Hussein and Najiri and Ors

[2016] FamCA 737

FAMILY COURT OF AUSTRALIA

HUSSEIN & NAJIRI AND ORS [2016] FamCA 737

FAMILY LAW – PROPERTY – INTERLOCUTORY INUNCTIONS – where the wife seeks interlocutory injunctions against additional respondents – where final relief is sought against the additional respondents under s 106B of the Act – where such injunctions are sought in aid of that relief – where discussion of applicable principles – where wife has not made out an arguable case that there is a “serious question” to be tried – where wife’s application dismissed – where costs reserved to final hearing.

Family Law Act 1975 (Cth) ss 106B, 114(3)

ABC v Lenah Game Meats Pty Limited [2001] 208 CLR 199
Cardile v LED Builders Pty Ltd (1999) 198 CLR 380
Jackson v Sterling Industries Ltd (1987) 162 CLR 612
VC & GC and Ors [2010] FamCAFC 62

APPLICANT: Ms Hussein

1st RESPONDENT: 2nd RESPONDENT: Mr Najiri Mr B Najiri 2nd RESPONDENT: Mr B Najiri

3rd RESPONDENT: Mr C Najiri

4th RESPONDENT: Mr D Najiri

FILE NUMBER: PAC 425 of 2016

DATE DELIVERED: 2 September 2016

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: Foster J

HEARING DATE: 29 July 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Giveny

SOLICITOR FOR THE APPLICANT: McGrath Dicembre & Company

COUNSEL FOR THE 1ST RESPONDENT: Mr Johnston

SOLICITOR FOR THE 1ST RESPONDENT: Adam & Co Solicitors

COUNSEL FOR THE 2ND RESPONDENT: Mr Richardson SC

SOLICITOR FOR THE 2ND RESPONDENT: A Plus Legal

COUNSEL FOR THE 3RD RESPONDENT: Mr Richardson SC

SOLICITOR FOR THE 3RD RESPONDENT: A Plus Legal

COUNSEL FOR THE 4TH RESPONDENT: Mr Richardson SC

SOLICITOR FOR THE 4TH RESPONDENT: A Plus Legal

Orders

1. That the wife’s application for interlocutory injunctions against the second, third, and fourth respondents be dismissed.

2. That the costs of the second, third, and fourth respondents be reserved to final trial or earlier completion of proceedings against them.

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 Hussein & Najiri 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 PARRAMATTA

FILE NUMBER: PAC 425  of 2016

Ms Hussein

Applicant

And

Mr Najiri and Mr B Najiri and Mr C Najiri and Mr D Najiri

Respondents

REASONS FOR JUDGMENT

1. The applicant wife in her amended application initiating proceedings filed on 1 July 2016 seeks final orders that in summary provide:

   a)That the husband’s transfer of his interest in the property at E Street, Suburb F to his brother Mr C Najiri (the Third Respondent) be set aside pursuant to section 106B of the Family Law Act 1975 (Cth) (“the Act”) as a transaction likely to defeat the wife’s property claim;

   b)That the husband’s brother Mr C Najiri transfer to the husband his interest in the property at E Street, Suburb F;

   c)That similarly the husband’s transfer of his interest in the property at G Street, Suburb H to his father Mr D Najiri (the Fourth Respondent) be set aside as a transaction likely to defeat the wife’s property claim;

   d)That the husband’s father transfer to the husband his interest in the property at G Street, Suburb H;

   e)That similarly the husband’s transfer of his interest in the property known as I Street, Suburb J to his other brother Mr B Najiri (the Second Respondent) be set aside as a transaction likely to defeat the wife’s property claim;

   f)That the husband’s brother Mr B Najiri transfer to the husband his interest in the property at I Street, Suburb J; and

   g)That the husband transfer to the wife his interest in the property at K Street, Suburb H unencumbered and that the husband pay to the wife the sum of $500,000.

2. Otherwise the wife sought final orders as to spouse maintenance and parenting orders in relation to the children of the marriage on a final basis.

3. The issue as to interim spouse maintenance was not at this stage being agitated on an interim basis, nor was the question of interim property relief.

4. The wife’s amended initiating application relevantly for the purposes of the present proceedings sought interim relief seeking injunctive relief against the husband’s two brothers and his father. Injunctive relief was sought so as to restrain those persons from dealing with their present interest in the properties referred to above by of way of transfer, encumbrance or diminution in value.

5. The applicant wife relied upon her affidavits filed on 11 April 2016, 1 July 2016 and with leave on 29 July 2016.

6. The respondent husband relied upon his amended response filed on 27 July 2016 and his affidavit filed on 27 July 2016.

7. The Second, Third and Fourth Respondents relied upon their response to the wife’s initiating application filed on 29 July 2016 and their respective affidavits all filed on 28 July 2016.

Context

1. The parties were married in 2007 and separated on 4 April 2016. The parties had a number of separations over the period of their marriage which at best can be described as tumultuous. For much of the cohabitation the husband asserts that the wife received Centrelink benefits as a separated mother.

2. There are three children of the marriage now aged seven years, six years, and 16 months.

3. The mother is aged 27 and the father 36. Both were born in South Central Asia and migrated with their respective families to Australia in 1991 and 1990 respectively.

4. The wife and children presently reside in the property at K Street, Suburb H that is registered in the husband’s name. By order made on 16 May 2016 by consent the wife has exclusive occupation of that property.

5. The wife asserts that she receives no financial support from the husband who she says is employed on a salary of about $167,000 per annum. The husband otherwise has pursued property development interests over the years.

6. There were various property transactions by the husband during the marriage.

7. Recent property searches reveal the following property interests:

   a)That as at 22 January 2016 the husband was the sole registered proprietor of a property at L Street, Suburb J with the property being subject to a mortgage encumbrance to the Commonwealth Bank of Australia. The property he asserts has a value of $950,000.

   b)That as at 8 December 2015 the husband was the sole registered proprietor of a property at M Street, Suburb H with the property also being subject to a mortgage to the Commonwealth Bank of Australia. The property he asserts has a value of $880,000.

   c)That as at 8 December 2015 the husband was the sole registered proprietor of a property at K Street, Suburb H with the property also being subject to a mortgage to the Commonwealth Bank of Australia. The property he asserts has a value of $920,000.

   d)That as at 22 January 2016 the husband was the sole registered proprietor of the property at N Street, Suburb J with the property also being subject to a mortgage to the Commonwealth Bank of Australia.

   e)That as at 8 December 2015 the husband was the registered proprietor of a property at O Street, Suburb H with the property also being subject to a mortgage to the ANZ Bank in respect to which the property at P Street, Suburb H was collateral security. Subsequent to separation the husband without the wife’s knowledge sold this property for $840,000 necessitating the wife’s application for sole use and occupation of the property at K Street, Suburb H. The husband asserts that it was necessary for the whole of the net proceeds of sale to be paid to the ANZ Bank to procure a discharge of mortgage to that bank on sale. As a consequence there was a redraw facility of about $122,000 that the husband redrew and paid into his Commonwealth Bank of Australia liability.

   f)That as at 8 December 2015 the husband was the registered proprietor of a property at P Street, Suburb H that was subject to a mortgage to the ANZ Bank. The property he asserts has a value of $800,000 and is subject to a mortgage debt of $698,000. The husband asserts an outstanding debt to Q Pty Ltd of $99,450 and a charge for land tax of about $36,000. The property is tenanted for $650 per week. There is also, he says, a prospective CGT liability if sold.

   g)That as at 8 December 2015 the husband held a 5 per cent interest in the property at E Street, Suburb F, there being no registered mortgage encumbrance secured against the property. On 23 December 2015 without notice to the wife the husband purportedly sold his interest in this property to his brother Mr C Najiri for $158,500. The wife asserts that the property is a development site in respect to which application has been made for the construction of 55 townhouses and a child care centre. On 16 February 2016 the husband banked to his NAB account 3952 a cheque for $158,500 and within a few days in six transactions had withdrawn the funds. The husband asserts that the property was sold at valuation and he received a bank cheque for sale proceeds.

   h)That as at 22 January 2016 the husband and his brother Mr B Najiri were the joint registered proprietors of a property at I Street, Suburb J with the property being subject to a mortgage to the Commonwealth Bank of Australia. On 10 March 2016 the husband transferred his interest in the property to the joint owner his brother by transfer evidencing a consideration of $340,000. The husband’s brother borrowed funds from the ANZ Bank at the time of that transaction discharging the mortgage to the Commonwealth Bank of Australia. The ANZ Bank now holds registered mortgage security. The husband asserts that the property was sold at valuation and he received a bank cheque for sale proceeds. The property has now been subdivided into two separate lots, although development consent for the subdivision was received prior to 9 June 2015 (Exh B). The wife has no knowledge as to how the purported sale funds of $340,000 have been dealt with by the husband and she asserts that the sale of the husband’s interest was at a significant undervalue. The wife relies on a “marketing advice” letter that asserts a range of $850,000-$900,000 for “both properties respectively”. Yet the properties have now had substantially two cottages erected thereon by the husband’s brother.   The wife adduces no evidence as to the value of the property at date of transfer. In May 2016 the wife observed two partly constructed homes on these properties and by late June 2016 she observed that the houses were nearing completion. On 27 June 2016 the wife asserts that she observed the husband working on the building site at the property; he denies same. The wife expresses concern that the husband’s brother proposes to sell the properties and the sale proceeds will be disbursed before the Court can determine the property entitlements of the parties.

   i)That as at 8 December 2015 the husband was the registered proprietor of a property being G Street, Suburb H, there being no registered mortgage encumbrance secured against the property. On 29 January 2016 the husband transferred the property to his father for $200,000. The husband asserts that the property was sold at valuation and he received a bank cheque for sale proceeds. On the same day the husband’s brother Mr B Najiri lodged a caveat against the title to the property alleging a loan between himself and his father pursuant to a loan agreement dated 29 January 2016. The husband deposited $200,000 to his Westpac Saver account 6255 on 10 February 2016 and the whole of those funds were withdrawn by the husband by 18 February 2016. It is the wife’s contention that the property was sold by the husband to his father at a significant undervalue. The wife relies on a “marketing advice” letter asserting a reasonable selling range of $700,000-$750,000 for the land. There is neither basis for the opinion expressed nor any indication that the property was inspected. The letter is of little weight.

8. It appears that the husband’s property development interest comprised purchasing and developing vacant blocks of land.  The parties or either of them and the children resided in various properties during cohabitation.

9. At the commencement of cohabitation the wife had no assets of any significance. The husband owned the properties at R Street, Suburb J and L Street, Suburb J that were both subject to mortgages totalling $400,000. He asserts he also had savings of $100,000 and a car.

10. Following their separation the wife found certain financial documents relating to the husband’s property dealings. She found a Commonwealth Bank of Australia bank statement for an account (4424) in the name of the husband described as a “personal transaction” account in the period from 28 May 2015 to 26 August 2015 total deposits to that account were $1,913,783. In the same period withdrawals totalled $200,563. The wife has no knowledge as to the source of these funds save that they were funds transferred from other accounts of the husband or appear to be from property sales.

11. The husbands asserts sales of five properties in the period before separation:

    a)Property at 13 Jonah Street Stanhope Gardens described as a “private sale” for $1.37 million;

    b)Property at N Street Suburb J described as “private sale” for $800,000;

    c)Property at G Street, Suburb H described as “private sale” for $200,000. This property is referred to above;

    d)His share in property at E Street, Suburb F described as “private sale” for $158,500. This property is referred to above.

    e)His share in property at S Street, Suburb J described as “private sale” for $340,000.

12. It may be inferred that funds in the husband’s accounts represented the net proceeds of sale of all or some of these properties.

13. On 6 May 2016 the husband borrowed $35,000 from the St George Bank. On 6 May 2016 $34,805 was deposited to his St George account 9981. On 9 and 10 May 2016 the husband withdrew a total of $35,000.

14. The wife asserts that between early December 2015 and May 2016 the husband made numerous withdrawals from various bank accounts totalling about $2 million. She has no knowledge as to the application of these funds save for the husband’s bald assertion that he has “gambled them”. The wife has no knowledge of any significant gambling activities by the husband except very modestly when in her presence.

15. The husband procured a voluntary exclusion order prohibiting him from the gaming areas of the T Casino on 24 May 2016. A copy of his request for such an order is not provided. Thus the significance of the voluntary exclusion order is not apparent.

16. He provides a referral from his GP dated 15 July 2015 under a mental health plan with such referral making absolutely no reference to any gambling addiction but referring to sleep problems and anxiety. The husband confirmed the mental health referral in those terms with his signature.

17. This was at a time when his marriage was in significant difficulty. He produces a letter confirming his self-referral to the U Mental Health Counselling Service for “pathological gambling”. No treatment notes were provided.

18. His assertions as to gambling appear at odds with a man who has been active in finance and property development and was able he says to accumulate in excess of $2 million in cash reserves by mid-2015. His evidence in this regard will no doubt be tested on final hearing.

19. The injunctive relief sought by the wife was opposed by the Second, Third and Fourth Respondents.

20. Their response filed on 29 July 2016 relevantly sought the dismissal of the wife’s relief sought against them on an interim and final basis.

The Second, Third and Fourth Respondents

1. The Second Respondent is a licensed tradesman holding various tertiary qualifications. He is a director of Q Pty Ltd, as company to which the husband asserts he owes money.

2. He and his wife own various properties.

3. He and the husband previously owned the property at I Street, Suburb J that comprised vacant land of about 748 square metres. He asserts that the husband sought to sell the property. He agreed to acquire the husband’s interest for $340,000. The contract for sale was dated 23 November 2015. For stamp duty purposes the property was valued with the valuation at “market value” being $675,000.

4. The valuation makes reference to applicable zoning but makes no reference to subdivision or subdivision potential and uses comparable sales that consist of vacant land. Yet development consent for the subdivision was received prior to 9 June 2015. Clearly the Second Respondent was aware of the development potential of the property as within weeks he had subdivided the land into two parcels and promptly commenced construction of two homes on the properties.

5. The husband asserted that he required $360,721 to pay out his obligation to the mortgagee bank, the Commonwealth Bank of Australia. The Second Respondent paid the purchase price and says he advanced to the husband a further $22,000. These funds the second respondent says were borrowed from his father as to $230,000 and the balance from his own funds.

6. The sum of $230,000 by bank cheque was sourced from Westpac account 053100 on 22 February 3016. Yet the Second Respondent provides a bank statement for a Westpac Housing Loan … showing a withdrawal of $230,000. The Second Respondent provides a bank statement for ANZ account … evidencing a withdrawal of $127,454 on 22 February 2016.

7. The ownership of these accounts is not known and the statements are heavily redacted to conceal transactions before and after the withdrawals.

8. It would have been easy for the Second Respondent to adduce evidence that clearly showed the sourcing and payment of funds to the husband from objective documents. He has not. There is some circumspection as to these dealings.

9. The Second Respondent asserts that he is in a strong financial position but reliant on dealing with the two properties due to his “other commitments and mortgages against these two properties”. He proffers no evidence of such circumstances. It is to be inferred from the submissions made on behalf of the wife that the funds in fact represented cash funds withdrawn by the husband made available to the Second Respondent and then repaid to the husband in a sham transaction. However there is no evidence at this stage to support that inference.

10. The Third Respondent is a brother of the husband. The Third Respondent was the majority owner of a property at E Street, Suburb F with the husband holding a 5 per cent interest in that property.

11. The Suburb F property was purchased in June 2015 for $3.285 million. The Third Respondent asserts that in about mid-November 2015 there was an agreement between him and the husband for the Second Respondent to acquire the husband’s share.

12. A contract for sale was signed on 30 November 2015 pursuant to which the Third Respondent acquired the husband’s 5 per cent share in the property for $158,500. This represented an overall valuation of the property of $3.17 million.

13. Notwithstanding the sale price agreed to by contract, it was not until 15 December 2015 that a valuation of the subject property was obtained for stamp duty purposes. The subject property comprises 1.41 hectares of vacant land in a “newly establishing residential neighbourhood with surrounding development” with zoning permitting conventional dwellings, duplexes and the battle-type properties. The valuation was based on a broad acre value of $225 per square metre. No reference is made to the prospective development potential of the property or is it asserted that the property was valued at its highest and best use.

1. The Third Respondent provided to the husband a bank cheque for the sale price of $158,500 with it appears those funds being drawn from the joint account of the Second Respondent and his wife with the Commonwealth Bank of Australia. The Third Respondent provides a copy of the bank statement evidencing the withdrawal but the bank statement is heavily redacted leaving the only identifiable transaction the withdrawal of $158,515 on 24 December 2015.

2. The balance remaining in the account after the withdrawal was $182.59. No evidence is given by the Third Respondent as to how he sourced funds for the payment to the husband. It is to be inferred from the submissions made on behalf of the wife that the funds in fact represented cash funds withdrawn by the husband made available to the Third Respondent and then repaid to the husband in a sham transaction. However there is no evidence at this stage to support that inference.

3. The Fourth Respondent is the father of the husband. The Fourth Respondent is retired although he does some work in retail.

4. The husband was the owner of vacant land being G Street, Suburb H. The transaction is referred to above and resulted in a payment of $200,000 by way of bank cheque to the husband.

5. A valuation of the property was obtained for stamp duty purposes on 28 January 2016. The property comprised vacant land of 849 square metres. The property was zoned residential. The valuer was instructed to value the property on the assumption “as if it is not developable”. On that basis the property was valued at $200,000.

6. It seems a peculiar contradiction for the Fourth Respondent to assert a transaction at arm’s length when he says he paid valuable consideration for a property that has no development potential. The funds provided by the Fourth Respondent to the husband were drawn by way of bank cheque from a Westpac account .... The ownership of the account is not identified on the bank statement itself but the Fourth Respondent asserts that it is his account.

7. Once again the bank statement evidencing the withdrawal to facilitate the payment to the husband is heavily redacted with the only identifiable transaction being the withdrawal for the purposes of the bank cheque on 1 February 2016. The Fourth Respondent asserts that the funds for payment to the husband were drawn as against his existing home loan. No documents were produced to support this assertion. Again it is to be inferred from the submissions made on behalf of the wife that the funds in fact represented cash funds withdrawn by the husband made available to the Fourth Respondent and then repaid to the husband in a sham transaction. However there is no evidence at this stage to support that inference.

Discussion

1. It is well settled that the consideration of any application under s 106B of the Act as to setting aside the transaction is preferably to be done as part of the final hearing: VC & GC and Ors [2010] FamCAFC 62.

2. Thus the question of the wife’s primary application relating to the additional respondents will not be determined at an early date.

3. The additional respondents are not men of straw and apart from the impugned properties have significant other assets including their primary residences. Thus the likelihood of any order as to a monetary sum being defeated is remote on the available evidence.

4. Section 114(3) of the Act provides that the Court may grant an injunction “in any case in which it appears to the Court to be just or convenient to do so and either unconditionally or upon such terms and conditions as the Court considers appropriate.”

5. It is well settled that the power to order an injunction continue until trial is purposive – it must be seen to serve the interests of the court by protecting against abuse of process. If there is evidence that a party is a risk of removing assets from the reach of the court, this makes the ultimate orders effectively unenforceable. The purpose is therefore to protect the efficacy of the orders that may lie against the prospective judgment debtor: (Cardile v LED Builders Pty Ltd (1999) 198 CLR 380, 392; Jackson v Sterling Industries Ltd (1987) 162 CLR 612 at 623, 638).

6. The obligation of the wife in seeking interlocutory injunctive relief against third parties is to show that there is a serious question to be tried, that the balance of convenience favours the grant of the injunction, and that it is not just to confine the applicant to any remedy they may have in damages.

7. In ABC v Lenah Game Meats Pty Limited [2001] 208 CLR 199, Callinan J said at p296:

   It is important to keep in mind that the order against which the appellant appeals is an interlocutory injunction, an order to preserve the status quo until the hearing of the main action.
   ...
   Because the proceedings are interlocutory “the Court does not undertake a preliminary trial, and give or withhold interlocutory relief upon a forecast as to the ultimate result of the case”... . Just what measure of success an applicant for an interlocutory injunction must establish is not completely settled ... . In my opinion, the correct test is whether the applicant can demonstrate either a reasonably arguable case on both the facts and the law, or that there is a serious question to be tried. These tests it seems to me are to the same effect.

8. In Cardile (supra) the High Court warned at 403 that a freezing order “requires a high degree of caution on the part of the court ... An order lightly or wrongly granted may have a capacity to impair or restrict commerce...”

9. The wife’s argument rests upon inference and innuendo. Whilst there may be suspicion in the mind of the wife about the nature of the transactions between the husband and the additional respondents, the evidence of the additional respondents supports at this stage that the transactions as best can be determined  were “at arm’s length”. There is no doubt that funds changed hands and the husband was paid, he now asserting that he has dissipated those funds.

10. Whilst the wife asserts undervalue transactions, her evidence is inadequate to substantiate same. Whilst the wife asserts that in reality the funds that changed hands may well have been those of the husband, her evidence does not support that contention and the objective evidence of the additional respondents is supportive of the funds coming from them.

11. It may be that in the context of ongoing proceedings evidence comes to hand that will support interlocutory relief as against the additional respondents.

12. At this point there is insufficient evidence to support a contention that the wife has a serious question to be tried by way of a reasonably arguable case sufficient to support interlocutory injunctive relief against the additional respondents.

13. It is thus not necessary to consider balance of convenience issues.

14. The wife’s application for injunctive relief will be dismissed.

I certify that the preceding sixty-one (61) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 2 September 2016.

Associate: 

Date:  2 September 2016