Martin and Martin and Ors

[2011] FamCA 536

FAMILY COURT OF AUSTRALIA

MARTIN & MARTIN AND ORS [2011] FamCA 536

FAMILY LAW – INJUNCTIONS - Preservation of property – Where an injunctive order was previously made by consent between the parties – Where the wife applied for an order restraining the husband from further borrowings within a group of companies – Whether the Court should grant the injunctive order sought in all the circumstances
FAMILY LAW – PRACTICE AND PROCEDURE – Adjournments – Where the wife and second and third respondents sought an adjournment of the application
FAMILY LAW – COSTS - Circumstances justifying order – Where the husband served documents the late in the day prior to the hearing – Where the documents served were substantial and the husband was put on notice that the wife would seek an adjournment due to late service – Where the wife sought orders in addition to the injunction – Whether an order for costs should be made on an indemnity basis or fixed and reserved to the substantive hearing  

Family Law Act 1975 (Cth), ss 117,117(2A)

APPLICANT: Ms Martin

RESPONDENT: Mr Martin

SECOND RESPONDENT: Ms X

THIRD RESPONDENT:

QF Pty Ltd

ACN …

FILE NUMBER: MLC 9829 of 2007

DATE DELIVERED: 7 July 2011

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Young J

HEARING DATE: 7 July 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Ackman Qc With Mr O’shannessy

SOLICITOR FOR THE APPLICANT: X Firm

COUNSEL FOR THE RESPONDENT: Mr Puckey

SOLICITOR FOR THE RESPONDENT: Taussig Cherrie Fildes

COUNSEL FOR THE 2^ND RESPONDENT: Mr North SC

SOLICITOR FOR THE 2^ND RESPONDENT: Nedovic & Co Solicitors

COUNSEL FOR THE 3^RD RESPONDENT: Mr Martin

SOLICITOR FOR THE 3^RD RESPONDENT: QF Pty Ltd

Orders

IT IS ORDERED:

1. THAT the Application in a Case filed by the wife on 30 June 2011 and the husband’s Response thereto filed by leave of the Court this day be adjourned for further hearing before Dessau J at the earliest opportunity that the matter may be listed but otherwise on 28 July 2011 at 10.00 a.m. (subject to any part-heard defended matter).

2. THAT within seven (7) days the wife make, file and serve any affidavit or other amended Application upon which she may intend to rely.

3. THAT within seven (7) days each of the Second Respondent and Third Respondent make, file and serve any Response or affidavit upon which they intend to rely.

4. THAT the respondent husband thereafter make, file and serve any amended Response or any other affidavit upon which he intends to rely within a further three (3) working days or such extended period as may be agreed between all parties.

5. THAT the husband pay the costs of the Second Respondent of and incidental to the hearing this day fixed in the sum of $3,850.00.

6. THAT the husband pay the costs of the Third Respondent of and incidental to the hearing this day fixed in the sum of $1,200.00.

7. THAT the quantum of the costs incurred by the wife in engaging Senior Counsel be fixed in the sum of $6,600.00, Junior Counsel be fixed in the sum of $3,000.00 and instructing solicitors be fixed in the sum of $1,200.00 but the payment of those costs as fixed be reserved to the hearing Judge on 28 July 2011.

8. THAT the husband’s oral application to fix or reserve his costs of and incidental to this day be dismissed.

9. THAT the extempore reasons for judgment delivered upon the substantive issues and upon the costs issues be each transcribed, be placed upon the Court file and be made available to all parties as a matter of urgency.

IT IS CERTIFIED

1. THAT pursuant to Rule 19.50 of the Family Law Rules this matter reasonably required the attendance of Senior Counsel for the wife with Junior Counsel and the Second Respondent, Counsel for the husband and Solicitor appearing as Counsel for the Third Respondent.

IT IS NOTED

A.THAT the letter as to costs dated 6 July 2011 from the wife’s solicitors addressed to the husband’s solicitors be marked as exhibit “W1” and be and remain upon the Court file.

IT IS NOTED that publication of this judgment under the pseudonym Martin & Martin is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 9829 of 2007

Ms Martin

Applicant

And

Mr Martin

Respondent

And

Ms X

Second Respondent

And

QF PTY LTD

Third Respondent

REASONS FOR JUDGMENT

1. The matter of Martin is a long standing defended property matter that is listed to the docket of Dessau J.  An Application in a Case was filed by the wife’s solicitors on 30 June 2011 and that has been listed urgently before me for interim hearing in the absence of her Honour from the Melbourne Registry.  Mr Ackman, one of her Majesty’s Counsel, and Mr O’Shannessy, appear for the wife.  Mr Puckey appears as Counsel for the husband.  Both the husband and wife are in Court for this hearing.

2. Mr North, Senior Counsel announced his appearance for the Second Respondent, Ms X, solicitor who has lodged a caveat over a property that is the subject of consideration in these proceedings.  Mr North is instructed by Nedovic & Co solicitors, and a Notice of Address for Service is yet to be filed.  Counsel for the Second Respondent has not actively participated in the proceedings today, having only recently been served with documents in these proceedings, and was seeking an adjournment in order to read and then prepare material. 

3. Mr Martin a solicitor employed by QF Pty Ltd likewise appeared to represent the interests of that company who have previously advanced moneys to the wife for the purposes of litigation in this Court.  Currently they are being repaid those moneys plus accrued interest.  Likewise, he also sought further time to read and prepare matters of, and related to, the interests of his client as caveator, and generally.

4. The reasons that I am now delivering are given extempore without rising from the Bench and after hearing lengthy submissions from both Mr Ackman QC and Mr Puckey.  They are therefore given in a summary and concise form to deal with the urgent issues that have been listed before me as a Judge assisting in this matter.

5. The starting point is to understand that on 10 December 2010 there were injunctive orders pronounced by consent.  On that occasion, Ms MacMillan, Senior Counsel represented the wife and Mr Puckey the husband.  Both parties were, as best I can ascertain, present in Court and consented to the injunctive orders.  Those orders were subsequently prepared by the husband’s solicitors and forwarded to the Court on or about 16 December 2010 and then sealed by the Court.  The orders were intended to be operative as from 10 December 2010.

6. Paragraph 8 of those orders provided:

   That until further order, the husband be and is hereby restrained from any further borrowings within the [B Group] (including but not limited to [Martin Pty Ltd] and [C Pty Ltd] as is valued and identified by [D Report]) and the wife, by herself, her servants or agents be an is hereby restrained by from encumbering or further encumbering any property registered in her name.”

7. As I can best understand from the questions raised in this Court today and from the responses of Counsel those orders were made by consent until further order and remain operative and effective.  There has been, prior to this day, no application filed in this Court to vary, amend or in any way discharge that injunction or the obligations and duties imposed upon both parties thereby.

8. The application in a case which commenced these interim proceedings was filed on behalf of the wife on 30 June 2011.  In paragraph 2 thereof an order is sought that the husband be restrained by injunction from proceeding with the purchase of the property situate at and known as S Street, Town Q in the State of Victoria, hereafter referred to as the “Town Q property”.

9. Otherwise there are various orders sought on behalf of the wife in relation to payment of her legal and accounting costs incurred in these proceedings, the ability of the wife to encumber or sell properties to discharge her very substantial legal obligations, and otherwise orders in respect of properties at E Town E and in Town A.  Finally the wife has sought an order as to costs as contained within that application.

10. The wife’s application was supported by an affidavit of her solicitor filed that same day and primarily directed to the issue of legal costs and the payment thereof, and annexing an updated legal services agreement.  The wife’s primary affidavit was sworn on 29 June 2011 and which was likewise filed 30 June 2011.  That affidavit provided a somewhat detailed background of the matters historically before this Court, of and related to the marriage, and dealt with the issue of the purchase of the Town Q property in paragraphs 14 to 28 thereof.  I have read that affidavit and the many annexures thereto.

11. The husband’s response was filed by leave of the Court this morning.  The Court is yet to receive a sealed copy of the document, but has been provided with a duplicate copy.  That response seeks orders for the application of the wife to be dismissed and then, for the first time, addresses the injunctive order contained within paragraph 8 of the orders of 10 December 2010.  It seeks for that injunction to be discharged or, in the alternative, amended insofar as is required to enable the husband through his company, C Pty Ltd as trustee for the C Family Trust, to settle the commercial purchase of the Town Q property and additionally, the purchase of another property at T Street, Town Q in or about late 2011.

12. Otherwise the further orders sought in his carefully prepared response, deal with issues of the Town A or Town E properties and/or the question of the outstanding legal costs of the wife and various caveats encumbering properties which has resulted in Mr North and Mr Martin appearing at Court this day.  There are consequential orders contained within paragraphs 11 and 12 of that response, and the husband sought orders that his costs of and incidental to this day be paid by the wife.

13. In support of that response, the husband filed by leave and the court has been provided with a substantial affidavit.  The affidavit is 76 pages in length and 141 paragraphs in total.  What the Court was not provided with but which has now been filed are two substantial arch lever files of folders containing exhibits in excess of 700 pages or thereabouts.  I emphasise I have not received nor sighted those documents which will be filed in due course.

14. The other document filed by leave this day is an affidavit of Mr U, the forensic accountant from KPMG engaged by the wife’s solicitors on her behalf.  That is a relatively short affidavit of 11 paragraphs, but it exhibits a considerable number of corporate and financial documents and the Court has had a very brief opportunity to read and consider matters contained therein.  It is a matter upon which Counsel for the husband has addressed and I have therefore re-read paragraphs 8, 9 and 10 thereof. 

15. I turn to the central issue in this case which necessitated the urgent hearing of this application.  The husband has purchased or entered into contracts to purchase, in the name of C Pty Ltd or its nominee, the Town Q property.  The history of the matters and facts leading up to the purchase of that property are detailed by the husband in his affidavit filed with the Court this day.  In late April 2011 the husband became aware of the opportunity to purchase the Town Q property which is currently leased to V Pty Ltd. 

16. It is said by him that it was on the market for sale at a discounted price as the vendor required an immediate sale by way of an unconditional contract.  The husband alleged that he formed the view that the property was the best site for a car dealership in Town A and was superior to an alternate property.  There was competition in the purchase and the husband was required to make a swift commercial decision.  That he did, but did so in the face of the injunction and did so with no knowledge to the wife or her solicitors.

17. Paragraph 28 of the husband’s affidavit identified that he entered into a contract of sale on 12 May 2011 to purchase the property.  That contract of sale is before the Court as an annexure to the wife’s affidavit and it shows the purchase price to be $5,620,000 and that a deposit of $562,000 was paid on the signing of the contract.  What actually has been paid by way of deposit is dealt with by the husband in his affidavit and it was paid from the business overdraft as explained in paragraph 28.

18. The husband, it now seems common ground, although not dealt with by him in his affidavit, did not advise the wife or her solicitors contemporaneously with the execution of that contract and indeed did not do so for approximately 18 days thereafter.  By letter dated 1 June 2011, the husband’s solicitors in the Family Law proceedings, who are not the solicitors recorded to act on the purchase of the Town Q property, wrote to the wife’s solicitors and, in the context of that letter and under a heading referrable to the sale of the W Street property identified the purchase of this property for a sum of $5.62 million.

19. I have perused the correspondence as annexed between 1 June and late June 2011 and there were various solicitors’ letters exchanged for further particulars, information and ascertaining facts surrounding the purchase and other matters relevant to the ongoing proceedings before the Court.  It was the wife by application who brought the matter back to Court and the wife’s solicitors who sought a further injunction restraining the husband in respect of the purchase of the property, presumably on the basis of some level of concern that the current injunction agreed to by consent was either wholly ignored by the husband or otherwise may have been perceived to be inadequate in some way.

20. The present position is that settlement of the Town Q property is due on Monday 11 July 2011.  The husband is not permitted to settle that property in his name or in the name of C Pty Ltd pursuant to the current injunction stated in order 8 of 10 December 2010 orders.  Significantly it has been confirmed by the husband’s Counsel at Court this day that no other purchaser will be substituted for C Pty Ltd in the contract and thus the current injunction is both relevant and effective to restrain the husband from proceeding with any borrowings, including in the name of C Pty Ltd to fund the purchase of this property.

21. Mr Puckey, on behalf of the husband, has certainly in his submissions put all of the matters that could be said on a commercial and financial basis to facilitate a discharge or variation of the injunction.  There may be a level of commercial commonsense that the parties could have applied, but I make no finding in that regard.  It may be that the purchase of the Town Q property is an excellent opportunity and colloquially speaking “a good buy”.  Again, I make no such finding.  It may be argued on behalf of the husband that the Court should actively involve itself in the best commercial interests of the parties and make orders without all of the facts and circumstances being before the Court, but that I would not do.

22. This Court must proceed on evidence before it.  The parties must have a timely opportunity to put material before the Court on an informed basis.  The crucial elements of the proceeding before me are that the current injunction is valid, effective and was known to the husband.  It embraces both him and the identified corporate entity that has purchased the Town Q property.  The husband should have given proper notice to the wife’s solicitors far earlier than he did.  He should have approached the Court to vary the injunction as a precursor to its purchase.  That he did not do, no doubt by choice.

23. The husband now, effectively at the last minute, and within two working days of settlement, would have the injunction in order 8 varied, and the purchase proceed to be financed on a basis that is not wholly known to the wife or, indeed, to the other interested parties in Court, perhaps on other financial and commercial interests.  I have reflected upon the wide discretionary powers of the Court, but many of the options that otherwise may have been available to the Court are negated by the current consent order made until further order and what the parties have themselves agreed to perform.

24. In the circumstances of this case, the rush with which it has been brought to Court, the lack of financial knowledge and information it would be inappropriate to at this stage vary, discharge or amend the current injunction.

25. The issue that next arises is that Mr Ackman seeks, in paragraph 2 of the wife’s application in a case, a further extended injunction specifically related to the Town Q property.  I will not so order. 

26. On my reading, and this is a matter that I have discussed with the husband’s Counsel in his submissions, the current injunction is clearly targeted to restraining the husband and various corporate entities, including the purchasing company, C Pty Ltd, from any further borrowings, and as I understand the evidence the Town Q property is to be purchased with borrowings and thus the injunction is relevant, effective and operative.  That is further confirmed by the belated application of the husband in his response to now vary, amend or discharge that injunction. 

27. Accordingly, I do not see the need in any way to interfere with the consent orders that the parties negotiated on 10 December 2010, on proper legal advice, at Court, by way of the current injunction, and accordingly I will not make the orders sought on behalf of the wife in paragraph 2.  I will carefully not dismiss that application, but it and all other orders sought can be adjourned for hearing before the docketed Judge on the first available date.  Currently I am advised by Registrar Field that the earliest date is 28 July 2011, but I will order that the matter be adjourned to the earliest date that may become available upon enquiry by the solicitors with the Registrar, but almost certainly it will be 28 July 2011.

28. Otherwise, the husband’s response details various other orders sought in paragraphs 3 to 12 thereof and I will likewise adjourn all of those applications.  A separate issue that was floated by Mr Puckey, and properly so, was whether the Court should require any undertaking as to damages to be given by, or on behalf of the wife, to accompany the continuation of the current injunction.  I am of the view that it would be inappropriate to require such an undertaking at this time.  The current injunction is ongoing and is not being varied this day.  It was made by consent without any undertaking or a requirement of such undertaking as to damages and the parties can and should abide by their consent orders.

29. It may be that hereafter some undertaking for damages from one or other of the parties is an issue that can and should be considered, but I will not do so today.  I will provide orders for the wife to file any responding material within seven working days.  I will likewise permit the parties represented by Mr North and Mr Martin to file any documents or applications within a like seven days.  I carefully do not want to buy into all of the commercial and financial issues in this matter of which her Honour is seized.

30. The legal fees and accounting fees already incurred are enormous.  I imply no criticism with that observation, but if these parties are not careful, their total legal and financial fees will exceed any asset pool.  If the asset pool is $10 million, there may be financial salvation for them.  If it happens to be a much lesser sum, then other considerations arise.  Again, I carefully do not traverse those matters, but financial common sense as well as appropriate legal advice is a matter of absolute urgency in this case.  I say no more and those matters can be further considered by the docket judge.

1. I will have these brief extempore reasons transcribed, placed upon the court file and made available to all parties.  I will now proceed to structure orders consistent with my reasons for judgment and hear any costs applications.

Costs

1. I have before me a costs application made by, or on behalf of, the parties and the Second and Third Respondents. Costs are considered by the Court pursuant to section 117 of the Family Law Act 1975 (Cth) (“the Act”). The primary principle is that each party bears their own costs. However, pursuant to subparagraph (2) of that s 117, the Court in its discretion may order costs if, in all of the circumstances of the case, it is just to do so.

2. Section 117(2A) sets out the various factors to be considered by the Court in making any order for costs and those factors include the financial circumstances of the parties, whether any party was wholly unsuccessful in the proceedings or otherwise, the conduct and management of the proceedings including whether the proceedings were necessitated by the failure of a party to comply with previous orders of the Court, the issues before the Court for trial, whether a party is in receipt of legal aid, which at least is not applicable in this case, and the other matters as described therein.

3. I have considered and reflected upon each of those relevant factors in arriving at orders made in the exercise of my discretion on the costs issue and the letter of 6 July 2011 from the wife’s solicitors to the husband’s solicitors.  I have delivered an extempore reasons for judgment on the factual issues arising in the proceedings and have already made certain orders whereby the proceedings are adjourned with directions for the filing of documents prior to the next hearing before the docket Judge.

4. Mr Ackman QC, made the submission on behalf of his client, that there should be an order for costs of and incidental to the hearing this day made in the sum of $6,600 for himself, $3,000 for Junior Counsel and presumably an appropriate attendance fee at an hourly rate for his solicitor who has been in Court from 10.00 a.m. to 1.30 p.m.

5. Mr North’s submission is that his brief fee of $3,850 should be paid by the husband; he has no instructing solicitor this day.

6. Mr Martin appears as solicitor for the third respondent and suggests that on his hourly rate of $380 he should be paid a sum of $1,520 for this day. 

7. Mr Puckey, whose fee is $2,750 and who likewise has been assisted by a solicitor throughout the hearing would have his costs quantified and reserved, pending further hearing by the Court. 

8. The wife’s Counsel does not seek that costs be reserved but seeks an order on the basis that his client has largely, if not wholly, been successful and the husband unsuccessful, in relation to the hearing before the Court of, and related to, the Town Q purchase.

9. Mr Puckey has addressed the Court on the basis that the wife placed other applications and issues before the Court of, and related to, the payment of legal costs and expenses.  He submitted that the order sought by the wife in paragraph 2, related to Town Q purchase, was not successful, notwithstanding the submission of Mr Ackman that it was both unnecessary and would and could have been withdrawn if sought.  Mr Puckey’s further submissions were directed to the Second and Third Respondents and contended that a costs order should not be made this day but should be reserved pending further hearing, further evidence and matters that may arise.

10. I have already in some detail dealt with the circumstances of the filing by the husband of his response which was, to say the least, somewhat belated and the volume of documents that he presented to the parties and to the Court this day. Costs are discretionary.  So long as it is just, I may order costs and reasonably fix the quantum though I carefully bear in mind Mr Puckey’s brief submission on quantum directed to the third respondent.  I need be mindful of the interests of justice as between all of these parties and the orders that are appropriate to be made in relation to costs in all of the circumstances.

11. I must, however, balance the fact that I have heard these matters today and I am  seized of all matters that have transpired in this Court over the past three and a half hours.  As to the Second Respondent, I deem it just and appropriate that there be a costs order and I intend to make an order for costs in the sum of $3,850.  As to the Third Respondent, I deem it just and appropriate that there is an order for costs however; I will order only in the sum of $1,200.  As to the wife, what I intend to do and what I consider is just is to fix the costs at $6,600 for Senior Counsel, $3,000 for Junior Counsel, and $1,200 for the instructing solicitor, but reserve the payment of those costs to the trial Judge, at the July 28 hearing or as her Honour may otherwise fix.

12. I consider, notwithstanding the submissions of Mr Ackman QC, that there are matters within the overall content of the applications before the Court and/or the outcome of the purchase and the other matters that were associated with the wife’s application that could, but not necessarily would, touch upon what is just to so order.  I record in these brief extempore reasons that I was somewhat inclined to make an order for the wife’s costs, but on a careful balance, I have decided to reserve the wife’s costs but fix the quantum. 

13. I do not intend to reserve the husband’s costs of this day and would reserve only the wife’s costs.  I see no justification whatsoever for any submission that the husband’s costs be paid or reserved or be a further issue in the proceeding.  I will have these costs reasons transcribed, placed upon the court file and made available to all parties.

I certify that the preceding forty-four (44) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Young delivered on 7 July 2011.

Associate: 

Date:  11 July 2011