Minas and Castellanos

[2010] FamCA 149

FAMILY COURT OF AUSTRALIA

MINAS & CASTELLANOS [2010] FamCA 149

FAMILY LAW – PROPERTY – Interim Application – Validity and enforceability of binding financial agreements – Restraint on dealing with certain real property – Allegations of non-disclosure in relation to inheritance – HELD – Injunctive relief granted as outlined in the orders of the Court

Family Law Act 1975 (Cth) ss 75(2), 79, 79A, 90K, 90KA

APPLICANT: Ms Minas

RESPONDENT: Mr Castellanos

FILE NUMBER: MLC 7416 of 2008

DATE DELIVERED: 11 February 2010

PLACE DELIVERED: Canberra

PLACE HEARD: Canberra

JUDGMENT OF: Faulks DCJ

HEARING DATE: 10 February 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Sweeney

SOLICITOR FOR THE APPLICANT: Carew Counsel Pty. Ltd.

COUNSEL FOR THE RESPONDENT: Mr Booth & Ms Byrnes

SOLICITOR FOR THE RESPONDENT: Hogg & Reid

Orders

It is ordered until further order that:

1. The wife, upon completion of the sale of the property known as M property in the state of Victoria, deposit one half of the net proceeds there from (after deduction of all reasonable expenses in relation to the sale) into an interest‑bearing account to be established by the parties’ lawyers within four working days of the date of these orders in a banking or equivalent institution or if the parties otherwise agree into an account as agreed between the parties in the joint names of the parties on the basis that no deduction may be made from the account or disbursement effected without the joint authorisation of the parties or the signature of both of the parties. 

2. The husband’s application for restraining the disposition of funds in Minute of Orders Sought 2 by the wife in relation to non real-estate assets, which have been acquired by the wife pursuant to a grant of probate dated 9 April 2009 as beneficiary of the estate of KR under her Will dated 4 November 2007, is otherwise dismissed.

3. The husband be and is hereby restrained from further encumbering or alienating his interest in any of the real estate either personally or through any entity in which the husband and wife as at 17 July 2008 were Directors or Shareholders except with the prior written consent of the wife or order of this Court. 

4. a.     Notwithstanding the last mentioned order the husband may sell or dispose of his interest in any of the said property provided that upon completion of such sale or disposition he deposit forthwith thereafter the net proceeds of such sale (after deduction of reasonable sale expenses in relation thereto) into an interest account to be established by the parties’ lawyers at a bank or equivalent institution or if the parties so agree into an account in the joint names of the parties on the basis that no deduction may be made or disbursement effected from such account without the joint authorisation (or the written agreement) of both parties.

   b.      In relation to the funds in such account the husband may apply (on giving not less than two working day’s written notice to the wife or her solicitors) for such sums to be disbursed in relation to the ordinary operation of his business or otherwise. 

   c.      If there is no consent or agreement in accordance with Order 4b there be liberty to apply.

5. The husband’s applications for the setting aside of the binding agreements between the parties dated 17 July 2008 and 13 February 2009 together with his application that orders made by consent in this Court under s 79A be set aside are adjourned to 27, 28 and 29 April 2010 for hearing and determination.

6. The wife will file and serve a financial statement and any additional affidavits upon which she seeks to rely and the husband will file and serve any additional affidavits upon which he seeks to rely on or before noon on 29 March 2010.

7. Henceforth in these proceedings the husband is designated the applicant. 

8. I otherwise make orders by consent in accordance with the Minute of Orders supplied to me by counsel for the parties other than those in 8 and 9. 

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

FAMILY COURT OF AUSTRALIA AT CANBERRA

FILE NUMBER: MLC 7416 of 2008

MS MINAS

Applicant

And

MR CASTELLANOS

Respondent

REASONS FOR JUDGMENT

Introduction

1. The orders that I will make in this matter I will read out first, and then I will briefly give my reasons therefore. 

2. In essence, what I have determined should occur is that there should be a restraint on Mr Castellanos in relation to the disposition or encumbering of the real estate that was owned by the parties at the relevant time, subject to his being permitted to sell the real estate provided he puts the proceeds into a joint account between the parties, which requires either joint authorisation or joint signatures for its disposition. 

3. I have also determined for reasons which I will outline that there should be an injunction restraining the disposition of the proceeds of the sale of the property in M, Victoria by Ms Minas as to one half.  I decline to impose an injunction in relation to the balance of the proceeds of the estate which are in various financial forms.  That is the essence of it, but the formal orders are as follows. 

   ORDERS DELIVERED

Relevant background

1. In this matter, which is an interim matter relating to what will occur until this matter is able to be disposed of by the Court, which I note will occur relatively promptly, the background situation is this.  The parties separated in 2007 on a date that the parties cannot agree about, after a marriage of nearly 23 years. 

2. On 17 July 2008, the parties entered into what are asserted to be the first of two binding financial agreements and a child support agreement.  The asserted supplementary binding financial agreement was entered into on 13 February 2009.  Consent orders were made on 1 September 2008, and there were further consent orders made on 15 October 2009. 

3. In an application filed on 14 October 2009, which I note gave rise to the second set of consent orders referred to above, the wife sought orders which essentially were of an injunctive nature, or for enforcement of the binding financial agreements.  The orders that were made by consent of the parties reflect that and reflect the fact that neither party takes the point that this Court may not be the appropriate forum for the enforcement of a binding financial agreement.[1] 

   [1] Subsequently, on 11 February 2010 after delivery of this ex tempore Judgment, I directed my Legal Associate to contact counsel via email and advise them that s 90KA of the Family Law Act 1975 (Cth) appeared to resolve the question with respect to the appropriate forum as to the validity or enforceability or otherwise of the binding financial agreements.

4. On 1 February 2010, the husband filed a response in which he sought a number of orders, which were of an injunctive nature and sought that the binding financial agreements and various consent orders be set aside.  The issues that were raised by the husband were essentially his assertion that there had been a failure on the part of the wife to disclose an inheritance from Ms KR. 

5. This is an inheritance of some significance, involving a piece of real estate property which appears to be worth something in the order of $1 million, although it is hard to determine that on the evidence before me.  There are also various other deposits and financial sums which total some $600,000.  The precise amount is not relevant at this particular point, except to say that it is relatively substantial. 

6. There is also a dispute between the parties about whether or not there was non‑disclosure, and the circumstances of such non-disclosure and the stated knowledge of the husband in relation to the proposed or, at that stage, future inheritance. 

7. The second issue raised by the husband’s application is whether this non-disclosure gives rise to a basis upon which the two binding financial agreements might be set aside in accordance with s 90K of the Family Law Act 1975 (Cth) and the consent orders pursuant to s 79A of the Family Law Act 1975 (Cth). The substantive issues in relation to that, together with the enforcement issues which arise under the binding financial agreements and the asserted failure on the part of the husband to comply with some of the terms, are effectively adjourned for hearing before me as I indicated previously, early in April 2010.

Discussion

1. The evidence I have before me, as is common with most interim matters, especially those prepared as this one was to some extent, in some haste, does not provide me with sufficient information, particularly as I have had no opportunity to see the credit of the parties tested in any way, that could  satisfy me that there was non-disclosure.  This is not to determine that issue; it simply means it is a matter that will require more substantial evidence at the time of the final hearing.  

2. I note in this regard there is some corroborative evidence for the wife’s position from an affidavit filed by her daughter,[2] and one of the unfortunate consequences, it seems to me, of this matter proceeding to a hearing is that the children of the parties, and, in particular, their daughter E, would appear to be drawn into the vortex of their parents’ litigation.

   [2] Filed in Court on 10 February 2010.

3. There is, however, in my opinion, not enough evidence before me about the non-disclosure to ground, in itself, substantial significant injunctive relief.  However, it is clear from the affidavits of both of the parties that there was no formal disclosure about the inheritance and it seems to me that there is enough evidence to satisfy the proposition that there should be a substantive hearing in relation to the matters raised by the husband, and, in particular, whether or not there are grounds for setting aside the binding financial agreements.

Where to from here?

1. If the husband’s application were to be successful, then the final hearing would be a division of property pursuant to the provisions of s 79 of the Family Law Act1975 (Cth). In such circumstances, that which had previously been agreed between the parties may or may not be of some guidance about what might be just and equitable property division as the law requires. But, more importantly, the division of property that had been agreed would no longer be the one that would necessarily apply.

2. In this regard, without being in a position on the evidence or with the assistance of counsel (who should not regard this in any way as a criticism), I am not able to determine at this point the percentage division of the properties between the parties in the course of their binding financial agreements.  I note the assertion of the husband that this was substantially in favour of the wife.  Without being able to determine that matter, this, in my opinion, gives rise to an entitlement, at least on an interim basis, that other assets of the wife, in this case the proceeds of the sale of the inherited property, should be at least in part quarantined until a final decision of the Court can be made. 

3. This in no way accepts the assertion of the husband that the property be divided, as I think he suggested, something in the order of 75 per cent to the wife and 25 per cent to him. 

4. It also gives no judgment or determination about the way in which the inheritance might be the subject of division, or not, in proceedings under s 79 of the Family Law Act 1975 (Cth) – if they become relevant. I note it has been agreed by the husband’s counsel in the course of proceedings before me yesterday that the husband had made no contribution himself to that inheritance. That, of course, does not preclude its being the property of the parties at the relevant time, nor does it preclude its being taken into account under s 75(2) of the Family Law Act 1975 (Cth). What I am concerned about in these proceedings is to ensure that the property of the parties is adequately safeguarded pending the disposition of the substantial issues between them.

5. There were a number of points that were raised during the course of submissions which I will briefly review. 

6. I do not accept the proposition contended for by the husband that the binding financial agreement of February 2009 is such that no claim could be made at this point that the husband was in breach of the agreement.  Mr Booth pointed out that the loan was not due to be repaid until 28 February 2011.  However, I accept, at this point, without determining the issue except for the purposes of this judgment, that Clause “O” of the second binding financial agreement means that if in fact the husband is in breach of the second financial agreement (and there is certainly some prima facie evidence that that is the case), then the mortgage would become due and payable immediately.

7. It is unnecessary for my purposes to determine that at this point, nor is it necessary for me to determine that the relief sought by the wife by way of injunction should be confined to, or arising out of, enforcement of the binding financial agreement.  To that end, as will be noted from the orders that I have indicated that I will make, I have not required that the proceeds of any sale of property or that any sum be deposited into the ANZ Bank account in partial discharge of the mortgage.

8. It seems to me that the issue of the enforcement of the binding financial agreements needs to await the outcome of the husband’s applications.  However, that does not determine that the wife is not entitled to injunctive relief on the broader ground.  But if there were to be a reopening of the proceedings if the husband’s application should be successful, then it is important that the assets of the parties should not be dissipated in any way, or certainly in a way that would affect the ability of the Court to make orders that would do justice and equity between the parties.

9. In this context, it seems to me that the wife is entitled to, and may reasonably expect to receive, the support of the Court in enjoining the husband from disposing of assets and real estate in his possession.  In coming to that conclusion, I rely in part, but not in whole, upon the submission of Mr Sweeney that in the past the parties had been engaged in the process of acquiring real estate, not selling it. 

10. I note further, that there are assertions, and they are set at some length in paragraph 78 of the wife’s affidavit, that the husband is in breach of his obligations under the binding financial agreements and the child support agreement, and in relation to certain consent orders.  I make no determination about those matters at this point except to say, as I have done previously, that it seems to me that there is at least prima facie evidence that he has not complied with the terms of the agreement.  Not the least is his failure to pay the money that he was required to pay into the ANZ Bank account as required by the second binding financial agreement.  That is a fact which is admitted by him, although he seeks, in part, to explain it in the course of his affidavits before me.

Conclusion

1. On that basis, given that I accept, at least on an interim basis, the need to protect the property, and given that I propose, as I have indicated in the orders that I suggested that I would allow the sale of any of the property so that the husband is not completely hamstrung in the further pursuit of his business, but that the disposition of that property should be subject to either the approval of the wife or, alternatively, an order of this Court, it seems to me that the injunctions that are sought by the wife should be made with the consequences and in the form that I have indicated. 

2. I note in passing, although I do not need to comment further about it, that it was asserted that the wife had already disposed of some of the money she had received from the inheritance, and that assertion was responded to by Mr Sweeney on the basis that at least part of it had been made as a contribution to superannuation.  That, of course, does not mean that that sum would be immediately accessible to an order of this Court as if it were a bank account in proceedings of a final nature.  However, it does mean that the sum would, for all practical purposes, be “quarantined” until the hearing, and until such time a the Court, if it considered it to be appropriate to do so, could make a splitting order under the superannuation provisions of the Family Law Act 1975 (Cth).

3. There are a number of other matters in issue between the parties which have been the subject of resolution and are the subject of the consent orders I have made this day.  I note that some of those are in the nature of enforcement of the binding financial agreements, but I note further that those orders are made by consent and, accordingly, I have no difficulty in making orders in those terms today.

I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of the Honourable Deputy Chief Justice Faulks.

Legal Associate: 

Date:  24 February 2010