ENGLUND & ENGLUND

Case [2018] FamCA 775

FAMILY COURT OF AUSTRALIA

ENGLUND & ENGLUND [2018] FamCA 775
FAMILY LAW – PROPERTY – Interim application – Where the wife seeks various injunctive interim property orders in relation to the preservation of the matrimonial pool – Where the wife seeks that certain monies be restored to the matrimonial property pool – The Court makes certain of the orders sought by the wife on the basis that both parties have acted without the consent of the other in dealing with the matrimonial pool since separation – The Court amends the orders sought by the wife so that they go no further than is necessary to protect the matrimonial pool – The Court declines to make certain orders sought by the wife on the basis that the matrimonial property pool can be adjusted to address the wife’s concerns at final hearing.
Family Law Act 1975 (Cth) ss. 79, 114
Family Law Rules 2004 rr. 1.04, 13.01, 13.04
Acton & Burton [2015] FamCA 469
Briese and Briese (1986) FLC 91-713
Cardile v LED Builders Pty Limited (1999) 198 CLR 380
Frigo v Culhaci [1998] NSWCA 88
Glover v Walters (1950) 80 CLR 172
In the Marriage of Farr (1976) FLC 90-133
Iphostrou & Iphostrou and Ors [2011] FamCA 20
Jeeves & Jeeves (No 2) [2008] FamCA 1148
Livesey and Jenkins (1985) 1 All ER 106
Martin & Martin and Ors [2013] FamCA 222
Mertens & Mertens [2016] FamCAFC 136
Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia(No 3) (1998) 195 CLR 1
Philips & Samuels [2017] FamCA 125
Tripp & Tripp [2013] FamCA 1107
APPLICANT: Ms Englund
RESPONDENT: Mr Englund
FILE NUMBER: SYC 2241 of 2018
DATE DELIVERED: 28 September 2018
PLACE DELIVERED: Sydney
PLACE HEARD: Sydney
JUDGMENT OF: McClelland J
HEARING DATE: 17 September 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Gillies SC
SOLICITOR FOR THE APPLICANT: Marsdens Law Group
COUNSEL FOR THE RESPONDENT: Mr Lloyd SC
SOLICITOR FOR THE RESPONDENT: Clinch Long Woodbridge Lawyers

THE COURT ORDERS, PENDING FURTHER ORDER, THAT:

  1. Subject to order 4 herein, within seven (7) days of the date of these orders, the parties do all things and sign all documents necessary to direct that the rental income of the following properties, and any associated leases, including but not limited to parking spaces and storage cages, be deposited into the Commonwealth Bank of Australia joint account of the parties (BSB: …; Account No.: #56):

    (a)PP Street, B Town NSW (“the B Town commercial property”);

    (b)C Street, Suburb D, NSW (“the Suburb D Property”);

    (c)E Street, F Town, NSW (“the F Town property”);

    (d)1 G Street, Sydney NSW (“the 1 G Street property”);

    (e)2 G Street Sydney NSW (“the 2 G Street property”);

    (f)H Street, Suburb J NSW (“the Suburb J property”);

    (g)K Street, Suburb L NSW (“the Suburb L property”);

    (h)M Street, N Town QLD (“the N Town property”);

    (i)O Street, Suburb P NSW (“the Suburb P property”); and

    (j)Q Street, Suburb R NSW (“the Q Street property”).

  2. Subject to order…

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ENGLUND & ENGLUND [2018] FamCA 775
Case
[2018] FamCA 775
Decision Date

CaseChat Overview and Summary

In this matter before McClelland J, the dispute concerned proposed orders relating to the management and disposition of rental income from various properties owned by the parties. The wife sought orders to control the deposit of rental income from specific properties into designated bank accounts, while the husband raised concerns about the wife's disclosure of her business relocation arrangements. A central issue was the parties' compliance with their duty of full and frank disclosure of all material facts, documents, and information relevant to the dispute, as stipulated by clause 6 of Part 1 of Schedule 1 of the Rules.

The court was required to determine whether the wife's proposed orders, as presented, were necessary and appropriate, and whether they unduly impacted the business activities associated with the properties. Furthermore, the court had to consider the adequacy of the parties' compliance with their disclosure obligations, particularly in light of the husband's recent sale of a business premises and the wife's alleged lack of disclosure regarding her business relocation. The court also considered whether to make orders requiring the husband to refund monies from the matrimonial property pool that the wife contended were applied for his sole benefit.

McClelland J applied the principle that courts may make interlocutory orders to ensure the effective exercise of their jurisdiction and to prevent the frustration of their process. This requires establishing a real risk of assets being disposed of and a real ground for believing that the applicant will be prejudiced in their remedy. While not requiring proof of all propositions for final relief, the applicant must demonstrate a real risk, not merely an assertion, that the other party may deal with assets in a manner that prejudices the court's ability to make appropriate final orders. The court found that while the net property pool was substantial enough to allow for adjustments at final hearing regarding alleged sole benefit payments, there was a significant concern regarding the parties' disclosure obligations. The court noted the wife's complaint about the late disclosure of the husband's sale of a business premises and the husband's complaint about the wife's disclosure regarding her business relocation.

Consequently, the court made orders substantially as sought by the wife, including the properties owned by YPL, but with modifications. These modifications clarified that the orders would not apply to reasonable deductions from rental income for ordinary business expenses, and an additional order was made requiring monthly accounts of such expenses. The court was not satisfied that orders requiring the husband to refund monies applied for his sole benefit were necessary at this interim stage, given the size of the net property pool.

Orders

Orders of the court

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Background

Background to the litigation

Clause 6 of Part 1 of Schedule 1 of the Rules relevantly provides that:(6) At all stages during the pre-action negotiations and, if a case is started, during the conduct of the case itself, the parties must have regard to:…(i) the duty to make full and frank disclosure of all material facts, documents and other information relevant to the dispute. Note: The duty of disclosure extends to the requirement to disclose any significant changes (see clause 4 of this Part). [Emphasis added]. The fact that the obligation of disclosure exists as a duty to the Court, as well as the other party, is significant. It is also significant that the obligation is in respect to the disclosure of “information relevant to the dispute”, not simply one that attaches to the production of documents. It is not clear why the wife has excluded the Suburb HH property from her proposed orders in circumstances where, by letter dated 22 December 2017, she requested NN Realty to deposit income from that property into the parties’ Commonwealth Bank Account (BSB: ...; Account No. #56), referred to in proposed order 7. In terms of the S Street property, the wife seeks, at proposed order 8, that the rental income from that property be deposited into a bank account in the name of the parties’ self-managed superannuation fund. By letter dated 22 December 2017, the wife’s solicitors requested the Suburb P business to deposit rental income from that property into a Commonwealth Bank account titled “OO Trust”. There is no other evidence that would enable the Court to sensibly adjudicate in respect to whether the S Street property should or should not be named in proposed order 7. It did not appear to be disputed that the wife continues to reside at the Suburb R property and there is no evidence before the Court that rental income is being obtained from that property. In those circumstances, it is appropriate that that property be identified as an exemption from the operation of proposed orders 7 and 9. I am satisfied that, in circumstances where there is a real issue as to whether the parties in these proceedings have adequately complied with their obligations of disclosure, I propose to make, with certain amendments, orders 7, 8 and 9 as sought by the wife, with the inclusion in order 9 of the properties owned by YPL. However, I find that the wife’s proposed orders, in the sense of their unqualified operation, go further than is necessary to protect the interests of the parties. I also find that those orders could unnecessarily adversely impact upon the business activities associated with those properties. Accordingly, I intend to modify the proposed orders by clarifying that they will not apply to reasonable deductions made from rental income received from the relevant properties in order to meet expenses incurred in the ordinary operation of the business associated with the leasing of the properties. I will, however, include an additional order requiring the parties to provide a monthly account of expenses so incurred.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

Their Honours referred to the joint judgment of Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ in Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia(No 3) (1998) 195 CLR 1, where the following was stated at [35]:The general principle which informs the exercise of the power to grant interlocutory relief is that the court may make such orders, at least against the parties to the proceeding against whom final relief might be granted, as are needed to ensure the effective exercise of the jurisdiction invoked. The … Court had jurisdiction to make interlocutory orders to prevent frustration of its process in the present proceeding. [References omitted, emphasis added]. It is unnecessary for an applicant for interlocutory orders to establish “all of the propositions that would be necessary” to obtain the final relief they are seeking: Cardile at [127]. However, the applicant for such an order must establish:a)That there is a real risk of assets being disposed of (Cardile at [122]); andb)That, as a result of that risk, there is a real ground for believing that the applicant will be prejudiced in the remedy he or she is seeking (Glover v Walters (1950) 80 CLR 172 at 176). Moreover, the applicant for relief must establish that there is a real risk, rather than a mere assertion, that the other party may deal with their assets in such a manner as to prejudice the ability of the Court to make appropriate orders at final hearing: Frigo v Culhaci [1998] NSWCA 88 at page 8. In this case, the relevant orders are those providing for the just and equitable adjustment of the parties’ interest in the matrimonial property, having regard to the matters set out in s 79 of the Act. In this matter, I am not satisfied that it is necessary to make orders requiring the husband to refund to the monies from the matrimonial property pool which the wife contends have been applied, without her consent, for his sole benefit. This is because, the net property pool, which it is agreed, is between $10,000,000 and $25,000,000 million can be adjusted, at final hearing, having regard to the amounts in question in these interim proceedings. However, a matter of concern, which I will further discuss below, is that I am not satisfied that the parties have adequately complied with their obligations of disclosure pursuant to Part 13 of the Family Law Rules 2004 (“the Rules”). In particular, Senior Counsel for the wife justifiably complained on behalf of her client that it was not until the morning of the hearing that her client became aware that the husband had entered into a contract for the sale of Z Suburb P (Exhibit “3-H”). Notably, the wife’s business is currently operated from the premises that are being sold. The husband, on the other hand, complained that the wife had not provided him with all relevant information in respect to arrangements she has entered into to move her business to a property owned by the parties’ self-managed superannuation fund.