FARRELL & FARRELL

[2010] FamCA 986

FAMILY COURT OF AUSTRALIA

FARRELL & FARRELL [2010] FamCA 986

FAMILY LAW – PROPERTY – injunction – restraining order – partial property settlement

Family Law Act 1975 (Cth)

APPLICANT: Ms Farrell

RESPONDENT: Mr Farrell

FILE NUMBER: SYC 1996 of 2010

DATE DELIVERED: 29 October 2010

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Ainslie-Wallace J

HEARING DATE: 26 October 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT:

SOLICITOR FOR THE APPLICANT: Mr Dura

COUNSEL FOR THE RESPONDENT: Mr Richardson SC

SOLICITOR FOR THE RESPONDENT:

Orders

1. That the Husband, in his capacity as a director and shareholder of C Pty Limited, forthwith do all acts and things and sign all documents necessary to sell the property at W in the State of New South Wales Folio Identifier … (“the W property”) for the best price reasonably obtainable on such terms and mechanisms for sale as he prescribes, and that upon settlement of the sale the Husband shall cause C Pty Limited to apply the proceeds of sale in the following order and priority:

   1.1costs of sale including but not limited to costs of the lawyers acting on the sale, real estate agents, auctioneers, advertising and market costs;

   1.2water and council rates and adjustments;

   1.3an amount of $250,000 to be paid to the trust account of the legal representatives for the Wife, to be applied by her in payment of her costs and disbursements of the proceedings and on the basis that the moneys are a partial property settlement to the Wife and with the treatment of those moneys in the accounts of C Pty Limited to be documented in such manner as recommended by the accountants for C Pty Limited;

   1.4the balance to be applied towards repayment of moneys outstanding to the National Australia Bank.

2. That the Husband cause C Pty Limited to promptly provide to the solicitors for the Wife upon receipt by the company, the following as and when they occur:

   2.1copy of the exchanged contracts for sale of the W property;

   2.2details of the date of settlement of sale of the W property and any change to that date;

   2.3a copy of the settlement statement for the W property;

   2.4a copy of the bank statement from the NAB showing deposit of funds in accordance with the above Order from the proceeds of sale of the W property.

3. That pending further Order, the wife be restrained from:

   3.1entering upon the W property;

   3.2lodging or causing to be lodged a caveat over the title to the W property;

   3.3attending the auction of the W property.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC1996 of 2010

MS FARRELL

Applicant

And

MR FARRELL

Respondent

REASONS FOR JUDGMENT

Background

1. Ms Farrell (the wife) applies for an injunction to restrain Mr Farrell (the husband) through his company, C Pty Ltd from selling a property at W in NSW.  The property is listed for sale by auction 30^th October 2010.

2. I indicated to the parties that I refused to make that injunction and would make further orders and provide reasons for the decision.

3. These are the reasons.

4. The parties began living together in about 1996 or 1997 and married in 1997.  There are four children of the parties – aged from 12 to 5 years.  The children live with the husband.  The children spend time with their mother from after school on Monday, Wednesday and Friday until 6pm and each Saturday from 9am until 5pm.  Their time with the wife is supervised by people provided by a private agency.  The husband pays the costs associated with this supervision.

5. After the wife was admitted to hospital apparently suffering from a drug induced psychotic episode, the Department of Community Services became involved with the family.  Eventually in April 2010 Interim Orders were made in the Family Court that gave the husband exclusive occupation of the family home in M other than for the times that the wife was spending time with the children and provided for the supervision of the time she spends with the children.

6. In early April 2010, the husband applied for both interim and final orders in relation to financial and property matters and in relation to the children.  The wife filed a response to the parenting applications but not in relation to the property and financial orders sought by the husband.

7. On 21^st April 2010, the wife applied for interim orders for maintenance for her support and for an order that she receive money by way of interim property orders to assist her in paying her legal expenses.  Orders were made that required the husband to provide rental accommodation for the wife up to the cost of $4000 per week and that he pay her $1,187 per week for her maintenance.

8. On 4^th May 2010 the wife was ordered to file a response to the husband’s application for property orders and an affidavit of her financial circumstances.  She did not file documents in compliance with the order.

9. On 2^nd September 2010, the husband, through his solicitor, informed the wife’s solicitor that he intended to sell the property at W.  On 6^th September 2010, the wife’s solicitor sought the husband’s undertakings that he not sell the property.  He declined to give those undertakings and the wife’s solicitor responded requesting the husband keep the wife informed about the progress of the sale, the sale price and other matters.

10. The wife lodged two caveats against the W property, the second was lodged on 5^th October 2010.  On 11^th October she attended the property with a locksmith and caused the locks on the property to be changed.

11. On 11^th October 2010, the wife filed an application seeking orders in relation to the financial and property matters with the husband and sought an injunction restraining the husband from selling the W property.  That aspect of the application was the subject of the hearing before me.  Relevantly to this aspect of the matter, the wife seeks an order that the M home be retained so that she and the children may live there together if she is successful in obtaining an order that the children live with her.

Brief Financial History of the parties

1. It appears from the material relied on by the parties in this application that there are significant factual disputes between them as to the wife’s assets at the date of cohabitation (in fact there is a dispute over the date of cohabitation) and her contributions during the marriage.  In an interim application where none of the issues and assertions of the parties is able to be tested or explored thoroughly, it is not possible to resolve disputed issues of fact.

2. It is not disputed that from about 1993 until 2003 the husband received significant distributions from a family trust administered by his father.  In all, it is estimated that the husband received about $32m in capital and income in this way paid into the Farrell Discretionary trust.  It appears that the property and other assets of the parties were purchased through the distributions from the father’s trust.

3. It was asserted during the hearing that the net value of the assets is some $32million all of which found its genesis in the distributions from the husband’s father’s trust.  There is presently a debt of about $26million referable to the husband’s business.

W Property

1. The W property was purchased in 2003 through C Pty Ltd, a company associated with the husband.  The wife asserts that it became a “second home” to the parties and the children and they spent considerable time there.  The husband denies this and said that while they made frequent visits to the property in the 12 months after purchase, as the children grew older and their weekend activities increased, they spent less time at the property.   The wife’s application is that this property be retained so that she and the children can spend time there.  She seeks orders permitting her to reside there from each weekend from 9am Friday until 5pm on Monday and other times when the children are spending time with her.

2. The husband expects the sale of this property to realise between $3 million and $3.5 million.  

3. The husband proposes that from the sale of the W property after payment of the costs of sale, the sum of $250,000 be paid to the wife’s solicitor by way of interim property order to assist her to meet her anticipated legal fees.  The balance would be used to pay down debt.  In the absence of the sale of the property, the husband said that he would not have liquid funds to pay an interim property order to the wife.

4. As to the reason for sale, the husband said that he is experiencing significant financial difficulties and asserted that he told the wife that it would be necessary to sell the W property to pay down debt to the National Australia Bank to do otherwise would be to jeopardise their ownership of the M Property.  He said that it was a non income producing property and cost $100,000 per year to retain.  Senior Counsel submitted that this was a reference to the land tax referable to the property before payment of other regular outgoings on the property.

5. The financial documents filed by the husband appear to support his contention of a lack of liquid funds.

6. The husband said that he has spent about $20,000 in advertising the property for the upcoming sale.

7. It was argued for the wife that her anticipated property claim would entitle her to retain the M home and the W home.  It was argued that it was necessary for the W property be kept because it had been a “second home” to her and the children. 

8. It was contended for the wife that should the husband need to sell assets to meet financial obligations, he could sell his business.

9. The husband argued that it was not likely that the wife would receive a property adjustment in her favour in the order of the value of both properties but in any event argued that she had not advanced any reason why the property must be retained in specie.

Discussion

1. The wife’s counsel argued that they had received the husband’s financial affidavit and associated documents on receipt of his affidavit on 22^nd October 2010 and, as a result, the wife was not in a position to challenge the husband’s assertion about the financial state of the business.  It was argued that some little time was needed to enable the wife to make some enquiries and then further submissions could be made about the balance of her application.  He pressed for an injunction restraining the sale of the property pending further agitation of the wife’s applications.

2. It was not argued for the wife that should she succeed in obtaining a property order in her favour of or in excess of the value of the W property, the husband would not be able to pay her that sum. 

3. Senior counsel for the husband observed that some time before the filing of the husband’s affidavit and associated financial documents, extensive information about his finances, corporate and other holdings and asset and debt position was provided to the wife’s solicitor together with valuations of properties.  It was argued that the information already in possession of the wife’s solicitor would have enabled them to assess properly the liabilities as asserted by the husband.

4. Fundamental to any application for an injunction is the demonstration by the party seeking the injunction of a prima facie case or as differently expressed, a “serious question to be tried”.  The degree to which the court should be satisfied of that matter will vary from case to case, nonetheless the satisfaction of there being a serious question to be tried remains essential to the grant of an injunction.   The wife bore the responsibility of establishing at a prima facie level an entitlement to retain the W property in order to support her application for an injunction.

5. Her counsel candidly agreed that, without having an opportunity to consider the husband’s financial position, the wife could not establish that fundamental position.  Based on that concession, in my view, the wife cannot sustain the application for injunction.

6. However, even had the wife had been able to establish a serious issue for trial to keep the W property I am of the view that nonetheless the injunction ought not be granted.  

7. The wife and her legal advisors had notice on 2^nd September of the husband’s intention to sell that property and, when he refused to undertake not to sell it, asked to be kept informed.  It is also pertinent to note that at this time the wife had not filed the ordered documents in response to the husband’s application for property orders. The husband was entitled then to proceed with his indicated intention of selling the W property and it was listed for auction.  Expenses, including as I have indicated, advertising costs have been incurred.  The wife’s actions in seeking the injunction occurred at the heel of the hunt and without any explanation as to why her position as expressed through the exchange of solicitors’ letters has changed.

8. Finally, the wife demonstrated no cogent reason why the property should be retained.  It is apparent that the effect of the present orders for supervised time effectively prevent her from taking the children there and in any event the order she seeks enabling her to live in the property includes times in which she is otherwise to spend time with the children.

9. There would be considerable financial prejudice to the husband were the property to be withdrawn from sale, not only the loss of the costs incurred on sale but, as senior counsel for the husband submitted, the husband’s indebtedness would not be reduced by the corresponding deposit of the sale proceeds and there would not be a reduction in the interest being incurred on those liabilities.

10. For these reasons I declined to order the injunction and will make the orders sought by the husband in his application filed 22^nd October 2010.

I certify that the preceding thirty three (33) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Ainslie Wallace delivered on              29  October 2010.

Associate: 

Date:             October 2010