G and G
[2002] FMCAfam 236
•13 February 2002
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| G & G | [2002] FMCAfam 236 |
| FAMILY LAW – Injuctions – sections 114, 106B of the Family Law Act 1975. Ascot Investments Pty. Ltd. v. Harper and Harper (1981) 145 CLR 337 Australian Coarse Grain Pool Pty. Ltd. v Barley Marketing Board of Queensland (1982) 46 ALR 398 Collins and Collins (1987) FLC 91-800 |
| Applicant: | N G |
| First Respondent: | D P G |
| Second Respondent: | P J G |
| File No: | PAM4252 of 2001 |
| Delivered on: | 13 February 2002 |
| Delivered at: | Parramatta |
| Hearing Date: | 8 February 2002 |
| Judgment of: | Scarlett FM |
REPRESENTATION
| Solicitors for the Applicant: | Ms Murdoch, Watts McCray Solicitors DX 8224 Parramatta NSW |
| Solicitor for the First Respondent: | Ms Harris, Coleman and Greig Solicitors DX 8226 Parramatta NSW |
| Solicitors for the Respondent: | Mr Paul G, G Lawyers DX 8137 Blacktown NSW |
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT PARRAMATTA |
PAM4252 of 2001
| N G |
Applicant
And
| D P G |
First Respondent
And
| P J G |
Second Respondent
REASONS FOR JUDGMENT
Application
The wife, who is the Applicant in these proceedings, seeks orders by way of injunction against the Second Respondent, who is her father in law. Her husband is the First Respondent.
The injunctive orders that she seeks, pursuant to section 114 of the Family Law Act, can be summarised as follows:
a)an order requiring the Second Respondent to withdraw the sum of $39,000 from an account in the St. George Bank and pay that sum into her solicitors’ trust account, to be held on trust for the First Respondent and herself;
b)an order requiring the Second Respondent to apply to the National Australia Bank to re-draw the sum of $35,000.00 from the mortgage on his home and pay that sum into the trust account to be held on the same terms;
c)an order requiring him to withdraw the sum of $25,000.00 from his office account at the Westpac Bank and pay that sum into the trust account; and
d)an order restraining him from increasing the indebtedness on his home until he has complied with the earlier orders.
After an interim hearing on Friday 8 February 2002, where the Second Respondent was cross-examined on an affidavit that he had filed, the Court made some interim orders, in terms rather more limited than the Applicant had sought, and reserved its decision. The orders made on
8 February can be summarised as follows:
a)the Second Respondent was restrained from dealing with a sum of $35,840.00 held in the St. George Bank in the name of a company called C Pty. Limited;
b)he was also restrained from doing anything to increase the indebtedness on his home; and
c)he was restrained from reducing the balance in his office account below the sum of $25,000.00.
Background
The application arises in the course of property proceedings commenced by the wife on 7 December 2001. The wife, according to her affidavit material, says that she and her husband separated on 26th October 2001. She deposed that she estimated the parties’ total net assets at the date of separation at $312,000.00. These assets include the former matrimonial home, which she estimates to be worth about $280,000.00, subject to a mortgage of only about $30,000.00. The wife also deposes that she ascertained that between 5th and 15th November 2001 her husband withdrew sums of money totalling $125,000.00, without her knowledge. She later found out that her husband had lent the sum of $105,000.00 to his father, who has now been joined as the Second Respondent.
The husband has filed an affidavit in which he denies that the date of separation was 26th October. He claims that the parties did not separate until 21st November, when his wife removed various items from the home. He estimates the net value of the parties’ assets at $285,479.00, showing a loan of $105,000.00 to his father as an asset, but also showing an amount of $181, 152.00 as owing under the mortgage. He deposed that he had agreed to lend this sum to his father on or about 10th November.
The Second Respondent, a solicitor, has filed an affidavit in these proceedings, also describing a conversation with his son on 10th November, when he asked for the loan of about $105,000 for up to 15 years. He deposed that he received a bank cheque for that amount on 15th November, and that he applied that money in the following ways:
a)he paid several debts totalling $60,800.69;
b)he withdrew the sum of $6,000.00 to pay for such things as medical expenses (he underwent surgery in December); and
c)he invested the balance of $38,199.31 in his legal practice.
In his oral evidence, the Second Respondent said that he had paid the sum of $39,500.00 to the National Australia Bank to reduce his indebtedness under a mortgage, and that he had transferred the sum of $38900.00 to C Pty Limited. C is an investment company, and evidence was produced to show that $35,840.00 was being held in a cash management account in the name of C Pty Limited at the St. George Bank. Evidence was also produced to show that he had a credit balance of $29, 934.80 in his office account as at 27th January 2002.
Issues
In her Amended Application, filed on 21st December 2001, the Applicant seeks a final order pursuant to section 106B of the Family Law Act, setting aside the loan from the First Respondent to the Second Respondent. In these interlocutory proceedings, she seeks orders that her solicitor, Ms Murdoch, has described as “positive injunctions”, to bring the money back into an area where it can be accessed at the conclusion of her property proceedings.
The First Respondent has made no submissions. The Second Respondent, however, has argued that the orders sought, which would require him to repay the sum of $99,000.00, would put him out of business. He doubted that the National Australia bank would allow him to redraw money on his mortgage.
The Second Respondent has relied on the decisions in Ascot Investments Pty. Ltd. v. Harper and Harper (1981) 145 CLR 337, and Re Ross-Jones, Marinovich and Marinovich, Ex parte Green (1984) 156 CLR 526, in support of the proposition that the court should not make orders that would have the effect of interfering with the rights of a third party, in this case his right to use the proceeds of a loan which he required for the use of his business.
The Applicant relies on the decision of the Full Court of the Family Court in Collins and Collins (1987) FLC 91-800, where the decisions in Ascot Investments v Harper and Re Ross-Jones & Ors, Ex parte Green were distinguished. The Full Court held that section 114(3) of the Family Law Act enabled the trial Judge to grant the injunctions that he did in relation to the exercise by the Family Court of its jurisdiction under section 85 (now section 106B). It was also submitted that the test to be applied was that referred to in Aldred and Aldred (No. 2) (1985) FLC 91-602, where the Full Court cited, without conclusively deciding the issue, the dicta of Gibbs CJ in Australian Coarse Grain Pool Pty. Ltd. v Barley Marketing Board of Queensland (1982) 46 ALR 398, where he said:
“The proper approach, in considering whether an interlocutory injunction should be granted, is first to inquire whether there is a serious question to be tried, and then to determine the matter on the balance of convenience.” (at page 398).
Conclusions
The Applicant has commenced property proceedings where the net value of the matrimonial property is estimated at either $285,479.00 or $312,000, 00, depending on whether the First Respondent’s figures or the Applicant’s figures are accepted. As part of her application, the Applicant seeks an order pursuant to section 106B of the Family Law Act, which empowers the Court to set aside a disposition “which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order”. The disposition she seeks to have set aside is a loan to the value of $105,000.00, which is a significant sum of money.
Whilst the Applicant and the First Respondent differ as to when separation actually took place, the affidavit evidence of both Respondents place the negotiation of the loan at or about 10th November 2001, with the money being delivered to the Second Respondent on or about 15th November 2001. The First Respondent deposes to being aware of difficulties between himself and his wife over the weeks leading up to 10th November, but denies that he was aware that a separation was imminent. The wife places the separation at an earlier date, and says in her affidavit that she was unaware of the loan until after it had happened.
Those matters are sufficient to indicate, in my opinion, that there is a serious question to be tried. The bona fides of the loan would no doubt be a significant issue of contention between the parties. The Applicant’s fear is that, with the money being in the hands of the Second Respondent, any property order she may obtain will be of reduced value to her. There is already evidence that the Second Respondent has spent some $6,000.00 of the original loan on medical and other expenses. The orders sought by the Applicant relate only to the sum of $99,000.00.
I am satisfied, relying on the decision in Collins and Collins (supra), that section 114(3) gives the Court power to grant injunctions to preserve the property which forms a significant part of the matrimonial property. I am also satisfied that there is a serious question to be tried and that, accordingly, this is an appropriate case for the Court to grant certain injunctions.
I am not satisfied, however, that the Court should grant the orders in the form sought by the Applicant. The Applicant seeks orders that would have the effect of requiring the Second Respondent to borrow money and to repay all but a small portion of the loan. This appears to me to be beyond the scope of an interlocutory injunction under section 114(3). It appears to go more towards deciding the Applicant’s claim under section 106B rather then just attempting to preserve the money, or a substantial proportion of it, until the matter can be litigated on a final basis.
It is for these reasons that I do not consider it appropriate to make the orders sought by the Applicant. Continuing the interlocutory orders made by this Court on Friday 8th February 2002 would have the effect of preserving a substantial amount of the loan moneys made by the First Respondent to the Second Respondent. Whilst there may well be some limitation placed on the Second Respondent by requiring him to ensure that the balance in his office account does not fall below a credit balance of $25,000.00, the evidence shows that his normal office expenses do not normally exceed $2500.00 in any one withdrawal. The Second Respondent will still receive the benefit of the injection of funds as a result of the loan, which should maintain his credit rating with his bank, even though he will be temporarily unable to dispose of the money or re-draw on his mortgage.
I certify that the preceding seventeen (17) paragraphs are a true copy of the reasons for judgment of Scarlett FM
Associate: A. Coutman
Date: 7 August 2002
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