McKay and Charles

[2008] FamCA 503

FAMILY COURT OF AUSTRALIA

MCKAY & CHARLES AND ORS [2008] FamCA 503

FAMILY LAW – INJUNCTIONS – Injunction sought by husband that wife return a car under lease and swap for a more economical vehicle – Car purchased initially by wife but put into husband's parents' company name and financial obligations under the lease relate to company – Wife uses car almost exclusively throughout marriage – Husband had been committing himself to make payments – Husband complaining of inability to continue to make payments – Parents making payments on the lease – Wife refuses to return car – Appropriateness of application in this Court as between husband and wife when real issue is between wife and company – Company not a party to proceedings although parents were for other reasons – Injunction must only be made if factual basis justifies it and it is proper – Injunction declined.

Family Law Act 1975 (Cth)

S and S (unreported, Full Court of the Family Court of Australia, Kay, Holden and Monteith JJ, 7 February 2002)
Sieling v Sieling (1979) FLC 90-627
Stowe and Stowe (1981) FLC 91-027

APPLICANT: MR McKAY

RESPONDENT: MS CHARLES

SECOND & THIRD RESPONDENTS: MR McKAY (SNR) and MRS McKAY (SNR)

FILE NUMBER: MLC 3150 of 2007

DATE DELIVERED: 7 JULY 2008

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: THE HONOURABLE JUSTICE CRONIN

HEARING DATE: 1 JULY 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT: MR ST JOHN SC

SOLICITOR FOR THE APPLICANT: NEVETT FORD

COUNSEL FOR THE RESPONDENT: MR SKERLJ

SOLICITOR FOR THE RESPONDENT: HARWOOD ANDREWS LAWYERS

COUNSEL FOR THE SECOND AND THIRD RESPONDENTS: MR ST JOHN SC

SOLICITOR FOR THE SECOND AND THIRD RESPONDENTS: NEVETT FORD

Orders

1. That the application in a case filed by the husband on 23 May 2008 be dismissed.

2. That the response to the husband’s application in a case filed 19 June 2008 be dismissed.

3. That all interim proceedings be removed from the list of cases awaiting a hearing.

IT IS NOTED that publication of this judgment under the pseudonym McKay & Charles 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: MLC 3150  of 2007

MR McKAY

Applicant

And

MS CHARLES

Respondent

And

MR AND MRS McKAY (SNR)

Second and Third Respondents

REASONS FOR JUDGMENT

1. In December 2004, the wife negotiated the “trading in” of her motor car on a Subaru vehicle she wanted to acquire. The negotiations included price and accessories. There was a shortfall in the payout on her old vehicle. The husband paid that. The wife says she paid him back.

2. It would seem that negotiations with the Subaru car dealer were sufficiently successful to enable the wife to sign a contract for the Subaru’s purchase. The facsimile number on the contract document would suggest that it was sent by the wife to the dealer on 23 December 2004. According to the wife, a new contract was drawn in January 2005 in which M Pty Ltd was named as the purchaser. M Pty Ltd is the corporate business vehicle of the husband’s parents. As I understand the background, the wife is not and never was a director of the company.

3. I do not profess to be a handwriting expert but the signature of the purchaser on that second contract looks remarkably like that of the wife. If so, in other words, the wife was a willing and presumably authorised agent of the company.

4. On or about 25 April 2005, the husband told an accounts administrator at McKay Business that the car had been “purchased under [M Pty Ltd]” for “taxation purposes”. As is often the case in these days of electronic communication, the email message to the wife was brief and in a shorthand fashion.

5. The Subaru was presumably financed by a leasing arrangement under which M Pty Ltd was responsible.

6. There is some dispute about who has had possession of the Subaru but it seems otherwise undisputed that it has been the wife’s vehicle since about the time of its acquisition.

THE ISSUE

1. M Pty Ltd, or more correctly, the husband’s parents, now want the car back.

2. The wife has been offered another vehicle as a replacement.

3. The application before me is about whether the wife should be compelled to hand over the Subaru.

BACKGROUND TO THE PARTIES’ DISPUTE

1. The husband and wife were married for a short period of some 18 months. They have one child who is about to turn 2 years of age.

2. The Court file discloses that the parties have litigated to such an extent in a very short time that the file is now about to start its fourth volume of papers. The parties themselves have spent collectively over $200,000 in legal fees to date.

3. The dispute about the motor car epitomises the problem between them.

4. The issue in relation to their 2 year old son is about the time he will spend with each parent. There is currently a sharing arrangement under which the husband spends three nights per fortnight caring for child. The husband wants to move to an equal time arrangement. It is common ground that there is no communication between the parties. That issue will take some court time.

5. The husband describes himself as a company director of an entity that is a retailer. He asserts that he has no legal ownership of the business.

6. The former matrimonial home is also the subject of a dispute. The title is in the names of the husband’s parents. The wife asserts that they hold the property on trust for the husband.

7. As a result of these latter issues, the husband’s parents have been joined as parties. They dispute the wife’s assertions.

8. The wife has not joined M Pty Ltd. In earlier orders, I set the time frames for the wife to consider her position and make the application to join M Pty Ltd if she was so advised. She did not.

9. Instead now, the husband makes the application for the return of the Subaru to his parents.

10. I spent some of the allocated time with the parties trying to get them to focus on what was really in dispute between them having regard to the short relationship and the matters that flow from that. The parties have agreed to have a meeting with the assistance of accountants who have already been involved to endeavour to define what it is that should be in the pool of assets for division. One aspect of that will be whether the husband has a financial resource in the house if he is not an owner. Another aspect will be whether he has some interest in M Pty Ltd but at this stage, that entity has not been joined as a party.

11. These facts are all indirectly relevant to the question of the application before me.

THE APPLICATION

1. The application was filed on 23 May 2008. The husband was the applicant. He sought an order that:

   …the Respondent Wife make available to the Applicant forthwith the Suburu motor vehicle registration number […] (together with various accessories).

2. Notwithstanding the car is owned by M Pty Ltd, the husband seeks the orders. He is supported in that application by his father.

THE LAW

1. The relevant provisions of the Family Law Act 1975 (Cth) (“the Act”) are as follows:

   Section 114 provides:

   (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;

   …

   (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.

2. Section 114 does not provide an exhaustive list of injunctions that a court can make. It will be seen that the basis upon which an injunction may be granted is that it is proper.

3. In the definition of “Matrimonial Cause “ in section 4 of the Act, the following appears:

   “matrimonial cause" means:

   …

   (ca)     proceedings between the parties to a marriage with respect to the property of the parties to the marriage or either of them, being proceedings:

   (i)arising out of the marital relationship;

   (ii)in relation to concurrent, pending or completed divorce or validity of marriage proceedings between those parties; or

   …

   (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);

4. Whilst there may be some doubt about whether an injunction could be made in the way that this application was framed, it was common ground between the parties that the provisions I have referred to, enabled the injunction sought by the husband to be granted (see also Stowe (1981) FLC 91-027).

5. The Full Court in Sieling v Sieling (1979) FLC 90-627 discussed the general nature of an injunction under s 114 saying at 78,264:

   The power to grant injunctions is, of course, a discretionary power, not to be exercised lightly. The Court must balance the hardship to each party of granting or refusing an order, and frame its order in such a way as to impose no further restriction than is necessary to achieve the protection of the applicant's interest. It will not lightly interfere with the rights of an owner of property on the basis of a vague or uncertain claim. There must be circumstances arising out of the marital relationship which make it necessary to restrain, temporarily, a spouse from using his or her property rights to the detriment of the other party.

6. In S and S Full Court (unreported 7 February 2002, Kay, Holden and Monteith JJ) said:

   There are no words of limitation in s 114 other than the grant of the injunction must be "proper".  But, even so, it is difficult to see how the grant of such an injunction could be said to be proper unless there is an appropriate factual base supporting it.

THE EVIDENCE 

1. Is there a factual basis for the injunction sought which could then satisfy me that it is proper to exercise the discretion to grant it?

THE HUSBAND’S EVIDENCE

1. The husband relied upon 3 affidavits for this application. Before turning to those, each party relied upon some historical material about which the husband had given sworn evidence.

2. On 20 June 2007, the husband filed an affidavit in this Court concerning his financial state. He said:

3. “I am presently paying approximately $2,319 per month comprising:

4. (i)       car lease of $1,108 per month;

5. (ii)      petrol of between $300 to $350 per month ”

6. The wife points to the husband’s evidence and says that he was telling the Court that he had the capacity to pay and notwithstanding the obligations for the lease fell to M Pty Ltd, it was his responsibility to meet the payments.

7. In November 2007, by an affidavit filed on 21 November 2007, the husband said:

   I am currently paying, with substantial assistance from my parents, approximately $2,319 per month. At my parents’ behest the company [M] Pty Ltd is additionally meeting the ordinary maintenance, registration and insurance of the car the wife drives.

   I note here that no reference was made to the lease.

8. The husband points now to the fact that in November 2007, he had become an employee rather than the position he was in when he swore his affidavit in June 2007.

9. The husband does not set out any detail about the car ownership presumably on the basis that he acknowledged that it was owned by M Pty Ltd. It certainly does not belong to him.

10. The husband does not say that because his wife was driving the car, he felt that he had some obligation to pay the lease payments. He does not refer to the fact that the car was acquired by the company for commercial or taxation reasons. All of these matters go to the question of the exercise of discretion.

11. The wife has not brought an application against the husband for maintenance such as would oblige him to make the payments. She has chosen to defend the application on the basis that it should simply be dismissed.

THE EVIDENCE OF THE HUSBAND’S FATHER

1. The first affidavit relied upon by the husband in this application was from his father, Mr McKay (Snr). The husband’s father is a party to the proceedings. He said that in April 2008, his lawyer wrote to the wife’s lawyer saying that he and his wife wanted to “exchange” the Subaru for a 2004 Holden Commodore. He said:

   The Subaru motor vehicle is on loan from the company to the wife and is currently in her possession.

2. He went on to say that the company had been meeting the payments and expenses on the vehicle. The wife does not deny that but rather points to the husband’s income as an employee and says that what is happening at face value is different from what she claims to be the reality. Her counsel said that it beggared belief that the husband could do what he is doing on the income asserted.

3. The husband’s father said:

   Given the significant expense of the Subaru motor vehicle, I am proposing that it be exchanged for the Holden motor vehicle which will be more economic in terms of lease expenses and so forth.

   By that, I understood him to mean it was more economic for him.

THE HUSBAND’S EVIDENCE

1. The husband filed his first affidavit on 20 June 2008. In that, he said that under orders made on 25 March 2008, he was to give notice if he intended to alter prevailing financial provisions. He said that he was no longer in a position to pay the lease payments. Whilst there may be a healthy cynicism about that, I am dealing with this matter on the basis of the untested evidence presented.

THE WIFE’S EVIDENCE

1. On 19 June 2008, the wife filed an affidavit. She referred to the background which I have earlier mentioned. She maintained that the car had been purchased under the company name for “taxation purposes”.  She does not say that she was claiming to be the owner of it nor that the company was holding the vehicle on trust. In her affidavit, the wife claimed that the Subaru was never on loan to her by the company.

2. The wife says as part of her case that the acquisition was (with her knowledge), in the name of the company. The wife asserts in her affidavit that because she has had the vehicle for so long, it is unreasonable for the husband to suggest a change.

3. There is little doubt that the company obtained, and is obtaining, some benefit for tax purposes for having acquired the vehicle. Whether the wife and for that matter the husband, received any such direct or indirect benefit may be a matter for argument. Mr. St John of Senior Counsel pointed to the fact that the company could no longer claim the car as a taxation expense if it was in the possession of the wife for personal purposes. That argument is not very convincing having regard to the fact that the company and its directors have been quite content for that situation to continue since acquisition of the car and more importantly, enshrined it indirectly in consent orders.

4. The wife asserted that the husband had

   effective control over the assets and income of the company [M] Pty Ltd and the [Retail] Store at [H].

5. The difficulty with that assertion is that I had made provision for the wife to bring an application to join M Pty Ltd and insofar as that issue was disputed, time was allocated for the hearing. The application was not brought.

SUBMISSIONS

1. Mr. St John said that the wife was estopped from continuing to make the assertion when there was no application to join the entity. I do not accept that the orders I made preclude the wife from persisting with an argument about the ownership of the company. However, there must come a point in time at which the party who has brought the litigation has to have it determined. When I asked Mr Skerlj what the wife’s position was about the company, he said that the wife was reserving her position on that issue. These proceedings have been on foot for over a year now and the husband is entitled to know what it is that the wife intends to argue. The uncertain position adopted by the wife does little to assist me in the determination of this application when she continues to assert that the husband has “effective” control over the assets of the company.

2. The wife complains that this issue was not raised when the parties were before the court in April. Whilst that is so, on what I heard from the parties, both sides are settling in for the long haul so it may be some time before this case can have its final hearing.

3. Whilst the husband is the applicant, the reality is that it is the company that is seeking the return of its vehicle.

4. The company has offered a replacement vehicle if I make the order. The wife says that it will not have the same accessories and will cost more to run. The parents have made an open offer in court to provide the necessary accessories to ensure that their grandchild (and hopefully their grandchild’s mother) are safe. The increased cost of running the vehicle in terms of fuel just seems to me to be a fact of life and not relevant.

5. In the end, the dilemma is that all parties acknowledge that the vehicle is leased. All acknowledge its formal registration. No evidence was presented about what would occur if the payments of the lease were not made. The reality is that the forces of the civil law will take effect. That is a significant issue pressed by Mr St John for the husband and his parents.

6. This therefore is a dispute between M Pty Ltd, the financing company, the wife and the husband’s parents. It is not an issue in dispute between the husband and the wife.

CONCLUSION

1. As I earlier pointed out, the granting of an injunction of this nature is a discretionary remedy. It is not one to be taken lightly. It requires considerations of not only what all parties have done but also the justice and equity issues associated with it. One of the considerations in the exercise of discretion is the balance of convenience.

2. Having regard to the fact that the issue is really one between parties other than the husband and the wife, it is one that should either be dealt with by the normal processes of the law or on a specific application by M Pty Ltd as owner. That is not what I have before me.

3. Accordingly, in the exercise of my discretion and taking into account the balance of convenience, I decline to make the order.

4. The husband’s application will be dismissed.

I certify that the preceding Fifth Nine (59) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin

Associate: 

Date:  7 July 2008