LYNAM & LYNAM (DECEASED)

[2019] FamCA 330

FAMILY COURT OF AUSTRALIA

LYNAM & LYNAM (DECEASED) [2019] FamCA 330

FAMILY LAW – PROPERTY – Interim proceedings – Deceased estate – Where the deceased estate is now represented by a Legal Personal Representative – Injunctions sought by the wife that would restrain the Legal Personal Representative in their capacity as the Administrator of the estate and their personal capacity – Where there is a potential death benefit payment – Orders

Family Law Act 1975 (Cth) s 114(3)

Blueseas Investments Pty Ltd v Mitchell and McGillivray (1999) FLC 92-856
Martiniello & Martiniello (1981) FLC 91-050
Rieck & Rieck (1981) FLC 91-067
Stowe & Stowe (1981) FLC 91-027
Yunghanns & Ors v Yunghanns & Ors; Yunghanns (1999) FLC 92-836

APPLICANT: Ms Lynam

RESPONDENT: Mr Lynam (Deceased)

FILE NUMBER: ADC 2904 of 2017

DATE DELIVERED: 23 May 2019

PLACE DELIVERED: Adelaide

PLACE HEARD: Adelaide

JUDGMENT OF: Berman J

HEARING DATE: 17 May 2019

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Dickson

SOLICITOR FOR THE APPLICANT: Clelands Lawyers Adelaide Pty Ltd

COUNSEL FOR THE RESPONDENT: Ms Cocks

SOLICITOR FOR THE RESPONDENT: Adelta Legal

order until further order

1. That Ms F both personally and in her capacity as the Administrator of the Estate of deceased husband and the wife both personally and in her capacity as Legal Guardian of the two children of the marriage are restrained and injunctions are granted restraining each of them from distributing, transferring, or assigning or otherwise dealing with any monies that may be payable by G Company pursuant to the death benefit component of the deceased husband’s G personal super.

2. That Ms F be restrained and an injunction is granted restraining her from distributing, transferring, assigning, encumbering, mortgaging, dealing with or disposing of the assets of the Estate of the Mr Lynam (deceased) SAVE AND EXCEPT:-

   (a)That Ms F be permitted to deposit the following cheques into the Estate:-

   (i)P Company Westpac cheque number … in the sum of $499.51;

   (ii)E Company National Australia Bank cheque number … in the sum of $179.07;

   (iii)Q Energy Commonwealth Bank cheque number … in the sum of $229.60;

   (iv)Q Energy Commonwealth Bank cheque number … in the sum of $36.86;

   (v)Any other money whether by way of cheque, cash or electronic funds transfer due and owing to the Estate.

   (b)That Ms F be permitted to pay the following accounts of the Estate:-

   (i)O Business in the sum of $174;

   (ii)Australian Government Department of Human Services (Child Support) $979.28;

   (iii)H Department Store $156.92;

   (iv)Fees payable to Ms J in the sum of $11,797.50;

   (v)Such other expenses of the Estate up to a total sum of $10,000.

3. Further consideration of paragraph 7 of the Amended Application is listed for hearing at 9.00 am on 8 July 2019 with liberty to vacate.

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 Lynam & Lynam 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 ADELAIDE

FILE NUMBER: ADC 2904 of 2017

Ms Lynam

Applicant

And

Mr Lynam (Deceased)

Respondent

REASONS FOR JUDGMENT

Introduction

1. By Initiating Application filed 17 July 2017 Ms Lynam (“the wife”) seeks final orders for property settlement in the following terms:-

   (1)That she retain the net proceeds of sale of the former matrimonial home at K Street, Suburb L.

   (2)That she retain the monies standing to the credit of the parties in the Education Fund.

   (3)That the balance of the net assets of the husband and the wife including financial resources and superannuation be divided as to 75 percent to the wife and 25 percent to the husband.

2. By his Response filed 9 February 2018 Mr Lynam (deceased) (“the husband”) opposes the wife’s orders and instead leaves the division of property to be determined by the Court.

3. The parties married in 1999 and separated on 25 March 2016. There are two children of the marriage X born in 2004 and Y born in 2006 (“the children”).

4. The wife is employed as a public servant and the husband was a company director.

5. The husband died in 2018.

6. The husband commenced a relationship with Ms F in late 2013 and commenced a de facto relationship with her in early 2016 until his death.

7. The wife was not able to serve the application on the husband and on 21 August 2017 an order was made for substituted service on the husband’s mother Ms C Lynam and his sister Ms B Lynam.

8. On 20 September 2017 an order was made for substituted service by delivering the documents to the husband’s solicitors and by posting the documents to the husband, his mother and his sister.

9. The wife claims that prior to the husband’s death and as a result of his superannuation and other entitlements and consequent upon his diagnosis of a medical condition, he received the following payments:-

   (1)In August 2017 from R Superannuation Scheme the sum of $194,918.22.

   (2)On 24 July 2017 from S Super the sum of $264,990.87; and

   (3)On 3 August 2017 from G Business Super the sum of $435,368.

10. Whilst the wife understood that certain monies had been accessed by the husband, it was not until April 2018 that she was advised that the total sum of $895,277.41 had been received by the husband and deposited into various bank accounts. Pursuant to an Enduring Power of Attorney in favour of Ms F dated 20 June 2017, the various sums then passed through her personal accounts to Ms B Lynam, Ms D Lynam, and a friend and associate of Ms F, Mr M.

11. An order was made on 19 April 2018 requiring the husband to file an affidavit setting out how funds received by him have been dispersed to third parties.

12. The husband died in 2018. No affidavit was filed in response to that order.

13. The wife continues her employment as a public servant. She retains the physical and financial care of the children in circumstances where there is no longer any payments of Child Support.

14. The wife filed an Amended Application in a Case on 1 August 2018 seeking orders by way of interim settlement of property. The application was opposed by Ms F on the basis that until a legal personal representative had been appointed to represent the husband’s estate, the Court did not have the power to make orders as sought by the wife.

15. Ms F sought to be heard as a friend of the Court and relied upon the decision of Nygh J in Strelys & Strelys; Lukaitis (Executor) (1988) FLC 91-961 where his Honour said at 76,965:-

    In my view, until and unless such a person is appointed, the proceedings are, as it were, suspended and no legally effective step can be taken either to continue or to discontinue them.

16. It was argued that the orders sought by the wife clearly went beyond any reasonable application of the rules and in any event until the appointment of an appropriate representative, the Court does not even have power to make any procedural orders.

17. On 8 August 2018 Judge Kelly ordered that by way of partial property settlement the sum of $45,000 held in the trust account of N Company be paid to the wife.

18. Her Honour’s order is the subject of an appeal and is awaiting judgment.

19. By Application in a Case filed 30 November 2018, the wife sought that Ms F be restrained from dealing with the assets of the estate, that the remaining monies be placed into the wife’s solicitors’ trust account and that Ms F provide an affidavit deposing to her knowledge of how monies received by her from the husband have been dispersed.

20. The application was opposed, however, on 14 March 2019 Ms F obtained a grant of letters of administration in relation to the husband’s estate. She sought an order that she be substituted for the husband as a party to the proceedings in her capacity as his legal personal representative.

21. The interim proceedings were listed for hearing on 10 May 2019. However, on 6 May 2019 the wife received a letter from the solicitors for Ms F dated 6 May 2019 (“Exhibit “…”) alerting them that Ms F had received advice from G Company that there is a death benefit entitlement of $407,000 associated with the husband’s G Super Policy.

22. The letter confirmed that the sum was additional to benefits that had already been paid to the husband.

23. The letter advises the following action:-

    On that basis we attach for your client’s consideration the G Company death benefits claim form, including the G Company guide to making a claim. If your client wishes to make a claim in relation to the death benefits for herself and/or the children, please arrange for your client to complete and return the form to G Company.

    For your information we advise that our client has instructed us to make a claim in relation to the death benefit in her capacity as Administrator of the estate. In that form our client has nominated herself, your client and the 2 children as potential beneficiaries.

24. The letter further advises that Ms F “intends to make her own claim in relation to the death benefit in her personal capacity”.

25. On 10 May 2019 orders were made that Ms F be substituted as the legal representative for the husband and the proceedings were adjourned to 17 May 2019 subject to the following orders:-

    2    Noting that Ms F is present in the court room, the Undertaking given by her on 4 December 2018 be extended during the period of the adjournment to 2.15pm on 17 May 2019.

    3    That Ms F both personally and in her capacity as the administrator of the estate of the deceased husband, the wife both personally and in her capacity as legal guardian of the two children of the marriage are restrained and an injunction is granted restraining each of them from distributing, transferring, assigning or otherwise dealing with any monies that may be payable by G Company pursuant to the death benefit component of the deceased husband’s G Personal Super, with such order to apply only during the period of the adjournment.

26. On the adjourned date the wife sought to rely upon an Amended Application in a Case which sought that Ms F be restrained from distributing, transferring, assigning, encumbering, mortgaging, dealing with or disposing of the assets of the estate save and except as to a number of specified deposits and disbursements.

27. Paragraph 6 seeks a continuation until further order of the order of restraint in respect of the parties dealing with any proceeds payable by G Company pursuant to the death benefit component of the G Personal Super and the wife sought to obtain an authority to obtain information direct from G Company in respect of the said death benefit payment.

28. The amended application was supported by an affidavit of the wife. Counsel for Ms F opposed the application being heard on the basis that her client had not had any opportunity to consider the amended paragraphs and in particular the supporting affidavit of the wife.

29. I considered that there was no good reason why the amended application should not be the subject of argument save as to [7] being the wife’s request for an authority from Ms F to be given to G Company.

30. Ms F has provided a copy of the assets and liabilities of the husband’s estate filed in action number …

31. The wife accepts that certain specified deposits and disbursements could be made and do not prejudice the estate.

32. Ms F in her capacity as the administrator is not taken by surprise by [6] of the orders sought namely that both she personally and in her capacity as the administrator of the estate and the wife both personally and in her capacity as the legal guardian of the children of the marriage be restrained by injunction from dealing with any monies that may be payable by G Company pursuant to the death benefit component.

33. There was however some force in the argument that Ms F needs to have an opportunity to consider her position in respect of the authority to G Company as sought by the wife.

34. The gravamen of the wife’s concern is better understood by reference to Exhibit “…” which is a summary of money that had been transferred into Ms F’ account and then disbursed. The short summary is that the husband deposited $836,000 and disbursed via the accounts of Ms F the sum of $659,944. Of the remaining money, namely $176,056, there were anticipated expenses totalling $176,589. The net effect according to the schedule was a negative balance of $533.34.

35. Between 15 and 21 August 2017 the following transfers occurred:-

    ·Mr M  $140,000

    ·Ms D Lynam             $519,944

36. Ms F annexed an up to date statements of assets and liabilities to her Affidavit filed 26 March 2019. The wife has considered the schedule and has calculated that the current balance remaining in the estate is $8,382.86.

37. By reference to the husband’s Will, Ms F is the sole beneficiary other than in circumstances where if she should not survive him, then the children should take in equal shares.

38. Circumstances are such that neither the wife nor the children are likely to benefit from the husband’s estate and at this stage there would be little utility in an application being made for inheritance provision on behalf of the children or the wife.

39. The wife is considering amending the initiating proceedings to join Mr M and Ms D Lynam pursuant to s 106B of the Family Law Act 1975 (Cth) (“the Act”). Those proceedings have not yet been issued and I consider it unnecessary to make orders joining those persons.

40. The short summary may well be that if the G Company death benefit payment of $407,000 is paid into the estate, that may be the only remaining asset available for consideration pursuant to the s 79(8) proceedings.

41. The wife seeks to restrain the G Company payment once it is received from being distributed and/or dealt with by Ms F.

42. For her part, Ms F considers that she had given up her employment to care for the husband and does not agree with the wife’s assessment that she has in any way been complicit in removing or distributing money from the estate with the resultant effect of negating the wife’s claim for property settlement.

43. Exhibit “…” is the G Company Guide to Claiming a Super Death Benefit.

44. It provides that each potential beneficiary needs to complete a form to make a claim. For beneficiaries under 18, a legal guardian will need to complete the form on their behalf.

45. A claim can be made by an executor or administrator of an estate, noting that:-

    The death benefit is only part of the member’s Estate if the Trustee decides to make a payment in favour of the Estate, or if a binding death benefit nomination directs the Trustee to pay the Legal Personal Representative.

46. It is conceded that there is not a binding death benefit nomination.

47. The range of potential beneficiaries are as follows:-

    ·the member’s spouse, including a de facto spouse or same sex partner

    ·the member’s child (including an adopted child, stepchild, ex-nuptial child, or their spouse’s child)

    ·any person with whom the member, at the time of their death, had an interdependency relationship

    ·anyone financially dependent on the member at the time of their death, or

    ·the Legal Personal Representative of the member.

48. The document sets out the pathway and it is important to note that when the Trustee makes a decision, the potential beneficiary will be notified and be given a chance to object to any decision within 28 days.

49. If an objection is received, then the information will be reassessed and further information will be sought.

50. If the objector is still dissatisfied, then an application can be made to the Superannuation Complaints Tribunal and the Trustee will refrain from making any payment until those proceedings are determined.

51. It is assumed that all parties either have or will complete a claim form.

52. It is unlikely that there will be any precipitous action by G Company. Even if a decision is made in favour of one or more beneficiaries, 28 days’ notice is to be given and there is ample opportunity for any objections to be heard and determined before G Company makes a payment.

53. Nonetheless, Ms F was not prepared to consent to the injunction as sought or to a continuation of the interim undertaking given by her.

Interim injunctions

1. In Stowe & Stowe (1981) FLC 91-027 at page 76,273 Nygh J considered the fundamental requirements before a court should consider before making an injunction restraining a party from dealing with property.

2. The Court has power under s 114(1) to grant an injunction in property proceedings. The Court must consider both the merits of the claim and the extent of any prejudice to the claim should an injunction not be granted.

3. In Martiniello & Martiniello (1981) FLC 91-050 the Court considered at 76,420 that:-

   ·The order must be necessary to ensure that the property claim is not frustrated;

   ·There must be a real risk that a parties possible entitlements will not be met if the injunction is not granted;

   ·There must be no undue prejudice to third parties.

4. In Rieck & Rieck (1981) FLC 91-067 Nygh J considered the statement of the Full Court in Stowe (supra) and at 76,512 summarised the position as follows:-

   However, as the Full Court pointed out in Stowe it is not sufficient to establish that the applicant has prima facie a relevant interest in the subject property – “Some other factor must be established, for example, that unless an injunction is granted, the other asset may be disposed of or dealt with in such a manner that there is a risk that any order made under sec. 79 will not be met”. In other words, there must be an interest to which the applicant has a prima facie claim and which if the order was not made would be disposed of irretrievably. If that interest has already been disposed of, it would clearly be too late.

5. The Court should also consider the balance of hardship and the balance of convenience between the parties and the consequences that might flow to third parties if an order of injunction is made.

6. The status of the G Company death benefits claim is uncertain. Whilst I assume that the wife may well lodge a claim either in her own right or in her capacity as the legal guardian of the children of the marriage, Ms F has made a claim both personally and in her capacity as administrator of the estate.

7. Ms F has not sought to explore the significant payments that were made by the husband to Mr M and Ms Lynam.

8. In those circumstances it is reasonable to assume that but for the prospect of some or all of the G Company death benefit claim being paid into the estate, there is little or nothing that remains for division pursuant to the wife’s claim for settlement of property.

9. I am satisfied that the wife at the very least has shown that there is a serious question to be determined. (see Blueseas Investments Pty Ltd v Mitchell and McGillivray (1999) FLC 92-856).

10. Ms F has also made a claim in her personal capacity.

11. On the present evidence available, her claim both in her personal capacity and in her capacity as administrator of the estate may well raise issues of conflict of interest.

12. The detail of Ms F’ claim have not been discovered.

13. The wife seeks that Ms F be restrained from dealing with or dissipating any money that she might receive from G Company in her personal capacity.

14. I consider that s 114(3) enables me to grant an injunction against Ms F notwithstanding that in her personal capacity she would be considered as a third party.

15. The relief sought by the wife is permissible because it does not go towards determining any claim that the wife may have against Ms F but rather, it preserves property the subject of an arguable claim. (see Yunghanns & Ors v Yunghanns & Ors; Yunghanns (1999) FLC 92-836).

1. The Court always has jurisdiction to entertain proceedings for the purpose of and up to the point of deciding whether it has jurisdiction to make orders in the proceedings.

2. Whilst the orders sought by the wife will have the effect of restraining Ms F both personally and in her capacity as administrator, some provision must be made to enable her to properly discharge her obligation to administer the estate. There are likely to be arms-length creditors who should not be unnecessarily prejudiced or affected by orders of injunction.

3. In those circumstances I propose to exercise my discretion and order that in addition to the payment of the accounts as specified in [5] of the wife’s Amended Application, I propose to allow Ms F discretionary spending on behalf of the estate up to a total sum of $10,000.

4. I make orders as appear at the commencement of these reasons.

I certify that the preceding seventy-two (72) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 23 May 2019

Associate:

Date: 23 May 2019