Hien & Waldron (No 2)
[2022] FedCFamC2F 1588
Federal Circuit and Family Court of Australia
(DIVISION 2)
Hien & Waldron (No 2) [2022] FedCFamC2F 1588
File number(s): ADC 1763 of 2021 Judgment of: JUDGE McGINN Date of judgment: 18 November 2022 Catchwords: FAMILY LAW – interim injunction – joinder – de facto relationship – third parties – equitable claims – arguable case – balance of convenience – articulation of primary relief sought – terms of Initiating Application and affidavit – undertaking as to damages – injunction granted – case management – direction as to amendment Legislation: Family Law Act 1975 (Cth)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)
Cases cited: Blueseas Investments Pty Ltd v Mitchell and McGillivray (1999) FLC 92–856
Craig v Craig [2015] SADC 109
Hancock Family Memorial Trust Foundation Ltd v Porteous [1999] WASC 55; 32 ACSR 124; 151 FLR 191
Hatton, VF v Attorney-General of Commonwealth of Australia, Commonwealth Bank of Australia, and Commonwealth Development Bank of Australia (2000) FLC 93-038
Norton & Locke (2013) FLC 93-567
Wayne & Dillon and Anor [2008] FamCAFC 204
Waugh and Waugh (2000) FLC 93–052
Yunghanns & Ors v Yunghanns & Ors (1999) FLC 92-836
Heydon JD and Leeming MF, Jacobs Law of Trusts in Australia (7th ed, LexisNexis Australia, 2006)
Principles of the Law of Trusts (2nd ed, Sydney Law Book Company, 1990)
Division: Division 2 Family Law Number of paragraphs: 107 Date of last submission/s: 12 October 2022 Date of hearing: 12 October 2022 Place: Adelaide Counsel for the Applicant: Mr Dillon Solicitor for the Applicant: Stevens Law The First Respondent: Mr B Waldron in person Counsel for the Second Respondents and for C Street, Suburb D Pty Ltd: Ms Bailey Solicitor for the Second Respondents and for C Street, Suburb D Pty Ltd: Stanley & Co Lawyers ORDERS
ADC 1763 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS HIEN
Applicant
AND: MR WALDRON
First Respondent
MS WALDRON and MR B WALDRON
Second Respondents
INDEPENDENT CHILDREN'S LAWYER
order made by:
JUDGE McGINN
DATE OF ORDER:
18 November 2022
UPON NOTING the applicant de facto wife's undertaking:
A.to submit to such order (if any) as the Court may consider to be just for the payment of compensation (to be assessed by the Court or as the Court may direct) to any person (whether or not that person is a party) affected by the operation of the following orders or this undertaking or any continuation (with or without variation) of the orders and undertaking; and
B.to pay compensation referred to in paragraph A. to the person affected by the order or undertaking.
IT IS ORDERED:
1.That the company C Street, Suburb D Pty Ltd be joined as a party to these proceedings as third respondent.
UNTIL FURTHER OR OTHER ORDER IT IS ORDERED:
2.That the company C Street, Suburb D Pty Ltd be restrained and an injunction be granted restraining that company from selling, encumbering or disposing of its interest in the property known as and situate at C Street, Suburb D in the State of South Australia being the whole of the land comprised and described in Certificate of Title … save and except:
(a)for the purposes of refinancing any existing liability secured by way of mortgage over the said property upon such terms that do not increase the liability as at the date of this order that is so secured; or
(b)without the written consent of the applicant de facto wife first had and obtained; or
(c)without order of this Honourable Court first had and obtained.
IT IS FURTHER ORDERED:
3.That within 5 days of the date of these orders that the applicant de facto wife do file and serve an Amended Initiating Application consolidating both of her applications for parenting orders and property settlement and identifying herself as the applicant, the de facto husband as the first respondent, the paternal grandparents Ms Waldron and Mr B Waldron jointly as the second respondents, the company C Street, Suburb D Pty Ltd as the third respondent and the Independent Children's Lawyer as the remaining party.
4.That within 7 days the applicant de facto wife in respect of her claims against the registered proprietor of C Street, Suburb D in the State of South Australia do file and serve written particulars of:-
(a)the relief sought by the de facto wife in relation to the property at C Street, Suburb D, S.A.;
(b)the type(s) of cause of action and, in respect of each cause of action, the elements of that cause that are asserted to be required established by the de facto wife to claim the relief the de facto wife has sought; and
(c)in relation to each element referred to in the previous subparagraph:
(i)by separate paragraphs, each of the material facts in chronological order which will be asserted to establish that element; and
(ii)the documents that are asserted support each such assertion (if any).
5.That the applicant de facto wife do serve a copy of the Amended Initiating Application and the written particulars referred to in these orders upon the respondent de facto husband, the second respondents and the respondent company within 10 days of the date of these orders.
6.That subject to any further order of this Court, in default of the de facto wife complying with orders 3 and 4 of these orders then and in such event that the de facto wife’s application for any final orders pursuant to s 90SL or 90SM in respect of the property at C Street, Suburb D South Australia do stand dismissed.
7.Subject to compliance with orders 3 and 4 that within 24 days of the date of these orders that the respondent company do file and serve upon the applicant de facto wife particulars of any defence or answer to:
(a)each type(s) of cause of action and the elements thereof; and
(b)any answer to each of the material facts and documents asserted by the company and any document asserted to support such answer.
8.That within 24 days of the date of these orders that the respondent de facto husband file an Amended Response to Final Orders sought by the applicant de facto wife in her Amended Initiating Application filed and served pursuant to these orders.
9.That within 24 days that the second respondents (the de facto husband’s parents) do file and serve an Amended Response to Final Orders in response to the de facto wife's Amended Initiating Application filed pursuant to these orders.
10.That within 24 days the company C Street, Suburb D Pty Ltd do file and serve a Response to the Amended Initiating Application filed on behalf of the de facto wife referred to in these orders.
11.That within 31 days of the date of these orders that each party to these proceedings (for the sake of clarity including the company C Street, Suburb D Pty Ltd) do provide disclosure by way of filing and service of a list of documents upon each other party.
12.That within 14 days of the date of these orders that the respondent de facto husband do file a Notice of Address for Service and serve a copy of the Notice of Address for Service upon each other party to these proceedings and the Independent Children's Lawyer.
13.That this matter be listed for directions before Judge McGinn on 21 November 2022 at 9.30am as to parenting matters.
14.The costs of the applicant de facto wife and of the company in respect of the Application in a Proceeding sealed 21 July 2022 do stand reserved to the trial of the de facto wife’s application for property settlement or dismissed of claims in respect of C Street, Suburb D, S.A. pursuant to paragraph 6 which ever first occurs.
15.That the Independent Children’s Lawyer and each of the parties other than the company attend the hearing on 21 November 2022 at 9.30am in relation to parenting matters.
16.That the said Application in a Proceeding and Response thereto do otherwise stand dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Hien & Waldron has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE McGINN
For the reasons that follow the Court has determined:
(a)that there is present in this matter a de facto financial cause despite the Amended Initiating Application of the de facto wife making incorrect reference to section 79 and not making explicit reference of the type of orders being sought against the company C Street, Suburb D Pty Ltd (“the company”);
(b)that the de facto wife has an arguable case in respect of a claim for a beneficial interest in respect of the property at C Street, Suburb D, S.A. held in the third party company name;
(c)that the de facto wife has established that on the balance of convenience and on the basis of her giving and the Court accepting her undertaking as to damages that an interim injunction, although in a form modified from those sought by the de facto wife in her Application in a Proceeding, should be granted in respect of the property held by the company;
(d)that the interim injunction can be granted pursuant set subsection 114(3) of the Family Law Act 1975 (Cth) (“the Act”);
(e)that the company should be joined to the proceedings;
(f)that the de facto wife must amend her Amended Initiating Application and give particulars in respect of her claim in equity in a meaningful way so that her claim can be made plain and case managed; and
(g)that the costs of the company and the applicant de facto wife in respect of the interim application should be reserved.
BACKGROUND – UNDERSTANDING THE DOCUMENTS
The application to be determined is an Application in a Proceeding sealed 21 July 2022 under which the applicant de facto wife seeks orders, amongst other things, to join the company C Street, Suburb D Pty Ltd (“the company”) to the present proceedings pursuant to Rule 3.03 of the Federal Circuit and Family Court of Australia (Division 2) (Family Law) Rules 2021 (“the Rules”) and that the property at C Street, Suburb D in the State of South Australia not be sold without the written consent of the parties to the proceedings or an order of the Court.
Other orders were sought of a procedural nature which were dealt with by orders made by this Court from time to time before the matter came before the Court for argument on 12 October 2022.
An affidavit in support of the Application in a Proceeding of the Applicant de facto wife affirmed 19 July 2022 and sealed on that date was filed in support of the application.
The property at C Street, Suburb D in the State of South Australia is registered in the sole name of the company. The sole director and secretary of the company is a Mr B Waldron who is the father of the respondent de facto husband in the substantive parenting and financial proceedings pending in this Court.
The shareholder of the company is a company known as E Pty Ltd of which the only directors are the de facto husband's parents Ms Waldron and Mr B Waldron. The only shareholders of E Pty Ltd are the de facto husband's parents.
It is convenient for the purposes of this judgment to recognise the following parties and the following relationships between them:
(a)the applicant de facto wife and the de facto husband cohabited from January 2003 until June 2020;
(b)on 15 April 2021 the de facto wife commenced, by way of an Initiating Application, parenting proceedings in this Court;
(c)on 9 June 2022 the applicant de facto wife by way of an Amended Initiating Application filed proceedings dealing only with the question of final orders for property settlement and not referring to the pending parenting proceedings;
(d)the Application for property settlement was allocated a different file number from that associated with the parenting application and an order was made on 4 August 2022 consolidating the two sets of proceedings under the action number ADC 1763/2021;
(e)the parenting proceedings remain pending in this Court. The de facto husband has filed a Response to the Initiating Application as to parenting matters and the de facto husband's parents have also filed a Response to that Initiating Application as to parenting matters; and
(f)no response to the Application for Final Orders for property settlement have been filed on behalf of either the de facto husband or the de facto husband's parents or the company.
In the parenting proceedings there has been the appointment of an Independent Children's Lawyer. Those proceedings are otherwise before the Court on 31 January 2023 for mention.
The de facto wife has had two solicitors acting for her until 14 October 2022. The de facto wife had one lot of solicitors acting for her in relation to the property settlement proceedings and did have another distinct firm of solicitors acting for her in relation to the parenting proceedings. The solicitors who acted for the de facto wife in relation to the parenting proceedings filed a Notice of Ceasing to Act on 14 October 2022.
It is the de facto wife's Amended Initiating Application with respect to the question of property settlement and the Financial Statement and affidavit filed in support of that Amended Initiating Application that gives context to the present Application in a Proceeding.
That Amended Initiating Application sought final orders pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act).
In the Amended Initiating Application of 9 June 2022 the applicant de facto wife sought by way of an interlocutory order an order that the property situated at C Street, Suburb D, SA ("the former matrimonial home") as well as the items of personal property, furniture, furnishings and effects contained in the said property as well as any motor vehicles held in the name of the parties or on behalf of the parties shall be valued by agreement or failing agreement on or before 31 August 2022 by certain nominated valuers.
In the de facto wife's Financial Statement, sworn and affirmed 8 June 2022 filed in support of the Amended Initiating Application seeking orders for property settlement, at Part I identified (at paragraph 36) as part of the property owned by the de facto wife deponent the property at C Street, Suburb D, South Australia with the registered owner identified as C Street, Suburb D Pty Ltd and claiming a 50% share "on trust" with an estimated value of that half share of $650,000 whilst at the same time identifying elsewhere in the Financial Statement at paragraph 47 borrowings by the company of $490,000.
On 9 June 2022 the de facto wife filed an affidavit affirmed 8 June 2022 deposing to certain matters about the property at C Street, Suburb D in the State of South Australia being:
(a)in 2015 the de facto wife and the de facto husband purchased in their joint names a property at F Street, Suburb G;
(b)the de facto wife paid the deposit and "closing costs" of F Street, Suburb G;
(c)the de facto wife and the de facto husband borrowed $280,000 to also finance the purchase of F Street, Suburb G;
(d)in 2016 the de facto wife and the de facto husband subdivided F Street, Suburb G creating a new title and address of H Street, Suburb G;
(e)in 2017 the de facto wife removed herself from the Certificate of Title for F Street, Suburb G;
(f)in 2017 at the request of the de facto husband the de facto wife removed her name from the H Street, Suburb G property in favour of the de facto husband. No consideration is identified in the affidavit for that "removal";
(g)the de facto husband then sold H Street, Suburb G to his parents for $180,000 said by the de facto wife to be less than full market value;
(h)in May 2018 the de facto wife says she transferred $5,000 to the de facto husband's father to assist in the purchase of the property at C Street, Suburb D;
(i)in June 2018 the de facto wife says she transferred $9,000 in total to the de facto husband's father to assist in the purchase of the C Street, Suburb D property;
(j)in June 2018 the de facto wife gives contradictory evidence as to the de facto husband and the de facto wife (or just the de facto husband) purchasing C Street, Suburb D;
(k)upon the purchase of C Street, Suburb D the "whole family" - then understood to be the de facto wife and the de facto husband and the three children of their household (being two children of their relationship and one child of the de facto wife's previous relationship) - commenced living in the C Street, Suburb D property;
(l)upon purchase of C Street, Suburb D property it was placed into the name of the company C Street, Suburb D Pty Ltd;
(m)the purchase of the C Street, Suburb D property is said by the de facto wife to have been purchased by a contribution of about $300,000 from joint funds of the de facto wife and the de facto husband;
(n)at the same time as that purchase, the de facto wife says on behalf of the de facto husband $510,000 was borrowed from Bank J;
(o)the de facto wife says she does not know beyond discussions about tax planning benefits why C Street, Suburb D was placed in the company name;
(p)the de facto wife says she was told by the de facto husband and his parents that as a result of the contributions made by the de facto wife and the de facto husband that they had an interest in the C Street, Suburb D property;
(q)the de facto husband and the de facto wife then ceased living in F Street, Suburb G;
(r)in October 2018 the de facto wife provided $3,400 to the de facto husband's father to assist with the maintenance and upkeep of the C Street, Suburb D property; and
(s)in or about June 2020 the de facto wife left the C Street, Suburb D property. This was at or about the time of the separation between the de facto wife and the de facto husband.
With respect to the Application in a Proceeding sealed 21 July 2022 which now falls for determination by this Court, the applicant de facto wife sought to rely upon her affidavits filed 9 June 2022, 19 July 2022 and 7 October 2022. No objection was taken to her so relying upon those affidavits.
For the purposes of the present application the Court dispenses with the requirements of the Rules so as to permit the applicant de facto wife to rely upon those affidavits and in particular the affidavit of 9 June 2022 as that affidavit is necessary to provide context for the present Application in a Proceeding.
The proceedings commenced as to parenting and property settlement have been consolidated pursuant to the orders of 4 August 2022. In respect of that consolidation the applicant de facto wife has been deemed to be the applicant, the respondent de facto husband has been deemed to be the first respondent and the respondent de facto husband's parents and each of them have been jointly nominated as the second respondents and the Independent Children's Lawyer has been jointly nominated by the Court as the other party.
On 4 August 2022 the Court made certain holding orders pending judgment and the making of orders in relation to the Application in a Proceeding of 21 July 2022 against the company precluding that company from selling or refinancing or further encumbering the C Street, Suburb D property without the consent of the de facto wife and the de facto husband or order of the Court having been first had and obtained with liberty to the company to apply on short notice and otherwise setting down the Application in a Proceeding for argument on 12 October 2022.
Further the Court on 4 August 2022, amongst other things, directed the de facto wife file serve a copy of her Amended Initiating Application of 9 June 2022 (introducing into the proceedings the question of property settlement) and her affidavit in support thereof upon the solicitors for the company and directing that within 21 days the company do file a and serve a Response to the Application in a Proceeding.
At the time the orders were made on 4 August 2022 the de facto husband was understood to have been absent from the jurisdiction and in Country K since March 2022, such information having come before the Court by way of the de facto wife's affidavit of 11 July 2022.
Service of the Application in a Proceeding upon the de facto husband, the de facto husband's parents and the company were not in dispute and no point was taken about such matters at the hearing of argument on 12 October 2022.
At that hearing on 12 October 2022 the de facto husband appeared in person. Also at that hearing each of the de facto husband's parents and the company were represented by the same counsel instructed by the same solicitors.
By the time of the hearing on 12 October the de facto husband had not filed any response or other material in answer to the Application in a Proceeding.
On 12 October 2022 and after enquiry by the Court the de facto husband indicated that notwithstanding he was then seeking legal representation he did not wish to be heard in relation to the Application in a Proceeding expressing the view that the application and the property the subject of it had nothing to do with him.
A Case Outline was provided on behalf of the de facto husband's parents which sought to rely upon an affidavit of the de facto husband's father of 25 August 2022 and a Response to an Application in a Proceeding which was by its terms was said to be filed on behalf of the company dated 6 October 2022 which was seeking dismissal of the Application in a Proceeding and an order for costs.
In the course of oral submissions the counsel appearing for the de facto husband's parents and the company informed the Court (as it had informed the applicant de facto wife's counsel prior to the hearing) that no reliance upon the affidavit of the de facto husband's father of 25 August 2022 was to be maintained.
That affidavit of the respondent de facto husband's father sworn/affirmed 25 August 2022 and sealed 25 August 2022 was said to be filed on behalf of the company and the opening paragraph stated:
"I am the sole director of [C Street, Suburb D PTY LTD] ("the Company"), the interested party in this proceeding. The sole shareholder of this company is [E PTY LTD], of which my wife [MS WALDRON] ("[Ms Waldron]") and I are the sole directors and shareholder. I am authorised to make this Affidavit on behalf of the Company."
The Amended Initiating Application for Final Orders for property settlement filed on behalf the de facto wife does not name the husband's parents or either of them or the company as parties to the proceedings.
On 4 August 2022 orders were made for the company to file and serve a Response to the Application in a Proceeding on or before 26 August 2022. That time was subsequently extended by order of 4 October 2022.
No issue was taken with the relatively late provision of the Response to an Application in a Proceeding on behalf of the company.
The affidavit filed on behalf of the company sealed 25 August 2022 of which the deponent was the de facto husband's father in his capacity as director of the company was prepared/settled by the same lawyer acting for the de facto husband's parents in parenting matters.
Given that this affidavit of the de facto husband's father was not sought to be relied upon its content is to be disregarded. However the consideration of the de facto wife's Application in a Proceeding does not go forward ignoring the fact that such an affidavit has been filed and that reliance upon it has been withdrawn.
As referred to above the affidavit of the de facto wife filed on 9 June 2022 is an affidavit affirmed 8 June 2022 and filed in support of the Amended Initiating Application seeking orders for property settlement. It is to be recalled that that Application does not join the de facto husband's parents or the company.
The affidavit of the de facto wife of 7 October 2022 was sworn/affirmed and sealed that day.
That affidavit was in response to the matters raised in the de facto husband's father's affidavit sworn 25 August 2022 upon which a reliance was initially asserted by the de facto husband's parents in the Case Outline provided to the Court but which, ultimately, the Court was informed at the hearing on 12 October would not be relied upon for the purposes of the argument.
The de facto wife's affidavit of 7 October 2022 can be taken into account insofar as it makes further allegations of fact including admissions of what was asserted by the de facto husband's father in his affidavit of 25 August 2022. However consideration of that affidavit of the de facto wife does not give the assertions of the de facto husband's father otherwise addressed and responded to in that affidavit weight in respect of the present Application in a Proceeding other than to serve to identify issues that may have to be resolved in the course of the wife's application for property settlement, particularly with respect to the question of identification of the pool of assets and liabilities of the parties and, possibly, that the issue of contribution pursuant to s 90SM.
The affidavit of the de facto wife of 7 October asserts and/or admits:
(a)that the de facto husband was provided with $21,000 to purchase a Motor Vehicle 1 in Victoria for the company E Pty Ltd;
(b)that contrary to the de facto wife's affidavit of 9 June 2020, the de facto wife made two payments (not three) of $5,000 and $4,000 towards the deposit and purchase of the property at C Street, Suburb D; and
(c)that in April 2018 that the de facto wife transferred three payments totalling $50,000 to the de facto husband to enable him to borrow money from a bank to purchase in May 2018 a property in his sole name at L Street, Suburb M.
Importantly this affidavit of 7 October 2022 of the applicant de facto wife asserts at paragraph 14 that there is prima facie evidence of a “resulting trust.” Although that paragraph is a mere assertion, it does serve to particularise by way of nomination the basis upon which the de facto wife sought the injunctive relief that she did.
Further the applicant de facto wife's position in respect of her Application in a Proceeding was set out in her written Case Outline of 12 October 2022.
This Case Outline also asserted at paragraph 5 that the company held its legal interest in the C Street, Suburb D property for the benefit of the de facto wife by way of “resulting trust.”
The Case Outline says that the resulting trust arises because:
(a)monies that the wife paid to the de facto husband’s parents prior to settlement were applied towards the purchase of C Street, Suburb D;
(b)that other monies applied to the purchase of C Street, Suburb D in the sum of $120,000 being the proceeds of sale of H Street, Suburb G were applied towards the purchase of C Street, Suburb D; and
(c)that the other monies for the purchase of C Street, Suburb D were secured against the H Street, Suburb G property.
It was conceded in the de facto wife's written submission that she failed to plead in the Amended Initiating Application particular relief. It was asserted by her that this failure arose as a result of the de facto husband, his parents and the company’s failure to provide disclosure.
In the course of oral submissions on behalf of the applicant de facto wife, when queried by the Court, the applicant de facto wife proffered through her counsel an undertaking as to damages in the form stipulated in Rule 10.18(5).
The submissions made both orally and in writing on behalf the applicant de facto wife proceeded on the basis that the company and the de facto husband's parents should be joined as "necessary parties" for the purposes of Rule 3.03 and that the joining of the de facto husband's parents was impliedly not a great impost upon them as the de facto husband's parents were already in their own right parties in the parenting proceedings.
As stated above the respondent de facto husband appeared at the hearing on 12 October 2022. He had not filed any Response to an Application in a Proceeding nor affidavit. He made his position known that he was supportive of his parents and the company's opposition to the interim orders sought by the de facto wife but made no reasoned submissions in support of that position, rather leaving it up to his parents and the company's legal representatives to prosecute the opposition to the de facto wife's application.
The de facto husband's parents took what was termed to be a “technical” answer or defence to the applicant de facto wife's Application in a Proceeding.
This defence asserted that the company should not be joined nor should the de facto husband's parents be parties to the financial proceedings because no orders were sought against them in the de facto wife's Amended Initiating Application for property settlement such as seeking orders by way of a declaration as might be available pursuant to section 90SL of the Act.
As stated above the parties who can bring proceedings for property settlement pursuant to the Act in this matter are the de facto husband and the de facto wife – that is, the right to bring the proceedings arises out of their de facto relationship.
The reference to section 79 in the Initiating Application in the applicant de facto wife's Amended Initiating Application sealed 9 June 2022 is literally an impossibility.
When that Initiating Application was before the Court for directions on 4 August 2022 it was noted at paragraph C to those orders that it was not intended for the Initiating Application for property settlement at that time to be amended. No further amendment to that Initiating Application has been made or sought to be effected.
In this context it is understandable that the learned written submission on behalf of the de facto husband's parents and the company should make reference to that section “78” of the Act.
It was said on behalf of the respondents that a failure by the de facto wife to both nominate a correct section of the Act and, more particularly, to name the company as a respondent to the de facto wife's Amended Initiating Application for property settlement and to seek orders specifically in relation to the property at C Street, Suburb D was fatal to the application for interim injunctive relief as against the company.
Further it was also said specifically with the claim for injunctive relief on behalf of the respondents that:
(a)the injunction sought could only be at granted against a third party when section 90AF(3) was to be satisfied; and
(b)that the granting of any injunction requires:
(i)a need to enforce or have present an existing legal or equitable right;
(ii)an assertion of a legal or equitable claim by the de facto wife with specific reference to the property; and
(iii)the injunction which was being sought was not necessary to effect a division of property between the de facto husband and the de facto wife as sought by the de facto wife.
(c)that there was no serious question to be tried as the de facto wife could not demonstrate sufficient likelihood of success to justify the preservation of the status quo and given the terms of her Amended Initiating Application there were no prospects of success in the terms expressed in that Amended Initiating Application;
(d)there was no evidence of even the mere possibility of an attempt or of an intention to dispose of the property at C Street, Suburb D by either the company or either of the de facto husband's parents; and
(e)the injunction in the terms sought precluded the de facto husband's parents and the company from refinancing mortgage borrowings secured against C Street, Suburb D resulting in increased monthly mortgage repayments and so in inconvenience and damage without the prospect of any recovery pursuant to any undertaking as to damages which undertaking was otherwise absent.
The technical failure of the de facto wife’s case is to be remedied
The submissions on behalf of the respondent de facto husband's parents and the company are of weight in that the drafting of the Amended Initiating Application sealed 9 June 2022 by its terms is an impossibility in referring to s 79. No explanation was given to the Court as to why this was nor was application made despite the notation in the orders of 4 August 2022 to amend the Amended Initiating Application.
Were it not for the fact that the context provided by the other documents filed with the Amended Initiating Application and the content of other parts of the Initiating Application makes reference to “section 79” obviously appear incorrect that the Court forms the view that the reference to section 79 was not anything other than what appears to be a careless administrative error of some type.
This Court is not a court of pleading but a court by which proceedings are prosecuted by way of application and affidavit at least until, generally speaking, matters reach trial. In that context the Court entertained the submissions and the application in this matter on the basis that each of the parties who made submissions should have reasonably understood that the application was for a property settlement being pursued on behalf of the de facto wife pursuant to Part VIIIAB of the Act given the content of affidavit material filed.
The claimed inability on behalf of the applicant de facto wife to plead particular relief was asserted to arise as the result of the failure for disclosure to have been provided on behalf of the de facto husband, his parents and the company.
This claim that the alleged lack of disclosure on behalf of the de facto husband's parents and/or the company precluding the de facto wife's articulating or particularising claims is rejected. Such a submission is tantamount to saying that a claim cannot be made because it is not known without disclosure. If that were so, it would be an admission that the claim could not have been made or is otherwise brought as unknown. Rather, the better understanding of such a claim of non-disclosure is that the claim is, in fact, known (and can therefore be articulated) but that the evidence by which such a claim might be established to the satisfaction of the Court is yet to be marshalled by the claimant.
To address the proper concerns that have been raised about the explicit terms in the Amended Initiating Application the Court shall make orders and directions as to amendment and the provision of particulars by the applicant de facto wife and that in default of those matters being attended to in a timely way the Amended Initiating Application or any late filed Amended Initiating Application otherwise be dismissed insofar as it seeks orders pursuant to s 90SL or pursuant to s 90SM in respect of the property at C Street, Suburb D.
Disclosure is not needed for compliance with such orders.
Joinder is to occur
The affidavit material filed makes plain there exists disputed issues of fact between the de facto wife and the de facto husband's parents and the company as to the equitable ownership of the property at C Street, Suburb D and with respect to alleged loans between the de facto husband's parents and one or both of the parties to the de facto relationship.
Rule 3.01 provides:
"A person whose rights may be directly affected by an issue in the proceeding, and whose participation as a party is necessary for the court to determine all issues in dispute in the proceeding, must be included as a party to the proceeding." [Examples excluded].
In this context "necessary" means something more than "useful" or "expeditious".[1]
[1] Wayne & Dillon and Anor [2008] FamCAFC 204 [18].
Here, although financial relief is claimed in affidavits, it is not sought directly by way of application as against the de facto husband's parents or the company/their property. This appears to the Court to be a failure on behalf of the applicant de facto wife to comply with the Rules.
However, the de facto husband's parents, the company and the de facto husband remain on notice of the de facto wife's claims against the company property and in respect of certain alleged loans through the service of the Amended Initiating Application and the documents filed in support of that application and the various affidavits filed in support of the Application in a Proceeding.
There is an issue in the proceedings on the de facto wife's case as disclosed in the affidavit material that will directly affect the company's rights despite the lack of “pleading" in the form of the relief sought in the Amended Initiating Application. As stated above this Court in respect of any matter arising under the Act is not a Court of pleading but rather proceeds on the basis of applications and affidavits subject to any orders or directions that are otherwise made by the Court.[2]
[2] In the context of subpoena see Hatton, VF v Attorney-General of Commonwealth of Australia, Commonwealth Bank of Australia, and Commonwealth Development Bank of Australia (2000) FLC 93-038 at [59].
In this case, the lack of compliance with Rule 3.01 is more a matter of form rather than of substance and the Application in a Proceeding at [2] now seeks to remedy that failure in respect of the company and that application now appears to be appropriate although belated.
The submission made on behalf of the de facto wife that the company can only be joined pursuant to Rule 3.03(4) overlooks that the company could have been named as a necessary party pursuant to Rule 3.01 in the first place.
There does not appear to be any reason as to why the de facto wife should not have adopted that course. However, be that as it may, the Court considers that it is appropriate that an order be made for the company to be now joined to the proceedings.
The Injunctive Relief
The injunctive relief sought by the de facto wife's Application in a Proceeding was that the property at C Street, Suburb D not be sold without the written consent of the parties or order of the Court. In her written outline the de facto wife it was conceded that no objection would be taken to refinancing the mortgage loan secured over the property provided that the property was not further encumbered with debt.
Another departure from the terms of the written application for injunctive relief was made by the de facto wife in the course of oral submissions on 12 October 2022 in that the de facto wife indicated she would be willing to give an undertaking as to damages as identified in Rule 10.18(5).
No issue is taken with the Court's jurisdiction to otherwise determine the de facto wife's application for property settlement (subject to the observations above as to the use of “section 79") or the grant the injunctive relief sought.
This Court in exercising its power under the Act can grant an interlocutory injunction for the purposes of preserving assets pending determination of an application for property settlement by enjoining a person from disposing of or of encumbering an asset.[3]
[3] Yunghanns & Ors v Yunghanns & Ors (1999) FLC 92-836 at [86] and [109]; Norton & Locke (2013) FLC 93-567 at [30]; subsection 114(3) and or section 90SS(5) of the Act)
An interim injunction can be granted preserving the status quo pending the resolution of the controversy between parties in the present context under s 114(3) of the Act as discussed below.
There are two matters an applicant for an interim injunction must demonstrate being:
(a)firstly, that a serious question is to be tried which is variously termed an “arguable case” with:
(b)sufficient likelihood of success to justify in the circumstances the preservation of the status quo; and
(c)secondly, the balance of convenience favours the making of the orders sought which can include:
(d)a real and not theoretical evidence-based danger or risk of dissipation or dealing with assets which will frustrate judgment;
(i)an assessment that the risk may be assessed as somewhat less probable than not; and
(ii)that in the absence of a positive intention to dispose of assets there remains a possibility of such an event occurring.
The establishment of the balance of convenience can be constituted by an inference from facts and circumstances established by the applicant's evidence.
In undertaking the exercise of determining whether there is a serious question to be tried it must be recognised that a distinction is to be drawn between the seeking of injunctions to restrain the dissipation of assets to which recourse might be had to enforce a judgment to be obtained and the preservation of property for the purpose of property settlement proceedings under the Act to prevent the dissipation of assets in which an "essential connection" exists between the property and the substantive proceedings[4] which although not the subject of specific claim are nevertheless represent property of the parties to a marriage or a de facto relationship or one of them to which a de facto party claims to have made a contribution under section 90SM.
[4] Waugh and Waugh (2000) FLC 93–052 at [31]
The applicant de facto wife's case goes forward on the basis:
(a)firstly that it is claimed that the affidavit evidence of the applicant de facto wife has disclosed that there is a resulting trust in her favour (at least);
(b)secondly, in the alternative, there is a constructive trust that operates in her favour - both trusts arising in relation to the property at C Street, Suburb D in South Australia; and
(c)that either of those trusts if established arise on account of contributions made by one or both of the de facto parties.
The basis upon which a resulting trust was said to arise was not clear from the applicant de facto wife's affidavit material or the outline of written submissions and the Court called for further written submissions on 12 October 2022 in that regard from each of the applicant de facto wife, the respondent company and the de facto husband's parents.
Only the Applicant de facto wife took up that opportunity and provided further written submissions on 19 October 2022.
With respect to the claim that the evidence discloses a resulting trust, nowhere in the evidence put forward does the applicant expressly assert that in providing funds for the purchase of C Street, Suburb D she or the de facto husband acted as a purchaser and rather it is left for this to be implied.[5] The drawing of such an implication arises from the affidavit evidence of the de facto wife which is not inherently improbable that monies were provided to the de facto husband's parents to facilitate the purchase of C Street, Suburb D and the Court finds that the wife's case in that regard is arguable.
[5] Hancock Family Memorial Trust Foundation Ltd v Porteous [1999] WASC 55; 32 ACSR 124; 151 FLR 191 per Anderson J at [69]; Craig v Craig [2015] SADC 109 at [162]; Heydon JD and Leeming MF, Jacobs Law of Trusts in Australia (7th ed, LexisNexis Australia, 2006) [1210]; Ford HAJ and Lee WA, Principles of the Law of Trusts (2nd ed, Sydney Law Book Company, 1990) [21.110 and 21.115].
The alternative case alleged by the applicant de facto wife as to the C Street, Suburb D property (or a portion of it) being held by the company as constructive trustee for the de facto husband and/or the de facto wife is plainer than the case with the resulting trust with assertions in her affidavit evidence of representations and subsequent conduct including the provision of monies which could give rise to the view that the retention of the C Street, Suburb D property by the company would be unconscionable. In addition, in this context, there is other evidence that the de facto wife and the de facto husband had acted in ways consistent with beneficial ownership such as the selection of C Street, Suburb D as a family home living in it with children as such and financially contributing to its maintenance.
The Court finds that the de facto wife’s stated claim in as to a constructive trust, albeit made in the course of submissions on 12 October 2022 and not asserted before then (including in her affidavit of 7 October 2022) is arguable.
The Court finds that the applicant de facto wife has established that there is a serious question to be tried although the manner in which the de facto wife has brought evidence forward and presented her case has not been done simply, efficiently or with ready clarity.
With respect to the question of the balance of convenience the written submissions of the applicant de facto wife do not address this topic in those terms.
However, in the course of oral submissions the Court was taken to affidavit material as to an endeavour to deal with the C Street, Suburb D property by the company and its directors at the request or direction or with the support of the de facto husband as described at paragraph 35 of the de facto wife's affidavit affirmed and sealed 19 July 2022. In that paragraph the de facto wife stated her belief as of December 2021 (without stating the source or sources for that belief) that there had been an endeavour to dispose of the C Street, Suburb D property.
The de facto wife's stated beliefs were not the subject of submissions on behalf of the de facto husband’s parents or the company nor made an issue through the fact of filing the de facto husband’s father’s affidavit of 25 August 2022.
No objection was taken to that belief evidence coming before the Court. This evidence (although slight) is sufficient to permit the Court to infer, and it does, that there is a risk of the required type that C Street, Suburb D may be sold and that the proceeds of that sale utilised in disregard of the de facto wife's claims for property settlement and claim for the interest in the property.
In this context the Court notes that the evidence given by the wife by her affidavit that a caveat lodged by her in December 2021 over the C Street, Suburb D property and which is now sought to be removed in April 2022 should see the adoption of an understanding or an inference of there being a risk of dealing with the property.
That understanding or inference is not justified by that evidence. The lodging and the attempt at removal of the caveat is not relevant to the present claim and the Court will not draw any inference on the basis of a mere challenge to the caveat or a request that it be withdrawn in the circumstances of this case.
No submissions were made on behalf of that applicant de facto wife as to the value of C Street, Suburb D and so the relative significance of the absence or presence of that property in any asset pool to be considered for the purposes of property settlement division between the de facto husband and the de facto wife could not be precisely ascertained. That said, however, the wife's affidavit material discloses that in 2018 the purchase price of C Street, Suburb D is described as being $710,000 and it appears to be subject to borrowing secured by mortgage of $510,000, thereby permitting the inference which is drawn that the amount of $200,000 or so in equity is involved. The de facto wife’s Financial Statement suggests an equity of $810,000. Even if a portion of that equity is claimed the Court considers the amount of equity in issue not to be insubstantial or insignificant.
On behalf the respondent company and the respondent de facto husband's parents as shareholders it was raised in the written submission that prejudice had been and would be suffered if injunctive relief were granted. This prejudice was said to arise as a result of an inability to refinance borrowings secured against the C Street, Suburb D property and that such prejudice had and would continue to see the company pay higher interest commitments on the borrowings than might otherwise be the case.
The increase in monthly interest commitments was identified in the written case outline as being approximately $894 per month. With the resiling from reliance upon the de facto husband's father's affidavit of 25 August 2022 there is no evidence to support this claim of prejudice. Indeed the withdrawal of reliance upon the affidavit implies that the alleged prejudice is not to be considered as pressed.
This question of prejudice as against the company however is balanced by there being a concession made on behalf the de facto wife that there would be no objection to the finance secured by mortgage over C Street, Suburb D being refinanced provided that the amount of borrowing was not increased.
In all the circumstances the Court considers that if such a term were to be included in any injunctive relief to be granted that the balance of convenience otherwise favours the granting of an interim injunction.
To this point the Court is satisfied that the evidence brought forward by the de facto wife demonstrates an arguable case and that there exists a possibility of the disposition of the C Street, Suburb D property and/or the proceeds of its sale which might prejudice the wife's claim for property settlement. The Court now turns to other matters determining the question of the interim injunction.
an Undertaking as to Damages
The provision of an undertaking as to damages or at least an undertaking that can be regarded as practicably enforceable is only a matter to be brought to account in assessing the question of the balance of convenience with respect to the granting of an interim injunction.[6]
[6] Blueseas Investments Pty Ltd v Mitchell and McGillivray (1999) FLC 92–856
At the hearing the de facto wife indicated through her counsel that she would be willing to grant such an undertaking and the Court considers that in all the circumstances including her financial circumstances as disclosed in her Financial Statement that the provision of such an undertaking is an appropriate condition to the granting of injunctive relief.
The acceptance of this undertaking does not, of course, disturb the Court’s view that the balance of convenience factors the granting of the injunction sought.
Source of Power for the injunction sought
The Court agrees with the submission made on behalf of the second and third respondents and company that joinder is not a precondition for the granting of the injunction which has been sought in this case.
The Court considers that the injunction sought in these proceedings can be granted pursuant to ss 114(3) of the Act.
It was submitted on behalf of the respondents that subsections 90AF(3)(a) and (d) need to be satisfied. The Court disagrees. The injunctive relief sought here is not of the type referred to in s 90AE(1).
In any event for the reasons set out above the Court considers that the granting of an injunction is both reasonably necessary, reasonably appropriate and adapted to enable in due course a division of property between the parties to a de facto relationship to be made.
conclusion as to injunctions
Taking all forgoing matters into account the Court is satisfied that an interim injunction should be granted in respect of the property at C Street, Suburb D.
The Court finds that for reasons stated above it is both just and convenient to grant an interim injunction in this matter in terms set out at the commencement of these reasons.
Costs
The applicant de facto wife by her Application in a Proceeding seeks costs as did the de facto husband, de facto husband’s parents and the company by their Response. No submissions were made with respect to the question of costs at the time of making submissions on 12 October 2022 but that is to be expected where the outcome of the application and the response to it is not known.
The Court will make orders reserving the question of the cost of the de facto wife and the company in respect of the Application in a Proceeding to trial or upon the failure of the de facto wife to comply with certain orders as to the timely prosecution of the equitable claim in respect of the C Street, Suburb D property.
I certify that the preceding one hundred and seven (107) numbered paragraphs are a true copy of the Reasons for Judgment of Judge McGinn. Associate:
Dated: 18 November 2022
0
4
0