Mandel & Duan
[2024] FedCFamC1A 166
•20 September 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Mandel & Duan [2024] FedCFamC1A 166
Appeal from: Duan & Ren (No 2) [2024] FedCFamC1F 310 Appeal number: NAA 136 of 2024 File number: SYC 2533 of 2024 Judgment of: MCCLELLAND DCJ, TREE & ALTOBELLI JJ Date of judgment: 20 September 2024 Catchwords: FAMILY LAW – APPEAL – Leave to appeal – Property – Injunction – Third parties – Where the primary judge extended an injunction granting the respondent wife exclusive occupation over the former matrimonial home on the basis that the wife had an arguable case for relief under both s 79 and s 106B of the Family Law Act 1975 (Cth) (“the Act”) – Where the applicant is a third party who purchased the former matrimonial home from the second respondent husband, unbeknownst to the wife – Whether s 114(1) of the Act is a sufficient head of power to found an injunction against a third party – Where the primary judge clearly had jurisdiction to make an order granting the wife exclusive occupation – Whether the primary judge correctly applied the test for the grant of an interlocutory injunction – Where the wife’s underlying 106B claim is clearly arguable – Adequacy of reasons – Where the urgent reasons of the primary judge are brief, but nonetheless clear – Whether the primary judge failed to consider the matters set out in s 90AF of the Act – Where the injunction was reasonably appropriate and adapted to the eventual effecting of a division of property between the husband and wife – No error identified – Leave to appeal refused – Appeal dismissed.
FAMILY LAW – CROSS-APPEAL – Leave to appeal –Where the cross-appeal was expressly premised upon the appeal succeeding – Where the cross-appeal falls away with the dismissal of the appeal – Leave to cross-appeal refused – Costs ordered in a fixed sum.
Legislation: Family Law Act 1975 (Cth) ss 4, 75, 79, 90ADA, 90AF, 90AK, 94AA, 106B, 114
Federal Circuit and Family Court of Australia Act 2021 (Cth) s 28
Cases cited: AIS v AMF (1999) 199 CLR 160; [1999] HCA 26
Bennett and Bennett (1991) FLC 92-191; [1990] FamCA 148
House v The King (1936) 55 CLR 499; [1936] HCA 40
Hunt v Hunt (2006) 36 Fam LR 64; [2006] FamCA 167
Lopez v Gold Titan Pty Ltd [2022] FCAFC 117
Luck & Norwood (2018) FLC 93-869; [2018] FamCAFC 207
Maviglia v Maviglia [1999] NSWCA 188
Medlow & Medlow (2016) FLC 93-692; [2016] FamCAFC 34
Mei & Yao [2017] FamCA 942
Men & Gong [2017] FamCA 846
Mullane v Mullane (1983) 158 CLR 436; [1983] HCA 4
North East Equity Pty Ltd v Proud Nominees Pty Ltd (2010) 269 ALR 262; [2010] FCAFC 60
Sun Alliance Insurance Ltd v Massoud [1989] VR 8
Number of paragraphs: 69 Date of hearing: 28 August 2024 Place: Heard in Sydney, delivered in Cairns Counsel for the Appellant / Cross Respondent: Mr Sansom SC with Mr Reynolds Solicitor for the Appellant / Cross Respondent: J C Legal Practice Counsel for the First Respondent / Cross Appellant: Mr Ahmad Solicitor for the First Respondent / Cross Appellant: Alton legal Counsel for the Second Respondent: Mr Bennett Solicitor for the Second Respondent: Korn Tlais Defence Lawyers
Table of Corrections 11 October 2024 In paragraph 42 the reference to “the wife” has been corrected to show “the third party” ORDERS
NAA 136 of 2024
SYC 2533 of 2024FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MS MANDEL
Appellant / Cross Respondent
AND: MS DUAN
First Respondent / Cross Appellant
MR REN
Second Respondent
ORDER MADE BY:
MCCLELLAND DCJ, TREE & ALTOBELLI JJ
DATE OF ORDER:
20 SEPTEMBER 2024
THE COURT ORDERS THAT:
1.Leave to bring appeal NAA 136 of 2024 is refused, and the Notice of Appeal filed 5 June 2024 is dismissed.
2.Leave to bring the Amended Notice of Cross-Appeal filed 31 July 2024 is refused, and the Amended Notice of Cross-Appeal is dismissed.
3.The appellant is to pay the first respondent’s costs in the sum of $30,000 within 28 days.
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).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Mandel & Duan has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
Amended pursuant to r 10.14(b) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) on 11 October 2024
MCCLELLAND DCJ, TREE & ALTOBELLI JJ
INTRODUCTION
On 11 April 2024, on application by Ms Duan (“the wife”), a Senior Judicial Registrar of the Federal Circuit and Family Court of Australia (Division 2) made a suite of interim property and spouse maintenance orders between the wife and Mr Ren (“the husband”). Relevant to these reasons was an order (“Order 7”) granting the wife exclusive occupation of C Street, Suburb D (“Suburb D”), and a further order restraining the husband from taking any step to progress the settlement of a sale of Suburb D (“Order 8”) to Ms Mandel (“the third party”).
Thereafter pursuant to the Senior Judicial Registrar’s orders on 26 April 2024, the third party was formally joined as a respondent to the wife’s proceedings, which were transferred to the Federal Circuit and Family Court of Australia (Division 1).
On 10 May 2024 the primary judge discharged Order 8 but continued Order 7. From the continuation of Order 7 the third party seeks leave to appeal, and if granted and her appeal succeeds, the discharge of the order preserving the exclusive occupation order. In the event that the third party’s appeal is allowed, the wife seeks leave to cross-appeal from the discharge of Order 8, and, if granted, and her appeal succeeds, the reinstatement of that order.
For the reasons which follow, leave to bring both the appeal and the cross-appeal is refused.
BACKGROUND
The wife was born in Country B in 1984 and is presently 40 years of age. She works in the entertainment industry, although has not worked for some years. The husband was born in Country B in 1976 and is presently 48 years of age. He is a businessman. The parties married in Country B in 2015 and, according to the wife, the parties separated in Australia on 12 January 2024. One child, now five years old, was born to the relationship in 2019.
During the relationship the husband initially lived in Country B, but thereafter split his time between Australia and Country B. For her part, until late 2023, the wife and child lived in Country B, but thereafter they have both lived in Australia in Suburb D, which until recently was registered in the husband’s sole name.
In January 2024, a provisional Apprehended Domestic Violence Order was taken out by police for the protection of the wife and child. One of the orders forbade the husband from approaching within 100 metres of Suburb D. The wife and the child presently continue to live there.
On 18 January 2023, by solicitor’s letter, the wife sought that the husband provide financial disclosure, and a sum of money. A body of communication ensued, but no financial disclosure or support was forthcoming from the husband. Rather, he was busily moving millions of dollars of funds out of Australia.
In March 2024, unbeknownst to the wife, the husband and the third party entered a contract for sale of Suburb D at a price of $3.3 million. In mid-March 2024, the wife lodged a caveat over Suburb D. In early April 2024 the contract for the sale of Suburb D settled, in the sense that the third party paid the purchase price to the husband, and those monies were released to him. The transfer of title did not proceed, as it was prevented by the wife’s caveat. It seems clear that by about 10 April 2024 all of the net proceeds of the sale of Suburb D had left Australia, having been transferred to Country B, ostensibly to repay a debt owing to the husband’s mother.
By then, the wife had commenced these proceedings on 9 April 2024. Her application for interim relief was made returnable on 11 April 2024, on which occasion orders and notations were made by the Senior Judicial Registrar, including:
Interim Hearing Adjourned
5.[The wife’s] Amended Application in a Proceeding filed
511 April 2024 is adjourned to 26 April 2024 at 9.30am before Senior Judicial Registrar Osmand, by Microsoft Teams.Injunctions
6.[The husband] and his servants or agents be restrained from disposing of or further encumbering any interests or assets standing in his name in Australia, whether such assets be held by him or on his behalf including any assets in which he may have an equitable interest, including but not limited to any money standing to his credit in any bank account or any real property, without providing at least 30 days notice and obtaining the Applicant Wife’s consent save and except in the ordinary course of business and up to $3000 per week for the Husband’s necessary living expenses.
7.Until further order, the Applicant Wife is granted exclusive occupation of the property [at C Street, Suburb D].
8.Until further order, the Respondent Husband is restrained from taking any steps to progress the settlement of the sale of [the Suburb D property], including the registration of the transfer.
9.The Respondent Husband is to pay the Applicant Wife by way of urgent spousal maintenance a sum of $1000 a week with the first payment to be made before 4.00pm 12 April 2024.
THE COURT NOTES THAT:
A.The Court notes that the Applicant Wife has, through her Counsel today, given an undertaking as to damages.
Then, on 26 April 2024 (on which occasion the third party appeared by counsel) the Senior Judicial Registrar made the following orders and notations:
BY CONSENT THE COURT NOTES THAT:
A.It is noted that [the wife] has filed an Amended Initiating Application on 12 April 2024 seeking Orders pursuant to section 79 as against the Husband relating to the property in Australia and equitable relief against [the third party].
B.By way of Response to Initiating Application filed 24 April 2024, [the husband] objects to the jurisdiction of this Court to hear and determine [the wife’s] application and, in alternative, asserts that this Court is the not appropriate forum to hear and determine the parties’ property dispute.
C.The [third party] has not been formally joined to the proceedings but did appear today and, if joined, proposes to oppose the relief sought by [the wife].
D.[The husband] contends that he commenced divorce proceedings in [Country B] [in early] 2024 that included relief for divorce and parenting Orders. The parties are in dispute in relation to whether or not there is at present a property division proceeding before the [Country B] Court. [The wife] disputes [the husband’s] contentions.
E.Orders were made on an urgent basis on 11 April 2024 in circumstances where [the husband] raised the issues as to jurisdiction and forum. [The third party] was not on notice of the application and did not appear.
F.It is further noted that the consent of [the husband] to these Orders is not taken as a submission by [the husband] to the jurisdiction of the Court.
G. It is further noted that [the third party]:
i.Has paid $3.3 million for the purchase of [C Street, Suburb D], which funds were released to [the husband] by PEXA on settlement of the sale [in early] April 2024 (prior to the orders of 11 April 2024);
ii.Seeks for [the wife’s] application for a continuation of the injunctive orders 7-8 granted on 11 April 2024, which confer exclusion possession of the said property to [the wife] and restrain the settlement of the property, to be determined, whether together with or separately from the jurisdiction and forum issues.
BY CONSENT THE COURT ORDERS THAT:
1.That the proceedings are listed for mention before Justice Campton on 29 April 2024 at 2.15pm, via Microsoft Teams.
…
6.That Order 6 of the Orders dated 11 April 2024 shall continue pending further Order save that [the husband] is permitted to apply any funds transferred to, or any funds held in, the Trust Account of his Solicitor to his legal costs and disbursements and it is further noted that the interests of [the third party] are not affected by this Order (such interest including her rights and entitlements in respect of the property situated at [E Street].
7.That, without prejudice to the Respondents or admissions on their part, Orders 7 and 8 of the Orders dated 11 April 2024 shall continue until 4pm on Monday 29 April 2024.
8.That all pending applications are adjourned for directions to the Judge hearing the question of jurisdiction, forum and injunction.
THE COURT FURTHER ORDERS THAT:
9.[The third party] is formally joined to the proceedings and is now the Second Respondent. [The wife] remains the Applicant, and [the husband] is now the First Respondent.
10.Pursuant to section 149 of the Federal Circuit and Family Court of Australia Act 2021 (Cth), this proceeding is transferred to the Federal Circuit and Family Court of Australia (Division 1).
…
THE COURT FURTHER NOTES THAT:
H.[The husband] has deposed to the fact that he commenced proceedings in [Country B] dealing with divorce and his legal rights as against [the wife] [in early] 2024
I.There is an issue as to whether the Orders made 11 April 2024 should be discharged or stayed.
J.[The third party] is the purchaser of the property at [C Street, Suburb D] (“the [Suburb D] property”) which she says she purchased for $3.3m and entered into a contract with [the husband] [in March 2024].
K.[The third party] and [the husband] are joint tenants with respect to a property known as [E street].
L.[The wife] has lodged caveats over [E street] and the [Suburb D] property.
M.[The wife], through her Counsel, gave an undertaking as to damages on 11 April 2024 and [the third party] raises concerns as to [the wife’s] ability to meet the undertaking as to damages.
N.[The husband] and [the wife] are currently outside of Australia and cannot appear in person at the next Court event, but will appear by teams.
O. The matter has been transferred to Division 1 for the following reasons:
i. The complexity of the factual issues involved;
ii. The case involves international issues;
iii. The case involves multiple parties;
iv. There are issues raised as to jurisdiction and forum.
The matter came before Campton J on 29 April 2024, on which occasion his Honour made the following orders:
1.The proceeding be adjourned part heard by way of Microsoft Teams to 2.15pm on 9 May 2024.
2.Orders 7 & 8 as made 11 April 2024 and without prejudice to either respondent continue until 5pm on 9 May 2024.
3.It be noted that Order 7 made 11 April 2024 continues pending further order pursuant to Order 6 made 26 April 2024.
It is clear that Order 3 should properly refer to Order 6, not Order 7, made 11 April 2024.
Subsequently, Campton J could not deal with the matter on 9 May 2024. Sensibly the parties agreed to the primary judge then dealing with the remaining issues afresh. At the conclusion of the hearing on 9 May 2024, his Honour extended the operation of Order 7 and Order 8 until 5.00 pm on 10 May 2024.
On 10 May 2024 the primary judge made the following orders:
1. Order 8 made 11 April 2024 is discharged.
2.Upon the Undertaking of [the third party], [the third party] is restrained from doing any act or thing to encumber or transfer or otherwise deal with [the Suburb D property]. The Court notes that [the third party] does not object to the lodgement by the wife of a caveat over that property.
3.The interim relief sought by the wife in her Amended Initiating Application sealed 9 May 2024 is dismissed.
4.The interim relief sought by the husband in his Response dated 19 April 2024 is dismissed.
5.The interim relief sought by [the third party] in her Response sealed 27 April 2024 is dismissed.
6. For the abundance of clarity, Order 7 made 11 April 2024 continues.
THE PRIMARY JUDGE’S REASONS
On 9 May 2024, there were essentially only three matters for the primary judge’s determination; firstly, whether the wife should continue to have exclusive occupation of Suburb D (ie, should Order 7 continue or be discharged), secondly, if Order 7 continued, whether the wife should be required to provide security for her undertaking as to damages as a condition for that continuance, and thirdly, whether the husband should continue to be restrained from concluding the settlement of the sale of Suburb D (ie, should Order 8 continue or be discharged).
As to the first, the primary judge:
(a)concluded that the wife has an arguable case for relief under both s 79 and s 106B of the Family Law Act 1975 (Cth) (“the Act”) (at [37], [41] and [45]);
(b)was satisfied that the balance of convenience favoured the continuation of the injunction as, were it not extended, the wife could not otherwise house herself and the child, which outweighed any prejudice to the third party (at [43] and [45]).
As to the second, his Honour reasoned that although the proceedings were only at an early stage, it seems that either the wife had significant funds in Country B, or a claim for property settlement in Australia against a large pool, such that the need for security was not made out (at [47]–[49]).
As to the third, the primary judge said this:
50.I am also not satisfied that the injunction in relation to completion of the transaction in relation to [the Suburb D property] should continue. The contract has settled and the transfer I am told is with the Lands Titles Office. Subject to the injunction and caveat proffered by [the third party] counsel for the wife could not identify any prejudice to the wife other than expressing some “trepidation” about allowing the transfer to be registered. More than that is required to sustain the injunction.
51. That injunction will be discharged.
LEAVE TO APPEAL
The test adopted in this Court, which was confirmed in Medlow & Medlow (2016) FLC 93-692 (“Medlow”) provides that leave to appeal will only be granted where:
(a)The decision of the primary judge was “attended by sufficient doubt” to warrant its reconsideration; and
(b)If leave were refused, a “substantial injustice” would ensue.
The subsequent repeal of s 94AA of the Act, and its replacement with the substantially similar s 28 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) is no reason to doubt the correctness or continued applicability of Medlow.
It is therefore convenient to consider the grounds of the proposed appeal before returning to the question of leave.
THE APPEAL
At the outset, it is useful to restate the relevant principles which govern appeals from discretionary judgments. Particularly, it is well settled that error of the type identified in House v The King (1936) 55 CLR 499 at 504–505 (“House v The King”) must be established. There, the majority of the High Court said:
…The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred…
Ground 1
This ground provides:
1.That his Honour erred in principle in continuing an order for exclusive occupation made against [the husband] on 11 April 2024 so as to operate against [the third party] in circumstances where:
1.1.the order of 11 April 2024 was made against [the husband] who was at the time of the subject orders then the registered proprietor of [the Suburb D] property but as a consequence of his Honour’s orders [the third party] was forthwith entitled to be registered as owner;
1.2.[The third party] was not a party when the orders of 11 April 2024 were made;
1.3.there is no jurisdiction or power to make an order for exclusive occupation against [the third party] who is not a party to the marriage; and
1.4.his Honour’s consideration of whether there was a serious issue to be tried and whether [the wife’s] claim would be imperilled failed to discriminate between the injunction for preservation of [Suburb D] property as opposed to exclusive occupation.
We shall deal with the jurisdiction argument first. Section 114 of the Act provides:
Injunctions
(1)In proceedings of the kind referred to in paragraph (e) of the definition of matrimonial cause in subsection 4(1), the court may make such order or grant such injunction as it considers proper with respect to the matter to which the proceedings relate, including:
…
(e)an injunction in relation to the property of a party to the marriage; or
(f)an injunction relating to the use or occupancy of the matrimonial home.
…
(3)A court exercising jurisdiction under this Act in proceedings other than proceedings to which subsection (1) applies may grant an injunction, by interlocutory order or otherwise (including an injunction in aid of the enforcement of a decree), 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.
…
(Emphasis added)
Relevant to s 114(1), paragraph (e) of the definition of “matrimonial cause” in s 4(1) of the Act provides:
matrimonial cause means:
…
(e)proceedings between the parties to a marriage for an order or injunction in circumstances arising out of the marital relationship (other than proceedings under a law of a State or Territory prescribed for the purposes of section 114AB); or
…
(Emphasis added)
There can be no doubt that when Order 7 was made on 11 April, and continued on 26 April, 29 April and 9 May, the wife’s proceedings fell within (e) and thus it was an order or injunction considered proper with respect to proceedings between the parties of the marriage with respect to their property, such proceedings arising out of the marital relationship. A contentious issue before us was whether that remained the head of power for the continuation of Order 7 on 10 May 2024. However, although we shall briefly address that shortly, even if s 114(1) ceased to apply, s 114(3) thereafter clearly did, and indeed confers an arguably even broader power. Further, as we shall later explain, s 106B(4A) provided an alternative basis for jurisdiction to make the order, and although not adverted to by the primary judge, that is not fatal (see Luck & Norwood (2018) FLC 93-869 at [16]). Thus, strictly it is unnecessary to consider s 114(1) further.
Nonetheless we are of the view that s 114(1) continued to be an available head of power for Order 7. Firstly, the third party’s argument that s 114(1) does not found jurisdiction to make an order against a third party, rather than a spouse, is contrary to a number of first instance authorities (see, eg, Men & Gong [2017] FamCA 846 at [28] per Forest J; Mei & Yao [2017] FamCA 942 per McClelland DCJ). Secondly, and more significantly, it is also contrary to the subsequent insertion into the Act of s 90AF, sub-section 3(d) of which specifically contemplates that s 114(1) is a source of power to make an injunction against a third party.
Thirdly, there is no reason to read down the term “matrimonial home” in s 114(1)(f) so as to preclude Suburb D from being such as at 10 May 2024. Indeed a construction which prevented a matrimonial home, which was owned by a third party (for instance a rental home), from the ambit of s 114(1) would be perverse, and would positively encourage the sort of sale which was entered into by the husband and the third party in March 2024.
Finally, there is no warrant to read down such a clear head of power so as to carve out from its operation property that has been transferred to a third party and which transfer is sought to be impugned under s 106B of the Act.
The primary judge clearly had jurisdiction to make an order giving the wife exclusive occupation of Suburb D.
As to the balance of this ground, Ground 1.1 does not speak to any error of principle. There can be little doubt that his Honour well understood what it contends.
Likewise, Ground 1.2, whilst self-evidently correct, does not speak to any error in principle. The primary judge was clearly aware that the third party was not a party to the litigation when Order 7 was pronounced, yet advertent to that, nonetheless declined to discharge it, and noted its continued operation.
As to 1.4, there is no reason to think that his Honour did – or more correctly failed to do – that which it contends.
However, as expanded upon in the third party’s Summary of Argument, some greater specificity of the contended error of principle was advanced. Particularly it was said that the primary judge did not properly apply the test for the grant of an interlocutory injunction in that his Honour:
(a)in considering whether there was a serious question to be tried, did not sufficiently focus on the wife’s s 106B claim (at paragraphs 35–38);
(b)failed to consider whether there was a risk that the third party might dissipate Suburb D (at paragraph 39);
(c)failed to consider whether the exclusive occupation order was in aid of any final relief sought against the third party (at paragraph 42) but rather determined it solely by reference to the balance of convenience (paragraph 43).
Those submissions must be rejected.
Firstly, the primary judge did sufficiently focus upon the s 106B claim; although he could have done so at greater length, this was an urgent decision, not particularly dissimilar to ex tempore reasons, which are not to be “picked over” (Maviglia v Maviglia [1999] NSWCA 188). Further, appellate review should avoid an overly critical or pernickety analysis of a primary judge’s reasons (AMF v AIS (1999) 199 CLR 160).
In any event:
(a)the stealth surrounding the sale of Suburb D, in which the estranged wife was then residing with the child;
(b)the circumstances of the sale, including a term of the contract which saw it due to settle in seven days (although not achieved); and
(c)the rapid spiriting out of Australia of the net proceeds of sale, all of which had left the country by the day before the first listing of the wife’s application,
all make the wife’s s 106B claim clearly arguable, albeit founded on inference.
Further, notwithstanding the third party’s denial that she had any knowledge that the sale of Suburb D to her was likely to defeat an anticipated order in property proceedings in Australia (Affidavit of the third party filed 8 May 2024, paragraph 8) in addition to the matters listed above, there is objective evidence from which a contrary inference could be drawn.
As we have noted, the husband and wife had separated on 12 January 2023, with the wife remaining in Suburb D. Only six days later, the wife commenced, via family law solicitors, to seek information and financial support from the husband. Clearly, proceedings were likely to have been anticipated by the husband from that time on.
Not even two months after separation, in early March, the husband sold Suburb D to the third party without any inspection of it by her. The third party likely knew the wife remained in occupation, and indeed must have known she remained so after settlement. On any view, it was a rushed and highly unusual transaction.
Further, in early March 2024 over AUD $4,000,000 was paid into the third party’s bank account which, although immediately sourced form term deposits in her name, had ultimately been obtained from her father. However, between early February and early March 2024, over AUD $4,000,000 had been paid by the husband to the third party’s father. Indeed on two dates in early to mid-March 2024, over AUD $4,000,000 was so paid by two transfers, in themselves being sufficient to fund the purchase of Suburb D. Although the third party contends these transfers were related to business dealings between the husband and her father, that evidence may not be accepted.
If it were to transpire, or at least be found that – albeit via some complicated means – the husband had effectively provided the funds for the third party’s purchase of Suburb D. That finding, together with the almost immediate transfer of the net proceeds of sale out of the country, could quite easily found the conclusion that the sale was likely to defeat an anticipated s 79 order and that it was known by the third party. That is all the more likely given that under s 106B, an intention to effect such a defeat is not required, just the actuality of the likelihood.
Next, although the risk of dissipation was not orally pressed before us, in any event, it is but one factor which may, and in some instances should, be weighed in determining the balance of convenience. It must be taken that the primary judge was well aware of the fact that, by virtue of the undertakings given by the third party and her agreement to the wife caveating the title to Suburb D, there was limited risk of dissipation of that asset. However, that does not mean that the balance of convenience is thereby foreclosed in the third party’s favour, particularly where no restraint on sale of Suburb D was sought by the wife, but rather only interim exclusive occupancy.
As to whether or not the exclusive occupation order was in aid of final relief, there can be little doubt that it was. In that the wife’s Amended Initiating Application filed 9 May 2024, she sought to set aside the transfer of Suburb D under s 106B, and for it to be transferred to her as part of her s 79 claim. That is a sufficient connection to found Order 7.
There is no merit to Ground 1 of the proposed appeal.
Ground 2
This ground provides:
2.In the alternative, in the event that ground 1 fails, his Honour failed to give adequate reasons for making an order granting to [the wife] the exclusive occupancy of a property owned by [the third party].
The obligation to provide reasons is well established. In Bennett and Bennett (1991) FLC 92-191 at 78,266, the Full Court adopted the following test articulated by Gray J in Sun Alliance Insurance Ltd v Massoud [1989] VR 8 at 18:
The adequacy of the reasons will depend upon the circumstances of the case. But the reasons will, in my opinion, be inadequate if: –
(a)the appeal court is unable to ascertain the reasoning upon which the decision is based; or
(b)justice is not seen to have been done.
The two above stated criteria of inadequacy will frequently overlap. If the primary Judge does not sufficiently disclose his or her reasoning, the appeal court is denied the opportunity to detect error and the losing party is denied knowledge of why his or her case was rejected.
Whilst as we have already noted, given the urgency, necessarily his Honour’s reasons are brief, it is nonetheless clear why the primary judge continued the wife’s exclusive occupation of Suburb D. Namely, that she had a sufficient case in relation to her 106B claim, and had no other option to house herself in Australia.
In any event, even if there was a slight insufficiency in reasons, then the appropriate course would be to remit the matter back to the primary judge for the formulation of further reasons, (North East Equity Pty Ltd v Proud Nominees Pty Ltd (2010) 269 ALR 262; Lopez v Gold Titan Pty Ltd [2022] FCAFC 117) a course which on a practical level would seem to be of little advantage to the third party.
Ground 2 is without merit.
Ground 3
This ground provides:
3.In the event that each of the foregoing grounds fail, then his Honour failed to give adequate reasons for dismissing the application for an order requiring security for the undertaking given by [the wife].
Again, we note that the urgency of the matter necessitated short reasons.
The primary judge’s explanation for not requiring security for the wife’s undertaking was as follows:
47.The [third party] seeks as an alternative order in the event that the Court declines to grant the [third party’s] primary relief, that the wife pay such amount as the Court considers fit into court as security for her undertaking as to damages. During the course of submissions, the [third party] contended that such amount should cover the rent that the [third party] would otherwise not receive by the wife occupying the property.
48.I am not satisfied that it is necessary at this stage for the wife to provide security for her undertaking as to damages. The proceedings are at a very early stage. [The third party] contends “the wife’s financial disclosure is woefully inadequate, and the court should not accept that she does not have access to significant funds in [Country B]”. This submission goes on to point to her evidence of renovations to a home in [City G] contending that it is implausible that the wife would only have a modest amount of funds in bank accounts. On one version of the evidence, accepting what the husband says, the wife has a significant sum of money in [Country B]. The wife contends otherwise.
49.If the [third party] is correct, then the wife has significant funds ultimately to meet any loss sustained by [the third party]. The wife has an unsatisfied application for financial adjustment under s 79 as well as the benefit of financial proceedings in [Country B] instituted by the husband where the husband asserts that the parties’ assets have a value of approximately 13 million AUD. I am not satisfied that a case has been made for the wife to provide security for her undertaking as to damages.
That reasoning is quite sufficient in the circumstances. Some criticism of the paucity of evidence of any contributions by the wife to the assets of the parties was advanced by the third party and the husband, in support of an argument that the wife’s s 79 claim might not see her entitlement exceed any loss suffered by the third party, and hence her undertaking as to damages prove worthless. However, the wife has the sole care of the party’s child, and even if she did make little by way of financial contributions, she will likely have a compelling argument as to homemaker/parent contribution. Further, the wife may have a good argument for a s 75(2) adjustment by reason of her need to house herself and the child. Given the size of the likely pool here, even if her s 106B claim against Suburb D fails, that entitlement may be substantial.
Ground 3 does not have merit.
Ground 4
This ground provides:
4.In making an order under s 114 of the FLA against [the third party], being a third party, the learned primary judge was required to, but failed to, consider and reach the requisite a state of satisfaction as to the matters set out in ss 90AF and 90AK of the FLA. Had these matters been considered, the learned primary judge ought to have found either that he was not satisfied of all of these factors and hence had no jurisdiction under s 114 of the FLA to make the order sought or, alternatively, he could not be so satisfied in the absence of the Wife paying appropriate security or compensation to [the third party] for her exclusive occupation of the [Suburb D] property.
The argument based on s 90AK was sensibly abandoned before us. Section 90AF relevantly provides as follows:
Court may make an order or injunction under section 114 binding a third party
…
(2)In proceedings under section 114, the court may make any other order, or grant any other injunction that:
…
(b)alters the rights, liabilities or property interests of a third party in relation to the marriage.
(3)The court may only make an order or grant an injunction under subsection (1) or (2) if:
(a)the making of the order, or the granting of the injunction, is reasonably necessary, or reasonably appropriate and adapted, to effect a division of property between the parties to the marriage; and
(b)if the order or injunction concerns a debt of a party to the marriage – it is not foreseeable at the time that the order is made, or the injunction granted, that to make the order or grant the injunction would result in the debt not being paid in full; and
(c)the third party has been accorded procedural fairness in relation to the making of the order or injunction; and
(d)for an injunction or order under subsection 114(1) – the court is satisfied that, in all the circumstances, it is proper to make the order or grant the injunction; and
(e)for an injunction under subsection 114(3) – the court is satisfied that, in all the circumstances, it is just or convenient to grant the injunction; and
(f)the court is satisfied that the order or injunction takes into account the matters mentioned in subsection (4)
(4) The matters are as follows:
(a)the taxation effect (if any) of the order or injunction on the parties to the marriage;
(b)the taxation effect (if any) of the order or injunction on the third party;
(c)the social security effect (if any) of the order or injunction on the parties to the marriage;
(d)the third party's administrative costs in relation to the order or injunction;
(e)if the order or injunction concerns a debt of a party to the marriage – the capacity of a party to the marriage to repay the debt after the order is made or the injunction is granted;
…
(f)the economic, legal or other capacity of the third party to comply with the order or injunction;
…
(g)if, as a result of the third party being accorded procedural fairness in relation to the making of the order or the granting of the injunction, the third party raises any other matters – those matters;
…
(h)any other matter that the court considers relevant.
(Emphasis added)
The answer to the s 90AF point raised by this ground is that, even assuming s 90AF(2)(b) is engaged, then the matters in s 90AF(3)(b), (c), (d) and (e) are all not applicable or clearly satisfied, such that is only s 90AF(3)(a), and perhaps (f), which are in play. As to that, unsurprisingly, since his Honour was not directed to the provision in the context of the exclusive occupation claim, he did not directly address it. Nonetheless, it seems tolerably clear that, in the context of the wife advancing a s 106B claim impugning the transaction which gave rise to the third party’s present rights in relation to Suburb D and making a claim to Suburb D in the s 79 proceedings, the maintenance of the status quo was appropriate pending the adjudication of the overall division of the property of the husband and the wife. In that sense the continuation of Order 7 was reasonably appropriate and adapted to the eventual effecting of a division of property between the husband and wife, or at least not amenable to appellate intervention within the confines of House v The King.
However, there is a cogent argument that s 90AF(2)(b) was not necessarily engaged here, if there was an alternative source of power to make Order 7 other than s 114 of the Act. We have already noted that s 106B(4A) provides another source of power, and by its express terms s 90AF does not impose any fetter on that power. On such a construction, where s 106B is engaged, there is no need for the injunction to be “reasonably necessary or reasonably appropriate and adapted to effect a division of property between the parties to the marriage” because self-evidently, the means by which a stranger to the marriage came to have their property interest is itself impugned in the litigation. On this argument, s 106B claims are therefore in a unique situation.
We think that argument is sound. Particularly, it is supported by s 90ADA, which works to preserve s 106B(4A). We do not construe anything said by O’Ryan J in Hunt v Hunt (2006) 36 Fam LR 64 as comprising any contrary proposition. Further, such a construction recognises that s 106B will often necessarily involve the interests of strangers to the marriage, and to impose the requirements of s 90AF(3) to such litigation is not justifiable where such strangers’ property rights are inevitably at risk.
The wife also argued that s 90AF(2) was not engaged, since Order 7 did not alter the “rights … or property interests” of the third party, as it only modified her personal rights, not her property rights (Mullane v Mullane (1983) 158 CLR 436 at 445). Particularly it was argued that if “rights” in s 90AF(2) included personal rights, such as a right to occupation, s 90AF(3) would render s 114 unworkable in such circumstances. However, we do not need to determine that issue in order to resolve the application for leave to appeal, and therefore do not do so.
As to s 90AF(4), it is only (d) which is even potentially in play. The third party contended that her quarterly body corporate fees payable in respect of Suburb D were an administrative cost in relation to the order of injunctions. We disagree; they are not such costs. In any event, plainly the primary judge was well aware of them, which potentially would be encompassed within the wife’s undertaking as to damages.
Conclusion
No ground of appeal enjoys merit.
LEAVE TO APPEAL
Leave to appeal must be refused, as the primary judge’s decision is not attended by sufficient doubt to warrant a grant of leave. However, even if there were some merit in the appeal, the question of substantial injustice would loom large, given the wife’s undertaking as to damages, and her likely substantial entitlement in the s 79 proceedings, even if her s 106B claim fails. As part of that consideration there would be two significant issues; the quite possible knowing involvement of the third party in the husband’s liquidation of assets and movement of funds outside this jurisdiction, and the right of the third party to, at any time, seek to dissolve or vary Order 7.
THE CROSS APPEAL
The cross-appeal was expressly premised upon the appeal succeeding. It has not, and we need not consider it further. Leave to bring it will be refused.
OUTCOME
The proposed appeal does not enjoy merit, and hence leave to bring it is refused, and the application for leave to cross-appeal falls away and will be dismissed.
COSTS
In the event that leave to bring the appeal was refused, the wife sought costs from the third party in the sum of $31,426.14. However, clearly some small, but unquantified, part of those costs related to the cross-appeal.
We are satisfied that the failure of the third party’s application justifies an order for costs against her in favour of the wife in the sum of $30,000. Those costs should be payable within 28 days.
I certify that the preceding sixty-nine (69) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Deputy Chief Justice McClelland and Justices Tree and Altobelli . Associate:
Dated: 20 September 2024
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