Kachmar & Madero (No 2)
[2023] FedCFamC1F 121
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Kachmar & Madero (No 2) [2023] FedCFamC1F 121
File number(s): MLC 8783 of 2020 Judgment of: WILLIAMS J Date of judgment: 7 March 2023 Catchwords: FAMILY LAW – PROPERTY – Interim application – Freezing order – Injunction sought by the wife restraining the second respondent from dealing with matrimonial assets – Procedural fairness accorded to the second respondent – Where there is a real risk that the second respondent may dissipate or otherwise deal with particular matrimonial assets overseas in a way that would defeat the wife’s ability to recover them – Balance of convenience favours the making of the injunctions against the second respondent from dealing with the apartment and relevant bank account. Legislation: Family Law Act 1975 (Cth) ss 79, 114 Cases cited: Kachmar & Madero [2021] FedCFamC2F 616
Tsiang & Wu and Ors (2019) FLC 93-911
Division: Division 1 First Instance Number of paragraphs: 40 Date of hearing: 14 February 2023 Place: Melbourne Counsel for the Applicant: Ms Dellidis Solicitor for the Applicant: Waterson Legal Counsel for the First Respondent: Mr Mathews Solicitor for the First Respondent: Jurisbridge Legal The Second Respondent: Did not participate ORDERS
MLC 8783 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS KACHMAR
Applicant
AND: MR MADERO
First Respondent
MS C
Second Respondent
order made by:
WILLIAMS J
DATE OF ORDER:
14 FEBRUARY 2023
THE COURT ORDERS THAT:
1.Until further orders in this proceeding, the second respondent be restrained by injunction from:
(a)dealing with and/or in any way encumbering or disposing of any of her rights and entitlements in the apartment located at L Street, City M, Country B, registered under the name Ms C; and
(b)accessing or otherwise dealing with any funds in any bank account in Country B under her name, Ms C or any other alias being used, including, but not limited to, account CB…23.
2.By 4:00pm on 27 February 2023, the second respondent provide the applicant copies of bank statements of all her bank accounts in Country B, under her sole name or jointly with another person, including account number CB…23, for the period from 1 August 2017 to date.
3.The wife's costs of the Application in a Proceeding filed 31 January 2023 be fixed in the sum of $5,939 and reserved.
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 the pseudonym Kachmar & Madero (No 2) has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
WILLIAMS J:
Before the Court is the wife’s application for interim injunctions in the nature of freezing orders against the second respondent, the husband’s mother. The husband was represented by counsel and the second respondent did not participate in the proceeding. The freezing orders in this Court are required to enable the wife to continue an application in the Country B courts to expand current freezing orders made on 25 November 2022 against the second respondent.
At the conclusion of submissions, I made the freezing order injunctions as sought by the wife and these are my reasons.
BACKGROUND
The husband and the wife separated on 18 November 2016 after a 16 year cohabitation, which included 11 years of marriage. There are two children of the relationship who are now aged 10 and 12 who live with the wife in Australia.
Shortly after separation, the husband re-partnered with a Country B national and travelled between Country B and Australia on numerous occasions. In 2021, the husband left Australia permanently and migrated to Country B. He has not subsequently returned to Australia.
On 12 August 2020, the wife initiated proceedings for property adjustment. On 20 October 2020, the husband filed a Response, which also sought equal time with the children.
The wife alleges the husband has failed to provide full disclosure of his bank statements and financial affairs and she has had to issue subpoenas to banking institutions to obtain information. On occasions the husband has unsuccessfully objected to the release of his financial information produced to the Court pursuant to various subpoenas.
The genesis for the current application is the wife’s assertions that the husband has transferred matrimonial funds to Country B, which have been applied to purchase an apartment in City M registered in the name of the second respondent. The wife discovered the asserted application of the funds from documents produced pursuant to a subpoena.
In mid-2016, settlement of the sale of the parties’ former matrimonial home occurred. The wife asserts the proceeds of sale were controlled by the husband. In her affidavit, the wife deposes to the husband transferring large sums of money between various accounts, including withdrawing $300,000 from a Westpac account three days after the wife advised him she wanted to separate.
Both parties agree that between 7 and 17 August 2017, the husband transferred $430,599 to Country B in five separate transactions. According to the husband’s chronology in his Outline of Case document, and his affidavit filed 21 January 2022, he transferred $300,000 of the funds to his grandmother to repay a historic debt owing to his deceased grandfather, made a payment to his mother of funds which he had held for many years for safekeeping and other funds used for living costs and legal fees.
In mid-2017, the second respondent purchased an apartment in City M for EUR 265,500. The wife asserts the funds transferred to Country B were applied to the purchase of the City M apartment.
The wife discovered the purchase of the apartment from narratives on the husband’s bank statements, which referred to the address of the property. The bank statements were obtained via subpoena. The wife subsequently conducted a title search, which is Annexure MK-3 to her affidavit of 23 December 2023 which confirms the property was purchased by the second respondent in mid-2017.
On 10 November 2022, the wife applied to the Country B courts seeking an ex parte freezing order, which was granted on 25 November 2022. A copy of the order is Annexure MK-5 to the wife’s affidavit of 23 December 2023.
The Country B freezing order is registered against the apartment, as to a 50 per cent entitlement and the second respondent’s bank account. The freezing order provides for further application to be made within 90 days of the order, which would enable the wife to assert an interest in the apartment greater than 50 per cent.
In order to make the further application in the Country B courts, the wife filed an application and supporting affidavit on 23 December 2022, which was listed for determination before me on 14 February 2023.
WAS THE SECOND RESPONDENT ACCORDED PROCEDURAL FAIRNESS?
Neither the husband nor the second respondent filed any material responding to the wife’s application. Counsel for the husband advised the Court that as the wife did not seek any relief against the husband, he would not be making any submissions opposing the wife’s application, other than raising whether the second respondent had been accorded procedural fairness.
On 23 December 2022, the wife sought to file an Application in a Proceeding and an affidavit in support via the Commonwealth Courts Portal. The affidavit was sealed on 23 December 2022 and the Application in a Proceeding was sealed on 31 January 2023. The delay for sealing the Application in a Proceeding was caused by the court closure over the Christmas break. Eventually the application was referred to my chambers and orders were made in chambers on 31 January 2023 providing for the Application in a Proceeding and a Case Management Hearing to be listed on 14 February 2023 at 9.30 am.
On 13 February 2023, the wife’s lawyer filed an affidavit deposing to service of the Application in a Proceeding, affidavit of the wife dated 23 December 2022 and orders of 31 January 2023. The husband’s solicitors were served by email on 1 February 2023 at 1.26 pm and the second respondent was served by email on 1 February 2023 at 3.09 pm. A further affidavit, of the Country B lawyer, Mr N was served via email on the husband’s solicitors and the second respondent on 11 February 2023.
On 10 February 2023, the wife filed an affidavit of a process server in Country G who deposed to personally serving the second respondent on 6 February 2023 at her address in Country G. The documents served were a copy of the Application in a Proceeding, the affidavit of the wife in support filed 23 December 2022, a letter from the wife’s solicitors dated 1 February 2023 in English and in the language of Country G, together with a copy of orders dated 31 January 2023. The letter, which is annexed to the affidavit of the process server states, as follows:
We refer to the above matter and note that we act for [the wife].
Please find enclosed by way of service the following documents:
1. Application in Proceeding returnable 14 February 2023;
2. Affidavit of [the wife] with its exhibits; and
3. Orders of the Court dated 31 January 2023.
We strongly recommend that you seek legal advice and engage a solicitor as a matter of urgency, as the consequences against you can be serious.
As at the date of the hearing, the second respondent remained in breach of orders made on 18 March 2022, which required her to personally attend court on 17 June 2022, orders of 7 July 2022 which required her to provide an address of the apartment in City M and to produce bank statements and documents referable to the purchase of the City M apartment. The second respondent has failed to file a Notice of Address for Service and as noted in notation C of the orders made 19 August 2022, is aware of the proceedings and is choosing not to engage in the proceedings.
I am not sure why the husband’s counsel sought to make submissions about the issue procedural fairness vis-à-vis the second respondent when he does not act for her, she has obviously been served with the current Application in a Proceeding and supporting affidavit, and to date has chosen not to participate in the proceedings.
In any event, the letter from the wife’s solicitors which was served personally on the second respondent in Country G on 6 February 2023 makes it abundantly clear she should obtain legal advice and that the application is listed before the Court on 14 February 2023. An examination of the Application in a Proceeding demonstrates that the document also records the hearing date of the application as Tuesday, 14 February 2023 at 9.30 am. In anticipation of the hearing, a Microsoft Teams link was provided to the second respondent at her email address used for electronic service of documents.
I am comfortably satisfied that the wife has taken all reasonable steps to serve the second respondent with the Application in a Proceeding and to bring to her attention the court date of 14 February 2023 at 9.30 am. In the context of her failure to comply with previous court orders and to participate in the proceedings, it is difficult to contemplate what else could have been done to accord procedural fairness to the second respondent and to make sure she was aware of the impending court date. It is appropriate for the application of the wife to proceed in her absence.
DOCUMENTS RELIED UPON
The wife relied upon the following documents:
(i)Application in a Proceeding sealed on 31 January 2023;
(ii)Affidavit in support filed on 23 December 2022;
(iii)Affidavits of Service filed on 13 February 2023;
(iv)Outline of Case document filed 13 February 2023.
The husband did not file any documents other than an Outline of Case document filed on 13 February 2023, because no interim relief was sought against him and he did not participate in the application, other than to raise the issue of procedural fairness which is addressed earlier in these reasons.
The second respondent did not file any documents and did not participate in the application.
RELEVANT LEGAL PRINCIPLES
Section 114(1) of the Family Law Act 1975 (Cth) (“the Act”) provides that the Court “may make such order or grant such injunction as it considers proper with respect to the matter to which the proceedings relate”.
In exercising its power, the Court must be satisfied the party seeking the injunction has a reasonable claim for altering property interests and the success of that claim may be prejudiced if the injunction is not granted.
The Full Court of the Family Court in Tsiang & Wu and Ors (2019) FLC 93-911 at [20]–[27] stated the principles governing the exercise of injunctive relief to grant freezing orders:
20.The grant of an injunction is discretionary and the basis on which such an order is made is well established. A purpose, as in this case, is to preserve the status quo pending resolution of the controversy. An applicant must demonstrate first that there is a serious issue to be tried. While that statement has been the subject of various iterations, in essence it requires the demonstration of an arguable case or as was said in Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at [65], the applicant must “show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo”.
21.Next the applicant must demonstrate that the balance of convenience favours making the order sought. As part of this, the applicant must show that there is a “danger” or risk of dissipation of or dealings with assets which will frustrate any judgment in favour of the applicant.
22.In Patterson v BTR Engineering (Aust) Ltd (1989) 18 NSWLR 319, Gleeson CJ said after discussing the discretionary nature of the remedy at 321–325:
… as a general rule a plaintiff will need to establish, first, a prima facie cause of action against the defendant, and secondly, a danger that, by reason of the defendant’s absconding, or of assets being removed out of the jurisdiction or disposed of within the jurisdiction or otherwise dealt with in some fashion, the plaintiff, if he succeeds, will not be able to have his judgment satisfied.
...
It is not difficult to imagine situations in which justice and equity would require the granting of an injunction to prevent dissipation of assets pending the hearing of an action even though the risk of such dissipation may be assessed as being somewhat less probable than not.
23.As McDougall J in Skyworks v 32 Drummoyne Road [2017] NSWSC 343 said:
24.The Court is required to undertake a qualitative evaluation of all the evidence that is available, to see if there is a sufficiently serious risk of frustration to justify the making of a freezing order. Further, the two considerations [namely, (1) whether there is a good arguable case and (2) whether there is a real risk of judgment frustration] should be analysed together (as each may impact on the other), and with an appreciation of both the underlying purpose of the rule and the relative risks of granting or withholding relief – the customary discretionary calculus.
24.In this case the identified risk was that the wife might dispose of assets in Australia and in her name in order to defeat the husband’s claim and, equally it was asserted that there was a risk that the second and third respondents too might deal with the partnership assets in a way so as to defeat the husband’s possible judgment or claim to that entity.
25.It is unnecessary to demonstrate a positive intention but merely the possibility of the event occurring. The determination about the balance of convenience may thus be an inference drawn from the facts and circumstances established by the applicant’s evidence.
26.Nor is it the role of the judge determining the question of the injunction to, in effect conduct a trial of the disputed evidence to resolve those disputes (see Shercliff v Engadine Acceptance Corporation Pty Ltd [1978] 1 NSWLR 729).
27.As to the determination of the existence of the risk and its magnitude, in Palmer v Parbery [2019] QCA 27 McMurdo JA (with whom Fraser and Gotterson JJA agreed) said:
119.The determination of whether there exists a sufficiently serious risk of the dissipation of assets involves the evaluation of future possibilities, rather than the ascertainment of historical facts. The risk of dissipation might justify an order although the probability of the risk eventuating is less than 50 per cent. But, as the risk of dissipation must be a real and not merely a theoretical one, it must have an evidentiary basis. Where a fact is alleged by the plaintiff in support of its case about the risk, but there is contrary evidence from the defendant, must the fact be proved to the court’s satisfaction as if the application for the freezing order was the trial of the case? In my view, a plaintiff need not do so. A freezing order is interlocutory in nature; it does not involve a final determination of the parties’ positions. Usually it is made in circumstances of urgency in which the court is unable to conduct an extensive and conclusive factual inquiry in a way which is fair to both parties. Where the factual basis for the plaintiff’s case about the risk of dissipation is disputed, the risk will commonly have to be evaluated with the recognition that the factual basis for it is in doubt. Nevertheless, the possibility of the plaintiff’s evidence being correct, considered with other facts and circumstances, might mean that there is a sufficiently serious risk of the frustration of the satisfaction of a judgment as to justify the making of a freezing order. …
IS THERE A SERIOUS ISSUE TO BE TRIED?
The wife in this case has issued proceedings for an adjustment of property pursuant to s 79 of the Act.
On 10 December 2021, when the substantive matter was before Division 2 of this Court, her Honour Judge Harland, made injunctive orders requiring the husband to do all acts and things and sign all necessary documents to cause the sum of $149,950 to be paid into the trust account of the wife’s solicitors within seven days of the orders. The orders were made pursuant to the wife’s application seeking the husband return marital funds, which he had repatriated overseas during a series of transactions in April and May 2021 including a transfer of $33,200 into his partner’s account. The wife discovered the transactions from the husband’s ANZ account through the issue of a subpoena to the bank. Ironically, the husband objected to the release of the subpoenaed documents, despite his failure to comply with his discovery and disclosure obligations.
Her Honour delivered reasons on 10 December 2021, Kachmar & Madero [2021] FedCFamC2F 616. At [30] of those reasons, her Honour referred to the wife’s concerns that if the order sought was not made, her property claim may be defeated because her entitlements could exceed the marital funds available in Australia and that there would be a real risk that her claim could not be satisfied, because of her inability to recover overseas assets. Her Honour was satisfied that there was a serious issue to be tried in the case, being what property adjustment would be just and equitable between the parties and that there was a real risk of matrimonial assets being dissipated based on what the husband was silent about and what he had sworn to.
Those statements equally apply to the issue before the Court today vis-à-vis the husband’s mother and I am satisfied there is a serious issue to be tried.
BALANCE OF CONVENIENCE
The wife’s position on the balance of convenience is that the husband has deliberately transferred joint matrimonial funds to his mother, to enable her to ostensibly purchase an apartment in City M. She points to a trail of transactions, which inevitably lead to that conclusion. She contends the City M apartment should be included in the asset pool for division between the husband and herself, including any increase in value of the apartment and rent derived from it and she intends to seek orders to that effect at trial.
She also contends the sum of EUR 80,000 transferred by the husband to his mother, should likewise be included in the asset pool, because it was matrimonial funds. The husband’s response to the wife’s contentions raises many questions.
The husband’s mother has failed to participate in the proceedings and has not provided any explanation about the purchase of the City M property or about any inconvenience which might arise from the injunctions. I do note that the affidavit of service filed on 10 February 2023 refers to personal service of her at an address in Country G and not at the address of the City M apartment.
She remains in breach of orders made on 18 March 2022 requiring her to personally attend court and orders made on 7 July 2022 to provide bank statements and documents referable to the purchase of the City M apartment.
I am satisfied there is a risk of dissipation of assets by the second respondent, in the absence of the injunction sought, and the possibility that satisfaction of the wife’s claim may be defeated.
COSTS
At the hearing, the wife’s counsel asked for costs of the Application in a Proceeding to be fixed in the sum of $5,939. I consider those costs to be a reasonable sum and will make an order reserving costs for determination at trial.
CONCLUSION
I am comfortably satisfied that there is a serious issue to be tried between all parties to the litigation, that is the wife’s entitlement to a just and equitable property settlement and her capacity to satisfy her entitlements from assets which may have been transferred overseas or acquired overseas from marital funds. The balance of convenience must favour the making of injunctions to preserve assets, including the City M apartment, and funds in the relevant bank account.
The only prudent course is to impose injunctions to prevent the husband’s mother dealing with the apartment and the relevant bank account.
I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Williams. Associate:
Dated: 7 March 2023
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