Martin and Martin and Ors

[2010] FamCA 944

FAMILY COURT OF AUSTRALIA

MARTIN & MARTIN AND ORS [2010] FamCA 944

FAMILY LAW – PROPERTY – Restraint – sale of property

APPLICANT: Ms Martin

RESPONDENT: Mr Martin

SECOND RESPONDENT: Martin Developments Pty Ltd

THIRD RESPONDENT: Martin & Martin Pty Ltd

FOURTH RESPONDENT: M Martin

FILE NUMBER: DGC 168 of 2010

DATE DELIVERED: 14 OCTOBER 2010

PLACE DELIVERED: MELBOURNE

PLACE HEARD: MELBOURNE

JUDGMENT OF: YOUNG J

HEARING DATE: 14 OCTOBER 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT: MR DAVIS

SOLICITOR FOR THE APPLICANT: MARIA BARBAYANNIS & CO

COUNSEL FOR THE RESPONDENT: MR GUZZO

SOLICITOR FOR THE RESPONDENT: CAVOLI & CO

COUNSEL FOR THE THIRD AND FOURTH RESPONDENTS MR WEIL

SOLICITOR FOR THE THIRD AND FOURTH RESPONDENTS MGA LAWYERS

Orders

IT IS ORDERED:

1. THAT the husband and the Second Respondent be and are hereby restrained from selling, or offering for sale the real property at N in the State of Victoria without the prior written agreement of the wife or Court order first obtained.

2. THAT the husband and the Second Respondent forthwith do all acts and things and give all necessary and proper instructions to advise in writing the appointed commercial real estate agents of the postponement or cancellation of the auction of N property that was scheduled for 21 October 2010.

3. THAT the husband and Second Respondent do all acts and things and give all necessary and proper written advice to their bankers and to all mortgagee and commercial lenders having security upon the title of N property of the postponement or cancellation of the auction and further advise all such bankers, mortgagees or lenders of the adjourned hearing date of these proceedings which is 11 November 2010 at 10.00 a.m. (for no more than one (1) day).

4. THAT within fourteen (14) days the husband wholly comply with paragraph 6 of the Orders for disclosure, discovery and inspection pronounced 9 September 2010.

5. THAT the extempore reasons for judgment be transcribed, be placed upon the Court file and be made available to all parties.

6. THAT the costs of each of the husband, the wife and the Second Respondent of and incidental to this day and on the N property sale issues be reserved for determination on the adjourned hearing date.

7. THAT any further affidavit(s) to be made by or on behalf of the husband, the wife or the Second Respondent of and concerning N property and its postponed auction, or any other application or orders sought, are to be filed and served on or before 12.00 noon Monday 8 November 2010.

   THAT in the proceedings as between the wife and the Third and Fourth Respondents IT IS FURTHER ORDERED BY CONSENT:

8. THAT leave be granted to the Third and Fourth Respondents to file and serve their response(s) to an application in a case filed by leave this day together with the affidavit of the Fourth Respondent and the affidavits of the supporting witnesses Mr L and Mr A.

9. THAT each of the responses of the Third and Fourth Respondents be consolidated with all other extant applications before the Court and be adjourned for further hearing to 11 November 2010 at 10.00 a.m. before Young J.

10. THAT pending the adjourned hearing date, or until further order, any and all monies paid to the Third and Fourth Respondents by reason of the payment of the balance of the debt of $1,030,000 (“the debt”) and allegedly due to each of them from H Constructions Pty Ltd (“the debtor”) be held in an interest bearing trust account in the name of MGA Lawyers Practice Trust Account on behalf of the wife and the Third and Fourth Respondents.

11. THAT in the event the debtor be in default nothing in these Orders be taken to prohibit or restrain in any way the Third or Fourth Respondents, or either of them, from enforcing the mortgage securing the debt.

12. THAT the Third and Fourth Respondents have liberty to apply, on proper affidavit material filed and served, as to the payment of any proven loss or damage incurred by reason of these Orders and the non-payment of the debt to them.

13. THAT apart from Order 6 hereof, the costs of the Third and Fourth Respondents as against each of the husband, the wife and the Second Respondent are reserved for argument and decision on the adjourned hearing date or otherwise as may be fixed.

14. THAT all extant applications both interim and final be otherwise adjourned to 11 November 2010 before Young J. at 10.00 a.m.

15. THAT any further affidavit to be filed by the Third or Fourth Respondents or by the wife in response to matters of and concerning each of those parties are to be filed and served on or before 12.00 noon Monday 8 November 2010.

IT IS CERTIFIED

1. THAT pursuant to Rule 19.50 of the Family Law Rules this matter reasonably required the attendance of Counsel for the all parties.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: DGC 168 of 2010

MS MARTIN

Applicant

And

MR MARTIN

Respondent

And

MARTIN DEVELOPMENTS PTY LTD
Second Respondent

And

MARTIN & MARTIN PTY LTD
Third Respondent

And

M MARTIN
Fourth Respondent

REASONS FOR JUDGMENT

1. The wife, through her Counsel, Mr Davis, sought by leave this morning to file a further application in a case.  That leave was not opposed and was therefore granted and that application has now been filed and served.  The wife is applicant and the husband is respondent in property proceedings before the Court.  The second respondent in the proceedings is Martin Developments Pty Ltd, a company of which the husband is both sole director and sole shareholder.  Mr Guzzo of counsel, instructed by the husband’s new solicitor, Mr Cavoli represents both the husband and the second respondent.

2. There are other legal matters in issues and orders sought before me on or against the Third and Fourth Respondents.  The Third Respondent is Martin & Martin Pty Ltd and the Fourth Respondent is the husband’s brother, M Martin and they are represented by Mr Weil of Counsel.  This extempore judgment deals only with that application in a case issued by the wife against the husband and the Second Respondent and does not, at this stage, impact upon the Third and Fourth Respondents.  I will separately deal with matters of and concerning them in subsequent extempore judgments or orders this day.  By her application the wife has sought orders to manage or deal with any sale of a property at N.  That property is registered in the name of the Second Respondent.

3. The actual orders sought on behalf of the wife and as drafted by her solicitors are:

   i)That the husband irrevocably authorise the selling agent and the lawyer, who he has appointed for and on behalf of Martin Developments Pty Ltd, or may appoint in the future, to provide to Barbayannis Lawyers all and any documents including but not limited to a section 32, contract of sale, lease documentation, deposit moneys, balance of settlement moneys, loan payouts, settlements statements, and all relevant correspondence and documentation in relation to the proposed sale of N property.

   ii)That the husband irrevocably authorise the selling agent of N property to inform the wife’s lawyers of any offer or offers to purchase the property at N and provide copies of any contract of sale proposed to be entered into.

   iii)That the net proceeds of sale of the property at N be paid to Barbayannis Lawyers, or as they may direct, to be placed into an interest-bearing controlled money account on behalf of the husband and wife pending a resolution of the proceedings or order of this Court.

4. As drafted those orders deal with the consequences of the sale of N property rather than formally restrain or preclude the sale of N property.  The background to the orders sought this day are that there is an injunction which was pronounced by consent on 22 July 2010 at which time the wife was represented by her Counsel of this day and Mr O’Connor, solicitor then represented the husband.  The second respondent was not then represented.  Paragraph 3 of the orders of that day, by consent, order that:

   “That otherwise the husband be restrained both personally and by his servants and agents from transferring, dealing with, disposing of or diminishing the value of property or any interest or entitlement therein, either personally or in a corporate entity or trust save in the usual and ordinary course of business and then upon giving written notice to the solicitors representing the wife of his intention to so act”.

5. Mr Guzzo on behalf of the husband and the Second Respondent has not taken any issue, appropriately so, with the fact that the Second Respondent was not represented on that day and did not consent to the orders.  The reality is that the second respondent has only a sole director and shareholder and that is the husband and thus, in all ways, that corporate entity is the alter ego of and represents him and that has not been a matter of dispute in the submissions before me.  Likewise it has not been argued that the intended sale of N property is in the usual and ordinary course of business.  That perhaps was an avenue of legal argument open to the husband and the Second Respondent but it was not explored and would have been qualified upon the basis of then having given prior written notice to the wife’s solicitors and this they have not done.

6. I proceed upon the basis that that restraining order was entered into by the former solicitor for the husband with knowledge and upon instructions and I must accept that Mr O’Connor both advised the husband and had instructions from him before consenting to that injunction.  The whole history and knowledge of the N property as is before the Court is scant in detail.  The husband filed, by his former solicitor, an affidavit of some size and substance on 25 August 2010 accompanied by voluminous exhibits thereto, none of which highlight N property, the financial circumstances and history of N property and the reasons for its forced sale.  As Mr Guzzo has explained on instructions today, the husband has negotiated for an auction of the property this coming Thursday, 21 October.

7. A commercial reality firm has been appointed and the husband has spent $13,000 or thereabouts on advertising.  It is expected that the property could realise approximately $3.8 million and I carefully make no finding as to whether that is optimistic or whatever.  It is said that there is $3 million secured against title in favour of the Commonwealth Bank.  What is a matter of particular significance is that no proper notice was given to the wife or to her solicitors, either by the husband or his former solicitor, of the actions in proposing to list and then listing, and then in conducting the pre‑auction process.  I can only understand that the decision to list this property would have been taken several months ago. 

8. There is no evidence before me as to when the commercial real estate firm was engaged to sell the property or as to what other inquiries were made of and related to its sale.  I have, from the bar table, been advised that there were other real estate agents previously listed to sell the property, albeit a long time ago.  What, however, is further known is that this matter was before me on 9 September this year, at which time Mr Davis represented the wife and Ms Wynne, of counsel then represented the husband.  The second respondent was not represented and that was the day when consent leave was granted to the wife to join the third and fourth respondents to the proceedings, and there is a brief ex tempore judgment in support of that order.  The matter of importance is that on 9 September the decision to list the property for sale or auction would or should have then been known to the husband.  The Court should have been advised.  Counsel on that day must not have known, or otherwise would have advised the husband of the extant consent injunction.

9. The former solicitor was then acting and should have been aware of that injunction and the consequences of selling property without the Court’s approval.  I record that the current solicitor, Mr Cavoli, has commenced to act for the husband and the second respondent, only as and from 8 October of this year.  I have no affidavit material from the husband of or concerning N property and the proposed auction.  I have no material before the Court whatsoever from the second respondent.  Mr Davis, on behalf of the wife, made clear this morning that his client has only stumbled across the purported sale of N property and its advertising by Internet searches.  I record that Mr Guzzo, on instructions, advised the Court, and this remains wholly untested, that the husband advised his mother‑in‑law of the intended sale many weeks ago.  I make no finding as to the accuracy or otherwise of those matters which are all in dispute.

10. I have afforded the parties and their legal representatives some time to consider and discuss the significant issues and ramifications arising from the withdrawal of this property from sale.  The principle complaint of the wife is that the husband has failed to make any reasonable or proper disclosure of documents and information, and in particular, it is alleged that the husband is and remains in breach of paragraph 6 of the orders of 9 September 2010.  Mr Guzzo and the current solicitor for the husband seemingly agree that much discovery could have been done and they have indicated to the Court that they have recently sighted a very significant bundle of documents, but that time is required to prepare, analyse and disclose those documents to the wife’s solicitors.

11. It is also suggested that apart from the Commonwealth Bank liabilities of some $3 million, there are other cross‑collateral borrowings and liabilities encumbered on the title to N property.  The wife’s concern, as expressed by her counsel, is that if the property were to sell and if the Commonwealth Bank were to take secured liabilities of $3 million or thereabouts, all other equity might be taken pursuant to other outstanding cross‑collateral loan agreements or whatever.  They are matters upon which I can make no judgment because none of the evidence is before me.  I do not have a title to the property in evidence.  I do not know the secured liabilities on title.  I am told that the wife has lodged a caveat and will not likely uplift caveat from title.  That would, of necessity, mean that any settlement of the sale of property could not occur, save for Court order or the wife’s agreement.

12. Mr Guzzo has been at some length to highlight to the Court that the bank has exerted pressure upon the husband and the second respondent to sell the property.  Again, I have no evidence of that fact.  It may or may not be true.  It likely is true, if there are collateral loan agreements, but all of those matters are unknown.  It is not for the Court at this stage of these proceedings to speculate upon the financial outcome of the sale.  A current injunction is in place.  It is very broad and directed only at the husband, but the intent was to preserve and protect real property pending further Court order.  The husband had legal advice at the time of the making of that consent injunction and that is a crucial fact, as I must proceed on the basis that he had informed legal advice.

13. I propose to uphold the injunction and that means that the auction of this N property in October this year must not proceed.  There will likely be significant financial implications arising from that decision and again, I repeat, I gave legal advisers every opportunity to talk out of court on that matter.  Mr Davis’ submission to the Court is blunt and absolute.  The wife does not agree.  The wife will not consent, no matter the financial outcome or circumstances.  They are the wife’s instructions to Mr Davis. 

14. I will, therefore, direct that the husband do all acts and things and give all necessary instructions to postpone or cancel the auction.  The husband will, of necessity – no doubt, with the assistance of his solicitor – need to advise the bank of that imposed court order.  Again, whatever ramifications flow from that decision are matters that are for the parties to discuss, consider, or otherwise for them to respond thereto. 

15. The Court can and, I repeat, must only take and deal with matters independently and on the evidence before the Court.  There are likely financial consequences and the only alternative I have in this matter is to relist before me on 11 November all outstanding matters, including the consequences of the cancelled or postponed auction, and any financial matters that arise there from can be dealt with on affidavit and submissions properly filed.  I take this opportunity to say to solicitors that this is not a matter where I will entertain applications being filed at court on the morning, save in the most extreme circumstance.

16. As it was, I have allowed a fair degree of latitude in the way the wife’s application was prepared.  It really did not address the issue of a postponed sale.  It dealt with the consequences of sale.  I have been somewhat liberal in allowing Mr Davis to speak contrary to the strict worded application and to seek to vary the orders sought.  But without that, it perhaps made no sense of the wife’s instructions to her counsel and the way in which the case was put.  All questions of costs and issues arising there from will have to be matters before the Court on the adjourned hearing date.

I certify that the preceding sixteen
(16) paragraphs are a true copy of the reasons
for judgment of the Honourable Justice Young
delivered on 14 October 2010.

Associate: ……………………………………………………………

Date:  …………………………………………………………………