King and King and Anor (No 2)

[2012] FamCA 298

FAMILY COURT OF AUSTRALIA

KING & KING AND ANOR (NO 2) [2012] FamCA 298

FAMILY LAW - ENFORCEMENT OF ORDERS - Enforcement of spousal maintenance by garnishment order - Application by third party for summary dismissal and/or security of costs

Family Law Act 1975 (Cth)

Linden v Commonwealth (No. 2) (1996) 70 ALJR 541

APPLICANT: Ms King

RESPONDENT: Mr M King

2^ND RESPONDENT: Mr B King

FILE NUMBER: MLC 9554 Of 2011

DATE DELIVERED: 24 January 2012

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 24 January 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr G Berkovitch

SOLICITOR FOR THE APPLICANT: Kliger Partners

THE RESPONDENT: In person

SOLICITOR FOR THE 

2^ND RESPONDENT:

Mr P Vlahos

Orders

1. That the husband forthwith pay to the wife arrears of spousal maintenance pursuant to paragraph 4 of the orders of 29 November 2011 fixed in the sum of $3325 due as at 20 January 2012.

2. If the payment referred to in paragraph 1 is not paid by 4.00pm this day, without further resort to the Court, S Pty Ltd as agent for the husband is directed to pay all future payments of rent received by them on behalf of the husband after deduction of their fees, to the wife in part satisfaction of the husband’s obligations under the orders of this day and 29 November 2011.

3. All outstanding financial proceedings are adjourned to 27 March 2012 at 10.00am in the Judicial Duty List (noting the question of the 2^nd respondent’s application for his removal from the proceedings and/or security for costs are the main unresolved issues).

IT IS CERTIFIED:

1. That pursuant to Order 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend.

2. That there be liberty to all parties to apply.

   Reserve the question of costs of all parties this day.

IT IS NOTED that publication of this judgment by this Court under the pseudonym King & King and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Act.

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 9554 of 2011

Ms King

Applicant

And

Mr M King and Mr B King

Respondent

REASONS FOR JUDGMENT

1. This application before me in the judicial duty list effectively revolves around two issues.  The first is the enforcement of orders that I made in a contested hearing on 29 November 2011.  On that day, I ordered the husband to pay $475 per week by way of spousal maintenance for the support of his wife.  I do not intend to go behind the order.  It is my understanding that there has not been an appeal.  There has been no application to vary the order because of a change of circumstance.  On that basis, I must start from the presumption that the order stands.

2. I am told today that there has not been compliance with the order.  Mr King has indicated to me from the bar table that he found a couple of thousand dollars and he paid those towards some school fees.  As I pointed out at the time, there is not much point in sending children to school if they do not have food to eat and a house in which to live.  This is about priorities, and that was what I ordered on the previous occasion.  I ordered it because the money was available.

3. On the evidence before me in November, there was a property owned by the husband which he rented out through a commercial agent.  The money is being paid by the tenants of the property at Suburb H to the agent.  That money, in turn, is directed, either directly or indirectly, to the mortgagee and, as it seems common ground, there is still a shortfall.  The bank has held off from taking any action.  I am not being so presumptuous as to tie the hands of the bank.  If the bank wishes to take action, so be it.

4. The dilemma at the moment is that the wife is in impecunious circumstances.  She has been to the residential tenancies section of VCAT and the Sword of Damocles is going to drop tonight in relation to her own rent.  Although the husband says that he would be prepared to talk to the agent, that is not going to solve the problem.

5. There is outstanding money due to the wife under the spousal maintenance order.  No payments have been made and it is appropriate on an enforcement application that that sum be capitalised and be paid. 

6. Making an order for the payment of money again is senseless.  The law presumes that people will comply with court orders.  If they do not, then on an enforcement application, provisions for default must be applied. 

7. The rules provide for a garnishment order to be made.  Neither the agent nor the tenants have been made aware of it, but I do not see that that is a problem, having regard to the urgency of the position. 

8. Accordingly, I will order that the money being paid by the tenants to the agent for and on behalf of the husband be paid direct by the agent to the wife until further order. 

9. The first of those payments, if they are being paid according to the contract between the husband and the tenants, would be on the 8^th of the month and, as such, the first payment can be made on 8 February.

10. The second issue before me today relates to the third parties.  The third party for whom Mr Vlahos appears is the wife’s brother-in-law.  In these proceedings the brother-in-law was joined because the wife asserted that properties in 2002 and 2006 were acquired by the husband and the wife but in the brother’s name.  No explanation seems to have been given in the affidavit as to why that was the case but I am treating that as a claim that the brother holds those properties on trust for the husband and/or the husband and wife.  It seems common ground that the husband denies that, as does the brother.

11. The brother consented to an order on 29 November 2011 that, until further order, he be restrained from disposing of those properties.  Subsequent to those orders being made and now before me today, is the second application which is by the third party to be discharged from the proceedings and/or that the wife be ordered to make payment of $30,000 by way of security for costs. 

12. Dealing with the first of those two issues, the wife’s position is that she has asserted ownership.  The husband and the third party deny it.  The application by the brother today is an application for summary dismissal.  As Kirby J said in Linden v Commonwealth (No. 2) (1996) 70 ALJR 541, the Court should be very cautious about precluding parties from litigating, but this may be one of those cases where the wife has no evidence to support the assertion she has made. That may become more evident than it is today when discovery is done. Bearing in mind what Kirby J said in Linden (supra) about even a weak case being entitled to be heard by the courts, I would not be prepared at this stage to discharge the claim against the brother, the second respondent, but that may be a situation that could be reviewed when discovery is completed. 

13. The second limb of the brother’s claim is in the alternative, and that is that if I allow the claim to continue, then the wife should make a payment of $30,000 by way of security for costs. 

14. The starting point in any security for costs application is the jurisdictional foundation for the Court doing anything. Section 117 of the Family Law Act 1975 (Cth) (“the Act”) provides that in proceedings in this Court each party shall bear their own costs, unless there are circumstances that justify the Court departing from that principle and that, in contemplating that concept, the Court must take into account matters that are set out in s 117(2A).

15. Two of the matters in s 117(2A) include the financial circumstances of all of the parties, and the other is compliance with court orders including matters relating to discovery.

16. At my suggestion, the brother’s counsel suggested that we simply put the application for security for costs off, not to mention also the application for discharge, until after the discovery process is undertaken.  Thus, if the wife does not make adequate discovery or obfuscates, then it may very well be that the brother has a very strong argument for either a review of the position I am now adopting for his discharge from the proceedings on the basis there is no prospect of success, bearing in mind the summary dismissal law requires the applicant for summary dismissal to show that the case is doomed to fail.  That may be very obvious once the discovery process is completed. 

17. Even if there is a scintilla of evidence that might justify the case proceeding, if it is just that, a scintilla, it may very well be that the cost issue becomes far more relevant because, whilst it is anticipated that the brother at this stage will spend something in the vicinity of $30,000 to defend his position, with respect, that seems to me to be a little on the low side, but the bulk of the costs will be run up at a trial.

18. The situation should be considered once the discovery process is completed.  If the wife persists in running a case without evidence, the costs can be reconsidered at that point in time to avoid the parties running up further costs unnecessarily.

19. I am, therefore, not prepared to dismiss the application for discharge, nor the application for security of costs at this stage on the basis that I am not entirely clear whether there is some foundation.  I discussed with the parties chapter 19 of the rules and, in particular, those matters there set out and at this stage, on the evidence, they favour the wife but I am not prepared to rule completely until the discovery process is completed. 

20. Accordingly, I will make orders in those terms.

    RECORDED  :  NOT TRANSCRIBED

ORDERS DELIVERED

I certify that the preceding Twenty (20) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 24 January 2012.

Associate: 

Date:  17 April 2012