Janko and Janko (No. 2)
[2018] FamCA 353
•22 May 2018
FAMILY COURT OF AUSTRALIA
| JANKO & JANKO (NO. 2) | [2018] FamCA 353 |
| FAMILY LAW – INJUNCTIONS – where the husband seeks that the wife provide an undertaking as to damages for an injunction already granted – where the husband seeks the undertaking be provided retrospectively – where it is found the Court cannot compel a party to provide an undertaking and cannot do so retrospectively |
| Blue Seas Investments v Mitchell (1999) 25 Fam LR 65 First Netcom Pty Ltd v Telstra Corporation Ltd (2000) 179 ALR 725 |
| APPLICANT: | Mr Janko |
| RESPONDENT: | Ms Janko |
| FILE NUMBER: | MLC | 4869 | of | 2016 |
| DATE DELIVERED: | 22 May 2018 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Macmillan J |
| HEARING DATE: | 9 May 2018 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Berger |
| SOLICITOR FOR THE APPLICANT: | Berger Kordos Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Strum QC with Mr Werner |
| SOLICITOR FOR THE RESPONDENT: | Taussig Cherrie Fildes |
Orders
Paragraph 3 of the husband’s Response to an Application in a Case filed 1 May 2018 be dismissed and removed from the list of cases awaiting hearing.
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 Janko & Janko (No. 2) 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: MLC 4869 of 2016
| Mr Janko |
Applicant
And
| Ms Janko |
Respondent
REASONS FOR JUDGMENT
On 9 April 2018, the wife filed an Application in a Case where she sought orders, inter alia, that the husband, his servants or agents be restrained from entering into any transaction or disposition or further agreements in relation to his interest or the interest of the Janko Family Trust in B Pty Ltd (“BPL”), B Trust or the real property situate at D Street, Melbourne without providing the wife with 21 days’ notice in writing. On 13 April 2018, I gave leave to the wife to make an oral application in terms of her Application in a Case and made orders in the terms of paragraphs 2 to 9. I also made an order restraining the husband until further order from entering into any transaction or disposition or further agreements in relation to his interests or the interest of the Janko Family Trust in BPL, the B Trust or the real property situate at D Street Melbourne. I reserved my reasons and otherwise adjourned the matter for hearing before me in the Judicial Duty List on 9 May 2018. I delivered my reasons on that date.
On 1 May 2018, the husband filed a Response to the wife’s Application in a Case whereby he sought, inter alia, the discharge of the injunction and in the event that the Court did not make the order, he sought that the wife provide an undertaking that she will pay compensation to the husband and/or such other person as the Court may in its discretion consider to be appropriate. When the matter came on for hearing before me the parties had agreed upon all but one of the matters in dispute and I ultimately made orders by consent reflecting that agreement. This included the appointment of a single expert to audit the accounts of BPL and to advise as to the best method of maximising the value of BPL upon sale or liquidation and orders facilitating that process. The husband did not pursue his application for the discharge of the injunction made on 13 April 2018. He did however seek an order that the wife provide an undertaking “...that she will pay compensation to the husband and/or such other person as the court may in its discretion consider to be appropriate”. That was opposed.
Counsel for the husband submitted, inter alia, that the undertaking as to damages was necessary in circumstances where the husband’s partner in the business, Mr G, had deposed that he no longer wished to continue his business relationship with the husband or be involved in the operations of BPL or the B Trust, had on that basis entered into an agreement with the husband to unwind the business and would be prejudiced by any delay. It was the husband’s case that Mr G would look to him to make good any loss caused by the granting of the injunction. Although not articulated, it is inherent in that submission that it is the husband’s case that the injunction should not have been granted that being the basis of a claim for damages based upon an undertaking as to damages. Mr G set out what appears to be the basis of the possible prejudice that he might suffer because of the injunction sought by the wife. However, that evidence suggests that he may have already been prejudiced by what he describes as the wife’s unreasonable delays, rather than identifying any loss directly related to the granting of the injunction which would not in any event be the subject of the undertaking for damages the husband seeks. This also disregards the evidence with respect to Mr G having undertaken to this Court in his own matrimonial proceedings that he has no beneficial interest in BPL and how that might impact upon any claim he might make for damages against the husband. I also note that although Mr G is not a party to these proceedings, he was in Court and represented by counsel on the first day of the hearing and did not make any submissions with respect to the question of any prejudice he might suffer or has suffered as a result of the granting of the injunction.
Although it may be that the Court could take into account any loss incurred by the husband as a consequence of an injunction, that should not have been granted as part of the property proceedings, there is some force in counsel for the husband’s submission that absent an undertaking as to damages the Court cannot entertain a claim for damages. However, as counsel for the wife submitted, the Court cannot retrospectively order a party to provide an undertaking. Although I agree with counsel for the wife, the more fundamental issue in this case is whether or not a party can be compelled to give an undertaking.
In First Netcom Pty Ltd v Telstra Corporation Ltd (2000) 179 ALR 725, the Full Court of the Federal Court considered a number of cases that had dealt with the giving of an undertaking for damages upon the grant of an interim injunction. One of those cases was the decision of the High Court in Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (1981) 33 ALR 578. In that case, Gibbs J stated at 580 that
The object of requiring a plaintiff who seeks an interlocutory injunction to enter into an undertaking of this kind is to attempt to ensure that a defendant will receive compensation for any loss which he suffers by reason of the grant of the injunction if it appears in the event that the plaintiff was not entitled to obtain it. The insistence upon the giving of an undertaking is a very important, if not an essential, means of preventing injustice from being done by the court when it makes an order at an interlocutory stage…
Stephen J observed at 586 that
What occurs when such an undertaking [for damages] is extracted from a plaintiff is that the court, as a condition of its grant of interim or interlocutory injunctive relief, has ensured that, should it turn out that that relief should never have been granted, it will have the power, so far as monetary compensation allows, to make good the harm which the grant has done to the defendant. The court acquires powers to do justice between the parties which it would not otherwise possess
…
Damages awarded under such an undertaking are, therefore, of a rather different nature from those awarded at common law. Their special character appears from the fact that their source lies in the plaintiff's own voluntary undertaking, given as the price of obtaining an injunction (emphasis added).
Their Honours in First Netcom, concluded as follows:
[26] It follows that in strictness the only order made by the court on an application for interim relief is the injunction itself. It is true that the operation of the injunction may be expressed to be conditional upon performance of a condition precedent. But the court does not direct, let alone order, the performance of such a condition. That is entirely at the Plaintiff’s election, with the consequences mentioned.
[27] It further follows that such conditions cannot, of their nature, be conditions subsequent. Either the interim injunction comes into operation upon being made, or it does not. In other words, the condition cannot be imposed (or superimposed) retrospectively.
The injunction in this case had already been made. In this case the husband, whilst seeking the removal of the injunction, did not pursue that application, it being agreed that the injunction would remain in place for the time being allowing the single expert to provide his advice. Although counsel for the wife submitted that as the injunction was made until further order rather than until further hearing, the Court could not make it conditional upon the wife providing an undertaking, I am satisfied that had the husband pursued his application, it would have been open to the Court to consider whether to extend or continue the injunction and as part of that process, make it a condition of doing so that the wife provide an undertaking as to damages. In circumstances where there was no opposition to the injunction remaining in force, at least until the process agreed upon has been completed, the Court cannot retrospectively impose as a condition of that injunction that the wife provide an undertaking.
Both counsel referred me, albeit for different reasons, to the decision of the Full Court of this Court in Blue Seas Investments v Mitchell (1999) 25 Fam LR 65 in which the Full Court held that in litigation pursuant to the Family Law Act 1975 (Cth) the impecuniosity of a party seeking injunctive relief to preserve property should not prevent the grant of an injunction. Whilst the Court has a discretion as to whether to make it a condition of the grant of an injunction that a party provide an undertaking as to damages, there is no suggestion in this case that the wife is impecunious and would not be able to satisfy any liability for damages pursuant to such an undertaking if it were ultimately to be found that the injunction should not have been granted. However that does not alter the fact that the Court cannot require a party to provide an undertaking and certainly cannot do so retrospectively. In all of the circumstances I propose to dismiss paragraph 3of the husband’s Response to the Wife’s Application in a Case.
I certify that the preceding nine (9) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered on 22 May 2018.
Associate:
Date: 22 May 2018
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