HELLNER & ZAGAR

[2015] FamCA 147

FAMILY COURT OF AUSTRALIA

HELLNER & ZAGAR [2015] FamCA 147

FAMILY LAW – PROPERTY – INTERIM PROPERTY ORDER – Where the applicant seeks to vary orders relating to undertakings  – Where the applicant submits that the court did not have power to accept the undertakings  – Where the applicant submits that the undertakings should be discharged – Where the applicant submits that there has been a change in his financial circumstances as to justify a discharge of the undertakings – Where the applicant still has significant cash resources – Where the application in a case in so far as it relates to the variation of the undertakings, is dismissed.

Family Law Act 1975 (Cth) s 114
Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 (Cth) s 88

Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150
Norton & Locke [2013] 50 FamLR 517

APPLICANT: Mr Hellner

RESPONDENT: Ms Zagar

FILE NUMBER: SYC 6187 of 2013

DATE DELIVERED: 9 February 2015

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Aldridge J

HEARING DATE: 9 February 2015

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Rosic

SOLICITOR FOR THE APPLICANT: Manning Lawyers

COUNSEL FOR THE RESPONDENT: Ms Petrie

SOLICITOR FOR THE RESPONDENT: Court Legal

Orders

1. That the Application in a Case filed by the husband on 12 December 2014, in so far as it relates to the variation of the undertakings given on 9 April 2014, is dismissed. 

1. That costs of and incidental to this application are reserved for all parties.

NOTATIONS:

1. It is noted that the Application in a Case is otherwise not proceeded with and that the respondent does not wish to proceed with her proposed variations as to parenting at this stage either.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Hellner & Zagar has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 6187 of 2013

Mr Hellner

Applicant

And

Mr Zagar

Respondent

REASONS FOR JUDGMENT

1. These reasons were delivered orally.

2. In an application in a case, the applicant seeks to set aside orders made on 11 November 2013.

3. The orders made on 9 April 2014 were made in the context of proceedings part of which concerned the validity of a domestic relationship agreement signed between the parties. It is the applicant’s case, relying upon section 88 of the Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 (Cth) that such an agreement is taken to be a binding financial agreement under the Family Law Act 1975 (Cth) (“the Act”), and that until it is set aside the court has no power to make any financial orders in the proceedings. The applicant also asserts that his ability to comply with the undertakings has now changed so that it would be appropriate to relieve him from those undertakings.

4. The consent orders, which were made pending further order on 9 April 2014, largely concerned the parenting of the child of the relationship, B (“the child”).  The parties were to have equal shared parental responsibility for her.  She was to live with the respondent and then, commencing from the date that the respondent vacated the premises at C Street, Suburb D, to live with the applicant for five nights each alternate week and three months later, for six nights each alternate week.

5. The applicant gave a number of undertakings to the court, the effect of which was that he was to do all things necessary to obtain a residential lease in his name for a two bedroom apartment in Suburb D and that he pay the rent plus the bond until final property orders are made by the court, or the binding financial agreement is set aside, whichever occurs the later.  The respondent was to vacate the former matrimonial home and the applicant was to give the undertakings, pay periodic child support of $1 000 per month, and to agree to the release and payment of particular sums.

6. It was noted that, upon the respondent vacating the former matrimonial home, that she should have exclusive occupation of the rental premises acquired, pursuant to the undertaking, and that the applicant would have exclusive occupancy of the former matrimonial home. 

7. It is the applicant’s case that those orders were made pending what he hoped to be the early determination of the threshold issues of validity of the domestic relationship agreement.  Due to the number of matters filed in the court, and the number of judges available to deal with them, the matter has not yet been fixed for a first day before a judge.

8. There are therefore two aspects to the application.  The first is the applicant submits that the court did not have power to accept the undertakings, and they should accordingly be discharged.  Second, he submits that they ought to be discharged due to the change in his financial circumstances. 

9. It is trite to say that the court can only exercise power that is within its jurisdiction, and that jurisdiction cannot be conferred by consent where it is otherwise lacking. 

10. In Thomson Australian Holdings Pty Ltd v Trade Practices Commission (1981) 148 CLR 150, at 165 Gibbs CJ, Stephen, Mason and Wilson JJ said:

    As an undertaking is given in lieu of an injunction and is enforceable in like manner, the principles which govern the grant of an injunction by a court must guide it in deciding whether it should accept an undertaking. Limitations which affect the court's jurisdiction or power to grant a final injunction must be observed in the acceptance of an undertaking when it is offered as a substitute for a final injunction. The court cannot escape such limitations by the expedient of accepting an undertaking in lieu of an injunction. The court cannot put itself in the position of enforcing conduct which it has no capacity to command or compel. No doubt the Federal Court has power to accept an undertaking at an interlocutory stage when the undertaking is reasonably related to the orderly procedure of the court or to the subject matter of the litigation, as Deane and Fisher JJ observed, even though it is not in a form which falls within s 80. But, with great respect to their Honours, this does not justify the conclusion that the court has power to accept an undertaking by way of final disposition of the case when the court lacks power to make a final order in that form and the effect of the undertaking is to restrain conduct which the court has no power to restrain.

11. It is to be noted that in the middle of that paragraph the court distinguished the accepting of undertakings as a final order in lieu of an injunction, as opposed to the accepting of an undertaking at an interlocutory stage, when the undertaking is reasonably related to the ordinary procedure of the court or the subject matter of the litigation. 

12. Applying the same reasoning, the Full Court of this court in Norton & Locke [2013] 50 FamLR 517 accepted, in relation to applications to set aside binding financial agreements, that the court did not have power to make an order for spousal maintenance or interim property settlements until it had determined that the binding financial agreement should be set aside, as such an agreement ousted the court’s jurisdiction to do so.

13. At paragraph 49 and 50 the court set out the circumstances in which, in that particular case, the court may nonetheless grant an interlocutory injunction. The Full Court found as follows at [49] & [50]:

    49.Taken together, the authorities point to the Family Court having power — within its jurisdiction to determine if it has jurisdiction — to control its own processes and to protect its function as a court by granting interlocutory injunctions so as to “preserve the status quo” pending the resolution of the issue of jurisdiction.

    50.However, the ambit of relief “preserving the status quo” is limited by the narrow ambit of the power itself and by the narrow jurisdiction within which the power is being exercised. As a result, the cautionary notes sounded by the authorities in respect of Mareva orders have a direct bearing upon the nature and ambit of interlocutory injunctions of the type under discussion. In particular:

    a) the preservation of an existing state of affairs (the “status quo”) is not sufficient, of itself, to grant the relief — an injunction is not granted “as of right” when an assertion of jurisdiction and an entitlement to de facto financial relief is sought;

    b) the injunction “… must be necessary to prevent the abuse of the process of the court” (per Wilson and Dawson JJ in Jackson at 617–8) or to “protecting its function as a court” (per Menzies J in Ex parte Bevan; Gibbs CJ in Ex parte Green);

    c) the relief must be required by reference to an emergent state of affairs which demonstrate a clear danger to the applicant obtaining relief reasonably sought. That is where “… the circumstances point compellingly to a need to preserve the status quo as an interim measure pending a hearing to determine whether interlocutory relief should be granted” (per Wilson and Dawson JJ in Ex parte Green);

    d) the relief should be granted only “… while the question whether [the court] had jurisdiction remained in doubt” (Ex parte Green);

    e) the questions of fact and law upon which jurisdiction depended would have to be determined as a matter of the “utmost urgency” and “… once it appeared that jurisdiction was lacking, the injunction would have to be dissolved, however inconvenient that course might appear” (Ex parte Green);

    f) the remedy is not to be used so as to “create security for the [applicant] or to require a [respondent] to provide security as a condition of being allowed to defend the action …” (per Deane J in Jackson v Sterling Industries Pty Ltd);

    g) pending a decision as to jurisdiction, regard must be given to the fact that the injunction “… imposes a severe restriction upon a [respondent’s] right to dealt with his or her assets” (per Dixon J in Glover v Walters);

    h) proper regard must be had to the fact that jurisdiction has not been decided and the fact that, consequently, a possible outcome is that no remedy sought by the applicant may be granted. Equally, proper regard must be had to the nature, extent and value of the relief claimed by the applicant in the event that jurisdiction is established;

    i) the remedy, if granted should go no further than that which is required to preserve property in respect of which a danger is established pending determination of the jurisdictional question.

14. In the present case, the undertakings were accepted as part of a suite of orders that dealt with the parenting arrangements for the child, and the occupation of particular residences by the parents and the child at particular times. In effect, the applicant sought an order that he have exclusive occupation of the former matrimonial home. Such orders can be made by the court as interlocutory orders under section 114 of the Act. The undertakings that were given were undertakings to give effect to that exclusive occupation by requiring the applicant to, in effect, provide alternative accommodation for the respondent and the child.

15. Whilst the undertakings are clearly interlocutory undertakings pending the determination of the issue as to whether or not there is a binding domestic relationship agreement they are part of orders that dealt with the interim parenting arrangements of a child.  Indeed, exclusive occupation agreements often involve considerations of the best interests of the child.  Such an injunction could have been made in relation to the parenting proceedings, in respect of which the court clearly has jurisdiction. 

16. Therefore, for those reasons, I am satisfied that the court would have had jurisdiction, either in the parenting proceedings or as a way of preserving the status quo and managing the issue that was before the court, to make orders for exclusive occupation, and it follows that the accepting of the undertakings to give effect to the same are not beyond jurisdiction.

17. As to the second matter, the applicant says that his business started to decline in 2011 as a result of the global financial crisis, and that there was a reduction in the market for the use of professional conference speakers and corporate trainers, which has been felt most significantly over the last three years.  He said that his income has diminished such that the year ending 2012 was $154,000; June 2013, $102,499;  and 30 June 2014, $42,946.  In addition to the matters the subject of the undertakings, the applicant also pays other sums for the benefit of the child of the relationship, including school fees, medical expenses, and extra-curricular activities, and he accepts that he would nonetheless continue to pay the child support obligations.

18. He also refers to the respondent having, still available to her, funds that were paid to her as a lump sum by way of the previous undertakings.  In his financial statement, the applicant says that his total average weekly income is $650, and his average expenditure is some $3,314.  The expenses include expenses for a European motor vehicle, as well as expenses for holidays, gardening, pool cleaning and gifts.  More importantly, he discloses that at present his interest in the home is some $1.5 million.  He has just short of $11 000 in a savings account, just short of $34,000 in a Westpac Business Cash Reserve Account, and $359,394 in a CommSec Share Portfolio.  He points out, the sale of shares in that may be subject to GST. 

19. The undertakings that were given on 9 April 2014 were obviously part of an arrangement to give effect to an agreement for sole occupation of the matrimonial home.  It was a condition, it seems to me, of that arrangement, that the applicant make those payments as a result of which he obtained exclusive occupation of the matrimonial home.  Although his income has, as he has said, diminished, he still has available to him significant cash resources. It is to be hoped that this matter will be reached before a judge shortly, but if not, an application for expedition can always be made.  I am not satisfied however that there has been such a change in circumstance as would justify variation of the orders made.  In particular, the applicant does not seek to provide accommodation for the respondent and the child in the event he ceases to pay the rent and he has, as I have said, available to him considerable resources, albeit of a capital nature.

20. Accordingly the application in a case before me, in so far as it relates to a variation of the undertakings given on 9 April 2014, is dismissed.

I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Aldridge delivered on 9 February 2015.

Associate: 

Date:  10 March 2015