adduced evidence from her had he chosen to do so to say, for example, how she will be prejudiced by these orders. Several things must be said of her position, namely –
a)her position is unknown, despite the respondent having an abundance of opportunity to obtain it;
b)she may or may not rescind her contract for the purchase of E Street, Suburb F; and
c)if she does and looks elsewhere, she may obtain a property in respect of which she suffers no loss or if she does say she is out-of-pocket she may have a claim in damages that can be fought some other day in another place.
The market is sufficiently fluid at the moment for Ms G’s circumstances to play out. Put differently, her situation with a potentially abortive sale is not such that it weighs in the balance to subordinate the applicant’s legitimate interest of preserving the status quo in this case.
I certify that the preceding sixty-seven (67) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson delivered on 20 March 2020.
Associate:
Date: 26 March 2020
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