Middleton & Middleton
[2009] FMCAfam 781
•31 July 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| MIDDLETON & MIDDLETON | [2009] FMCAfam 781 |
| FAMILY LAW – Property – interim hearing – conflict of interest – party/solicitor’s firm acting for solicitor & acting for wife in separate proceedings – employed solicitor acting for principal of firm in which she is employed – property application – Barro/costs orders – spousal maintenance – injunctive relief. |
| Family Law Act1975 (Cth), Part VIII, ss.72, 74, 75 (2), 75 (2)(g), 80, 114(3), 114(1) |
| Asia Pacific Telecommunications Ltd v Optus Networks Pty Ltd [2005] NSWSC 550 M. Connock, “Restraining Lawyers from Acting in the Face of a Conflict: Discussion and Advice in Australia,” (1995) 12 Australian Bar Review 244 Law Council of Australia, Model Rules of Professional Conduct and Practice (2002) |
| Applicant: | MS MIDDLETON |
| Respondent: | MR MIDDLETON |
| File Number: | CAC 955 of 2009 |
| Judgment of: | Neville FM |
| Hearing date: | 8 July 2009 |
| Date of Last Submission: | 8 July 2008 |
| Delivered at: | Canberra |
| Delivered on: | 31 July 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr Gill |
| Solicitors for the Applicant: | Evans Yeend Family Lawyers |
| Counsel for the Respondent: | Mr A |
| Solicitors for the Respondent: | [B] |
ORDERS
UNTIL FURTHER ORDER, IT IS ORDERED:
That the firm [B] and any employee of that firm be disqualified from acting for the Husband in these proceedings, and the Husband be restrained from continuing to retain the firm known as [B], or any partner or employee of that firm as his legal representative.
That the Husband be restrained from accessing information held by the firm known as [B] or by any employee of the firm, in relation to the Wife’s personal injury claim.
That within 10 days of the date of these Orders the husband will do all acts and things to draw from the Westpac Variable Rate Investment Property Loan ([2]) the sum of $30,000, to be deposited into the trust account of Evans Yeend Family Lawyers, such funds to be applied to the costs of valuations and legal fees on behalf of the Applicant Wife.
That the treatment of the payment of fees in accordance with Order 3 be a matter for the trial judge as to payment of spousal maintenance on behalf of the wife, partial distribution of matrimonial property on behalf of the wife or payment of legal fees.
That in addition to funds and other financial support currently provided by the Husband to the Wife (which are to continue) the Husband pay to the Wife the sum of $700.00 per week by way of spousal maintenance. In the absence of agreement between the parties the sum of $700.00 per week is to be paid until the final resolution of these proceedings.
That unless otherwise agreed in writing between the parties and co-signed by their legal representatives, both parties be restrained from transferring, encumbering or dealing with the following:
(a)Rural property and home at Property L;
(b)Adjoining rural acreage known as Property A;
(c)Holiday home at Property G, Queensland;
(d)The company, [C] Pty Ltd;
(e)Commercial premises at Property M;
(f)Investment property at Property E, Brisbane, known as [E];
(g)The company, [L] Pty Ltd;
(h)Property L Belted Galloway Stud;
(i)The Middleton Family Trust;
(j)The Middleton Family Superannuation Fund;
(k)Contents of the matrimonial home;
(l)Art collection within the matrimonial home;
(m)Motor vehicles including an [X] and [Y];
(n)Share portfolio;
(o)Bank accounts as follows:
(i)Westpac cash management account ([1]);
(ii)Westpac variable rate investment property loan ([2]);
(iii)Westpac variable rate investment property loan ([3]);
(iv)The business cheque account ([4]);
(v)Westpac Advantage Saver ([5]); and
(vi)Westpac Fixed Investment Property Loan.
That the Wife have sole occupation of the matrimonial home known and situate at Property L, save that the Husband is to have unfettered access to the animals on the property and the cattle stud and to any dwellings, machinery (including tractors), tools or other material in relation to their care and well-being.
That the parties attend a conciliation conference with a Registrar on
21 October 2009 at 10:00am.That each party’s solicitors email to the Registrar a conciliation conference document no later than 2.00 pm the day before the conference.
That if either party is in a superannuation plan that party forthwith make an application pursuant to section 90MZB to the trustee of the plan for information about the party’s interest in the plan and provide a copy of that information to the other party as soon as it is received.
That if valuations are in issue the parties are to exchange copies of valuations or market appraisals no later than 14 days prior to the date of the conference.
That the matter be adjourned for further directions on 27 November 2009 at 9:15am .
Costs reserved.
IT IS NOTED that publication of this judgment under the pseudonym Middleton & Middleton is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT CANBERRA |
CAC 955 of 2009
| MS MIDDLETON |
Applicant
And
| MR MIDDLETON |
Respondent
REASONS FOR JUDGMENT
Introduction
The parties to these property proceedings were married for approximately 26 years. In every respect they should be honoured for their commitment to the marriage. Its breakdown is all the more regrettable in such circumstances. There are two adult children of the relationship, aged 18 and 21 years. Somewhat surprisingly, there is little information in the material currently before the Court regarding them. That may be remedied in due course if for no other reason than to provide a more complete factual background to the proceedings.
There are multiple applications before the Court, sought on an interim basis. All of the applications have been brought by the applicant Wife, Mrs Middleton. In broad terms, she seeks: (a) interim spousal maintenance; (b) a Barro or costs order in relation to the provision of funds for the purposes of conducting the proceedings;[1] (c) interim property injunctions;[2] and (d) that she have sole occupation of the matrimonial home.[3]
[1] Cf. In the Marriage of Barro (1982) 8 Fam LR 855.
[2] Cf. In the Marriage of BA and RS Waugh (2000) 158 FLR 152; M v DB (2006) 36 Fam LR 454.
[3] Cf.Davis v Davis (1976) 11 ALR 445; Nguyen v Scheiff (2002) 29 Fam LR 177.
There is little dispute that the asset pool is significant. It comprises real estate, which is diverse as to kind (e.g. including a cattle stud and commercial investment property on the Gold Coast), and substantial monetary holdings. It also seems not in dispute that the Respondent Husband, who is a prominent legal practitioner in a well-known local law firm, has a significant income stream. Certainly, it is significantly greater than that of the Wife. And, for reasons explained in his affidavit material, and accepting that they are statements of broad application, all assets are essentially in the Husband’s name, or effectively held by entities that are under his control. All such matters are documented in the respective Financial Statements and affidavits filed by the parties.
Although there will certainly be strict and rigorous attention to each and every detail in the event that the matter goes to trial, for current purposes, the above general comments will suffice to indicate that the Court has before it sufficient evidence that would enable a finding to be made that there are substantial assets (speaking generally, something close to $3.2 million), and substantial income, out of which, for example, any order for spousal maintenance could be satisfied.
I will deal with each of the discrete applications before the Court as they are listed above. However, there is one matter to be addressed at the outset, as it was at the recent interim hearing. It concerns an application that the law firm acting for the Respondent Husband, of which he is a principal, be disqualified from continuing to act for him in these proceedings. In the course of the interim hearing I expressed my concerns about risk of conflicts of interests to Counsel for the husband, Mr A. I indicated at the time that I was not minded to make any formal order in relation to disqualification. However, in considering again the material contained in the affidavits filed, I am duty-bound to address this issue directly.
A. Disqualification Application
Before dealing with the legal principles to be applied, a short narrative of the relevant facts that give rise to the application is required. It is somewhat complicated by what might be described as `very late-breaking’ news.
The day before delivery of this judgment, the solicitor on the record for the Respondent Husband filed a Notice of Ceasing to Act. There is little to comment on in this regard. My observations on the difficult position in which she had been placed, and those pertaining to the firm that employs her, which I set out in some detail below, should, it seems to me, remain.
Also filed on the same day, namely the day before delivery of these reasons, the Respondent Husband filed a Notice of Address for Service confirming that he now acts for himself in these proceedings. As I note below, he remains a principal of the firm that has previously acted for his now estranged wife. In such circumstances, at this still very early stage of proceedings, and in the absence of any application before the Court, it seems to me premature to be making either any comment other than the reasons set out below, or any orders other than those which I make today.
Mr Gill contended that because the Respondent Husband’s law firm has acted for the wife in a personal injury matter, and thereby has in its possession certain information from medical specialists that relate to the wife’s health and well-being, the firm cannot and should not continue to act for the husband in these proceedings. The personal injury matter involving the wife is being conducted by a principal in the same firm, other than Mr Middleton. For current purposes I do not need to canvass a separate ground of concern raised by Mr Gill that involved a service company of the law firm.
There is one other area of disquiet which I raised at the hearing. It arises this way. The solicitor on the record is Mrs N. She is an employed solicitor at the firm of which the Respondent Husband is a principal. It would appear to be uncontested that she worked for approximately five years as the Respondent’s secretary while she was completing her legal studies and before being admitted to practice. Since admission she has worked as an employed solicitor with the Respondent’s firm. It also seems factually uncontroversial that the parties to these proceedings were guests at her wedding last year, and that the parties and Mrs N and her husband, from time to time, have socialised together.
All of this certainly indicates that there is a close relationship – professional and personal – between both of the parties and Mrs N. Leaving aside questions of the personal difficulty (and possibly much else) of Mrs N being embroiled in these proceedings and the intimate financial and other knowledge to which she is now privy involving her employer, I confess to significant unease in a situation where an employed solicitor, who has been admitted to practice for a comparatively short time, being charged formally with the carriage of these proceedings on behalf of one of her employers. I am not questioning, in any way, either her competence or her integrity. However, it seems to me that the Respondent has placed her in an untenable position. For example, how will an employed solicitor challenge the judgment of her employer over any aspect of the conduct of the case? The retention of experienced Counsel does not, in my view, obviate or palliate the risks. What will Mrs N do if there is a conflict in relation to her duty to the Court and her duty to the Respondent? Her position, and that of the Respondent, risk serious compromise. Indeed, without any disrespect to Mrs N, given the position of authority the he holds in the firm and in relation to Mrs N, it might be said that the Respondent is, in effect, acting for himself. Such is a dangerous course, to which an old adage avers.
For my part, on both factual bases – the confidential medical information about the Applicant wife in the possession of the respondent’s law firm, and the ethical/conflict risk of Mrs N and the Respondent – the disqualification application is well made out. Briefly, I turn to the authorities – legion though they have become.
An early statement of the impossibility, in all but the most unusual circumstances, of a solicitor acting for two parties who have different (if not competing) interests is the House of Lords decision in Willis v Barron.[4] There was little by way of detailed comment or discussion, other than most of the Law Lords, especially the Earl of Halsbury LC and Lord Macnaghten, indicating that it was a straight-forward proposition that a solicitor could not, and should not, be in such a position of acting for two parties whose interests were opposed.
[4] [1902] AC 271. Another early and regularly cited authority is Rakusen v Ellis, Munday & Clarke [1912] 1 Ch 831.
Australian authority might be taken in two parts: (a) authorities generally that concern conflicts of interest; (b) authorities relating to conflict of interest in family law matters. There is some overlap of principle between the two categories.
By way of overview, however, it is helpful to recall the statements of general principle by Deane J in Chan v Zacharia,[5] where his Honour said:[6]
The variations between more precise formulations of the principle governing the liability to account are largely the result of the fact that what is conveniently regarded as the one "fundamental rule" embodies two themes. The first is that which appropriates for the benefit of the person to whom the fiduciary duty is owed any benefit or gain obtained or received by the fiduciary in circumstances where there existed a conflict of personal interest and fiduciary duty or a significant possibility of such conflict: the objective is to preclude the fiduciary from being swayed by considerations of personal interest. The second is that which requires the fiduciary to account for any benefit or gain obtained or received by reason of or by use of his fiduciary position or of opportunity or knowledge resulting from it: the objective is to preclude the fiduciary from actually misusing his position for his personal advantage.
[5] Chan v Zacharia (1984) 154 CLR 178.
[6] (1984) 154 CLR 178 at pp.198-199.
In the same place, although admittedly in the context of duty to account, Deane J went on to speak about “the principle of equity” in relation to a person who is under a “fiduciary obligation” in terms of a “conflict or significant possibility of conflict.”[7]
[7] Ibid., at p.199. Emphasis added.
Deane J’s comments in Chan v Zacharia were endorsed and applied by Gummow J in his Honour’s survey of “The Australian law as to conflict of interest”, in National Mutual Holdings Pty Ltd v Sentry Corporation.[8]
[8] (1989) 87 ALR 539 at pp.558-561. See particularly p.559. See also the helpful recent discussion by Bergin J in Asia Pacific Telecommunications Ltd v Optus Networks Pty Ltd [2005] NSWSC 550, and by M. Connock, “Restraining Lawyers from Acting in the Face of a Conflict: Discussion and Advice in Australia,” (1995) 12 Australian Bar Review 244; C. Edmonds, “Trusting Lawyers with Confidences – Conflicting Realities (Conflicts Where Lawyers Act Against Former Clients – A Review of the Test and Principles Applying to Lawyers’ Conflict of Interests),” (1998) 16 Australian Bar Review 222; F.M.B. Reynolds, “Solicitors and Conflict of Duties,” (1991) 107 Law Quarterly Review 536.
At the very least, putting aside any other concerns to which I have already referred, Mr Middleton owes a duty to the law firm of which he is a principal, not to place it in a position where its interests and those of its clients are at significant risk of conflict. Currently, that firms acts for him. Until somewhat recently, or at least the not too distant past, that same firm has acted for his wife, with whom he is now engaged in litigation. That firm `cannot serve two masters.’ Nor can it use any information about the Wife that was obtained while they were acting for her. That blatant conflict is not able to be remedied by the wife now being represented, in these proceedings, by another firm. As it currently stands, Mr Middleton’s firm is acting against one of its former clients. It cannot continue to do so.
Moving then to authority in the context of family law proceedings the following may be noted.
First, in Thevenaz, Frederico J referred to the long-standing adage/principle “… of the utmost importance that justice should not only be done but should appear to be done.” That case involved a solicitor who had acted for the parties on the purchase of the matrimonial home later acting for the wife in contested property proceedings in the Family Court. His Honour ordered that the solicitor could not continue to act for the wife. In the circumstances of the present case, there is a risk which may well be merely theoretical but still exists, that `justice might not appear to be done.’[9] In this case, in my view the risk is significantly more than “merely theoretical.”
[9] In the Marriage of Thevenaz (1986) 84 FLR 10 at p.13. Thevenaz was endorsed strongly by the Full Court (Finn, Kay & Moore JJ) in McMillan & McMillan (2000) FLC ¶93-048 at [54].
In Magro, a solicitor, formerly employed by the applicant wife in contested property proceedings had joined the firm of the solicitors who were now acting for the respondent husband. Rourke J followed the decision of Frederico J in Thevenaz. His Honour noted that in family law proceedings especially, particular sensitivity should be paid not only to genuine conflicts but also even to the risk of appearance of them. Rourke J also held that the giving of undertakings not to use information or even to confer with colleagues in the new firm did not and could not remedy the risks.[10]
[10] In the Marriage of Magro (1989) 93 FLR 365. See especially pp.373-375.
Finally, there is a compendious, though still brief, discussion of the above cases (and more) by the Full Court (Ellis, Baker & Finn JJ) in McGillivray & Mitchell.[11]
[11] In the Marriage of McGillivray & Mitchell (1998) 23 Fam LR 238.
At the interim hearing, Counsel for the Husband indicated that he well understood my concerns about the issues raised by Counsel for the Wife, and those raised by the Court. In the light of my comments and observations outlined above, as a matter of formality and regularity, in the unlikely event that the Respondent’s firm continues to seek to act in the proceedings, it seems to me that an order should be put in place to ensure that that does not occur.
Such an order would be in the form of a restraint upon the Respondent from continuing to retain the firm known as [B], or any partner or employee of that firm, to act for him in these proceedings, and the use of any information concerning the wife in possession of the firm.
It remains only to note that standard Rules of Practice, such as those issued by the Law Council of Australia (2002), and by the Law Society of New South Wales, provide clear guidance in relation to matters of this sort.[12] For example, the Model Rules of Professional Conduct and Practice (Rule 9), provide that a practitioner must avoid a conflict between his own interests and those of a client. Specifically, Rule 9.2 provides: “A practitioner must not accept instructions to act or continue to act for a person in any matter when the practitioner is, or becomes, aware that the person’s interest in the matter is, or would be, in conflict with the practitioner’s own interest or the interest of an associate.”[13] Rule 10 of the Law Society of New South Wales Professional Conduct and Practice Rules is to similar effect.
[12] Law Council of Australia, Model Rules of Professional Conduct and Practice (2002); The Law Society of New South Wales, Professional Conduct and Practice Rules (1995).
[13] “Associate” is defined under the Model Rules to include “a member of the immediate family of a partner of the practitioner’s firm….”
I turn now to each of the other applications before the Court: (a) interim spousal maintenance; (b) a Barro or costs order in relation to the provision of funds for the purposes of conducting the proceedings; (c) interim property injunctions; and (d) that the wife have sole occupation of the matrimonial home.
B. Interim Spousal Maintenance
Mrs Middleton seeks an order that her husband pay her $1500.00 per week by way of spousal maintenance.
Sections 72, 74, 75(2) and 80 of the Family Law Act1975 (“the Act”) govern the entitlement to spousal maintenance. The following cases are also relevant to such applications: In the Marriage of Best, Bevan & Bevan, In the Marriage of Mitchell, In the Marriage of DJM & JLM, In the Marriage of Vautin, and K & P.[14]
[14] Respectively, (1993) 16 Fam LR 937; (1995) FLC¶92-600; (1995) 19 Fam LR 44; (1998) 23 Fam LR 396; (1998) 23 Fam LR 627; [2008] FamCAFC 23.
In order to make an order for spousal maintenance, the case-law noted prescribes that the so-called “threshold” test in s.72 be satisfied. That test requires there to be a finding that the spouse seeking the order is “unable to support herself or himself adequately.” If that question or issue is resolved in favour of the applicant-spouse then the Court is required to have regard to s.74 and the very wide discretion it confers, and in particular, as required by s.72, the Court must have “regard to any relevant matter referred to in subsection 75(2).”
Summarily stated, the “need” contemplated by s.72 means more than a subsistence existence. According to the Full Court in Bevan, the Court is also required to consider whether any such order will ultimately result in a depletion (especially a significant depletion, such as would arise in any contested litigation) of capital resources. This would certainly be a consideration, especially where, for example, the other spouse (such as here) is in receipt of significant income.[15]
[15] See here the Full Court decision in Best, which involved a high-income earning solicitor, who was a partner in a prominent law firm. The circumstances in that case bear many similarities to the present litigation.
According to the Full Court in Mitchell, the Court should also pay due regard to the reality of employment prospects “especially for people in middle age, lacking experience and confidence, and who may be out of the skilled workforce for many years, and in the context of high unemployment.”[16] In this case, without going in to detail, respectfully both parties might be described as being “middle-aged.”
[16] Mitchell (1995) 19 Fam LR 41 at p.61.
In my view, having regard to the facts of this case, the“threshold” requirement is readily satisfied. Mrs Middleton works essentially part-time and otherwise has little if any income. For the duration of the long marriage, she has undertaken the onerous tasks of Mother and home-maker. She does not have the capacity to earn anywhere near the income that Mr Middleton does.[17] Put another way, it is not inapt to say that, notwithstanding Mrs Middleton working part-time, the reality is that because of her long-time spousal and home-making responsibilities her employment “skill-set” is not in the same league as that of Mr Middleton.
[17] Cf. the House of Lords discussion in McFarlane v McFarlane [2006] 2 AC 618 in relation to high income-earning spouses and the conduct of a marriage in the light thereof.
I am conscious that under s.74 of the Act, the Court is required only to make an order which is considered “proper for the provision of maintenance….” In considering whether an order is “proper” I must have regard to s.75(2). Some matters have already been addressed, such as the age of the parties, Mrs Middleton’s income-earning capacity, and the duration of the marriage. I am not aware of any immediate health issues, save for the personal injury matter to which I have briefly referred earlier in these reasons.
I am also to have regard to “a standard of living that in all the circumstances is reasonable” (s.75(2)(g)). In this connection I am conscious that Mr Middleton has been providing some financial assistance to his wife since the separation. This certainly needs to be taken into account.
Balanced against the above, the Court is required to consider the “ability to pay” any order for spousal maintenance. I have already noted this and do not consider that there is any issue in this regard.
Having regard to the facts and circumstances in this case, and on the basis that the financial support that is currently in place, albeit on an informal basis, between the parties continues, in my view there should be an order for spousal maintenance in favour of Mrs Middleton, which directs that Mr Middleton pay her the sum of $700 per week. This sum should continue until final order of the Court or the matter is otherwise concluded on a final basis between the parties.
C. Barro/Costs Order
Mrs Middleton seeks an order that the sum of $60,000 be paid into her lawyer’s trust account to enable her to conduct the proceedings. The sum sought is intended to cover both legal costs and those associated with obtaining valuations for the not insignificant range of properties.[18]
[18] In the course of argument, there was some discussion by Counsel for Mr Middleton about whether an interest in a partnership was “property” and especially how difficult it is to value such interests. Such matters were addressed by the Full Court (Fogarty, Lindenmayer & McGovern JJ) in Best (1993) 16 Fam LR 937 where the Court held that, in ordinary circumstances, an interest in a partnership is property, and is capable of valuation, albeit that there can be difficulties in doing so.
Accepting that it was in the context of a special leave application, in Breen v Breen,[19] the High Court (Brennan J, for the Court comprising himself and Dawson & Gaudron JJ) said: “The [costs] order [made by the Family Court in favour of the wife and against which the husband seeks to appeal] seeks to ensure that, in the circumstances of the present case, the wife should be able to prosecute the pending matrimonial proceedings and should have the funds to do so. Such an order made for such a purpose, though it falls within one or other of the powers conferred on the Family Court, should be so framed as to protect the parties from any risk of injustice arising from the manner in which the funds are expended.” In the result, the High Court refused special leave, thus keeping in place the costs order made in favour of the wife.
[19] (1990) 65 ALJR 195 at pp.195-196.
In Bing & Bing,[20] the Full Court (Kay, Coleman & Cronin JJ) did not interfere with an order that provided for “security for costs”, pursuant to s.117 of the Act, in the sum of $200,000. The Full Court cited, with obvious approval, the earlier Full Court decision in Zschokke (Baker, Finn & Hannon JJ).[21] In Bing, the Court listed (at p.81,478) from Zschokke five criteria to be satisfied before a so-called “Barro/costs” order is made. Those criteria are: complexity in the respondent’s financial affairs; the need for expert investigation into those affairs; a position of financial strength on the part of the respondent; a capacity on the part of the respondent to meet his own costs; and an inability on the part of the applicant to meet her costs.
[20] (2007) FLC ¶93-318.
[21] (1996) FLC ¶92-693.
Such an order is appropriate here because, in my view, all the criteria just mentioned is accounted for on the facts of this case. However, the amount sought is very much at the high if not extreme end. The costs sought at this very early stage of the proceedings are more akin to those that might be expected at a similar stage in large commercial litigation rather than family law proceedings. In my view, having regard to the number and nature of the properties that require valuation, and more generally in the light of where things stand at the present, a more appropriate sum is $30,000. An order for this sum to be deposited into the trust account of the wife’s solicitors will be made.[22]
[22] See also the discussion by the Full Court in Kendling v Kendling (2008) 39 Fam LR 404, where an order for payment on account of costs in the sum of $1million was not interfered with.
An order will also be made in terms of order 4 in the Application concerning how this sum should be treated in the light of the final determination of the matter.
D. Injunctive Relief
Mrs Middleton seeks orders which, in effect and in reality, seek to preserve a wide range of assets (the assets are listed in detail in the application) and to prevent any dealing with them until determination by the Court. The assets range from real estate to superannuation interests and a family trust, to an art collection, contents of the matrimonial home, and various bank accounts and a share portfolio.
To speak generally, there are a number of claims made by both parties about dealing with property that properly will be taken into account in determining the asset pool. I do not think it productive or apposite, at this stage of proceedings however, to itemise the competing claims that are made. If necessary, such matters should, and will, be determined at a final hearing.
In Sheehan & Sheehan,[23] I considered at some length the principles considered by the High Court,[24] and the Full Court of the Family Court,[25] in relation to the granting of injunctive relief. I will not repeat what I said there regarding basic principle in relation to (a) whether there is a `serious question to be tried,’ (b) the balance of convenience, and (c) an object of certain injunctive relief is “to preserve the status quo.”[26] I will note, however, the Full Court’s observation in M v DB, at [46], where the Court (Kay, Warnick & Boland JJ) said: “…we think it helpful to recognise that the essential power being exercised in this Court is simply described in s.114(3). “A Court … may grant an injunction … in any case in which it is just or convenient to do so.””
[23] [2008] FMCAfam 655.
[24] Among other cases I considered were Cardile v LED Builders Pty Limited (1999) 198 CLR 380 and Patrick Stevedore’s Operations No 2 Pty Limited v Maritime Union of Australia(No 3) (1998) 195 CLR 1.
[25] Among a number of Full Court cases I considered were M v DB (2006) 36 Fam LR 454, also reported in (2006) FLC¶93-293.
[26] See the comments in Cardile v LED BuildersPty Ltd (1999) 198 CLR 380 at pp.403-404.
In my view, until further order or written agreement between the parties and co-signed by their respective legal representatives, both parties should be restrained, in terms set out in order 6 of the Wife’s application filed on 12th June 2009, from dealing with the property and other financial interests set out in that same order.
One final matter relating to injunctive relief needs to be addressed. It was not the subject of detailed oral submission. The Court was provided with an outline of written submissions, which briefly addressed the following aspect.
Counsel for the Wife, Mr Gill, submitted that in granting injunctive relief, according to the Full Court decision in Blueseas Investments Pty Ltd v Mitchell,[27] there was no unyielding requirement (at least in family law proceedings) to require that there be the usual undertaking as to damages.
[27] Blueseas Investments Pty Ltd v Mitchell (1999) 151 FLR 298.
This Full Court (Nicholson CJ, Lindenmayer & O’Ryan JJ) decision was criticised in a significant number of respects by Campbell J of the New South Wales Supreme Court in Varley v Varley.[28] In sum, Campbell J’s acute criticisms, beginning at [44] and proceeding through to [68], range from inaccuracy of citation[29] to a quite trenchant critique of the authorities relied upon by the Full Court, beginning at [51]. In short, his Honour had very significant doubts about the correctness of the propositions gleaned from the cases cited. For example, at [57], Campbell J said: “Dein v Bealey … does not, in my respectful view, provide support for the proposition for which the Full Court cited it in Mitchell.” His Honour made similar comments about the other authorities on which the Full Court relied.
[28] [2006] NSWSC 1025.
[29] Incorrect citation of Meagher, Gummow & Lehane’s classic text, Equity: Doctrines & Remedies. The Full Court cited the Fourth Edition, published in 2002, notwithstanding that the Court’s decision was in 1999.
Campbell J continued, at [46], saying: “I note that there was a concession by counsel for the appellant in Mitchell. There is no such concession in the present case. Thus it is necessary to look at the cases referred to in para [51] of Mitchell, to see whether they bear out the proposition that “there is no requirement for an undertaking as to damages if the party seeking an injunction is impecunious or has limited means”.”
He concluded the incisive discussion this way, at [68]:
It is implicit in the Full Court’s decision in Blue Seas Investments v Mitchell that if a litigant was in straitened circumstances in family law proceedings, because the manner in which the marriage had been conducted was one which had lead him or her to be in those straitened circumstances, that is a circumstance which could legitimately be taken into account in deciding whether to grant an interlocutory injunction even though an undertaking as to damages might be of dubious value. However, that is very far from the present case. In my view, the failure of the plaintiff to offer an undertaking as to damages in the present case is another significant factor against the application.[30]
[30] In the interests of balance, I note that in the first sentence of the quotation from his Honour’s judgment, Campbell J incorrectly refers to “lead” rather than “led.”
As I read Campbell J’s discussion, in the result, he chose to distinguish (rather strongly) the decision of the Full Court in Blueseas Investment from the case before him.
For my part, because of the path I have chosen whereby there is to be a mutual restraint on each party, in my view I do not have to decide the effect of Campbell J’s sober critique on the Full Court’s decision in Blueseas Investment.[31]
[31] I note that recently, Reithmuller FM has cited and relied upon the decision in Blueseas Investment, but only in relation to the granting of an injunction, not in relation to issues concerning any undertaking as to damages. See Wenz v Archer (2008) 40 Fam LR 212.
E. Sole Occupation
Somewhat curiously, another judgment of Campbell J from the
New South Wales Supreme Court is relevant to the order sought by Mrs Middleton to have sole occupation of the matrimonial home.
In Nguyen v Scheiff,[32] Campbell J followed, without hesitation, the Full Court decision in Davis v Davis.[33] At [59], Campbell J cited, among other parts of the Full Court’s judgment in Davis, the following (11 ALR at p.447):
In our view, provided that there are proceedings between the parties in circumstances arising from the marital relationship, sec. 114(1) gives the Court wide power to deal with the use and occupancy of the matrimonial home and to make such order as it thinks proper. This power may be exercised even if the home is solely owned by one spouse and where the other spouse has no legal or equitable interest in the home.
The criteria for the exercise of the power under sec. 114(1) are simply that the Court may make such order as it thinks proper. The matters which should be considered include the means and needs of the parties, the needs of the children, hardship to either party or to the children and, where relevant, conduct of one party which may justify the other party in leaving the home or in asking for the expulsion from the home of the first party.
[32] (2002) 29 Fam LR 177.
[33] (1976) 11 ALR 445.
In the circumstances of this case, which must include Mr Middleton’s unfettered access to the cattle stud and the care of the animals there, in my view, until further order (or by written agreement between the parties) Mrs Middleton should have sole occupation of the matrimonial home. I was advised at the interim hearing that Mr Middleton has secured alternative accommodation.
For the above reasons and with the modifications noted, I make orders as sought by the applicant Wife. Formally, I reserve the question of costs.
I certify that the preceding fifty-six (56) paragraphs are a true copy of the reasons for judgment of Neville FM
Associate: J. Curtis
Date: 31 July 2009
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