Holder & Holder
[2020] FamCA 347
•14 May 2020
FAMILY COURT OF AUSTRALIA
| HOLDER & HOLDER | [2020] FamCA 347 |
| FAMILY LAW – PRACTICE AND PROCEDURE – AMICUS CURIAE – legal basis for permitting a person to appear as amicus curiae – recital of key authorities. FAMILY LAW – SUPERANNUATION – private self-managed superannuation fund – disputed evidence about ownership of real property in rural Victoria – applicant and respondent contending that the land was transferred to them in their capacity as trustees of private superannuation fund – transfer not registered on title – local shire council levying rates over property – respondent saying superannuation fund should pay – rates remaining unpaid – local council threatening to sell land unless rates paid – SMSF having cash-at-bank to pay rates. FAMILY LAW – INJUNCTION – MANDATORY INJUNCTION – balance of convenience overwhelmingly favouring order for payment of rates from cash-at-bank – review of authorities on mandatory injunctions. FAMILY LAW – INJUNCTION – to prevent abuse of this court’s process – review of authorities. |
| Commonwealth of Australia Constitution Act 1900 (Imp), s 75(v) Family Law Act 1975 (Cth), s 79 Local Government Act 1989 (Vic), s 181(5)(a) Superannuation Industry (Supervision) Act 1993 (Cth), ss 126A(3), 315(3), 315(8), 344 Supreme Court Civil Procedure Act 1932 (Tas), s 11(12) |
| Attorney-General (Cth) v Alinta Ltd (2008) 233 CLR 542 Attorney-General (Cth) v Breckler (1999) 197 CLR 83 Attorney-General (WA) v Marquet (2003) 217 CLR 545 Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 Australian Railways Union v The Victorian Railways Commissioners (1930) 44 CLR 319 Bateman’s Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247 Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 Blueseas Investments Pty Ltd v Mitchell (1999) 25 Fam LR 65 Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148 Charrington v Simons & Co Ltd [1970] 1 WLR 725 Commissioner of Taxation v Scully (2000) 201 CLR 148 D.M.W. v C.G.W. (1982) 151 CLR 491 DJL v The Central Authority (2000) 201 CLR 226. Dunworth & Falletti [2020] FamCA 178 Earl of Mexborough v Bower [1843] 49 ER 1011 Fejo v Northern Territory (1998) 195 CLR 96 Glossop v Heston and Isleworth Local Board (1879) 12 Ch D 102 Goodridge & Beadle (2017) 57 Fam LR 425 Grassby v R (1989) 168 CLR 1 Holmes v Millage [1893] 1 QB 551 Isenberg v The East India House Estate Co Ltd [1863] 46 ER 637 Jackson v Normanby Brick Co [1899] 1 Ch 438 Jemena Gas Networks (NSW) Ltd v Mine Subsidence Board (2011) 243 CLR 558 Karjala & Gallard [2020] FamCA 110 Kennon v Spry (2008) 238 CLR 366 Kruger v The Commonwealth (1997) 190 CLR 1 Levy v Victoria (1997) 189 CLR 579 Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181 Martin & Martin [2013] FamCA 222 McManus v Cooke (1887) 35 Ch D 681 Members of the Yorta Yorta Aboriginal Community v Victoria (2002) 214 CLR 422 National Australia Bank Ltd v Bond Brewing Holdings Ltd [1991] 1 VR 386 North London Railway Co v Great Northern London Railway Co (1883) 11 QBD 30 Owners of Cargo Lately Laden on Board “Siskina” v Distos Compania Naviera S.A. [1979] AC 210 Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 Public Service Association of South Australia Inc v Industrial Relations Commission of South Australia (2012) 249 CLR 398 Queensland v Australian Telecommunications Commission (1985) 59 ALJR 562 R v Bell; Ex parte Lees (1980) 146 CLR 141 R v Forbes; Ex parte Bevan (1972) 127 CLR 1 R v Gray; ex parte Marsh (1985) 157 CLR 351 R v Pidoto and O'Dea [2006] VSCA 185 R v Ross-Jones; Ex parte Green (1984) 156 CLR 185 Raftland Pty Ltd v Federal Commissioner of Taxation (2008) 238 CLR 516 Re Macks; ex parte Saint (2000) 204 CLR 158 Redland Bricks Ltd v Morris [1970] AC 652 Scott v Federal Commissioner of Taxation (No 2) (1966) 40 ALJR 265 Shepherd Homes Ltd v Sandham [1971] 1 Ch 340 Smethurst v Commissioner of Police [2020] HCA 14 Smith v Smith (1875) LR 20 Eq 500 Snook v London and West Riding Investments Ltd [1967] 2 QB 786 State of Queensland v Australian Telecommunications Commission (1985) 59 ALJR 562 Taylor v Taylor (1979) 143 CLR 1 The Great Western Railway Company v The Birmingham & Oxford Junction Railway Company [1848] 41 ER 1074 Truth About Motorways Pty Ltd v Macquarie Infrastructure Management Ltd (2000) 200 CLR 591 |
| D. Heydon, M. Leeming and P. G. Turner, Meagher, Gummow and Lehane’s Equity: Doctrines and Remedies (5th ed, 2015) Sir Frederick Jordan, Chapters on Equity in New South Wales (Sydney: Govt. Printer, 6th ed, 1947) R. P. Meagher, W. M. C. Gummow and J. R. F. Lehane, Equity: Doctrines and Remedies (3rd ed, 1992) I. Spry, Principles of Equitable Remedies (6th ed, 2001) Joseph Story, Commentaries on Equity Jurisprudence (Hilliard, Gray, 1836) |
| APPLICANT: | Ms Holder |
| RESPONDENT: | Mr Holder |
| FILE NUMBER: | DGC | 2546 | of | 2012 |
| DATE DELIVERED: | 14 May 2020 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | The Honourable Justice Wilson |
| HEARING DATE: | 8 & 23 April 2020 |
| DATE OF FINAL WRITTEN SUBMISSIONS: | 6 May 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Not applicable |
| SOLICITOR FOR THE APPLICANT: | Webb Korfiatis Family Law |
| COUNSEL FOR THE RESPONDENT: | Not applicable |
| SOLICITOR FOR THE RESPONDENT: | Not applicable |
Orders
I order that the husband forthwith pay the B Shire Council the sum of $22,101.99 from funds in the Holder Superannuation Fund in satisfaction of its notice dated 15 January 2020.
I dismiss the husband’s application for the orders sought by him in his response filed on 7 April 2020.
This proceeding is added to my judicial docket.
This proceeding is listed for directions on 1 June 2020 at 10am to be conducted by a telephone conference.
The compliance hearing before the Honourable Chief Justice Alstergren on 21 May 2020 is vacated.
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 Holder & Holder 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 MELBOURNE |
FILE NUMBER: DGC 2546 of 2012
| Ms Holder |
Applicant
And
| Mr Holder |
Respondent
REASONS FOR JUDGMENT
Introduction
On 8 April 2020, when sitting in the Judicial Duty List, this injunction application was heard by me. On that day the applicant was represented by her solicitor, Mr Korfiatis, whereas Mr Holder was not represented. Mr Holder informed me he wanted to file material in answer to the applicant’s application in a case dated 13 March 2020. Mr Korfiatis had raised an issue that needed some investigation. I adjourned the proceeding to 23 April 2020 to enable Mr Holder to file such further material as he wished.
On 23 April 2020 the evidentiary situation remained unchanged. Mr Korfiatis told me the relevant shire council was pressing for payment and the matter had assumed a degree of urgency. Mr Holder told me he remained focused on doing all that needed to be done so as to render the self-managed superannuation fund (“SMSF”) compliant with the matters identified in the reasons for decision of a Senior Member of the Administrative Appeals Tribunal (“AAT”) in proceeding 2016/… in which Mr Holder sought a review of the decision of the Commissioner of Taxation to disqualify Mr Holder as a trustee.
By her application in a case dated 13 March 2020 the applicant in this proceeding sought orders, in essence, requiring the respondent to this application in a case, that is to say Mr Holder, to pay all sums due to B Shire Council. That council had previously levied rates together with interest in relation to land at C Street, D Town in the State of Victoria being the whole of the land described in certificate of title volume ...… folio ...… (“the C Street property”). She also sought a more omnibus order “appropriate to preserve the interests of the husband and the wife in real property situate at and known as C Street D Town.”
The source of funds proposed by the wife for the payment of amount due to the council was cash-at-bank in an account maintained by the parties’ self-managed superannuation fund.
Synopsis
For the reasons that follow, I order the husband to pay the council all sums owing as at this date from funds in the parties’ SMSF.
Relevant factual setting
This proceeding was commenced as long ago as 2012. On 16 February 2016 the Honourable Justice Macmillan fixed the proceeding for trial on 7 March 2016. By 16 February 2016 substantial disclosure issues were unaddressed so her Honour made orders for discovery in addition to fixing the proceeding for trial.
On 7 March 2016 the trial did not proceed because discovery issues were still incomplete so her Honour made other discovery orders and adjourned the proceeding for directions on 27 April 2016.
Slightly earlier, on 17 March 2016 further discovery orders were made and the proceeding was adjourned to 13 July 2016 by the Honourable Justice Macmillan. Her Honour made orders for the proceeding to be heard again on 13 July 2016 before her Honour. For some reason not readily apparent the case did not return before Macmillan J on 13 July 2016 and instead it was heard by a registrar on 3 August.
On various applications during 2016, leave was given for a particular legal practitioner to appear in this case. That practitioner was described in various orders as appearing “amicus curiae”. The transcripts of those appearances were not produced so it was not possible to ascertain on what foundation leave was given for that practitioner to appear amicus curiae. It struck me as peculiar that the practitioner sought and was given leave to appear on that basis. Ordinarily an order is made granting leave for a legal practitioner to participate in a proceeding as amicus curiae where a point of law is being considered by the court and the parties will not bring to the attention of the court all applicable legal principles on point. Where leave is so given, ordinarily that leave is limited to the filing of written submissions. That is the gravamen of a host of authorities such as Australian Railways Union v The Victorian Railways Commissioners,[1] Attorney-General (Cth) v Breckler,[2] Commissioner of Taxation v Scully,[3] Attorney-General (WA) v Marquet,[4] R v Pidoto and O'Dea,[5] Attorney-General (Cth) v Alinta Ltd,[6] Truth About Motorways Pty Ltd v Macquarie Infrastructure Management Ltd,[7] Kruger v The Commonwealth[8] and Levy v Victoria.[9]
[1] (1930) 44 CLR 319.
[2] (1999) 197 CLR 83.
[3] (2000) 201 CLR 148.
[4] (2003) 217 CLR 545.
[5] [2006] VSCA 185.
[6] (2008) 233 CLR 542.
[7] (2000) 200 CLR 591.
[8] (1997) 190 CLR 1.
[9] (1997) 189 CLR 579.
The registrar made orders on 3 August 2016 for yet further discovery and for the return of the proceeding before the registrar on 23 September 2016. The relevance of the involvement of the Australia Taxation Office (“ATO”) emerged in paragraph 4 of the registrar’s order made on 3 August 2016. It was in the following terms –
The parties are to advise the Court on the adjourned date if there are any other proceedings or investigations being conducted by the Australian Tax Office that would impact on this matter being listed for a final hearing.
The fate of the proceeding after 3 August 2016 is none too easy to decipher from the court file. It seems that the proceeding before the AAT occupied some of the time between August 2016 and 24 February 2020, the latter date being the date on which Deputy Chief Justice McClelland called over the case.
On 8, 9, 10 and 28 November 2017 Mr Holder was before the AAT on the return of Mr Holder’s application to review a decision made by the Commissioner of Taxation to disqualify Mr Holder from acting as a trustee or other responsible office of a body corporate that is a trustee investment manager or custodian of a superannuation entity. It is necessary to return to the AAT’s decision. Suffice it to say that the AAT upheld the decision to disqualify Mr Holder.
This case then came before me on 8 and 23 April 2020.
The C Street property and the SMSF
In her affidavit made 11 March 2020 Ms Holder, the applicant in this litigation, deposed to events concerning the C Street property as well as the SMSF. Relevantly paraphrased she deposed to the following –
a)in September 2006 she and Mr Holder purchased the property at C Street, D Town being the land described in certificate of title volume ... folio ... and thereupon they became registered as joint proprietors of the property;
b)by deed of settlement Mr Holder and the deponent created the Holder Superannuation Fund (“HSF”);
c)on 1 July 2011 the applicant and the respondent executed a transfer of land in favour of HSF (I presume she meant to convey that she and the respondent in their capacity as legal and beneficial owners of the land transferred the land to the trustees of the HSF);
d)the trustees of the HSF are the applicant and respondent;
e)the Commonwealth Bank of Australia (“CBA”) once held a mortgage over the C Street property;
f)CBA provided a discharge of its mortgage dated 14 April 2011;
g)neither the transfer of land or the discharge of mortgage was registered with the Land Titles Office;
h)the 2012 accounts for HSF show that the applicant and respondent each contributed $200,000 to the HSF by transferring the property from their personal ownership to the ownership of the trustees;
i)on 9 September 2015 the Commissioner of Taxation disqualified Mr Holder from being, among others, a trustee or responsible officer of a trustee of a superannuation entity, the disqualification being made pursuant to s 126A(3) of the Superannuation Industry (Supervision) Act;
j)on 11 September 2015 the deponent was likewise disqualified;
k)the deponent did not appeal against her disqualification whereas Mr Holder did;
l)outstanding rates on the property were pursued by the council resulting in the council entering judgment in the Magistrates’ Court against the applicant and the respondent;
m)on 15 January 2020 the solicitors for the council served a notice on the applicant and the respondent pursuant to s 181(5)(a) of the Local Government Act requiring payment of $22,101.99 by 19 February 2020;
n)HSF has sufficient cash reserves to meet payment of the sum due to the council;
o)Mr Holder has written to Ms Holder’s solicitor to the effect that the money held by HSF “are not able to be determined” until the HSF “has completed all present reporting requirements”; and
p)on 10 March 2020 Mr Holder was put on notice of this application.
The wife deposed that it was vital (her word) that the C Street property be preserved.
By way of response to this application, Mr Holder sought orders converting the C Street property to cash and that an order be made for all concerned to vacate that property within 14 days. He also sought orders for the applicant and the respondent to do all things necessary to ensure the HSF was compliant with the Superannuation Industry (Supervision) Act.
Despite being invited to do so, Mr Holder did not file any material between 8 and 23 April 2020. The affidavit material filed by Ms Holder went unanswered and unopposed. I accept her evidence, therefore. None of it was inherently improbable nor did any of it smack of untruth.
The AAT proceeding was the focus of Mr Holder’s resistance in this application. It seemed to be plain enough that Mr Holder felt compelled to ensure that all funds possessed by HSF were applied towards rendering the HSF compliant for the purposes of the Superannuation Industry (Supervision) Act. Thereafter, Mr Holder wanted the C Street property to be sold. Conversely Ms Holder wanted to retain the C Street property and she took the view that a modest payment from the HSF’s liquid cash reserves was sufficient for that purpose. In her affidavit Ms Holder pointed to an array of findings by the senior member of the AAT that reflected adversely on Mr Holder, so she said.
The AAT decision
It is necessary to go to some of the matters raised in the AAT decision handed down on … 2018. Among the more important of them were the following –
a)the trustees of the HSF as at 30 June 2012 were the applicant, the respondent and Ms E, their adult daughter;
b)HSF was a regulated superannuation fund;
c)the applicant and respondent separated in August 2012 or thereabouts;
d)in respect of the 2012 financial year the auditors of HSF lodged an auditor’s contravention report with ATO;
e)the contravention report stated that title to the C Street property was not registered in the names of HSF’s trustees;
f)an audit was thereafter commenced by the ATO in relation to HSF;
g)by letter dated 10 April 2015 ATO notified Mr Holder that it was considering disqualifying him as trustee on the basis that he was the trustee of the SMSF when the contravention occurred;
h)the ATO entertained Mr Holder’s response, considered it and decided to disqualify him on 10 September 2015; and
i)Mr Holder sought a review of that decision under s 344 of the Superannuation Industry (Supervision) Act on 4 January 2016.
Before the AAT, the Commissioner of Taxation relied on 14 contraventions. The more significant of them were as follows –
a)failing to lodge annual returns for the years 2013, 2014, 2015 and 2016;
b)HSF made loans or provided financial assistance to relatives;
c)HSF acquired shares in a company called F Inc (Country G);
d)HSF granted a lease or possessory right of the C Street property in favour of Mr Holder or a partnership subsisting between Mr and Ms Holder;
e)transferring $100,000 to a company called F Pty Ltd (a different company) to construct a building on the C Street property;
f)if no shares were acquired in the Country G company by the transfer of $100,000 then that transfer was not an arm’s length transfer;
g)if shares were acquired in the Country G company, an inadequate percentage of shares was allotted for the investment;
h)the C Street property was acquired by HSF when no business was conducted on the land;
i)the C Street property was not transferred to the names of all trustees;
j)HSF may have ceased to be a SMSF because the number of its members was five and the number of members of a SMSF was required to be less than five;
k)Mr Holder failed to act in the best interests of all beneficiaries; and
l)so far as Ms Holder’s cessation of membership in HSF was concerned, any forfeiture of benefits in her favour should be disregarded.
It is not necessary to pursue all of those contraventions. In detailed reasons for decision, the senior member examined the evidence in relation to each. In the course of a consideration of each contravention alleged, the senior member made a variety of observations about Mr Holder’s evidence, including –
a)he changed his evidence concerning the failure to lodge returns;
b)his evidence on point was “less than satisfactory”;
c)his “attempt to obfuscate with non-responsive answers”; and
d)“the explanation given by Mr Holder was illogical”.
There were others. It is fair to say that the senior member of the AAT formed an adverse view of aspects of Mr Holder’s conduct in the running of the HSF. The AAT found Mr Holder to have breached a substantial number of the contraventions alleged against him. The AAT found as follows –
200.It is abundantly clear from my findings on the evidence to which I have referred above that Mr Holder breached the SIS Act and SIS Regulations on numerous occasions while acting as a trustee of the SMSF. Not only were there a significant number of breaches, those breaches were extremely serious. They resulted in Ms Holder being divested of almost the entirety of her superannuation benefits, amounting to something in the vicinity of $300,000. The breaches also resulted in an almost entire dissipation of the funds in the SMSF which, at one stage, exceeded $600,000. Both the number and seriousness of the contraventions of the SIS Act justify Mr Holder being disqualified from acting as a trustee, investment manager or custodian, or a responsible officer of a body corporate that is a trustee, investment manager or custodian.
So far as whether Mr Holder was a fit and proper person to hold office as a trustee, the AAT found against him. It said the following –
212.Mr Holder’s behaviour can only be described as falling significantly below the standard one would expect from a competent trustee acting for a self managed superannuation fund. I find he is, unquestionably, not a fit and proper person to act in that role. His disqualification by the Commissioner was plainly warranted.
Mr Holder did not descend to the detail to reveal the steps, or the expenses associated with the steps, to render HSF compliant for the purposes of all relevant superannuation legislation. Conversely, Ms Holder stated that HSF presently has funds available to it to meet the sum due to the council.
Mr Holder has resisted the concept of my ordering the sums due to the council to be paid from funds standing to the credit of HSF. He prefers an order for the sale of the C Street property from which he appears to want to apply the proceeds to meet amounts referred to in the AAT reasons. Ms Holder regards the C Street property as a valuable asset that she wishes addressed in the trial of the property alteration application.
The legal basis for the wife’s application
The solicitor for Ms Holder urged me to make an order pursuant to s 315(3) or s 315(8) of the Superannuation Industry (Supervision) Act compelling Mr Holder to pay to the council the sum claimed by the council.
The notice on which the council relied was in terms unmistakably imperative in nature. It was as follows –
NOTICE PURSUANT TO SECTION 181(5)(a)
LOCAL GOVERNMENT ACT 1989 (Vic)To: Mr Holder AND Ms Holder
TAKE NOTICE that in respect of the property described in the Schedule hereto (“the property”), there are rates and charges due to the B Council (ABN …) of H Street, J Town (“the Council”), which have been in arrears for more than 3 years and in respect of which, no current arrangement exists for payment of such rates and charges to the Council. On 28 August 2014 the K Town Magistrates’ Court of Victoria ordered the rates and charges be paid in respect to the property however, they remain due and payable. TAKE FURTHER NOTICE that the Council requires you, being a person who appears to have an estate or interest in the property, from the Register kept under the Transfer of Land Act 1958 or from any Memorial in the Office of the Registrar-General, to pay to the Council the sum of $22,101.99 on or before 19 February 2020. TAKE FURTHER NOTICE that if you fail to pay the amount owing by the date specified above, the Council will in accordance with its powers pursuant to Section 181 of the Act, after such date cause the property to be sold or to be transferred to itself.
SCHEDULE
ALL THAT piece of land described in Lot … on Plan of Subdivision …, being more particularly described in Certificate of Title Volume ... Folio ..., being the land situate at C Street, D Town VIC.
DATED: 15 January 2020
Mr K
L Lawyers
…
…Ref: …
The notice was expressed to have been given under s 181(5)(a) of the Local Government Act. It was also expressed to have been given to the applicant and the respondent in their personal capacities, not as trustees of HSF. That appeared to be consistent with the registered proprietorship of the C Street property being in the names of the applicant and the respondent personally. The AAT made findings about the ownership of the C Street property at paragraph 39 of its reasons. It said the following –
39.A Register Search Statement from LANDATA Victoria discloses that Mr and Ms Holder became joint proprietors of the C Street property on …September 2006. Also, on that date, a mortgage was granted to the Commonwealth Bank of Australia (CBA) by way of security for purchase monies lent by the bank. The Transfer of Land document lodged with the Land Registry on 21 August 2006 discloses a transfer from the then proprietors to Mr and Ms Holder for consideration of $260,000. The Register Search Statement obtained on 23 August 2016 discloses no change in the names of the registered proprietors.
The senior member of the AAT felt a state of doubt about whether the C Street property was ever an asset of HSF. He said the following at paragraphs 45 and 46 of the AAT’s reasons –
45.Despite Mr Holder failing to comply with the provisions under Article 7 of the SMSF Trust Deed, the C Street property was treated by the trustees as if it was an asset of the fund. That asset having been acquired from members of the SMSF was subject to the provisions set out in Article 7.8 of the Trust Deed. I deal with that issue presently as it raises further possible contraventions of the SIS Act and the SIS Regulations.
46.I find that Mr Holder’s failure to comply with Article 7 is a serious breach of the SMSF Trust Deed and it casts considerable doubt upon whether the C Street property in fact ever became an asset of the SMSF.
Ultimately the AAT senior member declined to make a finding about whether the C Street property was or was not an asset of HSF. The senior member said the following –
53.While the evidence plainly discloses material which gives rise to serious doubts about the C Street property becoming an asset of the SMSF, for the purposes of the issues before me on this application, I need not make any finding about that. That is because after July 2011, the C Street property was treated by Mr and Ms Holder as an asset of the SMSF. That is sufficient for the purposes of this application as Mr Holder most certainly believed that to be the case. Therefore I shall assess his conduct in accordance with his belief.
At that juncture it is relevant to point up that the AAT was addressing issues that were different to those with which I am concerned on this application. The AAT was concerned with a review of the Commissioner’s decision to disqualify Mr Holder and in the course of that review the AAT immersed itself in an examination of Mr Holder’s alleged contraventions. In this case I am being asked to make an order in the nature of a performance injunction pursuant to the Superannuation Industry (Supervision) Act. That said, an overlap even to a modest extent exists in the work of the AAT in its decision in proceeding 2016/… and the issues that are raised in this case. For example, if the trustees of HSF were in fact correct in their treatment of the C Street property as an asset of HSF, as by paragraph 53 of the AAT’s reasons they said they were, then the maintenance of a trust asset was a duty imposed on the trustees. But that duty arose in equity. Whether the payment of the council dues was mandated by the Superannuation Industry (Supervision) Act, by a condition imposed on an RSE licence or a direction given under that Act by APRA or the Regulator was an entirely different matter.
It is important to set out the terms of ss 315(3) and (8) of the Superannuation Industry (Supervision) Act. Section 315(3) is in the following terms –
Performance injunctions
(3)If a person (the unwilling person) has refused or failed, is refusing or failing, or is proposing to refuse or fail, to do an act or thing that the person is required by this Act, a condition imposed on an RSE licence or a direction given under this Act by APRA or the Regulator to do, the Court may, on the application of:
(a) the Regulator; or
(b)any person whose interests have been, are or would be affected by the refusal or failure to do that act or thing;
grant an injunction, on such terms as the Court thinks appropriate, requiring the unwilling person to do that act or thing.
Section 315(8) is in the following terms –
Performance injunctions
(8)The power of the Court to grant an injunction requiring a person to do an act or thing may be exercised:
(a)whether or not it appears to the Court that the person intends to refuse or fail again, or to continue to refuse or fail, to do that act or thing; and
(b)whether or not the person has previously refused or failed to do that act or thing; and
(c)whether or not there is an imminent danger of substantial damage to any person if the first-mentioned person refuses or fails to do that act or thing.
In the submissions advanced by the wife’s solicitor, nowhere was it suggested that the payment to the council was required by the Superannuation Industry (Supervision) Act, by a condition imposed on an RSE licence or by a direction given under that Act by APRA or the Regulator. Those were the preconditions to the granting of a performance injunction under s 315(3) of that Act. As a result I arranged for my associate to contact the parties by email on 29 April 2020, in the following terms –
Dear parties,
His Honour has requested me to contact you in relation to one aspect of this application with a request for you to respond within seven days.
The performance injunction contemplated by s 315(3) of the Superannuation Industry (Supervision) Act may be ordered where the unwilling person (as defined) is refusing to do an act that is required to be done by –
(a) this Act; or
(b) a condition imposed on the RSE licence; or
(c) a direction given under this Act by APRA or the Regulator.
Please indicate what the evidence is in this case that the payment to the council of the sum set out in its notice given under the Local Government Act is an act required to be done by –
(a) the SIS;
(b) a condition imposed on an RSE licence; or
(c) a direction given by APRA or the Regulator.
Furthermore, his Honour has also requested me to inform the parties that they should advance submissions in support of or in opposition to any other basis for the grant of an order for the payment of the sums owing to the council. Those submissions should also be received within seven days.
A response was required by 4pm on 6 May 2020.
Both the applicant and respondent filed further submissions on 6 May 2020. Those submissions did not advance the matter. That left the evidence in a state where there was no evidence that the payment of the sums sought by the council was amendable to a performance injunction under s 315(3). As s 315(8) was predicated on the same factual basis for the grant of the performance injunction, identical considerations applied.
It seemed to me that there was no entitlement to the performance injunction sought under ss 315(3) or (8) of the Superannuation Industry (Supervision) Act. That was for the simple reason that no evidence had been adduced by or on behalf of Ms Holder to the effect that payment of the sums owing to the council was an act that Mr Holder had refused to do and that such payment to the council was required by the Act, by a condition imposed on an RSE licence or by a direction given under the Act by APRA or the Regulator. In those circumstances, I had no power to grant the performance injunction under s 315(3) or s 315(8).
A mandatory injunction
Since the decision of the House of Lords in Redland Bricks Ltd v Morris[10] the law in relation to the grant of a mandatory injunction has been settled. The learning in that decision has been incorporated into Australian equity jurisprudence in such cases as Queensland v Australian Telecommunications Commission;[11] Maggbury Pty Ltd v Hafele Australia Pty Ltd;[12] Members of the Yorta Yorta Aboriginal Community v Victoria;[13] Jemena Gas Networks (NSW) Ltd v Mine Subsidence Board[14] and Smethurst v Commissioner of Police.[15]
[10] [1970] AC 652.
[11] (1985) 59 ALJR 562.
[12] (2001) 210 CLR 181.
[13] (2002) 214 CLR 422.
[14] (2011) 243 CLR 558.
[15] [2020] HCA 14.
Those cases stand for the proposition that a court has power to compel a person to do an act by the imposition of a mandatory injunction. Yet in assessing whether to grant such an injunction the usual criteria still apply namely, whether a serious issue to be tried exists and whether the balance of convenience supports the grant of the injunction. In the case of a mandatory injunction certain cases contain observations to the effect that the court should feel a greater sense of persuasion with a mandatory injunction than with a prohibitory injunction in relation to the serious issue to be tried. Cases in that category include R v Forbes; Ex parte Bevan;[16] Taylor v Taylor;[17] R v Bell; Ex parte Lees;[18] R v Ross-Jones; Ex parte Green;[19] Grassby v R[20] and DJL v The Central Authority.[21]
[16] (1972) 127 CLR 1.
[17] (1979) 143 CLR 1.
[18] (1980) 146 CLR 141.
[19] (1984) 156 CLR 185.
[20] (1989) 168 CLR 1.
[21] (2000) 201 CLR 226.
The decision in Redland Bricks Ltd v Morris[22] is a convenient starting point for a consideration of the mandatory injunction yet by no means is it the origin of the equitable remedy. In Australia, Sir Harry Gibbs, then Chief Justice of the High Court of Australia pronounced upon the availability of the remedy in State of Queensland v Australian Telecommunications Commission.[23] After referring to Redland Bricks Ltd v Morris, Gibbs CJ pointed out that the grant of the mandatory injunction is never made as of course and that a factor to be taken into account is that the defendant has behaved wrongly. Gibbs CJ also referred to the comments of Sir Robert Megarry in Shepherd Homes Ltd v Sandham[24] to the effect that the court is usually more reluctant to grant a mandatory injunction than it is to grant a prohibitory injunction and that the court must feel a high degree of assurance that at the trial of the proceeding it will appear that the injunction was rightly granted, a higher standard than is required for a prohibitory injunction.
[22] [1970] AC 652.
[23] (1985) 59 ALJR 562.
[24] [1971] 1 Ch 340, 351.
Yet the doctrinal basis of the grant of an injunction, whether prohibitory, mandatory, interlocutory, permanent, asset preservation, anti-suit or otherwise is equity. Lord Justice Lindley in the early 1890s, when speaking of the grant of injunctions and the appointment of receivers held in Holmes v Millage[25]–
Although injunctions are granted and receivers are appointed more readily than they were before the passing of the Judicature Acts, and some inconvenient rules formerly observed have been very properly relaxed, yet the principles on which the jurisdiction of the Court of Chancery rested have not been changed.
[25] [1893] 1 QB 551, 557.
A little earlier, in 1883 Lord Justice Cotton held in North London Railway Co v Great Northern London Railway Co[26] that the court has no power to grant an interlocutory injunction except in protection or assertion of some legal or equitable right which it has jurisdiction to enforce by final judgment. Lord Diplock in Owners of Cargo Lately Laden on Board “Siskina” v Distos Compania Naviera S.A.[27] repeated those statements.
[26] (1883) 11 QBD 30, 39.
[27] [1979] AC 210.
This being an interlocutory injunction the observations of Sir Frederick Jordan in Chapters on Equity in New South Wales[28] are on point. There his Honour said the following –
The purpose of an interlocutory injunction is to keep matters in statu quo until the rights of the parties can be determined at the hearing of the suit.
[28] (Sydney: Govt. Printer, 6th ed, 1947) p46.
Gleeson CJ in Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd[29] held that an applicant for an interlocutory injunction must be able to show sufficient colour of right to the final relief in aid of which the interlocutory relief is sought. Gleeson CJ called in aid the observations to similar effect of Lord Cottenham LC in The Great Western Railway Company v The Birmingham & Oxford Junction Railway Company.[30]
[29] (2001) 208 CLR 199.
[30] [1848] 41 ER 1074, 1076.
The ordinary test for the grant of an interlocutory injunction on which Australian courts have proceeded was formulated in Castlemaine Tooheys Ltd v South Australia[31] and repeated in Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia,[32] in Fejo v Northern Territory[33] and in Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd.[34] The principle is this –
In order to secure such an injunction the plaintiff must show (1) that there is a serious question to be tried or that the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief; (2) that he will suffer irreparable injury for which damages will not be an adequate compensation unless an injunction is granted; and (3) that the balance of convenience favours the granting of an injunction.
[31] (1986) 161 CLR 148.
[32] (1998) 195 CLR 1, 24.
[33] (1998) 195 CLR 96, 121.
[34] (2001) 208 CLR 199, 217.
In ABC v Lenah Game Meats Pty Ltd Gaudron J provided observations on the use of the word “injunction”. They were as follows –
In recent times, the word ‘‘injunction’’ has come to be used to mean any order by which a court commands a person to do or refrain from doing some particular act. Thus, it has come to be used in connection with orders of that kind that are specifically authorised by statute. It has also been used to describe orders which a court makes to protect its own processes such as an asset preservation order (sometimes called a ‘‘Mareva injunction’’) and some anti-suit injunctions. Leaving those matters to one side, however, an injunction is a curial remedy. Because it is a remedy, it is axiomatic that it can only issue to protect an equitable or legal right or, which is often the same thing, to prevent an equitable or legal wrong. So to say, is simply to emphasise that the function of courts is to do justice according to law.
In the same case, that is ABC v Lenah Game Meats Pty Ltd Kirby J provided an examination of the equitable character of the injunction. His Honour held as follows –
Equitable character: In so far as history continues to be imported by the very nature of the remedy of ‘‘injunction’’,[35] it is the history of equity. Whilst that branch of the law, over time, undoubtedly ‘‘developed positive rules and shed its ex tempore characteristics’’,[36] it continues to resist attempts (often said to arise at the hands of common lawyers[37]) to impose on discretions equitable in character classifications described ‘‘in terms of inflexible rules’’.[38] That approach would be contrary to ‘‘fundamental equitable principles’’.[39] Above all, such principles require that the beneficial remedy of interlocutory injunctions must, like other injunctions now provided by statute for particular purposes, be kept available to fulfil those purposes and not imprisoned in a cage of unyielding rules derived from ancient cases.
[35] Supreme Court Civil Procedure Act 1932 (Tas), s 11(12); see also Commonwealth of Australia Constitution Act 1900 (Imp), s 75(v)
[36] R. P. Meagher, W. M. C. Gummow and J. R. F. Lehane, Equity: Doctrines and Remedies (3rd ed, 1992) p7 at [114].
[37] I. Spry, Principles of Equitable Remedies (6th ed, 2001) pp 20-22.
[38] Ibid p20.
[39] Ibid p22.
In an application for an interlocutory injunction, as is this, the court does not embark on a preliminary trial, as was held in Beecham Group Ltd v Bristol Laboratories Pty Ltd.[40]
[40] (1968) 118 CLR 618.
In the very recent decision of the High Court in Smethurst v Commissioner of Police[41] the court had occasion to make observations about the nature of the court’s jurisdiction to grant an injunction. The plurality (Kiefel CJ, Bell and Keane J) held as follows –
It is well settled that for the grant of an injunction in equity’s auxiliary jurisdiction, interlocutory or final, a plaintiff must have a legal right which the injunction will protect.[42] It is so well settled that arguments concerning it tend to focus upon what may or may not constitute such a right.
[41] [2020] HCA 14.
[42] D. Heydon, M. Leeming and P. G. Turner, Meagher, Gummow and Lehane's Equity: Doctrines and Remedies (5th ed, 2015) at [21-035].
In the specific context of a mandatory injunction, Nettle J in Smethurst traced the learning that emerged in the mid nineteenth century. His Honour cited Lord Westbury LC’s decision in Isenberg v The East India House Estate Co Ltd[43] and Sir George Jessel MR’s decision in Smith v Smith.[44] Nettle J said that writing in 1836, the academic Joseph Story[45] said the following –
The object of this process [of injunction], which is most extensively used in Equity proceedings, is generally preventive, and protective, rather than restorative; though it is by no means confined to the former. It seeks to prevent a meditated wrong more often, than to redress an injury already done.
[43] [1863] 46 ER 637, 641.
[44] (1875) LR 20 Eq 500, 504.
[45] Joseph Story, Commentaries on Equity Jurisprudence (Hilliard, Gray, 1836).
While it is true that modern equity traces the mandatory to the decision of Lord Upjohn in Redland Bricks Ltd v Morris,[46] the mandatory injunction first emerged as a method of enforcing positive statutory duties. In Glossop v Heston and Isleworth Local Board[47] such an order was made. A mandatory injunction was also made by Buckley J in Charrington v Simons & Co Ltd.[48]
[46] [1970] AC 652.
[47] (1879) 12 Ch D 102.
[48] [1970] 1 WLR 725, 730.
Gordon J also addressed the origin of the mandatory injunction in Smethurst v Commissioner of Police. Her Honour traced the learning to Earl of Mexborough v Bower[49] and to Jackson v Normanby Brick Co.[50] Her Honour held as follows –
A mandatory injunction, long recognised by the law, will go where the defendant “is ordered to undo the wrong he has done, and give the [plaintiff] complete relief by putting him in the position in which he was before the injury was committed”. It took some time before a mandatory order was framed positively rather than negatively but, as the authorities recognise, this was a question of drafting practice, not a matter of substance.
[49] [1843] 49 ER 1011.
[50] [1899] 1 Ch 438.
To the argument that an injunction will only serve to protect a proprietary right advanced by a plaintiff, her Honour scotched the proposition. Her Honour held as follows citing Bateman’s Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd[51] –
In particular, it would be an error to proceed on any basis which assumed, as a governing principle, that an injunction will go only to protect a proprietary or other legal right advanced by a plaintiff.
[51] (1998) 194 CLR 247.
Sometimes a respondent to an application for a mandatory injunction contends that the consequences of the order are trivial. To that Edelman J in Smethurst v Commissioner of Police said the following –
A mandatory injunction is most easily justified where the consequences are ongoing and serious, the interference with the defendant’s liberty is trivial and, compared with an injunction, damages are an inadequate means to “undo the consequences of a wrong”. For instance, in McManus v Cooke,[52] a mandatory injunction was granted to require the defendant to take action involving what was described as the insignificant inconvenience of removing a skylight from which “it would be extremely difficult to estimate the damage” that the plaintiff would suffer.[53]
[52] (1887) 35 Ch D 681.
[53] (1887) 35 Ch D 681, 698.
To the argument that damages are an inadequate remedy, Edelman J held that it is necessary to examine the issue from not only the plaintiff’s perspective but also from the defendant’s. His Honour held as follows –
The inadequacy of damages is a consideration in favour of an injunction only from the plaintiff’s perspective. The perspective of the defendant must also be considered when assessing whether the defendant should be compelled to take action to reverse or ameliorate the consequences of a wrong where the defendant is not under a duty otherwise to perform the act.
The above survey of the case law supports my conclusion that a mandatory injunction in this case is warranted. I say that for the reasons that now follow.
In this case it seemed to me that a serious issue to be tried relates to the ownership of the C Street property, and in particular, whether Mr and Ms Holder in their personal capacity are the registered proprietors of a fee simple estate in the land or whether there is any validity to the declaration of trust made on 4 September 2012 about which the AAT spoke in paragraph 42 of its reasons. There, the senior member said the following –
42.I had in evidence a document described as a Declaration of Trust which was made on 4 September 2012. That document purports to have been executed by Mr Holder and Ms E as trustees for the SMSF. Ms Holder’s name does not appear on that document. Mr and Ms Holder separated shortly prior to that date, in August 2012. Ms E became a member and trustee of the SMSF on 1 April 2007. Mr P consented to become a trustee on 10 December 2011 and resigned as trustee on 28 February 2013.
The senior member expressed his doubt about whether the C Street property ever became an asset of HSF. To my mind that was an understatement. At law, as no alteration to the registered proprietorship in the land was effected, title to the C Street property has at all relevant times stood in the names of Mr and Ms Holder. Even if the declaration of trust was effective, it purportedly operated in such a manner that the legal and equitable interest in the C Street property was once held by Mr and Ms Holder absolutely but, by operation of the declaration of trust, the legal interest in the property was transferred to them in a representative trustee capacity to hold the beneficial interest in the property for themselves plus for whomever else was a beneficiary under the trust deed of HSF. The AAT senior member expressed his misgivings about that alleged arrangement. All I say about it at present is that such an alleged arrangement requires serious investigation. It is a serious issue to be tried. It appears at first blush to bear all the hallmarks of a device. While there is insufficient evidence before me at present to categorically call it a sham within the contemplation of such cases as Raftland Pty Ltd v Federal Commissioner of Taxation,[54] Scott v Federal Commissioner of Taxation (No 2),[55] Snook v London and West Riding Investments Ltd[56] and Goodridge & Beadle,[57] the legitimacy of the declaration of trust and of all the surrounding circumstances will need to be ventilated at trial, including why the CBA’s discharge of mortgage was not registered nor the transfer of land.
[54] (2008) 238 CLR 516.
[55] (1966) 40 ALJR 265.
[56] [1967] 2 QB 786.
[57] (2017) 57 Fam LR 425.
So far as the balance of convenience is concerned in this case, it overwhelmingly favours the wife’s application. To accede to the application brought by Mr Holder for the sale of the property would see the C Street property sold in the current depressed market simply to realise an amount that can be met easily from cash reserves of HSF. To accede to Mr Holder’s application would be to sell a valuable asset that falls to be divided in the s 79 application in this proceeding.
It seemed to me that there was real merit in Ms Holder’s application whereas there was no merit in Mr Holder’s application. Further, Mr Holder’s position heightened my concerns that his comprehension of the nature and extent of his duties as a trustee was poor. He failed in his application for the review of the decision to disqualify him as a trustee, and so he remains disqualified as a trustee. So was Ms Holder disqualified. Precisely who the trustee is of HSF remains very unclear. Nevertheless, Mr Holder has assumed the burden of ensuring that HSF is put in the position that it is a compliant SMSF. The evidence before me did not reveal the identity of the current trustee of HSF. Yet it appears that Mr Holder controls the day-to-day financial affairs of HSF. He has the ability to transfer the funds to meet the council’s debt. Unless he does so by the extended date for payment to which the council has agreed then the C Street property is most likely to be sold for whatever sum the council can get. That price may not necessarily equate to be best price obtainable by a scrupulous vendor keen to obtain the most advantageous price obtainable.
In those circumstances, I make an order in the nature of a mandatory injunction compelling Mr Holder a forthwith pay the B Shire Council the sum of $22,101.99.
Inherent power of the court
An additional (or possibly, alternative) basis exists for the making of the order requiring Mr Holder to pay the council the sum ordered.
This court has very limited inherent jurisdiction as has been held by the High Court on several occasions. Yet this court has an inherent jurisdiction to prevent its process from being abused. I wrote about that in Karjala & Gallard[58] and Dunworth & Falletti,[59] citing D.M.W. v C.G.W.,[60] R v Gray; ex parte Marsh,[61] Re Macks; ex parte Saint,[62] Kennon v Spry[63] and Public Service Association of South Australia Inc v Industrial Relations Commission of South Australia.[64]
[58] [2020] FamCA 110.
[59] [2020] FamCA 178.
[60] (1982) 151 CLR 491.
[61] (1985) 157 CLR 351.
[62] (2000) 204 CLR 158.
[63] (2008) 238 CLR 366.
[64] (2012) 249 CLR 398.
It seemed to me that the approach adopted in this case by Mr Holder of requiring the C Street property to be sold and a part only of the proceeds being used to meet the debt to the council was likely to render nugatory debate about the legal and equitable interests in one of the major assets of the relationship. In other words, the sale of the C Street property now when cash is available to meet the council debt will cause the loss of a major item of property, and in the process rending this proceeding irrelevant to that property in its current form, that is to say, as an item of real property not converted to cash. It may transpire that Ms Holder seeks orders for the transfer of the C Street property, in specie, to her. Naturally, that cannot be done if the property is sold in accordance with Mr Holder’s contentions.
Undertaking as to damages
Ordinarily, the giving of an undertaking as to damages is the price of an injunction, whether mandatory or prohibitory, or for that matter, any interlocutory order conferring equitable relief such as the appointment of a receiver. So much was held in National Australia Bank Ltd v Bond Brewing Holdings Ltd.[65] Yet in family law litigation, it has been held that unlike in commercial litigation an undertaking as to damages is not a necessary precondition to the grant of an injunction, especially where the arena of disputation is purely between husband and wife. So much was held by Cronin J in Martin & Martin.[66] His Honour did not base that conclusion on any authority. Yet it seems to me that such a result is correct in the circumstances of a dispute inter partes involving only a husband and wife. The situation will be entirely different where parties extraneous to the marriage are involved. In those circumstances, the relevant criteria for the grant of injunctive relief is likely to be determined by the test propounded in Blueseas Investments Pty Ltd v Mitchell[67] and, more importantly, the High Court cases set out above.
[65] [1991] 1 VR 386.
[66] [2013] FamCA 222.
[67] (1999) 25 Fam LR 65.
conclusion
I make the order canvassed above. I dismiss Mr Holder’s application.
So far as the ongoing interlocutory phases of this case are concerned, I am most troubled by the fact that this case has been on foot since 2012. Despite the involvement of the Deputy Chief Justice and also the Chief Justice in endeavouring to get the case to trial, it has limped along at a glacial speed. I regard that as most unsatisfactory. Under the leadership of Chief Justice Alstergren, most cases are expected to be commenced and heard at trial within a one year period, in the absence of good reason for a longer period. It is time for this case to be managed by a judge.
I will take this case into my docket henceforth. A directions hearing will need to be held to discuss trial directions. I fix 1 June 2020 for that. The case should be tried in the second half of 2020.
I certify that the preceding sixty-eight (68) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson delivered on 14 May 2020.
Associate:
Date: 14 May 2020
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