Fowles and Fowles (No 5)
[2018] FamCA 929
•16 November 2018
FAMILY COURT OF AUSTRALIA
| FOWLES & FOWLES (NO 5) | [2018] FamCA 929 |
| FAMILY LAW – INJUNCTION – where wife seeks to enjoin husband from travelling overseas during part-heard final property proceedings FAMILY LAW – INJUNCTION – where husband opposes restraint but has no immediate plans to travel FAMILY LAW – INJUNCTION- the test for exercising the power to grant an injunction is whether it is both just and convenient to do so – requirement to balance the utility of the order sought by the wife against the possible detriment to the husband and the curtailment of his liberty – regard to uncontroversial facts including husband’s non-compliance with certain orders – inability to make any clear findings about facts in issue FAMILY LAW – INJUNCTION - the right to travel internationally is not immutable; it must yield in the interests of justice and, in particular, when the court balances competing considerations and finds that the injunctive relief sought “is just and convenient” FAMILY LAW – CASE MANAGEMENT – where practitioners and parties cannot expect consecutive days for hearing if the estimates of the time for hearing are grossly inaccurate FAMILY LAW – INJUNCTION – interim injunction granted restraining the husband from travelling internationally FAMILY LAW – COSTS – irrespective of basis for calculation of any costs claimed (or opposition thereto), any application for costs must be accompanied by a memorandum of itemised costs drawn in accordance with Schedule 3 to the Family Law Rules 2004 |
| The Family Law Act 1975 (Cth) Bankruptcy Act 1966 (Cth) International Covenant on Civil and Political Rights Universal Declaration of Human Rights |
| Talacko & Talacko (2010) FCAFC 54 Shan & Prasad [2018] FamCAFC 12 |
| APPLICANT: | Ms Fowles |
| RESPONDENT: | Mr Fowles |
| INTERVENOR: |
| INDEPENDENT CHILDREN’S LAWYER: | Ms M Lonergan (Excused from attending) |
| FILE NUMBER: | MLC | 8587 | of | 2015 |
| DATE DELIVERED: | 16 November 2018 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Bennett J |
| HEARING DATE: | 27 March 2018 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr D Sheales with Dr Smith |
| SOLICITOR FOR THE APPLICANT: | Lander & Rogers |
| COUNSEL FOR THE RESPONDENT: | Mr T North SC |
| SOLICITOR FOR THE RESPONDENT: | Taussig Cherrie Fildes |
Orders
(1)The wife have leave to make an oral application for orders to restrain the husband from leaving Australia pending the conclusion of these financial proceedings and for the husband to deliver up all of his passports to the Registrar of this Court for safekeeping.
(2)Until further order, the husband be and is hereby restrained by injunction from departing from the Commonwealth of Australia without further order of the Court.
(3)Until further order, the husband’s passports which were deposited in the Registry pursuant to the Order made 5 July 2018 continue to be held in the Registry.
(4)Any party wishing to make an application for costs file and serve a submission of not more than 5 pages within 21 days and, without limiting the costs orders which may be sought, the written submission be accompanied by a memorandum of itemised costs drawn in accordance with Schedule 3 to the Family Law Rules 2004.
(5)Any party who receives a submission seeking costs against them, file and serve submission of not more than 3 pages in response thereto within 21 days which submission must include details of any opposition to the quantum of costs drawn under Schedule 3 to the Family Law Rules 2004.
(6)Following receipt of written submissions in accordance with this Order, my Associate enquire of the practitioners whether either party seeks that the costs issue be listed for oral submissions in reply or for clarification.
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 Fowles & Fowles (No 5) 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 |
FILE NUMBER: MLC8587 OF 2015
| Ms Fowles |
Applicant
And
| Mr Fowles |
Respondent
And
Independent children’s lawyer
REASONS FOR JUDGMENT
Introduction
On the seventh day of the trial, 27 March 2018, the wife sought an injunction under s 114 of the Family Law Act 1975 (Cth) (“the Act”) to prevent the husband leaving the Commonwealth of Australia (“Australia”).
The application was partially in response to emails sent by the husband on 25 March 2018[1] and comments made by the husband on the sixth day of the trial in which he expressed a desire to resign from companies of which he was in charge and return to the United States of America to see his family and “have a break.”
[1] The emails are exhibits “W18” and “W19” in the proceedings.
The wife’s application was opposed by the husband.
On 27 March 2018 I heard submissions and evidence from the husband and reserved my decision. I reserved liberty to apply in relation to the husband leaving the Commonwealth of Australia if he had specific reason to do so prior to me delivering this decision. It was understood that the husband would not leave Australia pending the delivery of my decision.
Until now, absent the husband actually seeking to leave Australia for specific dates or for a specific purpose, I have been disinclined to make observations about the husband’s conduct of the trial and his presentation in the witness box, and I delayed delivery of this decision. However, having heard argument on the wife’s initial oral application, it is necessary that I rule on it because one or more of the parties has now specifically requested the decision.
These are my reasons for granting the wife’s application.
Leave to make an oral application
The wife’s application was an oral application.
The husband’s practitioners were not taken by surprise. There was no complaint about lack of procedural fairness.
I will formally grant leave to the wife to proceed with her application orally.
I excuse each party from compliance with the rules of court which require written applications and affidavit evidence in support.
Subsequent developments
There have been subsequent developments restricting the husband’s ability to leave Australia which have largely overtaken the wife’s application of March 2018.
On 5 July 2018, when the matter was again to be adjourned for further hearing, the wife made oral application to renew her application that the husband be restrained from leaving Australia and that he hand up his passports. Without admitting necessity, the husband agreed for his passports to be held by the court.
On 5 July 2018 I pronounced the following interim orders:-
(1)The husband be and is hereby restrained by injunction from departing from the Commonwealth of Australia without further order of the Court.
(2)The husband cause his passports (Australia, United States of America and Ireland) to be delivered to the Registrar of the Court and held for safekeeping NOTING THAT the husband does so voluntarily and without admitting the necessity for an order in this regard.
On 22 August 2018 the husband filed an application in a case that the Order made on 5 July 2018, restraining him from traveling out of Australia, be discharged and his passports returned to him. In the alternative, that he be permitted to travel to the United States for ten days as soon as practicable or from 22 September 2018 until Monday 8 October 2018, or from 7 December 2018 to 31 January 2018.
The husband’s application in a case was set down for hearing on 10 September 2018 before me. On that day the husband requested this application be adjourned, save to costs, which was agreed to in principle by the wife but no minute was handed up to that effect. The day was spent in evidence and submissions about whether the parties’ son, D, could attend school camp (over the husband’s objection). I delivered a decision on that issue on 12 September 2018.
The husband’s application filed 22 August 2018 has not been listed for hearing.
The interim Order of 5 July 2018 is still in full force and effect.
The husband is still in the witness box being cross-examined by counsel for the wife.
All applications in this matter are next before the court on 23 November 2018 for mention.
There have been 13 days of hearing so far. It is likely that the next defended hearing dates that can be allocated to this matter will be 4 to 8 February 2019. It is less than satisfactory that the case has been adjourned part heard. However, it has run, and will continue to run, for times far in excess of counsels’ estimates of reasonable duration of the trial. Under this court’s case management system of judicial dockets, practitioners and parties cannot expect consecutive hearing days if, as here, the estimates of the time for hearing are grossly inaccurate.
Independent children’s lawyer
Ms Mary Lonergan is the independent children’s lawyer for the parties’ son, D born in 2003 (“the child”). Interim parenting orders were made on 20 March 2018 and Ms Lonergan was excused from participating in the financial proceedings. Ms Lonergan did not participate in this application.
Relevant Law
The wife seeks the injunction under s 114(3) of the Act. S 114(3) provides:-
(3)A court exercising jurisdiction under this Act in proceedings other than proceedings to which subsection (1) applies may grant an injunction, by interlocutory order or otherwise (including an injunction in aid of the enforcement of a decree), in any case in which it appears to the court to be just or convenient to do so and either unconditionally or upon such terms and conditions as the court considers appropriate
S 114(3) operates where there are existing proceedings[2] These financial proceedings fall within the definition of “matrimonial cause” under paragraph (e) contained in s.4(1) of the Act, being “proceedings between the parties to a marriage for an order or injunction in circumstances arising out of the marital relationship”. I am therefore satisfied that I have jurisdiction to make the orders sought.
[2] Tansell(1977) FLC 90-307; 3 Fam LR 11; 466.
The test for exercising the power to grant an injunction under s 114(3) is whether it is both just and convenient to do so.
I can also grant the injunction “either unconditionally or upon such terms and conditions as the court considers appropriate.” The term “appropriate” in the expression “such terms and conditions as the court considers appropriate” in s 114(3) is synonymous with “just”.[3] In turn, the word “proper” as referred to in s.114(1) has been interpreted to mean “reasonable and just in [the] circumstances” (see Farr and Farr (1976) FLC 90-133). I consider that “appropriate” within the context of s.114(3) is synonymous with “proper”.
[3] In Marriage of Page (1978) 35 FLR 101; 4 Fam LR 663; [1978] FLC 90-525 (FamCA), Tonge J at 107.
In making an order under s 114(3) I must balance the utility of the order against the possible detriment to the husband.[4]
[4] Shan & Prasad [2018] FamCAFC 12, [159].
Wife’s submissions
It was the wife’s submission that the injunction should be granted because, if the husband were to leave Australia, he would not return to the jurisdiction thereby defeating or severely impinging upon her prospects of success in these property proceedings.
These proceedings were initiated in the Federal Circuit Court of Australia. On 5 October 2015 the matter came before Judge Hartnett the Federal Circuit Court. Her Honour made a series of injunctions. Paragraph 5(f) provided that until further order the husband would be restrained from selling or otherwise disposing of or encumbering or diminishing any interest (legal or equitable), entitlement, power or office in respect of any business interest corporate entity or trust in which he has an interest save for in the ordinary course of business. Mr V is the wife’s expert on the valuation of certain corporate entities. A report by Mr V was served by the lawyers for the wife on the husband husband’s lawyers on Friday, 23 March 2018.
On Sunday, 25 March 2018 the husband wrote two communications to Mr V the email communications were:
·Sent 25 March 2018 at 1:20:17 a.m.[5] The subject matter was “resignation”. The text said “I will be submitting my resignation from [T Inc]and [W Pty Ltd] next week. I quit. Now, what is that worth? Regards, [Mr Fowles], Managing Director”
·Sent 25 March 2018 at 8:37:45 a.m.[6] The subject matter was “resignation”. The text said “I resign as RM of [T Inc] effective immediately. I also resign from all the day to day stuff I was doing. Can I resign as a director of company [T Inc], [W Pty Ltd] and [L Pty Ltd]. I’m now retired. Regards, [Mr Fowles], Managing Director”
[5] Exhibit “W18”
[6] Exhibit “W19”
The reference to T Inc and W Pty Ltd is to entities in which the husband holds an office and which are structures central to the husband’s business. A reading of paragraphs 4 and 5 of injunctive orders made on 5 October 2015 indicates the significance of W Pty Ltd and T Inc.
The emails sent on 25 March 2018 were regarded by the wife’s lawyers as incendiary because the resignations would have the effect of the husband relinquishing control over relevant entities.
The husband entered the witness box and was asked to explain what “RM” meant in the second email. The husband’s answer was discordant as well as non-responsive. The interchange commenced:
MR SHEALES: Thank you, your Honour.
What does “RM” mean?‑‑‑I was abused by ‑ ‑ ‑
What does it mean?‑‑‑ ‑ ‑ ‑ [Ms Fowles] over many years ‑ ‑ ‑
What does it mean?‑‑‑ ‑ ‑ ‑ both physically ‑ ‑ ‑
What does “RM” mean? Answer the question?‑‑‑ ‑ ‑ ‑ and verbally.
HER HONOUR: All right. Please be responsive to the question. Look at W19 and there is the first sentence:
I resign as RM of [W Pty Ltd] effective immediately.
Please tell me what “RM” stands for?‑‑‑Responsible manager.
The husband confirmed that he was the sole director and secretary of W Pty Ltd and that he oversees the operation of the business and the advisors. There are no alternate directors or alternate secretary.
A later part of the husband’s evidence was[7]:
[7] Transcript in Confidence 26.3.18 P-474 to P-475
MR SHEALES: You are the only person who is an office bearer of that company?‑‑‑Correct, but RM is not an office.
I agree with you, however, the director, who is you, is – and the secretary, who is you, is responsible in their entirety – in its entirety for [W Pty Ltd’s] activities.
Another responsible manager could be appointed.
HER HONOUR: By whom?‑‑‑By a director.
And did you appoint one?‑‑‑No.
MR SHEALES: So ‑ ‑ ‑?‑‑‑But it doesn’t need to be done right away. It could be done over a period of time.
Your Honour, I would seek leave to simply ask a couple of other questions on other matters which are relevant to the application in relation to passports.
HER HONOUR: When you – looking at – in a moment I will decide that. In W18, “I will be submitting my resignation from [T Inc].,” so the American entity “and [W Pty Ltd] next week. I quit. Now what is it worth?” Can you tell me what was intended – what sort of response you were intending to elicit from the expert witness for the wife in these proceedings?‑‑‑Your Honour, I’ve been abused for years, and I’m exhausted, and I need a break.
Just answer the question, please?‑‑‑And I just need some – I need some time off from work.
Well, what were you resigning?‑‑‑From day to day – I don’t want a – I want a break. I don’t know. I want a break.
So you don’t know what you were going to resign from? What offices could you resign from?‑‑‑I’m not sure. I would like to just go see my family and have a break.
The hearing concluded on 26 March 2018 with senior counsel for the husband informing the court that overnight he would, at my invitation, seek instructions from his client as to whether his client would surrender his passports as an alternative to the granting of an injunction. On 27 March 2018, senior counsel for the husband informed me that he was not instructed that his client would surrender his passports. There was no re-examination of the husband.
Counsel for the wife also relies on several non-controversial facts which, it was submitted, paint the husband as a litigant who is not disposed to comply with orders of the court particularly where those orders are for the benefit of the wife. Those facts were:-
a)On 5 October 2015 Judge Hartnett ordered that until further order the husband pay to the wife for her ongoing maintenance the sum of $800 per week such moneys to be paid by electronic transfer into the wife’s maintenance account and that he further pay all the wife’s medical, hospital, dental and/or pharmaceutical and/or treatment costs and expenses to the extent not covered by health insurance. The husband is substantially in arrears of the spousal maintenance order in favour of the wife. He has applied to vary the order but it remains unvaried. My understanding is that the arrears were, as at March 2018, likely to be in the vicinity of $40,000. In any event I take note that the arrears are very substantial.
b)Whilst not paying spousal maintenance to the wife the husband paid some $130,000 on account of costs owing by his father to a firm of solicitors without asking his father whether his father required him or needed him to do so. The costs were incurred by the husband’s father in proceedings in the Supreme Court of Victoria against the wife.
c)The husband has sent some $13,000 to his girlfriend in America for her support without any legal obligation to do so.
d)Being obliged to provide documents about financial transaction to the solicitors for the wife, his evidence on 22 March 2018 was that he had deleted documents which evidenced transmission of Bitcoin or Coinbase to the United States “to simplify things here” where “here” referred to the financial proceedings in this Court[8].
[8] Transcript-in-Confidence for 22.3.18 P-313 to P-315
There is also the issue of the husband’s use of the proceeds of sale of iShares. Paragraph 5(e) of the Order made on 5 October 2015 provides that, until further order, the husband be restrained from selling or otherwise disposing of or encumbering or diminishing value of shares held in his name, the wife’s name or in the name of any entity in which he has an interest save for in the ordinary course of business.
In an affidavit sworn 16 May 2017, the husband stated that the $500,000 Westpac loan which is secured by mortgage over the family apartment was used to buy iShares. The whole amount was used for that purchase. The shares were not security for the loan; the family home was the only security hence the mortgage. The husband deposed “I’ve sold those shares of recent times and have not paid down the loan to Westpac”. He distributed that money to himself. The wife asserts that this was a breach of the husband’s obligations under the Order of 5 October 2015. Senior Counsel for the husband stated that the husband characterises the entire transaction as “in the ordinary course of business”. That is difficult to reconcile with the shares being held in the husband’s name personally rather than through any business he operates.
Finally, counsel for the wife submitted that they had no objection to an order whereby the husband can make an application to the court to travel, supported by evidence of his capacity and willingness to return to Australia. However, the wife opposes the husband being able to leave at his whim and without reference to the court or to her.
Husband’s submissions
The husband wants to travel to the United States. However, as at 26 March 2018, he did not know when he would go to the United States or how he would pay for his trip.
The husband’s submissions focused on the importance of the husband’s liberty to travel. It was submitted that the court should not exercise its powers to grant an injunction restricting travel unless it was satisfied it is “necessary”.
To support the submission regarding the primacy of the husband’s right to travel, senior counsel for the husband relied on the decision of the Full Court in Talacko & Talacko (2010) FCAFC 54. Talacko dealt with the question of whether a person in respect of whom a bankruptcy notice has been issued can be required under s 31 of the Bankruptcy Act 1966 (Cth) to deliver their passport and be restrained from leaving Australia. The essence of the husband’s reliance on Talacko was to submit that the court must give significant weight to the right to travel against any other consideration when considering whether to restrict that right. Mr North SC pointed to paragraph 13 of Talacko where the Full Court of the Federal Court, comprising Gray, Mansfield and Mckerracher JJ, detailed the domestic and international instruments recognising the importance of the right to travel such as:-
…[t]he Charter of Human Rights and Responsibilities Act 2006 (VIC), s 12; the International Covenant on Civil and Political Rights (ICCPR), Art 12; the Human Rights and Equal Opportunity Commission Act 1986 (Cth), Sch 2 Art 12 (which is in the terms of the ICCPR); and the Universal Declaration of Human Rights, Art 13.
Counsel for the husband highlighted the following instruments and articles:-
Article 12 ICCPR
The above-mentioned rights shall not be subject to any restrictions except those which are provided by law, are necessary to protect national security, public order, public health or morals or the rights and freedoms of others, and are consistent with the other rights recognized in the present Covenant.
Article 13 UDHR.
(2) Everyone has the right to leave any country, including his own, and to return to his country.
I have no difficulty with the characterisation of a ne exeat colonia order being a serious remedy which should not be imposed except in circumstances which render it proper and, in the language of s114(3) “just and convenient.” To the extent that senior counsel relies upon the concept of the injunction only being granted if it is considered by the court to be “necessary”, I note that “necessary” is used in Talacko by reference to s30(1)(b) of the Bankruptcy Act 1966 (Cth). That provides that “the court may make such orders as (including declaratory orders and orders granting injunctions or other equitable remedies) as the court considers necessary for the purposes of carrying out or giving effect to this Act in any such case or matter.” I regard the test applicable to this matter as that which appears in s114(3).
On the issue of the risk of the husband not returning to Australia, it was submitted by Mr North that the degree of risk must be very high. Such that the risk is not merely an apprehension but a high degree of concern. So high, he submitted, that without the order, it is more likely than not these proceedings will be subverted by the husband staying away. I agree that the risk must be more than an apprehension. The justification would need to reach or exceed that which “appears to the court to be just and convenient” – which is the language of s114(3) – and be implemented “either unconditionally or upon such terms and conditions as the court considers appropriate”.
Counsel for the husband relied on the decision of the Full Court in Shan & Prasad [2018] FamCAFC 12. The facts of Shan & Prasad differ significantly from this matter in that this injunction is currently only pending the finalisation of the hearing, but the principle is relevant. In Shan & Prasad the Full Court found that the primary judge’s discretion under s 114(3) had miscarried, they stated:
In coming to that determination [to prohibit travel out of Australia], the primary judge was obliged to balance the utility of the order against the possible detriment to the husband. As we said, this exercise required careful consideration by reference to clear findings of fact, in relation to those matters.
In this case, I cannot make clear findings of fact because we are only part way through the trial and part way through the cross examination of the husband. I do not know what evidence will emerge from the husband in further cross- examination or re-examination. The husband’s witnesses are yet to be called and tested. I can only have regard to what is before me and I do not consider that I can make clear findings of fact. I will work with what I have in balancing the utility of the order sought by the wife against the possible detriment to the husband and the curtailment of his liberty.
Mr North’s response to the husband’s emails of 25 March 2018 was to concede that they were “intemperate”. That goes to the flavour of the emails. The substance of the purported resignation was not addressed, in circumstances where it is really the substance of the emails and the husband’s mindset that matters.
Senior counsel for the husband submitted that, given the husband is a citizen of Australia and had businesses in Australia for which he had reporting obligations, his ongoing involvement in Australia was required. I do not regard this as a particularly strong argument. The husband has semaphored that he wants “a rest” and not to be bothered by work.
I take into account that the husband’s business leases premises in X Street, Melbourne which lease is supported by a bank guarantee of $100,000. However, performance under the lease does not require the husband’s presence in Australia.
Counsel for the husband submitted that despite the husband’s conduct which has been in breach of previous orders, namely the non-payment of maintenance, the husband has appeared numerous times before this court and the Federal Circuit Court and the State Magistrates’ Court. The husband has attended on each occasion he has been required except for the first return date which was allocated to a date when he was already overseas. That is correct.
In summary, Mr North conceded that certain conduct of the husband gives rise to a risk that he will not return from the United States which, in turn, may make it difficult for the wife to enforce anticipated orders to their full extent. However, when that risk is weighed against other conduct, such as
·the husband’s continued presence in the jurisdiction,
·his clear connection with the jurisdiction and
·the likelihood, in all the circumstances, that he will indeed return –
coupled with the seriousness of the restraint of the husband’s freedom of movement and right to move in and out of the jurisdiction, the balance is in favour of no order being made.
Discussion
To the factors raised by Mr North, I would expressly add the fact that the parties’ son is, and will remain, in Melbourne. I regard this as a significant factor indicating that the husband would return to Australia in the medium term. In the short term, there is no time spent between father and son nor any meaningful communication between them. I am satisfied that the husband wants to maintain contact with the child. I have observed him in the witness box to become distraught over not being able to see the child.
I accept that the husband’s case may run differently in what is left of his cross-examination and with re-examination. His other witnesses may be illuminating. However, for the time being, I assess the husband’s application to the proceedings as less than satisfactory and consistent with a very real possibility that, if permitted to leave the jurisdiction, he will not return when required.
I have regard to the husband’s fundamental rights to travel in and out of Australia, as relied upon by counsel for the husband. However, that right is not immutable. There are circumstances in which it must yield in the interests of justice and, in particular, when the court considers competing factors and finds that it “is just and convenient to do so.” Competing considerations include the wife’s entitlement to expect that there will be compliance with orders made in her favour.
I also take into account the nature of the proceedings. The wife is trying, through cross-examination of the husband, to establish assets at law and in equity which can be divided or taken into account in these financial proceedings absent, it is said, proper admissions or adequate discovery by the husband. She is chasing what her counsel say are undisclosed assets located out of Australia. If the husband failed to return to Australia, the wife could not continue with her case in his absence.
The husband does not offer any security for return.
Conclusion
I am satisfied that it is just and convenient to grant the order sought by the wife. Whilst the extant Order of 5 July 2018 could be said to be a sufficient safeguard for the wife, for the avoidance of doubt, I will make another order which is specifically referrable to the wife’s oral application of March 2018.
I certify that the preceding fifty-eight (58) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Bennett delivered on 16 November 2018.
Associate:
Date: 16 November 2018
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